PROPOSED RULEMAKING
INSURANCE DEPARTMENT
[ 31 PA. CODE CH. 163 ]
Requirements for Funds Held as Security for the Payment of Obligations of Unlicensed, Unqualified Reinsurers
[42 Pa.B. 5628]
[Saturday, September 1, 2012]The Insurance Department (Department) proposes to amend Chapter 163 (relating to requirements for funds held as security for the payment of obligations of unlicensed, unqualified reinsurers) to read as set forth in Annex A. The rulemaking is proposed under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412), regarding the general rulemaking authority of the Department, and sections 319—319.2 of The Insurance Company Law of 1921 (act) (40 P. S. §§ 442—442.2).
Purpose
The purpose of this proposed rulemaking is to update Chapter 163 in accordance with amendments made to section 319.1 of the act by the act of July 5, 2012 (P. L. 1111, No. 136) (Act 136), which grants the Insurance Commissioner the authority to ''certify'' reinsurers so that ceding insurers may receive credit for reinsurance ceded to duly certified reinsurers. These amendments are proposed in conjunction with proposed amendments to Chapter 161 (relating to requirements for qualified reinsurers). Specifically, Chapter 163 is proposed to be amended to clarify that the requirements of Chapter 163 do not apply to assuming reinsurers that have been duly certified by the Commissioner as permitted by Act 136.
Explanation of Proposed Amendments
Section 163.1 (relating to definitions) is proposed to be amended to clarify that the definition of ''unlicensed, unqualified reinsurer'' does not include an assuming insurer who is certified by the Commissioner under section 319.1(a) of the act.
External Comments
The Department circulated pre-exposure drafts of the proposed rulemaking to the Insurance Federation of Pennsylvania, Inc. and the Pennsylvania Association of Mutual Insurance Companies.
Affected Parties
This proposed rulemaking will apply to insurance companies domesticated in this Commonwealth and the reinsurers with whom they do business.
Fiscal Impact
State government. The proposed rulemaking will strengthen and clarify existing regulatory requirements. There will not be material increase in cost to the Department as a result of this proposed rulemaking.
General public. While Chapter 163 does not have immediate fiscal impact on the general public, the general public will benefit to the extent that allowing reduced collateral for reinsurers that are financially solvent and licensed in well-regulated jurisdictions will reduce the cost of reinsurance to ceding insurers in this Commonwealth and reduce trade barriers allowing for more competition in the reinsurance marketplace.
Political subdivisions. This proposed rulemaking will not impose additional costs on political subdivisions.
Private sector. This proposed rulemaking will not impose significant costs on the transaction of business in this Commonwealth.
Paperwork
This proposed rulemaking will not impose additional paperwork on the Department.
Effective Date
This proposed rulemaking will become effective within 30 days after final-form publication in the Pennsylvania Bulletin.
Sunset Date
The Department continues to monitor the effectiveness of regulations on a triennial basis. Therefore, a sunset date has not been assigned.
Contact Person
Questions or comments regarding the proposed rulemaking may be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120, fax (717) 705-3873, psalvatore@pa.gov within 30 days following the publication of this proposed rulemaking in the Pennsylvania Bulletin.
Under the Regulatory Review Act (71 P. S. §§ 745.1—745.12), the Department is required to write to commentators requesting whether or not they wish to receive a copy of the final-form rulemaking. To better serve stakeholders, the Department has made a determination that all commentators will receive a copy of the final-form rulemaking when it is made available to the Independent Regulatory Review Commission (IRRC) and the legislative standing committees.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on August 22, 2012, the Department submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to IRRC and to the Chairpersons of the Senate Banking and Insurance Committee and the House Insurance Committee. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Department, the General Assembly and the Governor of comments, recommendations or objections raised.
MICHAEL F. CONSEDINE,
Insurance Commissioner(Editor's Note: See 42 Pa.B. 5629 (September 1, 2012) for a proposed rulemaking by the Department relating to this proposed rulemaking.)
Fiscal Note: 11-250. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART VIII. MISCELLANEOUS PROVISIONS
CHAPTER 163. REQUIREMENTS FOR FUNDS HELD AS SECURITY FOR THE PAYMENT OF OBLIGATIONS OF UNLICENSED, UNQUALIFIED REINSURERS § 163.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Unlicensed, unqualified reinsurer—An assuming insurer which is neither:
* * * * * (ii) Included on a list of qualified or certified reinsurers published and periodically reviewed by the Commissioner under section 319.1(a) of the act (40 P. S. § 442.1(a)).
[Pa.B. Doc. No. 12-1684. Filed for public inspection August 31, 2012, 9:00 a.m.]
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