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PA Bulletin, Doc. No. 98-373

RULES AND REGULATIONS

Title 31--INSURANCE

INSURANCE DEPARTMENT

[31 PA. CODE CH. 113]

Mass Merchandising of Property and Casualty Insurance

[28 Pa.B. 1235]

   The Insurance Department (Department) hereby deletes §§ 113.51--113.62 (relating to mass merchandising of property and casualty insurance) under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412). These regulations were previously promulgated under sections 601 and 621 of The Insurance Department Act of 1921 (40 P. S. §§ 231 and 251); section 354 of The Insurance Company Law of 1921 (40 P. S. § 477b); The Fire, Marine and Inland Marine Rate Regulatory Act (40 P. S. §§ 1221--1238); and The Casualty and Surety Rate Regulatory Act (40 P. S. §§ 1181--1199).

Purpose

   The purpose of the deletion of §§ 113.51--113.62, is to eliminate redundant regulations. Adopted in 1971, the regulations were prescribed to prevent abuses in the mass merchandising of property and casualty insurance. The regulations imposed requirements on insurance companies licensed to do business in this Commonwealth, and on their agents, where mass merchandising is used as a method of selling. The regulations required the Department's approval of rates and policies prior to the sale of insurance policies, and required the licensure of agents who sell the policies. The regulations also prohibited specific sales practices. In addition, the regulations required the insurer to give notice to the insured prior to cancellation for nonpayment of premiums, to provide assistance in obtaining other insurance to individuals who are denied insurance under the mass merchandising plan and to maintain statistics. The regulations are no longer necessary because their requirements merely repeat or duplicate present statutory requirements and are unduly burdensome.

   Specifically, these regulations duplicate existing authorities governing the filing of insurance rates and policy forms. The Department has statutory authority to review property and casualty policy rates prior to use under The Fire, Marine and Inland Marine Rate Regulatory Act and The Casualty and Surety Rate Regulatory Act. The Department also has the existing authority to review property and casualty policy forms prior to use under section 354 of The Insurance Company Law of 1921. These regulations also repeat the requirement of agent and broker licensure provided under sections 601 and 621, respectively, of The Insurance Department Act.

   Further, the attempt to prevent specific abuses in the mass merchandising of property and casualty insurance is no longer necessary, since the statutory authority to regulate unfair practices in the business of insurance exists under the Unfair Insurance Practices Act (UIPA) (40 P. S. §§ 1171.1--1171.15). The requirement of providing written notice to the insured prior to cancellation for nonpayment of premiums exists under the act of June 5, 1968 (P. L. 140, No. 78) (40 P. S. §§ 1008.1--1008.11) known as Act 78 (relating to the cancellation and nonrenewal of private passenger automobile insurance), the act of July 3, 1986 (P. L. 396, No. 86) (40 P. S. §§ 3401--3409) known as Act 86 (relating to commercial property and casualty risks) and section 5(a)(9) of the UIPA (40 P. S. § 1171.5(a)(9)) (relating to owner occupied residential properties and personal property of individuals). Finally, the sections requiring 1) the rendering of assistance to individuals in obtaining insurance is unduly burdensome; and 2) the reporting of statistics is no longer used by the Department.

Statutory Authority

   These regulations are being deleted under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929. These regulations were previously promulgated under section 601 and 621 of The Insurance Department Act of 1921; section 354 of The Insurance Company Law of 1021; The Fire, Marine and Inland Marine Rate Regulatory Act; and The Casualty and Surety Rate Regulatory Act.

Comments

   Notice of this deletion was published at 27 Pa.B. 1848 (April 12, 1997) as a proposed rulemaking with a 30-day comment period.

   No comments were received from the standing committees during the 30-day public comment period. Comments were solicited from the various trade associations representing the insurance industry. Comments were received from the Insurance Federation of Pennsylvania, Inc.

The Insurance Federation of Pennsylvania (IFP)

   The IFP expressed support for the deletion of these regulations. They agreed that sections proposed for deletion are either outdated or otherwise covered with the same force and effect in existing laws.

Fiscal Impact

   The deletion of these sections will have no fiscal impact. Because of the redundancy of the regulatory provisions to authorizing statutes, the provisions of the regulations remain in effect under the statutes.

Paperwork

   The deletion of these sections will have no effect on paperwork requirements.

Affected Parties

   The deletion of these sections will affect all insurers who are licensed to sell insurance in this Commonwealth.

Effectiveness/Sunset Date

   The rulemaking will become effective upon final publication in the Pennsylvania Bulletin. Because the rulemaking deletes obsolete regulations, no sunset date has been assigned.

Contact Person

   Questions and comments concerning this rulemaking may be addressed to Randolph L. Rohrbaugh, Director, Property and Casualty Bureau, 1311 Strawberry Square, Harrisburg, PA 17120, (717) 787-3044.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Department submitted a copy of this rulemaking on July 23, 1997, to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to the rulemaking, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department 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.

   This rulemaking was deemed approved by the House and Senate Committees on December 8, 1997, in accordance with section 5.1(d) of the Regulatory Review Act. The amendments were deemed approved by IRRC in accordance with section 5(g) of the Regulatory Review Act on December 9, 1997.

Findings

   The Insurance Commissioner finds that:

   (1)  Public notice of intention to adopt this rulemaking 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 for 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 113, are amended by deleting §§ 113.51--113.62 to read as set forth at 27 Pa.B. 1848.

   (b)  The Commissioner shall submit this order and 27 Pa.B. 1848 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 27 Pa.B. 1848 and deposit them with the Legislative Reference Bureau as required by law.

   (d)  The rulemaking adopted by this order shall take effect June 5, 1998.

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 27 Pa.B. 6878 (December 27, 1997).)

   Fiscal Note:  Fiscal Note 11-144 remains valid for the final adoption of the subject regulations.

[Pa.B. Doc. No. 98-373. Filed for public inspection March 6, 1998, 9:00 a.m.]



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