{ "id": 8522734, "name": "STATE OF NORTH CAROLINA ex rel. COMMISSIONER OF INSURANCE, Appellee v. NORTH CAROLINA RATE BUREAU, Appellant, IN THE MATTER OF A FILING DATED JULY 1, 1988 BY THE NORTH CAROLINA RATE BUREAU FOR REVISED AUTOMOBILE INSURANCE RATES-PRIVATE PASSENGER CARS AND MOTORCYCLES", "name_abbreviation": "State ex rel. Commissioner of Insurance v. North Carolina Rate Bureau", "decision_date": "1990-03-20", "docket_number": "No. 8910INS371", "first_page": "644", "last_page": "648", "citations": [ { "type": "official", "cite": "97 N.C. App. 644" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "335 S.E.2d 319", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "314 N.C. 547", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4696490, 4687151, 4696345, 4688826, 4686907 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/314/0547-04", "/nc/314/0547-01", "/nc/314/0547-02", "/nc/314/0547-03", "/nc/314/0547-05" ] }, { "cite": "331 S.E.2d 124", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "75 N.C. App. 201", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525529 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/75/0201-01" ] }, { "cite": "381 S.E.2d 801", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1989, "opinion_index": 0 }, { "cite": "95 N.C. App. 157", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8519844 ], "weight": 2, "year": 1989, "opinion_index": 0, "case_paths": [ "/nc-app/95/0157-01" ] }, { "cite": "269 S.E.2d 547", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1980, "opinion_index": 0 }, { "cite": "300 N.C. 381", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8562647 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/nc/300/0381-01" ] }, { "cite": "385 S.E.2d 510", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "96 N.C. App. 220", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521089 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc-app/96/0220-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 58-124.32", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "pin_cites": [ { "parenthetical": "recodified in 1988 as 58-36-70" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 58-124.19", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "pin_cites": [ { "parenthetical": "recodified in 1988 as 58-36-10" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 418, "char_count": 8114, "ocr_confidence": 0.741, "pagerank": { "raw": 2.3578891999654487e-07, "percentile": 0.7939281402120355 }, "sha256": "963a3598e3bacc242533fd01c98e7510f96c83aef302352b2e8b95892dba2d27", "simhash": "1:456171db20961ec1", "word_count": 1255 }, "last_updated": "2023-07-14T17:09:00.422652+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges Phillips and Lewis concur." ], "parties": [ "STATE OF NORTH CAROLINA ex rel. COMMISSIONER OF INSURANCE, Appellee v. NORTH CAROLINA RATE BUREAU, Appellant, IN THE MATTER OF A FILING DATED JULY 1, 1988 BY THE NORTH CAROLINA RATE BUREAU FOR REVISED AUTOMOBILE INSURANCE RATES\u2014PRIVATE PASSENGER CARS AND MOTORCYCLES" ], "opinions": [ { "text": "COZORT, Judge.\nThe North Carolina Rate Bureau appeals an Order of the Commissioner of Insurance disapproving the Bureau\u2019s 1 July 1988 rate filing and ordering into effect overall decreases in the existing rates. We vacate and remand.\nOn 1 July 1988, the North Carolina Rate Bureau filed for rate level changes for private passenger automobile and motorcycle insurance. The filing indicated a need for an overall average rate increase of 6.4% for liability and physical damage coverages for non-fleet private passenger automobiles and an overall average rate level adjustment of - 0.3% for motorcycle liability and physical damage coverages. The Bureau\u2019s rate filing included a 5% provision for underwriting profit and contingencies which was based in part on an allowance for policyholder dividends and rate deviations.\nIn disapproving the filing, the Commissioner adopted expense provisions different from those used by the Bureau, reduced the uninsured/underinsured motorist rate, and adopted underwriting profit and contingency provisions of -1.4% for liability coverage and + 2.3% for physical damage coverage. The Commissioner ordered into effect rate decreases of 0.3% for automobile liability and 3.1% for automobile physical damage (an overall decrease of 1.4%) and rate decreases of 3.4% for motorcycle liability and 11.4% for motorcycle physical damage (an overall decrease of 5.8%).\nOn appeal, the Bureau contends that in setting his underwriting profit and contingency provisions, the Commissioner (1) failed to consider dividends and deviations as required by statute, (2) made insufficient findings to allow judicial review, and (3) selected underwriting profit figures that will not produce the 13%-15% rate of return which he found to be a fair and reasonable profit for the Bureau\u2019s member companies.\nThe Bureau contends that the Commissioner\u2019s underwriting profit and contingency provisions are in error because he refused to consider the effects of policyholder dividends and downward rate deviations. On the record before us, we agree that the Commissioner erred in this respect. N.C. Gen. Stat. \u00a7 58-124.19 (recodified in 1988 as 58-36-10) requires that the Commissioner consider certain rating factors, including \u201ca reasonable margin for underwriting profit and to contingencies\u201d as well as \u201cdividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.