§ 27-72-3 - Licensing requirements. [Effective July 1, 2010.]. - Rhode Island Statutes

SECTION 27-72-3

   § 27-72-3  Licensing requirements.[Effective July 1, 2010.]. – (a) No person, wherever located, shall act as a provider or broker with anowner or multiple owners who is a resident of this state, without first havingobtained a license from the commissioner. If there is more than one owner on asingle policy and the owners are residents of different states, the lifesettlement contract shall be governed by the law of the state in which theowner having the largest percentage ownership resides or, if the owners holdequal ownership, the state of residence of one owner agreed upon in writing byall owners.

   (b) Application for a provider, or broker, license shall bemade to the commissioner by the applicant on a form prescribed by thecommissioner, and the application shall be accompanied by a fee reasonable inan amount established by the commissioner.

   (c) A life insurance producer who has been duly licensed as aresident insurance producer with a life line of authority in this state or hisor her home state for at least one year and is licensed as a nonresidentproducer in this state shall be deemed to meet the licensing requirements ofthis section and shall be permitted to operate as a broker.

   (d) Not later than thirty (30) days from the first day ofoperating as a broker, the life insurance producer shall notify thecommissioner that he or she is acting as a broker on a form prescribed by thecommissioner, and shall pay any applicable fee to be determined by thecommissioner. Notification shall include an acknowledgement by the lifeinsurance producer that he or she will operate as a broker in accordance withthis chapter.

   (e) The insurer that issued the policy that is the subject ofa life settlement contract shall not be responsible for any act or omission ofa broker or provider or purchaser arising out of or in connection with the lifesettlement transaction, unless the insurer receives compensation for theplacement of a life settlement contract from the provider or purchaser orbroker in connection with the life settlement contract.

   (f) A person licensed as an attorney, certified publicaccountant or financial planner accredited by a nationally recognizedaccreditation agency, who is retained to represent the owner, whosecompensation is not paid directly or indirectly by the provider or purchaser,may negotiate life settlement contracts on behalf of the owner without havingto obtain a license as a broker.

   (g) Broker licenses may be renewed on a schedule prescribedby the commissioner and upon payment of the reasonable renewal fee asprescribed by the commissioner. Failure to pay the fee within the termsprescribed shall result in the automatic revocation of the license requiringperiodic renewal.

   (h) The term of a provider license shall be perpetual;provided, that the provider files the annual report and pays the fee asprescribed by the commissioner. Failure to file the annual report or pay thefees on or before the due date shall result in immediate suspension of thelicense.

   (i) The applicant shall provide such information as thecommissioner may require on forms prepared by the commissioner. Thecommissioner shall have authority, at any time, to require such applicant tofully disclose the identity of its stockholders (except stockholders owningfewer than ten percent (10%) of the shares of an applicant whose shares arepublicly traded), partners, officers and employees, and the commissioner may,in the exercise of the commissioner's sole discretion, refuse to issue such alicense in the name of any person if not satisfied that any officer, employee,stockholder or partner thereof who may materially influence the applicant'sconduct meets the standards set forth in this chapter.

   (j) Upon the filing of an application and the payment of thelicense fee, the commissioner shall make an investigation of each applicant andmay issue a license if the commissioner finds that the applicant:

   (1) If a provider, has provided a detailed plan of operation;

   (2) Is competent and trustworthy and intends to transact itsbusiness in good faith;

   (3) Has a good business reputation and has had experience,training or education so as to be qualified in the business for which thelicense is applied;

   (4) If the provider applicant is a legal entity, is formed ororganized pursuant to the laws of this state or is a foreign legal entityauthorized to transact business in this state, or provides a certificate ofgood standing from the state of its domicile; and

   (5) Has provided to the commissioner an anti-fraud plan thatmeets the requirements of this chapter and includes:

   (i) A description of the procedures for detecting andinvestigating possible fraudulent acts and procedures for resolving materialinconsistencies between medical records and insurance applications;

   (ii) A description of the procedures for reporting fraudulentinsurance acts to the commissioner;

   (iii) A description of the plan for anti-fraud education andtraining of its underwriters and other personnel; and

   (iv) A written description or chart outlining the arrangementof the anti-fraud personnel who are responsible for the investigation andreporting of possible fraudulent insurance acts and investigating unresolvedmaterial inconsistencies between medical records and insurance applications.

   (k) The commissioner shall not issue any license to anynonresident applicant, unless a written designation of an agent for service ofprocess is filed and maintained with the commissioner or unless the applicanthas filed with the commissioner the applicant's written irrevocable consentthat any action against the applicant may be commenced against the applicant byservice of process on the commissioner.

   (l) Each licensee shall file with the commissioner on orbefore the first day of March of each year an annual statement containing suchinformation as the commissioner by rule may prescribe. The department may havethis annual statement renewed and analyzed by outside consultant(s) and thetotal cost of that review shall be borne by, billed directly to and paid by theprovider filing the annual statement.

   (m) A provider may not use any person to perform thefunctions of a broker as defined in this chapter unless the person holds acurrent, valid license as a broker, and as provided in this section.

   (n) A broker may not use any person to perform the functionsof a provider as defined in this chapter unless such person holds a current,valid license as a provider, and as provided in this section.

   (o) A provider, or broker shall provide to the commissionernew or revised information about officers, ten percent (10%) or morestockholders, partners, directors, members or designated employees withinthirty (30) days of the change.

   (p) An individual licensed as a broker shall complete, on abiennial basis, fifteen (15) hours of training related to life settlements andlife settlement transactions, as required by the commissioner; provided,however, that a life insurance producer who is operating as a broker pursuantto this section shall not be subject to the requirements of this subsection.Any person failing to meet the requirements of this subsection shall be subjectto the penalties imposed by the commissioner.