Download as PDF
Legislative Council,
General Assembly
State of Delaware
Title 18
Insurance Code
NOTICE: The Delaware Code appearing on this site is prepared by the Delaware Code Revisors and the
editorial staff of LexisNexis in cooperation with the Division of Research of Legislative Council of the General
Assembly, and is considered an official version of the State of Delaware statutory code. This version includes
all acts enacted as of October 7, 2022, up to and including 83 Del. Laws, c. 448.
DISCLAIMER: With respect to the Delaware Code documents available from this site or server, neither the
State of Delaware nor any of its employees, makes any warranty, express or implied, including the warranties
of merchantability and fitness for a particular purpose, or assumes any legal liability or responsibility for the
usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not
infringe privately-owned rights. Please seek legal counsel for help on interpretation of individual statutes.
Title 18 - Insurance Code
Part I
Insurance
Chapter 1
General Definitions and Provisions
§ 101. Short title.
This part constitutes the Delaware Insurance Code.
(18 Del. C. 1953, § 101; 56 Del. Laws, c. 380, § 1.)
§ 102. Definitions [For application of this section, see 79 Del. Laws, c. 172, § 6].
As used in this part:
(1) An “alien” insurer is a foreign insurer formed under the laws of any country other than the United States of America, its states,
districts, commonwealths and possessions.
(2) An “authorized” insurer is one duly authorized to transact insurance in this State by a subsisting certificate of authority issued
by the Commissioner.
(3) “Balance billing” means a health-care provider’s demand that a patient pay a greater amount for a given service than the amount
the individual’s insurer, managed care organization or health service corporation has paid or will pay for the service.
(4) “Commissioner” means the Insurance Commissioner of this State.
(5) “Department” means the Insurance Department of this State.
(6) A “domestic” insurer is one formed under the laws of this State.
(7) The “domicile” of an insurer means:
a. As to Canadian insurers, the province in which the insurer’s head office is located;
b. As to other alien insurers authorized to transact insurance in one or more states, as provided in § 532 (retaliatory provision)
of this title;
c. As to alien insurers other than those referred to in paragraph (7)a. or b. of this section above, the country under the laws of
which the insurer was formed;
d. As to all other insurers, the state under the laws of which the insurer was formed.
(8) A “foreign” insurer is one formed under the laws of any jurisdiction other than this State.
(9) “Insurance” means a contract whereby one undertakes to pay or indemnify another as to loss from certain specified contingencies
or perils, called “risks,” or to pay or grant a specified amount or determinable benefit in connection with ascertainable risk contingencies
or to act as surety.
(10) “Insurer” includes every person engaged as principal and as indemnitor, surety or contractor in the business of entering into
contracts of insurance; provided that with respect to a corporation established under Chapter 7 of Title 5, “insurer” means an insurance
department or division of such corporation (but not the corporation itself) which maintains separate books and records in the same
manner and to the same extent as if it were a separately incorporated subsidiary of such corporation, with separate capital accounts,
assets and liabilities.
(11) “Person” means corporations, companies, associations, firms, partnerships, societies and joint stock companies and individuals
as is provided in § 302 of Title 1. In addition, “person” includes trustees of common law trusts, syndicates, organizations, statutory
trusts, business trusts, attorneys-in-fact and every natural or artificial legal entity.
(12) “Third-party administrator” shall mean a person, firm or entity who directly or indirectly underwrites, collects charges or
premiums from, or who approves, denies, adjusts or settles claims on residents of this State, in connection with health coverage offered
or provided by an insurer. A third-party administrator shall be subject to the jurisdiction of the Department of Insurance. A third-party
administrator shall not include any person, firm or entity who operates a billing and/or paying service only and who does not perform
any of the other functions of a third-party administrator described above. Additionally, a third-party administrator shall not include
any person, firm or entity which holds a certificate of authority as an insurer, health service corporation, MCO, or HMO under this
title. The Commissioner shall promulgate regulations which shall provide for the registration, licensing and regulation of third-party
administrators and enforcement of applicable provisions of this title to third-party administrators. Third-party administrators doing
business in this State shall pay all fees and costs for registration, examination, assessments, fines and/or penalties as provided for
in this title or as the Commissioner shall establish by regulation. All revenues from the application of this provision to third-party
administrators shall be deposited in accordance with the provisions of § 305 of this title.
(18 Del. C. 1953, § 102; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 223, § 17; 73 Del. Laws, c. 96, § 3; 73 Del. Laws, c. 329, §
60; 74 Del. Laws, c. 157, § 4; 79 Del. Laws, c. 172, § 4.)
§ 103. “Transacting insurance” defined.
In addition to other aspects of insurance operations to which provisions of this title by their terms apply, “transact” with respect to a
business of insurance includes any of the following:
Page 1
Title 18 - Insurance Code
(1) Solicitation or inducement;
(2) Negotiations;
(3) Effectuation of a contract of insurance;
(4) Transaction of matters subsequent to effectuation and arising out of such a contract.
(18 Del. C. 1953, § 103; 56 Del. Laws, c. 380, § 1.)
§ 104. Application of Code as to particular types of insurers.
No provision of this title shall apply with respect to:
(1) Domestic mutual assessment property insurers, except as stated in Chapter 53 (Mutual Assessment Property Insurers) of this title;
(2) Domestic mutual benefit associations, except as stated in Chapter 55 (Mutual Benefit Associations) of this title;
(3) Fraternal benefit societies, except as stated in Chapter 62 (Fraternal Benefit Societies) of this title.
(18 Del. C. 1953, § 104; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 401, § 1; 69 Del. Laws, c. 111, § 2.)
§ 105. Particular provisions prevail.
Provisions of this title as to a particular kind of insurance, type of insurer or matter shall prevail over provisions relating to insurance,
insurers or matters in general.
(18 Del. C. 1953, § 105; 56 Del. Laws, c. 380, § 1.)
§ 106. General penalty.
(a) Each violation of this title for which a greater penalty is not provided by a provision of this title or other applicable laws of this
State, in addition to any applicable prescribed denial, suspension or revocation of certificate of authority or license shall, upon conviction
thereof, subject the violator to a fine of not more than $2,300 or imprisonment of not more than 1 year, or both, except that if the violator
is a corporation, the fine shall be not more than $6,900 as to each violation. Any director, officer, manager, employee or representative
of a corporation shall be subject to fine and imprisonment as above provided.
(b) Prosecutions for any such violation shall be brought in the Superior Court of the county in which the offense occurred.
(c) At the discretion of the Commissioner and the Attorney General, any fine provided for above may be recovered on behalf of the
State by a civil action brought against the violator.
(18 Del. C. 1953, § 106; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 278, § 1; 67 Del. Laws, c. 260, § 1.)
§ 107. Electronic notices and documents.
(a) In this section, the following words shall have the following meanings:
(1) “Delivered by electronic means” includes:
a. Delivery to an electronic mail address at which a party has consented to receive notice; or
b. Posting on an electronic network, together with separate notice to a party directed to the electronic mail address at which the
party has consented to receive notice of the posting.
(2) “Party” means an applicant, an insured, or a policyholder.
(b) Subject to subsection (d) of this section, any notice to a party or any other document required under this title in an insurance
transaction may be delivered by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act (§
12A-101 et seq. of Title 6).
(c) Delivery of a notice or document in accordance with this section shall be considered equivalent to any delivery method required
under this title, including delivery by first class mail, certified mail, certificate of mail, or certificate of mailing.
(d) A notice or document may be delivered by electronic means by an insurer to a party under this section if:
(1) The party has affirmatively consented to that method of delivery and has not withdrawn the consent;
(2) The party, before giving consent, is provided with a clear and conspicuous statement informing the party of:
a. Any right or option of the party to have the notice provided or made available in paper or another nonelectronic form.
b. The right of the party to withdraw consent to have notice or a document delivered by electronic means and any fees, conditions,
or consequences imposed in the event consent is withdrawn;
c. Whether the party’s consent applies:
1. Only to the particular transaction as to which the notice or document must be given; or
2. To identified categories of notices or documents that may be delivered by electronic means during the course of the parties’
relationship;
d. 1. The means, after consent is given, by which a party may obtain a paper copy of a notice or document delivered by electronic
means; and
Page 2
Title 18 - Insurance Code
2. The fee, if any, for the paper copy; and
e. The procedure a party must follow to withdraw consent to have a notice or document delivered by electronic means and to
update information needed to contact the party electronically;
(3) The party:
a. Before giving consent, is provided with a statement of the hardware and software requirements for access to and retention of
a notice or document delivered by electronic means; and
b. Consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access
information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party
has given consent; and
(4) After consent of the party is given, the insurer, in the event a change in the hardware or software requirements needed to access
or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain
a subsequent notice to which the consent applies.
a. Provides the party with a statement of:
1. The revised hardware and software requirements for access to and retention of a notice or document delivered by electronic
means;
2. The right of the party to withdraw consent without the imposition of any fee, condition, or consequence that was not disclosed
under paragraph (d)(2)b. of this section; and
b. Complies with paragraph (d)(2) of this section.
(e) This section does not affect requirements related to content or timing of any notice or document required under this title.
(f) If a provision of this title requiring a notice or document to be provided to a party expressly requires verification or acknowledgment
of receipt of the notice or document, the notice or document may be delivered by electronic means only if the method used provides for
verification or acknowledgment of receipt.
(g) The legal effectiveness, validity, or enforceability of any contract or policy of insurance executed by a party may not be denied
solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with paragraph (d)(3)b.
of this section.
(h) (1) A withdrawal of consent by a party does not affect the legal effectiveness, validity, or enforceability of a notice or document
delivered by electronic means to the party before the withdrawal of consent is effective.
(2) A withdrawal of consent by a party is effective within a reasonable period of time after receipt of the withdrawal by the insurer.
(3) Failure by an insurer to comply with paragraph (d)(4) of this section may be treated, at the election of the party, as a withdrawal
of consent for purposes of this section.
(i) This section does not apply to a notice or document delivered by an insurer in an electronic form before May 22, 2012, to a party
who, before that date, has consented to receive notice in an electronic form otherwise allowed by law.
(j) If the consent of a party to receive notice or document in an electronic form is on file with an insurer before May 22, 2012, the
insurer shall notify the party of:
(1) The notices or documents that may be delivered by electronic means under this section; and
(2) The party’s right to withdraw consent to have notices or documents delivered by electronic means.
(k) (1) Except as otherwise provided by law, if an oral communication or a recording of an oral communication from a party can be
reliably stored and reproduced by an insurer, the oral communication or recording may qualify as a notice or document delivered by
electronic means for purposes of this section.
(2) If a provision of this title requires a signature or record or document to be notarized, acknowledged, verified, or made under oath,
the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information
required to be included by the provision, is attached to or logically associated with the record or document.
(l) This section may not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and
National Commerce Act, Public Law 106-229 [15 U.S.C. § 7001 et seq.], as amended.
(m) The provisions of this section shall apply to any regulatory requirement of or transaction with, the Department of Insurance which
requires the filing or exchange of documents, notices, waivers, or forms.
(78 Del. Laws, c. 247, § 1.)
Page 3
Title 18 - Insurance Code
Part I
Insurance
Chapter 3
The Insurance Commissioner
§ 301. Commissioner; election; term.
(a) The Insurance Commissioner shall be the chief officer of the Insurance Department.
(b) The Commissioner shall be elected by the qualified electors of the State at a general election for a term of 4 years and shall be
commissioned by the Governor.
(c) Subject to prior qualification by the oath required by § 302 of this title, the Commissioner shall assume office on the 1st Tuesday
of January after election. The Commissioner shall hold office for the term for which elected and thereafter as provided by article XV,
§ 5, of the Delaware Constitution.
(18 Del. C. 1953, § 302; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1.)
§ 302. Oath.
Before entering upon the duties of office the Commissioner shall take and subscribe the oath or affirmation prescribed by article XIV
of the Delaware Constitution.
(18 Del. C. 1953, § 303; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 303. Removal; vacancy.
(a) The Commissioner may be removed from office for reasonable cause, as provided by article III, § 13, of the Delaware Constitution.
(b) A vacancy in the office of Commissioner shall be filled by appointment by the Governor, as provided in article III, § 9, of the
Delaware Constitution.
(18 Del. C. 1953, § 305; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1.)
§ 304. Seal.
The Commissioner shall have a seal of office of a suitable design and bearing the words “Insurance Commissioner of the State of
Delaware.”
(18 Del. C. 1953, § 306; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1.)
§ 305. Office; Insurance Commissioner Regulatory Revolving Fund.
(a) The Department may operate 3 offices, the principal office in the Dover area and branch offices in Wilmington and Sussex County.
(b) There is hereby created within the office of the Insurance Commissioner a special fund to be designated as the Insurance
Commissioner Regulatory Revolving Fund which shall be used in the operation of the office of the State Insurance Commissioner in the
performance of the various functions and duties required of the office by law.
(c) All supervisory assessments, examination fees and any rate filing or form filing fees paid by insurers and collected by the
Commissioner pursuant to this title shall be deposited in the State Treasury to the credit of said Insurance Commissioner Regulatory
Revolving Fund to be used in the operation of the office as authorized by the General Assembly in its annual operating budget. All other
fees and/or taxes collected by the Commissioner shall not be deposited in said Fund but shall be deposited in the General Fund of the State.
(d) Funds in the Insurance Commissioner Regulatory Revolving Fund shall be used by the Commissioner in the performance of the
various functions and duties involved in the oversight of insurance companies as provided by law, subject to annual appropriations by
the General Assembly for salaries and other operating expenses of the office.
(e) The maximum unencumbered balance which shall remain in the Insurance Commissioner Regulatory Revolving Fund at the end of
any fiscal year effective as of June 30, 2005; shall be $1,400,000; and any amount in excess thereof shall cause the Insurance Commissioner
to reduce assessments or fees collected in the next fiscal year by an amount sufficient to reduce the Regulatory Revolving Fund fiscal
year end balance back to or below $1,400,000.
(18 Del. C. 1953, § 308; 56 Del. Laws, c. 380, § 1; 60 Del. Laws, c. 283, § 1; 65 Del. Laws, c. 4, § 1; 70 Del. Laws, c. 185, § 1;
70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 74, § 99; 74 Del. Laws, c. 68, § 77; 75 Del. Laws, c. 89, § 116; 81 Del. Laws, c. 109, §
1.)
§ 306. Deputy Commissioner.
(a) The Commissioner may appoint and may remove a Deputy. Before entering upon the duties of office the Deputy shall take and
file the constitutional oath of office.
(b) The Deputy may exercise such powers and discharge such duties as the Commissioner may authorize.
Page 4
Title 18 - Insurance Code
(c) The Deputy shall devote full time to the Department, shall not engage in any other insurance-related activity for fee or compensation
and the State shall pay a salary at the rate provided by law in full compensation for all services.
(18 Del. C. 1953, § 309; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 307. Staff.
(a) The Commissioner may appoint and fix the compensation of such examiners, clerks, technical and professional personnel, and other
necessary assistants as conduct of the office may require and may revoke such appointments.
(b) The Commissioner may from time to time contract for and procure such additional and independent actuarial, rating, legal and other
technical and professional services as may be required for discharge of the duties of the office.
(18 Del. C. 1953, § 310; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 308. Prohibited interest; rewards.
(a) The Commissioner, the Commissioner’s Deputy, or any examiner, assistant or employee of the Department, shall not be connected
with the management of, nor have a material financial interest in, directly or indirectly, any insurer, insurance agency, or broker or
insurance transaction, except as policy holder or claimant under a policy; except that as to matters wherein a conflict of interest does
not exist on the part of any such individual, the Commissioner may employ or retain from time to time insurance actuaries, examiners,
accountants, attorneys or other technicians, who are independently practicing their profession even though from time to time they are
similarly employed or retained by insurers or others.
(b) The Commissioner, the Commissioner’s Deputy, or any examiner, assistant, employee or technician retained by the Department,
shall not be given nor receive, directly or indirectly, any fee, compensation, loan, gift or other thing of value, in addition to the
compensation and expense allowance provided by or pursuant to the law of this State, or by contract with the Commissioner, for any
service rendered or to be rendered as such Commissioner, Deputy, examiner, assistant, employee, or technician, or in connection therewith.
(c) Subsection (a) of this section shall not be deemed to prohibit receipt by any such person of fully vested commissions or fully vested
retirement benefits to which entitled by reason of services performed prior to becoming Commissioner or prior to employment by the
Commissioner.
(d) This section shall not be deemed to prohibit appointment and functioning of the Commissioner as process agent of insurers or of
nonresident licensees as provided for in this title.
(18 Del. C. 1953, § 311; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 309. Delegation of powers; duties.
(a) The Commissioner may delegate to the Commissioner’s Deputy, authorized representative, examiner or an employee of the
Department the exercise or discharge in the Commissioner’s name of any power, duty or function, whether ministerial, discretionary or
of whatever character vested in or imposed upon the Commissioner under this title.
(b) The official act of any such person acting in the Commissioner’s name and by the Commissioner’s authority shall be deemed an
official act of the Commissioner.
(18 Del. C. 1953, § 312; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1; 80 Del. Laws, c. 46, § 1;
80 Del. Laws, c. 376, § 1.)
§ 310. General powers; duties.
(a) The Commissioner shall enforce and execute the duties imposed by this title.
(b) The Commissioner shall have the powers and authority expressly vested by or reasonably implied from this title.
(c) With respect to enforcement of the payment of fees, charges and taxes, all the provisions of law conferring powers and duties upon
the State Treasurer shall also apply to the Commissioner.
(d) The Commissioner shall have such additional rights, powers and duties as may be provided by other laws of this State.
(18 Del. C. 1953, § 313; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1.)
§ 311. Rules and regulations; promulgation; violation.
(a) The Commissioner may make reasonable rules and regulations necessary for, or as an aid to, the administration or effectuation
of any provision of this title. No such rule or regulation shall extend, modify or conflict with any law of this State or the reasonable
implications thereof.
(b) The Commissioner shall adopt and promulgate rules and regulations in accordance with the procedures set forth in the state
Administrative Procedures Act, Chapter 101 of Title 29.
(c) Wilful violation of any such rule or regulation shall subject the violator to such suspension or revocation of certificate of authority
or license, or to such administrative fine in lieu thereof, as may be applicable under this title, for violation of the provision to which such
rule or regulation relates; but no penalty shall apply to any act done or omitted in good faith in conformity with any such rule or regulation,
notwithstanding that such rule or regulation, after such act or omission, may be amended or rescinded or determined by judicial or other
authority to be invalid for any reason.
(18 Del. C. 1953, § 314; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1.)
Page 5
Title 18 - Insurance Code
§ 312. Orders, notices in general.
(a) Orders and notices of the Commissioner shall be effective only when in writing signed by the Commissioner or by the
Commissioner’s authority.
(b) Except as otherwise expressly provided by law as to particular orders, every order of the Commissioner shall state its effective
date and shall concisely state:
(1) Its intent or purpose;
(2) The grounds on which based;
(3) The provisions of this title pursuant to which action is taken or proposed to be taken; but failure to so designate a particular
provision shall not deprive the Commissioner of the right to rely thereon except where expressly provided to the contrary.
(c) Except as may be provided by particular law or regulation, any order, notice, bulletin or the like may be given to the person or
persons affected thereby by any 1 or more of the following methods:
(1) First-class or bulk mail, postage prepaid, addressed to such person at the person’s principal place of business or residence as
last of record in the Department. Delivery of said item shall be deemed to have been given when deposited in a mail depository of
the United States Postal Service;
(2) By receipted ground or air commercial delivery service. Delivery of said item shall be deemed to have been given when a receipt
therefor is obtained from said commercial delivery service;
(3) By publication in the Register of Regulations; or
(4) By publication on the Internet, including but not limited to the Department’s webpage, the webpage of the National Association
of Insurance Commissioners (NAIC), and the webpage of the National Insurance Producer Registry (NIPR).
(18 Del. C. 1953, § 315; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 312, §
72.)
§ 313. Enforcement through Attorney General.
(a) The Commissioner, through the Attorney General of this State, may invoke the aid of the Superior Court, through proceedings
instituted in any county of this State, to enforce any lawful order made or action taken by the Commissioner. In such proceedings the
Superior Court may make such orders, either preliminary or final, as it deems proper under the facts established before it.
(b) If the Commissioner has reason to believe that any person has violated this title or any other law applicable to insurance operations,
for which criminal prosecution is provided, and, in the Commissioner’s opinion, would be in order, the Commissioner shall give the
information relative thereto to the Attorney General. The Attorney General shall promptly institute such action or proceedings against
such person as in the Attorney General’s opinion the information may require or justify.
(c) The Attorney General upon request of the Commissioner is authorized to proceed in the courts of any other state or in any federal
court or agency to enforce an order or decision of any court proceeding or in any administrative proceeding before the Commissioner.
(18 Del. C. 1953, § 316; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 314. Records; inspection; destruction.
(a) The Commissioner shall carefully preserve in the Department and in permanent form all papers and records relating to the business
of the Department and shall hand the same over to the successor in office.
(b) The Commissioner shall permit inspection of the papers, records, and filings in the Department in accordance with this State’s
Freedom of Information Act laws (Chapter 100 of Title 29).
(c) The Commissioner may destroy unneeded or obsolete records and filings in the Department in accordance with provisions and
procedures applicable to administrative agencies of this State in general.
(d) Nothing in this title shall prohibit the storage of documents and records by use of electronic means or media.
(18 Del. C. 1953, § 317; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1; 83 Del. Laws, c. 312, § 1.)
§ 315. Official documents, certified copies; use as evidence.
Any instrument duly executed by the Commissioner, and authenticated by the Commissioner’s seal of office, shall be received in
evidence in the courts of this State, and copies of papers and records in the Department so authenticated shall be received as evidence
with the same effect as the originals.
(18 Del. C. 1953, § 318; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 316. Interstate cooperation.
(a) The Commissioner shall communicate, on request of the insurance supervisory official of any state, province or country, any
information which it is the Commissioner’s duty by law to ascertain respecting authorized insurers. Any communication of documents,
materials or other information, including confidential and privileged documents, materials or information, shall be in accordance with the
provisions of this section, and any other applicable provisions of this title.
Page 6
Title 18 - Insurance Code
(b) The Commissioner may be a member of the National Association of Insurance Commissioners, the International Association of
Insurance Supervisors or any successor organization and may participate in and support other cooperative activities of public officials
having supervision of the business of insurance.
(c) The Commissioner may enter into agreements governing sharing, confidentiality, security and use of information consistent with
this section and other applicable provisions of this title. The Commissioner shall maintain, as confidential, any confidential documents
or information received from the National Association of Insurance Commissioners or the International Association of Insurance
Supervisors, and such documents and information shall not be subject to subpoena and may not be made public by the Commissioner
or any other person unless the prior written consent of the entity providing the documents or information and the company to which it
pertains has been obtained. In addition, any documents or information received by the Commissioner from state or federal insurance,
banking or securities regulators or similar regulators in a foreign country which are confidential in such jurisdictions shall be maintained
as confidential by the Commissioner, shall not be subject to subpoena and may not be made public by the Commissioner or any other
person unless the prior written consent of the entity providing the documents or information and the company to which it pertains has been
obtained. The Commissioner may share any information, including confidential information, with the National Association of Insurance
Commissioners, the International Association of Insurance Supervisors, or state or federal insurance, banking or securities regulators or
similar regulators in a foreign country so long as the Commissioner determines that such entities agree to maintain the same level of
confidentiality in their jurisdictions as is available in this State and are authorized to do so.
(18 Del. C. 1953, § 320; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1; 79 Del. Laws, c. 208, §
1.)
§ 317. Investigations authorized.
In addition to examinations and investigations expressly authorized, the Commissioner may conduct such investigations of insurance
matters as the Commissioner may deem proper, upon reasonable cause, to determine whether any person has violated this title or to
secure information useful in the lawful administration of any such provision. Except as otherwise provided in this title, the cost of such
investigations shall be borne by the State.
(18 Del. C. 1953, § 321; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 318. Examination of insurers.
(a) The Commissioner or any of the Commissioner’s examiners may conduct an examination under this section of any company as
often as the Commissioner in the Commissioner’s sole discretion deems appropriate, but shall, at a minimum, conduct an examination
of every insurer licensed in this State but not less frequently than every 5 years. In scheduling and determining the nature, scope and
frequency of the examinations, the Commissioner shall consider such matters as the results of financial statement analyses and ratios,
changes in management or ownership, actuarial opinions, reports of independent certified public accountants and other criteria as set forth
in the Examiner’s Handbook adopted by the National Association of Insurance Commissioners and in effect when the Commissioner
exercises discretion under this section. Examination of an alien insurer shall be limited to its insurance transactions, assets, trust deposits
and affairs in the United States except as otherwise required by the Commissioner.
(b) The Commissioner shall examine, in like manner, each insurer applying for an initial certificate of authority to transact insurance
in this State.
(c) In lieu of making an examination, the Commissioner may accept, in the Commissioner’s discretion, a full report of the most recent
examination of a foreign or alien insurer, certified to by the insurance supervisory official of another state.
(d) As far as practical, the examination of a foreign or alien insurer shall be made in cooperation with the insurance supervisory officials
of other states in which the insurer transacts business.
(e) In lieu of an examination under this section of any foreign or alien insurer licensed in this State, the Commissioner may accept
an examination report on such company as prepared by the insurance department for the company’s state of domicile or port-of-entry
state, so long as:
(1) The insurance department, at the time of the examination, was accredited under the National Association of Insurance
Commissioners’ Financial Regulation Standards and Accreditation Program; or
(2) The examination is performed under the supervision of an accredited insurance department, or with the participation of 1 or
more examiners, who are employed by such an accredited state insurance department, and who, after a review of the examination
work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures
required by their insurance department.
(f) The Commissioner shall also conduct examinations as required by § 2301E of Title 19 [repealed].
(18 Del. C. 1953, § 322; 56 Del. Laws, c. 380, § 1; 68 Del. Laws, c. 51, § 1; 69 Del. Laws, c. 92, § 1; 70 Del. Laws, c. 185, § 1;
70 Del. Laws, c. 186, § 1; 79 Del. Laws, c. 55, § 6.)
§ 319. Examination of agents, promoters and others.
For the purpose of ascertaining compliance with law or relationships and transactions between any such person and any insurer or
proposed insurer, the Commissioner may examine, as often as the Commissioner deems advisable, the accounts, records, documents and
transactions pertaining to or affecting insurance affairs or proposed insurance affairs of:
Page 7
Title 18 - Insurance Code
(1) Any insurance agent, solicitor, broker, general agent, adjuster, insurer representative or person holding oneself out as any of
the foregoing;
(2) Any person having a contract under which the person enjoys in fact the exclusive or dominant right to manage or control an insurer;
(3) Any person holding the shares of voting stock or the policyholder proxies of a domestic insurer for the purpose of controlling
the management thereof, as voting trustee or otherwise;
(4) Any person in this State, who is engaged in, or proposing to be engaged in, holding oneself out as engaging, proposing or assisting
in the promotion, formation or financing of an insurer, insurance holding corporation, corporation or other group, to finance an insurer
or the production of its business.
(18 Del. C. 1953, § 323; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 320. Conduct of examination; access to records; correction.
(a) The Commissioner shall conduct each examination in an expeditious, fair, and impartial manner. Upon determining that an
examination should be conducted, the Commissioner or the Commissioner’s designee shall issue an examination warrant appointing 1
or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination,
the examiner shall observe those guidelines and procedures set forth in the Examiner’s Handbook adopted by the National Association
of Insurance Commissioners. The Commissioner may also employ such other guidelines or procedures as the Commissioner may deem
appropriate.
(b) Upon any such examination the Commissioner or examiner may examine, under oath, any officer, agent or other individual believed
to have material information regarding the affairs under examination.
(c) Every person being examined, the person’s officers, attorneys, employees, agents and representatives, shall make freely available
to the Commissioner, or the Commissioner’s examiners, the accounts, records, documents, files, information, assets and matters of such
person, in the person’s possession or control, relating to the subject of the examination and shall facilitate the examination.
(d) If the Commissioner or examiner finds any accounts or records to be inadequate or inadequately kept or posted, the Commissioner
may employ experts to reconstruct, rewrite, post or balance them at the expense of the person being examined if such person has failed
to maintain, complete or correct such records or accounting, after the Commissioner or examiner has given the person written notice and
a reasonable opportunity to do so.
(e) Neither the Commissioner, nor any examiner, shall remove any record, account, document, file or other property of the person
being examined from the offices or place of such person, except with the written consent of such person in advance of such removal or
pursuant to an order of court duly obtained. This provision shall not be deemed to affect the making and removal of copies or abstracts
of any such record, account, document or file.
(18 Del. C. 1953, § 324; 56 Del. Laws, c. 380, § 1; 68 Del. Laws, c. 51, § 2; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 321. Examination report.
(a) The Commissioner or the Commissioner’s examiner shall make a full and true written report of every such examination made by
the Commissioner or the Commissioner’s examiner and shall therein certify under oath the report and findings.
(b) The report shall contain only information appearing upon the books, records, documents and papers of, or relating to, the person or
affairs being examined or ascertained from testimony of individuals under oath concerning the affairs of such person, together with such
conclusions and recommendations as may reasonably be warranted by such information.
(c) No later than 60 days following the completion of the examination, the examiner in charge shall file with the Department a verified
written report of examination under oath. Upon receipt of the verified report, the Department shall transmit the report to the company
examined, together with a notice which shall afford the company examined a reasonable opportunity of not more than 30 days to make
a written submission or rebuttal with respect to any matters contained in the examination report. If the company so requests in writing
within such 30-day period, the Commissioner shall grant a hearing as to the report and shall not file the report until after the hearing and
after such modifications have been made therein as the Commissioner deems proper.
(d) [Repealed.]
(e) The report when so filed shall be admissible in any action or proceeding brought by the Commissioner against the person examined
or against its officers, employees or agents. In any such action or proceeding, the Commissioner or the Commissioner’s examiners may,
however, at any time testify and offer proper evidence as to information secured or matters discovered during the course of the examination,
whether or not a written report of the examination has been either made, furnished or filed with the Department.
(f) The Commissioner may withhold from public inspection any examination or investigation report for so long as the Commissioner
deems such withholding to be necessary for the protection of the person examined against unwarranted injury or to be in the public interest.
(g) All working papers, recorded information, documents and copies thereof produced by, obtained by, or disclosed to the Commissioner
or any other person in the course of an examination made under this chapter, or in the course of analysis by the Commissioner of the
financial condition or market conduct of a company, shall be given confidential treatment and are not subject to subpoena and may not
be made public by the Commissioner or any other person except to insurance departments of any state or country, or to law-enforcement
officials of this or any other state or agency of the federal government at any time, so long as such agency or office receiving the report
Page 8
Title 18 - Insurance Code
or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this section, unless the prior written
consent of the company to which it pertains has been obtained.
(18 Del. C. 1953, § 325; 56 Del. Laws, c. 380, § 1; 68 Del. Laws, c. 51, § 3; 69 Del. Laws, c. 92, §§ 2,3; 70 Del. Laws, c. 185, §
1; 70 Del. Laws, c. 186, § 1; 79 Del. Laws, c. 208, § 2; 83 Del. Laws, c. 106, § 1.)
§ 322. Examination expense.
(a) The expense of examination of an insurer or of any person referred to in § 319(2) of this title (management or control of an insurer
under contract) or § 319(4) of this title (promoters, etc.) shall be borne by the person examined. Such expense shall include only the
reasonable and proper expenses of the Commissioner, and the Commissioner’s examiners and assistants, including expert assistance, and
a reasonable per diem as to such examiners and assistants as necessarily incurred in the examination.
(b) Such person examined shall promptly pay the examination expense upon presentation by the Commissioner, or the Commissioner’s
examiner, of a reasonably detailed written account thereof.
(18 Del. C. 1953, § 326; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 323. Administrative procedures; hearings in general.
(a) The Commissioner may hold a hearing without request by others for any purpose within the scope of this title.
(b) The Commissioner shall hold a hearing:
(1) If required by any other provision of this title; or
(2) Upon written application for a hearing by a person aggrieved by any act, threatened act or failure of the Commissioner to act, or
by any report, rule, regulation or order of the Commissioner (other than an order for the holding of a hearing, or order on a hearing, or
pursuant to such order, of which hearing such person had notice). Any such application must be filed in the Department within 90 days
after such person knew or reasonably should have known of such act, threatened act, failure, report, rule, regulation or order, unless a
different period is provided for by other laws applicable to the particular matter and, in which case, such other law shall govern.
(c) Any such application for a hearing shall briefly state the respects in which the applicant is so aggrieved, together with the grounds
to be relied upon as a basis for the relief to be sought at the hearing.
(d) If the Commissioner finds that the application is made in good faith, that the applicant would be so aggrieved if the grounds are
established and that such grounds otherwise justify the hearing, the Commissioner shall hold the hearing within 30 days after filing of
the application unless postponed by mutual consent. Failure to hold the hearing upon application of a person entitled, as hereinabove
provided, shall constitute a denial of the relief sought and shall be the equivalent of a final order of the Commissioner on hearing for the
purpose of an appeal under § 328 of this title.
(e) Pending the hearing and decision, the Commissioner may suspend or postpone the effective date of the previous action.
(f) To the extent that it does not conflict with the provisions of this chapter, the Administrative Procedures Act, Chapter 101 of Title
29, shall govern all aspects of the Department’s administrative proceedings, including, but not limited to, the following:
(1) Notice of hearing;
(2) Conduct of hearing;
(3) Ex parte consultations;
(4) Proposed order;
(5) Record retention; and
(6) Decision and final order.
(18 Del. C. 1953, § 327; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 324. Notice of hearing.
(a) Except where a longer period is expressly provided in this title, the Commissioner shall give written notice of the hearing to all
parties not less than 20 days in advance.
(b) If any such hearing is to be held for consideration of rules and regulations of the Commissioner or of other matters which, under
subsection (a) of this section, would otherwise require separate notices to more than 30 persons, in lieu of other notice the Commissioner
may give notice of the hearing by publication in a newspaper of general circulation in this State, at least once each week during the 4
weeks immediately preceding the week in which the hearing is to be held; except that the Commissioner shall mail such notice to all
persons who have requested the same in writing in advance and have paid to the Commissioner the reasonable amount fixed by the
Commissioner to cover the cost thereof.
(18 Del. C. 1953, § 328; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 325. Conduct of hearing.
The Commissioner may hold a hearing in Dover or any other place of convenience to parties and witnesses as the Commissioner
determines. The Commissioner, or the Commissioner’s designee, shall preside at the hearing and shall expedite the hearing and all
procedures involved therein.
(18 Del. C. 1953, § 329; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
Page 9
Title 18 - Insurance Code
§ 326. Witnesses and documentary evidence.
(a) As to the subject of any examination, investigation or hearing being conducted by the Commissioner, the Commissioner may
subpoena witnesses and administer oaths or affirmations, and examine any individual under oath, or take depositions, and by subpoena
duces tecum may require the production of documentary and other evidence. Any delegation by the Commissioner of power of subpoena
shall be in writing.
(b) Witness fees and mileage, if claimed, shall be allowed the same as for testimony in a Superior Court. Witness fees, mileage and
the actual expense necessarily incurred in securing attendance of witnesses and their testimony shall be itemized and shall be a part of
the examination expense to be paid by the person being examined, where payment of examination expense by such person is otherwise
provided for in this title, or paid by the person as to whom such proceedings, other than as part of an examination, are held if, in such
proceedings, such person is found to have been in violation of the law, or by the person, if other than the Commissioner, at whose request
the hearing is held.
(c) Subpoenas of witnesses shall be served in the same manner and at the same cost as if issued by a Superior Court. If any individual
fails to obey a subpoena issued and served hereunder with respect to any matter or evidence concerning which the individual may be
lawfully interrogated or required to produce for examination, upon application of the Commissioner, the Superior Court, in any county
in which is pending the proceeding at which such individual is so required to appear, or the Superior Court in the county in which such
individual resides, may issue an order requiring the individual to comply with the subpoena and to appear and testify or produce the
evidence subpoenaed; and any failure to obey such order of the Court may be punished by the Court as a contempt thereof.
(d) Any person knowingly giving false testimony under oath or making a false affirmation as to any matter material to any such
examination, investigation or hearing, upon conviction thereof, shall be guilty of perjury.
(18 Del. C. 1953, § 330; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 327. Testimony compelled; immunity.
(a) If any individual asks to be excused from attending or testifying or from producing any books, papers, records, contracts,
correspondence or other documents in connection with any examination, hearing or investigation being conducted by the Commissioner,
or the Commissioner’s examiner, on the ground that the testimony or evidence required of the individual may tend to incriminate the
individual, or subject the individual to a penalty or forfeiture and shall, by the Attorney General, be directed to give such testimony or
produce such evidence, the individual must nonetheless comply with such direction, but the individual shall not thereafter be prosecuted
or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which the individual may have so
testified or produced evidence, and no testimony so given or evidence produced shall be received against the individual upon any criminal
action, investigation or proceeding; except, however, that no such individual so testifying shall be exempt from prosecution or punishment
for any perjury committed by the individual in such testimony, and the testimony or evidence so given or produced shall be admissible
against the individual upon any criminal action, investigation or proceeding concerning such perjury, nor shall such individual be exempt
from the refusal, suspension or revocation of any license, permission or authority conferred or to be conferred, pursuant to this title.
(b) Any such individual may execute, acknowledge and file in the office of the Commissioner and of the Attorney General a statement
expressly waiving such immunity or privilege in respect to any transaction, matter or thing specified in such statement, and thereupon
the testimony of such individual or such evidence in relation to such transaction, matter or thing may be received or produced before
any judge or justice, court, tribunal, grand jury or otherwise, and if so received or produced such individual shall not be entitled to any
immunity or privileges on account of any testimony given or evidence so produced.
(18 Del. C. 1953, § 331; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 328. Appeal from the Commissioner.
(a) Except as to matters arising under Chapter 25 of this title (Rates and Rating Organizations), an appeal from the Commissioner
shall be taken only from an order on hearing or as to a matter on which the Commissioner has refused or failed to hold a hearing after
application therefor or issue an order on hearing as required by § 323 of this title.
(b) Any person who was a party to such hearing or whose pecuniary interests are directly and immediately affected by any such refusal
or failure, and who is aggrieved by such order, refusal or failure, may appeal from such order or as to any such matter within 60 days after:
(1) The order on hearing has been mailed or delivered to the persons entitled to receive the same or given by last publication thereof
where delivery by publication is permitted; or
(2) The Commissioner has refused or failed to make an order on hearing as required under § 323 of this title; or
(3) The Commissioner has refused or failed to grant or hold a hearing as required under § 323 of this title.
(c) The appeal shall be granted as a matter of right and shall be taken to the Superior Court in any county in this State.
(d) The appeal shall be taken by filing in the Court a verified petition stating the grounds upon which the review is sought, together
with a bond with good and sufficient sureties to be approved by the Court, conditioned to pay all costs which may be assessed against
the appellant or petitioner in such proceedings and by serving a copy of the petition upon the Commissioner. If the appeal is from the
Commissioner’s order on hearing, the petitioner shall also deliver to the Commissioner a sufficient number of copies of the petition and
Page 10
Title 18 - Insurance Code
the Commissioner shall mail or otherwise furnish a copy thereof to the other parties to the hearing to the same extent as a copy of the
Commissioner’s order is required to be furnished to the hearing parties under § 323 of this title.
(e) Upon receiving the petition for review, the Commissioner shall cause to be prepared an official record certified by the Commissioner
which shall contain a copy of all proceedings and orders of the Commissioner appealed from and the transcript of testimony and evidence
or summary record thereof. Within 30 days after the petition is served upon him or her, the Commissioner shall file such official record
with the Court in which the appeal is pending.
(f) Upon filing of the petition for review the Court shall have full jurisdiction of the proceeding. Such filing shall not stay the enforcement
of the Commissioner’s order or action appealed from unless so stayed by order of the Court.
(g) If the appeal is from the Commissioner’s order on hearing, the review of the Court shall be limited to matters shown by the
Commissioner’s official record; otherwise, the review shall be de novo. The Court shall have the power, by preliminary order, to settle
questions concerning the completeness and accuracy of the Commissioner’s official record.
(h) In its discretion the Court may remand the case to the Commissioner for further proceedings in accordance with the Court’s directions
or, in advance of judgment and upon a sufficient showing, the Court may remand the case to the Commissioner for the purpose of taking
additional testimony or other proceedings.
(i) From the judgment of the Superior Court, either the Commissioner or other party to the appeal may appeal directly to the Supreme
Court of the State in the same manner as is provided in civil cases.
(18 Del. C. 1953, § 333; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 185, § 1; 70 Del. Laws, c. 186, § 1.)
§ 329. Administrative penalty.
(a) Notwithstanding any other provisions of this title or any regulation implementing said title, the Commissioner, upon a finding after
notice and hearing conducted in accordance with the provisions of this chapter, that any person, insurer or insurance holding company has
violated any provision of this title or any regulation implementing said title, may impose or order an administrative penalty in an amount
of money that is reasonable and appropriate in view of the facts and circumstances surrounding the violation. In determining what the
amount of penalty shall be, the Commissioner may take into consideration such matters as the nature of the violation, the amount of loss
resulting from the violator’s conduct, the intent of the violator, the damages caused by the violation, any efforts made by the violator to
correct the violation and prevent a reoccurrence, and the recommendations of any hearing officer. In no event shall the administrative
penalty per violation exceed $15,000 for those licensed under Chapter 17 of this title, and $50,000 per violation for insurance companies,
insurance holding companies and all other persons licensed under this title.
(b) Any administrative penalty imposed pursuant to this section may be in addition to any penalty, fine or sentence ordered by a court
in any civil or criminal proceeding.
(c) Any penalty that may be imposed or ordered by the Commissioner after the hearing shall be paid to the State Treasurer for deposit
in the General Fund.
(65 Del. Laws, c. 165, § 1; 70 Del. Laws, c. 185, § 1.)
§ 330. Immunity from liability.
(a) No cause of action shall arise nor shall any liability be imposed against the Commissioner, the Commissioner’s authorized
representatives or any examiner appointed by the Commissioner for any statements made or conduct performed in good faith while
carrying out the provisions of this chapter.
(b) No cause of action shall arise nor shall any liability be imposed against any person for the act of communicating or delivering
information or data to the Commissioner or the Commissioner’s authorized representative or examiner pursuant to an examination,
investigation, or regulatory inquiry made under this chapter, if such an act of communication or delivery was performed in good faith
and without fraudulent intent or intent to deceive.
(c) This section does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by
any person identified in subsection (a) of this section.
(d) A person identified in subsection (a) of this section shall be entitled to an award of attorney’s fees and costs if they are the prevailing
party in a civil cause of action for libel, slander or any other relevant tort arising out of their activities in carrying out the provisions
of this chapter and the party bringing the action was not substantially justified in doing so. For purposes of this section a proceeding is
“substantially justified” if it had a reasonable basis in law or in fact at the time that it was initiated.
(68 Del. Laws, c. 51, § 4; 70 Del. Laws, c. 185, § 1; 80 Del. Laws, c. 46, § 2; 80 Del. Laws, c. 376, § 2.)
§ 331. Arbitration of disputes involving homeowners’ insurance coverage.
(a) Every insurer providing insurance coverage for homeowners’ risks shall be required to submit to arbitration, in the manner set forth
in this section, any dispute relating to the amounts owed under any claim for losses or damages by an insured claiming to have suffered
losses or damages under the contract. Disputes relating to whether coverage exists and under what terms and conditions the coverage
exists shall not be subject to the arbitration process established in this section. Notwithstanding the foregoing, where the insurance policy
Page 11
Title 18 - Insurance Code
provides an arbitration or appraisal provision in a form approved by the Insurance Department, the arbitration mandated by this subsection
shall not apply.
(b) All arbitration shall be administered by the Insurance Commissioner or the Insurance Commissioner’s nominee.
(c) The Insurance Commissioner or the Insurance Commissioner’s nominee shall establish panels of arbitrators in accordance with the
rules and regulations which shall be promulgated pursuant to this section. No cause of action shall arise nor any liability imposed against
any individual appointed to the panel for any conduct performed in good faith while carrying out the provisions of this section.
(d) Any request by an insured for arbitration shall be in writing and mailed to the Insurance Commissioner within 90 days from the
date an offer of settlement or denial of coverage or liability has been made by an insurer. Neither party shall be held to have waived any
of its rights by an act relating to arbitration and either party shall have a right to trial de novo to the Superior Court so long as notice of
appeal is filed with that Court in the manner set forth by its rules within 90 days of the date of the arbitration decision being rendered.
(e) The Insurance Commissioner shall establish a schedule of fees for arbitration which shall not exceed $75.
(f) The fee for arbitration shall be payable to the Department of Insurance at the time of the filing of the request for arbitration and
shall be maintained in a special fund identified as the “Arbitration Fund,” which shall remain separate and segregated from the General
Fund. The compensation paid to the arbitration panel shall be payable from this fund.
(70 Del. Laws, c. 173, § 1; 70 Del. Laws, c. 186, § 1.)
§ 332. Arbitration of disputes involving health insurance coverage.
(a) The following definitions shall apply with respect to this section:
(1) “Adverse determination” means a benefit denial, reduction or termination, a denial of certification, or both.
(2) “Benefit denial” means the denial, in whole or in part, of payment or reimbursement for health-care services rendered or healthcare supplies provided to any person claiming benefits under an insurance policy delivered or issued for delivery in Delaware.
(3) “Carrier” in this section shall have the same meaning applied to it at § 3343(a) of this title.
(4) “Covered person” means a person who claims to be entitled to receive benefits from a carrier.
(5) “Denial of certification” means a determination that an admission or continued stay, or course of treatment, or other covered
health-care service does not satisfy the insurance policy’s clinical requirements for appropriateness, necessity, health-care setting and/
or level of care.
(6) “Emergency review” means an IRP review involving an imminent, emergent or serious threat to the health of the claimant.
(7) “Health plan” shall have the same meaning as “health benefit plan” as defined at § 3343(a)(2) of this title.
(8) “Insurance policy” shall have the meaning assigned to it at § 2702 of this title, and shall also include all health plans and policies
for the payment for, provision of or reimbursement for medical services, supplies or both issued by insurers, health services corporations
or managed care organizations.
(9) “Internal review process” or “IRP” means the procedure for an internal review of an adverse determination pursuant to subsection
(b) of this section.
(b) Every carrier shall establish and maintain an IRP approved by the Insurance Commissioner.
(c) The Insurance Commissioner shall approve those IRPs that meet the following minimum criteria:
(1) Written notice. — The IRP must provide for written notice of the internal review procedure to covered persons, annually and
following any adverse determination.
(2) Requests for review of adverse determinations. —
The IRP must permit covered persons to submit requests for internal reviews of adverse determinations (“grievances”) orally or in
writing. Grievances must be submitted within 30 days of receipt by the covered person of written notice of an adverse determination.
The carrier must provide written forms for submission of grievances. Upon receipt of an oral grievance or a written grievance that does
not contain sufficient information, the carrier must immediately provide the covered person with a written form upon which to make
his or her grievance, and the carrier may require that an oral or insufficient written grievance be submitted in writing within 10 days
of the covered person’s receipt of the written form. A grievance shall be considered as received by the carrier when a written form,
which the covered person purports to be complete, is received by the carrier.
(3) Instructions on written form. — The written form referred to in paragraph (c)(2) of this section shall inform the covered person
of the information necessary to pursue an internal grievance of an adverse decision.
(4) Prompt response to written grievances. — The IRP shall provide that within 5 business days of receipt of a written grievance, the
carrier shall provide written acknowledgement of the grievance, including the name, address and telephone number of the individual
or department designated by the carrier to respond to the grievance.
(5) Speedy review of grievances. — That IRP shall require that all grievances be decided in an expeditious manner, and in any event,
no more than:
a. 72 hours after the receipt of all necessary information relating to an emergency review;
b. 30 days after the receipt of all necessary information in the case of requests for referrals or determinations concerning whether
a requested benefit is covered pursuant to the contract; and
Page 12
Title 18 - Insurance Code
c. 45 days after the receipt of all necessary information in all other instances.
A grievance shall be considered decided when the carrier has made its final decision on the subject of the review and has deposited
written notice of that decision in the mail, in accordance with paragraphs (c)(7) and (8) of this section.
(6) Assignment of qualified personnel. — The IRP shall provide that when the subject of the grievance relates to medical or clinical
matters, including medical necessity and appropriateness of treatment, the health carrier shall assign licensed, certified or registered
health care personnel with expertise in the field implicated by the request for review to conduct the review. The review shall be
conducted by personnel other than those who made the initial adverse determination.
(7) Written notice of decisions. — The IRP shall provide that within 5 days after a grievance is decided in the manner described
above, the insured shall be provided with written notice of the disposition of that grievance. In cases where the grievance has been
decided in a manner that does not pay the claim in its entirety, the carrier shall provide the insured with a letter fully stating the reasons
for the disposition (including specific policy language relied upon and any other documents relied upon) and the clinical rationale for
the determination in cases where the determination has a clinical basis. The carrier’s written notice shall also inform the insured of
the appropriate manner for the insured to pursue an external review of the carrier’s decision. Finally, the carrier’s written notice shall
inform the insured of the mediation services offered by the Department of Insurance, but shall clearly inform the insured in layman’s
terms that mediation does not change the deadlines imposed by § 6416 of this title or this section. The Department of Insurance shall
inform any person with rights under § 6416 of this title or this section of those rights.
(8) Manner of notice of decisions. — Written notice of the review decision shall be deposited in the mail, addressed to the last known
address of the covered person. In the case of emergency reviews, the carrier shall also make reasonable efforts to notify the covered
person immediately following the determination of the grievance and the written notice of determination shall be deposited in the mail,
addressed to the last known address of the claimant, within 48 hours after the receipt of all information necessary to complete the
review. For cases involving a denial, reduction or termination of benefits where the external review may be conducted pursuant to this
section, written notice shall be mailed requesting delivery confirmation by the United State Postal Service.
(d) Every carrier shall submit a report on its internal review process on an annual basis to the Insurance Commissioner in accordance
with regulations established by the Department.
(e) With respect to adverse determinations that are subject to review by the Department of Insurance pursuant to § 6416(f) of this title,
the Insurance Commissioner shall develop regulations providing for arbitration of such adverse determinations. Such regulations shall
contain the following provisions:
(1) Requests for arbitration shall be in writing and mailed to the Commissioner within 60 days of the receipt of the written statement
referred to in paragraph (c)(7) of this section.
(2) Arbitrators shall be chosen from an appropriate panel of arbitrators, and hearings shall be conducted according to rules established
by the Department of Insurance.
(3) The arbitrator shall review written arbitration requests prior to holding any hearing or allowing any exchange of information
between the parties in order to determine whether a written arbitration request is meritless on its face, and may summarily dismiss
meritless requests for arbitration.
(4) Neither party shall be held to have waived any of its rights to seek relief in a court of law with respect to a covered person’s legal
rights to benefits by an act relating to arbitration or the rendering of an arbitration decision.
(5) Arbitration decisions shall be rendered within 45 days of the Commissioner’s receipt of an arbitration request.
(f) The Insurance Commissioner shall establish a schedule of fees for arbitration. Fees chargeable to covered persons shall not exceed
$75 per arbitration. The carrier shall be responsible for all costs of arbitration which exceed this fee regardless of the final ruling, and
shall reimburse the Commissioner for the expenses related to the arbitration process. Funds paid to the Insurance Commissioner under
this subsection shall be placed in the arbitration fund and shall be used exclusively for the payment of appointed arbitrators. The Insurance
Commissioner may, in his or her discretion, impose a schedule of maximum fees that can be charged by an arbitrator for a given type
of arbitration.
(g) If the arbitrator makes a decision in favor of the carrier, that decision shall give rise to a rebuttable presumption to that effect in any
subsequent action brought by or on behalf of the covered person with respect to the decision. Should the decision favor the covered person,
the carrier shall have the right to appeal the matter to the court, in accordance with court rules. The outcome of that appeal, however, shall
have no effect on the covered person, as to whom the decision of the arbitrator shall control. The assignment of counsel for an appeal by
the carrier and the payment of expenses of that assigned counsel shall be as set forth in § 6416(b) of this title.
(h) Nothing in this section shall be construed to affect policies or contracts to the extent that those policies or contracts are exempt
from state regulation under federal law or regulation, nor shall anything in this section be read to restrict any affirmative rights granted
to patients or insureds under any other provision of the Delaware Code or the common law of the State.
(i) Notwithstanding any other language in the Delaware Code, the Department of Health and Social Services shall have the authority
to carry out all duties assigned to it by this section.
(70 Del. Laws, c. 194, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 96, § 4; 73 Del. Laws, c. 315, § 6; 75 Del. Laws, c. 362, §§
3-5; 78 Del. Laws, c. 226, § 3; 81 Del. Laws, c. 28, § 3; 81 Del. Laws, c. 29, § 1; 81 Del. Laws, c. 190, § 1.)
Page 13
Title 18 - Insurance Code
§ 333. Arbitration of disputes between insurance carriers and health-care providers.
(a) Definitions. — The following definitions shall apply with respect to this section:
(1) “Health-care provider” means a person, corporation, facility or institution licensed by this State pursuant to Title 24 or Title 16 to
provide health-care or professional services or any officers, employees or agents thereof acting within the scope of their employment;
provided, however, that the term “health-care provider” shall not mean or include the following:
a. Any nursing service or nursing facility conducted by or for those who rely upon treatment solely by spiritual means in accordance
with the creed or tenets of any generally recognized church or religious denomination;
b. Any long-term care facility, as defined at § 1102 of Title 16 or its successor; and
c. Any hospital as defined at § 1001 of Title 16 or its successor.
(2) “Insurance carrier” means any entity that provides health insurance in this State. For the purposes of this section, “carrier” includes
an insurance company, health services corporation, health maintenance organization and any other entity providing a plan of health
insurance or health benefits subject to state insurance regulation. “Carrier” also includes any third-party administrator or other entity
that adjusts, administers or settles claims in connection with health benefit plans.
(b) Every insurance carrier shall be required to submit to arbitration, in the manner set forth in this section, any dispute with a healthcare provider regarding reimbursement for an individual claim, procedure or service by that health-care provider for health-care services,
upon a request for arbitration by the health-care provider. A request for arbitration shall be made within 60 days after the receipt of the
decision rendered by the insurance carrier. The Commissioner shall promulgate regulations addressing the manner in which health-care
providers must be informed of the availability of arbitration under this section.
(c) By requesting arbitration pursuant to this chapter, a health-care provider shall be deemed to have agreed that it will not bill its
patient for the difference between its charge and any reimbursement awarded by the arbitrator if it is forbidden from such billing by its
contract with the carrier against whom the award is entered.
(d) The arbitration program shall be administered by the Department of Insurance.
(e) The Commissioner shall establish a panel of arbitrators, from which the Commissioner or the Commissioner’s designee will select
1 person to hear each request for arbitration. No cause of action shall arise nor shall any liability be imposed against any individual
appointed as arbitrator for any conduct performed in good faith while carrying out the provisions of this section. In establishing the panel
of arbitrators required by this subsection, the Commissioner shall endeavor to appoint persons qualified to hear both legal and medical
disputes.
(f) The losing party in an arbitration conducted pursuant to this section shall have a right to trial de novo in the Superior Court so long
as notice of appeal is filed with that Court in the manner set forth by Superior Court rules within 30 days of the date of the arbitration
decision being rendered.
(g) The Commissioner shall establish a schedule of fees for arbitration, which shall not exceed $100 per arbitration. The arbitrator may
award to the health-care provider the cost of filing the arbitration if the health-care provider should prevail.
(h) The cost of arbitration shall be payable to the Department of Insurance, and shall be maintained in a special fund identified as the
“Arbitration Fund,” which shall remain separate and segregated from the General Fund. The compensation paid to the arbitrator shall
be payable from the Arbitration Fund.
(i) The Commissioner may promulgate regulations exempting insurance carriers from the requirements of this section if the carriers
maintain a substantially similar program to that created by this section.
(j) The following issues shall not be subject to arbitration under this section:
(1) Disputes as to whether the patient for whom health-care services were provided was a policyholder of the insurance carrier at
the time services were rendered, or was otherwise entitled by contract to receive health-care services or reimbursement for healthcare services.
(2) Disputes that are already pending before a court of law.
(3) Disputes that fall under an insurance carrier’s own arbitration program, which has been granted an exemption pursuant to
subsection (i) of this section.
(k) Arbitration under this section of disputes that are subject to arbitration pursuant to § 332 of this title, or resolution pursuant to §
6416 et seq. of this title, shall be stayed during the pendency of those proceedings. If a decision is entered under § 332 of this title or §
6416 et seq. of this title regarding an issue identical to one for which arbitration is sought under this section, and no appeal is pending, the
decision entered under § 332 of this title or § 6416 et seq. of this title shall govern the outcome of the arbitration sought under this section.
(l) Health-care providers shall attempt to resolve disputes informally with insurance carriers before requesting arbitration pursuant to
this section. The arbitrator may dismiss an arbitration petition without prejudice if the arbitrator finds that the health-care provider has
not attempted to resolve the matter informally.
(m) Nothing in this section shall be construed to permit the alteration, amendment or modification of the substantive reimbursement
terms of the insurance carrier’s contracts with its members or health-care providers.
(n) This section shall be construed in a manner consistent with federal law and regulations.
Page 14
Title 18 - Insurance Code
(o) Arbitrations conducted pursuant to this section shall be subject to the provisions of §§ 10122 and 10125 of Title 29, provided
that arbitrations shall not be conducted in public. Except as otherwise provided in this subsection, arbitration proceedings shall not be
considered case decisions under Chapter 101 of Title 29.
(p) The Commissioner shall promulgate regulations for purposes of implementing this section.
(76 Del. Laws, c. 64, § 1; 80 Del. Laws, c. 404, § 1; 81 Del. Laws, c. 207, § 5; 82 Del. Laws, c. 73, § 1.)
§ 334. Office of Value-Based Health Care Delivery.
(a) The Office of Value-Based Health Care Delivery is established within the Department to reduce health-care costs by increasing the
availability of high quality, cost-efficient health insurance products that have stable, predictable, and affordable rates.
(b) For purposes of this section:
(1) “Affordability standard” means as defined by the Department in regulations promulgated under this section using information
collected under paragraphs (c)(2) and (c)(3) of this section and may include any of the following:
a. Trends, including any of the following:
1. Historical rates of trend for existing products.
2. National medical and health insurance trends.
3. Regional medical and health insurance trends.
4. Inflation indices.
b. Price comparison to other market rates for similar insurance products and medical services.
c. The ability of lower-income individuals to pay for health insurance.
d. Effective strategies carriers can use to maintain close control over administrative costs and enhance the affordability of products
and encourage delivery of high quality, efficient healthcare services.
(2) a. “Carrier” means any of the following:
1. “Health insurer” as defined in § 4004 of this title and licensed under this title.
2. A health insurer or other entity that is certified as a qualified health plan on the Delaware Health Insurance Marketplace for
plan year 2019 or a subsequent plan year.
b. Notwithstanding paragraph (b)(2)a. of this section, “carrier” does not mean any of the following:
1. A plan of health insurance or health benefits designed for issuance to persons eligible for coverage under Titles XVIII, XIX,
and XXI of the Social Security Act, 42 U.S.C. §§ 1395 et seq., 1396 et seq., and 1397aa et seq., known as Medicare, Medicaid,
or any other similar coverage under a state or federal government plan.
2. An entity selected by the State Group Health Insurance Plan to offer supplemental insurance program coverage under Chapter
52C of Title 29.
(3) “Primary care” means as defined by the Department in regulations promulgated under this section.
(4) “Primary Care Reform Collaborative” means as defined in § 9904A of Title 16.
(c) The Office of Value-Based Health Care Delivery shall do all of the following:
(1) Establish affordability standards for health insurance premiums based on recommendations from the Primary Care Reform
Collaborative.
(2) Establish, through regulations adopted under this section, mandatory minimums for payment innovations, including alternative
payment models, provider price increases, carrier investment in primary care, and other activities deemed necessary to achieve the
purpose of this section, to support a robust system of primary care by January 1, 2026.
(3) Collect data and develop reports regarding carrier investments in health care to monitor and evaluate all of the following:
a. The calculation of the amount of claims-based and non-claims-based primary care spending in this State, including data from
the Delaware Health Care Claims Database, under subchapter II of Chapter 103 of Title 16.
b. Carrier compliance with reimbursement rates for primary care required under §§ 3342B and 3556A of this title.
c. Health-care spending data collected and reported through the state benchmarking process.
d. The percentage of spending in primary care that is delegated to hospitals and related networks for care coordination through
alternative payment models.
