SECTION 1. Findings of fact. The general assembly finds and declares that:
(1) This Act ensures that Rhode Island homeowners’ insurance premiums will not be invested in activities which damage or put at risk their financial, physical, or property interests, or the integrity of Rhode Island homes, businesses, municipalities, state agencies, or state lands.
(2) Climate change, caused by the combustion of fossil fuels, is an immediate and grave threat to the people, buildings, infrastructure, environment, natural resources, and economy of the state.
(3) Rising sea levels and temperatures, extreme weather events, flooding, heat waves, droughts, and other climate change effects have and, for the foreseeable future, will continue to damage and destroy homes, businesses, and public infrastructure nationally and within our state, and, additionally, cause homeowners, businesses, municipalities, and states to continuously take on additional expenses of remediation, preparation, and insurance against such effects.
(4) In response to climate change impacts, many insurers have raised premiums and deductibles, reduced coverage, denied more claims, or withdrawn from high-risk areas, shifting climate risks onto homeowners, renters, and businesses. These changes particularly impact communities that are already vulnerable to economic instability and natural disasters.
(5) Insurers continue to underwrite and invest in fossil fuel expansion that contributes to growing climate risks that are burdening consumers and threatening financial markets. Fossil fuel companies depend on insurance coverage to operate, and insurers remain key financial backers of new coal, oil, and gas infrastructure. Scientific research indicates that a significant portion of known fossil fuel reserves must remain unused to limit global warming, and groups like the International Energy Agency have warned that no new fossil fuel supply projects are compatible with limiting global warming below 2°C.
(6) This Act will support the State’s goals by limiting the insurance industry’s participation in fossil fuel industries. The State has committed to reduce climate emissions to net-zero by 2050, as described in chapter 6.2 of title 42 ("2021 act on climate"). Additionally, this act will further the State’s goal to incentivize businesses, institutions, and industry to adapt to climate change, as described in the act on climate.
(7) To make sure households are able to maintain affordable property insurance, insurers must align their investments and underwriting with science-based emissions targets—meaning they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement and avoid the worst impacts of climate change.
(8) Insurers should not profit from activities which put their insured at risk of substantial loss, or which undermine the physical and financial wellbeing of their insured, or otherwise create or transfer substantial risks or costs to residents, municipalities, state agencies, and state property.
SECTION 2. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by adding thereto the following chapter: 27-84-1. Short title. This chapter shall be known and may be cited as the “Rhode Island Insurance Market Protection Act”. 27-84-2. Definitions. As used in this chapter:
(1) “Covered Insurer” means an insurance company authorized to conduct the business of property and casualty insurance in the State of Rhode Island:
(i) That reports over ten million dollars ($10,000,000) of direct property and casualty premiums written in the State of Rhode Island on its annual schedule “T” filing with the National Association of Insurance Commissioners;
(ii) Whose activities or investments may expose such insurer to a heightened level of risk from the physical or transition effects of climate change; or
(iii) The director otherwise determines that subjecting such an insurer to the requirements of §§ 27-84-3 and 27-84-4 would be in the public interest.
(2) “Department” means the department of business regulation.
(3) “Director” means the director of the department of business regulation.
(4) “Financed emissions” means greenhouse gas emissions associated with insurer investments, as defined by the department in consultation with the department of environmental management. Insurer investments under this definition shall include, at a minimum, investments in fossil fuel companies and fossil fuel projects. The department may, by rule or guidance, designate additional asset classes, sectors, or investment types to be included for the purpose of calculating financed emissions including, but not limited to, high-emitting industries, emissions-intensive supply chains, and emissions-intensive utilities. In establishing a definition under this subsection, the department shall consider:
(i) Internationally recognized standards for financed emissions accounting, including those issued by the Partnership for Carbon Accounting Financials (PCAF);
(ii) The availability and quality of emissions data from subsidiary, joint venture, or portfolio companies and asset classes;
(iii) The proportional contribution of investment activities to an insurer’s overall greenhouse gas footprint;
(iv) The need to provide consistent, comparable, verifiable, and transparent emissions disclosures and disclosure standards across the insurance sector; and
(v) Alignment with Rhode Island climate policy objectives, including emissions reduction targets, climate risk mitigation strategies, and sector-specific decarbonization targets.
