PRINTER'S NO. 1526
No. 1144 Session of 2007
INTRODUCED BY O'PAKE, BOSCOLA, HUGHES, FONTANA, KASUNIC, FERLO,
RHOADES, RAFFERTY, MUSTO, LAVALLE, ERICKSON, STOUT, LOGAN,
BROWNE, KITCHEN AND WASHINGTON, NOVEMBER 5, 2007
REFERRED TO BANKING AND INSURANCE, NOVEMBER 5, 2007
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.
4 The following words and phrases when used in this article
5 shall have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Consumer." Any person who is a named insured, insured or
8 beneficiary of a policy of insurance or any other person who may
9 be affected in any way by the Insurance Department's exercise of
10 or the failure to exercise its authority.
11 "Department." The Insurance Department of the Commonwealth
12 and includes the Insurance Commissioner.
13 "Fund." The Consumer Advocate for Insurance Fund established
14 pursuant to section 906-C.
15 "Insurer." Any "company," "association" or "exchange" as
16 such terms are defined in section 101 of the act of May 17, 1921
17 (P.L.789, No.285), known as The Insurance Department Act of
18 1921.
19 Section 902-C. Office of Consumer Advocate for Insurance.
20 (a) Office established.--There is hereby established as an
21 independent office within the Office of Attorney General an
22 Office of Consumer Advocate for Insurance appointed by the
23 Governor to represent the interest of consumers before the
24 department.
25 (b) Qualifications; compensation.--The Office of Consumer
26 Advocate for Insurance shall be headed by the Consumer Advocate
27 for Insurance, appointed by the Governor, who is an attorney and
28 by reason of training, experience and attainment is qualified to
29 represent the interest of consumers. Compensation shall be set
30 by the Executive Board.
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1 (c) Conflicts.--No individual who serves as Consumer
2 Advocate for Insurance shall, while serving in the position,
3 engage in any business, vocation or other employment, or have
4 other interests, inconsistent with the official
5 responsibilities, nor shall the individual seek or accept
6 employment nor render beneficial services for compensation with
7 any insurer subject to the authority of the office during the
8 tenure of the appointment and for a period of two years
9 immediately after the appointment is served or terminated.
10 (d) Political office restrictions.--Any individual who is
11 appointed to the position of Consumer Advocate for Insurance
12 shall not seek election nor accept appointment to any political
13 office during the tenure as Consumer Advocate for Insurance and
14 for a period of two years after the appointment is served or
15 terminated.
16 Section 903-C. Assistant consumer advocates for insurance;
17 employees.
18 The Consumer Advocate for Insurance shall appoint attorneys
19 as assistant consumer advocates for insurance and additional
20 clerical, technical and professional staff as may be
21 appropriate, and may contract for additional services as shall
22 be necessary for the performance of the duties imposed by this
23 article. The compensation of assistant consumer advocates for
24 insurance and clerical, technical and professional staff shall
25 be set by the Executive Board. No assistant consumer advocate
26 for insurance or other staff employee shall, while serving in
27 the position, engage in any business, vocation or other
28 employment or have other interests, inconsistent with official
29 responsibilities.
30 Section 904-C. Powers and duties of the Consumer Advocate for
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1 Insurance.
2 (a) Purpose.--In addition to any other authority conferred
3 by this article, the Consumer Advocate for Insurance is
4 authorized to and shall, in carrying out the responsibilities
5 under this article, represent the interest of consumers as a
6 party, or otherwise participate for the purpose of representing
7 an interest of consumers, before the department in any matter
8 properly before the department, and before any court or agency,
9 initiating proceedings if, in the judgment of the Consumer
10 Advocate for Insurance, the representation may be necessary, in
11 connection with any matter involving regulation by the
12 department or the corresponding regulatory agency of the Federal
13 Government, whether on appeal or otherwise initiated.
14 (b) Discretion.--The Consumer Advocate for Insurance may
15 exercise discretion in determining the interests of consumers
16 which will be advocated in any particular proceeding and in
17 determining whether or not to participate in or initiate any
18 particular proceeding and, in so determining, shall consider the
19 public interest, the resources available and the substantiality
20 of the effect of the proceeding on the interest of consumers.
21 The Consumer Advocate for Insurance may refrain from intervening
22 when, in the judgment of the Consumer Advocate for Insurance,
23 intervention is not necessary to represent adequately the
24 interest of consumers.
25 (c) Authority.--In addition to any other authority conferred
26 by this article, the Consumer Advocate for Insurance is
27 authorized to represent an interest of consumers which is
28 presented for consideration, upon petition in writing, by a
29 substantial number of persons who are consumers of an insurer
30 subject to regulation by the department. The Consumer Advocate
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1 for Insurance shall notify the principal sponsors of the
2 petition within a reasonable time after receipt of the petition
3 of the action taken or intended to be taken with respect to the
4 interest of consumers presented in that petition. If the
5 Consumer Advocate for Insurance declines or is unable to
6 represent the interest, written notification and the reasons for
7 the action shall be given to the sponsors.
