PROPOSED RULEMAKING
INSURANCE DEPARTMENT
[31 PA. CODE CHS. 1, 5, 7 AND 9]
Uniform Classification of Expenses
[27 Pa.B. 3231] The Insurance Department (Department) proposes to amend Part I, Subpart A (relating to uniform classification of expenses) by deleting the following chapters: Chapters 1, 5, 7 and 9 (relating to operating expense classifications; composition of and allocation to expense groups; allocation to lines of business; and special instructions for the allocation of salaries and other expenses). The proposed amendments are set forth in Annex A. This rulemaking is published as a proposed rulemaking under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412); the act of May 9, 1949 (P. L. 1025, No. 298) (act) (40 P. S. §§ 1261--1264); and section 320 of The Insurance Company Law of 1921 (40 P. S. § 443). The regulations apply to property and casualty insurers, the State Workmen's Insurance Fund and title insurers. The regulations prescribe accounting rules for allocating and classifying certain types of expenses in financial statements.
Purpose
The purpose of this rulemaking is to delete Chapters 1, 5, 7 and 9 to eliminate obsolete, unnecessary regulations. The regulations were initially adopted October 21, 1949, and last amended July 7, 1970, under the authority of the act. Specifically, sections 1 and 2 of the act (40 P. S. §§ 1261 and 1262) require property and casualty insurers, the State Workmen's Insurance Fund and title insurers to maintain uniform classifications of accounts and records as may be prescribed by the Insurance Commissioner and, in addition, to file reports in a form determined by the Insurance Commissioner. The regulations were adopted to prescribe uniform accounting rules for the classification of specific expenses.
Section 320(a) of The Insurance Company Law of 1921 requires insurers to file annual financial statements and, as amended by the act of December 18, 1992 (P. L. 792, No. 176) states, in pertinent part:
(a)(1) Every stock and mutual insurance company, association, and exchange, doing business in this Commonwealth, shall annually, on or before the first day of March, file in the office of the Insurance Commissioner and with the National Association of Insurance Commissioners a statement which shall exhibit its financial condition on the thirty-first day of December of the previous year . . . The Insurance Commissioner shall require each insurance company, association and exchange to report its financial condition on the statement convention blanks, in such form as adopted by the National Association of Insurance Commissioners . . . and may make such changes, from time to time, in the form of the same as shall seem best adapted to elicit from them a true exhibit of their financial condition.(2) Unless otherwise provided by law, regulation or order of the Insurance Commissioner, each insurance company, association and exchange shall adhere to the annual or quarterly statement instructions and the accounting practices and procedures manuals prescribed by the National Association of Insurance Commissioners . . .Under the authority of the act and section 320 of The Insurance Company Law of 1921, the Insurance Commissioner has determined that the form, instructions and manuals prescribed by the National Association of Insurance Commissioners (NAIC) sufficiently address the classification of the types of expenses covered in the regulations. Therefore, the Commissioner currently requires the insurers subject to the regulations, including the State Workmen's Insurance Fund, to adhere to the NAIC form, instructions and manuals for the classification and reporting of those expenses. The regulations in no manner enhance the NAIC instructions and manuals. Therefore, the regulations are outdated and redundant and are no longer needed.
Affected Parties
The deletion of the regulations affects property and casualty insurers, the State Workmen's Insurance Fund and title insurers.
Fiscal Impact
The current cost of the NAIC manual that includes the rules for classifying expenses is $100. Because the affected insurers are currently required to adhere to the NAIC instructions and manuals, the deletion of the regulations should have minimal fiscal impact.
Paperwork
The deletion of the regulations would impose no additional paperwork requirements on the Department or insurers.
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 Stephen Johnson, Director, Bureau of Examinations, 1345 Strawberry Square, Harrisburg, PA 17120, (717) 783-2142, within 30 days of 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 the rulemaking, 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. A copy of the material is available to the public upon request.
If IRRC has objections to any portion of the proposed rulemaking, it will notify the Department 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 of the rulemaking.
GREGORY S. MARTINO,
Acting Insurance CommissionerFiscal Note: 11-152. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART I. GENERAL PROVISIONS
Subpart A. UNIFORM CLASSIFICATION OF EXPENSES
CHAPTER 1. (Reserved) (Editor's Note: As part of this proposal, the Department is proposing to rescind §§ 1.1--1.4, 1.11--1.14, 1.21--1.26, 1.31--1.34, 1.41, 1.42 and 1.51--1.67 which appear at 31 Pa. Code pages 1-7--1-30, serial numbers (223455), (223456) and (203327)--(203350).)
CHAPTER 5. (Reserved) (Editor's Note: As part of this proposal, the Department is proposing to rescind §§ 5.1--5.5, 5.11--5.15, 5.21, 5.22 and 5.31--5.37 which appear at 31 Pa. Code pages 5-1--5-8, serial numbers (203353)--(203360).)
CHAPTER 7. (Reserved) (Editor's Note: As part of this proposal, the Department is proposing to rescind §§ 7.1--7.4, 7.11 and 7.12 which appear at 31 Pa. Code pages 7-1--7-5, serial numbers (203361)--203365).)
CHAPTER 9. (Reserved) (Editor's Note: As part of this proposal, the Department is proposing to rescind §§ 9.1, 9.2, 9.11--9.20, 9.31, 9.32 and 9.41--9.48 which appear at 31 Pa. Code pages 9-1--9-16, serial pages (203367)--(203382).)
[Pa.B. Doc. No. 97-1080. Filed for public inspection July 3, 1997, 9:00 a.m.]
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