PRINTER'S NO. 62
No. 63 Session of 2003
INTRODUCED BY SCHWARTZ, MELLOW, RHOADES, KUKOVICH, COSTA, HUGHES, STACK, TARTAGLIONE, STOUT, KITCHEN, KASUNIC, MUSTO, BOSCOLA, WOZNIAK, LOGAN, O'PAKE AND FUMO, JANUARY 27, 2003
REFERRED TO BANKING AND INSURANCE, JANUARY 27, 2003
AN ACT 1 Amending the act of April 9, 1929 (P.L.177, No.175), entitled 2 "An act providing for and reorganizing the conduct of the 3 executive and administrative work of the Commonwealth by the 4 Executive Department thereof and the administrative 5 departments, boards, commissions, and officers thereof, 6 including the boards of trustees of State Normal Schools, or 7 Teachers Colleges; abolishing, creating, reorganizing or 8 authorizing the reorganization of certain administrative 9 departments, boards, and commissions; defining the powers and 10 duties of the Governor and other executive and administrative 11 officers, and of the several administrative departments, 12 boards, commissions, and officers; fixing the salaries of the 13 Governor, Lieutenant Governor, and certain other executive 14 and administrative officers; providing for the appointment of 15 certain administrative officers, and of all deputies and 16 other assistants and employes in certain departments, boards, 17 and commissions; and prescribing the manner in which the 18 number and compensation of the deputies and all other 19 assistants and employes of certain departments, boards and 20 commissions shall be determined," establishing the Office of 21 Consumer Advocate for Insurance as an independent office 22 within the Office of Attorney General and prescribing its 23 powers and duties. 24 The General Assembly of the Commonwealth of Pennsylvania 25 hereby enacts as follows: 26 Section 1. The act of April 9, 1929 (P.L.177, No.175), known 27 as The Administrative Code of 1929, is amended by adding an 28 article to read:
1 ARTICLE IX-C 2 OFFICE OF CONSUMER ADVOCATE FOR INSURANCE 3 Section 901-C. Definitions.--As used in this article: 4 "Consumer" means any person who is a named insured, insured 5 or beneficiary of a policy of insurance or any other person who 6 may be affected in any way by the Insurance Department's 7 exercise of or the failure to exercise its authority. 8 "Department" means the Insurance Department of the 9 Commonwealth and includes the Insurance Commissioner. 10 "Fund" means the Consumer Advocate for Insurance Fund 11 established pursuant to section 906-C. 12 "Insurer" means any "company," "association" or "exchange" as 13 such terms are defined in section 101 of the act of May 17, 1921 14 (P.L.789, No.285), known as "The Insurance Department Act of 15 1921." 16 Section 902-C. Office of Consumer Advocate for Insurance.-- 17 (a) There is hereby established as an independent office within 18 the Office of Attorney General an Office of Consumer Advocate 19 for Insurance appointed by the Governor to represent the 20 interest of consumers before the department. 21 (b) The Office of Consumer Advocate for Insurance shall be 22 headed by the Consumer Advocate for Insurance appointed by the 23 Governor who is an attorney, and by reason of training, 24 experience and attainment is qualified to represent the interest 25 of consumers. Compensation shall be set by the Executive Board. 26 (c) No individual who serves as a Consumer Advocate for 27 Insurance shall, while serving in the position, engage in any 28 business, vocation or other employment, or have other interests, 29 inconsistent with the official responsibilities, nor shall the 30 individual seek or accept employment nor render beneficial 20030S0063B0062 - 2 -
1 services for compensation with any insurer subject to the 2 authority of the office during the tenure of the appointment and 3 for a period of two years immediately after the appointment is 4 served or terminated. 5 (d) Any individual who is appointed to the position of 6 Consumer Advocate for Insurance shall not seek election nor 7 accept appointment to any political office during the tenure as 8 Consumer Advocate for Insurance and for a period of two years 9 after the appointment is served or terminated. 10 Section 903-C. Assistant Consumer Advocates for Insurance; 11 Employes.