(4) Annually evaluate whether primary care spending is increasing in compliance with the requirements of, and regulations adopted
under, this title, with consideration of overall total health-care spending.
(5) Make recommendations to the Insurance Commissioner and the Primary Care Reform Collaborative about appropriate
reimbursement rates for primary care.
(6) Develop and annually evaluate affordability standards, through an open and transparent process, in collaboration with the Primary
Care Reform Collaborative.
(82 Del. Laws, c. 189, § 2; 83 Del. Laws, c. 237, § 7.)
Page 15
Title 18 - Insurance Code
Part I
Insurance
Chapter 4
Workers’ Compensation Self-Insurance Groups
§ 401. Scope.
This chapter shall apply to workers’ compensation self-insurance groups of public and private employers. Groups which are issued a
certificate of authority by the Commissioner shall be subject to this chapter and Chapters 1, 3, 7, 11, 13, 17, 21, 23, 25, 26, 27 and 59
of this title and subchapters IV and V of Chapter 23 of Title 19, as well as any regulations promulgated under those chapters, except
as otherwise provided herein.
(70 Del. Laws, c. 540, § 1; 70 Del. Laws, c. 186, § 1.)
§ 402. Definitions.
For purposes of this chapter:
(1) “Administrator” means an individual, partnership or corporation engaged by a workers’ compensation self-insurance group’s
board of trustees to carry out the policies established by the group’s board of trustees and to provide day-to-day management of the
group.
(2) “Commissioner” means the Commissioner of Insurance.
(3) “Insolvent” or “insolvency” means the same as “impairment” or “insolvency” as those terms are defined in § 5901(1) of this
title as if the group were a reciprocal insurer.
(4) “Net premium” means premium derived from standard premium adjusted by any advance premium discounts.
(5) “Public employer” means a county, incorporated municipality, school district, parking authority or other instrumentality or
political subdivision of the State itself.
(6) “Service company” means a person or entity which provides services not provided by the administrator, including but not limited
to:
a. Claims adjustment;
b. Safety engineering;
c. Compilation of statistics and the preparation of premium, loss, and tax reports;
d. Preparation of other required self-insurance reports;
e. Development of members’ assessments and fees; and
f. Administration of a claim fund.
(7) “Standard premium” means the premium derived from the filed rates adjusted by experience modification factors but before
advance premium discounts.
(8) “Workers’ compensation” when used as a modifier of “benefits,” “liabilities,” or “obligations,” means both workers’
compensation and employers’ liability.
(9) “Workers’ compensation self-insurance group” or “group” means a not-for-profit unincorporated association consisting of 5 or
more private or public employers who are engaged in the same or similar type of business, who are members of the same bona fide
trade or professional association which has been in existence for not less than 5 years and who enter into agreements to pool their
liabilities for workers’ compensation benefits and employers’ liability in this State.
(70 Del. Laws, c. 540, § 1; 70 Del. Laws, c. 186, § 1.)
§ 403. Authority to act as a workers’ compensation self-insurance group.
No person, association or other entity shall act as a workers’ compensation self-insurance group unless it has been issued a certificate
of authority by the Commissioner.
(70 Del. Laws, c. 540, § 1; 70 Del. Laws, c. 186, § 1.)
§ 404. Qualifications for initial approval and continued authority to act as a workers’ compensation selfinsurance group.
(a) A proposed workers’ compensation self-insurance group shall file with the Commissioner its application for a certificate of approval
accompanied by a nonrefundable filing fee in accordance with § 701 of this title. The application shall include the group’s name, location
of its principal office, date or organization, name and address of each member and such other information as the Commissioner may
reasonably require, together with the following:
(1) Proof of compliance with subsection (b) of this section;
Page 16
Title 18 - Insurance Code
(2) A copy of the articles of association, if any;
(3) A copy of agreements with the administrator and with any service company;
(4) A copy of the by-laws of the proposed group;
(5) A copy of the agreement between the group and each member securing the payment of workers’ compensation benefits, which
shall include provision for payment of assessments as provided for in § 419 of this title;
(6) Designation of the initial board of trustees and administrator;
(7) The address in this State where the books and records of the group will be maintained at all times;
(8) A pro forma financial statement, on a form acceptable to the Commissioner, showing the financial ability of the group to pay
the workers’ compensation obligations of its members; and
(9) Proof of payment to the group by each member of not less than 25% of that member’s first-year estimated annual net premium
on a date prescribed by the Commissioner. Each payment shall be considered to be part of the first-year premium payment of each
member if the proposed group is granted a certificate of approval.
(b) To obtain and to maintain its certificate of authority, a workers’ compensation self-insurance group shall comply with the following
requirements as well as any other requirements established by law or regulation:
(1) A combined net worth of all members of a group of private employers of at least $1,000,000. Specific and aggregate excess
insurance in a form, in an amount and by an insurance company acceptable to the Commissioner for a group of public employers.
(2) Security in a form and amount prescribed by the Commissioner which shall be provided by a surety bond, security deposit or
financial security endorsement, or any combination thereof. If a surety bond is used to meet the security requirement, it shall be issued
by a corporate surety company authorized to transact business in this State. If a security deposit is used to meet the security requirement,
securities shall be limited to bonds or other evidences of indebtedness issued, assumed or guaranteed by the United States of America
or by an agency or instrumentality thereof; certificates of deposit in a federally insured bank; shares or savings deposits in a federally
insured savings and loan association or credit union; or any bond or security issued by a state of the United States of America and backed
by the full faith and credit of the state. Any such securities shall be deposited in accordance with § 1504 of this title and assigned to and
made negotiable by the Chairperson of the Industrial Accident Board and the Commissioner pursuant to a trust document acceptable to
the Commissioner. Interest accruing on a negotiable security so deposited shall be collected and transmitted to the depositor, provided
the depositor is not in default. A financial security endorsement, issued as part of an acceptable excess insurance contract, may be used
to meet all or part of the security requirement. The bond, security deposit or financial security endorsement shall be:
a. For the benefit of the State solely to pay claims and associated expenses; and
b. Payable upon the failure of the group to pay workers’ compensation benefits that it is legally obligated to pay.
The Commissioner may establish and adjust, from time to time, requirements for the amount of security based on differences among
groups in their size, types of employment, years in existence and other relevant factors.
(3) Specific and aggregate excess insurance in a form, in an amount and by an insurance company acceptable to the Commissioner.
The Commissioner may establish minimum requirements for the amount of specific and aggregate excess insurance based on differences
among groups in their size, types of employment, years in existence and other relevant factors, and may permit a group to meet this
requirement by placing in a designated depository securities of the type referred to in paragraph (b)(2) of this section.
(4) An estimated annual standard premium of at least $250,000 during a group’s first year of operation.
(5) An indemnity agreement jointly and severally binding the group and each member thereof to meet the workers’ compensation
obligations of each member. The indemnity agreement shall be in a form prescribed by the Commissioner and shall include minimum
uniform substantive provisions prescribed by the Commissioner. Subject to the Commissioner’s approval, a group may add other
provisions needed because of its particular circumstances.
(6) A fidelity bond for the administrator in a form and amount prescribed by the Commissioner.
(7) A fidelity bond for the service company in a form and amount prescribed by the Commissioner. The Commissioner may
also require the service company providing claim services to furnish a performance bond in a form and amount prescribed by the
Commissioner.
(c) A group shall notify the Commissioner of any change in the information required to be filed under subsection (a) of this section or
in the manner of its compliance with subsection (b) of this section no later than 30 days after the change.
(d) The Commissioner shall evaluate the information provided by the application required to be filed under subsection (a) of this section
to assure that no gaps in funding exist and that funds necessary to pay workers’ compensation benefits will be available on a timely basis.
(e) The Commissioner shall act upon a completed application for a certificate of approval within 60 days. If, because of the number
of applications, the Commissioner is unable to act upon an application within this period, the Commissioner shall have an additional
60 days to act.
(f) The Commissioner shall issue to the group a certificate of approval upon finding that the proposed group has met all requirements
or the Commissioner shall issue an order refusing the certification, setting forth reasons for refusal upon finding that the proposed group
does not meet all requirements.
Page 17
Title 18 - Insurance Code
(g) Each workers’ compensation self-insurance group shall be deemed to have appointed the Commissioner as its attorney to receive
service of legal process issued against it in this State. The appointment shall be irrevocable, shall bind any successor in interest and shall
remain in effect as long as there is in this State any obligation or liability of the group for workers’ compensation benefits.
(70 Del. Laws, c. 540, § 1; 70 Del. Laws, c. 186, § 1.)
§ 405. Certificate of authority; termination.
(a) The certificate of authority issued by the Commissioner to a workers’ compensation self-insurance group authorizes the group to
provide workers’ compensation benefits and employer’s liability coverage. The certificate of authority remains in effect until terminated
at the request of the group or revoked by the Commissioner, pursuant to § 423 of this title.
(b) The Commissioner shall not grant the request of any group to terminate its certificate of authority unless the group has insured
or reinsured all incurred workers’ compensation obligations with an authorized insurer under an agreement filed with and approved in
writing by the Commissioner. Such obligations shall include both known claims and expenses associated therewith and claims incurred
but not reported and expenses associated therewith.
Subject to the approval of the Commissioner, a group may merge with another group engaged in the same or similar type of business
only if the resulting group assumes in full all obligations of the merging groups. The Commissioner may hold a hearing on the merger
and shall do so if any party, including a member of either group, so requests.
(70 Del. Laws, c. 540, § 1; 70 Del. Laws, c. 186, § 1.)
§ 406. Examinations.
The Commissioner, pursuant to Chapter 5 of this title, may examine the affairs, transactions, accounts, records and assets and liabilities
of each group as often as the Commissioner deems advisable. The expense of such examinations shall be assessed against the group in
the same manner that insurers are assessed for examinations.
(70 Del. Laws, c. 540, § 1.)
§ 407. Board of trustees; membership, powers, duties and prohibitions.
Each group shall be operated by a board of trustees which shall consist of not less than 5 persons whom the members of a group elect
for stated terms of office. At least 2/3 of the trustees shall be employees, officers or directors of members of the group. The group’s
administrator, service company or any owner, officer, employee of or any other person affiliated with such administrator or service
company shall not serve on the board of trustees of the group. All trustees shall be residents of this State or officers of corporations
authorized to do business in this State. The board of trustees of each group shall ensure that all claims are paid promptly and take all
necessary precautions to safeguard the assets of the group, including all of the following:
(1) The board of trustees shall:
a. Maintain responsibility for all moneys collected or disbursed from the group and segregate all moneys into a claims fund account
and an administrative fund account. At least 70% of the net premium shall be placed into a designated depository for the sole purpose
of paying claims, allocated claims expenses, reinsurance or excess insurance and special fund contributions, including second injury
and other loss-related funds. This shall be called the “claims fund account.” The remaining net premium shall be placed into a
designated depository for the payment of taxes, general regulatory fees and assessments and administrative costs. This shall be called
the “administrative fund account.” The Commissioner may approve an administrative fund account of more than 30% and a claims
fund account of less than 70% only if the group shows to the Commissioner’s satisfaction that:
1. More than 30% is needed for an effective safety and loss control program; or
2. The group’s aggregate excess insurance attaches at less than 70%.
b. Maintain minutes of its meetings and make the minutes available to the Commissioner.
c. Designate an administrator to carry out the policies established by the board of trustees and to provide day-to-day management
of the group and delineate in the written minutes of its meetings the areas of authority it delegates to the administrator.
d. Retain an independent certified public accountant to prepare the statement of financial condition required by § 411(a) of this
title.
(2) The board of trustees shall not:
a. Extend credit to individual members for payment of a premium, except pursuant to payment plans approved by the
Commissioner.
b. Borrow any moneys from the group or in the name of the group except in the ordinary course of business, without first advising
the Commissioner of the nature and purpose of the loan and obtaining prior approval from the Commissioner.
(70 Del. Laws, c. 540, § 1.)
§ 408. Group membership; termination; liability.
(a) An employer joining a workers’ compensation self-insurance group after the group has been issued a certificate of authority shall:
Page 18
Title 18 - Insurance Code
(1) Submit an application for membership to the board of trustees or its administrator; and
(2) Enter into the indemnity agreement required by § 404(b)(5) of this title. Membership takes effect no earlier than each member’s
date of approval.
The application for membership and its approval shall be maintained as permanent records of the board of trustees.
(b) Individual members of a group shall be subject to cancellation by the group pursuant to the by-laws of the group. In addition,
individual members may elect to terminate their participation in the group. The group shall notify the Commissioner and the workers’
compensation agency of the termination or cancellation of a member within 10 days and shall maintain coverage of each canceled or
terminated member for 30 days after notice, at the terminating member’s expense, unless the group is notified sooner by the workers’
compensation agency that the canceled or terminated member has procured workers’ compensation insurance, has become an approved
self-insurer or has become a member of another group.
(c) The group shall pay all workers’ compensation benefits for which each member incurs liability during its period of membership. A
member who elects to terminate its membership or is canceled by a group remains jointly and severally liable for workers’ compensation
obligations of the group and its members which were incurred during the canceled or terminated member’s period of membership.
(d) A group member is not relieved of its workers’ compensation liabilities incurred during its period of membership except through
payment by the group or the member of required workers’ compensation benefits.
(e) The insolvency or bankruptcy of a member does not relieve the group or any other member of liability for the payment of any
workers’ compensation benefits incurred during the insolvent or bankrupt member’s period of membership.
(70 Del. Laws, c. 540, § 1.)
§ 409. Service companies.
(a) No service company or its employees, officers or directors shall be an employee, officer or director of, or have either a direct or
indirect financial interest in, an administrator. No administrator or its employees, officer or directors shall be an employee, officer or
director of, or have either a direct or indirect financial interest in, a service company.
(b) The service contract shall state that, unless the Commissioner permits otherwise, the service company shall handle, to their
conclusion, all claims and other obligations incurred during the contract period.
(70 Del. Laws, c. 540, § 1.)
§ 410. Licensing of agent.
Except for a salaried employee of a group, its administrator or its service company, any person soliciting membership for a workers’
compensation self-insurance group must be licensed as provided in Chapter 17 of this title.
(70 Del. Laws, c. 540, § 1.)
§ 411. Financial statements and other reports.
(a) Each group shall submit to the Commissioner a statement of financial condition audited by an independent certified public accountant
on or before the last day of the sixth month following the end of the group’s fiscal year. The financial statement shall be on a form
prescribed by the Commissioner and shall include, but not be limited to, actuarially appropriate reserves for:
(1) Known claims and expenses associated therewith;
(2) Claims incurred but not reported and expenses associated therewith;
(3) Unearned premiums; and
(4) Bad debts,
which reserves shall be shown as liabilities.
(b) An actuarial opinion regarding reserves for:
(1) Known claims and expenses associated therewith; and
(2) Claims incurred but not reported and expenses associated therewith shall be included in the audited financial statement.
The actuarial opinion shall be given by a member of the American Academy of Actuaries or other qualified loss reserve specialist as
defined in the annual statement adopted by the National Association of Insurance Commissioners.
(c) No person shall make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statement
made, in light of the circumstances under which it is made, not misleading, in connection with the solicitation of membership in a group.
(d) The Commissioner may prescribe the format and frequency of other reports which may include, but shall not be limited to, payroll
audit reports, summary loss reports and quarterly financial statements.
(70 Del. Laws, c. 540, § 1.)
§ 412. Taxes.
Groups shall be subject to subchapter V of Chapter 23 of Title 19 for the payment of premium tax.
(70 Del. Laws, c. 540, § 1.)
Page 19
Title 18 - Insurance Code
§ 413. Fees and assessments.
Groups shall be subject to subchapter V of Chapter 23 of Title 19 for the payment of fees and assessments.
(70 Del. Laws, c. 540, § 1.)
§ 414. Misrepresentation prohibited.
No person shall make a material misrepresentation or omission of a material fact in connection with the solicitation of membership of
a group nor violate any provision of Chapters 17 and 23 of this title or any regulations thereunder.
(70 Del. Laws, c. 540, § 1.)
§ 415. Investments.
Funds not needed for current obligations may be invested by the board of trustees in accordance with Chapters 11 and 13 of this title.
(70 Del. Laws, c. 540, § 1.)
§ 416. Rates and reporting of rates.
(a) Every workers’ compensation self-insurance group shall file and adhere to rates, rules and classifications pursuant to Chapter 26
of this title.
(b) Premium contributions to the group shall be determined by applying the rates and rules to the appropriate classification of each
member which may be adjusted by each member’s experience credit or debit. Subject to approval by the Commissioner, premium
contributions may also be reduced by an advance premium discount reflecting the group’s expense levels and loss experience.
(c) A group may contract with an advisory organization approved by the Commissioner for assistance in developing appropriate rates.
(d) Each group shall be audited at least annually by an auditor acceptable to the Commissioner to verify proper classifications,
experience rating, payroll and rates. A report of the audit shall be filed with the Commissioner in a form acceptable to the Commissioner.
A group or any member thereof may request a hearing on any objections to the classifications. If the Commissioner determines that,
as a result of an improper classification, a member’s premium contribution is insufficient, the commissioner shall order the group to
assess that member an amount equal to the deficiency. If the Commissioner determines that, as a result of an improper classification, a
member’s premium is excessive, the commissioner shall order the group to refund to the member the excess collected. The audit shall
be at the expense of the group.
(70 Del. Laws, c. 540, § 1.)
§ 417. Refunds.
(a) Any moneys for a fund year in excess of the amount necessary to fund all obligations for that fund year may be declared to be
refundable by the board of trustees not less than 12 months after the end of the fund year with the Commissioner’s approval.
(b) Each member shall be given a written description of the refund plan at the time of application for membership. A refund for any
fund year shall be paid only to those employers who remain participants in the group for the entire fund year. Payment of a refund based
on a previous fund year shall not be contingent on continued membership in the group after that fund year.
(70 Del. Laws, c. 540, § 1.)
§ 418. Premium payment; reserves.
(a) Each group shall establish to the satisfaction of the Commissioner a premium payment plan which shall include:
(1) An initial payment by each member of at least 25% of that member’s annual premium before the start of the group’s fund year; and
(2) Payment of the balance of each member’s annual premium in monthly or quarterly installments.
(b) Each group shall establish and maintain actuarially appropriate loss reserves which shall include reserves for:
(1) Known claims and expenses associated therewith; and
(2) Claims incurred but not reported and expenses associated therewith.
(c) Each group shall establish and maintain bad debt reserves based on the historical experience of the group or other groups.
(70 Del. Laws, c. 540, § 1.)
§ 419. Deficits and insolvencies.
(a) If the assets of a group are at any time insufficient to enable the group to discharge its legal liabilities and other obligations and to
maintain the reserves required of it under this chapter, it shall forthwith make up the deficiency or levy an assessment upon its members
for the amount needed to make up the deficiency.
(b) In the event of a deficiency in any fund year, the deficiency shall be made up immediately, either from:
(1) Surplus from a fund year other than the current fund year;
(2) Administrative funds;
(3) Assessment of the membership, if ordered by the group; or
Page 20
Title 18 - Insurance Code
(4) Such alternate method as the Commissioner may approve or direct.
The Commissioner shall be notified prior to any transfer of surplus funds from 1 fund year to another.
(c) If the group fails to assess its members or to otherwise make up such deficit within 30 days, the Commissioner may order it to do so.
(d) If the group fails to make the required assessment of its members within 30 days after the Commissioner orders it do so, or if the
deficiency is not fully made up within 60 days after the date on which the assessment is made or within such longer period of time as may
be specified by the Commissioner, the group shall be deemed to be insolvent or impaired.
(e) Notwithstanding subsections (a) through (d) of this section, the Commissioner may at any time proceed against an insolvent group
in the same manner as the Commissioner would proceed against an insolvent or impaired domestic insurer in this State as prescribed
in Chapter 59 of this title. The Commissioner shall have the same powers and limitations in such proceedings as are provided under
those laws.
(f) In the event of delinquency proceedings against a group, the Commissioner may levy an assessment upon its members for such
an amount as the Commissioner determines to be necessary to discharge all liabilities of the group, including the reasonable cost of
liquidation or rehabilitation.
(70 Del. Laws, c. 540, § 1.)
§ 420. Guaranty mechanism.
In the event of a liquidation pursuant to § 419 of this title, after exhausting the security required pursuant to § 404(b)(2) of this title, the
Commissioner may levy an assessment against all groups to assure prompt payment of benefits. The assessment on each group shall be
based on the proportion that the premium of each group bears to the total premium of all groups. The Commissioner may exempt a group
from assessment upon finding that the payment of the assessment would render the group insolvent. The assessment shall not relieve any
member of an insolvent group of its joint and several liability. After an assessment is made, the Commissioner shall take action to enforce
the joint and several liability provisions of the insolvent group’s indemnity agreement, and shall recoup:
(1) All costs incurred by the Commissioner in enforcing such joint and several liability provisions;
(2) Amounts that the Commissioner assessed any other groups pursuant to this section; and
(3) Any obligations included within § 419(f) of this title.
(70 Del. Laws, c. 540, § 1.)
§ 421. Monetary penalties.
After notice and opportunity for a hearing, the Commissioner may impose a monetary penalty on any person or group found to be in
violation of any provision of this chapter or title or of any rules or regulations pursuant to § 329 of this title and Chapter 101 of Title 29.
The amount of any monetary penalty shall be paid to the Commissioner for the use of the State.
(70 Del. Laws, c. 540, § 1.)
§ 422. Cease and desist orders.
(a) After notice and opportunity for a hearing, unless there are exigent circumstances, the Commissioner may issue an order requiring
a person or group to cease and desist from engaging in an act or practice found to be in violation of any provision of this chapter or
title or of any rules or regulations promulgated thereunder. Unless there are exigent circumstances, a minimum of 10 days’ notice will
be provided prior to a hearing. If exigent circumstances are present, the person or group will be offered a hearing within 10 days after
the issuance of the order.
(b) Upon a finding, after notice and opportunity for a hearing, that any person or group has violated any cease and desist order, the
Commissioner may do any or all of the following:
(1) Impose a monetary penalty of not more than $15,000, in the case of an individual, or not more than $50,000, in the case of a
group or corporation, for each and every act or violation of the order; or
(2) Revoke or suspend the group’s certificate of authority or any insurance license held by the person; or
(3) Place the group or person under supervision; or
(4) Permanently enjoin the conduct or enter any remedial order.
(70 Del. Laws, c. 540, § 1.)
§ 423. Revocation of certificate of authority.
(a) After notice and opportunity for a hearing, the Commissioner may revoke or suspend a group’s certificate of authority if it:
(1) Is found to be insolvent or impaired;
(2) Fails to pay any premium tax, regulatory fee or assessment or special fund contribution imposed upon it; or
(3) Fails to comply with any of the provisions of this chapter and title or with any rules promulgated thereunder or with any lawful
order of the Commissioner within the time prescribed.
Page 21
Title 18 - Insurance Code
(b) In addition, the Commissioner may revoke or suspend a group’s certificate of authority if, after notice and opportunity for hearing,
the Commissioner finds that:
(1) Any certificate of authority that was issued to the group was obtained by fraud;
(2) There was a material misrepresentation in the application for the certificate of authority; or
(3) The group or its administrator has misappropriated, converted, illegally withheld or refused to pay over upon proper demand any
moneys that belong to a member, an employee of a member or a person otherwise entitled thereto and that have been entrusted to the
group or its administrator in its fiduciary capacities.
(70 Del. Laws, c. 540, § 1.)
§ 424. Notice and hearings.
All notices and hearings shall be as provided in Chapter 3 of this title and Chapter 101 of Title 29.
(70 Del. Laws, c. 540, § 1.)
§ 425. Rules and regulations.
The Commissioner shall have power to make rules and regulations in order to implement this chapter.
(70 Del. Laws, c. 540, § 1.)
Page 22
Title 18 - Insurance Code
Part I
Insurance
Chapter 5
Authorization of Insurers and General Requirements
§ 501. “Stock insurer” defined.
A “stock insurer” is an incorporated insurer with its capital divided into shares and owned by its stockholders. Unless otherwise
provided, the insurance department or division of a corporation established under Chapter 7 of Title 5 (but not the corporation itself) shall
be deemed to be a stock insurer for purposes of this title, even though it has no capital divided into shares and owned by stockholders.
(18 Del. C. 1953, § 501; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 223, § 18.)
§ 502. “Mutual” insurer defined.
A “mutual” insurer is an incorporated insurer without capital stock and the governing body of which is elected by its policyholders.
This definition shall not be deemed to exclude as “mutual” insurers certain foreign insurers found by the Commissioner to be organized
on the mutual plan under the laws of their states of domicile but having temporary share capital or providing for election of the insurer’s
governing body on a reasonable basis.
(18 Del. C. 1953, § 502; 56 Del. Laws, c. 380, § 1.)
§ 503. “Reciprocal” insurer defined.
A “reciprocal” insurer is an unincorporated aggregation of subscribers operating individually and collectively through an attorney-infact common to all such persons to provide reciprocal insurance among themselves.
(18 Del. C. 1953, § 503; 56 Del. Laws, c. 380, § 1.)
§ 504. “Charter” defined.
“Charter” means certificate of incorporation, articles of incorporation, articles of agreement, articles of association, charter granted by
legislative act or other basic constituent document of a corporation or the power of attorney of the attorney-in-fact of a reciprocal insurer.
(18 Del. C. 1953, § 504; 56 Del. Laws, c. 380, § 1.)
§ 505. Certificate of authority required.
(a) No person shall act as an insurer and no insurer shall transact insurance in this State by mail or otherwise, except as authorized
by a subsisting certificate of authority granted to it by the Commissioner and except as to such transactions as are expressly otherwise
provided for in this title.
(b) No insurer formed under the laws of this State and no insurer from offices or with personnel or facilities located in this State shall
solicit insurance applications or otherwise transact insurance in another state or country unless it holds a subsisting certificate of authority
granted to it by the Commissioner authorizing it to transact the same kind or kinds of insurance in this State.
(c) Any wilful violation of this section by a domestic corporation shall constitute misuse of its corporate powers, and the Attorney
General shall proceed for the forfeiture of its charter under § 284 of Title 8.
(d) Notwithstanding any other provision of law, and except as provided herein, any person or other entity which provides coverage in
this State for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital
or optometric expenses, whether such coverage is by direct payment, reimbursement or otherwise, shall be presumed to be subject to the
jurisdiction and authority of the Commissioner unless the person or other entity shows that while providing such services it is subject
to the jurisdiction of another agency of this or another state, any subdivisions thereof, or the federal government. The jurisdiction and
authority of the Commissioner shall be governed by the following provisions:
(1) A person or entity may show that it is subject to the jurisdiction of another agency of this or another state, any subdivision thereof,
or the federal government by providing the Commissioner the appropriate certificate, license or other document issued by the other
governmental agency which permits or qualifies it to provide those services.
(2) Any person or entity which is unable to show that it is subject to the jurisdiction of another agency of this or another state,
any subdivision thereof or the federal government shall submit to an examination by the Commissioner to determine the organization
and solvency of the person or the entity, and to determine whether or not such person or entity is in compliance with the applicable
provisions of this Code.
(3) Any person or entity unable to show that it is subject to the jurisdiction of another agency of this or another state, any subdivision
thereof or the federal government shall be subject to all appropriate provisions of this Code regarding the conduct of its business.
(4) Any production agency or administrator which advertises, sells, transacts or administers coverage in this State, described in this
subsection, which is provided by any person or entity described in paragraph (d)(2) of this section shall, if that coverage is not fully
insured or otherwise fully covered by an admitted life or disability insurer, nonprofit hospital service plan or nonprofit health-care plan,
advise any purchaser, prospective purchaser and covered person of such lack of insurance or other coverage.
Page 23
Title 18 - Insurance Code
(5) Any administrator which advertises or administers coverage in this State, described in this subsection, which is provided by
any person or entity described in paragraph (d)(2) of this section, shall advise any production agency of the elements of the coverage
including the amount of “stop-loss” insurance in effect.
(18 Del. C. 1953, § 505; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 348, § 1.)
§ 506. Exceptions to certificate of authority requirement.
A certificate of authority shall not be required of an insurer with respect to the following:
(1) Investigation, settlement or litigation of claims under its policies lawfully written in this State or liquidation of assets and liabilities
of the insurer (other than collection of new premiums), all as resulting from its former authorized operations in this State;
(2) Transactions thereunder subsequent to issuance of a policy covering only subjects of insurance not resident, located or expressly
to be performed in this State at time of issuance and lawfully solicited, written and delivered outside this State;
(3) Prosecution or defense of suits at law;
(4) Transactions pursuant to surplus lines coverages lawfully written under Chapter 19 of this title;
(5) Reinsurance, except as to domestic reinsurers;
(6) Underwriting-membership in a regulated insurance exchange.
(7) An automobile club so long as its activities are restricted to those defined in § 1707(b)(4) of this title.
(18 Del. C. 1953, § 506; 56 Del. Laws, c. 380, § 1; 62 Del. Laws, c. 192, § 1; 75 Del. Laws, c. 49, § 4.)
§ 507. General eligibility for certificate of authority.
To qualify for and hold authority to transact insurance in this State, an insurer must be otherwise in compliance with this title and with
its charter powers and must be an incorporated stock or mutual insurer or a reciprocal insurer of the same general type as may be formed
as a domestic insurer under this title, except that:
(1) No foreign insurer shall be authorized to transact insurance in this State which does not maintain reserves as required by Chapter
11 (Assets and Liabilities) of this title, as applicable to the kind or kinds of insurance transacted by such insurer wherever transacted
in the United States, or which transacts business anywhere in the United States on the assessment plan or stipulated premium plan
or any similar plan;
(2) No insurer shall be authorized to transact workers’ compensation insurance in this State unless approved by the Department of
Labor of this State under the provisions of Part II of Title 19;
(3) No insurer shall be authorized to transact a kind of insurance in this State unless duly authorized or qualified for authorization
to transact such insurance in the state or country of its domicile.
(18 Del. C. 1953, § 507; 56 Del. Laws, c. 380, § 1; 71 Del. Laws, c. 84, § 25.)
§ 508. Ownership; management.
(a) No foreign insurer which is directly or indirectly owned or controlled in whole or substantial part by any government or governmental
agency shall be authorized to transact insurance in Delaware. Membership in a mutual insurer or subscribership in a reciprocal insurer
or ownership of stock of an insurer by the alien property custodian or similar official of the United States or ownership of stock or other
security which does not have voting rights with respect to the management of the insurer or supervision of an insurer by public authority
shall not be deemed to be an ownership or control of the insurer for the purposes of this provision.
(b) The Commissioner shall not grant or continue authority to transact insurance in this State as to any insurer or proposed insurer
the management of which is found by the commissioner after investigation or upon reliable information to be incompetent or dishonest
or untrustworthy or of unfavorable business repute or so lacking in insurance company managerial experience in operations of the kind
proposed in this State as to make such operation, currently or prospectively, hazardous to or contrary to the best interests of, the insurancebuying or investing public of this State, or which the commissioner has good reason to believe is affiliated directly or indirectly through
ownership, control, reinsurance transactions or other business relations with any person or persons of unfavorable business repute or
whose business operations are or have been marked, to the injury of insurers, stockholders, policyholders, creditors, or the public, by
illegality, or by manipulation of assets or of accounts or of reinsurance or by bad faith.
(18 Del. C. 1953, § 508; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 509. Name of insurer.
(a) No insurer shall be formed or authorized to transact insurance in this State which has or uses a name which is the same as or
deceptively similar to that of another insurer already so authorized without the written consent of such other insurer.
(b) No life insurer shall be so authorized which has or uses a name deceptively similar to that of another insurer authorized to transact
insurance in this State within the preceding 10 years if life insurance policies originally issued by such other insurer are still outstanding
in this State.
(c) No insurer shall be formed or authorized to transact insurance which has or uses a name the same as or deceptively similar to that
of any foreign insurer not so authorized if such foreign insurer has within the next preceding 12 months signified its intention to secure
an incorporation in this State under such name or to do business as a foreign insurer in this State under such name by filing notice of
Page 24
Title 18 - Insurance Code
such intention with the Commissioner, unless the written consent to the use of such name or deceptively similar name has been given
by such foreign insurer.
(d) No foreign insurer seeking admission to this State shall be authorized to transact insurance which has or uses a name the same as
or deceptively similar to that of a domestic corporation which has been incorporated as an insurer but has not yet secured a certificate
of authority until an expiration of 3 years from date of incorporation of such domestic corporation and of filing with the Commissioner
a written notice of intent to use such name.
(e) No insurer shall be so authorized which has or uses a name which tends to deceive or mislead as to the type of organization of
the insurer.
(f) In case of conflict of names between 2 insurers or a conflict otherwise prohibited under this section, the Commissioner may permit
(or shall require as a condition to the issuance of an original certificate of authority to an applicant insurer) the insurer to use in this State
such supplementation or modification of its name or such business name as may reasonably be necessary to avoid the conflict.
(g) Except as provided in subsection (f) above, an insurer shall conduct its business in this State in its own corporate (if incorporated)
or proper (if reciprocal insurer) name.
(18 Del. C. 1953, § 509; 56 Del. Laws, c. 380, § 1.)
§ 510. Combinations of insuring powers.
(a) A reciprocal insurer shall not be a life insurer.
(b) A title insurer shall be a stock insurer and shall not transact any other kind of insurance. This provision shall not prohibit acceptance
of reinsurance of title insurance risks by insurers not otherwise authorized to transact title insurance.
(18 Del. C. 1953, § 510; 56 Del. Laws, c. 380, § 1.)
§ 511. Capital funds required.
(a) To transact any 1 kind of insurance (as defined in Chapter 9 of this title), or combinations of kinds of insurance as shown below, an
insurer shall possess and thereafter maintain in cash or cash equivalents unimpaired paid-in capital stock (if a stock insurer) or a capital
account (if an insurance department or division of a corporation established under Chapter 7 or regulated under Chapter 9 of Title 5)
or unimpaired basic surplus (if a foreign mutual or a reciprocal insurer), and when first so authorized shall possess free surplus, all in
amounts not less than as follows:
Kind or kinds
of insurance
Life
Health
Life & health
Property
Casualty
Marine &
transportation
Surety
Multiple line
Title
Stock insurers
Capital stock
Free surplus
$300,000
$150,000
300,000
150,000
350,000
200,000
300,000
150,000
400,000
200,000
350,000
175,000
300,000
500,000
$250,000
150,000
250,000
$125,000
Mutual Insurers
Basic surplus
Free surplus
$300,000
$150,000
300,000
150,000
350,000
200,000
300,000
150,000
400,000
200,000
350,000
175,000
300,000
500,000
.....
150,000
250,000
.....
Reciprocal insurers
Basic surplus
Free surplus
.....
.....
$300,000
$150,000
.....
.....
300,000
150,000
400,000
200,000
350,000
175,000
300,000
500,000
.....
150,000
250,000
.....
Except:
(1) A domestic insurer holding a valid certificate of authority to transact insurance in this State immediately prior to November 1,
1968, may, if otherwise qualified therefor, for a period of 5 years after such date continue to be so authorized while possessing paidin capital stock (if a stock insurer) or surplus (if a mutual insurer) as required for such authority immediately prior to such date. The
Commissioner shall not authorize such an insurer to transact any other kinds of insurance unless it then complies with the requirements
as to capital and surplus, as applied to all kinds of insurance it then proposes to transact, as provided by this title as to foreign insurers
applying for original certificates of authority under this title.
(2) An insurer which otherwise possesses funds as required under this subsection (a) above, shall at all times maintain policyholders’
surplus (combined paid-in capital stock, if any, and surplus) reasonable in amount, as determined by the Commissioner, in relation
to the kinds and amount of insurance it has in force, or being written and retained by it, net of applicable reinsurance. In making any
such determination the Commissioner shall give due consideration to any applicable standards approved or adopted by the National
Association of Insurance Commissioners and to the desirability of substantial uniformity as to such requirements among the respective
states.
(b) Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer in any and all areas in which it
operates or proposes to operate, whether or not only a portion of such kinds is to be transacted in this State.
Page 25
Title 18 - Insurance Code
(c) As to surplus required for authority to transact one or more kinds of insurance and thereafter to be maintained, domestic mutual
insurers shall be governed by Chapter 49 of this title.
(18 Del. C. 1953, § 511; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 223, § 19; 68 Del. Laws, c. 70, § 1.)
§ 512. Insuring combinations without additional capital funds.
Without additional capital or additional surplus, an authorized insurer is also authorized:
(1) If a life insurer, to grant annuities or issue funding agreements;
(2) If a health insurer, to insure against congenital defects, as defined in § 906(a)(12) of this title;
(3) If a casualty insurer, to transact also health insurance. Except, that this provision shall not apply to a domestic insurer authorized
to transact casualty insurance pursuant to § 511(a)(1) of this title.
(18 Del. C. 1953, § 512; 56 Del. Laws, c. 380, § 1; 80 Del. Laws, c. 268, § 1.)
§ 513. Deposit requirements — In general.
(a) The Commissioner shall not authorize a foreign insurer (other than an alien insurer) to transact insurance in this State unless it makes
and thereafter continuously maintains on deposit in this State through the Commissioner, or in another state, cash or securities eligible
for such deposit under the laws of this State or of such other state of a fair market value not less than $100,000, for the protection of all its
policyholders wherever located or all of its policyholders in the United States or of all its policyholders and creditors. The Commissioner
shall accept the certificate in proper form of the public official having supervision over insurers in any other state to the effect that such
deposit or part thereof by such insurer is being maintained in public custody or control pursuant to law in such state. The insurer shall at
the time of filing its annual statement with the Commissioner as provided in § 526 of this title also file with the Commissioner a certificate
from such public official showing the amount and character of the securities composing its deposit held in such other state.
(b) The Commissioner shall not authorize an insurer to transact surety insurance unless it makes and thereafter continuously maintains
in this State through the Commissioner a special and additional deposit of cash or securities eligible therefor under § 1503 of this title,
of a fair market value not less than $10,000, to answer any default of such insurer upon surety contracts issued by it in this State. The
foregoing requirement shall not be applicable to any insurer having a paid-in capital and surplus of $10,000,000 or more and continuously
maintaining on deposit in this State through the Commissioner, or in another state, cash or securities eligible for such deposit under the
laws of this State or of such other state of a fair market value of not less than $400,000 for the protection of all its policyholders wherever
located, or all of its policyholders in the United States or all of its policyholders and creditors.
(c) No insurer shall transact workers’ compensation insurance in this State unless it makes and thereafter maintains in this State through
the Commissioner a special and additional deposit of cash or securities eligible therefor under § 1503 of this title, of a fair market value
of not less than $100,000 for the protection of persons in this State covered under the insurance so transacted. Upon any insurer’s inability
to pay workers’ compensation claims as a result of a court of competent jurisdiction finding of financial impairment or insolvency, which
prevents the regular payment of workers’ compensation benefits, this deposit shall be immediately available upon their request to the
Delaware Insurance Guaranty Association for continuation of claims benefits to eligible workers.
(d) The Commissioner shall not authorize a domestic title insurer to transact insurance unless it makes and thereafter continuously
maintains on deposit in this State through the Commissioner cash or securities eligible for such deposit under § 1503 of this title of a fair
market value not less than $25,000 for the protection of its policyholders in this State.
(e) All such deposits in this State are subject to the applicable provisions of Chapter 15 (Administration of Deposits) of this title.
(f) The Commissioner shall not authorize a domestic insurer, other than a title insurer, to transact insurance unless it makes and thereafter
continuously maintains on deposit in this State through the Commissioner cash or securities eligible therefor under § 1503 of this title
of a fair market value of not less than $100,000 for the protection of all its policyholders wherever located, or all its policyholders in the
United States, or all its policyholders and creditors.
(18 Del. C. 1953, § 513; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 32-34; 64 Del. Laws, c. 269, § 1; 65 Del. Laws, c. 409,
§ 1.)
§ 514. Deposit requirements — Alien insurers.
The Commissioner shall not authorize an alien insurer to transact insurance in this State unless it makes and thereafter continuously
maintains on deposit in this State through the Commissioner, or in another state, a surplus of assets in cash or securities eligible for such
deposit under the laws of this State or such other state of a value not less than the combined capital and surplus initially required of a like
foreign insurer transacting like kinds of insurance in this State. The deposit shall be held in trust for the benefit and security of all the
insurer’s policyholders and creditors in the United States or of all the insurer’s policyholders in the United States.
(18 Del. C. 1953, § 514; 56 Del. Laws, c. 380, § 1.)
§ 515. Application for certificate of authority.
To apply for an original certificate of authority an insurer shall file with the Commissioner its written application therefor, accompanied
by the applicable fees specified in § 701 of this title, stating under the oath of the president or vice-president, or other chief officer, and
the secretary of the insurer, or of the attorney-in-fact if the insurer is a reciprocal insurer, the insurer’s name, location of its home office
or principal office in the United States (if an alien insurer), the kinds of insurance to be transacted, date of organization or incorporation,
Page 26
Title 18 - Insurance Code
form of organization, state or country of domicile and such additional information as the Commissioner may reasonably require, together
with the following documents, as applicable:
(1) If a corporation, a copy of its charter or certificate or articles of incorporation, together with all amendments thereto, or as restated
and amended under the laws of its state or country of domicile, currently certified by the public official with whom the originals are
on file in such state or country;
(2) If an incorporated insurer, a copy of its bylaws, certified by the insurer’s corporate secretary;
(3) If a reciprocal insurer, a copy of the power of attorney of its attorney-in-fact, certified by the attorney-in-fact, and, if a domestic
reciprocal insurer, the declaration provided for in § 5706 of this title;
(4) A complete copy of its financial statement as of not earlier than the December 31 next preceding in form as customarily used in
the United States by like insurers, sworn to by at least 2 executive officers of the insurer or certified by the public insurance supervisory
official of the insurer’s state of domicile, or of entry into the United States (if an alien insurer);
(5) A copy of the report of the last examination, if any, made of the insurer within not more than the 3 years next preceding, certified
by the public insurance supervisory official of the insurer’s state of domicile, or of entry into the United States (if an alien insurer);
(6) Appointment of the Commissioner pursuant to § 524 of this title as its attorney to receive service of legal process;
(7) If a foreign or alien insurer, a certificate of the public insurance supervisory official of its state or country of domicile showing
that it is authorized to transact in such state or country the kinds of insurance proposed to be transacted in this State;
(8) If a foreign insurer, certificate as to deposit if to be tendered pursuant to § 513 of this title;
(9) If an alien insurer, certificate as to deposit in another state if to be tendered pursuant to § 514 of this title;
(10) If a life or health insurer, a copy of the insurer’s rate book and of each form of policy currently proposed to be issued in this
State and of the form of application therefor;
(11) If an alien insurer, a copy of the appointment and authority of its United States manager, certified by its officer having custody
of its records;
(12) Designation by the insurer of its officer or representative authorized to appoint and remove its agents in this State.
(18 Del. C. 1953, § 515; 56 Del. Laws, c. 380, § 1.)
§ 516. Issuance, refusal of authority; ownership of certificate.
(a) If upon completion of its application the Commissioner finds that the insurer has met the requirements therefor under this title,
the Commissioner shall issue to the insurer a proper certificate of authority; if he or she does not so find, the Commissioner shall issue
his or her order refusing such certificate. The Commissioner shall act upon an application for certificate of authority within a reasonable
period after its completion.
(b) The Commissioner shall issue certificates of authority under his or her seal of office, showing the date of actual issuance, the
kinds of insurance the insurer is authorized to transact in this State, and such other matters as the Commissioner deems necessary. At
the insurer’s request, the Commissioner may issue a certificate of authority limited to particular types of insurance or coverages within
a kind of insurance as defined in Chapter 9 of this title.
(c) Although issued and delivered to the insurer, the certificate of authority at all times shall be the property of the State. Upon any
expiration, suspension or termination thereof the insurer shall promptly deliver the certificate to the Commissioner.
(18 Del. C. 1953, § 516; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 517. Authority conferred; surety insurers; certificate as evidence.
(a) The certificate of authority confers upon the insurer authority to transact in this State only the kind or kinds of insurance therein
specified. No surety insurer shall be deemed thereby to possess power to act in capacity of executor, administrator, guardian, trustee,
receiver, assignee, or agent, or in any other capacity than that of surety, notwithstanding contrary provisions in its charter.
(b) An insurer’s valid and subsisting certificate of authority shall be prima facie evidence of its right to transact in this State the kind
or kinds of insurance specified therein.
(18 Del. C. 1953, § 517; 56 Del. Laws, c. 380, § 1.)
§ 518. Continuance, expiration, reinstatement of certificate of authority.
(a) A certificate of authority shall continue in force as long as the insurer is entitled thereto under this title, and until suspended or
revoked by the Commissioner or terminated at the insurer’s request; subject, however, to continuance of the certificate by the insurer
each year by:
(1) Payment on or before March 1 of the continuation fee provided in § 701 (fee schedule) of this title;
(2) Due filing by the insurer of its annual statement for the next preceding calendar year as required by § 526 of this title; and
(3) Payment by the insurer of premium taxes with respect to the preceding calendar year.
(b) If not so continued by the insurer, its certificate of authority shall expire as of midnight on the May 31 next following such failure
of the insurer to continue it in force, unless earlier revoked for failure to pay taxes as provided in § 519 of this title. The Commissioner
shall promptly notify the insurer of the occurrence of any failure resulting in impending expiration of its certificate of authority.
Page 27
Title 18 - Insurance Code
(c) The Commissioner may, in his or her discretion, upon the insurer’s request made within 3 months after expiration, reinstate a
certificate of authority which the insurer has inadvertently permitted to expire after the insurer has fully cured all its failures which resulted
in the expiration, and upon payment by the insurer of the fee for reinstatement specified in § 701(1) (fee schedule) of this title. Otherwise
the insurer shall be granted another certificate of authority only after filing application therefor and meeting all other requirements as for
an original certificate of authority in this State.
(18 Del. C. 1953, § 518; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 519. Suspension or revocation of certificate of authority — Mandatory grounds.
(a) The Commissioner shall refuse to continue or shall suspend or revoke an insurer’s certificate of authority:
(1) If such action is required by any provision of this title;
(2) If a foreign insurer and it no longer meets the requirements for a certificate of authority, on account of deficiency of assets or
otherwise;
(3) If a domestic insurer and it has failed to cure an impairment of capital or surplus within the time allowed therefor by the
Commissioner under this title, or is otherwise no longer qualified for the certificate of authority;
(4) If the insurer’s certificate of authority to transact insurance therein is suspended or revoked by its state of domicile, or state of
entry into the United States (if an alien insurer); or
(5) For failure of the insurer to pay taxes on its premiums as required by the laws of this State.
(b) Except in case of insolvency or impairment of required capital or surplus, or suspension or revocation by another state as referred
to in paragraph (a)(4) of this section above, the Commissioner shall give the insurer at least 10 days notice in advance of any such refusal,
suspension or revocation under this section, and of the particulars of the reasons therefor. If the insurer requests a hearing thereon within
such 10 days, such request shall automatically stay the Commissioner’s proposed action until his or her order is made on such hearing.
(18 Del. C. 1953, § 519; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 520. Suspension or revocation of certificate of authority — Discretionary and special grounds.
(a) The Commissioner may, in his or her discretion, refuse to continue or may suspend or revoke an insurer’s certificate of authority if
he or she finds after a hearing thereon, or upon waiver of hearing by the insurer, that the insurer has violated or failed to comply with any
lawful order of the Commissioner, or has wilfully violated or wilfully failed to comply with any lawful regulation of the Commissioner,
or has violated any provision of this title or any other title of the Delaware Code applicable to insurers other than those for violation of
which suspension or revocation is mandatory, or, in lieu of such suspension or revocation, the Commissioner may, in his or her discretion,
levy upon the insurer, and the insurer shall pay forthwith, an administrative fine of not over $5,000.
(b) The Commissioner shall suspend or revoke an insurer’s certificate of authority on any of the following grounds, if the Commissioner
finds after a hearing thereon that the insurer:
(1) Is in unsound condition, or is being fraudulently conducted, or is in such condition or using such methods and practices in the
conduct of its business as to render its further transaction of insurance in this State currently or prospectively hazardous or injurious
to policyholders or to the public;
(2) With such frequency as to indicate its general business practice in this State, has without just cause failed to pay or delayed
payment of claims arising under its policies, whether the claim is in favor of an insured or is in favor of a third person with respect
to the liability of an insured to such third person; or, with like frequency, without just cause compels insureds or claimants to accept
less than the amount due them or to employ attorneys or to bring suit against the insurer or such an insured to secure full payment
or settlement of such claims;
(3) Refuses to be examined, or if its directors, officers, employees or representatives refuse to submit to examination relative to its
affairs, or to produce its accounts, records and files for examination by the Commissioner when required, or refuse to perform any
legal obligation relative to the examination;
(4) Has failed to pay any final judgment rendered against it in this State upon any policy, bond, recognizance or undertaking as
issued or guaranteed by it, within 30 days after the judgment became final, or within 30 days after dismissal of an appeal before final
determination, whichever date is the later;
(5) As defined in Chapter 40 of this title, has failed to comply with § 4006 of this title;
(6) As defined in Chapter 40 of this title, has failed to accept the State’s right of recovery and the assignment to the State of any
right of an individual or other entity to payment from the party for an item or service for which payment has been made under the
state Medicaid Plan;
(7) As defined in Chapter 40 of this title, has failed to respond to any inquiry by the State regarding a claim for payment for any
health-care item or service that is submitted within 3 years of the date of the provision of such health-care item or service;
(8) As defined in Chapter 40 of this title, has denied a claim submitted by the State on the basis of lack of prior authorization; has
denied a claim submitted by the State based solely on the date of submission of the claim, the type or format of the claim, or a failure
to present proper documentation at the point-of-sale that is the basis of the claim, if:
a. The claim submitted by the State is made within 3 years of the date when the item or service was furnished; and
Page 28
Title 18 - Insurance Code
b. Any action by the State to enforce its rights with respect to such claim is commenced within 6 years of the State’s submission
of such claim.
(c) The Commissioner may, in his or her discretion and without advance notice or a hearing thereon, immediately suspend the certificate
of authority of any insurer as to which proceedings for receivership, conservatorship, rehabilitation or other delinquency proceedings
have been commenced in any state by the public insurance supervisory official of such state.
(18 Del. C. 1953, § 520; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 278, § 2; 70 Del. Laws, c. 186, § 1; 76 Del. Laws, c. 190, § 1;
80 Del. Laws, c. 376, § 3.)
§ 521. Order and notice of suspension, revocation; effect upon agents’ authority.
(a) All suspensions or revocations of or refusals to continue an insurer’s certificate of authority shall be, by the Commissioner’s order,
given to the insurer.
(b) Upon issuance of the order, the Commissioner shall forthwith give notice thereof to the insurer’s agents in this State of record in
the Department, and shall likewise suspend or revoke the authority of such agents to represent the insurer.
(18 Del. C. 1953, § 521; 56 Del. Laws, c. 380, § 1.)
§ 522. Duration of suspension; insurer’s obligations during suspension period; reinstatement.
(a) Suspension of an insurer’s certificate of authority shall be for such period as the Commissioner specifies in the order of suspension,
but not to exceed 1 year. During the suspension period the Commissioner may rescind or shorten the suspension by his or her further order.
(b) During the suspension period the insurer shall not solicit or write any new business in this State, but shall file its annual statement,
pay fees, licenses and taxes as required under this title, and may service its business already in force in this State, as if the certificate
of authority had continued in full force.
(c) Upon expiration of the suspension period, if within such period the certificate of authority has not terminated, the insurer’s certificate
of authority shall automatically reinstate, unless the Commissioner finds that the causes of the suspension, being other than a past event,
are continuing, or that the insurer is otherwise not in compliance with the requirements of this title, and of which the Commissioner shall
give the insurer notice not less than 30 days in advance of expiration of the suspension period. If not so automatically reinstated, the
certificate of authority shall be deemed to have terminated as of the end of the suspension period.
(d) Upon reinstatement of the insurer’s certificate of authority, the authority of its agents in this State to represent the insurer shall
likewise reinstate. The Commissioner shall promptly notify the insurer and its agents in this State, of record in the Department, of such
reinstatement.
(18 Del. C. 1953, § 522; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 523. General corporation laws inapplicable to foreign insurers.
The general corporation laws of this State as contained in Title 8 of the Delaware Code shall not apply as to foreign insurers holding
certificates of authority to transact insurance in this State.
(18 Del. C. 1953, § 523; 56 Del. Laws, c. 380, § 1.)
§ 524. Commissioner as process agent for certain insurers.
(a) Before the Commissioner shall authorize it to transact insurance in this State, each insurer shall appoint the Commissioner, and his
or her successors in office, as its attorney to receive service of legal process issued against the insurer in this State. The appointment shall
be made on a form as designated and furnished by the Commissioner, and shall be accompanied by a copy of a resolution of the board
of directors or like governing body of the insurer, if an incorporated insurer, showing that those officers who executed the appointment
were duly authorized to do so on behalf of the insurer.
(b) The appointment shall be irrevocable, shall bind the insurer and any successor in interest or to the assets or liabilities of the insurer,
and shall remain in effect as long as there is in force any contract of the insurer in this State or any obligation of the insurer arising out
of its transactions in this State.
(c) Service of such process against a foreign or alien insurer shall be made only by service thereof upon the Commissioner.
(d) Service of such process against a domestic insurer may be made as provided hereunder, or in any other manner provided by law.
(e) At the time of application for a certificate of authority the insurer shall file the appointment with the Commissioner, together with
designation of the person to whom process against it served upon the Commissioner is to be forwarded. The insurer may change such
designation by a new filing.
(18 Del. C. 1953, § 524; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 525. Serving process.
(a) Service of process against an insurer for whom the Commissioner is attorney shall be made by delivering to and leaving with the
Commissioner, his or her deputy, or a person in apparent charge of the Commissioner’s office during the Commissioner’s absence, 2
copies of the process, together with fee prescribed in § 701 of this title.
(b) Upon such service the Commissioner shall forthwith mail by certified mail 1 of the copies of such process to the person currently
designated by the insurer to receive the same as provided in § 524(e) of this title. Service of such process shall not be complete until
3 days after the same has been so mailed.
Page 29
Title 18 - Insurance Code
(c) Service of process in the manner provided by this section shall for all purposes constitute valid and binding personal service upon
the insurer within this State.
(d) The Commissioner shall keep a record of the day of service upon him or her of all legal process.
(18 Del. C. 1953, § 525; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 90, § 1.)
§ 526. Annual statement and other required filings.
(a) Each authorized insurer shall annually on or before March 1, or within any reasonable extension of time therefor which the
Commissioner for good cause may have granted, file with the Commissioner a full and true statement of its financial condition, transactions
and affairs as of December 31 preceding. The statement filing shall be the annual statement form approved by the National Association
of Insurance Commissioners (“NAIC”) prepared in accordance with NAIC annual statement requirements and the NAIC accounting
practices and procedures manual, except as otherwise prescribed or permitted by this title or by the Commissioner. The statement shall be
verified by the oath of the insurer’s president or vice-president, and secretary or actuary, as applicable, or, in the absence of the foregoing,
by 2 other principal officers, or, if a reciprocal insurer, by the oath of the attorney-in-fact or its like officers if a corporation.
(b) The statement of an alien insurer shall be verified by its United States manager or other officer duly authorized, and shall relate only
to the insurer’s transactions and affairs in the United States, unless the Commissioner requires otherwise. If the Commissioner requires
a statement as to such an insurer’s affairs throughout the world, the insurer shall file such statement with the Commissioner as soon as
reasonably possible.
(c) The Commissioner may refuse to continue or may suspend or revoke the certificate of authority of any insurer failing to file its
annual statement when due.
(d) At time of filing, the insurer shall pay the fee for filing its annual statement as prescribed by § 701 of this title.
(e) Each domestic, foreign and alien insurer who is authorized to transact insurance in this State shall annually on or before March 1 of
each year, file with the National Association of Insurance Commissioners a copy of its annual statement blank, along with such additional
filings as prescribed by the Commissioner for the preceding year. The information filed with the National Association of Insurance
Commissioners shall be in the same format and scope as that required by the Commissioner and shall include the signed jurat page and
the actuarial certification. Any amendments and addendums to the annual statement filing subsequently filed with the Commissioner shall
also be filed with the NAIC. Foreign insurers that are domiciled in a state which has a law substantially similar to this subsection shall
be deemed in compliance with this section.
(f) In the absence of actual malice, members of the NAIC, their duly authorized committees, subcommittees and task forces, their
delegates, NAIC employees and all others charged with the responsibility of collecting, reviewing and analyzing and disseminating the
information developed from the filing of the annual statement convention blanks shall be acting as agents of the Commissioner under the
authority of this section and shall not be subject to civil liability for libel, slander or any other cause of action by virtue of their collection
review, and analysis or dissemination of the data and information collected from the filings required hereunder. All financial analysis
ratios and examination synopses concerning insurance companies that are submitted to the Department by the National Association of
Insurance Commissioners’ Insurance Regulatory Information System are confidential and may not be disclosed by the Department.
(g) Each authorized insurer must quarterly file a full and true statement of its financial condition, transactions, and affairs as of the
quarter preceding the filing.
(1) The quarterly statement required by this subsection must be filed each quarter on or before May 15, August 15, and November 15.
(2) The Commissioner may grant for good cause a reasonable extension to an insurer to file the quarterly statement required by
this subsection.
(3) The statement required by this subsection is the quarterly statement form approved by the NAIC that is prepared in accordance
with NAIC quarterly statement requirements and the NAIC accounting practices and procedures manual, unless specified otherwise
in this title or by the Commissioner.
(4) In addition to the annual and quarterly filings required by this section, the Commissioner has the authority, in the discretion of
the Department, to prescribe additional filings by authorized insurers as necessary for the Department to monitor the ongoing financial
condition of authorized insurers.
(5) The Commissioner may refuse to continue or may suspend or revoke the certificate of authority of any insurer that fails to file
any statements or reports required under this subsection.
(h) The annual and quarterly financial statement filings required by this section must be submitted electronically through the NAIC in
a format acceptable to the NAIC. All other filings required by this section must be in the form prescribed by the Commissioner.
(18 Del. C. 1953, § 526; 56 Del. Laws, c. 380, § 1; 68 Del. Laws, c. 50, §§ 1, 2; 71 Del. Laws, c. 327, § 1; 83 Del. Laws, c. 184, §
1.)
§ 526A. Supplement to annual statement [Repealed].
(65 Del. Laws, c. 270, § 1; 66 Del. Laws, c. 328, §§ 1, 3; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 373, § 3; repealed by 83 Del.
Laws, c. 184, § 2, effective Sept. 17, 2021.)
Page 30
Title 18 - Insurance Code
§§ 527, 528. Resident agent, countersignature law; exceptions to resident agent, countersignature law.
Repealed by 70 Del. Laws, c. 376, §§ 1, 2, effective June 21, 1996.
§ 529. Cancellation of insurance agency contracts; arbitration.
(a) Every insurance company shall notify the Insurance Commissioner or the Commissioner’s successor and the agency involved of the
intent to cancel any written or verbal agency contract, except life insurance contracts, 30 days prior to issuance of the notice of cancellation.
(b) No insurance company may cancel an agency without giving 12 months notice, except where fraud exists or where an agency is
more than 60 days in arrears of money owed to the insurance company in question. This notice shall be in writing and, upon the option
of the company, may prohibit the agency from writing any new business for this particular company, but will allow the agency to renew
all existing business in this 12-month period and will allow the agency to have binding authority to make endorsements or other changes
to existing business and will provide for the same rate of commission for the 12-month period.
(c) The Insurance Commissioner shall appoint an arbitration board to arbitrate the cancellation of agency contracts. This board shall
consist of 3 arbitrators, 1 of whom shall be from the Insurance Department, and 2 of whom shall be from the insurance industry.
(d) The purpose of this board is to determine whether an agency cancellation will adversely affect the public interest. If such a
determination is made, the board shall prescribe a method of cancellation to be followed by both parties. The decision of the board of
arbitration shall be binding upon the company and agency involved.
(e) (1) This subsection shall not apply in an instance where such company:
a. Employs an agent directly; or
b. Has an exclusive business arrangement with an agent.
