PRINTER'S NO. 937
No. 843 Session of 1989
INTRODUCED BY DAWIDA, ANDREZESKI AND FATTAH, APRIL 17, 1989
REFERRED TO BANKING AND INSURANCE, APRIL 17, 1989
AN ACT
1 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
2 act relating to insurance; amending, revising, and
3 consolidating the law providing for the incorporation of
4 insurance companies, and the regulation, supervision, and
5 protection of home and foreign insurance companies, Lloyds
6 associations, reciprocal and inter-insurance exchanges, and
7 fire insurance rating bureaus, and the regulation and
8 supervision of insurance carried by such companies,
9 associations, and exchanges, including insurance carried by
10 the State Workmen's Insurance Fund; providing penalties; and
11 repealing existing laws," authorizing stock insurers to
12 establish more than one class or series of shares and to
13 permit different voting rights according to the class of
14 shares; providing for requirements relating to minimum
15 capital surplus for certain insurers; increasing capital
16 requirements for certain insurance companies; requiring
17 insurance companies to disclose certain data; providing for
18 the review of rate filings and for compliance with requests
19 for data and information; providing for a liability
20 underwriting services plan and for a notice of intent to
21 withdraw; and providing for penalties.
22 The General Assembly of the Commonwealth of Pennsylvania
23 hereby enacts as follows:
24 Section 1. Section 206(c) of the act of May 17, 1921
25 (P.L.682, No.284), known as The Insurance Company Law of 1921,
26 amended July 9, 1976 (P.L.948, No.184), is amended to read:
27 Section 206. Minimum Capital Stock and Financial
1 Requirements To Do Business.--* * *
2 (c) Stock casualty companies, organized under this act for
3 any of the purposes of insurance mentioned in subdivision (c) of
4 section two hundred and two (202) of this act, must have a paid
5 up capital stock of not less than [one hundred thousand dollars
6 ($100,000); except (i) companies organized for the purpose of
7 credit insurance, which must have a paid up capital stock of not
8 less than two hundred thousand dollars ($200,000); (ii)
9 companies organized for the purposes mentioned in clause (11)
10 subdivision (c) of section two hundred and two (202) of this
11 act, which must have a paid up capital stock of not less than
12 five hundred thousand dollars ($500,000); (iii) companies
13 organized for the purpose of workmen's compensation insurance as
14 provided for in clause (14) subdivision (c) of section two
15 hundred and two (202) of the act, which must have a paid up
16 capital stock of not less than seven hundred fifty thousand
17 dollars ($750,000); and (iv) companies organized to guarantee
18 the fidelity of persons and contracts of suretyship, which must
19 have a paid up capital stock of at least two hundred and fifty
20 thousand dollars ($250,000)] five hundred thousand dollars
21 ($500,000). Stock casualty companies organized under this act
22 may undertake two or more classes of insurance mentioned in
23 subdivision (c) of section two hundred and two (202) of this
24 act, by providing at least fifty thousand dollars ($50,000)
25 [additional] paid up capital stock for each [additional] class
26 of insurance; except [in case credit or fidelity and surety
27 insurance is added to any other line or lines, in which case the
28 additional] that the paid up capital stock for credit insurance
29 shall be one hundred thousand dollars ($100,000), and the
30 [additional] paid up capital stock for fidelity and surety
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1 insurance shall be two hundred thousand dollars ($200,000); and
2 except that the paid up capital stock in the case of insurance
3 for the purposes mentioned in clause (11) subdivision (c) of
4 section two hundred and two (202) of this act [is added to any
5 other line or lines, in which case the additional paid up
6 capital stock] shall be five hundred thousand dollars ($500,000)
7 and except that the paid up capital stock in the case of
8 workmen's compensation insurance as provided for in clause (14)
9 subdivision (c) of section two hundred and two (202) of the act
10 [is added to any other line or lines in which case the
11 additional paid up capital stock] shall be seven hundred fifty
12 thousand dollars ($750,000). Any [such] stock casualty company
13 [with a paid up capital stock of three hundred thousand dollars
14 ($300,000) may transact all of the] organized under this act to
15 undertake two or more classes of insurance mentioned in
16 subdivision (c) of section two hundred and two (202) of this
17 act[, except credit, livestock, and fidelity and surety
18 insurance, and except insurance for the purposes mentioned in
19 clause (11) and except workmen's compensation insurance as
20 provided for in clause (14) thereof;] and a company with a paid
21 up capital stock of one million nine hundred fifty thousand
22 dollars ($1,950,000) may transact all of the classes of
23 insurance mentioned in subdivision (c) of section two hundred
24 and two (202) of this act. Every such company shall, in addition
25 thereto, have a surplus paid in at least equal to fifty per
26 centum (50%) of the [subscribed capital stock] required paid up
27 capital.
