*1
tion,
property’s potential of mineral
finding
no
As there was
basis
estate,
part
a
of the taxed surface
wealth is
ques
mineral interest in
taxes due on the
that it adds no value
itself
here,
but
estate.10
proceedings
generated
which
tion
appellant
tax certificate under which
the
claims title were invalid. The
the
invalidity of
practice
entering
voluntary
The
a
as-
cer
proceedings
in turn render the tax
ap-
sessment. on a
mineral
severed
interest
tificate void.16 We therefore affirm
parently
response
in this
arose
state
point.
of the trial court on this
decision
that,
statutes,
holdings
under our
a severed
passed by
mineral estate is
surface for
a sale of the
DOOLIN,
HARGRAVE, V.C.J.,
C.J.,
delinquent
By
taxes.11
volun-
WILSON,
HODGES, OPALA,
KAUGER
tarily entering an assessment of the miner-
JJ.,
SUMMERS,
concur.
separately
al interest
tate,
from the surface es-
mailing
the mineral owner’s name put upon
county
address were
tax rolls.
practice
This
mineral
was intended to assure the
owner
actual notice of tax delin-
quency proceedings concerning the surface
ex rel.
STATE Oklahoma
estate.12
TURPEN, Attorney
Michael C.
General, Appellant,
question
We thus come to the crux of the
voluntary
before us. Does the
of a
est
assessment
v.
nonproducing
severed mineral inter-
STATE BOARD for
OKLAHOMA
13subject
continuing
that interest to a
AND
RATES
PROPERTY
CASUALTY
liability
subject
tax
so as to render it
to tax
Compen-
and the National Council on
delinquency proceedings? We hold that it
Insurance,
rating organization,
sation
a
consistently
does not. Oklahoma has
held
Appellees.
nonproducing
that a
mineral interest is not
subject
separately
to ad valorem taxation
The NATIONAL COUNCIL ON COM-
estate,
from the surface
and that such an
INSURANCE,
rating
PENSATION
interest adds no taxable value to the sur-
organization, Appellant,
points,
face.
it
Given these two
would
require the creation from whole cloth of a
v.
liability
nonproducing
new tax
miner-
BOARD FOR
The OKLAHOMA STATE
separate
al estate
a result
from the surface. Such
AND CASUALTY
PROPERTY
permissible.
is not
Ad valorem
RATES, Appellees.
taxes are creatures of statute and must be
enforced in the manner
65430,
Nos.
65423.
those statutes.14 Here we have neither the
Supreme
Court
Oklahoma.
provision under our statutes for the tax
liability suggested by appellant nor a meth-
24,
July
1986.
odology for enforcement. Hence there ex-
12,
Aug.
1986.
As Corrected
ists no basis under Oklahoma law for find-
nonproducing
mineral interest delin-
Rehearings
Feb.
1987.
Denied
quent in
payment
of ad valorem taxes.
To the extent that Mitcham v.
is
Bowers15
expressed
inconsistent with the views
present opinion,
the
ruled.
expressly
over-
Kenoyer
Equalization,
10.
v.
supra,
Board of
13. Where the record is
point,
silent on the
it will
7;
Beattie,
McNaughton
notes 6 and
supra,
v.
be assumed that the minerals have remained
note 8.
undeveloped.
Anderson,
Smith v.
supra, note 9.
Jackson,
9;
supra,
11. See Cornelius v.
note Hales
Duckworth,
McDonald v.
197 Okl.
Lee,
(1947).
v.
199 Okl.
Michael C. Susan Bird, Loving, Brimer Attys. Victor N. Asst. Gen., City, Oklahoma appellant for State Turpén, Okl. ex rel. Atty. Michael C. Gen. Abies, Kerr, Rhodes, Angela J. Irvine & City, appellee Oklahoma Okl. State Bd. Property and Cas. Rates. Larry Parrish, Derryberry, Derryberry, McMahan, Gooding City, & Oklahoma appellant Compensation Nat. Council on Ins.
