PRINTER'S NO. 112
No. 105 Session of 1989
INTRODUCED BY LLOYD, MANDERINO, CAWLEY, KUKOVICH, COWELL,
PISTELLA, GIGLIOTTI, MELIO, HARPER, TIGUE, McHALE, PRESSMANN
AND MICHLOVIC, JANUARY 24, 1989
REFERRED TO COMMITTEE ON INSURANCE, JANUARY 24, 1989
AN ACT
1 Amending Title 75 (Vehicles) of the Pennsylvania Consolidated
2 Statutes, providing for extraordinary medical benefits, for
3 limits, for transition of catastrophic loss benefits and for
4 funding of benefits; and making repeals.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Section 1306(7) of Title 75 of the Pennsylvania
8 Consolidated Statutes is repealed.
9 Section 2. Section 1309 of Title 75 is amended to read:
10 § 1309. Renewal of registration.
11 At least 60 days prior to the expiration of each
12 registration, the department shall send to the registrant an
13 application for renewal of registration. Upon return of the
14 application, accompanied by self-certification of financial
15 responsibility[,] and the applicable fee or fees [and proof that
16 the Catastrophic Loss Trust Fund charge has been paid], the
17 department shall send to the registrant a renewed registration
18 card. Failure to receive a renewal application shall not relieve
1 a registrant from the responsibility to renew the registration.
2 Section 3. Section 1373(7) of Title 75 is repealed.
3 Section 4. Sections 1715, 1722 and 1723 of Title 75 are
4 amended to read:
5 § 1715. Availability of adequate limits.
6 (a) General rule.--An insurer shall make available for
7 purchase first party benefits as follows:
8 (1) For medical benefits, up to at least $100,000.
9 (1.1) For extraordinary medical benefits, from $100,000
10 to $1,100,000, as limited by subsection (d). Such
11 extraordinary medical benefits shall be included in every
12 policy providing first party benefits unless the named
13 insured declines such coverage.
14 (2) For income loss benefits, up to at least $2,500 per
15 month up to a maximum benefit of at least $50,000.
16 (3) For accidental death benefits, up to at least
17 $25,000.
18 (4) For funeral benefits, $2,500.
19 (5) For combination of benefits enumerated in paragraphs
20 (1) through (4) and subject to a limit on the accidental
21 death benefit of up to $25,000 and a limit on the funeral
22 benefit of $2,500, up to at least [$277,500] $1,177,500 of
23 benefits in the aggregate or benefits payable up to three
24 years from the date of the accident, whichever occurs first.
25 (b) Higher or lower limits and additional benefits.--
26 Insurers may make available higher or lower limits or benefits
27 in addition to those enumerated in subsection (a).
28 (c) Restriction on providing first party benefits.--An
29 insurer shall not issue or deliver a policy providing first
30 party benefits in accordance with this subchapter unless the
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1 policy also contains coverage for liability in amounts at least
2 equal to the limits required for financial responsibility.
3 (d) Limitations.--The maximum medical benefit which shall be
4 paid on behalf of any one eligible claimant under subsection
5 (a)(1.1) shall be $50,000 per year and $1,000,000 lifetime
6 aggregate of reasonable and necessary expenses only for medical
7 treatment and rehabilitative services which, as described in
8 section 1712(1) (relating to availability of benefits), exceed
9 $100,000. During the first 18 months of eligibility, the insurer
10 shall approve payments on behalf of a claimant without regard to
11 the $50,000 per year limit but subject to the $1,000,000
12 lifetime aggregate. Extraordinary medical benefit losses and
13 allocated loss adjustment expenses shall be discounted in
14 calculating rates for coverage under subsection (a)(1.1) if, and
15 to the extent, deemed appropriate by the Insurance Commissioner.
16 Rates for coverage under subsection (a)(1.1) shall not be
17 subject to any premium tax levied under State law and shall not
18 exceed the rate established under section 1798.1(c) (relating to
19 extraordinary medical benefit plan).
20 § 1722. Preclusion of pleading, proving and recovering required
21 benefits.
