PRINTER'S NO. 4078
No. 2839 Session of 1986
INTRODUCED BY DeVERTER, GODSHALL, VROON, FLICK, BOWSER, JOHNSON,
FARGO, MERRY, HERMAN, SCHULER, BLACK AND DAVIES, OCTOBER 6,
1986
REFERRED TO COMMITTEE ON INSURANCE, OCTOBER 6, 1986
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," authorizing municipalities to form
12 municipal reciprocal insurers.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Section 101 of the act of May 17, 1921 (P.L.682,
16 No.284), known as The Insurance Company Law of 1921, amended
17 July 1, 1937 (P.L.2529, No.468), is amended to read:
18 Section 101. Certain Words Defined.--The word "company," as
19 used in this act, shall be construed to include incorporated
20 insurance companies only, and title insurance companies, whether
21 incorporated under the laws of this Commonwealth, or any other
22 state, territory, or district, or under the laws of any foreign
1 country.
2 Except where otherwise indicated, the word "association," as
3 used in this act, shall be construed to include only
4 individuals, partnerships or associations of individuals,
5 authorized to engage in the business of insurance in the
6 Commonwealth as insurers on the Lloyds plan.
7 The word "exchange," as used in this act, shall be construed
8 to include only individuals, partnerships and corporations,
9 authorized by the laws of the Commonwealth to exchange with each
10 other inter-insurance or reciprocal insurance contracts. Such
11 word shall include any aggregation of counties, municipalities,
12 cities, boroughs, townships, villages, school districts or other
13 public entities, whether incorporated or unincorporated.
14 Section 2. Section 300 of the act, added July 17, 1959
15 (P.L.545, No.163), is amended to read:
16 Section 300. Government Owned Companies.--(a) [No] Except
17 as provided in subsection (d), no domestic, foreign or alien
18 insurance company, association or exchange, in which the major
19 financial interest is held, directly or indirectly, by another
20 state of the United States or by a foreign government or by any
21 political subdivision, instrumentality or agency of either,
22 shall be admitted and authorized to do business.
23 (b) No certificate of authority to transact any kind of
24 insurance business in this Commonwealth shall be issued, renewed
25 or continued in effect for any such insurance company,
26 association or exchange.
27 (c) The provisions of this section shall not apply to:
28 (1) [any] Any insurance company, association or exchange
29 which was so owned, controlled or constituted prior to January
30 1, 1958, and was authorized to do business in this Commonwealth
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1 and was issued a certificate of authority to do so prior to
2 January 1, 1958.
3 (2) Any exchanges or reciprocals authorized or organized by
4 the Commonwealth or any of its political subdivisions, agencies,
5 boards or commissions.
6 Section 3. Section 1002 of the act is amended to read:
7 Section 1002. Corporations Authorized To Exchange
8 Contracts.--Any corporation, now or hereafter organized under
9 the laws of this Commonwealth, shall, in addition to the rights,
10 powers, and franchises specified in its article of
11 incorporation, have full power and authority to exchange
12 insurance contracts of the kind and character herein mentioned.
13 The right to exchange such contracts is hereby declared to be
14 incidental to the purpose for which such corporations are
15 organized and as much granted as the rights and powers expressly
16 conferred. Corporations, as defined or organized under the laws
17 of this Commonwealth, shall include any county, municipality,
18 city, borough, township, village, school district or other
19 public entity, whether incorporated or unincorporated.
20 Section 4. Section 1004(f) of the act, amended June 24, 1939
21 (P.L.683, No.318), is amended to read:
22 Section 1004. Declaration To Be Filed with Insurance
23 Commissioner; Contents.--Such subscribers, so contracting among
24 themselves, shall, through their attorney, file with the
25 Insurance Commissioner of this Commonwealth a declaration
26 verified by the oath of such attorney, setting forth:
27 * * *
28 (f) (1) That applications have been made for indemnity upon
29 at least one hundred (100) separate risks, aggregating not less
30 than one and one-half million ($1,500,000) dollars, as
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1 represented by executed contracts or bona fide applications to
2 become concurrently effective, or, in case of employes'
3 liability or compensation insurance, covering a total payroll of
4 not less than one and one-half million ($1,500,000) dollars or
5 in the alternative.
6 (2) Twenty-five or more counties, municipalities, cities,
7 boroughs, townships, village or school district or other public
8 entity of the Commonwealth, each having the qualifications of
9 subscribers as prescribed in this article, may organize a single
10 state under municipal reciprocal insurer.
11 * * *
12 Section 5. Section 1005 of the act is amended to read:
13 Section 1005. Certificate of Attorney.--(a) Each attorney,
14 by or through whom are issued any policies of or contracts for
15 indemnity of the character referred to in this article, shall
16 procure from the Insurance Commissioner, annually, a certificate
17 of authority, stating that all the requirements of this act have
18 been complied with; and, upon the payment of the fees required
19 by this act, the Insurance Commissioner shall issue such
20 certificate. The Insurance Commissioner may revoke or suspend
21 any certificate of authority issued hereunder.
22 (b) The officers or directors of subscribers to a municipal
23 reciprocal insurer shall appoint an advisory committee to act on
24 behalf of the subscribers, with power to supervise and control
25 the attorney-in-fact and to control the investments of the
26 assets of the reciprocal insurer and such other powers as may be
27 conferred upon it by the declaration filed with the Insurance
28 Commissioner, except that the advisory committee of the
29 municipal reciprocal insurer shall be appointed by the Insurance
30 Commissioner to serve until the first annual meeting of the
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1 subscribers; and, subject to the approval of the Insurance
2 Commissioner, the members of the advisory committee shall
3 reflect the proportional composition of subscribers
4 participating in the municipal reciprocal insurer.
5 (c) A municipal reciprocal insurer may not be licensed to
6 offer accident and health insurance, noncancellable disability
7 insurance, marine protection and indemnity insurance, life
8 insurance, annuities, title insurance, financial guaranty and
9 residual value insurance, workmen's compensation or reinsurance
10 or coverage on risks outside this Commonwealth.
11 Section 6. The act is amended by adding a section to read:
12 Section 1007.1. Municipal Reciprocal Insurance.--The
13 attorney of a municipal reciprocal insurer shall, with the
14 approval of the advisory committee; (i) establish and promote a
15 risk management program; (ii) establish equitable risk
16 classifications; and (iii) establish uniform recordkeeping and
17 reporting procedures. Every subscriber to the municipal
18 reciprocal insurer shall agree to participate in the established
19 risk management program as a condition of eligibility. The
20 program shall include, but not be limited to, identification and
21 the reduction of hazards or perils or risks of loss or damage
22 through the implementation of improved safety technologies,
23 improved work techniques and more efficient and effective
24 procedures. The attorney, subject to the approval of the
25 advisory committee, may enter into a contract or contracts with
26 any person, firm or corporation for services necessary to
27 perform and administer the risk management program or to perform
28 or administer other functions deemed necessary to the advisory
29 committee and approved by the Insurance Commissioner.
30 Section 7. This act shall take effect in 60 days.
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