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DISCRIMINATION IN INSURANCE RATES. LAWS AGAINST

DISCRIMINATION IN INSURANCE RATES, LAWS AGAINST. The laws of several states prohibit discrimination in the making of rates, or charges, for policies of fire insurance. Such legislation has been enacted within recent years, and is in most cases a section, or part of the laws providing for regulation, or supervision over rates or rating organizations. [See also Anti-Rebate Laws, Life Section.]

The following is a statement of the laws:

NEW JERSEY. Laws of 1913, Chapter 85.

I. No corporation, firm, association, individual or aggregation of individuals, hereinafter called "insurer," doing the business of insurance within this State shall fix or make any rate or schedule of rates, or charge, demand, collect or receive, directly or indirectly, or through any special rate, tariff, drawback, rebate, concession, device or subterfuge, a rate for insurance, which discriminates unfairly between risks within this State of essentially the same hazard, nor shall any insurer against the hazards of fire or legal liability of employers make any such insurance within this State except in accordance with general basis schedules, embodying basis rates, charges, credits, terms, conditions, permits, standards and other data necessary to the computation of equitable rates and rules of practice for such insurance, which general basis schedules, embodying basis rates, charges, credits, terms, conditions, permits, standards and other data used for the determination of rates shall be filed by such insurer or its agent or expert duly authorized, with the Commissioner of Banking and Insurance or with the amendments to such basis schedules which may be filed . . . from time to time. . .

The act provides that any one or more insurers, singly or jointly, may employ the services of experts in making such basis schedules or rates, and every insurer or agent shall, within ten days after written demand therefor, furnish to any person upon whose property a risk or rate has been made, full information as to such rate. The insurance commissioner may, whenever it is made to appear to his satisfaction that any such rule or general basis schedule, or amendment thereof, discriminates unfairly between risks of essentially the same hazard, or that any rate has been made not in accordance with the generaĺ basis schedule, order such discrimination removed or such rate corrected, and all such insurers shall forthwith comply with such order. The discrimination may not be removed by increasing the rates on any risk or classes of risk affected by such order unless the commissioner is satisfied that such increase is justifiable. Any insurer, agent, person, or corporation violating the provisions of the act is subject to a fine of five hundred dollars for each and every violation.

lows:

SOUTH CAROLINA. Section 2739, Laws of 1912, reads as fol

Upon the complaint of one or more citizens of this State, that any insurance company is discriminating in rates between citizens of this State on risks similar in character, the Insurance Commissioner shall forthwith summon said company to appear before him, and if it shall be known that said company has charged for any risk so complained of, an amount in excess of the rates charged other persons on other risks of the same class, this being discrimination in rates to the prejudice of a citizen of this State, the Insurance Commissioner shall order said company to make due correction in the rate immediately, by refunding such excess as may have been charged together with interest thereon from the date of its payment until the same is refunded to the citizen thus charged; and if any such company shall fail to make this correction within thirty days after notice and the making of such order, the Insurance Commissioner,

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on proof thereof, shall revoke the license of the said company: Provided, That no rate on any fire insurance risk in this State shall exceed the rate on similar risks in adjoining States, nor shall any rate be charged or maintained on property in this State after a full hearing before the Insurance Commissioner, which shall be shown to be greater than rates charged in adjoining States on risks of like character and similar circumstances.

Section 2738 permits companies to be members of any association "the purpose and object of which is to secure the proper inspection of risks, the classification of risks, the maintenance of uniform and reasonable rates and the prevention of discrimination in charges between parties dealing with such insurance companies in this State."

The legislature in 1915 amended Section 2739 by adding the following provision at the end of said section: That nothing herein contained shall prohibit any licensed or authorized company from competing with any non-licensed or unauthorized company in rates on any risk in this state."

MINNESOTA. Section 1, Chapter 331, Laws of 1905, reads:

No fire insurance company shall charge or receive, directly or indirectly, a higher or greater rate or premium for insurance against destruction or damage by fire of any property within this state than it charges for other risks in this state of the same kind or class, taking into consideration the local fire loss record, the nature of the risk, the exposures and hazards thereof, and the means of fire prevention applicable thereto.

Violation subjects the offender to a fine of not exceeding $500, and a second offence to a revocation of license.

KANSAS. Section 203, Article 9, providing for control of rates. The law was enacted in 1909, Chapter 152, and Section 203 reads:

That no fire insurance company shall, directly or indirectly, by any special rate, tariff, rebate, drawback or other device, charge, demand, collect or receive from any person or persons a greater or less or different compensation for the insurance of any property located in this state than it charges, demands, collects or receives from any other person or persons for like insurance or risks of a like kind and hazard under similar circumstances and conditions in this state; and any fire insurance company violating any of the provisions of this section shall be deemed guilty of unjust discrimination, which is hereby declared to be unlawful.

