JAMES DONELON, COMMISSIONER OF INSURANCE FOR THE

JAMES

DONELON,

COMMISSIONER

OF

INSURANCE

FOR

THE

STATE

OF

LOUISIANA

r9TH

JUDICIAL

DISTRICT

COURT

PARISH

OF EAST

BATON

ROUGE

STATE

OF LOUISIAI{A

DIVISION:

NUMBER:

VERSUS

ALLSTATE

INSURANCE

COMPANY,

STATE

FARM

F'IRE

AND

CASUALTY

COMPANY,

NATIONAL

ASSOCIATION

OF MUTUAL

INSURANCE

COMPANIES,

AMERICAN

PROPERTY

CASUALTY

INSURANCE

ASSOCIATION,

ENCOMPASS

INSURANCE

COMPANY,

ESURANCE

INSURANCE

COMPANY

PETITION

FOR DEC

TORY

JUDGMENT

Petitioner,

James

Donelon,

Commissioner

of Insurance

for the

State

of Louisiana

("Commissionet"),

through

undersigned

counsel,

seeks a Declaratory

Judgment, as

described

herein.

Named

as defendants

are the

following

associations

and

insurers,

to wit: Allstate

Insurance

Company,

State Farm

Fire and

Casualty

Company,

Encompass

Insurance

Company,

Esurance

Insurance

Company,

National

Association

of Mutual

Insurance

Companies,

and

American

Property

Casualty

Insurance

Association.

Pursuant

to La.

C.C.P. art.1871,

et

seq., Commissioner

seeks a declaratory

judgment

declaring

the

proper

statutory

interpretation

and application

of Act

61 of the 2017

Regular

Session

of the Louisiana

Legislature

as

to

policies

of insurance

issued

or

delivered

in this

State that

provide

coverage

for the

peril

of fire.

1.

The

Commissioner

requests

that

the Court

declare the

rights and

obligations

of the

parties

as to the interpretation

and

application

of Act

61 of the 2017

Regular

Session

of the Louisiana

Legislature,

codified as

La. R.S. 22:1a60(I)(1)(c).

2.

Jurisdiction

is

proper pursuant

to Article

V,

Section i6

of

the

Louisiana

Constitution.

Venue

is

proper pursuant

to Article

42

of the Louisiana

Code

of Civil Procedure.

3.

Petitioner is:

James

Donelon

is the duly

elected

Commissioner

of Insurance

for the State

of Louisiana.

He is charged with

regulation

of the

insurance industry

in all

its

phases

in this

State. Act 61

&

?k

J

&

tr

J

s

J

,(

&

,(

rk

g

2431015v.1

of 2017

is legislation

that regulates

fire insurance premium

calculations.

Thus,

Commissioner

Donelon

is the

proper

person

to

bring this

action.

Defendants

are:

Allstate

Insurance

Company

("Allstate"),

a foreign

insurer

authorized

to do an

actually

doing

business

in Louisiana

and which

issues

policies

of insurance

covering,

among

other things,

fire as a

peril.

State Farm

Fire and

Casualty

Company

("State

Farm"),

a

foreign

insurer authorized

to

do and

actually

doing

business

in this

State and

which

issues

policies

of insurance

covering

fire as a

peril;

American

Property

casualty

Insurance

Association ("APCIA"),

a

national

trade

association

whose

members

are

insurance

carriers,

many

of which

are

authorized

to

do

business

in Louisiana

and

which

are

subject

to regulation

by the

Commissioner,

and

who

issue

policies

of insurance

covering,

among

other

things,

fire

as a

peril;

National

Association

of Mutual

Insurance

Companies

("NAMIC"),

a national

trade

association

comprised

of

property

insurers,

as well

as insurers

offering

comprehensive

commercial

and personal

lines

coverage,

whose

members

are

insurance

carriers,

many

of which

are

authorizedto

do

business

in Louisiana

and

which

are subject

to regulation

by the

Commissioner,

and

who issue

policies

of

insurance

covering,

among

other things,

fire

as a

peril;

5.

Encompass

Insurance

Company

("Encompass"),

a foreign

insurer

authorized

to do

and actually

doing

business

in Louisiana

and which

issues

policies

of insurance

covering,

among

other

things,

fire as a covered peril.

6.

Esurance

Insurance

Company

("Esurance"),

a foreign insurer

authorized

to do and

actually

doing

business

in Louisiana

and

which

issues

policies

of

insurance

covering,

among

other things,

fire as

a covered

peril.

4.

APCIA

and NAMIC

have

advocated

before the

Commissioner

and in

other forums

on

behalf

of their member

insurers

for

an interpretation

and application

of Act 61

of

2017

thatdiffers

materially

from

the interpretation

and application

of the Commissioner,

Both associations

have

argued

that they

have

standing to

do

so

and.

consequently,

their members

(to

the extent

that they

have

not

yet

complied

with

the

provisions

of Act

61) should

be bound by

any

judgment

rendered

by this

Court in

these

proceedings.

