PRIOR PRINTER'S NOS. 590, 1065 PRINTER'S NO. 1110
No. 561 Session of 1973
INTRODUCED BY HANKINS, ARLENE, CIANFRANI, SMITH, MAZZEI, ROVNER,
McCREESH AND MELLOW, MARCH 26, 1973
AS AMENDED ON SECOND CONSIDERATION, JUNE 18, 1973
AN ACT
1 Regulating the writing, cancellation of or refusal to renew <--
2 policies of fire or casualty insurance; and imposing powers
3 and duties on the Insurance Commissioner therefor.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. As used in this act:
7 (1) "Policy" or "Policy of Fire and Casualty Insurance"
8 means any contract, including any endorsement, rider, binder
9 (written or oral), cover note, certificate or other instrument
10 of insurance attached or relating thereto, without regard to the
11 nature of the form of the same, delivered or issued for delivery
12 in this Commonwealth, which provides any of the coverages
13 enumerated in:
14 (i) Clause (1) of subsection (b) of section 202, act of May
15 17, 1921 (P.L.682, No.284), known as "The Insurance Company Law
16 of 1921," as amended, except insurance against perils to
17 property arising from the ownership or maintenance or from the
18 use of aircraft, automobiles, or other motor vehicles.
1 (ii) Clauses (4) and (6) of subsection (c) of said section
2 202 of "The Insurance Company Law of 1921," when such coverages
3 are written in conjunction with coverage provided under
4 subsection (i) of this section.
5 (iii) Clause (13) of subsection (c) of said section 202 of
6 "The Insurance Company Law of 1921."
7 (2) "Renewal" or "to renew" means the issuance and delivery
8 by an insurer of a policy superseding at the end of the policy
9 period a policy previously issued and delivered by the same
10 insurer, such renewal policy to provide types and limits of
11 coverage at least equal to those contained in the policy being
12 superseded, or the issuance and delivery of a certificate or
13 notice extending the term of a policy beyond its policy period
14 or term with types and limits of coverage at least equal to
15 those contained in the policy being extended: Provided, however,
16 That any policy with a policy period or term of less than twelve
17 months or any period with no fixed expiration date shall for the
18 purpose of this act be considered as if written for successive
19 policy periods or terms of twelve months.
20 (3) "Insurer" means any insurance company, association or
21 exchange authorized to transact the business of fire or casualty
22 insurance in the Commonwealth of Pennsylvania, including
23 eligible unlicensed insurers under the act of January 24, 1966
24 (P.L.1509, No.531).
25 (4) "Nonpayment of premium" means failure of the named
26 insured to discharge when due any of his obligations in
27 connection with the payment of premiums on a policy, or any
28 installment of such premium, whether the premium is payable
29 directly to the insurer or its agent or indirectly under any
30 premium finance plan or extension of credit.
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1 Section 2. No insurer shall cancel or refuse to write or <--
2 renew a policy of fire and casualty insurance because of any one
3 or more of the following grounds: the age, residence, race,
4 color, creed, national origin, ancestry, marital status or
5 lawful occupation (including the military service) of any person
6 who has or seeks a policy; the location of the property; another
7 insurer has refused to write a policy, or has cancelled or has
8 refused to renew an existing policy in which that person was the
9 named insured; or for such other reasons as have been approved
10 by the Insurance Commissioner as provisions of the policy
11 subsequently to the enactment of this act.
12 Section 3. No insurer shall cancel OR REFUSE TO RENEW a <--
13 policy except for SUBSTANTIAL CHANGE IN THE SUBJECT MATTER OF <--
14 THE INSURANCE, OR FRAUD OR FOR nonpayment of premium OR FOR <--
15 OTHER REASONS WHICH MAY BE PROMULGATED BY THE INSURANCE
16 COMMISSIONER.
17 Section 4. No cancellation or refusal to renew by an insurer
18 of a policy of fire and casualty insurance shall be effective
19 unless a written notice of the cancellation or refusal to renew
20 is received by the insured either at the address shown in the
21 policy or at a forwarding address. Such notice shall:
22 (1) Be approved as to form by the Insurance Commissioner
23 prior to use;
24 (2) State the date, not less than thirty days after the date
25 of delivery or mailing on which such cancellation or refusal to
26 renew shall become effective;
27 (3) State the specific reason or reasons of the insurer for
28 cancellation or refusal to renew;
29 (4) Advise the insured of his right to request, in writing,
30 within ten days of the receipt of the notice of cancellation or
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1 intention not to renew that the Insurance Commissioner review
2 the action of the insurer;
3 (5) Advise the insured of his possible eligibility for
4 insurance under the act of July 31, 1968 (P.L.738, No.233),
5 known as "The Pennsylvania Fair Plan Act."
6 (6) Advise the insured in a form commonly understandable of
7 the provisions of sections 2, 3, and 4 of this act as they limit
8 permissible time and reasons for cancellation.
9 (7) Advise the insured of the procedures to be followed in
10 prosecuting an appeal.
