The Delaware Insurance Department proposes a new regulation that requires the prompt payment of claims settled by insurance companies either pursuant to a legal action or otherwise.
The public may obtain a copy of the proposed regulation from the Delaware Insurance Department, Rodney Building, 841 Silver Lake Boulevard, Dover, DE 19904. The contact person is Kathy Gravell who can be reached at the aforementioned address or by telephone at (302) 739-4251 ext. 121. The Department of Insurance will accept written comments from October 1, 2000 through November 30, 2000. A public hearing will be held at the Delaware Insurance Department, Rodney Building, 841 Silver Lake Boulevard, Dover on Wednesday, November 15, 2000 at 10:00 p.m.
No other regulations are impacted by this regulation. The Delaware Insurance Department derives its authority to adopt this regulation through 18 Del.C. §§311 and 2312.
Regulation 81, Prompt Payment of Settled Claims
Table of Contents
1.0 Authority
2.0 Scope
3.0 Purpose
4.0 Prompt Payment
5.0 Settlement of Claims
6.0 Procedure and Penalties
7.0 General Business Practice
8.0 Separability
9.0 Causes of Action and Defenses
10.0 Effective Date
1.0 Authority
This regulation is adopted by the Commissioner pursuant to the authority granted by 18 Del. C. §§ 311 and 2312, and promulgated in accordance with the Delaware Administrative Procedures Act, Title 29 Del. C. Chapter 101.
2.0 Scope
This regulation will apply to all insurers that settle claims either pursuant to a legal action or otherwise.
3.0 Purpose
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 thirty (30) days from the date of agreement or final order by the court.
5.0 Settlement of Claims
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 the carrier is required to make prompt payment.
6.0 Procedure and Penalties
6.1 In the event that a carrier does not remit prompt payment pursuant to the settlement of a claim and the Department has determined that the 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.
6.1.3 Fine any person(s) involved with the claim and/or settlement according to the provisions outline 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 pay a claim or bill for services promptly, as defined in section 2 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 paragraph 7.1 above shall be measured based upon the date the amount was agreed upon or ordered by the court.
8.0 Separability
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 the Commissioner’s signature.