Alternatively,

and

to the extent

either association

may

object

to their

members

being

bound by any

judgment

rendered

by the Court,

the Commissioner

reserves

the right

to name as

defendants

any and all

members

of such association

who

are subject to

regulation

by the Commissioner

who

have not

yet

complied with

Act

6i.

5.

State

Farm,

Allstate, Esurance,

and Encompass,

are

authorized to

do business in

this State.

All

are

subject to regulation

by the

Commissioner.

All issue

or deliver

policies

of insurance

in

this

State that

include fire

as a covered

peril.

Accordingly,

they

should

be bound by any

judgment

rendered

by the

Court in these

proceedings.

2

3

4

-2-

2431015v.1

6.

This cause of

action is

brought

pursuant

to the

provisions

of

La.

C.C.P. art. I87I and

1872,

which

provide,

among

other

things, that a

plaintiff

"whose

rights,

status,

or other legal relations

are affected

by a statute"

may seek the determination

of

"any

question

of construction

or

validity

arising under

... the statute ...

and obtain a

declaration

of rights, status

or other legal relations

thereunder."

Declaratory

judgment

may

be rendered

"whether

or not further

relief is

or

could

be

claimed."

La.

C.C.P. art. 1871.

The function

of a declaratory

judgment

is

to establish the

rights of

the

parties

or express the

opinion

of

the

court on a

question

of law

without

ordering anything to

be

done. lllR

Pipeline

Company v.

Louisiana Tax

Commission,0l-2594, p.

9

(La.

App.

1st Cir.

3120102),815

So.2d

178, 185,

ffirmed

and remanded,

02-1479

(La.712103),

851

So.2d 1145.

Precisely

such

questions

are

presented

in this

suit.

7.

In

the 2017

Regular

Session, the Legislature

enacted

Act 61 which

provides

as follows:

AN ACT to

enact R.S. 22:1460(IX1Xc),

relative to

fire insurance

rates; to

provide

for the determination

of fire insurance

rates; to

prohibit

certain

methods

of

determination;

and to

provide

for related matters.

Be it enacted

by the Legislature

of Louisiana:

Section 1. R.S. 221a60Q)(1)(c)

is

hereby enacted

to read

as follows:

(c)

No insurance company

shall combine

a higher classified public

fire

protection

area

with a

lower classified public

fire

protection

area for

the

purpose

of

determining

the fire insurance

rate

for the combined public

fire

protection

areas.

(A

copy

of Act

61 is attached to

this Petition.)

8.

The

practice

addressed

in La.

R.S.

22:1460(l)(1Xc)

is known

as

"grouping."

Act

61

prohibits

insurers

from applying

the

same factor

for the calculation

of

a

premium

for a

policy

covering

the

peril

of

fire

for any

two fire

protection

areas

or classifications.

9.

Additionally,

La.

R.S. 22:Ia60Q)Q)@)

requires that: "Every

insurance

company

authorized

to write

fire insurance

in this

state shall adhere to the

rates

promulgated

by the

Property

Insurance

Association

of Louisiana

("PIAL")

and approved

by the

commissioner

of insurance in

accordance

with Subsection

A of this

Section ..."

The

phrase

"authorized

to write

fire insurance,"

includes,

by its

own terms, all

insurers authorized

to write

policies

that

cover the

peril

of fire and,

by extension,

all

policies

that include

fire as a covered

peril.

2431015v.1

-J

10.

PIAL has created

ten fire classification

areas

(or

"fire

protection

areas"

as that term is used

in Act

61) and uses

those classifications

to

develop, and

submit to the

Commissioner

for approval,

rates for

policies

that

include fire

as a covered

peril.

11.

Consistent with the

Commissioner's

interpretation,

PIAL's

ten fire classifications properly

comply

with

Act 61. The

rates

submitted for approval

by, and approved

by, the

Commissioner do

not incorporate

or

utilize the

practice

of "grouping."

The

PIAL rate filing

draws a distinction

between

each of the

ten fire classifications.

12.

Many

insurers that

issue

policies

including

fire as a covered

peril

have adopted

the rates

developed

by PIAL

and

submitted to the

Commissioner

for approval

and are in compliance

with

Act

61.

13.

Some insurers

which issue policies

of insurance that

include fire

as a covered

peril

submit

proposed

rates

that deviate

from the rates

promulgated

by PIAL. The

Commissioner

contends, and

requests

a declaration,

that

any such deviation

must

not include the

practice

of "grouping"

fire

protection

areas

or classifications

as

such would not

comply with

Act 61.

14.

Some insurers

which issue policies

of insurance that

include fire

as a covered

peril,

but that

also

include

other coverages

(such

as

liability), contend

that Act

61 does not apply

to such

policies.

