NOTICES
Private Passenger Motor Vehicle Liability Insurance Policies; Limited and Full Tort Data Reporting; Notice 2016-08
[46 Pa.B. 3771]
[Saturday, July 9, 2016]To: All Insurers Writing Private Passenger Motor Vehicle Insurance Policies in Pennsylvania
From: Mark Lersch, Property and Casualty Bureau Director, Office of Insurance Product Regulation
The purpose of this notice is to alert private passenger motor vehicle insurers that the Insurance Department (Department) intends to collect certain ratemaking data by tort election of the policyholder and tort election of the claimant in its future annual Act 6 of 1990 private passenger auto data calls.
Background
Section 8 of Act 6 of 1990 amended Title 75 of Pennsylvania's consolidated statutes by adding Section 1705 ''Election of tort options.'' Section 1705 (75 Pa.C.S. § 1705) requires insurers to provide their named insureds with the option to elect either full tort benefits or limited tort benefits on private passenger motor vehicle liability insurance policies.
As described in the notices required by Section 1705, the limited tort option provides the named insured with ''the right to choose a form of insurance that limits your right and the right of members of your household to seek financial compensation for injuries caused by other drivers.''
Alternatively, the full tort option provides ''the right to choose a form of insurance under which you maintain an unrestricted right for you and the members of your household to seek financial compensation for injuries caused by other drivers.''
Section 19 of Act 6 of 1990 amended Title 75 of Pennsylvania's consolidated statutes by adding, among other sections, Section 1799.7 ''Rates.'' Section 1799.7(g) ''Calculation of rates'' (75 Pa.C.S. § 1799.7(g)) requires:
''In all rate filings subsequent to the initial filing required by subsection (a), insurers shall allocate expenses, losses and income according to the coverages which generate such expenses, losses and income, provided that each insurer shall provide its limited tort electors with premium savings that equal, in the aggregate, reductions in the insurer's losses created by limited tort electors under the system of tort options established in section 1705.''Department Notice 2003-07 communicated the results of the last Department study of the savings associated with limited tort election under Pennsylvania's system of tort options and required a 40% discount on bodily injury, uninsured motorist coverage, underinsured motorist coverage and first party benefits for insureds that choose the limited tort option.
Requirements
As the Department intends to study the savings associated with limited tort election in the future, it is hereby notifying all insurers writing private passenger motor vehicle insurance policies in Pennsylvania that if they are not already doing so, they should track and record standard ratemaking data by the tort election of the policyholder and, for bodily injury coverage, the tort election of the claimant.
For purposes of this notice, ''standard ratemaking data'' includes incurred claims, paid claims, incurred losses, paid losses, incurred ALAE or DCC expense and paid ALAE or DCC expense.
The Department will begin requiring this information from the 20 largest writers of private passenger motor vehicle insurance, as measured by Pennsylvania direct written premium, on an accident year basis with its future annual Act 6 of 1990 private passenger auto data calls. The first such data call will be due on October 15, 2017, and will require accident year ending December 31, 2016, data. Subsequent annual development on accident year data (beginning with accident year ending December 31, 2016) will be collected in future annual data calls (for example due October 15, 2018, and each October 15 thereafter).
Even though only the 20 largest writers of private passenger motor vehicle insurance will be required to report this information with future data calls, it is suggested that all insurers collect and record this information. Additionally, a company that was initially outside but that grows into the top 20 will be required to report the historical development data (beginning with accident year ending December 31, 2016) along with all top 20 companies.
For bodily injury coverage, insurers should anticipate providing standard ratemaking data as follows:
For policyholders selecting limited tort:
A.) Claimants selecting limited tort
B.) Claimants selecting full tort
For policyholders selecting full tort:
A.) Claimants selecting limited tort
B.) Claimants selecting full tort
For all coverages except bodily injury, insurers should anticipate providing standard ratemaking data by the tort selection of the policyholder only. It is anticipated that this request will be isolated to first party benefits, uninsured motorist coverage and underinsured motorist coverage as these are the coverages (along with bodily injury) that receive the limited tort discount in accordance with Department Notice 2003-07.
Questions regarding this notice may be directed to Michael McKenney, Property and Casualty Actuarial Supervisor, (717) 705-0166, mmckenney@pa.gov.
TERESA D. MILLER,
Insurance Commissioner
[Pa.B. Doc. No. 16-1189. Filed for public inspection July 8, 2016, 9:00 a.m.]
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