Pa. Gov. Rendell Signs Bills on Crop Insurance, Insurance Company Surplus Rules

December 1, 2004

Pennsylvania Governor Edward G. Rendell has signed into law several bills affecting the insurance industry, including one on crop insurance awareness and another on insurance company surplus contributions.

Senate Bill 912, sponsored by Sen. Mike Waugh (R-York), provides that the Department of Agriculture establish a program to educate producers of agricultural commodities as to the benefits of federal crop insurance and risk management practices.

The department may use funds appropriated for the purposes of the act, or contributions from other state or federal agencies, or public or private sources to provide financial assistance to eligible producers of agricultural commodities in an amount of up to 10 percent of the cost of federal crop insurance premiums.

Finally, the department is to report to the appropriate standing committees of the House and Senate as to its expenditures under the program. The bill passed the Senate, 50-0, and was approved in the House, 196-0, where it was amended. The Senate concurred and passed the bill, 47-0. It takes effect in 60 days.

Senate Bill 1096, sponsored by Sen. Gibson Armstrong (R-Lancaster, York), amends the Insurance Company Law of 1921. The bill repeals section 322.1 dealing with contributions to surplus and replaces it with a new section 322.2 dealing with surplus notes. The provisions on surplus notes carries forward the concepts in the old law and adds provisions on approval by the insurance department, subordination of liabilities, payment of interest and reporting requirements.

The amendments also increase the cap on agreements involving the lending of securities from 2 to 5 percent.

The bill also adds new provisions to the nonforfeiture provisions of annuities that require minimum payments under an annuity contract when the annuitant ceases payments. The bill repeals section 809 of the Act. Section 809 dealt with loans to companies. In addition, there are provisions dealing with long-term care and personal care insurance. These provisions are intended to distinguish between these two types of coverage to insure that consumers are made aware that a prepaid home heath care or personal care service policy is not a substitute for or replacement for a long-term care policy.

Finally, the law is amended to clarify that a long-term care policy may not provide coverage of less than 12 consecutive months.

The bill passed the Senate 50-0 and the House 195- 0, with amendments. The Senate concurred with the amendments 46-0. The bill will go into effective as follows: the amendment of section 1103 of the act, the addition of 1104.1 of the act and the amendment of section 1105 (B) of the act will go into effect in 45 days. The remainder of this act will go into effect immediately.

House Bill 798, sponsored by Rep. Dennis M. O’Brien (R-Philadelphia), prohibits any municipal pension or retirement system in a city of the first class (Philadelphia) from denying certain benefits to surviving spouses of police officers or certain employees upon subsequent remarriage of the surviving spouse. The bill passed the House, 201-0, and was approved in the Senate, 47-0. It becomes effective in 60 days.

Senate Bill 856, sponsored by Sen. Roger A. Madigan (R-Bradford), amends the fireworks law by redefining “fireworks” so as to differentiate between consumer fireworks (which does not include sparklers and other novelties) and display fireworks. The bill permits the sale of consumer fireworks at facilities licensed by the Department of Agriculture, and provides requirements for the location, construction and sale of other items at such facilities; provides that permission shall be given by a municipality, under rules and regulations, for displays of consumer and display fireworks; provides for licensure by the Department of Agriculture of facilities that sell consumer fireworks, upon completed application and an annual license fee of $5,000 and that such facilities are to carry at least $2 million in public and product liability insurance; provides for penalties for the misuse and unlawful selling of display and consumer fireworks; allows the State Police to seize fireworks held in violation of the Act, and; repeals inconsistent sections of the existing fireworks law.

The fireworks bill was approved in the Senate, 50-0, and passed the House, 193-0, where it was amended. The Senate concurred and approved the bill, 47-0. It takes effect immediately.

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