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Joyce Mitchell and Alexander Kriekhaus v. Federal Insurance Company
Docket No. INS-05-2099, Decision Issued January 23, 2006.

The insured requested a hearing following receipt of a notice of homeowners insurance nonrenewal citing the insured’s loss activity as the reason for nonrenewal. At hearing, the company testified that its actuarial analysis and predictive modeling tools indicated an increased likelihood of future loss. The insured corroborated the losses cited in the nonrenewal notice.

Held: For the insured. Title 24-A M.R.S.A. § 3051 specifically states that explanations such as “loss record” and similar insurance terms are not by themselves acceptable reasons 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, and the connection must be clearly indicated in the notice of nonrenewal. Simply the fact that claims have occurred does not by itself meet this standard.
It is clear from the company’s testimony and the wording of the nonrenewal notice that the policy was chosen for nonrenewal only because the claims occurred. The company has failed to demonstrate that its stated reason for nonrenewal is a good faith reason related to the insurability of the property as required under 24-A M.R.S.A. § 3051.

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