Pennsylvania Act 1931-197 — REINSURANCE, PROVIDING FOR PURCHASE OF

Act text

REINSURANCE, PROVIDING FOR PURCHASE OF
                 Act of Jun. 12, 1931, P.L. 566, No. 197              Cl. 40
                                  AN ACT

     Providing for the purchase of reinsurance for the benefit of
        holders of outstanding policies, issued by any company
        authorized to insure titles, of which possession may be taken
        by the Secretary of Banking; and providing further for the
        use for that purpose of reserve funds accumulated by such
        companies to protect such policyholders; providing also for
        the form of such reinsurance and defining the extent of the
        liability thereunder, and also for suits at law to recover
        thereon.

        Section 1.  Be it enacted, &c., That whenever the Secretary
     of Banking shall purchase reinsurance under and by virtue of the
     authority conferred upon him by section one of the act, approved
     the twenty-sixth day of April, one thousand nine hundred and
     twenty-nine (Pamphlet Laws, eight hundred thirty-four), entitled
     "An act requiring all title insurance companies to create and
     maintain a reserve; fixing the amount thereof, and regulating
     the same," he may fulfill this duty by purchasing from a
     company, incorporated under the laws of Pennsylvania, with the
     right to insure titles to real estate to owners, mortgagees and
     others, and having a title insurance reserve of the maximum
     amount required by the first section of the act, approved the
     twenty-sixth day of April, one thousand nine hundred and twenty-
     nine, above recited, a blanket policy, in the name of the
     Commonwealth of Pennsylvania, for the use of the original
     policyholders; in which blanket policy, such title insurance
     company shall agree that it will, on demand of anyone holding an
     outstanding policy issued by the original company, fulfill for
     such demandant the same obligations as were due to the demandant
     under the original policy; but so far as the amount of
     recoverable damages is concerned, the same shall be limited in
     accordance with the formula set forth in section two of this
     act.
        Section 2.  Prior to purchasing such reinsurance, the
     Secretary of Banking shall determine, as best he can according
     to his judgment, the total amount of insurance issued by the
     corporation of which he has taken possession, and estimate, as
     best he can according to his judgment, the amount of such
     insurance upon which the corporation had an outstanding
     liability on the day such corporation came into his custody and
     charge; and of these two facts determined by him, the secretary
     shall file written certificates in his office and also in the
     records of the court under which his certificate of possession
     was filed. He shall then use the reserve fund in his custody (1)
     to pay the fee for examinations by the reinsuring company, and
     (2) with the balance of the fund to purchase as large an amount
     of insurance as can be acquired therewith. The blanket policy
     for such reinsurance shall contain a clause that each
     policyholder of the company which originally issued the
     insurance reinsured shall be entitled to recover in his, her or
     its own name, not according to the amount of the original
     policy, but in the proportion that the total amount of the
     reinsurance purchased bears to the total amount of outstanding
     insurance determined to be in existence by the secretary and
     shown by his certificates on file under the provisions of this
     act: Provided, That the total liability of the reinsuring
     company shall not exceed the amount of the blanket policy issued
     under section one thereof.
        Section 3.  The extent of the liability of the reinsuring
     company shall in no event be enlarged beyond that of the
     original company; and claims by policyholders against the
     reinsuring company shall be subject to all the conditions and
     limitations of the original insurance as respects the status of
     such claim and claimant.
        Section 4.  Each policyholder of the company which originally
     issued the insurance reinsured shall have the right to sue the
     company issuing the reinsurance, using his, her, or its own name
     as plaintiff, notwithstanding the fact that the reinsurance
     policy is issued in the name of the Commonwealth of
     Pennsylvania, and the parties to each suit instituted on the
     blanket policy of insurance shall be entitled to recover and be
     liable for costs as in any other suits at law.