According to the National Association of Independent Insurers (NAII), The Rhode Island Department of Business Regulation (RIDBR)’s Regulation 101 should be rewritten to specifically exclude surplus
lines insurers, which are not included in the state’s Lead Hazard Mitigation Act.
“Although the language of the law makes it clear that insurers licensed in the state cannot exclude lead poisoning coverage, this requirement does not include surplus lines insurers, which are not licensed companies,” Gerald Zimmerman, senior counsel for the NAII, said.
In a letter to the RIDBR, NAII pointed out that the Lead Act specifies that “no insurance company licensed or permitted by the Department of Business Regulation to provide liability coverage to rental property owners shall exclude, after June 30, 2004, coverage, for losses or damages caused by lead poisoning.”
However, because surplus lines insurers are not licensed, it remains unclear whether a surplus lines insurer is permitted by the RIDBR to provide liability coverage. NAII argues they are not because surplus lines insurers operate by accepting exported business from Rhode Island brokers.
“In a surplus lines transaction, a Rhode Island licensed surplus lines broker could go to a surplus lines insurer located Illinois to place business,” Zimmerman said. “If the Rhode Island legislature intended to apply the lead rules to surplus lines insurers, they could have addressed the situation by correctly focusing on the surplus lines transaction, which they did not.”
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