Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1916-03-03
INSURANCE RATES
UNDER THE STATE
Attorney Generals Opinion an
Important Matter For LA
bility Business

The attorney general in answering
the request of the insurance commits
sioner for. an official opinion as to the
authority of the commissioner to ap-
prove or disapprove policies of insur-
ance against liability under Article
III of the Workmens Compensation
Act of 1915, particularly as to whether
the policy is drawn to comply with the
requirements OF Sections /, 2 and of
act S41, and also as to the limitation
OF the coverage to insure against la
bility for compensation only under the
WorkmenS Compensation Act, also as
to whether the commissioner has the
power under the act to disapprove of
any system of schedule or merit rat
ing under which an insurance COM
pany will inspect and rate it's own
risks, without any regulations what
ever, or may the commissioner request
that schedule rating shall be applied
only after an impartial inspection and
rating of risks has been made; holds
that the commissioner has the power
under the law to approve of a policy
of insurance drawn in compliance
with Section 1 and of the act, and
to disapprove of one at variance
Herewith, to the extent that the pro-
visions of the policy shall be appropri-
ate to the acts specific requirem ents,
and for the enforcement of his au-
thority to this end the power to re-
woke the license of an offending in
surer could be invoked; also that the
commissioner has the authority under
the act to approve or disapprove of
a contract or policy of insurance in
respect to its coverage, and to re-
quire q policy form providing or a
coverage limited to liability for COM
only Vel
Compensation act of 1915.
In passing on the question of sched-
ule or merit rating, he holds that the
provisions of the law. in effect and
intent, place the whole system of
schedule or merit rating steadily un-
der the commissioners control and
supervision. No such system can be
applied or become effective without
his approval This is tantamount to
the power to regulate the same. The
inspection or rating of risks necessary
to be made to enable him to approve
intelligently the adequacy of any sys-
tenn of merit rating is a matter for
his determination and within his
sound administrative discretion. lie
may approve such system in any case
where in his judgment it Is adequate
to the risks to which it applies or he
may disapprove of it II it fails therein,
or he may withdraw his approval of
any SCnGuulG IL III his Judgment II is
inadequate to provide the necessary
reserves. IL a company under q sys-
tenn of merit rating could inspect and
rate its own risks without any regu-
lation whatever, it would take from
the insurance commissioner that con-
troll over the adequacy of such system
with which he is specifically clothed
by the act
The conclusion is clear that the
commissioner has the power to dis
approve of any system of schedule or
merit rating whatever and that it can
only be lawfully applied where it has
had his approval
The act does not expressly charge
the commissioner with the duty of ap-
proving a general system of merit rat
ing, but in effect he possesses the pow
er to establish a general system since
none filed by an insurer is effective
without his approval from any that
f; Is to measure up thereto.
This opinion implies the power to
establish a general system of inspec-
ton and merit rating.