Rhode Island’s Insurance Business Transfer Act (“IBT”) (“Regulation 68”) permits the transfer and ‘novation’ of commercial ‘legacy business’ (subject to certain limitations) from one carrier to another, subject to court approval. It also permits the ultimate commutation of that business should the transferee, at some point in the future, determine that a commutation of the liabilities is in the best interest of all stakeholders. Although never intended, a potential ambiguity in the legislation led some to believe that a commutation was a requirement that needed to be part of the initial IBT proposal. This Is not the view of the Department of Business Regulation (“DBR”). However, to clarify that potential ambiguity, House Bill 8163, introduced to the legislature in early May, removes the specter of the commutation requirement. The bill also clarifies that the transfer can be to a protected cell entity, which was also the original intent. It is expected that the legislature will enact the amendments in the near future.
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