Regular Session 2017-2018 House Bill 1335 P.N. 1654

PRINTER'S NO. 1654

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1335

Session of

2017

INTRODUCED BY PICKETT, DeLUCA, GODSHALL, GROVE, MASSER, MENTZER,

MILLARD, RYAN, SIMMONS, WARD, WHEELAND AND MOUL, MAY 5, 2017

REFERRED TO COMMITTEE ON INSURANCE, MAY 5, 2017

AN ACT

Amending Title 40 (Insurance) of the Pennsylvania Consolidated

Statutes, in preliminary provisions, providing for Insurance

Regulation and Oversight Fund; and making a related repeal.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Part I of Title 40 of the Pennsylvania

Consolidated Statutes is amended by adding a chapter to read:

CHAPTER 3

INSURANCE REGULATION AND OVERSIGHT FUND

Sec.

301. Scope of chapter.

302. Definitions.

303. Purpose and use of fund.

304. Deposit of money to fund and appropriation and expenditure

of fund.

305. Retention.

306. Annual report to General Assembly.

§ 301. Scope of chapter.

This chapter relates to the Insurance Regulation and

Oversight Fund.

§ 302. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Commissioner." The Insurance Commissioner of the

Commonwealth or a duly authorized representative of the

Insurance Commission of the Commonwealth.

"Fund." The Insurance Regulation and Oversight Fund

established under this chapter.

"Insurance Company Law." The act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921.

"Insurance Department Act." The act of May 17, 1921

(P.L.789, No.285), known as The Insurance Department Act of

1921.

§ 303. Purpose and use of fund.

(a) Creation and purpose of fund.--To provide for the

department's regulation, management, development and oversight

of the Commonwealth's insurance industry, beginning July 1,

2013, and every fiscal year thereafter, the department's

operating costs and expenses shall be paid from a special fund

called the Insurance Regulation and Oversight Fund, which is

created in the State Treasury.

(b) Limitations on use.--Money in the fund shall not be used

to pay the department's operating costs or expenditures when

those costs and expenditures arise from actions, duties or

functions that are payable from other dedicated sources of

funding, including, but not limited to, the following:

(1) The rehabilitation and liquidation of insurance

20170HB1335PN1654 - 2 -

companies under Article V of the Insurance Department Act.

(2) The Catastrophic Loss Benefits Continuation Fund

under 75 Pa.C.S. § 1798.4 (relating to Catastrophic Loss

Benefits Continuation Fund).

(3) The Underground Storage Tank Indemnification Fund

under the act of July 6, 1989 (P.L.169, No.32), known as the

Storage Tank and Spill Prevention Act.

(4) The Workers' Compensation Security Fund under the

act of July 1, 1937 (P.L.2532, No.470), known as the Workers'

Compensation Security Fund Act.

(5) The Medical Care Availability and Reduction of Error

Fund under the act of March 20, 2002 (P.L.154, No.13), known

as the Medical Care Availability and Reduction of Error

(Mcare) Act.

(6) The Children's Health Insurance Program under the

Insurance Company Law.

§ 304. Deposit of money to fund and appropriation and

expenditure of fund.

(a) Deposits.--The following amounts shall be deposited into

the fund:

(1) Fifty percent of all licenses and fees collected,

received or derived by the department each month.

(2) All funds and money collected, received or derived

from all penalties, fines or settlements received by the

department in fiscal year 2013-2014.

(3) All augmentations and reimbursements made to the

department by regulated entities as a result of financial and

market regulation activities for which regulated entities are

responsible for payment.

(b) Exclusion from deposit.--Money collected under 75

20170HB1335PN1654 - 3 -

Pa.C.S. § 6506 (relating to surcharge) and deposited into the

General Fund under section 1798-E of the act of April 9, 1929

(P.L.343, No.176), known as The Fiscal Code, shall not be

deposited into the fund.

annually appropriate money from the fund to the department, and

the department may expend the appropriated money only for the

purposes authorized under this chapter. The department shall

annually submit a proposal for its expenditure of fund money for

the succeeding fiscal year to the Secretary of the Budget at the

time or times required by and in accordance with the act of

April 9, 1929 (P.L.177, No.175), known as The Administrative

Code of 1929.

(d) Fiscal year 2013-2014.--

(1) If during the Commonwealth's fiscal year 2013-2014

the commissioner and the Secretary of the Budget determine

that the cash balance and the current estimated receipts of

the fund are insufficient at any time during that fiscal year

to promptly meet the department's expenses payable from the

fund, the State Treasurer is authorized and directed to

transfer from the General Fund, Workers' Compensation

Security Fund or Underground Storage Tank Indemnification

Fund to the fund such money as the Governor shall from time

to time direct.

(2) Money transferred from the General Fund, Workers'

Compensation Security Fund or Underground Storage Tank

Indemnification Fund to the fund shall be available during

fiscal year 2013-2014 to be used for the purposes of the fund

under this chapter upon their receipt in the fund.

