RULES AND REGULATIONS
Title 31--INSURANCE
INSURANCE DEPARTMENT
[31 PA. CODE CH. 67b]
Assigned Risk Plan--Mandatory Offer to Write Nonsurcharged Private Passenger Nonfleet Risk
[31 Pa.B. 5079] The Insurance Department (Department) hereby adds Chapter 67b (relating to mandatory offer to write nonsurcharged private passenger nonfleet risks) to read as set forth in Annex A.
Statutory Authority
These final-omitted regulations are adopted under 75 Pa.C.S. § 1741 (relating to establishment) and sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412).
Purpose
Chapter 67b is being promulgated to establish the terms and conditions under which the Pennsylvania Assigned Risk Plan (Plan) must give notice to insureds in the Plan that they are eligible for a mandatory offer of coverage in the voluntary market from their assigned carrier. Formerly, this notice was offered under Assigned Risk Plan Rule 12 of the current Assigned Risk Plan Manual, Rule 14A in previous Assigned Risk Plan Manuals, otherwise known as the take-out rule. The take-out rule has been in effect for over 20 years. On May 22, 2001, the Commonwealth Court held in Professional Insurance Agents Association, et al. v. Koken, docket number 714 M.D. 1999, that the take-out rule was invalid without authorizing regulations by the Department. The purpose of these final-omitted regulations is to promulgate the take-out rule as a regulation in compliance with the order of the Commonwealth Court.
Notice of proposed rulemaking is omitted under section 204(3) of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1204(3)), known as the Commonwealth Documents Law (CDL), which provides that notice of proposed rulemaking may be omitted when the agency, for good cause, finds that the notice procedures found in sections 201 and 202 of the CDL (45 P. S. §§ 1201 and 1202) are impracticable, unnecessary or contrary to the public interest. The Department believes that the notice procedures are impracticable and contrary to the public interest because the Commonwealth Court's order places the status of take-out in this Commonwealth into doubt. Consumers who would otherwise have been eligible to exit the Plan under the take-out rule will no longer receive notice of their options to leave the Plan and assigned carriers will no longer be required to offer those consumers guaranteed voluntary market coverage. The Department believes that immediate emergency action is necessary to safeguard the interests of consumers eligible to exit the Plan under the take-out rule.
Affected Parties
The final-omitted regulations apply to the Plan and to all insurance companies who write motor vehicle insurance in this Commonwealth.
Fiscal Impact
State Government
There will be no increase in cost to the Department due to the adoption of Chapter 67b.
General Public
There will be no fiscal impact to the public.
Political Subdivisions
The final-omitted regulations will not impose additional costs on political subdivisions.
Private Sector
The final-omitted regulations will not impose additional costs on insurance companies doing the business of motor vehicle insurance in this Commonwealth.
Paperwork
The adoption of the final-omitted regulation will not impose additional paperwork on the Department or the insurance industry.
Effectiveness/Sunset Date
This final-omitted regulations become effective upon publication in the Pennsylvania Bulletin. No sunset date has been assigned.
Contact Person
Any questions regarding these final-omitted regulations should be directed to Peter J. Salvatore, Regulatory Coordinator, Special Projects Office, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429. In addition, questions may be e-mailed to psalvatore@state.pa.us or faxed to (717) 772-1969.
Regulatory Review
Under section 5.1(c) of the Regulatory Review Act (71 P. S. § 745.5a(c)), on July 18, 2001, the Department submitted a copy of the final-omitted regulations to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Insurance and the Senate Committee on Banking and Insurance. On the same date, the final-omitted regulations were submitted to the Office of Attorney General for review and approval under the Commonwealth Attorneys Act (71 P. S. §§ 732-101--732-506).
Under section 5.1(d) of the Regulatory Review Act, on August 7, 2001, the final-omitted regulations were deemed approved by the Senate and House Committees. Under section 5.1(e) of the Regulatory Review Act, on August 9, 2001, IRRC met and approved the final-omitted regulation.
Findings
The Commissioner finds that:
(1) There is good cause to forego public notice of the intention to add Chapter 67b because the invalidation of the take-out rule by the Commonwealth Court's order in Professional Insurance Agents Association, et al. v. Koken, docket number 714 M.D. 1999, has placed the status of take-out into doubt, depriving consumers who would otherwise be eligible to exit the Plan of notice of their options and reducing those options by no longer requiring that consumers be offered voluntary market coverage by their assigned carriers. The Department believes that immediate emergency action is necessary to safeguard the interests of consumers eligible to exit the Plan under the take-out rule.
(2) The adoption of these final-omitted regulations in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statutes.
Order
The Commissioner, acting under the authorizing statutes, orders that:
(1) The regulations of the Department, 31 Pa. Code, are amended by adding §§ 67b.1--67b.7, to read as set forth in Annex A.