28 * * *
29 Section 2. The act is amended by adding sections to read:
30 Section 206.1. Exclusion from Minimum Financial
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1 Requirements.--(a) A fire or casualty company seeking a
2 certificate of authority to do business in Pennsylvania shall
3 satisfy and continue to comply with the minimum capital and
4 surplus requirements imposed by this act.
5 (b) An existing fire or casualty company with capital and
6 surplus that satisfies the requirements imposed by this act
7 shall comply and continue to comply with the requirements of
8 this act.
9 (c) An existing fire or casualty company that has capital
10 and surplus less than the minimum requirements imposed by this
11 act shall be required to continue to comply with the minimum
12 capital and surplus requirements imposed by this act at the time
13 its certificate of authority was granted and shall not be
14 required to meet the minimum requirements of this act. However,
15 any change in charter powers expanding the lines of insurance
16 the company may write, any acquisition or merger, any
17 transaction under section 337.6 or section 809 that results in a
18 transfer of ownership, acquisition of control through or
19 assignment of a management contract, or a change in the majority
20 of the board of directors as a result of a single event or
21 series of related events will require such company to comply
22 with the minimum capital and surplus requirements imposed by
23 this act.
24 Section 301.2. Classes of Shares.--Every stock insurance
25 company shall have power to create and issue one or more classes
26 of shares or one or more series of shares within any class
27 thereof, any or all of which classes or series may have full,
28 limited, multiple or fractional, or no voting rights, and such
29 designations, preferences, qualifications, privileges,
30 limitations, options, conversion rights and other special rights
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1 as shall be stated in the articles or in the resolution or
2 resolutions providing for the issue of such shares adopted by
3 the board of directors pursuant to authority expressly vested in
4 it by the articles. Except as otherwise provided by the
5 articles, each share shall be in all respects equal to every
6 other share. Different series of the same class of shares shall
7 not be construed to constitute different classes of shares for
8 the purpose of voting by classes under this act. Unless the
9 articles or by-laws otherwise provide, the board of directors
10 shall have the power, by resolution duly adopted, to issue from
11 time to time, in whole or in part, the classes or series of
12 shares authorized in the articles. The power to increase or
13 decrease or otherwise adjust the stated capital of a stock
14 insurance company, as in this act elsewhere provided, shall
15 apply to all or any such classes of shares authorized by this
16 section.
17 Section 3. Section 309 of the act is amended to read:
18 Section 309. Voting by Stockholders and Members; Proxies;
19 Record of Votes.--In the choice of directors or trustees, and at
20 all meetings of the company, each share of stock having voting
21 rights in a stock company, and each member in a mutual company,
22 shall be entitled to [one] vote: Provided, however, That, in the
23 case of mutual companies, other than mutual life companies, each
24 member shall be entitled to one vote or to a number of votes
25 based upon the insurance in force, the number of policies held,
26 or the amount of premiums paid; and in the case of mutual life
27 companies, each member shall be entitled to one vote. Proxies
28 may be authorized by written power of attorney. The record of
29 the votes made by the secretary, which shall show whether the
30 same were cast in person or by proxy, shall be evidence of all
19890S0843B0937 - 5 -
1 such elections.
