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                                                        PRINTER'S NO. 89

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 91 Session of 1997


        INTRODUCED BY HOLL, JANUARY 21, 1997

        REFERRED TO BANKING AND INSURANCE, JANUARY 21, 1997

                                     AN ACT

     1  Amending the act of June 5, 1968 (P.L.140, No.78), entitled "An
     2     act regulating the writing, cancellation of or refusal to
     3     renew policies of automobile insurance; and imposing powers
     4     and duties on the Insurance Commissioner therefor," further
     5     providing for cancellation or refusal to renew and for review
     6     procedures and policy termination.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9     Section 1.  Section 5(1) of the act of June 5, 1968 (P.L.140,
    10  No.78), entitled "An act regulating the writing, cancellation of
    11  or refusal to renew policies of automobile insurance; and
    12  imposing powers and duties on the Insurance Commissioner
    13  therefor," amended July 14, 1988 (P.L.546, No.97), is amended to
    14  read:
    15     Section 5.  No cancellation or refusal to renew by an insurer
    16  of a policy of automobile insurance shall be effective unless
    17  the insurer shall deliver or mail, to the named insured at the
    18  address shown in the policy a written notice of the cancellation
    19  or refusal to renew. Such notice shall:


     1     (1)  Be [approved as to form by the Insurance Commissioner
     2  prior to use] in a form acceptable to the Insurance
     3  Commissioner;
     4     * * *
     5     Section 2.  Sections 8 and 9 of the act, amended October 5,
     6  1978 (P.L.1060, No.248), are amended to read:
     7     Section 8.  (a)  Any insured may within [twenty] thirty days
     8  of the receipt by the insured of notice of cancellation or
     9  notice of intention not to renew, and of the receipt of the
    10  reason or reasons for the cancellation or refusal to renew as
    11  stated in the notice, request in writing to the Insurance
    12  Commissioner that [he] the commissioner review the action of the
    13  insurer in cancelling or refusing to renew the policy of such
    14  insured.
    15     (b)  Any applicant for a policy who is refused such policy by
    16  an insurer shall be given a written notice of refusal to write
    17  by the insurer. Such notice shall state the specific reason or
    18  reasons of the insurer for refusal to write a policy for the
    19  applicant. Within [twenty] thirty days of the receipt of such
    20  reasons, the applicant may request in writing to the Insurance
    21  Commissioner that [he] the commissioner review the action of the
    22  insurer in refusing to write a policy for the applicant.
    23     Section 9.  (a)  On receipt of a request for review [or if as
    24  a result of investigation, the Insurance Commissioner has good
    25  cause to believe that an insurer is violating the act], the
    26  Insurance Commissioner [or his designated representative] shall
    27  notify the insurer [thereof and shall] that a review has been
    28  requested. The commissioner shall review the matter to determine
    29  whether the cancellation or refusal to renew or to write was in
    30  violation of this act, and shall within forty days of the
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     1  receipt of such request either order the policy written or
     2  reinstated or uphold the cancellation or refusal to renew. [If
     3  either of the parties shall dispute the commissioner's findings,
     4  such party shall have the right to a formal hearing. In the
     5  event a hearing is requested, the commissioner shall immediately
     6  issue notice of said hearing which shall state the time and
     7  place for hearing which shall not be less than thirty days from
     8  the date of the notice.]
     9     (b)  [At the time and place fixed for the hearing in the
    10  notice, the parties shall have an opportunity to be heard and to
    11  show cause why an order should not be made by the commissioner
    12  to cease and desist from acts constituting a violation of this
    13  act.] After a review of a cancellation of or refusal to renew a
    14  policy, if the commissioner finds the insurer not to be in
    15  violation of this act, the policy shall remain in effect until
    16  the date referred to in clause (2) of section 5, or thirty days
    17  following the conclusion of the review provided for in
    18  subsection (a), whichever is later. Provided, however, for
    19  review of cancellations under clause (1) of section 4, the
    20  policy shall terminate as of the date provided in the notice
    21  under clause (2) of section 5 unless the policy is reinstated.
    22  Nothing in this subsection shall be construed to prevent the
    23  insurer, at its discretion, from continuing coverage after the
    24  initial review period until such time as the commissioner has
    25  issued a final order.
    26     (c)  [Upon good cause shown, the commissioner shall permit
    27  any person to intervene, appear and be heard at the hearing, in
    28  person or by counsel.] After review of a cancellation of or
    29  refusal to renew a policy, if the commissioner finds the insurer
    30  to be in violation of this act, and the insurer requests a
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     1  hearing pursuant to subsection (d), the policy shall remain in
     2  effect until such time as the commissioner has issued a final
     3  order.
     4     (d)  [The commissioner may administer oaths, examine and
     5  cross-examine witnesses, receive oral and documentary evidence
     6  and subpoena witnesses, compel their attendance and require the
     7  production of books, papers, records, or other documents which
     8  he deems relevant to the hearing. The commissioner shall cause a
     9  record to be kept of all evidence and all proceedings at the
    10  hearing.] If either of the parties shall dispute the
    11  commissioner's findings, that party shall have the right to a
    12  formal hearing. In the event a hearing is requested, the
    13  commissioner shall issue notice of the hearing, which shall
    14  state the time and place for the hearing which shall not be less
    15  than thirty days from the date of notice.
    16     (e)  [Following the hearing, the commissioner shall issue a
    17  written order resolving the factual issues presented at the
    18  hearing and stating what remedial action, if any, is required.
    19  The commissioner shall send a copy of the order to the persons
    20  participating in the hearing. In the case of a cancellation of
    21  or refusal to renew a policy, said policy shall remain in effect
    22  until the conclusion of such review or the date referred to in
    23  clause (2) of section 5, whichever is later, except for review
    24  of cancellations under clause (1) of section 4 in which case the
    25  policy shall terminate as of the date provided in the notice
    26  under clause (2) of section 5 unless the cancellation or refusal
    27  to renew is upheld or the policy reinstated.] At the time and
    28  place fixed for the hearing in the notice, the parties shall
    29  have an opportunity to be heard.
    30     (f)  Upon good cause shown, the commissioner shall permit any
    19970S0091B0089                  - 4 -

