PRINTER'S NO. 2829
No. 2174 Session of 1988
INTRODUCED BY HAYDEN, BLAUM, GODSHALL, TRELLO, OLASZ, BORTNER,
WOZNIAK, JAROLIN, COY, LINTON, COLAFELLA, CAWLEY, HERSHEY,
VAN HORNE, KENNEY, DONATUCCI, LUCYK, KOSINSKI, SEVENTY, BURD,
MURPHY, LaGROTTA, BRANDT, FARGO, MILLER, STUBAN, TIGUE AND
BLACK, FEBRUARY 8, 1988
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 8, 1988
AN ACT
1 Amending Title 75 (Vehicles) of the Pennsylvania Consolidated
2 Statutes, further providing for financial responsibility;
3 establishing a claims threshold; imposing a surcharge for
4 unfunded liability; establishing an all-industry insurance
5 association; adding definitions; and making repeals.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Section 1306 of Title 75 of the Pennsylvania
9 Consolidated Statutes is amended to read:
10 § 1306. Grounds for refusing registration.
11 The department shall refuse registration or renewal or
12 transfer of registration when any of the following circumstances
13 exists:
14 (1) The applicant is not entitled to registration under
15 the provisions of this chapter.
16 (2) The applicant has at registration or titling
17 neglected or refused to furnish the department with the
18 information required on the appropriate official form, or any
1 reasonable additional information required by the department.
2 (3) The department has reasonable grounds to believe
3 that the application contains false or fraudulent
4 information, or that the vehicle is stolen, which fact the
5 department shall ascertain by reference to the stolen vehicle
6 file required to be maintained under section 7114 (relating
7 to records of stolen vehicles), or that the granting of
8 registration would constitute a fraud against the rightful
9 owner or other person having a valid lien upon the vehicle.
10 (4) The fees required by law have not been paid.
11 (5) The vehicle is not constructed or equipped as
12 required by this title.
13 (6) The registration of the vehicle stands suspended or
14 revoked for any reason as provided for in this title.
15 [(7) The Catastrophic Loss Trust Fund charge has not
16 been paid.]
17 Section 2. Title 75 is amended by adding a section to read:
18 § 1318. Duties of agents.
19 (a) Verification of financial responsibility.--An agent who
20 is authorized to issue on behalf of the department a vehicle
21 registration renewal or temporary registration shall be required
22 to verify financial responsibility prior to issuance.
23 (b) Proof.--Proof of financial responsibility shall be
24 verified by examining one of the following documents:
25 (1) An identification card as required by regulations
26 promulgated by the Insurance Department.
27 (2) The declaration page of an insurance policy.
28 (3) A certificate of financial responsibility.
29 (4) A valid binder of insurance.
30 Section 3. Sections 1371, 1373, 1376, 1377 and 1701 of Title
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1 75 are amended to read:
2 § 1371. Operation following suspension or revocation of
3 registration.
4 (a) General rule.--No person shall operate and no owner
5 shall permit to be operated upon any highway a vehicle the
6 registration of which has been suspended or revoked.
7 (b) Penalty.--Any person violating this section is guilty of
8 a summary offense and shall, upon conviction, be sentenced to
9 pay a fine of not less than $100 nor more than $500.
10 § 1373. Suspension of registration.
11 The department may suspend any registration after providing
12 opportunity for a hearing in any of the following cases when the
13 department finds upon sufficient evidence that:
14 (1) The vehicle is unsafe or unfit for operation or is
15 not equipped as required by this title.
16 (2) The owner or registrant has made, or permitted to be
17 made, any unlawful use of the vehicle or registration plate
18 or plates, or registration card, or permitted the use by a
19 person not entitled thereto.
20 (3) The owner or registrant has knowingly made a false
21 statement or knowingly concealed a material fact or otherwise
22 committed a fraud in any application or form required to be
23 filed by this title.
24 (4) Upon the request or order of any court of record.
25 (5) The required fees have not been paid.
26 (6) The registrant or any agent or employee has
27 repeatedly violated any of the provisions of this chapter or
28 Chapter 11 (relating to certificate of title and security
29 interests).
30 [(7) The Catastrophic Loss Trust Fund charge has not
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1 been paid.]
2 § 1376. Surrender of registration plates and cards upon
3 suspension or revocation.
4 (a) General rule.--The department, upon suspending or
5 revoking any registration, shall require the registration plate
6 or plates and registration card to be surrendered immediately to
7 the department and may delegate authority to any authorized
8 [department] Commonwealth employee, member of the Pennsylvania
9 State Police or local police officer to seize the registration
10 plate or plates and registration card or cards. The department
11 shall, by regulation, prescribe the manner of selecting the
12 employees and State and local police officers to seize the
13 registration plates and registration cards.
14 (b) Penalty.--Any person failing or refusing to surrender to
15 the department, upon demand, any registration plate or card
16 which has been suspended or revoked is guilty of a summary
17 offense and shall, upon conviction, be sentenced to pay a fine
18 of $100.
19 § 1377. Judicial review of denial [or], suspension or
20 revocation of registration.
21 Any person whose registration has been denied [or], suspended
22 or revoked by the department shall have the right to appeal to
23 the court vested with jurisdiction of such appeals by or
24 pursuant to Title 42 (relating to judiciary and judicial
25 procedure). The filing of the appeal shall act as a supersedeas
26 and the suspension of registration shall not be imposed until
27 determination of the matter as provided in this section. The
28 court shall set the matter down for hearing upon 30 days written
29 notice to the department, and thereupon take testimony and
30 examine into the facts of the case and determine whether the
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1 petitioner is entitled to registration or subject to suspension
2 of registration under the provisions of this title.
3 § 1701. Short title of chapter.
4 This chapter shall be known and may be cited as the [Motor
5 Vehicle Financial Responsibility Law] Consumer Automobile
6 Insurance Reform Act.
7 Section 4. Title 75 is amended by adding a section to read:
8 § 1701.1. Findings and purposes.
9 (a) Findings.--The General Assembly hereby finds and
10 declares that:
11 (1) A Statewide low cost, comprehensive and fair system
12 for compensating and restoring motor vehicle accident victims
13 is necessary for the protection of the citizens of this
14 Commonwealth.
15 (2) It is the Commonwealth's obligation to ensure that
16 mandatory auto insurance coverage is available and affordable
17 for all its citizens in order that they may comply with the
18 law.
19 (3) Many Commonwealth citizens are unable to obtain the
20 basic minimum automobile insurance coverage required by the
21 Motor Vehicle Financial Responsibility Law due to the
22 unavailability of the coverage in their area of the State and
23 due to the unaffordability of the coverage. Consequently,
24 many citizens do not maintain required automobile insurance,
25 thereby depriving themselves coverage for medical expenses
26 and often precluding an innocent victim of an uninsured
27 motorist from obtaining reasonable compensation for injuries
28 suffered.
29 (4) Automobile insurance rates have increased at least
30 20% since late 1986 and will continue to skyrocket under the
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1 Motor Vehicle Financial Responsibility Law, rendering basic
2 minimum coverage unaffordable to an even larger number of
3 Commonwealth citizens.
4 (5) The major cause for escalating auto insurance rates
5 is the high frequency of small bodily injury claims.
6 (6) The establishment of a $10,000 medical cost claim
7 threshold and a verbal claim threshold in conjunction with
8 mandatory first-party benefits will eliminate up to 90% of
9 claims for pain and suffering resulting from minor motor
10 vehicle accidents. The thresholds will serve to reduce the
11 cost of providing auto insurance for the adequate protection
12 of injured insureds and victims.
13 (7) The continuation of benefits for catastrophically
14 injured motor vehicle accident victims is necessary for the
15 health and welfare of the citizens of this Commonwealth.
