RULES AND REGULATIONS
[31 PA. CODE CH. 103]
Uniform Bylaws for Mutual Fire Companies
[28 Pa.B. 3755] The Insurance Department (Department) hereby deletes Chapter 103 (relating to uniform bylaws for mutual fire companies) 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); and section 506 of The Insurance Company Law of 1921 (40 P. S. § 636). The regulation recommends that domestic assessment mutual fire insurance companies adopt uniform bylaws in the form attached to § 103.1 as Exhibit A. The regulation also encourages domestic assessment mutual fire insurance companies to use Pennsylvania's standard fire insurance policy.
Purpose
The purpose of the deletion of Chapter 103 is to eliminate obsolete, unnecessary, burdensome regulations. The regulations were adopted on May 26, 1936, under Article V of The Insurance Company Law of 1921 (40 P. S. §§ 631--702), which governs stock and mutual fire insurance companies. The regulations recommended, but did not mandate, the standardization of bylaws for one small subset of insurers--domestic mutual fire insurance companies that offer policies on an assessable basis. There is no public policy reason for standardizing the bylaws used by this type of insurer, when uniform bylaws are not imposed upon other types of fire insurance companies.
Further, the Commonwealth adopted a comprehensive corporations code at 15 Pa.C.S. (relating to Associations code) (code) in 1988; all other types of insurers may adopt bylaws consistent with that code. Domestic mutual fire insurance companies should have the same flexibility to adopt bylaws as is available to other companies against whom they compete. In addition, Exhibit A does not completely list all provisions that a domestic mutual fire insurance company should include in its bylaws, consistent with the code. Thus, the regulation is outdated as well as incomplete.
This regulation is also unnecessary because sufficient regulatory provisions exist for reviewing bylaws under current statutes, rendering this regulation superfluous. After the deletion of this regulation, the Department will continue to have the statutory authority to review a fire insurer's bylaws at the time of its admission, during a financial examination of the company and at any other time at the request of the Insurance Commissioner. See sections 1504(b) and 3121 of the code (relating to adoption, amendment and contents of bylaws; and bylaws); sections 903(a) and 904(b) of the Insurance Department Act of 1921 (40 P. S. §§ 323.3(a) and 323.4(b)); and section 320(a)(1) of the Insurance Company Law of 1921 (40 P. S. § 443(a)(1)). In addition, because the bylaws' provisions are encompassed within assessable policies, a mutual fire insurance company must submit its bylaws when it seeks review and approval of an assessable insurance policy. See section 354 of the Insurance Company Law of 1921 (40 P. S. § 477b). Accordingly, the regulation is not needed to maintain appropriate regulatory scrutiny of bylaws.
Finally, the regulation was intended to facilitate the review and approval of policy forms used by domestic assessment mutual fire insurance companies. Accordingly, the regulation recommended, but did not mandate, the use of the standard fire insurance policy found in section 506 of the Insurance Company Law of 1921 (40 P. S. § 636). However, the statute itself mandates that all insurance companies issuing fire insurance policies must adhere to the standard policy provisions in section 506. Therefore, the regulation duplicates existing statutory authority governing the standard policy provisions of fire insurance contracts, and inaccurately suggests that use of the standard fire policy is optional rather than mandatory.
Statutory Authority
The regulation is being deleted under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 and section 506 of The Insurance Company Law of 1921. The regulation was adopted in 1936 under Article V of The Insurance Company Law relating to fire and marine insurance.
Comments
Notice of this deletion was published at 27 Pa.B. 3064 (June 28, 1997) as a proposed rulemaking with a 30-day public comment period.
No comments were received from the standing committees. Comments were received from The Insurance Federation of Pennsylvania, Inc. (IFP). The IFP expressed support for the deletion of the regulation. On August 27, 1997, the Independent Regulatory Review Commission (IRRC) submitted notice to the Department that IRRC had no objections, comments or suggestions to offer on the deletion of the regulation.
Fiscal Impact
The deletion of the regulation has no fiscal impact because the regulation contains only advisory recommendations, and because of the obsolescence of the regulation.
Paperwork
The deletion of the regulation would impose no additional paperwork requirements on the Department or mutual insurance companies.
Affected Parties
The deletion of the regulation affects domestic assessment mutual fire insurance companies.
Effectiveness/Sunset Date
The rulemaking will become effective upon final publication in the Pennsylvania Bulletin. Because the rulemaking deletes obsolete, unnecessary regulations, no sunset date has been assigned.
Contact Person
Questions or comments regarding this final-form rulemaking may be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, Office of Special Projects, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 18, 1997, the Department submitted a copy of the proposed deletion to IRRC, the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to the submitted final-form regulations, 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.
These final-form regulations were deemed approved by the House and Senate Committee on June 21, 1998, in accordance with section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d). IRRC met on July 9, 1998, and deemed approved the deletion in accordance with section 5.1(e) of the Regulatory Review Act.
Findings
The Commissioner finds that:
(1) Public notice of intention to adopt this rulemaking as amended by this order has been given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulation thereunder, 1 Pa Code §§ 7.1 and 7.2.
(2) The adoption of this rulemaking 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:
(a) The regulations of the Department, 31 Pa. Code, are amended by deleting § 103.1 and Exhibit A to read as set forth in Annex A.
(b) 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.
(c) The Commissioner shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) The regulations rescinded by this order shall be deleted upon publication in the Pennsylvania Bulletin.
M. DIANE KOKEN,
Insurance Commissioner(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 28 Pa.B. 3558 (July 25, 1998).)
Fiscal Note: Fiscal Note 11-157 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 31. INSURANCE
PART VI. MUTUAL INSURANCE
CHAPTER 103. (Reserved) § 103.1. (Reserved).
EXHIBIT A. (Reserved)
[Pa.B. Doc. No. 98-1267. Filed for public inspection August 7, 1998, 9:00 a.m.]
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