OPALA, Justice. dispositive appeals The issues of the two are: [1] Did the rate filing of the National Compensation Council on Insurance [NCCI] automatically by opera- become effective 902(G) tion of 36 before the O.S.1981 § approved Board for State NCCI’s rate adjudicating order Rates issued its but reduced requested per- [Board] 41.9 filing? [2] Are the Board’s findings cent rate increase to 25.9 percent. From fact and conclusions of law sufficient to this determination both the Attorney Gen- workers’ Board’s the ney Board for NCCI’s accompanying documents. On the same increase in homa, ers’ 1985. On General fied rate second lack ers who swer, as modified? On behalf of its members and subscrib- State.2 on NCCI’s rate General evidentiary support? compensation NCCI seeking approval questions August submitted written *4 changes September order The Board premium formally appeared presently writing filed an third, [3] 29,1985 in classifications of work- approving we production Did the Board’s order filing insurance.1 At application continued the hear- insurance in Okla- meeting 1985 the of a 41.9 affirmative until October To the first and through speci- the rate request negative of data and on the Attor- will write behalf Attorney percent to the one. the an- 2, order is not insufficient findings tion of the consider these items in its assessment. was error in fact and conclusions of law and compel income and sented a matter short, which stand consolidated for our decision.3 cause it eral and NCCI modified, because, the by 902(B),4 argues and conclusions are contains insufficient NCCI NCCI. Attorney private production expense evidence of the financial condi- order approving law, facially that, brought separate General contends that [1] the Board had failed to insurance should be reversed be- the Board acted General data and hence did not while it of actual investment infirm, contrary to 36 O.S. NCCI’s rate carriers urges the Board’s believes findings wrong [2] that, appeals repre- filing, there the be- In to the date, the Board ordered NCCI to Attorney’s General request respond on or cause matically [1] effective its rate filing by operation had become auto- law, [2] the evidence the Board relied is insuf- September Sep- before 1985. NCCI’s tember 1985 response indicated that a ficient to support its order and [3] the tending support evidence NCCI’s rate portion the substantial information available, destroys probative structure the sought not it value of because cover- upon by ed “internal the evidence relied the Board. information” NCCI by its member companies. After the Both NCCI and the Board argue [1] 36 Governor, rating organization, (c) appear request 1. NCCI is a licensed as de- To at the of the thereof, by Legislature, fined 36 O.S.1981 and is authorized to or § the either branch approximately any file insurance rates for insur- prosecute 125 and defend in court or before writing commission, ers workers’ in any any insurance board or officers cause provisions criminal, Oklahoma. See the of 36 O.S.1981 proceeding, civil the or or which insurer, requiring every directly interested; 903 either or § party state be a or and when through rating organization, a licensed to file appearing proceeding, so such cause rates, rating plans with the Board all and classi- may, it the he if he deems advisable fications which members and subscribers use state, best interest of the take assume state, propose to use in this note 23. prosecution infra control of the or defense of the state’s interest therein.” Attorney repre- 2. The is authorized to General public proceedings sent the interest in the held by absence of critical data was raised the 3. The 903(D), by by § the Board. 36 Attorney during proceedings the General infra note 23. objection day hearing filed be- written gan. timely objections preserved ap- These Attorney formally appeared pursu- General Governor, legal sufficiency pellate request review the contested ant to the the President Senate, filing support any change. Tempore Speaker rate State NCCI's Pro of the and the Representatives. O.S.Supp. Cartwright v. Oklahoma Natural Gas House of ex rel. 18b(c). 18b(c) Okl., [1982], provide: Company, § § The terms of 640 P.2d "The duties of the General as chief law officer of the state shall be: 902(B), of 36 O.S.1981 see text § 4. For the terms opinion. in Part III of this controlling respect O.S.1981 3375 is waiting period extension” of the is limited § single legal sufficiency 15-day enlargement specifical- of the order’s con- tent section’s requirements. [2] order conforms to that ty discharge of our ly prescribed in to effectuate legislative constitutional § 902(G). intent within the Acting in responsibili- bounds of minimum pro- I standards of due cess, disagree. we must NCCFS RATE FILING DID NOT AUTO- component An essential statutory MATICALLY BECOME EFFECTIVE filing scheme for investigative rate is its 902(G) BY FORCE OF 36 O.S.1981 § process. It may be initiated the Board7 that, pursuant NCCI asserts to the terms by “any person organization aggriev- 902(G), of 36 its rate O.S.1981 be- 345(B) ed.” The terms of 36 O.S.1981 automatically came after the ex- effective provide in part any person affected piration 30-day waiting period pre- shall be “... reason- scribed in that section. The terms of opportunity inspect able documentary all 902(G)provide pertinent part: evidence, witnesses, to examine present “Any filing made in accordance with the interest, evidence in of his and to provisions of Section 903 of this article subpoenas have issued the Board to waiting shall file for