BEFORE THE MARYLAND INSUR4NCE ADMINISTRATION MARYLAND INSURANCE ADMINISTRATION * Ex REL. T.T. * Complainant STATE FARM FIRE & CASUALTY COMPANY * y. Case No. MIA-2010-05-033 Licensee * * * * * * * * * * * * * * * MARYLAND INSURANCE ADMINISTRATION * Ex REL. R.S. & E.Z. / Complainant / * * v. Case No. MIA-2011-04-OO1 * STATE FARM FIRE & CASUALTY COMPANY * Licensee * * * * * * * * * * * * * * MEMORANDUM AND FINAL ORDER GRANTING COMPLAINANTS MOTIONS FOR SUMMARY DECISION Pursuant to 27-607 ofthe Insurance Article 2 ofthe Annotated Code ofmaryland, the Maryland Insurance Commissioner finds that there are no disputes of material fact and the record demonstrates, as a matter of law, that Complainants are entitled to judgment in their favor. 1 In an effort to protect complainants privacy, initials are used to identify complainants. 2 Unless otherwise noted, all statutory citations are to the Insurance Article ofthe Annotated Code ofmaryland. 1
STATEMENT OF THE CASE A. MIA Case No. 2010-05-033 On February 9, 2009, the Maryland Insurance Administration ( MIA ) received a complaint from Mr. T. asserting that State Farm erred when classifying his wife s October 21, 2001 automobile accident as an at-fault loss and subsequently applying a surcharge to their auto policy at renewal and to their Personal Liability Umbrella Policy ( PLUP ). (MIA-T Ex. 1.) The MIA s Property and Casualty Insurance Unit began its investigation on February 24, 2010 by informing State Farm ofthe complaint and requesting a response. (MIA-T Ex. 6.) The Property and Casualty Insurance Unit investigated and, in a decision dated April 6, 2010, found that State Farm had violated the Insurance Article and directing it to reverse the premium increase effective March 24, 2009. (MIA-T Ex. 18.) State Farm noted its appeal by letter dated May 5, 2010. (MIA-T Ex. 19.) On February 25, 201 1, the parties filed ajoint stipulation of fact. (Hrg. Ofc. Ex. 9.) State Farm filed a motion for summary decision on March 3, 2011. (Hrg. Ofc. Ex. 10.) On March 11, 2011, the MIA filed its opposition to State Farm s motions and a cross motion for summary decision. (Hrg. Ofc. Ex. 11.) State Farm filed a response in opposition to the MIA s motion for summary decision on March 28, 2011. (Hrg. Ofc. Ex. 12.) B. MIA Case No. 2011-04-001 On March 30, 2010, MIA received a complaint from Ms. Z. asserting that State Farm erred when implementing a premiumincrease for her PLUP with State Farm. (MIA-S/Z Ex. 1.) The MIA s Property and Casualty Insurance Unit began its investigation on April 2, 2010 by informing State Farm ofthe complaint and requesting a response. (MIA-S/Z Ex. 3.) The Property and Casualty Insurance Unit investigated and, in a decision dated February 9, 2011, 2
found that State Farm had violated the Insurance Article when it failed to provide notice ofboth the amount ofthe current and expiring premiums for the PLUP at least forty-five (45) days prior to the renewal date. (MIA-S/Z Ex. 15.) State Farm noted its appeal by letter dated March 9, 2011. (MIA-S/ZEx. 17.) This case was forwarded to the Office ofadministrative Hearings ( OAH ) on April 12, 2011. (Hrg. Ofc. Ex. 13.) On April 21, 2011, the hearing officer was notified that the parties intended to consolidate the two cases. (Hrg. Ofc. Ex. 14.) The MIA revoked the delegation to OAR on April 22, 2011. (Hrg. Ofc. Ex. 15.) The MIA filed a Motion to Consolidate the two cases on April 26, 2011. (Hrg. Ofc. Ex. 16.) State Farm joined in the request to consolidate and the cases were scheduled for a motions hearing on July 8, 2011. (Hrg. Ofc. Exs.17, 18.) SUMMARY OF THE EVIDENCE MIA Exhibits MIA-2010-05-033 (Contained in the Record) 1 Complaint received on 02/09/09 2 Facsimile from Complainant received on 02/17/09 3 Facsimile from Complainant received on 02/18/09 4 Facsimile from Complainant received on 02/18/09 5 Second Copy of Exhibit #4 6 Letter from MIA to State Farm dated 02/24/09 7 Response to Exhibit #6 received on 03/17/09 8 Original Exhibit #7 received on 03/19/09 9 Additional response to Exhibit #6 received on 03/25/09 10 Letter from MIA to State Farm dated 04/27/09 11 Response to Exhibit #10 received on 05/13/09 12 Original Exhibit #11 received on 05/18/09 13 Additional response to Exhibit #10 received on 06/05/09 14 Letter from MIA to State Farm dated 07/01/09 15 Response to Exhibit #14 received on 07/16/09 16 Letter from MIA to State Farm dated 09/21/09 17 Response to Exhibit #16 received on 10/05/09 18 MIA determination letter dated 04/06/10 19 State Farm s request for hearing received on 05/05/10 20 Letter from MIA to parties dated 05/07/10 3
