§ 42-14.1-1. Finding required.
Upon a finding by the director of business regulation that a competitive, stable market
for medical malpractice insurance is lacking in the state of Rhode Island and that
as a consequence thereof, there is peril to the public health, safety, and welfare
of the people of the state of Rhode Island, the director is authorized to promulgate
a regulation addressed to the solution of the problem which may encompass among others,
the following provisions:
(a) Creation of a joint underwriting association consisting of all insurers authorized
to write, within this state on a direct basis, personal injury liability insurance
as defined in § 27-9-2, including insurers covering these perils in multiple peril package policies. Every
insurer shall be a member of the association and shall remain a member as a condition
of its authority to continue to transact these kinds of insurance in this state.
(b) To effectuate the purpose of the association which is to provide a market for medical
malpractice insurance on a self-supporting basis, the association shall be authorized
to issue policies of medical malpractice and incidental liability insurance to physicians,
hospitals, and other healthcare providers, but need not be the exclusive agency through
which this insurance may be written on a primary basis in this state.
(c) Policies issued by the association shall be subject to a group retrospective rating
plan to be approved by the director of business regulation and shall be calculated
to be self-supporting.
(d) The creation and administration of a stabilization reserve fund and initial policyholder
contribution to the fund. The purpose of the fund shall be the discharge when due
of any retrospective premium charges payable by policyholders of the association under
the group retrospective rating plan authorized by regulation. Any monies remaining
in the fund after all retrospective premium charges have been paid shall be returned
to policyholders.
(e) Upon certification by the association to the director that the estimated amount of
any deficit remaining after the stabilization reserve fund has been exhausted in payment
of the maximum final premium for all policyholders of the association, the director
shall authorize members of the association to commence recoupment by one of the following
procedures:
(1) Applying a surcharge to be determined by the association at a rate not to exceed one
percent (1%) of the annual premiums on future policies affording those kinds of insurance
that form the basis for their participation in the association, under procedures established
by the association; or
(2) Deducting their share of the deficit from past or future taxes due the state of Rhode
Island.
(f) Organization of a plan of operation, use of policies written on a "claim made� or
"occurrence� basis, participation of members of the association and all other powers
necessary to effectuate the purposes of the regulation.
(g) Any joint underwriting association created pursuant to the authority granted in this
chapter shall pay an annual tax to the tax administrator of two percent (2%) of the
gross premiums on contracts of insurance.
(h) Any joint underwriting association created pursuant to the authority granted in this
chapter (including the related stabilization reserve fund) shall be an integral part
of the state government, and its activities shall constitute the performance of an
essential governmental function of the state of Rhode Island. This subsection shall
be applied retroactively to June 16, 1975.