PRINTER'S NO. 1135
No. 1018 Session of 1979
INTRODUCED BY KOWALYSHYN, MICHLOVIC, DAWIDA, A. C. FOSTER, JR.,
GRUPPO, REED, BROWN, KUKOVICH, STEWART, MOWERY AND SCHEAFFER,
APRIL 24, 1979
REFERRED TO COMMITTEE ON INSURANCE, APRIL 24, 1979
AN ACT
1 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
2 act relating to insurance; amending, revising, and
3 consolidating the law providing for the incorporation of
4 insurance companies, and the regulation, supervision, and
5 protection of home and foreign insurance companies, Lloyds
6 associations, reciprocal and inter-insurance exchanges, and
7 fire insurance rating bureaus, and the regulation and
8 supervision of insurance carried by such companies,
9 associations, and exchanges, including insurance carried by
10 the State Workmen's Insurance Fund; providing penalties; and
11 repealing existing laws," further providing for fire
12 insurance contracts.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Subsection 2 of section 506, act of May 17, 1921
16 (P.L.682, No.284), known as "The Insurance Company Law of 1921,"
17 is repealed.
18 Section 2. The section heading and subsection 6 of section
19 506 of the act, added August 23, 1961 (P.L.1081, No.488), are
20 amended and a subsection is added to read:
21 Section 506. Fire Insurance Contract; [Standard Policy
22 Provisions;] Permissible Variations.--
1 * * *
2 2.1. (a) No policy of insurance against loss from fire,
3 lightning or removal, shall be issued or delivered by any
4 insurance company, association or exchange issuing such policies
5 to any person in this Commonwealth, including but not limited
6 to, any policy written pursuant to the provisions of the act of
7 July 31, 1968 (P.L.738, No.233), known as "The Pennsylvania Fair
8 Plan Act," until a copy of the form has been filed with and
9 approved by the Insurance Commissioner. If the Insurance
10 Commissioner shall notify in writing the company, association or
11 other insurer which has filed such form that it does not comply
12 with the requirements of law and regulation, specifying the
13 reason for his opinion, it shall be unlawful for any such
14 insurer to issue any policy in such form. A form shall be deemed
15 approved if it is not disapproved within sixty (60) days after
16 filing.
17 (b) The Insurance Commissioner shall disapprove a policy
18 upon a finding:
19 (1) That it is inequitable, unfairly discriminatory,
20 misleading, unreadable, deceptive, obscure or encourages
21 misrepresentation, including but not limited to, cases where the
22 form, policy or endorsements:
23 (i) Are misleading because benefits are too restricted to
24 achieve the purposes for which it is sold.
25 (ii) Contains provisions whose natural consequence is to
26 obscure or lessen competition.
27 (iii) Is unnecessarily verbose or complex in language.
28 (iv) Is misleading, deceptive or obscure because of such
29 physical aspects as format, typography, style, color, material
30 or organization.
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1 (v) Provides benefits or contains other provisions that
2 endanger the solidity of the insurer.
3 (vi) Fails to provide the exact name of the insurer and the
4 full address of its home office.
5 (vii) Violates a statute or rule promulgated by the
6 commissioner or is otherwise contrary to law.
7 (c) The Insurance Commissioner shall promulgate such rules
8 and regulations as are deemed necessary for the effective
9 implementation and operation of this act. Such regulations shall
10 include minimum standards of readability. The standards shall
11 include, but shall not be limited to, standards on an index of
12 policy provisions, general organization of the text, text
13 readability, type size, type style, type spacing and general
14 appearance of the insurance contract. Public hearings shall be
15 held prior to the promulgation of any such regulation unless
16 such regulation or amendment is insubstantial. If the Insurance
17 Commissioner has not promulgated such regulations within one (1)
18 year from the effective date of this amendatory act, any
19 insurance company, association or exchange issuing such policies
20 may file a policy form with the commissioner for approval. Such
21 form shall be deemed approved if not disapproved within thirty
22 (30) days.
23 (d) All insurers must file policy forms to comply with this
24 amendatory act and the regulations promulgated thereunder,
25 within one (1) year of the effective date of regulations
26 promulgated by the Insurance Commissioner. Insurers may use such
27 policy forms until such forms are disapproved by the
28 commissioner. During the interim between the effective date of
29 this amendatory act and the filing of their policy forms in
30 compliance with this subsection, all insurers shall continue to
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1 use the policy form mandated by former subsection 2 which is
2 temporarily continued for such purpose.
3 (e) Whenever the commissioner finds, after a hearing, that a
4 form approved or deemed to be approved under subsection 2 would
5 be disapproved under this subsection if newly filed, the
6 commissioner may order that on or before a date not less than
7 thirty (30) nor more than ninety (90) days after the order the
8 use of the form shall be discontinued or appropriate changes
9 shall be made.
10 * * *
11 [6. The form of policy, including fire insurance, as defined
12 in this section, upon property in the Commonwealth, shall be
13 plainly printed, and no portion thereof shall be in type smaller
14 than seven (7) point.]
15 * * *
16 Section 3. This act shall take effect in 60 days. The repeal
17 of subsection 2 of section 506 shall be applicable to insurers
18 as soon as they file new policy forms in compliance with
19 subsection 2.1(d) of section 506. In any event, the repeal of
20 subsection 2 of section 506 shall be absolute and applicable to
21 all insurers one year after the effective date of the
22 regulations promulgated by the Insurance Commissioner.
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