§ 27-46-2 - Definitions. - Rhode Island Statutes

SECTION 27-46-2

   § 27-46-2  Definitions. – As used in this chapter:

   (1) "Commissioner" means the director of the department ofbusiness regulation or the commissioner, director, or superintendent ofinsurance in any other state;

   (2) "Completed operations liability" means liability arisingout of the installation, maintenance, or repair of any product at a site whichis not owned or controlled by:

   (i) Any person who performs that work; or

   (ii) Any person who hires an independent contractor toperform that work; but shall include liability for activities which arecompleted or abandoned before the date of the occurrence giving rise to theliability;

   (3) "Domicile", for the purposes of determining the state inwhich a purchasing group is domiciled, means:

   (i) For a corporation, the state in which the purchasinggroup is incorporated; and

   (ii) For an unincorporated entity, the state of its principalplace of business;

   (4) "Hazardous financial condition" means that, based on itspresent or reasonably anticipated financial condition, a risk retention group,although not yet financially impaired or insolvent, is unlikely to be able:

   (i) To meet obligations to policyholders with respect toknown claims and reasonably anticipated claims; or

   (ii) To pay other obligations in the normal course ofbusiness;

   (5) "Insurance" means primary insurance, excess insurance,reinsurance, surplus lines insurance, and any other arrangement for shiftingand distributing risk, which is determined to be insurance under the laws ofthis state;

   (6) "Liability":

   (i) Means legal liability for damages, including costs ofdefense, legal costs and fees, and other claims expenses, because of injuriesto other persons, damage to their property, or other damage or loss to otherpersons resulting from or arising out of:

   (A) Any business whether profit or nonprofit, trade, product,services including professional services, premises, or operations; or

   (B) Any activity of any state or local government, or anyagency or political subdivision of any state or local government; and

   (ii) Does not include personal risk liability and anemployer's liability with respect to its employees other than legal liabilityunder 45 U.S.C. § 51 et seq.;

   (7) "Personal risk liability" means liability for damagesbecause of injury to any person, damage to property, or other loss or damageresulting from any personal, familial, or household responsibilities oractivities, rather than from responsibilities or activities referred to insubdivision (6) of this section;

   (8) "Plan of operation or a feasibility study" means ananalysis which presents the expected activities and results of a risk retentiongroup including, at a minimum:

   (i) Information sufficient to verify that its members areengaged in businesses or activities similar or related with respect to theliability to which the members are exposed by virtue of any related, similar,or common business, trade, product, services, premises or operations;

   (ii) For each state in which it intends to operate, thecoverages, deductibles, coverage limits, rates, and rating classificationsystems for each line of insurance the group intends to offer;

   (iii) Historical and expected loss experience of the proposedmembers and national experience of similar exposures to the extent that thisexperience is reasonably available;

   (iv) Pro forma financial statements and projections;

   (v) Appropriate opinions by a qualified, independent casualtyactuary, including a determination of minimum premium or participation levelsrequired to commence operations and to prevent a hazardous financial condition;

   (vi) Identification of management, underwriting, and claimsprocedures, marketing methods, managerial oversight methods, investmentpolicies, and reinsurance agreements;

   (vii) Identification of each state in which the riskretention group has obtained, or sought to obtain, a charter and license, and adescription of its status in each state; and

   (viii) Any other matters that may be prescribed by thecommissioner of the state in which the risk retention group is chartered forliability insurance companies authorized by the insurance laws of that state;

   (9) "Product liability" means liability for damages becauseof any personal injury, death, emotional harm, consequential economic damage,or property damage, including damages resulting from the loss of use ofproperty, arising out of the manufacturer, design, importation, distribution,packaging, labeling, lease, or sale of a product, but does not include theliability of any person for those damages if the product involved was in thepossession of the person when the incident giving rise to the claim occurred;

   (10) "Purchasing group" means any group which:

   (i) Has as one of its purposes the purchase of liabilityinsurance on a group basis;

   (ii) Purchases the insurance only for its group members andonly to cover their similar or related liability exposure, as described insubdivision (10)(iii);

   (iii) Is composed of members whose business or activities aresimilar or related with respect to the liability to which members are exposedby virtue of any related, similar, or common business, trade, product,services, premises or operations; and

   (iv) Is domiciled in any state;

   (11) "Risk retention group" means any corporation or otherlimited liability association:

   (i) Whose primary activity consists of assuming and spreadingall, or any portion, of the liability exposure of its group members;

   (ii) Which is organized for the primary purpose of conductingthe activity described under paragraph (i) of this subdivision;

   (iii) Which:

   (A) Is chartered and licensed as a liability insurancecompany and authorized to engage in the business of insurance under the laws ofany state; or

   (B) Before January 1, 1985, was chartered or licensed andauthorized to engage in the business of insurance under the laws of Bermuda orthe Cayman Islands and, before that date, had certified to the insurancecommissioner of at least one state that it satisfied the capitalizationrequirements of that state, except that the group shall be considered to be arisk retention group only if it has been engaged in business continuously sincethat date and only for the purpose of continuing to provide insurance to coverproduct liability or completed operations liability, as the terms were definedin the Product Liability Risk Retention Act of 1981 before the date of theenactment of the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 etseq.;

   (iv) That does not exclude any person from membership in thegroup solely to provide for members of the group a competitive advantage overthe person;

   (v) Which:

   (A) Has as its owners only persons who comprise themembership of the risk retention group and who are provided insurance by thegroup; or

   (B) Has as its sole owner an organization which has as:

   (I) Its members only persons who comprise the membership ofthe risk retention group; and

   (II) Its owners only persons who comprise the membership ofthe risk retention group and who are provided insurance by the group;

   (vi) Whose members are engaged in businesses or activitiessimilar or related with respect to the liability of which the members areexposed by virtue of any related, similar, or common business trade, product,services, premises or operations;

   (vii) Whose activities do not include the provision ofinsurance other than:

   (A) Liability insurance for assuming and spreading all or anyportion of the liability of its group members; and

   (B) Reinsurance with respect to the liability of any otherrisk retention group or any members of the other group which is engaged inbusiness or activities so that the group or member meets the requirementdescribed in subdivision (vi) from membership in the risk retention group whichprovides the reinsurance; and

   (viii) The name of which includes the phrase "risk retentiongroup"; and

   (12) "State" means any state of the United States or theDistrict of Columbia.