PRIOR PRINTER'S NOS. 109, 745 PRINTER'S NO. 862
No. 109 Session of 1989
INTRODUCED BY HOLL, JANUARY 23, 1989
AS AMENDED ON THIRD CONSIDERATION, APRIL 5, 1989
AN ACT
1 Amending Title 75 (Vehicles) of the Pennsylvania Consolidated
2 Statutes, requiring certain insurers to provide for
3 extraordinary medical benefits; providing for limits, for
4 transition of catastrophic loss benefits and for funding of
5 benefits; and making repeals.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Section 1306(7) of Title 75 of the Pennsylvania
9 Consolidated Statutes is repealed.
10 Section 2. Section 1309 of Title 75 is amended to read:
11 § 1309. Renewal of registration.
12 At least 60 days prior to the expiration of each
13 registration, the department shall send to the registrant an
14 application for renewal of registration. Upon return of the
15 application, accompanied by self-certification of financial
16 responsibility[,] and the applicable fee or fees [and proof that
17 the Catastrophic Loss Trust Fund charge has been paid], the
18 department shall send to the registrant a renewed registration
19 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 Section 1373(7) of Title 75 is repealed.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 1711, 1715, 1722 and 1723 of Title 75
4 are amended to read:
5 § 1711. Required benefits.
6 An insurer issuing or delivering liability insurance policies
7 covering any motor vehicle of the type required to be registered
8 under this title, except recreational vehicles not intended for
9 highway use, motorcycles, motor-driven cycles or motorized
10 pedalcycles or like type vehicles, registered and operated in
11 this Commonwealth, shall include coverage providing a medical
12 benefit in the amount of [$10,000, an] $5,000, an optional
13 income loss benefit up to a monthly maximum of $1,000 up to a
14 maximum benefit of $5,000 and [a] an optional funeral benefit in
15 the amount of $1,500, as defined in section 1712 (relating to
16 availability of benefits), with respect to injury arising out of
17 the maintenance or use of a motor vehicle, PROVIDED THAT THERE <--
18 BE AN IMMEDIATE COMMENSURATE REDUCTION IN RATE TO BE ORDERED BY
19 THE COMMISSIONER, BUT IN ANY EVENT NOT LESS THAN A 25% REDUCTION
20 IN RATE. The income loss benefit provided under this section may
21 be expressly waived by the named insured provided the named
22 insured has no expectation of actual income loss due to age,
23 disability or lack of employment history. At the election of the
24 named insured, such policy shall also include an extraordinary
25 medical benefit as described in section 1715(a)(1.1) and (d)
26 (relating to availability of adequate limits).
27 § 1715. Availability of adequate limits.
28 (a) General rule.--An insurer shall make available for
29 purchase first party benefits as follows:
30 (1) For medical benefits, up to at least $100,000.
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1 (1.1) For extraordinary medical benefits, from $100,000
2 to $1,100,000, which may be offered in increments of
3 $100,000, as limited by subsection (d).
4 (2) For income loss benefits, up to at least $2,500 per
5 month up to a maximum benefit of at least $50,000.
6 (3) For accidental death benefits, up to at least
7 $25,000.
8 (4) For funeral benefits, $2,500.
9 (5) For combination of benefits enumerated in paragraphs
10 (1) through (4) and subject to a limit on the accidental
11 death benefit of up to $25,000 and a limit on the funeral
12 benefit of $2,500, up to at least $277,500 of benefits in the
13 aggregate or benefits payable up to three years from the date
14 of the accident, whichever occurs first, provided that
15 nothing contained in this subsection shall be construed to
16 limit, reduce, modify or change the provisions of subsection
17 (d).
18 (b) Higher or lower limits and additional benefits.--
19 Insurers may make available higher or lower limits or benefits
20 in addition to those enumerated in subsection (a).
21 (c) Restriction on providing first party benefits.--An
22 insurer shall not issue or deliver a policy providing first
23 party benefits in accordance with this subchapter unless the
24 policy also contains coverage for liability in amounts at least
25 equal to the limits required for financial responsibility.
26 (d) Limitations.--The maximum medical benefit which shall be
27 paid on behalf of any one eligible claimant under subsection
28 (a)(1.1) shall be $50,000 per year and $1,100,000 lifetime
29 aggregate of reasonable and necessary expenses only for medical
30 treatment and rehabilitative services which, as described in
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1 section 1712(1) (relating to availability of benefits), exceed
2 $100,000. During the first 18 months of eligibility, the insurer
3 shall approve payments on behalf of a claimant without regard to
4 the $50,000 per year limit but subject to the $1,100,000
5 lifetime aggregate.
6 (e) Other extraordinary medical benefits.--Notwithstanding
7 the requirement of subsection (a)(1.1), an insured may obtain
8 the extraordinary medical benefits described in that subsection
9 through any insurance contract, program or group arrangement.
10 (f) Determining adverse experience of an agent.--For
11 purposes of determining adverse experience of an agent,
12 experience generated from extraordinary medical benefit coverage
13 described in subsection (a)(1.1) shall be excluded.
