Rhode Island § 27-71-5 - Market Conduct Surveillance Act

§ 27-71-5. Market analysis procedures.

(a)(1) The commissioner shall gather information as deemed necessary from data currently available, as well as surveys and required reporting requirements, information collected by the NAIC, and a variety of other objective sources in both the public and private sectors including law enforcement inquiries.

(2) Such information, when collected, shall be analyzed in order to develop a baseline understanding of the marketplace and to identify for further review insurers and/or practices that deviate significantly from the norm or that may pose a potential risk to the insurance consumer. The commissioner shall use the NAIC Market Regulation Handbook as one resource in performing this analysis (or procedures, adopted by regulation, that are substantially similar to the foregoing NAIC product).

(3) The commissioner shall perform the analysis described under this section by:

(i) Identifying key lines of business for systematic review; and

(ii) Identifying companies for further analysis based on available information.

(b) If the analysis compels the commissioner to inquire further into a particular insurer or practice, the following continuum of market conduct actions may be considered prior to conducting a targeted, on-site market conduct examination. The action selected shall be made known to the insurer in writing if the action involves insurer participation or response. These actions may include, but are not limited to:

(1) Correspondence with insurer;

(2) Insurer interviews;

(3) Information gathering;

(4) Policy and procedure reviews;

(5) Interrogatories;

(6) Review of insurer self-evaluation (if not subject to a privilege of confidentiality) and compliance programs, including membership in a best-practice organization; and

(7) Desk examinations.

(c) The commissioner shall select a market conduct action that is efficient for the department of business regulation and the insurer, while still protecting the insurance consumer.

(d) The commissioner shall take those steps reasonably necessary to eliminate requests for information that duplicate information provided as part of an insurer’s annual financial statement, the annual market conduct statement of the NAIC, or other required schedules, surveys, or reports that are regularly submitted to the commissioner, or with data requests made by other states if that information is available to the commissioner, unless the information is state-specific, and coordinate market conduct actions and findings with other states.

(e) Causes or conditions, if identified through market analysis, that may trigger a targeted examination, include but are not limited to:

(1) Information obtained from a market conduct annual statement, market survey, or report of financial examination indicating potential fraud, that the insurer is conducting the business of insurance without a license or is engaged in a potential pattern of violation of the general laws or law enforcement inquiry;

(2) A number of complaints against the insurer or a complaint ratio sufficient to indicate potential fraud, conducting the business of insurance without a license, or a potential pattern of unfair trade practice in violation of the general laws. For the purposes of this section, a complaint ratio shall be determined for each line of business;

(3) Information obtained from other objective sources, such as published advertising materials indicating potential fraud, conducting the business of insurance without a license, or evidencing a potential pattern of unfair trade practice in violation of the general laws; and

(4) Patterns of violations of the general laws and administrative regulations promulgated thereunder that cause consumer harm.