PRINTER'S NO. 3194
No. 2317 Session of 1986
INTRODUCED BY JOSEPHS, AFFLERBACH, MICHLOVIC, CARN, DAWIDA,
MURPHY, TRUMAN, DeVERTER, DURHAM, WAMBACH, KUKOVICH, SWEET,
TIGUE, HARPER, PISTELLA, STABACK, FREEMAN, TRELLO AND
HOWLETT, MARCH 19, 1986
REFERRED TO COMMITTEE ON INSURANCE, MARCH 19, 1986
AN ACT
1 Relating to insurance; regulating and requiring the disclosure
2 of certain loss ratios; and making repeals.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Accident and
7 Health Insurance Fair Disclosure Act.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Accident or health insurance." Any form of insurance which
13 provides, on an individual, group, blanket or other basis,
14 medical, osteopathic, dental, podiatry, hospital or other
15 services or indemnity therefor. The term includes services which
16 may be provided or indemnified for by a:
17 (1) Domestic or foreign insurance company.
1 (2) Hospital plan corporation subject to 40 Pa.C.S. Ch.
2 61 (relating to hospital plan corporations).
3 (3) Professional health service corporation subject to
4 40 Pa.C.S. Ch. 63 (relating to professional health services
5 plan corporations).
6 (4) Health maintenance organization subject to the act
7 of December 29, 1972 (P.L.1701, No.364), known as the Health
8 Maintenance Organization Act.
9 "Covered person." An insurer which delivers or issues for
10 delivery in this Commonwealth a policy of accident or health
11 insurance or a certificate evidencing group or other coverage
12 under such a policy of insurance. The term includes a foreign
13 insurer not admitted to do business in this Commonwealth.
14 "Loss ratio." Claims paid or incurred divided by premiums
15 received or accrued. The Insurance Commissioner may specify by
16 regulation the manner in which the loss ratio or accident or
17 health insurance is computed for the purposes of this act. The
18 loss ratio shall be determined for any year on the basis of the
19 experience for the most recent three years ending not more than
20 12 months prior to the year for which determined. If the covered
21 person shall not have issued a policy subject to sections 3 and
22 4 of this act for all of the three-year period, the loss ratio
23 shall be determined on the basis of experience during such
24 period for which the policy, or a substantially similar policy,
25 was issued. Claims paid or incurred shall not include
26 commissions, home office expenses or other expenses.
27 "Other services." Services which the Insurance Commissioner
28 by regulation determines for the purposes of this act to be
29 similar to medical, osteopathic, dental, podiatry or hospital
30 services.
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1 Section 3. Minimum loss ratio.
2 (a) General rule.--A covered person shall not issue or cause
3 to be issued for delivery in this Commonwealth any policy of
4 accident or health insurance or any certificate evidencing group
5 or other coverage under such a policy of insurance unless the
6 premium charged or collected results in a loss ratio which is
7 not less than:
8 (1) Seventy-five percent in the case of group coverage.
9 (2) Ninety percent in any other case.
10 (b) Exception.--The Insurance Commissioner, after notice in
11 the Pennsylvania Bulletin and opportunity for hearing, may grant
12 a temporary waiver of the requirements of subsection (a) upon a
13 showing of good cause.
14 Section 4. Disclosure of loss ratio.
15 (a) Policies.--At least annually, each covered person shall
16 include in the policy or certificate form, or otherwise
17 transmit, in writing, to the policyholder or certificateholder
18 of accident or health insurance a statement of the actual loss
19 ratio currently applicable to the coverage to which the policy
20 or certificate relates.
21 (b) Advertising.--Advertising or soliciting material used or
22 authorized by a covered person with respect to any policy or
23 certificate of accident or health insurance issued or issued for
24 delivery in this Commonwealth shall set forth the actual loss
25 ratio currently applicable to the coverage to which the policy
26 or certificate relates.
27 (c) Regulations.--The Insurance Commissioner may specify by
28 regulation the manner in which the disclosures under this
29 section shall be made.
30 Section 5. Enforcement.
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1 The transaction of insurance in violation of the provisions
2 of this act shall be unlawful and the Insurance Commissioner may
3 enforce the provisions of this act in the same manner as under
4 existing laws in the case of the unauthorized transaction of
5 insurance. Any person damaged by reason of any violation of this
6 act may bring a civil action therefor. In any such civil action,
7 the court, in its discretion, may allow the prevailing party a
8 reasonable attorney's fee as part of the costs.
9 Section 6. Repeals.
10 All acts and parts of acts are repealed insofar as they are
11 inconsistent with this act.
12 Section 7. Effective date.
13 This act shall take effect in one year.
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