903 Prompt Payment of Settled Claims [Formerly Regulation 81]
This regulation is adopted by the Commissioner pursuant to the authority granted by 18 Del.C. §§311, 520, 2304(16), and 2312, and promulgated in accordance with the Delaware Administrative Procedures Act, 29 Del.C. Ch. 101.
This regulation will apply to all insurers that settle claims either pursuant to a legal action or otherwise.
The purpose of this regulation is to ensure prompt payment of claims pursuant to the settlement of claims by insurance carriers as required by 18 Del.C. §2304(16)(f).
4.0 Prompt Payment
For the purpose of this regulation prompt payment is defined as remittance of the check within 30 days from: the date of agreement, memorialized in writing; final order by the court; or unappealed arbitration award.
5.0 Settlement of Claims
5.1 The language in 18 Del.C. §2304 (16)(f) requires good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear. The aforementioned section also applies in those instances where a case is settled prior to a hearing but pursuant to an action filed in court. Once liability has been resolved and an amount agreed upon, or ordered by the court, or awarded by an arbitration panel, the carrier is required to make prompt payment.
6.0 Procedure and Penalties
6.1 In the event that an insurance carrier does not remit prompt payment pursuant to this regulation and the Department has determined that said carrier has done so in bad faith and with such frequency as to indicate a general business practice, the Department shall file an action against the carrier pursuant to the Administrative Procedures Act. The commissioner may take all of the following actions:
6.1.1 Award interest on the amount of the claim from the date the claim was settled or ordered, in an amount equal to the prime rate of interest plus 3%.
6.1.2 Fine the insurer according to the provisions outlined in 18 Del.C. §329, and impose other such penalties as provided in 18 Del.C. §520.
6.1.3 Fine any person(s) involved with the claim and/or settlement according to the provisions outlined in 18 Del.C. §2308(a)(1).
7.0 General Business Practice
7.1 Within a 36 month period, three instances of a carrier’s failure to make prompt payment, as defined in section 4.0 above, shall give rise to a rebuttable presumption that the insurer is in violation of 18 Del.C. §2304 (16)(f).
7.2 The 36 month period established in section 7.1 above shall be measured from the date the amount was agreed upon, ordered by the court, or awarded by arbitration.
8.1 If any provision of this Regulation or the application of any such provision to any person or circumstance shall be held invalid the remainder of such provisions, and the application of such provision to any person or circumstance other than those as to which it is held invalid, shall not be affected.
9.0 Causes of Action and Defenses
This regulation shall not create a cause of action for any person or entity, other than the Delaware Insurance Commissioner, against an insurer or its representative based upon a violation of 18 Del.C. §2304(16). In the same manner, nothing in this regulation shall establish a defense for any party to any cause of action based upon a violation of 18 Del.C. §2304(16).
10.0 Effective Date
This regulation shall become effective 30 days after publication in the Delaware Register of Regulations.