22 In any action for damages against a tortfeasor arising out of
23 the maintenance or use of a motor vehicle, a person who is
24 eligible to receive benefits under the coverages set forth in
25 section 1711 (relating to required benefits) or the coverage set
26 forth in section 1715(a)(1.1) (relating to availability of
27 adequate limits) shall be precluded from pleading, introducing
28 into evidence or recovering the amount of benefits paid or
29 payable under section 1711 or 1715(a)(1.1). This preclusion
30 applies only to the amount of benefits set forth in [section]
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1 sections 1711 and 1715(a)(1.1).
2 § 1723. Reporting requirements.
3 Beginning December 31, 1986, and each year thereafter, each
4 insurance company writing automobile insurance in this
5 Commonwealth shall file with the Insurance Department the number
6 of its insureds, the number of its insureds who have purchased
7 first party medical benefits in excess of the minimum required
8 by section 1711 (relating to required benefits) and the number
9 of insureds who have purchased first party medical benefits [in
10 the amount of $100,000] under section 1715(a)(1) and (1.1)
11 (relating to availability of adequate limits). The Insurance
12 Department shall furnish this information to the General
13 Assembly annually.
14 Section 5. Section 1753 of Title 75 is amended to read:
15 § 1753. Benefits available.
16 An eligible claimant may recover medical benefits, as
17 described in section 1712(1) (relating to availability of
18 benefits), up to a maximum of $5,000 and an extraordinary
19 medical benefit as defined in section 1715 (relating to
20 availability of adequate limits). No income loss benefit or
21 accidental death benefit shall be payable under this subchapter.
22 Funeral expenses, as described in section 1712(4), in the amount
23 of $1,500 shall be recoverable as an offset to the maximum
24 amount of medical benefits available under this section.
25 Section 6. Section 1787(d) of Title 75 is repealed.
26 Section 7. Section 1791 of Title 75 is amended to read:
27 § 1791. Notice of available benefits and limits.
28 It shall be presumed that the insured has been advised of the
29 benefits and limits available under this chapter provided the
30 following notice in bold print of at least ten-point type is
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1 given to the applicant at the time of application for original
2 coverage or at the time of the first renewal after October 1,
3 1984, and no other notice or rejection shall be required:
4 IMPORTANT NOTICE
5 Insurance companies operating in the Commonwealth of
6 Pennsylvania are required by law to make available for
7 purchase the following benefits for you, your spouse or
8 other relatives or minors in your custody or in the
9 custody of your relatives, residing in your household,
10 occupants of your motor vehicle or persons struck by your
11 motor vehicle:
12 (1) Medical benefits, up to at least $100,000.
13 (1.1) Extraordinary medical benefits, from $100,000
14 to $1,100,000.
15 (2) Income loss benefits, up to at least $2,500 per
16 month up to a maximum benefit of at least $50,000.
17 (3) Accidental death benefits, up to at least
18 $25,000.
19 (4) Funeral benefits, $2,500.
20 (5) As an alternative to paragraphs (1) through (4),
21 a combination benefit, up to at least [$277,500]
22 $1,177,500 of benefits in the aggregate or benefits
23 payable up to three years from the date of the accident,
24 whichever occurs first, subject to a limit on accidental
25 death benefit of up to $25,000 and a limit on funeral
26 benefit of $2,500.
27 (6) Uninsured, underinsured and bodily injury
28 liability coverage up to at least $100,000 because of
29 injury to one person in any one accident and up to at
30 least $300,000 because of injury to two or more persons
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1 in any one accident or, at the option of the insurer, up
2 to at least $300,000 in a single limit for these
3 coverages, except for policies issued under the Assigned
4 Risk Plan. Also, at least $5,000 for damage to property
5 of others in any one accident.
6 Additionally, insurers may offer higher benefit levels
7 than those enumerated above as well as additional
8 benefits. However, an insured may elect to purchase lower
9 benefit levels than those enumerated above.
10 Your signature on this notice or your payment of any
11 renewal premium evidences your actual knowledge and
12 understanding of the availability of these benefits and
13 limits as well as the benefits and limits you have
14 selected.
