PRINTER'S NO. 1405
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1092
Session of
2024
INTRODUCED BY DiSANTO, STREET, PHILLIPS-HILL, COLEMAN, COSTA,
BAKER AND GEBHARD, MARCH 11, 2024
REFERRED TO BANKING AND INSURANCE, MARCH 11, 2024
AN ACT
Amending Title 40 (Insurance) of the Pennsylvania Consolidated
Statutes, in regulation of insurers and related persons
generally, providing for rebates and inducements; and making
repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 40 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 47
REBATES AND INDUCEMENTS
Sec.
4701. Definitions.
4702. Rebates and inducements.
4703. Advertisements.
4704. Pilot or testing program.
4705. Penalties.
4706. Regulations.
§ 4701. Definitions.
The following words and phrases when used in this chapter
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shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Customer." A policyholder, potential policyholder,
certificate holder, potential certificate holder, insured,
potential insured or applicant.
"Insurance policy." A certificate, excluding a certificate
of liability insurance, or contract of insurance, indemnity,
health care, suretyship, title insurance or annuity issued,
proposed for issuance or intended for issuance by an insurance
producer or insurer.
"Insurance producer." A person licensed or approved by the
department to sell, solicit or negotiate insurance policies.
"Insurer." Any of the following that is licensed or approved
by the department:
(1) An insurance company, association or exchange.
(2) A reciprocal or interinsurance exchange.
(3) A health maintenance organization.
(4) A preferred provider organization.
(5) A professional health services plan corporation
subject to Chapter 63 (relating to professional health
services plan corporations).
(6) A hospital plan corporation subject to Chapter 61
(relating to hospital plan corporations).
(7) A fraternal benefits society.
(8) A beneficial association.
(9) A Lloyd's insurer.
(10) An eligible surplus lines insurer.
§ 4702. Rebates and inducements.
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(a) Unfair or deceptive acts or practices.--Except as
otherwise expressly provided by law, each of the following is
deemed to be an unfair or deceptive act or practice in the
business of insurance:
(1) Knowingly permitting, offering to make or making an
insurance policy, or an agreement as to the insurance policy,
other than as plainly expressed in the insurance policy that
is issued.
(2) Paying, allowing or giving, or offering to pay,
allow or give, directly or indirectly, as inducement to an
insurance policy, any of the following not specified in the
insurance policy:
(i) A rebate of premiums payable on the insurance
policy.
(ii) A special favor or advantage in the dividends
or other benefits on the insurance policy.
(iii) Valuable consideration or inducement.
(3) Giving, selling or purchasing, or offering to give,
sell or purchase, as inducement to an insurance policy, any
of the following not specified in the insurance policy:
(i) Stocks, bonds or other securities of a company
or other corporation, association or partnership.
(ii) Any dividends or profits accrued on the items
described in subparagraph (i).
(iii) Anything of value whatsoever.
(b) Construction.--Nothing in subsection (a) shall be
construed as including within the definition of discrimination
or rebates any of the following practices:
(1) In the case of an insurance policy involving life
insurance or an annuity, paying bonuses to policyholders or
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otherwise abating their premiums in whole or in part out of
surplus accumulated from nonparticipating insurance, if the
bonuses or abatement of premiums are fair and equitable to
policyholders and for the best interests of the company and
its policyholders.
(2) In the case of a life insurance policy issued on the
industrial debit plan, making allowance to policyholders who
have continuously for a specified period made premium
payments directly to an office of the insurer in an amount
that fairly represents the saving in collection expenses.
(3) Readjusting the rate of premium for a group
insurance policy based on the loss or expense under the group
insurance policy, at the end of the first or any subsequent
policy year of insurance under the group insurance policy,
which may be made retroactive only for that policy year.
(4) Engaging in an arrangement that would not violate:
(i) 12 U.S.C. § 1972 (relating to certain tying
arrangements prohibited; correspondent accounts), as
interpreted by the Board of Governors of the Federal
Reserve System; or
(ii) 12 U.S.C. § 1464(q) (relating to Federal
savings associations).
(5) Offering or providing, by an insurer or insurance
producer, by or through employees, affiliates or third-party
representatives, a value-added product or service at no or
reduced cost if the product or service is not specified in
the insurance policy and if all of the following requirements
are met:
(i) The product or service relates to the insurance
coverage.
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(ii) The product or service is primarily designed to
satisfy one or more of the following:
(A) Provide loss mitigation or loss control.
(B) Reduce claim costs or claim settlement
costs.
(C) Provide education about liability risks or
risk of loss to persons or property.
(D) Monitor or assess risk, identify sources of
risk or develop strategies for eliminating or
reducing risk.