(2) Notwithstanding any other provision of this section, a company may not cancel the contract of an independent agent for property
and casualty insurance solely because of adverse underwriting experience in the line of private passenger insurance to the extent losses
incurred by the insurer were not the fault of the insured.
(3) This subsection does not apply to adverse underwriting experience on losses incurred by the company on:
a. Bodily injury coverage;
b. Property damage coverage;
c. Collision coverage; or
d. To the extent that the losses incurred by the insurer were the fault of the insured, personal injury protection coverage and
comprehensive coverage.
(18 Del. C. 1953, § 529; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 184; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 161, § 1.)
§ 530. Emergency requirements.
Whenever in the Commissioner’s opinion a public emergency exists by reason of an abnormal disruption of economic and financial
processes which affects the conduct of the business of insurance in a normal and ordinary manner, the Commissioner, with the concurrence
of the Governor and the General Assembly, may declare the existence of a public emergency. During such emergency the Commissioner
may make, alter, amend, revise and rescind rules and regulations, imposing any condition upon the conduct of the business of any insurer
which may be necessary or desirable to maintain sound methods of insurance and to safeguard the interests of policyholders, beneficiaries
and the public generally during the period of such emergency, which rules and regulations shall become inoperative when such emergency
ceases, and an order to that effect shall be made by the Commissioner.
(18 Del. C. 1953, § 530; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 531. Emergency powers to regulate liability insurance cancellations and nonrenewals.
(a) (1) Whenever the Insurance Commissioner in his or her discretion finds that an abnormal disruption has occurred or is occurring in
the liability insurance market, which has created or will create a situation where the availability of commercial, municipal or professional
liability insurance is affected and such disruption will affect the normal transaction of business in this State, as to mid-term cancellations,
or affect the health, safety and welfare of Delaware citizens as to nonrenewals, the Commissioner may promulgate regulations regarding
cancellations and nonrenewals to safeguard the interests of policyholders and the public generally.
(2) When the Commissioner has reasonable cause to believe that a specific line of commercial, municipal or professional liability
insurance is unavailable and that such unavailability is a threat to the public health, safety and welfare, he or she may declare such
line to be “critical” and immediately suspend and enjoin any proposed nonrenewal of coverage of policies of insurance relating to such
line and extend policy renewal dates pending a hearing. Within 30 days thereafter, the Commissioner shall hold a public hearing in
accordance with procedures mandated by the Administrative Procedures Act [Chapter 101 of Title 29]. The Commissioner shall serve
upon known affected insurers and any other persons involved a copy of such notice, including an order to extend the date of policy
terminations pending the public hearing.
(3) Within 15 days after the public hearing the Commissioner shall find whether or not the specific line is in fact “critical.” The
Commissioner may find that the specific line is “critical” if he or she finds both that:
Page 31
Title 18 - Insurance Code
a. The type of coverage is generally unavailable in Delaware at any price reasonably related to the risk assumed; and
b. The unavailability of this type of coverage constitutes a threat to the public health, safety and welfare.
(4) If the Commissioner finds that paragraphs (a)(3)a. and b. of this section are present, he or she may declare the line of coverage is
“critical.” Such declaration shall be effective for 90 days from the date when first declared critical under paragraph (a)(2) of this section.
(b) Such regulation shall apply to commercial liability insurance policies, other than automobile, but including commercial multi-peril
insurance policies and municipal or professional liability coverages. It does not apply to reinsurance, excess and surplus lines insurance,
residual market risks, workers’ compensation insurance, multi-state location risks, policies subject to retrospective rating plans, excess
or umbrella policies and such other policies that are exempted by the Commissioner.
(c) Such regulation shall provide that no cancellation or nonrenewal of a policy under this section shall be effective in this State unless
such cancellation or nonrenewal is based upon any 1 of the following reasons:
(1) Nonpayment of premium;
(2) Material misrepresentation or nondisclosure to the company of a material fact at the time of acceptance of the risk;
(3) Increased hazard or material change in the risk assumed which could not have been reasonably contemplated by the parties at
the time of assumption of the risk;
(4) Substantial breaches of contractual duties, conditions or warranties that materially affect the nature and/or insurability of the risk;
(5) Fraudulent acts against the company by the insured or its representatives that materially affect the nature of the risk insured;
(6) Lack of cooperation from the insured on loss control matters affecting insurability of the risk;
(7) Bona fide loss of or substantial changes in applicable reinsurance. The insurer shall give 60 days’ notice to the Insurance
Commissioner and the insured under this section and shall supply such information at that time as the Insurance Commissioner shall
require;
(8) Material increase in exposure arising out of changes in statutory or case law subsequent to the issuance of the insurance contract;
(9) Bona fide loss of or reduction in available insurance capacity. The insurer shall give 60 days’ notice to the Insurance Commissioner
and the insured under this section and shall supply such information at that time as the Insurance Commissioner shall require;
(10) Any other reasons approved by the Commissioner.
(d) This section shall not apply to an insurer issuing a notice of cancellation with respect to any policy which has been in effect for
less than 60 days at the time the notice is mailed or delivered.
(e) A notice of cancellation or nonrenewal of insurance coverage by insurer shall be in writing, shall be mailed or delivered to the
first named insured at the mailing address as shown on the policy. Notices of cancellation or nonrenewal shall be mailed or delivered
at least 60 days but no more than 120 days prior to the effective date of the cancellation or nonrenewal. Notices of cancellation based
upon nonpayment of premium shall be mailed or delivered at least 10 days prior to the effective date of cancellation. The notice shall
state the effective date of the cancellation.
(f) The insurer shall provide the first named insured with a written statement setting forth the reasons for cancellation or nonrenewal
where the named insured agrees in writing to hold the insurer harmless from liability for any communication giving notice of or specifying
a reason for a cancellation or nonrenewal, or for any statement made in connection with an attempt to discover or verify the existence of
conditions which would be a reason for a cancellation or nonrenewal under this section.
(g) For purposes of this section, the transfer of a policyholder between companies within the same insurance group is not a refusal
to renew. In addition, changing deductibles, changes in premium, changes in the amount of insurance or reductions in policy limits or
coverage are not refusals to renew, if such changes are reasonably related to the risk involved.
(h) Notice of nonrenewal is not required if:
(1) The insurer has offered to issue a renewal policy; or
(2) A named insured has obtained replacement coverage or has agreed in writing to obtain replacement coverage.
(i) Any cancellation or nonrenewal not in compliance with the notice provision of this section is not effective until proper notice is given.
(j) No policy of commercial, municipal or professional liability insurance subject to this section shall be extended beyond its termination
date for a period of more than 90 days. The premium on such policies may reflect any change in rates approved by the Insurance
Commissioner.
(k) Rate filings for any line or class affected by this section shall be approved or disapproved within 30 days of their filing.
(l) In addition to these provisions, the Commissioner may implement a market assistance plan providing for a voluntary group of
insurers in order to aid insureds in obtaining commercial insurance coverages specified therein.
(65 Del. Laws, c. 264, § 2; 70 Del. Laws, c. 186, § 1.)
§ 532. Retaliatory provision.
(a) When by or pursuant to the laws of any other state or foreign country or province any taxes, licenses and other fees, in the aggregate,
and any fines, penalties, deposit requirements or other material requirements, obligations, prohibitions or restrictions are or would be
Page 32
Title 18 - Insurance Code
imposed upon Delaware insurers doing business or that might seek to do business in such state, country or province, or upon the agents
or representatives of such insurers, or upon brokers, which are in excess of such taxes, licenses and other fees, in the aggregate, or which
are in excess of the fines, penalties, deposit requirements or other requirements, obligations, prohibitions or restrictions directly imposed
upon similar insurers, or upon the agents or representatives of such insurers, or upon brokers, of such other state, country or province
under the statutes of this State, so long as such laws of such other state, country or province continue in force or are so applied, the same
taxes, licenses and other fees, in the aggregate, or fines, penalties or deposit requirements or other material requirements, obligations,
prohibitions or restrictions of whatever kind shall be imposed by the Commissioner upon the insurers, or upon the agents or representatives
of such insurers, or upon brokers, of such other state, country or province doing business or seeking to do business in Delaware. Any tax,
license or other fee or other obligation imposed by any city, county or other political subdivision or agency of such other state, country
or province on Delaware insurers or their agents or representatives shall be deemed to be imposed by such state, country or province
within the meaning of this section.
(b) This section shall not apply as to personal income taxes, or as to ad valorem taxes on real or personal property, or as to special purpose
obligations or assessments imposed by another state in connection with particular kinds of insurance other than property insurance, or
as to guaranty association assessments or tax credits for such assessments, except that deductions, from premium taxes or other taxes
otherwise payable, allowed on account of real estate or personal property taxes paid shall be taken into consideration by the Commissioner
in determining the propriety and extent of retaliatory action under this section.
(c) For the purposes of this section the domicile of an alien insurer, other than insurers formed under the laws of Canada or a province
thereof, shall be that state designated by the insurer in writing filed with the Commissioner at time of admission to this State or within 6
months after November 1, 1968, whichever date is the later, and may be any 1 of the following states:
(1) That in which the insurer was first authorized to transact insurance;
(2) That in which is located the insurer’s principal place of business in the United States;
(3) That in which is held the largest deposit of trusteed assets of the insurer for the protection of its policyholders in the United States.
If the insurer makes no such designation, its domicile shall be deemed to be that state in which is located its principal place of business
in the United States.
(d) The domicile of an insurer formed under the laws of Canada or a province thereof shall be as provided in § 102 of this title.
(18 Del. C. 1953, § 531; 56 Del. Laws, c. 380, § 1; 65 Del. Laws, c. 264, § 1; 73 Del. Laws, c. 178, § 1.)
§ 533. Immunity from liability for reporting fraudulent practices.
Repealed by 69 Del. Laws, c. 463, § 3, effective July 22, 1994.
§ 534. Location of headquarters.
(a) The headquarters of day-to-day corporate activity and management of any insurer engaged in the business of insurance as a subsidiary
or division of a bank or trust company, which bank or trust company is authorized to act as an insurer and transact the business of insurance
pursuant to authority granted by § 761(a)(14) of Title 5, shall be located within this State, and the principal books and records of each
such insurer shall be located within this State.
(b) The Commissioner shall, by regulation promulgated after consultation with the Bank Commissioner, define the term “headquarters
of day-to-day corporate activity and management,” and provide for the maintenance and inspection of such headquarters and books and
records to assure compliance with the provisions of §§ 929, 930 and 931 of Title 5, and § 2304(23) of this title.
(67 Del. Laws, c. 223, § 20.)
§ 535. Nondisclosure of nonpublic personal information; adoption of regulations.
No person regulated pursuant to this title shall disclose any nonpublic personal information contrary to the provisions of Title V of the
Gramm Leach Bliley Act of 1999 (Public Law 106-002; [15 U.S.C. § 6801 et seq.]). The Commissioner may adopt rules and regulations
necessary to carry out this section. Such rules and regulations shall be consistent with the provisions of Title V of the Gramm Leach
Bliley Act of 1999. Nothing in this section shall be construed to create a private cause of action.
(73 Del. Laws, c. 53, § 1.)
§ 536. “Funding agreement” defined.
A “funding agreement” is an agreement for an insurer to accept and accumulate funds and to make 1 or more payments at future dates
in amounts that are not based on mortality or morbidity contingencies (of the holder of the funding agreement).
(80 Del. Laws, c. 268, § 1.)
Page 33
Title 18 - Insurance Code
Part I
Insurance
Chapter 5A
Port-of-Entry for Foreign Insurance Companies
§ 560. Definitions.
As used in this part.
(1) “Non-U.S. insurer” means an insurer or reinsurer organized under the laws of a foreign country.
(2) “United States branch” or “U.S. branch” means the business unit through which business is transacted within the United States
by a non-U.S. insurer and the assets and liabilities of the non-U.S. insurer within the United States pertaining to such business.
(80 Del. Laws, c. 159, § 1.)
§ 561. Scope.
This chapter applies to a U.S. branch using this State as a state of entry to transact insurance in the United States. The U.S. branch
shall also be subject to all state laws applicable to an insurer domiciled in this State with the exception of Chapter 50 of this title, and
unless otherwise provided.
(80 Del. Laws, c. 159, § 1.)
§ 562. Authorization of entry.
(a) A non-U.S. insurer may use this State as a state of entry to transact insurance in the United States through a U.S. branch by:
(1) Qualifying as an insurer licensed to do business in this State; and
(2) Establishing a trust account, pursuant to a trust agreement approved by the Commissioner with a U.S. bank approved by the
Commissioner, in an amount at least equal to the minimum capital and surplus or authorized control level risk based capital, whichever
is greater, required to be maintained by a domestic insurer licensed to do the same kind or kinds of insurance.
(b) Before authorizing the entry through this State of a U.S. branch of any non-U.S. insurer, the Commissioner shall require the nonU.S. insurer, in addition to any other requirement of the Insurance Law:
(1) To submit a copy of its charter and by-laws, if any, currently in force, and such other documents necessary to show the kinds of
business which it is empowered to do in its domiciliary jurisdiction, attested to as accurate and complete by the insurance supervisory
official in its home jurisdiction, and a full statement, subscribed and affirmed as true under the penalties of perjury by 2 officers or
equivalent responsible representatives in such manner as the Commissioner shall prescribe, of its financial condition as of the close of
its latest fiscal year, showing its assets, liabilities, income, disbursements, business transacted and other facts required to be shown in
its annual statement, as reported to the insurance supervisory official in its home jurisdiction; such submission shall include an English
language translation, as required by the Commissioner, of each of the documents required herein; and
(2) To submit to an examination of the insurer’s affairs at its or its United States manager’s principal office within the United States.
However, the Commissioner may instead accept a report of the insurance supervisory official of the insurer’s home jurisdiction.
(80 Del. Laws, c. 159, § 1.)
§ 563. Maintenance of trust account.
The assets in the trust account shall be known as “trusteed assets” and shall at all times be in an amount equal to the U.S. branch’s
reserves and other liabilities plus the minimum capital and surplus or authorized control level risk based capital, whichever is greater,
required to be maintained by a domestic insurer licensed to do the same kind or kinds of insurance.
(80 Del. Laws, c. 159, § 1.)
§ 564. Requirements for trust agreement.
(a) The deed of trust and all amendments thereto shall be authenticated in such form and manner as the Commissioner may prescribe
and shall not be effective unless approved by the Commissioner upon a finding that:
(1) A deed of trust and its amendments, if any, are sufficient in form and in conformity with law;
(2) The trustee or trustees are eligible as such; and
(3) The deed of trust is adequate to protect the interests of the beneficiaries of the trust.
(b) If at any time the Commissioner finds, after reasonable notice and hearing, that the requisites for the approval no longer exist, the
Commissioner may withdraw approval.
(c) The Commissioner may from time to time approve amendments to the deed of trust, which in the Commissioner’s judgment are not
prejudicial to the interests of the people of this State or the United States policyholders, cedents and creditors of the U.S. branch.
Page 34
Title 18 - Insurance Code
(d) The deed of trust shall contain provisions which:
(1) Vest legal title to trusteed assets in the trustees, and their successors lawfully appointed;
(2) Require that all assets deposited in the trust shall be continuously kept within the United States;
(3) Require that all assets deposited in the trust shall be available to the Commissioner upon the issuance of a court order for all
the uses set forth in Chapter 59 of this title.
(4) Provide for substitution of a new trustee or trustees in case of a vacancy by death, resignation or otherwise, subject to the approval
of the Commissioner;
(5) Require that the trustee or trustees shall continuously maintain a record at all times sufficient to identify the assets of such fund;
(6) Require that the trusteed assets shall consist of cash or investments eligible for investment of the funds of domestic insurers and
accrued interest thereon if collectable by the trustee;
(7) Require that the trust shall be for the exclusive benefit, security and protection of the policyholders and cedents, or policyholders,
cedents and creditors, of the U.S. branch in the United States and that it shall be maintained as long as there is outstanding any liability
of the non-U.S. insurer arising out of its insurance transactions in the United States; and
(8) Provide, in substance, that no withdrawals of assets, other than income as specified in subsection (e) of this section shall be made
or permitted by the trustee or trustees without the approval of the Commissioner except to:
a. Make deposits required by law in any state for the security or benefit of all policyholders or cedents, or policyholders, cedents
and creditors, of the U.S. branch in the United States;
b. Substitute other assets permitted by law and at least equal in value and quality to those withdrawn, upon the specific written
direction of the United States manager of the U.S. branch when duly empowered and acting pursuant to either general or specific
written authority previously given or delegated by the board of directors; or
c. Transfer such assets to an official liquidator or rehabilitator of the U.S. branch pursuant to an order of a court of competent
jurisdiction.
(e) The deed of trust may provide that income, earnings, dividends or interest accumulations of the assets of the fund may be paid over
to the United States manager of the U.S. branch upon request, provided that the total trusteed assets shall not thereby be less than the
amount required to be maintained pursuant to § 563 of this title.
(f) Upon withdrawal of trusteed assets deposited in another state in which the insurer is authorized to do business, it shall be sufficient if
the deed of trust requires similar written approval of the insurance supervising official of that state in lieu of approval of the Commissioner
provided that the total trusteed assets shall not thereby be less than the amount required to be maintained pursuant to § 563 of this title.
In all such cases the U.S. branch shall notify the Commissioner in writing of the nature and extent of the withdrawal.
(g) The Commissioner may from time to time:
(1) Make examinations of the trusteed assets of any authorized U.S. branch at the insurer’s expense; and
(2) Require the trustee or trustees to file a statement, in such form as the Commissioner may prescribe, certifying the assets of the
trust fund and the amounts thereof.
(h) Refusal or neglect of any trustee to comply with the foregoing requirements shall be grounds for the revocation of the insurer’s
license or the liquidation of its U.S. branch.
(80 Del. Laws, c. 159, § 1.)
§ 565. Reporting requirements for U.S. branches of non-U.S. insurers.
(a) In addition to other requirements of this chapter, every authorized U.S. branch shall, not later than the March 1 in each year and 45
days after the end of each of the first 3 calendar-year quarters, file with the Commissioner and with the National Association of Insurance
Commissioners (NAIC):
(1) Annual and quarterly statements of the business transacted within the U.S. and the assets held by or for it within the U.S. for
the protection of policyholders and creditors within the U.S., and of the liabilities incurred against such assets. The forms shall not
contain any statement in regard to its assets and business elsewhere. The statements shall be in the same format required of an insurer
domiciled in the U.S. branch’s state of entry state and licensed to write the same kinds of insurance; and
(2) A statement of trusteed surplus, in such form as the Commissioner may prescribe, as of the end of the same period covered by the
statement filed pursuant to paragraph (a)(1) of this section. The aggregate value of the insurer’s general state deposits and trusteed assets
deposited with a trustee in compliance with § 564 of this title, plus accrued investment income thereon where such interest is collected
by the states for trustees, less the aggregate net amount of all of its reserves and other liabilities in the United States as determined in
accordance with this section shall be known as its “trusteed surplus” in the United States. In determining the net amount of the U.S.
branch’s liabilities in the United States to be reported in the statement of trusteed surplus, the U.S. branch shall make adjustments to
total liabilities reported on the accompanying annual or quarterly statement as follows:
a. Add back liabilities used to offset admitted assets reported in the accompanying quarterly or annual statement; and
b. Deduct:
Page 35
Title 18 - Insurance Code
1. Unearned premiums on agent’s balances or uncollected premiums not more than 90 days past due;
2. Reinsurance on losses with authorized insurers, less unpaid reinsurance premiums;
3. Reinsurance recoverables on paid losses from unauthorized insurers that are included as an asset in the annual statement, but
only to the extent a liability for such unauthorized recoverables is included in the liabilities report in the trusteed surplus statement;
4. Special state deposits held for the exclusive benefit of policyholders, or policyholders and creditors, of any particular state
not exceeding net liabilities reports for that state;
5. Secured accrued retrospective premiums;
6. If a life insurer:
A. The amount of its policy loans to policyholders within the United States, not exceeding the amount of legal reserve required
on each such policy; and
B. The net amount of uncollected and deferred premiums; and
7. Any other nontrusteed asset which the Commissioner determines secures liabilities in a substantially similar manner; and
(3) Any additional information that the Commissioner may require relating to the total business or assets, or any portion thereof,
of the non-U.S. insurer.
(b) The annual statement and trusteed surplus statement shall be signed and verified by the United States manager, attorney-in-fact, or
a duly empowered assistant United States manager, of the U.S. branch. The items of securities and other property held under trust deeds
shall be certified in the trusteed surplus statement by the United States trustee or trustees.
(c) Every report on examination of a U.S. branch shall include a trusteed surplus statement as of the date of examination in addition
to the general statement of the financial condition of the U.S. branch.
(80 Del. Laws, c. 159, § 1.)
§ 566. Additional requirements for U.S. branch license.
(a) Before issuing any new or renewal license to any U.S. branch, the Commissioner may require satisfactory proof, either in the
non-U.S. insurer’s charter or by an agreement evidenced by a duly certified resolution of its board of directors, or otherwise as the
Commissioner may require, that the insurer will not engage in any insurance business in contravention of the provisions of the section
or not authorized by its charter.
(b) The Commissioner shall issue a renewal license to any U.S. branch if satisfied, by such proof as required, that the insurer is not
delinquent with respect to any requirement imposed by this chapter and that its continuance in business in this State will not be hazardous
or prejudicial to the best interests of the people of this State.
(c) No U.S. branch shall be licensed to do in this State any kind of insurance business, or any combination of kinds of insurance business,
which are not permitted to be done by domestic insurers licensed under the provisions of this chapter. No U.S. branch shall be authorized
to do an insurance business in this State if it does anywhere within the United States any kind of business other than an insurance business
and the business necessarily or properly incidental to the kinds of insurance business which it is authorized to do in this State.
(d) Except as otherwise specifically provided, no U.S. branch, entering through this State or another state, shall be or continue to be
authorized to do an insurance business in this State if it fails to comply substantially with any requirement or limitation of this chapter,
applicable to similar domestic insurers hereafter organized, which in the judgment of the Commissioner is reasonably necessary to protect
the interest of the policyholders.
(e) No U.S. branch which does anywhere within the United States any kind or combination of kinds of insurance business not permitted
to be done in this State by similar domestic insurers hereafter organized, shall be or continue to be authorized to do an insurance business
in this State, unless in the judgment of the Commissioner the doing of such kind or combination of kinds of insurance business will not
be prejudicial to the best interests of the people of this State.
(f) No U.S. branch shall be or continue to be authorized to do an insurance business in this State if it fails to keep full and correct
entries of its transactions, which shall at all times be open to the inspection of persons invested by law with the rights of inspection and
be maintained in its principal office within this State.
(80 Del. Laws, c. 159, § 1.)
§ 567. Authority of Commissioner.
Whenever it appears to the Commissioner from any annual or quarterly statement or trusteed surplus statement or any other report
that a U.S. branch’s trusteed surplus is reduced below minimum capital and surplus or the authorized control level risk based capital,
whichever is greater, required to be maintained by a domestic insurer licensed to transact the same kinds of insurance, the Commissioner
may proceed against the U.S. branch pursuant to the provisions of Chapter 59 of this title, as an insurer whose condition is such that its
further transaction of business in the United States will be hazardous to its policyholders, its creditors or the public in the United States.
(80 Del. Laws, c. 159, § 1.)
Page 36
Title 18 - Insurance Code
Part I
Insurance
Chapter 7
Fees and Taxes
§ 701. Fee schedule.
Except as provided herein or otherwise by law, the Commissioner shall collect, in advance, fees, costs and miscellaneous charges as
follows:
(1) Insurer’s certificate of authority.
a. For filing application for initial certificate
$1,000
of authority including all documents
submitted as part of such application
b. Issuance of certificate of authority
150
c. Annual continuation
150
d. Reinstatement (§ 518 of this title)
150
e. Amendment to include
150
or delete lines of authority
The fee for a duplicate or replacement
certificate issued under this title shall be the
same as required for an original certificate.
(2) Dental plan organization license (§ 3804 of this title).
a. Original license
150
b. Annual continuation
150
(3) Managed care organizations license (§ 6404 of this title).
a. Original license
500
b. Annual continuation
150
(4) Fraternal associations (§ 6227 of this title).
a. Original license
100
b. Renewal
100
c. Annual statement
100
(5) Insurance premium finance company (§ 4802 of this title).
a. Original license
500
b. Annual continuation
500
(6) Rating organization license.
a. Application for original license
150
and issuance of license, if issued
b. Annual continuation
150
(7) Risk retention group.
a. Initial registration
150
b. Annual continuation
150
(8) Risk purchasing group.
a. Initial registration
150
b. Annual continuation
150
(9) Accredited reinsurer.
a. Initial registration
150
b. Annual continuation
150
(10) Surplus lines insurer.
a. Initial registration
150
b. Annual continuation
150
(11) Captive insurer.
a. Application fee
300
b. Annual continuation
400
(12) Reinsurance intermediary.
a. Initial license
250
b. Annual continuation
100
Page 37
Title 18 - Insurance Code
(13) Solicitation permit application, filing.
a. For initial financing
250
b. For subsequent filing
100
(14) Charter documents (other than those
10
filed with application for certificate of
authority). Filing amendments to certificate
of incorporation, or articles of incorporation,
or charter, or bylaws, or power of attorney
(as to reciprocal insurers) or to other
constituent documents of the insurer
(15) Annual statement filing of insurer
150
(16) Registration statement of insurance holding company
or member of insurance holding company system, filing.
a. Annual registration statement filing
100
b. Each amendment thereof
100
(17) Form A filing
1,000
(18) Copies of documents on file in the
5
Department, ($.50 per page) minimum
(19) Certifying and affixing official seals
10
(20) Certified copy of insurer
10
certificate of authority or of any
license issued under this title
(21) Rate changes or deviations
100
(22) Service of process, acceptance.
Against unauthorized persons and
25
insurers under Chapter 21 of this title
(23) Insurance producer (§ 1702(i) of
this title), limited line credit insurance
producer (as defined in § 1702 of this
title), limited lines producer (as defined
in § 1702 of this title) and miscellaneous
limited lines producer (§ 1708(f) of this title).
a. Initial license (resident and nonresident)
100
b. Resident license renewal (due
100
biennially February 28 in even
years beginning February 28, 2004)
c. Resident insurance producer’s, limited line credit insurance producer’s, limited
lines producer’s initially licensed within 90 days prior to the renewal deadline of
February 28 (December 1-February 28) are not subject to the renewal fee for that
specific biennial renewal period referenced in paragraph (23)b of this section.
d. Nonresident license renewal
100
(due biennially February 28 in odd
years beginning February 28, 2003)
e. Nonresident producer’s, nonresident limited line credit insurance producer,
nonresident limited lines producer and nonresident miscellaneous limited lines
producer’s initially licensed within 90 days prior to the renewal deadline of
February 28 (December 1-February 28) are not subject to the renewal fee for that
specific biennial renewal period referenced in paragraph (23)d. of this section.
f. One-time appointment of insurance
50
producer, limited line credit insurance
producer, limited lines producer and
miscellaneous limited line producer
(§ 1715 of this title), each insurer
(24) Amendments to license issued
25
under Chapter 17 of this title
(25) Surplus lines broker (§ 1912 of this title):
a. Initial license (resident and nonresident)
250
Page 38
Title 18 - Insurance Code
b. Resident license renewal (due
200
biennially February 28 in even
years beginning February 28, 2004)
c. Resident surplus lines broker’s initially
licensed within 90 days prior to the renewal
deadline of February 28 (December 1February 28) are not subject to the renewal
fee for that specific biennial renewal period
referenced in paragraph (25)b. of this section.
d. Nonresident license renewal
200
(due biennially February 28 in odd
years beginning February 28, 2003)
e. Nonresident surplus lines broker’s initially licensed within 90 days prior to the renewal
deadline of February 28 (December 1-February 28) are not subject to the renewal fee
for that specific biennial renewal period referenced in paragraph (25)d. of this section.
(26) Fraternal representative (§ 1702(g) of this title):
a. Initial license (resident and nonresident)
100
b. Resident license renewal (due
100
biennially February 28 in even
years beginning February 28, 2004)
c. Resident fraternal representative’s initially
licensed within 90 days prior to the renewal
deadline of February 28 (December 1February 28) are not subject to the renewal
fee for that specific biennial renewal period
referenced in paragraph (26)b. of this section.
d. Nonresident license renewal
100
(due biennially February 28 in odd
years beginning February 28, 2003)
e. Nonresident fraternal representative’s
initially licensed within 90 days prior to the
renewal deadline of February 28 (December
1-February 28) are not subject to the renewal
fee for that specific biennial renewal period
referenced in paragraph (26)d. of this section.
f. One-time appointment of fraternal
50
representative (§ 1715 of this
title), each society or association
(27) Adjuster (§ 1702(a) of this title):
a. Initial license (resident and nonresident)
100
b. Resident license renewal (due
100
biennially February 28 in even
years beginning February 28, 2004)
c. Resident adjuster’s initially licensed
within 90 days prior to the renewal deadline
of February 28 (December 1-February
28) are not subject to the renewal fee
for that specific biennial renewal period
referenced in paragraph (27)b. of this section.
d. Nonresident license renewal
100
(due biennially February 28 in odd
years beginning February 28, 2003)
e. Nonresident adjuster’s initially licensed within 90 days prior to the renewal deadline
of February 28 (December 1-February 28) are not subject to the renewal fee for
that specific biennial renewal period referenced in paragraph (27)d. of this section.
(28) Motor vehicle appraiser (§ 1702(c) of this title):
a. Initial license (resident and nonresident)
100
Page 39
Title 18 - Insurance Code
b. Resident license renewal (due
100
biennially February 28 in even
years beginning February 28, 2004)
c. Resident motor vehicle appraiser’s initially licensed within 90 days prior to the renewal
deadline of February 28 (December 1-February 28) are not subject to the renewal fee
for that specific biennial renewal period referenced in paragraph (28)b. of this section.
d. Nonresident license renewal
100
(due biennially February 28 in odd
years beginning February 28, 2003)
e. Nonresident motor vehicle appraiser’s
initially licensed within 90 days prior to the
renewal deadline of February 28 (December
1-February 28) are not subject to the renewal
fee for that specific biennial renewal period
referenced in paragraph (28)d. of this section.
(29) Apprentices (§ 1702(d) of this title) and
temporary insurance producer (§ 1711 of this title):
License (initial)
50
(30) “Viatical settlement provider” (§ 7502 of this title):
a. Initial license (resident and nonresident)
250
b. Resident license renewal (due
250
biennially February 28 in even
years beginning February 28, 2004)
c. Resident viatical settlement provider’s initially licensed within 90 days prior to the
renewal deadline of February 28 (December 1-February 28) are not subject to the renewal
fee for that specific biennial renewal period referenced in paragraph (33)b. of this section.
d. Nonresident license renewal (due
250
biennially February 28 in odd years
ending in the numbers 1, 3, 5, 7,
9 beginning February 28, 2003)
e. Nonresident viatical settlement provider’s
initially licensed within 90 days prior to the
renewal deadline of February 28 (December
1-February 28) are not subject to the renewal
fee for that specific biennial renewal period
referenced in paragraph (30)d. of this section.
(31) Business entity (insurance agency, § 1702(f) of this title):
Initial license (resident and nonresident)
100
a. Resident license renewal (due
100
biennially February 28 in even
years beginning February 28, 2004)
b. Resident business entity initially licensed within 90 days prior to the renewal
deadline of February 28 (December 1-February 28) are not subject to the renewal fee
for that specific biennial renewal period referenced in paragraph (23)b. of this section.
c. Nonresident license renewal
100
(due biennially February 28 in odd
years beginning February 28, 2003)
d. Nonresident business entity initially licensed within 90 days prior to the renewal
deadline of February 28 (December 1-February 28) are not subject to the renewal fee
for that specific biennial renewal period referenced in paragraph (23)d. of this section.
(32) Vending machine, each year
100
(33) Examination of insurer, see § 322 of this title.
(34) Form, advertising and/or rule
150
filings for each insurance policy
or annuity contract or application
(35) Bail agent, initial and renewal:
Bail agent
200
Page 40
Title 18 - Insurance Code
(36)a. For initial licensing of a
500
discount medical plan organization:
b. For renewal of discount
250
medical plan organization license:
(37) Limited lines travel insurance producers (that are
registering travel retailers under Chapter 17B of this title):
a. For initial licensing of a limited
1,000
lines travel insurance producer:
b. For renewal of a limited lines
500
travel insurance producer license:
c. Licensing periods, renewal dates and appointments for limited lines
travel insurance producers are subject to paragraph (23) of this section.
The increase in fees collected in Fiscal Year 2018 pursuant to this section shall be used solely to make appropriations for certain grantsin-aid for the fiscal year ending June 30, 2018.
(18 Del. C. 1953, § 701; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 278, § 9; 59 Del. Laws, c. 197, § 2; 62 Del. Laws, c. 78, § 1;
65 Del. Laws, c. 142, §§ 1, 2; 65 Del. Laws, c. 143, §§ 1, 2; 67 Del. Laws, c. 260, § 1; 67 Del. Laws, c. 343, § 1; 71 Del. Laws, c.
423, §§ 1-27; 73 Del. Laws, c. 90, § 2; 73 Del. Laws, c. 325, §§ 1, 2; 75 Del. Laws, c. 156, § 2; 76 Del. Laws, c. 394, § 4; 77 Del.
Laws, c. 470, § 2; 79 Del. Laws, c. 87, §§ 1, 2; 79 Del. Laws, c. 428, § 1; 80 Del. Laws, c. 215, § 1; 81 Del. Laws, c. 57, § 1; 81
Del. Laws, c. 172, § 1; 82 Del. Laws, c. 112, § 1.)
§ 702. General premium tax; underwriting profits tax.
(a) Each authorized insurer and each formerly authorized insurer shall file with the Commissioner, on or before March 1 each year
a report in form as prescribed by the Commissioner showing, except with respect to wet marine and transportation insurance, gross
direct premium income, including policy, membership and other fees, assessments and all other considerations for insurance received
by it during the next preceding calendar year on account of insurance contracts, other than as to workers’ compensation and employer’s
liability, covering property, subjects or risks located, resident or to be performed in this State (with proper proportionate allocation of
premiums as to such persons, property, subjects or risks in this State insured under policies covering persons, property, subjects or risks
located or resident in more than 1 state), after deducting from such total direct premium income (1) the amount of returned premiums on
cancelled policies (but not including the return of cash surrender values of life insurance policies) and (2) the unabsorbed portion of any
deposit premium and the amount returned to policyholders as dividends and similar returns, whether paid in cash or credited or applied
in reduction of premiums. The report shall be verified by the oath or affirmation of the president or secretary or other responsible officer
of the insurer, duly administered by a person authorized to administer oaths. Considerations received for annuity contracts or funding
agreements shall not be included in gross direct premium income or be subject to taxes imposed by this section or by § 707 of this title.
Any premiums received for employer-owned life insurance policies, as defined in § 2704(e) of this title, and trust-owned life insurance
policies, as defined in § 2704(c)(5) of this title, shall be itemized separately in the report, except that separate itemization for a trustowned life insurance policy shall not be required if the insurer elects to pay tax on premiums received for such policy under paragraph
(c)(1) of this section.
(b) For the purpose solely of the tax upon the premiums and at the rate provided under this section, a domestic insurer shall also include
in the report provided for in subsection (a) of this section above, except with respect to wet marine and transportation insurance, the gross
amount of premiums and other considerations for direct insurance received by it upon insurance business written pursuant to solicitation of
business by mail directed to persons located in a state or province of Canada in which the insurer is not admitted to transact insurance with
respect to persons, property and subjects or risks resident, located or to be performed in such state or province and on which a premium
tax is not paid or surplus line tax is not payable to such state or province and shall deduct therefrom returned premiums, unabsorbed
portion of deposit premiums, dividends, and similar returns paid or credited to policyholders as provided in such subsection.
(c) (1) There shall be paid a tax at the rate of 1.75% on net premiums as shown on reports required to be filed under subsection (a)
of this section.
(2) In lieu of paragraph (c)(1) of this section, there shall be paid a tax on a graduated basis at the rates set forth in the following
table on net premiums per case for employer-owned life insurance policies, as defined in § 2704(e)(3) of this title, and trust-owned
life insurance policies, as defined in § 2704(e)(4) of this title, not taxed pursuant to paragraph (c)(3) of this section. For purposes of
this paragraph, a “case” is:
a. All contracts issued to an employer, or a trust established by an employer or an individual, as appropriate; or
b. All contracts issued to all employers or trusts that participate in a private placement under federal securities laws and/or purchase
with respect to at least 25 lives policies covered by registrations under such laws.
Said tax shall be paid on net premiums and other considerations received on account of insurance contracts issued for delivery in this
State, except that no premium tax shall be paid with respect to persons resident or located outside of this State upon whom premium
tax is paid to the State of residency or location.
Page 41
Title 18 - Insurance Code
Net Premiums Per Case
First $10,000,000
$10,000,001 to $24,999,999
$25,000,000 to $99,999,999
$100,000,000 and over
Premium Tax Rate
2.0%
1.5%
1.25%
1.0%
The premium tax rate shall be calculated on the basis of net premiums (upon which taxes are payable to this State) received per case
in each calendar year, except that in subsequent calendar years the premium tax rate shall not be higher than the rate established for
the preceding year. A reduction in the premium tax rate for a subsequent calendar year shall not apply retrospectively to any previous
calendar year. The following example illustrates calculation of the tax rates under this section:
Calendar Year
1995
1996
1997
1998
Premiums Per Case
$9,000,000
$20,000,000
$30,000,000
$9,000,000
Tax Rate
2%
2% x $10,000,000 + 1.5% x $10,000,000
1.5% x $25,000,000 + 1.25% x $5,000,000
1.25%
The tax imposed by this subsection shall be the only tax imposed by this chapter on employer-owned life insurance policies and
trust-owned life insurance policies.
(3) In lieu of paragraphs (c)(1) and (2) of this section, the premium tax rate shall be 2% on the first $100,000 of net premiums and
0.0% for the net premium exceeding $100,000 for trust-owned life insurance policies covering the life of an individual that participate in
private placement under federal securities laws. Said tax shall be paid on net premiums and other considerations received on account of
insurance contracts issued for delivery in this State, except that no premium tax shall be paid with respect to persons resident or located
outside of this State upon whom premium tax is paid to the State of residency or location. The premium tax rate shall be calculated
on the basis of net premiums (upon which taxes are payable to this State) received per policy in each calendar year. The tax imposed
by this paragraph shall be the only tax imposed by this chapter on trust-owned life insurance policies covering the life of an individual
that participate in private placement under federal securities laws.
(d) The taxes imposed under this section and §§ 703, 704, 707, 1917 and 6914 of this title shall be payable as follows:
Fifty percent of the estimated tax liability for the current year shall be paid on April 15 of the current year, and the balance of the
estimated tax shall be paid in installments as follows: 20% on June 15 of the current taxable year; 20% on September 15 of the current
taxable year; 10% on December 15 of the current taxable year; and the remaining balance to be paid on March 1 of the following year.
(e) Tax on wet marine and transportation insurance underwriting profits:
(1) Each authorized insurer and formerly authorized insurer shall, with respect to all wet marine and transportation insurance written
within this State, pay a tax of 5% upon its taxable underwriting profit, ascertained as, hereinafter provided, from such insurance written
within this State;
(2) The underwriting profit on such insurance written within this State shall be that proportion of the total underwriting profit of such
insurer from such insurance written within the United States which the amount of net premiums of such insurer from such insurance
written within this State bears to the amount of net premiums of such insurer from such insurance written within the United States;
(3) The underwriting profit of such insurer on such insurance written within the United States shall be determined by deducting from
the net earned premiums on such wet marine and transportation insurance written within the United States during the taxable year,
meaning thereby the calendar year next preceding the date on which such tax is due, the following items:
a. Net losses incurred, meaning gross losses incurred during such calendar year under such wet marine and transportation insurance
contracts written within the United States, less reinsurance claims collected or collectible and less net salvages or recoveries collected
or collectible from any source applicable to the corresponding losses under such contracts;
b. Net expenses incurred in connection with such wet marine and transportation insurance contracts, including all state and federal
taxes in connection therewith, but in no event shall the aggregate amount of such net expenses deducted exceed 40% of the net
premiums on such wet marine and transportation insurance contracts, ascertained as hereinafter provided; and
c. Net dividends paid or credited to policyholders on such wet marine and transportation insurance contracts;
(4) In determining the amount of such tax, net earned premiums on such wet marine and transportation insurance contracts written
within the United States during the taxable year shall be arrived at as follows:
From gross premiums written on such contracts during the taxable year deduct any and all return premiums, premiums on policies
not taken, premiums paid for reinsurance of such contracts and net unearned premiums on all such outstanding contracts at the end
of the taxable year and add to such amount net unearned premiums on such outstanding wet marine and transportation insurance
contracts at the end of the calendar year next preceding the taxable calendar year;
(5) In determining the amount of such tax, net expenses incurred shall be determined as the sum of the following:
a. Specific expenses incurred on such wet marine and transportation insurance business, consisting of all commissions, agency
expenses, taxes, licenses, fees, loss adjustment expenses and all other expenses incurred directly and specifically in connection with
Page 42
Title 18 - Insurance Code
such business, less recoveries or reimbursements on account of or in connection with such commissions or other expenses collected
or collectible because of reinsurance or from any other source;
b. General expenses incurred on such wet marine and transportation insurance business, consisting of that proportion of general
or overhead expenses incurred in connection with such business which the net premiums on such wet marine and transportation
insurance written during the taxable year bear to the total net premiums written by such insurer from all classes of insurance written
by it during the taxable year. Within the meaning of this paragraph, general or overhead expenses shall include salaries of officers
and employees, printing and stationery, all taxes of this State and of the United States, except as included in subparagraph a. above,
and all other expenses of such insurer not included in paragraph (e)(5)a. of this section above, after deducting expenses specifically
chargeable to any or all other classes of insurance business;
(6) In determining the amount of such tax, the taxable underwriting profit of such insurer on such wet marine and transportation
insurance business written within this State shall be ascertained as follows:
a. In the case of every such insurer which has written any such business within this State during 3 calendar years immediately
preceding the year in which such taxes were payable, the taxable underwriting profit shall be determined by adding or subtracting,
as the case may be, the underwriting profit or loss on all such insurance written within the United States, ascertained as hereinbefore
provided, for each of such 3 years, and dividing by 3;
b. In the case of every such insurer other than as specified in paragraph (e)(6)a. of this section, such taxable underwriting profit,
if any, shall be the underwriting profit, if any, on such wet marine and transportation insurance business written within this State
during the taxable year ascertained as hereinbefore provided; but after such insurer has written such wet marine and transportation
insurance business within this State during 3 calendar years, an adjustment shall be made on the 3 year average basis by ascertaining
the amount of tax payable in accordance with paragraph (e)(6)a. of this section above, but no refunds of all or any part of such
payments shall be made, except as provided in § 707 of this title;
(7) The tax hereinbefore provided shall be paid annually, on or before June 1, by every insurer authorized to do in this State the
business of wet marine and transportation insurance during any 1 or more of the next preceding 3 calendar years, and the calendar year
next preceding such June 1 shall be deemed the taxable year within the meaning of this section;
(8) Every insurer liable to pay the tax hereinbefore provided under this subsection (e) shall, on or before June 1 of each year, file
with the Commissioner a tax return in form prescribed by the Commissioner;
(9) The tax provided for in this subsection (e) shall apply to the business of the year ending December 31, 1968, and to subsequent
years, and for such purpose the underwriting profits or losses of prior years shall be taken into account, as hereinbefore provided.
Section 2702 of this title and in force immediately prior to November 1, 1968, shall continue to be effective with respect to all taxes
due under such section, but this provision shall not be construed as imposing any duplication of taxes for any of such years.
(f) In case of any underpayment of estimated tax required by this section, there shall be added to the tax for the taxable year an amount
determined at the rate of 11/2% per month, or fraction thereof, upon the amount of the underpayment for the period of the underpayment.
The period of the underpayment shall run from the date the estimated tax or installment was required to be paid to the date on which
actually paid. No penalty for underpayment shall be imposed if the quarterly estimated tax payments equal 100% of the total tax due
and paid for the previous tax year.
(18 Del. C. 1953, § 702; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 17, §§ 1-3; 66 Del. Laws, c. 382, §§ 1-4; 69 Del. Laws, c.
462, §§ 6, 7; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 530, §§ 1, 2; 71 Del. Laws, c. 239, § 1; 76 Del. Laws, c. 275, § 1; 80 Del.
Laws, c. 222, §§ 1, 2; 80 Del. Laws, c. 268, § 2.)
§ 703. Privilege tax on certain domestic insurers.
(a) Except as provided in subsection (e) of this section, a domestic insurer, other than a mutual insurer doing business on the assessment
premium plan, shall pay to the Commissioner for the use of the State an annual privilege tax in the amount determined in accordance with
subsections (b) and (c) of this section, due and payable at the same time as the premium tax and estimated payments as provided in § 702
of this title. The payment of such privilege tax shall accompany a form as designated and furnished by the Commissioner, together with
such information required thereon relating to the provisions of this section.
(b) (1) For purposes of subsection (a) of this section, the privilege tax with respect to each year shall be an amount determined in
accordance with the following table, less any credits provided in subsection (c) of this section:
If annual gross receipts are:
Under $1,000,000
$1,000,000 to $5,000,000
$5,000,001 to $10,000,000
$10,000,001 to $20,000,000
$20,000,001 to $30,000,000
$30,000,001 to $40,000,000
over $40,000,000
Page 43
The annual privilege tax shall be:
Exempt
$10,000
$25,000
$45,000
$65,000
$85,000
$95,000
Title 18 - Insurance Code
(2) For purposes of the foregoing table and subsection (e) of this section, the “annual gross receipts” of a domestic insurance company
shall consist of its net premium income and its investment income. As the terms are used herein:
a. The term “net premium income” shall mean an amount determined by taking the domestic insurer’s gross direct premium
income and all other considerations for insurance received by the domestic insurer on account of insurance contracts, but excluding
considerations received for annuity contracts and funding agreements, and subtracting therefrom the amount of any returned
premiums on cancelled policies (but not including the return of cash surrender values of life insurance policies) and the unabsorbed
portion of any deposit premium and the amount returned to policyholders as dividends and similar returns, whether paid in cash or
credited or applied in reduction of premiums; and
b. The term “investment income” shall mean the amount shown on the line for investment income on the annual statement filed
in accordance with § 526(a) of this title.
(c) In determining the annual privilege tax under subsection (a) of this section, the amount of tax determined in the table provided in
subsection (b) of this section shall be reduced, but with respect to domestic insurers that do not maintain their principal offices in the State
to an amount not less than $15,000, by the credits with respect to such year provided in this subsection. Except as limited by subsection (d)
of this section, the domestic insurer subject to tax under this section is entitled to credits against annual privilege tax liability as follows:
For each $100,000 of gross salaries, wages and other compensation paid by the domestic insurer and its affiliates for employee services
performed within Delaware, the domestic insurer shall be entitled to a credit of $1,500 for such year.
Notwithstanding the above, any insurer which writes 50 percent or more of its total premium on property or persons residing within
this State shall be exempt from application and payment of the privilege tax.
(d) Domestic insurers shall not be entitled to carry-over or carry back or otherwise apply a credit to any year other than the year to
which the credit originally applies.
(e) In the case of domestic insurers with 1, 2 or 3 domestic insurer affiliates, only the affiliate with the largest gross receipts as defined
herein shall be subject to the annual privilege tax imposed pursuant to subsection (b) of this section. Any affiliates exceeding 3 in number
shall each be subject to the annual privilege tax.
(f) For purposes of subsections (c) and (e) of this section, “affiliate” shall: (i) have the same meaning as provided in subchapter V
of Chapter 7 of Title 5, and (ii) shall mean any corporation which is a member of a controlled group of corporations as defined in §
1563(a) of the Internal Revenue Code of 1986 (“IRC”) [26 U.S.C. § 1563(a)], without regard to subsections (a)(4) and (b)(2)(D) of IRC
§ 1563 [26 U.S.C. § 1563(a)(4) and (b)(2)(D)], except that “more than 50 percent” shall be substituted for “at least 80 percent” each
place it appears in IRC § 1563(a) [26 U.S.C. § 1563(a)]; provided further that “affiliate” shall also include the insurance division of a
bank created pursuant to 5 Del. C. § 767(a).
(18 Del. C. 1953, § 703; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 7; 68 Del. Laws, c. 83, § 1; 69 Del. Laws, c. 153, § 1;
80 Del. Laws, c. 268, § 2.)
§ 704. Tax on workers’ compensation; employer’s liability premiums.
(a) Every insurance carrier shall pay a tax upon all workers’ compensation or employer’s liability premiums received in this State or
on account of business done in this State at the rate of 2% of the amount of such premiums, which tax shall be in lieu of all other taxes
on such premiums.
(b) The insurance carrier shall be credited with all canceled or returned premiums actually refunded during the year on such insurance
and premiums on reinsurance received from other insurance carriers, except that mutual insurance companies shall be taxed upon the
gross premiums charged and collected and shall not be credited with unabsorbed premiums or dividends.
(c) The taxes imposed by this section shall be collected as provided in § 702(d) and (f) of this title.
(18 Del. C. 1953, § 704; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 266, § 5.)
§ 705. Reporting by insurers of gross premiums and payments to fire companies based thereon.
(a) Every insurance company receiving premiums for covering risks of loss on any real or personal property within the limits of this State
from fire, other allied lines, homeowners multiple peril, commercial multiple peril (nonliability portion), multiple peril crop, farmowners
multiple peril, federal flood, ocean marine, inland marine, earthquake, private passenger automobile physical damage, commercial
automobile physical damage and aircraft (all perils) shall annually, at the same time that such company files its annual report as required
by law, deliver to the Insurance Commissioner a full detailed statement of the amount of gross premiums of all such business done by such
a company in the City of Wilmington, in the County of New Castle outside the City of Wilmington, in Kent County and in Sussex County,
less return and reinsurance premiums received from other companies or by any agent or agents of such company, in cash or otherwise,
for the year ending on the previous December 31, including therein an allocation of the portion of the gross premiums coverage allocable
to each of the above areas. This statement shall be verified by the oath or affirmation of the insurance company’s president or vicepresident and secretary or other officer, and the statement shall be on a form prepared and furnished by the Insurance Commissioner for
that purpose. The Insurance Commissioner shall have the power and authority to request and receive additional information regarding any
insurance company’s business of covering the types of risks of loss stated in this subsection. Failure to give the Insurance Commissioner
the requested information shall be good cause, under § 520 of this title, for revocation of any certificate of authority of any insurance
company so ignoring the request.
Page 44
Title 18 - Insurance Code
(b) The Insurance Commissioner shall ascertain and report to the State Treasurer, on or before April 1 of each year, the information
contained in the statements and such other information as the Insurance Commissioner has obtained from the insurance companies pursuant
to subsection (a) of this section; and after receipt of such report, the State Treasurer shall pay a total sum equivalent to 33/4% reduced by
payments made pursuant to subsection (c) of this section during the preceding year of all such premiums obtained for writing in Delaware
the types of coverage stated in subsection (a) of this section from a special fund, which shall consist of a sum equivalent to 33/4% reduced
by payments made pursuant to subsection (c) of this section during the preceding year of all such premiums obtained for writing in
Delaware the types of coverage stated in subsection (a) of this section, to the Treasurer of the City of Wilmington and to the fire companies
registering, as provided in subsection (d) of this section, in the proportions stated in subsection (e) of this section. Such payment shall be
made by the State Treasurer from this special fund on or before May 1 of each year. Payments to the special fund shall be made out of fees
and taxes deposited with the State Treasurer by the Insurance Commissioner, not including those funds received under § 707 of this title.
(c) On or before September 15 of each year, the Insurance Commissioner shall ascertain and report to the State Treasurer, based on
information contained in statements filed pursuant to this section, the amount which equals 3/4% of the amount reflected in such statements
as to the total premium obtained during the preceding calendar year for writing in Delaware the types of coverage stated in subsection
(a) of this section, and the State Treasurer shall pay such amount to the Treasurer of the City of Wilmington and to the fire companies
registering as provided in subsection (d) of this section, in the proportions stated in subsection (e) of this section. Such payment shall be
made by the State Treasurer from a special fund created for this purpose on or before October 31 of each year. Payments to the special
fund shall be made out of fees and taxes deposited with the State Treasurer by the Insurance Commissioner, not including those funds
per § 707 of this title.
(d) The Delaware Volunteer Firefighter’s Association shall annually submit to the Commissioner a report giving their location,
apparatus and equipment maintained for its member fire companies and departments for use by the Commissioner in calculating the
funding under this chapter.
(e) The Insurance Commissioner shall ascertain the proportions of the sums described in subsections (b) and (c) of this section and
the actual amount thereby due to the Treasurer of the City of Wilmington and to the member departments identified in the report filed
by the Delaware Volunteer Firefighter’s Association with the Insurance Commissioner pursuant to subsection (d) of this section and the
State Treasurer shall then make payments in such amounts, which funds shall be used for assisting and maintaining the fire department
or companies of this State. The payments to the City of Wilmington shall be used only for its Firemen’s Pension Fund of the Bureau
of Fire in the City of Wilmington.
(f) All insurance companies writing the types of coverage described in subsection (a) of this section within this State shall be required
to reduce their premiums on all such coverage written in Delaware, under the rate filing in effect on January 1, 1972, by the sum of 31/2%
of all such premiums, unless such rate filing then in effect shall have made allowance for no more than a 2% premium tax. All future
rate filings covering the types of coverage described in subsection (a) of this section within this State shall make allowance for no more
than 2% premium tax, unless the premium tax shall be changed after January 1, 1972, in which case they may make allowance therein
for no more than the then effective premium tax.
(g) On or before July 1 of each year, the Insurance Commissioner shall ascertain and report to the State Treasurer, based on information
contained in statements filed pursuant to this section, the amount which equals 0.08% of the amount reflected in such statements as to
the total premium obtained during the preceding calendar year for writing in Delaware the types of coverage stated in subsection (a) of
this section, and the State Treasurer shall pay such amount to the State Insurance Coverage Office for purposes of funding the premium
payment required to be paid by the Insurance Coverage Office under § 6707B of this title. Payments to the Insurance Coverage Office
under this section shall be paid out of fees and taxes deposited with the State Treasurer by the Insurance Commissioner, not including
those funds received under § 707 of this title.
(18 Del. C. 1953, § 705; 57 Del. Laws, c. 731; 66 Del. Laws, c. 382, §§ 10-14; 77 Del. Laws, c. 378, §§ 2, 3; 79 Del. Laws, c. 102,
§ 1; 83 Del. Laws, c. 123, § 2.)
§ 706. Definitions of terms used in §§ 707-709 of this title.
As used in §§ 707-709 of this title:
(1) “County police” means any police under the control and direction of the Levy Court or County Council of the 3 counties of this
State which are separate and apart from any state or municipal police.
(2) “Municipal” means any incorporated city or town.
(3) “Municipal police” means police in any incorporated city or town.
(4) “Police pension fund” means any pension or retirement fund established by law for and on behalf of any state, county or municipal
police.
(5) “State police” means that police agency of the State acting under the direction of the State Department of Safety and Homeland
Security.
(18 Del. C. 1953, § 707; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 327, § 6; 74 Del. Laws, c. 110, § 138.)
Page 45
Title 18 - Insurance Code
§ 707. Special tax on gross premiums for benefit of police.
(a) Every insurer transacting insurance within this State, other than workers’ compensation insurance and wet marine and transportation
insurance, shall, in addition to other taxes, fees and charges required by law, at the same time as the premium tax and estimated payments
as provided in § 702 of this title pay to the Commissioner, for the use of the State, 1/4% upon the gross premiums received and assessments
collected from insurance of every kind upon persons or on the lives of persons resident in or upon real and personal property located
within this State, or upon any other risks insured within this State, by any such insurer or the authorized agent thereof for the calendar
year immediately preceding the date herein provided for such payments.
(b) “Gross premiums” whenever used in this section in reference to premiums received by insurers on policies covering risks located in
this State shall mean all moneys collected, together with all notes or credits allowed, as premiums on such policies including reinsurance
premiums received. In computing taxable premiums there may be deducted from gross premiums dividends and similar returns paid or
credited to policyholders, return premiums paid by reason of cancellation of policies, and reinsurance premiums received from other
insurers.
(c) No insurer affected by provisions of this section shall increase the rate of insurance premiums upon any insurable risk affected
by this section because of the tax provided for in this section, unless the Commissioner after a hearing on the matter is satisfied that an
increase is necessary; and in the event the Commissioner is satisfied after such hearing that an increase in the premium rate is necessary,
the Commissioner shall authorize such reasonable increase as he or she deems fair and equitable.
(18 Del. C. 1953, § 708; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 5; 70 Del. Laws, c. 186, § 1.)
§ 708. Distribution of proceeds of tax.
(a) Each insurance company, firm or corporation covered by the provisions of § 707 of this title shall, at the time of making tax
payments, deliver to the Insurance Commissioner a full and detailed statement showing the gross amount of premiums received and
assessments collected and dividends paid to policy holders by such insurance company, firm or corporation or the authorized agent thereof
for the calendar year immediately preceding the date provided for in § 707 of this title for tax payments, and such statement shall be
verified by the oath or affirmation of the president or secretary or other responsible officer of said company, duly administered by some
person authorized to administer oaths. Said statement shall be on the blanks prepared and furnished by the Insurance Commissioner for
the purpose of carrying out the provisions of this section and § 707 of this title.
(b) The money received by the Insurance Commissioner in accordance with the provisions of § 707 of this title shall be paid to the
State Treasurer and shall be set aside as a special fund and shall be paid out by the State Treasurer, subject to the provisions of subsection
(c) of this section, to the proper officers in charge of any state, county or municipal police department or bureau having a pension fund,
or which shall hereafter by law have a police pension fund. The State Treasurer shall determine the total number of state, county and
municipal police entitled to benefits under the provisions of this section and § 707 of this title from an annual registry in accordance with
§ 709(a) of this title, and shall make distribution proportionately and on a per capita basis, subject to the provisions of subsection (c) of
this section, to the proper officers of any state, county or municipal police department or bureau complying with the provisions of this
section and § 707 of this title. Distribution under this section shall take place twice annually, on or before June 30 and December 31.
(c) (1) The payments to the State referred to in this section for “state police,” as defined in § 706 of this title, shall be deposited into a
special fund, to be managed by the State Board of Pension Trustees, to provide post-retirement increases for retired county and municipal
police and firefighters. The State Board of Pension Trustees shall allocate the funds deposited in this special fund on a per capita basis to
the account of each eligible county or municipality based upon the annual registry in accordance with § 709(b) of this title, provided that
the eligible county or municipality has elected to participate in the State-administered County and Municipal Police/Firefighter Pension
Plan for all new hires after the time a municipality or county elects into that plan in accordance with Chapter 88 of Title 11. No funds
shall be disbursed from this special fund without the prior approval of the Board of Pension Trustees.
(2) Any county or municipality wishing to grant a post-retirement increase from this fund shall submit a proposal to the State Board
of Pension Trustees outlining the proposal in such detail as the State Board of Pension Trustees may require. The State Board of Pension
Trustees shall not approve any proposal for a post-retirement increase unless the county or municipality requesting such increase agrees
to deposit into this special fund, prior to the implementation of such increase, sufficient funds to cover 25% of the total actuarial cost
of such increase.
(3) Any funds on deposit in this special fund, including accumulated income, shall revert to the General Fund, if such funds are
not utilized for a post-retirement increase by the eligible counties or municipalities within 10 years from the date of deposit into the
special fund.
(4) If a county or municipality does not submit a proposal to the State Board of Pension Trustees, the State Board of Pension Trustees
shall distribute funds from the account within this special fund to the county or municipality for the benefit of all eligible individuals
who started receiving a normal retirement, disability, or survivor pension. The State Board of Pension Trustees shall distribute the
funds consistent with the following:
a. For purposes of this section, “eligible retiree” means an individual who retired before June 30, 2018; a surviving beneficiary; or
an individual receiving a disability pension. Eligible retirees must be alive on July 1 of each biennial payout year to receive payment.
Page 46
Title 18 - Insurance Code
b. Eligible retirees must be placed into 1 of the following 3 categories:
1. Category 1, consisting of individuals who are 1 of the following:
A. Retired for greater than or equal to 20 years.
B. A surviving beneficiary.
C. Receiving a disability pension.
2. Category 2, consisting of individuals who have been retired for greater than or equal to 10 years but less than 20 years.
