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                                 SENATE AMENDED
        PRIOR PRINTER'S NOS. 1177, 1527               PRINTER'S NO. 1985

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1055 Session of 1997


        INTRODUCED BY MICOZZIE, SATHER, COLAIZZO, MELIO, COLAFELLA,
           NICKOL, GODSHALL, BAKER, SEMMEL, BATTISTO, ITKIN, YOUNGBLOOD,
           SERAFINI, RAMOS AND JAMES, MARCH 25, 1997

        AS AMENDED ON SECOND CONSIDERATION, IN SENATE, JUNE 9, 1997

                                     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," providing
    13     for risk-based capital requirements; FURTHER PROVIDING FOR     <--
    14     AGENTS AND BROKERS DEFINITIONS, SOLICITATION PENALTIES,
    15     LICENSES, COMPENSATION PENALTIES AND REBATES AND INDUCEMENTS;
    16     PROVIDING FOR AGENTS AND BROKERS DISCLOSURES; FURTHER
    17     PROVIDING FOR GENERAL PENALTIES AND FOR INSTITUTIONAL AGENTS
    18     AND BROKERS; AND PROVIDING FOR INSURANCE SALES BY FINANCIAL
    19     INSTITUTIONS.

    20     The General Assembly of the Commonwealth of Pennsylvania
    21  hereby enacts as follows:
    22     Section 1.  The act of May 17, 1921 (P.L.789, No.285), known
    23  as The Insurance Department Act of 1921, is amended by adding an
    24  article to read:
    25                            ARTICLE V-A


     1                  RISK-BASED CAPITAL REQUIREMENTS
     2     Section 501-A.  Definitions.
     3     The following words and phrases when used in this article
     4  shall have, unless the context clearly indicates otherwise, the
     5  meanings given to them in this section.
     6     "Adjusted RBC report" means an RBC report that has been
     7  recalculated by the Insurance Commissioner in accordance with
     8  section 502-A(c).
     9     "Authorized control level event" means one or more of the
    10  following events:
    11     (1)  The filing of an RBC report by the insurer which
    12  indicates that the insurer's total adjusted capital is greater
    13  than or equal to its mandatory control level RBC but less than
    14  its authorized control level RBC.
    15     (2)  The notification by the Insurance Commissioner to the
    16  insurer of an adjusted RBC report that indicates the event in
    17  paragraph (1).
    18     (3)  The failure of the insurer to respond, in a manner
    19  satisfactory to the Insurance Commissioner, to a corrective
    20  order, provided the insurer has not challenged the corrective
    21  order under section 510-A.
    22     (4)  If the insurer has challenged a corrective order under
    23  section 510-A and the Insurance Commissioner has, after a
    24  hearing, rejected the challenge or modified the corrective
    25  order, the failure of the insurer to respond, in a manner
    26  satisfactory to the Insurance Commissioner, to the corrective
    27  order subsequent to rejection or modification by the Insurance
    28  Commissioner.
    29     "Commissioner" means the Insurance Commissioner of the
    30  Commonwealth.
    19970H1055B1985                  - 2 -

     1     "Company action level event" means one or more of the
     2  following events:
     3     (1)  The filing of an RBC report by an insurer that indicates
     4  that:
     5     (i)  the insurer's total adjusted capital is greater than or
     6  equal to its regulatory action level RBC but less than its
     7  company action level RBC; or
     8     (ii)  if a life or health insurer, the insurer has total
     9  adjusted capital that is greater than or equal to its company
    10  action level RBC but less than the product of its authorized
    11  control level RBC and 2.5 and has a negative trend.
    12     (2)  The notification by the Insurance Commissioner to the
    13  insurer of an adjusted RBC report that indicates an event in
    14  paragraph (1).
    15     "Corrective order" means an order issued by the Insurance
    16  Commissioner specifying corrective actions that the Insurance
    17  Commissioner has determined are required under section 507-A(b).
    18     "Department" means the Insurance Department of the
    19  Commonwealth.
    20     "Domestic insurer" means an insurer that is incorporated or
    21  organized under the laws of this Commonwealth.
    22     "Foreign insurer" means an insurer that is licensed by the
    23  Insurance Department to do business in this Commonwealth and
    24  incorporated or organized under the laws of a jurisdiction other
    25  than this Commonwealth.
    26     "Insurer" means life or health insurers and property or
    27  casualty insurers.
    28     "Life or health insurer" means a stock or mutual insurance
    29  company, association or exchange licensed by the Insurance
    30  Department to transact life or accident and health insurance
    19970H1055B1985                  - 3 -

     1  coverages or both.
     2     "Mandatory control level event" means one or more of the
     3  following events:
     4     (1)  The filing of an RBC report which indicates that the
     5  insurer's total adjusted capital is less than its mandatory
     6  control level RBC.
     7     (2)  Notification by the insurance commissioner to the
     8  insurer of an adjusted RBC report that indicates the event in
     9  paragraph (1).
    10     "NAIC" means the National Association of Insurance
    11  Commissioners or successor organization.
    12     "Negative trend"  means, with respect to a life or health
    13  insurer, a decrease over a period of time, as determined in
    14  accordance with the Trend Test Calculation included in the RBC
    15  instructions.
    16     "Property or casualty insurer"  means a stock or mutual
    17  insurance company, association or exchange licensed by the
    18  Insurance Department to transact property or casualty insurance
    19  coverages or both.
    20     "RBC" means risk-based capital.
    21     "RBC instructions" means the RBC report, including RBC
    22  instructions and formula adopted by the NAIC as required by the
    23  Insurance Commissioner under section 320(a)(2) of the act of May
    24  17, 1921 (P.L.682, No.284), known as "The Insurance Company Law
    25  of 1921."
    26     "RBC level" means an insurer's company action level RBC,
    27  regulatory action level RBC, authorized control level RBC or
    28  mandatory control level RBC where:
    29     (1)  "Company action level RBC" means the product of 2.0 and
    30  the authorized control level RBC.
    19970H1055B1985                  - 4 -

     1     (2)  "Regulatory action level RBC" means the product of 1.5
     2  and the authorized control level RBC.
     3     (3)  "Authorized control level RBC" means the amount of an
     4  insurer's authorized control level RBC calculated under the RBC
     5  formula in accordance with the RBC instructions.
     6     (4)  "Mandatory control level RBC" means the product of .70
     7  and the authorized control level RBC.
     8     "RBC plan" means a comprehensive financial plan containing
     9  the elements specified in section 506-A(a).
    10     "RBC report" means the report required under sections 502-A
    11  and 503-A of this article.
    12     "Regulatory action level event" means one or more of the
    13  following events:
    14     (1)  The filing of an RBC report by the insurer that
    15  indicates that the insurer's total adjusted capital is greater
    16  than or equal to its authorized control level RBC but less than
    17  its regulatory action level RBC.
    18     (2)  The notification by the Insurance Commissioner to an
    19  insurer of an adjusted RBC report that indicates the event in
    20  paragraph (1).
    21     (3)  The failure of the insurer to file an RBC report by the
    22  date required under this article unless the insurer has provided
    23  an explanation for the failure that is satisfactory to the
    24  Insurance Commissioner and has cured the failure within ten days
    25  after the date the report is required to be filed under this
    26  article.
    27     (4)  The failure of the insurer to submit an RBC plan or
    28  revised RBC plan to the Insurance Commissioner within the time
    29  period set forth in section 506-A(b) and (d).
    30     (5)  Notification by the Insurance Commissioner to the
    19970H1055B1985                  - 5 -

     1  insurer that:
     2     (i)  the RBC plan or revised RBC plan submitted by the
     3  insurer is in the judgment of the Insurance Commissioner
     4  unsatisfactory; and
     5     (ii)  the notification constitutes a regulatory action level
     6  event with respect to the insurer.
     7     (6)  Notification by the Insurance Commissioner to the
     8  insurer that the insurer has failed to adhere to its RBC plan or
     9  revised RBC plan, but only if the failure has a substantial
    10  adverse effect on the ability of the insurer to eliminate the
    11  company action level event in accordance with its RBC plan or
    12  revised RBC plan and the Insurance Commissioner has so stated in
    13  the notification.
    14     "Revised RBC plan"  means an RBC plan that has been rejected
    15  by the Insurance Commissioner and revised by the insurer, with
    16  or without the Insurance Commissioner's recommendation.
    17     "Total adjusted capital" means the sum of:
    18     (1)  an insurer's statutory capital and surplus as determined
    19  in accordance with the statutory accounting applicable to its
    20  annual financial statements filed with the Insurance Department;
    21  and
    22     (2)  other items as the RBC instructions may provide.
    23     Section 502-A.  RBC Reports Required; Domestic Insurers.--(a)
    24  Every domestic insurer shall, on or prior to each March 1,
    25  prepare and submit to the commissioner and to the NAIC a report
    26  of its RBC levels as of the end of the calendar year just ended,
    27  in a form and containing the information required by the RBC
    28  instructions.
    29     (b)  In addition, every domestic insurer shall file its RBC
    30  report with the chief insurance regulatory official in any
    19970H1055B1985                  - 6 -

