Who Regulates Insurance and Provides Protection to Insurance Consumers in Pennsylvania?
The population of Pennsylvania is around 13 million making it the 5th most populated state in the United States. This presents a large pool of prospective policyholders who need insurance coverage and consumer protection. The Pennsylvania Department of Insurance (PDI) regulates and administers the insurance industry in the Commonwealth of Pennsylvania. It enforces the Insurance Code of Pennsylvania and performs oversight and supervisory functions on the operations of insurance companies and producers (insurance agents and brokers).
Other regulatory activities of the department include:
Financial liquidity and solvency of insurance companies
Premium financing
Review and approval of insurance policies
License issuance
Continuous education and examination of insurance writers, brokers, and agents
Approval of insurance rates
Pennsylvania is susceptible to flooding, which is the most common natural disaster in Pennsylvania. This is because Pennsylvania has three river basins situated in its territorial borders. With just one inch of flood water causing flood-related damage and loss of about $25,000, which runs into billions of dollars in damage annually, there is an extensive demand for flood insurance coverage in Pennsylvania.
Pennsylvania residents can purchase flood insurance from the National Flood Insurance Program (NFIP). The NFIP is the foremost agency in charge of writing flood and selling flood insurance policies in Pennsylvania. The Federal Emergency Management Agency (FEMA) operates and regulates the NFIP to ensure compliance. Private insurance companies and producers also issue flood insurance policies under the NFIP’s Write Your Own (WYO) Program. Under the WYO program, the NFIP provides financial protection and pays claims to policyholders. The Pennsylvania Insurance Department licenses private insurance companies to sell flood insurance policies to insurance consumers in Pennsylvania. Surplus line carriers are also permitted to write flood policies in Pennsylvania but must be authorized by the PDI.
You can contact the Pennsylvania Department of Insurance for more information on insurance regulations by filling out and submitting the PID Contact Us Form. You can also walk in and make your inquiries at:
Pennsylvania Department of Insurance
1326 Strawberry Square
Harrisburg, PA 17120
What is the Pennsylvania Department of Insurance?
The Pennsylvania Department of Insurance oversees 227 domestic and nearly 1,500 foreign insurers licensed to write insurance policies for Pennsylvania residents. This places PA as the 6th largest state in the U.S. in terms of domestic and foreign insurers per state. The policies insurance companies in Pennsylvania write include life insurance, health insurance, accident and medical disability insurance, title insurance, property and casualty insurance, and automobile insurance. All in all, Pennsylvania residents pay around $36 billion in annual premiums, making Pennsylvania the 5th largest state in annual premiums payments in the U.S.
The Pennsylvania Insurance Department is responsible for the protection of the rights and interests of insurance consumers in Pennsylvania. Other functions of the department include:
Monitoring the financial solvency of insurance companies
Issuance of licenses to insurance companies and agents
Approval of insurance policies, language, and rates after a thorough review
Rehabilitation and liquidation of insolvent insurance companies
Maintaining the highest professional standards of insurance agents and brokers in the state through continuous education
The PDI is divided into eight offices with sub-departments tasked with performing various functions that see to the department’s day-to-day operations. These offices include:
The Office of Product Regulation and Administration: Evaluates, reviews, and regulates insurance rates and the sale of policy forms. It oversees budget preparation, human resource, fiscal management, procurement, and contract management and ensures that all insurance companies operating in Pennsylvania are duly licensed. It oversees the following Bureaus:
Bureau of Administration
Bureau of Property and Casualty Insurance
Bureau of Life, Accident and Health Insurance
The Office of Corporate and Financial Regulation: The office is responsible for supervising and regulating the insurance companies operating in Pennsylvania and ensuring that they are financially stable. This office oversees the following:
Bureau of Financial Examinations
Bureau of Company Licensing and Financial Analysis
The Office of Market Regulation: The office is in charge of research, resolving customer complaints, testing and licensing insurance agents, brokers, public adjusters, solicitors, surplus line agents, and professional bondsmen in Pennsylvania. It also investigates unfair trade practices violations and enforces statutes and regulations pertaining to insurance agents, brokers, and companies. In addition, it oversees the following Bureaus:
Bureau of Consumer Services
Bureau of Market Actions
Bureau of Licensing and Enforcement
The Office for Liquidations, Rehabilitations, and Special Funds: This is responsible for organizing, directing, and coordinating programs to rehabilitate financially distressed insurance companies. The office is also responsible for keeping a record of estates discharged from liquidation, revenue collection, and managing investment activities. In addition, the Insurance Commissioner doubles as a Statutory Liquidator or Receiver for insurance companies declared financially insolvent by the Commonwealth court. The Office of Liquidation Rehabilitation and Special Funds oversees the following:
Bureau of Liquidations and Rehabilitation Administration
Bureau of Special Funds
Bureau of Medical Care Availability and Reduction of Error (MCARE)
The Office of the Chief Counsel: Institutes legal actions on behalf of the Pennsylvania Department of Insurance to enforce insurance laws in Pennsylvania. The Office of the Chief Counsel doubles as Legal adviser for the department and interprets insurance laws for enforcement by the department.
