Opinion ID: 2518552
Heading Depth: 3
Heading Rank: 1

Heading: Progressive's Proposal Violates AS 21.36.460(d)(1).

Text: Director Hall ruled that Progressive's proposal violates AS 21.36.460(d)(1). Progressive argues that Director Hall's interpretation contradicts both the statute's plain meaning and its legislative history. Alaska Statute 21.36.460(d)(1) states that an insurer may not fail to renew or, at renewal, again underwrite or rate a personal insurance policy based in whole or in part on a consumer's credit history or insurance score; the prohibition in this paragraph against underwriting or rating a personal insurance policy at renewal may be waived by the consumer; waiver allowed under this paragraph must occur at each renewal. . . . The division argues that because Progressive would leave a consumer in the same credit tier based on that consumer's frozen credit score, Progressive would `in part' be using the consumer's credit history in the rating/underwriting process at renewal. Progressive contends that its proposal does not violate the statute because, in the statute's words, Progressive would not be again underwriting or rating at all; instead, it would be leav[ing] the consumer in the same credit tier based on that consumer's frozen credit score data.
Progressive argues that underwriting, by definition, requires an affirmative action. Progressive contends that because it is proposing to merely maintain a consumer's status in the same underwriting credit tier or rate classification, Progressive would not be taking an affirmative action and thus not again underwriting or rating. The division responds by arguing that there is no way to use credit scoring (or any other rating or eligibility factor) at renewal other than for underwriting or rating. This is proved, the division argues, by Progressive's concession that consumers' rates will be impacted if Progressive removes their credit scores at renewal. Using our independent judgment, we interpret Alaska Statutes according to reason, practicality, and common sense, taking into account the plain meaning and purpose of the law as well as the intent of the drafters. [9] Words that have not acquired a peculiar meaning, by virtue of statutory definition or judicial construction, are to be construed in accordance with their common usage. [10] Alaska Statute 21.36.460 does not define the terms again underwrite or again rate, and the parties do not cite any cases in which we have defined those terms. Underwrite, however, is a verb with two common meanings, depending on the context in which it is used. Thus, underwriting has been defined as the process by which an insurer decides whether, and at what price, the insurer will accept a given risk. [11] Under this first definition, the Federal Trade Commission (FTC) has explained the scope of underwriting as follows: An insurer may obtain a consumer report to decide whether or not to issue a policy to the consumer, the amount and terms of coverage, the duration of the policy, the rates or fees charged, or whether or not to renew . . . a policy, because these are all underwriting decisions.[ [12] ] Second, underwrite means to write one's signature at the end of (an insurance policy), thus assuming liability in the event of a specified loss or damage. [13] Given the context in which the terms underwrite and underwriting exist in AS 21.36.460(d)(1), we interpret those terms to refer to the process by which an insurer measures a consumer's risk level to decide whether, and at what price, the insurer will accept the risk of loss posed by that consumer. In context, the phrase again underwrite or rate at renewal therefore refers to the process by which an insurer re-evaluates a consumer's risk level in deciding whether or not to renew that consumer's policy and, if so, at what rate. This definition was confirmed by an expert witness, who stated in an affidavit submitted by Progressive, that the term underwrite refers to the function of securing and evaluating information, and making decisions to accept or reject risks. Progressive argues that it would not be again underwriting at renewal because, it asserts, it would not be taking an affirmative action; it would be merely maintain[ing] an insured's status in the same credit underwriting tier or rate classification. This argument, however, overlooks a fundamental question: For what purpose would Progressive maintain a consumer's credit tier if not for underwriting? An insurer's decision to offer a consumer the option to renew her policy is, by definition, an underwriting decision. [14] It is a decision that necessarily implies that the insurer has analyzed the consumer's risk of loss and found it to be acceptable. Under its proposal, even if Progressive offers to renew a consumer's policy at the same rate and underwriting risk group, it will have done so only after considering the consumer's frozen credit tier as a factor in its renewal decision. This process violates AS 21.36.460(d)(1) because it falls within the plain meaning of again underwriting or rating at renewal based in part on a consumer's credit history.
