PRINTER'S NO. 1162
No. 1078 Session of 1993
INTRODUCED BY CIVERA, PESCI, TIGUE, FAIRCHILD, SCRIMENTI, OLASZ,
BELFANTI, MIHALICH, E. Z. TAYLOR, O'BRIEN, TRELLO, HENNESSEY,
ADOLPH AND WOGAN, MARCH 29, 1993
REFERRED TO COMMITTEE ON INSURANCE, MARCH 29, 1993
AN ACT
1 Amending the act of September 22, 1978 (P.L.763, No.143),
2 entitled "An act establishing certain procedures relating to
3 the termination of insurance agency contracts or accounts and
4 providing penalties," prohibiting cancellation in certain
5 situations.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Section 1.1 of the act of September 22, 1978
9 (P.L.763, No.143), entitled "An act establishing certain
10 procedures relating to the termination of insurance agency
11 contracts or accounts and providing penalties," added December
12 18, 1987 (P.L.418, No.88), is amended to read:
13 Section 1.1. Scope of act.
14 (a) General rule.--This act applies to all classes and kinds
15 of insurance which may be written by stock or mutual property or
16 casualty insurance companies, associations or exchanges,
17 including fidelity, surety and guaranty bonds and all other
18 forms of motor vehicle insurance except:
19 (1) Reinsurance.
1 (2) Accident and health insurance.
2 (3) Insurance against loss of or damage to aircraft or
3 against liability arising out of the ownership, maintenance
4 or use of aircraft.
5 (b) Nonapplicability.--The provisions of this act do not
6 apply to:
7 [(1) business owned by the insurer and not by the agent,
8 provided such insurer offers to continue such policies
9 through another of its agents;
10 (2)] (1) any agency contract in effect for less than
11 four years;
12 [(3)] (2) an agent whose license has been suspended or
13 revoked by the Insurance Commissioner or whose contract has
14 been terminated for insolvency, abandonment, gross or willful
15 misconduct, or failure to pay over to the insurer moneys due
16 to the insurer after his receipt of a written demand thereof;
17 or
18 [(4)] (3) an agent who has demonstrated gross
19 incompetence which would normally be cause for agency
20 contract termination.
21 Section 2. The act is amended by adding a section to read:
22 Section 2.1. Cancellation prohibited.
23 An insurer may not cancel or amend a written agreement with
24 an agent with respect to property or casualty insurance because
25 of an adverse loss ratio experience on that agent's book of
26 business if:
27 (1) the insurer required the agent to submit the
28 application for underwriting approval, and all material
29 information on the application was fully completed, and the
30 agent has not omitted or altered any information provided by
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1 the applicant; or
2 (2) the insurer accepted, without prior approval,
3 policies issued by the agent, if all material information on
4 the application or on the insurer's copy of any policy issued
5 by the agent was fully completed and the agent has not
6 omitted or altered any information provided by the applicant.
7 Section 3. This act shall take effect in 60 days.
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