Insurance Commissioner of Maryland v. Allstate Ins. Co.

• Decision Date: 28 March 1973
• Docket Number: Nos. 205,212,s. 205
• Citation: 302 A.2d 200,268 Md. 428
• Parties: INSURANCE COMMISSIONER OF MARYLAND et al. v. ALLSTATE INSURANCE COMPANY. INSURANCE COMMISSIONER OF MARYLAND v. AETNA CASUALTY AND SURETY COMPANY.
• Court: Maryland Court of Appeals

Page 428

268 Md. 428

302 A.2d 200

INSURANCE COMMISSIONER OF MARYLAND et al. v.ALLSTATE INSURANCE COMPANY.

INSURANCE COMMISSIONER OF MARYLAND v.AETNA CASUALTY AND SURETY COMPANY.

Nos. 205, 212.

Court of Appeals of Maryland.

March 28, 1973.

Thomas G. Young, Asst. Atty. Gen. (Francis B. Burch, Atty. Gen., Baltimore, on the brief), for appellants.

Hamilton O'Dunne, Baltimore (Patrick A. O'Doherty, Baltimore, on the brief), for appellees in No. 205.

Thomas Waxter, Jr., Baltimore (William A. Fisher, Jr., Benjamin R. Goertemiller and Semmes, Bowen & Semmes, Baltimore, on the brief), for appellees in No. 212.

Argued before BARNES, McWILLIAMS, SINGLEY, SMITH, DIGGES and LEVINE, JJ.

BARNES, Judge.

In the two appeals, No. 205, September Term, 1972, Insurance Commissioner of Maryland et al. v. Allstate Insurance Company and No. 212, September Term, 1972, Insurance Commissioner of Maryland v. Aetna Casualty and Surety Company, the same statute, Code(1972 Repl.Vol.) Art. 48A, § 234A, as amended and rewritten by Chapter 789 of the Laws of 1971, is to be construed and the same points of law are to be considered.Both appeals were argued on the same day.We have concluded that we may decide both cases in one opinion after giving the facts in each case.

No. 205, September Term, 1972, Insurance Commissioner of Maryland et al. v. Allstate Insurance Company

In No. 205, the Insurance Commissioner of Maryland (Commissioner) had received a complaint from James L. Pierce, an insured under an automobile policy issued by Allstate Insurance Company(Allstate), to the effect that Allstate intended to refuse to renew his automobile policy on November 23, 1971, the anniversary date of the policy.The Commissioner by letter dated November 3, 1971, ordered Allstate to continue the policy in effect until a hearing could be held to determine the appropriateness of Allstate's contemplated action under Art. 48A, § 234A(a).This hearing was held in the Insurance Division on December 9, 1971, before Eugene A. Graham, the Hearing Officer designated by the Commissioner (Hearing Officer).

The testimony before the Hearing Officer indicated that the automobile covered by the policy was not only driven by James L. Pierce but also by his wife, Mary Verdell Pierce.We quote from the Commissioner's Order of January 5, 1972, in regard to the testimony before the Hearing Officer:

'Mr. Kenneth J. Higgins, Underwriting Manager of the Roanoke, Virginia Regional Office of Allstate Insurance Company, stated that the decision to discontinue the coverages was based on two violations and seven claims.There were two vehicles and three operators.

'The violations were:

'April 3, 1967-James Louis Pierce-Speeding-$10 fine.

'March 16, 1968-Mary Verdell Pierce-Reckless Driving.

'The accidents were as follows:

'At 5:20 p.m., August 31, 1967, Mrs. Pierce was driving and her vehicle was hit in rear.Medical payments of $136.13 were paid.There were no other payments or recoveries.

'At 7:10 p.m., March 16, 1968, Mrs. Pierce was driving and hit the claimant's parked car.A summons was issued to the third party for illegal parking.The company paid Collision $94.36 and Property Damage $331.02.There was no subrogation.

'At 2:15 a.m., March 24, 1968, Mrs. Pierce was a passenger in her own car.The driver was making a turn when the vehicle was hit in the rear.The company paid $216.09 Collision and three medical payment claims of $275.75; $312.00 and $50.00.The Collision payment was recovered through subrogation.

'At 1:30 p.m., September 29, 1968, Mrs. Pierce hit a parked car.There was a Property Damage claim of $126.50.No Collision paid.

'At 9:30 p.m., the Pierce's automobile was struck by a hit and run driver.There was a Collision claim of $123.38.

'On October 30, 1970, Mrs. Pierce was making a left turn on St. George Avenue.A car hit the insured's front right fender.The road was wet and it was raining.The police were called, but there is no record of citation on Mrs. Pierce's motor vehicle record for this accident.A collision claim of $90.55 was paid and a Property Damage claim of $539.90.