     1  jurisdiction in which the insurer is authorized to do business,
     2  if the chief insurance regulatory official of the jurisdiction
     3  has notified the insurer of its request in writing, in which
     4  case the insurer shall file its RBC report not later than the
     5  later of:
     6     (1)  the date instructed by the chief insurance regulatory
     7  official of the jurisdiction requesting the filing; or
     8     (2)  March 1 of the year following the end of the calendar
     9  year for which the report is requested.
    10     (c)  If a domestic insurer files an RBC report that, in the
    11  judgment of the commissioner, is inaccurate, the commissioner
    12  shall recalculate the RBC report to correct the inaccuracy and
    13  shall notify the insurer of the amount of the recalculation. The
    14  notice shall contain a statement of the reason for the
    15  recalculation. If, within thirty days after the notification
    16  from the commissioner, the insurer fails to prepare and submit
    17  to the commissioner and to the NAIC an adjusted RBC report to
    18  correct the inaccuracy in accordance with the commissioner's
    19  notification, the commissioner may enter an order calling for an
    20  investigatory hearing with no less than twenty days' notice to
    21  the insurer for purposes of obtaining additional documentation,
    22  data, information and testimony. Following the hearing, the
    23  commissioner shall issue a final order accepting the RBC report
    24  as filed or the adjusted RBC report as initially recalculated or
    25  with other corrections.
    26     Section 503-A.  RBC Requirements; Foreign Insurers.--(a)  A
    27  foreign insurer shall, upon the written request of the
    28  commissioner, submit to the commissioner an RBC report as of the
    29  end of the calendar year just ended no later than the later of:
    30     (1)  the date an RBC report would be required to be filed by
    19970H1055B1985                  - 7 -

     1  a domestic insurer under this article; or
     2     (2)  fifteen days after the request is received by the
     3  foreign insurer.
     4     (b)  A foreign insurer shall, upon the written request of the
     5  commissioner, submit to the commissioner a copy of an RBC plan
     6  that is filed with the chief insurance regulatory official of
     7  any other jurisdiction, within fifteen days after receiving the
     8  request from the commissioner.
     9     (c)  In the event of a company action level event, regulatory
    10  action level event or authorized control level event with
    11  respect to a foreign insurer as determined under the RBC statute
    12  applicable in the jurisdiction of domicile of the insurer, or,
    13  if no RBC statute is in force in that jurisdiction, under the
    14  provisions of this article, if the chief insurance regulatory
    15  official of the jurisdiction of domicile of the foreign insurer
    16  fails to require the foreign insurer to file an RBC plan in the
    17  manner specified under that state's RBC statute, or if no RBC
    18  statute is in force in that jurisdiction, under this article,
    19  the commissioner may require the foreign insurer to file an RBC
    20  plan with the commissioner. The failure of the foreign insurer
    21  to file an RBC plan with the commissioner under this section
    22  shall be grounds to order the insurer to cease and desist from
    23  writing new insurance business in this Commonwealth. The
    24  commissioner shall give written notice to the foreign insurer,
    25  stating specifically the nature of the grounds for the order and
    26  fixing a time and place, at least ten days thereafter, when a
    27  hearing before the commissioner regarding the matter shall be
    28  held.
    29     (d)  In the event of a mandatory control level event with
    30  respect to a foreign insurer, if no domiciliary receiver has
    19970H1055B1985                  - 8 -

     1  been appointed with respect to the foreign insurer under the
     2  rehabilitation and liquidation statute applicable in the
     3  jurisdiction of domicile of the foreign insurer, the
     4  commissioner may make application to the Commonwealth Court
     5  under sections 553 and 554, and the occurrence of the mandatory
     6  control level event shall be considered adequate grounds for the
     7  application under sections 553(a) and 554(a).
     8     Section 504-A.  Calculation of RBC Relating to Life or Health
     9  Insurers.--(a)  A life or health insurer's RBC shall be
    10  determined in accordance with the formula set forth in the RBC
    11  instructions.
    12     (b)  The formula shall take into account and may adjust for
    13  the covariance between the following risks determined in each
    14  case by applying the factors in the manner set forth in the RBC
    15  instructions:
    16     (1)  The risk with respect to the insurer's assets.
    17     (2)  The risk of adverse insurance experience with respect to
    18  the insurer's liabilities and obligations.
    19     (3)  The interest rate risk with respect to the insurer's
    20  business.
    21     (4)  All other business risks and other relevant risks as set
    22  forth in the RBC instructions.
    23     Section 505-A.  Calculation of RBC Relating to Property or
    24  Casualty Insurers.--(a)  A property or casualty insurer's RBC
    25  shall be determined in accordance with the formula set forth in
    26  the RBC instructions.
    27     (b)  The formula shall take into account and may adjust for
    28  the covariance between the following risks determined in each
    29  case by applying the factors in the manner set forth in the RBC
    30  instructions:
    19970H1055B1985                  - 9 -

     1     (1)  Asset risk.
     2     (2)  Credit risk.
     3     (3)  Underwriting risk.
     4     (4)  All other business risks and other relevant risks as are
     5  set forth in the RBC instructions.
     6     Section 506-A.  Company Action Level Event.--(a)  In the
     7  event of a company action level event, the insurer shall prepare
     8  and submit to the commissioner an RBC plan that shall include,
     9  at a minimum, all of the following:
    10     (1)  Identification of the conditions that contribute to the
    11  company action level event.
    12     (2)  Proposals of corrective actions that the insurer intends
    13  to take and that would be expected to result in the elimination
    14  of the company action level event.
    15     (3)  Projections of the insurer's financial results for the
    16  current year and at least the four succeeding years, both in the
    17  absence of proposed corrective actions and giving effect to the
    18  proposed corrective actions, including projections of statutory
    19  operating income, net income, capital and surplus. Projections
    20  for both new and renewal business may include separate
    21  projections for each major line of business and separately
    22  identify each significant income, expense and benefit component.
    23     (4)  Identification of the key assumptions impacting the
    24  insurer's projections and the sensitivity of the projections to
    25  the assumptions.
    26     (5)  Identification of the quality of and problems associated
    27  with the insurer's business, including, but not limited to, its
    28  assets, anticipated business growth and associated surplus
    29  strain, extraordinary exposure to risk, mix of business and use
    30  of reinsurance, if any, in each case.
    19970H1055B1985                 - 10 -

     1     (b)  The RBC plan required under this section shall be
     2  submitted within forty-five days after the occurrence of the
     3  company action level event.
     4     (c)  Within sixty days after the submission by an insurer of
     5  an RBC plan to the commissioner, the commissioner shall notify
     6  the insurer whether the RBC plan shall be implemented or whether
     7  the RBC plan is, in the judgment of the commissioner,
     8  unsatisfactory. If the commissioner determines the RBC plan is
     9  unsatisfactory, the notification to the insurer shall set forth
    10  the reasons for the determination and may set forth proposed
    11  revisions that will render the RBC plan satisfactory in the
    12  judgment of the commissioner.
    13     (d)  Upon notification from the commissioner of a
    14  determination that the RBC plan is unsatisfactory, the insurer
    15  shall prepare a revised RBC plan, which may incorporate by
    16  reference any revisions proposed by the commissioner and, unless
    17  the commissioner has taken action under subsection (e), shall
    18  submit the revised RBC plan to the commissioner within forty-
    19  five days after the notification from the commissioner.
    20     (e)  In the event of a notification by the commissioner to an
    21  insurer that the insurer's RBC plan or revised RBC plan is
    22  unsatisfactory, the commissioner may specify in the notification
    23  that the notification constitutes a regulatory action level
    24  event or take action as necessary to place the insurer under
    25  regulatory control under Article V.
    26     (f)  Every domestic insurer that files an RBC plan or revised
    27  RBC plan with the commissioner shall file a copy of the RBC plan
    28  or revised RBC plan with the chief insurance regulatory official
    29  in any jurisdiction in which the insurer is authorized to do
    30  business if:
    19970H1055B1985                 - 11 -

     1     (1)  The jurisdiction has an RBC provision substantially
     2  similar to section 512-A(a) and (b).
     3     (2)  The chief insurance regulatory official of that
     4  jurisdiction has notified the insurer of his request for the
     5  filing in writing, in which case the insurer shall file a copy
     6  of the RBC plan or revised RBC plan in that jurisdiction no
     7  later than the later of:
     8     (i)  fifteen days after the receipt of notice to file a copy
     9  of its RBC plan or revised RBC plan with the jurisdiction; or
    10     (ii)  the date on which the RBC plan or revised RBC plan is
    11  filed under this section.
    12     Section 507-A.  Regulatory Action Level Event.--(a)  In the
    13  event of a regulatory action level event, the commissioner:
    14     (1)  may require the insurer to prepare and submit an RBC
    15  plan or, if applicable, a revised RBC plan;
    16     (2)  shall perform an examination under Article IX or
    17  analysis as the commissioner deems necessary of the assets,
    18  liabilities and operations of the insurer, including, if
    19  applicable, a review of its RBC plan or revised RBC plan; and
    20     (3)  subsequent to an examination or analysis performed under
    21  paragraph (2), shall issue an order specifying corrective
    22  actions as the commissioner shall determine are required.
    23     (b)  In determining corrective actions, the commissioner may
    24  take into account factors as the commissioner deems relevant
    25  with respect to the insurer based upon the commissioner's
    26  examination or analysis of the assets, liabilities and
    27  operations of the insurer, including, but not limited to, the
    28  results of any sensitivity tests undertaken pursuant to the RBC
    29  instructions.
    30     (c)  The RBC plan or revised RBC plan required under this
    19970H1055B1985                 - 12 -

