§ 27-3-38 - Surplus line brokers – License – Affidavit of inability to obtain insurance – – Reports and records – Premium tax – Notice to purchasers.
SECTION 27-3-38
§ 27-3-38 Surplus line brokers –License – Affidavit of inability to obtain insurance – – Reportsand records – Premium tax – Notice to purchasers. – (a) The insurance commissioner may issue a surplus line broker's license to anyperson who or which is licensed as a property and casualty insurance producerin this state, authorizing the licensee to procure, subject to the restrictionsprovided in this section, policies of insurance, except life and health andaccident, from insurers which are on the commissioner's list of approvedsurplus insurers in this state. This license may be suspended or revoked by theinsurance commissioner whenever, in the commissioner's judgment, a suspensionor revocation will best promote the interest of the people of this state.Before any license is issued by the insurance commissioner and before eachrenewal of a license, there shall be filed in his or her office a writtenapplication by the person desiring the license in the form or forms andsupplements to the form, and containing any information, that the insurancecommissioner may prescribe.
(b) A Rhode Island resident business entity acting as asurplus line broker may elect to obtain a surplus line broker license.Application shall be made using the uniform business entity application. Priorto approving the application, the commissioner shall find both of the following:
(1) The business entity has paid the appropriate fees.
(2) The business entity has designated a licensed surplusline broker responsible for the business entity's compliance with the insurancelaws and rules of this state.
(c) When any policy of insurance is procured under theauthority of that license, there shall be executed, both by the licensee and bythe insured, affidavits setting forth facts showing that the insured or alicensed Rhode Island producer were unable, after diligent effort, to procurefrom no less than three (3) authorized insurers the full amount of insurancerequired to protect the property owned or controlled by the insured or therisks insured. Provided, however the aforementioned affidavit shall not berequired when insuring the following interest: amusement parks and devices,environmental improvement and/or remediation sites, vacant property or propertyunder renovation, demolition operations, event cancellation due to weather,railroad liability, discontinued products, fireworks and pyrotechnics,warehouseman's legal liability, excess property coverage, and contingentliability. For purposes of this section, residual market mechanisms shall notbe considered authorized insurers. Prior to renewing, continuing, or extendingany policy, the licensed surplus line broker must confirm that the insurer ison the insurance commissioner's list of approval surplus line insurers in thisstate.
(d) The licensee shall keep a complete and separate record ofall policies procured from approved surplus lines insurers under the licenseand these records shall be open to the examination of both the insurancecommissioner and tax administrator at all reasonable times, and shall show theexact amount of each kind of insurance permitted under this section which hasbeen procured for each insured, the gross premiums charged by the insurers foreach kind of insurance permitted under this section which were returned to eachinsured, the name of the insurer or insurers which issued each of thesepolicies, the effective dates of these policies, and the terms for which thesepolicies were issued. The licensee shall file a yearly report with theinsurance commissioner on a form prescribed by the insurance commissionershowing the business procured under the surplus line license for the precedingcalendar year, and the report shall be due annually on or before April 1.
(e) Every person, firm, or corporation licensed pursuant tothe provisions of this section shall file with the insurance commissioner, atthe time of the insurance producer license renewal, sufficient information asdetermined by the insurance commissioner whether a licensee or a person actingon the licensee's behalf, has paid to the tax administrator, for all policiesprocured by the licensee pursuant to the license during the next precedingcalendar year, a tax, computed at the rate of three percent (3%) on the grosspremiums charged the insured by the insurers, less the amount of premiumsreturned to the insured.
(f) Every application form for insurance from a surplus linesinsurer, every affidavit form executed by the insured, and every policy (on itsfront and declaration pages) issued by the surplus lines insurer, shall containin ten (10) point type the following notice:
NOTICE
THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOTLICENSED TO DO BUSINESS IN THE STATE OF RHODE ISLAND BUT APPROVED AS A SURPLUSLINES INSURER. THE INSURER IS NOT A MEMBER OF THE RHODE ISLAND INSURERSINSOLVENCY FUND. SHOULD THE INSURER BECOME INSOLVENT, THE PROTECTION ANDBENEFITS OF THE RHODE ISLAND INSURERS INSOLVENCY FUND ARE NOT AVAILABLE.