1301 Permissible activity under the Liability Risk Retention Act of 1986 (15 U.S.C.A. §§ 3901--3906)--statement of policy

Title 31--INSURANCE

INSURANCE DEPARTMENT

[31 PA. CODE CH. 153]

Permissible Activity under the Liability Risk Retention Act of 1986 (15 U.S.C.A. §§ 3901--3906)--Statement of Policy

[27 Pa.B. 4102]

   The Insurance Department (Department) hereby deletes a statement of policy in § 153.1 pertaining to permissible activity under the Federal Liability Risk Retention Act of 1986 (Federal act) (15 U.S.C.A. §§ 3901--3906), to read as set forth in Annex A. The statement of policy was announced August 26, 1988 (18 Pa.B. 3849) under the authority of sections 209, 605 and 606 of The Insurance Department Act of 1921 (40 P. S. §§ 47, 235 and 236); and section 3 of the act of January 24, 1966 (40 P. S. §§ 1006.1--1006.19) (now repealed) relating to unlicensed insurers. The statement of policy notified the insurance industry of the Department's interpretation of the Federal act with respect to the permissible activities of agents, brokers and insurers when dealing with risk retention groups and purchasing groups.

Purpose

   The purpose of this notice is to delete § 153.1, to eliminate an obsolete statement of policy. The Federal act created risk retention groups (insurers owned and operated by insureds) and purchasing groups (groups of insureds seeking to purchase insurance) and allowed these groups to operate to a certain extent outside the scope of state insurance regulation. In October 1986, Congress responded to a commercial insurance crisis by passing amendments to the act which broadened the scope to include all commercial liability insurance (except worker's compensation).

   The Federal act preempts state insurance laws with respect to risk retention groups and to a lesser extent with respect to purchasing groups. Each state may regulate these entities only to the extent permitted by the Federal law. The statement of policy delineated the conduct of agents and brokers regarding risk retention groups and the conduct of agents, brokers and insurers regarding purchasing groups that the Department considered to be outside the scope of the act and therefore subject to Pennsylvania's insurance statutes.

   On December 18, 1992, Article XV was added to The Insurance Company Law of 1921, known as the Pennsylvania Risk Retention Act (40 P. S. §§ 991.1501--991.1516). The currently effective requirements with respect to the permissible activities of agents, brokers and insurers in this Commonwealth when dealing with risk retention groups and purchasing groups are found in the Pennsylvania Risk Retention Act. Specifically, sections 1510 and 1514 of that act (40 P. S. §§ 991.1510 and 991.1514) set forth the restrictions on insurance purchased by purchasing groups and the duty of an agent or broker to obtain a license. In addition, section 1509(a)(7) (40 P. S. § 991.1509(a)(7)) clarifies that insurers of purchasing groups are subject to the applicable provisions of insurance laws, rules and regulations governing policy form and rate standards. Therefore, the statement of policy has been superseded by the Pennsylvania Risk Retention Act and is no longer needed.

Affected Parties

   There are no parties affected by the deletion of this statement of policy because the statement of policy was made obsolete by the enactment of the Pennsylvania Risk Retention Act.

Fiscal Impact

   The deletion of the statement of policy has no fiscal impact.

Paperwork

   The deletion of the statement of policy has no impact on paperwork.

Effectiveness/Sunset Date

   The deletion of the statement of policy will become effective upon final publication in the Pennsylvania Bulletin. No sunset date has been assigned because the Department is deleting an obsolete statement of policy.

Contact Person

   The person to contact for information on the deletion of this statement of policy is Elaine M. Leitzel, Administrative Officer, Office of Regulation of Companies, 1345 Strawberry Square, Harrisburg, PA 17120, [phone].

GREGORY S. MARTINO,   
Acting Insurance Commissioner

   Fiscal Note:  11-168. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 31.  INSURANCE

PART VIII.  MISCELLANEOUS PROVISIONS

CHAPTER 153.  (Reserved)

§ 153.1.  (Reserved).

[Pa.B. Doc. No. 97-1301. Filed for public inspection August 15, 1997, 9:00 a.m.]