3. Category 3, consisting of individuals who have been retired for less than 10 years.
c. On each biennial anniversary starting from September 1, 2019, and each biennial anniversary thereafter, the State Board of
Pension Trustees shall make funds available for distribution from this special fund, as follows:
1. At least $500,000 must remain in this special fund after distributions are made to eligible retirees.
2. Payments to eligible retirees in Category 3 must not exceed $3,000 to each individual.
3. The amount of the payment to each individual in Category 1 shall be 3 times the amount of the payment to each individual
in Category 3 and the amount of the payment to each individual in Category 2 shall be 2 times the amount of the payment to
each individual in Category 3.
4. A payment may not be made to any individual who receives an annual pension of more than $35,000.
d. The State Board of Pension Trustees shall determine the total amount available for distribution in any given year by July 1 of
such year based upon the category information received from the county or municipality before July 1 of such year.
e. A county or municipality must disperse payments to eligible retirees within 30 days of receiving the funds under paragraph
(c)(4)c. of this section.
(18 Del. C. 1953, § 709; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 15; 67 Del. Laws, c. 327, §§ 7, 8; 68 Del. Laws, c. 120,
§ 1; 70 Del. Laws, c. 464, § 1; 80 Del. Laws, c. 419, § 1; 81 Del. Laws, c. 398, § 1; 83 Del. Laws, c. 159, § 1.)
§ 709. Registering information.
(a) It shall be the duty of the officer in charge of any state, county or municipal police department or bureau participating in the
provisions of §§ 707 and 708 of this title to register with the State Treasurer on or before the 1st day of April in each year, and to provide
the State Treasurer with the following information: the location, jurisdiction and average number of paid, full-time, sworn police officers
employed for the year ending on the previous December 31.
(b) It shall be the duty of the officer in charge of any county or municipal police/fire department or bureau participating in the provisions
of §§ 707 and 708 of this title to register with the State Board of Pension Trustees on or before April 1 in each year, and to provide the
State Board of Pension Trustees with a listing of the number of retired police officers or firefighters receiving benefits as of December
31 of the preceding year excluding those covered by the County and Municipal Police/Firefighter Pension Plan as contained in Chapter
88 of Title 11.
(18 Del. C. 1953, § 710; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 327, §§ 9, 10; 70 Del. Laws, c. 186, § 1.)
§ 710. Purpose, receipt, deposit of fees, fines and taxes.
(a) All fees, charges, administrative fines and taxes payable under this title shall be paid to and collected by the Commissioner.
(b) The Commissioner shall give to any person paying cash a prenumbered, itemized receipt for fees, charges, administrative fines
and taxes paid under this title.
(c) Except as otherwise expressly provided, the Commissioner shall promptly deposit to the credit of the General Fund all fees, charges,
administrative fines, taxes and other funds collected by him or her for the use of this State, and shall promptly report the same to the State
Treasurer as provided in Chapter 61 of Title 29.
(18 Del. C. 1953, § 711; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 351; 70 Del. Laws, c. 186, § 1.)
§ 711. Refund of overpayments.
(a) Any person from whom fees, charges or taxes imposed by this title have been erroneously collected may apply to the Commissioner
for refund at any time within 1 year from the date such fees, charges or taxes were originally required to be paid or within 30 days from
the date of payment of any additional tax, charge or fee.
(b) If the amount of taxes, charges or fees found due are less than the amount paid, either by examination of the return by the
Commissioner or by allowance of a claim for overpayment filed by the payer with the Commissioner, the State Treasurer shall refund the
excess out of the General Fund of this State upon certification and approval by the Commissioner.
(c) No such refund shall be made unless the amount to be so refunded is $10 or more.
(18 Del. C. 1953, § 712; 56 Del. Laws, c. 380, § 1; 75 Del. Laws, c. 88, § 21(10); 83 Del. Laws, c. 319, § 1.)
§ 712. In lieu; preemption provision.
(a) The fees, charges and premium taxes imposed by the State shall be in lieu of all county and municipal license fees and taxes upon
the business of insurance in this State, excepting property taxes.
Page 47
Title 18 - Insurance Code
(b) The State hereby preempts the field of regulating or of imposing excise, privilege, franchise, income, license, permit, registration
and similar taxes, licenses and fees upon insurers and their general agents, agents and other representatives as such, and on the intangible
property of insurers or such representatives, and all political subdivisions or agencies thereof in this State are prohibited from regulating
insurers or their general agents, agents and other representatives as such, and from imposing upon them any such tax, license or fee.
However, this provision shall not prohibit the imposition by political subdivisions of taxes upon real and tangible personal property.
(18 Del. C. 1953, § 713; 56 Del. Laws, c. 380, § 1.)
§ 713. Reporting gross premiums received by life and health insurers; special fund for payments to all
volunteer ambulance companies or rescue services.
(a) The Insurance Commissioner each year shall ascertain the total amount of gross premiums received by insurance companies and
agents thereof as payment for all types of life and/or health insurance coverage within this State. The Insurance Commissioner shall then
notify the State Treasurer of the total amount of such gross premiums and also the names and addresses of each volunteer ambulance
company or volunteer rescue service in this State. After the Insurance Commissioner so informs the State Treasurer, the State Treasurer
shall:
(1) Establish a special fund each year. This special fund shall be created out of the existing annual premium taxes paid by insurance
companies and agents thereof pursuant to this chapter on all types of life and/or health insurance coverage within this State. The special
fund shall be created out of the aforesaid premium taxes, and shall be equal to 20/100 of 1% of the gross premiums received by insurance
companies and agents thereof for all types of life and/or health insurance coverage within this State.
(2) Distribute on a pro rata basis the proceeds of the special fund to the aforementioned nonprofit organizations within this State that
are engaged in providing ambulance and/or rescue services.
(b) The Insurance Commissioner shall have the authority to request and receive any information regarding any insurance company’s
business relating to any type of life and/or health insurance coverage sold or offered for sale within this State for the purpose of determining
the gross premiums received for such insurance coverage in order to determine the amount of the special fund.
(c) For the purpose of implementing this section, the Insurance Commissioner is authorized to promulgate rules and regulations that
are consistent with this section.
(d) For the purpose of this section:
(1) “Basic life support (BLS)” shall have the same meaning as set forth in § 9702 of Title 16.
(2) “Volunteer ambulance company” shall mean a nonprofit ambulance company that is certified by the State Fire Prevention
Commission and is providing basic life support (BLS) services.
(65 Del. Laws, c. 196, § 1; 66 Del. Laws, c. 302, § 1; 79 Del. Laws, c. 437, § 1.)
§ 714. Expenses and fees for form and rate filings.
(a) In addition to a filing fee as set forth in § 701 of this title, the expenses and fees of the Department of Insurance for the review
and determination of a form and rate filing by an insurer shall be assessed to and paid by the insurer and shall include the reasonable and
proper expenses of the Commissioner and the Commissioner’s examiners and assistants, including expert assistance contracted for by the
Commissioner. Such insurer shall promptly pay the form and rate filing review expense upon presentation by the Commissioner or the
Commissioner’s examiners of a reasonably detailed written account thereof.
(b) No insurer shall be required to pay a form filing fee pursuant to § 701(34) of this title that exceeds $2,000 per filing. For form filings
that are made on a group-wide basis, the $2,000 filing cap shall be applied to each insurer within the filing.
(73 Del. Laws, c. 325, § 3; 75 Del. Laws, c. 156, § 1; 81 Del. Laws, c. 57, § 2; 82 Del. Laws, c. 112, § 1.)
Page 48
Title 18 - Insurance Code
Part I
Insurance
Chapter 9
Kinds of Insurance; Limits of Risk; Reinsurance
Subchapter I
Kinds of Insurance
§ 901. Definitions not mutually exclusive.
It is intended that certain insurance coverages may come within the definitions of 2 or more kinds of insurance as defined in this chapter,
and the inclusion of such coverage within 1 definition shall not exclude it as to any other kind of insurance within the definition of which
such coverage is likewise reasonably includable.
(18 Del. C. 1953, § 901; 56 Del. Laws, c. 380, § 1.)
§ 902. “Life insurance” defined.
Life insurance is insurance on human lives. The transaction of life insurance includes also the granting of endowment benefits, additional
benefits in event of death or dismemberment by accident or accidental means, additional benefits in event of the insured’s disability, and
optional modes of settlement of proceeds of life insurance.
(18 Del. C. 1953, § 902; 56 Del. Laws, c. 380, § 1.)
§ 903. “Health insurance” defined.
Health insurance is insurance of human beings against bodily injury, disablement or death by accident or accidental means, or the
expense thereof, or against disablement or expense resulting from sickness, and every insurance appertaining thereto.
(18 Del. C. 1953, § 903; 56 Del. Laws, c. 380, § 1.)
§ 904. “Property insurance” defined.
Property insurance is insurance on real or personal property of every kind and of every interest therein against loss or damage from any
and all hazard or cause, and against loss consequential upon such loss or damage, other than noncontractual legal liability for any such
loss or damage. Property insurance does not include title insurance, as defined in § 908 of this chapter.
(18 Del. C. 1953, § 904; 56 Del. Laws, c. 380, § 1.)
§ 905. “Surety insurance” defined.
(a) Surety insurance includes:
(1) Fidelity insurance, which is insurance guaranteeing the fidelity of persons holding positions of public or private trust;
(2) Insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds,
undertakings and contracts of suretyship;
(3) Insurance indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss, resulting from
any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts or other valuable
papers, documents, money, precious metals and articles made therefrom, jewelry, watches, gems, precious and semiprecious stones,
including any loss while the same are being transported in armored motor vehicles or by messenger, but not including any other risks of
transportation or navigation; also insurance against loss or damage to such an insured’s premises or to his or her furnishings, fixtures,
equipment, safes and vaults therein caused by burglary, robbery, theft, vandalism or malicious mischief, or any attempt thereat.
(b) Transaction of surety insurance does not confer power on the insurer to guarantee titles to real estate.
(18 Del. C. 1953, § 905; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 906. “Casualty insurance” defined.
(a) Casualty insurance includes:
(1) Vehicle insurance. — Insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal or to property
while contained therein or thereon or being loaded or unloaded therein or therefrom, from any hazard or cause, and against any loss,
liability or expense resulting from or incidental to ownership, maintenance or use of any such vehicle, aircraft or animal; together with
insurance against accidental injury to individuals, irrespective of legal liability of the insured, including the named insured while in,
entering, alighting from, adjusting, repairing, cranking or caused by being struck by a vehicle, aircraft or draft or riding animal, if such
insurance is issued as an incidental part of insurance on the vehicle, aircraft or draft or riding animal;
(2) Liability insurance. — Insurance against legal liability for the death, injury or disability of any human being, or for damage to
property, and provision of medical, hospital, surgical, disability benefits to injured persons and funeral and death benefits to dependents,
beneficiaries or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental
coverage with or supplemental to liability insurance;
Page 49
Title 18 - Insurance Code
(3) Workers’ compensation and employer’s liability. — Insurance of the obligations accepted by, imposed upon, or assumed by
employers under law for death, disablement or injury of employees;
(4) Burglary and theft. — Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious
mischief, confiscation or wrongful conversion, disposal or concealment, or from any attempt at any of the foregoing, including
supplemental coverage for medical, hospital, surgical and funeral expense incurred by the named insured or any other person as a result
of bodily injury during the commission of a burglary, robbery or theft by another; also insurance against loss of or damage to moneys,
coins, bullion, securities, notes, drafts, acceptances or any other valuable papers and documents resulting from any cause;
(5) Personal property floater. — Insurance upon personal effects against loss or damage from any cause;
(6) Glass. — Insurance against loss or damage to glass, including its lettering, ornamentation and fittings;
(7) Boiler and machinery. — Insurance against any liability and loss or damage to property or interest resulting from accidents to or
explosions of boilers, pipes, pressure containers, machinery or apparatus, and to make inspection of and issue certificates of inspection
upon boilers, machinery and apparatus of any kind, whether or not insured;
(8) Leakage and fire extinguishing equipment. — Insurance against loss or damage to any property or interest caused by the breakage
or leakage of sprinklers, hoses, pumps and other fire extinguishing equipment or apparatus, water pipes or containers, or by water
entering through leaks or openings in buildings, and insurance against loss or damage to such sprinklers, hoses, pumps and other fire
extinguishing equipment or apparatus;
(9) Credit. — Insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured;
(10) Medical negligence. — Insurance against legal liability of the insured, and against loss, damage or expense incidental to a claim
of such liability, and including medical, hospital, surgical and funeral benefits to injured persons, irrespective of legal liability of the
insured, arising out of the death, injury or disablement of any person, or arising out of damage to the economic interest of any person,
as the result of negligence in rendering expert, fiduciary or professional service;
(11) Elevator. — Insurance against loss of or damage to any property of the insured, resulting from the ownership, maintenance or
use of elevators, except loss or damage by fire, and to make inspection of and issue certificates of inspection upon elevators;
(12) Congenital defects. — Insurance against congenital defects in human beings;
(13) Livestock. — Insurance against loss or damage to livestock, and services of a veterinary for such animals;
(14) Entertainments. — Insurance indemnifying the producer of any motion picture, television, radio, theatrical, sport, spectacle,
entertainment, or similar production, event or exhibition against loss from interruption, postponement or cancellation thereof due to
death, accidental injury or sickness of performers, participants, directors or other principals;
(15) Miscellaneous. — Insurance against any other kind of loss, damage or liability properly a subject of insurance and not within
any other kind of insurance as defined in this subchapter, if such insurance is not disapproved by the Commissioner as being contrary
to law or public policy.
(b) Provision of medical, hospital, surgical and funeral benefits, and of coverage against accidental death or injury, as incidental to
and part of other insurance as stated under paragraphs (a)(1) (vehicle), (2) (liability), (4) (burglary), (7) (boiler and machinery), (10)
(medical negligence), and (11) (elevator) of this section, shall for all purposes be deemed to be the same kind of insurance to which it is
so incidental, and shall not be subject to provisions of this title applicable to life and health insurances.
(18 Del. C. 1953, § 906; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 373, § 3.)
§ 907. Marine and transportation, “wet marine” insurance defined.
(a) “Marine and transportation insurance” includes:
(1) Insurance against any kinds of loss or damage to:
a. Vessels, craft, aircraft, cars, automobiles and vehicles of every kind, as well as all goods, freights, cargoes, merchandise, effects,
disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry
and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to, or in connection with
any and all risks or perils of navigation, transit or transportation, including war risks, on or under any seas or other waters, on land
or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the
same or during any delays, storage, transshipment or reshipment incident thereto, including marine builder’s risks and all personal
property floater risks; and
b. Person or to property in connection with or appertaining to a marine, inland marine, transit or transportation insurance, including
liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of
the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily
injury to the person arising out of the ownership, maintenance or use of automobiles); and
c. Precious stones, jewels, jewelry, gold, silver and other precious metals, whether used in business or trade or otherwise and
whether the same be in course of transportation or otherwise; and
d. Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and
furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/
Page 50
Title 18 - Insurance Code
or civil commotion are the only hazards to be covered; piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler
leakage, hail, explosion, earthquake, riot and/or civil commotion; other aids to navigation and transportation, including dry docks
and marine railways, against all risks.
(2) “Marine protection and indemnity insurance,” meaning insurance against, or against legal liability of the insured for, loss, damage
or expense arising out of or incident to the ownership, operation, chartering, maintenance, use, repair or construction of any vessel,
craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or
for loss of or damage to the property of another person.
(b) For the purposes of this title “wet marine and transportation” insurance is that part of “marine and transportation” insurance which
includes only:
(1) Insurance upon vessels, crafts, hulls and of interests therein or with relation thereto;
(2) Insurance of marine builders’ risks, marine war risks and contracts of marine protection and indemnity insurance;
(3) Insurance of freights and disbursements pertaining to a subject of insurance coming within this definition; and
(4) Insurance of personal property and interests therein, in course of exportation from or importation into any country, or in course
of transportation coastwise or on inland waters, including transportation by land, water or air from point of origin to final destination
in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit or transportation, and while being
prepared for and while awaiting shipment, and during any delays, storage, transshipment or reshipment incident thereto.
(18 Del. C. 1953, § 907; 56 Del. Laws, c. 380, § 1.)
§ 908. “Title insurance” defined.
Title insurance is insurance of owners of property or others having an interest therein, or liens or encumbrances thereon, against loss
by encumbrance or defective titles or invalidity or adverse claim to title.
(18 Del. C. 1953, § 908; 56 Del. Laws, c. 380, § 1.)
§ 908A. “Automobile club” defined.
“Automobile club” means a legal entity which, in consideration of dues, assessments or periodic payments of money, promises its
members or subscribers to assist them in matters relating to motor travel or the operation, use or maintenance of a motor vehicle, by
supplying services which may include but are not limited to towing service, emergency road service, indemnification service, guaranteed
arrest bond certificate service, discount service, financial service, theft service, map service or touring service. This definition does not
include an entity that enters into a service contract with an automobile club licensed under this chapter for the provision of emergency
road service and towing service to the entity’s customers.
(75 Del. Laws, c. 49, § 1; 78 Del. Laws, c. 169, § 1.)
Subchapter II
Limits of Risk
§ 909. Limits of risk.
(a) No insurer shall retain any risk on any 1 subject of insurance, whether located or to be performed in this State or elsewhere, in an
amount exceeding 10% of its surplus to policyholders.
(b) A “subject of insurance” for the purposes of this section, as to insurance against fire and hazards other than windstorm, earthquake
and other catastrophic hazards, includes all properties insured by the same insurer which are customarily considered by underwriters to
be subject to loss or damage from the same fire or the same occurrence of any other hazard insured against.
(c) Reinsurance ceded as authorized by § 910 of this title shall be deducted in determining risk retained. Except, that as to surety risks
reinsurance shall be allowed as a deduction only if such reinsurance is with an insurer authorized to transact such insurance in this State,
and is in such form as to enable the obligee or beneficiary to maintain an action thereon against the reinsured jointly with the reinsurer,
and upon recovering judgment against the reinsured to have recovery against the reinsurer for payment to the extent in which it may be
liable under such reinsurance and in discharge thereof. As to surety risks, deduction shall also be made of the amount assumed by any
authorized cosurety and the value of any security deposited, pledged or held subject to the surety’s consent and for the surety’s protection.
(d) As to alien insurers, this section shall relate only to risks and surplus to policyholders of the insurer’s United States branch.
(e) “Surplus to policyholders” for the purposes of this section, in addition to the insurer’s capital and surplus, shall be deemed to include
any voluntary reserves which are not required pursuant to law, and shall be determined from the last sworn statement of the insurer on
file with the Commissioner or by the last report of examination of the insurer, whichever is the more recent at time of assumption of risk.
(f) This section shall not apply to life or health insurance, annuities, title insurance, insurance of wet marine and transportation risks,
workers’ compensation insurance, employers’ liability coverages, nor to any policy or type of coverage as to which the maximum possible
loss to the insurer is not readily ascertainable on issuance of the policy.
(g) Limits of risk as to newly formed domestic mutual insurers shall be as provided in § 4905 of this title.
(18 Del. C. 1953, § 910; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
Page 51
Title 18 - Insurance Code
Subchapter III
Reinsurance
§ 910. Reinsurance.
Any authorized insurer may reinsure all or any part of an individual risk or of a particular class of risks in any other insurer or accept
such reinsurance from any other insurer. Domestic insurers will be subject to § 4944 of this title with regard to bulk reinsurance.
(18 Del. C. 1953, § 910; 56 Del. Laws, c. 380, § 1; 65 Del. Laws, c. 96, § 1; 68 Del. Laws, c. 58, § 1; 78 Del. Laws, c. 364, § 1.)
§ 911. Credit allowed a domestic ceding insurer.
Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance
ceded only when the reinsurer meets the requirements of paragraph (1), (2), (3), (4), (5), (6) or (7) of this section. Credit shall be allowed
under paragraph (1), (2) or (3) of this section only as respects cessions of those kinds or classes of business which the assuming insurer
is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a U.S. branch of an alien assuming insurer,
in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under paragraph (3) or
(4) of this section only if the applicable requirements of paragraph (8) of this section have been satisfied.
(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance
in this State.
(2) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the Commissioner as a reinsurer
in this State. In order to be eligible for accreditation, a reinsurer must:
a. File with the Commissioner evidence of its submission to this State’s jurisdiction;
b. Submit to this State’s authority to examine its books and records;
c. Be licensed to transact insurance or reinsurance in at least 1 state, or in the case of a U.S. branch of an alien assuming insurer,
be entered through and licensed to transact insurance or reinsurance in at least 1 state;
d. File annually with the Commissioner a copy of its annual statement filed with the insurance department of its state of domicile
and a copy of its most recent audited financial statement; and
e. Demonstrate to the satisfaction of the Commissioner that it has adequate financial capacity to meet its reinsurance obligations
and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet this requirement
as of the time of its application if it maintains a surplus as regards policyholders in an amount not less than $20,000,000 and its
accreditation has not been denied by the Commissioner within 90 days after submission of its application.
(3) a. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a U.S. branch
of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to
those applicable under this statute and the assuming insurer or U.S. branch of an alien assuming insurer:
1. Maintains a surplus as regards policyholders in an amount not less than $20,000,000; and
2. Submits to the authority of this State to examine its books and records.
b. The requirement of paragraph (3)a.1. of this section does not apply to reinsurance ceded and assumed pursuant to pooling
arrangements among insurers in the same holding company system.
(4) a. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified U.S.
financial institution, as defined in § 913(b) of this title, for the payment of the valid claims of its U.S. ceding insurers, their assigns
and successors in interest. To enable the Commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report
annually to the Commissioner information substantially the same as that required to be reported on the National Association of Insurance
Commissioners (NAIC) Annual Statement form by licensed insurers. The assuming insurer shall submit to examination of its books
and records by the Commissioner and bear the expense of examination.
b. 1. Credit for reinsurance shall not be granted under this subsection unless the form of the trust and any amendments to the
trust have been approved by:
A. The Commissioner of the state where the trust is domiciled; or
B. The Commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory
oversight of the trust.
2. The form of the trust and any trust amendments also shall be filed with the Commissioner of every state in which the
ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and
enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its
assets in its trustees for the benefit of the assuming insurer’s U.S. ceding insurers, their assigns and successors in interest. The
trust and the assuming insurer shall be subject to examination as determined by the Commissioner.
3. The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance
agreements subject to the trust. No later than February 28 of each year the trustee of the trust shall report to the Commissioner in
Page 52
Title 18 - Insurance Code
writing the balance of the trust and listing the trust’s investments at the preceding year-end and shall certify the date of termination
of the trust, if so planned, or certify that the trust will not expire prior to the following December 31.
c. The following requirements apply to the following categories of assuming insurer:
1. The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer’s
liabilities attributable to reinsurance ceded by U.S. ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed
surplus of not less than $20,000,000, except as provided in paragraph (4)c.2. of this section.
2. At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for
at least 3 full years, the Commissioner with principal regulatory oversight of the trust may authorize a reduction in the required
trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the
protection of U.S. ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The
risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider
all material risk factors, including when applicable the lines of business involved, the stability of the incurred loss estimates and
the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus
may not be reduced to an amount less than 30% of the assuming insurer’s liabilities attributable to reinsurance ceded by U.S.
ceding insurers covered by the trust.
3. A. In the case of a group including incorporated and individual unincorporated underwriters:
I. For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after January
1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters’ several liabilities
attributable to business ceded by U.S. domiciled ceding insurers to any underwriter of the group;
II. For reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not
amended or renewed after that date, not-withstanding the other provisions of 78 Del. Laws, c. 364, the trust shall consist
of a trusteed account in an amount not less than the respective underwriters’ several insurance and reinsurance liabilities
attributable to business written in the United States; and
III. In addition to these trusts, the group shall maintain in trust a trusteed surplus of which $100,000,000 shall be held
jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all years of account; and
B. The incorporated members of the group shall not be engaged in any business other than underwriting as a member of
the group and shall be subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are
the unincorporated members.
C. Within 90 days after its financial statements are due to be filed with the group’s domiciliary regulator, the group
shall provide to the Commissioner an annual certification by the group’s domiciliary regulator of the solvency of each
underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of
each underwriter member of the group.
4. In the case of a group of incorporated underwriters under common administration, the group shall:
A. Have continuously transacted an insurance business outside the United States for at least 3 years immediately prior to
making application for accreditation;
B. Maintain aggregate policyholders’ surplus of at least $10,000,000,000;
C. Maintain a trust fund in an amount not less than the group’s several liabilities attributable to business ceded by U.S.
domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;
D. In addition, maintain a joint trusteed surplus of which $100,000,000 shall be held jointly for the benefit of U.S. domiciled
ceding insurers of any member of the group as additional security for these liabilities; and
E. Within 90 days after its financial statements are due to be filed with the group’s domiciliary regulator, make available to
the Commissioner an annual certification of each underwriter member’s solvency by the member’s domiciliary regulator and
financial statements of each underwriter member of the group prepared by its independent public accountant.
(5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the Commissioner as a
reinsurer in this State and secures its obligations in accordance with the requirements of this paragraph.
a. In order to be eligible for certification, the assuming insurer shall meet the following requirements:
1. The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as
determined by the Commissioner pursuant to paragraph (5)c. of this section;
2. The assuming insurer must maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the
Commissioner pursuant to regulation;
3. The assuming insurer must maintain financial strength ratings from 2 or more rating agencies deemed acceptable by the
Commissioner pursuant to regulation;
4. The assuming insurer must agree to submit to the jurisdiction of this State, appoint the Commissioner as its agent for service
of process in this State, and agree to provide security for 100% of the assuming insurer’s liabilities attributable to reinsurance
ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment;
Page 53
Title 18 - Insurance Code
5. The assuming insurer must agree to meet applicable information filing requirements as determined by the Commissioner,
both with respect to an initial application for certification and on an ongoing basis; and
6. The assuming insurer must satisfy any other requirements for certification deemed relevant by the Commissioner.
b. An association including incorporated and individual unincorporated underwriters may be a certified reinsurer. In order to be
eligible for certification, in addition to satisfying requirements of paragraph (5)a. of this section:
1. The association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents (net
of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied
obligation of the association or any of its members, in an amount determined by the Commissioner to provide adequate protection;
2. The incorporated members of the association shall not be engaged in any business other than underwriting as a member of
the association and shall be subject to the same level of regulation and solvency control by the association’s domiciliary regulator
as are the unincorporated members; and
3. Within 90 days after its financial statements are due to be filed with the association’s domiciliary regulator, the association
shall provide to the Commissioner an annual certification by the association’s domiciliary regulator of the solvency of each
underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each
underwriter member of the association.
c. The Commissioner shall create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and
domiciled in such jurisdiction is eligible to be considered for certification by the Commissioner as a certified reinsurer.
1. In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a
qualified jurisdiction, the Commissioner shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system
of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits and the extent of reciprocal recognition
afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S. A qualified jurisdiction must agree to
share information and cooperate with the Commissioner with respect to all certified reinsurers domiciled within that jurisdiction.
A jurisdiction may not be recognized as a qualified jurisdiction if the Commissioner has determined that the jurisdiction does
not adequately and promptly enforce final U.S. judgments and arbitration awards. Additional factors may be considered in the
discretion of the Commissioner.
2. A list of qualified jurisdictions shall be published through the NAIC committee process. The Commissioner shall consider
this list in determining qualified jurisdictions. If the Commissioner approves a jurisdiction as qualified that does not appear on
the list of qualified jurisdictions, the Commissioner shall provide thoroughly documented justification in accordance with criteria
to be developed under regulations.
3. U.S. jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program
shall be recognized as qualified jurisdictions.
4. If a certified reinsurer’s domiciliary jurisdiction ceases to be a qualified jurisdiction, the Commissioner has the discretion to
suspend the reinsurer’s certification indefinitely, in lieu of revocation.
d. The Commissioner shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings
that have been assigned by rating agencies deemed acceptable to the Commissioner pursuant to regulation. The Commissioner shall
publish a list of all certified reinsurers and their ratings.
e. A certified reinsurer shall secure obligations assumed from U.S. ceding insurers under this paragraph at a level consistent with
its rating, as specified in regulations promulgated by the Commissioner.
1. In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer,
the certified reinsurer shall maintain security in a form acceptable to the Commissioner and consistent with the provisions of §
912 of this title, or in a multibeneficiary trust in accordance with paragraph (4) of this section, except as otherwise provided
in this paragraph.
2. If a certified reinsurer maintains a trust to fully secure its obligations subject to paragraph (4) of this section, and chooses to
secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain
separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with
reduced security as permitted by this subsection or comparable laws of other U.S. jurisdictions and for its obligations subject to
paragraph (4) of this section. It shall be a condition to the grant of certification under this paragraph (5) that the certified reinsurer
shall have bound itself, by the language of the trust and agreement with the Commissioner with principal regulatory oversight
of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any
deficiency of any other such trust account.
3. The minimum trusteed surplus requirements provided in paragraph (4) of this section are not applicable with respect to a
multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this paragraph,
except that such trust shall maintain a minimum trusteed surplus of $10,000,000.
4. With respect to obligations incurred by a certified reinsurer under this paragraph (5), if the security is insufficient, the
Commissioner shall reduce the allowable credit by an amount proportionate to the deficiency, and has the discretion to impose
Page 54
Title 18 - Insurance Code
further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer’s obligations will not
be paid in full when due.
5. For purposes of this paragraph (5), a certified reinsurer whose certification has been terminated for any reason shall be treated
as a certified reinsurer required to secure 100% of its obligations.
A. As used in this paragraph (5), the term “terminated” refers to revocation, suspension, voluntary surrender and inactive
status.
B. If the Commissioner continues to assign a higher rating as permitted by other provisions of this section, this requirement
does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
f. If an applicant for certification has been certified as a reinsurer in an NAIC accredited jurisdiction, the Commissioner has the
discretion to defer to that jurisdiction’s certification, and has the discretion to defer to the rating assigned by that jurisdiction, and
such assuming insurer shall be considered to be a certified reinsurer in this State.
g. A certified reinsurer that ceases to assume new business in this State may request to maintain its certification in inactive status
in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to
comply with all applicable requirements of this paragraph (5), and the Commissioner shall assign a rating that takes into account,
if relevant, the reasons why the reinsurer is not assuming new business.
(6) a. Credit shall be allowed when the reinsurance is ceded to an assuming insurer meeting each of the conditions set forth below.
1. The assuming insurer must have its head office or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction.
A “reciprocal jurisdiction” is a jurisdiction that meets 1 of the following:
A. A non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal
authority, or, in the case of a covered agreement between the United States and European Union, is a member state of the
European Union. For purposes of this subsection, a “covered agreement” is an agreement entered into pursuant to the DoddFrank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period
of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition
for entering into any reinsurance agreement with a ceding insurer domiciled in this State or for allowing the ceding insurer to
recognize credit for reinsurance;
B. A U.S. jurisdiction that meets the requirements for accreditation under the National Association of Insurance
Commissioners financial standards and accreditation program; or
C. A qualified jurisdiction, as determined by the Commissioner pursuant to § 911(5)e. of this title, which is not otherwise
described in paragraph (6)a.1.A. or B. of this section above and which meets certain additional requirements, consistent with
terms and conditions of in-force covered agreements, as specified by the Commissioner in regulation.
2. The assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated
according to the methodology of its domiciliary jurisdiction, in an amount to be set forth in regulation. If the assuming insurer is an
association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis,
minimum capital and surplus equivalents (net of liabilities), calculated according to the methodology applicable in its domiciliary
jurisdiction, and a central fund containing a balance in amounts to be set forth in regulation.
3. The assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, which
will be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated
underwriters, it must have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction
where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed.
4. The assuming insurer must agree and provide adequate assurance to the Commissioner, in a form specified by the
Commissioner pursuant to regulation, as follows:
A. The assuming insurer must provide prompt written notice and explanation to the Commissioner if it falls below the
minimum requirements set forth in paragraphs (6)a.2. and 3. of this section, or if any regulatory action is taken against it for
serious noncompliance with applicable law;
B. The assuming insurer must consent in writing to the jurisdiction of the courts of this State and to the appointment of the
Commissioner as agent for service of process. The Commissioner may require that consent for service of process be provided
to the Commissioner and included in each reinsurance agreement. Nothing in this provision shall limit, or in any way alter, the
capacity of the parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent
such agreements are unenforceable under applicable insolvency or delinquency laws;
C. The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a
ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained;
D. Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount
equal to 100% of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming
insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained
or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its
resolution estate; and
Page 55
Title 18 - Insurance Code
E. The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement which
involves this State’s ceding insurers, and agree to notify the ceding insurer and the Commissioner and to provide security in an
amount equal to 100% of the assuming insurer’s liabilities to the ceding insurer, should the assuming insurer enter into such a
solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of paragraph (5) of this section
and § 912 of this title and as specified by the Commissioner in regulation.
5. The assuming insurer or its legal successor must provide, if requested by the Commissioner, on behalf of itself and any legal
predecessors, certain documentation to the Commissioner, as specified by the Commissioner in regulation.
6. The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements, pursuant to the
criteria set forth in regulation.
7. The assuming insurer’s supervisory authority must confirm to the Commissioner on an annual basis, as of the preceding
December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies
with the requirements set forth in paragraphs (6)a.2. and 3. of this section.
8. Nothing in this provision precludes an assuming insurer from providing the Commissioner with information on a voluntary
basis.
b. The Commissioner shall timely create and publish a list of reciprocal jurisdictions.
1. A list of reciprocal jurisdictions is published through the National Association of Insurance Commissioners Committee
Process. The Commissioner’s list shall include any reciprocal jurisdiction as defined under paragraphs (6)a.1 and 2. of this section,
and shall consider any other reciprocal jurisdiction included on the National Association of Insurance Commissioners list. The
Commissioner may approve a jurisdiction that does not appear on the National Association of Insurance Commissioners list of
reciprocal jurisdictions in accordance with criteria to be developed under regulations issued by the Commissioner.
2. The Commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction
no longer meets the requirements of a reciprocal jurisdiction, in accordance with a process set forth in regulations issued by the
Commissioner, except that the Commissioner shall not remove from the list a reciprocal jurisdiction as defined under paragraphs
(6)a.1. and 2. of this section. Upon removal of a reciprocal jurisdiction from this list credit for reinsurance ceded to an assuming
insurer which has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to this section.
c. The Commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this
subsection and to which cessions shall be granted credit in accordance with this subsection. The Commissioner may add an assuming
insurer to such list if a National Association of Insurance Commissioners accredited jurisdiction has added such assuming insurer to
a list of such assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the Commissioner as
required under paragraph (6)a.4. of this section and complies with any additional requirements that the Commissioner may impose
by regulation, except to the extent that they conflict with an applicable covered agreement.
d. If the Commissioner determines that an assuming insurer no longer meets 1 or more of the requirements under this subsection,
the Commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this subsection in accordance
with procedures set forth in regulation.
1. While an assuming insurer’s eligibility is suspended, no reinsurance agreement issued, amended or renewed after the effective
date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured
in accordance with § 912 of this title.
2. If an assuming insurer’s eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation
with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into
prior to the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form
acceptable to the Commissioner and consistent with the provisions of § 912 of this title.
e. If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer, or its representative,
may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the
assuming insurer post security for all outstanding ceded liabilities.
f. Nothing in this subsection shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on
requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by this chapter or other
applicable law or regulation.
g. Credit may be taken under this subsection only for reinsurance agreements entered into, amended, or renewed on or after the
effective date of the statute adding this subsection, and only with respect to losses incurred and reserves reported on or after the later
of (i) the date on which the assuming insurer has met all eligibility requirements pursuant to paragraph (6)a. of this section, and (ii)
the effective date of the new reinsurance agreement, amendment, or renewal.
1. This paragraph does not alter or impair a ceding insurer’s right to take credit for reinsurance, to the extent that credit is not
available under this paragraph, as long as the reinsurance qualifies for credit under any other applicable provision of this section.
2. Nothing in this subsection shall authorize an assuming insurer to withdraw or reduce the security provided under any
reinsurance agreement except as permitted by the terms of the agreement.
Page 56
Title 18 - Insurance Code
3. Nothing in this subsection shall limit, or in any way alter, the capacity of parties to any reinsurance agreement to renegotiate
the agreement.
(7) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of paragraph (1),
(2), (3), (4), (5) or (6) of this section, but only as to the insurance of risks located in jurisdictions where the reinsurance is required
by applicable law or regulation of that jurisdiction.
(8) If the assuming insurer is not licensed, accredited or certified to transact insurance or reinsurance in this State, the credit permitted
by paragraphs (3) and (4) of this section shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:
a. 1. That in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement,
the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in
any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final
decision of the court or of any appellate court in the event of an appeal; and
2. To designate the Commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful
process in any action, suit or proceeding instituted by or on behalf of the ceding insurer.
b. This paragraph (8) is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate
their disputes, if this obligation is created in the agreement.
(9) If the assuming insurer does not meet the requirements of paragraph (1), (2), (3) or (6) of this section, the credit permitted by
paragraph (4) or (5) of this section shall not be allowed unless the assuming insurer agrees in the trust agreements to the following
conditions:
a. Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount
less than the amount required by paragraph (4)c. of this section, or if the grantor of the trust has been declared insolvent or placed
into receivership, rehabilitation, liquidation or similar proceedings under the laws of its state or country of domicile, the trustee
shall comply with an order of the Commissioner with regulatory oversight over the trust or with an order of a court of competent
jurisdiction directing the trustee to transfer to the Commissioner with regulatory oversight all of the assets of the trust fund.
b. The assets shall be distributed by and claims shall be filed with and valued by the Commissioner with regulatory oversight
in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance
companies.
c. If the Commissioner with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to
satisfy the claims of the U.S. ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the Commissioner
with regulatory oversight to the trustee for distribution in accordance with the trust agreement.
d. The grantor shall waive any right otherwise available to it under U.S. law that is inconsistent with this provision.
(10) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the Commissioner may
suspend or revoke the reinsurer’s accreditation or certification.
a. The Commissioner must give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect
until after the Commissioner’s order on hearing, unless:
1. The reinsurer waives its right to hearing;
2. The Commissioner’s order is based on regulatory action by the reinsurer’s domiciliary jurisdiction or the voluntary surrender
or termination of the reinsurer’s eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the
primary certifying state of the reinsurer under paragraph (5)f. of this section; or
3. The Commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed
the Commissioner’s action.
b. While a reinsurer’s accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date
of the suspension qualifies for credit except to the extent that the reinsurer’s obligations under the contract are secured in accordance
with § 912 of this title. If a reinsurer’s accreditation or certification is revoked, no credit for reinsurance may be granted after the
effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured in accordance with
paragraph (5)e. of this section or § 912 of this title.
(11) Concentration risk. —
a. A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic
ceding insurer shall notify the Commissioner within 30 days after reinsurance recoverables from any single assuming insurer, or
group of affiliated assuming insurers, exceeds 50% of the domestic ceding insurer’s last reported surplus to policyholders, or after
it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to
exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.
b. A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the Commissioner
within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20% of the ceding
insurer’s gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming
Page 57
Title 18 - Insurance Code
insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure
is safely managed by the domestic ceding insurer.
(68 Del. Laws, c. 58, § 2; 69 Del. Laws, c. 399, § 1; 78 Del. Laws, c. 364, § 2; 83 Del. Laws, c. 104, § 1.)
§ 912. Asset or reduction from liability for reinsurance ceded by domestic insurer to assuming insurer not
meeting requirements of § 911 of this title.
An asset or reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements
of § 911 of this title shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in
the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance
contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject
to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified U.S. financial
institution, as defined in § 913(b) of this title. This security may be in the form of any of the following:
(1) Cash;
(2) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those
deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as
admitted assets;
(3) a. Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified U.S. financial institution, as defined in
§ 913(a) of this title, effective no later than December 31 of the year for which the filing is being made, and in the possession of, or
in trust for, the ceding insurer on or before the filing date of its annual statement.
b. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) shall,
notwithstanding the issuing (or confirming) institution’s subsequent failure to meet applicable standards of issuer acceptability,
continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs;
(4) Any other form of security acceptable to the Commissioner.
(68 Del. Laws, c. 58, § 3; 78 Del. Laws, c. 364, § 3; 83 Del. Laws, c. 104, § 1.)
§ 913. Qualified U.S. financial institutions.
(a) For purposes of § 912(3) of this title, a “qualified U.S. financial institution” means an institution that:
(1) Is organized or (in the case of a U.S. office of a foreign banking organization) licensed under the laws of the United States or
any state thereof;
(2) Is regulated, supervised and examined by U.S. federal or state authorities having regulatory authority over banks and trust
companies; and
(3) Has been determined by either the Commissioner or the Securities Valuation Office of the National Association of Insurance
Commissioners to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the
quality of financial institutions whose letters of credit will be acceptable to the Commissioner.
(b) A “qualified U.S. financial institution” means, for purposes of those provisions of this law specifying those institutions that are
eligible to act as a fiduciary of a trust, an institution that:
(1) Is organized, or, in the case of a U.S. branch or agency office of a foreign banking organization, licensed, under the laws of the
United States or any state thereof and has been granted authority to operate with fiduciary powers; and
(2) Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.
(68 Del. Laws, c. 58, § 4; 78 Del. Laws, c. 364, § 4.)
§ 914. Additional requirements.
(a) Notwithstanding any other provision of § 911 or § 912 of this title, no credit shall be allowed as an admitted asset or deduction
from liability unless the reinsurance agreement provides that in the event of insolvency of the ceding insurer, reinsurance proceeds shall
be paid under a contract or contracts reinsured by the assuming insurer on the basis of the amount of the claim allowed in the insolvency
proceeding without diminution by reason of the inability of the ceding insurer to pay all or any part of the claim. For all ceding insurers
which are subject to liquidation proceedings pursuant to Chapter 59 of this title on or before December 31, 1999, such payments shall
be made directly to the domiciliary liquidator. For all other ceding insurers, including ceding insurers under supervision or rehabilitation
proceedings under Chapter 59 of this title as of December 31, 1999, subject to the provisions of subchapter II (Summary Proceedings) of
Chapter 59 of this title, such payments shall be made directly to the ceding insurer or to its domiciliary liquidator, except:
(1) Where the contract or other written agreement between the ceding insurer and the assuming insurer specifically provides another
payee of such reinsurance in the event of the insolvency of the ceding insurer; provided, however, that the exception set forth in this
paragraph shall only apply to the extent that the re-insurance proceeds due such payee are actually paid by the assuming insurer; or
(2) Where the assuming insurer, with the consent of the direct insured or insureds, has assumed such policy obligations of the ceding
insurer as direct obligations of the assuming insurer to the payees under such policies and in full and complete substitution for the
obligations of the ceding insurer to such payees.
Page 58
Title 18 - Insurance Code
(b) Upon request of the Commissioner an insurer shall promptly inform the Commissioner in writing of the cancellation or any other
material change of any of its reinsurance treaties or arrangements.
(68 Del. Laws, c. 58, § 5; 72 Del. Laws, c. 405, § 1.)
§ 915. Rules and regulations.
The Commissioner may adopt rules and regulations implementing the provisions of this law.
(68 Del. Laws, c. 58, § 6; 78 Del. Laws, c. 364, § 5.)
§ 916. Reinsurance agreements affected.
78 Del. Laws, c. 364 shall apply to all cessions after July 27, 2012, under reinsurance agreements that have an inception, anniversary
or renewal date after January 27, 2013. 83 Del. Laws, c. 104 shall apply to all cessions after July 30, 2021, under reinsurance agreements
that have an inception, anniversary or renewal date after January 30, 2022.
(78 Del. Laws, c. 364, § 6; 83 Del. Laws, c. 104, § 1.)
Subchapter IV
Exemptions
(82 Del. Laws, c. 71, § 1.)
§ 917. Definitions.
For purposes of this section, the following terms shall have the following meaning:
(1) “Consumer product” means any tangible personal property that is distributed in commerce and is normally used for personal,
family, or household purposes, including a motor vehicle and any tangible personal property intended to be attached to or installed in
any real property without regard to whether it is so attached or installed.
(2) “Incidental costs” means expenses specified in a vehicle theft protection program warranty that are incurred by the warranty
holder due to the failure of a vehicle theft protection program to perform as provided in the contract. Incidental costs may be reimbursed
in either a fixed amount specified in the vehicle theft protection program warranty or by use of a formula itemizing specific incidental
costs incurred by the warranty holder.
(3) “Maintenance agreement” means a contract of limited duration that provides for scheduled maintenance only.
(4) “Road hazard” means a hazard that is encountered while driving a motor vehicle and which may include potholes, rocks, wood
debris, metal parts, glass, plastic, curbs, or composite scraps.
(5) “Service contract” means a contract or agreement for a separately stated consideration for any duration to perform the repair,
replacement, or maintenance of a consumer product or indemnification for the same, for the operational or structural failure of a
consumer product due to a defect in materials, workmanship, accidental damage from handling, or normal wear and tear, with or without
additional provisions for incidental payment of indemnity under limited circumstances, including towing, rental, and emergency road
service and road hazard protection. Service contracts may provide for the repair, replacement, or maintenance of a consumer product
for damage resulting from power surges or interruption. Service contract also includes a contract or agreement sold for a separately
stated consideration for a specific duration that provides for any of the following:
a. The repair or replacement or indemnification for the repair or replacement of a motor vehicle for the operational or structural
failure of 1 or more parts or systems of the motor vehicle brought about by the failure of an additive product to perform as represented.
b. The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards.
c. The removal of dents, dings, or creases on a motor vehicle that can be repaired using the process of paintless dent removal
without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding, or painting.
d. The repair of chips or cracks in or the replacement of motor vehicle windshields as a result of damage caused by road hazards.
e. The replacement of a motor vehicle key or key-fob in the event that the key or key-fob becomes inoperable or is lost or stolen.
f. Other services or products which may be approved by the Commissioner.
(6) “Vehicle theft protection product” means a device or system that:
a. Is installed on or applied to a motor vehicle;
b. Is designed to prevent loss or damage to a motor vehicle from theft; and
c. Includes a vehicle theft protection program warranty.
Vehicle theft protection product does not include fuel additives, oil additives, or other chemical products applied to the engine,
transmission, or fuel system, or interior or exterior surfaces of a motor vehicle.
(7) “Vehicle theft protection product warranty” means a written agreement by a warrantor that provides if the vehicle theft protection
product fails to prevent loss or damage to a motor vehicle from theft, that the warrantor will pay to or on behalf of the warranty holder
specified incidental costs as a result of the failure of the vehicle theft protection product to perform pursuant to the terms of the vehicle
theft protection product warranty.
(82 Del. Laws, c. 71, § 1; 70 Del. Laws, c. 186, § 1.)
Page 59
Title 18 - Insurance Code
§ 918. Exemption from insurance regulation.
The offering, sale, or issuance of a service contract, vehicle theft protection product warranty, or maintenance agreement shall not be
considered insurance or subject to the insurance laws of this State unless made expressly applicable thereto.
(82 Del. Laws, c. 71, § 1.)
Page 60
Title 18 - Insurance Code
Part I
Insurance
Chapter 11
Assets and Liabilities
Subchapter I
Assets
§ 1101. “Assets” defined.
In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the
insurer and which consist of:
(1) Cash in the possession of the insurer or in transit under its control, and including the true balance of any deposit in a solvent
bank or trust company;
(2) Investments, securities, properties and loans acquired or held in accordance with this title, and in connection therewith the
following items:
a. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis
including accrued interest;
b. Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset;
c. Interest due or accrued upon a collateral loan in an amount not to exceed 1 year’s interest thereon;
d. Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such
interest is in the judgment of the Commissioner a collectible asset;
e. Interest due or accrued on a mortgage loan in an amount not exceeding in any event the amount, if any, of the excess of the
value of the property less delinquent taxes thereon over the unpaid principal;
f. Rent due or accrued on real property if such rent is not in arrears for more than 3 months, and rent more than 3 months in arrears
if the payment of such rent be adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral;
g. The unaccrued portion of taxes paid prior to the due date on real property;
(3) Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts
and accrued interest thereon in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy;
(4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer;
(5) Premiums in the course of collection, other than for life insurance, not more than 3 months past due, less commissions payable
thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the United States government or by
any of its instrumentalities;
(6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy
to which premiums apply;
(7) Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to
be issued on such basis, to the extent of the unearned premium reserves carried thereon;
(8) The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized
under § 910 of this title;
(9) Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty;
(10) Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds, or from any suspended
banking institution, to the extent deemed by the Commissioner available for the payment of losses and claims and at values to be
determined by him or her;
(11) All assets, whether or not consistent with the provisions of this section, as may be allowed pursuant to the annual statement
form approved by the Commissioner for the kinds of insurance to be reported upon therein;
(12) As to a title insurer, its title plant and equipment reasonably necessary for conduct of its abstract or title insurance business;
(13) Electronic and mechanical data processing machines and related equipment are allowed as prescribed in the NAIC Accounting
Practices and Procedures Manual;
(14) Other assets, not inconsistent with this section, deemed by the Commissioner to be available for the payment of losses and
claims at values to be determined by him or her.
(18 Del. C. 1953, § 1101; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 74 Del. Laws, c. 214, §§ 1-3.)
§ 1102. Assets not allowed.
In addition to assets impliedly excluded by § 1101 of this title, the following expressly shall not be allowed as assets in any
determination of the financial condition of an insurer:
(1) Trade names and other like intangible assets;
Page 61
Title 18 - Insurance Code
(2) Advances to officers (other than policy loans) whether secured or not, and advances to employees, agents and other persons on
personal security only;
(3) Stock of such insurer, owned by it, or any equity therein or loans secured thereby, or any proportionate interest in such stock
acquired or held through the ownership by such insurer of an interest in another firm, corporation or business unit;
(4) Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature and supplies (other than data processing,
recordkeeping and accounting systems authorized under § 1101(13) of this title) and except in the case of title insurers such materials
and plants as the insurer is expressly authorized to invest in under § 1322 of this title [repealed]; and except, in the case of any insurer,
such personal property as the insurer is permitted to hold pursuant to Chapter 13 of this title, or which is reasonably necessary for the
maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office,
branch office and similar purposes;
(5) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the
aggregate value thereof as determined under this title;
(6) With respect to an insurance division of a bank or trust company established pursuant to § 767(a) of Title 5, any assets of the
bank or trust company other than those entered on the separate and distinct financial records of such division.
(18 Del. C. 1953, § 1102; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 223, § 21; 74 Del. Laws, c. 214, § 4.)
§ 1102A. Bank insurance department or division distinct from bank.
The assets of any insurance department or division of a bank or trust company established pursuant to § 767(a) of Title 5 shall be liable
for and applicable to the payment and satisfaction of the liabilities, obligations and expenses of such insurance department or division
only. The liabilities, obligations and expenses of any such insurance department or division shall be applied against and paid and satisfied
solely out of the assets of such insurance department or division.
(67 Del. Laws, c. 223, § 22.)
Subchapter II
Liabilities and Reserves
§ 1103. Liabilities, in general.
In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include:
(1) The amount of its capital stock outstanding, if any, or capital account required by § 511(a) of this title;
(2) The amount, estimated consistent with the provisions of this title, necessary to pay all of its unpaid losses and claims incurred on
or prior to the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof;
(3) With reference to life insurance policies and annuity contracts, and disability and accidental death benefits in or supplemental
thereto:
a. The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality,
rates of interest, and methods adopted pursuant to this title which are applicable thereto;
b. Reserves for disability benefits, for both active and disabled lives;
c. Reserves for accidental death benefits;
d. Any additional reserves which may be required by the Commissioner consistent with applicable customary and general practice
in insurance accounting;
(4) As to health insurance policies, the reserves required under § 1108 of this title;
(5) With reference to insurance other than specified in paragraphs (3) and (4) of this section above, and other than title insurance,
the amount of the unearned premium reserves computed in accordance with this subchapter;
(6) Taxes, expenses and other obligations due or accrued at the date of the statement;
(7) With respect to an insurance division of a bank or trust company established pursuant to § 767(a) of Title 5, only those liabilities
enumerated in this section which are entered on the separate and distinct financial records of such department or division.
(18 Del. C. 1953, § 1103; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 223, §§ 23, 24.)
§ 1104. Reserves of domestic insurers transacting business in foreign countries only.
A domestic insurer transacting insurance in foreign countries only, and not transacting insurance in any state as defined in § 103 of
this title, may calculate its reserves on insurance written in each foreign jurisdiction in accordance with the reserve standards required
by such jurisdiction; and negotiation and issuance of insurance on subjects of insurance resident, located or to be performed in such
foreign jurisdiction, and changes in, communications concerning, and collection of premiums on insurance so issued shall not be deemed
to constitute the transaction of insurance in any such state.
(18 Del. C. 1953, § 1104; 56 Del. Laws, c. 380, § 1.)
§ 1105. Disallowance of “wash” transactions.
(a) The Commissioner shall disallow as an asset or as a credit against liabilities any reinsurance found by him or her after a hearing
thereon to have been arranged for the purpose principally of deception as to the ceding insurer’s financial condition as at the date of any
Page 62
Title 18 - Insurance Code
financial statement of the insurer. Without limiting the general purport of the foregoing provision, reinsurance of any substantial part of
the insurer’s outstanding risks contracted for in fact within 4 months prior to the date of any such financial statement and cancelled in fact
within 4 months after the date of such statement, or reinsurance under which the reinsurer bears no substantial insurance risk or chance
of net loss to itself, shall prima facie be deemed to have been arranged principally for the purpose of deception.
(b) The Commissioner shall disallow as an asset any deposit, funds or other assets of the insurer found by him or her after a hearing
thereon:
(1) Not to be in good faith the property of the insurer; and
(2) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations
arising under its policies; and
(3) To be resulting from arrangements made principally for the purpose of deception as to the insurer’s financial condition as at the
date of any financial statement of the insurer.
(c) The Commissioner may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such
deception or attempt thereat.
(18 Del. C. 1953, § 1105; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1106. Unearned premium reserve.
(a) As to property, casualty and surety insurance the insurer shall maintain an unearned premium reserve on all policies in force.
(b) Except as provided in § 1107 of this title as to marine and transportation risks, the unearned premium shall be equal to the unearned
portion of gross premiums in force (after deduction of applicable reinsurance in solvent insurers) computed on an annual, monthly or
more frequently pro rata basis.
(18 Del. C. 1953, § 1106; 56 Del. Laws, c. 380, § 1.)
§ 1107. Unearned premium reserve for marine and transportation insurance.
As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned, and
the Commissioner may require the insurer to carry a reserve equal to 100% of premiums on trip risks written during the month ended
as of the date of statement.
(18 Del. C. 1953, § 1107; 56 Del. Laws, c. 380, § 1.)
§ 1108. Health insurance policy reserves.
For all health insurance policies the insurer shall maintain an active life reserve which shall place a sound value on its liabilities under
such policies and be not less than the reserve according to appropriate standards set forth in regulations issued by the Commissioner and,
in no event, less in the aggregate than the pro rata gross unearned premiums for such policies.
(18 Del. C. 1953, § 1108; 56 Del. Laws, c. 380, § 1.)
§ 1109. Title insurance reserves.
In addition to an adequate reserve as to outstanding losses as required under § 1103 of this title, a title insurer shall maintain a guaranty
fund or unearned premium reserve of not less than an amount computed as follows:
(1) Ten percent of the total amount of the risk portion of premiums written in the calendar year for title insurance contracts shall
be assigned originally to the reserve;
(2) During each of the 20 years next following the year in which the title insurance contract was issued, the reserve applicable to the
contract may be reduced by 5% of the original amount of such reserve.
(18 Del. C. 1953, § 1109; 56 Del. Laws, c. 380, § 1.)
§ 1110. Mortgage guaranty contingency reserve.
Casualty or surety insurers insuring real property mortgage lenders against loss by reason of nonpayment of the mortgage indebtedness
by the borrower shall maintain a contingency reserve for the protection of policyholders against the effects of adverse economic cycles.
(18 Del. C. 1953, § 1110; 56 Del. Laws, c. 380, § 1; 74 Del. Laws, c. 214, § 5.)
Subchapter III
Life Insurance Reserves
§ 1111. Title and definitions.
(a) This subchapter III shall be known as the “Standard Valuation Law” (the “Act”).
(b) For purposes of the Act, the following definitions shall apply on or after the operative date of the valuation manual:
(1) “Accident and health insurance” means contracts that incorporate morbidity risk and provide protection against economic loss
resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual.
(2) “Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial
opinion required in § 1113(b) of this title.
Page 63
Title 18 - Insurance Code
(3) “Company” means an entity, which (A) has written, issued, or reinsured life insurance contracts, accident and health insurance
contracts or deposit-type contracts in this State and has at least 1 such policy in force or on claim or (B) has written, issued or reinsured
life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate
of authority to write life insurance, accident and health insurance or deposit-type contracts in this State.
(4) “Deposit-type contract” means contracts that do not incorporate mortality or morbidity risks and as may be specified in the
valuation manual.
(5) “Life insurance” means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may
be specified in the valuation manual.
(6) “NAIC” means the National Association of Insurance Commissioners.
(7) “Policyholder behavior” means any action a policyholder, contract holder or any other person with the right to elect options,
such as a certificate holder, may take under a policy or contract subject to this Act including, but not limited to, lapse, withdrawal,
transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract but excluding events
of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.
(8) “Principle-based valuation” means a reserve valuation that uses one or more methods or one or more assumptions determined by
the insurer and is required to comply with § 1122 of this title as specified in the valuation manual.
(9) “Qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with
the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements
specified in the valuation manual.
(10) “Tail risk” means a risk that occurs either where the frequency of low probability events is higher than expected under a normal
probability distribution or where there are observed events of very significant size or magnitude.
(11) “Valuation manual” means the manual of valuation instructions adopted by the NAIC as specified in this Act or as subsequently
amended.
(80 Del. Laws, c. 117, § 1.)
§ 1112. Reserve valuation.
(a) Policies and contracts issued prior to the operative date of the valuation manual. — (1) The Commissioner shall annually value,
or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure
endowment contracts of every life insurance company doing business in this state issued on or after 1968 and prior to the operative
date of the valuation manual, except that in the case of an alien insurer such valuation shall be limited to its insurance transactions in
the United States. In calculating reserves, the Commissioner may use group methods and approximate averages for fractions of a year
or otherwise. In lieu of the valuation of the reserves required of a foreign or alien company, the Commissioner may accept a valuation
made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the
minimum standard provided in this Act.
(2) The provisions set forth in §§ 1114, 1114A, 1114B, 1115, 1115A, 1116, 1117, 1118, 1119, and 1120 of this title shall apply
to all policies and contracts, as appropriate, subject to this Act issued on or after 1968 and prior to the operative date of the valuation
manual and the provisions set forth in §§ 1121 and 1122 of this title shall not apply to any such policies and contracts.
(3) The minimum standard for the valuation of policies and contracts issued prior to 1968 shall be that provided by the laws in effect
immediately prior to that date.
(b) Policies and contracts issued on or after the operative date of the valuation manual. — (1) The Commissioner shall annually value,
or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance contracts, annuity and pure
endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date
of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the Commissioner may accept a
valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies
with the minimum standard provided in this Act.
(2) The provisions set forth in §§ 1121 and 1122 of this title shall apply to all policies and contracts issued on or after the operative
date of the valuation manual.
(80 Del. Laws, c. 117, § 1.)
§ 1113. Actuarial opinions of reserves.
(a) Actuarial opinion prior to the operative date of the valuation manual. — (1) General. — Every life insurance company doing business
in this State shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of
the policies and contracts specified by the Commissioner by regulation are computed appropriately, are based on assumptions that satisfy
contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The Commissioner shall
define by regulation the specifics of this opinion and add any other items deemed to be necessary to its scope.
(2) Actuarial analysis of reserves and assets supporting reserves. — (A) Every life insurance company, except as exempted by
regulation, shall also annually include in the opinion required by paragraph (a)(1) of this section, an opinion of the same qualified
actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Commissioner
Page 64
Title 18 - Insurance Code
by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items,
including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under
the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including but not
limited to the benefits under and expenses associated with the policies and contracts.
(B) The Commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified
actuary may deem necessary in order to render the opinion required by this section.
(3) Requirement for opinion under paragraph (a)(2) of this section. — Each opinion required by paragraph (a)(2) of this section
shall be governed by the following provisions:
(A) A memorandum, in form and substance acceptable to the Commissioner as specified by regulation, shall be prepared to support
each actuarial opinion.