The Commissioner

contends

that

this interpretation

is legally

incorrect

and requests a

declaration

that Act

61 applies

to any

policy

of insurance

issued

or delivered in this

State that includes

fire as

a covered peril.

15.

Although

many

insurers who issue

or deliver

fire

policies,

including homeowners'

and

other lines

of insurance

that include

fire as a covered

peril,

have

complied with the

Commissioner's

interpretation

of Act

61, a dispute has

arisen

between the

Commissioner

on one hand and

the

defendants

(and

in the

case

of

the

trade associations,

some of their members)

on the

other as to the

proper

interpretation

of

Act

61. Thus, there

is a

justiciable

controversy

among the

parties.

2431015v,1

-4-

t6.

The

Commissioner's

interpretation

of

Act 61

as to the policies

to

which

it

applies

is

supported

by the

Insurance

Code, which

lists

"Kinds

of insurance."

The

statute

provides

that

homeowners' policies

include

fire and allied

lines.

La. RS,22:47(15)

provides:

(15)

Homeowners'

insurance.

A

policy

of insurance

on

a one-

or two-family

owner-

occupied premises,

which

combines

fiire

and allied

lines

with

any

one

or more

perils

of casualty,

liability,

or other

types

of insurance

within

one

policy

form

at

a

single

premium,

where

the insurer's

liability

for damage

to the

premises

under

said

policy

is determined

with

reference

to

the replacement

value

of the

premises.

Accordingly,

homeowners'

insurance

is a "hybrid"

policy

that

combines

fire and

allied

lines

with

one

or more

peril

of casualty.

All

insurers

authorized

to write

homeowners'

insurance

are

"authonzed

to write

fire

insurance"

as contemplated

by La. R.S. 22:1a60$)(1Xa),

and

all such

policies

are

subject

to the provisions

of Act

61.

17.

The Commissioner

requests

that this

court render

a

declaratory

judgment

as

to the

proper

interpretation (as

described

herein)

of Act

61 insofar

as

the

practice

of

"grouping"

is concerned

and

declaring

that

Act 61 applies

and extends

to all

policies

of insurance

issued

or delivered

in this

State

that

provide

coverage

for the

peril

of fire.

WHEREFORE,

James Donelon,

in his

capacity

as Commissioner

of Insurance

for the

State

of Louisiana,

respectfully

prays

that

each

of

the

defendants

named herein

be cited

and

served

and

ordered to

appear

and answer

and

that after

all legal

delays

and due proceedings

had,

there

be

judgment:

2

Declaring

that

Act 6l

of

2017 prohibits

the

practice

of

"grouping"

and

requires

that

the

factors

applied

to fire

protection

areas

or classifications

distinguish

between

each classification;

and

Declaring

that

Act 61

of the 2017

applies

to all

policies

of insurance

issued

or

delivered

in this

State that

include

fire as

a covered

peril;

and

3.

For all

additional

relief warranted

herein

as may

be

just

and

equitable.

Respectfully

submitted,

TAYLOR,

PORTER,

BROOKS

&

PHILLIPS

L.L.p.

J

lips,

Jr., Bar #

2047

Michael

A

,Bar

# 38240

450

Laurel

Street,

8th Floor

(70801)

P.O.Box247l

Baton

Rouge, LA 70821-247

I

Telephone:

(225)

387-3221

Facsimile:

(225)346-8049

Attorneys

for

James Donelon,

Commissioner

of

Louisiana

Department

of Insurance

243 I

01 5v.

i

5-

PLEASE

SERVE:

i. National

Association

of Mutual Insurance

Companies

Via

Louisiana Long-Arm

Statute

3601 Vincennes

Road

Indianapolis,

IN

46268

AND

20

F Street NW

Suite

510

Washington,

DC 20001

2.

American Property

Casualty

Insurance Association

Via

Louisiana

Long-Arm

Statute

555

lzth

Street, NW,

Suite

555

Washington,

DC

20004-1264

AND

8700

West

Bryn Mawr,

Suite 12005

Chicago, IL

60631-3512

3. Allstate

Insurance

Company

Through its

agent for

service ofprocess:

Louisiana

Secretary

of State

8585 Archives

Avenue

Baton Rouge,

LA 70809

4.

Encompass Insurance

Company

Through

its agent

for service

ofprocess

Louisiana

Secretary

of State

8585

Archives Avenue

Baton Rouge,

LA 70809

5.

Esurance

Insurance

Company

Through its

agent for

service ofprocess:

Louisiana

Secretary

of State

8585 Archives Avenue

Baton

Rouge, LA

70809

6.

State Farm Fire and

Casualty

Company

Through

its agent

for

service ofprocess:

Louisiana

Secretary

of State

8585

Archives Avenue

Baton

Rouge,

LA 70809

2431015v.l

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