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Governor Signs Insurance Insolvency Measure
HARRISBURG -- Governor
Ed Rendell signed into law on Tuesday (June 29) Senate Bill 815, a measure
introduced by Senator Don White, R-41st District, that will change the way
payments to insolvent insurance companies are handled by the state.
“I am pleased that the Governor has finalized the
process that put this bill on the books as law in Pennsylvania,” said Senator
White. “This measure received strong bi-partisan support in both the
Senate and House and I appreciate the support of my colleagues. All this bill
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. The legislation
went into effect immediately upon the Governor’s signature.
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 money, here and across the
country.”
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