2 Section 4. The act is amended by adding articles to read:
3 ARTICLE X-A.
4 DATA DISCLOSURE.
5 Section 1001-A. Reporting of Insurance Data.--By no later
6 than September 1, 1989, and each September 1 thereafter, each
7 insurer licensed to write property or casualty insurance in this
8 Commonwealth shall annually report its loss and expense
9 experience as provided in this act. However, an insurance
10 company whose market share, for a given line of insurance in the
11 most recent annual statement, is less than one per centum by
12 direct written premium volume, shall not be required to submit
13 the data listed in subsection (b)(1) through (12) for all types
14 of insurance included in that annual statement line, unless the
15 company is a member of a group of companies under the same
16 ownership or management, another member of which has a market
17 share of at least one per centum. Once exempted from reporting
18 by this section, a company shall not be required to submit data
19 unless and until it or another member of its group achieves a
20 market share of at least two per centum. Once required to report
21 by this section, a company shall not be exempted from submitting
22 data unless and until it and all other members of its group
23 achieve market shares of less than one per centum. The Insurance
24 Department may designate one or more rate-service organizations
25 to gather and compile such experience and data, provided that
26 the data are reported separately for each company. The
27 department shall require each insurer licensed to write property
28 or casualty insurance in this Commonwealth to provide the
29 required data in a data processing format prescribed by the
30 department.
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1 Section 1002-A. Commercial Insurance.--(a) The report
2 required for commercial insurance by section 1001-A shall
3 include, but not be limited to, the following specific types of
4 insurance (which shall be shown separately) written by each
5 insurer:
6 (1) Political subdivision liability insurance, reported
7 separately in the following categories:
8 (i) municipalities;
9 (ii) school districts or schools; and
10 (iii) authorities and other political subdivisions.
11 (2) Public official liability insurance.
12 (3) Dram shop liability insurance.
13 (4) Commercial day-care center liability insurance for
14 facilities licensed and regulated by the Department of Public
15 Welfare.
16 (5) Products liability insurance.
17 (6) Medical malpractice insurance.
18 (7) Attorneys malpractice insurance.
19 (8) Architects and engineers malpractice insurance.
20 (9) Officers and directors liability insurance.
21 (10) Commercial motor vehicle insurance reported separately
22 for voluntary and involuntary writings, for each of the
23 following coverages:
24 (i) bodily injury liability insurance;
25 (ii) property damage liability insurance;
26 (iii) first party benefits insurance;
27 (iv) uninsured and underinsured motorist coverage; and
28 (v) physical damage insurance (comprehensive insurance and
29 collision insurance combined).
30 The automobile insurance plan shall provide the data for the
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1 involuntary market; however, all insurance companies writing
2 commercial motor vehicle insurance shall report the data for the
3 voluntary market.
4 (b) The required report shall include the following data by
5 type of insurance, both specific to this Commonwealth and also
6 to the United States, except where otherwise noted. The data
7 shall be compiled for the previous calendar year, accident year,
8 or policy year, as determined by the Insurance Department,
9 ending on the thirty-first day of December, and evaluated as of
10 the thirty-first day of March of the following year:
11 (1) Direct written premiums at collected rate levels.
12 (2) Direct earned premiums at collected rate levels.
13 (3) Net investment income, excluding both realized and
14 unrealized capital gains and losses, using estimates where
15 necessary, broken down by line in accordance with the NAIC
16 insurance expense exhibit method.
17 (4) Net investment income, including realized capital gains
18 and losses (which shall be shown separately) but excluding
19 unrealized capital gains and losses, using estimates where
20 necessary, broken down by line in accordance with the NAIC
21 insurance expense exhibit method.