16 (b) Purpose.--It is hereby declared to be the policy of the
17 General Assembly to establish a comprehensive system which will
18 assure the availability and affordability of automobile
19 insurance coverage through the private sector. The establishment
20 of a fair and equitable motor vehicle insurance system will
21 further the health and welfare of the citizens of this
22 Commonwealth by providing prompt medical care to motor vehicle
23 accident victims and providing reasonable compensation to
24 seriously injured motor vehicle accident victims.
25 Section 5. Sections 1702, 1711, 1715 and 1718(c) of Title 75
26 are amended to read:
27 § 1702. Definitions.
28 The following words and phrases when used in this chapter
29 shall have the meanings given to them in this section unless the
30 context clearly indicates otherwise:
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1 "Association." The All-Industry Insurance Association.
2 "Benefits" or "first party benefits." Medical benefits,
3 extraordinary medical benefits, income loss benefits, accidental
4 death benefits and funeral benefits.
5 "Board" or "board of directors." The board of directors of
6 the association.
7 "Commissioner." The Commissioner of Insurance of the
8 Commonwealth.
9 "Department." The Department of Transportation or Insurance
10 Department, as applicable.
11 "Extraordinary medical benefit." Coverage for those
12 reasonable and necessary expenses only for medical treatment and
13 rehabilitative services which, as described in section 1712(1)
14 (relating to availability of benefits), exceed $100,000, subject
15 to the limitation that the maximum benefit payable on behalf of
16 any one eligible individual, shall be $50,000 per year,
17 $1,000,000 lifetime aggregate. The $50,000 limitation shall not
18 apply for the first 18 months from the date of injury, but all
19 payments are subject to the $1,000,000 lifetime aggregate.
20 "Financial responsibility." The ability to respond in
21 damages for liability on account of accidents arising out of the
22 maintenance or use of a motor vehicle in the amount of $15,000
23 because of injury to one person in any one accident, in the
24 amount of $30,000 because of injury to two or more persons in
25 any one accident and in the amount of $5,000 because of damage
26 to property of others in any one accident. The financial
27 responsibility shall be in a form acceptable to the Department
28 of Transportation.
29 "Incurred medical expenses." The total of the value of all
30 reasonable and necessary expenses for medical services,
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1 including, but not limited to, hospital, dental, surgical,
2 radiological, psychiatric, psychological, osteopathic,
3 ambulance, chiropractic, licensed physical therapy, nursing
4 services, vocational rehabilitation and occupational therapy,
5 speech pathology and audiology, optometric services,
6 medications, prescription drugs, medical supplies and prosthetic
7 devices incurred in the diagnosis, treatment, care and recovery
8 of an injured person.
9 "Injury." Accidentally sustained bodily harm to an
10 individual and that individual's illness, disease or death
11 resulting therefrom.
12 "Insured." Any of the following:
13 (1) An individual identified by name as an insured in a
14 policy of motor vehicle liability insurance.
15 (2) If residing in the household of the named insured:
16 (i) a spouse or other relative of the named insured;
17 or
18 (ii) a minor in the custody of either the named
19 insured or relative of the named insured.
20 "Insurer" or "insurance company." A motor vehicle liability
21 insurer subject to the requirements of this chapter.
22 "Minimum coverage." The minimum limits of:
23 (1) financial responsibility as defined in this section;
24 (2) first party benefits as required by section 1711
25 (relating to required benefits); and
26 (3) uninsured and underinsured motorists coverage as
27 required by section 1731 (relating to scope and amount of
28 coverage).
29 "Noneconomic loss." Pain and suffering and similar
30 nonmonetary detriment.
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1 "Optional coverages." Coverage at limits which exceed
2 minimum coverages and comprehensive and collision coverages.
3 "Private passenger motor vehicle." A motor vehicle of the
4 private passenger or station wagon type that is not used as a
5 public or livery conveyance for passengers and is not rented to
6 others, or any four-wheel motor vehicle with a gross weight not
7 exceeding 9,000 pounds which is not principally used in the
8 occupation, profession or business of the insured other than
9 farming. The term shall not include any motor vehicle insured
10 under a policy issued through an automobile assigned risk plan,
11 nor to any motor vehicle insured under a policy covering garage,
12 automobile sales agency repair shop, service station or public
13 parking place operation hazards.
14 "Qualified applicant." An individual who is required to
15 demonstrate financial responsibility.
16 "Self-insurer." An entity providing benefits and qualified
17 in the manner set forth in section 1787 (relating to self-
18 insurance).
19 "Serious injury." A personal injury resulting in any of the
20 following:
21 (1) Death.
22 (2) Dismemberment.
23 (3) Permanent and significant disfigurement.
24 (4) Permanent loss of use of a:
25 (i) body organ;
26 (ii) body member;
27 (iii) body function; or
28 (iv) body system.
29 (5) Permanent consequential limitation of use of a body
30 organ or member.
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1 (6) Significant limitation of a body function or system
2 which prevents the injured person from performing
3 substantially all of the material acts which constitute such
4 person's usual and customary daily activities for not less
5 than 90 days during the 180 days immediately following the
6 occurrence of the injury or impairment.
7 "Underinsured motor vehicle." A motor vehicle for which the
8 limits of available liability insurance and self-insurance are
9 insufficient to pay losses and damages.
10 "Uninsured motor vehicle." Any of the following:
11 (1) A motor vehicle for which there is no liability
12 insurance or self-insurance applicable at the time of the
13 accident.
14 (2) A motor vehicle for which the insurance company
15 denies coverage or the insurance company is or becomes
16 involved in insolvency proceedings in any jurisdiction.
17 (3) An unidentified motor vehicle that causes an
18 accident resulting in injury provided the accident is
19 reported to the police or proper governmental authority and
20 the claimant notifies his insurer within 30 days, or as soon
21 as practicable thereafter, that the claimant or his legal
22 representative has a legal action arising out of the
23 accident.
24 § 1711. Required benefits.
25 An insurer issuing or delivering liability insurance policies
26 covering any motor vehicle of the type required to be registered
27 under this title, except recreational vehicles not intended for
28 highway use, motorcycles, motor-driven cycles or motorized
29 pedalcycles or like type vehicles, registered and operated in
30 this Commonwealth, shall include coverage providing a medical
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1 benefit in the amount of $10,000, an extraordinary medical
2 benefit, an income loss benefit up to a monthly maximum of
3 $1,000 up to a maximum benefit of $5,000 and a funeral benefit
4 in the amount of $1,500, as defined in section 1712 (relating to
5 availability of benefits), with respect to injury arising out of
6 the maintenance or use of a motor vehicle. The income loss
7 benefit provided under this section may be expressly waived by
8 the named insured provided the named insured has no expectation
9 of actual income loss due to age, disability or lack of
10 employment history. The minimum medical benefit shall be
11 adjusted pursuant to section 1798.2 (relating to index of
12 medical costs).
13 § 1715. Availability of adequate limits.
14 (a) General rule.--An insurer shall make available for
15 purchase first party benefits as follows:
16 (1) For medical benefits, up to at least $100,000.
17 (2) For income loss benefits, up to at least $2,500 per
18 month up to a maximum benefit of at least $50,000.
19 (3) For accidental death benefits, up to at least
20 $25,000.
21 (4) For funeral benefits, $2,500.
22 (5) For combination of benefits enumerated in paragraphs
23 (1) through (4) and subject to a limit on the accidental
24 death benefit of up to $25,000 and a limit on the funeral
25 benefit of $2,500, up to at least [$277,500] $177,500 of
26 benefits in the aggregate or benefits payable up to three
27 years from the date of the accident, whichever occurs first.
28 (b) Higher [or lower] limits and additional benefits.--
29 Insurers may make available higher [or lower] limits or benefits
30 in addition to those enumerated in subsection (a).