\u201d In his Order the Commissioner found that dividends and deviations were proper ratemaking criteria, yet he declined to take those criteria into account in figuring underwriting profit because (1) dividends and deviations are the result of discretionary business decisions made by the Bureau\u2019s member companies and cannot be assured or guaranteed and (2) the Bureau failed to trend or otherwise predict into the rate period the amount of dividends to policyholders or deviations from manual rates. These findings are insufficient to support the Commissioner\u2019s decision not to consider dividends and deviations. The payment of dividends and rate deviations are by nature the result of business decisions, and the Commissioner\u2019s Notice of Public Hearing failed to put the Bureau on notice of any trending requirement. See N.C. Gen. Stat. \u00a7 58-124.32 (recodified in 1988 as 58-36-70). We therefore vacate the ordered underwriting profit provisions and remand for a recalculation that includes an adjustment for dividends and deviations. See State ex rel. Comm\u2019r of Ins. v. North Carolina Rate Bureau, 96 N.C. App. 220, 385 S.E.2d 510 (1989).\nThe Bureau\u2019s second and third assignments of error raise related issues. First, the Bureau contends that the Commissioner did not make sufficient findings to explain how he derived his underwriting profit figures. Second, the Bureau contends that the evidence shows that the underwriting provisions selected by the Commissioner will not produce a 14\u00b0/o overall return unless either investment income from capital and surplus is considered in violation of Article 36 (see State ex rel. Comm\u2019r of Ins. v. North Carolina Rate Bureau, 300 N.C. 381, 269 S.E.2d 547 (1980)) or a premium to surplus ratio is used which does not accurately reflect the actual ratio of companies doing business in this State. In response to these contentions, the Commissioner fails to provide a meaningful analysis of the Commissioner\u2019s basis for arriving at the rate levels set forth in the Order of 3 November 1988. Rather, the Commissioner urges this Court to rely on the Commissioner\u2019s duty to make policy and judgment decisions.\nIn State ex rel. Comm\u2019r of Ins. v. North Carolina Rate Bureau, 95 N.C. App. 157, 381 S.E.2d 801 (1989), this Court held that the Commissioner had not sufficiently explained the factual basis for his Order. In that case, however, the Commissioner selected underwriting provisions different from those of any other witness, and, given the divergence in statistics and methodology, the absence of further findings rendered review impossible. In the present case, however, the Commissioner selected underwriting provisions identical to those of witness Schwartz, and the record contains the underlying basis for Schwartz\u2019 results. However, Schwartz stated that his underwriting provisions were sufficient to produce a profit slightly in excess of 6.6%, or a 14% overall return minus investment income on capital and surplus. Although the Commissioner found that his underwriting profit would generate an overall return, without consideration of investment income from capital and surplus, of 14.4%, we are unable to determine from the record exactly how the Commissioner made such a finding. We remand to allow the Commissioner to make findings that clearly show the facts upon which he bases his order, how he has resolved the conflicting evidence, and the specific consideration given to the material and substantial evidence that has been offered. See State ex rel. Comm\u2019r of Ins. v. North Carolina Rate Bureau, 95 N.C. App. 157, 381 S.E.2d 801 (1989); and State ex rel. Comm\u2019r of Ins. v. North Carolina Rate Bureau, 75 N.C. App. 201, 331 S.E.2d 124, disc. review denied, 314 N.C. 547, 335 S.E.2d 319 (1985).\nThe Bureau\u2019s remaining assignment of error dealt with an alleged error in the Commissioner\u2019s calculation of the rate level change for bodily injury liability. In oral argument before this Court, the error was conceded. On remand the Commissioner must adjust his order accordingly.\nVacated and remanded.\nJudges Phillips and Lewis concur.", "type": "majority", "author": "COZORT, Judge." } ], "attorneys": [ "Hunter, Wharton & Lynch, by John V. Hunter, III; and Parker, Sink & Powers, by E. Daniels Nelson, for plaintiff appellee.", "Young, Moore, Henderson & Alvis, P.A., by Charles H. Young, Jr., Marvin M. Spivey, Jr., and R. Michael Strickland, for defendant appellant." ], "corrections": "", "head_matter": "STATE OF NORTH CAROLINA ex rel. COMMISSIONER OF INSURANCE, Appellee v. NORTH CAROLINA RATE BUREAU, Appellant, IN THE MATTER OF A FILING DATED JULY 1, 1988 BY THE NORTH CAROLINA RATE BUREAU FOR REVISED AUTOMOBILE INSURANCE RATES\u2014PRIVATE PASSENGER CARS AND MOTORCYCLES\nNo. 8910INS371\n(Filed 20 March 1990)\n1. Insurance \u00a7 79.3 (NCI3d)\u2014 rate decreases ordered \u2014underwriting profit improperly figured\nIn ordering into effect rate decreases for automobile and motorcycle insurance the Commissioner of Insurance erred in declining to take into account dividends and deviations in figuring underwriting profit.\nAm Jur 2d, Insurance \u00a7\u00a7 22, 30.\n2. Insurance \u00a7 79.3 (NCI3d)\u2014 ratemaking case \u2014 insufficiency of findings to support underwriting profit figures\nThe record failed to show how the Commissioner of Insurance arrived at his underwriting profit figures, and the case is remanded to allow the Commissioner to make findings which clearly show the facts upon which he based his order, how he resolved the conflicting evidence, and the specific consideration given to the material and substantial evidence which was offered.\nAm Jur 2d, Insurance \u00a7\u00a7 22, 30.\nAPPEAL by North Carolina Rate Bureau from Order of North Carolina Commissioner of Insurance entered 3 November 1988. Heard in the Court of Appeals 12 October 1989.\nHunter, Wharton & Lynch, by John V. Hunter, III; and Parker, Sink & Powers, by E. Daniels Nelson, for plaintiff appellee.\nYoung, Moore, Henderson & Alvis, P.A., by Charles H. Young, Jr., Marvin M. Spivey, Jr., and R. Michael Strickland, for defendant appellant." }, "file_name": "0644-01", "first_page_order": 672, "last_page_order": 676 }