PROPOSED RULEMAKING
INSURANCE DEPARTMENT
[31 PA. CODE CHS. 33 AND 67a]
Pennsylvania Assigned Risk Consumer Protection
[28 Pa.B. 5246] The Insurance Department (Department) proposes to delete § 33.29 (relating to the Pennsylvania Automobile Insurance Plan (assigned risk)) and establish Chapter 67a (relating to Pennsylvania Assigned Risk Plan Consumer Protections) to read as set forth in Annex A. The Department proposes the amendments under the authority of the act of May 17, 1921 (P. L. 682, No. 284) (40 P. S. §§ 341--991); The Insurance Department Act of 1921 (40 P. S. §§ 1--321); sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412); and 75 Pa.C.S. Chapter 17, Subchapter D (relating to Motor Vehicle Financial Responsibility Law).
Purpose
Section 33.29, was initially promulgated to address the Department's concerns regarding the method of payment and the manner in which premium moneys were collected and forwarded to the Pennsylvania Assigned Risk Plan. Additionally, the Department wanted to ensure that coverage in the market of last resort is provided as expeditiously as possible so that the owners and operators of motor vehicles registered or operated in this Commonwealth can meet the requirements for compulsory automobile insurance in this Commonwealth. These guidelines were offered to assist the applicant, producer and the plan. The purpose of this proposed rulemaking is to delete § 33.29 and establish Chapter 67a by: 1) providing a new title and format to facilitate understanding of the terminology and the provisions in the proposal; 2) adding detail for clarity; 3) eliminating those items that should not be reflected in regulation but should be addressed in the Assigned Risk Plan rules; and 4) strengthening the provisions of the regulation continuing to ensure protections for those residents of this Commonwealth seeking automobile insurance through the market of last resort.
Explanation of Regulatory Requirements
The new provisions of § 33.29 have been moved to Chapter 67a. The format has been changed to reflect both the new definitions section and the section relating to consumer protections.
The title of the chapter ''Pennsylvania automobile insurance plan (assigned risk)'' has been changed to ''Pennsylvania assigned risk plan Consumer protections'' to more accurately describe the intent of the regulations.
Section 67a.1 (relating to definitions) has been added to explain the terms ''Assigned Risk Plan,'' ''producer,'' ''producer of record'' and ''voluntary market'' when used in the context of the regulations.
Section 67a.2 (relating to consumer protections) formerly § 33.29, has been renamed providing for a more accurate description of its purpose.
Section 67a.2(a) reflects the amendments to § 33.29(a) which enhance its clarity.
Section 67a.2(b) replaces § 33.29(b). This subsection has been added as a consumer protection measure, ensuring that coverage in the assigned risk plan is offered to the applicant, by the producer, only after a diligent search of the voluntary market has been conducted.
Section 67a.2(c) replaces § 33.29(c). Section 33.29(c) was deleted because it contains unnecessary language regarding the administration of commissions which should be addressed in the assigned risk plan rules. Sections 67a.2(c), 67a.2(d) and 67a.2(e) contain language previously found in § 33.29(d). Section 33.29(d) was split into three sections to emphasize the importance of each provision. However, these subsections were modified to eliminate unnecessary reference to conformance to the assigned risk plan rules. Section 67a.2(c) was also modified to allow for the acceptance of premium using other methods of premium payment approved by the Commissioner.
Section 67a.2(f), formerly § 33.29(e) has been modified to eliminate unnecessary language referencing the assigned risk plan rules.
Section 67a.2(g) has been added to reflect case law which upholds the Department's position regarding the prohibition against producers charging referral or other fees for placing or servicing any Assigned Risk Plan policy. See. Park v. Chronister, 617 A.2d 863 (Pa. Cmwlth. 1992).
Section 67a.2(h), formerly § 33.29(f), has been modified to clarify that the Department's authority to enforce the provisions of the Assigned Risk Plan rules, relating to the conduct of producers, is not limited to fiduciary matters.
Fiscal Impact
The proposed amendments will have no impact on costs associated with the Department, producers, Assigned Risk Plan, political subdivisions or the general public.
Paperwork
The proposed amendments impose no additional paperwork requirements on the Department, producers, Assigned Risk Plan or the general public.
Persons Regulated
The proposed amendments apply to agents or brokers authorized by the Department to conduct business of property and casualty insurance and are certified by the Assigned Risk Plan.
Contact Person
Questions or comments regarding the proposed rulemaking may be addressed, in writing, to Peter J. Salvatore, Regulatory Coordinator, 1326 Strawberry Square, Harrisburg, PA 17120, within 30 days following the publication of this notice in the Pennsylvania Bulletin.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on October 5, 1998, 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 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 that material is available to the public upon request.
If IRRC has objections to any portion of the proposed amendments, it will notify the Department within 10 days of the close of the Committees' review 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 the Department, the Governor and the General Assembly to review these objections before final publication of the rulemaking.
M. DIANE KOKEN,
Insurance CommissionerFiscal Note: 11-171. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART I. GENERAL PROVISIONS
Subpart C. AGENTS AND BROKERS
CHAPTER 33. LICENSING REQUIREMENTS § 33.29 [Pennsylvania Automobile Insurance Plan (assigned risk)] (Reserved).
