Insurance Rate Litigation : A Survey of Judicial Treatment of Insurance Ratemaking and Insurance Rate Regulation

The idea for this book came from my decision to update an article by Roy C. McCullough entitled "Insurance Rates in the Courts" published in the June and July 1961 issues of the Insurance Law Journal. When this project began, the intention was to produce a similar journal article surveying insurance rate litiga­ tion between 1960 and the present using basically the same organization followed in the seminal article. However, the volume of reported cases during the last twenty years was much larger than anticipated and the issues being litigated had expanded dramatically. The project grew as my study progressed, and the resulting book surveys more than three hundred disputes involving insurance ratemaking and insurance rate regulation. The fruition of this project would not have been possible without the consistent encouragement and criticism of Roy McCullough, and it is with gratitude that I acknowledge his continuous and valuable assistance to me in this effort. Once an initial draft was prepared, a number of my associates cooperated by reading and commenting on the manuscript. I would like to give special thanks to Michael J. Miller and James F. Perry who unselfishly shared their time and knowledge to improve this work. Needless to say, none of those who read the manuscript is responsible for any errors in concept or detail that may remain.

1 Introduction.- Trends in Insurance Rate Litigation.- Rate Regulatory Laws.- Focus of Analysis.- I The Procedural Aspects of Insurance Rate Regulation.- 2 Ratemaking Initiative.- Ratemaking Initiative and Partial Approval of Rate Filings.- Ratemaking Initiative and Credit Insurance Rates.- Initiation of Rate Reductions by Government.- Table of Cases.- Insurance Services Office v. Monroe, 257, Ark. 1018, 522 S.W. 2d 428 (1975).- 3 Nature of Administration Rate Hearings.- Rate Proceedings: Legislative or Judicial?.- Rulemaking versus Adjudication.- Rulemaking Dealing with Rates.- Qualifications of the Hearing Officer.- Table of Cases.- Carroll v. Barnes, 169 Colo. 277, 455 P.2d 644 (1969).- 4 Procedural Due Process.- Right to Reasonable Notice and Hearing.- Timing of Agency Action.- Burden of Proof and Persuasion.- Requirement of Specific Findings.- Table of Cases.- American Bankers Life Assurance Co. v. Commonwealth, 220 Va. 773, 263 S.E. 2d 867 (1980).- 5 Evidence.- Treatment of Expert Testimony.- Evidence Not in the Record.- Exclusion or Rejection of Evidence.- Table of Cases.- Insurance Services Office v. Whaland, 117 N.H. 712, 378 A.2d 743 (1977).- 6 Rights of Third Parties.- Right to Participate in Rate Proceedings.- Discovery.- Standing to Seek Judicial Review.- Exhaustion of Administrative Remedies.- Table of Cases.- Shavers v. Kelley, 402 Mich. 554, 267 N.W. 2d 72 (1977).- 7 Procedural Aspects of Judicial Review.- Proper Tribunal.- Scope of Judicial Review.- Standards of Judicial Review.- Table of Cases.- United Auto Workers v. State Farm Mutual Auto Ins. Co., 350 F.Supp. 522 (N.D. III. 1972).- II Judicial Treatment of Substantive Issues Concerning Insurance Rate Regulation.- 8 Risk Classifications Plans.- Risk Classification in General.- Risk Classification and Ratemaking Initiative.- Federal Court Treatment of Risk Classification.- Workers’ Compensation Insurance and Risk Classification.- Refinement of Risk Classification.- Blue Cross and Blue Shield Plans and Risk Classification.- Territorial Risk Classification.- Merit Rating.- Table of Cases.- Blue Cross of Kansas v. Bell, 227 Kan. 426, 607 P2d 498 (1980).- 9 Standards for Determining Rates.- Statutory Rate Standards.- Regulation of Rates Using Non-Rating Laws.- Prior Regulatory Practice.- Table of Cases.- Caldwell v. Insurance Co. of North America, 235 Ga. 141, 218 S.E. 2d 754 (1975).- 10 Measures of Outgo and Income.- Rate Revision Methods.- Losses.- Catastrophe Losses.- Expenses.- Table of Cases.- Nationwide Mutual Ins. Co. v. Commonwealth, 15 Pa. Cmwlth. 24, 324 A.2d 878 (1974).- 11 Allowance for Profit.- Underwriting Profit.- Investment Income and Profit.- Table of Cases.- Massachusetts Auto Rating & Acci. Prevention Bureau v. Commissioner of Ins., 424 N.E.2d 1127 (1981).- 12 Application of Approved Rate Filings.- Premiums that Depart from Filings.- Mid-Term Rate Changes.- Dividends and Rebates.- Installment Payments.- Table of Cases.- Sullivan v. Commonwealth, Insurance Department, 48 Pa. Cmwlth. 11, 408 A. 2d 1174 (1979).- 13 Retroactive Rate Regulation.- Refunds and Excess Profits.- Statutory Excess Profits Provisions.- Recoupment of Past Losses.- Table of Cases.- GEICO v. Florida State Ins. Dept. ex. rel. Gunter, Case No. 79-2876 (Circuit Court of Leon Co.) April 24, 1980 (unreported).- 14 Residual Market Rate Regulation.- Automobile Insurance.- Property Insurance.- Other Lines.- Table of Cases.- In the Matter of a Rating Formula for the Automobile Insurance Plan, State of New York Ins. Dept., Richard E. Stewart, Superintendent, Dec. 16, 1970 (Unreported).- III Judicial Treatment of Other Insurance Rate Regulatory Issues.- 15 Deregulation of Insurance Rates.- Role of Rating Bureaus.- Competitive Considerations in Rate Regulation.- The Exemption from Federal Anti-trust Enforcement for Insurance Pricing.- Table of Cases.- Ben v. General Motors Acceptance Corp., 374 F. Supp. 1199 (1974).- 16 Constitutional Aspects of Insurance Rate Regulation.- State Action Issues.- Constitutional Protections for Insurers.- Table of Cases.- Welsh, et. al. v. Aetna Insurance Company, et. al., Court of Common Pleas of Alleghany Co., No. GD82-06493, Nov. 24, 1982 (unreported).- Alphabetical Table of Cases and Index.- Table of Cases by State.- About the Author.