The Office of Legislative Affairs: Serves as a bridge between the insurance department and the legislature. It keeps track of and monitors legislative bills concerning insurance in the legislature.
The Office of Press and Communications: This is responsible for the dissemination of information to the general public from the insurance department. The office is in charge of information released through press releases and statements, social media accounts, bulletins, email lists, etc.
The Administrative Hearings Office: is responsible for receiving, hearing, and resolving complaints made by insurance consumers against insurance companies.
Who Regulates the Pennsylvania Department of Insurance?
The State Legislature of Pennsylvania regulates the Pennsylvania Department of Insurance and governs the operation of the insurance industry in Pennsylvania. It establishes and oversees the Department of Insurance and enacts laws governing the insurance industry in the state. It also regularly reviews state insurance laws and approves budgets for the department.
What are the Unfair Trade Practices in Pennsylvania?
Unfair trade practices in Pennsylvania refer to unfair and deceptive acts perpetrated by businesses to gain patronage or unfair business advantage. It also refers to fraudulent business activities and misleading and false communication that violates the provisions of the Pennsylvania Unfair Trades Practices and Consumer Law or other laws promulgated under it.
The Pennsylvania Unfair Trade Practices and Consumer Protection Law protects insurance consumers from unscrupulous and unethical business practices designed to gain unfair business advantage by exploiting intending customers. It defines and proscribes acts that make up unfair trade practices and proscribes such acts. The Pennsylvania Unfair Trade Practices and Consumer Protection Law Act is administered by the Pennsylvania Bureau of Consumer Protection, Office of the Attorney General. The Bureau of Consumer Protection promotes fair and equitable treatment of consumers in Pennsylvania among other duties. The Attorney General enforces the unfair trade practices and has the power to levy sanctions against companies that engage in these unfair trade practices or operate contrary to the Unfair Trade Practices and Consumer Protection Law.
According to the Pennsylvania Unfair Trade Practices and Consumer Protection Law, unfair practices may be classified into any of the following categories:
Falsely advertising or misrepresenting the qualities of products and services of another company or business in order to discredit them before the general public
Misrepresenting the qualities, benefits, conditions, or terms of a product or service
Denying an insurance claim without conducting a reasonable investigation
Portraying that the product or service has features or qualities that it does not actually have
Misrepresenting or giving false information about why certain goods are services are at discounted rates
Advertising without intent on delivering on the promised product or service or not providing enough to satisfy demand without prior notice
Misrepresenting the standard of the services you provide
Promising immediate buyer referral compensation while compensation is based on a future date
Not adhering to the terms of a written guarantee given to a consumer
Soliciting telephone sales without stating the identity of the caller or the purpose of the call
How to Report Suspected Unfair Trade Practices in Pennsylvania?
An insurance consumer that has fallen victim to an unfair trade practice or insurance fraud can submit a complaint to the Pennsylvania Attorney General’s Office by filling and submitting a private citizen insurance fraud referral form. This form should contain the complainant’s personal details and other important details, such as insurance policy number, policy type, claim number, and the details of the fraud incidence. Complainants can also attach documents to support their claims against the insurance providers. The form can be submitted online or printed and filled out, then mailed to:
Office of the Attorney General
Insurance Fraud Section
16th Floor, Strawberry Square
Harrisburg PA 17120
Upon the receipt of an unfair trade practices complaint by the Bureau of Consumer Protection, the complaint is assigned to an agent, and an acknowledgment letter is sent to the complainant by the Bureau acknowledging receipt of the complaint. In addition, a copy of the complaint is sent to the company accused of unfair trade practice requesting a response. Businesses must respond to complaints leveled against them within 21 days. The agent follows up with both parties in the complaint to resolve the issue through mediation. A complainant can follow up on their complaint with the agent assigned to them via the email attached to the letter of acknowledgment sent by the Bureau.
