Monroe v. Insurance Services Office of Ark.
Docket: 74-283
Court: Supreme Court of Arkansas; April 21, 1975; Arkansas; State Supreme Court
An appeal has been filed by the Arkansas Insurance Commissioner concerning a Pulaski Circuit Court order that reversed the commissioner's directive for the Insurance Services Office of Arkansas (ISO) to lower automobile insurance rates by specified percentages. ISO acts as a statistical rating and advisory organization rather than an insurer, collecting data and filing on behalf of its member companies. The trial court determined that the commissioner lacks statutory authority to reduce rates, except for fire insurance. The commissioner argues that he is responsible for regulating private passenger automobile insurance rates to prevent them from being excessive, inadequate, or unfairly discriminatory, as outlined in Ark. Stat. Ann. 66-3101 (Repl. 1966). He cites additional statutes, Ark. Stat. Ann. 66-3110 and 66-3111, which establish procedures for filing rates with the commissioner for prior approval. Section 66-3101 aims to promote public welfare through insurance rate regulation and allows for cooperative action among insurers in rate-making, ensuring that competition is not hindered and that uniformity in rates is only encouraged as necessary. The sections referenced by the commissioner detail the review process for rate filings, including a fifteen-day waiting period before a filing becomes effective, which may be extended if the commissioner requires more time. Specific inland marine rates and certain surety bond filings are automatically effective upon submission until reviewed by the commissioner. If the Commissioner determines that a filing does not comply with statutory requirements during the designated waiting period, he must notify the insurer or rating organization in writing, detailing the reasons for disapproval and stating that the filing will not take effect. This also applies to specific filings related to inland marine rates and special surety or guaranty filings, where disapproval must occur within thirty days of their effectiveness. However, such disapproval does not affect contracts made prior to the expiration of the notice period. The court agrees that the Commissioner lacks the authority to establish specific rates, as explicitly indicated in the insurance code, which grants the Commissioner the power to adjust fire rates but not for other types of insurance. This conclusion is supported by case law, including a 1975 Oklahoma case, which held that the Board of Insurance did not have rate-fixing authority for casualty insurance. The argument that legislative guidelines imply such authority was rejected, emphasizing that the existence of disapproval powers excludes the implied power to fix rates. A similar ruling occurred in Wisconsin, where the court held that the Commissioner of Insurance had no authority to set insurance rates under the relevant statutes. The Wisconsin case reinforced that the statute does not empower the Commissioner to establish rates or determine necessary factors for fair rates. The ruling clarifies that while the Commissioner can indicate how proposed deficiencies affect rates, it does not grant him the power to establish rates directly. The decision was affirmed.