SENATE AMENDED PRIOR PRINTER'S NOS. 1177, 1527 PRINTER'S NO. 1985
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. B26L40JLW/19970H1055B1985 - 34 -