The bill amends various sections of the General Laws concerning the "Voluntary Restructuring of Solvent Insurers" and the "Rhode Island Property and Casualty Insurance Guaranty Association." Key updates include new definitions for terms such as "cybersecurity insurance," which encompasses first and third-party coverage for losses related to data privacy breaches, unauthorized information network security intrusions, computer viruses, ransomware, cyber extortion, identity theft, and similar exposures. The bill clarifies that the Rhode Island Property and Casualty Insurance Guaranty Association does not cover life, health, or disability insurance, and it introduces provisions to ensure claims obligations are honored during an insurer's insolvency.

The bill defines "covered claim" to include claim obligations arising from policies issued by member insurers, even if those obligations are later allocated, transferred, or assumed by non-member insurers under certain conditions. It outlines the association's powers and duties, including the obligation to pay covered claims and the right to appoint and direct service providers for covered services.

New claim limits are established, including a maximum of $1,000,000 for all first-party property loss claims arising from a single occurrence under a policy covering commercial or residential property for insolvencies occurring after January 1, 2026, and $500,000 for all first and third-party claims under a policy providing cybersecurity insurance coverage arising out of a single insured event, regardless of the number of claims made or claimants.

The bill also introduces a provision regarding "high net worth insureds," allowing the association to pay cybersecurity insurance obligations on behalf of these individuals while requiring reimbursement for amounts paid, including allocated claim adjustment expenses and legal fees. Procedures for assessing insureds' net worth and the implications of failing to provide financial information are included. The act is set to take effect on January 1, 2026.

Statutes affected:
600: 27-14.5-1
600  SUB A: 27-14.5-1