PCI: Del. Legislative Session Proves Difficult, But Not Damaging to P/C Industry

The Delaware General Assembly wrapped up its 2005 session with the passage of the budget bill on June 30. Thanks to a year of strong efforts by property casualty insurance representatives, the first year of the 143rd Delaware General Assembly’s biennial session ended without the passage of legislation that would have negatively impacted insurers according to the Property Casualty Insurers Association of America (PCI).

Enacted legislation that will yield positive results for insurers and consumers includes SB 20, legislation that permits the Department of Insurance Fraud Bureau investigators to confiscate the tags of automobiles that have been found to be uninsured.

The bill also requires advance notice of the planned confiscation to the vehicle’s owners and an opportunity to prove they have coverage. Also, HB 192, legislation that requires public participation in a final agency agreement passed this year. While this legislation does not directly impact property/casualty insurers, it may make it easier for insurers to add their voice to an agency consent decree where the public is normally left out of the decision-making process.

Another bill that will help make Delaware a strong insurance market is HB 218, legislation that would help provide important flexibility in establishing captive insurers in Delaware through certain changes in the statutes. This bill will help to make Delaware the ‘first state’ on attracting captive insurers. It has passed the General Assembly and is awaiting the governor’s action.

Key legislation that did not pass included SB 2, the insurance scoring bill. While there was significant consideration of this bill earlier this year, it failed to pass the Senate. There was a last minute effort to consider the bill prior to the recess, but efforts to hear the bill fell apart due to a lack of time. SB 173, legislation that would prohibit homeowners insurers from canceling or non renewing a policy due to one or two weather-related claims also did not pass.

At the eleventh hour, it was decided that this legislation would be tabled for further discussion in 2006. Since this year was the first of a two-year legislative session, these bills are still considered active and will most likely be brought up again next year.

Another significant bill is HB 133, legislation that requires insurance carriers to report medical malpractice settlements and jury verdicts to the Insurance Department. The bill was amended to standardize the reporting form, provide for confidentiality about the cases and requires an annual report by the Commissioner to the General Assembly. This bill has passed the Senate and is awaiting the governor’s signature.

The final bill of note, HB 90, centers on bad faith notice to the Department. Similar bills have been considered in several states this year. In its final form, the bill was amended to reduce the increases in fines, modify the timeframe to respond to the Department to 21 calendar days of an inquiry and remove a provision making the legislation applicable to health insurance carriers.

“While we did not feel that there was a strong need to revise the state’s bad faith law, we wish to applaud legislators for working with the insurance industry in creating balanced legislation that will assure a timely response to the Department,” said Richard Stokes, regional vice president for PCI.

PCI was also disappointed the General Assembly failed to consider substantive workers compensation reform that would reduce costs and help provide a solid business environment in Delaware. However, several bills were recently introduced at the end of the session that PCI expects to be considered next year. “As the business environment changes and the need to attract new business to Delaware endures, it is important that the General Assembly make workers’ compensation reform a high priority for next year,” said Stokes.

“Overall, we are pleased Delaware legislators are focusing their efforts on making the state a strong insurance market,” added Stokes. “We look forward to continuing our good relationships with legislators that will keep the insurance marketplace moving in the right direction.”