(5) “Fossil fuel” means a carbon-based energy source formed in the earth’s crust from decayed organic material including, but not limited to, petroleum, crude oil, natural gas, and coal.
(6) “Fossil fuel company” means any entity including, but not limited to, corporations, limited liability companies, partnerships, joint ventures, trusts, special purpose vehicles, private equity funds, subsidiaries, associates, affiliates, or any other legal, financial, or organizational structure that derives ten percent (10%) or more of its revenue from any new or existing fossil fuel project.
(7) “Fossil fuel project” means a project, undertaking, activity, or investment designed to facilitate any significant action with respect to fossil fuels or any byproduct thereof for commercial purposes including, but not limited to:
(i) Upstream activities to include exploration, extraction, drilling, mining, production, collection, gathering, development, redevelopment, expansion, or construction of mines, fields, wells, rigs, platforms, or any other related infrastructure;
(ii) Midstream activities to include refining, processing, exportation, transportation, storage, petrochemical manufacturing, or any other distribution infrastructure or logistics including construction of pipelines, terminals, power plants, or compressors; and
(iii) Downstream activities to include power, heat, or cooling generation facilities and fossil fuel-powered manufacturing under North American Industry Classification System (NAICS) codes: 221112 (Fossil Fuel Electric Power Generation), 325110 (Petrochemical Manufacturing), and 324199 (All Other Petroleum and Coal Products Manufacturing).
(8) “Insured emissions” means greenhouse gas emissions associated with insurer underwriting, as defined by the department, in consultation with the department of environmental management. Insurer underwriting under this definition shall include, at a minimum, underwriting fossil fuel companies and fossil fuel projects. The department may, by rule or guidance, designate additional asset classes, sectors, or investment types to be included for the purpose of calculating insured emissions including, but not limited to, high-emitting industries, emissions-intensive supply chains, and emissions-intensive utilities. In establishing a definition under this subsection, the department shall consider:
(i) Methodologies for attributing greenhouse gas emissions to insurance underwriting activities, including the methodology issued by the Partnership for Carbon Accounting Financials
(PCAF) for insurance-associated emissions, and guidance from international initiatives such as the Forum for Insurance Transition to Net Zero (FIT) and the Science Based Targets Initiative (SBTi);
(ii) Distinctions among lines of business, including whether the underwriting pertains to high-emitting sectors such as fossil fuel exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, natural gas, coal, or any byproduct thereof;
(iii) The extent to which emissions attributable to underwriting can be reasonably measured, estimated, or modeled using available data;
(iv) The need to provide consistent, comparable, verifiable, assured, and transparent emissions disclosures and disclosure standards across the insurance sector; and
(v) Alignment with Rhode Island climate policy objectives, including emissions reduction targets, climate risk mitigation strategies, and sector-specific decarbonization targets.
(9) “New fossil fuel project” means a fossil fuel project in excess of what is in or approved for development as of the effective date of this chapter, including projects designed to expand the use of or generate new infrastructure for production from existing reserves. A “new fossil fuel project” shall not include modifications made solely to increase safety or reduce carbon intensity including, but not limited to, reduce fugitive or vented emissions; provided that, such modifications do not expand the fossil fuel supply base.
