The 2003-04 session of the Pennsylvania General Assembly adjourned in the early hours of Nov. 21 to conclude what the industry’s American Insurance Association (AIA) described as a successful and productive legislative session.
Insurers were particularly pleased with legislative activity in the areas of guaranty fund reform, medical malpractice insurance and tougher driving under the influence (DUI) of alcohol laws.
Enactment of SB 815, which was signed into law by Gov. Ed Rendell (D) in June, marked the successful conclusion of a multi-year effort to fix problems arising from the Reliance Insurance Company insolvency. The “large deductible law,” as it is known, produces significant savings for insurers (estimated to total $600 million) by changing the way that payments made to insolvent insurance companies are handled by the Commonwealth of Pennsylvania.
“This new law (Act 46-2004) should bring much-needed fairness to the way large deductible workers’ compensation policies are handled during insolvencies,” said Taylor Cosby, AIA vice president, mid-Atlantic region. “It will save both insurers and policyholders money, while giving an economic boost to businesses across the country.”
Additionally, the legislature passed HB 1211, which provides a one-year extension on MCARE relief for all physicians practicing in Pennsylvania. The MCARE Fund is a state-mandated excess insurance program which represents on average 40 percent of high-risk specialty surgeon’s medical liability insurance premiums. High-risk specialty surgeons such as orthopedic surgeons, neurosurgeons, obstetricians and general surgeons will receive full abatement from their MCARE charges, while other physicians will receive a 50 percent abatement.
“Many factors, including increased costly litigation, have led to the skyrocketing cost of medical malpractice insurance,” said Cosby. “This bill will help to provide relief to physicians and hopefully keep many from leaving Pennsylvania.”
Also noteworthyfor insurers and the AIA was the passage of SB 8 in the first year of the session, which makes changes to the commonwealth’s drunk driving laws, including lowering the legal blood-alcohol level for driving under the influence of alcohol from .10 percent to .08 percent. The bill creates a first-in-the-nation drunk driving law that imposes increasingly harsher penalties on drunk drivers based on their blood-alcohol content (BAC).
“Drunk driving costs Pennsylvanians more than $8 billion in economic losses annually. That adds up to $665 per person or 2.3 percent of the commonwealth’s personal income,” explained David Snyder, AIA vice president and assistant general counsel. “The costs of drunk driving are paid by the public through personal tragedy, loss of employee productivity, higher taxes and higher insurance premiums. Seldom can all of these issues be dealt with at one time, but they are all addressed in this important legislation,” said Snyder.
Crosby said AIA is pleased that, despite the attempts of some legislators in the final hours of the session, an attempt to fund mass transit through a proposed 140 percent increase in the cost of obtaining motor vehicle records (MVRs) was not successful; nor were the amendments to the Unfair Insurance Practice Act.
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