Pennsylvania Property Study Guide

Pennsylvania is the rare large eastern state with no coastal hurricane exposure, and its property regime reflects that: the losses come from convective storms, winter weather and rivers, and the residual market is a FAIR Plan rather than a windstorm pool. Three things carry most of the state-law marks on this line — the FAIR Plan itself, a credit-scoring rule that switches off after 60 days, and a surplus-lines regime with unusually specific mechanics.

The FAIR Plan — and a correction worth making loudly

Pennsylvania has a FAIR Plan. You will encounter study material asserting the opposite — that Pennsylvania has no residual property market and high-risk owners must go to surplus lines — and it is simply wrong.

The Insurance Placement Facility of Pennsylvania, marketed as the PA FAIR Plan, was created by Act 233 of 1968, effective 1 August 1968. It is an association of the property insurance companies doing business in Pennsylvania, serving anyone with an insurable interest in Pennsylvania property who has been unable to secure coverage in the voluntary market. Its lines include fire, homeowners, renters, property, and vacant and seasonal property.

Catastrophe profile — inland, not coastal

Pennsylvania’s dominant perils are severe thunderstorms with straight-line wind and hail, winter storms, riverine flooding, and the remnants of tropical systems that have already made landfall elsewhere. There is no direct coastal hurricane landfall risk — which is precisely why the state’s residual mechanism is a general FAIR Plan rather than the coastal windstorm pools Texas and Florida operate.

It is also why Pennsylvania’s newest continuing-education mandate is about flood: since Act 142 of 2024, producers holding property, casualty or personal lines authority must take 2 of their 24 CE credits on flood insurance and the National Flood Insurance Program.

Credit scoring — a rule worth doubting

You will encounter a confident statement of Pennsylvania credit-scoring law: permitted at initial underwriting, unusable after 60 days to cancel, nonrenew or raise renewal rates, and never adverse merely because an applicant has no credit history.

Every clause of that is lifted from the NCOIL model act — the Use of Credit Information in Personal Lines Insurance Underwriting Act — and Pennsylvania appears never to have enacted it. The bills that would have adopted it died in committee. What Pennsylvania genuinely has is a general 60-day underwriting window, which is a different rule about a different thing.

Rates themselves are filed with the Insurance Department under the Casualty and Surety and Fire rate-regulatory acts (40 P.S. §§ 1181–1199), and may be disapproved as excessive, inadequate or unfairly discriminatory.

Surplus lines — three declinations, and a five-day rule

Pennsylvania treats surplus lines as a separate licence with its own examination, sitting on top of an underlying property and casualty licence. Before a risk goes to a surplus lines insurer, 31 Pa. Code § 124.5 requires a diligent effort — deemed made “if the writing producer has documented a declination of coverage from at least three admitted insurers.”

Three mechanics make Pennsylvania’s version distinctive:

• Declinations must be recorded at or near the time of receipt, not reconstructed afterwards
• An insurer that simply does not respond counts as a declination after 5 business days — so a slow market cannot block a placement indefinitely
• Records are retained 5 years after the contract terminates

Two different people sign two different documents. The writing producer executes a written statement, in Department-prescribed form, declaring the diligent effort was made. The surplus lines licensee files a declaration of lack of knowledge of how the coverage could have been procured from admitted insurers. Risks on the Department’s Export List are excepted from the search entirely.

Premium tax is 3% of gross premiums, reported on RCT-123 and due 31 January for the preceding year — and the Department of Revenue notes the enabling statute provides no exemptions.