The State of Rhode Island has introduced amendments to its Voluntary Restructuring of Solvent Insurers Law and its Protected Cell Companies Act that should make run-off transactions easier to execute.
Introduced on May 4 by Representatives Robert Jacquard, Camille Vella-wilkinson, Mary Messier, and Michael Morin, House Bill 8163 allows a domestic insurance company to enter into a voluntary restructuring, including the use of a protected cell, with the approval of the commissioner.
The bill is currently on its way to Governor Gina Raimondo for signature and will come into immediate effect once signed.
The decision has been welcomed by re/insurance consultancy and service provider Pro Global who had testified in front of a House Committee on May 8 to demonstrate the continued interest from business, industry bodies and insurance stakeholders for the Rhode Island statute.
Pro had suggested the legislation would provide opportunities to the industry, would improve the efficiency of business and create more jobs in Rhode Island and across the state.
"I’d like to thank Superintendent of Insurance, Elizabeth Dwyer, and everyone who worked so diligently to get these amendments passed," said Mory Katz, managing director of the US at Pro Global. "This bill has the potential to ignite economic development and bring hundreds of millions in capital to Rhode Island."
The Rhode Island Department of Business Regulation (Insurance Division), the Property Casualty Insurers Association (PCI), the Providence Rhode Island office of law firm Locke Lord, the Governor's chief of staff Brett Smiley and Governor Raimondo all supported the effort.
Katz added: “The changes that have been passed will now strengthen the existing regulation by reducing potential ambiguities in how the law is applied.”
Rhode Island’s Voluntary Restructuring of Solvent Insurers Law will allow insurers and reinsurers to cede run-off commercial books with court-sanctioned finality in a similar fashion to a Part VII of the UK's Financial Services and Markets Act in the UK, Pro explained.
In 2017, ProTucket Insurance Company has become the first domestic insurer in the state expressly created to provide run-off portfolio transfer solutions under Rhode Island’s Voluntary Restructuring of Solvent Insurers Law.
Katz continued: "The changes to the legislation allow not only Rhode Island to be a leader in the market, but also positions Pro Global, via its ProTucket entity, to take a lead position in this potentially lucrative market.
“The amendments to the Voluntary Restructuring of Solvent Insurers Law and Protected Cell Companies Act show there is a real willingness in government, not just business, to make the law work. There is a consensus that it’s good for the industry and good for the State.
“This establishes Rhode Island as a centre of excellence for the US run-off sector. Rhode Island is being talked about at conferences all over the country and dozens of large insurers have waited for these changes to be enacted. There will be job creation for all sorts of insurance professionals - actuaries, accountants and lawyers.”
Protected Cell Companies, Captive insurance, Legislation, Pro Global, Rhode Island, North America