Rhode Island: Coastal Property Legislation Passes

Three pieces of legislation addressing coastal property insurance issues were ultimately passed by both chambers of the Rhode Island General Assembly prior to the end of session.

In all cases, legislators worked with industry representatives as well as the Department of Business Regulation to eliminate or amend legislative provisions that would have posed serious problems for insurers and the functioning of the market.

The most significant coastal property legislation were bills H-6468B and S-1110B that establish certain limitations on insurer use of percentage windstorm deductibles and mitigation measures for policies issued or renewed after July 1, 2008. The final versions of the bills limit deductibles to no more than 5 percent of insured value. They require flat dollar deductibles rather than percentage deductibles when insureds undertake mitigation measures. The bills also limit insurers’ ability to nonrenew accounts after requiring mitigation measures.

The House and Senate also approved H-6503B, which creates a commission to study hurricane models. The original version would have created a state catastrophe fund.

Another bill passed, H-6522A, requires insurers to report in rate filings what catastrophe models they use and what impact the use of the models has on the filing. The original version of the bill contained language that would have required insurers to submit the model used in rate filings.

All of the proposals enacted resulted from the work of the House commission formed to study the effects of natural disasters on property insurance. The commission is expected to continue examining the issue, and members have indicated that more legislation will be considered in the next session. NAMIC will continue work with other industry representatives to ensure that proposals going forward do not place onerous restrictions on insurers operating in the market.

Direct questions to NAMIC State Affairs Manager Paul Tetrault.

Posted: Tuesday, July 03, 2007 12:00:00 AM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.