'On December 16, 1970, the insured's vehicle was struck by a hit and run driver.The other driver was apprehended by the police.A Collision payment of $51.95 was made.There was no subrogation.

'Mr. Higgins stated that the record indicated that the company could expect a continued pattern of more accidents in the future and possibly of a more serious nature.He felt that it would not be profitable for the company to insure the Pierces' for an additional five (5) years.'

The Commissioner indicated in the Order of January 5, 1972, the '(u)pon the foregoing findings of fact,' Allstate was in violation of Art. 48A, § 234A(a) in that it 'arbitrarily, capriciously or for unfairly discriminatory reasons' issued a notice of intent not to renew the coverages in the policy.The Order further stated:

'With three operators and two vehicles, the possibility of claims would exceed those for one operator with one vehicle.The at fault accidents involved Mrs. Pierce who was a newly licensed operator.'

Allstate was ordered to renew the coverages in the Pierce policy.

Allstate filed a timely notice of appeal to the Baltimore City Court from the Order of January 5, 1972, on January 21, 1972, followed by a petition in accordance with Maryland Rule B2 e setting forth its grounds of appeal.

Thereafter, on April 17, 1972, the appeal came before the Baltimore City Court(Harris, J.) for a de novo hearing as provided in Art. 48A, § 40(4).Mr. Higgins, the underwriting manager of the Roanoke, Virginia Regional Office of Allstate, gave substantially the same evidence he gave before the Hearing Officer and also stated:

'During the period of the policy, in April of 1969, the underwriter reviewed these losses.Actually, the underwriting department reviews all accidents that occur.The policy was reviewed and, at that time, two underwriters agreed that we should look at this policy prior to renewal.Prior to renewal, in August of 1971, two other underwriters reviewed all of the accidents and violations that occurred under the policy and made a decision that this was in excess of what we would normally expect in a policy, and we were deciding as to renewing for a five year period and we believed that it was not to be to the Company's advantage.We therefore issued a non-renewal notice and we did not renew the policy.

'An underwriter is a risk selection man from the standpoint of evaluating the premium that is available to us and desirable from the standpoint of past accidents, violations of the use of an automobile, the various drivers of an automobile and he makes a decision as to whether or not the Company can properly insure this particular risk.

'The underwriter does review practically all changes that occur in the policy of continued profitability.In a situation such as Mr. Pierce, he reviews the claims that do occur, he evaluates them from the standpoint of profitability, and if he judges that we cannot expect the risk to be profitable from what has happened in the past, he does make the judgment in writing as part of the file.He thereafter refers this to another underwriter-another experienced underwriter, and the second underwriter must agree with that original decision.If he does not, it is referred to a third underwriter.In any event, it is two that agree to the decision not to renew or not to issue a particular policy.

'In this particular case it was actually reviewed twice.It was reviewed in 1969 by two underwriters who, at that time, decided it was more than the average number of accidents which had occurred and they recommended that another review be made prior to renewal.At that time two additional underwriters reviewed the case prior to renewal and their decision was non-renewal.

'The policy of the Company, in a decision like this, it would be an excessive number of accidents.We are trying to insure the average exposure and company policy dictates that when the exposure goes beyond the average-goes beyond the norm, the risk will not be continued.'

He further testified that these accidents exceeded the norm and that Allstate only issued a five-year policy in Maryland which had a significant bearing on its decision not to renew the policy.He also stated that throughout the five-year period of the Pierce policy, the premiums paid amounted to $1,210.30 whereas Allstate paid in excess of $2,000 during that period.

Judge Harris in his carefully considered opinion filed June 5, 1972, concluded that there was no evidence whatever to indicate that Allstate's decision not to renew the policy was based upon "race, color, creed or sex."He further found that Allstate's decision was based upon their substantial losses from the policy and was not "arbitrary, capricious, or unfairly discriminatory."He stated that the Commissioner's decision was unsupported by competent, material and substantial evidence in view of the entire record as submitted and was, itself, "arbitrary and capricious."The Order of the Commissioner was reversed and on June 6, 1972, judgment absolute in favor of Allstate for costs was entered.From this judgment, the Commissioner filed a timely appeal to this Court.

No. 212, September Term, 1972, Insurance Commissioner of Maryland v. Aetna Casualty and Surety Company

The Commissioner received a complaint from James Buchanan, a resident of Baltimore City, that Aetna Casualty and Surety Company(Aetna) had notified him that it would not renew his automobile liability policy.By its letter of January 12, 1972, Aetna replied to Mr. Buchanan's request to give reasons for its refusal to renew, as follows:

'The police report concerning your accident of 6-5-71 indicates that you struck the claimant in the rear and left the scene of the accident and that you were apprehended ten blocks away by police.In addition, you refused to take a breathelizer test but were...