PRINTER'S NO. 754
No. 701 Session of 1993
INTRODUCED BY SCANLON, MUSTO, WILLIAMS, AFFLERBACH, SCHWARTZ AND O'PAKE, MARCH 23, 1993
REFERRED TO BANKING AND INSURANCE, MARCH 23, 1993
AN ACT 1 Amending the act of May 17, 1921 (P.L.789, No.285), entitled, as 2 amended, "An act relating to insurance; establishing an 3 insurance department; and amending, revising, and 4 consolidating the law relating to the licensing, 5 qualification, regulation, examination, suspension, and 6 dissolution of insurance companies, Lloyds associations, 7 reciprocal and inter-insurance exchanges, and certain 8 societies and orders, the examination and regulation of fire 9 insurance rating bureaus, and the licensing and regulation of 10 insurance agents and brokers; the service of legal process 11 upon foreign insurance companies, associations or exchanges; 12 providing penalties, and repealing existing laws," further 13 providing for group policies. 14 The General Assembly of the Commonwealth of Pennsylvania 15 hereby enacts as follows: 16 Section 1. Section 208(e) of the act of May 17, 1921 17 (P.L.789, No.285), known as The Insurance Department Act of one 18 thousand nine hundred and twenty-one, amended or added July 31, 19 1968 (P.L.763, No.239), July 9, 1976 (P.L.912, No.166) and July 20 9, 1992 (P.L.434, No.91), is amended to read: 21 Section 208. Certificates of Authority To Do Business.--* * 22 * 23 (e) The provisions of this section shall not apply to the
1 following: 2 (1) Transactions regulated by the act of January 24, 1966 3 (1965 P.L.1509, No.531), entitled "An act relating to, 4 regulating, taxing, supervising and controlling the placing of 5 insurance on risks located in the Commonwealth of Pennsylvania 6 with insurers not licensed to transact insurance business in 7 Pennsylvania, permitting licensed insurers to afford coverage 8 which may be placed with unlicensed insurers, providing fees and 9 penalties, and repealing certain existing laws." 10 (2) Any life insurance or annuity company organized and 11 operated, without profit to any shareholder or individual, 12 exclusively for the purpose of aiding nonprofit educational or 13 scientific institutions by issuing insurance and annuity 14 contracts only to or for the benefit of such institutions and 15 individuals engaged in the service of such institutions. Any 16 insurance company as described in this clause is required to 17 join the Life and Health Insurance Guaranty Association pursuant 18 to the act of November 26, 1978 (P.L.1188, No.280), known as the 19 "Life and Health Insurance Guaranty Association Act," and to 20 join any successor association pursuant to any similar statute 21 which replaces the "Life and Health Insurance Guaranty 22 Association Act." The assessments for any company so required to 23 join shall be the same as for member insurers, but these 24 assessments shall not apply to annuity considerations. The "Life 25 and Health Insurance Guaranty Association Act" shall not apply 26 to annuity contracts issued by any insurance company as 27 described in this clause. 28 (3) Contracts of reinsurance. 29 (4) Transactions in this Commonwealth which (i) involve a 30 policy lawfully solicited, written and delivered outside of this 19930S0701B0754 - 2 -
1 Commonwealth covering only subjects of insurance not resident, 2 located, or expressly to be performed in this Commonwealth at 3 the time of issuance of such policy, and (ii) are subsequent to 4 the issuance of such policy. 5 (5) (i) Transactions in this Commonwealth, except group 6 credit life or group credit accident and health insurance 7 transactions, involving group [or blanket] accident and health 8 or life insurance policies or group annuity contracts where the 9 group policy [or contract is issued and delivered pursuant to 10 the group or blanket insurance or group annuity laws of a 11 jurisdiction in which the insurer is authorized to do an 12 insurance business and in which the policyholder is domiciled or 13 has its principal place of business or otherwise has a bona fide 14 situs.] is issued to: 15 (A) An out-of-State trustee of a fund where Commonwealth 16 residents shall not at any time comprise twenty-five per centum 17 or more of the total certificate holders, or where Commonwealth 18 residents shall not at any time comprise the largest share of 19 the total certificate holders, whichever is less. This clause 20 shall apply only if the insurer supplies to the Insurance 21 Commissioner certification as to its insured trusts and, for 22 each trust, the percentage of Commonwealth certificate holders 23 or the number of Commonwealth certificate holders compared to 24 the total number of certificate holders. The initial 25 certification shall be supplied no later than the effective date 26 of this act, and thereafter no later than the first day of March 27 of each year. The certification shall be filed along with the 28 annual statement but shall not be made a part thereof. 