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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
United States Fidelity and Guaranty Company vs. SCDOI

AGENCY:
South Carolina Department of Insurance

PARTIES:
Petitioners:
United States Fidelity and Guaranty Company

Respondents:
South Carolina Department of Insurance
 
DOCKET NUMBER:
95-ALJ-09-0515-CC

APPEARANCES:
Thomas C. Salane, Esq., for Petitioner, United States Fidelity and Guaranty Company

Alicia K. Clawson, Esq., for Respondent, S. C. Department of Insurance
 

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


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