Rhode Island General Laws 27-6.1-6. Prohibited practices
(a) An insurer or insurance producer shall not issue lender-placed insurance on mortgaged property that the insurer or insurance producer or an affiliate of the insurer or insurance producer owns, performs the servicing for, or owns the servicing right to the mortgaged property.
Terms Used In Rhode Island General Laws 27-6.1-6
- Affiliate: means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. See Rhode Island General Laws 27-6.1-3
- Dependent: A person dependent for support upon another.
- Insurance producer: means a person or entity (or its affiliates) required to be licensed under the laws of this state to sell, solicit, or negotiate insurance. See Rhode Island General Laws 27-6.1-3
- Insurer: means an insurance company, association, or exchange authorized to issue lender-placed insurance in this state (or its affiliates). See Rhode Island General Laws 27-6.1-3
- Investor: means a person or entity (and its affiliates) holding a beneficial interest in loans secured by real property. See Rhode Island General Laws 27-6.1-3
- Lender: means a person or entity (and its affiliates) making loans secured by an interest in real property. See Rhode Island General Laws 27-6.1-3
- Lender-placed insurance: means insurance obtained by a lender or servicer when a mortgagor does not maintain valid and/or sufficient insurance upon mortgaged real property as required by the terms of the mortgage agreement. See Rhode Island General Laws 27-6.1-3
- Person: means an individual or entity. See Rhode Island General Laws 27-6.1-3
- servicer: includes entities involved in subservicing arrangements. See Rhode Island General Laws 27-6.1-3
(b) An insurer or insurance producer shall not compensate a lender, insurer, investor, or servicer (including through the payment of commissions) on lender-placed property insurance policies issued by the insurer.
(c) An insurer or insurance producer shall not share lender-placed insurance premium or risk with the lender, investor, or servicer that obtained the lender-placed insurance.
(d) An insurer or insurance producer shall not offer contingent commissions, profit sharing, or other payments dependent on profitability or loss ratios to any person affiliated with a servicer or the insurer in connection with lender-placed insurance.
(e) An insurer shall not provide free or below-cost outsourced services to lenders, investors, or servicers, and an insurer will not outsource its own functions to lenders, insurance producers, investors, or servicers on an above-cost basis.
(f) An insurer or insurance producer shall not make any payments, including, but not limited to, the payment of expenses to a lender, insurer, investor, or servicer for the purpose of securing lender-placed insurance business or related outsourced services.
History of Section.
P.L. 2022, ch. 404, § 7, effective June 30, 2022; P.L. 2022, ch. 405, § 7, effective June 30, 2022.