Opinion ID: 2359555
Heading Depth: 1
Heading Rank: 5

Heading: The Grainger Case

Text: Lumbermen's had also issued an automobile liability insurance policy to Jana Grainger of Laurel, Maryland. The insurer, on May 7, 1981, sent Miss Grainger a nonrenewal notice which referred to two traffic violations in 1980. Otherwise the notice was identical to the notices in the other two cases, referring to the inadequacy of the surcharges under the rating plan, etc. As did the insureds in the other two cases, Miss Grainger protested and requested a hearing. The hearing was similar to those in Carter and Matthews, except that Lumbermen's sole witness was Donald M. Schlear, identified as the personalized underwriting supervisor with the Kemper Insurance Group. Mr. Schlear testified that the nonrenewal of Miss Grainger's policy was because of a conviction on April 17, 1980, for exceeding the speed limit and a conviction on May 16, 1980, for failure to obey a traffic device. Mr. Schlear also testified that Lumbermen's refuses to renew all policy holders who have more than one moving violation over a three year period, and that this underwriting decision is based on the insurer's own experience and on studies. Again, no data or evidence concerning Lumbermen's experience was offered, and no studies were offered into evidence. Mr. Schlear also testified that under its filed rating plan Lumbermen's could surcharge for both of Miss Grainger's traffic violations but that the surcharges under the plan do not compensate the company for the increased risk. He concluded by testifying that the surcharges in the rating plan are not adequate to provide sufficient premiums to offset the risk of loss shown by a driver with two violations within a three-year period. Miss Grainger testified concerning the circumstances underlying the two traffic convictions, stated that she had received no traffic tickets since those convictions, and testified that she had never been involved in a traffic accident. After the testimony had concluded, the Hearing Officer found that the nonrenewal was in violation of Section[s] 234A and 240AA, and the company's action will be disallowed, and the company will be allowed to surcharge for the violations but must remain on the risk. These findings were later embodied in a written order of the Insurance Commissioner, signed on behalf of the Commissioner by the Hearing Officer.