     1  section shall be submitted within forty-five days after the
     2  occurrence of the regulatory action level event.
     3     (d)  The commissioner may retain actuaries, investment
     4  experts, attorneys, appraisers, certified public accountants and
     5  other professionals and specialists as may be necessary in the
     6  judgment of the commissioner to review the insurer's RBC plan or
     7  revised RBC plan, examine or analyze the assets, liabilities and
     8  operations of the insurer and formulate the corrective order
     9  with respect to the insurer. The fees, costs and expenses
    10  relating to professionals and specialists retained under this
    11  section shall be charged to and paid by the affected insurer or
    12  other party as directed by the commissioner.
    13     Section 508-A.  Authorized Control Level Event.--In the event
    14  of an authorized control level event with respect to an insurer,
    15  the commissioner shall:
    16     (1)  Take such actions as are required under section 507-A
    17  regarding an insurer with respect to which a regulatory action
    18  level event has occurred.
    19     (2)  If the commissioner deems it to be in the best interests
    20  of the policyholders and creditors of the insurer and of the
    21  public, take actions necessary to cause the insurer to be placed
    22  under regulatory control under Article V. In the event the
    23  commissioner takes action under Article V, the authorized
    24  control level event shall be deemed sufficient grounds for the
    25  commissioner to take that action.
    26     Section 509-A.  Mandatory Control Level Event.--In the event
    27  of a mandatory control level event:
    28     (1)  With respect to a life or health insurer, the
    29  commissioner shall take actions necessary to place the insurer
    30  under regulatory control under sections 512 through 563. The
    19970H1055B1985                 - 13 -

     1  mandatory control level event shall be deemed sufficient grounds
     2  for the commissioner to take action under section 514; however,
     3  the commissioner may forego action for up to ninety days after
     4  the mandatory control level event if the commissioner finds
     5  there is a reasonable expectation that the mandatory control
     6  level event may be eliminated within the ninety-day period.
     7     (2)  With respect to a property or casualty insurer, the
     8  commissioner shall take actions necessary to place the insurer
     9  under regulatory control under sections 512 through 563 or, in
    10  the case of an insurer that is writing no business, may allow
    11  the insurer to run off its existing business under the
    12  supervision of the commissioner. In either event, the mandatory
    13  control level event shall be deemed sufficient grounds for the
    14  commissioner to take action under section 514; however, the
    15  commissioner may forego action for up to ninety days after the
    16  mandatory control level event if the commissioner finds there is
    17  a reasonable expectation that the mandatory control level event
    18  may be eliminated within the ninety-day period.
    19     Section 510-A.  Hearings.--(a)  The insurer shall have the
    20  right to a confidential departmental hearing at which the
    21  insurer may challenge a determination or action by the
    22  commissioner upon one or more of the following events:
    23     (1)  Issuance of a final order by the commissioner accepting
    24  an adjusted RBC report under section 502-A(c).
    25     (2)  Notification to an insurer by the commissioner of a
    26  corrective order with respect to the insurer.
    27     (b)  The insurer shall notify the commissioner of the
    28  insurer's request for a hearing under this section within five
    29  days after the action or notification by the commissioner under
    30  subsection (a). Upon receipt of the insurer's request for a
    19970H1055B1985                 - 14 -

     1  hearing, the commissioner shall set a date for the hearing,
     2  which date shall be no less than ten days nor more than thirty
     3  days after the date of the insurer's request.
     4     Section 511-A.  Notices.--(a)  Notices by the commissioner to
     5  an insurer which may result in regulatory action under this
     6  article shall be effective upon dispatch if transmitted by
     7  certified mail or any other form of delivery that insures
     8  signature upon receipt.
     9     (b)  Notices by the commissioner to an insurer transmitted by
    10  a form of delivery other than that provided in subsection (a)
    11  shall be effective upon the insurer's receipt of the notice.
    12     Section 512-A.  Confidentiality; Prohibition on
    13  Announcements; Prohibition on Use in Ratemaking.--(a)  RBC
    14  reports, to the extent the information therein is not required
    15  to be set forth in a publicly available annual statement
    16  schedule, and RBC plans, including the results or report of any
    17  examination or analysis of an insurer performed under this
    18  article, and any corrective order issued by the commissioner
    19  pursuant to examination or analysis with respect to a domestic
    20  insurer or foreign insurer that are filed with the commissioner
    21  constitute information that may be damaging to the insurer if
    22  made available to its competitors and, therefore, shall be kept
    23  confidential by the commissioner.
    24     (b)  Information described in subsection (a) shall be given
    25  confidential treatment, may not be subject to subpoena by any
    26  Federal, state or other jurisdiction and may not be made public
    27  by the commissioner or any other person, except to insurance or
    28  other regulatory officials of this or other jurisdictions,
    29  without the prior written consent of the insurer to which the
    30  information pertains, unless the commissioner determines to make
    19970H1055B1985                 - 15 -

     1  the information public for purposes of actions taken by the
     2  commissioner under Article V.
     3     (c)  The comparison of an insurer's total adjusted capital to
     4  any of its RBC levels is a regulatory tool that may indicate the
     5  need for possible corrective action with respect to the insurer
     6  and is not intended as a means to rank insurers generally.
     7  Therefore, except as otherwise required under the provisions of
     8  this article, the making, publishing, disseminating, circulating
     9  or placing before the public or causing, directly or indirectly,
    10  to be made, published, disseminated, circulated or placed before
    11  the public in a newspaper, magazine or other publication or in
    12  the form of a notice, circular, pamphlet, letter or poster or
    13  over a radio or television station, or in any other way, an
    14  advertisement, announcement or statement containing an
    15  assertion, representation or statement with regard to the RBC
    16  levels of an insurer or of a component derived in the
    17  calculation, by an insurer, agent, broker or other person would
    18  be misleading and is prohibited, provided, however, that if a
    19  materially false statement with respect to the comparison
    20  regarding an insurer's total adjusted capital to its RBC levels
    21  or an inappropriate comparison of any other amount to the
    22  insurer's RBC levels is published in a written publication and
    23  the insurer is able to demonstrate to the commissioner with
    24  substantial proof the falsity or inappropriateness of the
    25  statement, the insurer may publish an announcement in a written
    26  publication if the sole purpose of the announcement is to rebut
    27  the materially false or inappropriate statement.
    28     (d)  The RBC instructions, RBC reports, adjusted RBC reports,
    29  RBC plans and revised RBC plans are intended solely for use by
    30  the commissioner in monitoring the solvency of insurers and the
    19970H1055B1985                 - 16 -

     1  need for possible corrective action with respect to insurers and
     2  shall not be used by the commissioner for ratemaking nor
     3  considered or introduced as evidence in any rate proceeding nor
     4  used by the commissioner to calculate or derive any elements of
     5  an appropriate premium level or rate of return for any line of
     6  insurance which an insurer or any affiliate is authorized to
     7  write.
     8     Section 513-A.  Exemptions.--(a)  The following insurers are
     9  exempt from this article:
    10     (1)  Monoline mortgage guaranty insurers.
    11     (2)  Financial guaranty insurers.
    12     (3)  Title insurers.
    13     (b)  A domestic property or casualty insurer that meets all
    14  of the following conditions is exempt from this article unless
    15  the commissioner makes a specific finding that application of
    16  this article to the insurer is necessary for the commissioner to
    17  carry out statutory responsibilities:
    18     (1)  Writes direct business only in this Commonwealth.
    19     (2)  Writes direct annual premiums of ten million dollars
    20  ($10,000,000) or less or such higher amount as the commissioner
    21  may order in five-year intervals as necessary to reflect the
    22  impact of inflationary factors.
    23     (3)  Assumes no reinsurance in excess of five per centum of
    24  direct premium written except for assumed reinsurance of
    25  business directly written in this Commonwealth if the assuming
    26  insurer's total annual net written premium, direct plus assumed
    27  minus ceded, is ten million dollars ($10,000,000) or less.
    28     Section 514-A.  Supplemental Provisions; Rules.--(a)  The
    29  provisions of this article are supplemental to any other
    30  provisions of the laws of this Commonwealth and shall not
    19970H1055B1985                 - 17 -