14 (g) Voluntary pooling.--Notwithstanding any other provisions
15 of this act or the act of June 11, 1947 (P.L.538, No.246), known
16 as The Casualty and Surety Rate Regulatory Act, two or more
17 insurers may enter into an arrangement or agreement to provide
18 for the availability of an extraordinary medical benefit
19 pursuant to the provisions of this chapter. All such
20 arrangements or agreements entered into by an insurer shall be
21 subject to the prior approval of the Insurance Commissioner.
22 § 1722. Preclusion of pleading, proving and recovering required
23 benefits.
24 In any action for damages against a tortfeasor arising out of
25 the maintenance or use of a motor vehicle, a person who is
26 eligible to receive benefits under the coverages set forth in
27 section 1711 (relating to required benefits) or the coverage set
28 forth in section 1715(a)(1.1) (relating to availability of
29 adequate limits) shall be precluded from pleading, introducing
30 into evidence or recovering the amount of benefits paid or
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1 payable under section 1711 or 1715(a)(1.1). This preclusion
2 applies only to the amount of benefits set forth in [section]
3 sections 1711 and 1715(a)(1.1).
4 § 1723. Reporting requirements.
5 Beginning December 31, 1986, and each year thereafter, each
6 insurance company writing automobile insurance in this
7 Commonwealth shall file with the Insurance Department the number
8 of its insureds, the number of its insureds who have purchased
9 first party medical benefits in excess of the minimum required
10 by section 1711 (relating to required benefits) and the number
11 of insureds who have purchased first party medical benefits [in
12 the amount of $100,000] under section 1715(a)(1) and (1.1)
13 (relating to availability of adequate limits). The Insurance
14 Department shall furnish this information to the General
15 Assembly annually.
16 Section 5. Section 1787(d) of Title 75 is repealed.
17 Section 6. Section 1791 of Title 75 is amended to read:
18 § 1791. Notice of available benefits and limits.
19 It shall be presumed that the insured has been advised of the
20 benefits and limits available under this chapter provided the
21 following notice in bold print of at least ten-point type is
22 given to the applicant at the time of application for original
23 coverage or at the time of the first renewal after October 1,
24 1984, and no other notice or rejection shall be required:
25 IMPORTANT NOTICE
26 Insurance companies operating in the Commonwealth of
27 Pennsylvania are required by law to make available for
28 purchase the following benefits for you, your spouse or
29 other relatives or minors in your custody or in the
30 custody of your relatives, residing in your household,
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1 occupants of your motor vehicle or persons struck by your
2 motor vehicle:
3 (1) Medical benefits, up to at least $100,000.
4 (1.1) Extraordinary medical benefits, from $100,000
5 to $1,100,000 which may be offered in increments of
6 $100,000.
7 (2) Income loss benefits, up to at least $2,500 per
8 month up to a maximum benefit of at least $50,000.
9 (3) Accidental death benefits, up to at least
10 $25,000.
11 (4) Funeral benefits, $2,500.
12 (5) As an alternative to paragraphs (1) through (4),
13 a combination benefit, up to at least $277,500 of
14 benefits in the aggregate or benefits payable up to three
15 years from the date of the accident, whichever occurs
16 first, subject to a limit on accidental death benefit of
17 up to $25,000 and a limit on funeral benefit of $2,500,
18 provided that nothing contained in this subsection shall
19 be construed to limit, reduce, modify or change the
20 provisions of section 1715(d) (relating to availability
21 of adequate limits).
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
30 of others in any one accident.
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1 Additionally, insurers may offer higher benefit levels
2 than those enumerated above as well as additional
3 benefits. However, an insured may elect to purchase lower
4 benefit levels than those enumerated above.
5 Your signature on this notice or your payment of any
6 renewal premium evidences your actual knowledge and
7 understanding of the availability of these benefits and
8 limits as well as the benefits and limits you have
9 selected.
10 Section 7. Title 75 is amended by adding sections to read:
11 § 1798.1. Extraordinary medical benefit rate.
12 (a) Filing.--Each insurer issuing or delivering liability
13 insurance policies as described in section 1711 (relating to
14 required benefits) shall file with the Insurance Commissioner
15 for an extraordinary medical benefit rate for coverage under
16 section 1715(a)(1.1) (relating to availability of adequate
17 limits). The filing shall be subject to the act of June 11, 1947
18 (P.L.538, No.246), known as The Casualty and Surety Rate
19 Regulatory Act, provided that no filing for extraordinary
20 medical benefit coverage which is scheduled for a formal
21 administrative hearing may be deemed effective until an
22 adjudication is issued by the Insurance Commissioner. Insurers
23 may provide for the discounting of extraordinary medical benefit
24 loss reserves in annual financial statements. Unallocated
25 extraordinary medical benefit loss expense payments may be
26 treated in accordance with section 315 of the act of May 17,
27 1921 (P.L.789, No.285), known as The Insurance Department Act of
28 one thousand nine hundred and twenty-one, and regulations
29 promulgated pursuant thereto. In calculating rates for coverage
30 under section 1715(a)(1.1) extraordinary medical benefit losses
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1 and allocated loss adjustment expenses may be discounted to the
2 extent that such rates are determined to be actuarially sound.