(B) If the insurance company fails to provide a supporting memorandum at the request of the Commissioner within a period
specified by regulation or the Commissioner determines that the supporting memorandum provided by the insurance company fails
to meet the standards prescribed by the regulations or is otherwise unacceptable to the Commissioner, the Commissioner may engage
a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting
memorandum required by the Commissioner.
(4) Requirement for all opinions subject to subsection (a) of this section. — Every opinion required by subsection (a) of this section
shall be governed by the following provisions:
(A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year
ending on or after December 31, 2014.
(B) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance
acceptable to the Commissioner as specified by regulation.
(C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional
standards as the Commissioner may by regulation prescribe.
(D) In the case of an opinion required to be submitted by a foreign or alien company, the Commissioner may accept the opinion
filed by that company with the insurance supervisory official of another State if the Commissioner determines that the opinion
reasonably meets the requirements applicable to a company domiciled in this State.
(E) For the purposes of this section, “qualified actuary” means a member in good standing of the American Academy of Actuaries
who meets the requirements set forth in the regulation.
(F) Except in cases of fraud or wilful misconduct, the qualified actuary shall not be liable for damages to any person (other than
the insurance company and the Commissioner) for any act, error, omission, decision or conduct with respect to the actuary’s opinion.
(G) Disciplinary action by the Commissioner against the company or the qualified actuary shall be defined in regulations by the
Commissioner.
(H) Except as provided in paragraphs (a)(4)(L), (M) and (N) of this section, documents, materials or other information in the
possession or control of the Department of Insurance that are a memorandum in support of the opinion, and any other material
provided by the company to the Commissioner in connection with the memorandum, shall be confidential by law and privileged,
shall not be subject to this State’s Freedom of Information Act (Chapter 100 of Title 29), shall not be subject to subpoena, and
shall not be subject to discovery or admissible in evidence in any private civil action. However, the Commissioner is authorized
to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the
Commissioner’s official duties.
(I) Neither the Commissioner nor any person who received documents, materials or other information while acting under the
authority of the Commissioner shall be permitted or required to testify in any private civil action concerning any confidential
documents, materials or information subject to paragraph (a)(4)(H) of this section.
(J) In order to assist in the performance of the Commissioner’s duties, the Commissioner:
(i) May share documents, materials or other information, including the confidential and privileged documents, materials or
information subject to paragraph (a)(4)(H) of this section with other state, federal and international regulatory agencies, with the
National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and international lawenforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document,
material or other information;
(ii) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or
information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory
and law-enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any
document, material or information received with notice or the understanding that it is confidential or privileged under the laws of
the jurisdiction that is the source of the document, material or information; and
(iii) May enter into agreements governing sharing and use of information consistent with paragraphs (a)(4)(H) to (J) of this
section.
Page 65
Title 18 - Insurance Code
(K) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a
result of disclosure to the Commissioner under this section or as a result of sharing as authorized in paragraph (a)(4)(J) of this section.
(L) A memorandum in support of the opinion, and any other material provided by the company to the Commissioner in connection
with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary
submitting the memorandum by reason of an action required by this section or by regulations promulgated hereunder.
(M) The memorandum or other material may otherwise be released by the Commissioner with the written consent of the company
or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of
professional disciplinary proceedings and setting forth procedures satisfactory to the Commissioner for preserving the confidentiality
of the memorandum or other material.
(N) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental
agency other than a state insurance department or is released by the company to the news media, all portions of the confidential
memorandum shall be no longer confidential.
(b) Actuarial opinion of reserves after the operative date of the valuation manual. — (1) General. — Every company with outstanding
life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the
Commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held
in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are
consistent with prior reported amounts and comply with applicable laws of this State. The valuation manual will prescribe the specifics
of this opinion including any items deemed to be necessary to its scope.
(2) Actuarial analysis of reserves and assets supporting reserves. — Every company with outstanding life insurance contracts,
accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the Commissioner, except as
exempted in the valuation manual, shall also annually include in the opinion required by paragraph (b)(1) of this section, an opinion of
the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified
in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial
items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained
under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including
but not limited to the benefits under and expenses associated with the policies and contracts.
(3) Requirements for opinions subject to paragraph (b)(2) of this section. — Each opinion required by paragraph (b)(2) of this section
shall be governed by the following provisions:
(A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the Commissioner, shall be
prepared to support each actuarial opinion.
(B) If the insurance company fails to provide a supporting memorandum at the request of the Commissioner within a period
specified in the valuation manual or the Commissioner determines that the supporting memorandum provided by the insurance
company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the Commissioner, the
Commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and
prepare the supporting memorandum required by the Commissioner.
(4) Requirement for all opinions subject to this subsection (b). — Every opinion shall be governed by the following provisions:
(A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the Commissioner.
(B) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year
ending on or after the operative date of the valuation manual.
(C) The opinion shall apply to all policies and contracts subject to paragraph (b)(2) of this section, plus other actuarial liabilities
as may be specified in the valuation manual.
(D) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on
such additional standards as may be prescribed in the valuation manual.
(E) In the case of an opinion required to be submitted by a foreign or alien company, the Commissioner may accept the opinion
filed by that company with the insurance supervisory official of another State if the Commissioner determines that the opinion
reasonably meets the requirements applicable to a company domiciled in this State.
(F) Except in cases of fraud or wilful misconduct, the appointed actuary shall not be liable for damages to any person (other
than the insurance company and the Commissioner) for any act, error, omission, decision or conduct with respect to the appointed
actuary’s opinion.
(G) Disciplinary action by the Commissioner against the company or the appointed actuary shall be defined in regulations by
the Commissioner.
(80 Del. Laws, c. 117, § 1.)
§ 1114. Computation of minimum standard.
Except as provided in §§ 1114A, 1114B and 1120 of this title, the minimum standard for the valuation of policies and contracts issued
prior to 1968, shall be that provided by the laws in effect immediately prior to 1968. Except as otherwise provided in §§ 1114A, 1114B and
Page 66
Title 18 - Insurance Code
1120 of this title, the minimum standard for the valuation of all policies and contracts issued on or after 1968 shall be the Commissioners
reserve valuation methods defined in §§ 1115, 1115A, 1118 and 1120 of this title, 31/2% interest, or in the case of life insurance policies
and contracts, other than annuity and pure endowment contracts, issued on or after June 21, 1973, 4% interest for policies issued prior to
July 8, 1980, and 41/2% interest for all other policies issued on and after July 8, 1980, and the following tables:
(a) For ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in the
policies: the Commissioners 1941 Standard Ordinary Mortality Table for policies issued prior to the operative date of § 2929(e) of
this title, the Commissioners 1958 Standard Ordinary Mortality Table for policies issued on or after the operative date of § 2929(e) of
this title and prior to the operative date of § 2929(g) of this title, provided that for any category of policies issued on female risks, all
modified net premiums and present values referred to in this Act may be calculated according to an age not more than 6 years younger
than the actual age of the insured; and for policies issued on or after the operative date of § 2929(g) of this title:
(1) The Commissioners 1980 Standard Ordinary Mortality Table;
(2) At the election of the company for any 1 or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary
Mortality Table with Ten-Year Select Mortality Factors; or
(3) Any ordinary mortality table, adopted after 1980 by the NAIC, which is approved by regulation promulgated by the
Commissioner for use in determining the minimum standard of valuation for such policies;
(b) For industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in the
policies: the 1941 Standard Industrial Mortality Table for policies issued prior to the operative date of § 2929(f) of this title, and for
policies issued on or after the operative date of § 2929(f) of this title, the Commissioners 1961 Standard Industrial Mortality Table or
any industrial mortality table adopted after 1980 by the NAIC that is approved by regulation promulgated by the Commissioner for
use in determining the minimum standard of valuation for the policies;
(c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies:
the 1937 Standard Annuity Mortality Table, or at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or any
modification of either of these tables approved by the Commissioner;
(d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies: (i) the
Group Annuity Mortality Table for 1951 or any modification of the table approved by the Commissioner, (ii) at the option of the
company, the 1971 Group Annuity Mortality Table or any modification of such table approved by the Commissioner in which event
5% interest shall be used in determining the minimum standard for the valuation of such contracts, or (iii) at the option of the company,
any of the tables or modifications of tables specified for individual annuity and pure endowment contracts;
(e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts: for policies or contracts issued
on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study
of the Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and termination rates adopted after
1980 by the NAIC, that are approved by regulation promulgated by the Commissioner for use in determining the minimum standard
of valuation for those policies; for policies or contracts issued on or after January 1, 1961, and prior to January 1, 1966, either those
tables or, at the option of the company, the Class (3) Disability Table (1926); and for policies issued prior to January 1, 1961, the
Class (3) Disability Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating
the reserves for life insurance policies;
(f) For accidental death benefits in or supplementary to policies issued on or after January 1, 1966: the 1959 Accidental Death
Benefits Table or any accidental death benefits table adopted after 1980 by the NAIC that is approved by regulation promulgated by
the Commissioner for use in determining the minimum standard of valuation for those policies, for policies issued on or after January
1, 1961, and prior to January 1, 1966, either that table or, at the option of the company, the Inter-Company Double Indemnity Mortality
Table; and for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality Table. Either table shall be
combined with a mortality table for calculating the reserves for life insurance policies; and
(g) For group life insurance, life insurance issued on the substandard basis and other special benefits: tables approved by the
Commissioner.
(80 Del. Laws, c. 117, § 1.)
§ 1114A. Computation of minimum standards for annuities.
(a) Except as provided in § 1114B of this title, the minimum standard of valuation for individual annuity and pure endowment contracts
issued on or after the operative date of this section and for annuities and pure endowments purchased on or after the operative date under
group annuity and pure endowment contracts, shall be the Commissioners reserve valuation methods defined in §§ 1115 and 1115A of
this title and the following tables and interest rates:
(1) For individual annuity and pure endowment contracts issued prior to July 8, 1980, excluding any disability and accidental
death benefits in those contracts: the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the
Commissioner, and 6% interest for single premium immediate annuity contracts and 4% interest for all other individual annuity and
pure endowment contracts;
Page 67
Title 18 - Insurance Code
(2) For individual single premium immediate annuity contracts issued on or after July 8, 1980, excluding any disability and accidental
death benefits in those contracts: the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after
1980 by the NAIC that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of
valuation for these contracts, or any modification of these tables approved by the Commissioner, and 71/2% interest;
(3) For individual annuity and pure endowment contracts issued on or after July 8, 1980, other than single premium immediate annuity
contracts, excluding any disability and accidental death benefits in those contracts: the 1971 Individual Annuity Mortality Table or any
individual annuity mortality table adopted after 1980 by the NAIC, that is approved by regulation promulgated by the Commissioner
for use in determining the minimum standard of valuation for those contracts, or any modification of these tables approved by the
Commissioner, and 51/2% interest for single premium deferred annuity and pure endowment contracts and 41/2% interest for all other
individual annuity and pure endowment contracts;
(4) For annuities and pure endowments purchased prior to July 8, 1980, under group annuity and pure endowment contracts,
excluding any disability and accidental death benefits purchased under those contracts: the 1971 Group Annuity Mortality Table or
any modification of this table approved by the Commissioner, and 6% interest; and
(5) For annuities and pure endowments purchased on or after July 8, 1980, under group annuity and pure endowment contracts,
excluding any disability and accidental death benefits purchased under those contracts: the 1971 Group Annuity Mortality Table, or
any group annuity mortality table adopted after 1980 by the NAIC that is approved by regulation promulgated by the Commissioner
for use in determining the minimum standard of valuation for annuities and pure endowments, or any modification of these tables
approved by the Commissioner, and 71/2% interest;
(b) After June 21, 1973, any company may file with the Commissioner a written notice of its election to comply with the provisions of
this section after a specified date before January 1, 1979, which shall be the operative date of this section for that company, provided that a
company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and
pure endowment contracts. If a company makes no election, the operative date of this section for that company shall be January 1, 1979.
(80 Del. Laws, c. 117, § 1.)
§ 1114B. Computation of minimum standard by calendar year of issue.
(a) The interest rates used in determining the minimum standard for the valuation of the following shall be the calendar year statutory
valuation interest rates as defined in this section:
(1) Life insurance policies issued in a particular calendar year, on or after the operative date of § 2929(g) of this title;
(2) Individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1984;
(3) Annuities and pure endowments purchased in a particular calendar year on or after January 1, 1984, under group annuity and
pure endowment contracts; and
(4) The net increase, if any, in a particular calendar year after January 1, 1984, in amounts held under guaranteed interest contracts.
(b) Calendar year statutory valuation interest rates. — (1) The calendar year statutory valuation interest rates, I, shall be determined
as follows and the results rounded to the nearer ¼ of 1%
(A) For life insurance:
I = .03 + W R1 - .03 + W 2 R2 - .09
(B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities
with cash settlement options and from guaranteed interest contracts with cash settlement options:
I = .03 + WR - .03
Where R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate defined in this section, and is
the weighting factor defined in this section;
(C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an
issue year basis, except as stated in paragraph (b)(1)(B) of this section, the formula for life insurance stated in paragraph (b)(1)(A) of
this section shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years and the formula
for single premium immediate annuities stated in paragraph (b)(1)(B) of this section shall apply to annuities and guaranteed interest
contracts with guarantee duration of 10 years or less;
(D) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the
formula for single premium immediate annuities stated in paragraph (b)(1)(B) of this section shall apply.
(E) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a
change in fund basis, the formula for single premium immediate annuities stated in paragraph (b)(1)(B) of this section shall apply.
(2) However, if the calendar year statutory valuation interest rate for a life insurance policy issued in any calendar year determined
without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding
calendar year by less than 1/2 of 1%, the calendar year statutory valuation interest rate for the life insurance policies shall be equal
to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding
Page 68
Title 18 - Insurance Code
sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for
1980 (using the reference interest rate defined in 1979) and shall be determined for each subsequent calendar year regardless of when
§ 2929(g) of this title becomes operative.
(c) Weighting factors. — (1) The weighting factors referred to in the formulas stated above are given in the following tables:
(A) Weighting factors for life insurance:
Guarantee Duration (Years)
Weighting Factors
10 or less
More than 10, but not more than 20
More than 20
.50
.45
.35
For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis
guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both
which are guaranteed in the original policy;
(B) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from
other annuities with cash settlement options and guaranteed interest contracts with cash settlement options: .80.
(C) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in paragraph (c)(1)(B) of this
section, shall be as specified in paragraphs (c)(1)(C)(i), (ii) and (iii) of this section below, according to the rules and definitions in
paragraphs (c)(1)(C)(iv), (v) and (vi) of this section below:
(i) For annuities and guaranteed interest contracts valued on an issue year basis:
Guarantee Duration
(Years)
5 or less:
More than 5, but
not more than 10:
More than 10, but
not more than 20:
More than 20:
A
.80
.75
Weighting for Plan Type
B
.60
.60
C
.50
.50
.65
.50
.45
.45
.35
.35
(ii) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in paragraph (c)(1)(C)
(i) of this section above increased by:
Plan Type
A
.15
B
.25
C
.05
(iii) For annuities and guaranteed interest contracts valued on an issue year basis (other than those with no cash settlement
options) that do not guarantee interest on considerations received more than 1 year after issue or purchase and for annuities and
guaranteed interest contracts valued on a change in fund basis that do not guarantee interest rates on considerations received more
than 12 months beyond the valuation date, the factors shown in paragraph (c)(1)(C)(i) of this section or derived in paragraph (c)
(1)(C)(ii) of this section increased by:
Plan Type
A
.05
B
.05
C
.05
(iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee
duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation
interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement
options and for guaranteed interest contracts with no cash settlement options, the guaranteed duration is the number of years from
the date of issue or date of purchase to the date annuity benefits are scheduled to commence.
(v) “Plan type” as used in the above tables is defined as follows:
Plan type A: — At any time policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates
or asset values since receipt of the funds by the insurance company, or (2) without an adjustment but installments over 5 years
or more, or (3) as an immediate life annuity, or (4) no withdrawal permitted.
Page 69
Title 18 - Insurance Code
Plan type B: — Before expiration of the interest rate guarantee, policyholder may withdraw funds only (1) with an adjustment
to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without an
adjustment but in installments over 5 years or more, or (3) no withdrawal permitted. At the end of interest rate guarantee, funds
may be withdrawn without an adjustment in a single sum or installments over less than 5 years.
Plan type C: — Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments
over less than 5 years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds
by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
(vi) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement
options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options
and other annuities with no cash settlement options must be valued on an issue year basis. As used in this section, an “issue year
basis of valuation” refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for
the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue
or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation
basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held
under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
(d) Reference interest rate. — (1) The reference interest rate referred to in subsection (b) of this section shall be defined as follows:
(A) For life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending
on June 30 of the calendar year preceding the year of issue, of the monthly average of the composite yield on seasoned corporate
bonds, as published by Moody’s Investors Service, Inc.
(B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities
with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of 12 months,
ending on June 30 of the calendar year of issue or year of purchase, of the monthly average of the composite yield on seasoned
corporate bonds, as published by Moody’s Investors Service, Inc.
(C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a
year of issue basis, except as stated in paragraph (d)(1)(B) of this section, with guarantee duration in excess of 10 years, the lesser
of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of
issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors
Service, Inc.
(D) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a
year of issue basis, except as stated in paragraph (d)(1)(B) of this section, with guarantee duration of 10 years or less, the average
over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite
yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.
(E) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the
average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the
composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.
(F) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a
change in fund basis, except as stated in paragraph (d)(1)(B) of this section, the average over a period of 12 months, ending on June
30 of the calendar year of the change in the fund, of the monthly average of the composite yield on seasoned corporate bonds, as
published by Moody’s Investors Service, Inc.
(e) Alternative method for determining reference interest rates. — In the event that the monthly average of the composite yield on
seasoned corporate bonds is no longer published by Moody’s Investors Service, Inc. or in the event that the NAIC determines that the
monthly average of the composite yield on seasoned corporate bonds as published by Moody’s Investors Service, Inc. is no longer
appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate
adopted by the NAIC and approved by regulation promulgated by the Commissioner may be substituted.
(80 Del. Laws, c. 117, § 1.)
§ 1115. Reserve valuation method—Life insurance and endowment benefits.
(a) Except as otherwise provided in §§ 1115A, 1118 and 1120 of this title, reserves according to the Commissioners reserve valuation
method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment
of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of the future guaranteed benefits provided
for by those policies, over the then present value of any future modified net premiums therefor. The modified net premiums for a policy
shall be the uniform percentage of the respective contract premiums for the benefits such that the present value, at the date of issue of
the policy, of all modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy
and the excess of (1) over (2), as follows:
(1) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year,
divided by the present value, at the date of issue, of an annuity of 1 per annum payable on the first and each subsequent anniversary of
Page 70
Title 18 - Insurance Code
the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the
19-year premium whole life plan for insurance of the same amount at an age 1 year higher than the age at issue of the policy.
(2) A net 1-year term premium for the benefits provided for in the first policy year.
(b) For a life insurance policy issued on or after January 1, 1987, for which the contract premium in the first policy year exceeds that
of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an
endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the reserve according to
the Commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein
as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than
the excess premium shall, except as otherwise provided in § 1118 of this title, be the greater of the reserve as of the policy anniversary
calculated as described in the preceding paragraph and the reserve as of the policy anniversary calculated as described in that paragraph,
but with (i) the value defined in subsection (a) of this section being reduced by 15% of the amount of such excess first year premium,
(ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy
after the assumed ending date, (iii) the policy being assumed to mature on that date as an endowment, and (iv) the cash surrender value
provided on that date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated
in §§ 1114 and 1114B of this title shall be used.
(c) Reserves according to the Commissioners reserve valuation method shall be calculated by a method consistent with the principles
of the preceding paragraphs of this section for:
(1) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums;
(2) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established
or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a
plan providing individual retirement accounts or individual retirement annuities under § 408 of the Internal Revenue Code [26 U.S.C.
§ 408], as now or hereafter amended;
(3) Disability and accidental death benefits in all policies and contracts; and
(4) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other
annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of the preceding paragraphs of
the subsection,
(5) Notwithstanding the paragraphs in this subsection, any extra premiums charged because of impairments or special hazards shall
be disregarded in the determination of modified net premiums.
(80 Del. Laws, c. 117, § 1.)
§ 1115A. Reserve valuation method—Annuity and pure endowment benefits.
(a) This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts
purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or
sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual
retirement annuities under § 408 of the Internal Revenue Code [26 U.S.C. § 408], as now or hereafter amended.
(b) Reserves according to the Commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding
any disability and accidental death benefits in the contracts, shall be the greatest of the respective excesses of the present values, at the
date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end
of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future
gross considerations, required by the terms of the contract, that become payable prior to the end of the respective contract year. The future
guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in the contracts for
determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the
terms of the contracts to determine nonforfeiture values.
(80 Del. Laws, c. 117, § 1.)
§ 1116. Minimum reserves.
(a) In no event shall a company’s aggregate reserves for all life insurance policies, excluding disability and accidental death benefits,
issued on or after 1968, be less than the aggregate reserves calculated in accordance with the methods set forth in §§ 1115, 1115A, 1118
and 1119 of this title and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for the policies.
(b) In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by
the appointed actuary to be necessary to render the opinion required by § 1113 of this title.
(80 Del. Laws, c. 117, § 1.)
§ 1117. Optional reserve calculation.
(a) Reserves for any category of policies, contracts, or benefits as established by the Commissioner, issued prior to 1968, may be
calculated, at the option of the company, according to any standards that produce greater aggregate reserves for all such policies and
contracts than the minimum reserves required by the laws in effect immediately prior to that date.
Page 71
Title 18 - Insurance Code
(b) Reserves for any category of policies, contracts or benefits established by the commissioner, issued on or after 1968, may be
calculated, at the option of the company, according to any standards that produce greater aggregate reserves for the category than those
calculated according to the minimum standard provided herein, but the rate or rates of interest used for policies and contracts, other
than annuity and pure endowment contracts, shall not be greater than the corresponding rate or rates of interest used in calculating any
nonforfeiture benefits provided in the policies or contracts.
(c) A company, which adopts at any time a standard of valuation producing greater aggregate reserves than those calculated according
to the minimum standard provided under this Act, may adopt a lower standard of valuation with the approval of the Commissioner, but
not lower than the minimum provided herein; provided that, for the purposes of this section, the holding of additional reserves previously
determined by the appointed actuary to be necessary to render the opinion required by § 1113 of this title shall not be deemed to be the
adoption of a higher standard of valuation.
(80 Del. Laws, c. 117, § 1.)
§ 1118. Reserve calculation—Valuation net premium exceeding the gross premium charged.
(a) If in any contract year the gross premium charged by a company on a policy or contract is less than the valuation net premium for
the policy or contract calculated by the method used in calculating the reserve but using the minimum valuation standards of mortality
and rate of interest, the minimum reserve required for the policy or contract shall be the greater of either the reserve calculated according
to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually
used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation
net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium.
The minimum valuation standards of mortality and rate of interest referred to in this section are those standards stated in §§ 1114 and
1114B of this title.
(b) Provided, that for a life insurance policy issued on or after January 1, 1987, for which the gross premium in the first policy year
exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which
provides an endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the provisions
of this section shall be applied as if the method actually used in calculating the reserve for the policy were the method described in § 1115
of this title, ignoring the second paragraph of § 1115 of this title. The minimum reserve at each policy anniversary of such a policy shall
be the greater of the minimum reserve calculated in accordance with § 1115 of this title, including the second paragraph of that section,
and the minimum reserve calculated in accordance with this section.
(80 Del. Laws, c. 117, § 1.)
§ 1119. Reserve calculation—Indeterminate premium plans.
(a) In the case of a plan of life insurance that provides for future premium determination, the amounts of which are to be determined
by the insurance company based on then estimates of future experience, or in the case of a plan of life insurance or annuity that is of
such a nature that the minimum reserves cannot be determined by the methods described in §§ 1115, 1115A and 1118 of this title, the
reserves that are held under the plan shall:
(1) Be appropriate in relation to the benefits and the pattern of premiums for that plan; and
(2) Be computed by a method that is consistent with the principles of this Standard Valuation Law, as determined by regulations
promulgated by the Commissioner.
(b) Notwithstanding any other provision in the laws of this State, a policy, contract, or certificate providing life insurance under such
a plan shall be affirmatively approved by the Commissioner before it can be marketed, issued, delivered, or used in this State.
(80 Del. Laws, c. 117, § 1.)
§ 1120. Minimum standard for accident and health insurance contracts.
For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in
the valuation manual is the minimum standard of valuation required under § 1112(b) of this title. For disability, accident and sickness,
accident and health insurance contracts issued on or after 1968 and prior to the operative date of the valuation manual the minimum
standard of valuation is the standard adopted by the Commissioner by regulation.
(80 Del. Laws, c. 117, § 1.)
§ 1121. Valuation manual for policies issued on or after the operative date of the valuation manual.
(a) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the
minimum standard of valuation required under § 1112(b) of this title, except as provided under subsection (e) or (g) of this section.
(b) The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the
following have occurred:
(1) The valuation manual has been adopted by the NAIC by an affirmative vote of at least 42 members, or 3/4 of the members voting,
whichever is greater.
Page 72
Title 18 - Insurance Code
(2) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions,
has been enacted by States representing greater than 75% of the direct premiums written as reported in the following annual statements
submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements.
(3) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions,
has been enacted by at least 42 of the following 55 jurisdictions: The 50 States of the United States, American Samoa, the American
Virgin Islands, the District of Columbia, Guam, and Puerto Rico.
(c) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January
1 following the date when all of the following have occurred:
(1) The change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:
(A) At least 3/4 of the members of the NAIC voting, but not less than a majority of the total membership; and
(B) Members of the NAIC representing jurisdictions totaling greater than 75% of the direct premiums written as reported in the
following annual statements most recently available prior to the vote in paragraph (c)(1)(A) of this section: life, accident and health
annual statements, health annual statements, or fraternal annual statements.
(2) The valuation manual becomes effective pursuant to a regulation adopted by the Commissioner.
(d) The valuation manual must specify all of the following:
(1) Minimum valuation standards for and definitions of the policies or contracts subject to § 1112(b) of this title. Such minimum
valuation standards shall be:
(A) The Commissioners reserve valuation method for life insurance contracts, other than annuity contracts, subject to § 1112(b)
of this title;
(B) The Commissioners annuity reserve valuation method for annuity contracts subject to § 1112(b) of this title; and
(C) Minimum reserves for all other policies or contracts subject to § 1112(b) of this title.
(2) Which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in
§ 1122(a) of this title and the minimum valuation standards consistent with those requirements;
(3) For policies and contracts subject to a principle-based valuation under § 1122 of this title:
(A) Requirements for the format of reports to the Commissioner under § 1122(b)(3) of this title and which shall include
information necessary to determine if the valuation is appropriate and in compliance with this Act;
(B) Assumptions shall be prescribed for risks over which the company does not have significant control or influence.
(C) Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or
modification of such procedures.
(4) For policies not subject to a principle-based valuation under § 1122 of this title the minimum valuation standard shall either:
(A) Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or
(B) Develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a
level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.
(5) Other requirements, including, but not limited to, those relating to reserve methods, models for measuring risk, generation of
economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial
opinions and memorandums, transition rules and internal controls; and
(6) The data and form of the data required under § 1123 of this title, with whom the data must be submitted, and may specify other
requirements including data analyses and reporting of analyses.
(e) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion
of the Commissioner, in compliance with this Act, then the company shall, with respect to such requirements, comply with minimum
valuation standards prescribed by the Commissioner by regulation.
(f) The Commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the
company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a
company’s compliance with any requirement set forth in this Act. The Commissioner may rely upon the opinion, regarding provisions
contained within this Act, of a qualified actuary engaged by the Commissioner of another State, district or territory of the United States.
As used in this paragraph, the term “engage” includes employment and contracting.
(g) The Commissioner may require a company to change any assumption or method that in the opinion of the Commissioner is necessary
in order to comply with the requirements of the valuation manual or this Act; and the company shall adjust the reserves as required by
the Commissioner. The Commissioner may take other disciplinary action as permitted pursuant to this title.
(80 Del. Laws, c. 117, § 1.)
§ 1122. Requirements of a principle-based valuation.
(a) A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts
as specified in the valuation manual:
Page 73
Title 18 - Insurance Code
(1) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that
reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts.
For polices or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk.
(2) Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not
necessarily identical to, those utilized within the company’s overall risk assessment process, while recognizing potential differences
in financial reporting structures and any prescribed assumptions or methods.
(3) Incorporate assumptions that are derived in 1 of the following manners:
(A) The assumption is prescribed in the valuation manual.
(B) For assumptions that are not prescribed, the assumptions shall:
(i) Be established utilizing the company’s available experience, to the extent it is relevant and statistically credible; or
(ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant,
statistically credible experience.
(4) Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger
the margin and resulting reserve.
(b) A company using a principle-based valuation for 1 or more policies or contracts subject to this section as specified in the valuation
manual shall complete all of the following:
(1) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described
in the valuation manual.
(2) Provide to the Commissioner and the board of directors an annual certification of the effectiveness of the internal controls with
respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and
associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation
manual. The certification shall be based on the controls in place as of the end of the preceding calendar year.
(3) Develop, and file with the Commissioner upon request, a principle-based valuation report that complies with standards prescribed
in the valuation manual.
(c) A principle-based valuation may include a prescribed formulaic reserve component.
(80 Del. Laws, c. 117, § 1.)
§ 1123. Experience reporting for policies in force on or after the operative date of the valuation manual.
A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation
manual.
(80 Del. Laws, c. 117, § 1.)
§ 1124. Confidentiality.
(a) For purposes of this section, “confidential information” means all of the following:
(1) A memorandum in support of an opinion submitted under § 1113 of this this title and any other documents, materials and other
information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the
Commissioner or any other person in connection with such memorandum;
(2) All documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created,
produced or obtained by or disclosed to the Commissioner or any other person in the course of an examination made under § 1121(f)
of this title; provided, however, that if an examination report or other material prepared in connection with an examination made under
Chapter 3 of this title is not held as private and confidential information under Chapter 3 of this title, an examination report or other
material prepared in connection with an examination made under § 1121(f) of this title shall not be confidential information to the
same extent as if such examination report or other material had been prepared under Chapter 3 of this title;
(3) Any reports, documents, materials and other information developed by a company in support of, or in connection with, an annual
certification by the company under § 1122(b)(2) of this title evaluating the effectiveness of the company’s internal controls with respect
to a principle-based valuation and any other documents, materials and other information, including, but not limited to, all working
papers, and copies thereof, created, produced or obtained by or disclosed to the Commissioner or any other person in connection with
such reports, documents, materials and other information;
(4) Any principle-based valuation report developed under § 1122(b)(3) of this title and any other documents, materials and other
information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the
Commissioner or any other person in connection with such report; and
(5) Any documents, materials, data and other information submitted by a company under § 1123 of this title (collectively “experience
data”) and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies
thereof, created or produced in connection with such experience data, in each case that include any potentially company-identifying
Page 74
Title 18 - Insurance Code
or personally identifiable information, that is provided to or obtained by the Commissioner (together with any experience data, the
“experience materials”) and any other documents, materials, data and other information, including, but not limited to, all working
papers, and copies thereof, created, produced or obtained by or disclosed to the Commissioner or any other person in connection with
such experience materials.
(b) Privilege for, and confidentiality of, confidential information. — (1) Except as provided in this section, a company’s confidential
information is confidential by law and privileged, and shall not be subject to this State’s Freedom of Information Act (Chapter 100 of
Title 29), shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action;
provided, however, that the Commissioner is authorized to use the confidential information in the furtherance of any regulatory or legal
action brought against the company as a part of the Commissioner’s official duties.
(2) Neither the Commissioner nor any person who received confidential information while acting under the authority of the
Commissioner shall be permitted or required to testify in any private civil action concerning any confidential information.
(3) In order to assist in the performance of the Commissioner’s duties, the Commissioner may share confidential information:
(A) With other state, federal and international regulatory agencies and with the NAIC and its affiliates and subsidiaries; and
(B) In the case of confidential information specified in paragraphs (a)(1) and (a)(4) of this section only, with the Actuarial Board
for Counseling and Discipline or its successor upon request stating that the confidential information is required for the purpose of
professional disciplinary proceedings and with state, federal and international law enforcement officials; in the case of paragraph
(b)(3)(A) of this section and this paragraph (b)(3)(B), provided that such recipient agrees, and has the legal authority to agree, to
maintain the confidentiality and privileged status of such documents, materials, data and other information in the same manner and
to the same extent as required for the Commissioner.
(4) The Commissioner may receive documents, materials, data and other information, including otherwise confidential and privileged
documents, materials, data or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law-enforcement
officials of other foreign or domestic jurisdictions and from the Actuarial Board for Counseling and Discipline or its successor and
shall maintain as confidential or privileged any document, material, data or other information received with notice or the understanding
that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.
(5) The Commissioner may enter into agreements governing sharing and use of information consistent with this subsection (b) of
this section.
(6) No waiver of any applicable privilege or claim of confidentiality in the Confidential Information shall occur as a result of
disclosure to the Commissioner under this section or as a result of sharing as authorized in paragraph (b)(3) of this section.
(7) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under
this subsection (b) shall be available and enforced in any proceeding in, and in any court of, this State.
(8) For purposes of this section, “regulatory agency,” “law-enforcement agency” and the “NAIC” include, but are not limited to,
their employees, agents, consultants and contractors.
(c) Notwithstanding subsection (b) of this section, any confidential information specified in paragraphs (a)(1) and (a)(4) of this section:
(1) May be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the
related memorandum in support of an opinion submitted under § 1113 of this title or principle-based valuation report developed under
§ 1122(b)(3) of this title by reason of an action required by this Act or by regulations promulgated hereunder;
(2) May otherwise be released by the Commissioner with the written consent of the company; and
(3) Once any portion of a memorandum in support of an opinion submitted under § 1113 of this title or a principle-based valuation
report developed under § 1122(b)(3) of this title is cited by the company in its marketing or is publicly volunteered to or before a
governmental agency other than a state insurance department or is released by the company to the news media, all portions of such
memorandum or report shall no longer be confidential.
(80 Del. Laws, c. 117, § 1.)
§ 1125. Single state exemption.
(a) The Commissioner may exempt specific product forms or product lines of a domestic company that is licensed and doing business
only in the State of Delaware from the requirements of § 1121 of this title, provided:
(1) The Commissioner has issued an exemption in writing to the company and has not subsequently revoked the exemption in
writing; and
(2) The company computes reserves using assumptions and methods used prior to the operative date of the valuation manual in
addition to any requirements established by the Commissioner and promulgated by regulation.
(b) For any company granted an exemption under this section, §§ 1113, 1114, 1114A, 1114B, 1115, 1115A, 1116, 1117, 1118, 1119
and 1120 of this title shall be applicable. With respect to any company applying this exemption, any reference to § 1121 of this title found
in §§ 1113, 1114, 1114A, 1114B, 1115, 1115A, 1116, 1117, 1118, 1119 and 1120 of this title shall not be applicable.
(80 Del. Laws, c. 117, § 1.)
Page 75
Title 18 - Insurance Code
§ 1126. Effective date.
All acts and parts of acts inconsistent with the provisions of this Act are hereby repealed as of 1968. This Act shall take effect as of 1968.
(80 Del. Laws, c. 117, § 1.)
Subchapter IV
Valuation of Assets
§ 1127. Valuation of bonds.
(a) All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in
default as to principal or interest, be valued as follows:
(1) If purchased at par, at the par value;
(2) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so
as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of such method, according to such
accepted method of valuation as is approved by the Commissioner;
(3) Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual
brokerage, transfer, postage or express charges paid in the acquisition of such securities;
(4) Unless otherwise provided by valuation established or approved by the Commissioner, no such security shall be carried at above
the call price for the entire issue during any period within which the security may be so called.
(b) Notwithstanding any other provision of this section, no bond or other evidence of debt shall be valued in excess of the value
established by the National Association of Insurance Commissioners’ Capital Markets and Investment Analysis Office.
(18 Del. C. 1953, § 1114; 56 Del. Laws, c. 380, § 1; 69 Del. Laws, c. 92, § 4; 80 Del. Laws, c. 117, § 2; 83 Del. Laws, c. 184, § 3.)
§ 1128. Valuation of other securities.
(a) Securities, other than those referred to in § 1127 of this title, held by an insurer shall be valued, in the discretion of the Commissioner,
at their market value, or at their appraised value, or at prices determined by the Commissioner as representing their fair market value.
(b) Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, at the
discretion of the Commissioner and in accordance with such method of computation as he or she may approve.
(c) Notwithstanding any other provision of this section, securities shall be valued at prices established by the National Association
of Insurance Commissioners’ Capital Markets and Investment Analysis Office and in accordance with procedures established by the
National Association of Insurance Commissioners.
(18 Del. C. 1953, § 1115; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 39; 68 Del. Laws, c. 48, § 1; 70 Del. Laws, c. 186, § 1;
80 Del. Laws, c. 117, § 2; 83 Del. Laws, c. 184, § 4.)
§ 1129. Valuation of property.
(a) Real property acquired pursuant to a mortgage loan or contract for sale, in the absence of a recent appraisal deemed by the
Commissioner to be reliable, shall not be valued at an amount greater than the unpaid principal of the defaulted loan or contract plus
interest due and accrued at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such
acquisition, and the cost of improvements thereafter made by the insurer and any amounts thereafter paid by the insurer on assessments
levied for improvements in connection with the property.
(b) Real property owned by an insurer shall be valued at cost plus capital improvements less depreciation. Such a value shall not be in
excess of the NAIC accounting practices and procedures manual valuation nor in excess of fair market value as determined by a recent
appraisal acceptable to the Commissioner. If the valuation is based on an appraisal more than 3 years old, the Commissioner may require
a new appraisal to determine fair market value.
(18 Del. C. 1953, § 1116; 56 Del. Laws, c. 380, § 1; 69 Del. Laws, c. 92, § 5; 80 Del. Laws, c. 117, § 2.)
§ 1130. Valuation of purchase money mortgages.
Purchase money mortgages on real property referred to in § 1129(a) of this title shall be valued in an amount not exceeding the
acquisition cost of the real property covered thereby or 90% of the fair value of such real property, whichever is less.
(18 Del. C. 1953, § 1117; 56 Del. Laws, c. 380, § 1; 80 Del. Laws, c. 117, § 2.)
Subchapter V
Property and Casualty Actuarial Opinion Law
§ 1131. Title.
This subchapter shall be known as the “Property and Casualty Actuarial Opinion Law of 2011.”
(78 Del. Laws, c. 57, § 1; 80 Del. Laws, c. 117, § 2.)
Page 76
Title 18 - Insurance Code
§ 1132. Actuarial opinion of reserves and supporting documentation.
(a) This section shall become operative January 1, 2013.
(b) Every property and casualty insurance company doing business in Delaware, unless otherwise exempted by the Commissioner,
shall annually submit to the Department of Insurance the opinion of an appointed actuary entitled “Statement of Actuarial Opinion.” This
opinion shall be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions.
(c) Every property and casualty insurance company domiciled in Delaware that is required to submit a Statement of Actuarial Opinion
shall annually submit an actuarial opinion summary, written by the company’s appointed actuary. This actuarial opinion summary shall
be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and shall be considered as a
document supporting the actuarial opinion required in subsection (b) of this section.
(d) A company licensed but not domiciled in Delaware shall provide the actuarial opinion summary upon request.
(e) An actuarial report and underlying workpapers as required by the appropriate NAIC Property and Casualty Annual Statement
Instructions shall be prepared to support each actuarial opinion.
(f) If the insurance company fails to provide a supporting actuarial report and/or workpapers at the request of the Commissioner
or the Commissioner determines that the supporting actuarial report or workpapers provided by the insurance company are otherwise
unacceptable to the Commissioner, the Commissioner may engage a qualified actuary at the expense of the company to review the opinion
and the basis for the opinion and prepare the supporting actuarial report or workpapers.
(g) The appointed actuary shall not be liable for damages to any person (other than the insurance company and the Commissioner)
for any act, error, omission, decision or conduct with respect to the actuary’s opinion, except in cases of fraud or wilful misconduct on
the part of the appointed actuary.
(78 Del. Laws, c. 57, § 1; 80 Del. Laws, c. 117, § 2.)
§ 1133. Confidentiality.
(a) The Statement of Actuarial Opinion shall be provided with the annual statement in accordance with the appropriate NAIC Property
and Casualty Annual Statement Instructions and shall be treated as a public document.
(b) (1) Documents, materials or other information in the possession or control of the Department of Insurance that are considered an
actuarial report, workpapers or actuarial opinion summary provided in support of the opinion, and any other material provided by the
company to the Commissioner in connection with the actuarial report, workpapers or actuarial opinion summary, shall be confidential
by law and privileged, and, in accordance with § 10002(o)(2) of Title 29 shall be deemed to not be public records for purposes of the
Delaware Freedom of Information Act [Chapter 100 of Title 29], shall not be subject to subpoena, and shall not be subject to discovery
or admissible in evidence in any private civil action.
(2) This provision shall not be construed to limit the Commissioner’s authority to release the documents to the Actuarial Board for
Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings and that
the ABCD establishes procedures satisfactory to the Commissioner for preserving the confidentiality of the documents, nor shall this
section be construed to limit the Commissioner’s authority to use the documents, materials or other information in furtherance of any
regulatory or legal action brought as part of the Commissioner’s official duties.
(c) Neither the Commissioner nor any person who received documents, materials or other information while acting under the authority
of the Commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials
or information subject to subsection (b) of this section.
(d) In order to assist in the performance of the Commissioner’s duties, the Commissioner:
(1) May share documents, materials or other information, including the confidential and privileged documents, materials or
information subject to subsection (b) of this section with other state, federal and international regulatory agencies, with the National
Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and international law-enforcement
authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the documents, material or other
information and has the legal authority to maintain confidentiality;
(2) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or
information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and
law-enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any documents,
material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction
that is the source of the documents, material or information; and
(3) May enter into agreements governing sharing and use of information consistent with subsections (b) to (d) of this section.
(e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result
of disclosure to the Commissioner under this section or as a result of sharing as authorized in subsection (d) of this section.
(78 Del. Laws, c. 57, § 1; 78 Del. Laws, c. 382, § 1; 80 Del. Laws, c. 117, § 2; 83 Del. Laws, c. 65, § 1.)
Page 77
Title 18 - Insurance Code
Part I
Insurance
Chapter 13
Investments
§ 1301. Scope of chapter.
Except as to § 1329 of this title, this chapter applies to domestic insurers only.
(18 Del. C. 1953, § 1301; 56 Del. Laws, c. 380, § 1.)
§ 1302. Eligible investments.
(a) Insurers shall invest in or lend their funds on the security of, and shall hold as invested assets, only eligible investments as prescribed
in this chapter.
(b) Any particular investment held by an insurer on November 1, 1968, which was a legal investment at the time it was made, and
which the insurer was legally entitled to possess immediately prior to such date, shall be deemed to be an eligible investment.
(c) An investment qualified, in whole or in part, for acquisition or holding as an eligible investment may be qualified or requalified at
the time of acquisition or at a later date, in whole or in part, under any section of this chapter, if the relevant conditions contained in the
section are satisfied at the time of qualification or requalification. In order for an investment, subsequent to the time of its acquisition, to
be qualified or requalified, prior written approval of the Commissioner must be obtained.
(d) Unless otherwise specified, an investment limitation computed on the basis of an insurer’s admitted assets or capital and surplus
shall relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed with the
Commissioner or as shown by a current financial statement resulting from merger of another insurer, bulk reinsurance, or change in
capitalization. For purposes of computing any limitation based upon admitted assets, the insurer shall deduct from the amount of its
admitted assets the amount of the liability recorded on its statutory balance sheet for:
(1) The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;
(2) Cash received in a dollar roll transaction; and
(3) The amount reported as borrowed money in the most recently filed financial statement, to the extent not included in paragraphs
(d)(1) and (2) of this section.
(e) An insurer shall not invest in:
(1) Corporate obligations under § 1308 (c)(5) of this title;
(2) Bonds, notes or other evidences of indebtedness secured by second mortgages or deeds of trust under § 1323(a) of this title;
(3) Participations under § 1323(e) of this title;
(4) Secured obligations of institutions under § 1331 of this title; or
(5) Production payments under § 1332 of this title;
Unless such insurer possesses unimpaired capital and surplus (contributed and assigned) of not less than $7,500,000 (as shown by the
insurer’s annual statement as of December 31 next preceding the date of acquisition), which amount shall be invested in investments
permitted under this chapter other than those specified in this subsection or § 1320 (miscellaneous investments) of this title.
(18 Del. C. 1953, § 1302; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 363, § 19; 70 Del. Laws, c. 108, §§ 1, 2; 71 Del. Laws, c.
202, §§ 1, 2.)
§ 1303. General qualifications.
(a) No security or investment, other than real and personal property acquired under § 1324 (real estate) of this title, shall be eligible for
acquisition, unless it is interest bearing or interest accruing or entitled to dividends or is otherwise income earning, is not then in default
in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon. A debt
security will be considered to be income earning where, although bearing no fixed or contingent interest, it is issued at a discount and
contains a specific maturity date on which redemption is to be made at a stated value. Stocks will be considered income earning although
dividends are currently not being paid. Nothing in this section shall prohibit an insurer from giving or receiving a participating interest
in a bond, note or other evidence of indebtedness acquired by such insurer under § 1323 of this title, or the acquisition by an insurer of
warrants, options or similar rights to acquire securities if:
(1) The acquisition of such securities would then be permitted by this chapter (other than § 1320 of this title); or
(2) Such warrants, options or similar rights are acquired in connection with an investment otherwise permitted by this chapter.
(b) No security or investment shall be eligible for purchase at a price above its fair value or market value.
(c) Nothing in this chapter shall prohibit the acquisition by an insurer of other or additional securities or property if received as a
dividend or as a lawful distribution of assets, or upon a debt or judgment, or under a lawful and bona fide agreement of bulk reinsurance,
merger or consolidation, or if acquired by it through the exercise of warrants, options or similar rights to acquire securities received
by it in accordance with this chapter. Nothing in this chapter shall prevent any insurer from entering into an agreement for the purpose
Page 78
Title 18 - Insurance Code
of protecting the interests of the insurer in securities lawfully held by it, or for the purpose of reorganization of a corporation which
issued securities so held, and from depositing such securities with a committee or depositaries appointed under such agreement, nor from
accepting stock, bonds or other securities or other property which may be distributed pursuant to any such agreement, or to any plan of
reorganization or arrangement; and no provision of this chapter shall prevent any insurer from acquiring or holding any property acquired
in satisfaction of any debt previously contracted, or that shall be obtained by sale or foreclosure of any security held by it. Any security
or property so acquired which is not otherwise an eligible investment under this chapter shall be disposed of pursuant to § 1325 of this
title if real estate, or pursuant to § 1326 of this title if personal property or securities.
(d) Except as provided in § 1305(5) of this title, the limitations of this chapter shall apply to all investments described in § 77r-1 of
Title 15 of the United States Code [15 U.S.C. § 77r-1].
(e) For purposes of the investment limitations of this chapter, investments made by an insurer shall include investments made by that
insurer’s investment subsidiary.
(18 Del. C. 1953, § 1303; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 1, 2; 63 Del. Laws, c. 363, § 12; 68 Del. Laws, c. 177,
§ 1; 71 Del. Laws, c. 202, § 3.)
§ 1304. Authorization; record of investments.
An insurer shall not make any investment or loan (other than policy loans or annuity contract loans of a life insurer) unless the same is
authorized or approved by the insurer’s board of directors or by a committee thereof charged with supervision of investments and loans.
The insurer shall maintain a full record of each investment.
(18 Del. C. 1953, § 1304; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 3.)
§ 1305. Diversification.
An insurer shall invest in or hold as admitted assets categories of investments within applicable limits as follows only:
(1) One person. — An insurer shall not at any 1 time have any combination of investments in or loans upon the security of obligations,
property or securities of any 1 person (other than its lawful subsidiary) aggregating over 10% of the insurer’s assets. This shall not
apply as to general obligations of the United States or of any state, or of Canada or any province thereof, or include policy loans made
under § 1317 of this title.
(2) Voting stock. — An insurer may invest in and hold at any time not more than 50% of the outstanding voting stock of any
corporation, except as to voting rights of preferred stock during periods of defaults of dividends. This restriction shall not apply to
stock of a subsidiary of the insurer acquired under § 1313 of this title, or to controlling stock of an insurer acquired under § 1312(b)
of this title. The cost of such investments in any 1 corporation shall not exceed 3% of the insurer’s assets. The aggregate value of all
stock acquired and held under this section shall not exceed 40% of the insurer’s assets.
(3) Stocks. — a. A life insurer shall not:
1. Invest in any stocks under §§ 1311 (common stocks), 1312(a) (insurance stocks), and 1314 (common trust funds; mutual
funds) of this title if the cost thereof, when added to the aggregate cost of all such investments then held by such insurer, would
exceed 125% of its policyholders’ surplus (as defined in § 511(a)(2) of this title), or hold at any 1 time investments under such
sections having an aggregate market value exceeding 250% of such policyholders’ surplus; and
2. Invest in any stocks under § 1310 (preferred and guaranteed stocks) of this title if the cost thereof, when added to the
aggregate cost of all such stocks then held by such insurer, would exceed 20% of its assets, or hold at any 1 time stocks under
such section having an aggregate market value exceeding 40% of its assets.
b. This provision shall not apply to stock of any controlled or subsidiary corporation under §§ 1312(b) and 1313 of this title.
c. The cost of such investments in any 1 corporation shall not exceed 3% of the insurer’s assets.
(4) Mortgages. — An insurer shall not at any 1 time have more than 50% of its assets invested in obligations under § 1323 of this
title, exclusive of that portion of such obligations guaranteed or insured by an agency of the United States government. The investment
by an insurer in any 1 property shall not exceed 3% of the insurer’s assets.
(5) Certain mortgage pools. — An insurer may invest in and hold at any time up to 50% of its assets in certificates or other instruments
evidencing participating interests in mortgage loans or pools thereof issued by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation. The cost of such investment in any 1 mortgage pool shall not exceed 7% of the insurer’s assets.
(6) Other specific limits. — Limits as to investments in the category of real estate shall be as provided in § 1324 of this title, and other
specific limits, if any, shall apply as stated in sections dealing with other respective kinds of investments. Upon a request in writing
the Commissioner may permit an insurer to invest an amount up to 5% in excess of any specific investment limitation if determined by
the Commissioner to be a sound and prudent investment. Notwithstanding any other limitations contained herein, no investment in a
single person other than an investment deemed eligible under § 1302(b) of this title or as provided in § 1313 of this title, shall exceed
50% of policyholders’ surplus without the written approval of the Commissioner.
(18 Del. C. 1953, § 1305; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 4-6; 60 Del. Laws, c. 347, § 1; 61 Del. Laws, c. 150,
§ 1; 63 Del. Laws, c. 363, §§ 1, 13; 68 Del. Laws, c. 261, §§ 1-5; 69 Del. Laws, c. 373, § 1; 70 Del. Laws, c. 186, § 1; 70 Del.
Laws, c. 494, § 1.)
Page 79
Title 18 - Insurance Code
§ 1306. Public obligations.
An insurer may invest in bonds or other evidences of indebtedness, not in default as to principal or interest, which are valid and
legally authorized obligations issued, assumed or guaranteed by the United States or by any state thereof, or by Canada or any of the
provinces thereof, or by any county, city town, village, municipality or district therein or by any political subdivision thereof or by a
public instrumentality of 1 or more of the foregoing, and in any such obligations issued, assumed or guaranteed by the federal government
of Mexico, if, by statutory or other legal requirements applicable thereto, such obligations are payable, as to both principal and interest,
from (1) taxes levied or required to be levied upon all taxable property or all taxable income within the jurisdiction of such governmental
unit, or from (2) adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of such
payment; but not including any obligation payable solely out of special assessments on properties benefited by local improvements, unless
adequate security is evidenced by the ratio of assessment to the value of the property or the obligation is additionally secured by an
adequate guaranty fund required by law.
(18 Del. C. 1953, § 1306; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 363, § 17.)
§ 1307. Obligations and stock of certain federal and international agencies.
An insurer may invest in the obligations and/or stock where stated, issued, assumed or guaranteed by the following agencies of the
government of the United States of America, or in which such government is a participant, whether or not such obligations are guaranteed
by such government:
(1) Farm Loan Bank.
(2) Commodity Credit Corporation.
(3) Federal intermediate credit banks.
(4) Federal land banks.
(5) Central Bank for Cooperatives.
(6) Federal home loan banks, and stock thereof.
(7) Federal National Mortgage Association, and stock thereof.
(8) International Bank for Reconstruction and Development.
(9) Inter-American Development Bank.
(10) Asian Development Bank.
(11) African Development Bank.
(12) Any other similar agency of, or participated in by, the government of the United States of America and of similar financial
quality.
(18 Del. C. 1953, § 1307; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 158; 59 Del. Laws, c. 79, § 7; 66 Del. Laws, c. 20, § 1.)
§ 1308. Corporate obligations.
(a) An insurer may invest any of its funds in obligations rated 1 or 2 by the SVO if they are issued, assumed or guaranteed by any
solvent institution created or existing under the laws of the United States or Canada or of any state, district, province or territory thereof.
(b) An insurer may also invest any of its funds in any medium or lower grade obligations of any institution created or existing under
the laws of the United States or Canada or of any state, district, province or territory thereof, provided, however, that:
(1) Without prior approval of the Commissioner, no insurer shall invest any of its funds in any medium grade or lower grade obligation
of any institution if, after giving effect to any such acquisition, the aggregate amount of all medium grade and lower grade obligations
then held by the insurer would exceed 20 percent of its admitted assets.
(2) Without the prior approval of the Commissioner, no insurer shall invest any of its funds in any lower grade obligation of any
institution if, after giving effect to any such acquisition, the aggregate amount of all lower grade obligations then held by the insurer
would exceed 10 percent of its admitted assets; provided, that no more than 3 percent of its admitted assets consists of obligations
rated 5 or 6 by the Securities Valuation Office. In addition, without the Commissioner’s prior approval, no insurers shall acquire any
obligation rated 6 by the Securities Valuation Office and no more than 1 percent of its admitted assets may consist of obligations rated
6 by the Securities Valuation Office.
(3) Attaining the limit of any 1 category referred to in paragraph (b)(2) of this section shall not preclude an insurer from investing
any of its funds in obligations in other categories subject to the specific and multicategory limits. Nothing contained in this section shall
prohibit an insurer from investing any of its funds in any obligation which it has committed to acquire if the insurer would have been
permitted to invest any of its funds in that obligation pursuant to this section on that date on which such insurer committed to make
such investment. For the purposes of determining limitations contained in this chapter, an insurer shall give appropriate recognition
to any commitments to acquire investments. Notwithstanding the foregoing, an insurer may invest any of its funds in an obligation of
an institution in which such insurer already has 1 or more investments, if such investment is made in order to protect an investment
previously made in the obligations of such institution; provided, that such investment shall not exceed 1/2 of 1 percent of the insurer’s
admitted assets.
Page 80
Title 18 - Insurance Code
(c) An insurer may also invest any of its funds in obligations other than those permitted in subsection (a) or (b) of this section or
those eligible for investment under § 1323 (real estate mortgages) of this title if they are issued, assumed or guaranteed by any solvent
institution created or existing under the laws of the United States or Canada or of any state, district, province or territory thereof and are
qualified under any of the following:
(1) Obligations which are secured by adequate collateral security and bear fixed interest, if during each of any 3, including either of
the last 2, fiscal years of a period of not less than 3 nor more than 5 fiscal years next preceding the date of acquisition by such insurer,
the net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges, as defined in § 1309 of this title,
shall have been not less than 11/4 times the total of its fixed charges for such year, or obligations which, at the date of acquisition by such
insurer, are adequately secured and have investment qualities and characteristics wherein the speculative elements are not predominant.
In determining the adequacy of collateral security not more than 1/3 of the total value of such required collateral shall consist of stock
other than stock meeting the requirements of § 1310 (preferred or guaranteed stocks) of this title.
(2) Fixed interest-bearing obligations, other than those described in paragraph (c)(1) of this section, or noninterest-bearing obligations
issued at a discount and repayable at a stated value on a specific maturity date, if the net earnings of the issuing, assuming or guaranteeing
institution available for its fixed charges for a period of 5 fiscal years next preceding the date of acquisition by such insurer shall have
averaged per year not less than 11/2 times its average annual fixed charges applicable to such period and if during either of the last 2
years of such period such net earnings shall have been not less than 11/2 times its fixed charges for such year.
(3) Adjustment, income or other contingent interest obligations including, without limitation, variable or adjustable rate interest
obligations if the net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges for a period of 5 fiscal
years next preceding the date of acquisition by the insurer have averaged per year not less than 11/2 times the sum of its average annual
fixed charges and its average annual maximum contingent interest applicable to such period and if during either of the last 2 years of such
period such net earnings have not been less than 11/2 times the sum of its fixed charges and maximum contingent interest for such year.
(4) Fixed interest-bearing obligations, other than those described in paragraphs (c)(1) and (2) of this section, or noninterest-bearing
obligations issued at a discount and repayable at a stated value on a specific maturity date, if:
a. The net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges for a period of 5 fiscal years
next preceding the date of acquisition by such insurer shall have averaged per year not less than 11/4 times its average annual fixed
charges applicable to such period and if during each of any 4 fiscal years of such period such net earnings shall have been not less
than 11/4 times its fixed charges for such year;
b. The net earnings of such institution available for its fixed charges during a period of not less than 7 nor more than 10 fiscal
years next preceding the date of acquisition by such insurer shall have been such that for each of any 7 fiscal years of such period
such net earnings shall have been not less than 11/4 times its fixed charges for such year; and
c. The liquid assets of such institution shall have been not less than 105 percent of its liabilities (other than deferred income taxes,
deferred investment tax credits, capital stock and surplus).
(5) Fixed interest-bearing obligations, other than those described in paragraphs (c)(1), (2) and (4) of this section, or noninterestbearing obligations issued at a discount and repayable at a stated value on a specific maturity date, if either: (i) The net earnings of the
issuing, assuming or guaranteeing institution available for its fixed charges during each of the 5 fiscal years next preceding the date of
acquisition by such insurer shall have been not less than 125 percent of its fixed charges for such year, and (ii) the liquid assets of such
institution as of the end of the fiscal year next preceding the date as of which determination thereof shall be made and as of the end of
each of the 4 fiscal years next preceding such fiscal year shall have been not less than 95 percent of its liabilities (other than deferred
income taxes, deferred investment tax credits, capital stock and surplus); or (i) the net earnings of the issuing, assuming or guaranteeing
institution available for its fixed charges for a period of 5 fiscal years next preceding the date of acquisition by such insurer shall have
averaged per year not less than 115 percent of its average annual fixed charges applicable to such period and during each of any 4 fiscal
years of such period such net earnings shall have been not less than 115 percent of its fixed charges for such year and during any fiscal
year of such 5-year period such net earnings shall have been not less than 105 percent of its fixed charges for such year, and (ii) the
liquid assets of such institution as of the end of the fiscal year next preceding the date as of which determination thereof shall be made
and as of the end of each of the 4 fiscal years next preceding such fiscal year shall have been not less than 105 percent of its liabilities
(other than deferred income taxes, deferred investment tax credits, capital stock and surplus).
(18 Del. C. 1953, § 1308; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 8-10; 63 Del. Laws, c. 363, §§ 2, 3; 70 Del. Laws, c.
108, § 3; 71 Del. Laws, c. 202, §§ 4-6.)
§ 1309. Corporate obligations; terms defined.
(a) Certain terms used are defined for the purposes of this chapter as follows:
(1) “Fixed charges” includes interest on funded and unfunded debt, amortization of debt discount and rentals for leased properties,
except that interest paid by a bank or trust company upon any deposit shall not be deemed a fixed charge of such institution.
Page 81
Title 18 - Insurance Code
(2) “Institution” includes corporations, joint-stock associations, investment partnerships, business joint ventures and business trusts,
statutory trusts or similar entities.
