At the Commutation & Networking Forum in October, 2016, the authors sat down with Elizabeth Dwyer, Jack Broccoli and Christopher Brennan to talk about the Rhode Island statute. Ms. Dwyer is the Rhode Island Superintendent of Banking and Insurance in the Department of Business Regulation. Jack Broccoli is in the Rhode Island Department of Banking and Insurance and Christopher Brennan is at the New Jersey Department of Banking and Insurance. Here is what transpired.
Connie: First of all, thank you for participating in the AIRROC Education Day; your panel discussion was very informative. While you did mention that the Rhode Island statute was an effort to promote business in Rhode Island, what caused you to focus on a run-off process for insurance companies?
Elizabeth: Well, in looking at Part VII transfers in the UK and similar schemes in Bermuda, we realized that there was no comparative process available to companies in the U.S. who wanted to run-off a book of business and achieve finality. We started with a statute in 2002 that was focused on supporting a commutation plan process and then, after various intervening revisions in the statute, we amended it in 2015 to permit a commercial insurer to transfer its legacy closed blocks of business to an assuming Rhode Island insurer. I must emphasize that this is for solvent companies and not for insolvencies.
Connie: Why is Rhode Island a good place for this?
Elizabeth: We have a court system that has a specialized “business calendar” and we have a small group of people that can work with you to move the process along. Rhode Island staff will talk to other state regulators to understand other states’ concerns and assist in resolving them.
Connie: Chris, do you see any concerns for New Jersey policyholders that may be involved in one of the Rhode Island Regulation 68 transfers?
Christopher: We will want to know why this is good for our policyholders and we will be looking at reserve/capital driven reviews to assure the financial adequacy of any such plan. I think any state looking at a plan to transfer will go through something equivalent to or very similar to a Form A review. [If a New Jersey company is sold to another entity it would go through the Form A review process].
Connie: Beth, you mentioned that this regulation was intended to improve the economy in Rhode Island, but how does it do that? Does a company have to move to or start up operations in Rhode Island?
Elizabeth: There is no such requirement in the statute but it does create work for lawyers and accountants in Rhode Island and a company could decide to staff offices there; we hope they do that.
Connie: I believe a company might have some concerns if they are planning to move a book of business to a Rhode Island entity either from a staff perspective or from a public relations perspective. If a company wishes to file a plan with the department, how much information is going to be subject to Rhode Island’s “Freedom of Information Act”and thus available to the public?
Elizabeth: The initial filing is exempt from public access. When it is approved, the Transfer Plan will be public, but some information in the process may still be proprietary and protected from disclosure. No individual case reserves would be specified. What needs to be confidential should be discussed with the department; a filing company cannot simply stamp everything confidential, but we are very sensitive to protecting proprietary information.
For the full article, refer to page 20 in the Spring 2017 issue. https://www.airroc.org/assets/docs/matters/AIRROC%20Matters%20Spring%202017%20No%2013%20Vol%201.pdf