--The Consumer Advocate for Insurance shall appoint 12 attorneys as assistant consumer advocates for insurance and 13 additional clerical, technical and professional staff as may be 14 appropriate, and may contract for additional services as shall 15 be necessary for the performance of the duties imposed by this 16 article. The compensation of assistant consumer advocates for 17 insurance and clerical, technical and professional staff shall 18 be set by the Executive Board. No assistant consumer advocate 19 for insurance or other staff employe shall, while serving in the 20 position, engage in any business, vocation or other employment, 21 or have other interests, inconsistent with official 22 responsibilities. 23 Section 904-C. Powers and Duties of the Consumer Advocate 24 for Insurance.--(a) In addition to any other authority 25 conferred by this article, the Consumer Advocate for Insurance 26 is authorized to and shall, in carrying out the responsibilities 27 under this article, represent the interest of consumers as a 28 party, or otherwise participate for the purpose of representing 29 an interest of consumers, before the department in any matter 30 properly before the department, and before any court or agency, 20030S0063B0062 - 3 -
1 initiating proceedings if, in the judgment of the Consumer 2 Advocate for Insurance, the representation may be necessary, in 3 connection with any matter involving regulation by the 4 department or the corresponding regulatory agency of the Federal 5 Government, whether on appeal or otherwise initiated. 6 (b) The Consumer Advocate for Insurance may exercise 7 discretion in determining the interests of consumers which will 8 be advocated in any particular proceeding and in determining 9 whether or not to participate in or initiate any particular 10 proceeding and, in so determining, shall consider the public 11 interest, the resources available and the substantiality of the 12 effect of the proceeding on the interest of consumers. The 13 Consumer Advocate for Insurance may refrain from intervening 14 when, in the judgment of the Consumer Advocate for Insurance, 15 intervention is not necessary to represent adequately the 16 interest of consumers. 17 (c) In addition to any other authority conferred by this 18 article, the Consumer Advocate for Insurance is authorized to 19 represent an interest of consumers which is presented for 20 consideration, upon petition in writing, by a substantial number 21 of persons who are consumers of an insurer subject to regulation 22 by the department. The Consumer Advocate for Insurance shall 23 notify the principal sponsors of the petition within a 24 reasonable time after receipt of the petition of the action 25 taken or intended to be taken with respect to the interest of 26 consumers presented in that petition. If the Consumer Advocate 27 for Insurance declines or is unable to represent the interest, 28 written notification and the reasons for the action shall be 29 given to the sponsors. 30 (d) Any action brought by the Consumer Advocate for 20030S0063B0062 - 4 -
1 Insurance before a court or an agency of this Commonwealth shall 2 be brought in the name of the Consumer Advocate for Insurance: 3 Provided, That the Consumer Advocate for Insurance may name a 4 consumer or group of consumers in whose name the action may be 5 brought or may join with a consumer or group of consumers in 6 bringing the action. 7 (e) At a time as the Consumer Advocate for Insurance 8 determines, in accordance with applicable time limitations, to 9 initiate, intervene or otherwise participate in any department, 10 agency or court proceeding, the Consumer Advocate for Insurance 11 shall issue publicly a written statement, a copy of which shall 12 be filed in the proceeding in addition to any required entry of 13 appearance, stating concisely the specific interest of consumers 14 to be protected. 15 (f) The Consumer Advocate for Insurance shall be served with 16 copies of all filings, correspondence or other documents filed 17 by insurers with the department unless the Consumer Advocate for 18 Insurance informs the insurer that specific types of classes of 19 documents need not be so served. The department shall not accept 20 a document as timely filed if the document is also required to 21 be served on the Consumer Advocate for Insurance and the insurer 22 has not indicated that service has or is being made on the 23 Consumer Advocate for Insurance. Insurers shall provide any 24 other nonprivileged information or data requested by the 25 Consumer Advocate for Insurance to the extent that the request 26 is reasonably related to the performance of his duties under 27 this article. 28 Section 905-C. Duties of the Department.--In dealing with 29 any proposed action which may substantially affect the interest 30 of consumers, including, but not limited to, a proposed change 20030S0063B0062 - 5 -
