The Rhode Island Department of Business Regulation and Office of the Health Insurance Commissioner recently proposed new regulations (the “Proposed Regulations”) regarding the issuance of insurance policies to Rhode Island trusts and associations. If promulgated, the Proposed Regulations could have a significant impact on insurers and brokers that issue or renew insurance policies to trusts and associations in Rhode Island, as well as the trustees responsible for maintaining such trusts.

Rhode Island has long served as a leading jurisdiction for group insurance policies issued to trusts and associations. This is likely due to the fact that Rhode Island laws and regulations did not previously restrict the issuance of policies to fictitious groups (i.e., groups formed for the sole purpose of purchasing insurance).

In 2009, Rhode Island took steps to increase regulation of group life insurance. Under R.I. Gen. Laws § 27-4.8-1, group life insurance policies may only be issued to employee groups, creditor groups, labor unions, associations and credit unions. R.I. Gen. Laws § 27-4.8-2 also grants the commissioner authority to approve issuance of life insurance policies to other groups not falling within those expressly authorized by R.I. Gen. Laws § 27-4.8-1 based upon a finding that the issuance of such a policy will result in economies of acquisition or administration, that such issuance is not contrary to the best interest of the public, and that the benefits provided are reasonable in relation to the premiums charged.

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