Rhode Island General Laws
Chapter 27-29 - Unfair Competition and Practices
Section 27-29-4.7. - Additional unfair methods of competition.

§ 27-29-4.7. Additional unfair methods of competition.
(a) In addition to those listed in § 27-29-4 the following are also defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1) Twisting. Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer.
(2) Churning. The practice whereby policy values in an existing life insurance policy or annuity contract, including, but not limited to, cash, loan values, or dividend values, and in any riders to that policy or contract, are directly or indirectly used to purchase another insurance policy or annuity contract with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation:
(i) Without an objectively reasonable basis for believing that the replacement or extraction will result in an actual and demonstrable benefit to the policyholder; or
(ii) In a fashion that is fraudulent, deceptive, or otherwise misleading or that involves a deceptive omission; or
(iii) When the applicant is not informed that the policy values, including cash values, dividends, and other assets of the existing policy or contract will be reduced, forfeited, or used in the purchase of the replacing or additional policy or contract, if this is the case; or
(iv) Without informing the applicant that the replacing or additional policy or contract will not be a paid-up policy or that additional premiums will be due or that a new contestable period will apply and explaining the impact of these differences, if this is the case.
(b) Each insurer shall comply with paragraphs (iii) and (iv) herein by disclosing to the applicant at the time of the offer if, how, and the extent to which the policy or contract values (including cash value, dividends, and other assets) of a previously issued policy or contract will be used to purchase a replacing or additional policy or contract with the same insurer. The disclosure must include the premium, the death benefit of the proposed replacing or additional policy, and the date on which the policy values of the existing policy or contract will be insufficient to pay the premiums of the replacing or additional policy or contract.
(c) Each insurer shall adopt written procedures sufficient to reasonably avoid twisting and churning of policies or contracts that it has issued, and failure to adopt written procedures sufficient to reasonably avoid twisting and churning shall be an unfair method of competition and an unfair or deceptive act or practice.
History of Section.P.L. 2012, ch. 296, § 2; P.L. 2012, ch. 326, § 2.

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