period be on compel attendance pro- of witnesses and * * * ” thirty days before becomes effec- duction of evidence in his behalf. tive, period may which be extended Sections 902 and 9039 address not period Board for an additional not to insurer’s duties in but also the (15) days gives exceed if it writ- responsibility to investigate the fifteen *5 ten notice.... A filing when, shall be deemed soundness of rates from its own requirements to meet the information or complaint this article from the of an disapproved aggrieved party, it appear unless is made to within tendered rates are not waiting period any or extension conformable * * * ” statutory analysis standards. From an [Emphasis added.] thereof. these legisla- sections it is obvious that the argues NCCI also the terms of 36 provide ture intended to a framework for 332(B),6 O.S.1981 which authorize the § an adversary adjudicative process during modify filing, Board to a rate are also agency hearings filings. on rate subject provided to the time limit in 902(G). argument The thrust of NCCI’s When a susceptible § statute is to is that the statutory “any construction, authorization for more than one it must be 7. 36 O.S.1981 6. See footnote D. The Administrator shall have the submitted to it. C. The Board prove, to secure information useful in the lawful ad- ministration of expressly implied Board shall have the B. The Board shall have § 332 are: O.S.1981 337. See scope power, subject investigations infra «A from the § itsof conferred approve note 14 for the [*] authority, § infra. 332. The provisions of insurance conduct such examinations [*] approval power as it provision. modifications, powers A pertinent relevant of this Code. The to matters, approve, disap- [*] deem reasonably text of 36 Board, authority authority terms of [*] proper within filings 9. See footnote Section 18 of this tion al of the Board. ings, except tion relies to with the ments and consistent with the any filings determine that records of the insurers or as torneys, may technicians as the Administrator or the Board employ See, verify, they may rating organizations deem actuaries, statisticians, auditors, validate and which the insurer or purposes for rate increases made necessary those deem for a rate increase in order to the rates or other act, * * *" infra. investigators appropriate of the Insurance terms, conditions, require- shall be or such investigate § and to examine such beneficial to examine 903(D), rating organizations in subsection F of subject rating organiza- accountants, in or infra the informa- conjunction All rate fil- filings any Code, note 23. insurers approv- other at- interpretation an that frees it from data-production sive request. By these constitutional doubt rather than one which investigative acts the process came to be fraught would make it with fundamental- triggered and underway. We there- law infirmities.10 Whether the Board was fore 902(G) conclude that the provisions authorized to extend the time for considera- for automatic apply do not effectiveness tion filing beyond statutory NCCI’s rate here under review.13 To 30-day period can be determined view this section otherwise deprive would construing phrase 902(G)— the critical in § aggrieved an person express statutory “any light legis- extension thereof” —in rights; it would also contravene the under- expressed lative intent in 332 and §§ lying purpose of the legislative scheme. clearly 345. The cited sections indicate Today’s construction will best assure the legislature that the intended to afford the preservation of process fundamental due Board, any aggrieved person, oppor- the investigative stage of the proceedings. tunity for investigation filing.11 an of a rate language, “any thereof,” extension must II encompass hence be construed to which, here, those circumstances actively investigating REQUI- THE and conduct- BOARD’S ORDER LACKS
ing hearings during statutory waiting SITE FINDINGS OF FACT period. Once the intent legislature The Board and NCCI contend that appears clear from a consideration of the 36 O.S.1981 337 controls the form of enactment, language total altered order, the Board’s specific and that no find and new supplied words it that ings of fact need be included. We dis meaning necessary fully which is to effec- agree. Another specific and more statute objective tuate the lawmaking govern must here because the order under body.12 review resulted from hearing. The terms formally 346(B)15 General of 36 ap provide O.S.1981 perti peared subsequently part: exten- nent
12. WRG 11. 10. Ricks go any provisions penalties may fully Board.” agent, person be requires rate ant to Board knowingly ty statements [36 O.S.Supp.1983 § 600 P.2d [1929]. 595 P.2d P.2d *6 [1985]; Water 904(D), any of the Legislative § R.I. & P. filings 903 A 530, false or withhold Resources workers' broker, who Neumann v. Tax Construction the Board to send notification to 334, notification of workers' 1329, agency investigative process, Exploration Company 532 which [Okl.Sess.L.1982, file fraudulent or is reflected in the 1982 amendment requests, writing, Ry. regulation. 337 [1979] concern that misleading be 1333 [1979]. compensation required Co., 36 O.S.1981 [1979], citing provides rating organization 909]. imposed and Wilson v. Company 137 Okl. Okl., Commission, Okl., information from or To information to the See 36 O.S.1981 that "[n]o against Ch. protect interested §§ rate § Protest of materially 186, 909] §59 901 et to be notified compensation v. Oklahoma P.2d filings pursu- Hoebel, Okl., Foster, Okl., 279 P. those who or violate 1], criminal insurer, seq. persons integri- Chica- which false wil- any 596 [36 15. The 14. Under the 13. The Board’s order that NCCI ters involved in such shall make its order on any are: "A. In shall sit as a of such order to the terms of date and shall Board. be effective unless in B. part: Attorney’s quest sufficiently the Administrator when authorized "A. Orders and notices of the Board shall not § 2. The 346, 902(G). 