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PA Bulletin, Doc. No. 05-175

NOTICES

Increase in the Accident Surcharge Dollar Threshold (Cap) to $1,150; No. 2005-01

[35 Pa.B. 612]

   Insurers writing private passenger automobile insurance in this Commonwealth may not, by law, penalize their policyholders (such as, apply rate surcharges or otherwise increase premiums) whose aggregate claim cost over a 3-year period does not exceed a certain threshold (cap). This threshold (cap) applies to any person injured or property damaged, and is measured in excess of any deductible or self-insured retention. Effective July 1, 2005, the Insurance Department (Department) has increased the threshold (cap) to $1,150.

   Section 19(a) of Act 6 of 1990 (75 Pa.C.S. § 1799.3 (relating to limit on cancellations, refusals to renew, refusals to write, surcharges, rate penalties and point assignments) does not allow an insurer to, ''cancel or refuse to renew a policy or apply any surcharge, rate penalty or driver record point assignment'' when the threshold (cap) is not exceeded.

   By law, the Department is required to adjust the amount of the threshold (cap) at least once every 3 years. Section 19(e) of Act 6 of 1990 stipulates the adjustment be made relative to changes in the Consumer Price Index for medical care and automobile maintenance and repair costs. The previous adjustment to the threshold (cap) was effective July 1, 2002, when the threshold (cap) increased to $1,050.

   Each individual insurer, ISO, AIPSO and MSO should file the previously mentioned change for prior approval by April 1, 2005, and specify an effective date of no later than July 1, 2005.

   Questions regarding this notice may be directed to Michael McKenney, Actuarial Review Division, Insurance Department, 1311 Strawberry Square, Harrisburg, PA 17120, (717) 705-0166, or mmckenney@state.pa.us.

M. DIANE KOKEN,   
Insurance Commissioner

[Pa.B. Doc. No. 05-175. Filed for public inspection January 21, 2005, 9:00 a.m.]


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