PRIOR PRINTER'S NO. 2001 PRINTER'S NO. 2111
No. 1669 Session of 1989
INTRODUCED BY HAYDEN, EVANS, ROEBUCK AND KOSINSKI, JUNE 7, 1989
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
JUNE 20, 1989
AN ACT
1 Amending the act of July 22, 1974 (P.L.589, No.205), entitled
2 "An act relating to unfair insurance practices; prohibiting
3 unfair methods of competition and unfair or deceptive acts
4 and practices; and prescribing remedies and penalties,"
5 further providing for unfair methods of competition and
6 unfair or deceptive acts or practices; authorizing
7 inspections and investigations; further providing for
8 hearings and the effects of hearings; and further providing
9 for penalties.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Section 5(a)(9) and (c)(3) and (4) of the act of
13 July 22, 1974 (P.L.589, No.205), known as the Unfair Insurance
14 Practices Act, are amended and subsection (a) is amended by
15 adding paragraphs to read:
16 Section 5. Unfair Methods of Competition and Unfair or
17 Deceptive Acts or Practices Defined.--(a) "Unfair methods of
18 competition" and "unfair or deceptive acts or practices" in the
19 business of insurance means:
20 * * *
21 (2.1) Misrepresenting that a fee is payable for transacting
1 any insurance business or placing any insurance policies, other
2 than the commissions specifically payable under the policy
3 delivered, except that licensed insurance brokers may enter into
4 a written agreement with the prospective insured specifying the
5 amount of the fee to be charged and the specific reason for such
6 charge.
7 * * *
8 (4.1) Requiring an insured, applicant or a member of the
9 insured's household to have in effect or purchase concurrently a
10 policy of insurance as a condition to the writing or renewing of
11 another policy.
12 (4.2) Endorsing, or otherwise altering a policy of insurance
13 in any manner without notification to and approval from the
14 policyholder. This paragraph shall not apply to endorsements
15 approved by the Insurance Department which apply to all
16 policyholders.
17 * * *
18 (9) Cancelling any policy of insurance covering owner-
19 occupied private residential properties or personal property of
20 individuals that has been in force for sixty days or more or
21 refusing to renew any such policy unless the policy was obtained
22 through material misrepresentation, fraudulent statements,
23 omissions or concealment of fact material to the acceptance of
24 the risk or to the hazard assumed by the company; or there has
25 been a substantial change or increase in hazard in the risk
26 assumed by the company subsequent to the date the policy was
27 issued; or there is a substantial increase in hazards insured
28 against by reason of wilful or negligent acts or omissions by
29 the insured; or the insured has failed to pay any premium when
30 due whether such premium is payable directly to the company or
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1 its agent or indirectly under any premium finance plan or
2 extension of credit; or for any other reasons approved by the
3 commissioner pursuant to rules and regulations promulgated by
4 the commissioner. No cancellation [or], refusal to renew or
5 refusal to write by any person shall be effective unless a
6 written notice of the cancellation [or], refusal to renew or
7 refusal to write is received by the insured either at the
8 address shown in the policy or at a forwarding address. Such
9 notice shall:
10 (i) Be approved as to form by the Insurance Commissioner
11 prior to use.
12 (ii) State the date, not less than thirty days after the
13 date of delivery or mailing on which such cancellation [or],
14 refusal to renew or refusal to write shall become effective.
15 (iii) State the specific reason or reasons of the insurer
16 for cancellation [or], refusal to renew or refusal to write.
17 (iv) Advise the insured of his right to request, in writing,
18 within [ten] twenty days of the receipt of the notice of
19 cancellation [or intention not], refusal to renew or refusal to
20 write that the Insurance Commissioner review the action of the
21 insurer.
22 (v) Advise the insured of his possible eligibility for
23 insurance under the act of July 31, 1968 (P.L.738, No.233),
24 known as "The Pennsylvania Fair Plan Act," or the Pennsylvania
25 Assigned Risk Plan.
26 (vi) Advise the insured in a form commonly understandable of
27 the provisions of subparagraphs (ii), (iii) and (iv) of this
28 paragraph as they limit permissible time and reasons for
29 cancellation.
30 (vii) Advise the insured of the procedures to be followed in
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1 prosecuting an appeal.