(3) “Liquid assets” and “liabilities”, as to the most recent fiscal year of an issuing, assuming or guaranteeing institution, shall be
determined in reliance upon the latest regular financial statement of such institution prepared as of a date not more than 15 months
prior to the date of acquisition of the obligations in question by an insurer and, as to any prior fiscal year of such institution, shall be
determined in reliance upon the regular financial statement of such institution as of the close of the applicable fiscal year. If net earnings
are determined in reliance upon consolidated earnings statements of parent and subsidiary institutions, “liquid assets” and “liabilities”
shall be determined in reliance upon consolidated financial statements of parent and subsidiary institutions after treating any minority
stock interest in such subsidiary institutions as a liability.
(4) “Liquid assets” means the sum of cash, receivables or portions thereof, as the case may be, payable on demand or not more than
12 years after the date as of which determination thereof shall be made for purposes of § 1308 of this title, and readily marketable
securities, in each case less applicable reserves and unearned income.
(5) “Lower grade obligations” means obligations rated 4, 5 or 6 by the Securities Valuation Office of the National Association of
Insurance Commissioners.
(6) “Medium grade obligations” means obligations rated 3 by the Securities Valuation Office of the National Association of Insurance
Commissioners.
(7) “Net earnings available for fixed charges” means net income after deducting operating and maintenance expenses, taxes (other
than federal, state and other income taxes), depreciation and depletion, but excluding extraordinary nonrecurring items of income or
expense appearing in the regular financial statements of such institutions.
(8) “Obligations” includes bonds, debentures, notes and other evidences of indebtedness (whether or not liability for payment extends
beyond the security therefor) as well as participation interests in any of the foregoing.
(9) “SVO” means the Securities Valuation Office of the NAIC or any successor office established by the NAIC.”
(b) If net earnings are determined in reliance upon consolidated earnings statements of parent and subsidiary institutions, such net
earnings shall be determined after provision for income taxes of subsidiaries in which the parent institution owns directly or indirectly
less than 80% of all classes of voting stock, and after proper allowance for minority stock interest if any; and the required coverage
of fixed charges shall be computed on a basis including fixed charges and preferred dividends of subsidiaries other than those payable
by such subsidiaries to the parent corporation or to any other of such subsidiaries, except that if the minority common stock interest in
the subsidiary corporation is substantial, the fixed charges and preferred dividends may be apportioned in accordance with regulations
prescribed by the Commissioner.
(c) If the issuing, assuming or guaranteeing institution has not been in legal existence for the whole of the period for which earnings
tests are being applied for purposes of § 1308, § 1310 or § 1311 of this title, but was formed as a consolidation or merger of 2 or more
businesses of which at least 1 was in operation at the commencement of such period or such institution has acquired all or substantially all
of the assets of a business or any divisional, branch or other unitary portion thereof which was in operation at the commencement of such
period, the tests of eligibility under § 1308, § 1310 or § 1311 of this title, as the case may be, shall be based upon pro forma statements
incorporating statements of the predecessor or constituent institutions or businesses or portions thereof.
(18 Del. C. 1953, § 1309; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 11-13; 63 Del. Laws, c. 363, §§ 4-7; 70 Del. Laws, c.
108, § 4; 71 Del. Laws, c. 202, § 7; 73 Del. Laws, c. 329, § 61.)
§ 1310. Preferred or guaranteed stocks.
An insurer may invest in preferred or guaranteed stocks or shares of any solvent institution existing under the laws of the United States
or of Canada, or of any state or province thereof, if all of the prior obligations and prior preferred stocks, if any, of such institution at the
date of acquisition of the investment by the insurer are eligible as investments under this chapter and are rated 1 or 2 by the SVO or if
the net earnings of such institution available for its fixed charges during either of the last 2 years have been, and during each of the last 5
years have averaged, not less than 11/2 times the sum of its average annual fixed charges, if any, its average annual maximum contingent
interest, if any, and its average annual preferred dividend requirements. For the purposes of this section such computation shall refer to the
fiscal years immediately preceding the date of acquisition of the investment by the insurer, and the term “preferred dividend requirement”
shall be deemed to mean cumulative or noncumulative dividends, whether paid or not.
(18 Del. C. 1953, § 1310; 56 Del. Laws, c. 380, § 1; 71 Del. Laws, c. 202, § 8.)
§ 1311. Common stocks; limited partnerships.
An insurer may invest in common stocks, other than insurance stocks, of any solvent institution organized and existing under the laws
of the United States or Canada, or of any state or province thereof, if during a period of 7 fiscal years next preceding the date of acquisition
by such insurer the institution had aggregate net earnings available for the payment of dividends upon its common stock of no less than
the aggregate sum which would have been sufficient to pay dividends of 4% per annum upon the par value (or in the case of common
stocks without par value, upon the stated capital) of all of its shares of common stock outstanding during such period. As used in this
Page 82
Title 18 - Insurance Code
section the term “common stock” includes transferable certificates of participation in business trusts and statutory trusts. An insurer may
invest in or otherwise acquire and hold a limited partnership interest in any limited partnership formed pursuant to the laws of any state
or the United States of America. No limited partnership interest shall be acquired under this section if the cost thereof would exceed 2%
of the assets of such insurer nor if such cost, plus the book value on the date of such acquisition of all limited partnership interest then
held by such insurer and acquired under this section, would exceed 10% of such assets.
(18 Del. C. 1953, § 1311; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 14; 63 Del. Laws, c. 363, § 8; 73 Del. Laws, c. 329, §
62.)
§ 1312. Insurance stocks.
(a) An insurer may invest in the stocks of other solvent insurers formed under the laws of this or another state, which stocks meet the
applicable requirements of §§ 1310 (preferred or guaranteed stock) and 1311 (common stocks) of this title.
(b) With the Commissioner’s advance written consent an insurer may acquire and hold the controlling interest in the outstanding voting
stock of another stock insurer formed under the laws of this or another state. All stocks under this subsection shall be subject to the
limitation as to amount as provided in § 1313 of this title. The Commissioner shall not give his or her consent to any such acquisition if the
Commissioner finds that it would not be in the best interests of the insurers involved, or of their respective policyholders or stockholders,
or that such acquisition would materially tend to lessen competition or to result in any monopoly in the insurance business.
(18 Del. C. 1953, § 1312; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1313. Stock of subsidiaries.
(a) An insurer may invest in:
(1) The stock of subsidiary insurance corporations formed or acquired by it; or,
(2) in addition to the right to own stock in other corporations given insurers in § 1305(2) of this title, it may also invest in not less
than a majority of the voting stock of a business corporation formed under the laws of this or another state or a foreign nation, the
activities of which corporation are primarily supplementary and complementary to the convenient operation of the insurer’s business or
to the administration of its affairs, and corporations engaged or organized to engage in the marketing of financial, insurance or service
products, the products to be subject to the approval of the Insurance Commissioner.
As used in this title, “subsidiaries” shall include, in addition to those such corporations where the insurer owns a majority of their stock,
those corporations formed or acquired by an insurer where it owns less than a majority of such corporation’s voting stock due to the laws
of a foreign national which require the insurer to own less than a majority of the voting stock of such subsidiary insurance corporation
if it is to operate in that nation.
(b) Limitations on investments in subsidiaries shall be as follows:
(1) Domestic insurers transacting insurance in any state of the United States of America and not establishing reserves and operating
in accordance with § 1104 of this title.
a. All of the insurer’s investments pursuant to paragraph (a)(1) of this section shall not at any time exceed the amount of the
investing insurer’s surplus, if a life insurer, or its policyholders’ surplus (as defined in § 511(a)(2) of this title) if other than a life
insurer.
b. All of the insurer’s investments pursuant to paragraph (a)(2) of this section shall not at any time exceed the lesser of 10 percent
of the insurer’s admitted assets or 50 percent of the insurer’s surplus, if a life insurer, or its policyholders’ surplus (as defined in §
511(a)(2) of this title) if other than a life insurer. With prior approval of the Commissioner, an insurer may invest a greater amount in
the securities of subsidiaries than permitted by paragraph (a)(2) of this section if after such investment the investing insurer’s surplus,
if a life insurer, or its policyholders’ surplus (as defined in § 511(a)(2) of this title) if other than a life insurer, will be reasonable in
relation to the insurer’s outstanding liabilities and adequate to meet its financial needs.
(2) Domestic insurers transacting insurance in foreign countries only, and not transacting insurance in any state of the United States of
America and establishing reserves and operating in accordance with § 1104 of this title: All of the insurer’s investments in subsidiaries
shall not at any time exceed 100 percent of the insurer’s surplus, if a life insurer, or its policyholders’ surplus (as defined in § 511(a)
(2) of this title) if other than a life insurer.
(c) All of the insurer’s investments under this section, together with its investments in insurance stocks under § 1312(b) of this title,
shall not at any time exceed the amount of the investing insurer’s surplus, if a life insurer, or its policyholders’ surplus (as defined in §
511(a)(2) of this title) if other than a life insurer.”
(18 Del. C. 1953, § 1313; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 15; 60 Del. Laws, c. 347, § 2; 66 Del. Laws, c. 179, §
1; 73 Del. Laws, c. 336, § 1; 74 Del. Laws, c. 188, § 1.)
§ 1314. Common trust funds; mutual funds.
An insurer may invest in:
(1) A bank’s common trust fund as defined in § 584 of the United States Internal Revenue Code of 1954 [26 U.S.C. § 584]; and
Page 83
Title 18 - Insurance Code
(2) The securities of any open-end or closed-end management type investment company or investment trust registered with the
Federal Securities and Exchange Commission under the Investment Company Act of 1940 [15 U.S.C. § 80a-1 et seq.] as from time to
time amended, if such investment company or trust has assets of not less than $25,000,000 as at date of investment by the insurer.
(18 Del. C. 1953, § 1314; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 16.)
§ 1315. Bankers’ acceptances; bills of exchange.
An insurer may invest in bankers’ acceptances and bills of exchange of the kinds and maturities made eligible by law for rediscount
with Federal Reserve Banks, and generally accepted by banks or trust companies which are members of the Federal Reserve System.
(18 Del. C. 1953, § 1315; 56 Del. Laws, c. 380, § 1.)
§ 1316. Equipment trust certificates.
An insurer may invest in equipment trust obligations or certificates adequately secured and evidencing an interest in transportation
equipment used wholly or in part within the United States of America or Canada, which obligations or certificates carry the right to receive
determined portions of rental, purchase or other fixed obligatory payments to be made for the use or purchase of such transportation
equipment.
(18 Del. C. 1953, § 1316; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 17.)
§ 1317. Policy loans.
A life insurer may lend to its policyholder upon pledge of the policy as collateral security any sum not exceeding the cash surrender
value of the policy, or may lend against pledge or assignment of any of its supplementary contracts or other contracts or obligations, so
long as the loan is adequately secured by such pledge or assignment. Loans so made are eligible investments of the insurer.
(18 Del. C. 1953, § 1317; 56 Del. Laws, c. 380, § 1.)
§ 1318. Collateral loans.
An insurer may lend and thereby invest its funds upon the pledge of securities eligible for investment under this chapter. As at date
made, no such loan shall exceed in amount 100% of the market value of such collateral pledged. The amount so loaned shall be included
pro rata in determining the maximum percentage of funds permitted under this chapter to be invested in the respective categories of
securities so pledged.
(18 Del. C. 1953, § 1318; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 18.)
§ 1319. Savings and share accounts.
An insurer may invest in share or savings accounts of savings and loan or building and loan associations, or in savings accounts of
banks; and in any 1 such institution only to the extent that the investment is insured by the federal savings and loan insurance corporation
or the federal deposit insurance corporation.
(18 Del. C. 1953, § 1319; 56 Del. Laws, c. 380, § 1.)
§ 1320. Miscellaneous investments.
(a) An insurer may make loans or investments not otherwise expressly permitted under this chapter, in an aggregate amount not over
10% of the insurer’s assets, if such loan or investment fulfills the requirements of § 1303 of this title and otherwise qualifies as a sound
investment. No such loan or investment shall be represented by:
(1) Any item described in § 1102 (assets not allowed) of this title, or any loan or investment otherwise expressly prohibited;
(2) Agents’ balances or amounts advanced to or owing by agents, except as to policy loans, mortgage loans and collateral loans
otherwise authorized under this chapter;
(3) Loans or investments expressly eligible under any other provision of this chapter;
(4) Any asset theretofore acquired or held by the insurer under any other category of loans or investments eligible under this chapter.
(b) The insurer shall keep a separate record of all loans and investments made under this section.
(18 Del. C. 1953, § 1320; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 19, 20.)
§ 1321. Investments in foreign countries.
(a) An insurer transacting insurance in a foreign country may invest funds required to meet its obligations in such country and in
conformity with the laws thereof in the same kinds of securities and investments of or in such country as the insurer is authorized to invest
in or acquire under other provisions of this chapter. Except as provided in the foregoing sentence and in subsection (b) of this section,
an insurer may not invest more than 15% of its assets in securities or investments of or in foreign countries other than Canada nor invest
more than an aggregate of 5% of its assets in securities or investments of or in a single foreign jurisdiction which has a sovereign debt
rating of SVO 1 or 3% of its assets as to any other foreign jurisdiction. The Commissioner may promulgate regulations which permit,
after thorough and appropriate review on a case-by-case basis, a life insurer domiciled in Delaware to increase its aggregate limit on
foreign investments to 20%.
Page 84
Title 18 - Insurance Code
(b) If such an insurer is not doing business in any state of the United States of America, it may invest its funds as permitted by the
laws of any jurisdiction where it does business. Negotiation and issuance of insurance on risks situated outside every such state, and
changes in, communications concerning, and collection of premiums on insurance so issued shall not be deemed hereunder to be doing
business in any such state.
(c) If such an insurer is not transacting insurance in the United States of America, it may establish 1 or more separate accounts and
subaccounts thereto in respect to 1 or more jurisdictions outside the United States relating to insurance business conducted in such
jurisdiction outside the United States. The insurer may allocate assets and make deposits thereto in respect of the whole or any part of the
insurance business transacted by it in such jurisdiction for the purpose of segregating the insurer’s assets for the benefit of policyholders
of that jurisdiction, subject to the following:
(1) All amounts received by an insurer in respect of a class of insurance business written in that jurisdiction, after the establishment
of a separate account in respect of that class or classes of business, shall be carried to and become assets of the separate account. The
assets of each separate account shall be kept separate and distinct from other assets of the insurer.
(2) Subaccounts may be established within a separate account for classes of insurance business written in that jurisdiction. All
amounts received by the insurer with respect to the class of insurance in a subaccount shall be carried to and become assets of such
subaccount.
(3) The income, gains and losses, realized or unrealized, from assets allocated to a separate account or subaccount thereof shall be
credited to or charged against such separate account or subaccount, without regard to other income, gains or losses of the insurer. To
the extent that the value of the assets in such separate account or subaccount are in excess of the reserves, other contract liabilities,
solvency and other requirements of the jurisdiction in which the separate account or subaccount is established, such excess may be
withdrawn by the insurer.
(4) Amounts allocated to a separate account or subaccount thereof in the exercise of the power granted by this subsection shall be
owned by the insurer and the insurer shall not be, nor hold itself out to be, a trustee with respect to such amounts.
(5) The assets of a separate account or subaccount shall not be available to meet any liabilities of the insurer other than policyholder
liabilities, expenses, taxes and levies, directly related to such separate account or subaccounts. The assets of any separate account or
subaccount equal to the reserves and other contract liabilities with respect to those accounts are excluded from the insurer’s general
assets and as such shall not be charged with other liabilities of the insurer which may arise out of any other business which the insurer
may conduct other than the separate account or subaccount. In any dissolution or liquidation of an insurer which has established a
separate account or subaccount under this subsection, the assets of the account shall be available only for meeting the policyholder
liabilities of the company attributable to the business in respect of which such separate account or subaccount was established. Any
assets which remain in any such account after the satisfaction of all policyholder liabilities of the account shall be made available to
the appointed receiver.
(6) An insurer shall not mortgage or charge any of the assets of any separate account or subaccount thereof, except for the benefit
of such separate account or subaccount.
(7) Assets of a readily determinable market value maintained in the separate account or subaccount shall be freely exchangeable in
the discretion of the insurer at any time for assets of like value.
(8) Where an insurer wishes to establish a separate account in respect of a part of the insurance business of the insurer, the insurer
shall apply to the Commissioner in writing for approval to establish the separate account, and shall indicate the proposed date and the
part of the insurance business of the insurer in respect of which the separate account is to be established. The separate account shall
take effect upon the approval of the Commissioner.
(9) A separate account or subaccount established under this subsection in respect of any part of the insurance business of an insurer
shall continue to be maintained in accordance with this subsection for as long as the insurer has any outstanding obligations or liabilities
in respect of that part of its business.
(10) Negotiation and issuance of insurance on risks situated outside the United States of America, and changes in, and
communications concerning, and collection of premiums on insurance so issued shall not be deemed hereunder to be doing business
or transacting insurance in the United States of America.
(18 Del. C. 1953, § 1321; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 21; 63 Del. Laws, c. 363, § 18; 68 Del. Laws, c. 343, §
1; 71 Del. Laws, c. 202, § 9; 76 Del. Laws, c. 39, § 1.)
§ 1322. Special investments of title insurers.
Repealed by 74 Del. Laws, c. 214, § 6, effective March 30, 2004.
§ 1323. Real estate mortgages.
(a) An insurer may invest in bonds, notes or other evidences of indebtedness secured by first or second mortgages or deeds of trust
representing first or second liens upon real estate, perpetual leases thereon or leasehold estates when the remaining term of such leasehold
and enforceable renewals is not less than the term of such first or second lien, as the case may be, in the United States or Canada, subject
to the following conditions:
Page 85
Title 18 - Insurance Code
(1) The amount loaned or the aggregate amount of bonds or other evidences of indebtedness issued upon the security of a mortgage
or deed of trust (when added to the amount unpaid upon any prior first mortgage or deed of trust) shall not at the time of the investment
exceed 75% of the fair market value of the real estate, as such value has been determined by a qualified appraiser for the purposes of
the investment or at the time of issuance of the bonds or other evidences of indebtedness.
(2) In applying the limitation under paragraph (a)(1) of this section above, there may be excluded from the amount invested that
portion of the investment which is guaranteed by the Administrator of Veterans’ Affairs pursuant to the Servicemen’s Readjustment Act
of 1944 [38 U.S.C. § 1802 et seq.], as amended, or insured by the Federal Housing Administrator or other United States or Canadian
government agency.
(3) Insurance not less comprehensive than fire and extended coverage must be carried on the improvements, if any, on the real estate,
in an amount not less than 75% of the insurable value of the improvements or the unpaid balance of the investment, whichever is the
lesser amount, and the policy or policies evidencing such insurance shall be endorsed to show the interest of the lender.
(4) No mortgage loan upon a leasehold shall be made or acquired by an insurer pursuant to this section unless the terms thereof
shall provide for such payments of principal, whatever the period of the loan, so that at no time during the period of the loan shall the
aggregate payments of principal theretofore required to be made under the terms of the loan be less than would have been necessary for a
loan payable completely by the end of the lesser of a period of 4/5 of the period of the leasehold, inclusive of the period or periods which
may be provided by enforceable options of renewal, which is unexpired at the time the loan is made or 40 years, through payments of
interest only for 5 years and equal payments applicable first to interest and then to principal at the end of each year thereafter.
(5) The total investments of any insurer permitted under this subsection in bonds, notes or other evidences of indebtedness secured
by second mortgages or deeds of trust, under subsection (e) of this section regarding participations evidencing participating interests
in bonds, notes or other evidences of indebtedness which are so secured and under subsection (f) of this section, shall not exceed 5%
of its assets, and no such investment shall be made or acquired by an insurer if the mortgagor, without the approval of the insurer,
may increase the principal amount of the indebtedness secured by the prior first mortgage except to the extent that the amount of such
increase is applied in reduction of the investment held by the insurer.
(b) For the purposes of this section real estate shall not be deemed to be encumbered by reason of the existence of taxes or assessments
which are not delinquent, instruments creating or reserving mineral, oil or timber rights, rights-of-way, joint driveways, sewer rights,
rights in walls, or by reason of building restrictions or other restrictive covenants, or when such real estate is subject to lease in whole
or in part whereby rents or profits are reserved to the owner.
(c) An insurer may invest in purchase money mortgages or like securities received by it upon the sale or exchange of real property
acquired pursuant to § 1324 of this title.
(d) In addition to the foregoing and supplemental to § 1320 of this title, any such insurer may, to an aggregate amount not in excess of
5% of the assets of such insurer, make and hold loans upon real property, including leasehold estates therein, in any state of the United
States, or in the District of Columbia or Puerto Rico, or in any province of the Dominion of Canada, notwithstanding the fact that such
loans and the mortgages securing the same do not comply with the provisions of this section.
(e) A permissible investment under this section shall include a participation (meaning an instrument evidencing a participating interest
in a bond, note or other evidence of indebtedness secured by first or second mortgage or deed of trust) if the entire indebtedness would
qualify for investment under subsection (a) of this section and:
(1) The entire indebtedness secured by the same mortgage or deed of trust is held by such insurer; or
(2) The insurer holds a senior participation giving it substantially the rights of a first or second mortgagee and a position of priority
over the other holders of participations in such indebtedness; or
(3) If each participation is of equal rank, the aggregate amount of the insurer’s investment under this paragraph in all such
participations does not exceed 20% of its assets.
(f) An insurer may invest in bonds, notes or other evidences of indebtedness secured by first or second mortgages or deeds of
trust representing first or second liens upon perpetual leases on real estate or leasehold estates in the jurisdictions approved by the
Commissioner, provided that the maturity date of the loan occurs on a date that is no later than 40 years prior to the leasehold termination
date (inclusive of the period or periods which may be provided by enforceable options of renewal) and the loan to value ratio of the
leasehold as of the date of acquisition of such loan does not exceed 70%. Bonds, notes or other evidences of indebtedness acquired
pursuant to this subsection shall be subject to the applicable limitations of § 1321 of this title. After a thorough and appropriate review on
a case-by-case basis, the Commissioner may grant authority to invest in bonds, notes or other evidences of indebtedness secured by first
or second mortgages or deeds of trust representing first or second liens upon leasehold estates in any jurisdiction that otherwise meets
the requirements of this subsection.
(18 Del. C. 1953, § 1324; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 22-24; 63 Del. Laws, c. 363, §§ 9-11; 83 Del. Laws, c.
317, § 1.)
§ 1324. Real estate.
(a) A domestic insurer may invest in real estate only if used for the purposes or acquired in the manners, and within the limits, as follows:
Page 86
Title 18 - Insurance Code
(1) The building in which it has its principal office, the land upon which the building stands, and such other real estate as may be
requisite for the insurer’s convenient accommodation in the transaction of its business. The amount so invested and apportioned as to
space actually so occupied or used shall not aggregate more than 10% of the insurer’s assets;
(2) Real estate acquired in satisfaction of loans, mortgages, liens, judgments, decrees or debts previously owing to the insurer in
the due course of its business;
(3) Real estate acquired in part payment of the consideration on the sale of other real estate owned by it, if such transaction shall
have effected a net reduction in the insurer’s investments in real estate;
(4) Real estate acquired by gift or devise, or through merger, consolidation or bulk reinsurance of another insurer under this title;
(5) The seller’s interest in real estate subject to an agreement of purchase or sale, but the sum invested in any such interest shall
not exceed 2/3 of the fair value of such parcel;
(6) Additional real estate and equipment incident thereto, if necessary or convenient for the purpose of enhancing the sale or other
value of real estate previously acquired or held under this section. Such real estate and equipment, together with the real estate for
the enhancement of which it was acquired, shall be included, for the purpose of applicable investment limits, and shall be subject to
disposal under § 1325 of this title at the same time and under the same conditions as apply to such enhanced real estate;
(7) Real estate, or any interest therein, acquired or held by purchase, lease or otherwise, acquired as an investment for production of
income, or acquired to be improved or developed for such investment purposes pursuant to an existing program therefor. The insurer
may hold, mortgage, improve, develop, maintain, manage, lease, sell, convey and otherwise dispose of real estate acquired by it under
this provision. An insurer shall not have at any 1 time invested in real estate under this paragraph more than 15% of its assets. Real
estate to be used primarily for agricultural, ranch, mining, development of oil and mineral resources, recreational, amusement, hotel,
motel or club purposes shall in total not exceed 10% of an insurer’s assets.
(b) All real estate owned by a domestic insurer under this section, other than as to seller’s interest specified in paragraph (a)(5) of this
section, shall not at any 1 time exceed 25% of the insurer’s assets.
(18 Del. C. 1953, § 1325; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 25, 26; 63 Del. Laws, c. 363, § 14.)
§ 1325. Time limit for disposal of real estate.
(a) Except as stated in subsection (b) of this section, or unless the insurer elects to hold the real estate as an investment under § 1324(a)
(7) of this title:
(1) An insurer shall dispose of real estate acquired under § 1324(a)(1) of this title within 5 years after it has ceased to be necessary
for the convenient accommodation of the insurer in the transaction of its business;
(2) An insurer shall dispose of real estate acquired under § 1324(a)(2), (3) and (4) of this title within 5 years after the date of
acquisition, unless used or to be used for the insurer’s accommodation under § 1324 (a)(1) of this title.
(b) The Commissioner may by order grant, from time to time, reasonable extensions of the period, as specified in any such order, within
which an insurer shall dispose of any particular parcel of such real estate.
(18 Del. C. 1953, § 1326; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 27.)
§ 1326. Time limit for disposal of other ineligible property and securities.
Any personal property or securities lawfully acquired by an insurer, which it could not otherwise have invested in or loaned its funds
upon at the time of such acquisition, shall be disposed of within 5 years from date of acquisition, unless within such period the security
has attained to the standard of eligibility; except, that any security or personal property acquired under any agreement of bulk reinsurance,
merger or consolidation may be retained for a longer period if so provided in the plan for such reinsurance, merger or consolidation
as approved by the Commissioner under Chapter 49 of this title. The Commissioner may by order grant, from time to time, reasonable
extensions of the period, as specified in any such order, within which an insurer shall dispose of any such property or security.
(18 Del. C. 1953, § 1327; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, §§ 28, 29.)
§ 1327. Failure to dispose of real estate or securities; effect; penalty.
(a) Any real estate, personal property, or securities lawfully acquired and held by an insurer after expiration of the period for disposal
thereof or any extension of such period granted by the Commissioner as provided in §§ 1325 and 1326 of this title, shall not be allowed
as an asset of the insurer.
(b) The insurer shall forthwith dispose of any ineligible investment unlawfully acquired by it, and the Commissioner shall suspend or
revoke the insurer’s certificate of authority if the insurer fails to dispose of the investment within such reasonable time as the Commissioner
may, by his or her order, specify.
(18 Del. C. 1953, § 1328; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1328. Prohibited investments and investment underwriting.
(a) In addition to investments excluded pursuant to other provisions of this title, an insurer shall not invest in or lend its funds upon
the security of:
Page 87
Title 18 - Insurance Code
(1) Issued shares of its own capital stock, except:
a. For the purpose of mutualization under § 4928 of this title; and
b. Where the insurer has first submitted a plan for such investment or loan to the commissioner and the Commissioner has not,
within 20 days after such submission or within such additional reasonable period as the Commissioner may request, disapproved
such plan as unfair or inequitable to the insurer’s policyholders or stockholders;
(2) Securities issued by any corporation or enterprise the controlling interest of which is, or will after such acquisition by the insurer
be, held directly or indirectly by the insurer or any combination of the insurer and the insurer’s directors, officers, subsidiaries or
controlling stockholders (other than a parent corporation), and the spouses and children of any of the foregoing individuals. Investments
in controlled insurance corporations or subsidiaries under §§ 1312(b) and 1313 of this title are not subject to this provision;
(3) Any note or other evidence of indebtedness of any director, officer, employee or controlling stockholder of the insurer or of the
spouse, or child of any of the foregoing individuals, except as to policy loans authorized under § 1317 of this title.
(b) No insurer shall underwrite or participate in the underwriting of an offering of securities or property of any other person.
(c) No insurer shall enter into any agreement to withhold from sale any of its securities or property, and the disposition of its assets
shall at all times be within the control of the insurer.
(18 Del. C. 1953, § 1329; 56 Del. Laws, c. 380, § 1.)
§ 1329. Investments of foreign insurers.
The investment portfolio of a foreign or alien insurer shall be as permitted by the laws of its domicile if of a quality substantially equal
to that required under this chapter for similar funds of like domestic insurers.
(18 Del. C. 1953, § 1330; 56 Del. Laws, c. 380, § 1.)
§ 1330. Personal property.
An insurer may invest in tangible personal property, or interests therein evidenced by trust certificates or other instruments, and a right to
receive rental, charter hire, purchase or other payments for the use or purchase of such personal property adequate to return the investment
and payable or guaranteed by 1 or more governmental units or instrumentalities whose obligations would qualify for investment under §
1306 of this title (public obligations) or 1 or more institutions whose obligations would qualify for investment under § 1308(a) or under
§ 1308(c)(2) or (4) of this title (corporate obligations). No insurer shall make an investment pursuant to this section if the aggregate
amount so invested will exceed 5% of its assets or if the aggregate amount so invested as to which such rental, charter hire, purchase or
other payments are payable or guaranteed by any 1 governmental unit or instrumentality other than the United States or Canada or any
1 institution will exceed 1% of such sets.
(18 Del. C. 1953, § 1331; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 30; 71 Del. Laws, c. 202, § 10.)
§ 1331. Secured obligations.
(a) An insurer may invest in obligations which are secured by:
(1) An assignment of a right to receive rental, charter hire, purchase or other payments for the use or purchase of real or personal
property adequate to return the investment and payable or guaranteed by 1 or more governmental units or instrumentalities whose
obligations would qualify for investment under § 1306 of this title (public obligations) or 1 or more institutions whose obligations
would qualify for investment under § 1308(a) or under § 1308(c)(2), (4) or (5) of this title (corporate obligations); and
(2) A mortgage on or secured interest in such real or personal property.
(b) No insurer shall make an investment pursuant to this section in obligations, other than those of institutions, if the aggregate amount
so invested will exceed 10% of its assets or if the aggregate amount so invested as to which such rental, charter hire, purchase or other
payments are payable or guaranteed by any 1 governmental unit or instrumentality or any 1 institution will exceed 5% of such assets. No
insurer shall make any investment pursuant to this section in obligations of or in any affiliate (as defined in § 5001 of this title).
(18 Del. C. 1953, § 1332; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 31; 63 Del. Laws, c. 363, § 15; 71 Del. Laws, c. 202, §
11.)
§ 1332. Production payments.
Production payments, or interests therein evidenced by trust certificates or other instruments, payable from oil, gas or other
hydrocarbons in producing properties located in the United States or Canada or the adjacent continental shelf if an obligation secured by
and payable from such production payment or interest therein would qualify for investment under § 1308(a) or under § 1308(c)(1) of
this title as an obligation which is adequately secured and has investment qualities and characteristics wherein the speculative elements
are not predominant. The term “production payments” shall be deemed to mean rights to oil, gas or other hydrocarbons in place or as
produced which entitle the owner thereof to a specified fraction or percentage of production until a specified sum of money has been
received. No insurer shall make an investment pursuant to this section if the aggregate amount so invested will exceed 15% of its assets.
(63 Del. Laws, c. 363, § 16; 71 Del. Laws, c. 202, § 12.)
Page 88
Title 18 - Insurance Code
§ 1333. Rules and regulations [For application of this section, see 79 Del. Laws, c. 207, § 3].
The Commissioner may issue such reasonable rules, regulations and orders as the Commissioner may deem necessary or desirable to
effectuate the purposes of this chapter, including setting standards for the prudent use by domestic insurers of derivative instruments and
other qualified financial contracts (as defined in § 5901 of this title), and setting standards (including without limitation any limits or
conditions) for domestic insurers qualifying for, entering into advance agreements and reporting borrowings from any federal home loan
bank, as defined in 12 U.S.C. § 1422(1)(A).
(78 Del. Laws, c. 29, § 1; 79 Del. Laws, c. 207, § 1.)
§ 1334. Additional investments.
An insurer may make additional loans or investments in excess of any aggregate investment limitation contained in this chapter in
accordance with paragraph (1) of this section except for the aggregate limitations contained in §§ 1305(1) and 1313 of this title.
(1) An insurer may make additional loans or investments in accordance with the following:
a. A property and casualty insurer may invest an amount that is the lesser of:
1. Policyholder surplus less any surplus write-ins less 400% of the authorized control level risk-based capital; or
2. Ten percent of the insurer’s cash and invested assets;
b. A life and health insurer may invest an amount that is the lesser of:
1. Policyholder surplus less surplus from separate accounts less any surplus write-ins less 450% of the authorized control level
risk-based capital; or
2. Ten percent of the insurer’s cash and invested assets.
No insurer shall make an investment pursuant to this section if the aggregate amount so invested will exceed 200% of the existing
aggregate limitation stipulated in any section of this title.
(2) No such loan or investment shall be represented by:
a. Any item described in § 1102 (assets not allowed) of this title, or any loan or investment otherwise expressly prohibited in
any section of this title;
b. Investments in derivatives.
(3) The insurer shall keep a separate record of all loans and investments made under this section.
(4) Unless otherwise specified, an investment limitation computed on the basis of an insurer’s cash and invested assets shall relate to
the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed with the Commissioner
or as shown by a current financial statement resulting from merger of another insurer, bulk reinsurance, or change in capitalization.
For purposes of computing any limitation based upon cash and invested assets, the insurer shall deduct from the amount of its cash and
invested assets the amount of the liability recorded on its statutory balance sheet for:
a. The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;
b. Cash received in a dollar roll transaction; and
c. The amount reported as borrowed money in the most recently filed financial statement, to the extent not included in paragraphs
(4)a. and b. of this section.
(78 Del. Laws, c. 56, § 1.)
Page 89
Title 18 - Insurance Code
Part I
Insurance
Chapter 15
Administration of Deposits
§ 1501. Authorized deposits of insurers.
The following deposits of insurers, when made through the Commissioner, shall be accepted and held by the Commissioner in trust,
subject to the provisions of this chapter:
(1) Deposits required under this title for authority to transact insurance in this State;
(2) Deposits of domestic insurers when made pursuant to the laws of other states, provinces and countries as requirement for authority
to transact insurance in such state, province or country;
(3) Deposits in such additional amounts as are permitted to be made under § 1508 of this title.
(18 Del. C. 1953, § 1501; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1502. Purpose of deposit.
(a) Deposits made in this State under § 513 (deposit requirements, in general) of this title shall be held in trust for the respective
purposes stated in that section.
(b) A deposit made in this State by a domestic insurer transacting insurance in another state, province or country, and as required by
the laws of such other state, province or country, shall be held for the protection of all the insurer’s policyholders or all its policyholders
and creditors or for such other purpose or purposes as may be specified pursuant to such laws.
(c) Deposits made by domestic life insurers in connection with registered policies and bonds shall be made and held for the special
protection of the holders of such policies and bonds.
(d) Deposits required under the retaliatory law, § 532 of this title, shall be held for such purposes as is required by such law, and as
specified by the Commissioner’s order requiring such deposit to be made.
(18 Del. C. 1953, § 1502; 56 Del. Laws, c. 380, § 1.)
§ 1503. Securities eligible for deposit.
(a) All such deposits required under § 513 of this title for authority to transact insurance in this State shall consist of good interestbearing or dividend-paying securities of kinds eligible for investment of the funds of domestic insurers under Chapter 13 of this title.
(b) All other deposits of a domestic insurer held in this State pursuant to the laws of another state, province or country shall be comprised
of securities of the kinds described in subsection (a) of this section above, and of such additional kind or kinds of securities required or
permitted by the laws of such state, province or country.
(c) Deposits of foreign insurers made in this State under the retaliatory law, § 532 of this title, shall consist of such assets as are required
by the Commissioner pursuant to such law.
(d) All securities placed on deposit on and after July 1, 1973, shall be of such a nature that the interest or dividends are payable without
the necessity of access to the depository.
(18 Del. C. 1953, § 1503; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 35.)
§ 1504. Depository; access; costs.
(a) Deposits made in this State under this title shall be made through the Commissioner and kept in safe deposit with an established
bank or trust company located in this State and selected by the Commissioner.
(b) Wherever reasonably possible all deposited securities shall be registered in the name of the Insurance Commissioner, State of
Delaware, in trust for the depositing insurer, or registered in the insurer’s name and be accompanied by a duly executed power of attorney
in favor of the Commissioner. The State shall be responsible for the safekeeping of all securities deposited under this subsection and shall
charge the costs of maintaining these deposits to the insurer.
(c) If securities for deposit are submitted in form other than as provided in subsection (b) of this section above or in connection with
“registered” policies or bonds, the Commissioner or his or her representative shall forthwith deposit the same in the presence of the
president, vice-president or authorized agent of the insurer, in a strong metal box, which shall require 2 distinct and different keys to
unlock the same, 1 key to be kept by the Commissioner and the other by the insurer. The box shall not be opened except in the presence
of the Commissioner or duly authorized representative, and the president, vice-president or authorized agent of the insurer. The insurer
shall bear the costs of the depository.
(d) In addition to the manner of making deposits under this title provided for above, any such deposits may also be made by sufficient
securities or cash being deposited directly with any established bank or trust company located in this State pursuant to an escrow agreement
entered into between the person making such deposits and the bank receiving them which agreement has first been approved in writing
Page 90
Title 18 - Insurance Code
by the Commissioner. If deposits are made in this manner, the provisions of subsections (a), (b) and (c) of this section above shall not
apply to such deposits, except as required by the Commissioner in granting approval of such escrow agreement and the arrangements
made pursuant thereto.
(18 Del. C. 1953, § 1504; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 79, § 40; 65 Del. Laws, c. 419, § 1; 70 Del. Laws, c. 186, §
1.)
§ 1505. Record of deposits.
(a) The Commissioner shall give to the depositing insurer vouchers as to all assets and securities so deposited with the Commissioner.
(b) The Commissioner shall keep a record of the assets and securities comprising each deposit, showing as far as practical the amount
and market value of each item, and all the Commissioner’s transactions relative thereto.
(18 Del. C. 1953, § 1505; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1506. Assignment, transfer of securities.
All securities deposited by an insurer and not negotiable by delivery shall be duly registered in the name of the Commissioner and his
or her successors in office, or with power of attorney as provided in § 1504 of this title. Upon release of any such security to the insurer,
the Commissioner shall reassign or surrender the power of attorney to the insurer.
(18 Del. C. 1953, § 1507; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1507. Appraisal.
The Commissioner may, in his or her discretion, prior to acceptance for deposit of any particular asset or security, or at any time
thereafter while so deposited, have the same appraised or valued by competent appraisers. The reasonable costs of any such appraisal
or valuation shall be borne by the insurer.
(18 Del. C. 1953, § 1508; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1508. Excess deposits.
(a) If assets deposited by an insurer under this chapter are subject to material fluctuations in market value, the Commissioner may, in
his or her discretion, require the insurer to deposit and maintain on deposit additional assets in an amount reasonably necessary to assure
that the deposit at all times has a market value of not less than the amount specified under the law by which the deposit is required.
(b) An insurer may otherwise at its option deposit assets in an amount exceeding its deposit required or otherwise permitted under
this title by not more than 20% of such required or permitted deposit, or $20,000, whichever is the larger amount, for the purpose of
absorbing fluctuations in the value of assets deposited and to facilitate exchange and substitution of such assets. During the solvency of
the insurer any such excess shall be released to the insurer upon its request. During the insolvency of the insurer, such excess deposit
shall be released only as provided in § 1512(e) of this title.
(18 Del. C. 1953, § 1509; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1509. Rights of insurer during solvency.
So long as the insurer remains solvent and is in compliance with this title it may:
(1) Demand, receive, sue for and recover the income from the assets deposited;
(2) Exchange and substitute for the deposited assets, assets of equivalent or greater fair market value; and
(3) At any reasonable time inspect any such deposit.
(18 Del. C. 1953, § 1510; 56 Del. Laws, c. 380, § 1.)
§ 1510. Levy upon deposit.
(a) Except as provided in subsection (b) of this section below, no judgment creditor or other claimant of an insurer shall have the
right to levy upon any of the assets held in this State as a deposit for the protection of the insurer’s policyholders or policyholders and
creditors. As to deposits made pursuant to the retaliatory provision, § 532 of this title, levy thereupon shall be permitted if so provided
in the Commissioner’s order under which the deposit is required.
(b) Securities comprising the special deposit of a surety insurer required under § 513(b) of this title shall not be subject to levy under
any writ of attachment, but shall be subject to process against the insurer, by final judgment and execution issued against the insurer
on account of its default upon any surety contract issued by it in this State, upon 30 days written notice to the insurer specifying the
time, place and manner of sale and the process under which and purposes for which the securities are to be sold and accompanied by
a copy of such process.
(18 Del. C. 1953, § 1511; 56 Del. Laws, c. 380, § 1.)
§ 1511. Deficiency of deposit.
If for any reason the market value of assets of an insurer held on deposit in this State as required under this title falls below the required
amount, the insurer shall promptly deposit other or additional assets eligible for deposit sufficient to cure the deficiency. If the insurer has
Page 91
Title 18 - Insurance Code
failed to cure the deficiency within 20 days after receipt of notice thereof by registered mail from the Commissioner, the Commissioner
shall forthwith revoke the insurer’s certificate of authority.
(18 Del. C. 1953, § 1512; 56 Del. Laws, c. 380, § 1.)
§ 1512. Duration and release of deposit, in general.
(a) Every deposit made in this State by an insurer pursuant to the retaliatory law, § 532 of this title, shall be held for so long as the
basis of such retaliation exists.
(b) When an insurer determines to discontinue business in this State, whether through merger, bulk reinsurance, or otherwise, and
desires to withdraw its deposit, upon the insurer’s application and at its expense the Commissioner shall publish notice of such intention
in a newspaper of general circulation in the State once a week for 4 weeks. After such publication the Commissioner shall deliver the
securities remaining on deposit to the insurer or its assigns when the Commissioner is satisfied, upon examination and the oaths of the
president and secretary or other chief officers of the insurer, that all debts and liabilities of every kind due or to become due which the
deposit was made to secure are paid or extinguished or otherwise adequately provided for.
(c) If the insurer has reinsured all its outstanding risks in another insurer or insurers, the Commissioner shall deliver such assets and
securities to such insurer or insurers so assuming such risks, after publication of the notice required under subsection (b) of this section
above, and upon proof to the Commissioner’s satisfaction that:
(1) The assuming insurer has assumed and agreed to discharge all liabilities of every kind due and to become due which the deposit
was to secure;
(2) The assuming insurer has on deposit in this State or with a state official in the United States, securities of a quality and in an
amount and value not less than the deposit required of the reinsured insurer under this title and which will subsist for the security of
the obligations of the reinsured insurer so assumed; and
(3) Such assets and securities have been duly assigned, transferred and set over to such assuming insurer or insurers.
(d) If such a withdrawal of deposit is desired by a foreign insurer, in addition to other requirements therefor the insurer shall notify
its domiciliary state or province of the intended withdrawal and furnish to the Commissioner written acknowledgment by such state of
such notification, in form satisfactory to the Commissioner.
(e) If the insurer is subject to delinquency proceedings as defined in § 5901 of this title, upon the order of a court of competent
jurisdiction, the Commissioner shall yield the insurer’s assets held on deposit to the receiver, conservator, rehabilitator or liquidator of
the insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer’s assets.
(f) No release of deposited assets shall be made except upon application to and the written order of the Commissioner. The
Commissioner shall have no personal liability for any release of any such deposit or part thereof so made by him or her in good faith.
(18 Del. C. 1953, § 1513; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1513. Deposit for “registered” life insurance policies and bonds.
(a) Deposits made with the Commissioner in connection with “registered” policies and bonds heretofore issued in this State by a life
insurer shall be held as long as the policy or contract with respect to which such deposit was made continues in force.
(b) Deposits held with respect to policies and bonds still in force shall not be released, whether or not such policies and bonds have been
reinsured or the entire liability thereunder assumed by another insurer, or the issuing insurer has become insolvent, subject to delinquency
proceedings, or dissolved.
(c) Upon proof satisfactory to the Commissioner that certain of such policies or bonds have lapsed, been surrendered for cash value,
matured, or otherwise terminated, and that all liabilities of the insurer to policyholders and beneficiaries or bondholders with respect
thereto have been fully paid and discharged, the Commissioner may release any applicable portion of the deposit if the deposit is then in
excess of the amount otherwise required. The Commissioner may accept and rely upon the records of the insurer, as kept, summarized,
and reported to him or her in regular course of its business, as to any such payment and discharge.
(18 Del. C. 1953, § 1514; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1514. Commissioner’s liability.
If the Commissioner wilfully fails faithfully to require, deposit, keep, account, and receipt for, or surrender in the manner by law
authorized or required any assets as provided in this title, the Commissioner shall be responsible upon his or her official bond therefor
and suit may be brought upon his or her bond by any person injured by such failure; and the Commissioner so offending shall be guilty
of a felony, and fined not more than $10,000 and imprisoned not less than 2 years or more than 10 years.
(18 Del. C. 1953, § 1515; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
Page 92
Title 18 - Insurance Code
Part I
Insurance
Chapter 16
Reinsurance Intermediary Act
§ 1601. Short title.
This chapter may be cited as the “Reinsurance Intermediary Act.”
(68 Del. Laws, c. 69, § 1.)
§ 1602. Definitions.
(a) “Actuary” means a person who is a member in good standing of the American Academy of Actuaries.
(b) “Controlling person” means any person, firm, association or corporation who directly or indirectly has the power to direct or cause
to be directed, the management, control or activities of the reinsurance intermediary.
(c) “Insurer” means any person, firm, association or corporation duly licensed in this State pursuant to the applicable provisions of
the Insurance Law as an insurer.
(d) “Licensed producer” means an agent, broker or reinsurance intermediary licensed pursuant to the applicable provisions of the
Insurance Law.
(e) Qualified United States financial institutions. — For purposes of this chapter, a “qualified United States financial institution” means
an institution that:
(1) Is organized or (in the case of a United States office of a foreign banking organization) licensed, under the laws of the United
States or any state thereof;
(2) Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and
trust companies; and
(3) Has been determined by either the Commissioner, or the Securities Valuation Office of the National Association of Insurance
Commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the
quality of financial institutions whose letters of credit will be acceptable to the Commissioner.
(f) “Reinsurance intermediary” means a reinsurance intermediary-broker or a reinsurance intermediary-manager as these terms are
defined in subsections (f) and (g) of this section.
(g) “Reinsurance intermediary-broker” (“RB”) means any person, other than an officer or employee of the ceding insurer, “firm,”
association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without
the authority or power to bind reinsurance on behalf of such insurer.
(h) “Reinsurance intermediary-manager” (“RM”) means any person, firm, association or corporation who has authority to bind or
manages all or part of the assumed reinsurance business of a reinsurer (including the manager of a separate division, department or
underwriting office) and acts as an agent for such reinsurer whether known as an RM, manager or other similar term. Notwithstanding
the above, the following persons shall not be considered an RM, with respect to such reinsurer, for the purposes of this chapter:
(1) An employee of the reinsurer;
(2) A United States manager of the United States branch of an alien reinsurer;
(3) An underwriting manager which, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common
control with the reinsurer, subject to the Holding Company Act, and whose compensation is not based on the volume of premiums
written;
(4) The manager of a group, association, pool or organization of insurers which engage in joint underwriting or joint reinsurance and
who are subject to examination by the insurance commissioner of the state in which the manager’s principal business office is located.
(i) “Reinsurer” means any person, firm, association or corporation duly licensed in this State pursuant to the applicable provisions of
the Insurance Law as an insurer which assumes reinsurance.
(j) “To be in violation” means that the reinsurance intermediary, insurer or reinsurer for whom the reinsurance intermediary was acting
failed to substantially comply with this chapter.
(68 Del. Laws, c. 69, § 1.)
§ 1603. Licensure.
(a) No person, firm, association or corporation shall act as an RB in this State if the RB maintains an office either directly or as a
member or employee of a firm or association, or an officer, director or employee of a corporation:
(1) In this State, unless such RB is a licensed producer in this State; or
(2) In another state, unless such RB is a licensed producer in this State or another state having a law substantially similar to this law
or such RB is licensed in this State as a nonresident reinsurance intermediary.
Page 93
Title 18 - Insurance Code
(b) No person, firm, association or corporation shall act as an RM:
(1) For a reinsurer domiciled in this State, unless such RM is a licensed producer in this State;
(2) In this State, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer,
director or employee of a corporation in this State, unless such RM is a licensed producer in this State;
(3) In another state for a nondomestic insurer, unless such RM is a licensed producer in this State or another state having a law
substantially similar to this law or such person is licensed in this State as a nonresident reinsurance intermediary.
(c) The Commissioner may require an RM subject to subsection (b) of this section to:
(1) File a bond in an amount from an insurer acceptable to the Commissioner for the protection of the reinsurer; and
(2) Maintain an errors and omissions policy in an amount acceptable to the Commissioner.
(d) (1) The Commissioner may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied
with the requirements of this chapter. Any such license issued to a firm or association will authorize all the members of such firm or
association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the
application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers, and any designated
employees and directors thereof to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named
in the application and any supplements thereto.
(2) If the applicant for a reinsurance intermediary license is a nonresident, such applicant, as a condition precedent to receiving
or holding a license, shall designate the Commissioner as agent for service of process in the manner, and with the same legal effect,
provided for by this chapter, for designation of service of process upon unauthorized insurers; and also shall furnish the Commissioner
with the name and address of a resident of this State upon whom notices or orders of the Commissioner or process affecting such
nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the Commissioner in writing of every change
in its designated agent for service of process, and such change shall not become effective until acknowledged by the Commissioner.
(e) The Commissioner may refuse to issue a reinsurance intermediary license if, in the Commissioner’s judgment, the applicant, anyone
named on the application, or any member, principal, officer or director of the applicant, is not trustworthy, or that any controlling person
of such applicant is not trustworthy to act as a reinsurance intermediary, or that any of the foregoing has given cause for revocation or
suspension of such license, or has failed to comply with any prerequisite for the insurance of such license. Upon written request therefor,
the Commissioner will furnish a summary of the basis for refusal to issue a license, which document shall be privileged and not subject
to disclosure under the Freedom of Information Act [Chapter 100 of Title 29].
(f) Licensed attorneys-at-law of this State, when acting in their professional capacity as such, shall be exempt from this section.
(68 Del. Laws, c. 69, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1604. Required contract provisions; reinsurance intermediary-brokers.
Transactions between an RB and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization,
specifying the responsibilities of each party. The authorization shall, at a minimum, contain provisions that:
(1) The insurer may terminate the RB’s authority at any time.
(2) The RB will render accounts to the insurer accurately detailing all material transactions, including information necessary to
support all commissions, charges and other fees received by, or owing to, the RB, and remit all funds due to the insurer within 30
days of receipt.
(3) All funds collected for the insurer’s account will be held by the RB in a fiduciary capacity in a bank which is a qualified United
States financial institution as defined herein.
(4) The RB will comply with § 1605 of this title.
(5) The RB will comply with the written standards established by the insurer for the cession or retrocession of all risks.
(6) The RB will disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.
(68 Del. Laws, c. 69, § 1.)
§ 1605. Books and records; reinsurance intermediary-brokers.
(a) For at least 10 years after expiration of each contract of reinsurance transacted by the RB, the RB will keep a complete record for
each transaction showing:
(1) The type of contract, limits, underwriting restrictions, classes or risks and territory;
(2) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation;
(3) Reporting and settlement requirements of balances;
(4) Rate used to compute the reinsurance premium;
(5) Names and addresses of assuming reinsurers;
(6) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RB;
(7) Related correspondence and memoranda;
Page 94
Title 18 - Insurance Code
(8) Proof of placement;
(9) Details regarding retrocessions handled by the RB including the identity of retrocessionaires and percentage of each contract
assumed or ceded;
(10) Financial records, including but not limited to, premium and loss accounts; and
(11) When the RB procures a reinsurance contract on behalf of a licensed ceding insurer:
a. Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
b. If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has
delegated binding authority to the representative.
(b) The insurer will have access and the right to copy and audit all accounts and records maintained by the RB related to its business
in a form usable by the insurer.
(68 Del. Laws, c. 69, § 1.)
§ 1606. Duties of insurers utilizing services of reinsurance intermediary-broker.
(a) An insurer shall not engage the services of any person, firm, association or corporation to act as an RB on its behalf unless such
person is licensed as required by § 1603(a) of this title.
(b) An insurer may not employ an individual who is employed by an RB with which it transacts business, unless such RB is under
common control with the insurer and subject to the Holding Company Act.
(c) The insurer shall annually obtain a copy of statements of the financial condition of each RB with which it transacts business.
(68 Del. Laws, c. 69, § 1.)
§ 1607. Required contract provisions; reinsurance intermediary-managers.
Transactions between an RM and the reinsurer it represents in such capacity shall only be entered into pursuant to a written contract,
specifying the responsibilities of each party, which shall be approved by the reinsurer’s board of directors. At least 30 days before such
reinsurer assumes or cedes business through such producer, a true copy of the approved contract shall be filed with the Commissioner
for approval. The contract shall, at a minimum, contain provisions that:
(1) The reinsurer may terminate the contract for cause upon written notice to the RM. The reinsurer may suspend the authority of
the RM to assume or cede business during the pendency of any dispute regarding the cause for termination.
(2) The RM will render accounts to the reinsurer accurately detailing all material transactions, including information necessary to
support all commissions, charges and other fees received by, or owing to the RM, and remit all funds due under the contract to the
reinsurer on not less than a monthly basis.
(3) All funds collected for the reinsurer’s account will be held by the RM in a fiduciary capacity in a bank which is a qualified United
States financial institution as defined herein. The RM may retain no more than 3 months’ estimated claims payments and allocated loss
adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that it represents.
(4) For at least 10 years after expiration of each contract of reinsurance transacted by the RM, the RM will keep a complete record
for each transaction showing:
a. The type of contract, limits, underwriting restrictions, classes or risks and territory;
b. Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and
disposition of outstanding reserves on covered risks;
c. Reporting and settlement requirements of balances;
d. Rate used to compute the reinsurance premium;
e. Names and addresses of reinsurers;
f. Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM;
g. Related correspondence and memoranda;
h. Proof of placement;
i. Details regarding retrocessions handled by the RM, as permitted by § 1609(d) of this title, including the identity of
retrocessionaires and percentage of each contract assumed or ceded;
j. Financial records, including but not limited to, premium and loss accounts; and
k. When the RM places a reinsurance contract on behalf of a ceding insurer:
1. Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
2. If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer
has delegated binding authority to the representative.
(5) The reinsurer will have access and the right to copy all accounts and records maintained by the RM related to its business in
a form usable by the reinsurer.
Page 95
Title 18 - Insurance Code
(6) The contract cannot be assigned in whole or in part by the RM.
(7) The RM will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection
or cession of all risks.
(8) Sets forth the rates, terms and purposes of commissions, charges and other fees which the RM may levy against the reinsurer.
(9) If the contract permits the RM to settle claims on behalf of the reinsurer:
a. All claims will be reported to the reinsurer in a timely manner.
b. A copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim:
1. Has the potential to exceed the lesser of an amount determined by the Commissioner or the limit set by the reinsurer;
2. Involves a coverage dispute;
3. May exceed the RM’s claims settlement authority;
4. Is open for more than 6 months; or
5. Is closed by payment of the lesser of an amount set by the Commissioner or any amount set by the reinsurer.
c. All claim files will be the joint property of the reinsurer and RM. However, upon an order of liquidation of the reinsurer such
files shall become the sole property of the reinsurer or its estate; the RM shall have reasonable access to and the right to copy the
files on a timely basis.
d. Any settlement authority granted to the RM may be terminated for cause upon the reinsurer’s written notice to the RM or upon
the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding
the cause of termination.
(10) If the contract provides for a sharing of interim profits by the RM, that such interim profits will not be paid until 1 year after
the end of each underwriting period for property business and 5 years after the end of each underwriting period for casualty business
(or a later period set by the Commissioner for specified lines of insurance) and not until the adequacy of reserves on remaining claims
has been verified pursuant to § 1609(c) of this title.
(11) The RM will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified
accountant.
(12) The reinsurer shall periodically (at least semiannually) conduct an on-site review of the underwriting and claims processing
operations of the RM.
(13) The RM will disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with
such insurer pursuant to this contract.
(14) The acts of the RM shall be deemed to be the acts of the reinsurer on whose behalf it is acting.
(68 Del. Laws, c. 69, § 1.)
§ 1608. Prohibited acts.
The RM shall not:
(1) Bind retrocessions on behalf of the reinsurer, except that the RM may bind facultative retrocessions pursuant to obligatory
facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such
guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages
and amounts or percentages that may be reinsured, and commission schedules.
(2) Commit the reinsurer to participate in reinsurance syndicates.
(3) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which the
producer is appointed.
(4) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser
of an amount specified by the reinsurer or 1 percent of the reinsurer’s policyholder’s surplus as of December 31 of the last complete
calendar year.
(5) Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without
prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer.
(6) Jointly employ an individual who is employed by the reinsurer.
(7) Appoint a sub-RM.
(68 Del. Laws, c. 69, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1609. Duties of reinsurers utilizing services of reinsurance intermediary-manager.
(a) A reinsurer shall not engage the services of any person, firm, association or corporation to act as an RM on its behalf unless such
person is licensed as required by § 1603(b) of this title.
(b) The reinsurer shall annually obtain a copy of statements of the financial condition of each RM which such reinsurer has engaged
prepared by an independent certified accountant in a form acceptable to the Commissioner.
Page 96
Title 18 - Insurance Code
(c) If an RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss
reserves established for losses incurred and outstanding on business produced by the RM. This opinion shall be in addition to any other
required loss reserve certification.
(d) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer
who shall not be affiliated with the RM.
(e) Within 30 days of termination of a contract with an RM, the reinsurer shall provide written notification of such termination to the
Commissioner.
(f) A reinsurer shall not appoint to its board of directors any officer, director, employee, controlling shareholder or subproducer of
its RM. This subsection shall not apply to relationships governed by the Holding Company Act or, if applicable, the Broker Controlled
Insurer Act.
(68 Del. Laws, c. 69, § 1.)
§ 1610. Examination authority.
(a) A reinsurance intermediary shall be subject to examination by the Commissioner. The Commissioner shall have access to all books,
bank accounts and records of the reinsurance intermediary in a form usable to the Commissioner.
(b) An RM may be examined as if it were the reinsurer.
(68 Del. Laws, c. 69, § 1.)
§ 1611. Penalties and liabilities.
(a) A reinsurance intermediary, insurer or reinsurer found by the Commissioner after a hearing conducted in accordance with the
Administrative Procedures Act [Chapter 101 of Title 29] to be in violation of any provision(s) of this chapter shall:
(1) For each separate violation, pay a penalty in an amount not exceeding $15,000;
(2) Be subject to revocation or suspension of its license; and
(3) If a violation was committed by the reinsurance intermediary, such reinsurance intermediary shall make restitution to the insurer,
reinsurer, rehabilitator or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to
such violation.
(b) The decision, determination or order of the Commissioner pursuant to subsection (a) of this section shall be subject to judicial
review pursuant to the Administrative Procedures Act [Chapter 101 of Title 29].
(c) Nothing contained in this section shall affect the right of the Commissioner to impose any other penalties provided in the Insurance
Law.
(d) Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors
or other third parties or confer any rights to such persons.
(68 Del. Laws, c. 69, § 1.)
§ 1612. Rules and regulations.
The Commissioner may adopt reasonable rules and regulations for the implementation and administration of this chapter.
(68 Del. Laws, c. 69, § 1.)
§ 1613. Effective date.
This chapter shall take effect on January 1, 1992. No insurer or reinsurer may continue to utilize the services of a reinsurance
intermediary on and after January 1, 1992, unless utilization is in compliance with this chapter.
(68 Del. Laws, c. 69, § 1.)
Page 97
Title 18 - Insurance Code
Part I
Insurance
Chapter 16A
Business Transacted With Producer Controlled Insurer Act
§ 1650. Definitions.
(a) “Accredited state” means a state in which the insurance department or regulatory agency has qualified as meeting the minimum
financial regulatory standards promulgated and established from time to time by the National Association of Insurance Commissioners
(NAIC).
(b) “Control” or “controlled” has the meaning ascribed in Chapter 50 of this title.
(c) “Controlled insurer” means a licensed insurer which is controlled, directly or indirectly, by a producer.
(d) “Controlling producer” means a producer who, directly or indirectly, controls an insurer.
