On Nov. 21, 2007, Unigard Insurance Company and Unigard Indemnity Company ("Unigard") filed for rate increases on their personal earthquake lines of insurance. The Greenlining Institute ("Greenlining") filed a petition for hearing on the proposed rate increases, along with a petition for intervention in those hearings, challenging Unigard's request for an increase in their earthquake rates.

On Nov. 3, 2008, the California Department of Insurance (the "Department") denied the request for hearing and the request to intervene. In denying the petitions, the Department made several important determinations, two of which should have general application to any further petitions for hearing or intervention by consumer intervenors on any company rate filing.

First, the Department determined that the hearing provisions of California Insurance Code §1861.05(c) do not require the Department to hold a rate hearing on issues that are not properly the subject of a rate hearing. Since none of the issues that Greenlining raised against Unigard were related to the determination of Unigard's rates under the applicable statutes or regulations, a hearing was not required.

Second, the Department determined that consumer participants in rate hearings, or members of the public, may not request that variances be included in a company's rate application form. In its amended petition, Greenlining asserted that Unigard's rate increase requests should be reduced because of Unigard's allegedly inferior service to underserved communities under CCR §2644.27(f)(3)(B) ("Variance 3B"), and Unigard's rate increase requests should be reduced because Unigard made lower investments in underserved communities under CCR §2644.27(f)(4) ("Variance 4").

The Department rejected both of these challenges because Unigard did not request these variances and intevernors cannot request a variance to a rate filing. In addition, if applicants do not request variances, challenges based on un-requested variances are not relevant to any issue in the rate proceedings.

Greenlining has filed a petition for hearing and intervention in several other rate applications. All of these petitions contain challenges based on issues wholly unrelated to the determination of the applicants' rates. Based on the Unigard decision, it is likely that the other petitions will also be denied.