     1  preclude or limit any other powers or duties of the commissioner
     2  under those laws, including, but not limited to, Article V and
     3  31 Pa. Code Ch. 160 (relating to standards to define insurers
     4  deemed to be in hazardous financial condition).
     5     (b)  The commissioner may adopt regulations necessary for the
     6  implementation of this article.
     7     Section 515-A.  Additional Penalties.--An insurer that fails
     8  to file an RBC report or adjusted RBC report within the time
     9  required under this article shall, in addition to any other
    10  penalties provided by law, forfeit a sum not to exceed two
    11  hundred dollars ($200) for each day during which the insurer
    12  fails to file.
    13     Section 2.  This act shall take effect immediately.            <--
    14     SECTION 2.  THE DEFINITION OF "PERSON" IN SECTION 601 OF THE   <--
    15  ACT, AMENDED JUNE 11, 1992 (P.L.284, NO.48), IS AMENDED AND THE
    16  SECTION IS AMENDED BY ADDING DEFINITIONS TO READ:
    17     SECTION 601.  CERTAIN WORDS DEFINED.--* * *
    18     THE TERM "CUSTOMER INFORMATION," AS USED IN THIS ARTICLE,
    19  MEANS INDIVIDUALLY IDENTIFIABLE INSURANCE-RELATED INFORMATION
    20  REGARDING A PERSON THAT HAS BEEN DERIVED FROM A RECORD OF A
    21  FINANCIAL INSTITUTION RELATED TO ITS LENDING ACTIVITIES. SUCH
    22  INFORMATION SHALL BE LIMITED TO INFORMATION CONCERNING THE TERMS
    23  AND CONDITIONS OF INSURANCE COVERAGE, INSURANCE EXPIRATIONS,
    24  INSURANCE CLAIMS OR INSURANCE HISTORY OF AN INDIVIDUAL. THE TERM
    25  DOES NOT INCLUDE CUSTOMER NAMES, ADDRESSES OR TELEPHONE NUMBERS.
    26     * * *
    27     THE TERM "FINANCIAL INSTITUTION," AS USED IN THIS ARTICLE,
    28  MEANS ANY FEDERAL OR STATE-CHARTERED BANK, BANK AND TRUST
    29  COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, TRUST
    30  COMPANY OR CREDIT UNION.
    19970H1055B1985                 - 18 -

     1     THE TERM "INSURER," AS USED IN THIS ARTICLE, MEANS ANY
     2  INSURANCE COMPANY, ASSOCIATION, EXCHANGE, HEALTH MAINTENANCE
     3  ORGANIZATION, PREFERRED PROVIDER ORGANIZATION AND PROFESSIONAL
     4  HEALTH PLAN CORPORATION.
     5     * * *
     6     THE TERM "PERSON," AS USED IN THIS ARTICLE, MEANS ANY
     7  INDIVIDUAL, CORPORATION, ASSOCIATION, PARTNERSHIP, RECIPROCAL
     8  EXCHANGE, INTER-INSURER, LLOYDS INSURER, FINANCIAL INSTITUTION,
     9  FRATERNAL BENEFIT SOCIETY, BENEFICIAL ASSOCIATION AND ANY OTHER
    10  LEGAL ENTITY ENGAGED IN THE BUSINESS OF INSURANCE, INCLUDING
    11  AGENTS, BROKERS AND ADJUSTERS AND ALSO MEANS HEALTH CARE PLANS
    12  AS DEFINED IN 40 PA.C.S. CHS. 61 (RELATING TO HOSPITAL PLAN
    13  CORPORATIONS), 63 (RELATING TO PROFESSIONAL HEALTH SERVICES PLAN
    14  CORPORATIONS), 65 (RELATING TO FRATERNAL BENEFIT SOCIETIES) AND
    15  67 (RELATING TO BENEFICIAL SOCIETIES) AND THE ACT OF DECEMBER
    16  29, 1972 (P.L.1701, NO.364), KNOWN AS THE "HEALTH MAINTENANCE
    17  ORGANIZATION ACT." FOR PURPOSES OF THIS ARTICLE, HEALTH CARE
    18  PLANS, FRATERNAL BENEFIT SOCIETIES AND BENEFICIAL SOCIETIES
    19  SHALL BE DEEMED TO BE ENGAGED IN THE BUSINESS OF INSURANCE.
    20     SECTION 3.  SECTIONS 609 AND 622(A) OF THE ACT, AMENDED OR
    21  ADDED JUNE 11, 1992 (P.L.284, NO.48), ARE AMENDED TO READ:
    22     SECTION 609.  PENALTY FOR SOLICITING FOR NONEXISTENT
    23  ENTITY.--ANY INDIVIDUAL, AND THE OFFICERS, MANAGERS, AGENTS,
    24  OWNERS OR REPRESENTATIVES OF AND ANY CORPORATION [OR],
    25  PARTNERSHIP OR FINANCIAL INSTITUTION, OFFERING IN THIS
    26  COMMONWEALTH TO SELL, PROCURE OR OBTAIN POLICIES, CERTIFICATES,
    27  AGREEMENTS, BINDERS OR APPLICATIONS FOR INSURANCE, SURETY OR
    28  INDEMNITY FOR OR ON BEHALF OF ANY SPURIOUS, FICTITIOUS,
    29  NONEXISTENT, DISSOLVED, INACTIVE, LIQUIDATED, LIQUIDATING OR
    30  BANKRUPT INSURANCE ENTITY, SOCIETY OR ORDER COMMITS A
    19970H1055B1985                 - 19 -

     1  MISDEMEANOR OF THE THIRD DEGREE.
     2     SECTION 622.  BROKERS' LICENSES.--(A)  THE INSURANCE
     3  DEPARTMENT MAY ISSUE TO ANY INDIVIDUAL OR TO ANY PARTNERSHIP
     4  [OR], CORPORATION OR FINANCIAL INSTITUTION A LICENSE TO ACT AS
     5  AN INSURANCE BROKER TO NEGOTIATE CONTRACTS OF INSURANCE OR
     6  REINSURANCE WITH ANY INSURANCE ENTITY OR THE APPOINTED AGENTS
     7  THEREOF AUTHORIZED BY LAW TO TRANSACT BUSINESS IN THIS
     8  COMMONWEALTH.
     9     * * *
    10     SECTION 4.  SECTION 634 OF THE ACT, AMENDED DECEMBER 30, 1974
    11  (P.L.1047, NO.343), IS AMENDED TO READ:
    12     SECTION 634.  PENALTIES FOR PAYING OR RECEIVING COMMISSION OR
    13  COMPENSATION FOR INSURING LIVES OF ATTORNEYS, PARTNERS, CLERKS,
    14  SERVANTS, OR EMPLOYES.--(A)  IT SHALL BE UNLAWFUL FOR ANY
    15  PERSON, COPARTNERSHIP, CORPORATION, FINANCIAL INSTITUTION,
    16  INSURANCE AGENT, BROKER, SOLICITOR, OR REPRESENTATIVE TO PAY OR
    17  CAUSE TO BE PAID ANY COMMISSION OR COMPENSATION WHATSOEVER TO
    18  ANY ATTORNEY, PARTNER, CLERK, SERVANT, EMPLOYE, OR ANY OTHER
    19  PERSON, HOWSOEVER HIRED OR EMPLOYED BY OR WITH ANY INSURED OR
    20  ANY BENEFICIARY NAMED IN ANY POLICY OF LIFE INSURANCE. IT SHALL
    21  BE UNLAWFUL FOR ANY ATTORNEY, PARTNER, CLERK, SERVANT, EMPLOYE,
    22  OR ANY OTHER PERSON, HOWSOEVER HIRED OR EMPLOYED BY OR WITH ANY
    23  INSURED OR ANY BENEFICIARY NAMED IN ANY POLICY OF LIFE
    24  INSURANCE, TO RECEIVE, DIRECTLY OR INDIRECTLY, ANY COMMISSION,
    25  COMPENSATION, OR OTHER BENEFIT BECAUSE OR BY REASON OF ANY SUCH
    26  LIFE INSURANCE BEING PLACED, SOLD, OR SOLICITED ON THE LIFE OR
    27  FOR THE BENEFIT OF THEIR RESPECTIVE CLIENTS, EMPLOYERS, OR
    28  MASTERS, OR ANY OF THEM. IT SHALL BE UNLAWFUL FOR ANY ATTORNEY,
    29  OFFICER, CLERK, SERVANT, OR EMPLOYE OF ANY CORPORATION,
    30  PARTNERSHIP, ASSOCIATION, FINANCIAL INSTITUTION, OR INDIVIDUAL
    19970H1055B1985                 - 20 -

     1  TO RECEIVE, DIRECTLY OR INDIRECTLY, ANY COMMISSION,
     2  COMPENSATION, OR BENEFIT BECAUSE OR BY REASON OF ANY LIFE
     3  INSURANCE BEING PLACED, SOLD, OR SOLICITED ON THE LIFE OR FOR
     4  THE BENEFIT OF ANY ATTORNEY, OFFICER, CLERK, SERVANT, OR EMPLOYE
     5  OF THE SAME CORPORATION, COPARTNERSHIP, ASSOCIATION, FINANCIAL
     6  INSTITUTION, OR INDIVIDUAL, WHETHER OR NOT ANY SUCH ATTORNEY,
     7  PARTNER, OFFICER, CLERK, SERVANT, OR EMPLOYE, OR OTHER PERSON,
     8  HIRED OR EMPLOYED BY OR WITH THE INSURED OR OF ANY BENEFICIARY
     9  NAMED IN ANY POLICY OF LIFE INSURANCE, IS DULY LICENSED BY THE
    10  PROPER AUTHORITY IN THIS COMMONWEALTH TO PLACE, SELL, OR SOLICIT
    11  LIFE INSURANCE.
    12     (B)  EVERY SUCH ATTORNEY, PARTNER, OFFICER, CLERK, SERVANT,
    13  OR EMPLOYE OR OTHER PERSON, HIRED OR EMPLOYED OR CONTINUING TO
    14  BE HIRED OR EMPLOYED IN THE RELATION AFORESAID, WITHIN NINETY
    15  DAYS BEFORE OR AFTER THE PLACING, SELLING, OR SOLICITING OF LIFE
    16  INSURANCE ON THE LIFE OR FOR THE BENEFIT OF THEIR RESPECTIVE
    17  CLIENTS, PARTNERS, OFFICERS, EMPLOYES, MASTERS, OR PERSON IN THE
    18  RELATION AFORESAID, OR ANY OF THEM, SHALL BE SUBJECT TO THE
    19  PROVISIONS OF THIS SECTION; AND EVERY PERSON, COPARTNERSHIP,
    20  FINANCIAL INSTITUTION, OR CORPORATION PARTICIPATING IN THE
    21  PAYMENT OR RECEIPT OF ANY COMPENSATION OR BENEFIT IN VIOLATION
    22  OF THIS SECTION SHALL BE GUILTY OF A MISDEMEANOR, AND, UPON
    23  CONVICTION THEREOF, SHALL BE LIABLE TO A FINE OF NOT MORE THAN
    24  ONE THOUSAND DOLLARS, PAYABLE TO THE COMMONWEALTH, AND
    25  IMPRISONMENT OF NOT LESS THAN THIRTY DAYS NOR MORE THAN SIX
    26  MONTHS, AT THE DISCRETION OF THE COURT.
    27     SECTION 5.  SECTION 635 OF THE ACT IS AMENDED TO READ:
    28     SECTION 635.  REBATES AND INDUCEMENTS PROHIBITED.--(A)  NO
    29  INSURANCE AGENT, SOLICITOR OR BROKER, PERSONALLY OR BY ANY OTHER
    30  PARTY, SHALL OFFER, PROMISE, ALLOW, GIVE, SET OFF, OR PAY,
    19970H1055B1985                 - 21 -