MIA Exhibits ML4-2011-04-OO1 (Contained in the Record) 1 Online Complaint received on 03/30/10 2 Facsimile from Complainant received on 03/30/10 3 Letter from MIA to State Farm dated 04/02/10 4 Response to Exhibit #3 received on 04/08/10 5 Additional Response to Exhibit #3 received on 04/16/10 6 Letter from State Farm received on 05/04/10 7 Letter from MIA to State Farm dated 09/24/10 8 Letter from MIA to State Farm dated 09/28/10 9 Response to Exhibit #7 received on 10/08/10 10 Facsimile from State Farm received on 10/13/10 11 Original ofexhibit #9 12 Original ofexhibit #10 13 Letter from IV11A to State Farm dated 11/01/10 14 Response to Exhibit #13 received on 11/12/1.0 15 MIA determination dated 02/09/11 16 State Farm s request for hearing received on 03/09/11 17 Letter from MIA to parties dated 03/11/11 Hearing Officer Exhibits (Combined) 1 Notice ofhearing dated 06/03/10 (MIA 2010-05-033) 2 Motion for Telephone Testimony from Louise McB. Warmath, Esq. dated 06/10/10 3 Letter from MIA to Louise Mc.B. Warmath, Esq. dated 06/15/10 4 MIA s Request for Production of Documents to State Farm Fire and Casualty Company received on 07/23/10 5 State Farm Fire and Casualty Company s Response to MIA s Request for Production of Documents dated 08/19/10 6 E-mail from Louise McB. Warmath, Esq. to M. Hayes and Jeffrey Shelton, AAG dated 08/24/10 7 Letter from MIA to Jeffrey Shelton, AAG and Louise McB. Warmath, Esq. dated 08/31/10 8 B-mails dated 02/15/11 9 Joint Statement of Stipulated Facts dated 02/25/11 10 State Farm Fire and Casualty Company s Motion for Summary Decision dated 03/03/11 11 MIA s Motion for Summary Decision and Response to Licensee s Motion dated 03/11/11 12 Response in Opposition to MIA s Motion for Summary Judgment (MIA 2010-05- 033) dated 03/28/11 13 MIA Case No. 2011-04-001 forwarded to OAR 04/12/11 14 Correspondence dated 04/21/11 from Jeffrey Shelton, AAG indicating that parties intended to consolidate cases 15 MIA revoked delegation to OAR on 04/22/11 16 MIA s Motions for Consolidation dated 04/26/11 4
17 MIA s Motion for Summary Decision (MIA 2011-04-001) 18 State Farm Fire and Casualty Company s Response in Opposition to MIA s Motion for Summary Decision and Cross-Motion for Summary Decision, and Response Joining in MIA s Motion for Consolidation dated 05/12/11 19 Notice ofrearing dated 06/06/11 A. MIA Case No. 2010-05-033 MATERIAL FACTS NOT IN DISPUTE The material facts ofthis case are not in dispute. On February 25, 2011, the parties submitted a Joint Statement of Stipulated Facts (Attachment A) for Mr. T. s case, which is incorporated by reference. B. MIA Case No. 2011-04-001 Mr. S. and Ms. Z. were insured under a State Farm PLUP policy number with a term from October 12 to October 12. (MIA-S/Z Ex. 5.) The premium forthe PLUP was $191.00. (MIA-S/Z Ex. 14.) They were also insured by State Farm automobile insurance policy 123-0418-D12-20. Id. Ms. Z. was involved in an automobile accident on April 19, 2009 and State Farm paid more than $750.00 on the claim. (MIA-S/Z Bxs. 6, 9.) State Farm surcharged the automobile policy. (MIA-S/ZEx. 4.) As a result ofthe surcharge on the automobile policy, State Farm imposed a mid-term increase on the premium for the PLUP effective April 12, 2010 (the date ofthe automobile renewal). (MIA-S/Z Exs. 5, 10.) On March 9, 2010, State Farm mailed Complainants a bill for $25.05, which represents the pro rate share ofthe PLUP s $50.00 increase. (MIA-S/Z Ex. 2.) On August 18, 2010, State Farm sent Mr. S. and Ms. Z. a PLUP renewal certificate for the term from October 12, 2010 to October 12, 2011. (MIA-S/Z Ex. 14.) The notice states that the prior term s annual premium was $241.00 and the current premium is $244.00. Id. The notice says [y]our premium has increase by $3.00 since the last term. (MIA-S/Z Ex. 14.) 5
