RULES AND REGULATIONS
Title 31--INSURANCE
INSURANCE DEPARTMENT
[31 PA. CODE CH. 89]
Requirements for All Policies and Forms; Preparation of Forms
[32 Pa.B. 1847] The Insurance Department (Department) amends § 89.14 (relating to dismemberment, death or surgical benefits) to read as set forth in Annex A. Sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) provide the Commissioner with the authority and duty to promulgate regulations governing the enforcement of the laws relating to insurance.
Notice of proposed rulemaking is omitted in accordance with section 204(3) of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1204(3)), known as the Commonwealth Documents Law (CDL). In accordance with section 204(3) of the CDL, notice of proposed rulemaking may be omitted when the agency for good cause finds that public notice of its intention to amend an administrative regulation is, under the circumstances, impracticable and unnecessary.
Purpose
The final-omitted regulation will bring the Department's regulation into compliance with the Supreme Court's ruling on time period limitations on recovery of accidental death benefits.
Explanation of Regulatory Requirements
The Supreme Court decision in Burne v. Franklin Life Insurance Company, 301 A.2d 799 (Pa. 1973), Attorney General's opinion No. 22, issued April 26, 1974, published at 4 Pa.B. 962 (May 11, 1974) and the Department's notice published at 4 Pa.B. 1933 (September 7, 1974) prohibited the sale of certain life insurance policies. Specifically, the Supreme Court stated that accidental death benefit policies may not be sold or issued in this Commonwealth if death must occur during a specific time period limitation. This applies regardless of the line of insurance with which it is sold.
The Department has not permitted any policies sold or marketed in this Commonwealth to contain the provision found in § 89.14(b). This final-omitted rulemaking is to reconcile § 89.14 with the decision that was made by the Supreme Court in 1973 and the Attorney General's opinion in 1974.
In addition, § 89.14(b) is in direct conflict with § 89.43 (relating to accidental death benefit).
Fiscal Impact
The insurance industry will likely not incur additional costs for complying with the requirement. Insurance companies have not been permitted to use this provision since 1974; therefore, there is no fiscal impact on the insurance industry.
Effectiveness/Sunset Date
This final-omitted regulation is effective upon publication in the Pennsylvania Bulletin. No sunset date has been assigned.
Paperwork
Adoption of this final-omitted regulation should not require significant paperwork for insurance carriers.
Persons Regulated
This final-omitted regulation applies to all insurance companies who issue insurance products in this Commonwealth.
Contact Person
Questions regarding the final-omitted rulemaking may be addressed to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429. Questions may also be e-mailed to psalvatore@state.pa.us or faxed to (717) 772-1969.
Regulatory Review
Under section 5.1(c) of the Regulatory Review Act (71 P. S. § 745.5a(c)), on February 21, 2002, the Department submitted copies of this final-omitted rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Insurance and the Senate Committee on Banking and Insurance. On the same date, the final-omitted rulemaking was submitted to the Office of the Attorney General for review and approval under the Commonwealth Attorneys Act (71 P. S. §§ 732-101--732-506).
Under section 5.1(d) of the Regulatory Review Act, on March 13, 2002, this final-omitted rulemaking was deemed approved by the House and Senate Committees. The Attorney General approved the amendment on March 18, 2002. Under section 5.1(e) of the Regulatory Review Act, on March 21, 2002, IRRC met and approved this final-omitted rulemaking.
Findings
The Commissioner finds that:
(1) There is good cause to amend Chapter 89, effective upon publication with the proposed rulemaking omitted. Deferral of the effective date of these regulations would be impractical and not serve the public interest. Under section 204(3) of the CDL, there is no purpose to be served by deferring the effective date.
(2) There is good cause to forego public notice of the intention to amend Chapter 89, because notice of the amendment under the circumstances is unnecessary and impractical for the following reasons:
(i) The changes mandated by the Supreme Court ruling have been in effect since 1974.
(ii) Public comment cannot change the fact that this requirement has been required by the Supreme Court ruling.
Order
The Commissioner, acting under the authorizing statutes, orders that:
(a) The regulations of the Department, 31 Pa. Code Chapter 89, are amended by amending § 89.14 to read as set forth in Annex A.
(b) The Department shall submit this order and Annex A to the Office of Attorney General and the Office of General Counsel for approval as to form and legality as required by law.
(c) The Department shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon its publication in the Pennsylvania Bulletin.
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 32 Pa.B. 1780 (April 6, 2002).)
Fiscal Note: 11-213. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART IV. LIFE INSURANCE
CHAPTER 89. APPROVAL OF LIFE, ACCIDENT AND HEALTH INSURANCE
Subchapter A. REQUIREMENTS FOR ALL POLICIES AND FORMS
PREPARATION OF FORMS § 89.14. Dismemberment, death or surgical benefits.
In contracts providing specified benefits for dismemberment, death or surgical operations, if the insurer limits its liability to one such loss as a result of a single accident, the contract shall provide that the insured is entitled to receive the largest amount applicable.
[Pa.B. Doc. No. 02-567. Filed for public inspection April 12, 2002, 9:00 a.m.]
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