PRINTER'S NO. 89
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 19970S0091B0089 - 2 -
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 19970S0091B0089 - 3 -
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. L17L40WMB/19970S0091B0089 - 6 -