HOUSE AMENDED
PRIOR PRINTER'S NOS. 109, 745, 862, PRINTER'S NO. 975
948
No. 109 Session of 1989
INTRODUCED BY HOLL, JANUARY 23, 1989
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
APRIL 25, 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9 Consolidated Statutes is repealed.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
1 department shall send to the registrant a renewed registration
2 card. Failure to receive a renewal application shall not relieve
3 a registrant from the responsibility to renew the registration.
4 Section 3. Section 1373(7) of Title 75 is repealed.
5 Section 4. Sections 1711, 1715, 1722 and 1723 of Title 75
6 are amended to read:
7 § 1711. Required benefits.
8 An insurer issuing or delivering liability insurance policies
9 covering any motor vehicle of the type required to be registered
10 under this title, except recreational vehicles not intended for
11 highway use, motorcycles, motor-driven cycles or motorized
12 pedalcycles or like type vehicles, registered and operated in
13 this Commonwealth, shall include coverage providing a medical
14 benefit in the amount of [$10,000, an] $5,000, an optional <--
15 income loss benefit up to a monthly maximum of $1,000 up to a
16 maximum benefit of $5,000 and [a] an optional funeral benefit in <--
17 the amount of $1,500, as defined in section 1712 (relating to
18 availability of benefits), with respect to injury arising out of
19 the maintenance or use of a motor vehicle., provided that there <--
20 be an immediate commensurate reduction in rate to be ordered by
21 the commissioner, but in any event not less than a 25% reduction
22 in rate. The income loss benefit provided under this section may
23 be expressly waived by the named insured provided the named
24 insured has no expectation of actual income loss due to age,
25 disability or lack of employment history. At the election of the
26 named insured, such policy shall also include an extraordinary
27 medical benefit as described in section 1715(a)(1.1) and (d)
28 (relating to availability of adequate limits).
29 § 1715. Availability of adequate limits.
30 (a) General rule.--An insurer shall make available for
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1 purchase first party benefits as follows:
2 (1) For medical benefits, up to at least $100,000.
3 (1.1) For extraordinary medical benefits, from $100,000
4 to $1,100,000, which may be offered in increments of
5 $100,000, as limited by subsection (d).
6 (2) For income loss benefits, up to at least $2,500 per
7 month up to a maximum benefit of at least $50,000.
8 (3) For accidental death benefits, up to at least
9 $25,000.
10 (4) For funeral benefits, $2,500.
11 (5) For combination of benefits enumerated in paragraphs
12 (1) through (4) and subject to a limit on the accidental
13 death benefit of up to $25,000 and a limit on the funeral
14 benefit of $2,500, up to at least $277,500 of benefits in the
15 aggregate or benefits payable up to three years from the date
16 of the accident, whichever occurs first, provided that
17 nothing contained in this subsection shall be construed to
18 limit, reduce, modify or change the provisions of subsection
19 (d).
20 (b) Higher or lower limits and additional benefits.--
21 Insurers may make available higher or lower limits or benefits
22 in addition to those enumerated in subsection (a).
23 (c) Restriction on providing first party benefits.--An
24 insurer shall not issue or deliver a policy providing first
25 party benefits in accordance with this subchapter unless the
26 policy also contains coverage for liability in amounts at least
27 equal to the limits required for financial responsibility.
28 (d) Limitations.--The maximum medical benefit which shall be
29 paid on behalf of any one eligible claimant under subsection
30 (a)(1.1) shall be $50,000 per year and $1,100,000 $1,000,000 <--
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1 lifetime aggregate of reasonable and necessary expenses only for
2 medical treatment and rehabilitative services which, as
3 described in section 1712(1) (relating to availability of
4 benefits), exceed $100,000. During the first 18 months of
5 eligibility, the insurer shall approve payments on behalf of a
6 claimant without regard to the $50,000 per year limit but
7 subject to the $1,100,000 $1,000,000 lifetime aggregate. <--
8 (e) Other extraordinary medical benefits.--Notwithstanding
9 the requirement of subsection (a)(1.1), an insured may obtain
10 the extraordinary medical benefits described in that subsection
11 through any insurance contract, program or group arrangement.
