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TRAVELERS INDEMNITY COMPANY ET AL. v. COMMONWEALTH PENNSYLVANIA (03/14/89)

decided: March 14, 1989.

THE TRAVELERS INDEMNITY COMPANY ET AL., PETITIONERS,
v.
COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT, RESPONDENT



PETITION FOR REVIEW

COUNSEL

S. Walter Foulkrod, III, Stephen L. Banko, Jr., and R. James Reynolds, Jr., Foulkrod, Reynolds & Havas, Harrisburg, for petitioners.

Karen Gantt, Asst. Counsel, Jean Callihan, Acting Chief of Litigation, Linda J. Wells, Chief Counsel, Theodie L. Peterson, III, Chief of Litigation, Kenneth B. Allen, Asst. Counsel, Harrisburg, for respondent.

Crumlish, Jr., President Judge, McGinley, J., and Narick, Senior Judge.

Author: Crumlish

[ 126 Pa. Commw. Page 43]

OPINION

The Travelers Indemnity Company et al. (Travelers) appeal the Commonwealth Insurance Commissioner's order reversing a decision of an Insurance Department (Department) hearing officer. In addition, the order enjoined Travelers from terminating its agency contract with the Wells Insurance Agency. We affirm.*fn1

[ 126 Pa. Commw. Page 44]

In June 1979, Delores Wells, formerly a Travelers' account analyst, entered into an agency contract. During her first several months of business, Wells had a high volume of policy sales; Travelers thereafter limited the number of auto and homeowner policies she could write. In 1982, Travelers advised Wells that her agency would be terminated because of high loss experience. However, it later decided that efforts would be made to rehabilitate the agency. Various recommendations were made to improve Wells' profitability but, in September 1986, Travelers again informed Wells that her agency contract would be terminated because of continued losses. Wells petitioned for administrative review of this decision. Section 2(d) of the Act of September 22, 1978 (Act 143), P.L. 763, as amended, 40 P.S. § 242(d). Upon review of the hearing officer's recommendation, the Commissioner concluded that Travelers did not make a reasonable effort to rehabilitate the agency prior to termination, in violation of section 2(f)(3) of Act 143, 40 P.S. § 242(f)(3), and thus ordered reinstatement.

Act 143, as it existed at the time of Wells' appeal, provided in pertinent part:

After an agency contract has been in effect for a period of five years, no insurer shall terminate its contract with an agent without first providing such agent and the Insurance Commissioner with written notification at least 90 days prior to the date of termination.

40 P.S. § 242(a).*fn2

No insurer shall terminate its contract with an agent due to the adverse experience of a single year. Prior to such termination, it shall be the obligation of the insurer to demonstrate that it ...


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