The act requires that every fire insurance company shall file with the superintendent of insurance general basis schedules showing the rates on all classes of risks and all charges, credits, terms, privileges, and conditions which in any wise affect such rates. No change shall be made in the schedules except after ten days' notice. The superintendent of insurance, when he shall determine that any rate is excessive or unreasonably high, or not adequate, is authorized to direct the filing of a higher or lower rate, which shall be commensurate with the character of the risk. Schedules of rates are open to public inspection. Section 205 provides that the superintendent 'shall not make any regulation or order" without giving the insurance company concerned reasonable notice and opportunity to be heard, and orders of the superintendent may be appealed from to the courts.

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DISCRIMINATION IN INSURANCE RATES, LAWS AGAINST

The penalty for violation of Section 203 is a fine not to exceed one hundred dollars or by imprisonment not exceeding ninety days, or both.

TEXAS. The law is Section 22, Chapter 106, of the Acts of 1913 providing for the State Insurance Commission, and reads:

No company shall engage or participate in the insuring or reinsuring of any property in this State against loss or damage by fire except in compliance with the terms and provisions of this act; nor shall any such company, knowingly write insurance at any lesser rate than the rates herein provided for, and it shall be unlawful for any company so to do, unless it shall thereafter file an analysis of same with the Commission, and it shall be unlawful for any company, or its officers, directors, general agents. State agents, special agents, local agents, or its representatives, to grant or contract for any special favor or advantages in the dividends or other profits to come thereon, or in commissions in the dividends or other profits to accrue thereon, or in commissions or division, of commission, or any position or any valuable consideration, or any inducement not specified in the policy contract of insurance; nor shall such company give, sell or purchase, offer to give, sell or purchase, directly or indirectly as an inducement to insure or in connection therewith, any stocks, bonds or other securities of any insurance company or other corporation, partnership or individuals, or any dividends or profits accrued or to accrue thereon, or anything of value whatsoever not specified in the policy; but nothing in this section or in this act shall be construed to prohibit a company from sharing its profits with its policyholders, provided that such agreement as to profit-sharing shall be placed on or in the face of the policy, and such profitsharing shall be uniform and shall not discriminate between individuals or between classes; provided, however, that no part of the profit shall be paid until the expiration of the policy.

Another section provides that no person shall knowingly receive a rebate or other consideration not specified in the policy, and violation of the section subjects the offender to a fine of not exceeding one hundred dollars and imprisonment not to exceed ninety days or both. It is also provided that a bona fide extension of credit is not a discrimination and no violation of the section. Any company, officer, or director, or person acting for such company violating the act is subject to a fine of not less than three hundred nor more than one thousand dollars.

Section 2 of the act provides that "a maximum rate of premiums to be charged or collected by all companies, . . . shall be exclusively fixed and determined and promulgated by the commission" and no company "shall charge or collect any premium or other compensation for or on account of any policy or contract of fire insurance" in excess of the maximum rate, but may write at a less rate provided that "such lesser rate shall be applicable to all risks of the same character." The commission must give reasonable notice of its orders and decisions, and opportunity to be heard in respect to same, and appeal may be taken from its decisions or orders to the courts.

NORTH CAROLINA. The law is part of Section 4, Chapter 145, Laws of 1913, providing for the regulation of rate making associations. The section reads:

No such person, corporation, association or bureau shall fix or make any rate or schedule of rates which is to or may apply to any risk within this State, on the condition that the whole amount of insurance on such risk or any specified part thereof shall be placed at such rates, or with the members of or subscribers to such rating organi

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zation; nor shall any such person, association or corporation authorized to transact the business of insurance within this State, fix or make any rate or schedule of rates or charge a rate which discriminates unfairly between risks within this State of essentially the same hazard, or if such rate be a fire insurance rate, which discriminates unfairly between the risks in the application of like charges or credits or which discriminatee unfairly between risks of essentially the same hazards and having substantially the same degree of public protection against fire.

The commissioner, whenever satisfied that such discrimination exists, may, after a hearing, order such discrimination removed, and all such persons, corporations, associations, or bureaus affected thereby shall immediately comply with such order, but shall not remove such discrimination by increasing rates on any risk or class of risk affected by such order, unless it is made to appear to the commissioner that such increase is justifiable.

The act also provides that the commissioner may require schedules of rates, and other information regarding the rates to be filed with the department, and the rating organization must furnish full information regarding the rate to any person on whose property a rate has been made, and must provide means whereby a person affected by such rate may be heard.

