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PA Bulletin, Doc. No. 06-1321




[31 PA. CODE CH. 73]

Credit Life Insurance and Credit Accident and Health Insurance

[36 Pa.B. 3665]
[Saturday, July 15, 2006]

   The Insurance Department (Department) amends Chapter 73 (relating to credit life insurance and credit accident and health insurance).

Statutory Authority

   The final-form rulemaking is adopted under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) and sections 301.1 and 311.1 of The Insurance Department Act (act) (40 P. S. §§ 71.1 and 93).

Comments and Response

   Notice of proposed rulemaking was published at 36 Pa.B. 391 (January 28, 2006) with a 30-day comment period. During the 30-day comment period, comment was received from the Insurance Federation of Pennsylvania, Inc. indicating no opposition to the proposed amendments. During its regulatory review, the Independent Regulatory Review Commission (IRRC) did not submit comments to the Department.

Affected Parties

   The final-form rulemaking applies to life insurance companies, property and casualty insurance companies and fraternal benefit societies marketing and soliciting the sale of credit life insurance and credit accident and health insurance in this Commonwealth.

Fiscal Impact

State Government

   There will be no increase in cost to the Department as a result of this final-form rulemaking. As part of its solvency monitoring responsibilities, the Department currently reviews the methodology used by an insurer to calculate credit life insurance reserves to ensure that the reserves are adequate and comply with the minimum standard requirements. Therefore, this final-form rulemaking will not require additional staff time or resources to perform the analysis.

General Public

   Since the final-form rulemaking concerns the solvency requirements applied to insurers, the public will benefit from a financially sound insurance industry in the ability of insurers to fulfill their contractual obligations under credit life insurance and credit accident and health insurance policies.

Political Subdivisions

   The final-form rulemaking will not impose additional costs on political subdivisions. However, because the final-form rulemaking promotes stability in this Commonwealth's insurance industry, political subdivisions' tax revenues will benefit as a result of fewer insurer insolvencies. Fewer insolvencies would result in less unemployment and would also increase incentives for insurers to market new insurance products in this Commonwealth.

Private Sector

   The final-form rulemaking does not apply to policies issued prior to the adoption of the final-form rulemaking. There may be some expense incurred by an insurer in modifying the reserve calculation system to comply with amended minimum reserve standards.


   The adoption of this final-form rulemaking does not impose additional paperwork on the Department or the insurance industry. The amendment to the minimum standards applies to the reserve calculation, but will not result in additional paperwork.

Effectiveness/Sunset Date

   The final-form rulemaking takes effect on January 1, 2007. The Department continues to monitor the effectiveness of regulations on a triennial basis. Therefore, no sunset date has been assigned.

Contact Person

   Questions regarding this final-form rulemaking should be directed to Peter J. Salvatore, Regulatory Coordinator, Office of Special Projects, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429, fax (717) 772-1969,

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 13, 2006, the Department submitted a copy of the notice of proposed rulemaking, published at 36 Pa.B. 391, to IRRC and the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee for review and comment.

   Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.

   Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on June 14, 2006, the final-form rulemaking was deemed approved by the House and Senate Committees. In accordance with section 5(g) of the Regulatory Review Act, the final-form rulemaking was deemed approved by IRRC, effective June 14, 2006.


   The Insurance Commissioner (Commissioner) finds that:

   (1)  Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.

   (2)  The adoption of this final-form rulemaking in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statutes.


   The Commissioner, acting under the authorizing statutes, orders that:

   (a)  The regulations of the Department, 31 Pa. Code Chapter 73, are amended by amending §§ 73.103 and 73.138 to read as set forth at 36 Pa.B. 391.

   (b)  The Commissioner shall submit this order and 36 Pa.B. 391 to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.

   (c)  The Commissioner shall certify this order and 36 Pa.B. 391 and deposit them with the Legislative Reference Bureau as required by law.

   (d)  The regulation adopted by this order shall take effect January 1, 2007.

Insurance Commissioner

   (Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 36 Pa.B. 3391 (July 1, 2006).)

   Fiscal Note: Fiscal Note 11-227 remains valid for the final adoption of the subject regulations.

[Pa.B. Doc. No. 06-1321. Filed for public inspection July 14, 2006, 9:00 a.m.]

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