11 Section 5. Except as otherwise provided in this section
12 nothing in this act shall apply:
13 (1) If the insurer has manifested its willingness to renew
14 by issuing or offering to issue a renewal policy, certificate or
15 other evidence of renewal, including the mailing of a renewal
16 premium notice to the insured not less than thirty days in
17 advance of the expiration date of the policy;
18 (2) If the named insured has demonstrated by some overt
19 action to the insurer or its agent other than mere nonpayment of
20 premium that he wishes the policy to be cancelled or that he
21 does not wish the policy to be renewed;
22 (3) To any policy of fire and casualty insurance which has
23 been in effect less than sixty days, including any notice of
24 termination period, unless it is a renewal policy, except that
25 no insurer shall decline to continue in force such a policy of
26 fire or casualty insurance solely on the basis of the grounds
27 set forth in section 3 hereof. Any declination of coverage
28 within the sixty-day period provided in this clause shall, for
29 purposes of review by the Insurance Commissioner, be deemed a
30 refusal to write and shall NOT be subject to the provisions of <--
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1 section 6 and of subsection (b) of section 7 of this act. Notice <--
2 of any such declination shall:
3 (i) Be approved as to form by the Insurance Commissioner
4 prior to use;
5 (ii) Advise the insured of his rights under subsection (b)
6 of section 7 of this act;
7 (iii) Advise the insured of his possible eligibility for
8 insurance under "The Pennsylvania Fair Plan Act." THIS ACT. <--
9 Section 6. There shall be no liability on the part of and no
10 cause of action of any nature shall arise against the Insurance
11 Commissioner, any insurer, the authorized representatives,
12 agents and employes of either or any firm, person or corporation
13 furnishing to the insurer information as to reasons for
14 cancellation or refusal to write or renew for any statement made <--
15 by any of them in complying with this act or for the providing
16 of information pertaining thereto.
17 Section 7. (a) Any insured may within ten days of the <--
18 receipt by the insured of notice of cancellation or notice of
19 intention not to renew, request in writing to the Insurance
20 Commissioner that he review the action of the insurer in
21 cancelling or refusing to renew the policy of such insured.
22 (b) Any applicant for a policy who is refused such policy by <--
23 an insurer may, in writing, within ten days of notice of such
24 refusal request the insurer to supply the reasons for such
25 refusal. The insurer shall supply such reasons within five days
26 of receipt by it of such request. Within ten days of the receipt
27 of such reasons, the applicant may request, in writing, to the
28 Insurance Commissioner that he review the action of the insurer
29 in refusing to write a policy for the applicant.
30 Section 8. On receipt of a request for review, the Insurance
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1 Commissioner or his designated representative shall notify the
2 insurer thereof and shall review the matter to determine whether
3 the cancellation or refusal to renew or to write was in <--
4 violation of this act, and shall within forty days of the
5 receipt of such request either order the policy written or <--
6 reinstated or uphold the cancellation or refusal to renew. In
7 the case of a cancellation of or refusal to renew a policy, such
8 policy shall remain in effect until the conclusion of such
9 review except for appeals from cancellations for nonpayment of
10 premiums in which case the policy shall terminate as of the date
11 the policy would otherwise end, unless the appeal is upheld or
12 the policy reinstated.
13 Section 9. The Insurance Commissioner shall promulgate rules
14 and regulations necessary for the administration of this act.
15 The commissioner may provide in such rules and regulations for
16 the establishment of a filing fee not exceeding fifteen dollars
17 ($15), to accompany the request for review. Should the Insurance
18 Commissioner decide the appeal in favor of the insured, the
19 filing fee shall be returned immediately and the fee shall be
20 paid by the insurer. No part of the review by the Insurance
21 Commissioner or his designated representative shall be subject
22 to the provisions of sections 31 through 36 of the act of June
23 4, 1945 (P.L.1388, No.442), known as the "Administrative Agency
24 Law." The decision of the Insurance Commissioner or his
25 designated representative shall be subject to appeal in
26 accordance with sections 41 through 46 of that act: Provided,
27 however, That the court hearing such appeal shall not decline to
28 affirm such decision on the ground that the requirements of
29 sections 31 through 36 of that act have not been complied with.
30 Section 10. Each insurer shall maintain records in such form
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1 as the Insurance Commissioner shall require of the numbers of
2 cancellations and refusals to write or renew policies and the <--
3 reasons therefor and shall supply to the Insurance Commissioner
4 such information as he may request.
5 Section 11. Upon failure by an insurer to comply with any
6 order of the Insurance Commissioner or his designated
7 representatives under section 9 of this act, or upon
8 satisfactory evidence of the violation by any insurer or agent
9 of an insurer, of any of the provisions of this act, or of any
10 rules or regulations promulgated hereunder by the Insurance
11 Commissioner, the Insurance Commissioner may in his discretion
12 pursue any one or more of the following courses of action:
13 (1) Suspend or revoke or refuse to renew the certificate of
14 authority or license to transact the business of insurance of
15 such insurer or agent.
16 (2) For failure of an insurer to comply with any order of
17 the Insurance Commissioner or his designated representatives
18 under section 9 of this act, impose a penalty not to exceed the
19 greater of one thousand dollars ($1,000) or one hundred dollars
20 ($100) per day for each day that such insurer fails to comply
21 with any such order.
22 (3) Impose a penalty of not more than one thousand dollars
23 ($1,000) for each and every act in violation of any of said
24 provisions, rules or regulations by said insurer or agent.
25 Any proceeding by the Insurance Commissioner under this
26 section shall be subject to the provisions of "Administrative
27 Agency Law."
28 Section 12. All acts and parts of acts are repealed in so
29 far as they are inconsistent herewith.
30 Section 13. This act shall take effect immediately.
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