The legislature in 1915 amended the act by inserting the word "board" in Section I after the word "association," and amending Section 3 to apply to all companies doing business in the state and requiring schedules to be filed with the commissioner whether made by a rating association, or by such company for its own use. The following section (Section 5) was also added:

The

"Any person, firm, or corporation aggrieved by any rating of a fire insurance company, bureau, or board, may file a complaint in writing with the Insurance Commissioner stating in detail the grounds upon which the complaint asks relief. Commissioner shall set a time, not earlier than seven days after the date of the notice, and a place for a hearing upon the complaint. After due hearing the Commissioner shall make a finding as to whether the established rate is excessive or unfair. and shall make such recommendations as he deems advisable. The finding and recommendations in each case shall be a matter of record, and shall be open to public inspection."

ARKANSAS. The following section was enacted in 1913 [Section 16, Chapter 2 of the insurance laws.]

All companies, corporations or associations authorized to transact business of insurance in this State, shall file with the Auditor or Insurance Commissioner a schedule of rates of premiums to be charged and collected therefor, on contracts of insurance or indemnity proposed to be effected by said company, corporation or association, which in all cases shall be a fixed percentage of the amount insured, and such companies, corporations and associations may employ a common expert to inspect individual risks and advise the premiums to be charged in accordance with schedule of rates on file with the Auditor or Insurance Commissioner, and such premiums shall be uniform for all risks rated under the same schedule.

WASHINGTON. Section 73 of the insurance code, as amended in 1915, requiring every fire insurance company to file a copy of its rating schedules with the commissioner of insurance, before being licensed, also provides as follows:

Every such company and its agents shall observe its rating schedules and shall not deviate therefrom when making insurance until amended or corrected rating sched

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DISCRIMINATION IN INSURANCE RATES, LawS AGAINST

ules shall have been filed in the office of the insurance commissioner. Any company which shall make fire insurance in this state according to the advisory rates, or stated deviation or deviations therefrom, furnished by a rating bureau as provided in the following section, may receive a license to transact the business of making fire insurance in this state, without filing rating schedules, by filing written notice in the office of the insurance commissioner of its adoption of such advisory rates, stating the deviation or deviations therefrom, if any, at which it will make insurance, which deviation or deviations, if any, shall be uniformly applied to all purchasers of insurance from any such company in this state in the class or classes to which such deviation or deviations apply.

Mu

IOWA. Act of 1915 providing for the supervision of rating bureaus. The act applies to all companies, associations, or aggregations of individuals, known as insurer transacting the business of insurance against the hazards of fire, lightning, windstorm, or hail." in the state. tual assessment associations and town or county mutuals are exempt however, from the provisions of Section 2 of the act, which requires that every insurance company, association, or other insurer, insuring against the hazards named above, "shall be a member of a rating bureau, or adopt as its basis the rating of a bureau," making rates on property in Iowa. The anti-discrimination feature of the act is con

tained in Section 5, which reads:

Section 5. No insurance company or association or other insurer insuring against any of the hazards mentioned in this act, and no rating bureau shall fix or charge any rate for such insurance upon property in this state which discriminates unfairly between risks of essentially the same hazards and having substantially the same degree of protection against the hazards covered by the insurance. Every such company or association or other insurer shall, at least fifteen days in advance of any variation by it from the rates then in use, file with the insurance department and the bureau of which it is a member a schedule showing the variation, and all such variations shall be uniform in their application to all of the risks in the class for which such variation is made.

Section 7 gives the commissioner power to "review any rate fixed by any bureau or insurer," and to remove any discrimination or "to fix and order substituted a rate which is not discriminatory or unjust." The commissioners orders or findings are subject to summary court review.

Section 8 of the act prohibits rebating and reads:

Section 8. No insurer, however constituted, doing the business of insurance. mentioned in this act, within this state, and no officer, agent, or employe thereof, shall, as an inducement to securing such business, or after the obligation has been issued, whether with or without the knowledge of such insurer, pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, any rebate, discount, or reduction of the premium paid or payable under such policy, nor in addition to the terms, credits, and allowances therein contained, promise or give anything of value, whether part of a compensation for securing said business, or by making contracts of sale or purchase, or in any other manner whatsoever, or confer any special favor, benefit, valuable consideration, or inducement whatever not given on all its policies of like class.

A company violating the act is subject to a fine of not less than $100 nor more than $1,000, and an agent to a fine of not less than $20 nor more than $200, with a commitment to jail and revocation of license. It is made unlawful for a company to pay a fine assessed against its agents or solicitors.