(2) The Commissioner shall submit this order and Annex A to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.
(3) The Commissioner shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(4) The final-omitted regulations adopted by this order shall take effect upon final publication in the Pennsylvania Bulletin.
M. DIANE KOKEN,
Insurance CommissionerFiscal Note: 11-207. No fiscal impact; (8) recommends adoption.
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 31 Pa.B. 4705 (August 25, 2001).)
Annex A
TITLE 31. INSURANCE
PART II. AUTOMOBILE INSURANCE
CHAPTER 67b. MANDATORY OFFER TO WRITE NONSURCHARGED PRIVATE PASSENGER NONFLEET RISKS Sec.
67b.1. Definitions. 67b.2. Eligibility. 67b.3. Take-out notice. 67b.4. Notification. 67b.5. Company obligations. 67b.6. Right of insured to reapply to Plan. 67b.7. Failure to comply. § 67b.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Assigned Risk Plan--As defined in section 7 of the Motor Vehicle Financial Responsibility Law (75 Pa.C.S. § 1702).
Commissioner--The Insurance Commissioner of the Commonwealth.
Department--The Insurance Department of the Commonwealth.
Governing committee--The governing body that administers the Plan.
Nonfleet--Four or fewer motor vehicles of any type.
Plan--Assigned Risk Plan.
Producer--An agent or broker, certified or licensed, by the Department to conduct business and certified by the Plan.
Producer of record--The agent or broker, certified or licensed, by the Department to conduct business, certified by the Plan and whose signature appears on the application for insurance.
Risk--Refers to private passenger nonfleet vehicles.
Take-out--An offer from the assigned company to write voluntary market coverage for a private passenger nonfleet automobile risk insured by the Plan.
Take-out notice--A notice from the assigned company offering voluntary market coverage to a private passenger nonfleet automobile risk insured by the Plan.
§ 67b.2. Eligibility.
A private passenger nonfleet automobile risk is eligible for take-out if during the 3 successive years prior to the expiration of the policy, the named insured and any other person who usually operates the automobile meet the following requirements:
(1) Have been licensed to operate an automobile for at least 2 years.
(2) Have not been involved in accidents or convictions for which points are required to be assessed in accordance with the rules of the Plan.
§ 67b.3. Take-out notice.
(a) The assigned company shall mail a take-out notice to all eligible private passenger nonfleet automobile risks.
(b) The take-out notice must offer to write the same coverages afforded by the Plan policy the assigned company is offering to replace for 1 year.
(c) An insured accepting take-out from the assigned company is not required to select the kinds and amounts of coverage specified in the take-out notice, but may select other kinds and amounts. However, the kinds and amounts of coverage selected by the insured shall be sufficient to maintain financial responsibility under 75 Pa.C.S. § 1702 (relating to definitions).
(d) The take-out notice shall inform the insured that acceptance of take-out is not mandatory, and that the insured may shop for coverage in the voluntary market or remain in the Plan under § 67b.6 (relating to right of insured to reapply to Plan).
§ 67b.4. Notification.
The assigned company shall mail a take-out notice to each insured eligible for take-out and the producer of record at least 45 days, but no more than 60 days, prior to the expiration of the Plan policy to be replaced. The take-out notice shall contain a provisional premium quotation for the voluntary market coverage being offered. If the assigned company complies with this section and the insured accepts take-out, the Plan shall give credit to the assigned company, at the expiration date of the Plan policy, for writing a voluntary market policy for risk previously insured by the Plan.
§ 67b.5. Company obligations.
(a) If the insured does not accept take-out and obtains replacement coverage in the voluntary market from another company, the assigned company shall have no further obligation to the insured or the producer of record, except that the assigned company shall issue a notice of termination of the Plan policy which is required by the rules of the Plan.
(b) If the insured accepts take-out, the assigned company shall be required to issue voluntary market coverage for 1 year.
(c) Thereafter, the company issuing the policy shall be obligated to renew coverage from year to year, unless the company is permitted to nonrenew the coverage under the act of June 17, 1998 (P. L. 484, No. 68) (40 P. S. §§ 991.2001--991.2013).
§ 67b.6. Right of insured to reapply to Plan.
This chapter will not render the insured ineligible for coverage in the Plan. The insured may, at the insured's option, continue the insured's policy with the assigned company as a Plan risk or, if the 3-year assignment period has expired, the insured may reapply to the Plan for assignment to another company.
§ 67b.7. Failure to comply.
If the governing committee finds that a company, without good cause, is not complying with this chapter, it shall notify the Commissioner.
[Pa.B. Doc. No. 01-1638. Filed for public inspection September 7, 2001, 9:00 a.m.]
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