RULING ON MOTION FOR. SUMMARY DECISION The notice ofhearing in this case states, that specific attention at the hearing will be directed to Maryland Code Annotated, Insurance Section 27-607. Title 27 of the Insurance Article outlines unfair trade practices and other prohibited practices. Subtitle 6 addresses cancellations, nonrenewals, premium increases, and reductions in coverage. Section 27-607 sets forth the requirement for notices forthe amount of renewal and expiring policy premiums and provides, (a) Applicability. -- This section applies only to policies ofpersonal insurance and insurance issued under the Maryland Property Insurance Availability Act or any similar act instituted to ensure the availability ofproperty insurance. (b) In general. -- At least 45 days prior to the renewal date of a policy subject to this section, the insurer shall send a notice to the named insured and the insuranceproducer, if any, by first-class mail stating both the amount ofthe renewal policy premium and the amount ofthe expiring policy premium. In the case of Mr. S. and Ms. Z., the MIA s determination letter states that State Farm violated 27-607(b) because the notice of renewal sent on August 18, 2010 incorrectly specified the amounts of the renewal policy premium and the expiring policy premium as $241.00 each, rather than $191.00 and $241.00 respectively... In the April 6, 2010 determination letter in the Mr. T. case, the MIA concluded that State Farm s notice violated 27-607(b) because it failed to specify the amount ofthe renewal premium and the expiring premium... (MIA-T Ex. 18.) It was also determinedthat, {s]ince State Farm did not include this mid-term additional premium charge effective March 24, 2009 in its October 10, 2008 renewal notice for the umbrella policy which renewed on December 4, 2008, your company may not increase the umbrella policy premium. 6
Both ofthese cases involve the impact of a loss surcharge on an automobile policy to the renewal premium on a PLUP policy. The issue as outlined at the motions hearing is, under 27-607(b), which premium must be included on the 45 day renewal notice as the amount ofthe expiring policy premium. State Farm is correct, and the MIA concedes, that to the extent that the MIA determined in Mr. T. s case that the mid term adjustment should have been included in the prior year s renewal notice, that finding was an error. The sole issue, and the issue that exists in both cases, involves the definition of the amount of the expiring policy premium. State Farm argues that the amount of the expiring policy premium must be read to mean that the premium amount at the time of renewal, which would include any increases since the renewal date. (T. 14-16.) Specifically, State Farm argues that once the insurer has amended a policy the old policy ceases to exist and the amount of the expiring policy premium forthe purpose of 27-607(b) is the premium as amended, i.e. the amount of the premium at the time the policy expires. (T. 15-16.) State Farm contends that the MIA is attempting to broadenthe scope of 27-607(b) by interpreting into the statute a requirement of separate notice of a midterm premium increase. (Hrg. Ofc. Ex. 10, p. 10.) The MIA argues that the amount ofthe expiring policy premium must be read to mean the premium amount at the time ofthe last annual renewal. (T. 29-3 0.) Further, the August 18, 2010 renewal. certificate denied Mr. T. the opportunity to compare the 2009-2010 annual premium to the 2010-2011 annual premium. (Hrg. Ofc. Ex. 11, p. 6.) It is the MIA s position that the amount ofthe expiring policy premium means the prior annual premium. Id. The parties, both well represented by counsel, have presented strong arguments fortwo competing interpretations ofthe phrase the amount ofthe expiring policy premium contained in 27-607(b). When a statute is part of a larger statutory scheme its language is not interpreted 7
