REHABILITATED INSURERS PERMITTED TO DEFER PAYMENTS TO FAIR PLANS
The Rhode Island Supreme Court, in a de novo review, denied an appeal by the Rhode Island and Massachusetts Fair Access to Insurance Requirements (FAIR) Plans relating to a judgment authorizing the deferral of certain payments owed to them under State and Federal law. The Rhode Island and Massachusetts FAIR Plans are funds statutorily established for the purpose of providing basic property insurance to persons who would otherwise be unable to obtain it.
In 2003, the Rhode Island Superior Court placed Pawtucket Mutual Insurance Company (PMIC) and its subsidiary, Narragansett Bay Insurance Company (NBIC) into rehabilitation after finding that their financial condition was hazardous to their policyholders, creditors and/or the public. As a way to revitalize PMIC and NBIC, the Rehabilitator converted PMIC from a mutual company to a stock company. In order to facilitate the sale of the newly formed stock company, the Rehabilitator filed a petition to defer PMIC and NBIC payments of FAIR Plan assessments. The FAIR plans filed objections.
Relying on the broad statutory authority granted to the Rehabilitator to take steps necessary to revitalize an insurer, the court affirmed the decision to allow deferral of payments to the FAIR Plans. Marques v. Pawtucket Mutual Insurance Company, Case No. 2006-52-Appeal (R.I. Feb. 19, 2007).
