1. Breaking up is hard to do: Agency Contract TERMINATIONS and “Act 143”
Co-Presented by:
Breaking up is hard to do: Agency Contract TERMINATIONS and “Act 143”
Christopher J. Knight, Esq.
Hawke McKeon & Sniscak, LLP
Jan Kozlowski
Vice President, Insurance Programs, Regulatory & Compliance Services
MSO, Inc.
Policy Cancellations:
easier said than done

2. Statutes & regs & rules: oh my
P & C policy cancellations governed by:
RESIDENTIAL = “UIPA” or “ACT 205”
COMMERCIAL = “ACT 86”
AUTO = “ACT 68”
Statutes compiled by “Purdon’s”
Regulations found in the Pa. Code
Published by NILS

3. “ACT 205” – Residential Property
Prohibits mid-term cancellation or non-renewal of a policy:
insuring an owner-occupied private residential or personal property
in place for 60 days or more
where the insured has paid premium when due
UNLESS obtained through material misrepresentation, fraudulent statements, omissions or concealment of material fact
OR substantial increase in hazards, by willful or negligent acts or omissions by insured

4. Residential Cancellation Notice Requirements
Form approved by Commissioner
Cancellation effective at least 30 DAYS after notice
State the SPECIFIC REASON(s) cancellation or refusal to renew
Advise of right to request Commissioner review
Advise possible eligibility for “Fair Plan” or Assigned Risk Plan
Must be “commonly understandable” as to effective date, reasons and right to Commissioner review
Advise of procedures followed in prosecuting an appeal

5. “ACT 86” – Commercial Property
Mid-term cancellation/non-renewal prohibited unless:
Policy in effect less than 60 days (30 days’ notice)
Substantial change or knowledge of material condition, factor or loss experience
Loss or decrease in reinsurance
Material misrepresentation by insured
Policy obtained through fraudulent statements, omissions or concealment of material fact
Insured has failed to pay premium when due
Insured requests cancellation
Insured failed to comply with policy terms, conditions or contract
Other reasons approved by Commissioner

6. Commercial Cancellation Notices
Mailed or delivered at least 60 days in advance unless
Material misrepresentation by insured – 15 days’ notice
Failure to pay premium when due – 15 days
Cancelled by insured – no notice
Labeled “Notice of Cancellation” or Notice of Nonrenewal”
State specific reasons: the condition, factor or loss causing the cancellation or nonrenewal & sufficient data to correct
State that upon request will provide 3 years loss history
Loss request must be within 10 days of insured’s receipt. 30 days for insured to provide it.

7. ACT 86 - Regulation
“The reason given for nonrenewal or cancellation shall be clear and complete. It shall be stated so that a person of average intelligence and education can understand it. Phrases such as ‘‘losses’’ or ‘‘underwriting reasons’’ are not sufficiently specific reasons for nonrenewal or cancellation.”
31 Pa. Code §

8. QUESTIONS? THANK YOU! Christopher J. Knight CJKnight@hmslegal.com
QUESTIONS?
THANK YOU!
Christopher J. Knight