§ 27-72-7 - Examination. [Effective July 1, 2010.]. - Rhode Island Statutes

SECTION 27-72-7

   § 27-72-7  Examination. [EffectiveJuly 1, 2010.]. – (a) The commissioner may, when the commissioner deems it reasonably necessaryto protect the interests of the public, examine the business and affairs of anylicensee or applicant for a license. The commissioner may order any licensee orapplicant to produce any records, books, files or other information reasonablynecessary to ascertain whether such licensee or applicant is acting or hasacted in violation of the law or otherwise contrary to the interests of thepublic. The expenses incurred in conducting any examination shall be paid bythe licensee or applicant.

   (b) In lieu of an examination under this chapter of anyforeign or alien licensee licensed in this state, the commissioner may, at thecommissioner's discretion, accept an examination report on the licensee asprepared by the commissioner for the licensee's state of domicile or port-of-entry state.

   (c) Names of and individual identification data, or for allowners and insureds shall be considered private and confidential informationand shall not be disclosed by the commissioner unless required by law.

   (d) Records of all consummated transactions and lifesettlement contracts shall be maintained by the provider for three (3) yearsafter the death of the insured and shall be available to the commissioner forinspection during reasonable business hours.

   (e) Conduct of examinations.

   (1) Upon determining that an examination should be conducted,the commissioner shall issue an examination warrant appointing one or moreexaminers to perform the examination and instructing them as to the scope ofthe examination. In conducting the examination, the examiner shall use methodscommon to the examination of any life settlement licensee and should use thoseguidelines and procedures set forth in an examiners' handbook adopted by anational organization.

   (2) Every licensee or person from whom information is sought,its officers, directors and agents shall provide to the examiners timely,convenient and free access at all reasonable hours at its offices to all books,records, accounts, papers, documents, assets and computer or other recordingsrelating to the property, assets, business and affairs of the licensee beingexamined. The officers, directors, employees and agents of the licensee orperson shall facilitate the examination and aid in the examination so far as itis in their power to do so. The refusal of a licensee, by its officers,directors, employees or agents, to submit to examination or to comply with anyreasonable written request of the commissioner shall be grounds for suspensionor refusal of, or nonrenewal of any license or authority held by the licenseeto engage in the life settlement business or other business subject to thecommissioner's jurisdiction. Any proceedings for suspension, revocation orrefusal of any license or authority shall be conducted pursuant to §42-35-1 et seq.

   (3) The commissioner shall have the power to issue subpoenas,to administer oaths and to examine under oath any person as to any matterpertinent to the examination. Upon the failure or refusal of a person to obey asubpoena, the commissioner may petition a court of competent jurisdiction, andupon proper showing, the court may enter an order compelling the witness toappear and testify or produce documentary evidence.

   (4) When making an examination under this chapter, thecommissioner may retain attorneys, appraisers, independent actuaries,independent certified public accountants or other professionals and specialistsas examiners, the reasonable cost of which shall be borne by the licensee thatis the subject of the examination.

   (5) Nothing contained in this chapter shall be construed tolimit the commissioner's authority to terminate or suspend an examination inorder to pursue other legal or regulatory action pursuant to the insurance lawsof this state. Findings of fact and conclusions made pursuant to anyexamination shall be prima facie evidence in any legal or regulatory action.

   (6) Nothing contained in this chapter shall be construed tolimit the commissioner's authority to use and, if appropriate, to make publicany final or preliminary examination report, any examiner or licensee workpapers or other documents, or any other information discovered or developedduring the course of any examination in the furtherance of any legal orregulatory action which the commissioner may, in his or her sole discretion,deem appropriate.

   (f) Examination reports.

   (1) Examination reports shall be comprised of only factsappearing upon the books, from the testimony of its officers or agents or otherpersons examined concerning its affairs, and such conclusions andrecommendations as the examiners find reasonably warranted from the facts.

