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This proceeding arose upon a request for hearing made by Stan Solohub of Bath, ME, to contest the pending nonrenewal of homeowners insurance coverage provided to him by Travelers Indemnity Company of Connecticut. On August 9, 2002, the insurer mailed a notice of nonrenewal effective September 18, 2002, on policy number 9513878626331, citing “our reason for non-renewing your homeowners policy is for the losses as described below. The losses an insured is expected to have in the future are directly related to the number of losses that the same insured has had in the past. Prior losses are valid indicators of future loss activity. A policyholder that has experienced 2 or more losses is expected in incur losses in the future that cost our company greater than 50% more than an insured with no prior losses. Based on these loss indicators, our reason for nonrenewal is rationally related to the insurability of the risk” as the grounds for nonrenewal. A water damage loss of 1/31/00 and a vandalism and theft loss of 12/31/01 were listed. Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, Travelers Indemnity Company of Connecticut provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on October 3, 2002 with Connie Mayette sitting as designated hearing officer pursuant to 24-A M.R.S.A. §§ 210 and 3054. The purpose of the hearing was limited to establishing the existence of proof or evidence given by the insurer to support their reason for policy nonrenewal. Staff representing Travelers Indemnity Company of Connecticut submitted a sworn statement in lieu of appearance at the hearing. Stan Solohub represented himself, accompanied by Paul Charles Raymond.

Title 24-A, M.R.S.A. § 3051 states that the reason for nonrenewal must be a good faith reason rationally related to the insurability of the property, the reason for nonrenewal must be explicit, and explanations such as "underwriting reasons," "loss record," and similar insurance terms are not by themselves acceptable explanations of an insurer's intended nonrenewal. Title 24-A, M.R.S.A. § 3054 requires the insurer to establish the proof or evidence of their reason for nonrenewal.

Rebecca Simons, an underwriter for the Travelers Group, provided details in her affidavit of the two losses cited in the reason for nonrenewal. She submitted claims documents as evidence of the losses. She concluded that there is a substantial increase in the risk exposure due to the exposure of roomers, the condition of the property, and the clutter which is a fire hazard; all of which were documented in the claims documents.

The reason for nonrenewal given on the notice sent to the insured articulated an argument based upon the loss indicators for the frequency of losses. No mention was made in the notice of the exposure of roomers, the condition of the property, or the clutter. The plain language of M.R.S.A. § 3051 requires the reason or reason for the action to be explicit. As these issues were not specified as a reason for nonrenewal in the notice, they will not be given consideration. The testimony also alluded to fraudulent activity in the earlier claim as a result of the lack of receipts or proof of ownership of the items claimed as damaged and stated that the items had been discarded before they could be examined by the adjuster. In the second claim, the affidavit mentions an amount of $16,000 reported to the police as stolen values, but states the insured then claimed $256,000 in the submission to the insurer. There was no mention of fraud or misrepresentation in the reason given in the notice. Rather, the reason given in the notice focused solely on the expected value of future losses based upon the number of prior losses. The frequency reason given in the notice was not addressed by the testimony presented by the insurer.

Mr. Solohub testified that he was told he needed to notify the company of claims when they occurred, and was not told not to submit claims. As a result, he stated he is now being cancelled for the claims he filed. The insurer submitted page 9 of 17 of the HO-3 policy, highlighting the requirement that the insured must exhibit the damaged property. The same page also has the requirement that immediate notice must be given to the insurer or agent in case of a loss.

Mr. Solohub and his witness also testified as to (what they felt was) the appropriate value of the two claims, but that issue is outside the scope of this hearing.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 3054. Travelers Indemnity Company of Connecticut bears the burden of proof for establishing that the statutory grounds for policy nonrenewal exist. Based on the evidence presented at the hearing, the Superintendent hereby concludes that Travelers Indemnity Company of Connecticut has not established adequate grounds for policy nonrenewal.

Title 24-A, M.R.S.A. § 3051 specifically states that "loss record" by itself is not an acceptable reason for nonrenewal. The Bureau has historically required a company to demonstrate a nexus or pattern to illustrate that the cause or nature of the past claims is such that similar or continued future claims are likely. Simply the fact that claims have occurred does not by itself meet this standard.

It was clear from the insurer's testimony that the policy would not have been nonrenewed but for the fact that claims had occurred. The insurer failed to demonstrate how this was rationally related to the insurability of the property.

INDEX OF RECORD:
Exhibit 1 - Affidavit of Rebecca Simons
Exhibit 2 - Termination Guidelines
Exhibit 3 - Page 9 of 17 of HO3 Policy
Exhibit 4 - 1/31/00 Claims Documents
Exhibit 5 - 12/31/01 Claims Documents

Order and Notice of Appeal Rights

The intended nonrenewal is not approved. Travelers Indemnity Company of Connecticut is hereby ordered to renew policy #951354562 633 1 on the same basis as the expiring policy.

This Decision and Order is a final agency action within the meaning of the Maine Administrative Procedure Act. It is appealable to the Superior Court in the manner provided in Title 24-A M.R.S.A. § 236 and M.R. Civ. P. 80C. Any party to the hearing may initiate an appeal within 30 days after receipt of this notice. Any nonparty whose interests are substantially and directly affected may initiate an appeal within 40 days of the effective date of this Decision and Order.

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