People's Insurance Counsel Division v. Allstate Insurance
36 A.3d 464
Md.2012Background
- Allstate filed a §19-107(a) notice designating Maryland geographic areas where it would stop writing new homeowners policies, effective 2007, due to catastrophe risk modeling.
- Maryland Insurance Administration reviewed the filing and, after inquiries, found an objective basis for the designation; no §27-501(a) concerns were noted in the initial review.
- PICD sought a hearing on the filing; the Associate Deputy Commissioner held a hearing, addressing standing, §27-501(a) applicability, and sufficiency of evidence.
- Allstate presented AIR catastrophe modeling (Model 7.0) and related expert testimony to show that bands 4–6 had higher projected losses, justifying non-write as reasonably related to business purpose.
- PICD argued §27-501(a) should require statistical validation and that the designation was discriminatory or arbitrary; the Commissioner found both statutes applicable and Allstate’s evidence sufficient.
- The Court of Special Appeals affirmed, and the Maryland Court of Appeals held that §27-501(a) applies to §19-107 filings and that Allstate met the burden with reliable data, upholding the decision and the designation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §27-501(a) applies to §19-107(a) filings. | PICD argues §27-501(a) should not apply to §19-107 filings. | Allstate contends §27-501(a) does not apply to such filings or that, if it does, the result is correct. | §27-501(a) applies to the filing. |
| Who bears the burden of proof under both statutes in this context. | PICD contends burden is on Allstate to prove compliance with both statutes. | Allstate contends burden-shifting or different burdens apply. | Burden lies with Allstate to show compliance with both §19-107(a) and §27-501(a). |
| Whether Allstate’s evidence sufficiently links the designation to a reasonable business purpose. | PICD argues no statistical validation or adequate linkage to business purpose. | Allstate relies on computer modeling and expert testimony to show objective relation. | Evidence reasonably related to business purposes; designation not arbitrary or unreasonable. |
| Whether the designation’s objective basis was properly established and not arbitrary. | PICD argues the tools and data lack sufficient quantification. | Allstate contends ZIP-code bands and modeled losses supply objective basis. | Designation has objective basis and is not arbitrary or unreasonable. |
| Whether the Crumlish framework governs evaluation of §27-501(a)(2) in this context. | PICD relies on Crumlish to require statistical validation. | Allstate argues Crumlish not uniformly required, given §27-501(j) catchall. | Court rejects blanket Crumlish requirement; §27-501(j) does not relieve Allstate of burden in this case. |
Key Cases Cited
- St. Paul Fire & Marine Ins. Co. v. Ins. Comm'r, 275 Md. 130 (1975) (discrimination standard scope and legislative intent guidance in 234A/§27-501(a))
- Crumlish v. Insurance Comm'r, 70 Md.App. 182 (1987) (set out factors for whether underwriting standards are reasonably related to business purposes)
- Lumbermen's Mut. Cas. Co. v. Ins. Comm'r, 302 Md. 248 (1985) (early framing of standards reasonably related to economic purposes; need for objective measures)
- Insurance Commissioner v. Allstate Ins., 268 Md. 428 (1973) (early approach to insurer underwriting decisions and regulatory scrutiny)
- Mirkin v. Med. Mut. Ins., 82 Md.App. 540 (1990) (context for statistical validation in underwriting standards (recognized exceptions))