Opinion ID: 1856280
Heading Depth: 1
Heading Rank: 5

Heading: assuming the commissioner intended on all age bands to mean on all credit life insurance written by an insurer, is the regulation void because inconsistent with the statute?

Text: ¶ 14. This Court reviews the regulations of an administrative agency de novo. Mississippi State Dept. of Health v. Southwest Mississippi Regional Medical Center, 580 So.2d 1238, 1240 (Miss. 1991). This Court will not reverse an agency's decision unless the decision was: (1) unsupported by substantial evidence; (2) arbitrary or capricious; (3) beyond the power of the administrative agency to make; or (4) in violation of some statutory or constitutional right of the complaining party. Mississippi Comm'n on Environmental Quality v. Chickasaw County Board of Supervisors, 621 So.2d 1211, 1215 (Miss. 1993). ¶ 15. American Federated argues that the adoption of the Regulation by the Commissioner is beyond the power of the Commissioner because the Regulation is inconsistent with Miss. Code Ann. § 83-53-23(5). Although the term age bands was never defined, it is clear that the intent of the Commissioner was to require at least a 50% overall loss ratio to charge rates in excess of $0.80 per $100.00 of initial indebtedness on credit life insurance. The Regulation requires at least a 50% loss ratio on all age bands to charge an amount greater than the statutory reasonable rate. It would be impossible for each age band to have a loss ratio of at least 50% if the overall loss ratio was not at least 50%. However, it would be possible to have an overall loss ratio in excess of 50% without having a loss ratio of at least 50% on all age bands. In that instance, the insurer would not qualify for an increased rate under the Regulation. Therefore, the definition of age band is irrelevant to the application of the Regulation as intended by the Commissioner. It is merely a means of grouping together different classes of risk that has no effect on the meaning of the Regulation. The true effect of the Regulation is to require at least a 50% loss ratio on the entire amount of credit life insurance issued by an insurer to charge a higher rate. ¶ 16. This Court must answer one question: Is the Regulation's requirement of an overall loss ratio in excess of 50% inconsistent with Miss. Code Ann. § 83-53-23(5) and therefore invalid? ¶ 17. As suggested by American Federated and the Commissioner, an administrative body or officer may not lawfully adopt regulations that are inconsistent with the statutes. Mississippi State Tax Comm'n v. Reynolds, 351 So.2d 326, 327 (Miss. 1977); Crosby v. Barr, 198 So.2d 571, 573 (Miss. 1967). ¶ 18. The Commissioner argues that the Regulation is merely a reiteration of the Statute clarifying a previously misinterpreted matter. The trial court agreed. The Commissioner suggests that a rate in excess of the reasonable rate is still allowed under the Regulation just as it was under the Statute, but an insurer must show a 50% loss ratio on all age bands. The Commissioner contends that it is within his power to liberally construe the credit insurance statutes to ensure the promotion of public interest and competition in the State of Mississippi. Miss. Code Ann. § 83-53-1. Within this power, the Commissioner may adopt regulations deemed necessary to effectuate the purposes of this chapter or to eliminate devices or plans designed to avoid or render ineffective the provisions of this chapter. Miss. Code Ann. § 83-53-29 (1991). ¶ 19. American Federated argues that elderly customers will no longer be able to purchase credit life insurance. Insurance companies generally do not offer credit life insurance to customers age seventy or older. The high risk on customers between the ages of sixty-five and seventy will prevent the insurance companies from offering credit life insurance to these customers unless they can charge a higher rate. In support, American Federated suggests a loss ratio far in excess of 50% for customers age sixty-five and older. ¶ 20. This Court holds that the Regulation is inconsistent with the Statute. The Statute clearly states that a variance may be granted if the loss ratio for a particular class is at least 50%. Despite the fact that the Commissioner makes a compelling public policy argument, this Court finds the Regulation to be inconsistent with the Statute. Therefore, this Court reverses the trial court because the Regulation is inconsistent with the Statute and is therefore outside the scope of the Commissioner's power to promulgate.