State ex rel. Commissioner of Insurance v. North Carolina Fire Insurance Rating Bureau

29 N.C. App. 237 | N.C. Ct. App. | 1976

PARKER, Judge.

Chapter 1079 of the 1949 Session Laws, which was ratified and became effective on 21 April 1949, was entitled “An Act to amend Chapter 58 of the General Statutes of North Carolina to provide for the holding of public hearings on rate filings.” Section 1, subsection (2) of that act enacted into law a new section of the General Statutes, G.S. 58-27.2, subsection (a) of which provides as follows:

“G.S. 58-27.2 (a) — Whenever any statutory or licensed insurance rating bureau or any insurance company making its own rate filings makes any proposal to revise an existing rating schedule, the effect of which is to increase or decrease the charge for insurance, or to set up a new rating schedule, and such rating schedules are subject to the approval of the Commissioner, such bureau or company shall file its proposed change and supporting data with the Commissioner who shall thereafter, before acting upon any such proposal, order a public hearing thereon, if such hearing is required by the rules and regulations adopted by the insurance advisory board and in accordance therewith, and fix a time and place for such hearing not earlier than 20 days thereafter. The bureau or the company making such proposal shall, not more than 10 days prior to the time of such public hearing cause to be published in a daily newspaper or newspapers published in North Carolina, and in accordance with the rules and regulations of the insurance advisory board, a notice, in the form and content approved by the Commissioner, setting forth the nature and effect of such proposal and the time and place of the public hearing to be held.”

Subsection (b) of G.S. 58-27.2 expressly makes the provisions of that statute “applicable to all rating bureaus operating in North Carolina.”

Ch. 1079 of the 1949 Session Laws also amended G.S. 58-27.1 by adding thereto subsection (c), which provides as follows:

“G.S. 58-27.1 (c) The insurance advisory board shall, within three months of the ratification of this subsection promulgate rules and regulations to provide for the holding of public hearings before the Commissioner of Insurance, or any person employed by the Insurance Department authorized by the Commissioner to act in his stead, on such proposals, to revise an existing rating schedule the effect of which is to increase or decrease the charge for insurance or to set up a new rating schedule, as are subject to the approval of the Commissioner and as, in the judgment of the board, are of such nature and importance as to justify and require a public hearing. The board shall have authority to determine by such rules and regulations the circumstances under which such public hearings shall be held and the Commissioner of Insurance shall hold public hearings in accordance with such rules and regulations. From time to time the board may revise and change its promulgated rules and regulations in such manner as, in its judgment, the public interest may require.”

Acting pursuant to the authority granted to it by G.S. 58-27.1 (c), the North Carolina Insurance Advisory Board adopted, and on 1 March 1950 filed with the Secretary of State, rules and regulations providing for the holding of public hearings before the Commissioner of Insurance on proposals to revise insurance rates. Insofar as pertinent to the questions raised on this appeal, these rules and regulations provide as follows:

“Pursuant to the provisions of the aforementioned act and to afford all citizens and interested persons as full an opportunity as possible to be heard in all cases where substantial rights of the public are involved in such matters, and without undue delay on minor rate adjustments or classification changes, the following rules are adopted:

1. Any rate adjustment or proposal involving a general revision of an existing rating schedule which the Commissioner or the Advisory Board finds upon investigation involves a material change in the rate level, or the setting up of a new rating schedule of a material nature for a kind of insurance or for a separately rated major subdivision thereof, shall be subject to a public hearing prior to action thereon by the Insurance Commissioner. Any proposal involving only a change or changes in specific items of an existing rating schedule shall not be subject to a public hearing unless the Insurance Commissioner, upon review, decides that a public hearing is justified and required by the nature and importance of the proposed change or changes and is in the public interest.

3. Public hearings herein provided for shall be conducted by the Commissioner of Insurance or, in his discretion, by any reasonable person employed and duly authorized to act in his stead.

4. The time and place of any public hearing shall be determined by the Commissioner, who shall give due regard to the convenience of all interested parties. In no event shall a public hearing be scheduled prior to twenty days after submission of a rate filing.

5. Publication of notice of any public hearing shall be made by the bureau or company which is the proponent of the rate filing. The notice shall set forth the nature and effect of the proposal and the time and place of the public hearing to be held. The notice shall be published in one or more daily newspapers published in this State not more than ten days prior to the time set for the hearing. The Commissioner shall approve the form and content of such notice. Notice regarding hearings where there is no bureau or company proponent shall be given by the Insurance Commissioner.

8. The hearing shall be open to the public and any interested person or persons may appear and be heard, either in person or by a representative, and produce oral or written evidence relevant and material to the subject matter.

10. At all such hearings the proponent of the rate adjustment shall be accorded the opportunity to offer evidence in rebuttal.

* * *

13. Subsequent to a public hearing on a filing made with the Insurance Department, immediate consideration shall be given to all the information available. Announcement of the Commissioner’s decision shall be made public as soon after the hearing as is feasible but in no event before any approved bulletins, rate schedules or amendments to schedules or manuals shall be placed in the mail to agents and companies affected, in order that the Commissioner’s decision shall be put into effect. The effective date shall be the date specified in the bulletins, rate schedules or amendments to schedules or manuals, mailed to the agents and companies.”

