TITLE 27

Insurance

CHAPTER 27-34.3

Rhode Island Life and Health Insurance Guaranty Association Act

SECTION 27-34.3-5



   § 27-34.3-5  Definitions. –

As used in this chapter:



   (1) "Account" means either of the two accounts created under

§ 27-34.3-6.



   (2) "Association" means the Rhode Island life and health

insurance guaranty association created under § 27-34.3-6.



   (3) "Authorized assessment" or the term "authorized" when

used in the context of assessments means a resolution by the board of directors

has been passed whereby an assessment will be called immediately or in the

future from member insurers for a specified amount. An assessment is authorized

when the resolution is passed.



   (4) "Benefit plan" means a specific employee, union or

association of natural persons benefit plan.



   (5) "Called assessment" or the term "called" when used in the

context of assessments means that a notice has been issued by the association

to member insurers requiring that an authorized assessment be paid within the

time frame set forth within the notice. An authorized assessment becomes a

called assessment when notice is mailed by the association to member insurers.



   (6) "Commissioner" means the commissioner of insurance within

the department of business regulation of this state.



   (7) "Contractual obligation" means any obligation under a

policy or contract or certificate under a group policy or contract, or portion

of a group policy or contract for which coverage is provided under §

27-34.3-3.



   (8) "Covered policy" means any policy or contract or portion

of a policy or contract for which coverage is provided under § 27-34.3-3.



   (9) "Extra-contractual claims" means claims not arising

directly out of contract provisions, including, for example, claims relating to

bad faith in the payment of claims, punitive or exemplary damages or attorneys'

fees and costs.



   (10) "Impaired insurer" means a member insurer which is not

an insolvent insurer, and



   (i) Is placed under an order of rehabilitation or

conservation by a court of competent jurisdiction.



   (11) "Insolvent insurer" means a member insurer which after

January 1, 1996, is placed under an order of liquidation by a court of

competent jurisdiction with a finding of insolvency.



   (12) "Member insurer" means any insurer licensed or which

holds a certificate of authority to transact in this state any kind of

insurance for which coverage is provided under § 27-34.3-3, and includes

any insurer whose license or certificate of authority in this state may have

been suspended, revoked, not renewed or voluntarily withdrawn, but does not

include:



   (i) A hospital or medical service organization, whether

profit or nonprofit; or



   (ii) A health maintenance organization; or



   (iii) A fraternal benefit society; or



   (iv) A mandatory state pooling plan; or



   (v) A mutual assessment company or other person that operates

on an assessment basis; or



   (vi) An insurance exchange; or



   (vii) An organization that has a certificate or license

limited to the issuance of charitable gift annuities; or



   (viii) An entity similar to any of the above.



   (13) "Moody's corporate bond yield average" means the monthly

average corporates as published by Moody's investors service, inc., or any

successor to it.



   (14) "Owner" of a policy or contract and "policy owner" and

"contract owner" means the person who is identified as the legal owner under

the terms of the policy or contract or who is otherwise vested with legal title

to the policy or contract through a valid assignment completed in accordance

with the terms of the policy or contract and properly recorded as the owner on

the books of the insurer. The terms owner, contract owner and policy owner do

not include persons with a mere beneficial interest in a policy or contract.



   (15) "Person" means any individual, corporation, limited

liability company, partnership, association, governmental body or entity or

voluntary organization.



   (16) "Plan sponsor" means:



   (i) The employer in case of a benefit plan established or

maintained by a single employer;



   (ii) The employee organization in the case of a benefit plan

established or maintained by an employee organization; or



   (iii) In the case of a benefit plan established or maintained

by two (2) or more employers or jointly by one or more employers and one or

more employee organizations, the association, committee, joint board of

trustees, or other similar group of representatives of the parties who

establish or maintain the benefit plan.



   (17) "Premiums" means amounts or considerations (by whatever

name called) received on covered policies or contracts less returned premiums,

considerations and deposits, and less dividends and experience credits.

