Case ID: pa-d-c_19/html/0576-01.html
Source: Caselaw Access Project
Author: {"author": "Keitel, Assistant Deputy Attorney General,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Supervision of Foreign Insurance Brokers
    September 29, 1933.
   Keitel, Assistant Deputy Attorney General,

We have your request to be advised whether foreign corporations licensed by your department as agents, brokers, or public adjusters, aré subject to the supervision of the Insurance Department so as to be excluded from the scope of the Business Corporation Law of May 5,1933, P. L. 364.

Section 4 of that act provides:

“This act does not relate to, does not affect, and does not apply to: ...
“(3) Any corporation which, by the laws of this Commonwealth, is subject to the supervision of the Department of Banking, the Insurance Department, The Public Service Commission, or the Water and Power Resources Board.”

Insurance companies, incorporated under and regulated by the provisions of The Insurance Company Law of May 17,1921, P. L. 682, are clearly subject to the supervision of the Insurance Department. The department is required by law to make periodic examinations of the capital, surplus, and reserve funds of such companies, and in general to regulate and investigate their affairs. On the other hand, the control which the Insurance Department exercises over corporations engaged in the insurance business as agents, brokers, or public adjusters is not supervision within the intent and meaning of section 4 of the Business Corporation Law.

We realize that every agent and every broker transacting business within this Commonwealth is required by The Insurance Department Act of May 17, 1921, P. L. 789, to obtain a license from the Insurance Department. Similarly, the Act of April 25, 1921, P. L. 276, requires that every public adjuster be licensed by the Insurance Department. Moreover, the Insurance Commissioner may revoke for cause the license of any corporation licensed as agent, broker, or public adjuster, and he may conduct hearings and make investigations for that purpose.

Nevertheless, in our opinion, the corporate affairs of such corporations are not supervised by the Insurance Department. There is no provision for the formation or the direct supervision of such corporations in The Insurance Company Law of 1921. They are essentially business corporations, not insurance companies, and they may be incorporated only under the Business Corporation Law.

Section 206(b) of the Business Corporation Law provides as follows;

“If the articles of incorporation delivered to the Department of State are for the incorporation of a business corporation for the transaction of any business in which a corporation may not engage without the approval of or a license from any department, board, or commission of the Commonwealth, the Department of State shall refer the articles to such department, board, or commission, and shall not file the articles or issue a certificate of incorporation until the approval or consent of such department, board, or commission shall have been endorsed on the articles.”

This section sets up the procedure for the formation of corporations which are not under the supervision of any department, board, or commission of the Commonwealth but which may not engage in business without a license from a department, board, or commission. The section makes it clear that the legislature did not intend to exclude from the scope of the Business Corporation Law corporations which are required by law merely to obtain a license from the Insurance Department.

Therefore, we advise you that foreign corporations licensed by your department as agents, brokers, or public adjusters, are not so subject to the supervision of the Insurance Department as to be excluded from the scope of the Business Corporation Law.

From C. P. Addams, Harrisburg, Pa.