8 (d) Identity of action.--Any action brought by the Consumer
9 Advocate for Insurance before a court or an agency of this
10 Commonwealth shall be brought in the name of the Consumer
11 Advocate for Insurance, provided the Consumer Advocate for
12 Insurance may name a consumer or group of consumers in whose
13 name the action may be brought or may join with a consumer or
14 group of consumers in bringing the action.
15 (e) Written statement.--At a time as the Consumer Advocate
16 for Insurance determines, in accordance with applicable time
17 limitations, to initiate, intervene or otherwise participate in
18 any department, agency or court proceeding, the Consumer
19 Advocate for Insurance shall issue publicly a written statement,
20 a copy of which shall be filed in the proceeding in addition to
21 any required entry of appearance, stating concisely the specific
22 interest of consumers to be protected.
23 (f) Service of process.--The Consumer Advocate for Insurance
24 shall be served with copies of all filings, correspondence or
25 other documents filed by insurers with the department unless the
26 Consumer Advocate for Insurance informs the insurer that
27 specific types of classes of documents need not be so served.
28 The department shall not accept a document as timely filed if
29 the document is also required to be served on the Consumer
30 Advocate for Insurance and the insurer has not indicated that
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1 service has or is being made on the Consumer Advocate for
2 Insurance. Insurers shall provide any other nonprivileged
3 information or data requested by the Consumer Advocate for
4 Insurance to the extent that the request is reasonably related
5 to the performance of his duties under this article.
6 Section 905-C. Duties of department.
7 In dealing with any proposed action which may substantially
8 affect the interest of consumers, including, but not limited to,
9 a proposed change of rates and the adoption of rules,
10 regulations, guidelines, orders, standards or final policy
11 decisions, the department shall:
12 (1) Notify the Consumer Advocate for Insurance and
13 provide, free of charge, copies of all related documents when
14 notice of the proposed action is given to the public or at a
15 time fixed by agreement between the Consumer Advocate for
16 Insurance and the department in a manner to assure the
17 Consumer Advocate for Insurance reasonable notice and
18 adequate time to determine whether to intervene in the
19 matter.
20 (2) Consistent with its other statutory
21 responsibilities, take action with due consideration to the
22 interest of consumers.
23 Section 906-C. Consumer Advocate for Insurance Fund.
24 (a) Fund established.--There is hereby established a
25 separate account in the State Treasury to be known as the
26 Consumer Advocate for Insurance Fund. This fund shall be
27 administered by the State Treasurer.
28 (b) Funds restricted.-- All moneys deposited into the fund
29 shall be held in trust and shall not be considered general
30 revenue of the Commonwealth but shall be used only to effectuate
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1 the purposes of this article. The fund shall be subject to audit
2 by the Auditor General.
3 (c) Payments to fund.--Prior to the first day of April
4 following the effective date of this article and prior to the
5 first day of April of each year thereafter so long as this
6 article shall remain in effect, each insurer who writes
7 coverages for fire and casualty, accident and health, credit
8 accident and health under life/annuity/accident, health and life
9 including annuities in this Commonwealth, as a condition of its
10 authorization to transact business in this Commonwealth, shall
11 pay into the fund in trust an amount equal to the product
12 obtained by multiplying $5,000,000 by a fraction, the numerator
13 of which is the direct premium collected for all coverages by
14 that insurer in this Commonwealth during the preceding calendar
15 year and the denominator of which is the direct premium written
16 on such coverages in this Commonwealth by all insurers in the
17 same period. Any insurer who fails to pay the required
18 assessment under this section shall be prohibited from writing
19 any insurance within this Commonwealth.
20 (d) Base amount determination.--In succeeding years the
21 General Assembly may vary the base amount of $5,000,000 based
22 upon the actual funding experience and requirements of the
23 Office of Consumer Advocate for Insurance.
24 (e) Assessments.--Assessments made under this section shall
25 not be considered burdens and prohibitions under section 212 of
26 the act of May 17, 1921 (P.L.789, No.285), known as The
27 Insurance Department Act of 1921.
28 (f) Return of funds.--In the event that the trust fund is
29 dissolved or the Office of Consumer Advocate for Insurance is
30 terminated by operation of law, any balance remaining in the
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1 fund, after deducting administrative costs for liquidation,
2 shall be returned to insurers in proportion to their financial
3 contributions to the fund in the preceding calendar year.
4 Section 907-C. Reports.
5 The Consumer Advocate for Insurance shall annually transmit
6 to the Governor and to the General Assembly, and shall make
7 available to the public, an annual report on the conduct of the
8 Office of Consumer Advocate for Insurance. The Consumer Advocate
9 for Insurance shall make recommendations as may, from time to
10 time, be necessary or desirable to protect the interests of
11 consumers.
12 Section 908-C. Savings provision; construction.
13 (a) Rights of consumers.--Nothing contained in this article
14 shall in any way limit the right of any consumer to bring a
15 proceeding before either the department or a court.
16 (b) Responsibility of department.--Nothing contained in this
17 article shall be construed to impair the statutory authority or
18 responsibility of the department to regulate insurers in the
19 public interest.
20 Section 2. This act shall take effect in 90 days.
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