12 (f) Determining adverse experience of an agent.--For
13 purposes of determining adverse experience of an agent,
14 experience generated from extraordinary medical benefit coverage
15 described in subsection (a)(1.1) shall be excluded.
16 (g) Voluntary pooling.--Notwithstanding any other provisions
17 of this act or the act of June 11, 1947 (P.L.538, No.246), known
18 as The Casualty and Surety Rate Regulatory Act, two or more
19 insurers may enter into an arrangement or agreement to provide
20 for the availability of an extraordinary medical benefit
21 pursuant to the provisions of this chapter. All such
22 arrangements or agreements entered into by an insurer shall be
23 subject to the prior approval of the Insurance Commissioner.
24 § 1722. Preclusion of pleading, proving and recovering required
25 benefits.
26 In any action for damages against a tortfeasor arising out of
27 the maintenance or use of a motor vehicle, a person who is
28 eligible to receive benefits under the coverages set forth in
29 section 1711 (relating to required benefits) or the coverage set
30 forth in section 1715(a)(1.1) (relating to availability of
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1 adequate limits) shall be precluded from pleading, introducing
2 into evidence or recovering the amount of benefits paid or
3 payable under section 1711 or 1715(a)(1.1). This preclusion
4 applies only to the amount of benefits set forth in [section]
5 sections 1711 and 1715(a)(1.1).
6 § 1723. Reporting requirements.
7 Beginning December 31, 1986, and each year thereafter, each
8 insurance company writing automobile insurance in this
9 Commonwealth shall file with the Insurance Department the number
10 of its insureds, the number of its insureds who have purchased
11 first party medical benefits in excess of the minimum required
12 by section 1711 (relating to required benefits) and the number
13 of insureds who have purchased first party medical benefits [in
14 the amount of $100,000] under section 1715(a)(1) and (1.1)
15 (relating to availability of adequate limits). The Insurance
16 Department shall furnish this information to the General
17 Assembly annually.
18 Section 5. Section 1787(d) of Title 75 is repealed.
19 Section 6. Section 1791 of Title 75 is amended to read:
20 § 1791. Notice of available benefits and limits.
21 It shall be presumed that the insured has been advised of the
22 benefits and limits available under this chapter provided the
23 following notice in bold print of at least ten-point type is
24 given to the applicant at the time of application for original
25 coverage or at the time of the first renewal after October 1,
26 1984, and no other notice or rejection shall be required:
27 IMPORTANT NOTICE
28 Insurance companies operating in the Commonwealth of
29 Pennsylvania are required by law to make available for
30 purchase the following benefits for you, your spouse or
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1 other relatives or minors in your custody or in the
2 custody of your relatives, residing in your household,
3 occupants of your motor vehicle or persons struck by your
4 motor vehicle:
5 (1) Medical benefits, up to at least $100,000.
6 (1.1) Extraordinary medical benefits, from $100,000
7 to $1,100,000 which may be offered in increments of
8 $100,000.
9 (2) Income loss benefits, up to at least $2,500 per
10 month up to a maximum benefit of at least $50,000.
11 (3) Accidental death benefits, up to at least
12 $25,000.
13 (4) Funeral benefits, $2,500.
14 (5) As an alternative to paragraphs (1) through (4),
15 a combination benefit, up to at least $277,500 of
16 benefits in the aggregate or benefits payable up to three
17 years from the date of the accident, whichever occurs
18 first, subject to a limit on accidental death benefit of
19 up to $25,000 and a limit on funeral benefit of $2,500,
20 provided that nothing contained in this subsection shall
21 be construed to limit, reduce, modify or change the
22 provisions of section 1715(d) (relating to availability
23 of adequate limits).
