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This proceeding arose upon a request for hearing made by Paul & Kathy Arnoldy to contest the pending nonrenewal of homeowners insurance coverage provided by AIU Insurance Company. On April 10, 2003, the insurer mailed a notice of nonrenewal effective May 26, 2003 on policy number 923-04-01, citing as the grounds for nonrenewal: “Underwriting reason: Your Homeowners Policy is being non-renewed due to two (2) or more losses within the preceding three (3) year period, none of which were closed with no payment made or where payment made was recovered through subrogation. These losses are the 02/16/01 ice dam loss with $2,640.00 paid, 07/16/01 physical damage loss to French door with $1,149.00 paid and the 10/09/02 water loss from a burst pipe with $6,250 paid.” Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, AIU Insurance Company provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on June 4, 2003 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 the proof or evidence given by the insurer to support its reason for policy nonrenewal. Staff representing AIU Insurance Company submitted a sworn statement in lieu of appearance at the hearing.

ANALYSIS AND CONCLUSION OF LAW

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, and also states that explanations such as “underwriting reasons,” underwriting experience,” “loss record,” and similar insurance terms are not by themselves an acceptable explanation of an insurer’s intended nonrenewal. 24-A M.R.S.A. § 3054 requires the insurer to establish the proof or evidence of its reason for nonrenewal.

Donald Procopio, Senior Vice President Actuary Mass Marketing of AIU, stated in his affidavit that a notice of nonrenewal was issued due to two or more losses within the three year period. He referenced the claims listed in the reason for nonrenewal, but did not submit any documentation of those claims, such as loss notices or adjuster’s reports. He stated that the nonrenewal is supported by the company’s underwriting guidelines, which were also not submitted. No argument was presented relating the stated claims to the insurability of the property.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 3054. AIU Insurance Company 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 AIU Insurance Company 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. A company must 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 Donald Procopio
Exhibit 2 - Notice of Nonrenewal

ORDER AND NOTICE OF APPEAL RIGHTS
The intended nonrenewal is not approved. AIU Insurance Company is directed to renew policy #923-04-01 on the same terms 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 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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