ORDERS:
ORDER
STATEMENT OF THE CASE
This matter comes before me pursuant to S.C. Code Ann. § 38-73-10, et seq. (Supp. 1994) and
S.C. Code Ann. § 1-23-310, et seq. (Rev. 1986 and Supp. 1994) upon a request by National
Casualty Company (Petitioner) for a mobile homeowners' property and casualty insurance rate
increase.
The South Carolina Department of Consumer Affairs (Consumer Advocate) petitioned to
intervene which was granted by Order dated September 26, 1995. After notice to the parties, a
public hearing was held on December 5, 1995, at the Administrative Law Judge Division offices,
Columbia, South Carolina. The rate request was not contested by the Department of Insurance
(Respondent or Department), the Consumer Advocate, or any member of the public.
Upon review of the testimony and evidence presented, the rate revision is approved.
FINDINGS OF FACT
I make the following Findings of Fact, taking into consideration the burden of the parties to
establish their cases by a preponderance of the evidence and taking into account the credibility of
the witnesses:
1. This Division has personal and subject matter jurisdiction.
2. Notice of the date, time, place and nature of the hearing was timely given to all parties.
3. National Casualty Company filed an application with the Department of Insurance on July 26,
1995, for a revision in it mobile homeowners' property and casualty insurance premium rates.
4. The Petitioner's overall requested change was in excess of 40.2%.
5. The Petitioner has never received a rate level change since its initial approval in 1989. In 1991,
some additional coverages were approved but there was no rate level change at that time.
6. The Petitioner's proposed overall rate level changes are as follows:
a. Base deductible changed to $250 all perils from $100 along with revised deductible
factors. Current base rates were offset for the effect of the change in base deductible;
b. Estimated overall base rate change of 22.9%. Includes move from Territory B (formerly
Inland) to A (formerly Seacoast) for the counties of Chesterfield, Darlington, Dillon,
Florence, Marion and Marlboro;
c. Addition of Wind/Hail exclusion at a 10% credit for those eligible for wind pool;
d. Addition of 5% Wind/Hail deductible at 2% credit if wind not excluded and within 2.5
miles of the ocean; and
e. Various changes and additions available to credits.
7. The Petitioner proposed an effective date concurrent with this Court's approval.
8. The Department of Insurance conducted an independent investigation of the filing and its Chief
Actuary, Martin Simons, represents that the rate increase request will not produce rates that are
excessive, inadequate or unfairly discriminatory.
9. Based on these facts, the Department's staff recommends that the overall increase of 40.2% in
mobile homeowners' property and casualty insurance rates be approved.
10. The Department of Consumer Affairs conducted an independent investigation of the filing and
reached the same conclusion as the Department of Insurance.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude, as a matter of law, the following:
1. The South Carolina Administrative Law Judge Division is empowered to hear this case
pursuant to S.C. Code Ann. § 38-73-910 (Supp. 1994) and Chapter 23 of Title I of the South
Carolina Code of Laws, as amended.
2. Generally, a request for an insurance rate increase is governed by S.C. Code Ann. § 38-73-10,
et seq. (Supp. 1994).
3. Pursuant to S.C. Code Ann. § 38-73-910 (Supp. 1994), a notice dated October 17, 1995, was
published in five newspapers of statewide circulation at least 30 days in advance of the hearing.
In it, the public was advised that an application for a rate increase by the Petitioner had been made
and that a hearing would be held on December 5, 1995. No member of the public appeared at the
hearing.
4. An excessive rate is one that will produce a rate of return on the insurer's equity that is greater
than the rate of return for other industries of similar risk to that of the insurer in writing this line
of insurance.
5. An inadequate rate is one that will, upon writing the line of insurance, financially impair the
insurer.
6. A discriminatory rate is one that is inconsistent with the expected insurance cost for the
insured.
7. S.C. Code Ann. § 38-73-920 (Rev. 1989) prohibits an insurer from receiving an insurance
premium rate increase in any line of insurance or in any type of insurance for which a rate increase
has been granted within the preceding twelve months. Petitioner has not received any rate level
change since the initial approval in 1989.
8. Petitioner has met the burden of proof in a rate increase request by establishing that the revised
rates would not be excessive, inadequate, or unfairly discriminatory. S.C. Code Ann. § 38-73-10
(a) (1) (Supp. 1994).
ORDER
IT IS THEREFORE ORDERED, that the proposed insurance rate increases requested by
Petitioner are approved, effective as of the date of this Order.
AND IT IS SO ORDERED.
_____________________________________________
Marvin F. Kittrell
Chief Judge
Columbia, South Carolina
December 19, 1995 |