"Premiums" does not include any amounts or consideration received for any

policies or contracts or for the portions of policies or contracts for which

coverage is not provided under § 27-34.3-3(b) except that assessable

premium shall not be reduced on account of § 27-34.3-3(b)(2)(iii) relating

to interest limitations and § 27-34.3-3(c)(2) relating to limitations with

respect to one individual, one participant and one owner. "Premiums" shall not

include:



   (i) Premiums in excess of five million dollars ($5,000,000)

on an unallocated annuity contract not issued under a governmental retirement

benefit plan (or its trustee) established under § 401, 403(b) or 457 of

the United States Internal Revenue Code, 26 U.S.C. § 401, 403(b) or 457.



   (ii) With respect to multiple nongroup policies of life

insurance owned by one owner, whether the policy owner is an individual, firm,

corporation or other person, and whether the persons insured are officers,

managers, employees or other persons, premiums in excess of five million

dollars ($5,000,000) with respect to these policies or contracts, regardless of

the number of policies or contracts held by the owner.



   (18)(i) "Principal place of business" of a plan sponsor or a

person other than a natural person means the single state in which the natural

persons who establish policy for the direction, control and coordination of the

operations of the entity as a whole primarily exercise that function,

determined by the association in its reasonable judgment by considering the

following factors:



   (A) The state in which the primary executive and

administrative headquarters of the entity is located;



   (B) The state in which the principal office of the chief

executive officer of the entity is located;



   (C) The state in which the board of directors (or similar

governing person or persons) of the entity conducts the majority of its

meetings;



   (D) The state in which the executive or management committee

of the board of directors (or a similar governing person or persons) of the

entity, conducts the majority of its meetings;



   (E) The state from which the management of the overall

operations of the entity is directed; and



   (F) In the case of a benefit plan sponsored by affiliated

companies comprising a consolidated corporation, the state in which the holding

company or controlling affiliate has its principal place of business as

determined using the above factors. However, in the case of a plan sponsor, if

more than fifty percent (50%) of the participants in the benefit plan are

employed in a single state, that state shall be deemed to be the principal

place of business of the plan sponsor.



   (ii) The principal place of business of a plan sponsor of a

benefit plan described in subsection (16)(iii) of this section shall be deemed

to be the principal place of business of the association, committee, joint

board of trustees or other similar group of representatives of the parties who

establish or maintain the benefit plan that, in lieu of a specific or clear

designation of a principal place of business, shall be deemed to be the

principal place of business of the employer or employee organization that has

the largest investment in the benefit plan in question.



   (19) "Receivership court" means the court in the insolvent or

impaired insurer's state having jurisdiction over the conservation,

rehabilitation or liquidation of the insurer.



   (20) "Resident" means a person to whom a contractual

obligation is owed and who resides in this state on the date of entry of court

order that determines a member insurer to be an impaired insurer or a court

order that determines a member insured to be an insolvent insurer, whichever

occurs first. A person may be a resident of only one state, which in the case

of a person other than a natural person shall be its principal place of

business. Citizens of the United States that are either: (i) residents of

foreign countries; or (ii) residents of United States possessions, territories

or protectorates that do not have an association similar to the association

created by this chapter, shall be deemed residents of the state of domicile of

the insurer that issued the polices or contracts.



   (21) "Structured settlement annuity" means an annuity

purchased in order to fund periodic payments for a claimant in payment for or

with respect to personal injuries suffered by the claimant.



   (22) "State" means a state, the District of Columbia, Puerto

Rico, or a United States possession, territory or protectorate.



   (23) "Supplemental contract" means a written agreement

entered into for the distribution of proceeds under a life, health or annuity

policy or contract.



   (24) "Unallocated annuity contract" means any annuity

contract or group annuity certificate which is not issued to and owned by an

individual, except to the extent of any annuity benefits guaranteed to an

individual by an insurer under the contract or certificate.



History of Section.

(P.L. 1995, ch. 114, § 1; P.L. 2002, ch. 292, § 79; P.L. 2004, ch.

39, § 1; P.L. 2004, ch. 44, § 1.)