An Act To Amend the Laws Relating to Property Insurance Amend the amendment in Part A by striking out all of sections 8 and 9 and inserting in their place the following: Sec. A-S. 24-A MRSA §3051, as amended by PL 1979, c. 347, §12, is further amended to read: §3051. Notice of intent Ne An insurer saa;; may not fail to renew a policy except by notice to the insured as provided in this subchapter. A notice of intention not to renew saa;; ~ not ae effective unless received by the named insured at least 30 days prior to the expiration date of the policy. A pes~-eFFi&&--Qepa~~meR~ post office certificate of mailing to the named insured at a~s the insured's last known address saa;l-ae ~ conclusive proof of receipt on the 3rd calendar day after mailing. The reason saa;; n:ll!§..t accompany the notice of intent not to renew, together with notification of the right to apply for a hearing before the Superintendent of Insurance within 30 days as provided. The reason or reasons for the intended nonrenewal action saa;; !!lY.§J;. accompany the notice of intent not to renew and the reason or reasons saa;; ~ be explicit. Explanations such as underwriting reasons," "underwriting experience," "loss record, location of risk," "credit report" and similar insurance terms are not by themselves acceptable explanations of an insurer's intended nonrenewal of a policy insuring property of the kind Page 1-LR2725(4) HOUSE AMENDMENT
Maine Legislature, Session 121, LD 1853
Committee Amendment CA_A-HA_A_H908 (House)
Amends: 24-A MRSA §3051

HOUSE AMENDMENT ,A" to COMMITTEE AMENDMENT "A" to S. P • 692, 
L.D. 1853, Bill, "An Act To Amend the Laws Relating to Property 
Insurance" 
Amend 
the 
amendment 
in Part A by striking out all of 
sections 8 and 9 and inserting in their place the following: 
'Sec. A-S. 24-A MRSA §3051, as amended by PL 1979, c. 347, 
§12, is further amended to read: 
§3051. 
Notice of intent 
Ne An insurer saa;; may not fail to renew a policy except by 
notice to the insured as provided in this subchapter. A notice of 
intention not to renew saa;; ~ not ae effective unless received 
by the named insured at least 30 days prior to the expiration 
date 
of 
the 
policy. 
A 
pes~-eFFi&&--Qepa~~meR~ post 
office 
certificate of mailing to the named insured at a~s the insured's 
last known address saa;l-ae ~ conclusive proof of receipt on the 
3rd calendar day after mailing. The reason saa;; n:ll!§..t accompany 
the notice of intent not to renew, together with notification of 
the right to apply for a hearing before the Superintendent of 
Insurance within 30 days as provided. 
The reason or reasons for the intended nonrenewal action 
saa;; !!lY.§J;. accompany the notice of intent not to renew and the 
reason or reasons saa;; ~ 
be explicit. Explanations such as 
"underwriting reasons," "underwriting experience," "loss record," 
"location of risk," "credit report" and similar insurance terms 
are not by themselves acceptable explanations of an insurer's 
intended nonrenewal of a policy insuring property of the kind 
HOUSE AMENDMENT 
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HOUSE AMENDMENT "A" to COMMITTEE AMENDMENT "A" to S.P. 692, L.D • 
1853 
defined in section 3048. The reason for nonrenewal sha** must be 
a good faith reason ~atieBa**y and related to the insurability of 
the property or a ground for cancellation pursuant to section 
~. 
This section sha** ~ 
not apply: 
1. 
If the insurer has manifested its willingness to renew; 
2. 
If the insured fails to pay any premium due or any 
advance premium required by the insurer for renewal. 
Sec. A-9. 24·A MRSA §3054, as amended by PL 1989, c. 172, 
§8, is further amended to read: 
§3054. 
Bearing before Superintendent of Insurance 
ABy A named insured who has received a statement of reason 
for cancellation, or of reason for an insurer's intent not to 
renew a policy, may, within 30 days of the receipt of a statement 
of 
reason, 
request 
a 
hearing 
before 
the 
Superintendent 
of 
Insurance. The purpose of this hearing 
sha~~--&e is limited to 
establishing the existence of the proof or evidence used by the 
insurer in its reason for cancellation or intent not to renew. 
The burden of proof of the reason for cancellation or intent not 
to renew sha**-&e-~peB is on the insurer. 
If an insurer's reason 
for 
nonrenewal 
is 
not 
based 
on 
a 
ground 
for 
cancellation 
permitted under section 3049. the insurer must provide proof or 
evidence that the reason for nonrenewal is a good faith reason 
and related to the insurability of the property. 
A statement 
from the insurer that the risk does not meet the insurer's 
underwriting guidelines alone is not considered sufficient proof 
or evidence. 
The superintendent shall adopt rules for carrying 
out this section. The superintendent sha**-hav~~~~~~y-te 
mgy order the policy to continue in effect both pending and, if 
the superintendent finds in favor of the insured, subsequent to a 
hearing. 
If the superintendent finds in favor of the insurer at 
a hearing, the superintendent may order the policy to remain in 
force for 14 days to allow the insured to obtain other coverage.' 
SUMMARY 
Under 
the 
provisions 
of 
the 
Maine 
Property 
Insurance 
Cancellation Control Act, current law, as reflected in Committee 
Amendment 
"A," requires that an insurer base its decision to 
nonrenew an insurance policy subject to the Act on one or more 
good faith reasons "rationally related" to the insurability of 
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HOUSE AMENDMENT ,fro, to COMMITTEE AMENDMENT "A" to S.P. 692, L.D. 
1853 
the property. 
In the recent decision, York Ins. Co. of Maine 
Inc. v. Supt. of Ins., 2004 ME 45, April 7, 2004, the Law Court 
interpreted the 
term "rationally related" in discussing what 
standard should be applied to determine whether an insurance 
company has met its burden of proof to establish 
that its 
decision 
to 
nonrenew 
a 
homeowner's 
insurance 
policy 
was 
rationally related to the insurability of the property. 
In the 
York decision, 
the 
Law Court concluded that the Legislature 
intended "rationally related" 
to mean that the insurance company 
need only prove "a reasonably conceivable state of facts that 
could provide a 
rational basis" for the company's nonrenewal 
decision. 
This amendment strikes the word "rationally" 
to clarify 
legislative intent that a reason for nonrenewal must be related 
to the insurability of the property. 
The 
purpose of this 
amendment is to clarify the appropriate standard to apply in 
determining whether an insurance company's decision to nonrenew a 
homeowner's insurance policy complies with the law. The change in 
language is 
intended to maintain 
the 
Bureau of 
Insurance's 
ability to exercise its statutory authority .in hearings 
to 
determine when an insurance company has established the existence 
of proof or evidence for its reason for nonrenewal. 
Without the 
amendment, the recent York decision may be construed to provide 
insurers with a 
lower standard upon which to establish their 
burden of proof for nonrenewal decisions. 
The amendment is not intended to affect the application of 
the 
remainder of the Law Court's analysis in York, including its 
conclusion that an insurance company's decision not to renew a 
homeowner's insurance policy is not per se irrational because it 
was not supported by empirical data. 
SPONSORED BY, C2.~ 
(Representative O'NEIL) 
TOWN: 
Saco 
HOUSE AMENDMENT