PROPOSED RULEMAKING
INSURANCE DEPARTMENT
[31 PA. CODE CH. 131]
Deductible Program
[27 Pa.B. 1941] The Insurance Department (Department) proposes to delete Chapter 131 (relating to deductible program) to read as set forth in Annex A, under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412). Chapter 131 was previously promulgated under section 13(d) of the Casualty and Surety Rate Regulatory Act (40 P. S. § 1193) and section 13(d) of the Fire, Marine and Inland Marine Rate Regulatory Act (40 P. S. § 1233(d)) (acts).
Purpose
The purpose of this rulemaking is to delete Chapter 131 to eliminate redundant and obsolete regulations. The regulations, adopted in 1973, imposed several requirements on insurance companies licensed to do business in this Commonwealth with respect to deductibles used for property or casualty policies. The regulations authorized insurance companies to offer previously prohibited small deductible or full coverage programs, overruling an Insurance Commissioner order issued in 1971. The regulations instructed insurance companies offering the expanded deductible choices to consumers to first file their revised rates with the Department. Finally, the regulations announced that a company would be in violation of The Insurance Unfair Practices Act (40 P. S. §§ 1151--1162) (Repealed) if it implemented lowered deductibles without the insured's consent, or otherwise failed to fully disclose and explain the available options to consumers.
The Department has determined that the regulations are redundant and unnecessary. The provisions of the regulations are sufficiently within the acts, and the regulations in no manner enhance the authorizing statutes. Additionally, the Department, through its market conduct activities, monitors insurers to ensure compliance with statutory requirements for filing and approval of rates and forms. Therefore, the Department recommends deletion of Chapter 131 in its entirety.
Comments regarding the deletion of these regulations were solicited from various trade associations representing the insurance industry. Comments were received from the Insurance Federation of Pennsylvania, Inc. The Insurance Federation agrees with the Department that this chapter should be deleted.
Fiscal Impact
There will be no fiscal impact as a result of the deletion of these regulations.
Paperwork
There will be no impact on paperwork as a result of the deletion of these regulations.
Affected Parties
The deletion of these sections will affect licensed property and casualty insurers in this Commonwealth.
Effectiveness/Sunset Date
The rulemaking will become effective upon final publication in the Pennsylvania Bulletin. Because the rulemaking proposes to delete obsolete regulations, no sunset date has been assigned.
Contact Person
For information on this matter, contact Randy Rohrbaugh, Director, Bureau of Property and Casualty, Insurance Department, 1311 Strawberry Square, Harrisburg, PA 17120, (717) 787-4192.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Department submitted a copy of this proposal on March 28, 1997, to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to the submitted proposal, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' 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 Department within 30 days of the close of the public comment period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the final-form regulations, by the Department, the General Assembly and the Governor of objections raised.
LINDA S. KAISER,
Insurance CommissionerFiscal Note: 11-143. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART VIII. MISCELLANEOUS PROVISIONS
CHAPTER 131. [DEDUCTIBLE PROGRAM] (Reserved) § 131.1. [Optional deductible programs] (Reserved).
[(a) Insurance companies may offer optional lower deductibles or full coverage programs which had previously been prohibited by the order of the Commissioner dated August 14, 1971 (1 Pa.B. 1650) and subsequent related notices.
(b) The optional coverages may be made available as soon as properly filed with and approved by the Department.]
§ 131.2. [Mandatory deductible programs] (Reserved).
[(a) Deductibles which were mandatory before the August 14, 1971 order, such as the $50 all perils deductible on homeowners policies, shall remain mandatory requirements.
(b) Mandatory deductibles required by the August 14, 1971 order and subsequent related notices shall remain fully available as options to the insured.]
§ 131.3. [Rates] (Reserved).
[(a) Insurance companies wishing to offer optional lower deductibles or full coverage may file for reinstatement of the same rates suspended by the August 14, 1971 order of the Commissioner.
(b) Those insurance companies which have received rate reductions on deductible coverage since January 1, 1972, and who now wish to reoffer the lower optional deductibles or full coverage programs, may file proportionately reduced rates when reinstating the programs.]
§ 131.4. [Filing requirements] (Reserved).
[(a) In a filing incorporating optional lower deductibles or full coverage, the insurer shall state the method whereby the coverage will be offered.
(b) A filing shall include the applicable marketing, solicitation and underwriting procedures that will be incorporated in making the optional coverages known and available to the public.
(c) The filing shall clearly specify that the following minimal requirements will be met in the sale of lower deductibles or full coverage:
(1) Prior to completion of the sale, there will be a clear and full disclosure and explanation to the consumer of all and each of the deductibles available.
(2) The disclosure and explanation of all and each of the deductibles available to the insured will be made regardless of whether the solicitation is by broker, agent, mail or otherwise.]
§ 131.5. [Violations] (Reserved).
[Companies found to be rolling on lower deductibles or full coverage, or otherwise failing to fully and clearly disclose and explain available options to the consumer shall be deemed to have violated the terms and basis for the reimplementation of the optional lower deductible or full coverage program, as well as being in violation of The Insurance Unfair Practices Act (40 P. S. §§ 1151--1162).]
§ 131.6. [Previous restrictions] (Reserved).
[This chapter relieves previous restrictions relating to the availability of certain kinds of insurance coverage by making the coverages available at the option of the insured.]
§ 131.7. [Participation in program] (Reserved).
[An insurer or insured is not required to participate in an optional program.]
[Pa.B. Doc. No. 97-593. Filed for public inspection April 18, 1997, 9:00 a.m.]
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