in isolation, but as a whole, considering the purpose, aim, orpolicy ofthe Legislature, and attempting to harmonize sections concerning the same subject, so that each may be given effect. Anderson v. Council of Unit Owners ofgables on Tuckerman Condominium, 404 Md. 560, 572 (2008); accord Blondell v. Baltimore City Police Dept., 341 Md. 680, 691 (1996). In ascertaining the intention ofthe legislature, all parts of a statute are to be read together to find the intention as to any one part and all parts are to be reconciled and harmonized, if possible. Sewell v. Norris, 148 Md. App. 122, 133, fn.7 (2002) appeal dismissed, 374 Md. 81(2003). Title 27 ofthe Insurance Article outlines unfair trade practices and other prohibited practices and serves as a primary source of consumer protection within the Insurance Article. Title 27 prohibits unfair methods of competition and unfair and deceptive acts (Subtitle 2), unfair claim settlement practices (Subtitle 3), fraudulent insurance acts (Subtitle 4), discrimination in underwriting (Subtitle 5), and false advertising (Subtitle 7). Subtitle 6 is devoted to issues involving cancellations, nonrenewals, premium increases, and reduction in coverages and the purpose underlying this subtitle is the protection of insurance consumers. Anderson v. General Casualty Insurance Co., 402 Md. App. 236, 245-246 (2007); Admiral Insurance Co. v. John Stromberg &Assocs. 77 Md. App. 726, 739 (1989). Therefore, the meaning ofthe phrase the amount of the expiring policy premium must be determined against the backdrop ofthe purpose ofthe overall statutory scheme of consumer protection. The purpose of 27-607(b) is to provide consumers with meaningful comparative information about the cost oftheir insurance, so that consumers can shop for the best insurance product that they can afford. The comparison~must be made on a year-to-year basis if it is to be meaningful to a consumer interested in shopping for the best price. 8
State Farm s position results, in these cases, with consumers looking at numbers indicating that their annual increase was minimal, when, in fact, the annual increase was significant. Here the renewal certificates do not compare apples to apples as they do not tell consumers how much they are being asked to pay in comparison to the same time last year. This is not the interpretation of 27-607(b) intended by the General Assembly as it does not provide consumers with comparative data, but paints a skewedpicture of the actual year to year increase. Rather, 27-607(b) must be read to require insurance companies to provide year to year comparative data, i.e. the premium at the time ofthe last renewal as compared to the premium at the time of the currentrenewal. It is worth noting that this interpretation 27-607(b) is supported by the language that State Farm has chosen to use in its own renewal certificate. State Farm does not use the phrase the amount ofthe expiring policy premium. Rather, the renewal certificate states that your prior term s annual premium was... Certainly, the plain language ofthis phrase means the prior year s premium. It is disingenuous of State Farm to contend that the prior term s annual premium is an amount that includes mid-term increases. CONCLUSION OF LAW Complainants are entitled to summary decision, because in both cases State Fann s renewal certificate did not comply with 27-607(b) as it did not provide the amount ofthe prior policy year s premium. 9
FINAL ORDER Based upon the foregoing reasons, it is ORDERED this th 8 day of August, 2011, that the Motions for Summary Decision filed by Complainants are granted and that the decision ofthe Maryland Insurance Administration is hereby AFFIRMED. The records and publication of the Maryland Insurance Administration shall reflect this decision. THERESE M. GOLDSMITH Insurance Commissioner Signature on file with Orignal ~ K1~REN ~TAI~M HORNIG Deputy Comn~issioner 10
MARYLAND INSURANCE * BEFORE THE ADMINISTRATION MARYLAND INSURANCE (ex rel ), * COMMISSIONER Complainant, * ~ n -~ r~ * rr~ ~j ~ :~:C) ~Lfl~ C-) STATE FARM FIRE & CASUALTY * Case No. MIA-2010-05-033 ~ii~ COMPANY, *. t.ij c~ Licensee * * * * * * * * * * * *. * * JOINT STATEMENT OF STIPULATED FACTS Licensee, State Farm Fire and Casualty Company, by its attorney, Louise McB. Warmath, and the Maryland Insurance Administration, by its attorney, Jeffrey L. Shelton, hereby stipulate to. the following facts material to the captioned matter: 1. Licensee, State Farm Fire & Casualty Company ( SFF&C ), is an insurer authorized. to engage in the insurance business in the State of Maryland under a Certificate ofauthority issued by the Insurance Commissioner. 2. On or about December 4, 1985, SFF&C issued a Personal Liability Umbrella Policy, No.: ( the PLUP Policy ) to ( the ). 3. Pursuant to the terms of this PLUP Policy, the were required to maintain certain levels of insurance on their household automobiles and residence ( required underlying insurance ), including motor vehicle liability policies covering all oftheir vehicles. 4. Pursuant to its terms, the PLUP Policy renewed annually for additional one-tear terms on each December 4 thereafter, up to and including the policy term of December 4, 2009 December 4, 2010. j~sff&cdoc. 7 10; 326 334]. 5. At least 45 days before each annual renewal of the PLUP, SFF&C mailed the a notice ofrenewal premium with respect the PLUP Policy. ~SFF&CDoc. 7 10]. {00043269.DOC / 3) ATTACHI~4ENT A