(10) “Science-based climate mitigation targets” means absolute emissions reduction targets that are in line with limiting global temperature rise to well below 2°C above pre-industrial levels, as defined by the department, in consultation with the department of environmental management. In establishing a definition under this subsection, the department shall:
(i) Consider peer-reviewed, science-based methodologies and criteria developed by recognized and reputable standard-setting bodies, including the Science Based Targets Initiative (SBTi), the Intergovernmental Panel on Climate Change (IPCC), and relevant international agreements such as the 2015 Paris Climate Accords;
(ii) Cover Scopes 1 (direct), 2 (indirect energy), and 3 (value chain) greenhouse gas emissions, as defined by the Greenhouse Gas Protocol and consistent with best available accounting and disclosure practices, to include, the accounting methodologies issued by the Partnership for Carbon Accounting Financials (PCAF) for financed emissions and insurance-associated emissions;
(iii) Require that targets shall not rely on carbon offsets, avoided emissions claims, or unproven greenhouse gas removal technologies;
(iv) Align with Rhode Island climate policy objectives, including the mandatory targets for emissions reduction laid out in chapter 6.2 of title 42 (“2021 act on climate”); and.
(v) Provide for periodic review and updating of targets based on evolving climate science, sector-specific developments, and real-world performance data.
(11) “State” or “the State” or “this State” means the State of Rhode Island. 27-84-3. Implementing climate leadership targets for Insurers.
(a) The department shall:
(1) On or before July 1, 2027, submit a report to the governor, the speaker of the house and senate president on the budgetary impacts of this chapter.
(2) On or before January 1, 2028, develop and implement a process for covered insurers to file reports pursuant to the provisions of subsection (b) of this section;
(3) Align covered insurer investment and underwriting activities with science-based climate mitigation targets, including by:
(i) Prohibiting covered insurers from underwriting any new fossil fuel projects on or after July 1, 2026;
(ii) Directing covered insurers to unwind and terminate any outstanding or pending commitments or negotiations to underwrite new fossil fuel projects no later than July 1, 2028.
(iii) Directing covered insurers to phase out all underwriting for any existing fossil fuel projects and fossil fuel companies by January 1, 2035 and establish short, medium, and long term benchmarks;
(iv) Prohibiting covered insurers from investing in any new fossil fuel projects on or after July 1, 2026;
(v) Directing covered insurers to unwind and terminate any outstanding or pending commitments or negotiations to invest in new fossil fuel projects on or before July 1, 2028;
(vi) Directing covered insurers to phase out all investments from any existing fossil fuel projects and fossil fuel companies by January 1, 2035 and establish short, medium, and long term benchmarks; and
(vii) Any other requirements deemed necessary by the department to align covered insurers’ investments and underwriting with science-based climate mitigation targets, including developing and implementing enterprise-wide transition plans
(4) On or before January 1, 2028, develop and implement a process for covered insurers to certify pursuant to the provisions of subsection (c) of this section, as a condition of licensure in the State of Rhode Island, that covered insurers meet the requirements of this section, which may include mandatory transition plans and progress; and
(5) Annually review the reports and certifications required under this section, and compile and post the information in such reports and certifications on the department’s website within three
(3) months of receiving the same.
(b) On or before July 1, 2028, and annually thereafter, covered insurers shall submit, within six (6) months of the end of each fiscal year, a report to the director disclosing:
(1) The covered insurer’s investments in any fossil fuel company, fossil fuel project, or new fossil fuel project;
(2) The financed emissions from all of the covered insurer’s investments in the previous fiscal year;
(3) The covered insurer’s underwriting for any fossil fuel company, fossil fuel project, or new fossil fuel project, in terms of total gross premiums in dollars, disaggregated by company and project in a format determined by the director;
(4) The insured emissions from all of the covered insurer’s underwriting in the previous reporting year;
(5) The timelines, strategies, and methodologies the covered insurer has implemented to comply with the requirements of this chapter;
(6) The progress the covered insurer has made towards achieving these requirements, including specific milestones; and
(7) Any other information the department deems necessary to effectively implement and enforce any rule or regulation promulgated pursuant to this chapter, which the department shall publish in advance.