   (2) No later than sixty (60) days following completion of theexamination, the examiner in charge shall file with the commissioner a verifiedwritten report of examination under oath. Upon receipt of the verified report,the commissioner shall transmit the report to the licensee examined, togetherwith a notice that shall afford the licensee examined a reasonable opportunityof not more than thirty (30) days to make a written submission or rebuttal withrespect to any matters contained in the examination report and which shallbecome part of the report or to request a hearing on any matter in dispute.

   (3) In the event the commissioner determines that regulatoryaction is appropriate as a result of an examination, the commissioner mayinitiate any proceedings or actions provided by law.

   (g) Confidentiality of examination information.

   (1) Names and individual identification data for all owners,purchasers, and insureds shall be considered private and confidentialinformation and shall not be disclosed by the commissioner, unless thedisclosure is to another regulator or is required by law.

   (2) Except as otherwise provided in this chapter, allexamination reports, working papers, recorded information, documents and copiesthereof produced by, obtained by or disclosed to the commissioner or any otherperson in the course of an examination made under this chapter, or in thecourse of analysis or investigation by the commissioner of the financialcondition or market conduct of a licensee shall be confidential by law andprivileged, shall not be subject to open records, shall not be subject tosubpoena, and shall not be subject to discovery or admissible in evidence inany private civil action. The commissioner is authorized to use the documents,materials or other information in the furtherance of any regulatory or legalaction brought as part of the commissioner's official duties. The licenseebeing examined may have access to all documents used to make the report.

   (h) Conflict of interest.

   (1) An examiner may not be appointed by the commissioner ifthe examiner, either directly or indirectly, has a conflict of interest or isaffiliated with the management of or owns a pecuniary interest in any personsubject to examination under this chapter. This section shall not be construedto automatically preclude an examiner from being:

   (i) An owner;

   (ii) An insured in a life settlement contract or insurancepolicy; or

   (iii) A beneficiary in an insurance policy that is proposedfor a life settlement contract.

   (2) Notwithstanding the requirements of this clause, thecommissioner may retain from time to time, on an individual basis, qualifiedactuaries, certified public accountants, or other similar individuals who areindependently practicing their professions, even though these persons may fromtime to time be similarly employed or retained by persons subject toexamination under this chapter.

   (i) Immunity from liability.

   (1) No cause of action shall arise nor shall any liability beimposed against the commissioner, the commissioner's authorized representativesor any examiner appointed by the commissioner for any statements made orconduct performed in good faith while carrying out the provisions of thischapter.

   (2) No cause of action shall arise, nor shall any liabilitybe imposed against any person for the act of communicating or deliveringinformation or data to the commissioner or the commissioner's authorizedrepresentative or examiner pursuant to an examination made under this chapter,if the act of communication or delivery was performed in good faith and withoutfraudulent intent or the intent to deceive. This paragraph does not abrogate ormodify in any way any common law or statutory privilege or immunity heretoforeenjoyed by any person identified in subdivision (1).

   (3) A person identified in subdivision (1) or (2) shall beentitled to an award of attorney's fees and costs if he or she is theprevailing party in a civil cause of action for libel, slander or any otherrelevant tort arising out of activities in carrying out the provisions of thischapter and the party bringing the action was not substantially justified indoing so. For purposes of this section a proceeding is "substantiallyjustified" if it had a reasonable basis in law or fact at the time that it wasinitiated.

   (j) Investigative authority of the commissioner.

   (1) The commissioner may investigate suspected fraudulentlife settlement acts and persons engaged in the business of life settlements.

   (k) Cost of examinations.

   (1) The total cost of examinations performed pursuant to thischapter shall be borne by the provider(s) or broker(s) examined companies inaccordance with the provision of paragraph 27-13.1-7. The commissioner isauthorized to retain contract examiners and consultants to perform theexaminations. The commissioner shall review and affirmatively endorse detailedbillings from the qualified contract examiner before summary billings are sentto the insurer.