Court Opinion

ID: 6260699
Source: CourtListenerOpinion
Date Created: 2022-02-17 22:03:04.067826+00
Date Added: 2024-06-11T08:59:42.106079
License: Public Domain

Dissenting Opinion by
Mr. Justice O’Brien :
The majority bases its reversal of - the decree of the Court of Common Pleas of Dauphin County, sitting as Commonwealth Court, on the policy provision limiting the time within which contingent liabilities might be levied against CMIC’s insureds to one year from the date of expiration or cancellation of their respective policies. The majority reasons that the insurance commissioner approved that policy language and is, therefore, estopped, as statutory liquidator, from ignoring *183it. While that reasoning has first blush appeal, further reflection requires me to reject it.
My view that the insurance commissioner may disregard the one-year limitation on assessments contained in the policy does not mean that I am not sympathetic with the plight of appellants, who may now learn for the first time that they cannot rely on a provision contained in the policy or who may even, as is alleged, be learning for the first time that they can be assessed at all. The insurance department of the Commonwealth should not have approved the one-year restriction contained in the policy. Moreover, the department should have insured that the policy contained a clea,r explanation to all policyholders that if they purchase a policy of a mutual insurance company, they will be assessed if the company is unable to pay its claims. Nevertheless, the statutory provision for contingent assessment of premiums was designed to protect the claimants and creditors of a dissolved company. In the conflict between these innocent claimants and the policyholders who previously received the economic benefits of coverage by mutual insurance policies, the statute makes clear that it is the policyholders who must bear the cost of these claims, to the extent of amounts they previously paid in premiums.
Appellants also emphasize that a period of more than six years elapsed between the February 28, 1961, order dissolving the company and the May 1, 1970, petition for an assessment order. The majority distinguishes this case from Commonwealth ex rel. Schnader v. Keystone Ind. Exchange, 335 Pa. 333, 8 A. 2d 821 (1939), because the policy language approved by the commissioner in Keystone forbade the imposition of assessments. The majority reasons that such policy language was contrary to the statute and was beyond the power of approval of the insurance commissioner. I believe that the instant policy language is equally *184beyond the power of the insurance commissioner because the administrative machinery necessary to calculate and impose assessments within a one year period from the appointment of a statutory liquidator does not exist. In Kelly v. Bremmerman, 260 N.Y.S. 2d 971 (1965), the Appellate Division of the Supreme Court of New York was faced with a similar problem involving the very insurance commissioner who is the statutory liquidator in the case at bar. There, the defendant complained that the action for collection of the assessment had been commenced nearly eleven years after his liability for assessment would have expired under the terms of his insurance policy and twelve years after the order of liquidation. His argument was that the action had been unreasonably delayed. The court there recognized that a longer period than the one-year period allowed by the policy language might be required for the levying of assessments. In that case, six years had elapsed between the last date for filing claims against the defunct carrier and the entry of the order of assessment. The court did not hold that the claim was invalid, but instead remanded the matter to the trial court for a determination of whether the delay in securing the order of assessment was unreasonable, recognizing that the one-year limitation provided by the policy could not be strictly enforced.
In the instant case, we are not totally without a guide as to the reasonableness of the time lapse of slightly more than six years between the dissolution order and the petition for the assessment order. The General Assembly recognized the problems inherent in permitting lengthy delays in assessment processes and enacted, in 1970, §509.1 of The Insurance Department Act of 1921. That act states that no assessment may be made after five years from the expiration date of the policy. However, that section does not apply to the assessments of members of companies which were dissolved *185before the effective date of the act. Section 509.1(f), 40 P.S. §209.1 (f). From that enactment it is readily observable that the General Assembly does not consider five years to be an unreasonable length of time to be consumed in the assessment processes. That being the case, I cannot state as a matter of law that an insurance commissioner, not faced with such a statutory deadline, was acting unreasonably in consuming six years and two months in conducting the highly technical and complex business of calculating the assessments required to be imposed in this case.
In my view, CMIC’s policyholders, who had the advantage of the lower premiums afforded by the mutual insurance company, should bear the burden imposed by the failure of the carrier, rather than innocent victims of torts committed by policyholders, and since the commissioner, in my view, approved policy language which made it impossible to enforce the provisions of the insurance law, I would affirm the decree of the court below.
Mr. Justice Eagen joins in this dissenting opinion.