(c) As part of the annual report required under subsection (b) of this section, the chief executive officer (CEO) or chief financial officer (CFO) of a covered insurer shall certify the accuracy of the information contained in such reports and that the covered insurer has:
(1) Ceased or made progress towards cessation of underwriting and investment in any fossil fuel project;
(2) Relinquished or made progress in relinquishing any direct or indirect stake in any fossil fuel company or fossil fuel project; and
(3) Not invested in or underwritten any new fossil fuel project.
(d) The director may engage the services of third-party attorneys, actuaries, accountants, and other experts not otherwise a part of the director’s staff, at the reporting covered insurer’s expense, as shall be reasonably necessary to assist in the review of such covered insurer’s filings under this section. All persons so engaged shall be under the direction and control of the director and shall act in a purely advisory capacity. 27-84-4. Statewide withdrawal restrictions.
(a) A covered insurer may surrender to the director its certificate of authority and thereafter cease to transact insurance in the State of Rhode Island, or discontinue the writing or renewal of one or more individual lines of insurance specified in the certificate of authority in the State of Rhode Island, only after the submission and approval of an informational filing submitted to the director, which filing shall be subject to the following provisions:
(1) The covered insurer shall send a notice to policyholders of the proposed withdrawal no later than thirty (30) days following the submission of the informational filing to the director, which shall state that the covered insurer intends to withdraw and has filed its intention to withdraw with the director, the terms of the withdrawal, including the date of the proposed commencement of nonrenewal of policies, and the proposed duration of the withdrawal plan for the covered insurer’s book of business;
(2) Nonrenewals shall not commence prior to one calendar year and ninety (90) days following the submission of the informational filing;
(3) The company shall send a notice of nonrenewal to every policyholder:
(i) No later than one calendar year preceding the date of nonrenewal; and
(ii) A subsequent notice of nonrenewal ninety (90) days preceding the date of nonrenewal; and
(4) Nonrenewals shall take place in a manner in order to be applicable to all insureds on an equitable basis with respect to risk classification and territorial or other form of rating factor, and shall be effectuated at a uniform rate over a period of not less than three (3) calendar years commencing with the date established in subsection (a)(2) of this section.
(b) Upon receiving the informational filing provided for in subsection (a) of this section, the director shall:
(1) Within seven (7) days, publish the informational filing on the department’s website; and
(2) Within thirty (30) days, hold a public hearing, at which the covered insurer and any members of the public may present testimony to determine if the withdrawal is justifiably required to protect the solvency of the covered insurer and would not be contrary to the public interest by disrupting the market or markets for said insurance.
(c) Within sixty (60) days of receiving the informational filing provided for in subsection
(a) of this section, the director shall notify the covered insurer in writing whether the withdrawal plan has been approved, any conditions of approval, and any requested modifications. If the director concludes that the withdrawal is not justified to protect the solvency of the covered insurer or would be contrary to the public interest by disrupting the market or markets for said insurance, the director shall prohibit the withdrawal unless the covered insurer surrenders all certificates of authority held by the covered insurer or other companies within the same holding company system as the covered insurer.
(d) Notwithstanding the provisions of subsections (a), (b), and (c) of this section, if the covered insurer finds a replacement carrier for the business that will not be renewed as the result of the withdrawal either prior to or after the date of the informational filing, the covered insurer may apply to the director for approval to transfer the business to a replacement carrier or carriers. If the director approves the replacement carrier or carriers, notwithstanding the provisions of subsection (a) of this section, the notice of nonrenewal shall be in compliance with the time limits provided by law for that line of insurance, and the covered insurer shall offer every insured coverage with the replacement carrier prior to the effective date of the nonrenewal. The director shall not withhold approval of a replacement carrier or carriers if that covered insurer is authorized to do business in the same line of business in Rhode Island and has the financial and business capability to write and service the business being transferred to it by the withdrawing covered insurer. The director shall approve or disapprove the replacement carrier or carriers within sixty
(60) days of:
(1) The date of the filing by the withdrawing covered insurer requesting approval of a replacement carrier or carriers; or
(2) The filing by the replacement carrier or carriers requesting to be a replacement carrier, whichever is later.