3 (b) Rates.--All rates established under this section shall
4 be adequate to assure actuarial soundness. Under no
5 circumstances shall rates for other coverages required under the
6 provisions of this chapter be modified or otherwise established
7 to subsidize, in whole or in part, the rate for the
8 extraordinary medical benefit. In making a rate for the
9 extraordinary medical benefit, due consideration shall be given
10 to the current factors generally in use in making motor vehicle
11 insurance rates.
12 (c) 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
17 Subchapter F (relating to Catastrophic Loss Trust Fund) by the
18 act of December 12, 1988 (P.L.1120, No.144), all natural persons
19 who suffer or suffered a catastrophic loss prior to May 1, 1989,
20 or who may suffer a catastrophic loss during the registration
21 year for which payment was made in accordance with former
22 section 1762 (relating to funding), shall continue to receive,
23 or be eligible to receive, catastrophic loss benefits as if
24 Subchapter F had not been repealed. To ensure the administration
25 and delivery of catastrophic loss benefits to eligible
26 claimants, all powers and duties previously imposed on the
27 Catastrophic Loss Trust Fund Board under Subchapter F are hereby
28 transferred to the Insurance Commissioner. For the purposes of
29 this section, the Catastrophic Loss Trust Fund shall continue to
30 exist, notwithstanding the repeal of section 1764 (relating to
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1 Catastrophic Loss Trust Fund).
2 (b) Rate filing.--All insurers shall, within 30 days of the
3 effective date of this section, file for approval by the
4 Insurance Commissioner, an extraordinary medical benefit rate
5 pursuant to section 1798.1(a) (relating to extraordinary medical
6 benefit rate). Any insurer having an approved rate for
7 catastrophic loss coverage on the effective date of this section
8 shall utilize that approved rate.
9 (c) Notice.--For extraordinary medical benefit rate filings
10 approved after the effective date of this section, the insurer
11 shall provide the following notice to all policyholders no later
12 than 30 days from the date of approval, which notice shall not
13 be subject to any provision of any law or regulation requiring
14 the approval of the Insurance Commissioner prior to its adoption
15 or use:
16 IMPORTANT NOTICE
17 EXTRAORDINARY MEDICAL BENEFITS
18 By virtue of recent amendment to the Motor Vehicle
19 Financial Responsibility Law, as of May 1, 1989, the
20 first party benefits coverage may be extended to provide
21 an extraordinary medical benefit which will pay the
22 medical and rehabilitation costs for you and your family
23 members residing in your household which are more than
24 $100,000 for each person injured as the result of an
25 automobile accident, up to a lifetime benefit limit of
26 $1,100,000 for each person. The cost of this
27 extraordinary medical benefit coverage on an annual basis
28 is $ per vehicle. If you wish to purchase the
29 extraordinary medical benefit coverage, please notify
30 your agent or insurance company for additional
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1 information. If you do not wish to purchase extraordinary
2 medical benefit coverage, please disregard this notice.
3 § 1798.3. Unfunded liability report.
4 By May 15, 1989, the Insurance Commissioner and the Budget
5 Secretary shall jointly prepare and provide to the Governor and
6 to the General Assembly a report on the actuarial soundness of
7 the fund, including a projection of the additional revenues
8 needed on a year-to-year basis and a comparison of the cost of
9 providing additional revenues on a year-to-year, as-needed basis
10 and the cost of providing adequate revenues to eliminate the
11 unfunded liability within no more than five years. The report
12 shall include recommendations as to how rapidly the unfunded
13 liability should be eliminated and what the source or sources of
14 the additional revenues should be, which shall include, but not
15 be limited to, the General Fund or other surcharges. If such
16 report includes recommendations for collecting a surcharge to
17 eliminate the unfunded liability, the report shall compare the
18 consequences of imposing that surcharge on each motor vehicle
19 required to be registered under Chapter 13 (relating to
20 registration of vehicles) except trailers, recreational vehicles
21 not intended for highway use, motorcycles, motor-driven cycles,
22 motorized pedalcycles or like type vehicles; on each insured as
23 defined in section 1702 (relating to definitions); and on each
24 motor vehicle for which coverage is purchased under section
25 1715(a)(1) (relating to availability of adequate limits) and
26 shall compare the consequences of eliminating the unfunded
27 liability over a period of five years, a period of ten years, a
28 period of 15 years and a period of 20 years.
29 Section 8. Section 7 (section 1798.2(a)) shall be
30 retroactive to December 12, 1988, and sections 1, 2, 3, 4, 5 and
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1 7 (section 1798.2(b)), if enacted after May 1, 1989, shall be
2 retroactive to May 1, 1989.
3 Section 9. This act shall take effect as follows:
4 (1) Section 6 shall take effect May 1, 1989.
5 (2) The remainder of this act shall take effect
6 immediately.
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