22 (5) Net investment income, including realized capital gains
23 and losses (which shall be shown separately) and including
24 unrealized capital gains and losses (which shall be shown
25 separately), using estimates where necessary, broken down by
26 line in accordance with the NAIC insurance expense exhibit
27 method.
28 (6) Incurred loss development for all available years
29 beginning with 1983, and determined as the sum of the following
30 developments, which shall be shown separately:
19890S0843B0937 - 8 -
1 (i) dollar amount of paid claims; plus
2 (ii) reserves for reported claims; plus
3 (iii) reserves for incurred but not reported claims; plus
4 (iv) paid allocated loss adjustment expenses; plus
5 (v) reserves for allocated loss adjustment expenses.
6 (7) Incurred claim count development for all available years
7 beginning with 1983, and determined as the sum of the following
8 developments, which shall be shown separately:
9 (i) number of claims closed with payment; plus
10 (ii) number of claims closed without payment; plus
11 (iii) number of claims pending.
12 (8) Incurred expenses, including commissions, other
13 acquisition costs, general expenses, unallocated loss adjustment
14 expenses, taxes, licenses and fees, all of which shall be shown
15 separately.
16 (9) Net underwriting gain or loss.
17 (10) Net operating gain or loss, including net realized
18 investment income but excluding unrealized investment income.
19 (11) The total number of incurred claims and corresponding
20 losses and loss distributions broken down into components of
21 economic loss, pain and suffering, and punitive damages.
22 (12) For all ceded reinsurance agreements with unrelated
23 insurers entered into with the current reporting year, except
24 those negotiated on an individual risk basis, the names and
25 addresses of reinsurance intermediaries and fronting companies
26 that provide reinsurance services and coverage. Information
27 shall include, but not be limited to, limits and types of
28 coverage provided, restrictions and loss retention. For
29 individual risk reinsurance agreements allocated to
30 Pennsylvania, the company shall identify the three leading
19890S0843B0937 - 9 -
1 intermediaries placing the reinsurance and the number of
2 individual risks that are reinsured on that basis per line of
3 business. The data shall be held confidential; however, a
4 summary statement of the cost and availability of reinsurance
5 shall be made part of the report requirement of section 1006-A.
6 (13) Any other information requested by the Insurance
7 Department.
8 (c) The Insurance Department shall promulgate rules and
9 regulations setting forth procedures governing the reporting
10 requirements of this article that shall include, but not be
11 limited to:
12 (1) provisions to guarantee confidentiality of the data with
13 regard to information relevant to individual claims; and
14 (2) standard and uniform definitions for information
15 required to be submitted to the department pursuant to this
16 article, that shall be consistent with generally accepted
17 actuarial principles.
18 Section 1003-A. Private Passenger Motor Vehicle Insurance.--
19 (a) The report required for private passenger motor vehicle
20 insurance by section 1001-A shall include, but not be limited
21 to, private passenger motor vehicle insurance reported
22 separately for voluntary and involuntary writings, for each of
23 the following coverages:
24 (1) bodily injury liability insurance;
25 (2) property damage liability insurance;
26 (3) first party benefits insurance;
27 (4) uninsured and underinsured motorist insurance;
28 (5) comprehensive insurance; and
29 (6) collision insurance.
30 The automobile insurance plan shall provide the data for the
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1 involuntary market; however, all insurance companies writing
2 private passenger motor vehicle insurance shall report the data
3 for the voluntary market.
4 (b) The required report shall include the following private
5 passenger motor vehicle data, both specific to this Commonwealth
6 and also to the United States, except where otherwise noted. The
7 data for the coverages in clauses (1) through (4) of subsection
8 (a) shall be compiled for the previous accident year ending on
9 the thirty-first day of December and evaluated as of the thirty-
10 first day of March of the following year, whereas the data for
11 the comprehensive and collision coverages shall be compiled for
12 the previous calendar year. Furthermore, all data required by
13 clauses (1), (2), (3), (4), (8) and (9) of this subsection shall
14 be broken down by Pennsylvania rating territories.