     1  DIRECTLY OR INDIRECTLY, ANY REBATE OF, OR PART OF, THE PREMIUM
     2  PAYABLE ON THE POLICY OR ON ANY POLICY OR AGENT'S COMMISSION
     3  THEREON, OR EARNINGS, PROFIT, DIVIDENDS, OR OTHER BENEFIT
     4  FOUNDED, ARISING, ACCRUING OR TO ACCRUE THEREON OR THEREFROM, OR
     5  ANY SPECIAL ADVANTAGE IN DATE OF POLICY OR AGE OF ISSUE, OR ANY
     6  PAID EMPLOYMENT OR CONTRACT FOR SERVICES OF ANY KIND, OR ANY
     7  OTHER VALUABLE CONSIDERATION OR INDUCEMENT, TO OR FOR INSURANCE
     8  ON ANY RISK IN THIS COMMONWEALTH, NOW OR HEREAFTER TO BE
     9  WRITTEN, WHICH IS NOT SPECIFIED IN THE POLICY CONTRACT OF
    10  INSURANCE; NOR SHALL ANY SUCH AGENT, SOLICITOR, OR BROKER,
    11  PERSONALLY OR OTHERWISE, OFFER, PROMISE, GIVE, OPTION, SELL, OR
    12  PURCHASE ANY STOCKS, BONDS, SECURITIES, OR PROPERTY, OR ANY
    13  DIVIDENDS OR PROFITS ACCRUING OR TO ACCRUE THEREON, OR OTHER
    14  THING OF VALUE WHATSOEVER, AS INDUCEMENT TO INSURANCE OR IN
    15  CONNECTION THEREWITH. NOTHING IN THIS SECTION SHALL BE CONSTRUED
    16  TO PREVENT THE TAKING OF A BONA FIDE OBLIGATION, WITH LEGAL
    17  INTEREST, IN PAYMENT OF ANY PREMIUM.
    18     (B)  NO FINANCIAL INSTITUTION, NOR ANY DIRECTOR, OFFICER,
    19  EMPLOYEE, AGENT OR BROKER THEREOF, MAY REQUIRE THE PURCHASE OF
    20  INSURANCE FROM A FINANCIAL INSTITUTION OR ITS AFFILIATE OR FROM
    21  A DESIGNATED INSURER, AGENT OR BROKER AS A CONDITION OF ANY LOAN
    22  OR DEPOSIT TRANSACTION. NEITHER A FINANCIAL INSTITUTION NOR ANY
    23  DIRECTOR, OFFICER, EMPLOYE, AGENT OR BROKER THEREOF MAY REJECT A
    24  REQUIRED POLICY SOLELY BECAUSE THE POLICY WAS SOLD BY A PERSON
    25  WHO IS NOT ASSOCIATED WITH THE FINANCIAL INSTITUTION. NO
    26  FINANCIAL INSTITUTION MAY IMPOSE ANY UNREASONABLE REQUIREMENT ON
    27  ANY AGENT OR BROKER NOT ASSOCIATED WITH THAT FINANCIAL
    28  INSTITUTION.
    29     SECTION 6.  THE ACT IS AMENDED BY ADDING A SECTION TO READ:
    30     SECTION 637.1.  DISCLOSURES AND ACKNOWLEDGMENTS.--(A)  AN
    19970H1055B1985                 - 22 -

     1  AGENT OR BROKER EMPLOYED BY OR AFFILIATED WITH A FINANCIAL
     2  INSTITUTION WHO SOLICITS THE SALE OF ANNUITIES OR LIFE
     3  INSURANCE, EXCEPT CREDIT LIFE INSURANCE, ON OR FROM THE PREMISES
     4  OF THAT FINANCIAL INSTITUTION, SHALL PROVIDE THE APPLICANT WITH
     5  WRITTEN DISCLOSURE AT OR PRIOR TO THE TIME OF APPLICATION FOR
     6  LIFE INSURANCE OR ANNUITIES FROM THE FINANCIAL INSTITUTION THAT
     7  SUCH LIFE INSURANCE OR ANNUITY IS:
     8         (1)  NOT A DEPOSIT;
     9         (2)  NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
    10     CORPORATION OR ANY OTHER AGENCY OR INSTRUMENTALITY OF THE
    11     FEDERAL GOVERNMENT;
    12         (3)  NOT GUARANTEED BY THE FINANCIAL INSTITUTION OR AN
    13     AFFILIATED INSURED DEPOSITORY INSTITUTION; AND
    14         (4)  SUBJECT TO INVESTMENT RISK, INCLUDING POTENTIAL LOSS
    15     OF PRINCIPAL, WHEN APPROPRIATE.
    16     (B)  COMPLIANCE BY A FINANCIAL INSTITUTION WITH THE
    17  DISCLOSURE REQUIREMENTS SET FORTH IN THE "INTERAGENCY STATEMENT
    18  ON RETAIL SALES OF NONDEPOSIT INVESTMENT PRODUCTS" ISSUED
    19  FEBRUARY 15, 1994, BY THE BOARD OF GOVERNORS OF THE FEDERAL
    20  RESERVE SYSTEM, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
    21  OFFICE OF THE COMPTROLLER OF THE CURRENCY, AND THE OFFICE OF
    22  THRIFT SUPERVISION, SHALL SATISFY THE REQUIREMENTS OF SUBSECTION
    23  (A).
    24     (C)  WHEN A FINANCIAL INSTITUTION REQUIRES A CUSTOMER TO
    25  OBTAIN INSURANCE IN CONNECTION WITH A LOAN AND THE INSURANCE IS
    26  AVAILABLE THROUGH THE FINANCIAL INSTITUTION, THE AGENT OR BROKER
    27  OF THE FINANCIAL INSTITUTION SHALL INFORM THE CUSTOMER AT OR
    28  PRIOR TO THE TIME OF APPLICATION THAT THE PURCHASE OF THE
    29  INSURANCE FROM THE FINANCIAL INSTITUTION IS NOT A CONDITION OF
    30  THE LOAN AND WILL NOT AFFECT CURRENT OR FUTURE CREDIT DECISIONS.
    19970H1055B1985                 - 23 -

     1  THE AGENT OR BROKER OF THE FINANCIAL INSTITUTION MAY INFORM THE
     2  CUSTOMER THAT INSURANCE IS AVAILABLE FROM THE FINANCIAL
     3  INSTITUTION. THE FINANCIAL INSTITUTION SHALL OBTAIN A WRITTEN
     4  STATEMENT OR ACKNOWLEDGMENT FROM THE CUSTOMER PRIOR TO THE
     5  PURCHASE OF INSURANCE STATING THAT THE CUSTOMER HAS BEEN ADVISED
     6  THAT THE CUSTOMER IS NOT REQUIRED TO PURCHASE FROM THE FINANCIAL
     7  INSTITUTION ANY INSURANCE AS A CONDITION OF RECEIVING ANY LOAN.
     8     (D)  FOR MARKETING TECHNIQUES THAT DO NOT INVOLVE DIRECT
     9  CONTACT WITH THE CUSTOMER AT THE TIME OF SOLICITATION OR
    10  APPLICATION, THE INSURANCE COMMISSIONER SHALL PROMULGATE RULES
    11  AND REGULATIONS PROVIDING FOR ALTERNATIVE DISCLOSURE METHODS
    12  UNDER SUBSECTIONS (A) AND (C).
    13     SECTION 7.  SECTION 639(A) AND (C) OF THE ACT, AMENDED JUNE
    14  11, 1992 (P.L.284, NO.48) AND DECEMBER 12, 1994 (P.L.1035,
    15  NO.141), ARE AMENDED TO READ:
    16     SECTION 639.  PENALTIES IMPOSED BY INSURANCE DEPARTMENT.--(A)
    17  UPON SATISFACTORY EVIDENCE OF THE [VIOLATION OF] CONDUCT
    18  VIOLATING SECTIONS 602, 605, 606, 607, 608, 609, 622 [AND], 623,
    19  631 THROUGH 638, 646, 647, 648 AND 649 BY ANY AGENT OF ANY
    20  INSURANCE ENTITY [OR BY ANY], INSURANCE BROKER OR SURPLUS LINES
    21  LICENSEE OR ON SATISFACTORY EVIDENCE OF SUCH CONDUCT THAT WOULD
    22  DISQUALIFY THE AGENT OR BROKER FROM INITIAL ISSUANCE OF A
    23  CERTIFICATE OF QUALIFICATION UNDER SECTION 604 OR 622, THE
    24  DEPARTMENT MAY PURSUE ANY ONE OR MORE OF THE FOLLOWING COURSES
    25  OF ACTION REGARDLESS OF WHETHER THE AGENT OR BROKER WAS SO
    26  AUTHORIZED BY THE DEPARTMENT:
    27     (1)  SUSPEND OR REVOKE OR REFUSE TO RENEW THE CERTIFICATE OF
    28  QUALIFICATION OR LICENSE OF THE OFFENDING PARTY OR PARTIES.
    29     (2)  IMPOSE A CIVIL PENALTY OF NOT MORE THAN [ONE THOUSAND
    30  DOLLARS ($1,000.00)] FIVE THOUSAND DOLLARS ($5,000.00) FOR EACH
    19970H1055B1985                 - 24 -

