State ex rel. Com'r of Ins. v. North Carolina Auto. Rate Administrative Office

• Decision Date: 06 May 1975
• Docket Number: No. 74,74
• Citation: 287 N.C. 192,214 S.E.2d 98
• Court: North Carolina Supreme Court
• Parties: STATE of North Carolina ex rel. COMMISSIONER OF INSURANCE v. NORTH CAROLINA AUTOMOBILE RATE ADMINISTRATIVE OFFICE et al.

Page 98

214 S.E.2d 98

287 N.C. 192

STATE of North Carolina ex rel. COMMISSIONER OF INSURANCE v. NORTH CAROLINA AUTOMOBILE RATE ADMINISTRATIVE OFFICE et al.

No. 74.

Supreme Court of North Carolina.

May 6, 1975.

John Randolph Ingram, Comm'r of Ins., by Hugh R. Owen, Staff Atty., Raleigh, for the Commissioner of Insurance, Appellant.

Rufus L. Edmisten, Atty. Gen., by Isham B. Hudson, Jr., Asst. Atty. Gen., Raleigh, for intervenor appellant.

Allen, Steed & Pullen, P.A., by Arch T. Allen, Thomas W. Steed Jr., and Lucius W. Pullen; Broughton, Broughton, McConnell & Boxley, by J. Melville Broughton, Jr.; Sanford, Cannon, Adams & McCullough, by Hugh Cannon; Young, Moore & Henderson, by Charles H. Young, Raleigh, for the North Carolina Automobile Rate Administrative Office and Individually Named Insurance Companies, appellees.

HUSKINS, Justice:

Appellants' assignments one and two allege the Court of Appeals erred in reversing the order of the Commissioner of Insurance on grounds that it was (1) in excess of his statutory authority and (2) not supported by material and substantial evidence. Due to the statutory framework underlying these contentions, we will consider them together.

The history and framework of North Carolina's insurance laws, codified as Chapter 58 of the General Statutes, were reviewed by Chief Justice Bobbitt in In re Filing by Automobile Rate Office, 278 N.C. 302, 180 S.E.2d 155 (1971). With that background in mind, we limit our discussion to those provisions pertinent to the controversy here involved. For further background discussion, see also Allstate Insurance Company v. Lanier, 242 F.Supp. 73 (E.D.N.C.1965), aff'd 361 F.2d 870 (4th Cir.), cert. denied 385 U.S. 930, 87 S.Ct. 290, 17 L.Ed.2d 212 (1966).

G.S. § 58--9 sets out the general powers and duties of the Commissioner of Insurance and confers upon him the duty to '(s)ee that all laws of this State governing insurance companies, associations, orders or bureaus relating to the business of insurance are faithfully executed, and to that end he shall have power and authority to make rules and regulations, not inconsistent with law, to enforce, carry out and make effective the provisions of this Chapter, and to make such further rules and regulations not contrary to any provisions of this Chapter which will prevent practices injurious to the public by insurance companies . . .'

G.S. § 58--9.4, enacted in 1971 to expedite the rate-making processes, provides for direct review by the Court of Appeals of '(a)ny order or decision of the Commissioner that the premium rates charged or filed on all or any class of risks are excessive, inadequate, unreasonable, unfairly discriminatory or are otherwise not in the public interest . . ..' This section also provides: 'Any order or decision of the Commissioner, if supported by substantial evidence, shall be presumed to be correct and proper.'

G.S. § 58--9.5 establishes the procedures on appeal under G.S. § 58--9.4 and provides that such an appeal stays the Commissioner's order or decision pending determination of the appeal.

G.S. § 58--9.6 sets out the scope of review under G.S. § 58--9.4 and provides that the Court of Appeals may reverse or modify a decision of the Commissioner which is (1) in violation of constitutional provisions, (2) in excess of statutory authority or jurisdiction of the Commissioner, (3) made upon unlawful proceedings, (4) affected by other errors of law, (5) unsupported by material and substantial evidence in view of the entire record as submitted, or (6) arbitrary or capricious.

G.S. § 58--248.1, under which the Commissioner claims authority to enter the order contested in this case, confers authority on the Commissioner to enter orders directing revision of improper rates, classifications or classification assignments. To facilitate orderly discussion of the assignments and avoid repetition, the pertinent provisions of this statute will appear later in this opinion. For historical background of G.S. § 58--248.1 and other changes in North Carolina insurance laws wrought by Chapter 381 of the 1945 Session Laws, see Wettach, The 1945 Revision of the Insurance Laws of North Carolina, 23 N.C.L.Rev. 283 (1945); Report of the Governor's Study Commission on Automobile Liability Insurance and Rates (N.C. April 15, 1971); Report of the North Carolina Commission on Revision of the Insurance Laws (January 30, 1945).