15 Section 8. Title 75 is amended by adding sections to read:
16 § 1798.1. Extraordinary medical benefit plan.
17 (a) Provisions.--Insurers licensed to write motor vehicle
18 liability insurance in this Commonwealth shall organize,
19 maintain and participate in an unincorporated nonprofit
20 association for the purpose of providing extraordinary medical
21 benefit coverage under section 1715(a)(1.1) (relating to
22 availability of adequate limits) pursuant to a plan of
23 operation. The plan shall provide for all of the following:
24 (1) The remittance by insurers of premiums collected for
25 coverage under section 1715(a)(1.1) to a fund established by
26 the plan.
27 (2) The periodic reimbursement of insurers from the fund
28 for losses which have been paid on and after March 1, 1989,
29 as the result of coverage under section 1715(a)(1.1), for
30 reasonable administrative expenses incurred by insurers in
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1 connection with coverage under section 1715(a)(1.1), and for
2 reasonable commissions to agents for the sale of coverage
3 under section 1715(a)(1.1).
4 (3) A means for the adjustment of losses payable for
5 coverage under section 1715(a)(1.1).
6 (4) The filing of a rate request for coverage under
7 section 1715(a)(1.1).
8 (5) Annual reports to the Insurance Commissioner on the
9 operation of the plan, including the submission of an annual
10 financial statement to the Insurance Department in the same
11 format as required of property and casualty insurers.
12 (6) Development of methods and standards for the
13 establishment of adequate, actuarially sound reserves for
14 unpaid losses and loss adjustment expenses, including
15 provision for incurred but not reported losses.
16 (b) Approval of plan.--The initial plan of operation shall
17 be submitted to the Insurance Commissioner within 60 days of the
18 effective date of this section. The Insurance Commissioner shall
19 approve, disapprove or modify the plan. All future amendments to
20 the plan shall be subject to approval, disapproval or
21 modification by the Insurance Commissioner. The Insurance
22 Commissioner may review and propose amendments to the plan,
23 which shall become effective on the date specified by the
24 Insurance Commissioner.
25 (c) Rate.--Pursuant to the means established under the plan,
26 the association shall file for an extraordinary medical benefit
27 rate for coverage under section 1715(a)(1.1). The filing shall
28 be subject to the act of June 11, 1947 (P.L.538, No.246), known
29 as The Casualty and Surety Rate Regulatory Act, provided that no
30 filing which is scheduled for a formal administrative hearing
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1 may become effective until an adjudication is issued.
2 Extraordinary medical benefit losses and allocated loss
3 adjustment expenses shall be discounted in calculating a rate
4 if, and to the extent, deemed appropriate by the Insurance
5 Commissioner. A rate established under this section shall be
6 adequate to assure the actuarial soundness of the plan. Under no
7 circumstances shall rates for other coverages under this chapter
8 be established or required to subsidize the plan. In
9 establishing a rate, consideration shall be given to the current
10 factors generally accepted in establishing motor vehicle
11 insurance rates.
12 (d) Limitation.--The extraordinary medical benefit rate for
13 coverage under section 1715(a)(1.1), shall not be subject to any
14 premium tax levied under State law.
15 § 1798.2. Transition.
16 (a) Savings provision.--Notwithstanding the repeal of 75
17 Pa.C.S. Ch. 17 Subch. F (relating to Catastrophic Loss Trust
18 Fund) by the act of December 12, 1988 (P.L.1120, No.144), all
19 individuals who suffer or suffered a catastrophic loss prior to
20 March 1, 1989, shall continue to receive, or be eligible to
21 receive, catastrophic loss benefits as if Subchapter F had not
22 been repealed. To ensure the administration and delivery of
23 catastrophic loss benefits to eligible claimants, all powers and
24 duties previously imposed on the Catastrophic Loss Trust Fund
25 Board under 75 Pa.C.S. Ch. 17 Subch. F are hereby transferred to
26 the Insurance Commissioner. The Insurance Commissioner is also
27 hereby authorized to provide for returning, on a pro rata basis,
28 charges paid in accordance with section 1762 for portions of
29 registration years occurring on or after March 1, 1989. For the
30 purposes of this section, the Catastrophic Loss Trust Fund shall
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1 continue to exist, notwithstanding the repeal of section 1764
2 (relating to Catastrophic Loss Trust Fund).
