Opinion ID: 2598249
Heading Depth: 1
Heading Rank: 14

Heading: Catchall

Text: After the district court reversed the Commissioner's decision on the grounds of reduction of surplus and increased premiums, it also observed, as a catchall, that the Commissioner always has the ultimate authority to approve proposed insurance rate increases under K.S.A. 40-2215 and to approve dividend distribution from surplus  which would decrease surplus  under K.S.A. 40-3306. Essentially, according to the district court, the Commissioner has therefore acted prematurely. According to this holding, she should have first approved the acquisition and then, as necessary, denied requests for reductions in surplus and proposed rate increases when presented to her in the future. We hold this conclusion erroneous because it eliminates the Commissioner's proactive role and reduces her to being reactive. The acquisition statute does not require the Commissioner to first approve the acquisition and then await future requests for rate increases and surplus reductions before she is authorized to act. Cf. National Mutual Casualty Co. v. Hobbs, 149 Kan. 625, 633, 88 P.2d 1006 (1939) (Pertinent insurance legislation is a progressive and continuous response to avoid the historic evils suffered by the people of Kansas.). Indeed, the acquisition statute permits the Commissioner to prevent an insurer's action that is unfair and unreasonable to policyholders of the insurer and not in the public interest and  likely to be hazardous or prejudicial to the insurance-buying public. (Emphasis added.) K.S.A. 40-3304(d)(1)(C) and (E). Accordingly, we agree with the statement of amicus National Association of Insurance Commissioners that phrases in K.S.A. 40-3304(d)(1) such as might jeopardize, plans or proposals, and likely clearly communicate the legislature's command to the Commissioner to pass on the proposed acquisition now, rather than attempt to repair or prevent injury to the public at a much later date, when it may be too late to fully protect the public interest and the interests of policyholders. See Rhode Island Ins. Co. v. Downey, 95 Cal. App. 2d 220, 232, 212 P.2d 965 (1949) (No requirement of the Insurance Code that the insurance commissioner must wait until an insurance company is insolvent before he takes action to protect the policyholders because to do so is contrary to the ancient aphorism about locking the barn door after the horse is stolen.); See Boswell, Inc., d/b/a Reno County Adult Care Home v. Harkins, 230 Kan. 610, 613-614, 640 P.2d 1202 (1982) (Commissioner not required to withhold action until actual harm had occurred. Nowhere in the act do we find a requirement of actual harm.). To elaborate on the Downey aphorism, the Commissioner is not required to wait until likely future harm to the public appears before locking the barn door; she may do so now as a preventative. As an expert in the regulation of the insurance industry, the Commissioner is charged with making reasonable decisions and interpretations in order to carry out the statutory provisions. Guardian Title Co. v. Bell, 248 Kan. 146, 805 P.2d 33 (1991); Mitchell v. Liberty Mut. Ins. Co., 271 Kan. 684, 23 P.3d 711 (2001). The Commissioner's interpretation of the acquisition statute has a rational basis to which we give great deference and approve. The district court must be reversed.