Request By:
Mr. Daniel D. Briscoe
Commissioner
Department of Insurance
151 Elkhorn Court
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Robert L. Chenoweth, Deputy Attorney General
You have asked the Office of the Attorney General to consider certain language in the insurance statutes dealing with credit life insurance. The statutory provision in question is KRS 304.19-080(3)(a), which provides as follows:
"(3)(a) Credit life insurance. It shall be presumed that premium rates charged or to be charged are not excessive in relation to the benefits if the premium or premium rates as filed with the commissioner do not exceed the following, or actuarially equivalent rates:
1. For decreasing term credit life insurance, single premium of seventy-five cents (75 ) per annum per $100 of scheduled indebtedness, or ninety cents (90 ) per annum per $100 of scheduled indebtedness if dismemberment benefits are included in the policy.
2. Single premium rates for indebtedness repayable in monthly instalments other than twelve (12) in number shall not exceed one-twelfth (1/12) of the above premium rate multiplied by the number of full months in the scheduled period.
3. A premium payable monthly at the rate of $1.16 per $1,000 of outstanding unpaid insured indebtedness if dismemberment benefits are included in the policy, will be deemed the actuarial equivalent of the foregoing rates.
4. For level term credit life insurance, a single premium of $1.50 per annum per $100 of indebtedness or $1.80 per $100 of indebtedness if dismemberment benefits are included in the policy."
You have requested this office to consider whether the above cited statutory language creates a rebuttable presumption as to the excessiveness of credit life insurance rates. You further ask if the presumption is rebuttable, whether the Department of Insurance may present evidence rebutting that presumption and lower the maximum rates outlined in the statute. Public notice has been made that a hearing is to be held on August 28, 1980, to consider this issue.
It is the opinion of this office that the answers to your questions are that the presumption is rebuttable and that it is within the province of the Department of Insurance to present such evidence it has to rebut the presumption in an effort to effectuate a lowering of the maximum rates outlined in the statute.
The statutory insurance provision in question here presents a somewhat unique issue in that the General Assembly has created with this language a statutory presumption. That is, in a nut shell, the Legislature is saying that if the credit life insurance rates filed with you as Commissioner do not exceed the rating list stated in the statute, then such rates are to be presumed not excessive. The primary consideration for us then is to analyze the legal effect to be given this statutory presumption.
Before reviewing the pertinent law on presumptions, it is important to point out and note that the General Assembly could have passed legislation providing unequivocably what the rates for credit life insurance would be. The General Assembly, however, chose not to take this approach and rather indicated what rates would be presumed not excessive.
Thus, we come to the law on presumptions. There is no questioning the authority of the General Assembly to provide by statute that certain facts shall be presumed. Probably one of the most widely known statutory presumptions is that of death. KRS 422.130 states that "if any person who has resided in this state goes from and does not return to this state for seven (7) successive years, he shall be presumed to be dead, in any case wherein his death comes in question, unless proof is made that he was alive within that time." Other examples of statutory presumptions deal with the presumption of abandonment of certain categories of property. See, generally, KRS 393.060 to 393.110.
Presumptions deal by their very nature with the law of evidence. In one of the most widely recognized legal treatises on the law of evidence, McCormick on Evidence (2d Edition, 1972), the writer expresses a preference for the description of a presumption "as a rule that, at a minimum, shifts the burden of producing evidence. . . ." McCormick at 803. Such preference with regard to presumptions has been indulged in by our Kentucky courts, both federal and state. For example, in In Re Trustees System Co. of Louisville, 30 Fed. Supp. 361, Western District Kentucky (1939) at Page 363, the federal court stated: "Presumptions operate only to relieve the party in whose favor they work from going forward in evidence and the weight of evidence necessary to overcome them varies in relation to the weight of the evidential facts bringing them into existence." In a state case, the Court of Appeals stated in Carroll v. Carroll, 251 S.W.2d (1952) at Page 991 that "A presumption may be indulged only so long as there is no substantial evidence to the contrary. When that is offered, the presumption disappears, and the issues must be decided on the evidence." From these case references, we believe it is clear that a presumption as a usual matter has no force other than to shift the burden of proof. See Thelen v. Mutual Life Ins. Co. of N.Y., 261 S.W.2d 427 (1953) at Page 261.
Applying the law of presumptions to the insurance law provision in issue, we are of the opinion the General Assembly has statutorily only provided that credit life insurance rates within the range set forth in the statute are to be deemed not excessive in the absence of contrary evidence. We believe this statutory presumption was intended by the General Assembly to be rebuttable and not an irrebuttable or conclusive presumption. In fact, conclusive presumptions are not favored by the courts and may present constitutional problems if a fact statutorily provided to be presumed cannot in and of itself, by virtue of its own force, be conclusive. See 29 Am.Jur.2d, Evidence § 11 and McCormick, supra, at 811. The credit life insurance rate ceiling set forth in this statute cannot be considered to be conclusive evidence in and of itself of nonexcessiveness. These rates are to be presumed not excessive, but if substantial evidence is presented to the contrary, this presumption may be overcome. The burden is on someone other than those filing the rates with you as Commissioner to show by evidence that these rates are excessive.
We trust the above analysis of the legal effect of the presumption contained in KRS 304.19-080(3)(a) will adequately serve to guide you, the Department of Insurance and others interested in whether the credit life premium rates are excessive in relation to benefits.