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1 (c) Restriction on providing first party benefits.--An
2 insurer shall not issue or deliver a policy providing first
3 party benefits in accordance with this subchapter unless the
4 policy also contains coverage for liability in amounts at least
5 equal to the limits required for financial responsibility.
6 § 1718. Exclusion from benefits.
7 * * *
8 (c) Named driver exclusion.--An insurer may exclude any
9 insured or his personal representative from first party benefits
10 [under a policy enumerated in section 1711 or 1712] when the
11 insured is excluded from coverage while operating a motor
12 vehicle [in accordance with the act of June 5, 1968 (P.L.140,
13 No.78), relating to the writing, cancellation of or refusal to
14 renew policies of automobile insurance.] when his driver's
15 license or motor vehicle registration has been suspended or
16 revoked or because of failure to provide documentation that an
17 illness or temporary or permanent disability does not impair his
18 ability to operate a motor vehicle. Such exclusion shall not
19 affect entitlement to third party liability benefits under the
20 insured's policy or the excluded individual's eligibility for
21 coverage under the named insured's policy for any injuries
22 sustained while not operating a motor vehicle.
23 Section 6. Section 1722 of Title 75 is repealed.
24 Section 7. Sections 1731(d), 1733 and 1734 of Title 75 are
25 amended to read:
26 § 1731. Scope and amount of coverage.
27 * * *
28 (d) Limitation on recovery.--
29 (1) A person who recovers damages under uninsured
30 motorist coverage or coverages cannot recover damages under
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1 underinsured motorist coverage or coverages for the same
2 accident.
3 (2) A person shall not recover under uninsured motorist
4 coverage or underinsured motorist coverage damages for
5 liability for injury arising out of the maintenance or use of
6 a private passenger motor vehicle by a tort-feasor unless the
7 person would be entitled to recover damages against the tort-
8 feasor under section 1798.1(b) (relating to preclusion of
9 pleading, proving and recovering required benefits).
10 § 1733. Priority of recovery.
11 [Where multiple policies apply, payment shall be made in the
12 following order of priority:
13 (1) A policy covering a motor vehicle occupied by the
14 injured person at the time of the accident.
15 (2) A policy covering a motor vehicle not involved in
16 the accident with respect to which the injured person is an
17 insured.]
18 (a) General rule.--A person shall recover uninsured and
19 underinsured benefits against applicable insurance coverage in
20 the following order of priority:
21 (1) For a named insured, the policy on which he is the
22 named insured.
23 (2) For an insured, the policy covering the insured.
24 (b) Multiple sources of equal priority.--The insurer against
25 whom a claim is asserted first under the priorities set forth in
26 subsection (a) shall process and pay the claim as if wholly
27 responsible. The insurer is thereafter entitled to recover
28 contribution pro rata from any other insurer for the benefits
29 paid and the costs of processing the claim.
30 § 1734. Request for lower [or higher] limits of coverage.
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1 A named insured may request in writing the issuance of
2 coverages under section 1731 (relating to scope and amount of
3 coverage) in amounts less than the limits of liability for
4 bodily injury but in no event less than the amounts required by
5 this chapter for bodily injury. [If the named insured has
6 selected uninsured and underinsured motorist coverage in
7 connection with a policy previously issued to him by the same
8 insurer under section 1731, the coverages offered need not be
9 provided in excess of the limits of liability previously issued
10 for uninsured and underinsured motorist coverage unless the
11 named insured requests in writing higher limits of liability for
12 those coverages.]
13 Section 8. Title 75 is amended by adding a section to read:
14 § 1737. Stacking of benefits.
15 Uninsured and underinsured motorists benefits shall not be
16 increased by stacking the limits of coverage of:
17 (1) multiple motor vehicles covered under the same
18 policy of insurance; or
19 (2) multiple motor vehicle policies covering the
20 individual for the same loss.
21 Section 9. Sections 1741, 1744, 1751, 1752, 1753, 1754, 1756
22 and 1757 of Title 75 are amended to read:
23 § 1741. Establishment.
24 [The Insurance Department shall, after consultation with the
25 insurers licensed to write motor vehicle liability insurance in
26 this Commonwealth,] Insurers providing financial responsibility
27 as required by law, shall adopt a reasonable Assigned Risk Plan
28 for the equitable apportionment among those insurers of
29 applicants for [motor vehicle] liability insurance for motor
30 vehicles, except private passenger motor vehicles, who are
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1 entitled to, but are unable to, procure insurance through
2 ordinary methods. [When the plan has been adopted, all] Such
3 plan and all amendments thereto shall be subject to approval by
4 the commissioner. All motor vehicle liability insurers shall
5 subscribe [thereto] and shall participate in the plan approved
6 by the commissioner. The plan may provide reasonable means for
7 the transfer of individuals insured thereunder into the ordinary
8 market, at the same or lower rates, pursuant to regulations
9 established by the department.
10 § 1744. Termination of policies.
11 Cancellation, refusal to renew and other termination of
12 policies issued under the Assigned Risk Plan shall be in
13 accordance with the rules of the plan and the act of July 3,
14 1986 (P.L.396, No.86), entitled "An act requiring notice of rate
15 increases, policy cancellations and nonrenewals by property and
16 casualty insurers.
17 § 1751. Organization.
18 [Insurers providing financial responsibility as required by
19 law shall organize and maintain, subject to the approval and
20 regulation of the Insurance Department, an Assigned Claims Plan
21 and adopt rules for the operation and for the assessment of
22 costs on a fair and equitable basis.]
23 The association shall, as part of the plan of operation
24 required by section 1799.23 (relating to plan of operation),
25 adopt rules for the adjustment and payment of assigned claims
26 and for the assessment of costs of such claims on a fair and
27 equitable basis.
28 § 1752. Eligible claimants.
29 (a) General rule.--A person is eligible to recover benefits
30 [from the Assigned Claims Plan] as an assigned claim if the
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1 person meets the following requirements:
2 (1) Is a resident of this Commonwealth.
3 (2) Is injured as the result of a motor vehicle accident
4 occurring in this Commonwealth.
5 (3) Is not an owner of a motor vehicle required to be
6 registered under Chapter 13 (relating to registration of
7 vehicles).
8 (4) Is not the operator or occupant of a motor vehicle
9 owned by the Federal Government or any of its agencies,
10 departments or authorities.
11 (5) Is not the operator or occupant of a motor vehicle
12 owned by a self-insurer or by an individual or entity who or
13 which is immune from liability for, or is not required to
14 provide, benefits or uninsured and underinsured motorist
15 coverage.
16 (6) Is otherwise not entitled to receive any first party
17 benefits under section 1711 (relating to required benefits)
18 or 1712 (relating to availability of benefits) applicable to
19 the injury arising from the accident.
20 (7) Is not the operator or occupant of a recreational
21 vehicle not intended for highway use, motorcycle, motor-
22 driven cycle or motorized pedalcycle or other like type
23 vehicle required to be registered under this title and
24 involved in the accident.
25 (b) Grounds for ineligibility.--A person otherwise
26 qualifying as an eligible claimant under subsection (a) shall
27 nevertheless be ineligible to recover benefits [from the
28 Assigned Claims Plan] if that person contributed to his own
29 injury in any of the following ways:
30 (1) While intentionally injuring himself or another or
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1 attempting to intentionally injure himself or another.
2 (2) While committing a felony.
3 (3) While seeking to elude lawful apprehension or arrest
4 by a law enforcement official.
5 (4) While knowingly converting a motor vehicle.
6 § 1753. Benefits available.
7 An eligible claimant may recover medical benefits, as
8 described in section 1712(1) (relating to availability of
9 benefits), up to a maximum of [$5,000] $10,000 and an
10 extraordinary medical benefit as defined in section 1702
11 (relating to definitions). No income loss benefit or accidental
12 death benefit shall be payable under this subchapter. Funeral
13 expenses, as described in section 1712(4) (relating to
14 availability of benefits), in the amount of $1,500 shall be
15 recoverable as an offset to the maximum amount of medical
16 benefits available under this section. The medical benefit
17 provided under this section shall be adjusted pursuant to
18 section 1798.2 (relating to index of medical costs).
