Appeal from the Order of the Insurance Commissioner in case of In Re: Old Republic Life Insurance Company -- Violation of Section 354 of the Insurance Company Law and Section 7 of the Credit Life and Credit Accident and Health Insurance Act, Docket No. P74-6-1.
Robert J. Demer, with him Thomas R. Balaban, and Shaffer, Calkins & Balaban, for appellant.
Paul F. Donohue, Assistant Attorney General, with him Andrew F. Giffin, Assistant Attorney General, and Robert P. Kane, Attorney General, for appellee.
Judges Crumlish, Jr., Wilkinson, Jr., and Rogers, sitting as a panel of three. Opinion by Judge Wilkinson.
[ 21 Pa. Commw. Page 362]
This case is before us on appeal by Old Republic Life Insurance Company (appellant) from a decision of the Insurance Commissioner of Pennsylvania (Commissioner), imposing a $2,600.00 fine on appellant for its failure to obtain approval for, and its use of, certain insurance forms. We modify the amount of the penalty but otherwise sustain the Commissioner.
Appellant, a foreign stock life insurance company authorized to do business in Pennsylvania, deals largely in group life and group accident and health policies. Certain of its policyholders under creditors group insurance contracts are lending institutions having branch offices located throughout the Commonwealth. In February and May, 1974, Insurance Department investigators obtained from the files of these offices copies of two sets of multi-carboned documents bearing the logo of appellant and titled, "INSURANCE OPTION." With one set of forms, debtors of the lending institutions obtained credit life insurance under the group policies between appellant and the institutions by signing the document after the phrase, "I hereby request LIFE INSURANCE." With the other set, debtors similarly obtained credit life and/or disability insurance.
In a citation issued to appellant on June 19, 1974, the Insurance Department alleged that these documents were "applications for insurance" not on a form approved
[ 21 Pa. Commw. Page 363]
by the Commissioner, and that their use thus violated Section 354 of the Insurance Company Law of 1921 (Act of 1921), Act of May 17, 1921, P.L. 682, as amended, 40 P.S. § 477b, and Section 7 of the Model Act for the Regulation of Credit Life Insurance and Credit Accident and Health Insurance (Model Act), Act of September 2, 1961, P.L. 1232, as amended, 40 P.S. § 1007.7.*fn1 Following a hearing, the Commissioner, in an adjudication and order dated January 7, 1975, found appellant in violation of the above provisions and ordered it to cease and desist the use of such forms until they were filed and approved, and to pay a penalty of $2,600.00.
Appellant appeals to this Court on three grounds: (1) that the forms in dispute are not "applications for insurance," and thus do not require approval by the Commissioner; (2) that it has not "used" such forms; and (3) that the decision of the Commissioner, finding the forms to be "applications for insurance," is not supported by substantial evidence. We reject all three contentions.
Regarding its first ground, appellant argues that the forms in controversy are not "applications for insurance" because they are not offers or proposals to enter into a contract of insurance which appellant can accept ...