Delaware Department of Insurance (DOI)

The Delaware Department of Insurance (DOI) is the state agency responsible for regulating the Property & Casualty insurance industry in Delaware. The Department operates under Title 18 of the Delaware Code and protects consumers while ensuring a stable insurance marketplace.

The Insurance Commissioner

The Delaware Insurance Commissioner is:

• Appointed by the Governor of Delaware
• Subject to Senate confirmation
• Serves at the pleasure of the Governor (no fixed term)
• Chief regulator of Delaware's insurance industry
• Authorized to adopt regulations, examine insurers, investigate violations, and discipline licensees
• Supported by the Delaware Department of Insurance staff

Delaware's Appointment System

Unlike elected commissioners in some states (like Oklahoma or California), Delaware's appointed Commissioner approach provides:

• Executive accountability: Commissioner reports to Governor
• Professional expertise: Appointees typically have insurance industry experience
• Regulatory continuity: Less political influence on regulatory decisions
• Consumer focus: Emphasis on protection and market stability

Commissioner Powers for P&C Insurance

Rate Regulation

Delaware uses a competitive rating system for most P&C insurance:

Delaware's Competitive Rating Approach

• Market-Based: Insurers set rates based on competition and actuarial data
• File-and-Use: Insurers file rates with DOI and may use them immediately (no prior approval)
• DOI Review: Commissioner reviews filed rates for compliance
• Rate Standards: Rates must not be excessive, inadequate, or unfairly discriminatory
• Disapproval Authority: Commissioner may disapprove rates that violate standards
• Hearing Process: Insurers may contest rate disapprovals through administrative hearings

Rate Filing Process

1. Insurer Prepares Filing: Develop rates with actuarial justification
2. File with DOI: Submit rate filing electronically through SERFF system
3. Immediate Use: Rates effective immediately upon filing (file-and-use)
4. DOI Review: Department reviews filing for compliance (typically 30-60 days)
5. Approval or Disapproval: Commissioner accepts or orders rates modified
6. Insurer Response: If disapproved, insurer may modify rates or request hearing

Exam Tip: Delaware uses file-and-use (competitive rating), NOT prior approval. Insurers can implement rates immediately after filing, but the Commissioner reviews them and may disapprove. This differs from states with strict prior approval requirements.

Rate Regulation by Insurance Line

Delaware Insurance Code

Title 18 of the Delaware Code

Delaware insurance regulation is codified in Title 18 of the Delaware Code, which covers:

1. Insurer Licensing and Solvency

   • Requirements for insurers to operate in Delaware
   • Financial standards and reserve requirements
   • Annual financial examinations and reporting
   • Risk-based capital requirements

2. Producer Licensing

   • Producer license requirements and procedures
   • Continuing education mandates
   • Prohibited practices and penalties
   • Appointment requirements

3. Policy Requirements

   • Mandatory policy provisions
   • Required disclosures
   • Consumer protections
   • Standard policy forms

4. Rate Regulation

   • Rate filing requirements
   • Prohibitions on unfair discrimination
   • Rate review procedures
   • Actuarial standards

5. Consumer Protections

   • Cancellation and non-renewal restrictions
   • Claims handling requirements
   • Unfair trade practices prohibitions
   • Guaranty association protections

Key Delaware Code Sections

DOI Organization

The Delaware Department of Insurance operates through several functional divisions:

Key Divisions

Delaware Insurance Guaranty Association

The Delaware Insurance Guaranty Association (DIGA) protects Delaware policyholders when an insurance company becomes insolvent.

DIGA Purpose and Function

Purpose: Ensure policyholders are protected if their insurer fails and cannot pay claims.

Coverage: DIGA covers Property & Casualty insurance policies issued by member insurers licensed in Delaware.

How DIGA Works

1. Insurer Insolvency: A Delaware-licensed P&C insurer becomes insolvent
2. DIGA Activation: Delaware DOI triggers DIGA to handle claims
3. Claims Payment: DIGA pays covered claims up to statutory limits
4. Member Assessment: DIGA assesses solvent member insurers to fund payments
5. Subrogation: DIGA seeks recovery from insolvent insurer's assets

DIGA Coverage Limits

What DIGA Does NOT Cover

• Policies of non-member insurers (unauthorized insurers)
• Claims exceeding statutory limits
• Punitive or exemplary damages
• Policy deductibles
• Claims filed after deadline
• Fines and penalties

Exam Tip: Delaware Insurance Guaranty Association provides a safety net for policyholders, but coverage is limited to $300,000 per occurrence for most P&C claims. Workers' compensation has NO maximum limit under DIGA.

Delaware Market Conduct

Market Conduct Examinations

The Delaware DOI conducts market conduct examinations to ensure insurers comply with Delaware law:

Examination Areas:

• Claims Handling: Prompt and fair claims settlement
• Underwriting: Fair and non-discriminatory practices
• Rating: Proper application of filed rates
• Marketing: Accurate and non-misleading advertising
• Producer Oversight: Proper producer supervision and appointment
• Consumer Treatment: Fair dealing with policyholders

Unfair Trade Practices

Delaware law (Title 18, Chapter 23) prohibits unfair trade practices including:

Prohibited Practices:

1. Misrepresentation and False Advertising

   • Making false or misleading statements
   • Misrepresenting policy terms or benefits
   • Using misleading advertising

2. Unfair Discrimination

   • Discriminating unfairly between insureds of the same class
   • Using non-actuarial factors (race, religion, national origin)
   • Charging excessive or inadequate rates

3. Rebating (with exceptions)

   • Offering inducements not specified in the policy
   • Giving special advantages to obtain business
   • Exception: Value-added services, educational materials, dividends

4. Unfair Claims Settlement

   • Failing to investigate claims promptly
   • Delaying claim payments unreasonably
   • Making lowball settlement offers

5. Coercion and Intimidation

   • Forcing insureds to use specific repair shops
   • Threatening cancellation to discourage claims
   • Intimidating producers or insureds

Penalties for Violations