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decided: April 1, 1977.


Original jurisdiction in case of Pennsylvania Association of Life Underwriters, Robert B. Jacoby, CLU, Robert Seiler, Ernest M. Boll, CLU, James W. Shindler, George G. Pote, CLU, John D. Hopper, CLU, and James A. Pellow, CLU, v. Commonwealth of Pennsylvania, Department of Insurance, William J. Sheppard, Insurance Commissioner.


Robert J. Demer, with him Thomas R. Balaban, William R. Balaban, and Shaffer, Calkins & Balaban, for plaintiffs.

John H. Isom, Assistant Attorney General, with him Guy J. DePasquale, Assistant Attorney General, and Robert P. Kane, Attorney General, for defendant.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Blatt.

Author: Blatt

[ 29 Pa. Commw. Page 460]

The Pennsylvania Insurance Commissioner promulgated certain regulations, entitled Disclosures in Solicitations of Life Insurance, found at 31 Pa. Code § 83, and stated as authority for such regulations The Insurance Unfair Practices Act.*fn1 The Pennsylvania Association of Life Underwriters and certain individuals (plaintiffs) filed a complaint in equity within our original jurisdiction which challenged the Commissioner's authority to promulgate these regulations and which sought to permanently restrain the Commissioner from enforcing them. Because there are no issues of material fact to be resolved, the plaintiffs have moved for judgment on the pleadings and, we, therefore, are concerned here with the legal issue of whether or not the Commissioner had authority to promulgate these regulations.

[ 29 Pa. Commw. Page 461]

Initially, we note that

[t]he authority of a public administrative agency ordinarily includes the power to make or adopt rules and regulations with respect to matters within the province of such agency, provided such rules and regulations are not inconsistent with law. In exercising its power, an administrative body may adopt or make only such rules and regulations as are necessary and reasonable, and it may not act arbitrarily. While an administrative agency ordinarily may adopt and follow a regulatory policy with respect to matters within its administrative discretion, the exercise of such discretion is not without some limitation, and no declared regulatory policy of an administrative policy [sic] may preclude the future exercise of its functions as an administrative agency of the Legislature.

The exercise by an administrative agency of its rule-making function is subject to limitations arising from the fact that its authority is a delegated power. The power of such an agency to prescribe rules and regulations under a statute is only a power to adopt regulations to carry into effect the will of the Legislature as expressed by statute. Administrative agencies are not empowered to make rules and regulations which are violative of or exceed the powers given them by the statutes and the law, but must keep within the bounds of their statutory authority in the promulgation of general rules and orders.

1 Pennsylvania Law Encyclopedia, Administrative Law and Procedure, Chp. 2, § 32 at 281-282.

It is clear that there are two types of administrative rule-making power; legislative and interpretative.

[ 29 Pa. Commw. Page 462]

    in the business of insurance. The Act further provides that the Commissioner, in his discretion, "may examine and investigate the affairs of every person engaged in the business of insurance in this state in order to determine whether such person has been or is engaged in any . . . practice prohibited by this act," Section 7 of the Act, 40 P.S. § 1171.7, and that he may administratively prosecute such violations, Section 8 of the Act, 40 P.S. § 1171.8, and enforce penalties upon such violators. Sections 9 through 13 of the Act, 40 P.S. §§ 1171.9-.13.

The declared purpose of the regulations here concerned

     is to protect the purchaser from misrepresentation, unfair comparison and deceptive and misleading sales methods in the solicitation of life insurance by setting standards for disclosure of minimal information pertinent to a life insurance contract.

31 Pa. Code § 83.1(a).

We believe that the Commissioner here has implied authority to promulgate the regulations here involved, which authority is derived from his statutory power and duty to enforce the Act by investigating, prosecuting and penalizing violations thereof. See Uniontown Area School District, supra, 455 Pa. at 78, 313 A.2d at 170 ("statutory provisions . . . evidence to us a legislative intent to empower the Commission to do a good deal more than merely interpret the Act"); Volunteer Firemen's Relief Association v. Minehart, 425 Pa. 82, 89, 227 A.2d 632, 635 (1967) ("we concede the authority of the Auditor General to make regulations in connection with his statutorily imposed duties"); Newport Homes, Inc. v. Kassab, 17 Pa. Commonwealth Ct. 317, 332 A.2d 568 (1974) (Secretary of PennDOT may validly promulgate regulation in order

[ 29 Pa. Commw. Page 465]

    to exercise statutorily granted discretion);*fn4 1 K. C. Davis, Administrative Law Treatise, § 6.03 at 300.

That the regulations here concerned are reasonable and track the statute is clearly indicated by comparing the Act with the regulations.*fn5 For example, Section 5(a) of the Act, 40 P.S. § 1171.5(a), provides that unfair methods of competition and unfair and deceptive acts or practices include, among others:

1. Misrepresenting the benefits, advantages, conditions or terms of any insurance policy;

2. Misrepresenting the amount of dividends to be paid on any insurance policy;

3. Using the name or title of any insurance policy so as to misrepresent the true nature thereof.

The Commissioner's regulations provide, in part, that a written disclosure statement must be given to a prospective purchaser "no later than the time that the application form is signed by the applicant," 1 Pa. Code § 83.4, and that the statement shall disclose, among other information, the name and address of the insurer, the amount of coverage and benefits offered, and the premimum to be paid and the dividends, if

[ 29 Pa. Commw. Page 466]

    any, to be received. 1 Pa. Code § 83.3.*fn6 Other comparisons are equally persuasive.

We believe that the Insurance Commissioner has been authorized by the Unfair Insurance Practices Act to promulgate the regulations here involved and we, therefore, deny the plaintiff's motion for judgment on the pleadings and dismiss the complaint.


And Now, this 1st day of April, 1977, the plaintiffs' motion for judgment on the pleadings is denied and the complaint is dismissed.


Motion denied. Complaint dismissed.

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