Court Opinion

ID: 9669341
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:50:11.600821+00
Date Added: 2024-06-11T18:15:55.094654
License: Public Domain

WINTERSHEIMER, Justice,
dissenting.
I must respectfully dissent from the majority opinion because the expanded funding provisions required by the 1988 amendments to KRS 304.35-010, et seq., are unconstitutional violations of the due process and equal protection provisions of the state and federal constitutions.
The 1988 amendments, embodied in House Bill 552, established a new funding system which unfairly imposed financial burdens on automobile policyholders and automobile lines of insurance without any corresponding benefit from the new statutory funding mechanism. This type of shift in the financial burden for automobile policyholders and lines of insurance was arbitrary and capricious and violated due process and equal protection principles.
Section 2 of the Kentucky Constitution prohibits the exercise of arbitrary power even by the largest majority. Ky. Milk Marketing v. Kroger, Ky., 691 S.W.2d 893 (1985), stated in part that “whatever is essentially unjust and unequal or exceeds the reasonable and legitimate interest of the people is arbitrary.”
The Court of Appeals properly affirmed the decision of the circuit court which found that both the assessment and the surcharge provisions of the expanded funding system did not achieve the rational relationship between the goals of the statute and the means selected to realize such goals.
The circuit court determined that the un-eonstitutionality of the amendment was even more apparent when considered under an equal protection analysis because automobile insurers must participate in two residual market mechanisms which result in an arbitrary classification and a denial of equal protection.
The original Kentucky FAIR Plan was established in 1968 by the Commissioner of Insurance following various legislative enactments by the United States Congress which had found that significant property losses arising from the urban riots of the 1960s resulted in many insurance underwriters terminating basic property insurance in some urban markets. The original plan provided basic fire insurance to many policyholders who could not find regular insurers willing to write such coverage. Although the original motive may have passed, there may still be a need for what is called a residual market mechanism which can provide insurance protection.
The real question is whether the surcharge and assessment system required by the 1988 amendments are a reasonable method of achieving what may be an appropriate governmental objective. As noted by the circuit court, the decision in McGuffey v. Hall, Ky., 557 S.W.2d 401 (1987), stated that there were certain due process limitations beyond which the legislature could not go. We must agree with the circuit court and the Court of Appeals that the 1988 amendments go beyond such limits. We must agree with the circuit court when it said in pertinent part that it is not fair and uniform to have automobile lines of insurance and automobile policyholders support and subsidize property lines of insurance which participate in a FAIR plan when there is no chance to benefit directly from the FAIR plan. The funding mechanism established by the 1988 amendment is really not similar to other insurance funding systems for similar plans.
SPAIN, J., joins in this dissent.