(e) The director may waive the requirements of subsection (a)(2) of this section, and the one-year nonrenewal notice of subsection (a)(3) of this section, as well as the three (3) year minimum withdrawal period in subsection (a)(4) of this section if the director deems a waiver to be necessary to protect the solvency of the covered insurer making the informational filing or if the director deems the withdrawal to have a limited impact on the market. 27-84-5. Compliance and penalties.
(a) Any covered insurer that fails to comply with the reporting requirements, divestment obligations or investment and underwriting prohibitions, or withdrawal restrictions under this chapter shall be subject to, at the discretion of the director, one or more of the following:
(1) Administrative penalties:
(i) Pursuant to § 42-14-16(a); and
(ii) Equivalent to the covered insurer’s fractional share of the property and casualty insurance market in Rhode Island based on total premiums received multiplied by the insurer’s net profits generated from the covered insurer’s enterprise-wide operations within Rhode Island in the violation year, and
(iii) Up to an additional one-tenth of one percent (0.01%) of the violation year’s net profits generated from the covered insurer’s enterprise-wide operations within Rhode Island per day of a continuing violation; and
(2) Restriction, suspension, or revocation of the insurer’s certificate of authority to do business in Rhode Island.
(b) Any covered insurer that fails to comply with the reporting requirements, divestment obligations or investment and underwriting prohibitions under this chapter shall be required to report semiannually to the director and submit a compliance plan until the director determines the covered insurer is in compliance with this chapter.
(c) Any covered insurer that fails to comply with the provisions of this chapter three (3) times within five (5) years may be subject to additional penalties available to and at the discretion of the director under Rhode Island insurance laws.
(d) The director may transfer fees collected under this section to other departments or state- administered funds for the purpose of financing projects and initiatives designed to avoid, limit, or adapt to negative impacts caused by climate change, including for the benefit of households residing in and businesses located in low- and moderate- income communities or disadvantaged communities. 27-84-6. Reporting.
(a) On or before July 1, 2028, and once every two (2) years thereafter, the director shall submit a report to the governor, speaker of the house and senate president. The report shall also be made available to the public and posted on the department’s website. The report shall disclose, for the preceding two (2) calendar years, the department’s:
(1) Efforts to implement the provisions of § 27-84-3, including anonymized and aggregated data on insurer investments in and underwriting of fossil fuel companies and fossil fuel projects, financed emissions, and insured emissions;
(2) Regulatory and supervisory actions taken, if any, to bolster the resilience of insurers to the physical impacts of climate change;
(3) Regulatory and supervisory actions planned, if any, to bolster the resilience of insurers to the physical impacts of climate change;
(4) Violations of § 27-84-3, and any penalties assessed as a result, anonymized and aggregated;
(5) Violations of §27-84-4, and any penalties assessed as a result, anonymized and aggregated; and
(6) The effects, if any, that insurers’ efforts to address climate risk have had on the affordability and availability of insurance for low income communities, communities of color and other traditionally underserved communities in the state.
(b) Such report shall also summarize available information regarding:
(1) Insurer and insurance market readiness for climate change and the energy transition;
(2) Major sources of climate risk faced by the insurers;
(3) Any gaps related to climate risk that the department intends to address; and
(4) Any legislative action that must be taken in order to allow the department to address climate risk. 27-84-7. Rules and regulations. The department shall adopt such regulations as the director deems necessary to implement and carry out the purposes of this chapter. 27-84-8. Severability. If any provision of this chapter, or the application of it to any person or circumstance, is held invalid, that determination shall not affect the provisions or applications of this chapter which can be given effect without the invalid provision or application, and to that end the provisions of this chapter are severable.
SECTION 3. This act shall take effect upon passage.