     1  person to intervene, appear and be heard at the hearing, in
     2  person or by counsel.
     3     (g)  The commissioner may administer oaths, examine and
     4  cross-examine witnesses, receive oral and documentary evidence
     5  and subpoena witnesses, compel their attendance and require the
     6  production of books, papers, records or other documents which he
     7  deems relevant to the hearing. The commissioner shall cause a
     8  record to be kept of all evidence and all proceedings at the
     9  hearings.
    10     (h)  The insurer shall bear the burden at the hearing to
    11  prove that the cancellation or refusal to renew complies with
    12  this act. However, if the insured requested the hearing, and
    13  fails to appear at the time and place for the hearing, the
    14  commissioner may consider a motion to dismiss and shall not be
    15  compelled to take evidence at the scheduled hearing. In addition
    16  to any remedy in subsection (i), the commissioner shall have the
    17  authority to order an insurer to cease and desist from acts
    18  constituting a violation of this act.
    19     (i)  Following the hearing, the commissioner shall issue a
    20  written order resolving the factual issues presented at the
    21  hearing and stating what remedial action, if any, is required.
    22  If the commissioner finds that the cancellation or refusal to
    23  renew violates this act, then the remedial action ordered by the
    24  commissioner shall include at least one of the following:
    25     (1)  That the insurer reimburse the insured for any increase
    26  in the cost of insurance and any short-term cancellation fees
    27  which are incurred.
    28     (2)  That the insurer reinstate the original policy
    29  prospectively.
    30     (3)  That if an insurer has elected to continue coverage
    19970S0091B0089                  - 5 -

     1  pursuant to subsection (b), the coverage shall remain in full
     2  force and effect under the terms of the policy.
     3  Reimbursement shall be in the amount incurred by the insured to
     4  secure replacement coverage during the pendency of the hearing
     5  process, which cost exceeds the cost which would have been
     6  incurred had the policy under review remained in effect. The
     7  reimbursement shall be based on the difference of the cost of
     8  the policies to the extent that the coverage and limits of the
     9  replacement coverage does not exceed the original coverage. The
    10  insured shall bear the burden to request reimbursement and prove
    11  any increase in the cost of insurance. In addition, if a
    12  prospective reinstatement of the original policy is ordered,
    13  then the reinstatement shall take effect on the next policy
    14  anniversary date, unless the insured requests that the
    15  reinstatement take effect at an earlier date.
    16     (j)  The commissioner shall send a copy of the order to the
    17  parties participating in the hearing.
    18     (k)  All of the actions which may be performed by the
    19  commissioner in this section may be performed by the
    20  commissioner's designated representative.
    21     Section 3.  This act shall take effect in 60 days.






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