Opinion ID: 1189013
Heading Depth: 1
Heading Rank: 5

Heading: The Validity of the Rate Regulations as to Rollbacks With Respect to Uniform Maximum Rates and Uniform Percentage Refunds

Text: (38) The superior court determined that the rate regulations as to rollbacks are not invalid on their face insofar as they require a uniform, maximum rate for the rollback year, and a uniform percentage refund of premiums overcharged and overpaid therein, without regard to claimed excessiveness or inadequacy in individual lines. We agree. As construed in Calfarm, Proposition 103 expressly requires a uniform, maximum rate for the rollback year  i.e., 80 percent of the 1987 rate or such percentage of the 1987 rate greater than 80 percent as is minimally nonconfiscatory. Contrary to the insurers' claim, any discrimination between lines with excessive and inadequate rates  judged apparently against the minimum permitted earned premiums that are determined only as intermediate steps in the refund calculation  cannot be deemed unfair. Such discrimination was evidently intended by Proposition 103. It is in fact a kind of nondiscrimination: the maximum rate is, uniformly, 80 percent of the 1987 rate or such percentage of the 1987 rate greater than 80 percent as is minimally nonconfiscatory. Be that as it may, any discrimination between lines can hardly be complained of by the insurers. It is they who set the underlying excessive and inadequate rates. The initiative merely imposes a reduction and freeze on rates it found in place. Any discrimination between lines must therefore be attributed to those rates and ultimately to those that set them  the insurers themselves. As also construed in Calfarm, Proposition 103 impliedly requires a uniform percentage refund of premiums charged and paid over the uniform, maximum rate for the rollback year. Otherwise, an insurer might fully refund the overcharged and overpaid premiums by returning to one insured more than had been extracted from him and to another less. This would be an unreasonable result. It would frustrate one of the purposes of the initiative, which is to protect consumers from arbitrary insurance rates and practices. (Prop. 103, Gen. Elec. (Nov. 8, 1988), § 2, reprinted in Ballot Pamp., Proposed Stats. and Amends. to Cal. Const. with arguments to voters, Gen. Elec. (Nov. 8, 1988) p. 99.) As explained above, whether rates in individual lines could be said to be excessive or inadequate does not matter. Again contrary to the insurers' claim, any discrimination between lines with excessive and inadequate rates cannot be deemed unfair. There is certainly nothing confiscatory in the requirement of a uniform, maximum rate for the rollback year, and a uniform percentage refund of premiums overcharged and overpaid therein. (See also Fireman's Fund Ins. Co. v. Garamendi, supra, 790 F. Supp. at p. 948 [implying that a regulation is not properly subject to a facial takings challenge either in whole or in part].) Neither is there anything arbitrary, discriminatory, or demonstrably irrelevant to the legitimate policy of the protection of consumer welfare. [25]