Rhode Island SB 3008: AN ACT RELATING TO INSURANCE -- VOLUNTARY RESTRUCTURING OF SOLVENT INSURERS (Allows domestic insurance company to enter into a voluntary restructuring, including the use of a protected cell, with the approval of the commissioner.)

Bill Text

2018 -- S 3008
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LC005967
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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. 2018
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A N A C T
RELATING TO INSURANCE -- VOLUNTARY RESTRUCTURING OF SOLVENT
INSURERS
Introduced By: Senator Roger Picard
Date Introduced: June 23, 2018
Referred To: Placed on Senate Calendar

It is enacted by the General Assembly as follows:
SECTION 1. Sections 27-14.5-1, 27-14.5-3, 27-14.5-4 and 27-14.5-6 of the General 1
Laws in Chapter 27-14.5 entitled "Voluntary Restructuring of Solvent Insurers" are hereby 2
amended to read as follows: 3
27-14.5-1. Definitions. 4
As used in this chapter: 5
(1) "Applicant" means a commercial run-off insurer applying under § 27-14.5-4. 6
(2) "Assessment deficit" means the amount that the assessment for the previous year 7
under § 27-14.5-5 is less than, and "assessment surplus" is the amount that the assessment for the 8
previous year exceeds: 9
(i) The run-off insurer's proportionate share of regulatory expenditure for the previous 10
year, if the run-off insurer was domiciled in Rhode Island on March 15 of the previous year; or 11
(ii) The redomestication expenditure for the previous year attributable to the run-off 12
insurer, if the run-off insurer was not domiciled in Rhode Island on March 15 of the previous 13
year. 14
(3) "Assumption policyholder" means a policyholder whose policy is reinsured under an 15
assumption reinsurance agreement between the applicant and a reinsurer. 16
(4) "Assumption reinsurance agreement" has the meaning given in § 27-53.1-3(b), 17
subject to the following: 18

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(i) The agreement may be conditioned upon the court's entry of an implementation order. 1
(ii) If any policy subject to the agreement is protected through a guarantee association, 2
then the assuming insurer must have been and be licensed, and must have been and be a member 3
of the guarantee association, in all states known to the applicant in which either: (A) any property 4
covered under the policy has a permanent situs; or (B) the policyholder resided while the policy 5
was in force. 6
(5) "Class of creditors" means: 7
(i) All voting policyholders, including those without known claims; 8
(ii) Voting creditors, other than policyholders; or 9
(iii) Any separate class of creditors as the court may in its discretion determine should 10
approve the commutation plan. 11
(6) "Commercial run-off insurer" means: 12
(i) A run-off insurer domiciled in Rhode Island, or the protected cell of such insurer, 13
whose business, excluding all business subject to an assumption reinsurance agreement, includes 14
only the reinsuring of any line(s) of business other than life and/or the insuring of any line(s) of 15
business other than life, workers' compensation, and personal lines insurance; or 16
(ii) A Rhode Island domestic insurance company, or the protected cell of such insurer, 17
meeting the requirements of subsection (i) hereof and formed or re-activated for the sole purpose 18
of entering into a voluntary restructuring under this chapter and whose liabilities consist of 19
commercial liabilities transferred to said company with the approval of the commissioners 20
commissioner and pursuant to the regulations issued by the department under this chapter. The 21
amount of the commercial liabilities transferred must be less than or equal to the amount of assets 22
transferred to the newly formed or re-activated company. 23
(7) "Commissioner" means the director of the department. 24
(8) "Commutation plan" means a plan for extinguishing the outstanding liabilities of a 25
commercial run-off insurer. 26
(9) "Creditor" means: 27
(i) Any person that has a claim against the applicant; or 28
(ii) A policyholder other than an assumption policyholder. 29
(10) "Department" means the department of business regulation. 30
(11) "Guarantee association" means a guarantee association or foreign guarantee 31
association, as those terms are defined in § 27-14.3-3(10), that is potentially obligated with 32
respect to the applicant's policies. 33
(12) "Implementation order" means an order under § 27-14.5-4(c). 34

LC005967 - Page 3 of 9
(13) "Insurer" has the meaning given in § 27-14.3-3(12). 1
(14) "Person" means an individual, corporation, partnership, association, joint stock 2
company, trust, unincorporated organization, or any similar entity or any combination of the 3
foregoing acting in concert. 4
(15) "Personal lines insurance" means insurance issued for personal, family, or household 5
purposes. 6
(16) "Policy" means a contract of insurance or a contract of reinsurance. 7
(17) "Policyholder" means an insured or a reinsured of the insurer. 8
(18) "Proportionate share" means, for a particular run-off insurer as of December 31 of 9
the previous year, the ratio of: 10
(i) The gross assets of that run-off insurer; to 11
(ii) The gross assets of all run-off insurers, other than those that were not domiciled in 12
Rhode Island on March 15 of that calendar