1 of rates and the adoption of rules, regulations, guidelines, 2 orders, standards or final policy decisions, the department 3 shall: 4 (1) Notify the Consumer Advocate for Insurance and provide, 5 free of charge, copies of all related documents when notice of 6 the proposed action is given to the public or at a time fixed by 7 agreement between the Consumer Advocate for Insurance and the 8 department in a manner to assure the Consumer Advocate for 9 Insurance reasonable notice and adequate time to determine 10 whether to intervene in the matter. 11 (2) Consistent with its other statutory responsibilities, 12 take action with due consideration to the interest of consumers. 13 Section 906-C. Consumer Advocate for Insurance Fund.--(a) 14 There is hereby established a separate account in the State 15 Treasury to be known as the Consumer Advocate for Insurance 16 Fund. This fund shall be administered by the State Treasurer. 17 (b) All moneys deposited into the fund shall be held in 18 trust and shall not be considered general revenue of the 19 Commonwealth but shall be used only to effectuate the purposes 20 of this article. The fund shall be subject to audit by the 21 Auditor General. 22 (c) Prior to the first day of April following the effective 23 date of this article and prior to the first day of April of each 24 year thereafter so long as this article shall remain in effect, 25 each insurer who writes coverages for fire and casualty, 26 accident and health, credit accident and health under 27 life/annuity/accident, health and life including annuities in 28 this Commonwealth, as a condition of its authorization to 29 transact business in this Commonwealth, shall pay into the fund 30 in trust an amount equal to the product obtained by multiplying 20030S0063B0062 - 6 -
1 five million dollars ($5,000,000) by a fraction, the numerator 2 of which is the direct premium collected for all coverages by 3 that insurer in this Commonwealth during the preceding calendar 4 year and the denominator of which is the direct premium written 5 on such coverages in this Commonwealth by all insurers in the 6 same period. Any insurer who fails to pay the required 7 assessment under this section shall be prohibited from writing 8 any insurance within this Commonwealth. 9 (d) In succeeding years the General Assembly may vary the 10 base amount of five million dollars ($5,000,000) based upon the 11 actual funding experience and requirements of the Office of 12 Consumer Advocate for Insurance. 13 (e) Assessments made under this section shall not be 14 considered burdens and prohibitions under section 212 of the act 15 of May 17, 1921 (P.L.789, No.285), known as "The Insurance 16 Department Act of 1921." 17 (f) In the event that the trust fund is dissolved or the 18 Office of Consumer Advocate for Insurance is terminated by 19 operation of law, any balance remaining in the fund, after 20 deducting administrative costs for liquidation, shall be 21 returned to insurers in proportion to their financial 22 contributions to the fund in the preceding calendar year. 23 Section 907-C. Reports.--The Consumer Advocate for Insurance 24 shall annually transmit to the Governor and to the General 25 Assembly, and shall make available to the public, an annual 26 report on the conduct of the Office of Consumer Advocate for 27 Insurance. The Consumer Advocate for Insurance shall make 28 recommendations as may, from time to time, be necessary or 29 desirable to protect the interest of consumers. 30 Section 908-C. Savings Provision; Construction.--(a) 20030S0063B0062 - 7 -
1 Nothing contained in this article shall in any way limit the 2 right of any consumer to bring a proceeding before either the 3 department or a court. 4 (b) Nothing contained in this article shall be construed to 5 impair the statutory authority or responsibility of the 6 department to regulate insurers in the public interest. 7 Section 2. This act shall take effect in 90 days. A7L71JS/20030S0063B0062 - 8 -