1. Every rehearing days after termination of the Its reargument hearing. conducting any remaining provisions 36 O.S.1981 337 intent or grounds General written such order shall state its effective quoted quasi-judicial heading thereof or concisely met the notice thereof, purpose. on which based. in the text of this [*] same § writing signed by [*] state: hearing, covering mat- *»* reargument "Orders, and shall persons given body. provide data-production and in hearing of 36 O.S.1981 requirement respond hearing Within notices” the give copy thereon, the Board pertinent opinion, it or rehear- notice thirty or of re- by
(< [*] [*] [*] whether proceeded on the cor- B. The order shall contain a concise rect legal theory [3] be sufficiently specific reviewing to enable a court statement of the facts as found upon ascertain the ultimate whether facts concise statement of its conclu- which therefrom, sions the decision is rested afford a rea- and the effective date of sonable basis for the order. order.16 These re- facts drawn its underlying facts from adjudicative capacity must ambiguity which raises doubt findings from the [*] of an [*] evidence, *>> agency [1] [2] recite the acting in ultimate as to free its determination cannot be affirmed.17 the decision’s cy quirements and conclusions19 we fails to make On review of the Board’s findings constitute a validity adequate and, sine findings of where an constrained to qua non agen- fact, 18. The Board’s 17. Oklahoma 16. Allstate Insurance Stergiou Association. The State Board allowed the inter- and vention. dent ed Industries of ber, 1985, The State Board of Associated Industries of granted State Board’s a Petition for Intervention on behalf of Associat- of Commerce and the Oklahoma Lumbermen’s vided August, 1985. Intervention and Motion for Continuance in the homa the 2nd requested tion on workers ten in the State of Oklahoma. That on or about through specified Rates, State Board O.S.Supp.1984, nine-tenths 1985, Attorney reau notice of taking C. The order action theretofore taken or 4. That the State Board retained E. James 3. 2. That on or about the 23rd 1. That on or about the 1st NCCI, Property analyze That on or about the 17th v.. the Okl., (Attorney of new action within the [******] State Board the as an outside day the NCCI on or about the 12th hearing." [1965] Mr. Julius E. Kubier This additional information was additional rating organization 406 P.2d the rate seeking FINDINGS OF FACT percent Inspection findings August, Oklahoma, and Oklahoma General) allowed Casualty General of the State of Okla- affirm, Company on the NCCI rate changes expert actuary information General a continuance. (41.9%) made a are: Bureau v. State Board average forty-one Property Rates, 454 [1965]. the Rates, Okl., filed a Petition for the State Chamber modify, day intervention and the State Board in the classifica- Oklahoma, as defined supra (Kubier), insurance writ- day v. State Board day August, rate Inspection by constitute the scope concerning of July, the to review note 16 at with the 408 P.2d Casualty Septem- increase day NCCI; nullify Presi- filed pro- Bu- is neither That the fair and reasonable in tory. and Oklahoma. reducing compensation insurance in the rate calculations of Mr. E. James [sic] relief, providing this State will constrict tential through changes compensation coverages thereby creating substantial losses in Oklahoma on their workers and nine-tenths John economist, but, was indicated. that based being (15.2%) increase of expense records should result in no increase change income alone would reduce the indicated rate independent and John Wilson testified that based by the NCCI. indicated. twenty-five upon present tained Julius E. Kubier to make statements and by the and the Oklahoma Lumbermen’s Association re- outside economist to review the rate expert actuaries and Dr. John Wilson as an Schwartz and John Robert Hunter as outside 10. That the State Board 9. That the insurance 7. That Julius E. Kubier 6. That Allen 5. That E. James Oklahoma, incorporated that failure of the NCCI to as set forth in his That the Grippa, his That the granted the insurance threat NCCI; evidence independent Sturgiou excessive, the market this eight that an and nine-tenths review, to fifteen and two-tenths its and that the Associated Industries at all. coverage; the State Chamber of Commerce Sturgiou NCCI testified percent and one-tenths the his Schwartz, in rates actuary, regarding herein as Exhibits A and average [sic] inadequate Stergiou independent industry doing solvency recognition of investment establishing General review, availability reports [sic] recommendations are (41.9%) and, per their *7 industry and David increase of John Robert Hunter percent the rate adopts presented testified that based classification. recommendations of some insurers that without rate through Anthony a rate increase of (attached writing thereby provide nor percent retained Allen was indicated review, a rate which has suffered and of workers (25.9%) discrimina- business in filing Appel, forty-one Sturgiou evidence detailed accepts percent (8.1%), hereto a rate made their B). po- page
19.See note 19 on 401.