19 § 1754. Additional coverage.
20 An eligible claimant who has no other source of applicable
21 uninsured motorist coverage and is otherwise entitled under
22 section 1798.1(b) (relating to preclusion of pleading, proving
23 and recovering required benefits) to recover in an action in
24 tort against a party who has failed to comply with this chapter
25 may recover for losses or damages suffered as a result of the
26 injury up to $15,000 subject to an aggregate limit for all
27 claims arising out of any one motor vehicle accident of $30,000.
28 [If a claimant recovers medical benefits under section 1753
29 (relating to benefits available), the amount of medical benefits
30 recovered or recoverable up to $5,000 shall be set off against
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1 any amounts recoverable in this section.]
2 § 1756. Subrogation.
3 The [Assigned Claims Plan] association or its assignee is
4 entitled to recover, in accordance with the tort liability law
5 of this Commonwealth, reimbursement for benefits or coverages
6 paid, loss adjustment costs and any other sums paid to an
7 eligible claimant under this subchapter.
8 § 1757. Statute of limitations.
9 (a) General rule.--An action by an eligible claimant to
10 recover benefits or coverages from the [Assigned Claims Plan]
11 association shall be commenced within four years from the date
12 of the accident.
13 (b) Minors.--For minors entitled to benefits described in
14 section 1753 (relating to benefits available) or 1754 (relating
15 to additional coverage), an action to recover these benefits or
16 coverages shall be commenced within four years from the date on
17 which the injured minor attains 18 years of age.
18 Section 10. Subchapter F of Chapter 17 of Title 75 is
19 repealed.
20 Section 11. Sections 1781, 1782 and 1783 of Title 75 are
21 amended to read:
22 § 1781. Notice of sanction for not evidencing financial
23 responsibility.
24 An applicant for registration of a vehicle shall acknowledge
25 on a form developed by the Department of Transportation that the
26 applicant knows he may lose his operating privilege or vehicle
27 registrations if he fails to [evidence financial responsibility
28 for the purposes described in section 1772 (relating to
29 suspension for nonpayment of judgments), 1783 (relating to proof
30 of financial responsibility before restoring operating privilege
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1 or registration), 1784 (relating to proof of financial
2 responsibility following violation) or 1785 (relating to proof
3 of financial responsibility following accident).] maintain
4 financial responsibility on the currently registered vehicle for
5 the period of registration.
6 § 1782. Manner of providing proof of financial responsibility.
7 (a) General rule.--Proof of financial responsibility may be
8 furnished by filing evidence satisfactory to the department that
9 all motor vehicles registered in a person's name are covered by
10 motor vehicle liability insurance or by a program of self-
11 insurance as provided by section 1787 (relating to self-
12 insurance) or other reliable financial arrangements, deposits,
13 resources or commitments acceptable to the department.
14 (b) Nonresident.--The nonresident owner of a motor vehicle
15 not registered in this Commonwealth may give proof of financial
16 responsibility by filing with the department a written
17 certificate or certificates of an insurance company authorized
18 to transact business in the state in which the motor vehicle or
19 motor vehicles described in the certificate are registered or,
20 if the nonresident does not own a motor vehicle, then evidence
21 satisfactory to the department that the person does not own a
22 motor vehicle. The department shall accept the certificate upon
23 condition that the insurance company complies with the following
24 provisions with respect to the policies so certified:
25 (1) The insurance company shall execute a power of
26 attorney authorizing the department to accept service on its
27 behalf or process in any action arising out of a motor
28 vehicle accident in this Commonwealth.
29 (2) The insurance company shall agree in writing that
30 the policies shall be deemed to conform with the laws of this
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1 Commonwealth relating to the terms of motor vehicle liability
2 policies issued in this Commonwealth.
3 (c) Default by foreign insurance company.--If any insurance
4 company not authorized to transact business in this
5 Commonwealth, which has qualified to furnish proof of financial
6 responsibility, defaults in any undertakings or agreements, the
7 department shall not thereafter accept as proof any certificate
8 of the company whether theretofore filed or thereafter tendered
9 as proof as long as the default continues.
10 (d) Financial responsibility identification cards.--Insurers
11 shall provide financial responsibility identification cards to
12 insureds which shall be valid only for the period for which
13 coverage has been paid by the insured. Financial responsibility
14 identification cards shall disclose the period for which
15 coverage has been paid by the insured and contain such other
16 information as required by the Insurance Department.
17 § 1783. Proof of financial responsibility before restoring
18 operating privilege or registration.
19 (a) General rule.--Whenever the department suspends or
20 revokes the operating privilege of any person or the
21 registration of any vehicle pursuant to section 1532 (relating
22 to revocation or suspension of operating privilege), 1542
23 (relating to revocation of habitual offender's license), 1772
24 (relating to suspension for nonpayment of judgments), [1784
25 (relating to proof of financial responsibility following
26 violation) or 1785 (relating to proof of financial
27 responsibility following accident),] 1784.1 (relating to
28 required financial responsibility) or 1784.2 (relating to
29 maintenance of financial responsibility) or upon receiving the
30 record of a conviction or forfeiture of bail, the department
19880H2174B2829 - 20 -
1 shall not restore the operating privilege or the applicable
2 registration until the person furnishes proof of financial
3 responsibility.
4 (b) Additional requirements for registration restoration.--
5 Proof of financial responsibility for the restoration of a
6 registration shall be furnished to the department in the form of
7 a financial responsibility certificate. The certificate shall:
8 (1) Include the effective date of the motor vehicle
9 liability insurance policy and the period of time for which
10 payment has been tendered.
11 (2) Contain the policy number.
12 (3) Describe all vehicles covered by the policy, unless
13 such policy is issued with respect to all vehicles operated
14 by the insured.
15 (4) Certify that payment has been tendered for a minimum
16 period of three months.
17 (c) The department may reject any certificate or
18 certificates if they do not cover all vehicles registered in the
19 name of or operated by the person furnishing the proof except
20 vehicles that are in storage and for which the current
21 registration plates and cards have been surrendered to the
22 department.
23 Section 12. Section 1784 and 1785 of Title 75 are repealed.
24 Section 13. Title 75 is amended by adding sections to read:
25 § 1784.1. Required financial responsibility.
26 (a) General rule.--Every motor vehicle of the type required
27 to be registered under the title which is operated or currently
28 registered shall be covered by financial responsibility.
29 (b) Consent to produce proof of financial responsibility.--
30 Upon registering a motor vehicle or renewing a motor vehicle
19880H2174B2829 - 21 -
1 registration, the registrant of the motor vehicle shall be
2 deemed to have given consent to produce proof to any police
3 officer or to any Commonwealth employee authorized by the
4 department that the vehicle registrant has the financial
5 responsibility required by this chapter. Failure to produce
6 proof of financial responsibility to a police officer or
7 authorized Commonwealth employee upon request shall be
8 presumptive evidence that such person was operating the vehicle
9 without having in effect financial responsibility required by
10 this chapter.
11 (c) Suspension of registration and operating privilege.--The
12 department shall revoke the registration of a vehicle for a
13 period of three months if it determines the required financial
14 responsibility has not been secured as required by this chapter.
15 If the driver is the registrant of the vehicle, the department
16 shall also suspend the operating privilege of the defendant for
17 a period of three months. The registration or operating
18 privilege shall not be restored until proof of financial
19 responsibility is submitted together with the restoration fee
20 for operating privilege provided by section 1960 (relating to
21 reinstatement of registration or operating privilege). The
22 registration shall not be restored until an additional $200
23 civil penalty has been paid.