3 (b) Premium assessment.--For the purpose of funding
4 catastrophic loss benefits in accordance with subsection (a), an
5 assessment is hereby imposed, for five years beginning on the
6 effective date of this subsection, on all insurance companies
7 authorized to write private passenger or commercial automobile
8 insurance in this Commonwealth. The assessment shall be at the
9 rate of 1% of all gross premiums from such private passenger and
10 commercial automobile insurance in this Commonwealth. The
11 assessment shall be remitted within 90 days of imposition, and
12 annually thereafter, to the State Treasurer for deposit in the
13 Catastrophic Loss Trust Fund.
14 (c) Fines and fees.--For the purpose of funding catastrophic
15 loss benefits in accordance with subsection (a), a fine of $10
16 shall be levied for all traffic violations, exclusive of parking
17 offenses, and a fee of $10 shall be imposed upon persons
18 admitted to programs for Accelerated Rehabilitative Disposition
19 for offenses enumerated in section 3731 (relating to driving
20 under influence of alcohol or controlled substance). The fine or
21 fee shall be in addition to any fines or fees levied or imposed
22 pursuant to any other provisions of law. The court or district
23 justice imposing the fine or fee shall remit such fine or fee to
24 the State Treasurer for deposit in the Catastrophic Loss Trust
25 Fund. Remittance shall be made within 30 days of receipt of the
26 fine or fee by the court or district justice. If the fine or fee
27 is being paid in installments, the fine or fee shall be remitted
28 on each installment. No additional fine or fee shall be imposed
29 pursuant to this subsection after the date five years from the
30 effective date of this subsection.
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1 (d) Rate.--The annual rate for extraordinary medical benefit
2 coverage under section 1715(a)(1.1) (relating to availability of
3 adequate limits), shall be $28 per motor vehicle until the first
4 policy renewal after the establishment of a rate under section
5 1798.1(c) (relating to extraordinary medical benefit plan).
6 (e) Endorsement.--All policies providing first party
7 benefits which are issued under this chapter and which are in
8 effect on March 1, 1989, shall be amended as of March 1, 1989,
9 to comply with the provisions of this act by the following
10 endorsement, which shall not be governed or affected by any
11 provision of law requiring approval of the insured prior to
12 endorsement:
13 EXTRAORDINARY MEDICAL BENEFIT ENDORSEMENT
14 By virtue of recent amendment to the Motor Vehicle
15 Financial Responsibility Law, as of March 1, 1989, the
16 first party benefits coverage under this policy provides
17 an extraordinary medical benefit which will pay the
18 medical and rehabilitation costs for you and your family
19 which are more than $100,000 for each person up to a
20 lifetime limit of $1,000,000 for each person.
21 The annual charge to you for the extraordinary medical
22 benefit coverage is $28. Your charge, based on the number
23 of vehicles you own and the number of months remaining
24 until your next policy renewal, is shown on the enclosed
25 form. We will be billing this charge to you unless you
26 sign and return the enclosed form declining the
27 extraordinary medical benefit coverage.
28 Insurers shall provide this endorsement to all named insureds.
29 Section 9. Section 8 (section 1798.2(a)) shall be
30 retroactive to December 12, 1988, and sections 1, 2, 3, 4, 6 and
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1 8 (Section 1798.2(d)), if enacted after March 1, 1989, shall be
2 retroactive to March 1, 1989.
3 Section 10. This act shall take effect as follows:
4 (1) Section 8 (section 1798.1) shall take effect
5 immediately.
6 (2) Section 8 (section 1798.2(a), (d) and (e)) shall
7 take effect immediately.
8 (3) Section 8 (section 1798.2(b) and (c)) shall take
9 effect in 60 days.
10 (4) Sections 1, 2, 3, 4, 6 and 9 shall take effect
11 immediately.
12 (5) The remainder of this act shall take effect in 60
13 days.
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