4Q1 HI of Several infirm. is order the that hold THE ORDER APPROVING BOARD’S that assertions mere but findings are the THE RATE FILING AS MODIFIED witness- various testimony of the to relate EVIDENTIARY SUPPORT LACKS an simply findings es, other while Attorney’s primary conten- General ulti- than rather procedural account failing by Board erred to tion is that the the 10,20in which Finding No. facts. mate compel production of and hence con- the presented evidence mass adopts a the sufficient evidence about financial sider Board lacks clearly witness, represented by of the insurers condition expert analysis begins agree. Our NCCI. We aof expected is that specificity statutes, pertinent with overview re- hearing. rendered order seq., govern 901 et which 36 O.S.1981 §§ consist order paragraphs maining ratemaking func- adjudicative the Board’s unsup- statements eonclusory tions. We fact.21 findings of by actual ported Regulation is the central tenor of the lacks order because hold therefore Every insurer is re- Insurance Code.22 which fact Board, findings directly file quired to law, it all organization, its conclusions through rating a licensed based have could rating plans it uses or and which va- hence be must deficient fatally is state.23 Rates in proposes to use cated. balancing other the interests of and to all have the effect the risk liar characteristics industry policyholders, relevant factors within and the insurance outside the state including establishing investment income from a fair rate. unearned State reserves, premium impact and loss of a the rate structure for workers com- 11. That policyholders increase on and the State’s pensation in the of Oklahoma busi- insurance State climate, availability ness of a market relationship a direct to the benefits and bears compensation workers insurance and the sol- determining benefits as mandat- the method of vency providing of the insurers workers com- ed under Oklahoma statutes and that in order to insurance, pensation pursuant O.S.Supp. to 36 reductions in workers affect rates, § 902. corresponding legislative changes in bene- twenty-five That a rate increase of and nine- determining benefits fits and the method (25.9%) excessive, percent tenths is not inade- required.” would quate unfairly discriminatory pursuant to 36 ”* * * O.S.Supp.1984, 902. portions 19.The relevant of the Board’s conclu- are: sions supra. See footnote "CONCLUSIONSOF LAW compensa- That the rate on workers Finding supra note No. 21. The statement adequate rates made the NCCI tion industry has suffered that "the insurance complete full and deliberation the State yields Oklahoma” no factu- substantial losses in determining Board in the reasonableness of "poten- that a the Board’s conclusion al basis for proposed pursuant rate increase to 36 solvency of some insurers" tial threat to the O.S.Supp. Regula- 902 and Rule "losses” makes the use of the term created. The finding ambiguous. tion of the State Board for and Casu- meaning have Its should Rates, 18(I)(5). alty explained. have incurred An insurer been gave That the State Board due consideration prof- net and still realized a "substantial losses" past prospective experience loss within it. state, hazards, physical and outside the factors, seq. safety prevention 101 et §§ and loss to underwrit- 22. 36 O.S.1981 judgment, catastrophe practice and haz- pro- O.S.Supp. The terms of 36 ards, any, margin reasonable under- if to a vide: dividends, contingencies; writing profit savings premium deposits Every or unabsorbed al- file with the insurer shall "A. rating through policy- directly a licensed *8 lowed or returned holders, insurers to their or either members, subscribers; member or sub- past organization scriber, it is a or to and of which rating plans classifi- expenses country and prospective all rates and both wide state; proposes to use in or specially applicable which it uses those to wheth- cations a notification shall generally state. The Board for the this er classification rates exist send requests, consideration; any person who to rarity pecu- of of rates risks under or 402 challenged can purpose determining
existence be “... for the of wheth- sponte sua by any party aggrieved er a complies provisions or be- with the of ... the burden seq.] cause those rates. If it shall be O.S.1981 et 901 [36 §§ proof shall rest on the insurer or rat- appear made to to the Board ... that there ing organization grounds filing.” to believe that which made such are reasonable [Emphasis O.S.Supp.1982 any rates or on all risks ...” contravene on added.] 903(C).25 seq., § the terms of 36 O.S.1981 901 et §§ required (cid:127)then the Board is to act its The statute’s foremost mandate for duty investigate statutory to and to deter- ratemaking is that rates “... shall not be mine the rates conform to whether Code excessive, inadequate, unfairly discrimi 903(B). requirements. § NCCI, natory.” filing, When re increase permitting quested rates, challenge essentially In addition to to it rates, legislature asserted that existing has the rates in effect at that inadequate. time were filings para also The third that be contested. The 903(D)24 graph 902(A) explicitly governs pertinent provide how terms § the Board organization determines whether rates are “[a]ny person aggrieved inadequate. provides: It respect any filing with to ... make application written to the Board for a hear- “No rate shall be to inadequate held unless ing hearing (1) thereon.” Whenever is held such unreasonably rate is low writing, any Any person organization aggrieved to be notified of workers’ D. filings pursuant regula- respect any filing pursuant to appli- tion of the Article 9 of this title Board. make written appear hearing cation to the B. Whenever it shall be made to Board for a thereon. Board, application specify grounds Such shall from its either own information or upon by applicant. be relied If complaint