Appeal from the Order of the Insurance Commissioner of the Commonwealth of Pennsylvania in the case of In Re: Federal Kemper Insurance, Docket No. P80-4-8.
Karen M. Balaban, Balaban & Balaban, for petitioner.
Hannah Leavitt, Chief of Litigation, with her Anthony A. Geyelin, Chief Counsel, for respondent, Insurance Department, Commonwealth of Pennsylvania.
Kenneth R. Shutts, for Amicus Curiae, Pennsylvania National Mutual Insurance Company, Temple Mutual Insurance Company, and State Auto Mutual Insurance Company.
Judges MacPhail, Doyle and Barbieri, sitting as a panel of three. Opinion by Judge Barbieri.
[ 79 Pa. Commw. Page 346]
This is an appeal from an order of the Insurance Commissioner of the Commonwealth of Pennsylvania directing Federal Kemper Insurance Company (Kemper) (1) to provide insurance coverage to Ronald L. Monn from April 13, 1979 through April 29, 1979, and (2) to cease and desist from "its practice of not giving a Notice of Cancellation whenever it attempts to terminate an automobile insurance policy for nonpayment of any premium prior to the end of a 12-month policy period." We affirm.
The facts in this case are not in dispute. In 1978, Mr. Monn purchased an automobile insurance policy from Kemper. This policy, which replaced an earlier policy Mr. Monn had with Kemper, had a fixed six month policy period extending from October 13, 1978 to April 13, 1979. On or about March 20, 1979, Kemper sent an "automobile premium notice" to Mr. Monn informing him of the premium payment that would be required if he wished to extend this insurance coverage for an additional six months. Mr. Monn subsequently failed to pay this premium before the April 13, 1979 expiration date of his coverage, however, and
[ 79 Pa. Commw. Page 347]
on or about April 18, 1979, Kemper sent a second notice offering therein, pursuant to the policy's terms, to reinstate insurance coverage without interruption if Mr. Monn paid his premium by April 28, 1979. No payment was received as of April 28, 1979, however, and on that date Mr. Monn was involved in an automobile accident. On or about April 29, 1979, Kemper sent Mr. Monn a new offer to reinstate insurance coverage, without retroactive effect, with an effective date one day after the post mark of the premium payment, and on April 30, 1979 Mr. Monn paid half of the premium in cash to his agent, and obtained renewed insurance coverage as of that date. Mr. Monn then filed a request for review with the Pennsylvania Department of Insurance (Department) alleging that Kemper had impermissibly terminated insurance coverage during the April 13, 1979 to April 29, 1979 period. Following an initial determination in Monn's favor, and a subsequent hearing on this issue before a hearing examiner, the hearing examiner issued an adjudication in favor of Kemper. An application for reconsideration was then filed, and granted, and after a hearing before a new hearing examiner expressly appointed to preside over the hearing, but not to issue any adjudication, the Commissioner of Insurance issued a new adjudication which, as we noted above, was favorable to Mr. Monn. A new request for reconsideration, filed by Kemper, was subsequently denied, and the present appeal followed.
The sole substantive issue raised in this appeal is whether the provisions of the Act of June 5, 1968 (Act), P.L. 140, as amended, 40 P.S. §§ 1008.1-1008.11, permit insurance companies to cancel or not renew automobile insurance policies in effect for less than a year, for nonpayment of premiums, without providing a formal cancellation notice meeting the requirements of Section 5 of the Act, 40 P.S. § 1008.5.
[ 79 Pa. Commw. Page 348]
Section 4 of the Act, 40 P.S. § 1008.4, provides in pertinent part that "[n]o insurer shall cancel a policy except for one or more of the following specified reasons: (1) Nonpayment of premium. . . ." Section 5 of the Act provides, however, that "[n]o cancellation or refusal to renew by an insurer of a policy of automobile insurance shall be effective unless the insurer shall deliver or mail, to the named insured . . . a written notice of the cancellation or refusal to renew[,]" and continues on to specify certain criteria which the cancellation notice must meet,*fn1 criteria which the parties here agree were not met in the notices sent Mr. Monn. Kemper ...