(E) Enhance health.
(F) Enhance financial wellness through items
such as education or financial planning services.
(G) Provide post-loss services.
(H) Incentivize behavioral changes to improve
the health or reduce the risk of death or disability
of a customer.
(I) Assist in the administration of the employee
or retiree benefit insurance coverage.
(iii) The cost to the insurer or insurance producer
offering the product or service to a customer is
reasonable in comparison to that customer's premiums or
insurance coverage for the policy class.
(iv) If the insurer or insurance producer is
providing the product or service, the insurer or
insurance producer has ensured that the customer is
provided with contact information to assist the customer
with questions regarding the product or service.
(v) The availability of the product or service is
based on documented objective criteria and offered in a
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manner that is not unfairly discriminatory. The insurer
or insurance producer shall maintain the criteria and
produce the criteria upon request by the department.
(c) Permissible activities.--An insurer or insurance
producer may:
(1) Offer or give noncash gifts, items or services,
including meals to or charitable donations on behalf of a
customer, in connection with the marketing, sale, purchase or
retention of insurance policies, in an amount not exceeding
$125 on an annual, aggregate basis. The following apply:
(i) The commissioner may increase the amount by
transmitting notice of the increase to the Legislative
Reference Bureau for publication in the next available
issue of the Pennsylvania Bulletin. The increase shall
become effective upon publication of the notice in the
Pennsylvania Bulletin.
(ii) The offer or gift shall be made in a manner
that is not unfairly discriminatory and may not be
contingent on the purchase or retention of insurance.
(2) Offer or give noncash gifts, items or services,
including meals to or charitable donations on behalf of a
customer, to commercial or institutional customers in
connection with the marketing, sale, purchase or retention of
insurance policies, if the cost is reasonable in comparison
to the premium or proposed premium and the cost of the gift
or service is not included in any amounts charged to another
person or entity. The offer or gift shall be made in a manner
that is not unfairly discriminatory and may not be contingent
on the purchase or retention of insurance.
(3) As follows:
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(i) Conduct a raffle or drawing to the extent
permitted by State law, if:
(A) there is no financial cost for entrants to
participate;
(B) the raffle or drawing does not obligate
participants to purchase insurance;
(C) the prizes are not valued in excess of $125;
and
(D) the raffle or drawing is open to the public.
(ii) The commissioner may increase the amount under
subparagraph (i)(C) by transmitting notice of the
increase to the Legislative Reference Bureau for
publication in the next available issue of the
Pennsylvania Bulletin. The increase shall become
effective upon publication of the notice in the
Pennsylvania Bulletin.
(iii) The raffle or drawing shall be offered in a
manner that is not unfairly discriminatory and may not be
contingent on the purchase or retention of insurance.
§ 4703. Advertisements.
An insurer or insurance producer, or a representative of an
insurer or insurance producer, may not offer or provide
insurance as an inducement to the purchase of another policy or
otherwise use the words "free," "no cost" or words of similar
import in an advertisement.
§ 4704. Pilot or testing program.
If an insurer or insurance producer does not have sufficient
evidence but has a good faith belief that the product or service
meets the criteria specified under section 4702(b)(5)(ii)
(relating to rebates and inducements), the insurer or insurance
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producer may provide the product or service to consumers in a
manner that is not unfairly discriminatory as part of a pilot or
testing program for no more than one year. The following apply:
(1) The insurer or insurance producer shall notify the
department of the pilot or testing program prior to launching
the pilot or testing program.
(2) The insurer or insurance producer may proceed with
the pilot or testing program unless the department objects
within 21 business days of the submission of a description of
the pilot or testing program to the department.
§ 4705. Penalties.
A violation of this chapter shall be deemed and defined by
the commissioner to be an unfair method of competition and an
unfair or deceptive act or practice in accordance with the act
of July 22, 1974 (P.L.589, No.205), known as the Unfair
Insurance Practices Act.
§ 4706. Regulations.
The department may promulgate regulations, as necessary, to
implement, administer and enforce this chapter.
Section 2. Repeals are as follows:
(1) The General Assembly declares that the repeals under
paragraph (2) are necessary to effectuate the addition of 40
Pa.C.S. Ch. 47.
(2) The following are repealed:
(i) Section 346 of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921.
(ii) Sections 645-A and 646-A of the act of May 17,
1921 (P.L.789, No.285), known as The Insurance Department
Act of 1921.
(iii) Section 5(b) of the act of July 22, 1974
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(P.L.589, No.205), known as the Unfair Insurance
Practices Act.
Section 3. This act shall take effect in 180 days.
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