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Commissioner of Insurance v. North Carolina Rate Bureau

Court of Appeals of North Carolina
124 N.C. App. 674 (N.C. Ct. App. 1996)


On February 1, 1994, the North Carolina Rate Bureau (Bureau) (plaintiff) filed a request to increase the rates of return for private passenger automobiles by 10.8 percent and for motorcycles by 22.4 percent. The commissioner of insurance of North Carolina (commissioner) (defendant) held a hearing. At the hearing, the commissioner calculated the rates of return using statutory accounting provisions (SAP) instead of generally accepted accounting principles (GAAP). The commissioner supported his use of SAP with expert testimony and by citing to the appropriate statute. When determining the current cost and expense provisions, the Commissioner used an expert witness’s findings instead of the Bureau’s findings. Although there were inconsistencies between these findings, the commissioner relied only on the expert witness. Based on the commissioner’s SAP calculations, the rates of return would be reduced for automobiles by 13.8 percent and for motorcycles by 10.2 percent. The commissioner disapproved the Bureau’s request and reduced the rates of return based on the SAP calculations. The Bureau appealed, arguing that the commissioner should not have used SAP and that the commissioner’s calculations were not supported by material and substantial evidence.

Rule of Law


Holding and Reasoning (McGee, J.)

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