(3) The fund shall reimburse the General Fund, Workers'

20170HB1335PN1654 - 4 -

Compensation Security Fund or Underground Storage Tank

Indemnification Fund for any money transferred to the fund

under this subsection by transferring to the General Fund,

Workers' Compensation Security Fund or Underground Storage

Tank Indemnification Fund an amount equal to that transferred

from the General Fund, Workers' Compensation Security Fund or

Underground Storage Tank Indemnification Fund during fiscal

year 2013-2014 as the Governor shall from time to time

direct, but full reimbursement shall be made from the fund to

the General Fund, Workers' Compensation Security Fund or

Underground Storage Tank Indemnification Fund before June 15,

2014.

(4) The Secretary of the Budget shall notify the

chairperson and minority chairperson of the Appropriations

Committee of the Senate and the chairperson and minority

chairperson of the Appropriations Committee of the House of

Representatives of any transfers and reimbursements made

under this subsection in writing within 15 days of the date

on which they are made.

§ 305. Retention.

At the end of the fiscal year, the fund shall retain an

amount equal to not more than 100% of the total expenditures and

commitments by the department from the fund in the immediately

preceding fiscal year. If the balance in the fund at the end of

the fiscal year exceeds this retention amount, then that amount

of the fund which exceeds the retention amount shall be lapsed

and deposited in the General Fund within 30 days of the end of

the fiscal year.

§ 306. Annual report to General Assembly.

(a) Transmittal.--Within 30 days of the end of each fiscal

20170HB1335PN1654 - 5 -

year, the department shall provide a report to the General

Assembly and post the report on the department's publicly

accessible Internet website.

(b) Contents.--The annual report under this section shall

set forth the following for the immediately prior fiscal year:

(1) The total amount of deposits into the fund, by

deposit type, that derived from all fees, fines, penalties,

administrative charges, augmentations and reimbursements made

to the department by regulated entities as a result of

financial and market regulation oversight activities for

which the regulated entities are responsible for payment.

(2) The total amount of money paid by regulated entities

directly to third-party consultants selected by the

department to assist the department in the performance of

each of the following four categories of financial and market

regulation oversight activities:

(i) Financial examinations under the authority set

forth in:

(A) section 904 of the Insurance Department Act;

(B) section 1406 of the Insurance Company Law.

(ii) Market conduct examinations under the authority

set forth in section 904 of the Insurance Department Act.

(iii) The review of transactions required to be

filed by regulated entities with the department under the

authority set forth in section 803-A, 807-A, 1402 or 1405

of the Insurance Company Law.

(iv) Solvency monitoring of regulated entities under

the authority set forth in:

(A) section 507-A of the Insurance Department

20170HB1335PN1654 - 6 -

Act;

(B) section 2607 of the Insurance Company Law;

of the categories of financial and market regulation

oversight activities set forth under this paragraph.

(3) The identity of each third-party consultant and

amount of money paid to each third-party consultant under

each of the four categories of financial and market

regulation oversight activities set forth under paragraph

(2).

Section 2. Repeals are as follows:

(1) The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the addition of 40

Pa.C.S. Ch. 3.

(2) The act of July 2, 2013 (P.L.255, No.46), known as

the Insurance Regulation and Oversight Fund Act, is repealed.

Section 3. The addition of 40 Pa.C.S. Ch. 3 is a

continuation of the act of July 2, 2013 (P.L.255, No.46), known

as the Insurance Regulation and Oversight Fund Act. The

following apply:

(1) Except as otherwise provided in 40 Pa.C.S. Ch. 3,

all activities initiated under the Insurance Regulation and

Oversight Fund Act shall continue and remain in full force

and effect and may be completed under 40 Pa.C.S. Ch. 3.

Orders, regulations, rules and decisions which were made

under the Insurance Regulation and Oversight Fund Act and

which are in effect on the effective date of 40 Pa.C.S. Ch. 3

shall remain in full force and effect until revoked, vacated

or modified under 40 Pa.C.S. Ch. 3. Contracts, obligations

20170HB1335PN1654 - 7 -

and collective bargaining agreements entered into under the

Insurance Regulation and Oversight Fund Act are not affected

nor impaired by the repeal of the Insurance Regulation and

Oversight Fund Act.

(2) Except as set forth in paragraph (3), any difference

in language between 40 Pa.C.S. Ch. 3 and the Insurance

Regulation and Oversight Fund Act is intended only to conform

to the style of the Pennsylvania Consolidated Statutes and is

not intended to change or affect the legislative intent,

judicial construction or administration and implementation of

the Insurance Regulation and Oversight Fund Act.

(3) Paragraph (2) does not apply to the addition of 40

Pa.C.S. § 306.

Section 4. This act shall take effect immediately.

20170HB1335PN1654 - 8 -