Opinion
No. 78-810
Decided December 28, 1978.
District court reversed ruling of insurance commissioner that insurer's underwriting policies were unfairly discriminatory, and Commissioner appealed.
Affirmed
1. INSURANCE — Refusal — Renew Homeowner's Policy — Economic Grounds — No Basis — Application of Statute — Discriminatory Rates — Finding — Underwriting Policies — Discriminatory — Invalid. Where insurance agent refused to renew homeowner's policy on grounds that it was uneconomical for him to handle less than all the insurance needs of a customer, and insurer was found to have ratified that action, there existed no basis for insurance commissioner's use of statute concerning discriminatory insurance rates, and thus insurance commissioner's finding that insurer's underwriting policies were unfairly discriminatory was invalid.
Appeal from the District Court of the City and County of Denver, Honorable Clifton Flowers, Judge.
Wagner, Wyers, Vanatta Spelts, P.C., Dean R. Vanatta, for plaintiff-appellee.
J. D. MacFarlane, Attorney General, David W. Robbins, Deputy Attorney General, Edward G. Donovan, Special Assistant Attorney General, Thomas Frank, Assistant Attorney General, for defendant-appellant.
Edward A. Jersin, amicus curiae, for Independent Insurors of Colorado, Inc.
The Commissioner of Insurance found that the underwriting policies of United States Fidelity and Guaranty Company (USFG), were unfairly discriminatory in violation of § 10-4-402, C.R.S. 1973. The district court reversed, and the Commissioner appeals. We affirm.
In September of 1977, after receiving a complaint from an insured, the Commissioner issued a Notice of Hearing to USFG, charging it with rate regulation violations under §§ 10-4-402 and 10-4-403, C.R.S. 1973. A hearing was held, and the Commissioner found that USFG caused the insured's homeowners's policy not to be renewed because the insured had dropped her USFG auto coverage. The insured obtained her policies through an independent agent, and the agent testified that he decided not to renew the homeowner's policy because it was uneconomical for him to handle anything less than an insured's entire insurance needs through a single insurer.
The Commissioner found that USFG ratified the independent agent's non-renewal decision, and that it thereby unfairly discriminated against the insured in violation of § 10-4-402(1), C.R.S. 1973. That statute provides, in pertinent part:
"Rates shall not be excessive, inadequate, unfairly discriminatory, destructive of competition, or detrimental to the solvency of insurers, as measured by a reasonable underwriting profit." See also § 10-4-303(1)(d), C.R.S. 1973.
[1] We agree with the district court that the case at bar has nothing to do with discriminatory rates, and that § 10-4-402 is therefore inapplicable. There is no evidence in the record indicating that USFG had a policy of refusing to issue single coverages, or that it charged insureds with single coverages any more than insureds with full across-the-board protection. Moreover, we do not believe § 10-4-402 was intended to be a mechanism through which the Commissioner could indirectly regulate an independent insurance agent's freedom to select individual coverages best suited to the needs of his clients and to the economies of his business. While it is true that USFG "ratified" the decision of the independent agent in the sense that it was aware of the reason for the agent's decision, § 10-4-402 does not mean that an insurance company is liable for an independent agent's economic decisions. What the Commissioner characterized as a "discriminatory underwriting decision" we view only as the agent's proper exercise of his independent business judgment.
We appreciate the Commissioner's argument that premium rates cannot be separated from risk underwriting, and that it may presently be impossible to decide from the information filed by insurers whether a particular combination package selected by an independent agent from a number of different insurers is excessive, inadequate, or unfairly discriminatory. But the question of whether USFG is required under §§ 10-1-114 and 10-4-405, C.R.S. 1973, to file rating information on combination packages is not properly before this court. It was never mentioned in the Notice of Hearing, nor was it a basis of the Commissioner's decision, and we will not consider it for the first time on appeal. See City of Aurora v. Aurora Firefighters' Protective Ass'n, 193 Colo. 437, 566 P.2d 1356 (1977). Moreover, the decision to regulate the activities of independent insurance agents in this fashion is, in our view, a matter for the General Assembly or for the Commissioner through the promulgation of rules, and not for the courts by judicial legislation.
Judgment affirmed.
JUDGE COYTE and JUDGE KELLY concur.