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H 7111Insurance

Insurance - Producer Licensing Act

Requires insurance companies to provide 180 days' written notice to agents before modifying contracts or changing compensation rates.

Signed into law69 Yea0 Nay6 Not voting
Population
Affected
15
Email Legislator
Introduced Jan 15, 2026Committee House Corporations

Plain-English Summary

This legislation amends the "Producer Licensing Act" to provide greater stability for property and casualty insurance producers (agents) who work with multiple insurance companies. Specifically, it prohibits insurance companies from modifying an existing contract with an insurance producer unless the company provides written notice at least 180 days before the modification takes effect. The bill explicitly defines any change in the producer's compensation as a contract modification, thereby ensuring agents receive six months' warning before their pay structure or contract terms are altered.

For younger readers

Imagine you have a job selling insurance, and you have a contract that says how much money you get paid for your work. This new law says that the big insurance companies cannot suddenly change your contract or pay you less money without giving you a warning. They must send you a letter at least 180 days (about six months) before they make any changes to your deal. This helps the people selling insurance plan for the future and prevents them from being surprised by sudden changes to their pay.

Who & Where It Applies

Impacted groups
Insurance ProducersProperty and Casualty Insurance CompaniesIndependent Insurance AgentsInsurance BrokersSmall Business Owners
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
None
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Protects independent workers and small business owners from exploitative practices by large corporations, ensuring they cannot unilaterally cut compensation without significant notice.
  • Promotes economic stability for local insurance agents, allowing them time to adjust their business models or negotiate before income changes occur.
  • Addresses power imbalances in the labor market by checking the ability of dominant industry players to dictate sudden terms to individual contractors.
  • Focuses on protecting the business interests of insurance agents rather than directly addressing the costs or needs of low-income insurance consumers.
  • Could potentially cause insurance companies to be more hesitant in offering initial competitive compensation rates, knowing they cannot easily adjust them downward if market conditions change.
  • May inadvertently slow down industry-wide adjustments that could otherwise lead to efficiencies or cost-savings that might benefit the broader community.
For Conservatives
  • Supports small business owners and independent contractors by providing regulatory certainty and protecting them from arbitrary corporate decisions.
  • Upholds the sanctity of business relationships by preventing one party from changing the terms of an agreement without reasonable warning.
  • Encourages long-term business planning and financial responsibility among local professionals by ensuring stable contract terms.
  • Interferes with the free market by dictating the specific timeline and notification procedures for private business-to-business contracts.
  • Reduces the operational flexibility of insurance companies, preventing them from reacting quickly to economic shifts or performance issues.
  • Increases government regulation on the private sector by adding new statutory mandates to contractual relationships.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 4 additions

SECTION 1. Section 27-2.4-20.1 of the General Laws in Chapter 27-2.4 entitled "Producer Licensing Act" is hereby amended to read as follows: 27-2.4-20.1. Revocation or modification of property and casualty insurance producer’s contract — Procedures.

(a) No property and casualty insurance company shall cancel the authority of an insurance producer, having a contract with and placing such insurance with more than one property and casualty insurance company, unless the company gives written notice of its intent to cancel that insurance producer at least fourteen (14) months before the proposed effective date of any cancellation. In such case, no company shall allow the license of that insurance producer to expire unless the company gives written notice of its intent to do so at least fourteen (14) months before the proposed effective date of expiration because of cancellation. In addition, no company shall modify a contract with an insurance producer, unless the company gives written notice of its intent to modify the contract of that insurance producer at least one hundred eighty (180) days before the proposed effective date of the modification. Any change in producer compensation shall be considered a contract modification.

(b) When a property and casualty insurance company cancels the authority of an insurance producer having a contract with and placing such insurance with more than one property and casualty insurance company, under the provisions of this section, the company shall continue to renew the expiring policies of the insurance producer who has received notification of cancellation that meets its underwriting guidelines for a period of fourteen (14) months of the issuance of the notice at a rate of compensation to that insurance producer equal to that provided in the expiring contract.

(c) The provisions of subsections (a) and (b) do not apply to a property and casualty insurance producer:

(1) Convicted of a dishonest act related to his or her occupation as an insurance agent; or

(2) Whose license to engage as an insurance producer was revoked; or

(3) Whose company surrendered its license to do business in the state; or

(4) Who is an employee of the insurance company.

SECTION 2. This act shall take effect upon passage.