G.S. § 58--248 establishes the procedures to be followed by the Rate Administrative Office in obtaining Commissioner approval of a rate change and enumerates the factors to be considered in determining the necessity for a rate adjustment. Under that section the Commissioner is authorized to compel production of any data 'necessary to compile statistics for the purpose of determining the underwriting experience of automobile liability injury and property damage insurance' and to make that data available to the Rate Office 'for the capitulation (sic) and promulgation of rates.' The section contains the following statement in regard to approval or disapproval of rates by the Commissioner: 'All such rates compiled and promulgated by such bureau shall be submitted to the Commissioner of Insurance for approval and no such rates shall be put into effect in this State until approved by the Commissioner of Insurance and not subsequently disapproved.' Factors to be considered by the Commissioner and Rate Office in the rate-making process are enumerated as follows:

'The Commissioner of Insurance in considering any rate compiled and promulgated by the bureau may take into consideration the earnings of all companies writing automobile liability insurance in this State realized from the investment of unearned premium reserves and investments from loss reserves on policies written in this State. The amount of earnings may in an equitable manner be included in the rate-making formula to arrive at a fair and equitable rate.

In determining the necessity for an adjustment of rates the Commissioner shall give consideration to past and prospective loss experience, including the loss-trend and other relevant factors developed from the latest statistical data available; to such relevant economic data from reliable indexes which demonstrate the trend of costs relating to the line of automobile insurance for which rates are being considered and to such other reasonable and related factors as are relevant to the inquiry. The bureau in promulgating and fixing rates shall consider the same factors and shall prepare and present such information, data, indexes and exhibits with the rate filing.' G.S. § 58--248.

G.S. § 58--248 further requires the Rate Office to submit rate proposals to the Commissioner on or before July 1 of each calendar year and requires the Commissioner to approve or disapprove the proposals within ninety days.

With this statutory background, we turn to the appellants' contention that G.S. § 58--248.1 vests the Commissioner with authority to order an interim rate reduction in this case.

While the Office of Commissioner of Insurance is created by Article III, sec. 7(1) of the North Carolina Constitution, section 7(2) of that Article says his duties shall be prescribed By law. Hence, the power and authority of the Commissioner emanate from the General Assembly and are limited by legislative prescription. The only power he has to fix rates is such power as the General Assembly has delegated to and vested in him. In re Filing by Automobile Rate Office, 278 N.C. 302, 180 S.E.2d 155 (1971); Comr. Of Insurance v. Automobile Rate Office, 19 N.C.App. 548, 199 S.E.2d 479, cert. denied 284 N.C. 424, 200 S.E.2d 663 (1973).

We are further guided by rules of construction that statutes In pari materia, and all parts thereof, should be construed together and compared with each other. Redevelopment Commission v. Bank, 252 N.C. 595, 114 S.E.2d 688 (1960). Such statutes should be reconciled with each other when possible, and any irreconcilable ambiguity should be resolved so as to effectuate the true legislative intent. Duncan v. Carpenter, 233 N.C. 422, 64 S.E.2d 410 (1951); McLean v. Board of Elections, 222 N.C. 6, 21 S.E.2d 842 (1942); Thomasson v. Patterson, 213 N.C. 138, 195 S.E. 389 (1938).

Chapter 58 of the General Statutes clearly reveals the intent of the General Assembly to vest the Rate Office with primary authority to fix, adjust and propose rates subject to the approval or disapproval of the Commissioner of Insurance. G.S. §§ 58--246 and 58--248. 'The Commissioner Shall approve proposed changes in rates, classifications or classification assignments to the extent necessary to produce rates, classifications or classification assignments which are reasonable, adequate, not unfairly discriminatory, and in the public interest.' G.S. § 58--248 (Emphasis added). Chapter 58 grants the Commissioner broad regulatory and supervisory powers for overseeing the faithful execution of the insurance laws of this State. But we find no provision in that chapter giving the Commissioner concurrent authority with the Rate Office to Fix or reduce rates.

The Commissioner relies on the provisions of G.S. § 58--248.1 which read in pertinent part as follows:

'Whenever the Commissioner, upon his own motion or upon petition of any aggrieved party, shall determine after notice and a hearing, that the rates charged or filed on any class of risks are excessive, inadequate, unreasonable, unfairly discriminatory, or otherwise not in the public interest, or that a classification or classification assignment is unwarranted, unreasonable, improper or unfairly discriminatory he shall issue an order to the bureau directing that such rates, classifications or classification assigment be altered or revised in the manner and to the extent stated in such order to produce rates, classifications or classification assignments which are reasonable,...