24 (6) Uninsured, underinsured and bodily injury
25 liability coverage up to at least $100,000 because of
26 injury to one person in any one accident and up to at
27 least $300,000 because of injury to two or more persons
28 in any one accident or, at the option of the insurer, up
29 to at least $300,000 in a single limit for these
30 coverages, except for policies issued under the Assigned
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1 Risk Plan. Also, at least $5,000 for damage to property
2 of others in any one accident.
3 Additionally, insurers may offer higher benefit levels
4 than those enumerated above as well as additional
5 benefits. However, an insured may elect to purchase lower
6 benefit levels than those enumerated above.
7 Your signature on this notice or your payment of any
8 renewal premium evidences your actual knowledge and
9 understanding of the availability of these benefits and
10 limits as well as the benefits and limits you have
11 selected.
12 Section 7. Title 75 is amended by adding sections to read:
13 § 1798.1. Extraordinary medical benefit rate.
14 (a) Filing.--Each insurer issuing or delivering liability
15 insurance policies as described in section 1711 (relating to
16 required benefits) shall file with the Insurance Commissioner
17 for an extraordinary medical benefit rate for coverage under
18 section 1715(a)(1.1) (relating to availability of adequate
19 limits). The filing shall be subject to the act of June 11, 1947
20 (P.L.538, No.246), known as The Casualty and Surety Rate
21 Regulatory Act, provided that no FIRST TIME filing for <--
22 extraordinary medical benefit coverage which is scheduled for a
23 formal administrative hearing may be deemed effective until an
24 adjudication is issued by the Insurance Commissioner. Insurers
25 may provide for the discounting of extraordinary medical benefit
26 loss reserves in annual financial statements. Unallocated
27 extraordinary medical benefit loss expense payments may be
28 treated in accordance with section 315 of the act of May 17,
29 1921 (P.L.789, No.285), known as The Insurance Department Act of
30 one thousand nine hundred and twenty-one, and regulations
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1 promulgated pursuant thereto. In calculating rates for coverage <--
2 under section 1715(a)(1.1) THE INSURANCE COMMISSIONER MAY ORDER <--
3 THE DISCOUNTING OF extraordinary medical benefit losses and
4 allocated loss adjustment expenses may be discounted IN <--
5 CALCULATING RATES FOR COVERAGE UNDER SECTION 1715(A)(1.1) to the
6 extent that such rates are determined to be actuarially sound. <--
7 (b) Rates.--All rates established under this section shall
8 be adequate to assure actuarial soundness. Under no
9 circumstances shall rates for other coverages required under the
10 provisions of this chapter be modified or otherwise established
11 to subsidize, in whole or in part, the rate for the
12 extraordinary medical benefit. In making a rate for the
13 extraordinary medical benefit, due consideration shall be given
14 to the current factors generally in use in making motor vehicle
15 insurance rates.
16 (c) Limitation.--The extraordinary medical benefit rate for
17 coverage under section 1715(a)(1.1) shall not be subject to any
18 premium tax levied under State law.
19 § 1798.2. Transition.
20 (a) Savings provision.--Notwithstanding the repeal of
21 Subchapter F (relating to Catastrophic Loss Trust Fund) by the
22 act of December 12, 1988 (P.L.1120, No.144), all natural persons
23 who suffer or suffered a catastrophic loss prior to May JUNE 1, <--
24 1989, or who may suffer a catastrophic loss during the
25 registration year for which payment was made in accordance with
26 former section 1762 (relating to funding), shall continue to
27 receive, or be eligible to receive, catastrophic loss benefits
28 as if Subchapter F had not been repealed. To ensure the
29 administration and delivery of catastrophic loss benefits to
30 eligible claimants, all powers and duties previously imposed on
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1 the Catastrophic Loss Trust Fund Board under Subchapter F are
2 hereby transferred to the Insurance Commissioner. For the
3 purposes of this section, the Catastrophic Loss Trust Fund shall
4 continue to exist, notwithstanding the repeal of section 1764
5 (relating to Catastrophic Loss Trust Fund).
