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S 2199Insurance

Insurance - Producer Licensing Act

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

Signed into law69 Yea0 Nay6 Not voting
Population
Affected
15
Email Legislator
Introduced Jan 23, 2026Committee Senate Commerce

Plain-English Summary

This legislation amends the "Producer Licensing Act" to provide greater protections for property and casualty insurance producers (agents) regarding their contracts with insurance companies. Specifically, it prohibits an insurance company from modifying a contract with a producer unless the company provides written notice at least 180 days before the change takes effect. The bill explicitly defines any change in the producer's compensation as a contract modification requiring this notice. These protections apply to independent producers but do not apply to direct employees of insurance companies or producers who have had their licenses revoked.

For younger readers

This bill creates new rules for insurance companies and the agents who sell insurance for them. Sometimes, an insurance company wants to change the agreement they have with an agent, such as how much money the agent gets paid for their work. This new law says the company cannot change the agreement immediately. Instead, they must send a letter telling the agent about the change at least 180 days (about six months) before it happens. This gives the agent time to prepare for the changes to their job or pay.

Who & Where It Applies

Impacted groups
Insurance ProducersProperty and Casualty Insurance CompaniesIndependent Insurance AgenciesSmall Business OwnersInsurance Policyholders
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 sudden, arbitrary changes in compensation dictated by large corporations.
  • Promotes economic stability for local insurance agencies, allowing them to better plan their finances and payroll without fear of immediate revenue cuts.
  • Checks the power of large financial institutions by legally mandating transparency and fair notice in their business dealings with smaller entities.
  • May inadvertently keep insurance premiums higher for consumers if companies cannot quickly adjust commission structures to lower costs.
  • Focuses primarily on protecting business-to-business interests rather than directly assisting low-income individuals or the broader social safety net.
  • Could discourage insurance companies from contracting with new, smaller, or diverse agencies due to the difficulty of modifying contracts later.
For Conservatives
  • Supports small business owners and entrepreneurs by providing contract security against large conglomerates.
  • Ensures stability and predictability in the marketplace, allowing businesses to plan for the long term without government-induced volatility.
  • Reinforces the importance of adhering to agreed-upon terms rather than allowing one party to unilaterally change the rules of engagement.
  • Represents government interference in private contractual relationships between business entities, violating free market principles.
  • Restricts the freedom of companies to react quickly to market changes or economic downturns by adjusting their cost structures.
  • Adds regulatory burden to the insurance industry, which could stifle innovation and efficiency.

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.