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PA Bulletin, Doc. No. 96-1349


Restitution in Act 205 Cases; Notice No. 1996-12

[26 Pa.B. 3964]

   Under Act 205, the Insurance Commissioner is authorized to review consumer complaints regarding a termination of a homeowner's policy. See sections 5(a)(9) and 7 (40 P. S. §§ 1171.5(a)(9) and 1171.7). After a hearing, upon a finding that Act 205 has been violated, the Commissioner is empowered inter alia to issue a cease and desist order (40 P. S. § 1171.9) or require that the violator take remedial action (40 P. S. § 1171.8(e)).

   Remedial action that the Commissioner may order includes:

   *  Reinstating the policy

   *  Offering coverage on a prospective basis

   *  Reimbursing the consumer for any additional premium or charge which the insured was required to pay to secure a replacement policy, including any creditor-placed insurance coverage.

   Persons should also be aware that the law also permits the Commissioner to take action against the certificate of authority of the offender (40 P. S. § 1171.9), or commence an action to recover civil penalties (40 P. S. § 1171.11).

   If a violation of Act 205 is established, the goal of this Department will be to ensure that the consumer is made whole and suffers no lapse in coverage from the improper termination. During an Act 205 review, if it becomes clear to the insurance company that it will be unable to sustain the burden of proving that the cancellation or nonrenewal was proper, the insurer is expected to offer appropriate remedial action on its own accord.

Insurance Commissioner

[Pa.B. Doc. No. 96-1349. Filed for public inspection August 16, 1996, 9:00 a.m.]

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