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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY MATZIE, CALTAGIRONE, D. COSTA, DeLUCA, FABRIZIO, GEORGE, HALUSKA, JOSEPHS, KORTZ, KOTIK, KULA, MUNDY, MURT, M. O'BRIEN, STABACK AND THOMAS, FEBRUARY 16, 2011 |
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| REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 16, 2011 |
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| AN ACT |
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1 | Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An |
2 | act relating to insurance; amending, revising, and |
3 | consolidating the law providing for the incorporation of |
4 | insurance companies, and the regulation, supervision, and |
5 | protection of home and foreign insurance companies, Lloyds |
6 | associations, reciprocal and inter-insurance exchanges, and |
7 | fire insurance rating bureaus, and the regulation and |
8 | supervision of insurance carried by such companies, |
9 | associations, and exchanges, including insurance carried by |
10 | the State Workmen's Insurance Fund; providing penalties; and |
11 | repealing existing laws," providing for retained asset |
12 | accounts. |
13 | The General Assembly of the Commonwealth of Pennsylvania |
14 | hereby enacts as follows: |
15 | Section 1. The act of May 17, 1921 (P.L.682, No.284), known |
16 | as The Insurance Company Law of 1921, is amended by adding a |
17 | section to read: |
18 | Section 413.1. Retained Asset Accounts.--(a) As used in |
19 | this section the following words and phrases shall have the |
20 | meanings given to them in this subsection: |
21 | "Commissioner" means the Insurance Commissioner of the |
22 | Commonwealth. |
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1 | "Department" means the Insurance Department of the |
2 | Commonwealth. |
3 | "Insurer" means a properly licensed life insurance company, |
4 | association or exchange. |
5 | "Retained asset account" means a mechanism where the |
6 | settlement of proceeds payable under a life insurance policy is |
7 | accomplished by an insurer or entity acting on behalf of the |
8 | insurer depositing the proceeds into a checking or draft |
9 | account. |
10 | (b) An insurer may use a retained asset account as means for |
11 | settling a claim against a life insurance policy. A retained |
12 | asset account shall be used as a means for settling a claim |
13 | against a life insurance policy only if the beneficiary or |
14 | applicant has expressly consented to or elected to settlement |
15 | through use of a retained asset account. |
16 | (c) An insurer shall not use a retained asset account as the |
17 | following: |
18 | (1) The sole means for settling a claim against a life |
19 | insurance policy. |
20 | (2) The default method for settling a claim against a life |
21 | insurance policy. |
22 | (d) Prior to offering a retained asset account as a means |
23 | for settling a claim against a life insurance policy, the |
24 | insurer shall provide the beneficiary with a disclosure |
25 | statement that discloses: |
26 | (1) Any other settlement options available under the policy. |
27 | (2) Any interest being paid under other options. |
28 | (3) Whether the retained asset account is the equivalent of |
29 | a checking or draft account. |
30 | (4) An explanation of the account's features, including: |
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1 | (i) What banking services are provided to the account |
2 | holder. |
3 | (ii) Which services are provided at no charge and which |
4 | services involve a fee and the amount of the fee. |
5 | (iii) The nature and frequency of account statements. |
6 | (iv) A telephone number and address where the beneficiary |
7 | can obtain additional information regarding the account. |
8 | (v) Any minimum or maximum benefit payment requirements |
9 | under the account. |
10 | (vi) The number of withdrawals permitted within any time |
11 | period. |
12 | (5) That payment of the total proceeds is accomplished by |
13 | delivery of a checkbook kit or draft kit to the beneficiary. |
14 | (6) That one check or draft can be written to access the |
15 | entire proceeds and that other settlement options are preserved |
16 | until the entire balance is withdrawn or the balance drops below |
17 | the insurer's minimum payment requirements. |
18 | (7) Time delays the beneficiary should expect to encounter |
19 | in completing any authorized transaction under a retained asset |
20 | account and the anticipated amount of the time delay. |
21 | (8) That interest earned on the account may be taxable and |
22 | the beneficiary should consult a tax advisor. |
23 | (9) The methodology used to determine the interest rate |
24 | being paid under the retained asset account. |
25 | (10) Other information as the department may identify. |
26 | (e) If the beneficiary elects a retained asset account as |
27 | the means for settling a claim against a life insurance policy, |
28 | the insurer shall provide a supplemental contract that clearly |
29 | discloses the rights and obligations of the beneficiary and the |
30 | insurer regarding the benefit. |
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1 | (f) Upon a determination by hearing that this section has |
2 | been violated, the commissioner may pursue one or more of the |
3 | following courses of action: |
4 | (1) Issue an order requiring the person in violation to |
5 | cease and desist from engaging in the violation. |
6 | (2) Suspend or revoke or refuse to issue or renew the |
7 | certificate or license of the person in violation. |
8 | (3) Impose a civil penalty of not more than $5,000 for each |
9 | violation. |
10 | (4) Impose any other penalty or remedy deemed appropriate by |
11 | the commissioner, including restitution. |
12 | (g) The enforcement remedies imposed under this section are |
13 | in addition to other remedies or penalties that may be imposed |
14 | by any other applicable statute, including the act of July 22, |
15 | 1974 (P.L.589, No.205), known as the "Unfair Insurance Practices |
16 | Act." Violations of this section are deemed and defined by the |
17 | commissioner to be an unfair method of competition and an unfair |
18 | or deceptive act or practice under the "Unfair Insurance |
19 | Practices Act." |
20 | (h) The department may promulgate regulations necessary to |
21 | implement this section. |
22 | Section 2. This act shall take effect in 60 days. |
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