PENNSYLVANIA BILL WOULD HELP GUARANTY ASSOCIATIONS.

The Pennsylvania Senate has approved legislation that would help guaranty associations by ensuring that large commercial policyholders whose policies carry large deductibles remain responsible for those deductibles even after the insurer becomes insolvent.

The 47-2 vote in the Senate sends the measure, SB 215, to the Pennsylvania House.

Large commercial policyholders often have policies for worker compensation, commercial auto and general liability exposures with deductibles of $250,000 or more per claim.

Two Pennsylvania-based carriers that wrote large amounts of deductible business - Reliance Insurance Co. and Legion Insurance Co. - have become insolvent, leaving the guaranty associations to cover claims against them through assessments on other insurers.

The associations argue they should be treated the same way the insolvent carrier would have been on the deductible exposure, while the Insurance Department regards the benefits are an asset of the estate and says they should benefit all creditors.

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