If the mediation reaches a deadlock and parties cannot reach an amicable resolution of the complaint, the complaint file will be closed. This means that the Bureau will not make any more efforts to meditate, intervene, or resolve the complaint again. However, the complainant institutes a claim in a Commonwealth Court upon consultation with an attorney to ascertain the extent of their rights and the best possible option for them to take to obtain redress. The Bureau can also institute legal action against the company based on public interest. For example, complaints filed against the business being sued by other consumers can be used as evidence of the Unfair Trade Practice and Consumer Protection Law violation. A complainant can find a lawyer by accessing the Pennsylvania Bar Association website.
What is the Pennsylvania Life and Health Insurance Guaranty Association?
The Pennsylvania Life and Health Insurance Guaranty Association was established in 1978 and is responsible for protecting policyholders and beneficiaries of policies issued by insolvent insurance companies in Pennsylvania. Its membership consists of insurance companies licensed to issue life and health insurance or annuities in Pennsylvania. Every insurance company in the state is required to be a member of the Pennsylvania Life and Health Insurance Association to obtain an operating license in Pennsylvania. If a member of this association becomes financially insolvent, the association, upon the conclusion of some assessments, will obtain money from member insurance companies issuing similar policies as the insolvent company. This money obtained would be used to pay claims and continue coverage from the insolvent company.
The Pennsylvania Life and Health Insurance Guaranty Association covers the following classes of insureds and their beneficiaries:
Insureds with individual life or health insurance policies
Persons with certificates of insurance issued under policies of group life
Insureds with group health insurance
The types of policies covered by the association include the following:
Direct individual or direct group life and health insurance policy
Individual annuity contracts
The Association does not cover the insured in the following situations where:
The insured qualifies for protection outside Pennsylvania. This occurs if the insolvent insurer is incorporated in another state with a Guaranty Association that covers the insured living in that state
The insurer is not licensed to operate in Pennsylvania
The insured’s policy was issued by an insurer that is not a member of the Pennsylvania Life and Health insurance Guaranty Association
The insured has assumed liability for a portion of the whole policy, which was not guaranteed by the insurer, such as a variable contract sold by prospectus
Dividends of shares and other forms of investments are involved
There are credits given in connection with the administration of a policy by a group contract
The Pennsylvania Life and Health Insurance Guaranty Association Act limits the amount payable by the association to the insured. The association cannot pay more than the amount payable by the insurance company under the policy or annuity contract. The following are the maximum amounts the association can pay to the following classes of insureds:
Single life insured individual - $300,000 in death benefit. This amount also includes net cash surrender and net cash withdrawal values
Cash surrender values for life insurance - $100,000
Cash surrender values for annuity benefits - $100,000
Unallocated annuity contract - $5,000,000
There are no limits on the amount payable to a group, blanket, or individual accident and health insurance policy.
You can contact the association via email at info@palifega.org (for inquiry questions only), telephone at (610) 975-0572, or by visiting their office at:
Pennsylvania Life and Health Insurance Guaranty Associations
Two Bala Plaza, Suite 710
Bala Cynwyd, PA 19004
How Does the Pennsylvania Life and Health Insurance Guaranty Association Work?
When an insurance company that is a member of the Pennsylvania Life and Health Insurance Guaranty Association (PALIFEGA) is liquidated by an order of a court, a receiver is appointed by the court to oversee the liquidation process. PALIFEGA takes over the responsibility of paying valid claims and providing coverage to the insureds who have taken out a policy with the liquidated company. The company policy of the liquidated determines the insured’s coverage under the organization. The association also provides coverage for the duration that the insured keep paying the premiums by transferring these policies to another member insurance company.
- Are all Policies Covered in Full?
No. not all policies are covered in full. The Pennsylvania Life and Health Insurance Guaranty Association only covers individual life and group life insurance policies, health insurance policies, annuity contracts, supplemental contracts, and funding agreements.
The highest amount of coverage the guaranty association can provide when an insurance company is declared insolvent by a court is $300,000 for a single insured individual, while the highest amount for multiple non-group life policies is $5,000,000 for multiple non-group life policies. Health insurance benefits vary depending on the type of policy. For example, long-term disability or long-term care coverages are capped at $300,000, while the maximum amount for health benefit plans is $500,000. Group health benefits do not have any limits.
- How Much Coverage Does the Pennsylvania Life and Health Insurance Guaranty Association Provide?
The law and policy language of Pennsylvania at the time a member insurer is ordered liquidated by a court is what determines coverage. The language of your insurance policy also determines the amount of coverage. Therefore, the association cannot speak definitively about coverage unless the insurance policy claim is with a company the association has appointed to provide protection in the event of liquidation.
- How Fast Does the Pennsylvania Life and Health Insurance Guaranty Association Pay?