15 (1) Direct written premiums at collected and current rate
16 levels; however, the current rate level information is not
17 required on a countrywide basis.
18 (2) Direct earned premiums at collected and current rate
19 levels; however, the current rate level information is not
20 required on a countrywide basis.
21 (3) Written exposures.
22 (4) Earned exposures.
23 (5) Net investment income, excluding both realized and
24 unrealized capital gains and losses, using estimates where
25 necessary, broken down by line in accordance with the NAIC
26 insurance expense exhibit method.
27 (6) Net investment income, including realized capital gains
28 and losses (which shall be shown separately) but excluding
29 unrealized capital gains and losses, using estimates where
30 necessary, broken down by line in accordance with the NAIC
19890S0843B0937 - 11 -
1 insurance expense exhibit method.
2 (7) Net investment income, including realized capital gains
3 and losses (which shall be shown separately) and including
4 unrealized capital gains and losses (which shall be shown
5 separately), using estimates where necessary, broken down by
6 line in accordance with the NAIC insurance expense exhibit
7 method.
8 (8) Incurred loss development for all available years
9 beginning with 1983, and determined as the sum of the following
10 developments, which shall be shown separately:
11 (i) dollar amount of paid claims; plus
12 (ii) reserves for reported claims; plus
13 (iii) reserves for incurred but not reported claims; plus
14 (iv) paid allocated loss adjustment expenses; plus
15 (v) reserves for allocated loss adjustment expenses.
16 (9) Incurred claim count development for all available years
17 beginning with 1983, and determined as the sum of the following
18 developments, which shall be shown separately:
19 (i) number of claims closed with payment; plus
20 (ii) number of claims closed without payment; plus
21 (iii) number of claims pending.
22 (10) Incurred expenses, including commissions, other
23 acquisition costs, general expenses, unallocated loss adjustment
24 expenses, taxes, licenses and fees, all of which shall be shown
25 separately.
26 (11) Net underwriting gain or loss.
27 (12) Net operating gain or loss, including net realized
28 investment income but excluding unrealized investment income.
29 (13) The total number of incurred claims and corresponding
30 losses and loss distributions, broken down into components of
19890S0843B0937 - 12 -
1 economic loss, pain and suffering, and punitive damages.
2 (14) For all ceded reinsurance agreements with unrelated
3 insurers entered into with the current reporting year, except
4 those negotiated on an individual risk basis, the names and
5 addresses of reinsurance intermediaries and fronting companies
6 that provide reinsurance services and coverage. Information
7 shall include, but not be limited to, limits and types of
8 coverage provided, restrictions and loss retention. For
9 individual risk reinsurance agreements allocated to
10 Pennsylvania, the company shall identify the three leading
11 intermediaries placing the reinsurance and the number of
12 individual risks that are reinsured on that basis per line of
13 business. The data shall be held confidential; however, a
14 summary statement of the cost and availability of reinsurance
15 shall be made part of the report requirement of section 1005-A.
16 (15) Any other information requested by the Insurance
17 Department.
18 Section 1004-A. Rules and Regulations.--The Insurance
19 Department shall promulgate rules and regulations setting forth
20 procedures governing the reporting requirements of this article
21 that shall include, but not be limited to:
22 (1) provisions to guarantee confidentiality of the data with
23 regard to information relevant to individual claims; and
24 (2) standard and uniform definitions for information
25 required to be submitted to the department pursuant to this
26 article, that shall be consistent with generally accepted
27 actuarial principles.
28 Section 1005-A. Actuarial Impact Statement Regarding
29 Judicial Decisions.--Any insurance company or rating
30 organization, acting on behalf of more than one insurance
19890S0843B0937 - 13 -
1 company, may file an actuarial study detailing the impact of any
2 appellate judicial decision it believes will have a significant
3 impact on the price or availability of insurance.