24 (d) Obligations upon termination of financial
25 responsibility.--
26 (1) Any registrant of a motor vehicle who ceases to
27 maintain financial responsibility on a registered vehicle
28 shall not operate or permit operation of the vehicle in this
29 Commonwealth until proof of the required financial
30 responsibility has been provided to the department.
19880H2174B2829 - 22 -
1 (2) An insurer who has issued a contract of motor
2 vehicle liability insurance, or any approved self-insurance
3 entity, shall notify the department within ten days of the
4 cancellation, nonrenewal or termination of the insurance by
5 the insurer or insured in a method prescribed by regulations
6 promulgated by the department.
7 (3) Any person who, after maintaining financial
8 responsibility on the vehicle of another person, ceases to
9 maintain such financial responsibility shall immediately
10 notify the vehicle's registrant, who shall not operate or
11 permit operation of the vehicle in this Commonwealth.
12 (4) In the case of a person who leases any motor vehicle
13 from a person engaged in the business of leasing motor
14 vehicles, the lessee shall sign a statement indicating that
15 the required financial responsibility has been provided. The
16 lessee shall submit the statement to the lessor.
17 § 1784.2. Maintenance of financial responsibility.
18 (a) General rule.--Any registrant of a motor vehicle for
19 which the existence of financial responsibility is a requirement
20 for its legal operation shall maintain financial responsibility
21 required by this chapter and shall, upon request of the
22 department produce proof of financial responsibility in a manner
23 determined by the department. Any person who fails to comply
24 with this subsection is subject to a civil penalty of $100 plus
25 $100 for each month or part of a month of the registration
26 period for which financial responsibility was not maintained.
27 (1) Any additional offense committed within a period of
28 five years shall result in a $200 civil penalty plus $200 for
29 each month or part of a month of the registration period for
30 which financial responsibility was not maintained.
19880H2174B2829 - 23 -
1 (2) The registration of the vehicle shall not be
2 renewed, restored or transferred until these penalties are
3 fully paid. Payment shall be in the form of cash, money order
4 or certified check.
5 (b) Defense.--No person shall be penalized for maintaining a
6 registered motor vehicle without financial responsibility if the
7 registration plate and card were surrendered to the department
8 at the time insurance coverage terminated or financial
9 responsibility lapsed.
10 Section 14. Section 1787, 1791 and 1793(c) of Title 75 are
11 amended to read:
12 § 1787. Self-insurance.
13 (a) General rule.--Self-insurance is effected by filing with
14 the Department of Transportation, in satisfactory form, evidence
15 that reliable financial arrangements, deposits, resources or
16 commitments exist such as will satisfy the department that the
17 self-insurer will:
18 (1) Provide the benefits required by section 1711
19 (relating to required benefits), subject to the provisions of
20 Subchapter B (relating to motor vehicle liability insurance
21 first party benefits), except the additional benefits and
22 limits provided in sections 1712 (relating to availability of
23 benefits) and 1715 (relating to availability of adequate
24 limits).
25 (2) Make payments sufficient to satisfy judgments as
26 required by section 1774 (relating to payments sufficient to
27 satisfy judgments).
28 (3) Provide uninsured motorist coverage up to the limits
29 set forth in section 1774.
30 (b) Stacking limits prohibited.--Any recovery of uninsured
19880H2174B2829 - 24 -
1 motorist benefits under this section only shall not be increased
2 by stacking the limits provided in section 1774, in
3 consideration of the ownership or operation of multiple vehicles
4 or otherwise.
5 (c) Assigned Risk and [Assigned Claims Plans] assigned
6 claims.--Self-insurers shall not be required to accept assigned
7 risks pursuant to Subchapter D (relating to Assigned Risk Plan)
8 or contribute to the [Assigned Claims Plan] association for
9 assigned claims pursuant to Subchapter E (relating to [Assigned
10 Claims Plan] assigned claims).
11 (d) Catastrophic Loss Trust Fund.--Self-insurers shall
12 [contribute to the Catastrophic Loss Trust Fund in the manner
13 provided in Subchapter F (relating to Catastrophic Loss Trust
14 Fund).] be billed for the surcharge levied under section 1798.3
15 (relating to surcharge for unfunded liability) by the method
16 adopted under section 1799.24(d) (relating to powers and duties
17 of association) and the association's plan of operation.
18 (e) Promulgation of regulations, etc.--The Department of
19 Transportation may, jointly with the Insurance Department,
20 promulgate rules, regulations, guidelines, procedures or
21 standards for reviewing and establishing the financial
22 eligibility of self-insurers.
23 § 1791. Notice of available benefits and limits.
24 It shall be presumed that the insured has been advised of the
25 benefits and limits available under this chapter provided the
26 following notice in bold print of at least ten-point type is
27 given to the applicant at the time of application for original
28 coverage or at the time of the first renewal after October 1,
29 1984, and no other notice or rejection shall be required:
19880H2174B2829 - 25 -
1 IMPORTANT NOTICE
2 Insurance companies operating in the Commonwealth of
3 Pennsylvania are required by law to make available for
4 purchase the following benefits for you, your spouse or
5 other relatives or minors in your custody or in the
6 custody of your relatives, residing in your household,
7 occupants of your motor vehicle or persons struck by your
8 motor vehicle:
9 (1) Medical benefits, up to at least $100,000.
10 (2) Income loss benefits, up to at least $2,500 per
11 month up to a maximum benefit of at least $50,000.
12 (3) Accidental death benefits, up to at least
13 $25,000.
14 (4) Funeral benefits, $2,500.
15 (5) As an alternative to paragraphs (1) through (4),
16 a combination benefit, up to at least [$277,500] $177,500
17 of benefits in the aggregate or benefits payable up to
18 three years from the date of the accident, whichever
19 occurs first, subject to a limit on accidental death
20 benefit of up to $25,000 and a limit on funeral benefit
21 of $2,500.
22 (6) Uninsured, underinsured and bodily injury
23 liability coverage up to at least $100,000 because of
24 injury to one person in any one accident and up to at
25 least $300,000 because of injury to two or more persons
26 in any one accident or, at the option of the insurer, up
27 to at least $300,000 in a single limit for these
28 coverages, except for policies issued under the Assigned
29 Risk Plan. Also, at least $5,000 for damage to property
19880H2174B2829 - 26 -
1 of others in any one accident. Additionally, insurers may
2 offer higher benefit levels than those enumerated above
3 as well as additional benefits. However, an insured may
4 elect to purchase lower benefit levels than those
5 enumerated above. Your signature on this notice or your
6 payment of any renewal premium evidences your actual
7 knowledge and understanding of the availability of these
8 benefits and limits as well as the benefits and limits
9 you have selected.
10 § 1793. Special provisions relating to premiums.
11 * * *
12 (c) Return of premiums of canceled policies.--When an
13 insurer cancels a motor vehicle insurance policy [which is
14 subject to section 6(3) of the act of June 5, 1968 (P.L.140,
15 No.78), relating to writing, cancellation of or refusal to renew
16 policies of automobile insurance] pursuant to section 1799.26
17 (relating to cancellation and rescission of policies), the
18 insurer shall within 30 days of canceling the policy return to
19 the insured all premiums paid under the policy less any
20 proration for the period the policy was in effect. Premiums are
21 overdue if not paid to the insured within 30 days after
22 canceling the policy. Overdue return premiums shall bear
23 interest at the rate of 12% per annum from the date the return
24 premium became due.
25 Section 15. Section 1795 of Title 75 is repealed.
26 Section 16. Title 75 is amended by adding sections to read:
27 § 1798.1. Preclusion of pleading, proving and recovering
28 required benefits.
29 (a) First party benefits.--In any action for damages against
30 a tort-feasor arising out of the maintenance or use of a motor
19880H2174B2829 - 27 -
1 vehicle, a person who is eligible to receive benefits under the
2 coverages set forth in Subchapter B shall be precluded from
3 pleading, introducing into evidence or recovering the amount of
4 benefits paid or payable under Subchapter B.