any party alleging the Board from to be application good shall find that the is made in aggrieved thereby, that are there reasonable applicant ag- faith and that the grieved would be so grounds any to believe that the rates on or on established, grounds if such all risks or of risks or classes kinds of insur- (30) thirty days receipt shall within after scope ance within the of this law are not application hearing upon such hold a not less law, accordance with the terms of this it shall (20) twenty days’ than written notice to the duty investigate be the of the Board to applicant every rating and to insurer and or- any determine whether or not or all of such ganization filing. which made such requisites rates meet the of Article 9 of this meetings E. All of the Board shall be formal title. public meetings and no official action shall be investigation any C. After such an such except public meeting taken at a formal rates, shall, ordering before proceedings where minutes of the are record- rates, discontinuance of the use of such hold public ed and made a matter of record. No hearing (10) days’ less than ten any involving final action on matter notice, specifying written the matters to be shall be taken until not less than fifteen hearing, every considered at such insurer days meeting. Any from the time of such rating organization which filed such prior any meeting conferences held where hearing rates. The Board need not hold such final action is taken shall be official confer- by every if the Board is advised such insurer proceedings ences with minutes of the to be rating organization they do not de- public recorded and made a matter of record. hearing. sire such If after such empowered F. The Board is further to inves- Board determines that or all of such rates removed, tigate and to order at such time and compliance provisions are not in with the specify any in such manner as it shall unfair title, order, Article 9 of this it shall issue an existing discrimination between individual when, stating period within a reasonable risks classes of risks." thereafter, such rate or rates shall be deemed longer Pending investiga- no in effect. supra complete 24. See footnote 23 for the text of tion rates shall be deemed to 903(D). have been made in accordance with the terms of Article 9 of this title. In the event a hear- 25. See also Standard National Insurance Com- purpose determining is held for the pany Hartford, Connecticut v. State Board filing complies provisions whether a with the Rates, Okl., 520 P.2d title, proof of Article 9 of this the burden of [1974], rating organiza- shall rest on the insurer or 902(A). tion which made such O.S. 26. 36 *9 (2) profit contingencies; dividends, provided and to for the insurance endangers savings premium deposits or unabsorbed continued use such same, using insurer solvency of the allowed or returned insurers to their (3) unreasonably members, subscribers; rate is policyholders, such or or unless provided insurance and the past prospective expenses for the to low both using by the insurer of such rate countrywide specially applica- use and those have, has, if continued will state; or same ble to the to whether classification destroying competition or creat- effect of generally rates exist for the risks under [Emphasis ing monopoly.” consideration; a rarity peculiar added.] or risks; characteristics of the and to all stan- quoted provision, whose basic This other relevant within and out- pre- disjunctive, read in the dards must be factors [Emphasis side the state.” measuring gauges, added.] ei- two distinct scribes employed in deter- of which must be ther record, Upon examination of the we inadequate.27 mining whether cannot conclude that NCCI tendered for Hence, rates are inade- a conclusion that consideration evi sufficient necessarily depends upon finding a quate financial dence about the actual condition (1) unreasonably low—a rates are it represented of the insurers to warrant a (2) gauges, and factor common to both finding that the rates at the time of the endangers insur- the use of the rates either filing inadequate. Although were the ma solvency the rates do will adverse- er terials included in contain NCCI’s monopoly. a ly competition or create affect exhibits, have numerous tables we It that NCCI elected found no information from which the actual seems evident attempting inadequacy of rates state of NCCI member com prove financial they reasonably were unreason pany to establish be ascertained. (2) endangered solvenc ably insurer data consist almost en low financial Board, then, required tirely percentages computed y.28 The from development met its bur application determine whether NCCI had of various factors. giv figures den to establish these elements A few documents contain dollar after the factors ing due consideration to all of reference to the insurers to whom without 902(B). apparent prescribed they pertain, 36 O.S.1981 and it is not how the provide: They may have figures terms of this subsection were determined. averages com weighted of all NCCI been shall “B. Due consideration be average of ten panies merely a total or prospective experience loss past and fact, major companies. In NCCI admitted state, physical and outside the within on ly excluded detailed data investment hazards, safety prevention loss necessity for disclosure of factors, income.29 The underwriting practice and income hazards, on investment becomes catastrophe any, if information judgment, to light industry-rec- margin underwriting even more clear to a reasonable creating monopoly, dissenting we have found no it tion or a vice of the view is that 27. The one, combines, compresses finding. into and hence evidence sufficient to measuring gauges. independent statutory two Limiting dissent, single gauge, a as does the the Board to Exhibit No. 1 included memoran- 29.NCCI's but misconstrues the statute In- Consideration