(e) “Licensed insurer” or “insurer” means any person, firm, association or corporation duly licensed to transact a property/casualty
insurance business in this State. The following, inter alia, are not licensed insurers for the purposes of this chapter:
(1) All risk retention groups as defined in the Superfund Amendments [and] Reauthorization Act of 1986, Pub. L. No. 99-499, 100
Stat. 1613 (1986) [29 U.S.C. § 655; 42 U.S.C. §§ 9601 note, 9611, 9671-9675], the Risk Retention Act, 15 U.S.C. § 3901 et seq.
(1982 & Supp. 1986) and Chapter 80 of this title;
(2) All residual market pools and joint underwriting authorities or associations; and
(3) All captive insurers (for the purposes of this chapter, captive insurers are insurance companies owned by another organization
whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations,
insurance organizations owned by the insureds whose exclusive purpose is to insure risks to member organizations and/or group
members and their affiliates).
(f) “Producer” means an insurance broker or brokers or any other person, firm, association or corporation, when, for any compensation,
commission or other thing of value, such person, firm, association or corporation acts or aids in any manner in soliciting, negotiating or
procuring the making of any insurance contract on behalf of an insured other than the person, firm, association or corporation.
(68 Del. Laws, c. 334, § 1.)
§ 1651. Applicability.
This chapter shall apply to licensed insurers as defined in § 1650 of this title, whether domiciled in this State or domiciled in a state that
is not an accredited state having in effect a substantially similar law. All provisions of the Insurance Holding Company Act, to the extent
they are not superseded by this chapter, shall continue to apply to all parties within holding company systems subject to this chapter.
(68 Del. Laws, c. 334, § 1.)
§ 1652. Minimum standards.
(a) Applicability of section. — (1) The provisions of this section shall apply if, in any calendar year, the aggregate amount of gross
written premium on business placed with a controlled insurer by a controlling producer is equal to or greater than 5 percent of the admitted
assets of the controlled insurer, as reported in the controlled insurer’s quarterly statement filed as of September 30 of the prior year.
(2) Notwithstanding paragraph (a)(1) of this section, the provisions of this section shall not apply if the controlling producer:
a. Places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled
insurer’s holding company system, or the controlled insurer’s parent, affiliate or subsidiary and receives no compensation based
upon the amount of premiums written in connection with such insurance; and
b. Accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds; and
c. The controlled insurer, except for insurance business written through a residual market facility such as Assigned Risk Plan,
accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is
a subsidiary of the controlled insurer.
(b) Required contract provisions. — A controlled insurer shall not accept business from a controlling producer and a controlling
producer shall not place business with a controlled insurer unless there is a written contract between the controlling producer and the
insurer specifying the responsibilities of each party, which contract has been approved by the board of directors of the insurer and contains
the following minimum provisions:
(1) The controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled
insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause
for the termination;
(2) The controlling producer shall render accounts to the controlled insurer detailing all material transactions, including information
necessary to support all commissions, charges and other fees received by, or owing to, the controlling producer;
(3) The controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly
basis. The due date shall be fixed so that premiums or installments thereof collected shall be remitted no later than 90 days after the
effective date of any policy placed with the controlled insurer under this contract;
Page 98
Title 18 - Insurance Code
(4) All funds collected for the controlled insurer’s account shall be held by the controlling producer in a fiduciary capacity, in 1 or
more appropriately identified bank accounts in banks that are members of the Federal Reserve System, in accordance with the provisions
of the insurance law as applicable. (Funds of a controlling producer not required to be licensed in this State shall be maintained in
compliance with the requirements of the controlling producer’s domiciliary jurisdiction);
(5) The controlling producer shall maintain separately identifiable records of business written for the controlled insurer;
(6) The contract shall not be assigned in whole or in part by the controlling producer;
(7) The controlled insurer shall provide the controlling producer with its underwriting standards, rules and procedures, manuals
setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to
the standards, rules, procedures, rates and conditions. The standards, rules, procedures, rates and conditions shall be the same as those
applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer;
(8) The rates and terms of the controlling producer’s commissions, charges or other fees and the purposes for those charges or fees.
The rates of the commissions, charges and other fees shall be no greater than those applicable to comparable business placed with the
controlled insurer by producers other than controlling producers. For purposes of this paragraph and paragraph (b)(7) of this section,
examples of “comparable business” include the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy
limits, and similar quality of business;
(9) If the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated
contingent upon the insurer’s profits on that business, then such compensation shall not be determined and paid until at least 5 years
after the premiums on liability insurance are earned and at least 1 year after the premiums are earned on any other insurance. In no
event shall the commissions be paid until the adequacy of the controlled insurer’s reserves on remaining claims has been independently
verified pursuant to paragraph (d)(1) of this section;
(10) A limit on the controlling producer’s writings in relation to the controlled insurer’s surplus and total writings. The insurer
may establish a different limit for each line or sub-line of business. The controlled insurer shall notify the controlling producer when
the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling
producer shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been
reached; and
(11) The controlling producer may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the
controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts
pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including,
for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and
amounts or percentages that may be reinsured and commission schedules.
(c) Audit committee. — Every controlled insurer shall have an audit committee of the board of directors composed of independent
directors. The audit committee shall annually meet with management, the insurer’s independent certified public accountants, and an
independent casualty actuary or other independent loss reserve specialist acceptable to the Commissioner to review the adequacy of the
insurer’s loss reserves.
(d) Reporting requirements. — (1) In addition to any other required loss reserve certification, the controlled insurer shall annually, on
April 1 of each year, file with the Commissioner an opinion of an independent casualty actuary or such other independent loss reserve
specialist acceptable to the Commissioner reporting loss ratios for each line of business written and attesting to the adequacy of loss
reserves established for losses incurred and outstanding as of year-end (including incurred but not reported) on business placed by the
producer; and
(2) The controlled insurer shall annually report to the Commissioner the amount of commissions paid to the producer, the percentage
such amount represents of the net premiums written and comparable amounts and percentage paid to noncontrolling producers for
placements of the same kinds of insurance.
(68 Del. Laws, c. 334, § 1.)
§ 1653. Disclosure.
The producer, prior to the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship
between the producer and the controlled insurer; except that, if the business is placed through a subproducer who is not a controlling
producer, the controlling producer shall retain in the producer’s records a signed commitment from the subproducer that the subproducer
is aware of the relationship between the insurer and the producer and that the subproducer has or will notify the insured.
(68 Del. Laws, c. 334, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1654. Penalties.
(a) (1) If the Commissioner believes that the controlling producer or any other person has not materially complied with this chapter,
or any regulation or order promulgated hereunder, after notice and opportunity to be heard, the Commissioner may order the controlling
producer to cease placing business with the controlled insurer; and
Page 99
Title 18 - Insurance Code
(2) If it is found that because of such material noncompliance that the controlled insurer or any policyholder thereof has suffered
any loss or damage, the Commissioner may maintain a civil action or intervene in an action brought by or on behalf of the insurer or
policyholder for recovery of compensatory damages for the benefit of the insurer or policyholder or other appropriate relief.
(b) If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to Chapter 59 of this title, and the
receiver appointed under that order believes that the controlling producer or any other person has not materially complied with this chapter,
or any regulation or order promulgated hereunder, and the insurer suffered any loss or damage therefrom, the receiver may maintain a
civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer.
(c) Nothing contained in this section shall affect the right of the Commissioner to impose any other penalties provided for in the
Insurance Law.
(d) Nothing contained in this section is intended to or shall in any manner alter or affect the rights of policyholders, claimants, creditors
or other 3rd parties.
(68 Del. Laws, c. 334, § 1.)
Page 100
Title 18 - Insurance Code
Part I
Insurance
Chapter 17
Licensing of Professional Insurance Personnel
§ 1701. Purpose and scope.
(a) This chapter governs the qualifications and procedures for the licensing of insurance producers, surplus lines brokers, fraternal
representatives, adjusters, apprentice adjusters, property damage appraisers, apprentice property damage appraisers and temporary
licensees. This chapter shall apply to all lines of insurance, including, but not limited to, life, health, variable annuity and variable life,
property, casualty, surety, title, credit, personal lines, travel, transportation and marine, and to all types of insurers, whether operating
on a mutual, stock, reciprocal, fraternal, group or other plan. It simplifies and organizes some statutory language to improve efficiency,
permits the use of new technology, and reduces costs associated with issuing and renewing insurance licenses.
(b) This chapter shall establish the qualifications for granting licenses to professional insurance personnel; establish the procedures
to be followed in determining the initial and continuing qualifications for such personnel; and provide definitions of such personnel’s
authorities, duties, responsibilities and prohibitions in a manner that will provide guidance to such personnel and control over such
personnel by the Commissioner of Insurance for the benefit and protection of the citizens of the State.
(c) All transactions entered into by a surplus lines broker shall also be subject to Chapter 19 of this title.
(18 Del. C. 1953, § 1701; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 577, § 1; 65 Del. Laws, c. 142, § 3; 70 Del. Laws, c. 424, §
1; 73 Del. Laws, c. 80, § 1.)
§ 1702. Definitions.
(a) “Adjuster” means a licensee of the Department who, as an independent contractor or on behalf of an independent contractor, insurer,
self-insurer, producer or managing general agent, investigates and/or negotiates settlement of claims arising under insurance contracts.
(b) “Agent of the insurer” means a licensed producer of the Department appointed by an insurer to sell, solicit or negotiate applications
for policies of insurance on its behalf and, if authorized to do so by the insurer, to issue conditional receipts.
(c) “Appraiser” means a licensee of the Department who assesses property damage to motor vehicles.
(d) “Apprentice” means a licensee of the Department who is qualified in all respects as an adjuster or appraiser, except as to experience,
education and/or training.
(e) “Broker of insured” means a licensed producer of the Department who for compensation negotiates on behalf of others contracts
for insurance from companies to whom he or she is not appointed.
(f) “Business entity” means a corporation, association, partnership, limited liability company, limited liability partnership or other legal
entity.
(g) “Fraternal representative” means a licensee of the Department who is appointed or authorized to act for a society or fraternal
organization to sell, solicit or negotiate, or make a life insurance, accident, or health insurance or annuity contract for no compensation
except as specifically exempted from this requirement by § 6233 of this title.
(h) “Home state” means the District of Columbia or any state or territory of the United States in which an insurance producer, adjuster
or appraiser maintains his or her principal place of residence or principal place of business and is licensed to act as an insurance producer,
adjuster or appraiser.
(i) “Insurance producer” means a person required to be licensed under the laws of this State to sell, solicit or negotiate contracts of
insurance or annuity or the lines of authority authorized within the scope of such license. For the purposes of this title the terms “insurance
agent,” “insurance broker,” and “insurance consultant” shall be used interchangeably with the term “insurance producer.”
(j) “License” means a document issued by this State’s Insurance Commissioner authorizing a person to act as an insurance producer,
adjuster or appraiser for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent
or inherent, in the holder to represent or commit an insurance carrier.
(k) “Licensee” means any person issued a license pursuant to this chapter.
(l) “Limited line credit insurance” includes credit life, credit disability, credit property, credit unemployment, involuntary
unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection (gap) insurance and any other
form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation
that the Insurance Commissioner determines should be designated a form of limited line credit insurance.
(m) “Limited line credit insurance producer” means a person who sells, solicits or negotiates 1 or more forms of limited line credit
insurance coverage to individuals through a master, corporate, group or individual policy.
(n) “Limited lines insurance” means those lines of insurance defined in § 1707(b) of this title or any other line of insurance that the
Insurance Commissioner deems necessary to recognize for the purposes of complying with § 1708(e) of this title.
(o) “Limited lines producer” means a person authorized by the Insurance Commissioner to sell, solicit or negotiate limited lines
insurance.
Page 101
Title 18 - Insurance Code
(p) “Negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a
particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person
engaged in that act either sells insurance or obtains insurance from insurers for purchasers.
(q) “Person” means an individual or a business entity.
(r) “Portable electronics insurance” has the meaning set forth in § 2051 of this title.
(s) “Revocation” means recalling or taking back an insurance license or licenses for a minimum period of 12 months. Any insurer
appointments of such license shall likewise be revoked. No individual whose license is revoked shall be issued another license without
first complying with all requirements of § 1706 of this title.
(t) “Self-service storage insurance” means insurance offered in connection with and incidental to the rental of space at a self-service
storage facility.
(u) “Sell” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.
(v) “Solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular
company.
(w) “Suspension” means to bar temporarily the privileges of an insurance license or licenses granted under Chapter 17 of this title,
for a maximum of 12 months. A suspension shall also include a suspension of the appointment of such licensee. Upon the expiration of
the suspension period and upon satisfactory completion of such terms and conditions as the Commissioner has imposed pursuant to the
suspension, all licenses and appointments shall be reinstated.
(x) “Termination” means the cancellation of the relationship between a licensee and the insurer or the termination of a licensee’s
authority to transact insurance.
(y) “Transact” shall have the meaning set forth in § 103 of this title and, for purposes of this chapter shall include negotiating, selling
and soliciting insurance and settling and/or adjusting claims under policies.
(z) “Travel insurance” means insurance coverage for personal risks incident to planned travel, including but not limited to:
(1) Interruption or cancellation of trip or event;
(2) Loss of baggage or personal effects;
(3) Damages to accommodations or rental vehicles; or
(4) Sickness, accident, disability or death occurring during travel.
“Travel insurance” does not include major medical plans, which provide comprehensive medical protection for travelers with trips
lasting 6 months or longer, including for example, those working overseas as an expatriate or military personnel being deployed.
(aa) “Uniform Business Entity Application” means the current version of the NAIC Uniform Business Entity Application for resident
and nonresident business entities.
(bb) “Uniform Application” means the current version of the NAIC Uniform Application for resident and nonresident producer
licensing.
(70 Del. Laws, c. 424, § 1; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 381, § 1; 73 Del. Laws, c. 80, § 1; 78 Del. Laws, c. 359, §
1; 79 Del. Laws, c. 428, § 2; 80 Del. Laws, c. 215, § 1; 81 Del. Laws, c. 437, § 1.)
§ 1703. License required.
A person shall not transact insurance in this State for any class or classes of insurance unless the person is licensed as an insurance
producer, adjuster or appraiser for that line of authority in accordance with this chapter.
(59 Del. Laws, c. 577, § 1; 61 Del. Laws, c. 64, § 1; 65 Del. Laws, c. 142, §§ 5, 6; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 424,
§ 1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 2.)
§ 1704. Exceptions to licensing.
(a) Nothing in this chapter shall be construed to require an insurer to obtain a license pursuant to this chapter. In this section, the term
“insurer” does not include an insurer’s officers, directors, employees, subsidiaries or affiliates.
(b) A license as an insurance producer shall not be required of the following:
(1) An officer, director or employee of an insurer or of an insurance producer, provided that the officer, director or employee does
not receive any commission on policies written or sold to insure risks residing, located or to be performed in this State and:
a. The officer, director or employee’s activities are executive, administrative, managerial, or clerical, or a combination of these,
and are only indirectly related to the sale, solicitation or negotiation of insurance;
b. The officer, director or employee’s function relates to underwriting; or
c. The officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers
where the person’s activities are limited to providing technical advice and assistance to licensed insurance producers and do not
include the sale, solicitation or negotiation of insurance;
(2) A person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance,
group annuities, or group or blanket accident and health insurance or for the purpose of enrolling individuals under plans; a person
Page 102
Title 18 - Insurance Code
issuing certificates under plans or otherwise assisting in administering plans; or a person who performs administrative services related
to mass marketed property and casualty insurance, where no commission is paid to the person for the service;
(3) An employer or association or its officers, directors or employees, or the trustees of an employee trust plan, to the extent that the
employers, officers, employees, director or trustees are engaged in the administration or operation of a program of employee benefits
for the employer’s or association’s own employees or the employees of its subsidiaries or affiliates, which program involves the use of
insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner
compensated, directly or indirectly, by the company issuing the contracts;
(4) Employees of insurers or organizations employed by insurers who are engaging in the rating or classification of risks or in
the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of
insurance;
(5) A person whose activities in this State are limited to advertising without the intent to solicit insurance in this State through
communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the
State, provided that the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed
in this State;
(6) A person who is not a resident of this State who sells, solicits or negotiates a contract of insurance for commercial property and
casualty risks to an insured with risks located in more than 1 state insured under that contract, provided that that person is otherwise
licensed as an insurance producer to sell, solicit or negotiate that insurance in the state where the insured maintains its principal place
of business and the contract of insurance insures risks located in that state; or
(7) A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer
or of the subsidiaries or business affiliates of the employer provided that the employee does not sell or solicit insurance or receive
a commission.
(18 Del. C. 1953, § 1709; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 577, § 1; 65 Del. Laws, c. 142, §§ 10, 11; 70 Del. Laws, c.
186, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 3.)
§ 1705. Application for examination.
(a) A resident individual applying for a license shall pass a written examination unless exempt pursuant to § 1709 of this title. The
examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and
responsibilities of an insurance producer, adjuster or appraiser, as applicable, general insurance knowledge, insurance ethics as established
by the Commissioner, and the insurance laws and regulations of this State.
(b) The Insurance Commissioner may make arrangements for administration and grading by an independent testing service as specified
by contract.
(c) An individual who fails to appear for the examination as scheduled or fails to pass the examination shall reapply for an examination
and remit all required fees and forms before being rescheduled for another examination.
(d) Reexamination. — The failure of an applicant to pass an examination or the failure to appear for the examination or to take or
complete the examination does not preclude the applicant from taking subsequent examinations.
(e) All examination score reports are valid for a period of 12 months from the date of examination.
(18 Del. C. 1953, §§ 1714, 1716, 1717; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 279, § 10; 59 Del. Laws, c. 577, § 1; 64 Del.
Laws, c. 230, § 1; 70 Del. Laws, c. 424, § 1; 71 Del. Laws, c. 381, § 3; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 4.)
§ 1706. Application for license [For application of this section, see 83 Del. Laws, c. 297, § 2].
(a) A person applying for a resident license shall make application to the Insurance Commissioner on the Uniform Application or on
forms prescribed by the Commissioner for license types and lines of authority not available on the Uniform Application and declare under
penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the
best of the individual’s knowledge and belief. Before approving the application, the Insurance Commissioner shall find that the individual:
(1) Is at least 18 years of age;
(2) Has not committed any act that is a ground for denial, suspension, or revocation set forth in § 1712 of this title;
(3) Has paid the fees set forth in Chapter 7 of this title;
(4) Has successfully passed the examinations for the lines of authority for which the person has applied, unless specifically exempted
from such examination by this chapter; and
(5) If applying for a resident producer license, is a resident of Delaware or works for a business entity that is licensed to conduct
the business of insurance in Delaware and maintains a physical location in Delaware that is open to the public and from which such
business is conducted. An applicant may not use registered agent services or a Delaware postal box in order to establish the residency
requirements set forth in this paragraph.
(b) (1) Any person applying for a resident license, whether a resident applicant or a nonresident applicant that has declared Delaware
to be his or her home state, shall submit fingerprints and other necessary information to the State Bureau of Identification in order to
obtain all of the following:
Page 103
Title 18 - Insurance Code
a. A report of the person’s entire criminal history record from the State Bureau of Identification or a statement from the State Bureau
of Identification that the State Bureau of Identification Central Repository contains no such information relating to that person.
b. A report of the person’s entire federal criminal history from the Federal Bureau of Investigation pursuant to the Federal Bureau
of Investigation appropriation of Title II of Public Law 92-544(28 U.S.C. § 534, note) or a statement that the Federal Bureau of
Investigation’s records contain no such information relating to that person.
(2) The State Bureau of Identification shall be the intermediary for purposes of this section and the Department shall be the screening
point for the receipt of federal criminal history reports required by paragraph (b)(1)b. of this section.
(3) The State Bureau of Identification shall forward all information obtained under this subsection to the Department.
(4) A person required to obtain criminal history reports under this subsection is responsible for any costs associated with obtaining
the criminal history reports.
(c) Every applicant for a license as an apprentice adjuster or apprentice property damage appraiser must file with the Commissioner
a certification from one holding a license as an adjuster or property damage appraiser in which said holder of the license assumes
responsibility for the applicant’s training and for all actions undertaken by the applicant pursuant to the requested license.
(d) Every applicant for a license as an insurance producer for the line of variable annuity must hold a license as a life insurance agent
and must be registered with the National Association of Security Dealers.
(e) All premiums, return premiums or other funds received in any manner by a licensee or a surplus lines broker shall be held in a
fiduciary capacity and shall be accounted for by such licensee or surplus lines broker. The licensee or surplus lines broker shall, in the
ordinary course of business, pay the funds to the insured or the insured’s assignee, insurer, insurance premium finance company or agent
entitled to the payment.
(f) A business entity acting as an insurance producer, adjuster or appraiser is required to obtain a license pursuant to this chapter.
Application shall be made using the Uniform Business Entity Application or on forms prescribed by the Commissioner for license
types and lines of authority not available on the Uniform Business Entity Application. Before approving the application, the Insurance
Commissioner shall find that:
(1) The business entity has paid the fees set forth in Chapter 7 of this title; and
(2) The business entity has designated a licensed producer, adjuster or appraiser, as applicable, responsible for the business entity’s
compliance with the insurance laws, rules and regulations of this State. If the license of a business entity’s designated responsible
licensee is no longer active (whether due to expiration, suspension, revocation or otherwise), the license of such business entity shall
be immediately suspended until such time as a designated responsible licensee in good standing is designated as such business entity’s
responsible producer, adjuster or appraiser, as applicable.
(g) The Insurance Commissioner may require any documents reasonably necessary to verify the information contained in an application.
(h) Each insurer that sells, solicits or negotiates any form of limited line credit insurance shall provide to each individual whose duties
will include selling, soliciting or negotiating limited line credit insurance a program of instruction that may be approved by the Insurance
Commissioner.
(i) No resident of Canada may be licensed as an adjuster pursuant to this section or may designate Delaware as the adjuster’s home
state, unless such person has successfully passed the adjuster examination and has complied with other applicable portions of this section.
(j) A business entity applying for a license as an adjuster for portable electronic insurance claims shall submit such application on a
form as prescribed by the Commissioner. The Commissioner is authorized, at all times, to require the applicant to disclose the names and
addresses of all executive officers and directors of the applicant and of all executive officers and directors of entities owning and any
individuals owning, directly or indirectly, 51% or more of the outstanding voting securities of the applicant. The Commissioner is further
authorized, at all times, to require the applicant to obtain their criminal histories from their state of residence. The Commissioner may, in
the exercise of his or her discretion, refuse to issue a license to the applicant if not satisfied that their conduct meets the standards of this
chapter. Any nonresident business entity applicant whose home-state requirements comply with all of these provisions of this subsection
shall not be required to submit this material.
(59 Del. Laws, c. 577, § 1; 64 Del. Laws, c. 228, § 1; 65 Del. Laws, c. 142, §§ 12, 13; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c.
424, § 1; 71 Del. Laws, c. 434, § 1; 73 Del. Laws, c. 80, § 1; 78 Del. Laws, c. 359, § 2; 79 Del. Laws, c. 102, § 5; 80 Del. Laws, c.
116, § 1; 80 Del. Laws, c. 203, § 1; 80 Del. Laws, c. 215, § 5; 83 Del. Laws, c. 297, § 1.)
§ 1707. License.
(a) Unless denied licensure pursuant to § 1712 of this title, persons who have met the requirements of §§ 1705 and 1706 of this title
shall be issued a license. An insurance producer may receive qualification for a license in 1 or more of the following lines of authority:
(1) Life insurance coverage on human lives, including benefits of endowment and annuities, and may include benefits in the event
of death or dismemberment by accident and benefits for disability income as defined in § 902 of this title.
(2) Accident and health or sickness insurance coverage for sickness, bodily injury or accidental death, and may include benefits for
disability income as defined in § 903 of this title.
(3) Property insurance coverage for the direct or consequential loss or damage to property of every kind as defined in § 904 of
this title.
Page 104
Title 18 - Insurance Code
(4) Casualty insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal
property as defined in § 906 of this title.
(5) Variable life and variable annuity products insurance coverage provided under variable life insurance contracts and variable
annuities.
(6) Personal lines property and casualty insurance coverage sold to individuals and families for noncommercial purposes.
(7) Fidelity and surety, as defined in § 905 of this title.
(8) Marine and transportation insurance, as defined in § 907 of this title.
(9) Title insurance, as defined in § 908 of this title.
(10) Any other line of insurance permitted under state laws or regulations.
(b) Limited lines producer may be qualified and licensed and a qualified producer may hold 1 or more of the following limited lines
of authority:
(1) Credit insurance lines.
(2) Life insurance or annuity products used solely to fund a pre-arranged funeral program.
(3) Travel insurance.
(4) Bail agent as provided for in Chapter 43 of this title.
(5) Automobile club where its activities are limited to those specified in § 908A of this title.
(6) Self-service storage insurance.
(7) Any other limited line of insurance permitted under state laws or regulations.
(c) A property damage appraiser’s license shall convey authority for the appraisal of damage to motor vehicles as defined in § 101
of Title 21.
(d) An adjuster’s license shall convey authority to investigate and negotiate settlement of claims on behalf of licensed agents, brokers,
self-insurers, or insurers in 1 or more of the following lines of insurance:
(1) Property insurance.
(2) Casualty insurance.
(3) Fidelity and surety insurance.
(4) Automobile insurance.
(5) Marine and transportation insurance.
(6) Crop insurance.
(7) Workers compensation insurance.
(e) No license shall be required for any of the following:
(1) An adjuster or appraiser sent into this State on behalf of an insurer for the investigation of a particularly unusual or extraordinary
loss, or series of losses, resulting from a catastrophe common to all such losses; provided that such adjuster or appraiser shall furnish
to the Commissioner written notice within 10 calendar days of any such catastrophic insurance adjustment or appraisal work.
(2) An individual who, in regards to portable electronics insurance claims, collects claim information from, or furnishes claim
information to, insureds or claimants, and who conducts data entry including entering data into an automated claims adjudication
system, provided that the individual is an employee of a licensed independent adjuster or its affiliate where no more than 25 such
persons are under the supervision of 1 licensed independent adjuster or licensed producer. A producer who is acting as a supervisor
and adjusting claims pursuant to this paragraph is not required to be licensed as an adjuster. For purposes of this section, “automated
claims adjudication system” means a preprogrammed computer system designed for the collection, data entry, calculation and final
resolution of portable electronics insurance claims which:
a. Is only utilized by a licensed independent adjuster, licensed producer, or supervised individuals operating pursuant to this
paragraph;
b. Complies with all claims payment requirements of the insurance code; and
c. Is certified as compliant with this section by a licensed independent adjuster that is an officer of a licensed business entity
under this chapter.
(f) A license issued pursuant to this chapter shall remain in effect unless revoked or suspended as long as the fee set forth in Chapter
7 of this title is paid and education requirements for resident licensees are met by the due date. Notwithstanding anything to the contrary
in this chapter, a licensee’s failure to pay the fees set forth in Chapter 7 of this title or meet the education requirements established by
the Commissioner shall result in the lapse by operation of law of the license issued to such licensee, without any notice required to be
sent by the Department of Insurance to the licensee.
(g) An individual licensee who fails to timely renew and, as a result, allows his or her license to lapse may, within 12 months from
the due date of the renewal fee or due date for the completion of the education requirements, as applicable, reapply for the same license
Page 105
Title 18 - Insurance Code
without the necessity of passing a written examination. However, a penalty in the amount of double the unpaid renewal fee shall be
required for any renewal fee received after the due date and within the first grace period of 6 months from the due date of the renewal
fee; and may be subject to a civil fine of not less than $200 and not more than $1,000 within the second grace period of 6 months after
the due date of the first grace period. Prior to any such license being reissued, the licensee shall provide evidence of compliance with all
continuing education requirements for the relevant renewal period. Licensees who do not intend to renew their licenses must, on or prior
to the due date of the renewal fee or due date for the completion of the education requirements, as applicable, submit to the Department
a notice of voluntary surrender of their license in a form approved by the Department. Licensees who fail to timely renew within the
grace period set forth in this subsection and do not otherwise submit a timely notice of voluntary surrender shall be subject to the same
civil fine imposed on those licensees who renew within the second grace period referenced above, with such fine to be payable prior to
being able to reapply for a Delaware license.
(h) A licensee who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance
(e.g., a long-term medical disability) may request a waiver of those procedures. The licensee may also request a waiver of any examination
requirement or any other fine or sanction imposed for failure to comply with renewal procedures.
(i) The license shall contain the licensee’s name, address, and personal identification number, and the date of issuance, the lines of
authority, the expiration date and any other information the Insurance Commissioner deems necessary.
(j) Licensees shall inform the Insurance Commissioner by any means acceptable to the Insurance Commissioner of a legal name change
or a change of physical mailing address or electronic mail address within 30 days of the change. Failure to timely inform the Insurance
Commissioner of a change in legal name or address as required by this subsection shall result in a penalty pursuant to § 1712(a) and/
or (d) of this title.
(k) The Commissioner may issue a new license for any lost, stolen or destroyed license issued pursuant to this chapter upon written
request from the licensee and payment of appropriate fees for such duplicate license. In order to assist in the performance of the Insurance
Commissioner’s duties, the Insurance Commissioner may contract with nongovernmental entities, including the National Association of
Insurance Commissioners (NAIC) or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including
the collection of fees, related to producer, adjuster and appraiser licensing that the Insurance Commissioner and the nongovernmental
entity may deem appropriate.
(l) The Commissioner may participate, in whole or in part, with the NAIC, or any affiliates or subsidiaries the NAIC oversees, in a
centralized license registry where insurance producer licenses, adjuster licenses, appraiser licenses and appointments may be centrally or
simultaneously effected for all states that require an insurance producer license, adjuster license or appraiser license and participate in
such centralized license registry. If the Commissioner finds that participation in such a centralized license registry is in the public interest,
the Commissioner may adopt by rule any uniform standards and procedures as necessary to participate in the registry. This includes the
central collection of all fees for licenses or appointments that are processed through the registry.
(m) Records. —
The licensee shall maintain at his or her principal place of business the license issued by the Commissioner, together with such records
as may be reasonably required by the Commissioner. Such records shall show:
(1) With respect to insurance producers, for each policy or contract placed or countersigned by or through the licensee, names of the
insurers, insureds, policy number, expiration date thereof, premium payable under the terms of the policy or contract, and such other
information as the Commissioner may, from time to time, require;
(2) With respect to adjusters, for each claim settled or adjusted, names of the insurers, insureds, policy number, the amount for which
the claim was adjusted or settled, and such other information as the Commissioner may, from time to time, require; and
(3) With respect to appraisers, for each appraisal submitted, the names of the insured and the person for whom the appraisal was
completed, a copy of the written appraisal, and such other information as the Commissioner may, from time to time, require.
Records shall be retained and available for inspection by the Commissioner for a period of 3 years.
(59 Del. Laws, c. 577, § 1; 62 Del. Laws, c. 284, § 2; 65 Del. Laws, c. 142, § 9; 66 Del. Laws, c. 4, § 2; 68 Del. Laws, c. 208, § 1;
70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1; 75 Del. Laws, c. 49, § 2; 76 Del. Laws, c. 394, § 3;
78 Del. Laws, c. 359, § 3; 79 Del. Laws, c. 428, § 3; 80 Del. Laws, c. 215, § 6; 81 Del. Laws, c. 437, § 2; 83 Del. Laws, c. 201, §
1.)
§ 1708. Nonresident licensing.
(a) Unless denied licensure pursuant to § 1712 of this title, a nonresident person shall receive a nonresident license if:
(1) The person is currently licensed as a resident and in good standing in that person’s home state; and
(2) The person has submitted the proper request for licensure and has paid the fees required by Chapter 7 of this title; and
(3) The person has submitted or transmitted to the Insurance Commissioner the application for licensure that the person submitted
to his or her home state, or in lieu of the same, a completed Uniform Application or forms prescribed by the Commissioner for license
types and lines of authority not available on the Uniform Application; and
(4) The person’s home state awards nonresident licenses to residents of this State on the same basis.
Page 106
Title 18 - Insurance Code
Nonresident adjusters whose home states (including designated home states) do not have examination requirements for adjusters shall
be required to satisfy this State’s examination requirements prior to licensure.
Except where prohibited by state or federal law, by submitting an application for license, the applicant shall be deemed to have appointed
the Commissioner as the agent for service of process on the applicant in any action or proceeding arising in this State out of or in connection
with the exercise of the license. Such appointment of the Commissioner as agent for service of process shall be irrevocable during the
period within which a cause of action against the applicant may arise out of transactions with respect to subjects of insurance in this
State. Process shall be served upon the Commissioner or any Deputy Insurance Commissioner or such other person or persons as the
Commissioner shall designate by rule or regulation.
(b) The Insurance Commissioner may verify the licensee’s licensing status through the Producer Database maintained by the National
Association of Insurance Commissioners, its affiliates or subsidiaries. If a nonresident licensee’s license in his or her home state is
no longer in good standing (whether as a result of suspension, revocation or other action by the home state regulator), such licensee’s
nonresident license shall, 30 days after the final action taken with respect to the home state license, lapse by operation of law, without
any notice required to be sent by the Department of Insurance to the licensee.
(c) A nonresident licensee who moves from 1 state to another state or a resident licensee who moves from this State to another state
shall file a change of address and provide certification from the new resident state within 30 days of the change of legal residence. No
license fee or license application is required.
(d) Notwithstanding any other provision of this chapter, a person licensed as a surplus lines producer in his or her home state shall
receive a nonresident surplus lines producer license pursuant to subsection (a) of this section. Except as to subsection (a) of this section,
nothing in this section otherwise amends or supersedes any provision of Chapter 19 of this title.
(e) Notwithstanding any other provision of this chapter, a person licensed as a limited line credit insurance or other type of limited lines
producer in that person’s home state shall receive a nonresident limited lines producer license, pursuant to subsection (a) of this section,
granting the same scope of authority as granted under the license issued by the producer’s home state. For the purposes of this subsection,
limited line insurance is any authority granted by the home state which restricts the authority of the license to less than the total authority
prescribed in the associated major lines pursuant to § 1707(a)(1) through (6) of this title.
(f) Insurance for an insurer authorized to do business in Delaware which is permitted as a limited line of insurance in a Delaware
nonresident producer’s home state and is not described in this section shall have the same scope of authority as granted under the limited
license issued by the producer’s resident state, which shall be briefly described on the license issued.
(59 Del. Laws, c. 577, § 1; 65 Del. Laws, c. 142, § 15; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, §
1; 73 Del. Laws, c. 324, § 1; 80 Del. Laws, c. 215, § 7.)
§ 1709. Exemption from examination.
(a) An individual who applies for a license in this State who was previously licensed for the same lines of authority in another state
shall not be required to complete any prelicensing education or examination. This exemption is only available if the person is currently
licensed in that state or if the application is received within 90 days of the cancellation of the applicant’s previous license and if the prior
state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state’s Producer Database
records maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries indicate that the individual is
or was licensed in good standing for the line of authority requested.
(b) A person licensed as an insurance producer, adjuster or appraiser in another state who moves to this State shall make application
within 90 days of establishing legal residence to become a resident licensee pursuant to § 1706 of this title. No prelicensing education or
examination shall be required of that person to obtain any line of authority previously held in the prior state except where the Insurance
Commissioner determines otherwise by regulation.
(c) An applicant for a license as a producer for title insurance who is an attorney licensed to practice law in this State shall not be
required to complete any prelicensing education or examination.
(d) An applicant for a license as a travel insurance licensee shall not be required to complete any prelicensing education or examination.
(e) An applicant for a license as an automobile club licensee shall not be required to complete any prelicensing education or examination.
(f) An applicant for a license as a self-service storage producer shall not be required to complete any prelicensing education or
examination.
(18 Del. C. 1953, § 1715; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 279, § 9; 59 Del. Laws, c. 577, § 1; 64 Del. Laws, c. 230, §
3; 65 Del. Laws, c. 142, § 16; 70 Del. Laws, c. 424, § 1; 70 Del. Laws, c. 533, § 3; 73 Del. Laws, c. 80, § 1; 75 Del. Laws, c. 49,
§ 3; 79 Del. Laws, c. 428, § 4; 80 Del. Laws, c. 215, § 8; 81 Del. Laws, c. 437, § 3.)
§ 1710. Assumed names.
A licensee doing business under any name other than the licensee’s legal name is required to notify and receive the approval of the
Insurance Commissioner prior to using the assumed name. Such notification shall include proof that the licensee has registered the assumed
name with the appropriate state authority.
(73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 9.)
Page 107
Title 18 - Insurance Code
§ 1711. Temporary licensing.
(a) The Insurance Commissioner may issue a temporary license for a period not to exceed 180 days without requiring an examination if
the Insurance Commissioner deems that the temporary license is necessary for the servicing of an insurance business in the following cases:
(1) To the surviving spouse or court-appointed personal representative of a licensee who dies or becomes mentally or physically
disabled to allow adequate time for the sale of the insurance business owned by the licensee or for the recovery or return of the licensee
to the business or to provide for the training and licensing of new personnel to operate the licensee’s business;
(2) To a member or employee of a business entity licensed as an insurance producer, adjuster or appraiser, upon the death or disability
of an individual designated in the business entity application or the license;
(3) To the designee of a licensee entering active service in the armed forces of the United States of America; or
(4) In any other circumstance where the Insurance Commissioner deems that the public interest will best be served by the issuance
of this license.
(b) The Insurance Commissioner may by order limit the authority of any temporary licensee in any way deemed necessary to protect
insureds and the public. The Insurance Commissioner may require the temporary licensee to have a suitable sponsor who is a licensed
producer, adjuster, appraiser or insurer, as applicable, and who assumes responsibility for all acts of the temporary licensee and may
impose other similar requirements designed to protect insureds and the public. The Insurance Commissioner may by order revoke a
temporary license if the interest of insureds or the public are endangered. A temporary license may not continue after the owner or the
personal representative disposes of the business.
(59 Del. Laws, c. 577, § 1; 64 Del. Laws, c. 121, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, §
10.)
§ 1712. License denial, nonrenewal or revocation.
(a) The Insurance Commissioner may place on probation, suspend, revoke or refuse to issue or renew a license or may levy a penalty
in accordance with subsection (d) of this section or any combination of actions, for any 1 or more of the following causes:
(1) Providing incorrect, misleading, incomplete or materially untrue information in the license application or presenting, causing
to be presented, preparing, assisting, abetting, soliciting or conspiring with another to prepare any document in the conduct of the
licensee’s business that contains false, incomplete or misleading information concerning any fact material to such document;
(2) Violating any insurance laws, or violating any regulation, subpoena or order of the Insurance Commissioner or of another state’s
Insurance Commissioner;
(3) Obtaining or attempting to obtain a license through misrepresentation or fraud;
(4) Improperly withholding, misappropriating or converting any moneys or properties received in the course of doing insurance
business;
(5) Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;
(6) Having been convicted of a felony;
(7) Having admitted or been found to have committed any insurance unfair trade practice or fraud;
(8) Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility
in the conduct of business in this State or elsewhere;
(9) Having an insurance producer, adjuster or appraiser license or its equivalent, denied, suspended or revoked in any other state,
province, district or territory;
(10) Forging another’s name to an application for insurance or to any document related to an insurance transaction;
(11) Improperly using notes or any other reference material to complete an examination for an insurance license;
(12) Knowingly accepting insurance business from an individual who is not licensed;
(13) Failing to comply with an administrative or court order imposing a child support obligation;
(14) Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; or
(15) Failing to provide preliminary substantive responses to inquiries from the Department regarding violations of this title within
21 calendar days of such inquiry.
(b) In the event that the action by the Insurance Commissioner is to nonrenew or to deny an application for a license, the Insurance
Commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or
nonrenewal of the applicant’s or licensee’s license. The applicant or licensee may make written demand upon the Insurance Commissioner
within 10 days for a hearing before the Insurance Commissioner to determine the reasonableness of the Insurance Commissioner’s action.
The hearing shall be held pursuant to the Administrative Procedures Act, Chapter 101 of Title 29, and such additional implemented
regulations as may be published by the Commissioner.
(c) The license of a business entity may be suspended, revoked or refused if the Insurance Commissioner finds, after hearing, that an
individual licensee’s violation was known or should have been known by 1 or more of the partners, officers or managers acting on behalf
of the business entity and the violation was neither reported to the Insurance Commissioner nor was corrective action taken.
Page 108
Title 18 - Insurance Code
(d) In addition to or in lieu of any applicable denial, suspension or revocation of a license, a person may, after hearing, be subject to
a fine of not less than $200 and not more than $20,000 for each such violation. The Commissioner’s order shall specify the date upon
which such fine shall be paid and shall revoke the license of any licensee failing to comply with such order. The date on which payment
shall be due shall be not less than 30 days following the date of the Commissioner’s order unless otherwise specified in the order. The
Commissioner may institute a civil action to recover fines so levied and shall pay over all fines paid and recovered to the State Treasurer.
(e) The Insurance Commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized
by this chapter and this title against any person who is under investigation for or charged with a violation of this chapter or this title
even if the person’s license or registration has been surrendered or has lapsed by operation of law. The Commissioner may, upon the
Commissioner’s discretion, reinstate a suspended license at any time, and may impose as conditions upon the reinstatement such terms
and conditions as the Commissioner determines appropriate.
(f) The Commissioner may place any individual or business entity on probation for a period of 1 year for violation of any insurance
laws, rules, regulations and orders. The probationary period will not exceed 1 year.
(g) A person whose license has been revoked or suspended on 2 occasions shall not again be licensed under this title.
(h) An applicant whose license application was denied for 1 or more of the causes set forth in subsection (a) of this section shall be
ineligible to reapply for a license under this chapter for a period of 1 year following the date of the denial of the application.
(59 Del. Laws, c. 577, § 1; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, §
11.)
§ 1713. Conservation of insurance business.
(a) If the Commissioner finds that the business of any licensee in this State has become financially impaired or insolvent, or has been
abandoned by the licensee, or has been conducted in such a manner as to require or justify revocation of the licenses of that licensee, and
if the Commissioner further finds that the conservation and administration of the business of the licensee would be in the public interest,
he or she shall file in the Court of Chancery in the county in which the insurance business is located a petition for the appointment of the
Commissioner as conservator or receiver of such licensee’s business except by leave of the Court.
(b) The petition shall be verified by the Commissioner and shall set forth the facts and circumstances from which the existence of 1
or more of the grounds required under subsection (a) of this section may be determined; such petition may request that the licensee be
required to show cause why the petition should not be granted.
(c) A copy of the petition and of the order to show cause, if they are issued, shall be served upon the licensee in the same manner as
provided by law of this State for service of other legal process.
(d) Upon the filing of a petition and pending a hearing upon the order to show cause, the Court may, upon good cause shown and
without notice to the other party, appoint the Commissioner as temporary conservator or receiver of the licensee’s business.
(e) The Commissioner shall, as conservator or receiver, be authorized and empowered to conduct and administer the affairs of the
licensee’s business in order to expeditiously terminate such business and, to the extent reasonably possible, to provide services and an
accounting for funds to all persons previously insured and to insurers who have previously been doing business through such licensee.
Subject to the Court’s order, the Commissioner shall have the power to collect funds owed to the licensee on account of insurance business
transacted by him or her, and to account for and make payment of those funds to such persons as are entitled to them.
(f) The Commissioner may delegate the actual conduct and administration of the business of the licensee and no charges for services
so rendered shall be made against the funds or assets of the licensee business except by leave of the Court.
(g) Except as expressly herein provided, receivership or conservatorship shall be subject to the applicable laws of this State and to the
order of any court of competent jurisdiction.
(18 Del. C. 1953, § 1746; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 577, § 1; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 424, §
1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 12.)
§ 1714. Commissions.
(a) An insurance company or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration
to a person for selling, soliciting or negotiating insurance in this State if that person is required to be licensed under this chapter and
is not so licensed.
(b) A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating
insurance in this State if that person is required to be licensed under this chapter and is not so licensed.
(c) Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this State if the
person was required to be licensed under this chapter at the time of the sale, solicitation or negotiation and was so licensed at that time.
(d) An insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an
insurance agency or to persons who do not sell, solicit or negotiate insurance in this State, unless the payment would violate §§ 2303
and 2304 of this title.
(e) No producer acting as a consultant may accept any fee, commission or other consideration from an insurer for any activity for which
the producer acting as a consultant has received or will receive a fee from the producer’s client.
Page 109
Title 18 - Insurance Code
(f) An insurer or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for
selling, soliciting or negotiating insurance in this State if that person is required to be licensed under this chapter and is not so licensed.
Nothing in this section allows an insurer to pay commissions to a nonappointed insurance producer when an appointment is otherwise
required.
(g) An unlicensed person who refers a customer or potential customer to an insurer or insurance producer and who does not discuss
specific terms and conditions of a policy or give opinions or advice regarding insurance may be compensated for the referral, if the
compensation:
(1) For each referral is:
a. Nominal;
b. On a 1-time basis; and
c. Fixed in amount by referral;
(2) Does not depend on whether the customer or potential customer purchases the insurance; and
(3) Is not contingent on the volume of insurance transacted.
The restrictions set forth in this provision shall not apply to commercial lines. Referral fees for commercial lines shall still be subject
to subsection (d) of this section.
(18 Del. C. 1953, § 1737; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 577, § 1; 65 Del. Laws, c. 142, §§ 22, 23; 70 Del. Laws, c.
186, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 13.)
§ 1715. Appointments.
(a) An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that
insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed.
(b) To appoint a producer as its agent, the appointing insurer shall file, in a format approved by the Insurance Commissioner, a notice
of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted. An insurer
may also elect to appoint a producer to all or some insurers within the insurer’s holding company system or group by the filing of a single
appointment request. The group appointment provision of this section is only applicable upon implementation by this Department of an
electronic appointment process.
(c) Upon receipt of the notice of appointment, the Insurance Commissioner shall verify within a reasonable time not to exceed 30
days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the
Insurance Commissioner shall notify the insurer within 5 days of its determination.
(d) An insurer shall pay an appointment fee, in the amount and method of payment set forth in Chapter 7 of this title, for each insurance
producer appointed by the insurer.
(59 Del. Laws, c. 577, § 1; 65 Del. Laws, c. 142, §§ 7, 8; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1.)
§ 1716. Notification to Insurance Commissioner of termination.
(a) Termination for cause. — An insurer or authorized representative of the insurer that terminates the appointment, employment,
contract or other insurance business relationship with a producer shall notify the Insurance Commissioner within 30 days following the
effective date of the termination, using a format prescribed by the Insurance Commissioner, if the reason for termination is 1 of the reasons
set forth in § 1712 of this title or the insurer has knowledge the producer was found by a court, government body or self-regulatory
organization authorized by law to have engaged in any of the activities in § 1712 of this title. Upon the written request of the Insurance
Commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination or activity
of the producer.
(b) Termination without cause. — An insurer or authorized representative of the insurer that terminates the appointment, employment
or contract with a producer for any reason not set forth in § 1712 of this title shall notify the Insurance Commissioner within 30 days
following the effective date of the termination, using a format prescribed by the Insurance Commissioner. Upon written request of the
Insurance Commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination.
(c) Ongoing notification requirement. — The insurer or the authorized representative of the insurer shall promptly notify the Insurance
Commissioner in a format acceptable to the Insurance Commissioner if, upon further review or investigation, the insurer discovers
additional information that would have been reportable to the Insurance Commissioner in accordance with subsection (a) of this section
had the insurer then known of its existence.
(d) Copy of notification to be provided to producer. — (1) Within 15 days after making the notification required by subsections (a), (b)
and (c) of this section, the insurer shall mail a copy of the notification to the producer at his or her last known address. If the producer
is terminated for cause for any of the reasons listed in § 1712 of this title, the insurer shall provide a copy of the notification to the
producer at that producer’s last known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using
a nationally recognized carrier.
(2) Within 30 days after the producer has received the original or additional notification, the producer may file written comments
concerning the substance of the notification with the Insurance Commissioner. The producer shall, by the same means, simultaneously
Page 110
Title 18 - Insurance Code
send a copy of the comments to the reporting insurer, and the comments shall become a part of the Insurance Commissioner’s file
and accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subsection (f)
of this section.
(e) Immunities. — (1) In the absence of actual malice, an insurer, the authorized representative of the insurer, a producer, the Insurance
Commissioner, or an organization of which the Insurance Commissioner is a member and that compiles the information and makes it
available to other Insurance Commissioners or regulatory or law-enforcement agencies shall not be subject to civil liability, and a civil
cause of action of any nature shall not arise against these entities or their respective agents or employees as a result of any statement
or information required by or provided pursuant to this section or any information relating to any statement that may be requested in
writing by the Insurance Commissioner from an insurer or producer or a statement by a terminating insurer or producer to an insurer
or producer limited solely and exclusively to whether a termination for cause under subsection (a) of this section was reported to the
Insurance Commissioner, provided that the propriety of any termination for cause under subsection (a) of this section is certified in writing
by an officer or authorized representative of the insurer or producer terminating the relationship.
(2) In any action brought against a person that may have immunity under paragraph (e)(1) of this section for making any statement
required by this section or providing any information relating to any statement that may be requested by the Insurance Commissioner,
the party bringing the action shall plead specifically in any allegation that paragraph (e)(1) of this section does not apply because the
person making the statement or providing the information did so with actual malice.
(3) Paragraph (e)(1) or (2) of this section shall not abrogate or modify any existing statutory or common law privileges or immunities.
(f) Confidentiality. — (1) Any documents, materials or other information in the control or possession of the Department of Insurance
that is furnished by an insurer or producer or an employee or agent thereof acting on behalf of the insurer or producer or obtained by the
Insurance Commissioner in an investigation pursuant to this section shall be confidential by law and privileged, shall not be subject to
Chapter 100 of Title 29, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private
civil action. However, the Insurance Commissioner is authorized to use the documents, materials or other information in the furtherance
of any regulatory or legal action brought as a part of the Insurance Commissioner’s duties.
(2) Neither the Insurance Commissioner nor any person who received documents, materials or other information while acting
under the authority of the Insurance Commissioner shall be permitted or required to testify in any private civil action concerning any
confidential documents, materials, or information subject to paragraph (f)(1) of this section.
(3) In order to assist in the performance of the Insurance Commissioner’s duties under this chapter, the Insurance Commissioner:
a. May share documents, materials or other information, including the confidential and privileged documents, materials or
information subject to paragraph (f)(1) of this section, with other state, federal and international regulatory agencies, with the National
Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal and international law-enforcement
authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other
information;
b. May receive documents, materials or information, including otherwise confidential and privileged documents, materials or
information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries and from regulatory and lawenforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document,
material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction
that is the source of the document, material or information; and
c. May enter into agreements governing sharing and use of information consistent with this subsection.
(4) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a
result of disclosure to the Commissioner under this section or as a result of sharing as authorized in paragraph (f)(3) of this section.
(5) Nothing in this chapter shall prohibit the Insurance Commissioner from releasing final, adjudicated actions including for cause
terminations that are open to public inspection pursuant to Chapter 100 of Title 29 to a database or other clearinghouse service
maintained by the National Association of Insurance Commissioners or its affiliates or subsidiaries.
(g) Penalties for failing to report. — An insurer, the authorized representative of the insurer, or a producer that fails to report as required
under the provisions of this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after
notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with this title.
(59 Del. Laws, c. 577, § 1; 67 Del. Laws, c. 260, § 1; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 424, § 1; 71 Del. Laws, c. 381, §
5; 73 Del. Laws, c. 80, § 1.)
§ 1717. Reciprocity.
(a) The Insurance Commissioner shall waive any requirements for a nonresident license applicant with a valid license from the
applicant’s home state, except the requirements imposed by § 1708 of this title, if the applicant’s home state awards nonresident licenses
to residents of this State on the same basis.
(b) A nonresident licensee’s satisfaction of that licensee’s home state’s continuing education requirements for licensed insurance
producers, adjusters or appraisers, as applicable, shall constitute satisfaction of this State’s continuing education requirements if the
Page 111
Title 18 - Insurance Code
nonresident licensee’s home state recognizes the satisfaction of its continuing education requirements imposed upon licensees from this
State on the same basis. Nonresident adjusters whose home states (including designated home states) do not have continuing education
requirements for adjusters shall be required to satisfy this State’s continuing education requirements.
(c) No resident of Canada shall be granted reciprocity for purposes of obtaining a nonresident’s adjuster license unless that individual
has designated another state as his or her home state or obtained a resident adjuster’s license in another state.
(73 Del. Laws, c. 80, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 359, § 4; 80 Del. Laws, c. 215, § 14.)
§ 1718. Additional or continuing education.
In addition to meeting the standards prescribed in other sections of this chapter for the issuance of a license, the Commissioner may
promulgate regulations and/or prerequisites which will establish reasonable standards and criteria for requiring additional or continuing
education of licensees, in order to ensure the maintenance or improvement of a licensee’s insurance skills and knowledge. Failure to
provide proof of meeting continuing education requirements shall result in the automatic lapse of such licensee’s license in accordance
with § 1707(f) of this title and may result in the imposition of monetary penalties in accordance with §§ 1707(g) and 1712(d) of this title.
(59 Del. Laws, c. 577, § 1; 64 Del. Laws, c. 230, § 2; 66 Del. Laws, c. 4, § 3; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1;
80 Del. Laws, c. 215, § 15.)
§ 1719. Reporting of actions.
(a) A licensee shall report to the Insurance Commissioner any administrative action taken against the licensee in another jurisdiction
or by another governmental agency in this State within 30 days of the final disposition of the matter. This report shall include a copy of
the order, consent to order or other relevant legal documents.
(b) Within 30 days of the initial pretrial hearing date, a licensee shall report to the Insurance Commissioner any criminal prosecution
of the licensee taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing,
and any other relevant legal documents.
(66 Del. Laws, c. 16, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1; 80 Del. Laws, c. 215, § 16.)
§ 1720. Regulations.
The Insurance Commissioner may promulgate reasonable regulations as are necessary or proper to carry out the purposes of this chapter.
(59 Del. Laws, c. 577, § 1; 70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1.)
§ 1721. Enforcement after license lapses or is surrendered.
The Commissioner shall retain authority to enforce the provisions of, and impose any penalty or remedy authorized by, this chapter and
title against any person who is under investigation for, or charged with, a violation of this chapter and title even if, while the investigation
or charges are pending, such person’s license or registration is surrendered or lapses by operation of law.
(70 Del. Laws, c. 424, § 1; 73 Del. Laws, c. 80, § 1.)
§ 1722. Regulation of adjusters and appraisers [Repealed].
(79 Del. Laws, c. 102, § 5; repealed by 80 Del. Laws, c. 215, § 17, effective Apr. 20, 2016.)
§ 1723. Severability.
If any provisions of this chapter, or the application of a provision to any person or circumstances, shall be held invalid, the remainder
of the chapter, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not
be affected.
(73 Del. Laws, c. 80, § 1; 79 Del. Laws, c. 102, § 6; 80 Del. Laws, c. 215, § 17.)
§ 1724. Effective date.
This chapter shall take effect March 1, 2002.
(73 Del. Laws, c. 80, § 1; 79 Del. Laws, c. 102, § 6; 80 Del. Laws, c. 215, § 17.)
Page 112
Title 18 - Insurance Code
Part I
Insurance
Chapter 17A
Licensing of Public Adjusters
§ 1750. Definitions.
For the purposes of §§ 1750-1761 of this title, the following terms have the meanings indicated.
(1) “Adjuster” means an adjuster as defined in § 1702(a) of this title.
(2) “License” means a license issued by the Commissioner to act as a public insurance adjuster.
(3) “Licensee” means any person licensed in the State to do business as a public insurance adjuster.
(4) “Public adjuster” shall include any person who, for compensation or any other thing of value:
a. Acts or aids, solely in relation to first party claims arising under insurance contracts that insure the real or personal property of
the insured, on behalf of an insured individual in negotiating for, or effecting the settlement of, a claim for loss or damage covered
by an insurance contract;
b. Advertises for employment as an adjuster of insurance claims or solicits business or represents oneself to the public as an adjuster
of first party insurance claims for losses or damages arising out of policies of insurance that insure real or personal property; or
c. Directly or indirectly solicits business, investigates or adjusts losses or advises an insured about first-party claims for losses
or damages arising out of policies of insurance that insure real or personal property for another person engaged in the business of
adjusting losses or damages covered by an insurance policy.
(74 Del. Laws, c. 178, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1751. License requirement.
(a) No person shall, directly or indirectly, act as a public adjuster without first procuring a license from the Commissioner to act as
a public insurance adjuster.
(b) The Commissioner shall issue a license to an applicant for a public adjuster’s license who:
(1) Has paid the applicable fee, which shall be the same as that for an adjuster’s license;
(2) Passes a written examination for which a fee may be charged, in accordance with regulations issued pursuant to this chapter; and
(3) Has sufficient experience, training, and instruction concerning the adjusting of first party claims for damages or losses under
insurance contracts that insure the real or personal property of the insured, as determined by the Commissioner in accordance with
regulations issued pursuant to this chapter.
(c) The Commissioner may issue a license to any applicant without an examination if:
(1) The applicant holds a like license in good standing from another state and the public official having supervision of public insurance
adjusters in the other state certifies that the applicant has passed a written examination; and
(2) The other state recognizes public insurance adjusters with public insurance adjuster licenses issued by the State of Delaware for
the purpose of licensing the applicant without the requirement of an examination.
(d) A license issued pursuant to this section shall continue in force provided the licensee has completed continuing education
requirements as established for adjusters and paid renewal fees as established for adjusters under this title, unless suspended, revoked
or otherwise terminated prior thereto. Requests for renewal of the license shall be made to the Commissioner and accompanied by the
license fee as established under Title 18.
(74 Del. Laws, c. 178, § 1.)
§ 1752. Bond requirement.
(a) At the time of the application for license as a public adjuster, the applicant shall file with the Commissioner a bond executed
and issued by a surety insurer authorized to transact business in the State in the amount of $20,000, which bond shall serve the faithful
performance of his or her duties as a public insurance adjuster. A public adjuster license shall automatically terminate when the bond
is not in force.
(b) The bond shall have the following characteristics:
(1) The bond shall be in favor of the State and shall specifically authorize recovery by the Commissioner of the damages sustained
if the licensee is convicted of fraud or unfair practices in connection with the licensee’s business as a public adjuster.
(2) The aggregate liability of the surety for all damages shall not exceed the amount of the bond.
(3) The bond shall not be terminated unless at least 30 days written notice is given to the licensee and filed with the Commissioner.
(74 Del. Laws, c. 178, § 1; 70 Del. Laws, c. 186, § 1.)
Page 113
Title 18 - Insurance Code
§ 1753. Ownership of other entities.
(a) An applicant for a public adjuster’s license shall disclose to the Commissioner the full name and residence of each person who
directly or indirectly owns or controls the licensee, or holds with power to vote or holds proxies with the power to vote, 10 percent or
more of the voting securities of the licensee.
(b) The Commissioner may deny an application or suspend or revoke the license of a public adjuster if any person who directly or
indirectly owns or controls the licensee, or holds with power to vote or holds proxies with the power to vote, 10 percent or more of the
voting securities of the licensee does not meet the qualifications for licensure under this chapter.
(c) Every applicant for an initial or renewal public adjuster’s license shall file with the Commissioner a list of the full names of all
employees who are authorized to negotiate claims settlements.
(74 Del. Laws, c. 178, § 1.)
§ 1754. Maintenance of records.
(a) A public adjuster shall maintain a complete record of each transaction as a public insurance adjuster. The records required by this
section shall include at least the:
(1) Name of the insured;
(2) Date, location and amount of the loss;
(3) Copy of the contract between the public insurance adjuster and insured;
(4) Name of the insurer, amount, expiration date and number of each policy carried with respect to the loss;
(5) Itemized statement of the insured’s recoveries; and
(6) Itemized statement of all compensation received by the public insurance adjuster, from any source whatsoever, in connection
with a particular claim.
(b) Records shall be maintained for at least 5 years after the termination of the transaction with an insured and shall be open to
examination by the Commissioner at all times.
(c) Records submitted in accordance with this section that contain proprietary information, identified in writing as such by the public
insurance adjuster shall be treated as confidential by the Commissioner.
(74 Del. Laws, c. 178, § 1.)
§ 1755. License denial, suspension, revocation and refusal to renew; civil penalties.
