Court Opinion

ID: 5367836
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:56:06.35262+00
Date Added: 2024-06-11T08:29:58.566437
License: Public Domain

Callahan, J.
(dissenting). An insurer’s license is essential to authorize any domestic or foreign insurance company to do business in this State. The Superintendent of Insurance is authorized to refuse to issue or renew any license, if, in his judgment, such action will best promote the interests of the People of the State. (Insurance Law, § 40.) A foreign insurer is permitted to receive a license if the Superintendent is satisfied by such proof as he may require that the insurer is not delinquent with respect to any requirement of the Insurance Law, and that its continuation in business in this State will not be hazardous or prejudicial to the best interests of the People of the State of New York.
The business of insurance is clothed with public interest and is subject to the police power of the State. (German Alliance Ins. Co. v. Lewis, 233 U. S. 389.) Accordingly, a State statute hmiting commissions to be paid to insurance brokers is deemed a valid exercise of the police power, unless unreasonable. (O’Gorman and Young, Inc., v. Hartford Fire Ins. Co., 282 U. S. 251.) To the extent that the Legislature may regulate by specific act, it may within constitutional limitations direct an administrative officer to regulate. Such direction may be general or specific. The Legislature has in general terms invested the Superintendent with power to do those things necessary to promote the best interests of the State by ehminating hazardous and prejudicial practices in the insurance field. This, of course, means that there must be a *220reasonable basis for the decision that hazards are involved. The burden is on the one asserting unreasonableness to establish that fact. (La Tourette v. McMaster, 248 U. S. 465.)
Before issuing a license the Superintendent of Insurance is authorized to make an examination of the affairs of an insurer. (Insurance Law, § 42.) An examination made pursuant to that authority disclosed that petitioner, a foreign insurance company, in addition to paying regular commissions of $55,466.48 during a particular period, on a business involving $305,406.69, had allowed an additional ten per centum in cash to brokers. These payments had not been disclosed on the company’s books. It is the payment of this excess commission that caused the Superintendent to refuse petitioner its license. Petitioner says that the Superintendent is nob specifically authorized by law to limit the commissions to be paid brokers. We think that the power to do so is implied in the general powers conferred. v
It appears that ninety-eight per centum of the companies doing business in this State do not allow any excess commission to brokers. The Superintendent has found as a fact that payment of excess commissions is an evil which reacts disadvantageously to the policyholders, companies and producers. He states that he had no desire to fix commissions. He considers excess commissions those sums paid in cash over and above the amounts agreed on by the bulk of the industry. It is not beyond the realm of reason that excessive competition in some matters relating to the insurance business leads to prejudicial results. The Superintendent claims that if one company is permitted to pay excess commission, others must follow suit. He has further found that regulation of rates is a well-defined policy in the State of New York, and that reasonable standardization of commissions is a necessary part of rate regulation. Accordingly, he gave petitioner an opportunity to desist from allowing excess commissions. It has refused to do so, and has brought on this litigation. In his formal findings the Superintendent stated that the payment of excess commissions has been found an abuse in the fire insurance business in the light of past experience.
We think that under the circumstances indicated the refusal to issue a license was warranted and within the powers conferred by law on the Superintendent, for there was a reasonable basis for the decision that hazards are involved which made the payments of excess commissions prejudicial to the best interests of the People of the State of New York.
Martin, P. J., concurs.
Determination annulled, with fifty dollars costs and disbursements to the petitioner. Settle order on notice.