When we engage in statutory construction, we must, whenever possible, interpret each part or section of a statute with every other part or section, so as to create a harmonious whole. [15] We must presume that the legislature intended every word, sentence, or provision of a statute to have some purpose, force, and effect, and that no words or provisions are superfluous. [16] Progressive argues that the division's interpretation of AS 21.36.460(d)(1) is wrong because it renders four distinct provisions of AS 21.36.460 superfluous. Progressive contends that if credit must be completely removed from consideration at renewal as the division claims, all four of these provisions would be unnecessary. First, Progressive notes that AS 21.36.460(d)(1) prevents insurers from fail[ing] to renew . . . a personal insurance policy . . . based in whole or in part on credit. It argues that if AS 21.36.460(d)(1) really requires insurers to completely strip out credit scores at renewal when underwriting or rating, the statute would not need to also prohibit insurers from using credit to fail to renew a policy because credit would already be removed from consideration. Second, Progressive notes that per AS 21.36.460(e) if a consumer is charged a higher premium based on the use of incorrect credit history, the insurer must `rerate the policy retroactive to the effective date of the current policy term.' (Emphasis by appellee.) Progressive argues that if credit must be stripped out at renewal, there would be no need for the word current because only the consumer's first policy could be based on credit. Finally, Progressive notes that the definition of adverse action as used in AS 21.36.460(i)(1)(A) and (C) includes both the failure to renew coverage and the unfavorable change in coverage based upon credit information. These too, it argues, would be superfluous if insurers were forced to strip out credit scores at renewal. However, as the division points out, all of these arguments ignore the significance of AS 21.36.460(d)(1)'s waiver provision. Because the statute permits a consumer to waive the credit usage ban, it is possible that credit can be used even when a policy is renewed, and it is therefore possible such usage can cause an unfavorable change in coverage. Similarly unpersuasive is Progressive's argument that AS 21.36.460's fail[ure] to renew based on credit language is superfluous under the division's interpretation. Under AS 21.36.460(d)(1), fail[ing] to renew based on credit and underwriting or rating based on credit are two distinct concepts. By its own terms, the waiver provision in AS 21.36.460(d)(1) only applies to underwriting or rating a personal insurance policy at renewal. The waiver provision therefore allows a consumer to permit his insurer to re-underwrite or re-rate his policy based on credit. The waiver provision in AS 21.36.460(d)(1) does not, however, extend so far as to allow insurers to fail to renew a consumer's policy based on credit. A consumer who thinks he has a favorable credit score is thus able to allow his insurer to underwrite or rate his policy based on credit. But if that consumer's credit score is actually unfavorable the insurer is prohibited from failing to renew his policy on that basis. Progressive argues that this hypothetical scenario is improbable because What [consumer] would ask for credit to be used at renewal if it would lead to a failure to renew their policy? Progressive overlooks the possibility that consumers might mistakenly believe that their credit scores are better than they actually are. Given the legislature's criticism of the credit scoring process as mysterious, [17] the legislature has apparently contemplated such a scenario. Alaska Statute 21.36.460's language prohibiting insurers from failing to renew based on credit is therefore not superfluous under the division's interpretation.
When we interpret Alaska statutes we apply a sliding scale of interpretation, where the plainer the language, the more convincing contrary legislative history must be. [18] The division interpreted the plain language of AS 21.36.460(d)(1) as prohibiting Progressive's proposed use of consumers' frozen credit scores at renewal. Progressive argues that AS 21.36.460's legislative history does not support this interpretation. We disagree. Annette Skibinski, staff to Senator Cowdery (who, with Senator Elton, co-authored Senate Bill 13, which enacted AS 21.36.460(d)(1)) [19] testified before the Senate Judiciary Committee that Senate Bill 13 precludes insurers from [using] credit when it's time to renew a policy in rating or underwriting. [20] Ms. Skibinski further testified that at every renewal period, the consumer has to ask for the[ir] credit to be used. Otherwise it won't be used at all at renewal. [21] Moreover, Ms. Skibinski testified that Senate Bill 13 requires insurers at renewal to look at factors such as the consumer's driving record, payment history, and how many claims the consumer has filed  but not the consumer's credit score. [22] Even if we assume, for the sake of argument, that the plain language of AS 21.36.460(d)(1) is ambiguous, AS 21.36.460's legislative history convincingly supports the division's position that a consumer's credit score must be stripped out at renewal unless the consumer consents to its continued usage. [23]