What does the Delaware Department of Insurance do for you?

April 1, 2016
Karen Weldin Stewart was elected Delaware's 25th Insurance Commissioner in 2008, and is now serving her second term. She regulates Delaware's insurance industry, fighting for the rights of consumers, ensuring that companies are able to pay claims, and enforcing state insurance laws.
Stewart is a life-long Delawarean —her Quaker ancestors settled north of Wilmington in the 1600s, after coming over with William Penn. Weldin Farm and Weldin Road, off Route 202, are named for her family.
She graduated from Claymont High School and Brandywine College.
She has served as a consultant to insurance commissioners across the country and was Delaware’s Deputy Insurance Commissioner from 1989 until 1993.
In 1991, Stewart founded the International Association of Insurance Receivers and was elected three times as president. She received her Certification for Insurance Receiver, Multiple Lines (CIR-ML) in 1995.
Since she became Commissioner, her office has continued to be a revenue generator for Delaware, giving half a billion dollars to the state over seven years in premium taxes and fines levied against insurance companies. A portion of that goes to Delaware fire companies and ambulance services, the police pension fund and workers' compensation fund. The balance goes into the state’s general fund.
The mission statement of the Delaware Department of Insurance is simple: "Protecting Delawareans through regulation and education while providing oversight of the insurance industry to best serve the public." Carrying out that mission is not so simple.
"The companies we regulate have $621 billion in assets," Stewart said. "We monitor 1,800 companies licensed to do business in Delaware. Delaware ranks 10th nationally for written domestic premiums, amounting to $53 billion in 2014."
What's more, in 2015 DOI had the seventh lowest department operating budget in the United States.
Stewart is always trying to keep the cost of insurance low.
In February, she announced that Delawareans paid the seventh lowest average homeowner’s insurance premium in the country in 2013, the most recent year for which data is available.
According to research by the National Association of Insurance Commissioners, homeowners in Delaware paid an average of $709, nearly $400 less than the national average of $1,096.
Commissioner Stewart said, “If you’re looking to save on your homeowners insurance, shop around for quotes from different companies. Always ask about possible discounts, like multi-line discounts for having your auto and home insurance through the same company.”
Despite expensive weather-related claims on coastal properties in recent years, it is still possible to insure homes close to the water in Delaware. "There are approximately 25 companies who write insurance on beach homes in Delaware," Stewart said.
In some cases where licensed in-state insurers will not accept a risk because it may be too big, too unusual or not up to their standards, homeowners insurance may be procured from a surplus line insurer.
"Companies who are licensed to do business as a surplus line are willing to take risks that others may not. For instance, they may insure homes right on the water or manufactured homes. But the price of the coverage will reflect the higher risk.”
"These policies are not the cheapest, but being on the water is not the safest place to have a house," Stewart acknowledged. "Coverage is available. We changed the law to make it so people would have more choices."
DOI advocates for policyholders during disputes with insurance companies, and last year recovered nearly $1.1 million for individuals while handling 4,450 formal complaints and inquiries. In addition, the Department facilitates arbitration hearings on behalf of consumers, which led to awards totaling $816,384.
"We recover a lot of money for policy holders," Stewart said. In fact, she estimates DOI consumer services division has saved Delawareans around $2 million a year for seven years.
The Commissioner also keeps her eye on questionable practices by some insurance companies. One recent example involves what is called a "widow's penalty." Stewart said a company was filing for a rate change, indicating it wanted to charge widows and widowers the same auto insurance rates as a single person.
"I said, ‘No, you're not going to do that.’ I made them refund the money, then I issued a Department bulletin stating that no company could engage in that practice.”
There are studies that show single people in their early 20s are at a greater risk for automobile accidents than married people of the same age. After they get married, people tend to settle down and become better drivers. However, insurance companies haven’t provided statistical support to show that persons between, say, 40 and 60, who suffer the loss of their spouse, become worse drivers,” Stewart noted. "You don't become a greater driving risk just because you are suddenly single again.”
She does offer one caveat: Companies may set a married couples’ rate by taking each spouse’s driving record into consideration. “So, if you're the surviving spouse and you personally have a bad driving record, then your premium could go up."