     1  [ACT] ACTION IN VIOLATION OF ANY OF THE PROVISIONS LISTED IN
     2  THIS SUBSECTION.
     3     (3)  ISSUE AN ORDER TO CEASE AND DESIST.
     4     (4)  IMPOSE SUCH OTHER CONDITIONS AS THE DEPARTMENT MAY DEEM
     5  APPROPRIATE.
     6     * * *
     7     (C)  ANY AGENT OR SOLICITOR OF ANY ENTITY OR ANY INSURANCE
     8  BROKER OR ANY PERSON, PARTNERSHIP, ASSOCIATION OR CORPORATION
     9  VIOLATING THE PROVISIONS OF SECTIONS 633.1, 635, 636, 637 [AND],
    10  638, 646, 647, 648 AND 649 OF THE ACT SHALL BE GUILTY OF A
    11  MISDEMEANOR AND, UPON CONVICTION THEREOF, SHALL BE SENTENCED TO
    12  PAY A FINE OF NOT MORE THAN [ONE THOUSAND DOLLARS ($1,000.00)]
    13  FIVE THOUSAND DOLLARS ($5,000.00) FOR EACH AND EVERY VIOLATION
    14  OR, AT THE DISCRETION OF THE COURT, TO IMPRISONMENT IN THE
    15  COUNTY JAIL OF THE COURT IN WHICH THE OFFENSE IS COMMITTED FOR A
    16  PERIOD OF NOT MORE THAN SIX (6) MONTHS.
    17     SECTION 8.  SECTION 641 OF THE ACT, AMENDED MAY 27, 1994
    18  (P.L.257, NO.41), IS AMENDED TO READ:
    19     SECTION 641.  [LENDING INSTITUTIONS,] PUBLIC UTILITIES [AND
    20  HOLDING COMPANIES] NOT TO BE LICENSED.--(A)  AS USED IN THIS
    21  SECTION:
    22     [(1)  "LENDING INSTITUTION" MEANS ANY INSTITUTION THAT
    23  ACCEPTS DEPOSITS AND LENDS MONEY IN THE COMMONWEALTH OF
    24  PENNSYLVANIA, INCLUDING BANKS AND SAVINGS AND LOAN ASSOCIATIONS,
    25  BUT EXCLUDING INSURANCE COMPANIES.]
    26     (2)  "PUBLIC UTILITY" MEANS A PRIVATE EMPLOYER SUBJECT TO THE
    27  JURISDICTION OF THE PENNSYLVANIA PUBLIC UTILITY COMMISSION AND
    28  ENGAGED IN THE BUSINESS OF RENDERING ELECTRIC, GAS, WATER AND
    29  STEAM HEAT SERVICES TO THE PUBLIC IN THIS COMMONWEALTH:
    30  PROVIDED, HOWEVER, THAT THE TERM "PUBLIC UTILITY" SHALL NOT
    19970H1055B1985                 - 25 -

     1  INCLUDE RURAL ELECTRIFICATION COOPERATIVES.
     2     [(3)  THE TERMS "SUBSIDIARY" AND "AFFILIATE" SHALL BE DEFINED
     3  IN THE REGULATIONS PROMULGATED BY THE INSURANCE COMMISSIONER,
     4  EXCEPT THAT "AFFILIATE" SHALL NOT APPLY TO AN ENTITY WHICH OWNS
     5  AN INTEREST IN ANOTHER COMPANY OR CORPORATION WHERE THE
     6  OWNERSHIP INTEREST IS NOT SUFFICIENT TO PERMIT EXERCISE OF
     7  EFFECTIVE CONTROL, AND DOES NOT INVOLVE DIRECT OR INDIRECT
     8  OWNERSHIP OR CONTROL OF FIVE PER CENTUM OR MORE OF THE VOTING
     9  STOCK OF SUCH COMPANY OR CORPORATION. NOR SHALL IT APPLY TO AN
    10  ENTITY WHOSE STOCK IS OWNED BY ANOTHER, PROVIDED THAT THE AMOUNT
    11  OF STOCK OWNED BY ANY ONE COMPANY OR CORPORATION DOES NOT PERMIT
    12  EFFECTIVE CONTROL AND DOES NOT EXCEED FIVE PER CENTUM OF THE
    13  VOTING STOCK OF THE ENTITY. THE TERM "AFFILIATE" SHALL, SUBJECT
    14  TO THE PROVISIONS TO INVEST IN STOCK CONTAINED IN THIS
    15  SUBSECTION, INCLUDE BANK HOLDING COMPANY, SAVINGS AND LOAN
    16  HOLDING COMPANY, AND A PUBLIC UTILITY HOLDING COMPANY AS
    17  HEREINAFTER DEFINED.
    18     (4)  "BANK HOLDING COMPANY" SHALL MEAN AND INCLUDE THE
    19  DEFINITION OF SUCH TERM IN SECTION TWO OF AN ACT OF CONGRESS
    20  ENTITLED THE "BANK HOLDING COMPANY ACT OF 1956," AS AMENDED:
    21  PROVIDED, HOWEVER, THAT IF ON OR BEFORE THE EFFECTIVE DATE OF
    22  THIS ACT, A BANK HOLDING COMPANY HAS BEEN GRANTED AN EXEMPTION
    23  BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM PURSUANT
    24  TO SECTION 4(D) OF THE BANK HOLDING COMPANY ACT OF 1956, AS
    25  AMENDED, SUCH BANK HOLDING COMPANY SHALL NOT BE HELD TO BE A
    26  BANK HOLDING COMPANY WITHIN THE MEANING OF SECTION 2 OF THE BANK
    27  HOLDING COMPANY ACT OF 1956, AS AMENDED.
    28     (5)  "CREDIT LIFE, HEALTH, AND ACCIDENT INSURANCE" MEANS
    29  INSURANCE ON THE LIFE AND HEALTH OF A BORROWER FROM A LENDING
    30  INSTITUTION TO SECURE THE REPAYMENT OF THE AMOUNT BORROWED, IN
    19970H1055B1985                 - 26 -

     1  ACCORDANCE WITH REGULATIONS PROMULGATED BY THE INSURANCE
     2  COMMISSIONER.
     3     (5.1)  "CREDIT UNEMPLOYMENT INSURANCE" MEANS INSURANCE ON A
     4  DEBTOR TO PROVIDE INDEMNITY FOR PAYMENTS BECOMING DUE ON A
     5  SPECIFIC LOAN OR OTHER CREDIT TRANSACTION WHILE THE DEBTOR IS
     6  UNEMPLOYED AS DEFINED IN THE POLICY.
     7     (6)  "TITLE INSURANCE" SHALL MEAN AND INCLUDE THE DEFINITION
     8  OF SUCH TERM IN SECTION SEVEN HUNDRED AND ONE OF THE ACT OF MAY
     9  17, 1921 (P.L.682, NO.284), KNOWN AS "THE INSURANCE COMPANY LAW
    10  OF 1921."
    11     (7)  A "SAVINGS AND LOAN HOLDING COMPANY" SHALL MEAN AND
    12  INCLUDE THE DEFINITION OF SUCH TERM AS DEFINED IN TITLE 12,
    13  UNITED STATES CODE, SECTIONS 1730A (A) (1) (D) (E) (F).]
    14     (8)  "PUBLIC UTILITY HOLDING COMPANY" SHALL MEAN AND INCLUDE
    15  THE DEFINITION OF SUCH TERM AS DEFINED IN TITLE 15, UNITED
    16  STATES CODE, SECTIONS 79B (A) (7), INCLUDING ELECTRIC, GAS,
    17  WATER AND STEAM HEAT SERVICES.
    18     [(9)  "DEPOSITS" SHALL MEAN AND INCLUDE THE DEFINITION OF
    19  SUCH TERM AS SET FORTH IN TITLE 12, UNITED STATES CODE, SECTION
    20  1813 (L), (1), (2), (3), (4), (5).]
    21     (B)  NO [LENDING INSTITUTION,] PUBLIC UTILITY[, BANK HOLDING
    22  COMPANY, SAVINGS AND LOAN HOLDING COMPANY] OR ANY SUBSIDIARY OR
    23  AFFILIATE OF [THE FOREGOING] A PUBLIC UTILITY, OR OFFICER OR
    24  EMPLOYE THEREOF, MAY, DIRECTLY OR INDIRECTLY, BE LICENSED OR
    25  ADMITTED AS AN INSURER OR BE LICENSED TO SELL INSURANCE IN THIS
    26  STATE EITHER AS A BROKER OR AS AN AGENT [EXCEPT THAT A LENDING
    27  INSTITUTION OR BANK HOLDING COMPANY, SUBSIDIARY OR AFFILIATE OF
    28  A LENDING INSTITUTION. A FINANCIAL INSTITUTION MAY BE LICENSED
    29  TO SELL CREDIT LIFE, HEALTH AND ACCIDENT INSURANCE, AS REGULATED
    30  UNDER THE ACT OF SEPTEMBER 2, 1961 (P.L.1232, NO.540), KNOWN AS
    19970H1055B1985                 - 27 -

