Va. Ass'n Of Ins. Agents v. Commonwealth Ex Rel. Va.

• Decision Date: 26 April 1948
• Citation: 47 S.E.2d 401
• Court: Virginia Supreme Court
• Parties: VIRGINIA ASS'N OF INS. AGENTS. v. COMMONWEALTH ex rel. VIRGINIA INS. RATING BUREAU et al.

47 S.E.2d 401

VIRGINIA ASS'N OF INS. AGENTS.

v. COMMONWEALTH ex rel. VIRGINIAINS. RATING BUREAU et al.

Supreme Court of Appeals of Virginia.

April 26, 1948.

Rehearing Denied June 14, 1948.

Appeal from State Corporation Commission.

Proceeding before State Corporation Commission, wherein the Commonwealth of Virginia, at the relation of Virginia Insurance Rating Bureau and others, sought approval of a plan for installment collection of premiums on fire insurance policies, and wherein Virginia Association of Insurance Agents, a corporation, intervened as objector. From an order approving plan, objector appeals.

Reversed, and final order entered in accordance with opinion.

Before HUDGINS, C. J., and GREGORY, EGGLESTON, SPRATLEY, BUCHANAN, and MILLER, JJ.

T. Nelson Parker, of Richmond, for appellant.

Bowles, Anderson & Boyd, of Richmond, and Roscoe R. Koch, Charles F. Littlepage, and Robert B. Ely, 3rd, all of Philadelphia, Pa., for appellee.

EGGLESTON, Justice.

This is an appeal from an order of the State Corporation Commission approving for use by the Insurance Company of North America, of Philadelphia, and certain allied companies engaged in the writing of fire insurance in Virginia, a proposed plan for the collection in installments of the premiums on fire insurance policies written by them in the State. The order appealed from permitted the applicant companies, and any other fire insurance companies which are members of the Virginia Insurance Rating Bureau, at their option, to use the plan in the collection of their premiums.

The appeal is prosecuted by the Virginia Association of Insurance Agents, a corporation, which intervened in the hearing before the Commission, and over whose objection and opposition the order was entered. The Virginia Insurance Rating Bureau neither approved nor opposed the plan and the real interested appellees are the Insurance Company of North America and its associates which sought its approval.

Under the plan approved one who desires to procure fire insurance protection for a term of more than one year, instead of paying the full premium within a short time after the issuance of the policy, may, at his election, pay the premium in annual installments. The policy is written at the reduced premium applicable to a contract for a term of years, and in addition thereto the policyholder is required to pay a further small premium or carrying charge for the privilege of paying the main premium in installments.

The operation of the proposed plan and the resulting saving to the policyholder were thus illustrated at the hearing:

A $25,000 policy written at the rate of 40¢ per $100, if renewed annually, would require a recurring premium of $100, or a total of $500 for five years. Under the regulations of the Commission and the Department of Insurance each of these premiums must be paid within forty-five days of the date of the issuance of the policy. If written for a term of five years the required premium would be $400, the full amount of which would have to be paid within forty-five days of the date of the issuance of the policy.

Under the proposed installment premium plan such a policy written for the term of five years would require a total of $420, payable as follows: $100 within forty-fivedays of the date of the issuance of the policy, and four annual installments of $80 each, payable one, two, three and four years, respectively, after the date of the issuance of the policy, with a similar forty-five days' period of grace for each installment. In other words, under the latter plan, while the policyholder is given the benefit of the reduced rate of $400 for the long-term policy, he is required to pay, in addition thereto, an added carrying charge or premium amounting to $20 for the privilege of paying the main premium in installments.

The Virginia Association of Insurance Agents, and others, objected to the aproval of the plan, on the grounds that (1) it violates the mandatory provisions of Code, § 4226a; (2) there is no need or demand for it in this State; (3) it discriminates unfairly against the purchaser of insurance on an annual basis; and (4) it is essentially the same plan which the Corporation Commission had previously disapproved.

In a written opinion the majority of the Commission, with Hooker, Chairman, dissenting, ¹ found against each of these contentions and approved the plan. Hence this appeal.

It is unnecessary that we review the reasoning of the Commission, as embodied in its opinion, with respect to the several contentions of the appellant. We may assume, without deciding, that the evidence adduced before the Commission shows that the proposed plan would serve a useful purpose, that it would be to the public interest, and that, therefore, there is a need for it in this State. The record shows that at the time of the hearing the plan had been approved by thirty-six States, in a number of which it is being freely used.

But however desirable the plan may seem, it of course cannot be put into operation if it runs counter to the plain terms of the statute (Code, § 4226a), as the appellant claims it does.

Code, § 4222, as amended, ² provides: "Insurance companies, legally authorized to do business in this State, except life, title and ocean marine insurance companies, and except any mutual fire insurance company conducting business exclusively in this State * * *, shall not make contracts of insurance or surety on persons or property herein, except through regularly constituted and registered resident agents or agencies of such companies; no contract of insurance or surety covering persons or property in this State, except contracts of life, title and ocean marine insurance and except temporary binders covering other forms of insurance shall be written, issued or...