Leslie, 062253 PAAGO, AGO 638

• Case Date: June 22, 1953
• Court: Pennsylvania

Honorable Artemis C. Leslie AGO 638 Opinion No. 638 Pennsylvania Attorney General Opinions Opinions of the Attorney General June 22, 1953          Insurance—Insurance Company Law of May 17, 1921, sec. 202(f)—Multiple Line Amendment of April 20, 1949—Privileges and obligations of domestic mutual fire insurance and casualty insurance companies—Maintenance of unearned premium reserves—Filing of rates—Submission of policy forms for approval— Licensing of agents—Casualty and Surety Rate Regulatory Act of June 11,1947 —The Fire Marine and Inland Marine Rate Regulatory Act of June 11, 1947.          Honorable Artemis C. Leslie, Insurance Commissioner, Harrisburg, Pennsylvania.          Sir: We have your request to be advised concerning certain questions which have arisen under the provisions of the so-called Multiple Line Amendment to Section 202 of The Insurance Company Law of May 17, 1921, P. L. 682, being the Act of April 20, 1949, P. L. 620, 40 P. S. §382, which added new subdivision (f) which reads as follows:

(f) Domestic stock and mutual insurance companies, other than life or title, and, if their charters permit, foreign companies, may transact any or all of the kinds of insurance included in subdivisions (b) and (c) of this section upon compliance with all of the financial and other requirements prescribed by the laws of this Commonwealth for fire, marine, fire and marine, and casualty insurance companies transacting such kinds of insurance. Any domestic mutual fire insurance company which takes advantage of the provisions of this subsection (f) shall not be required to license any of its agents.

         You have stated your questions as follows:          1. What unearned premium reserves shall be maintained by

(1) domestic mutual fire, marine and fire and marine insurance companies upon

(a) fire and marine business?

(b) casualty business?

(2) domestic mutual casualty insurance companies upon

(a) fire and marine business?

(b) casualty business?

         2. What rate filings must be made with and approved by the Insurance Commissioner by domestic mutual fire and marine and domestic mutual casualty insurance companies upon

(a) fire and marine business, including motor vehicle fire, theft and collision insurance?

(b) casualty business?

         3. What policy forms must be filed with and approved by the Insurance Commissioner by domestic mutual fire and marine and domestic mutual casualty insurance companies

(a) fire and marine business?

(b) casualty business?

         4. Must domestic mutual fire and marine and domestic mutual casualty insurance companies license their agents upon

(a) fire and marine business?

(b) casualty business?

         Before taking up each of these questions in detail, it would seem to be helpful to examine the background of the Multiple Line Amendment of 1949, supra.          For many years prior to the 1949 amendment the theory behind the organization and regulation of insurance companies was that these companies should be limited to writing insurance in certain particular fields rather than be permitted to write insurance in all fields. These fields were, in general: (1) life, (2) fire and marine, and (3) casualty and surety.          This principle was adopted in this Commonwealth and the basic law governing the organization and regulation of fire and casualty insurance companies in Pennsylvania has been written on the theory that fire companies would write only fire and marine business and casualty companies would write only casualty and surety business.¹ See Formal Opinion No. 594 of this department sent to you under date of July 5, 1949, where it was stated:

"When viewed broadly, the Insurance Company Law plainly reveals the legislative intent to maintain throughout the law the distinction between the various classes of insurance companies which may be incorporated thereunder, * * *"

         In keeping with this theory, the legislature saw fit to grant certain exemptions from the requirements of the law to domestic mutual fire insurance companies. For example, such companies were not required to:

1. Maintain reserves for unearned premiums on policies subject to limited or unlimited assessment: Insurance Company Law, supra, Section 807, 40 P. S. Section 917.

2. File a schedule of rates or become a member of any rating bureau: Act of June 11, 1947, P. L. 551, Section 2, 40 P. S. Section 1222.

3. Submit their policy forms for approval by the Insurance Commissioner: Insurance Company Law, supra, Section 354, 40 P. S. Section 477(b).

4. License their agents: The Insurance Department Law, the Act of May 17, 1921, P. L. 789, Section 603, 40 P. S. Section 233.

         Since, as we have seen, the writing of insurance was divided into different fields with different...