Court Opinion

ID: 6764643
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:35:21.296095+00
Date Added: 2024-06-11T16:02:40.395095
License: Public Domain

Sweeney, J.,
dissenting. Since I believe the majority has totally misconstrued the clear thrust of R.C. 3905.01(B) and 3905.04, I must respectfully dissent from the majority opinion.
In my view, 1988 Ohio Atty. Gen. Ops. No. 88-056, relied on by the Superintendent of Insurance in Bulletin 89-1 and embraced by the majority herein, has emasculated the statutory mandate set forth in R.C. 3905.04 as it relates to R.C. 3905.01. As cogently analyzed by the referee in the trial court below, the majority’s holding will merely foster unfair and anti-competitive practices by non-insurance businesses:
“ * * * The following scenario is employed to illustrate why, if permitted to proceed, the Department’s proposal is violative of the aforementioned sections. Bank A, as a parent corporation, incorporates Agency B which, pursuant to R.C. 3905.01, applies to the Department of Insurance for agency licensing. Agency B is licensed by the Department. Consumer C goes to Bank A for financing of an automobile loan and is led to purchase automobile insurance from Agency B as an inducement so that the financing may be obtained from Bank A. Consumer C is a ‘vendee’ and quite possibly a *317‘principal’ of Bank A. Bank A is the ‘vendor’ or ‘agent’ of Consumer C. Bank A is indirectly placing insurance on a party for which it is an ‘agent’ or ‘vendor’ in a particular transaction through its subsidiary/affiliate. This is a practice proscribed by R.C. Section 3905.04 as set forth above.
“The incentive for anti-competitive dealings under the foregoing factual scenario is clear. Bank A may encourage the use of Agency B through the use of lower financing rates or less stringent criteria for loan qualifications. The anti-competitive business environment likely to result from non-insurance businesses incorporating insurance agencies to provide homeowner’s insurance, motor vehicle insurance, and other forms of property and casualty insurance is antithetical to the business purpose rule upon which R.C. [Chapter] 3901 et seq. is grounded.
“In short, the proposal of the Department to license affiliates of non-insurance lending institutions and others outlined in 89-1 would work irreparable harm upon Plaintiff herein and should be enjoined. The proposal is contrary to the business purpose rule espoused by the Supreme Court in State, ex rel. Federal Union Ins., v. Warner [1934], 128 Ohio St. 261, 263 [190 N.E. 575, 576]. Moreover, the Department’s proposed licensure of subsidiaries of non-insurance financial institutions is contrary to the provisions of R.C. 3905.01 and R.C. 3905.04 because such an issuance would permit the applicants to do indirectly what is prohibited directly by the statute.”
As this court stated in Warner, supra, at 264, 190 N.E. at 577, “[i]t is well settled that the business of insurance is impressed with a public use, and that statutes designed to regulate such business should be liberally construed to effect the purpose to be served and to prevent and correct evils growing out of the conduct of such business.” (Emphasis added.) Under this standard, I believe the “directly or indirectly” language of R.C. 3905.04 was designed to prevent affiliates or subsidiaries of non-insurance businesses from selling insurance. The majority ignores the liberal construction standard to be used in resolving insurance regulations in favor of merely choosing sides in the so-called turf battle for insurance business. Much more is at stake from a consumer standpoint than the majority is willing to acknowledge, as was pointed out in the referee’s report to the trial court.
While the language of the statutes in issue was not artfully drafted, I believe the plain import of the language attempts to prevent banks and other entities from subtly coercing customers to purchase insurance from their affiliates or subsidiaries.
The majority dismisses such concerns as merely “public policy arguments that are more properly addressed to the General Assembly.” However, such facile reasoning abdicates this court’s constitutional role in interpreting stat*318utes already promulgated by the General Assembly, and ignores the broad central purposes under which R.C. 3905.01 and 3905.04 were enacted.
Based on the foregoing, I would reverse the judgment of the court of appeals below and reinstate the trial court’s judgment.