4 Section 1006-A. Department Utilization.--The Insurance
5 Department shall utilize the reports submitted by insurers
6 pursuant to this article, or any portions of these reports, in
7 determining whether the rates or rating plans, or any subsequent
8 modifications thereof, for property or casualty insurance in
9 this Commonwealth, are excessive, inadequate or unfairly
10 discriminatory, or for any other purpose. The department shall
11 annually summarize the data compiled pursuant to this act, and
12 file a report and findings with the standing committees of the
13 General Assembly having jurisdiction over insurance affairs. The
14 department shall be authorized to audit, at its discretion, any
15 of the data submitted under this article.
16 Section 1007-A. Requirement for Doing Business.--Each
17 insurance company shall file all of the information required
18 under this article with the Insurance Department as a
19 prerequisite to obtaining permission to write coverage, to
20 continue to do business, or to file for rate adjustments.
21 Section 1008-A. Penalty.--Each insurer who fails to comply
22 with the terms of section 1001-A, 1002-A or 1003-A shall pay an
23 administrative penalty of ten thousand dollars ($10,000) and
24 thereafter a further administrative penalty of two hundred
25 dollars ($200) daily until all sections are complied with.
26 ARTICLE X-B.
27 REVIEW OF RATE FILINGS.
28 Section 1001-B. Filings.--(a) The Insurance Department is
29 authorized to audit, at its discretion, all data submitted in
30 support of rules, rates or rating plans.
19890S0843B0937 - 14 -
1 (b) Public notice shall be given of any public hearing or
2 other opportunities for any interested party or person to
3 present information on filings of rules, rates or rating plans.
4 (c) All filings of rules, rates and rating plans presented
5 to the department shall be part of the public record.
6 (d) The commissioner shall promulgate rules and regulations
7 establishing procedures for the review of rules, rates and
8 rating plans for property and casualty insurance, which shall
9 include, but not be limited to:
10 (1) Uniform definitions of actuarial terms used in filings
11 of rules, rates and rating plans.
12 (2) Standard formats and standard methodologies for the
13 submission or modification of rules, rates and rating plans. An
14 insurance company may provide additional information beyond the
15 standard data base established by the department.
16 ARTICLE X-C.
17 REQUESTS FOR DATA AND INFORMATION; COMPLIANCE.
18 Section 1001-C. Requests for Data and Information.--Any
19 person or entity licensed or otherwise authorized to engage in
20 the business of insurance in this Commonwealth shall comply with
21 calls for data and any other information that may be made by the
22 Insurance Department. Compliance with such calls, relating to
23 the conduct of the business of insurance, shall include the
24 following actions:
25 (1) The provision of all data or information requested
26 within thirty (30) calendar days of the date that the request is
27 first received unless a different time to respond is provided by
28 the department or granted as a result of a formal request by the
29 entity to which the request is made. Where data or information
30 is not readily available in the form or format in which it is
19890S0843B0937 - 15 -
1 requested, such data and information shall be generated,
2 organized and presented in the form or format requested by the
3 department, provided that upon written request the person or
4 licensee shall have an additional thirty (30) days to generate,
5 organize and present all data and information requested. The
6 commissioner may grant additional thirty (30) day extensions to
7 the time to respond to a request for data or information upon
8 request.
9 (2) The provision of copies of actual records or documents
10 requested, including, but not limited to, letters, guidelines,
11 lists, memoranda, directives, notices and any form of
12 communication which relates to data or information requested.
13 Section 1002-C. Penalties.--Any person or entity which fails
14 to comply with this article shall pay up to a maximum
15 administrative penalty of ten thousand dollars ($10,000) and be
16 subject to a further administrative penalty of two hundred
17 dollars ($200) daily until full compliance occurs.