Thus, G.S. 58-27.2 (a) and the rules and regulations adopted by the North Carolina Insurance Advisory Board pursuant to the statutory authority granted it by G.S. 58-27.1 (c) clearly and explicitly required the Commissioner of Insurance, before acting upon the proposal for a 19% reduction in extended coverage and windstorm insurance premium rates filed with him by the Fire Insurance Rating Bureau on 6 January 1975, to hold a public hearing on such proposal, after the publishing of notice thereof to the public, and in accordance with such rules and regulations. Insofar as this statutory requirement for a public hearing may be repugnant to what the parties have in their correspondence sometimes referred to as the “deemer provisions” of G.S. 58-131.1, the provisions of G.S. 58-27.2 (a) mandating the public hearing must prevail. When two statutes are in conflict and cannot reasonably be reconciled, the statute last enacted repeals the earlier statute to the extent of the repugnancy, even absent a specific repealing clause. Commissioners v. Commissioners, 186 N.C. 202, 119 S.E. 206 (1923). As above noted, G.S. 58-27.2 (a) was enacted in 1949, while G.S. 58-131.1 was enacted in 1945. Therefore, whatever the legal effect of a “waiver” by the Fire Insurance Rating Bureau of the “deemer” provisions of G.S. 58-131.1 may be, it is clear that neither the Rating Bureau nor the Insurance Commissioner may lawfully dispense with the public hearing in cases in which a public hearing is mandated by G.S. 58-27.2(a). Moreover, the busy schedule of the Commissioner does not justify failure to comply with the statute’s mandate. We note that G.S. 58-27.1 (c) and the rules adopted by the Insurance Advisory Board pursuant thereto permit the public hearing to be held either before the Commissioner or before “any person employed by the Insurance Department authorized by the Commissioner to act in his stead.”

In the present case no hearing has been held on the rate filing made by the Rating Bureau on 6 January 1975. The only hearing of any nature held in connection with that filing was the hearing before the Insurance Commissioner held on 28 April 1975, and that hearing was held solely to consider the Rating Bureau’s motion to set aside the Commissioner’s ex parte letter ruling of 11 April 1975. At no time was any notice of hearing published as is required by G.S. 58-27.2 (a) and by paragraph Number 5 of the above cited rules of the Insurance Advisory Board. By entering the orders here appealed from without first conducting the public hearing mandated by the statute the Insurance Commissioner exceeded his authority. Comr. of Insurance v. Automobile Rate Office, 29 N.C. App. 182, 223 S.E. 2d 512 (filed 7 April 1976) ; Comr. of Insurance v. Rating Bureau, 28 N.C. App. 409, 221 S.E. 2d 96 (1976).

For an additional reason the orders appealed from must be reversed. When those orders were entered, the rate filing on which they purportedly were based had already been withdrawn by the Rating Bureau which filed them. We find nothing in Article 13 of Chapter 58 of the General Statutes, under which the North Carolina Fire Insurance Rating Bureau was created, which deals with the right of the Rating Bureau to withdraw a filing once made. We see no sound reason, however, why this may not be done, at least if done prior to the time a public hearing on the filing has been set. Certainly it is desirable that any rate filing be based upon the most current data available. As noted by our Supreme Court, “[w]hile the statute requires that a hearing by the Commissioner upon a filing by the Bureau be held promptly, it is well within the bounds of possibility that, between the filing and the hearing, experience may be had which would be most relevant to the determination of the direction of a projection of the present ‘loss trend’ into the future.” In re Filing by Fire Ins. Rating Bureau, 275 N.C. 15, 37, 165 S.E. 2d 207, 222 (1969). That case held that evidence of such more recent experience is admissible at the hearing. Even so, when because of delay in setting the hearing the data upon which a filing was made becomes obsolete, orderly procedure may call for the withdrawal of the old filing and the making of a new one based upon more recently available information. Accordingly, we hold that in such cases the Rating Bureau may, in its discretion, withdraw a filing if this is done prior to the setting of a public hearing thereon.

It should be noted that this holding recognizing the right of the Rating Bureau to withdraw a filing in no way limits the authority of the Insurance Commissioner to carry out his statutory duty to achieve insurance premium rates “as will produce a fair and reasonable profit only.” G.S. 58-131.2 gives the Commissioner power, even without any filing by the Rating Bureau, “to investigate at any time the necessity for a reduction or increase in rates.” Any order made by the Commissioner pursuant to that authority, however, may be made only after giving the Rating Bureau and insurers who may be affected thereby reasonable notice and hearing if hearing is requested. G.S. 58-131.5.

We find it unnecessary to pass upon appellant’s contention that in entering the orders appealed from the Commissioner violated appellant’s constitutional rights. The statutes above cited make adequate provision for protecting appellant’s due process rights to notice and hearing. It is only necessary that the Commissioner comply with the mandates of the statutes.

For the reasons noted, the orders appealed from are

Vacated.

Judge Morris concurs. Judge Martin dissents.