5 (b) Bodily injury liability.--In any action for damages
6 against a tort-feasor for liability for injury arising out of
7 the maintenance or use of a private passenger motor vehicle by
8 the tort-feasor, there shall be no right of recovery for any
9 damages, including, but not limited to, noneconomic loss, unless
10 incurred medical expenses equal at least $10,000 or the injury
11 is a serious injury.
12 § 1798.2. Index of medical costs.
13 The commissioner shall annually adjust the $10,000 incurred
14 medical expense threshold and the amount of medical benefit
15 required by section 1711 (relating to required benefits), to
16 reflect increases in medical costs as determined from the
17 Statewide Unlimited Medical Payment Claim Severity Trend Index.
18 For purposes of this section, the index is defined as the annual
19 trend in the Statewide average claim cost from all losses
20 incurred under minimum and optional medical benefit coverages,
21 modified to eliminate the effect of limits. The adjustment shall
22 be made to the nearest thousand dollar amount. Notice of the
23 adjustment shall be published in the Pennsylvania Bulletin. The
24 adjustment to the amount of the medical benefit required by
25 section 1711 shall apply to all policies issued or renewed on or
26 after the effective date specified in the notice. The adjustment
27 to the amount of the medical benefit provided by section 1753
28 (relating to benefits available) shall apply on the effective
29 date specified in the notice. The incurred medical expense
30 threshold shall be adjusted so that it is the same amount as the
19880H2174B2829 - 28 -
1 applicable source of medical benefits under section 1711 or
2 1753. If there is no source of medical benefits, the adjustment
3 to the incurred medical expense threshold shall apply to all
4 injuries suffered on or after the effective date specified in
5 the notice.
6 § 1798.3. Surcharge for unfunded liability.
7 (a) Imposition.--A surcharge is hereby imposed on each motor
8 vehicle of the type required to maintain first party benefits
9 under section 1711 (relating to required benefits). The
10 commissioner shall annually determine the surcharge which shall
11 be in an amount that is actuarily sound and justified. Such
12 surcharge determination shall be made based upon consultation
13 with actuarial experts. The surcharge shall be sufficient to
14 fully amortize the unfunded liability of the Catastrophic Loss
15 Trust Fund within ten years of October 1, 1988.
16 (b) Collection.--The surcharge shall be collected by
17 insurers annually as a separate item on the premium bill and
18 labeled "Surcharge for Unfunded CAT Fund Liability." If an
19 insured makes an installment or partial payment of the premium,
20 the full amount of the surcharge shall be deducted from the
21 initial payment. Failure to pay the surcharge shall constitute
22 failure to maintain financial responsibility for purposes of
23 this title. All insurers writing policies subject to the
24 surcharge shall remit it to the Catastrophic Loss Trust Fund
25 within 30 days of receipt.
26 (c) Limitation.--The surcharge shall not be subject to any
27 premium tax levied under any provision of State law. The
28 surcharge may not be utilized in computing commissions of
29 agents.
30 Section 17. Chapter 17 of Title 75 is amended by adding a
19880H2174B2829 - 29 -
1 subchapter to read:
2 SUBCHAPTER J
3 ALL-INDUSTRY INSURANCE ASSOCIATION
4 Sec.
5 1799.21. Establishment.
6 1799.22. Board of directors.
7 1799.23. Plan of operation.
8 1799.24. Powers and duties of association.
9 1799.25. Obtaining coverage; cessions and servicing of writings.
10 1799.26. Cancellation and rescission of policies.
11 1799.27. Rates.
12 1799.28. Hearings.
13 1799.29. Penalties.
14 1799.30. Regulations.
15 § 1799.21. Establishment.
16 (a) Membership.--There is hereby created an unincorporated
17 nonprofit association to be known as the All-Industry Insurance
18 Association consisting of all insurers licensed to transact
19 motor vehicle liability insurance in this Commonwealth with its
20 headquarters located in a place within the Commonwealth to be
21 determined by the board of directors, with the approval of the
22 commissioner. Every such insurer shall be a member of the
23 association and shall be bound by the association's plan of
24 operation as a condition of authority to transact motor vehicle
25 liability insurance in the Commonwealth. Any insurer which has
26 ceased to transact motor vehicle liability insurance in the
27 Commonwealth shall nevertheless remain liable for income, as
28 provided in the plan of operation, with respect to business
29 transacted prior to the effective date of its cessation of
30 business in the Commonwealth, and the commissioner may require
19880H2174B2829 - 30 -
1 such an insurer to deposit with the association an amount
2 sufficient to meet such insurer's obligations.
3 (b) Insurers licensed hereafter.--Any insurer licensed to
4 transact motor vehicle liability insurance after the effective
5 date of this act shall become a member of the association upon
6 receiving such license and the determination of any such
7 insurer's participation in the association shall be made as of
8 the date of such membership in the same manner as for all other
9 members of the association.
10 § 1799.22. Board of directors.
11 (a) Selection.--The association shall be governed by a board
12 of directors, consisting of nine persons selected by the members
13 of the association. The plan of operation of the association
14 shall provide for a method of making appointments to the board
15 which ensures fair representation of the industry, including
16 stock and mutual companies of varying size and agents. The
17 commissioner, or his designee, shall serve as an ex officio
18 member of the board. Not more than one company in a group under
19 the same ownership or management shall be represented on the
20 board at the same time. Each association member serving on the
21 board shall be represented by a senior official of the company.
22 Of the members initially selected, five shall be appointed for
23 terms of two years and four shall be for terms of one year, or
24 until their successors are selected. After the initial
25 selections have been made, all subsequent selections shall be
26 for terms of two years and members shall serve until their
27 successors are selected.
28 (b) Chairman; meetings.--After the board has been selected,
29 it shall elect from its membership a chairman and shall meet
30 thereafter at least quarterly, and as often as the chairman or
19880H2174B2829 - 31 -
1 the plan of operation require, or at the request of any four
2 members of the board or the commissioner. All meetings of the
3 board shall be held within the Commonwealth. Written notice
4 setting forth the meeting agenda shall be provided at least five
5 business days prior to the date of the meeting to all members,
6 directors and the commissioner. Minutes shall be kept of all
7 meetings. A copy of the minutes shall be sent within five
8 business days following the meeting to all members and the
9 commissioner. Five voting members of the board shall constitute
10 a quorum. No member may serve as chairman for more than two
11 consecutive years.
12 (c) Power of the board.--The board shall have and exercise
13 all powers of the association not reserved to the members by the
14 plan of operation or as otherwise provided in this act.
15 § 1799.23. Plan of operation.
16 (a) Plan to be filed.--Within 120 days of the effective date
17 of this section, unless the commissioner for good cause grants
18 an additional period not to exceed 30 days, the association
19 shall file with the commissioner for approval a proposed plan of
20 operation to discharge the powers and duties conferred on the
21 association by section 1799.24 (relating to powers and duties of
22 the association) and other provisions of this chapter.
23 (b) Approval or disapproval.--The plan of operation adopted
24 by the board shall be submitted to the commissioner for review
25 and approval. If the commissioner approves the proposed plan, he
26 shall certify such approval to the directors and said plan shall
27 take effect on the effective date of this act. The commissioner
28 shall publish notice of approval of the plan of operation in the
29 Pennsylvania Bulletin. If the commissioner disapproves all or
30 any part of the proposed plan of operation, he shall notify the
19880H2174B2829 - 32 -
1 directors of such action and provide a written statement of the
2 reasons for his disapproval along with recommendations for
3 amendment. The directors may accept the commissioner's
4 recommendations or may propose a new plan, which recommendations
5 or plan shall be submitted to the commissioner within 30 days
6 after the return of a disapproved plan to the directors. If the
7 directors do not submit a proposed plan of operation or if the
8 directors do not submit a new plan which is acceptable to the
9 commissioner, or accept the recommendations of the commissioner
10 within 30 days after the disapproval of a proposed plan, the
11 commissioner shall promulgate a plan of operation and certify
12 same to the directors. Any such plan promulgated by the
13 commissioner shall take effect on the date certified by the
14 commissioners.
