ORDERS:
ORDER
I. Statement of the Case
This matter comes before me pursuant to S.C. Code Ann. §38-73-10, et seq., (1989 & Supp.
1994) and S.C. Code Ann. §§1-23-310, et seq. (1986 & Supp. 1994) upon a request for a
businessowners' property and casualty insurance premium rate increase. A hearing was
conducted on September 28, 1995. The request was not opposed by the Department of
Insurance. Upon review of the testimony and evidence submitted, the rate increase request is
approved.
II. Issues
Will United States Fidelity and Guaranty Company's actuarially-developed rating formula expense
component, when combined with the currently-approved ISO commercial fire and allied lines
property and casualty insurance rating formula pure loss component, result in commercial fire and
allied lines property and casualty insurance premium rates which are excessive, inadequate, or
unfairly discriminatory?
III. Analysis
1. Positions of Parties:
The Department of Insurance does not oppose the adoption by United States Fidelity and
Guaranty Company of ISO's currently-approved pure loss component and the approval of the
insurer's rating formula expense component. USF&G asserts the request will not result in a rate
change that is excessive, inadequate or unfairly discriminatory.
2. Findings of Fact:
I find, by a preponderance of the evidence, the following facts:
1. Petitioners submitted on April 25, 1995, to the South Carolina Department of Insurance a
formal filing for revision of its businessowners' property and casualty insurance premium rates.
2. The filing requested an overall rate increase of 6.1% for its businessowners' property and
casualty insurance premiums.
3. USF&G's written premiums during the previous calendar year for the line of insurance here
under review represents a market share of 4.8%.
4. By notice dated August 7, 1995, and published in several newspapers of general circulation
throughout the State thirty (30) or more days in advance of the hearing, the public was advised
that an application for a rate increase by Petitioners had been made and that a hearing would be
held on September 28, 1995.
5. The Department of Insurance conducted an independent investigation of the filing.
6. The Department of Insurance, through its Chief Casualty Actuary, Mr. Martin M. Simons,
testifying as an expert witness, represents that the rate increase request, as amended, will produce
rates that are not excessive, inadequate, or unfairly discriminatory.
7. The rate increase request was not contested by the State Consumer Advocate or any member
of the public.
3. Discussion
S.C. Code Ann. § 38-73-1380 (1976), as amended, requires that no expense component filed by a
member or subscriber of a rating organization may be approved without a public hearing if the
filer's total written premiums during the previous calendar year equals or exceeds three percent of
the total written premium for the line of insurance for all insurers. Since USF&G's market share is
4.8 percent a public hearing was held in this matter. Further, pursuant to S.C. Code Ann.
§38-73-910 (1976), as amended, property and casualty rate hearings resulting in an increase in
premium are required to be the subject of a hearing.
The filing of a request for a rate change requires the Department of Insurance to determine if the
rate change is excessive, inadequate, or unfairly discriminatory within the meaning of S.C. Code
Ann. §38-73-10(a)(1) (Supp. 1994). In the instant case, the actuary for the Department of
Insurance reviewed the filing and found the rate increase was not excessive, inadequate, or
unfairly discriminatory. Further, no member of the public nor the Consumer Advocate entered
any opposition to the request for a rate increase. Accordingly, the amended request for a rate
increase is approved.
4. Conclusions of Law
Based on the foregoing Findings of Fact and Discussion, I conclude, the following as a matter of
law:
1. The South Carolina Administrative Law Judge Division is empowered to hear this case
pursuant to S.C. Code Ann. §38-73-910 (1989) and Chapter 23 of Title I of the 1976 Code, as
amended.
2. In general, a request for an insurance rate increase is governed by S.C. Code Ann. §§38-73-10,
et seq. (1989 & Supp. 1994).
3. Pursuant to S.C. Code Ann. §38-73-910 (1989), notice of the filing and of the public hearing
was given in all newspapers of statewide circulation at least 30 days in advance of the hearing.
4. Petitioners met the burden of proof in a rate increase request by establishing that the revised
rates would not be excessive, inadequate, or unfairly discriminatory. See S.C. Code Ann.
§38-73-10(a)(1) (Supp. 1994).
IV. ORDER
Since the United States Fidelity and Guaranty Company's actuarially-developed rating formula
expense component, when combined with the currently-approved ISO commercial fire and allied
lines property and casualty insurance rating formula pure loss component, does not result in
commercial fire and allied lines property and casualty insurance premium rates that are excessive,
inadequate, or unfairly discriminatory, the insurance rate increase requested by Petitioner,
USF&G, is approved effective upon the date of this Order.
IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
This 28th day of September, 1995 |