Investment dum entitled legislative clearly-articulated also contravenes come, which NCCI states: inadequate are as- to be intent. Rates asserted “ * * * recognize impor- clearly While we by the use of either of the two distinct sessable profita- income to insurer tance of investment example, seek For an insurer dimensions. bility, its inclusion in the cannot endorse we effect of rates to demonstrate adverse thing, ratemaking there is no formula. For one might solvency; alternatively, be its own methodology ap- accepted that can be generally could adverse- shown that the use of these rates rather, are host of plied problem; there competition among ly insurers. affect approaches, predicated on a set each alternative prove did intend to that use If NCCI of dubious validi- assumptions which * * *" had rates in existence at time ty. competi- destroying will have had the effect of *10 404
ognized money axiom that is from the Board did actuary retain an to assist in investments, underwriting.30 filing, its evaluation of NCCI’s we note empowered that Board is also to em- The evidence is devoid of itemization “statisticians, accountants, ploy attorneys, expenses by of The account. con- auditors, investigators or any other techni- general tains of ex- but classification as cians” it or the Board’s administrator penses, figures and those are unverifiable. may deem necessary examining adequate Before an evaluation can made filing.37 only rate evidence found in of solvency the effect of rates on the of the record on dividends of fig- consists ten insurers, the Board must consider detailed represent ures which per- the Oklahoma compa- evidence about the NCCI member centage of premiums dividends to earned expenses.31 nies’ years for the through 1975 1984. This In order for the Board have evidence is wholly both insufficient and “due consideration” to not each insubstantial. No disclosure was made of 902(B) specified item but also “all identity companies to which the factors,” specific other relevant data on figures may applied. Although have divi- companies NCCI should have been included dends be relevant compared when long in the We have held that one premiums, with earned they must be con- important of the most factors in determin sidered the context of an insurance com- inadequate whether rates are is the pany’s complete profile. financial The sub- financial soundness of the insurer.32 Evi specific mission of data on dividends would dence considered include seem to express meet the terms of the annual financial statements or other data statute, but we believe more that is re- profit forms from which net and dividends quired meaningful for a consideration. actually paid may Among be considered.33 paid earnings, and, Dividends are from net the other relevant factors that the Board actual, without verifiable information on must consider is income from unearned earnings, net the Board would be unable to premium and loss reserves.34 Because if ascertain the dividends were excessive.38 these reserves are in the nature of trust funds, income from urges derived them should General also that policyholders inure benefit of and there insufficient as to evidence under- hence writing practices be considered Board.35 judgments and as to safety prevention and loss factors. We 902(B) The terms of expressly agree. The specific, record is of devoid require the Board to consider dividends. verifiable data these items. Indeed, authority the Board has the protect the duty policyholders from the regulation Mindful effective potential harm through result from a dec adequate public disclosure of laration unlawful or excessive divid is purpose benefit the fundamental ends.36 While Code, the record indicates that that, Insurance we hold because of 30. Rating Massachusetts Automobile and Acci- 34. Oklahoma State AFL-CIO v. State Board for Rates, Okl., 693, dent v. Property Casualty Prevention Bureau In- Commissioner 463 P.2d surance, 1127, 333, 384 Mass. 424 N.E.2d 1135 [1970]. [1981]. 35. Oklahoma State AFL-CIO v. State Board for Rates, Casualty 31. See Associated Industries v. supra Oklahoma note 34 at Board, 361, State Insurance 173 Okl. 46 P.2d 695. 366 [1935]. 36. General Ins. Co. America State Ins. Board, 32. [1941], Utilities Ins. Co. Missouri v. State Ins. 189 Okl. 118 P.2d Oklahoma, Board Okl. 84 P.2d See, [1938]. 332(D), supra 37. 36 O.S. note 33. Utilities Ins. Co. Missouri v. State Ins. 38. General Ins. Co. v. State America Ins. Oklahoma, supra note supra note 36 at 394.
4Q5 voids, ap- charges appellee the Board’s Oklahoma State Board for evidentiary critical modified, Property Rates with filing, duty NCCI’s rate proval of reviewing filings. I therefore must It hence follows that be affirmed.39 cannot majority opinion’s dissent to the treatment percent sought 41.9 rate increase questions there involved. lacking requisite evidentia- NCCI also *11 fails to support. Where the evidence ry legislation The in question, 36 O.S.1981 that support preliminary a determination 902, provides (A): in subsection Board existing inadequate, rates are the A. Rates for insurance shall not ex- be rate validly approve any increase.40 cannot cessive, inadequate, unfairly discrimi- natory. filing is insufficient Since NCCI’s No rate shall be held to excessive be the rate increase 25.9% (1) unreasonably high unless such rate is insurance, the ex workers’ (2) provided; for the insurance a rea- has existing the rate which been
cess over
degree
competition
sonable
does
must
by
affected insurers
be
collected
the
respect
exist in the area
with
the
prescribe
The
shall
refunded.
Board
appli-
classification to which such rate is
refunding premium over-
method for
unreasonably high
and such rate is
cable
The
under review is va
payments.
order
provided.
for the insurance
proceeding
the
remanded
cated and
in a man
proceed
inadequate
Board with directions to
No rate shall be held to be
opinion.