15 (c) Amendments.--The directors of the association may amend
16 the plan of operation at any time, subject to approval by the
17 commissioner.
18 (d) Review.--The commissioner shall annually review the plan
19 of operation not later than 180 days of the effective date of
20 the plan of operation and each year thereafter, approve or amend
21 the plan of operation, and any amendments to the plan adopted by
22 the commissioner pursuant to the annual review shall be binding
23 on the board as of the effective date of the amendments. The
24 commissioner may review the plan of operation at any time, and
25 may propose amendments to the board. If the board does not adopt
26 amendments acceptable to the commissioner within 30 days, the
27 commissioner may certify amendments and their effective date to
28 the board.
29 § 1799.24. Powers and duties of association.
30 The association shall have the following powers and duties
19880H2174B2829 - 33 -
1 to:
2 (1) Assure the availability of private passenger motor
3 vehicle insurance to all qualified applicants. To fulfill
4 this duty, the plan of operation may require members of the
5 association to accept business placed by licensed brokers.
6 (2) Accept and record cessions of all private passenger
7 motor vehicle minimum coverages and such optional coverage
8 writings as may be ceded to the association.
9 (3) Assess losses and distribute surpluses in the pool
10 among its members on the basis of participation ratios as
11 defined in the plan of operation.
12 (4) Establish a means approved by the commissioner for
13 the adjustment of losses payable as an extraordinary medical
14 benefit and to bill self-insurers for the surcharge imposed
15 by section 1798.3 (relating to surcharge for unfunded
16 liability).
17 (5) Establish procedures for reviewing claims practices.
18 (6) Enter into contracts as are necessary or proper to
19 carry out the provisions and purposes of this chapter.
20 (7) Sue or be sued in the name of the association,
21 including taking any legal actions necessary or proper for
22 recovery of any assessments for, on behalf of, or against
23 members. A judgment against the association shall not create
24 any direct liability against the board of directors or the
25 members.
26 (8) Indemnify its directors, officers and employees for
27 any and all claims, suits, costs of investigations, costs of
28 defense, settlements or judgments against them on account of
29 an act or omission in the scope of their official capacity,
30 duties or employment. The association shall refuse to
19880H2174B2829 - 34 -
1 indemnify if it or a court determines that the act or failure
2 to act constituted self-dealing, willful misconduct or
3 recklessness.
4 (9) Appoint from among its members appropriate legal,
5 actuarial, claims, investment and other committees as
6 necessary to provide assistance in the operation of the
7 association.
8 (10) Order the reporting by the members of the
9 association of loss and expense experience, and all other
10 data required by the association or the department in a
11 standard data processing format approved by the commissioner.
12 On request of the Department, such data shall be recorded and
13 reported to the department in a standard data processing
14 format prescribed by the commissioner.
15 (11) Report to the department such data on business
16 ceded to the association as required by writers of property
17 and casualty insurance pursuant to other provisions of law.
18 (12) Establish a uniform agent commission for minimum
19 coverages and ceded optional coverages in an amount which
20 provides reasonable compensation for services performed.
21 (13) Adopt bylaws for the regulation of its internal
22 affairs.
23 (14) Employ an executive director, who shall serve at
24 its pleasure and be responsible for the conduct of the
25 administrative affairs of the association. The board may
26 employ other necessary personnel and may delegate to the
27 executive director and other personnel such authority as it
28 deems necessary to assure proper administration and operation
29 of the association consistent with the plan of operation. The
30 board shall arrange and contract if necessary for suitable
19880H2174B2829 - 35 -
1 quarters within the Commonwealth for operations of the
2 association for such equipment, goods and services and incur
3 such expenses as it deems necessary to assure efficient
4 administration of the association consistent with the plan of
5 operation.
6 (15) Review complaints of any member or agent concerning
7 the operation of the association in accordance with
8 procedures prescribed in section 1799.28 (relating to
9 hearings).
10 (16) Annually report to the commissioner on the
11 operation of the association, including the submission of an
12 annual financial statement to the Insurance Department in the
13 same format as required of property and casualty insurers.
14 (17) Audit the operations of members for the purpose of
15 determining compliance with this subchapter.
16 (18) Develop methods and standards for the establishment
17 of adequate, actuarially sound reserves for unpaid losses and
18 loss adjustment expenses, including provision for incurred
19 but not reported losses. Losses and allocated loss adjustment
20 expenses shall be discounted at the discount rate utilized
21 when making rates for the policy period.
22 (19) Administer assigned claims pursuant to Subchapter E
23 (relating to assigned claims).
24 (20) Take such other action as is necessary to
25 effectuate the purposes of this subchapter.
26 § 1799.25. Obtaining coverage; cessions and servicing of
27 writing.
28 (a) Cessions of writings.--Any qualified applicant shall
29 obtain minimum and optional coverages for private passenger
30 motor vehicle upon application to any agent licensed with a
19880H2174B2829 - 36 -
1 member of the association. All minimum coverage writings shall
2 be ceded to the association. Optional coverages may be ceded to
3 the association. Prior to a member ceding an optional coverage
4 to the association, the policyholder must be informed that:
5 (i) his coverage will be ceded;
6 (ii) the coverages will be written at the
7 association rate which rate differential from the
8 retained coverage rate must be specified; and
9 (iii) the policyholder may seek insurance through
10 other insurers who may elect not to cede his policy.
11 (b) Servicing of ceded writings.--Except for extraordinary
12 medical benefit claims, all writings of members of the
13 association, both ceded and retained, will be serviced by the
14 producing company. Extraordinary medical benefit claims will be
15 serviced as set forth in section 1799.24 (relating to powers and
16 duties of association) and the plan of operation. For purposes
17 of this section, the term "servicing" includes, but is not
18 limited to, policy issuance, billing and loss adjustment.
19 (c) Determining adverse experience of an agent.--For
20 purposes of determining adverse experience of an agent under the
21 act of September 22, 1978 (P.L.763, No.143), entitled "An act
22 establishing certain procedures relating to the termination of
23 insurance agency contracts or accounts and providing penalties,"
24 experience generated from minimum coverages and ceded optional
25 coverages shall be excluded.
26 § 1799.26. Cancellation and rescission of policies.
27 (a) Coverage ceded to the association.--No insurer shall
28 cancel coverage ceded to the association in a policy of motor
29 vehicle liability insurance except for nonpayment of premium.
30 (b) Coverage retained by the insurer.--No insurer shall
19880H2174B2829 - 37 -
1 cancel coverage retained by an insurer in a policy of motor
2 vehicle liability insurance except for one or more of the
3 following specified reasons:
4 (1) Nonpayment of premium.
5 (2) A determination that the insured has concealed a
6 material fact, or has made a material allegation contrary to
7 fact, or has made a misrepresentation of a material fact and
8 that such concealment, allegation or misrepresentation was
9 material to the acceptance of the risk by the insurer.
10 (c) Offer of coverage after cancellation by insurer.--Any
11 insured cancelled by an insurer shall be offered coverage
12 through the association, except for cancellation due to
13 nonpayment of premium.
14 (d) Rescission prohibited.--No insurer shall rescind a
15 policy of automobile insurance. The only permissible reasons for
16 termination are those set forth in subsections (a) and (b) of
17 this section.
18 § 1799.27. Rates.
