Travelers Indem. Co. v. Commissioner of Ins.

• Decision Date: 13 July 1972
• Citation: 285 N.E.2d 442,362 Mass. 301
• Parties: The TRAVELERS INDEMNITY COMPANY v. COMMISSIONER OF INSURANCE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 442

285 N.E.2d 442

362 Mass. 301

The TRAVELERS INDEMNITY COMPANY v. COMMISSIONER OF INSURANCE.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 5, 1971.

Decided July 13, 1972.

Acheson H. Callaghan, Jr., Boston, for The Travelers Indemnity co.

Robert H. Quinn, Atty. Gen., and James P. Kiernan, Asst. Atty. Gen., for Commissioner of Ins., submitted a brief.

Before TAURO, C.J., and QUIRICO, BRAUCHER and HENNESSEY, JJ.

QUIRICO, Justice.

The Travelers Indemnity Company (Travelers) appeals under G.L. c. 175A, § 19(c), and G.L. c. 30A, § 14(8), from a decision of the Commissioner of Insurance (Commissioner) disapproving a rate filing made by Travelers on December 4, 1970, increasing by 24.7% its previously filed 'Private Passenger Automobile Physical Damage Rates' for comprehensive insurance coverage on automobiles. ¹ This coverage is described by Travelers as providing protection of automobiles 'against losses, not caused by collision, arising from fire, wind, theft, glass breakage and various miscellaneous perils.' Since this coverage is 'noncompulsory,' the premium rates applicable to it are established in accordance with the provisions of G.L. c. 175A, § 4, as amended through St.1955, c. 384, § 8.

The new rates, filed by Travelers, were intended to supersede others which had been filed by the Insurance Rating Board for use by its members and subscribers which included Travelers. However Travelers terminated its status as such a subscriber on December 21, 1970. Thus, the subject rate filing was made by Travelers on an independent basis and was intended to apply only to it.

The Chief Actuary of the Division of Insurance (Chief Actuary) made an immediate examination of the filing and advised the Commissioner that he was unable to analyze and evaluate the filing, and stated his reasons therefor. Accordingly, on December 7, 1970, the Commissioner issued a written notice to Travelers, as required by G.L. c. 175A, § 7, informing it that a hearing on the new filing would be held on December 18, 1970. This notice specified that '(t) he matters to be considered at the hearing are: (1) (t)he lack of tabulations supporting the filing, (2) the trend factors, . . . (3) the credibility and date of the most recent experience contained in the filing (and) (4) any other relevant factors.' ²

At the hearing held on December 18 and 21, 1970, the Commissioner received oral and documentary evidence presented by Travelers and by the Chief Actuary. At that time Travelers amended its filing to change the effective date of the proposed rates from December 21 to December 24, 1970. On December 23, 1970, the Commissioner filed his written opinion disapproving the filing, stating that it 'does not meet the requirements of M.G.L. c. 175A.'

On January 8, 1971, Travelers brought this appeal in the Supreme Judicial Court for the county of Suffolk under G.L. c. 175A, § 19(c), as amended through St.1954, c. 681, § 19. On April 2, 1971, the case was reserved and reported by a single justice for the determination of the full court upon the appeal, the opinion and decision of the Commissioner, the record of the public hearing before the Commissioner, and the portions of the record and exhibits specified in the single justice's certificate and order. ³

On October 19, 1971, this court issued an interlocutory order staying the Commissioner's decision of December 23, 1970, and permitting Travelers to collect premiums from its policyholders in accordance with its rate filing, pending decision on this appeal. The order was conditioned on the filing of a bond by Travelers in the amount of $1,125,000 to ensure the refund to its policyholders of any premiums in excess of the rates finally determined. Travelers filed such a bond on December 28, 1971.

The Commissioner's 'Opinion and Decision' (opinion) disallowing the rate filing is relatively brief, occupying only three pages of the printed record. Approximately one-half of the opinion is devoted to introductory material and a summary of the proceedings, and the other half to the Commissioner's actual findings, rulings and conclusions. In the opinion the Commissioner reviews the evidence, notes several seeming internal inconsistencies in it, criticizes it, and questions its adequacy to support the position taken by Travelers. The opinion then concludes as follows: 'for the above stated reasons, I find that the Private Passenger Automobile Physical Damage Rate Revision of . . . Travelers . . . does not meet the requirements of M.G.L. c. 175A, and the filing is not to go into effect on December 24, 1970, for new and renewal policies issued on or after the said date.'

Travelers' argument on appeal is based primarily upon its assumption that under G.L. c. 175A the Commissioner may disapprove its rates 'only if they are 'excessive, inadequate or unfairly discriminatory.' G.L. c. 175A, § 5(a), paragraph 4.' Accordingly, it has devoted the bulk of its brief to arguing that the proposed rates are not 'excessive.' ⁴ We do not agree that the Commissioner's power to disallow rates is thus limited. We hold that he may disallow rates if, upon request by him under G.L. c. 175A, § 6(a), an insurer or rating organization fails to produce supporting...