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NOTICES

INSURANCE DEPARTMENT

Increase in the Accident Surcharge Dollar Threshold (Cap) to $1,450; Notice No. 2011-01

[41 Pa.B. 121]
[Saturday, January 1, 2011]

 Insurers writing private passenger automobile insurance in this Commonwealth may not, by law, penalize their policyholders (for example, apply rate surcharges or otherwise increase premiums) whose aggregate claim cost over a 3-year period does not exceed a certain threshold (cap). This threshold (cap) applies to any person injured or property damaged, and is measured in excess of any deductible or self-insured retention. Effective July 1, 2011, the Insurance Department (Department) has increased the threshold (cap) to $1,450.

 Section 1799.3(a) of 75 Pa.C.S. (relating to limit on cancellations, refusals to renew, refusals to write, surcharges, rate penalties and point assignments) does not allow an insurer to ''cancel or refuse to renew a policy or apply any surcharge, rate penalty or driver record point assignment'' when the threshold (cap) is not exceeded.

 By law, the Department is required to adjust the amount of the threshold (cap) at least once every 3 years. Section 1799.3(e) of 75 Pa.C.S. stipulates the adjustment be made relative to changes in the Consumer Price Index for medical care and automobile maintenance and repair costs and may be rounded to the nearest $50. The underlying indices have averaged 3.3% (medical care) and 2.7% (maintenance and repair), annually, since the last adjustment. The previous adjustment to the threshold (cap) was effective July 1, 2008, when the threshold (cap) increased to $1,350.

 Each individual insurer, ISO, AIPSO and MSO should file the previously mentioned change for prior approval by April 1, 2011, and specify an effective date of no later than July 1, 2011.

 To expedite the review process, companies are advised to limit their rate/rule filings to the required threshold revision only. Any unrelated changes, revisions and manual pages should not be included in the filing. Additionally, ''surcharge disclosure plan(s)'' required under section 1793(b) (relating to special provisions relating to premiums) do not require the Department's review and prior approval and should not be submitted in response to this notice.

 Questions regarding this notice may be directed to Bojan Zorkic, Actuarial Review Division, Insurance Department, 1311 Strawberry Square, Harrisburg, PA 17120, (717) 787-6968, bzorkic@state.pa.us.

ROBERT L. PRATTER, 
Acting Insurance Commissioner

[Pa.B. Doc. No. 11-24. Filed for public inspection December 30, 2010, 9:00 a.m.]



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