§ 27-5-22. Application of special reserve fund to protection of policyholders.
Whenever the claims upon a fire insurance company shall exceed the amount of its capital stock and of the guaranty surplus fund provided for by this chapter, the company shall notify the insurance commissioner of the fact, who shall then make or cause to be made an examination of the company, and shall issue his or her certificate of the result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of reinsurance liability, and of other assets. Upon the issuing of that certificate in duplicate, one copy to be given to the company and one to be recorded in the office of the insurance commissioner, the special reserve fund shall be immediately held to protect all policyholders of the company other than those that are claimants upon it at the date of the certificate, and the special reserve fund together with other assets, certified by the insurance commissioner as equal in value to the amount of the unearned premiums of the company, to be ascertained as provided in this chapter, shall constitute the capital and assets of the company for the protection of policyholders other than the claimants and for the further conduct of its business, and any official certificate of the insurance commissioner shall be binding and conclusive upon all parties interested in the company, whether as stockholders, creditors, or policyholders. Upon the payment to the claimants, who are claimants at the date of the certificate, of the full sum of the capital of the company and of its guaranty surplus fund and of its assets at that date, excepting only the special reserve fund and an amount of its assets equal to the liability of the company for unearned premiums, as certified in this manner by the insurance commissioner, the company shall be forever discharged from any and all further liability to the claimants and to each of them, and the insurance commissioner shall, after issuing his or her certificate, upon the demand of the company, transfer to it all securities that have been deposited with the commissioner by the company as the special reserve fund, and if the amount of the special reserve fund is less than fifty percent (50%) of the full amount of the capital of the company, a requisition shall be issued by the insurance commissioner upon the stockholders to make up the capital to that proportion of its full amount; provided, that any capital impaired in this manner shall be made up at least to the sum of two hundred thousand dollars ($200,000), and in case the company, after the requisition, shall fail to make up its capital at least to the sum of two hundred thousand dollars ($200,000), the special reserve fund shall still be held as security and liable for any and all losses occurring upon policies of the company.
History of Section.P.L. 1907, ch. 1438, § 8; G.L. 1909, ch. 219, § 33; G.L. 1923, ch. 255, § 33; G.L. 1938, ch. 150, § 32; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-22.
Structure Rhode Island General Laws
Chapter 27-5 - Fire Insurance Policies and Reserves
Section 27-5-1. - Standard fire insurance policy.
Section 27-5-2. - Compliance with standard policy required.
Section 27-5-3. - Form of standard policy.
Section 27-5-3.1. - Exclusion — Nuclear damage.
Section 27-5-3.2. - Property insurance.
Section 27-5-3.3. - Resident agent — Banks.
Section 27-5-3.4. - Cancellation or nonrenewal of standard fire insurance policy.
Section 27-5-3.5. - Earthquake coverage endorsement for property insurance.
Section 27-5-3.6. - Notice concerning flood insurance.
Section 27-5-3.8. - Rhode Island commission on hurricane loss projection methodology.
Section 27-5-3.9. - Vacant property.
Section 27-5-4. - Items shown at head of policy.
Section 27-5-5. - Inclusion of regulations of mutual insurer.
Section 27-5-6. - Binders and temporary insurance.
Section 27-5-6.1. - Notice concerning single interest hazard insurance.
Section 27-5-6.2. - Escrow accounts for insurance premiums.
Section 27-5-7. - Combination standard form.
Section 27-5-8. - Supplemental contract forms.
Section 27-5-9. - Standard form not required for reinsurance.
Section 27-5-9.1. - Simplified comprehensive policies of insurance.
Section 27-5-10. - Penalty for nonconforming policy — Validity.
Section 27-5-11. - Enforcement of standard policy requirements.
Section 27-5-12. - Declination of premium notes by mutual companies — Provision as to liability.
Section 27-5-13. - Mutual membership not acquired by reinsurance.
Section 27-5-14. - Reinsurance by mutual insurers — Agreements with policyholders.
Section 27-5-15. - Power to create guaranty surplus and special reserve funds.
Section 27-5-16. - Resolution to establish surplus and reserve funds — Certification of funds.
Section 27-5-17. - Restrictions on dividends — Payments into surplus and reserve funds.
Section 27-5-18. - Computation of profits.
Section 27-5-19. - Certification that funds equal capital stock — Subsequent additions.
Section 27-5-20. - Investment of guaranty surplus fund — Liability to payment of losses.
Section 27-5-21. - Deposit of special reserve fund.
Section 27-5-22. - Application of special reserve fund to protection of policyholders.
Section 27-5-23. - Annual statement of amounts of funds.
Section 27-5-24. - Maintenance of surplus fund equal to reserve fund.
Section 27-5-25. - Use of special reserve fund to replace capital stock.
Section 27-5-26. - Physical assets for protection of policyholders.
Section 27-5-27. - Making up of impairments of capital.
Section 27-5-28. - Maximum single risk insured.
Section 27-5-29. - Statement on policy as to surplus and reserve funds.
Section 27-5-30. - Funds established under prior law.
Section 27-5-31. - Termination of surplus and reserve fund method — Return of special reserve fund.