RULES AND REGULATIONS
Title 31--INSURANCE
INSURANCE DEPARTMENT
[31 PA. CODE CH. 3]
Allocation of Joint Expenses
[31 Pa.B. 2000] The Insurance Department (Department) by this order deletes Chapter 3 (relating to allocation of joint expenses) to read as set forth at 30 Pa.B. 5019 (September 30, 2000). The chapter applied to property and casualty insurers, the State Workmen's Insurance Fund and title insurers. The chapter prescribed accounting rules for allocation of joint expenses in financial statements.
Purpose
The purpose of this rulemaking is to delete Chapter 3 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 of May 9, 1949 (P. L. 1025, No. 289) (40 P. S. §§ 1261--1264) (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 (Commissioner) and, in addition, to file reports in a form determined by the Commissioner. The regulations were adopted to prescribe uniform accounting rules for the allocation of joint expenses in financial reports filed with the Commissioner. Joint expenses are expenses shared among members of a group of entities.
Section 320(a) of The Insurance Company Law of 1921 (40 P. S. § 443(a)) 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 Commissioner has determined that the annual statement instructions and the accounting practices and procedures manual (manual) prescribed by the National Association of Insurance Commissioners (NAIC) sufficiently address the allocation of joint expenses. Specifically, Statement of Statutory Accounting Principles No. 70 in the manual establishes statutory accounting principles for the apportionment of shared expenses and refers to the applicable annual statement instructions. The regulations codified in Chapter 3 in no manner enhance the NAIC instructions and manual. In addition, §§ 3.4(a) and 3.6 (relating to records required; and other applicable instructions) refer to requirements in Chapter 9 that have been deleted effective August 8, 1998. Therefore, the regulations are outdated and are no longer needed.
Statutory Authority
This final-form rulemaking is adopted 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 and section 320 of The Insurance Company Law of 1921.
Comments
Notice of the proposed rulemaking was published at 30 Pa.B. 5019 with a 30-day public comment period.
No comments were received from the standing committees. The Insurance Federation of Pennsylvania, Inc., commented in support of the proposed rulemaking to delete the regulations. On November 30, 2000, the Independent Regulatory Review Commission (IRRC) notified the Department that IRRC had no objections, comments or suggestions to offer on the proposed rulemaking.
Fiscal Impact
The deletion of the regulations has no fiscal impact on State government, the general public, political subdivisions or the private sector.
Paperwork
The deletion of the regulations will impose no additional paperwork requirements on the Department or insurers.
Persons Regulated
The deletion of the regulations affects property and casualty insurers, the State Workmen's Insurance Fund and title insurers.
Contact Person
Questions or comments regarding this final-form rulemaking may be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, Office of Special Projects, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429. Questions and comments may also be e-mailed to psalvatore@state.pa.us or faxed to (717) 705-3873.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 21, 2000, the Department submitted a copy of the proposed rulemaking to IRRC and to the Chairpersons of the Senate Committee on Banking and Insurance and the House Committee on Insurance. In addition to the submitted rulemaking, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the agency in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.''
In compliance with section 5(c) of the Regulatory Review Act, the Department also provided IRRC and the Committees with copies of the comments received. A copy of that material is available to the public upon request.
Under section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), this final-form rulemaking was deemed approved by the Senate and House Committees on March 14, 2001. IRRC met on March 22, 2001, and the proposal was deemed approved in accordance with section 5(g) 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 regulations 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 Chapter 3, are amended by deleting §§ 3.1--3.6 to read as set forth at 30 Pa.B. 5019.
(b) The Commissioner shall submit this order and 30 Pa.B. 5019 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 30 Pa.B. 5019 and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect 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 31 Pa.B. 1925 (April 7, 2001).)
Fiscal Note: Fiscal Note 11-201 remains valid for the final adoption of the subject regulations.
[Pa.B. Doc. No. 01-635. Filed for public inspection April 13, 2001, 9:00 a.m.]
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