COA affirms cures imposed for title insurance company’s statutory violations

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The Indiana Court of Appeals found nothing wrong in the trial court’s decision to uphold the Indiana Department of Insurance’s order that found a title insurance company violated several statutes and outlined what the company must do to cure its violations.

In Commonwealth Land Title Insurance Company v. Stephen W. Robertson, Insurance Commissioner of the State of Indiana, et al, 49A04-1302-PL-84, Commonwealth Land Title Insurance Co. appealed the trial court’s affirmation of the IDOI’s administrative order that was issued after the agency conducted a target market examination of Commonwealth to determine if it was in compliance with state insurance code.

After examining a sample of title insurance transactions in Indiana from Jan. 1, 2005, to Jan. 1, 2010, the companies that conducted the investigation found problems with Commonwealth’s program for pricing title insurance premiums, dubbed the “Cents Per Thousand” program. In this program, an agent pays remittance rate dollars to the underwriter based on a special rate chart rather than relying on the more traditional method of calculating premium for title insurance. The program was discontinued after Commonwealth was acquired by another company in December 2008.

The examination also found that the premium charged to the consumer during the CPT program was not specifically tied to risk. As a result of the program, Commonwealth underpaid approximately $60,000 in premium taxes during the examination period.

The IDOI’s administrative order found Commonwealth violated the Rate Statute, Unsafe Business Practices Statute, and Gross Premium Tax Statute. In order to cure the violations, the IDOI ordered Commonwealth to file premium rates and policy forms with the state agency for approval; recalculate its premium tax liability for Jan. 1, 2005, through Dec. 31, 2009; and other actions.

The trial court upheld the administrative order, concluding the IDOI properly interpreted Indiana’s insurance laws, that substantial evidence established that Commonwealth violated the statutes, and that IDOI ordered appropriate curative measures.

Commonwealth appealed to the COA, contending that the trial court erred in accepting the state agency’s interpretations of the Rate, Unsafe Business Practices, Gross Premium Tax and Cure statutes. But the appeals judges agreed with the trial court’s determinations.

There is ample evidence in the record that Commonwealth charged an excessive rate and an unfairly discriminatory rate. The judges also rejected the company’s assumption that the IDOI was required to make findings that Commonwealth’s business practices threatened its solvency in order to determine that it violated the Unsafe Business Practices Statute.

The cures imposed by the IDOI for the statutory violations are authorized by the Cure Statute, the COA held. The agency was within its authority to order Commonwealth to recalculate its premium tax liability for the examination period, and it has the authority under the Cure Statute to order Commonwealth to perform a retrospective actuarial analysis of its rates.


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