The period within which the Pennsylvania Life and Health Insurance Guaranty Association pays coverage claims varies on a case-by-case basis. The payment process begins upon the order of liquidation by a court of competent jurisdiction. Payment of claims commences from the date of the completion of assessments of member insurance companies, which is 30 days from the date of the liquidation order. Interests accrue after the due date of the assessment.
- Do I Need to Continue Paying Premiums?
Yes, you need to continue paying premiums to the guaranty association if you wish to keep your insurance policy in force. Paying your premiums regularly prevents your policy from lapsing.
- What If My Claims Exceeds the Amount the Association Can Pay?
Where your claim exceeds the limit payable by the guaranty association, the excess amount is filed against the estate of the liquidated insurance company by the guaranty association as a policyholder-level claim. You may receive a sum when the failed insurer’s company assets are liquidated.
- What if I No Longer Live In Pennsylvania?
If you no longer live in Pennsylvania, you will retain your coverage if your insurance company is a member of the guaranty association in your new state of residence.
- Is My Insurance Company Covered by the Pennsylvania Life and Health Insurance Guaranty Association?
Your insurance company is covered if it is a Pennsylvania Life and Health Insurance Guaranty Association member insurer. Only policyholders who have policies with insurance companies that are members of the guaranty association are entitled to coverage from the guaranty association. To find a licensed insurance company in Pennsylvania, you can search the company name on the Pennsylvania Insurance Department. You can also call the department at (717) 787-2317. To determine the status of your insurance company as a member of the guaranty association, you can contact the Office of Corporate and Financial Regulation at:
Office of Financial and Corporate Regulation
Pennsylvania Department of Insurance
1345 Strawberry Square
Harrisburg, Pennsylvania 17120
(717) 787 - 2735
ra-in-company@pa.gov
- Why Hasn’t My Insurance Agent or Company Told Me More About the Pennsylvania Life and Health Insurance Guaranty Association?
An insurance company or agent in Pennsylvania cannot use their membership of the Pennsylvania Life and Health insurance Guaranty Association for advertising or influencing the decisions of prospective customers because it is unlawful. Being a member of a guaranty association is not proof of the quality of insurance service or coverage by the insurance company.
What is the Pennsylvania Property and Casualty Insurance Guaranty Association?
The Pennsylvania Property and Casualty Insurance Guaranty Association (PPCIGA) is an association of insurers licensed to write property and casualty insurance policies in the Commonwealth of Pennsylvania. Based on the Pennsylvania Property and Casualty Insurance Guaranty Association Act, the association assumes the insurance obligations of licensed insurers in Pennsylvania that have become financially insolvent and cannot keep up with their insurance obligations to their clients. The association was created to protect insurance consumers in the event of insurance companies going bankrupt or becoming insolvent. The association mandates all property and casualty insurance companies to register as members of the association. The functions of the association are as follows:
To pay covered claims to insureds holding certain types of property and casualty policies to avoid delay in payment of such claims to the insured because of the insurer’s insolvency
To assist in the detection of and prevention of insurer insolvencies
To assist in the formulation and administration of an operation plan by the association that is needed to cover the provisions of the article
The association has a duty to pay claims that exist before or arise 30 days after the date of the declaration of insolvency. Payment of claims also applies to a policy that expires before the end of 30 days from the declaration of insolvency or a policy that is canceled and not renewed within 30 days after the determination. Once the association has paid an amount equal to the covered claim obligation or the applicable unit, the job claim is deemed paid, and the association no longer not has any duty or responsibility to the insured. The association covers property and casualty insurance claims, including medical malpractice, homeowners, automobile, and workers compensation.
The Pennsylvania Property and Casualty Guaranty Association does not cover claims in the following areas:
Life, annuity, disability, and health
Title insurance
Mortgage or financial guaranty
Surety bonds or other forms of bonding obligations
Insurance of warranties or service contract
Worker’s compensation and employer’s liability insurance
Government guaranteed insurance
Ocean marine insurance
Credit insurance, vendor’s single interest insurance or collateral protection insurance or any similar insurance protecting the interests of a creditor emanating from a creditor/debtor transaction
You can contact the Pennsylvania Property and Casualty Insurance Guaranty Association at:
One Penn Center, Suite 1850
1617 John F. Kennedy Blvd
Philadelphia, PA 19103
Telephone: (215) 568-1007, extension 18
How Does the Pennsylvania Property and Casualty Insurance Guaranty Association Work?
When an insurer in Pennsylvania is declared insolvent by a court, the court appoints a liquidator for the insolvent company, or the association takes over the company's assets and acts as a creditor.