6. On or about July 13, 2007, SFF&C filed a proposed amendment to its rate plan relating to Personal Liability Umbrella Policies it issued in the State. Included in these proposed amendments was the addition ofthe following language: When you request changes ~ this policy or to required underlying insurance., or the information or factors used to calculate the premium for this policy changes during the policy period, we may adjust the premium in accordance with the change during the policy period and you must pay any additional premium due within the time we specify. (Bold in original to indicate defined terms; underlining in original to indicate added language; italics added here). [SFF&C Doc; 37 153, at 68]. 7. In the same filing, SFF&C also filed proposed amendments to its rating rules to provide, inter alia:.. changes that affect territory, coverage, or the class used in rating the. ~. policy (plus additional automcxbile exposure count changes coincidental with such a class change) will be made during the policy period. [SFF&C Doc. 24 36, at 29]. 8. On July 25, 2007, the Maryland Insurance Administration approved the filing without comment. [SFF&C Doc. 338 343]. 9. The amendment became effective for new business on October 1, 2007 and for renewal business December 1, 2007. {SFF&C Doc. 338 343]. 10. On or about April 17, 2008, SFF&C filed a proposed amendment to its rate plan seeking to clarify the existing rule regarding mid-term change to allow changes in the application of the class 50 discount mid-term when they are associated with a mid-term change, and thereby to match the PLUP timing with the existing auto mid-term rule. 11. Specifically, this proposed amendment stated: {00043269.DOC/3}- 2 -
changes that affect territory, coverage, or the class used in rating - the policy (plus automobile exposure count changes coincidental and Class 50 Discount eligibility changes coincidental with such a class change) will be made during the policy period. [SFF&C Doc. 14 23, at 18]. 12. On April 24, 2008, the Maryland Insurance Administration approved the filing without comment. [SFF&C Doc. 344 38]. 13. In or about September, 2007, the acquired a 2008 Toyota Highlander, and requested that State Farm issue a policy of automobile liability insurance covering this newlyacquired vehicle. [SFF&C Doc. 167 170]. 14. Accordingly, on September 24, 2007, SFMAIC issued policy number 108-7397- C24-20 covering the 2008 Toyota ( the Underlying Auto Policy ), providing, inter alia, collision coverage. : 15. This Underlying Auto Policy had a six-month policy period, renewing on Maich 24. and September 24 ofeach year.. 16. was listed on the Underlying Auto Policy as the Principal Operator for the 2008 Toyota. [~~SFF&CDoc. 168]. 17. On October 10, 2007, SFF&C sent the a Renewal Certificate regarding the December 4, 2007 renewal oftheir PLUIP policy. [SFF&C Doc. 348-349] 18. Because the PLUP policy was set to renew afterthe effective date of the filed and approved changes to SFF&C s rate plan and the adoption by SFF&C ofplup policy Form FP- 7950.2, SFF&C included with this Renewal Certificate a notification that the PLUP policy had been amended, and provided the with a copy ofthe modified the terms of the PLUP Policy, i.e., form no.: FP-7950.2. {00043269.DOC/3)- 3
