ORDERS:
CONSENT ORDER AND ORDER OF DISMISSAL
1. On March 25, 2002, Philip S. Porter, Consumer Advocate for the State of South Carolina (the Consumer Advocate)
and Brenda and Keith Hays, insureds under a State Farm Fire and Casualty Company ("State Farm") homeowners'
policy, requested the South Carolina Department of Insurance ("the Department") to initiate a public hearing on the
filing of State Farm requesting an approval of an overall increase of +15.5% in its homeowners' insurance rates.
2. On March 27, 2002, the Department filed with the Administrative Law Judge Division an Agency Transmittal
Form requesting a public hearing.
3. The Administrative Law Judge Division assigned this matter to the Honorable Ray N. Stevens under the Docket
No. 02-ALJ-09-0118-CC. A hearing on the matter was set for June 20, 2002, but all parties requested a continuance
due to a scheduling conflict and the fact that the parties were close to resolving all outstanding issues.
4. Meanwhile, the Consumer Advocate and Brenda and Keith Hays requested several sets of additional information
from State Farm. The Consumer Advocate retained two experts to provide an independent actuarial analysis and to
assist him with various aspects of the filing. As part of his analysis, the Consumer Advocate felt it was necessary to
include in the review the impact of the changes in various coverages approved as a form filing by the Department on
July 5, 2000 and implemented March 1, 2001, for new business and May 1, 2001, for renewals because it was not clear
how those coverage additions, eliminations and reductions were incorporated in the calculations of current level
premiums and losses in the present filing.
5. The Consumer Advocate also expressed concerns regarding the meaning of the revised basis for repair or
replacement of damage to property from "equivalent" construction to "similar" construction.
6. State Farm provided the final set of responses to the issues related to the changes in coverages on June3, 2002. A
copy of that response is attached to this order and is adopted by the parties as an integral part of the order.
7. The parties held two prehearing conferences in order to resolve any outstanding issues.
8. Based on the analysis of the entire body of information provided by State Farm, the Consumer Advocate and the
Hayses now come to the conclusion that the adverse experience documented by State Farm would likely be sufficient
to justify an increase in rates.
9. In view of this actuarial analysis and after reviewing State Farm's June 3, 2002, explanation of the rate impact of
the coverage changes referred to in Item 4, above, the Consumer Advocate and the Hayses have decided not to contest
the rate filing on these grounds.
10. With respect to the use of "similar" construction instead of "equivalent" construction, State Farm represents that
the new language does not result in a change in its claim handling, but merely reflects State Farm's ability to repair or
replace property that is no longer available at any cost and that it has been applying and will continue to apply this
interpretation, as further elaborated upon in item 13 of its June 3, 2002, response, in handling claims of its South
Carolina insureds.
11. Based upon the foregoing, the Consumer Advocate and Brenda and Keith Hays now withdraw their original request
for a hearing in this matter.
12. There are no unresolved issues remaining; therefore, all parties agree to the dismissal of this matter.
NOW THEREFORE, it is ordered that the above-captioned matter be dismissed.
IT IS SO ORDERED this 16th day of July, 2002, at Columbia, South Carolina.
______________________________
Ray N. Stevens
Administrative Law Judge
WE SO MOVE AND CONSENT:
NELSON MULLIN RILEY & SCARBOROUGH, L.L.P.
By:____________________________________________
James C. Gray, Jr.
William C. Wood, Jr.
Nelson Mullins Riley & Scarborough, L.L.P.
1330 Lady Street, Third Floor
Post Office Box 11070
Columbia, SC 29211
(803) 799-2000
Richard Bates
State Farm Fire and Casualty Company
One State Farm Plaza
Bloomington, IL 61710
(309) 766-3535
Attorneys for State Farm Fire and Casualty Company
WE SO MOVE AND CONSENT:
________________________________
T. Douglas Concannon
Associate General Counsel
P.O. Box 100105
Columbia, SC 29202
(803) 737-6132
Attorney for the South Carolina Department of Insurance, Respondent
WE SO MOVE AND CONSENT:
________________________________
Hana Pokorna-Williamson
Staff Attorney
South Carolina Department of Consumer Affairs
P.O. Box 5757
Columbia, SC 29250-5757
(803) 734-4188
Attorney for Phillip S. Porter, Esq., Consumer Advocate for the
State of South Carolina, Intervenor/Respondent
WE SO MOVE AND CONSENT:
________________________________
Keith Hays
_________________________________
Brenda Hays
251 Osprey Point
North Augusta, South Carolina 29841
(843) 442-9429
Respondent/Intervenors |