(1)
this
unreasonably
ner not inconsistent with
such rate
unless
is
low
(2)
provided and
the
for the insurance
VACATED AND PROCEED-
ORDER
endangers
continued use of such rate
REMANDED.
ING
same,
using the
solvency of the insurer
unreasonably
rate is
or unless
V.C.J.,
SIMMS, C.J., DOOLIN,
for the insurance
and the
low
SUMMERS,
HODGES,
HARGRAVE
using
use of such rate
the insurer
JJ., concur.
have,
has,
if
same
continued will
LAVENDER, J.,
in
I
concurs
Parts
competition or creat-
destroying
effect of
II
from Part III.
and dissents
ing monopoly.
a
WILSON, J., concurring
ALMA
grounds
forth three
This section sets
specially.
existing
filing:
proposed or
rate
rejecting a
excessive; two, if
one,
if the rate is
KAUGER, J., disqualified.
three,
if the rate is
inadequate;
is
rate
LAVENDER, Justice, concurring
part
in
discriminatory.
enacting
In
this
unfairly
part:
dissenting
in
to set
Legislature went on
section
majority
II
parts
I concur in
I and
of the
of when a
the determination
guidelines for
therein.
opinion for the reasons stated
excessive or
filing is to be considered
rate
clearly set
guidelines
however,
inadequate. These
appears
opinion,
III of
Part
compe-
Legislature’s concern
forth the
from a miscon-
my
view to have resulted
industry and
in the
be maintained
which tition
of 36 O.S.1981
struction
Rating
Bureau
and Accident Prevention
protective duties
mobile
extensive and
39. The Board’s
30;
Insurance, supra
statutory
note
adherence to the
v. Commissioner
also include close
Travis,
unjust
P.
prevent the
enrich-
Kan.
scheme in order to
Aetna Ins. Co.
compensa-
companies writing
workers’
ment of
Alliance
and American
1071-1072 [1927]
Indus-
Com'rs.,
in this state. Associated
tion insurance
126 S.W.2d
Ins.
Ins. Co. v.
Board, su-
Oklahoma v. State Insurance
tries
[Tex.Civ.App.1939],
pra
We note that insurance
note 31 at 366.
impressed
engaged
companies are
in a business
stay
effectiveness of
A motion to
is
public
interest. Because
General.
filed
order was
according
prescribed
authorized to fix
standards,
not be
need
that motion
issues raised
The
sufficiency
of the
its determination
moot
they
rendered
have been
as
addressed
ratemaking
is somewhat akin
of a rate
today’s pronouncement.
utility
Auto-
public
See Massachusetts
cases.
primary regulative
competition
opinion,
consistent with majority
on
industry.
remand,
for the
mechanism
the Oklahoma State Board For
And
Rates should re-
Legislature’s
intent
is clearly
quest production
require
the National
gleaned
language
guide-
from the
On Compensation
Council
Insurance to
902(A).
Leg-
lines contained
section
why
show
the Attorney
cause
General’s
has
that a
islature
stated
to be
request
of September
1985 for data
considered excessive
when is unrea-
production should not be complied with.
sonably high.
One
factors foreseen
Findings and conclusions based on this data
giving
high
unreasonably
rise to
rates is
would appropriately implement 75 O.S.
competition
lack
the classification
1981, 312 of the Administrative Proce-
Similarly
area.
rate is to
be considered
Act,
way
dures
which is in no
irreconcilable
inadequate only
it is unreasonably
when
*12
345(B)
with 36
O.S.1981
as delineated
endanger
as
compe-
low and
a result would
opinion.
the majority
Legislative acts are
by threatening
solvency
tition
the
to be construed in such manner
to recon-
company offering the rate or
other
of
com-
provisions
cile different
and render them
panies in competition
offering
with the
consistent and harmonious and
intelli-
company.1
gent effect to each. Eason
Company
Oil
however,
majority opinion,
has wide-
Commission,
Corporation
v.
fails to address the of whether the
evidence before would be suffi- finding
cient to sustain a the rate granted increase was not excessive. In- MOSER, Plaintiff, Regina L. opinion question stead the addresses the whether the evidence was sufficient to sus- tain finding previously existing LIBERTY MUTUAL COM- INSURANCE rates were inadequate. My reading of the PANY and First State Insurance statutes would point beyond find this Company, Defendants. scope of the inquiry in this matter. No. 65959. For this part reason I must dissent to III of majority opinion. Supreme Court Oklahoma. Dec. WILSON, ALMA (concurring Justice Rehearing Jan. Denied specially): I fully concur disposition with the effect-
ed analysis and the supporting dispo-
sition as set majority opinion; forth in the cinnati, Oklahoma,
1. See Utilities Ins. Co.
v. State
Missouri
Ins.
Ohio v. State Ins. Bd.
Oklahoma,
Bd.
(1938).
184 Okla.