6 (b) Rate filing.--All insurers shall, within 30 days of the
7 effective date of this section, file for approval by the
8 Insurance Commissioner, an extraordinary medical benefit rate
9 pursuant to section 1798.1(a) (relating to extraordinary medical
10 benefit rate). Any insurer having an approved rate for
11 catastrophic loss coverage on the effective date of this section
12 shall utilize that approved rate.
13 (c) Notice.--For extraordinary medical benefit rate filings
14 approved after the effective date of this section, the insurer
15 shall provide the following notice to all policyholders no later
16 than 30 days from the date of approval, which notice shall not
17 be subject to any provision of any law or regulation requiring
18 the approval of the Insurance Commissioner prior to its adoption
19 or use:
20 IMPORTANT NOTICE
21 EXTRAORDINARY MEDICAL BENEFITS
22 By virtue of recent amendment to the Motor Vehicle
23 Financial Responsibility Law, as of May JUNE 1, 1989, the <--
24 first party benefits coverage may be extended to provide
25 an extraordinary medical benefit which will pay the
26 medical and rehabilitation costs for you and your family
27 members residing in your household which are more than
28 $100,000 for each person injured as the result of an
29 automobile accident, up to a lifetime benefit limit of
30 $1,100,000 $1,000,000 for each person. The cost of this <--
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1 extraordinary medical benefit coverage on an annual basis
2 is $ per vehicle. If you wish to purchase the
3 extraordinary medical benefit coverage, please notify
4 your agent or insurance company for additional
5 information. If you do not wish to purchase extraordinary
6 medical benefit coverage, please disregard this notice.
7 § 1798.3. Unfunded liability report.
8 By May 15, 1989, the Insurance Commissioner and the Budget
9 Secretary shall jointly prepare and provide to the Governor and
10 to the General Assembly a report on the actuarial soundness of
11 the fund, including a projection of the additional revenues
12 needed on a year-to-year basis and a comparison of the cost of
13 providing additional revenues on a year-to-year, as-needed basis
14 and the cost of providing adequate revenues to eliminate the
15 unfunded liability within no more than five years. The report
16 shall include recommendations as to how rapidly the unfunded
17 liability should be eliminated and what the source or sources of
18 the additional revenues should be, which shall include, but not
19 be limited to, the General Fund or other surcharges. If such
20 report includes recommendations for collecting a surcharge to
21 eliminate the unfunded liability, the report shall compare the
22 consequences of imposing that surcharge on each motor vehicle
23 required to be registered under Chapter 13 (relating to
24 registration of vehicles) except trailers, recreational vehicles
25 not intended for highway use, motorcycles, motor-driven cycles,
26 motorized pedalcycles or like type vehicles; on each insured as
27 defined in section 1702 (relating to definitions); and on each
28 motor vehicle for which coverage is purchased under section
29 1715(a)(1) (relating to availability of adequate limits) and
30 shall compare the consequences of eliminating the unfunded
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1 liability over a period of five years, a period of ten years, a
2 period of 15 years and a period of 20 years.
3 Section 8. Section 7 (section 1798.2(a)) shall be
4 retroactive to December 12, 1988, and sections 1, 2, 3, 4, 5 and <--
5 7 (section 1798.2(b)), if enacted after May 1, 1989, shall be
6 retroactive to May 1, 1989.
7 Section 9. This act shall take effect as follows:
8 (1) Section 6 shall take effect May 1, 1989. <--
9 (1) SECTIONS 4 (SECTIONS 1711 AND 1715) AND 6 SHALL TAKE <--
10 EFFECT JUNE 1, 1989.
11 (2) The remainder of this act shall take effect
12 immediately.
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