2 (9.1) Rescinding any policy of insurance covering owner- <--
3 occupied private residential properties or personal property of
4 individuals.
5 * * *
6 (c) Nothing in subsection (a)(9) of this section shall
7 apply:
8 * * *
9 (3) To any policy of insurance which has been in effect less
10 than sixty days, [including] excluding any notice of termination
11 period, unless it is a renewal policy. Any declination of
12 coverage within the sixty-day period provided in this clause
13 shall, for purposes of review by the Insurance Commissioner, be
14 deemed a refusal to write and shall not be subject to the
15 provisions of subsection (a)(9) of this section[.], except that
16 such notice and procedures must comply with the requirements of
17 subsections (a)(9)(i) through (vii) of this act. Subsection
18 (a)(9)(ii) does not apply where no coverage was in effect during
19 the sixty-day period.
20 (4) Any insured may, within [ten] twenty days of the receipt
21 by the insured of notice of cancellation [or], notice of
22 intention not to renew, or notice of refusal to write, request
23 in writing to the Insurance Commissioner that he review the
24 action of the insurer in cancelling or refusing to renew the
25 policy of such insured or refusing to write a policy.
26 Section 2. Section 7 of the act is amended to read:
27 Section 7. Power of Commissioner.--(a) The commissioner may
28 monitor, examine and investigate the affairs of every person <--
29 engaged in the business of insurance in this State in order to
30 determine whether such person has been or is engaged in any
19890H1669B2111 - 4 -
1 unfair method of competition or in any unfair or deceptive act
2 or practice prohibited by this act.
3 (b) In order to carry out the purposes of this act, the
4 commissioner shall require every person engaged in the business
5 of insurance to make, keep and preserve, format and make <--
6 available to the Insurance Department, for inspection,
7 examination or duplication, such records and reports as the
8 department may prescribe by regulation as necessary or
9 appropriate for the enforcement of this act.
10 Section 3. Section 8 of the act is amended by adding a
11 subsection to read:
12 Section 8. Administrative Hearing.--* * *
13 (a.1) If, as a result of cancellation or refusal to renew
14 any policy of insurance covering owner-occupied private
15 residential properties or personal property of individuals, an
16 administrative hearing is requested, the policy shall remain in
17 effect until the conclusion of the administrative process.
18 * * *
19 Section 4. Sections 9 and 11 of the act are amended to read:
20 Section 9. Administrative Penalty.--Upon a determination by
21 hearing that this act has been violated, the commissioner may
22 issue an order requiring the person to cease and desist from
23 engaging in such violation or, if such violation is a method of
24 competition, act or practice defined in section 5 of this act,
25 the commissioner may suspend or revoke the person's license.
26 Following a hearing and adjudication, the commissioner is hereby
27 empowered to order the payment of restitution to any person who
28 is injured as a result of an action or practice which violated
29 any provision of this act. An order or restitution issued by the
30 commissioner following a hearing and adjudication shall be
19890H1669B2111 - 5 -
1 enforceable by any court of common pleas in this Commonwealth.
2 Section 11. Civil Penalties.--In addition to any other
3 penalties imposed pursuant to this act, the commissioner may, or
4 the court may, [in an action filed by the commissioner,] impose
5 the following civil penalties:
6 (1) for each [method of competition, act or practice defined
7 in section 5 of this act and in] violation of this act [which
8 the person knew or reasonably should have known was such a
9 violation], a penalty of not more than five thousand dollars
10 ($5,000) [for each violation but not to exceed an aggregate
11 penalty of fifty thousand dollars ($50,000) in any six month
12 period;
13 (2) for each method of competition, act or practice defined
14 in section 5 of this act and in violation of this act which the
15 person did not know nor reasonably should have known was such a
16 violation, a penalty of not more than one thousand dollars
17 ($1,000) for each violation but not to exceed an aggregate
18 penalty of ten thousand dollars ($10,000) in any six month
19 period]; and
20 [(3)] (2) for each violation of an order issued by the
21 commissioner pursuant to section 9 of this act, while such order
22 is in effect, a penalty of not more than ten thousand dollars
23 ($10,000) for each violation.
24 Section 5. This act shall take effect as follows:
25 (1) The amendments to section 5(a)(9) and (c)(3) and (4)
26 shall take effect in 120 days.
27 (2) The remainder of this act shall take effect
28 immediately.
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