29 (B) An out-of-State single employer. 30 (C) A trustee of a fund established by any person acting 19930S0701B0754 - 3 -
1 directly as an employer having its principal office located in a 2 state other than this Commonwealth. 3 (D) An association, organized or domiciled in a state other 4 than this Commonwealth, which has a constitution and bylaws, has 5 been organized by other than an insurer, is maintained in good 6 faith for purposes other than that of obtaining insurance, has 7 been in active existence for at least two years, operates from 8 offices other than the insurer's and is controlled by principals 9 other than the insurer's. 10 (E) A union-negotiated out-of-State trust. 11 (F) Other groups as may be determined by the Insurance 12 Commissioner at his discretion. 13 (ii) As used in this clause (5): 14 An "out-of-State single employer" means any person acting 15 directly as an employer and has its principal office located in 16 a state other than this Commonwealth. 17 An "out-of-State trustee" of a fund means a trustee of a fund 18 established by an insurer for or established by two or more 19 persons acting directly as employers in the same industry and 20 the trustee has its principal office located in a state other 21 than this Commonwealth. 22 A "union-negotiated out-of-State trust" means a trust 23 established under a collective bargaining agreement and which is 24 located in a state other than this Commonwealth. 25 [(5.1) Transactions in this Commonwealth, except group 26 credit life or group credit accident and health insurance 27 transactions, involving a group or blanket insurance policy or 28 group annuity contract not exempt under the provisions of clause 29 (5) of this subsection, shall nonetheless be exempt from the 30 provisions of this section if: 19930S0701B0754 - 4 -
1 (i) they involve a group which conforms to one of the 2 definitions of eligibility for group coverage contained in the 3 laws of this Commonwealth; and, 4 (ii) the group policy or contract is lawfully issued without 5 this Commonwealth in a jurisdiction in which the insurer is 6 authorized to do an insurance business.] 7 It shall be the responsibility of the insurer claiming exemption 8 under this subsection to demonstrate compliance with each of the 9 above conditions. 10 (6) (i) Any insurance company or underwriter issuing 11 contracts of insurance to industrial insureds, (ii) industrial 12 insureds, or (iii) contracts of insurance issued to an 13 industrial insured: Provided, That nothing herein shall relieve 14 such industrial insured from the requirement of compliance with 15 the applicable provisions of the act of January 24, 1966 (1965 16 P.L.1509, No.531), referred to above. For purposes of this 17 section, an "industrial insured" is an insured (i) who procures 18 the insurance of any risk or risks by use of the services of a 19 full-time employe acting as an insurance manager or buyer or the 20 services of a regularly and continuously retained qualified 21 insurance consultant, (ii) whose aggregate annual premiums for 22 insurance on all risks total at least twenty-five thousand 23 dollars ($25,000), and (iii) who has at least twenty-five full- 24 time employes. 25 (7) Transactions in this Commonwealth involving a policy of 26 insurance issued prior to the effective date of this act. 27 (8) Insurance on the property and operation of railroads or 28 aircraft engaged in interstate or foreign commerce, insurance of 29 vessels, crafts or hulls, cargoes, marine builder's risks, 30 marine protection and indemnity, lessees and charterers' 19930S0701B0754 - 5 -
1 liability, or other risks including strikes and war risks 2 commonly insured under ocean or wet marine forms of policies. 3 Section 2. This act shall take effect in 90 days. A28L40DGS/19930S0701B0754 - 6 -