19 (a) Association rates.--The association shall file with the
20 department for rates pursuant to the act of June 11, 1947
21 (P.L.538, No.246), known as The Casualty and Surety Rate
22 Regulatory Act, for:
23 (1) minimum coverages, including a rate for
24 extraordinary medical benefits as described in subsection
25 (d); and
26 (2) optional coverages which are ceded to the
27 association.
28 In filing a rate for extraordinary medical benefits, the
29 association shall discount losses and allocated loss adjustment
30 expenses.
19880H2174B2829 - 38 -
1 (b) Retained optional coverage rates.--Insurers shall file
2 with the department for optional coverage rates for retained
3 writings pursuant to the act of June 11, 1947 (P.L.538, No.246),
4 known as The Casualty and Surety Rate Regulatory Act.
5 (c) Premium installment payment plan.--Insurers shall submit
6 a premium installment payment plan as part of every rate filing
7 for approval by the department. The approved premium installment
8 payment plan shall be made available to all insureds and shall
9 apply to minimum and optional coverages, both retained and
10 ceded. The surcharge levied under section 1798.3 (relating to
11 surcharge for unfunded liability) may not be subject to the
12 premium installment payment plan.
13 (d) Territorial rates.--The rate for extraordinary medical
14 benefits shall be uniform statewide and shall be charged on each
15 motor vehicle of the type required to maintain first party
16 benefits under section 1711 (relating to required benefits). All
17 other rates shall be established on a territorial basis
18 utilizing the 1987 territories of the Insurance Services Office,
19 or such other territorial plan as the commissioner may approve.
20 (e) Effective date of filings.--Notwithstanding any other
21 provision of law to the contrary, no filing for minimum and
22 optional coverage rates which is scheduled for a formal
23 administrative hearing may become effective until an
24 adjudication is issued. An adjudication shall be issued within
25 60 days of the close of the hearings.
26 (f) Rate reduction.--For the first calendar year following
27 October 1, 1988, the association's rates shall be such that the
28 total annual average premium in each territory for the minimum
29 coverages, exclusive of the extraordinary medical benefit, is
30 less than the corresponding total average annual premium for the
19880H2174B2829 - 39 -
1 minimum coverages for the calendar year immediately preceding
2 October 1, 1988, by at least 10%.
3 (g) Return of premium.--Insurers shall remit to their
4 insureds, either by direct payment or as a credit on the next
5 premium bill, the difference between any premium which had
6 previously been paid for the portion of the policy period on and
7 after October 1, 1988, and the premium applicable during the
8 remainder of this policy period.
9 (h) Limitation.--Extraordinary medical benefit rates shall
10 not be subject to any premium tax levied under any provision of
11 State law. Extraordinary medical benefit rates may not be
12 utilized in computing commissions of agents.
13 § 1799.28. Hearings.
14 (a) Grievances.--A member insurer or agent aggrieved by a
15 ruling of the association or by its alleged violation of or
16 failure to comply with the plan of operation or the provisions
17 of this subchapter shall be entitled to a hearing upon request
18 made within 30 days after notification of the alleged violation
19 or improper act or ruling, provided the board may extend the
20 time for requesting hearing in extraordinary situations. The
21 hearing shall be held within 15 days after the receipt of the
22 request by a panel of the board consisting of not less than
23 three directors. The ruling of a majority of the panel shall be
24 deemed to be the formal ruling of the board unless the full
25 board, on its own motion, modifies or rescinds the action of the
26 panel.
27 (b) Rulings of the board.--Within 30 days after the
28 conclusion of any hearing held pursuant to this section, the
29 board shall issue a written ruling setting forth the
30 determination of the issues presented and the facts and reasons
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1 on which such determination is based. This ruling may be
2 appealed to the commissioner by the filing of a written notice
3 of appeal with the board and commissioner within 30 days after
4 issuance of the ruling.
5 (c) Written orders of the commissioner.--The commissioner
6 shall, upon review of the record established before the board or
7 after additional hearings, issue a written order approving,
8 disapproving or modifying the action or decision of the board.
9 § 1799.29. Penalties.
10 The commissioner may suspend or revoke, after notice and
11 hearing, the certificate of authority of any member insurer or
12 the license of any agent or broker who willfully fails to comply
13 with the provisions of this subchapter, the plan of operation or
14 applicable regulations. In addition to or in lieu of suspension
15 or revocation, any member company violating the provisions of
16 this subchapter, the plan of operation or applicable regulations
17 may be fined by the commissioner up to $5,000 for each such
18 violation; and any agent or broker violating the provisions of
19 this subchapter, the plan of operation or applicable regulations
20 may be fined by the commissioner up to $1,500 for each
21 violation.
22 § 1799.30. Regulations.
23 In addition to the general powers conferred upon the
24 commissioner by law and this act, the commissioner shall have
25 the authority to promulgate such regulations as deemed necessary
26 for the effective implementation of this act.
27 Section 18. Section 1960 of Title 75 is amended to read:
28 § 1960. Reinstatement of registration or operating privilege.
29 The department shall charge a fee of [$25] $50 to restore a
30 registration or a person's operating privilege following a
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1 suspension or revocation.
2 Section 19. All policies which are issued under former 75
3 Pa.C.S. Ch. 17 (relating to financial responsibility) and which
4 are in effect on October 1, 1988, shall be amended as of October
5 1, 1988, to comply with the provisions of this act by the
6 following endorsement, which shall not be governed or effected
7 by any provision of law requiring approval of the insured prior
8 to endorsement:
9 EXTRAORDINARY MEDICAL BENEFIT ENDORSEMENT
10 By virtue of the enactment of the Consumer Automobile
11 Insurance Reform Act, as of October 1, 1988, the first party
12 benefits coverage under this policy provides an extraordinary
13 medical benefit for medical costs exceeding $100,000 up to a
14 lifetime limit of $1,000,000 as defined by section 1702 and
15 required by section 1711 of the Consumer Automobile Insurance
16 Reform Act.
17 Adjustments to your premium reflecting changes as a
18 result of passage of the Consumer Automobile Insurance Reform
19 Act will either be paid to you directly or will be reflected
20 in the premium billed to you for the renewal of this policy
21 or upon your termination of this policy.
22 The notice required by section 1799.25(a) (relating to
23 obtaining coverage, cessions and servicing of writings) must
24 also be provided if the insurer cedes optional coverages.
25 Section 20. Savings provision.
26 (a) Catastrophic Loss Trust Fund.--Notwithstanding the
27 repeal of 75 Pa.C.S. Ch. 17 Subch. F (relating to Catastrophic
28 Loss Trust Fund), all individuals who suffer a catastrophic loss
29 prior to October 1, 1988, shall continue to receive, or be
30 eligible to receive, catastrophic loss benefits as if Subchapter
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1 F had not been repealed. To ensure the administration and
2 delivery of catastrophic loss benefits to eligible claimants,
3 all powers and duties previously imposed on the Catastrophic
4 Loss Fund Board under 75 Pa.C.S. Ch. 17 Subch. F are hereby
5 transferred to the Insurance Commissioner. The Catastrophic Loss
6 Trust Fund shall continue to exist, notwithstanding the repeal
7 of section 1764 (relating to Catastrophic Loss Trust Fund)
8 (b) Funding of assigned claims under prior law.--
9 Notwithstanding this act, the requirement to fund payment of
10 assigned claims under any prior law remains unaffected.
11 Section 21. The act of June 5, 1968 (P.L.140, No.78),
12 entitled "An act regulating the writing, cancellation of or
13 refusal to renew policies of automobile insurance; and imposing
14 powers and duties on the Insurance Commissioner therefor," is
15 repealed.
16 Section 22. This act shall take effect as follows:
17 (1) Sections 1799.21, 1799.22 and 1799.23 of the act
18 shall take effect immediately.
19 (2) The remaining provisions of this act shall take
20 effect on October 1, 1988.
21 (3) This section shall take effect immediately.
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