[31 PA. CODE CH. 64] Private Passenger Automobile Policy Forms [28 Pa.B. 4931] The Insurance Department (Department) proposes to delete Chapter 64 (relating to private passenger automobile policy forms), to read as set forth in Annex A. The Department is publishing this proposed rulemaking under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412); section 354 of The Insurance Company Law of 1921 (40 P. S. § 477b); and sections 4 and 5 of the Unfair Insurance Practices Act (40 P. S. §§ 1171.4 and 1171.5). Chapter 64 sets forth detailed readability requirements for the approval of automobile insurance policies including application of the Flesch Scale testing procedure.
Purpose
The purpose of this proposed rulemaking is to delete Chapter 64 and eliminate obsolete and redundant regulations which do not serve any compelling public interest. Adopted in 1975, the chapter requires insurers licensed to do business in this Commonwealth to provide auto insurance policies that are understandable to a person of average intelligence and education. The chapter is limited to private passenger auto insurance policies. The chapter requires the insurer to file auto policy forms that are simply written, clearly worded, legible, use simple words and avoid complex sentences and which include an index at the beginning of the form. The chapter further requires specific standards for policy structure, printing, margins and related legibility requirements. The chapter is unnecessary because its requirements duplicate present statutory requirements and the specific standards of the Flesch Test are unduly burdensome.
Specifically, this chapter duplicates existing authorities governing the filing of insurance policy forms. The Department has the existing authority to review property and casualty policy forms prior to use under section 354 of The Insurance Company Law.
Further, the attempt to prevent specific auto insurance policy abuses by regulation is not necessary because statutory authority to regulate unfair practices in the business of insurance exists under the Unfair Insurance Practices Act (40 P. S. §§ 1171.1--1171.15).
Sections 4 and 5 of the Unfair Insurance Practices Act address unfair, deceptive practices or misrepresentation by any person or company engaged in the business of insurance. The existing authorities provide a basis for the Department's disapproval of an insurance policy which is not understandable to a person of average intelligence or education. Finally, the sections requiring policies to make use of specific typeface and conform to highly complex readability standards by means of the application of the Flesch Scale testing procedure are unduly burdensome.
External Comments
Comments regarding this proposed rulemaking were solicited from the various trade associations representing the insurance industry in this Commonwealth. Comments were received from the Insurance Federation of Pennsylvania, Inc.
Fiscal Impact
The proposed deletion of Chapter 64 is expected to result in a slight reduction in business cost for the property and casualty insurance industry. By deletingthis chapter, the readability testing requirement will be eliminated. Currently each auto form filed with the Department is accompanied by Flesch Test analysis and readability score. This analysis will no longer be performed and submitted. A conservative estimated savings to the insurance industry is $100,000 annually. This is based on the average of 4,000 auto policy forms filed annually.
Paperwork
The proposed deletion of Chapter 64 is expected to decrease paperwork requirements for the affected parties because the deletion eliminates unnecessary reporting requirements for the insurance industry.
Affected Parties
The proposed deletion of Chapter 64 will affect all insurers who are licensed to sell property and casualty insurance in this Commonwealth.
Effectiveness/Sunset Date
The proposed rulemaking will become effective upon final publication in the Pennsylvania Bulletin. Because the rulemaking proposes to delete obsolete regulations, no sunset date has been assigned.
Contact Person
Questions or comments regarding the proposed rulemaking may be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, 1326 Strawberry Square, Harrisburg, PA 17120, within 30 days following the publication of this notice in the Pennsylvania Bulletin.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 23, 1998, the Department submitted a copy of this rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to the proposed rulemaking, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the agency in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of that material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed rulemaking, it will notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for the agency, the Governor and the General Assembly to review these objections before final publication of the rulemaking.
M. DIANE KOKEN,
Insurance CommissionerFiscal Note: 11-147. No fiscal impact; (8) recommends adoption.
Annex A TITLE 31. INSURANCE PART II. AUTOMOBILE INSURANCE CHAPTER 64. (Reserved) (Editor's Note: The Department is proposing to delete the existing text of §§ 64.1--64.14 and Appendix A, which currently appears at 31 Pa. Code pages 64-1--64-8, serial pages (131427), (131428), (146453), (146454) and (131431)--(131434) to read as set forth in Annex A.).
§§ 64.1--64.14. (Reserved).
[Pa.B. Doc. No. 98-1601. Filed for public inspection October 2, 1998, 9:00 a.m.]