18 ARTICLE X-D.
19 NOTICE OF INTENT TO WITHDRAW.
20 Section 1001-D. Notice Required.--(a) Whenever an insurer
21 licensed to write property and casualty insurance as described
22 in section 1001-A decides to withdraw from any line, subline or
23 classification of business, the insurance company shall file
24 with the Insurance Department a notice detailing the intent to
25 withdraw. The notice shall include, but not be limited to, the
26 reasons for withdrawal, the number of policyholders affected,
27 the effective date of the withdrawal, if the withdrawal is
28 Statewide or national, and a listing of potential sources for
29 replacement coverage for insureds. This notice of withdrawal by
30 insurers shall be filed at least sixty days prior to the
19890S0843B0937 - 16 -
1 effective date of the withdrawal.
2 (b) The Insurance Department shall use this information to
3 assist in determining market conditions.
4 (c) The department shall not permit any insurer licensed to
5 write property and casualty insurance to withdraw from any line
6 or classification of business without complying with the
7 provisions of this article.
8 ARTICLE X-E.
9 PENNSYLVANIA LIABILITY UNDERWRITING SERVICES PLAN.
10 Section 1001-E. Definitions.--The following words and
11 phrases when used in this article shall have the meanings given
12 to them in this section, unless the context clearly indicates
13 otherwise:
14 (1) "Board," means the board of directors of the plan.
15 (2) "Commercial liability insurance," means insurance
16 coverage against the legal liability of the insured against
17 loss, damage or expense incident to a claim arising out of the
18 death or injury of any person or property damage as the result
19 of or incident to the lawful conduct of a business enterprise or
20 public purpose. The term includes such insurance coverage of
21 governmental entities, including political subdivisions as
22 specified in section 1002-A(1)(i), (ii) and (iii).
23 (3) "Commissioner," means the Insurance Commissioner of the
24 Commonwealth.
25 (4) "Department," means the Insurance Department of the
26 Commonwealth.
27 (5) "Plan," means the Pennsylvania Liability Underwriting
28 Services Plan.
29 (6) "Surplus lines agent," means an individual, partnership
30 or corporation that is duly licensed as such by the commissioner
19890S0843B0937 - 17 -
1 to effect placement of insurance coverage with an unlicensed
2 insurer, and who may receive a commission therefor.
3 Section 1002-E. Creation of Plan.--The Pennsylvania
4 Liability Underwriting Services Plan is created as a legal
5 entity with all the rights which are reasonable and necessary to
6 fulfill its purpose, including, but not limited to, the
7 following:
8 (1) To own property.
9 (2) To enter into contracts.
10 (3) To sue and be sued, provided that no judgment against
11 the Plan shall create any liability in the individual members.
12 Section 1003-E. Purpose.--The Plan shall assist in the
13 placement of commercial liability insurance for eligible
14 Pennsylvania commercial risks and public entities that have
15 tried and failed to find such coverage.
16 Section 1004-E. Membership.--Every commercial liability
17 insurer admitted to do business in this Commonwealth shall, as a
18 condition of its authority to write such kinds of insurance
19 within this Commonwealth, be a member of the Plan and have the
20 rights and obligations as hereinafter described. The
21 commissioner may require that the surplus lines insurance
22 companies participate in the Plan.
23 Section 1005-E. Participation.--Each member of the Plan
24 shall participate in funding the administrative costs of the
25 plan, to the extent that application fees do not defray those
26 costs, and in the review of applications for insurance. Each
27 member's share of participation obligations shall be equitable
28 and set forth in the plan of operation. However, members of the
29 Plan shall not be required to review application of eligible
30 commercial risks or public entities where the member has not
19890S0843B0937 - 18 -
1 underwritten such coverage for two consecutive years preceding
2 the effective date of this section.
3 Section 1006-E. Board of Directors.--The Plan shall be
4 governed by nine directors and the Insurance Commissioner, who
5 shall serve as a non-voting ex officio chairman. The nine
6 directors shall be appointed to the board as voting members, by
7 the commissioner, each to serve a term of two years. Five
8 members shall be representatives of insurance companies, two
9 members shall be licensed insurance agents or brokers and two
10 members shall be consumers of commercial insurance. Members
11 shall serve as representatives of their employers, who may have
12 the right to substitute individuals with the prior approval of
13 the commissioner.