     1  THE "MODEL ACT FOR THE REGULATION OF CREDIT LIFE INSURANCE AND
     2  CREDIT ACCIDENT AND HEALTH INSURANCE," TO SELL CREDIT
     3  UNEMPLOYMENT INSURANCE, SUBJECT TO SUBSECTION (B.1) AND AS
     4  REGULATED UNDER THE "MODEL ACT FOR THE REGULATION OF CREDIT LIFE
     5  INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE," AND TO SELL
     6  AND UNDERWRITE TITLE INSURANCE IN ACCORDANCE WITH REGULATIONS
     7  PROMULGATED BY THE INSURANCE COMMISSIONER].
     8     [(B.1)  (1)  ALL CREDIT UNEMPLOYMENT INSURANCE IN CONNECTION
     9  WITH LOANS OR OTHER CREDIT TRANSACTIONS SHALL BE SUBJECT TO THE
    10  SAME PROVISIONS OF THE "MODEL ACT FOR THE REGULATION OF CREDIT
    11  LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE" AS
    12  APPLY TO CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH
    13  INSURANCE.
    14     (2)  THE TOTAL AMOUNT OF BENEFITS PAYABLE BY CREDIT
    15  UNEMPLOYMENT INSURANCE IN THE EVENT OF UNEMPLOYMENT AS DEFINED
    16  IN THE POLICY SHALL NOT EXCEED THE AGGREGATE OF THE PERIODIC
    17  SCHEDULED UNPAID INSTALLMENTS OF THE INDEBTEDNESS. THE AMOUNT OF
    18  EACH MONTHLY PAYMENT SHALL NOT EXCEED THE ORIGINAL INDEBTEDNESS
    19  DIVIDED BY THE NUMBER OF INSTALLMENTS.
    20     (3)  THE INSURANCE COMMISSIONER SHALL SET A LOSS RATIO FOR
    21  CREDIT UNEMPLOYMENT INSURANCE. THE LOSS RATIO SHALL BE SET AND
    22  REGULATED IN THE SAME MANNER AS THE LOSS RATIO IS SET AND
    23  REGULATED FOR CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH
    24  INSURANCE.
    25     (4)  CREDIT UNEMPLOYMENT INSURANCE SOLD IN CONNECTION WITH
    26  OPEN-END CREDIT MUST PROVIDE, IN THE EVENT OF THE DEBTOR'S
    27  INVOLUNTARY UNEMPLOYMENT, MONTHLY BENEFITS AT LEAST EQUAL TO THE
    28  DEBTOR'S MINIMUM MONTHLY PAYMENT CALCULATED AT THE TIME OF SUCH
    29  UNEMPLOYMENT, SUBJECT TO A MAXIMUM MONTHLY INDEMNITY AS
    30  CONTAINED IN THE CERTIFICATE OF INSURANCE.
    19970H1055B1985                 - 28 -

     1     (5)  AT THE MINIMUM, CREDIT UNEMPLOYMENT INSURANCE BENEFITS
     2  ARE PAYABLE UPON THE DEBTOR MEETING THE ELIGIBILITY REQUIREMENTS
     3  FOR UNEMPLOYMENT COMPENSATION.
     4     (6)  THE PERIOD DURING WHICH CREDIT UNEMPLOYMENT INSURANCE
     5  BENEFITS ARE PAYABLE IN THE EVENT OF THE DEBTOR'S INVOLUNTARY
     6  UNEMPLOYMENT SHALL CONTINUE AT LEAST UNTIL THE EARLIEST OF THE
     7  FOLLOWING:
     8     (I)  RETURN OF THE DEBTOR TO FULL-TIME WORK.
     9     (II)  SATISFACTION OF THE LOAN OR OTHER CREDIT TRANSACTION.
    10     (III)  IN THE CASE OF OPEN-END CREDIT, PAYMENT OF TWELVE
    11  CONSECUTIVE MONTHLY INSTALLMENTS.
    12     (7)  CREDIT UNEMPLOYMENT INSURANCE SHALL NOT BE REQUIRED AS A
    13  CONDITION OF THE EXTENSION OF CREDIT.
    14     (8)  IF A CREDITOR OFFERS CREDIT UNEMPLOYMENT INSURANCE TO
    15  ANY OF ITS DEBTORS, IT MUST OFFER IT UNDER THE SAME TERMS AND
    16  CONDITIONS TO ALL OF ITS LIKE DEBTORS AND UNDER THE SAME TERMS
    17  AND CONDITIONS AT ALL OF ITS OFFICES OR LOCATIONS IN THIS
    18  COMMONWEALTH.]
    19     (C)  THE INSURANCE COMMISSIONER IS AUTHORIZED TO PROMULGATE
    20  REGULATIONS IN ORDER TO EFFECTUATE THE PURPOSES OF THIS SECTION,
    21  WHICH ARE TO HELP MAINTAIN THE SEPARATION BETWEEN [LENDING
    22  INSTITUTIONS AND] PUBLIC UTILITIES AND THE INSURANCE BUSINESS
    23  AND TO MINIMIZE THE POSSIBILITIES OF UNFAIR COMPETITIVE
    24  PRACTICES BY [LENDING INSTITUTIONS AND] PUBLIC UTILITIES AGAINST
    25  INSURANCE COMPANIES, AGENTS AND BROKERS.
    26     SECTION 9.  ARTICLE VI OF THE ACT IS AMENDED BY ADDING A
    27  SUBDIVISION TO READ:
    28        (C.1)  SALE OF INSURANCE BY FINANCIAL INSTITUTIONS.
    29     SECTION 646.  THE SALE OF INSURANCE BY FINANCIAL
    30  INSTITUTIONS.--(A)  A FINANCIAL INSTITUTION MAY NOT BE LICENSED
    19970H1055B1985                 - 29 -

     1  OR ADMITTED AS AN INSURER, EXCEPT TO UNDERWRITE TITLE INSURANCE
     2  IN ACCORDANCE WITH REGULATIONS PROMULGATED BY THE INSURANCE
     3  COMMISSIONER.
     4     (B)  A FINANCIAL INSTITUTION, AND ANY OFFICER, EMPLOYE OR
     5  AGENT THEREOF, THAT SELLS INSURANCE SHALL BE LICENSED IN
     6  ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND REGULATIONS
     7  PROMULGATED UNDER THIS ACT.
     8     SECTION 647.  PHYSICAL PREMISES.--(A)  THE SALE OF ANNUITIES
     9  OR INSURANCE, EXCEPT CREDIT INSURANCE, BY FINANCIAL INSTITUTIONS
    10  AND AGENTS AND BROKERS THEREOF SHALL TAKE PLACE IN A LOCATION
    11  THAT IS DISTINCT FROM THE AREA WHERE DEPOSITS ARE TAKEN AND LOAN
    12  APPLICATIONS ARE DISCUSSED AND ACCEPTED. SIGNS OR OTHER MEANS
    13  SHALL BE USED TO DISTINGUISH THE INSURANCE OR ANNUITIES SALES
    14  AREA FROM THE DEPOSIT TAKING AND LENDING AREAS. THE INSURANCE
    15  COMMISSIONER SHALL EXEMPT A FINANCIAL INSTITUTION FROM THE
    16  REQUIREMENTS OF THIS SECTION IF THE NUMBER OF STAFF OR SIZE OF
    17  THE FACILITY WOULD PREVENT COMPLIANCE.
    18     (B)  COMPLIANCE BY A FINANCIAL INSTITUTION WITH THE SETTING
    19  AND CIRCUMSTANCES REQUIREMENTS SET FORTH IN THE "INTERAGENCY
    20  STATEMENT ON RETAIL SALES OF NONDEPOSIT INVESTMENT PRODUCTS"
    21  ISSUED FEBRUARY 15, 1994, BY THE BOARD OF GOVERNORS OF THE
    22  FEDERAL RESERVE SYSTEM, THE FEDERAL DEPOSIT INSURANCE
    23  CORPORATION, THE OFFICE OF THE COMPTROLLER OF THE CURRENCY, AND
    24  THE OFFICE OF THRIFT SUPERVISION, SHALL SATISFY THE REQUIREMENTS
    25  OF SUBSECTION (A).
    26     SECTION 648.  CUSTOMER PRIVACY.--(A)  NO FINANCIAL
    27  INSTITUTION SHALL USE OR SHARE WITH A THIRD PARTY ANY CUSTOMER
    28  INFORMATION FOR THE PURPOSE OF SELLING OR SOLICITING THE
    29  PURCHASE OF INSURANCE OR ANNUITIES UNLESS THE REQUIREMENTS OF
    30  THIS SECTION ARE MET.
    19970H1055B1985                 - 30 -

