Opinion ID: 2323105
Heading Depth: 1
Heading Rank: 5

Heading: sufficiency of the evidence

Text: Although not precisely articulated as an insufficiency of evidence, the thrust of PICD's complaint is essentially that. The Division argues first that, in order to prove that its decision not to write new homeowners policies in the designated areas was reasonably related to its economic and business purposes, as required by § 27-501(a)(2), Allstate was required to produce valid statistical data demonstrating the probability of a hurricane sufficiently strong to cause catastrophic damage actually making landfall in Maryland, and that it failed to do so. [4] It complains as well that Allstate failed to demonstrate that its rating plan in effect at the time of its amended filing was insufficient to cover catastrophic losses should they occur. With respect to both arguments, PICD relies heavily on Crumlish v. Insurance Com'r, supra, 70 Md.App. 182, 520 A.2d 738. Crumlish involved a decision by an insurer to cancel an automobile liability policy because the insured had two accidents within two years. The notice stated that the insured was 2.93 times as likely to have another accident within the next year as a driver with no prior accidents. At a hearing before the Commissioner, the insurer merely said that one of the company's underwriting standards was that the company would not insure any individual who had two or more surchargeable losses involving a payout of more than $300 over a two-year period. No evidence was produced to show how the 2.93 probability was determined or how, in light of the ability to surcharge for that kind of driving record, that standard was reasonably related to the insurer's economic and business purposes. The Court of Special Appeals did not need to reach that issue, because it concluded that the Commissioner's order was deficient for other reasons, but, in dicta, the Court made clear that conclusory statements that the standard at issue has the required relationship are insufficient. Rather, the insurer must produce facts showing (1) the statistical basis for the asserted relationship, (2) the validity of the statistical evidence, and (3) the direct and adverse effect the asserted increased risk would have on losses and expenses in light of the company's current approved rating plan. PICD contends that this Crumlish dicta governs the analysis required under § 27-501(a)(2). The Commissioner rejected that argument, and so do we. It made sense in the context of what was before the Crumlish Courtan ex cathedra assertion of a quantified probability of future accidents based on two prior accidents, without any evidence establishing the validity of the assertion. It is not, and never has been, a universal requirement applicable to every underwriting standard. The Court of Special Appeals itself has recognized that (see Mirkin v. Medical Mutual, 82 Md.App. 540, 551, 572 A.2d 1126, 1132 (1990) and Miller v. Ins. Comm'r, 70 Md. App. 355, 521 A.2d 761 (1987)), as, indeed, has the Legislature. In 1998, the General Assembly addressed the issue directly by adding to § 27-501 a new subsection (j) which, in the case of homeowners insurance, lists a number of standards that the Legislature declared were reasonably related to an insurer's economic and business purpose and did not need statistical validation. Among them, with an exception not relevant here, was the catchallany other standard approved by the Commissioner that is based on factors that adversely affect the losses or expenses of the insurer under its approved rating plan and for which statistical validation is unavailable or is unduly burdensome. See § 27-501(j)(1)(vi). That is what the Commissioner did in this case. We already have summarized the testimony given by Messrs. Newbold, Michel, and Chernick that, given the paucity of historical data, insurers throughout the country have found sophisticated computer modeling to be a more accurate predictor of when, where, and how often catastrophic hurricanes will strike particular areas of the country, including Maryland. They described in significant detail how the particular model used by Allstate was devised and tested, what factors it took into account, and how the meteorological conclusions translated into reliable damage estimates. This was not a Crumlish situation. PICD had the opportunity to crossexamine those witnesses, and it did so. The Commissioner found that evidence relevant and compelling, as he had a right to do, and, based on that evidence, concluded that the geographic designations were reasonably related to Allstate's economic and business purposes and were not arbitrary or unreasonable. We find no error. As a final note, Allstate moved to strike certain parts of the record extract and PICD's appendix as presenting material outside of the record in the case. PICD is admonished for doing so. As we have not relied on any of that material, there is no need to rule on the motion. JUDGMENT OF COURT OF SPECIAL APPEALS AFFIRMED; PETITIONER TO PAY THE COSTS. HARRELL, J., Concurs and Dissents. HARRELL, J., concurring and dissenting.