Last fall, Stewart also issued a bulletin prohibiting the use of "price optimization" by property and casualty insurers when setting rates for personal lines of insurance such as automobile and homeowners’ policies.
Price optimization is based, not on risk, but on data-mined information that a given customer tends not to shop around, or is unlikely to notice or object to an increase of premium.
Price optimization violates well-established state insurance laws, like Delaware’s, which say that insurance rates shall not be “unfairly discriminatory.”  Insurers are allowed to discriminate based on factors such as age, gender, marital status and driving record. But unfair discrimination can occur when one of two drivers with the same risk profile is charged a higher rate, only because data-mining results indicate she is the kind of person who is less likely to notice the increase or to switch insurers.
"Price optimization penalizes customers who are loyal to their insurance company, and I won’t allow it in our state,” Stewart said. "Delaware was one of the early states to issue a consumer bulletin on that. Since then a number of other states have followed our lead."
Although insurance regulation may seem dull to the general public, it can also be exciting — sometimes too exciting.
"We regulate the solvency of insurance companies, to make sure that claims against the company can be paid," Stewart explained. "Last year, a man who owned an insurance company that was operated like a Ponzi scheme was convicted on multiple counts of fraud."
Former insurance company executive Jeffrey B. Cohen was sentenced to 37 years in federal prison and required to pay $137 million in restitution by a federal court judge in Maryland in December. His empire began to unravel when a DOI analyst questioned a fraudulent bank report made by Cohen. During the course of the litigation, Cohen had made threats against DOI officials and a Delaware Chancery Court judge. When federal law enforcement agents went to his house to arrest him on the fraud charges, they found weapons, bomb-making materials, disguises and attack plans he might have used to carry out those threats.
Commissioner Stewart likes to promote two DOI programs which save money for different groups of Delawareans. The Workplace Safety Program promotes safety on the job and provides lower workers compensation insurance premiums for qualifying employers conducting business within the State of Delaware.
Last year, this program saved large and small businesses $9 million in wokers comp premiums. Participating employers can get a discount of up to 19 percent on workers' compensation policies by submitting to and passing an inspection by a third party vendor.
The Delaware Medicare Assistance Bureau (DMAB), formerly known as ELDERinfo, provides information, counseling and assistance to people with Medicare on health insurance matters. Although Medicare is a federal program, DMAB offers beneficiaries health insurance counseling free of charge, to help them better understand their options.
"We helped 7,000 beneficiaries last year," Stewart said, “and saved them nearly $840,000 in healthcare costs."
Stewart is especially proud of DOI’s Bureau of Captive and Financial Insurance Products. Captive insurance is the state’s fastest growing industry, and Delaware is the world’s fifth largest and the country’s third largest captive domicile.
Captive insurance is a form of self-insurance, Stewart explained. A captive insurer is an insurance company that is wholly owned and controlled by its insureds. Its primary purpose is to insure the risks of its owners.
Some captives insure unusual risks for which traditional coverage cannot be easily found in the market place.
One example is Nuclear Electric Insurance Ltd., a Bermuda company domiciled in Delaware with 40 employees in Wilmington. NEIL insures nuclear power plants around the world. It is coverage that most of the plants are unable to get from any other source.
When Stewart formed the Captive Bureau within DOI in July 2009, it had 38 captives. Today it has licensed more than 1,000 active captive entities. During her tenure, the Captive Bureau has generated more than $16 million in revenue for Delaware. Captive Review magazine recently named Stewart to its first Enterprise Risk Captive Pioneers list, recognizing 20 of the “key influencers” in the U.S. captive industry.
The DOI is the largest consumer protection agency in the state, but don't let its size intimidate you. If you have a problem or question about insurance, call. "No matter how little (your problem) may seem, it is important to us," Stewart said. She cited an example where one woman called to say she had not been given a required premium discount for the $45 safe driving course she took. Stewart said, "We investigated and found the company had not given that discount to any of its policyholders for three years. We made them reimburse everybody and we levied a fine. All from just one phone call."
Consumers may call (302) 674-7300 or (800) 282-8611. For Medicare assistance, call (800) 336-9500.
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