19. Additionally, SFF&C included with the T 2007 PLUP Renewal Certificate a summary of the changes to their PLUP policy which stated, inter alia, IMPORTANT NOTICE... about changes to your policy AGREEMENT [SFF&C Doc. 322 325]. Language is added to state that if the information used to calculate - the premium on this policy changed during the policy term, your premium may be adjusted during the term. 20. On October 22, 2007, the paid the $148.00 premium due as stated on the October10, 2007 Renewal Certificate and their PLUP policy, as stated in form no.: -FP-7950.2,. renewed for a one-year term. [~SFF&C Doc. 327]. 21. On October 10, 2008, SFF&C sent the a Renewal Certificate with respect to their PLUP policy, setting forth a $148.00 premium for the expiring policy period ofdecenther 4, 2007 Through December 4, 2008, and a $148.00 premium for the renewal policy period of ) December 4, 2008 through December 4, 2009. [SFF&C Doc. 7]. 22. This October 10, 2008 Renewal Certificate stated that PLUP coverage was governed by form FP-7950.2. [SFF&C Doc. 7]. 23. SFF&C s Rating Classes applicable to PLUP policies renewed effective December 4, 2007 provided that its best rate, Preferred Class I, applied where there are no youthful operators in the household, all automobiles are insured as voluntary preferred business by {SFMAIEC] or at the 3-Star Discount level in [SFF&C], and all automobiles in the household are free of any accident record rating surcharges. {SFF&C Doc. 263]. 24. SFF&C s Rating Classes applicable to PLUP policies renewed effective December 4, 2007 provided that Class III ratingwould apply where there were no youthful operators in the {00043269.DOC/3)- 4-
household but that the household does not meet all the remaining Class I criteria. {SFF&C Doc. 263]. 25. At the time ofthe October 10, 2008 Renewal Certificate was sent, there were no youthful operators in the household, and there were no accident surcharges on any ofthe automobile liability insurance policies covering automobiles in their household. 26. Additionally, at the time of this renewal, SFF&C s rating plan applicable to PLUP policies provided that a Class 50 Discount would be applied to the preferred Class Ipremium if any member of the household is a principle operator on a State Farm auto policy and is at least 50 years of age. [SFF&C Doc. 225]. 27. was born on November 1, 1940 and was born on.january 14. 1942. [See SFF&C Doe. 168].. 28. Accordingly, at the time ofthe December 4, 2008 renewal, as set forth on the October 10, 2008 Renewal Certificate,.the PLU]~premium was based upon SFF&C~ Preferred Class I and the Class 50 Discount. 29. On October21, 2008, the paid the $148.00 premium as stated on the October 10, 2008 Renewal Certificate and their PLUP policy, as set forth in Form 7950.2, renewed for a one-year term ofdecember 4, 2008 December 4, 2009. [See SFF&C Doc. 327]. 30. On October 21, 2008, was involved in an accident while operating her 2008 Toyota, wherein she struck debris in the roadway. 31. Prior to this accident, had not been involved in a chargeable accident for at least 3 years. 32. As a result ofthis accident, the made a claim to SFMAIC under the Underlying Auto Policy. {00043269.DOC/3}- 5 -
33. After investigation, SFMAIC determined that the accident was caused by Mrs. failure to maintain a proper lookout and made payment in the amount of $1,022.50 under the collision coverage ofthe Underlying Auto Policy. 34. Whenthe Underlying Auto Policynext came up for renewal in March of 2009, SFMAIC had a rate plan in effect that provided, for renewal rating: 1. Chargeable accidents: An accident shall be chargeable as of the date the Company has recorded payments totaling $750 or more (for accidents occurring on or after April 1, 1999) under property damage liability coverage and collision coverage combined. In the event of a multiple vehicle accident,. property damage liability payment must be present for a claim, to be considered chargeable. An accident shall not be considered chargeable if the driver Involved in the accident was not at fault. Note-Accidents occurring prior to April 1, 1999, are considered. - chargeable as of the da~ethe,.cqitipatw has recorded payments totaling $400 or more under property damage liability coverage or, in the event ofa one car collision, under collision coverage. 2. Premium Surcharge The surcharge applicable during a policy period is determined by totaling the separate charges for the individual accidents which became chargeable during the thirty-four month period ending two mdnths prior to the current expiration date. In determining the premium surcharges, the accidents of all excluded operators are to be ignored. 3. Accident Charges - The charge for a specific accident shall be: i. 10% if there were no other chargeable accidents during the three years.preceding the date this accident became chargeable; {00043269.DOC/3} 6 -
