A state policy change aimed at helping Johnston insurance company FM expand its investments, and potentially, its employment in Rhode Island, sailed through the Rhode Island House of Representatives on Tuesday.
The 71-0 vote came without discussion, following a strong backing by Rep. Joseph Solomon, chairman of the House Committee on Commerce, which held a May 15 hearing on the bill.
“It’s a great bill,” said Solomon, a Warwick Democrat, noting that no written or verbal opposition on the proposal emerged during the hearing before the House panel.
The bill sponsored by Rep. Alex Finkelman, a Jamestown Democrat, was introduced on May 8 after FM executives met with House Speaker K. Joseph Shekarchi. The Fortune 500 company was formerly known as FM Global, but rebranded in July 2024.
The proposed policy change seeks to let insurance companies invest as much as they want in nontraditional or alternative assets — referred to under federal reporting requirements as Schedule BA assets — like hedge funds, private equity funds and real estate holdings. It effectively reverses the 1984 law on the books, which limited investments on long-term assets outside of traditional stocks and bonds to no more than 10% of a company’s total assets.
The origins of the 1984 law remain somewhat hazy, but proponents for its repeal insist the rule no longer makes sense, with alternative investments like hedge funds now widely used and commonly accepted.
“When this law was enacted in 1984, the limitation was practical, as regulatory techniques for overseeing insurance investments were more limited at that time,” Solomon said Tuesday. “The law is now outdated.”
Since 2010, insurance companies have been steadily increasing investments in alternative assets, searching for higher returns in a low-interest rate environment. The appeal of alternate asset classes increased further after 2017 regulatory changes adopted by the National Association of Insurance Commissioners (NAIC), which reformed how companies could record exchange-traded funds on their balance sheets.
Certain bonds are also now considered Schedule BA assets under a new NAIC effective Jan. 1. Removing the state’s limit on BA investments now is particularly timely,” Jonathan Schreiber, associate vice president of state government relations for the American Property Casualty Insurance Association, wrote in a May 15 letter to lawmakers.
The change would also put Rhode Island in line with neighboring Massachusetts and Connecticut — a key selling point for Gov. Dan McKee, who has already signaled support for the policy change.
Especially as the state wrestles with how to retain major employers like Hasbro, Inc., which previously indicated it was looking to abandon its Pawtucket headquarters in favor of a new location in Boston. The potential relocation was put on hold after Trump tariffs roiled markets and put company profits at risk; an update is now expected sometime this summer.
FM executives made it clear they have no intention of picking up and moving from their 8-acre Johnston headquarters, which houses the bulk of the property insurer’s 1,500-person local workforce. Instead, the company is contemplating more hiring as it looks to expand its offerings of research, development and industrial and commercial insurance products for renewable energy, Finkelman said previously.
FM did not offer specifics on expansion plans when asked by Rhode Island Current.
Lifting the investment cap could also benefit the other 29 local insurance companies that operate in Rhode Island, according to Elizabeth Dwyer, director for the Department of Business Regulation. Dwyer wrote a letter supporting the policy change, noting that state business regulators will continue to carefully monitor companies.
“This vigilance gives me confidence that a blunt tool for investments is no longer necessary,” Dwyer wrote in the May 14 letter to lawmakers.
Lincoln-based Amica Mutual Insurance Co. and Providence’s Delta Dental of Rhode Island also submitted written support for the policy change, along with the Rhode Island Business Coalition and the National Association of Mutual Insurance Companies.
A companion bill in the Senate, sponsored by Johnston Democrat Andrew Dimitri, remains under review by the Senate Committee on Finance following an initial May 20 hearing. A committee vote has not been scheduled as of Tuesday, according to Greg Pare, a Senate spokesperson.
If passed by both chambers and signed into law by McKee, the investment cap would be repealed immediately.
Reps. Arthur Handy, Brian Kennedy, Earl Read III and Brandon Voas were not present for the House vote Tuesday.
This story was originally published by the Rhode Island Current.
