PROPOSED RULEMAKING
INSURANCE DEPARTMENT
[31 PA. CODE CH. 135]
Qualifications of Persons Signing Annual Financial Statements
[27 Pa.B. 2824] The Insurance Department (Department) proposes to amend Part VIII (relating to miscellaneous provisions) by deleting §§ 135.1 and 135.2 to read as set forth in Annex A. The deletion is being published as a proposed rulemaking to allow the opportunity for public comment. The repeal is proposed under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412); section 301(g) of The Insurance Department Act of 1921 (40 P. S. § 71(g)); and section 320 of The Insurance Company Law of 1921 (act) (40 P. S. § 443). The regulations relate to the qualifications of persons signing annual financial statements for foreign and domestic life, accident and health insurance companies, associations, exchanges, fraternal benefit societies and beneficial societies.
Purpose
The purpose of this rulemaking is to eliminate obsolete, unnecessary regulations. The regulations adopted were effective January 1, 1971, under the authority of section 320 of the act; section 28 of the act of July 17, 1935 (P. L. 1092, No. 357) (40 P. S. § 1078) (now repealed) relating to fraternal benefit societies; and section 7 of the act of June 4, 1937 (P. L. 1643, No. 342) (40 P. S. § 1107) (now repealed) relating to beneficial societies.
The regulations prescribe the qualifications required of an actuary who signs the annual financial statement filed with the Department by life, accident and health insurance companies, associations, exchanges, fraternal benefit societies and beneficial societies. The regulations require the signing actuary to (1) be a member of the American Academy of Actuaries; or (2) have the educational background necessary for the practice of actuarial science with not less than 7 years of actuarial experience.
The requirements in the regulations are no longer used by the Department and duplicate existing statutory and regulatory authority. The Insurance Department Act of 1921 was amended in 1994 adding section 301(g) requiring a submission of an actuarial opinion of reserves for annual statements, beginning with the year 1993.
The current qualification requirements for actuaries signing annual statements with respect to life insurers and fraternal benefit societies (including accident and health insurance written by those insurers) are found in § 84b.5(b) (relating to general requirements) adopted December 10, 1994, under the authority of section 301(f) of The Insurance Department Act of 1921.
The current actuarial qualification requirements for financial statements filed by property and casualty insurers (including accident and health insurance written by property and casualty insurers) are contained in the instructions for completing annual financial statements. Section 320(a)(2) of the act requires insurers to adhere to the annual statement instruction adopted by the National Association of Insurance Commissioners (NAIC), in the absence of a contrary statute, regulation or order of the Insurance Commissioner. For uniformity, the Commonwealth has historically relied upon NAIC instructions and has not adopted any laws, regulations or orders governing this topic.
Both the annual statement instructions (governing property and casualty insurers) and § 84b.5(b) sufficiently address the credentials that an actuary must have to sign a financial statement. Chapter 135 (relating to qualifications of persons signing annual financial statements) in no manner enhances the authorizing statutes and regulations. Therefore, the regulations are outdated and redundant, and have been superseded by more recent regulations and requirements.
Affected Parties
The deletion of the regulations is expected to have a minimal effect on life insurers and fraternal benefit societies because the regulations are outdated and have been superseded by statutory amendment and subsequently adopted regulations.
Fiscal Impact
The deletion of the regulations has no fiscal impact because of the redundant nature of the regulations in relation to section 301(g) of The Insurance Department Act of 1921, Chapter 84b (relating to actuarial opinion and memorandum) and section 320 of the act. The regulatory provisions remain in effect under the statutes and regulations.
Paperwork
The deletion of the regulations would impose no additional paperwork requirements on the Department, life insurers or fraternal benefit societies.
Effectiveness/Sunset Date
The rulemaking will become effective upon final publication in the Pennsylvania Bulletin. Because the rulemaking proposes to delete obsolete, redundant regulations, no sunset date has been assigned.
Contact Person
Questions or comments regarding the proposed rulemaking may be addressed in writing to Elaine Leitzel, Administrative Officer, Office of Regulation of Companies, 1345 Strawberry Square, Harrisburg, PA 17120, (717) 787-8840, within 30 days after its publication in the Pennsylvania Bulletin.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 3, 1997, the Department submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to submitting this proposal, the Department has provided IRRC and the House and Senate Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1. A copy of the material is available to the public upon request.
If IRRC has objections to any portion of the proposal, it will notify the agency within 30 days of the close of the public comment period. The notification shall specify the regulatory review criteria that have not been met by that portion. The Regulatory Review Act specifies detailed procedures for the Department, the Governor and the General Assembly to review these objections before final publication.
LINDA S. KAISER,
Insurance CommissionerFiscal Note: 11-159. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART VIII. MISCELLANEOUS PROVISIONS
CHAPTER 135. [QUALIFICATIONS OF PERSONS SIGNING ANNUAL FINANCIAL STATEMENTS] (Reserved) § 135.1 [Purpose] (Reserved).
[This chapter is to assure compliance with the requirement that an actuary or a consulting actuary signing the annual financial statement of an insurer is experienced and qualified to perform his duties in a fully competent and professional manner and in the public interest, and to establish, promote and maintain high standards of conduct and competence within the actuarial profession in the interests of policyholders and the insuring public in general.]
§ 135.2 [Qualified actuaries] (Reserved).
[Annual financial statements of foreign and domestic life and accident and health insurance companies, associations, exchanges, fraternal benefit societies and beneficial societies and any other related documents, statements or reports filed with the Insurance Department which require the signature of an actuary or consulting actuary shall be signed by a qualified actuary. For the purpose of this chapter, a qualified actuary is either of the following:
(1) A member of the American Academy of Actuaries.
(2) An individual who has demonstrated to the satisfaction of the Insurance Department that he has the educational background necessary for the practice of actuarial science and that he has not less than 7 years' actuarial experience.]
[Pa.B. Doc. No. 97-934. Filed for public inspection June 13, 1997, 9:00 a.m.]
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