A liquidator is a court-appointed official empowered to wind up the affairs of an insolvent insurance company. The liquidator determines the liabilities of the insolvent company, such as debts, bills, and outstanding claims. The liquidator also puts together company assets for distribution and develops a plan to distribute the company’s assets to offset the liquidated insurance company’s pending claims. The plan is submitted to the court for approval. Upon approval by the court, the liquidator distributes the cases for covered claims to the Property and Casualty Insurance Guaranty Association, where the insured resides or where the insured business is located to start paying out claims. It takes eight to ten months to pay a covered claim.
The maximum amount the association can pay for a covered claim or return of unearned premium is $10,000 while $300,000 is the maximum amount payable for other covered claims per claimant.
- What Pennsylvania Property and Casualty Insurance Guaranty Association is not?
The Pennsylvania Property and Casualty Insurance Guaranty Association is not a regulatory agency or an insurance company. Instead, it is a non-governmental association that takes on the insurance obligations of its members who have been declared bankrupt by a court.
- What does the Pennsylvania Property and Casualty Insurance Guaranty Association Cover?
The Pennsylvania Property and Casualty Guaranty Insurance Association covers insureds and beneficiaries of policies written by members covered by the association. In addition, the association covers the benefits payable to holders of insurance policies written by its members and accepts covered claims that meet the terms stipulated in the insurance policy contract.
- At what point does the Pennsylvania Property and Casualty Insurance Guaranty Association become responsible for taking on the claims of an insolvent member?
When a court of competent jurisdiction declares that an insurance company is liquidated, the association takes over the claims of the insolvent member.
- Am I eligible for coverage by the Pennsylvania Property and Casualty Insurance Guaranty Association?
Yes, you are eligible for coverage by the Property and Casualty Insurance Association if your insurer is a member of the association. This coverage applies to you as long as you have a covered claim, even if you no longer reside in Pennsylvania.
- Will I get coverage in Pennsylvania for my insurer that has gone into insolvency in another state?
Yes, you are entitled to coverage in Pennsylvania for your insurer that has gone insolvent in another state as long as your insurer remains a member of the Pennsylvania Property and Casualty Insurance Guaranty Association.
- Will I still get my benefits under the current policy?
You may not get all your benefits under your current policy. There is a limit to the amount the Pennsylvania Property and Casualty Insurance Guaranty Association can pay as claims if your insurer becomes insolvent. The maximum amount payable by the association for covered claims or return of unearned premium is $10,000. Where your claim exceeds this maximum amount, you would either forfeit the difference or wait to receive more payments in the event that the Liquidator disposes of the company’s assets. You can contact the Pennsylvania Property and Casualty Insurance Guaranty Association for further inquiries at:
Pennsylvania Property and Casualty Insurance Guaranty Association
1617 John F. Kennedy Boulevard
Suite 1850
Philadelphia, PA 19103
Telephone: (215) 568-1007
- What if I have another coverage with another Insurer?
If you have more than one insurance policy coverage for the same insurable risks, the Pennsylvania Property and Insurance Guaranty Association would only cover one of those risks if your insurer becomes financially insolvent. This is because there is a limit to the amount the association can pay out in a claim. So, for example, if you have two policies with the same maximum payment amount, which is $300,000, only $300,000 would be paid out as a claim to you.
- Does Pennsylvania Property and Casualty Insurance Guaranty Association protect business owners?
Yes, the Pennsylvania Property and Casualty Guaranty Insurance Association protects business owners who are policyholders and need property and casualty insurance.
- Will Pennsylvania Property and Casualty Insurance Guaranty Association notify me of my claim?
Upon the order of the court that your insurer has become financially liquidated, the Office of Rehabilitation and Liquidation of the Pennsylvania Insurance Department will notify you of your insurer’s liquidation. The association will not inform you of your insurer’s liquidation.
- Are there deadlines for filing Pennsylvania Property and Casualty Insurance Guaranty Association claims?
The deadline for filing Pennsylvania Property and Casualty Insurance Association claims is 30 days from the issuance of the liquidation order by a court of competent jurisdiction.
- What does a Pennsylvania Property and Casualty Insurance Guaranty Association proof of claim mean?
A Pennsylvania Insurance Guaranty Association proof of claim is an official form submitted by the insured whose insurance company has been financially liquidated by a court. The purpose of this form is to authenticate a claim for an insurance payout after the insurer has become insolvent.
You can contact the Pennsylvania Property and Casualty Insurance Guaranty Association at:
Pennsylvania Property and Casualty Insurance Guaranty Association
1617 John F. Kennedy Boulevard
Suite 1850
Philadelphia, PA 19103
Telephone: (215) 568-1007