14 Section 1007-E. Voting Rights.--Whenever so designated by
15 the board pursuant to its plan of operation, each commercial
16 liability insurer shall be allotted votes in proportion to its
17 share of the Statewide total written premium during the prior
18 year relating to general liability coverage, plus the liability
19 portion, as determined by the commissioner, of commercial multi-
20 peril coverage.
21 Section 1008-E. Organization.--(a) Within sixty (60) days
22 following the issuance of an order by the commissioner to
23 establish a plan the board shall submit to the commissioner, for
24 his review, a proposed plan of operation of the Plan, consistent
25 with the provisions of this act, which shall provide for the
26 formation of the Plan and the economical and efficient
27 administration of the Plan, including, but not limited to,
28 management of the Plan, preliminary assessment of all members
29 for initial expenses necessary to commence operations,
30 establishment of necessary facilities within this Commonwealth,
19890S0843B0937 - 19 -
1 assessment of members to defray continuing expenses, limits of
2 liability, eligibility requirements, procedures for securing
3 timely referrals and quotes on insurance applications and
4 governance of the Plan.
5 (b) The plan of operation shall be subject to approval by
6 the commissioner and shall take effect ten (10) days after
7 having been approved by him. If the commissioner disapproves the
8 proposed plan of operation, the commissioner shall specify his
9 objections and how the plan of operation may be made acceptable.
10 Following the receipt of objections from the commissioner, the
11 Plan shall, within fifteen (15) days, submit for review an
12 appropriately revised plan of operation, and, if the Plan fails
13 to do so or if the revised Plan so filed is unacceptable, the
14 commissioner shall promulgate a plan of operation.
15 (c) The Plan may, by its own initiative, subject to prior
16 approval by the commissioner, amend the plan of operation.
17 Section 1009-E. Application Fees.--Subject to approval by
18 the commissioner, the Plan shall require applications to be
19 accompanied by reasonable application fees, which may vary for
20 different classes of applicants. Initially, application fees
21 should not exceed one hundred dollars ($100) nor be less than
22 ten dollars ($10) for any class of insured and shall be reviewed
23 annually by the commissioner. The application fee is non-
24 refundable if the applicant is determined to be eligible for
25 coverage, regardless of whether coverage is found for the
26 applicant through the Plan.
27 Section 1010-E. Eligibility.--All applications for
28 commercial liability coverage may be eligible for consideration
29 by the Plan if they are accompanied by the application fee
30 appropriate to that class of risk, three refusals of coverage
19890S0843B0937 - 20 -
1 from admitted Pennsylvania commercial lines writers and one
2 refusal of coverage from a licensed surplus lines agent, and a
3 completed questionnaire as shall be supplied to the applicant by
4 the Plan and approved by the commissioner, except for
5 applications relating to:
6 (1) Insurance on motor vehicles.
7 (2) Insurance for pollution or environmental impairment.
8 (3) Insurance for workers' compensation and employers'
9 liability.
10 (4) Insurance for medical malpractice professional
11 liability.
12 (5) Insurance on activities conducted substantially outside
13 this Commonwealth unless the insurance is required by
14 Pennsylvania or Federal statute.
15 (6) Other risks as may be excluded by the Plan and approved
16 by the commissioner.
17 Section 1011-E. Immunity.--There shall be no liability or
18 cause of action against any member of the Plan or its agents or
19 employes, the Plan or its agents or employes, members of the
20 board of directors or the department or its representatives for
21 any action taken by or statement made by them in the performance
22 of their powers and duties under this article.
23 Section 1012-E. Funds.--All fees, assessments and other
24 moneys received by the Plan shall be deposited into a restricted
25 revenue account within the General Fund and are hereby
26 appropriated to the board for the purposes set forth in this
27 article.
28 Section 5. This act shall take effect in 60 days.
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