§ 27-14.3-16 - Grounds for rehabilitation. - Rhode Island Statutes

SECTION 27-14.3-16

   § 27-14.3-16  Grounds for rehabilitation.– The commissioner may apply by petition to the superior court for the county ofProvidence for an order authorizing him or her to rehabilitate a domesticinsurer or an alien insurer domiciled in this state on any one or more of thefollowing grounds:

   (1) The insurer is in a condition that the furthertransaction of business would be hazardous financially to its policyholders,creditors, or the public;

   (2) There is reasonable cause to believe that there has beenembezzlement from the insurer, wrongful sequestration or diversion of theinsurer's assets, forgery or fraud affecting the insurer, or other illegalconduct in, by, or with respect to the insurer that if established wouldendanger assets in an amount threatening the solvency of the insurer;

   (3) The insurer has failed to remove any person who in facthas executive authority in the insurer, whether an officer, manager, generalagent, employee, or other person if the person has been found after notice andopportunity for a hearing by the commissioner to be dishonest or untrustworthyin a way affecting the insurer's business;

   (4) Control of the insurer, whether by stock ownership orotherwise, and whether direct or indirect, is in a person or persons foundafter notice and opportunity for a hearing to be untrustworthy;

   (5) Any person who in fact has executive authority in theinsurer, whether an officer, manager, general agent, director or trustee,employee, or other person, has refused to be examined under oath by thecommissioner concerning its affairs, whether in this state or in another place,and after reasonable notice of the fact, the insurer has failed promptly andeffectively to terminate the employment and status of the person and all of hisor her influence on management;

   (6) After demand by the commissioner under § 27-1-11 andchapter 13.1 of this title or under this chapter, the insurer has failed topromptly make available for examination any of its own property, books,accounts, documents, or other records, or those of any subsidiary or relatedcompany within the control of the insurer, or those of any person havingexecutive authority in the insurer so far as they pertain to the insurer;

   (7) Without first obtaining the written consent of thecommissioner, the insurer has transferred, or attempted to transfer, in amanner contrary to chapter 35 or chapter 53 of this title, a material amount ofits entire property or business, or has entered into any transaction the effectof which is to merge, consolidate, or reinsure a material amount of its entireproperty or business in or with the property or businesses of any other person;

   (8) The insurer or its property has been or is the subject ofan application for the appointment of a receiver, trustee, custodian,conservator, or sequestrator or similar fiduciary of the insurer or itsproperty as authorized under the insurance laws of this state, and thatappointment has been made or is imminent, and that appointment might oust thecourts of this state of jurisdiction or might prejudice orderly delinquencyproceedings under this chapter;

   (9) Within the previous four (4) years the insurer haswillfully violated its charter or articles of incorporation, its bylaws, anyinsurance law of this state, or any valid order of the commissioner;

   (10) The insurer has failed to pay within sixty (60) daysafter due date any obligation to any state or any subdivision of the state orany judgment entered in any state, if the court in which the judgment wasentered had jurisdiction over the subject matter, except that the nonpaymentshall not be a ground until sixty (60) days after any good faith effort by theinsurer to contest the obligation has been terminated, whether it is before thecommissioner or in the courts, or the insurer has systematically attempted tocompromise or renegotiate previously agreed settlements with its creditors onthe ground that it is financially unable to pay its obligations in full;

   (11) The insurer has failed to file its annual report orother financial report required by statute within the time allowed by law and,after written demand by the commissioner, has failed to give an adequateexplanation immediately; and/or

   (12) The board of directors or the holders of a majority ofthe shares entitled to vote, or a majority of those individuals entitled to thecontrol of those entities specified in § 27-35-1, request or consent torehabilitation under this chapter.