[(a) An agent who submits an application to the assigned risk plan through the company for which he is a licensed agent is not required to be licensed as an insurance broker in order to handle the delivery of the policy of the company to which the risk is assigned.
(b) Commissions earned on the transaction shall be considered as having been earned in the normal business of the agent with the company for which he holds an agent's license.
(c) An agent or broker through whom an assigned risk was placed is obligated to return, on a pro rata basis, his unearned commission to the insurance company to which the risk was assigned upon cancellation of a policy by the company. An agent or broker through whom an assigned risk was placed is obligated to return, on a short rate basis, as provided in the policy, his unearned commission to the insurance company to which the risk was assigned upon cancellation of a policy by an insured. In the absence of an explanation satisfactory to the Insurance Department, an agent or broker failing to return unearned commissions as provided in this subsection shall be deemed in violation of sections 633 and 639 of the Insurance Department Act of one thousand nine hundred and twenty-one (40 P. S. §§ 273 and 279) and other applicable laws and shall be subject to penalties as specified therein.
(d) Upon original applications, premium monies to the producer of record shall be in the form of a postal money order, cashier's check, certified check or personal check made payable to the ''Pennsylvania Automobile Insurance Plan.'' The producer of record shall speedily remit such payment in conformance with the rules of the Plan. Upon receipt of such premium monies, the producer of record shall issue a receipt, certifying the date--day, month and year--and time--hour, a.m. or p.m., the applicant's name and address, the signature of the producer, and the following statement:
''Received for the Pennsylvania Automobile Insurance Plan.''
The producer of record shall maintain appropriate records of original applications, noting the time and date of coverage and shall make available for inspection or photocopying such records by the Plan or by a company representative or the Insurance Department. A copy of such receipt will be sent to the Plan along with other forms in conformance with the rules of the Plan.
(e) If the applicant produces reasonable documentation of payment of the required premium to the producer of record and completion of an application for insurance under the Plan, payment to the producer of record shall be deemed payment to the Plan for the purposes of this subsection. Coverage shall be deemed effective as of the date and time specified in the application and according to sections 11, 12 and 14 of the Plan.
(f) An agent or broker failing to remit premium monies received under subsection (d) violates sections 633, 633.1 and 639 of The Insurance Department Act of one thousand nine hundred and twenty-one (40 P. S. §§ 273, 273.1 and 279) and other applicable laws and are subject to penalties as specified therein.]
(Editor's Note. The following chapter is proposed to be added. It is printed in regular type to enhance readability.)
CHAPTER 67a. PENNSYLVANIA ASSIGNED RISK PLAN CONSUMER PROTECTIONS Sec.
67a.1. Definitions. 67a.2. Consumer protections. § 67a.1. Definitions.
The following words and terms, when used in this chapter, have the following meaning unless the context clearly indicates otherwise:
Assigned Risk Plan--A mechanism for the equitable apportionment among insurers of good faith applicants who are unable to obtain insurance through the voluntary market.
Department--The Insurance Department of the Commonwealth.
Producer--An agent or broker authorized by the Department to conduct business and certified by the Assigned Risk Plan.
Producer of record--The agent or broker authorized by the Department to conduct business, certified by the Assigned Risk Plan and whose signature appears on the application for insurance.
Voluntary market--The market where a person obtains insurance without the assistance from government and through an insurer of the consumer's own selection.
§ 67a.2. Consumer protections.
(a) A producer may submit an application to the Assigned Risk Plan and may deliver the policy of the company to which the risk is assigned.
(b) A producer may submit an application to the Assigned Risk Plan only after having been unable to obtain coverage for the applicant, after a reasonable search of the voluntary market, within the time frame established by the Assigned Risk Plan rules.
(c) Upon completion of the original application, premium moneys from the applicant to the producer of record shall be in the form of a money order, cashier's check, certified check, personal check or other method approved by the Insurance Commissioner, made payable to the ''Pennsylvania Assigned Risk Plan.'' The producer of record may not accept cash.
(d) Upon receipt of the premium moneys for an original application, the producer of record shall issue a receipt showing the amount received, and the date and time that the money was received. The receipt shall also contain the applicant's name and address, the signature of the producer of record and a statement indicating that it was received for the Pennsylvania Assigned Risk Plan. The electronic mail reference number shall be included, if applicable.
(e) A producer of record shall maintain appropriate records of original applications, including the electronic mail reference number, noting the date and time of coverage. The producer of record shall make these records available for inspection to the Assigned Risk Plan, a representative of the assigned company or the Department.
(f) If the applicant produces reasonable documentation of payment of the required premium to the producer of record in accordance with subsection (c) and a completed application for insurance under the Assigned Risk Plan, payment to the producer of record shall be deemed payment to the Assigned Risk Plan in accordance with the Assigned Risk Plan rules. Coverage shall be effective as of the date and time specified in the application in accordance with the Assigned Risk Plan rules.
(g) A producer may not charge referral fees or other fees for placing or servicing any coverage in the Assigned Risk Plan. A producer's remuneration shall be limited to the method of compensation established by the Assigned Risk Plan rules.
(h) Producers shall comply with the Assigned Risk Plan rules. Violation of the Assigned Risk Plan rules may be construed to be a violation of section 604 of The Insurance Department Act of 1921 (40 P. S. § 234).
[Pa.B. Doc. No. 98-1707. Filed for public inspection October 16, 1998, 9:00 a.m.]
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