Court Opinion

ID: 9569513
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:14:34.647388+00
Date Added: 2024-06-11T12:03:22.532652
License: Public Domain

Judge CLARK
dissenting.
The 29 November 1977 filing on its face supports a statewide average increase of 23.2%. G.S. 58-124.26 places a cap on *325automobile insurance rate increases, limiting the increase to not “more than twelve percent (12%) from the general rate level existing at the time of the ratification of this Article, provided that such increase shall not exceed six percent (6%) on or prior to July 1, 1978.” The result of the majority opinion is that any opportunity for increase, except for the proposed rate for $25 deductible collision coverage, for the period up to July 1, 1978, is lost to the member insurers of the Rating Bureau. The opinion has based its affirmance of the Commissioner’s disapproval order on, first, the failure of the Bureau to submit audited data, and, second, the fact that a 10% higher Facility rate is excessive and unfairly discriminatory.
It is my opinion that the Commissioner has waived the requirement that the data be audited. There should be no fair dispute over the right of the Rating Bureau to know the nature of the evidence on which the Commissioner relies. Due process in the rate-making procedure is provided for in G.S. 58-124.21, as follows: “At any time within 30 days from and after the date of any filing, the Commissioner may give written notice to the Bureau specifying in what respect and to what extent he contends such filing fails to comply with the requirements of this Article and fixing a date for hearing. . . .” (Emphasis added.) I interpret the statute to mean that if the Commissioner is not fully satisfied with the filing and its supporting data he may give notice of a hearing, and that the hearing will be confined to those matters specified in the notice of hearing. An interpretation that the Commissioner may specify “in what respect and to what extent he contends such filing fails to comply” would give him the option of giving notice of hearing without restrictions and without notice to the Rate Bureau as to those matters in the filing which he contends fail to comply with the law. Such an interpretation would obviously violate legislative intent and due procedure.
In his notice of hearing to the Bureau the Commissioner did not specify that the filing did not comply because the data filed to support the filing was unaudited. It is clear that at the time the notice was given the Commissioner had knowledge that the data was unaudited. An audit involves formal examinations and authentication of records, and includes a final report or certification of the audit. There was nothing in the filing to indicate that *326that data was audited. The following appears in the Commissioner’s appeal brief:
“Finally, the appellants contend that the Commissioner’s conclusions should be rejected because the ‘Notice of Hearing’ fails to disclose even a hint that the data would be challenged. With respect to this contention, it is enough to say that the filing did not indicate that the data to be presented had not been audited. While it is true that past rate filings by various statutory rate bureaus did not employ audited data, these filings were made under other governing statutes and regulations. Neither the Bureau nor the Commissioner should be bound by past practices. . . .”
It is my opinion that though the Commissioner and the Bureau should not be bound by past practices, if the Commissioner wants a material change in the nature of the evidence on which he relies, then due process requires that the Bureau be given notice and an oppotunity to comply or to show cause why it could not do so.
Nor do I agree with that part of the majority opinion relating higher rates for Facility risks, which concludes:
. “And based upon the finding that there are no objective criteria for cession to the Facility, and the Commissioner’s finding that 62.3% of the insureds ceded to the Facility have neither assessed any SDIP points nor caused a claim payment to be made, we find that there is ample support for the Commissioner’s conclusion that a 10% rate increase for insureds in the Facility would be unfairly discriminatory.”
I question this conclusion. Under the statute the insurer may elect to cede to the Facility, and it appears to me that the data presented establishes that rate differentials between “clean risks” and voluntary risks are sound. Rate Bureau Exhibit 19 shows a claim frequency per hundred cars for “clean risks” is about double that of the voluntary risks. Further, this seems of little importance since the data supports an 11.8% increase for voluntary business and 63.4% increase for insureds in the Facility. Any insurance rate will discriminate against some insureds; *327the question is whether there is unfair discrimination. I do not think that the Commissioner’s conclusion is supported by the evidence.
Finally, assuming the majority opinion is correct in its conclusion relating to unaudited data and the increased rate for Facility risks, it is my opinion that the Bureau should be given a rehearing and allowed to present new evidence limited to these two questions or to show cause why the Bureau was unable to do so.