The bill is now headed to Governor Ed Rendell for his signature and enactment into law.  A series of amendments in the Senate and the House meant the bill passed between the chambers twice before receiving legislative approval.

“The concept behind the bill is not particularly complicated. All it does is clarify that under our insurance liquidation laws, any deductibles connected to an insurance policy go to claims under that policy, not to the estate of the insurer,” White added.

Senate Bill 815 could save Pennsylvania businesses around $40 million in workers compensation and other insurance premium costs, a move that could protect jobs and save costs to consumers.

“This legislation will produce savings for businesses, medical providers and homeowners here and across the country.  Once this legislation is enacted, Guaranty Associations here and across the country will have to assess less money on insurance policyholders,” Senator White said.

Senator White drafted SB 815 in reaction to the insolvency of Reliance Insurance Company, which faces an estimated $3 billion shortfall in assets versus policyholder claims.  Because Reliance was domiciled in Pennsylvania, the Department of Insurance is serving as liquidator.

Reliance had issued many policies to corporate policyholders with large deductibles of $250,000 and more.  Right now, those deductibles are going into the Reliance estate -- meaning the Guaranty Associations in Pennsylvania and across the country, and all other policyholders, are paying the claims that were supposed to be covered by these deductibles.  SB 815 changes that, directing these deductibles to the claims they were intended to cover.

“Any bankruptcy is a painful one, and no creditor or claimant can ever be made whole,” Senator White said.  “The best we can do is make sure creditors and claimants are treated fairly.  This bill helps do that. Bottom line -- it saves policyholders here and across the country money.”