Rhode Island HB 5549: AN ACT RELATING TO INSURANCE -- RHODE ISLAND PROPERTY AND CASUALTY INSURANCE GUARANTY ASSOCIATION

Bill Text

2025 -- H 5549 SUBSTITUTE A
========
LC001766/SUB A
========
S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
____________

A N A C T
RELATING TO INSURANCE -- RHODE ISLAND PROPERTY AND CASUALTY
INSURANCE GUARANTY ASSOCIATION
Introduced By: Representatives Kennedy, Azzinaro, Edwards, Solomon, O'Brien,
Kazarian, and Diaz
Date Introduced: February 26, 2025
Referred To: House Corporations
(Dept. of Business Regulation)

It is enacted by the General Assembly as follows:
SECTION 1. Section 27-34-8 of the General Laws in Chapter 27-34 entitled "Rhode Island 1
Property and Casualty Insurance Guaranty Association" is hereby amended to read as follows: 2
27-34-8. Powers and duties of the association. 3
(a) The association shall: 4
(1)(i) Be obligated to pay covered claims existing prior to the order of liquidation; arising 5
within sixty (60) days after the order of liquidation or before the policy expiration date if less than 6
sixty (60) days after the order of liquidation or before the insured replaces the policy or causes its 7
cancellation if the insured does so within sixty (60) days of the order of liquidation. The obligations 8
shall be satisfied by paying to the claimant an amount as follows: 9
(A) The full amount of a covered claim for benefits under a workers’ compensation 10
insurance coverage; 11
(B) An amount not exceeding ten thousand dollars ($10,000), per policy for a covered 12
claim for the return of unearned premium; 13
(C) An amount not exceeding one million dollars ($1,000,000) for all first-party property 14
loss claims arising from a single occurrence under a policy covering commercial or residential 15
property for all other covered claims for insolvencies occurring after January 1, 2026; an amount 16
not exceeding five hundred thousand dollars ($500,000), per claimant for all other covered claims 17
for insolvencies occurring on or after January 1, 2008,; and an amount not exceeding three hundred 18

LC001766/SUB A - Page 2 of 15
thousand dollars ($300,000) per claimant for all other covered claims for insolvencies occurring 1
prior to January 1, 2008. 2
(ii) In no event shall the association be obligated to pay a claimant an amount in excess of 3
the obligation of the insolvent insurer under the policy or coverage from which the claim arises. 4
Notwithstanding any other provision of this chapter, a covered claim shall not include a claim filed 5
with the guaranty association after the final date set by the court for the filing of claims against the 6
liquidator or receiver of an insolvent insurer. For the purpose of filing a claim under this subsection, 7
notice of claims to the liquidator of the insolvent insurer shall be deemed notice to the association 8
or its agent and a list of claims shall be periodically submitted to the association or association 9
similar to the association in another state by the liquidator. 10
(iii) Any obligation of the association to defend an insured shall cease upon the 11
association’s payment or tender of an amount equal to the lesser of the association’s covered claim 12
obligation limit or the applicable policy limit; 13
(2) Be deemed the insurer to the extent of its obligation on the covered claims and to that 14
extent, subject to the limitation provided in this chapter, shall have all rights, duties, and obligations 15
of the insolvent insurer as if the insurer had not become insolvent, including, but not limited to, the 16
right to pursue and retain salvage and subrogation recoverable on covered claim obligations to the 17
extent paid by the association. The association shall not be deemed the insolvent insurer for the 18
purpose of conferring jurisdiction; 19
(3) Allocate claims paid and expenses incurred among the three (3) accounts separately, 20
and assess member insurers separately for each account amounts necessary to pay the obligations 21
of the association under subdivision (a)(1) subsequent to an insolvency, the expenses of handling 22
covered claims subsequent to an insolvency, and other expenses authorized by this chapter. The 23
assessments of each member insurer shall be in the proportion that the net direct written premiums 24
of the member insurer for the calendar year preceding the assessment on the kinds of insurance in 25
the account bears to the net direct written premiums of all member insurers for the calendar year 26
preceding the assessment on the kinds of insurance in the account. Each member insurer shall be 27
notified of the assessment not later than thirty (30) days before it is due. 28
A member insurer may not be assessed in any one year on any account an amount greater 29
than two percent (2%) of that member insurer’s net direct written premiums for the calendar year 30
preceding the assessment on the kinds of insurance in the account. If the maximum assessment, 31
together with the other assets of the association in any account, does not provide in any one year in 32
any account an amo