The Rhode Island Insurance Market Protection Act aims to align the state's insurance industry with climate change mitigation efforts by imposing restrictions on covered insurers regarding their underwriting and investment activities related to fossil fuel projects. The bill mandates that covered insurers cease underwriting any new fossil fuel projects by July 1, 2026, and phase out all underwriting for existing fossil fuel projects and companies by January 1, 2035. Additionally, insurers are required to report their fossil fuel-related investments and emissions annually, promoting transparency and accountability.

The legislation establishes definitions for key terms and outlines the responsibilities of the Department of Business Regulation (DBR) in implementing the Act. The DBR is tasked with developing a process for covered insurers to file reports and certifying compliance with the Act's requirements, which may include mandatory transition plans. The Act also introduces a structured withdrawal process for insurers wishing to exit the state's insurance market, requiring them to submit an informational filing to the DBR before ceasing operations. Insurers must notify policyholders within 30 days of filing, and nonrenewals cannot begin until at least one year and ninety days after the filing.

Penalties for noncompliance include administrative penalties based on the insurer's market share and profits, as well as restrictions on the insurer's ability to do business in the state. The director of the DBR may also require noncompliant insurers to report semiannually and submit a compliance plan until they are deemed compliant. The director is required to report biennially on the implementation of the Act, including its impact on underserved communities.

The ultimate goal of this legislation is to protect homeowners and businesses from the financial risks associated with climate change while supporting Rhode Island's commitment to achieving net-zero emissions by 2050.