     1     (B)  THE FOLLOWING NOTICE TO A LOAN CUSTOMER SHALL BE SET
     2  FORTH IN STANDARD OR LARGER TYPE:
     3               USE OF INSURANCE INFORMATION RELATING
     4                            TO YOUR LOAN
     5         AS A CURRENT LOAN CUSTOMER WE MAY HAVE INSURANCE COVERAGE
     6         INFORMATION THAT WAS OBTAINED AS PART OF YOUR LOAN
     7         PROCESS. UNDER PENNSYLVANIA LAW, YOU HAVE THE RIGHT TO
     8         DIRECT THAT WE NOT USE OR SHARE THIS INFORMATION IN THE
     9         MARKETING OF INSURANCE OR ANNUITIES. TO EXERCISE THIS
    10         RIGHT, YOU MUST SIGN AND RETURN THIS FORM WITHIN THIRTY
    11         (30) DAYS. IF YOU DO NOT SIGN AND RETURN THIS FORM TO US,
    12         WE MAY USE OR SHARE THIS INFORMATION IN THE MARKETING OF
    13         INSURANCE OR ANNUITIES.
    14                              ............................
    15                                      (SIGNATURE)
    16     (C)  THE NOTICE PRESCRIBED IN SUBSECTION (B) SHALL BE SENT BY
    17  FIRST CLASS MAIL AND MAY BE INCLUDED IN A SOLICITATION FOR THE
    18  PURCHASE OF INSURANCE OR ANNUITIES. THIS NOTICE SHALL BE
    19  ADDRESSED TO THE INDIVIDUAL CUSTOMER AND SHALL INCLUDE A POSTAGE
    20  PREPAID RESPONSE MECHANISM.
    21     (D)  IF A LOAN CUSTOMER HAS NOT RESPONDED TO THE NOTICE
    22  PRESCRIBED IN SUBSECTION (B), THE FINANCIAL INSTITUTION SHALL
    23  SEND A SECOND NOTICE. THE SECOND NOTICE SHALL MEET THE
    24  REQUIREMENTS SET FORTH IN SUBSECTIONS (B) AND (C).
    25     (E)  FOR THE PURPOSE OF COMPLYING WITH SUBSECTION (A), A
    26  FINANCIAL INSTITUTION MAY DIRECTLY OBTAIN WRITTEN CONSENT FOR
    27  THE USE OF CUSTOMER INFORMATION FROM A CURRENT OR PROSPECTIVE
    28  LOAN CUSTOMER. THE FOLLOWING NOTICE, SET FORTH IN STANDARD OR
    29  LARGER TYPE, SHALL BE USED FOR THIS PURPOSE.
    30               USE OF INSURANCE INFORMATION RELATING
    19970H1055B1985                 - 31 -

     1                            TO YOUR LOAN
     2         THE BORROWER HEREBY CONSENTS TO THE USE OR SHARING OF ANY
     3         INSURANCE COVERAGE INFORMATION OBTAINED AS PART OF THE
     4         LOAN PROCESS IN THE MARKETING OF INSURANCE OR ANNUITIES.
     5                               ......................
     6                                    (SIGNATURE)
     7     SECTION 649.  CREDIT, LIFE, HEALTH AND ACCIDENT INSURANCE AND
     8  CREDIT UNEMPLOYMENT INSURANCE.--(A)  A PERSON WHO SELLS CREDIT
     9  LIFE, HEALTH AND ACCIDENT INSURANCE AND CREDIT UNEMPLOYMENT
    10  INSURANCE SHALL DO SO IN ACCORDANCE WITH THE ACT OF SEPTEMBER 2,
    11  1961 (P.L.1232, NO.540), KNOWN AS THE "MODEL ACT FOR THE
    12  REGULATION OF CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND
    13  HEALTH INSURANCE."
    14     (B)  A PERSON WHO SELLS CREDIT PERSONAL PROPERTY INSURANCE
    15  SHALL DO SO IN ACCORDANCE WITH REGULATIONS OF THE DEPARTMENT.
    16     (C)  ALL CREDIT UNEMPLOYMENT INSURANCE SOLD IN CONNECTION
    17  WITH LOANS OR OTHER CREDIT TRANSACTIONS SHALL BE SUBJECT TO THE
    18  SAME PROVISIONS OF THE "MODEL ACT FOR THE REGULATION OF CREDIT
    19  LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE" AS
    20  APPLY TO CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH
    21  INSURANCE.
    22     (D)  CREDIT UNEMPLOYMENT INSURANCE SHALL ALSO BE SUBJECT TO
    23  THE FOLLOWING:
    24     (1)  THE TOTAL AMOUNT OF BENEFITS PAYABLE BY CREDIT
    25  UNEMPLOYMENT INSURANCE IN THE EVENT OF UNEMPLOYMENT AS DEFINED
    26  IN THE POLICY SHALL NOT EXCEED THE AGGREGATE OF THE PERIODIC
    27  SCHEDULED UNPAID INSTALLMENTS OF THE INDEBTEDNESS. THE AMOUNT OF
    28  EACH MONTHLY PAYMENT SHALL NOT EXCEED THE ORIGINAL INDEBTEDNESS
    29  DIVIDED BY THE NUMBER OF INSTALLMENTS.
    30     (2)  THE INSURANCE COMMISSIONER SHALL SET A LOSS RATIO FOR
    19970H1055B1985                 - 32 -

     1  CREDIT UNEMPLOYMENT INSURANCE. THE LOSS RATIO SHALL BE SET AND
     2  REGULATED IN THE SAME MANNER AS THE LOSS RATIO IS SET AND
     3  REGULATED FOR CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH
     4  INSURANCE.
     5     (3)  CREDIT UNEMPLOYMENT INSURANCE SOLD IN CONNECTION WITH
     6  OPEN-END CREDIT MUST PROVIDE, IN THE EVENT OF THE DEBTOR'S
     7  INVOLUNTARY UNEMPLOYMENT, MONTHLY BENEFITS AT LEAST EQUAL TO THE
     8  DEBTOR'S MINIMUM MONTHLY PAYMENT CALCULATED AT THE TIME OF SUCH
     9  UNEMPLOYMENT, SUBJECT TO A MAXIMUM MONTHLY INDEMNITY AS
    10  CONTAINED IN THE CERTIFICATE OF INSURANCE.
    11     (4)  AT THE MINIMUM, CREDIT UNEMPLOYMENT INSURANCE BENEFITS
    12  ARE PAYABLE UPON THE DEBTOR MEETING THE ELIGIBILITY REQUIREMENTS
    13  FOR UNEMPLOYMENT COMPENSATION.
    14     (5)  THE PERIOD DURING WHICH CREDIT UNEMPLOYMENT INSURANCE
    15  BENEFITS ARE PAYABLE IN THE EVENT OF THE DEBTOR'S INVOLUNTARY
    16  UNEMPLOYMENT SHALL CONTINUE AT LEAST UNTIL THE EARLIEST OF THE
    17  FOLLOWING:
    18     (I)  RETURN OF THE DEBTOR TO FULL-TIME WORK.
    19     (II)  SATISFACTION OF THE LOAN OR OTHER CREDIT TRANSACTION.
    20     (III)  IN THE CASE OF OPEN-END CREDIT, PAYMENT OF TWELVE
    21  CONSECUTIVE MONTHLY INSTALLMENTS.
    22     (6)  CREDIT UNEMPLOYMENT INSURANCE SHALL NOT BE REQUIRED AS A
    23  CONDITION OF THE EXTENSION OF CREDIT.
    24     (7)  IF A CREDITOR OFFERS CREDIT UNEMPLOYMENT INSURANCE TO
    25  ANY OF ITS DEBTORS, IT MUST OFFER IT UNDER THE SAME TERMS AND
    26  CONDITIONS TO ALL OF ITS LIKE DEBTORS AND UNDER THE SAME TERMS
    27  AND CONDITIONS AS ALL OF ITS OFFICES OR LOCATIONS IN THIS
    28  COMMONWEALTH.
    29     SECTION 650.  FEDERAL PREEMPTION.--NOTWITHSTANDING ANY LAW OR
    30  REGULATION OF THIS COMMONWEALTH TO THE CONTRARY, IN THE EVENT OF
    19970H1055B1985                 - 33 -

     1  FEDERAL PREEMPTION OF ANY OF THE PROVISIONS OF THIS ACT OR ANY
     2  OTHER LAW OF THIS COMMONWEALTH REGARDING THE SALE OF INSURANCE
     3  OR ANNUITIES BY FEDERALLY CHARTERED FINANCIAL INSTITUTIONS,
     4  STATE-CHARTERED FINANCIAL INSTITUTIONS SHALL NOT BE SUBJECT TO
     5  THOSE PROVISIONS OR LAWS WHICH WERE THE SUBJECT OF THE FEDERAL
     6  PREEMPTION.
     7     SECTION 10.  THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
















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