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FIREMEN'S INS. CO. v. WASHINGTON

October 18, 1971

FIREMEN'S INSURANCE COMPANY OF WASHINGTON, Plaintiff,
v.
Walter E. WASHINGTON et al., Defendants


John Lewis Smith, Jr., District Judge.


The opinion of the court was delivered by: SMITH, JR.

JOHN LEWIS SMITH, Jr., District Judge.

 Plaintiff brings this action to declare two of seven insurance regulations passed by the District of Columbia City Council illegal and to enjoin any action to enforce those regulations. On October 8, 1971 this matter came on for hearing before the Court on plaintiff's motion for summary judgment and the motion of all defendants for judgment on the pleadings.

 Plaintiff is a domestic stock insurance company organized in 1837 and authorized under the laws of the District of Columbia to write fire and property insurance. Plaintiff is headquartered in the District and derives a substantial portion of its premium volume from policies written on property located within the District of Columbia.

 Defendant Walter E. Washington is the Commissioner ("Mayor") of the District of Columbia and defendant Edward P. Lombard is the Superintendent of Insurance of the District of Columbia. Defendants Hahn, Tucker, Anderson, Daugherty, Haywood, Moore, Robinson, and Veasey were members of the District of Columbia City Council when the regulations were passed.

 The regulations at issue here, numbered 71-8 and 71-13, are designed to prohibit geographic discrimination and arbitrary cancellation of policies within the District. The City Council passed these regulations pursuant to its authority to make rules and regulations to protect the health, safety, welfare, property, and well-being of the public, i.e. the general police power.

 Regulations 71-8 and 71-13 were adopted by the City Council on March 2, 1971 and presented to Commissioner Washington the following day. The Commissioner neither approved nor disapproved the regulations within a ten-day period after they were presented to him and they became law on March 13, 1971 under the provisions of Section 406(c) of Reorganization Plan Number 3 of 1967. 1 D.C. Code Appendix (Supp. IV, 1971).

 Regulation 71-8 provides in pertinent part as follows:

 
Section 1. Geographic Discrimination.
 
(a) No insurer, policy-writing agent, soliciting agent, broker, or salaried company employee shall decline to insure or to renew contracts of insurance because of the geographic area within the District of Columbia wherein is located the subject of the risk or the applicant's or insured's address.
 
(b) The prohibition contained in subsection (a) shall not act to prevent an insurer, agent, broker, or company employee from declining to issue contracts of fire or property insurance due to a determination, after on-site inspection and written report, that the condition of the property proposed to be insured does not meet applicable underwriting standards, provided that an applicant for such insurance shall be furnished a statement describing such improvements as are necessary to bring said property into conformity with applicable underwriting standards.
 
(c) The prohibition contained in subsection (a) shall not act to prevent an insurer, agent, broker, or company employee from declining to issue contracts for fire or property insurance due to a determination that the property proposed to be insured will cause, due to its geographic location, a concentration of liability which will exceed reasonable underwriting standards based upon actual properties then insured, and, either (i) excessive loss experience or (ii) potential excessive loss experience within such geographical area, provided that a copy of the underwriting standard shall be furnished to the applicant for insurance, if denied, and provided that the Superintendent of Insurance may within his discretion rule on the reasonableness of the applicable underwriting standard, and provided further that in any action arising with respect to this section the burden of proof of reasonableness of the underwriting standard shall be on the proponent of the underwriting standard.
 
Section 2. Enforcement
 
Any insurer, policy-writing agent, soliciting agent, broker or salaried insurance company employee who violates any provision of this Regulation shall be imprisoned for not more than 10 days, or fined ...

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