Opinion ID: 64505
Heading Depth: 2
Heading Rank: 1

Heading: Facts and administrative proceedings

Text: On October 30, 2000, State Farm submitted to the Louisiana Insurance Rating Commission (Commission) a request for approval of rates to be associated with a new homeowner policy form, which would become known as the HO-W form. On November 2, State Farm submitted for approval to the Louisiana Department of Insurance (Department) the HO-W policy form for review. The Commission approved the rates and the Department approved the HO-W form. After obtaining these approvals, State Farm began issuing policies on the HO-W form on April 1, 2001, but only to new customers. To its existing customers, State Farm continued to offer HO-1, HO-3, and HO-5 form policies, all of which had rates previously approved by the Commission and forms previously approved by the Department. In February 2002, State Farm made a rate filing with the Commission for new rates related to the HO-1, HO-3, and HO-5 forms. The Commission deferred action on this filing, and on May 3 State Farm withdrew the request. On May 22, State Farm submitted another rate filing requesting new rates for all of its policy forms, including the HO-W form. The filing also included a statement by State Farm that it intended to commence converting all [policy forms HO-1, HO-3, and HO-5] to the HO-W policy form. The Commission approved State Farm's rate request, which became effective for all polices renewed on or after August 1, 2002, including those using the HO-W policy form. Although the rates were approved, James Donelon, the Acting Executive Counsel for the Commissioner of Insurance, opined that current law prohibited State Farm's conversion to the proposed HO-W form. Although State Farm disagreed with Donelon, it delayed conversion to the HO-W form, pending final judicial or legislative resolution of the issue. In April 2004, State Farm filed a declaratory-judgment action in Louisiana state district court, seeking a declaration that the conversion to the HO-W form would not violate Louisiana's nonrenewal law. However, the 2004 session of the Louisiana Legislature enacted Act 358. [2] Act 358 provides that an insurer may convert an entire class of homeowner policies to another homeowner policy form which has been submitted to and approved by the commissioner as those homeowner policies are renewed, and that such conversion shall not constitute a cancellation or nonrenewal of any policy. Section 22:635.4. In light of the legislation, State Farm dismissed the state court declaratory-judgment action. In August 2004, State Farm notified the Commissioner that it intended to convert its insureds' HO-1, HO-3, and HO-5 homeowner-insurance policy forms to the HO-W policy form. State Farm advised the Commissioner that effective February 1, 2005, as each of its insureds' current homeowner-insurance policies expired, State Farm would issue new policies, using the HO-W form. As the Commissioner took no action to disapprove the conversion within the statutory 45-day period after State Farm's notice, the conversion was deemed approved. See Section 22:635.4. On February 1, State Farm began issuing new policies to its insureds as each existing policy expired, using the HO-W form. [3] By letters of February 25 and March 2, 2005, Moore requested a hearing before the Commission, alleging that State Farm's HO-W form conversion constituted an improper de facto premium increase without the statutorily required preapproval by the Commission. State Farm responded that the conversion could potentially effect a rate change. The Commission held a hearing on Moore's allegations, and determined that the conversion potentially could effect a rate hike, instituted unilaterally without Commission approval. On May 6, State Farm requested a rehearing before the Commission. Following a June 21 hearing, the Commission ruled that State Farm's conversion did not involve a rate increase.