Del. Defeats Ban on Scores; Takes First Step Toward Medical Liability Reform

In a legislative session reportedly dominated by budget issues, Delaware lawmakers rejected a ban on the use of credit-based insurance scores and took a compromise approach toward medical liability reform. The Legislature also passed a bill affecting insurers’ investment in and ownership of a subsidiary stock and established a license for public adjusters.

“Budgetary issues forced most insurance legislation to be considered in the final days of the session,” said Michael Harrold, senior director of state government affairs for the National Association of Independent Insurers (NAII). However, we were pleased that the Senate defeated legislation (SB 95) that would have banned the use of credit-based insurance scores in the underwriting of private passenger automobile insurance. There was no need for this legislation as Insurance Commissioner Donna Williams signed in May new regulations that impose strict controls on the use of credit information.

“The department conducted a series of hearings around the state and accepted several recommendations from the insurance industry before adopting the regulation. On balance, the regulation, which goes into effect for policies issued on or after September 1, is an acceptable compromise.”

The new regulation prohibits the sole reliance on an insurance score to set premium rates, requires insurers to notify consumers that that credit information will be requested and reviewed, and provides consumers with a right to ask that an exceptions be made in the event that an extraordinary personal circumstances such as a serious illness or injury adversely affects a consumer’s insurance score.

Delaware is reportedly beginning to take action on medical liability before a crisis occurs.

House Bill 310 addresses the issue by making it more difficult to file a
frivolous medical liability lawsuit. The bill requires that an “affidavit of merit” signed by an expert witness be obtained before a lawsuit can be filed. The bill allows for a maximum of 90 days for the investigation of the claim and healthcare providers are required to provide patients copies of their medical records within 45 days. It is hoped that the issue of non-economic damage caps will be revisited in January when lawmakers conclude their two-year session.

Another item that may be picked up again in January is workers’
compensation reform.

Legislation introduced this session (SB 159) is expected to serve as the basis for future debate over the issue. The bill includes provisions that address wage rates, fee schedules, the selection of healthcare provider, return to work petitions, court appeals and the timely payment of medical expenses.

NAII worked with the Insurance Department to develop legislation (SB155) that clarified that Delaware-domiciled insurers can invest up to 100 percent of their net worth in subsidiary insurance companies without having to get prior approval from the insurance department. The bill addressed problems created by the way the department had interpreted a law enacted in 2002. This enactment complies with the National Association of Insurance Commissioners (NAIC) accreditation requirements for noninsurance subsidiaries.

The Legislature also corrected an oversight in the Uniform Licensing Act passed last session with House Bill 280, which applies licensing provision to public adjusters. The bill also limits their licensure to assisting policyholders in first party claims.