[SFF&C Doc. 182]. 35. By notice mailed January 27, 2009, SFMAIC therefore notified the of its intention to impose a surcharge on the premium for the Underlying Auto Policy for the next sixmonth policy term (March 24, 2009 September 24, 2009). [SFF&C Doc. 160-161]. 36. On February 17, 2009, the exercised their right to protest this premium increase by signing the Notice of Premium Increase and returning it to the Maryland Insurance Administration ( MIA ). [SFF&C Doc. 161]. 37. After conducting its investigation, the MIA concluded that SFMAIC had properly notified the ofthe proposed increase, and that SFMAIC was justified in seeking to impose the surcharge on the Underlying Auto Policy under its Rate Section Rules. [SFF&C Doc. 155-156]...,, 38. did not seek further review of this determination. 39. The protest did not Operate as a stay on the proposed premium increase, such that the premium charged on account ofthe Underlying Auto Policy increased as ofthe March 24, 2009 renewal date. 40. Consistent with SFF&C s rating rules applicable to PLUP policies, the October 21, 2008 chargeable accident resulted in a class change forthe such that they were no longer to be eligible forthe Preferred Class I premium, and instead were required to be rated Class III. 41. Additionally, the October 21, 2008 accident caused the no longer to be eligible for the Class 50 Discount, consistent with SFF&C s rating rules applicable to PLUP policies. 42 In accordance with the language ofthe PLUP policy ~ 6, supra], and as permittedby SFF&C s rating rules applicable to PLUP policies, [~ç~j 7, supra], on February 5, 2009, SFF&C sent a Balance Due Notice indicating that an additional $60.11 was due to be paid on (00043269.DOC/3}- 7 -
or before March 24, 2009 in order to keep the PLUP in force through the end ofthe current policy period (i.e., December 4, 2009). [SFF&C Doc. 11]. 43. In addition, on February 5, 2009, SFF&C sent a Declarations Page to the indicating that their PLUP would be amended on March 24, 2009 due to the $60.11 midterm premium adjustment. [SFF&C Doe. 350-351]. 44. This amount due was based upon apro rata allocation ofthe annual Class III premium for the PLUP policy for the remainder ofthe December 4, 2000 December 4, 2010 policy term. [SFF&C Doc. 220, 253, 262]. 45. On February 9,2009, filed an electronic Complaint with the Maryland Insurance Administration, asking that the agency review SFF&C s action in.increasing the. premiums charged for both the Underlying Auto Policy and the PLUP. [SFF&C Doe. 172-.. -. 173]..,. 46. - On October 1.2,~2009~ SFF&C sent the Tiffanys a Renewal Certificate fortheir~.. ~.-. PLUP,.setting forth a $234.00 premium for the expiring policy period ~nd a $234.00 premiumfor the renewal policy period of December 4,2009 through December 4, 20010. [SFF&C Doe. 9,327, 3-) 47. After completing its investigation, the MIA issued a determination letter dated April 6, 2010. [SFF&C Doe. 290 292]. 48. First, the MIA determined that it could not again consider the surcharge previously imposed upon the Underlying Auto Policy, having already determined that that action was proper andjustified. [SFF&C Doe. 290; ~j37, supra; SFF&C Doe. 155-156]. 49. With regard to the PLUP, the MIA determined that SFF&C had violated 27-607 ofthe Insurance Article by increasing the premium charged for the Tiffanys PLUP policy. Accordingly, the MIA disallowedthe premium increase. [SFF&C Doe. 290 292]. {00043269.DOC/3)- 8 -
50. By letter dated May 5, 2010, SSF&C timely requested a hearing. [SFF&C Doe. 299-301]. 51. By letter from the MIA dated May 7, 2010, this request was granted. [SFF&C Doe. 304]. Signature on file with Orignal Louise cb. armath LEONARD ~. 1)MOND, III, P.C. 115 West Saratoga Street Baltimore, Maryland 21201 410-752- 1555 Attorney for Licensee, State Farm Fire,& Casualty Company Signature on file with Orignal Jeffre~ L. She~n,Esquire Assistant Attorney General - Office ofthe Attorney General Maryland Insurance Administration 200 Saint Paul Place, Suite 2700 Baltimore, Maryland 21202 7./o-~96N.ZCf~ {00043269.DOC/3} 9