RI Insurance Regulators Propose New Rule On Trusts

The Rhode Island Insurance Division proposed a new rule last week to regulate the issuance of group policies to RI-based insurance trusts and associations, as is a common practice in the group insurance industry. Proposed Insurance Regulation 117 would require that policies issued by insurers that issue insurance through a RI trust or association must comply with applicable insurance laws of the state where an insured covered under the RI trust or association policy resides. The proposal would also require that forms issued to the RI trust or association include a provision granting regulatory jurisdiction to the regulatory agencies or courts in the states where insureds reside. While the proposal may yet encounter some thorny jurisdictional issues (extraterritoriality, anyone?), the regulation would have pretty significant implications for the continued use of trust vehicles in RI; at a minimum, the proposal seems to indicate that RI insurance regulators may be changing their views on RI trust usage. The rule would apply to individual and group policies issued or renewed on or after June 1, 2011.