(a) The Commissioner may deny a license to an applicant or suspend, revoke or refuse to renew a license if the applicant or licensee:
(1) Violates the provisions of this chapter and any provision of the Delaware Unfair Trade Practices Law [Chapter 25 of Title 6] or the
Delaware Unfair Claims Settlement Practices Law [Chapter 23 of this title] or any standard of conduct prescribed by the Commissioner
in regulations;
(2) Makes a material misstatement in the application for the license;
(3) Engages in fraudulent or dishonest practices;
(4) Demonstrates incompetence or untrustworthiness to act as a public insurance adjuster; or
(5) Fails to complete continuing education requirements.
(b) Upon a finding by the Commissioner of a violation of subsection (a) of this section, the Commissioner may impose a civil penalty
not to exceed $1,000 for each violation.
(c) This chapter shall not be applied or interpreted to bar a borrower from bringing an action pursuant to any Delaware or federal law
for damages, injunctive relief or any other relief.
(74 Del. Laws, c. 178, § 1.)
§ 1756. Contracts and solicitation of contracts.
(a) No licensee shall, directly or indirectly, act within the State as a public adjuster without having first entered into a contract, in
writing, on a form approved by the Commissioner and executed in duplicate by the public insurance adjuster and the insured or a duly
authorized representative. One copy of the contract shall be kept on file by the licensee and be available at all times for inspection without
notice by the Commissioner.
(b) (1) An insured who contracts for the services of a public adjuster shall have the right to cancel the contract until midnight on the
third business day after the day on which the insured signs the contract. Contracts that do not substantially conform to the requirements
contained in this section shall be void. Cancellation of the contract shall be effective when mailed if the following conditions are met:
a. The cancellation shall be in writing, but need not take a particular form, and shall be sufficient if it indicates the intent of the
person not to go forward with the representation.
b. The right to cancel shall be contained in the approved contract in a format designated by the Commissioner.
Page 114
Title 18 - Insurance Code
(2) The right of rescission contained in this subsection shall be in addition to, and not in limitation of, any other rights of the insured.
(3) In a commercial loss, if a contract is cancelled in accordance with this subsection, the public adjuster shall be entitled to reasonable
compensation for actual services rendered and costs incurred between the time the contract was entered into and the time it was
cancelled.
(c) A licensee shall not solicit, or attempt to solicit, a client for employment during the progress of a loss-producing occurrence, as
defined in the client’s insurance contract.
(d) A licensee shall not permit an unlicensed employee or agent in the unlicensed employee’s or agent’s own name to advertise, engage
clients, furnish reports or present bills to clients, or in any manner whatsoever to conduct business for which a license is required under
this chapter.
(e) A licensee shall not charge the client a fee that exceeds 2.5% of the first $25,000 of the total insurance recovery of the client. A
licensee may charge the client a fee of up to 12% of the amount of the total insurance recovery of the client that exceeds $25,000.
(f) A licensed public adjuster may not prevent or attempt to dissuade an insured from communicating with an insurer, the insurer’s
adjuster, an independent adjuster representing the insurer, an attorney, or any other person regarding the settlement of the insured’s claim.
(g) A public adjuster shall be subject to the Delaware Unfair Claims Settlement Act [Chapter 23 of this title].
(74 Del. Laws, c. 178, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1757. Adjustments to comply with insurance contract and law.
A public insurance adjuster shall adjust or investigate every claim, damage or loss made or occurring under an insurance contract for
which the public insurance adjuster has been employed in accordance with the terms and conditions of the public insurance adjuster’s
contract with the insured and the applicable laws and regulations of the State.
(74 Del. Laws, c. 178, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1758. Prohibited acts.
(a) Notwithstanding any other grounds for disciplinary action provided for under this chapter, the Commissioner may deny, revoke,
suspend, refuse to renew, or impose a penalty on an applicant or licensee for violation of acts prohibited under this section.
(b) A licensed public adjuster is prohibited from doing any of the following:
(1) Paying any money or giving anything of value to any person in consideration of a direct or indirect referral of a client or potential
client.
(2) Paying any money or giving anything of value to any person in consideration as an inducement to refer business or clients.
(3) Charging, collecting, or receiving any money or anything of value from any person providing services to an insured, either
directly or on behalf of the public adjuster, in connection with the business of adjusting insurance claims, without the prior written
disclosure of the fee or benefit to the insured.
(4) Rebating to any client any part of a fee specified in the employment contract.
(5) Splitting the licensed public adjuster’s fees or paying any money to any person for services rendered to a client unless such other
person is also licensed as a public adjuster.
(6) Having any interest directly or indirectly in any home improvement, restoration, construction, salvage, appraisal, loss mitigation,
cleaning, or environmental restoration business that conducts business in this State.
(7) In connection with the licensee’s conduct of business as public adjuster, making any misrepresentation of facts or advising any
person on any question of law.
(8) Making false statements about any insurance company or its employees, agents, or representatives.
(9) Soliciting the employment by a client in connection with any loss which is the subject of an employment contract involving the
client and another public adjuster.
(10) Representing both the insurer and the insured.
(11) Advancing any money to a client pending the settlement of a loss where such amount would be included in the final settlement.
(c) (1) A violation of this section is all of the following:
a. A prohibited trade practice under Chapter 25 of Title 6.
b. A violation of the Unfair Trade Practices Act under Chapter 23 of this title.
(2) A violation of this section may constitute insurance fraud under § 2407 of this title.
(d) A public adjuster is also subject to the penalties applicable to licensees under Chapter 17 of this title.
(74 Del. Laws, c. 178, § 1; 70 Del. Laws, c. 186, § 1; 83 Del. Laws, c. 283, § 24.)
§ 1759. Regulations and scope.
(a) The Commissioner shall promulgate rules and regulations as are necessary to carry out this chapter.
Page 115
Title 18 - Insurance Code
(b) This chapter shall not apply to:
(1) An adjuster for or an agent or employee of an insurer or group of insurers under common control or ownership that, as a
representative of the insurer or group, adjusts losses or damages under policies issued by the insurer or group of insurers;
(2) An agent or broker that acts as an adjuster without compensation for an insured for whom the agent or broker is acting as an
agent or broker;
(3) An attorney at law who does not:
a. Regularly act as a public insurance adjuster; or
b. Represent to the public by sign, advertisement or other written or oral communication indicating that the attorney at law acts
as a public insurance adjuster; or
(4) A licensed health-care provider, or employee of a licensed health-care provider, who prepares or files a health insurance claim
form on behalf of a patient;
(5) Persons employed only for the purpose of obtaining facts surrounding a loss or furnishing technical assistance to a licensed
adjuster, including but not limited to photographers, private investigators, engineers and handwriting experts;
(6) Any agent or other person who negotiates and/or settles claims arising under life and health insurance policies;
(7) A person who performs clerical duties for or as an employee of an insurance company, but who does not participate in negotiations
with parties on disputed and/or contested claims; or
(8) Any person who settles subrogation claims between authorized insurers.
(74 Del. Laws, c. 178, § 1.)
§ 1760. Immunity.
There shall be no liability on the part of and no cause of action shall arise against, the Commissioner or the Insurance Department or
its employees for any action taken by them in the performance of their powers and duties under this chapter.
(74 Del. Laws, c. 178, § 1.)
§ 1761. Severability clause.
If any provision of this chapter, or its application to any person or circumstance, is held invalid, that determination shall not affect
the provisions or applications of this chapter that can be given effect without the invalid provision or application, and to that end the
provisions of this chapter are severable.
(74 Del. Laws, c. 178, § 1.)
Page 116
Title 18 - Insurance Code
Part I
Insurance
Chapter 17B
Licensing of Limited Lines Travel Insurance Producers
§ 1770. Short title.
This chapter shall be known as the “Limited Lines Travel Insurance Act.”
(79 Del. Laws, c. 428, § 5.)
§ 1771. Definitions.
For purposes of this chapter, the following terms have the meanings indicated.
(1) “Limited lines travel insurance producer” means a licensed managing general agent or third-party administrator, or licensed
insurance producer, including a limited lines producer, designated by an insurer as the travel insurance supervising entity as set forth
in § 1775 of this title.
(2) “Offer and disseminate” means providing general information, including a description of the coverage and price, as well as
processing the application, collecting premiums, and performing other nonlicensable activities permitted by the State.
(3) “Travel insurance” shall have the meaning stated in § 1702 of this title.
(4) “Travel retailer” means a business entity that makes, arranges or offers travel services and may offer and disseminate travel
insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer.
(79 Del. Laws, c. 428, § 5; 80 Del. Laws, c. 215, § 1.)
§ 1772. Requirements.
Notwithstanding any other provision of law:
(1) The Commissioner may issue to an individual or business entity that has filed with the Commissioner an application for such
limited license in a form and manner prescribed by the Commissioner, a limited lines travel insurance producer license, which authorizes
the limited lines travel insurance producer to sell, solicit or negotiate travel insurance through a licensed insurer.
(2) A travel retailer may offer and disseminate travel insurance on behalf of a limited lines travel insurance producer business entity
only if the following conditions are met:
a. The limited lines travel insurance producer provides, or causes the travel retailer to provide, to purchasers of travel insurance,
brochures or written materials that contain:
1. A description of the material terms or the actual terms of the insurance coverage;
2. A description of the process for filing a claim;
3. A description of the review or cancellation process for the travel insurance policy;
4. The identity and contact information of the insurer and limited lines travel insurance producer;
5. An explanation that the purchase of travel insurance is not required in order to purchase any other product or service from
the travel retailer;
6. An explanation that an unlicensed travel retailer is permitted to provide general information about the insurance offered by
the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions
about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer’s existing
insurance coverage; and
7. A disclosure that the coverage offered may duplicate existing coverage maintained by the consumer and indicate that the
consumer may wish to compare the terms with existing life, health, home, and automobile policies, and other sources of protection.
b. At the time of licensure, the limited lines travel insurance producer shall establish and maintain a register, on a form prescribed
by the Commissioner, of each travel retailer that offers travel insurance on the limited lines travel insurance producer’s behalf. The
register shall be maintained and updated annually by the limited lines travel insurance producer and shall include the name, address,
and contact information of the travel retailer and an officer or person who directs or controls the travel retailer’s operations, and
the travel retailer’s Federal Tax Identification Number. The limited lines travel insurance producer shall submit such register to the
Commissioner upon reasonable request. The limited lines travel insurance producer shall also certify that all travel retailers registered
comply with 18 U.S.C. § 1033.
c. The limited lines travel insurance producer has designated one of its employees who is a licensed individual producer as the
person responsible (a “designated responsible producer” or “DRP”) for the limited lines travel insurance producer’s compliance with
the insurance laws, rules and regulations of this State.
d. The DRP, president, secretary, treasurer, and any other officer or person who directs or controls the limited lines travel insurance
producer’s insurance operations comply with the fingerprinting requirements applicable to insurance producers in the resident state
of the limited lines travel insurance producer.
Page 117
Title 18 - Insurance Code
e. The limited lines travel insurance producer has paid all applicable insurance producer licensing fees as set forth in Chapter
7 of this title.
f. The limited lines travel insurance producer requires each employee and authorized representative of the travel retailer whose
duties include offering and disseminating travel insurance to receive a program of instruction or training, which may be subject
to review by the Commissioner. The training material shall, at a minimum, contain instructions on the types of insurance offered,
ethical sales practices, and required disclosures to prospective customers.
g. Limited lines travel insurance producers are exempt from the examination and continuing education requirements under Chapter
17 of this title.
(3) If any of the above-listed conditions is not satisfied, the sale of travel insurance (whether by a limited lines travel insurance
producer or travel retailer) shall be pursuant to the terms of Chapter 17 of this title.
(4) A travel retailer and any of its employees or authorized representatives, who are not licensed as an insurance producer may not:
a. Evaluate or interpret the technical terms, benefits, and conditions of the offered travel insurance coverage;
b. Evaluate or provide advice concerning a prospective purchaser’s existing insurance coverage; or
c. Hold himself, herself or itself out as a licensed insurer, licensed producer, or insurance expert.
(79 Del. Laws, c. 428, § 5; 70 Del. Laws, c. 186, § 1.)
§ 1773. Registration.
Notwithstanding any other provision in law, a travel retailer whose insurance-related activities, and those of its employees and
authorized representatives, are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited
lines travel insurance producer meeting the conditions stated in this chapter, is authorized to do so and receive related compensation, upon
registration by the limited lines travel insurance producer as described in § 1772(2)b. of this title.
(79 Del. Laws, c. 428, § 5.)
§ 1774. Policy.
Travel insurance may be provided under an individual policy or under a group or master policy to the extent permitted under Delaware
laws and regulations.
(79 Del. Laws, c. 428, § 5.)
§ 1775. Responsibility.
The limited lines travel insurance producer is responsible for the acts of the travel retailers and shall use reasonable means to ensure
compliance by the travel retailers with this chapter.
(79 Del. Laws, c. 428, § 5.)
§ 1776. Enforcement.
The limited lines travel insurance producer and any travel retailer offering and disseminating travel insurance on behalf of the limited
lines travel insurance producer shall be subject to Chapter 17 (to the extent not inconsistent with this chapter) and Chapter 23 of this title.
(79 Del. Laws, c. 428, § 5.)
Page 118
Title 18 - Insurance Code
Part I
Insurance
Chapter 18
Managing General Agents Act
§ 1801. Short title.
This chapter may be cited as the “Managing General Agents Act.”
(68 Del. Laws, c. 68, § 1.)
§ 1802. Definitions.
As used in this chapter:
(1) “Actuary” means a person who is a member in good standing of the American Academy of Actuaries.
(2) “Insurer” means any person, firm, association or corporation duly licensed in this State as an insurance company pursuant to
Chapter 17 of this title.
(3) “Managing general agent” (“MGA”) means any person, firm, association or corporation who negotiates and binds ceding
reinsurance contracts on behalf of an insurer or manages all or part of the insurance business of an insurer (including the management
of a separate division, department or underwriting office) and acts as an agent for such insurer whether known as a managing general
agent, manager or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly
or indirectly, and underwrites an amount of gross direct written premium equal to or more than 5 percent of the policyholder surplus
as reported in the last annual statement of the insurer in any 1 quarter or year together with 1 or more of the following:
a. Adjusts or pays claims in excess of an amount determined by the Commissioner; or
b. Negotiates reinsurance on behalf of the insurer.
Notwithstanding the above, the following persons shall not be considered as MGAs for the purposes of this chapter:
a. An employee of the insurer;
b. A United States manager of the United States branch of an alien insurer;
c. An underwriting manager which, pursuant to contract, manages all or part of the insurance operations of the insurer, is under
common control with the insurer, subject to the holding company regulatory act and whose compensation is not based on the volume
of premiums written without regard for the profitability of the business written;
d. The attorney-in-fact authorized by, and acting for, the subscribers of a reciprocal insurer of interinsurance exchange under
powers of attorney.
(4) “Underwrite” means the authority to accept or reject risk on behalf of the insurer.
(68 Del. Laws, c. 68, § 1.)
§ 1803. Licensure.
(a) No person, firm, association or corporation shall act in the capacity of an MGA with respect to risks located in this State for an
insurer licensed in this State unless such person is a licensed producer in this State.
(b) No person, firm, association or corporation shall act in the capacity of an MGA representing an insurer domiciled in this State with
respect to risks located outside this State unless such person is licensed as a producer in this State (such license may be a nonresident
license) pursuant to this chapter.
(c) The Commissioner may require a bond in an amount acceptable to the Commissioner for the protection of the insurer.
(d) The Commissioner may require the MGA to maintain an errors and omissions policy.
(68 Del. Laws, c. 68, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1804. Required contract provisions.
No person, firm, association or corporation acting in the capacity of an MGA shall place business with an insurer unless there is in
force a written contract between both parties which sets forth the responsibilities of each party and where both parties share responsibility
for a particular function, specifies the division of such responsibilities and which contains the following minimum provisions:
(1) The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting
authority of the MGA during the pendency of any dispute regarding the cause for termination.
(2) The MGA will render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer
on not less than a monthly basis.
(3) All funds collected for the account of an insurer will be held by the MGA in a fiduciary capacity in a bank which is a member of
the Federal Reserve System. This account shall be used for all payments on behalf of the insurer. The MGA may retain no more than
3 months estimated claims payments and allocated loss adjustment expenses.
Page 119
Title 18 - Insurance Code
(4) Separate records of business written by the MGA will be maintained. The insurer shall have access and right to copy all accounts
and records related to its business in a form usable by the insurer and the Commissioner shall have access to all books, bank accounts
and such records of the MGA in a form usable to the Commissioner. Such records shall be retained until completion of the insurer’s
triennial financial examination.
(5) The contract may not be assigned in whole or part by the MGA.
(6) Appropriate underwriting guidelines including:
a. The maximum annual premium volume;
b. The basis of the rates to be charged;
c. The types of risks which may be written;
d. Maximum limits of liability;
e. Applicable exclusions;
f. Territorial limitations;
g. Policy cancellation provisions; and
h. The maximum policy period.
The insurer shall have the right to cancel or nonrenew any policy of insurance subject to the applicable laws and regulations.
(7) If the contract permits the MGA to settle claims on behalf of the insurer:
a. All claims must be reported to the company in a timely manner.
b. A copy of the claim file shall be sent to the insurer at its request or as it becomes known that the claim:
1. Has the potential to exceed an amount determined by the Commissioner or exceeds the limit set by the company, whichever
is less;
2. Involves a coverage dispute;
3. May exceed the MGA’s claims settlement authority;
4. Is open for more than 6 months; or
5. Is closed by payment of an amount set by the Commissioner or an amount set by the company, whichever is less.
c. All claim files will be the joint property of the insurer and MGA. However, upon an order of liquidation of the insurer, such
files shall become the sole property of the insurer or its estate; the MGA shall have reasonable access to and the right to copy the
files on a timely basis.
d. Any settlement authority granted to the MGA may be terminated for cause upon the insurer’s written notice to the MGA or
upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding
the cause for termination.
(8) Where electronic claims files are in existence, the contract must address the timely transmission of the data.
(9) If the contract provides for a sharing of interim profits by the MGA, and the MGA has the authority to determine the amount of
the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid
to the MGA until 1 year after they are earned for property insurance business and 5 years after they are earned on casualty business
and not until the profits have been verified pursuant to § 1805 of this title.
(10) The MGA shall not:
a. Bind reinsurance or retrocessions on behalf of the insurer, except that the MGA may bind facultative reinsurance contracts
pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including,
for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and
amounts or percentages that may be reinsured and commission schedules;
b. Commit the insurer to participate in insurance or reinsurance syndicates;
c. Appoint any producer without assuring that the producer is lawfully licensed to transact the type of insurance for which the
producer is appointed;
d. Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance,
which shall not exceed 1 percent of the insurer’s policyholder’s surplus as of December 31 of the last completed calendar year;
e. Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of
the insurer. If prior approval is given, a report must be promptly forwarded to the insurer;
f. Permit its subproducer to serve on the insurer’s board of directors;
g. Jointly employ an individual who is employed with the insurer; or
h. Appoint a sub-MGA.
(68 Del. Laws, c. 68, § 1; 70 Del. Laws, c. 186, § 1.)
§ 1805. Duties of insurers.
(a) The insurer shall have on file an independent financial examination, in a form acceptable to the Commissioner, of each MGA with
which it has done business.
Page 120
Title 18 - Insurance Code
(b) If an MGA establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss
reserves established for losses incurred and outstanding on business produced by the MGA. This is in addition to any other required loss
reserve certification.
(c) The insurer shall periodically (at least semiannually) conduct an on-site review of the underwriting and claims processing operations
of the MGA.
(d) Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of
the insurer, who shall not be affiliated with the MGA.
(e) Within 30 days of entering into or termination of a contract with an MGA, the insurer shall provide written notification of such
appointment or termination to the Commissioner. Notices of appointment of an MGA shall include a statement of duties which the
applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and
any other information the Commissioner may request.
(f) An insurer shall review its books and records each quarter to determine if any producer, as defined by § 1802(3) of this title, has
become, by operation of § 1802(3) of this title, an MGA as defined in that section. If the insurer determines that a producer has become an
MGA pursuant to the above, the insurer shall promptly notify the producer and the Commissioner of such determination and the insurer
and producer must fully comply with this chapter within 30 days.
(g) An insurer shall not appoint to its board of directors an officer, director, employee, subproducer or controlling shareholder of its
MGAs. This subsection shall not apply to relationships governed by the Insurance Holding Company Act or, if applicable, the Broker
Controlled Insurer Act.
(68 Del. Laws, c. 68, § 1.)
§ 1806. Examination authority.
The acts of the MGA are considered to be the acts of the insurer on whose behalf it is acting. An MGA may be examined as if it were
the insurer. An MGA shall retain all records pertaining to a specific insurer until the conclusion of the regular financial examination on
that insurer by the domestic regulator.
(68 Del. Laws, c. 68, § 1; 69 Del. Laws, c. 92, § 6.)
§ 1807. Penalties and liabilities.
(a) If the Commissioner finds after a hearing conducted in accordance with the Administrative Procedures Act [Chapter 100 of Title
29] that any person has violated any provision or provisions of this chapter, the Commissioner may order:
(1) For each separate violation, a penalty in an amount of $15,000;
(2) Revocation or suspension of the producer’s license; and
(3) The MGA to reimburse the insurer, the rehabilitator or liquidator of the insurer for any losses incurred by the insurer caused by
a violation of this chapter committed by the MGA.
(b) The decision, determination or order of the Commissioner pursuant to subsection (a) of this section shall be subject to judicial
review pursuant to the Administrative Procedures Act [Chapter 100 of Title 29].
(c) Nothing contained in this section shall affect the right of the Commissioner to impose any other penalties provided for in the
Insurance Law.
(d) Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants and
auditors.
(68 Del. Laws, c. 68, § 1.)
§ 1808. Rules and regulations.
The Commissioner of Insurance may adopt reasonable rules and regulations for the implementation and administration of this chapter.
(68 Del. Laws, c. 68, § 1.)
§ 1809. Effective date.
This chapter shall take effect on September 30, 1991. No insurer may continue to utilize the services of an MGA on and after September
30, 1991, unless such utilization is in compliance with this chapter.
(68 Del. Laws, c. 68, § 1.)
Page 121
Title 18 - Insurance Code
Part I
Insurance
Chapter 19
Delaware Nonadmitted Insurance Act
Subchapter I
Compliance with Federal Statutes
§ 1901. Finding and purpose.
(a) It is determined and declared as a matter of legislative finding that it is in the public interest to cooperate on a reciprocal basis
with other states in considering procedures which implement the provisions of the Nonadmitted and Reinsurance Reform Act of 2010
[15 U.S.C. § 8201 et seq.].
(b) It is further determined and declared that the purpose and policy of this chapter shall be to:
(1) Carry out the requirements of the Nonadmitted and Reinsurance Reform Act of 2010 [15 U.S.C. § 8201 et seq.] as such act
existed on January 1, 2011;
(2) Provide authority for the Insurance Commissioner to enter into an interstate cooperative agreement, reciprocal agreement, or
compact if doing so is in the best interests of this State; and
(3) Regulate the placement of insurance coverage with nonadmitted insurers when this State is the home state of the insured.
(78 Del. Laws, c. 176, § 1.)
§ 1902. Home state regulation of nonadmitted insurance.
(a) The placement of nonadmitted insurance business shall be subject to the statutory and regulatory requirements solely of the insured’s
home state as defined in this chapter.
(b) This section may not be construed to preempt any law, rule, or regulation that restricts the placement of workers’ compensation
insurance or excess insurance for self-funded workers’ compensation plans with a nonadmitted insurer.
(78 Del. Laws, c. 176, § 1.)
§ 1903. Interstate insurance regulatory cooperation.
(a) The Commissioner is authorized to enter into an interstate cooperative agreement, reciprocal agreement, or compact, hereafter
“Agreement,” for the purpose of carrying out the Nonadmitted and Reinsurance Reform Act of 2010 [15 U.S.C. § 8201 et seq.] (NRRA)
and to facilitate the collection, allocation, and disbursement of premium taxes attributable to the placement of nonadmitted insurance, to
provide for uniform methods of allocation and reporting among nonadmitted insurance risk classifications, and share information among
states relating to nonadmitted insurance premium taxes.
(b) The Commissioner may also enter into other cooperative agreements with surplus lines stamping offices located in this state or other
states for the reporting and capturing of related tax information. In addition, the Commissioner may enter into cooperative agreements
with processing entities located in this State or other states related to the capturing and processing of insurance premium and tax data.
(c) The Commissioner may participate in a clearinghouse operation established for the purpose of collecting and disbursing to reciprocal
states any premium tax funds collected applicable to properties, risks, or exposures located or to be performed outside of this State. The
Commissioner may also participate in such clearinghouse for purposes of surplus lines policies applicable to risks located solely within
this State.
(d) In order to assist in the performance of the Commissioner’s duties, under the NRRA, the Commissioner may contract with
nongovernmental entities, including the NAIC or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions
that the Commissioner and the nongovernmental entity may deem to be appropriate, including:
(1) The collection of fees related to producer licensing; and
(2) The collection of the premium tax under § 1925 of this title.
The NAIC or other entity with whom the Commissioner contracts may charge a reasonable fee to the insurer, insured, or other
appropriate person for the functions performed.
(e) An Agreement entered into under this section prevails over an inconsistent rule of the Commissioner. Except as otherwise provided
by this section, a statute of this State prevails over an inconsistent provision of an Agreement entered into under this section.
(f) The Commissioner may adopt rules as necessary to implement this chapter or the terms of an Agreement entered into under this
section. In adopting rules under this chapter, the Commissioner may not adopt a rule that does not specifically implement this chapter
or the Agreement.
(78 Del. Laws, c. 176, § 1.)
Page 122
Title 18 - Insurance Code
§ 1903A. Nonadmitted Reinsurance and Reform Act of 2010 Implementation Revenue Study.
(a) The Insurance Commissioner shall establish a Nonadmitted and Reinsurance Reform Act of 2010 [15 U.S.C. § 8201 et seq.] (NRRA)
Implementation Revenue Study Committee to study the potential impact that would result from the State’s entrance into an Agreement
pursuant to § 1903 of this title in order to prevent the State from losing revenue after July 21, 2011, the effective date of the NRRA. The
Committee shall determine if entering into an Agreement would result in retention of out-of-state surplus lines tax revenue for the State
and, if so, which Agreement would result in the most retention of surplus lines tax revenue for the State and the most cost-efficient method
of administering the collection and distribution of tax revenues. Notwithstanding subsection (b) of this section, the Committee shall report
its findings and recommendations, including any proposed legislation, to the chairs of the respective Senate and House committees, the
Senate Pro-Tempore, the Speaker of the House and to the Controller General no later than January 2012.
(b) In the event that an interstate surplus lines tax allocation, reporting and payment system becomes operational and the Insurance
Commissioner determines that the State of Delaware is likely to lose significant revenue by delaying the decision to enter into an
Agreement pursuant to § 1903 of this title until after completion of the report by the NRRA Implementation Revenue Study Committee,
then the Commissioner may enter into an Agreement after notice and hearing, which shall involve testimony regarding the Commissioner’s
determination, and the burden the tax allocation, reporting and payment system selected would impose on brokers.
(78 Del. Laws, c. 176, § 1.)
§ 1904. Definitions.
(a) For the purposes of this chapter the following definitions shall apply:
(1) Admitted insurer. — The term “admitted insurer” means an insurer authorized to engage in the business of insurance in this State.
(2) Affiliate. — The term “affiliate” means, with respect to an insured, any entity that controls, is controlled by, or is under common
control with the insured.
(3) Affiliated group. — The term “affiliated group” means any group of entities that are all affiliated.
(4) Broker. — The term “broker,” as used in this chapter and unless context otherwise requires, means a surplus lines broker duly
licensed as such under this chapter.
(5) Clearinghouse. — The term “clearinghouse” means a mechanism or entity established for the receipt and distribution of premium
taxes and transaction data related to the sale of nonadmitted insurance.
(6) Control. — An entity has “control” over another entity if:
a. The entity directly or indirectly or acting through 1 or more other persons owns, controls, or has the power to vote 25 percent
or more of any class of voting securities of the other entity; or
b. The entity controls in any manner the election of a majority of the directors or trustees of the other entity.
(7) Export. — The term “export” means to place insurance in a nonadmitted insurer under this surplus lines law.
(8) Gross premium. — The term “gross premium” means the amount charged by an insurer for consideration for insurance. Any
assessment, or any membership, policy, survey, inspection, service or similar fee or other charge in consideration for an insurance
contract is deemed part of the premium.
(9) Home state. — a. In general. — Except as provided in paragraph (a)(9)b. of this section, the term “home state” means, with
respect to an insured
1. The state in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal
residence; or
2. If 100 percent of the insured risk is located out of the state referred to in paragraph (a)(9)a.1. of this section, the state to which
the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
b. Affiliated groups. — If more than 1 insured from an affiliated group are named insureds on a single nonadmitted insurance
contract, the term “home state” means the home state, as determined pursuant to paragraph (a)(9)a. of this section, of the member of
the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.
(10) Home state insured. — The term “home state insured” means, unless the context indicates otherwise, an insured whose home
state is Delaware.
(11) Independently procured insurance. — The term “independently procured insurance” means insurance procured directly by an
insured from a nonadmitted insurer.
(12) Multi-state risk. — The term “multi-state risk” means a risk with exposures in more than 1 state.
(13) NAIC. — The term “NAIC” means the National Association of Insurance Commissioners or any successor entity.
(14) Net premium. — The term “net premium” means, for the purposes of this chapter, gross premium as defined herein, less any
returned premiums.
(15) Nonadmitted insurance. — The term “nonadmitted insurance” means any property and casualty insurance permitted to be placed
directly or through a surplus lines broker with a nonadmitted insurer eligible to accept such insurance. For purposes of this chapter,
nonadmitted insurance includes independently procured insurance placed directly and surplus lines insurance.
Page 123
Title 18 - Insurance Code
(16) Nonadmitted insurer. — The term “nonadmitted insurer”
a. Means an insurer not authorized to engage in the business of insurance in this state; but
b. Does not include a risk retention group, as that term is defined in § 2(a)(4) of the Liability Risk Retention Act of 1986 (15
U.S.C. § 3901(a)(4)).
(17) Premium tax. — The term “premium tax” means, with respect to surplus lines or independently procured insurance coverage, any
tax, fee, assessment, or other charge imposed by a government entity directly or indirectly based on any payment made as consideration
for an insurance contract for such insurance, including premium deposits, assessments, registration fees, and any other compensation
given in consideration for a contract of insurance.
(18) Qualified risk manager. — The term “qualified risk manager” means, with respect to a policyholder of commercial insurance,
a person who meets all of the following requirements:
a. The person is an employee of, or third-party consultant retained by, the commercial policyholder.
b. The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase
of insurance.
c. The person:
1. A. Has a bachelor’s degree or higher from an accredited college or university in risk management, business administration,
finance, economics, or any other field determined by a state insurance commissioner or other state regulatory official or entity to
demonstrate minimum competence in risk management; and
B. I. Has 3 years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or
purchasing commercial lines of insurance; or
II. Has:
(A) A designation as a “chartered property and casualty underwriter” (in this subparagraph referred to as “CPCU”)
issued by the American Institute for CPCU/Insurance Institute of America;
(B) A designation as an “associate in risk management” (“ARM”) issued by the American Institute for CPCU/Insurance
Institute of America;
(C) A designation as “certified risk manager” (“CRM”) issued by the National Alliance for Insurance Education &
Research;
(D) A designation as a “RIMS Fellow” (“RF”) issued by the Global Risk Management Institute; or
(E) Any other designation, certification, or license determined by a state insurance commissioner or other state insurance
regulatory official or entity to demonstrate minimum competency in risk management;
2. A. Has at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage
analysis, or purchasing commercial lines of insurance; and
B. Has any 1 of the designations specified in paragraphs (18)c.1.B.(II)(A) through (E) of this section;
3. Has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage
analysis, or purchasing commercial lines of insurance; or
4. Has a graduate degree from an accredited college or university in risk management, business administration, finance,
economics, or any other field determined by a State insurance commissioner or other state regulatory official or entity to
demonstrate minimum competence in risk management.
(19) Reciprocal state. — The term “reciprocal state” means a state that has:
a. Entered into a nonadmitted insurance compact or agreement; or
b. Otherwise adopted the allocation schedule and reporting forms prescribed by a multi-state agreement for nonadmitted insurance
(20) Single-state risk. — The term “single-state risk” means a risk with exposure in only 1 state.
(21) State. — The term “state” includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico,
Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa.
(22) Surplus lines broker. — The term “surplus lines broker” means an individual, firm, or corporation which is licensed in this State
to sell, solicit, negotiate, or procure insurance in this state with nonadmitted insurers.
(23) Surplus lines insurance. — The term “surplus lines insurance” means insurance procured by a surplus lines licensee from a
surplus lines insurer or other nonadmitted insurer as permitted under the law of the home state; for purposes of this chapter “surplus
lines insurance” shall also mean excess lines insurance as may be defined by applicable state law.
(24) Surplus lines insurer. — The term “surplus lines insurer” means a nonadmitted insurer eligible under the law of the home state
to accept business from a surplus lines licensee; for purposes of this chapter “surplus lines insurer” shall also mean an insurer that is
permitted to write surplus lines insurance under the laws of the state where such insurer is domiciled.
(b) In this chapter, unless otherwise specified, words and expressions used have the same meaning as in the NRRA [Nonadmitted and
Reinsurance Reform Act of 2010, 15 U.S.C. § 8201 et seq.].
(78 Del. Laws, c. 176, § 1; 80 Del. Laws, c. 386, § 1.)
Page 124
Title 18 - Insurance Code
§ 1905. Exclusions.
(a) Unless the Commissioner rules otherwise pursuant to § 1915 of this title, life insurance and health insurance shall not be considered
surplus lines insurance and shall be placed with admitted insurers licensed to write those types of insurance.
(b) The provisions of this chapter shall not apply to reinsurance or to the following insurances when so placed by licensed producers
or surplus lines brokers of this State:
(1) Wet marine and transportation insurance;
(2) Insurance on subjects located, resident or to be performed wholly outside this State or on vehicles or aircraft owned and principally
garaged outside this State;
(3) Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations;
(4) Insurance of aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight or
cargo of such aircraft or against liability, other than workers’ compensation and employer’s liability, arising out of the ownership,
maintenance or use of such aircraft;
(5) Transactions for which a certificate of authority to do business is not required of an insurer under the insurance laws of this State.
(78 Del. Laws, c. 176, § 1; 80 Del. Laws, c. 47, § 1.)
Subchapter II
Surplus Lines Insurance
§ 1911. Placement of insurance business.
(a) An insurer shall not engage in the transaction of insurance in this State unless authorized by a certificate of authority in force
pursuant to the laws of this State, or exempted by this chapter or otherwise exempted by the insurance laws of this State.
(b) A person shall not engage in a transaction of insurance or in this State directly or indirectly act as agent for, or otherwise represent
or aid on behalf of another, a nonadmitted insurer in the solicitation, negotiation, procurement or effectuation of insurance, or renewals
thereof, or forwarding of applications, or delivery of policies or contracts or inspection of risks, or fixing of rates, or investigation or
adjustment of claims or losses, or collection or forwarding of premiums, or in any other manner represent or assist the insurer in the
transaction of insurance.
(c) A person who represents or aids a nonadmitted insurer in violation of this section shall be subject to the penalties set forth in § 106
of this title. No insurance contract entered into in violation of this section shall preclude the insured from enforcing his or her rights under
the contract in accordance with the terms and provisions of the contract of insurance and the laws of this State, to the same degree those
rights would have been enforceable had the contract been lawfully procured.
(d) If the nonadmitted insurer fails to pay a claim or loss within the provisions of the insurance contract and the laws of this State,
a person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract, shall be liable to the
insured for the full amount under the provisions of the insurance contract.
(e) Subsection (b) or (d) of this section shall not apply to an insured who independently procures insurance.
(f) This section shall not apply to a person, properly licensed as a producer in this State who, for a fee and pursuant to a written
agreement, is engaged solely to offer to the insured advice, counsel or opinion, or service with respect to the benefits, advantages or
disadvantages promised under any proposed or in-force policy of insurance if the person does not, directly or indirectly, participate in the
solicitation, negotiation or procurement of insurance on behalf of the insured.
(g) This section shall not apply to a surplus lines broker duly licensed in this State who is acting in material compliance with the
insurance laws of this State in the placement of surplus lines insurance as provided in this chapter.
(78 Del. Laws, c. 176, § 2; 70 Del. Laws, c. 186, § 1.)
§ 1912. Conditions for export.
(a) If certain insurance coverage cannot be procured from authorized insurers, such coverage, hereinafter designated “surplus lines,”
may be procured from nonadmitted insurers, subject to the following conditions:
(1) Each insurer is an eligible surplus lines insurer; and
(2) Each insurer is authorized to write the type of insurance in its domiciliary jurisdiction; and
(3) The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from among the
insurers authorized to transact and actually writing that kind and class of insurance in this State, and the amount of insurance exported
shall be only the excess over or other than the amount procurable from authorized insurers; and
(4) The insurance must not be so exported for the purpose of securing advantages either as to:
a. A lower premium rate than would be accepted by an authorized insurer; or
b. Terms of the insurance contract.
(5) All other requirements of this chapter are met.
(b) For purposes of this section, “type of insurance” means the hazard or combination of hazards covered by a contract of insurance.
Page 125
Title 18 - Insurance Code
(c) Each surplus line broker shall be responsible to ensure that a diligent effort is made among insurers that are admitted to transact
and are actually writing the particular type of insurance in this State before procuring the insurance for a home state insured from a
nonadmitted insurer.
(1) A diligent search shall only be performed by a surplus lines broker or a producer licensed in this State that holds an active property
and casualty insurance producer license.
(2) An insurance producer or surplus lines broker is exempt from the diligent effort requirements of this section if the producer or
surplus lines broker is procuring insurance for a risk purchasing group as provided in Chapter 80 of this title.
(d) Except as provided in paragraph (c)(2) of this section and § 1914 of this title, the Commissioner shall by regulation establish the
degree of effort required to comply with paragraphs (a)(3) and (4) of this section and the means to certify to the accuracy of the facts
supporting the surplus line broker’s diligent search effort.
(18 Del. C. 1953, § 1904; 56 Del. Laws, c. 380, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1913. Duty of inquiry by surplus lines broker.
(a) The surplus lines broker shall be responsible for determining whether an applicant for nonadmitted insurance is a Delaware home
state insured. A surplus lines broker who reasonably relies on information provided in good faith by the applicant, whether directly or
through the producer, shall be deemed to be in compliance with this requirement.
(b) A broker shall not knowingly place surplus lines insurance with an insurer that is unsound financially or that does not meet the
eligibility requirements under subchapter III of this chapter.
(c) Before placing insurance with a nonadmitted insurer, all surplus lines brokers shall make a thorough inquiry into the financial
condition and operating history of such insurer in order that the interests of the citizens of Delaware may be protected.
(d) During the course of placing business with a nonadmitted insurer, either foreign or alien, each surplus lines broker shall be under
a continuous duty to apprise himself or herself that such insurer maintains a condition of solvency and general financial health, and that
the company processes claims and pays losses expeditiously.
(e) Whenever any reasonable doubt arises as to the capacity, competence, stability or good faith of a nonadmitted insurer with which
a surplus lines broker places insurance on behalf of the public of Delaware, the broker is under a further duty to inform the Insurance
Commissioner of the basis of such doubt. Any broker in a position of doubt shall immediately cease and desist placing further business
with such insurer.
(78 Del. Laws, c. 176, § 2; 70 Del. Laws, c. 186, § 1.)
§ 1914. Streamlined application for commercial purchasers.
(a) A surplus lines broker seeking to procure or place nonadmitted insurance in this State for an exempt commercial purchaser whose
home state is this State shall not be required to satisfy any requirement to make a diligent effort to determine whether the full amount or
type of insurance sought by such exempt commercial purchaser can be obtained from admitted insurers if:
(1) The broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that such insurance
may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and
(2) The exempt commercial purchaser has subsequently requested in writing the broker to procure or place such insurance from a
nonadmitted insurer.
(b) For purposes of this section, the term “exempt commercial purchaser” means any person purchasing commercial insurance that,
at the time of placement, meets the following requirements:
(1) The person employs or retains a qualified risk manager to negotiate insurance coverage.
(2) The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the
immediately preceding 12 months.
(3) The person meets at least 1 of the following criteria:
a. The person possesses a net worth in excess of $20,000,000; as such amount is adjusted pursuant to subsection (c) of this section.
b. The person generates annual revenues in excess of $50,000,000; as such amount is adjusted pursuant to subsection (c) of this
section.
c. The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an
affiliated group employing more than 1,000 employees in the aggregate.
d. The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000; as
such amount is adjusted pursuant to subsection (c) of this section.
e. The person is a municipality with a population in excess of 50,000 persons.
(c) Effective January 1, 2016, and each fifth January 1 occurring thereafter, the amounts in paragraphs (b)(3)a., b. and d. of this section
shall be adjusted to reflect the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published
by the Bureau of Labor Statistics of the Department of Labor.
(78 Del. Laws, c. 176, § 2.)
Page 126
Title 18 - Insurance Code
§ 1915. Open lines for export.
(a) The Commissioner may by order declare eligible for export for a home state insured, generally and without compliance with the
provisions of § 1912 of this title, any class or classes of insurance coverage or risk for which the Commissioner finds, after a hearing of
which notice was given to each insurer authorized to transact such class or classes in this State, that there is not a reasonable or adequate
market among authorized insurers either as to acceptance of the risk, contract terms, or premium rate. Any such order shall continue in
effect during the existence of the conditions upon which predicated, but subject to earlier termination by the Commissioner.
(b) The broker shall file as directed by the Commissioner a memorandum as to each such coverage placed by him or her in a nonadmitted
insurer for a home state insured, in such form and context as the Commissioner may reasonably require for the identification of the
coverage and determination of the tax payable to the state relative thereto.
(c) The broker or a licensed Delaware producer of the authorized insurer may also place with authorized insurers any insurance coverage
made eligible for export generally under subsection (a) of this section above, and without regard to rate or form filings which may
otherwise be applicable as to the authorized insurer. As to coverage so placed in an authorized insurer, the premium tax thereon shall be
reported and paid by the insurer as required generally under Chapter 7 of this title.
(18 Del. C. 1953, § 1906; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1916. Evidence of the insurance; changes; penalty.
(a) Upon placing a surplus lines coverage for a home state insured, the broker shall promptly issue and deliver to the insured evidence
of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, the surplus line broker’s
certificate. Such a certificate shall be executed by the broker and shall show the name and license number of the individual surplus lines
broker, the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate
charged, taxes collected from the insured, and the name and address of the insured and insurer. If the risk is assumed by more than 1
insurer, the certificate shall state the name and address and proportion of the entire risk assumed by each such insurer.
(b) No broker shall issue any such certificate or any cover note, or purport to insure or represent that insurance will be or has been granted
by any nonadmitted insurer, unless he or she has prior written authority from the insurer for the insurance, or has received information
from the insurer in the regular course of business that such insurance has been granted, or an insurance policy providing the insurance
actually has been issued by the insurer and delivered to the insured.
(c) If after the issuance and delivery of any such certificate there is any change as to the identity of the insurers, or the proportion of the
direct risk assumed by an insurer as stated in the broker’s original certificate, or in any other material respect as to the insurance evidenced
by the certificate, the broker shall promptly issue and deliver to the insured or the original producing agent a substitute for, or endorsement
of, the original document, accurately showing the current status of the coverage and the insurers responsible for the coverage.
(d) As soon as reasonably possible after the placement of the insurance, the surplus lines broker shall deliver a copy of the policy
or, if not available, a certificate of insurance to the insured or producing agent to replace any evidence of insurance previously issued.
Each certificate or policy of insurance shall contain or have attached a complete record of all policy insuring agreements, conditions,
exclusions, clauses, endorsements or any other material facts that would regularly be included in the policy.
(e) Any surplus lines broker, who knowingly or negligently issues a false certificate of insurance or who fails promptly to notify the
insured of any material change with respect to such insurance by delivery to the insured of a substitute certificate as provided in subsection
(c) of this section, shall, upon conviction, be subject to the penalty provided by § 106 of this title or to any greater applicable penalty
otherwise provided by law.
(18 Del. C. 1953, § 1908; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1917. Endorsement of contract.
(a) Licensee’s duty to notify insured. — (1) No contract of insurance placed by a surplus lines broker under this chapter for a home
state insured shall be binding upon the insured and no premium charged shall be due and payable until the surplus lines broker shall have
notified the insured in writing, in a form acceptable to the Commissioner, a copy of which shall be maintained by the surplus lines broker
with the records of the contract and available for possible examination, that:
a. The insurer with which the broker places the insurance is not licensed by this State and is not subject to its supervision; and
b. In the event of the insolvency of the surplus lines insurer, losses will not be paid by the state insurance guaranty fund.
(2) Nothing herein contained shall nullify any agreement by any insurer to provide insurance.
(3) This subsection shall not apply to an insured in this State who independently procures insurance.
(b) Every insurance contract procured and delivered as surplus lines coverage pursuant to this law shall have stamped or printed upon
it, initialed by and bearing the name of the individual surplus lines broker who procured it, the following disclosure statement:
“This insurance contract is issued pursuant to the Delaware Insurance Laws by an insurer neither licensed by nor under the jurisdiction
of the Delaware Insurance Department. This insurer does not participate in insurance guaranty funds created by state law. In the event
of the insolvency of the surplus lines insurer, losses will not be paid by the state insurance guaranty fund.”
(c) When a contract is issued to an exempt commercial purchaser as described in § 1914 of this title, neither the nonadmitted insurer
nor the surplus line broker is required to provide the notice required in this section except on the confirmation of insurance, the certificate
Page 127
Title 18 - Insurance Code
of placement, or the policy, whichever is first provided to the insured, nor is the insurer or surplus line broker required to obtain the
insured’s signature. The producer shall ensure that the notice affixed to the confirmation of insurance, certificate of placement, or the
policy is provided to the insured.
(d) Paragraph (a)(1)a. and subsection (b) of this section shall not apply when the surplus lines coverage is procured from a domestic
surplus lines insurer pursuant to § 1932 of this title.
(18 Del. C. 1953, § 1909; 56 Del. Laws, c. 380, § 1; 78 Del. Laws, c. 176, § 2; 80 Del. Laws, c. 30, § 1.)
§ 1918. Surplus line insurance valid.
Insurance contracts procured as surplus lines coverage from nonadmitted insurers in accordance with this law, whether so procured
by a surplus lines broker or directly by the insured by means of independent procurement, shall be fully valid and enforceable as to all
parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.
(18 Del. C. 1953, § 1910; 56 Del. Laws, c. 380, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1919. Liability of insurer.
(a) A payment of premium to a surplus lines broker acting for a person other than himself or herself in procuring, continuing or renewing
any policy of insurance procured under this law shall be deemed to be payment to the insurer, whatever conditions or stipulations may
be inserted in the policy or contract notwithstanding.
(b) As to a surplus lines risk which has been assumed by a nonadmitted insurer pursuant to this surplus lines insurance law, and if the
premium thereon has been received by the surplus line broker who placed such insurance, in all questions thereafter arising under the
coverage as between the insurer and the insured the insurer shall be deemed to have received the premium due to it for such coverage, and
the insurer shall be liable to the insured as to losses covered by such insurance and for unearned premiums which may become payable to
the insured upon cancellation of such insurance, whether or not in fact the broker is indebted to the insurer with respect to such insurance
or for any other cause.
(c) Each nonadmitted insurer assuming a surplus lines risk under this surplus lines insurance law shall be deemed thereby to have
subjected itself to the terms of this section.
(18 Del. C. 1953, § 1911; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1920. Surplus line brokers; licensing.
(a) No individual is required to be licensed pursuant to this chapter as a surplus lines broker if the home state of the insured is a state
other than Delaware.
(b) The penalty in Chapter 17 of this title for selling, soliciting, negotiating, or procuring surplus lines insurance in this State without a
surplus lines license shall be waived if the Insurance Commissioner receives an application for licensure as a surplus lines broker within
45 days from the effective date of a multi-state policy for which this State is the insured’s home state.
(c) Any individual, while licensed in this State as a resident or nonresident producer, who is deemed by the Commissioner to be
competent and trustworthy with respect to the handling of surplus lines may be licensed as a surplus lines broker.
(d) Application for the license shall be made to the Commissioner on forms as designated by the Commissioner.
(e) The license fee shall be as specified in § 701 of this title.
(f) The license and licensee shall be subject to the applicable provisions of Chapter 17 of this title.
(g) For the purposes of implementing the NRRA [Nonadmitted and Reinsurance Reform Act of 2010, 15 U.S.C. § 8201 et seq.], the
Commissioner shall participate in the National Insurance Producer Database of the NAIC or any other equivalent national database for
the licensure and license renewal of surplus lines brokers on and after July 21, 2012.
(18 Del. C. 1953, § 1912; 56 Del. Laws, c. 380, § 1; 73 Del. Laws, c. 69, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1921. Suspension, revocation, of broker’s license.
(a) Subject to § 1712 of this title, the Commissioner may also suspend or revoke any surplus line broker’s license:
(1) If the broker fails to file the annual statement as required by § 1924 of this title, or to remit the tax as required by § 1925 of
this title; or
(2) If the broker fails to keep the records, or to allow the Commissioner to examine his or her records as required by this law; or
(3) If the broker places a surplus line coverage in an insurer other than as authorized under subchapter III of this chapter; or
(4) For violation of any provision of this chapter; or
(5) For any cause for which an insurance license could be denied, revoked, suspended or renewal refused under Chapter 17 of this title.
(b) The procedures provided by Chapter 17 of this title for suspension or revocation of licenses shall apply to suspension or revocation
of a surplus lines broker’s license.
(c) Upon suspending or revoking the broker’s surplus lines license the Commissioner shall also suspend or revoke all other licenses
of or as to the same individual under this title.
(18 Del. C. 1953, § 1913; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 2.)
Page 128
Title 18 - Insurance Code
§ 1922. Broker may compensate agents and other licensed producers.
A licensed surplus lines broker may accept and place surplus lines business for any insurance producer licensed in this State for the
kind of insurance involved, and may compensate the producer for the business.
(18 Del. C. 1953, § 1914; 56 Del. Laws, c. 380, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1923. Records of broker.
(a) Each broker shall keep in his or her office a full and true record of each surplus lines coverage procured by him or her for a home
state insured, including a copy of each daily report, if any, a copy of each certificate of insurance issued by him or her, and such of the
following items as may be applicable:
(1) Verification that the insured is a Delaware home state insured;
(2) Whether or not a policy is a single-state policy or a multi-state policy;
(3) Verification that a commercial insured qualifies under the provisions of § 1914 of this title;
(4) Amount of the insurance;
(5) Gross premium charged;
(6) Return premium paid, if any;
(7) Rate of premium charged upon the several items of property;
(8) Effective date of the contract and the terms thereof;
(9) Name and address of each insurer on the direct risk and the proportion of the entire risk assumed by such insurer if less than
the entire risk;
(10) Name and address of the insured;
(11) Brief general description of the property or risk insured and where located or to be performed;
(12) A tax allocation spreadsheet detailing the portion of premium attributable to properties, risks, or exposures located in each state;
(13) Other information as may be required by the Commissioner; and
(14) A written statement on a form prescribed by the Commissioner as to the diligent effort to place the coverage with admitted
insurers as set forth in § 1912 of this title and the results of that effort, except where the transaction is pursuant to § 1912(c)(2) or §
1914 of this title. The written statement must be open to public inspection. The written statement must affirm that the insured was
expressly advised in writing prior to placement of the insurance that:
a. The surplus lines insurer with whom the insurance was to be placed is not licensed in this State and is not subject to the State’s
supervision; and
b. In the event of the insolvency of the surplus lines insurer, losses will not be paid by the State Insurance Guaranty Fund.
(b) The broker’s record shall be open to examination by the Commissioner at all times within 5 years after issuance of the coverage
to which it relates.
(c) After notice and hearing, the Commissioner may promulgate reasonable rules and regulations specifying the manner and type of
records to be maintained by surplus lines brokers and the location or locations where those records shall be kept.
(18 Del. C. 1953, § 1915; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 69, § 2; 78 Del. Laws, c. 176, § 2;
80 Del. Laws, c. 30, § 2.)
§ 1924. Annual statement of broker.
(a) Unless the Commissioner determines that more frequent reporting is necessary, each broker shall on or before March 1 of each
year file with the Commissioner a statement verified by the broker of all surplus lines insurance transacted by him or her during the
preceding calendar year.
(b) The statement shall be on forms as prescribed by the Commissioner and shall contain an account of the business done by the surplus
lines broker placing business for a home state insured, showing:
(1) Gross amount of each kind of insurance transacted;
(2) Total amount of gross premiums charged for business conducted;
(3) Total amount of gross premiums charged for single state risks where 100% of the premium is attributable to risks in Delaware;
(4) Total amount of gross premiums charged for multi-state risks and the percentage of premium allocated to Delaware and each
other state;
(5) Aggregate of returned premiums paid to insureds;
(6) Aggregate of net premiums;
(7) The amount of gross premiums of all business procured by him or her covering risks as described in § 705 of this title in the City
of Wilmington, in the County of New Castle outside the City of Wilmington, in Kent County and in Sussex County, including allocation
of the portion of the gross premiums for coverage types listed in § 705 of this title and allocable to each of the above geographic areas.
Page 129
Title 18 - Insurance Code
(8) Additional information as required by the Commissioner.
(c) For purposes of this section, “business done” or “business transacted” means all surplus lines insurance business conducted by the
surplus lines broker for a home state insured. If 2 or more persons licensed as surplus lines brokers are involved in placing a policy,
only the one who is responsible for negotiating, effecting the placement, and remitting the premium to the nonadmitted insurer or its
representatives, shall be considered transacting business.
(18 Del. C. 1953, § 1916; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 2.)
§ 1925. Tax on surplus lines.
(a) The Commissioner shall ensure that reasonable measures are developed to recover insurance taxes and other amounts due this State
during each year.
(b) Every surplus lines broker shall collect and pay to the State Treasurer through the Commissioner a 3 percent tax on the gross
premiums charged, less any returned premiums and exclusive of sums collected to cover federal and state taxes and examination fees, for
insurance placed or procured under his or her surplus lines license in which this State is the home state of the insured.
(c) For the purposes of this section, if a surplus lines policy procured through a surplus lines broker covers properties, risks, or exposures
only partially located or to be performed in this State, but this State is the home state of the insured, all premium for the policy shall be
considered written on properties, risks, or exposures located or to be performed in this State.
(d) The tax on any portion of the premium unearned at termination of insurance having been credited by the State to the surplus lines
producer must be returned to the policyholder directly by the surplus lines producer. The surplus lines producer is prohibited from rebating,
for any reason, any part of the tax.
(e) Annually, on or before March 1, unless more frequent reporting and payment is ordered by the Commissioner, each surplus lines
broker shall pay the premium tax due according to subsection (b) of this section for the policies written during the preceding calendar
year as shown by his or her annual statement filed with the Commissioner pursuant to § 1924 of this title. Payment shall accompany such
forms and shall be made in such manner as is prescribed by the Commissioner.
(f) One-third of the funds received by the Insurance Commissioner in accordance with the provisions of subsection (b) of this section
shall be paid to the State Treasurer and shall be set aside as a special fund to provide funding for health insurance premiums for retired
county and municipal police and firefighters as authorized in § 1928(a)(1) of this title. These funds shall be paid out by the State Treasurer
to the Board of Pension Trustees. The State Treasurer shall determine the total number of state, county and municipal police from an
annual registry in accordance with § 709(a) of this title, and shall make distribution proportionately and on a per capita basis, to the
Board of Pension Trustees.
(18 Del. C. 1953, § 1917; 56 Del. Laws, c. 380, § 1; 66 Del. Laws, c. 382, § 6; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, §
3; 79 Del. Laws, c. 373, § 1.)
§ 1926. Independently procured insurance.
(a) Any person whose home state is this State may directly procure or directly renew insurance with a nonadmitted insurer, as defined
in § 1904 of this title, without the involvement of a surplus lines licensee, on a risk located or to be performed, in whole or in part, in
this State.
(b) Each insured whose home state is this State that independently procures or continues or renews insurance with a nonadmitted insurer
on properties, risks, or exposures located or to be performed in whole or in part in this State, other than insurance procured through a
surplus lines broker, is subject to the same tax reporting requirements under this chapter as apply to a surplus lines broker.
(c) On or before March 1 each year, the insured that independently procures insurance must file a written report with the Commissioner,
upon forms prescribed by the Commissioner, showing the name and address of the insured or insureds, name and address of the insurer,
the subject of the insurance, a general description of the coverage, the amount of premium currently charged, and additional pertinent
information reasonably requested by the Commissioner.
(d) At the time of filing the report required in subsection (b) of this section, the insured shall pay to the State Treasurer through the
Commissioner a tax at the same rate and in the same manner as surplus lines brokers, as required in § 1925(e) of this title.
(78 Del. Laws, c. 176, § 3.)
§ 1927. Failure to file statement or remit tax; penalty.
(a) If any broker fails to file his or her annual statement or fails to remit the tax as required in §§ 1924 and 1925 of this title, or if any
insured who independently procured insurance fails to file the report and remit the tax provided by § 1926 of this title prior to or on the
date the tax is due, and, if in the Commissioner’s opinion such failure is without just cause, he or she shall be liable for a fine of $25 for
each day of delinquency commencing with the first day after the tax is due.
(b) The tax may be collected by distraint, or the tax and fine may be recovered by an action instituted by the Commissioner in any
court of competent jurisdiction.
(c) Any fine collected by the Commissioner shall be paid to the State Treasurer and credited to the General Fund.
(18 Del. C. 1953, § 1918; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 3.)
Page 130
Title 18 - Insurance Code
§ 1928. Distribution of proceeds of special revenue for benefit of police retiree health insurance [For
application of this section, see 79 Del. Laws, c. 373, § 3].
(a) (1) The payments to the Board of Pension Trustees referred to in § 1925(f) of this title for a county or municipality that has elected
to participate in the state-administered County and Municipal Police/Firefighter Pension Plan in accordance with Chapter 88 of Title 11,
shall be deposited into a special fund, to be managed by the State Board of Pension Trustees, to provide health insurance premiums for
retired county and municipal police and firefighters. The State Board of Pension Trustees shall allocate the funds deposited in this special
fund on an annual basis to provide up to 80% of the cost of retiree health insurance contingent on the availability of funds. The retiree’s
premium would be the difference between the total cost and what is available from the special fund.
(2) The payments to the Board of Pension Trustees referenced in § 1925(f) of this title for the State Police shall be deposited into the
Other Post-Employment Benefits Fund (OEPB) established by § 5281 of Title 29, to provide for the State’s health insurance premiums
for retired State Police.
(b) Any funds on deposit in this special fund, including accumulated income, shall revert to the General Fund, if such funds are not
utilized for retiree health insurance within 5 years from the date of deposit into the special fund.
(79 Del. Laws, c. 373, § 2.)
Subchapter III
Nonadmitted Insurers
§ 1931. Minimum financial eligibility standards for surplus line insurers.
(a) The Commissioner may consider a surplus lines insurer to be eligible if the nonadmitted insurer:
(1) If a United States domestic insurer has capital and surplus or its equivalent under the laws of its domiciliary jurisdiction which
equals the greater of:
a. 1. The minimum capital and surplus requirements under the law of this State; or
2. Fifteen million dollars.
b. The requirements of this paragraph (a)(1) may be satisfied by an insurer possessing less than the minimum capital and surplus
upon an affirmative finding of acceptability by the Commissioner. The finding must be based upon such factors as quality of
management, capital and surplus of any parent company, company underwriting profit and investment income trends, market
availability, and company record and reputation within the industry. The Commissioner may not make an affirmative finding of
acceptability when the nonadmitted insurer’s capital and surplus is less than $4,500,000; or
(2) The insurer is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC
if the insurer is not domiciled in the United States or its territories.
(b) This section shall not be deemed to require the Commissioner to determine the actual financial condition or claims practices of any
nonadmitted insurer; and the status of eligibility shall indicate only that the insurer appears to be sound financially and to have satisfactory
claims practices, and that the Commissioner has no credible evidence to the contrary.
(78 Del. Laws, c. 176, § 4.)
§ 1932. Domestic surplus lines insurers.
(a) A Delaware domestic insurer possessing policyholder surplus of at least $15,000,000 may, pursuant to a resolution by its board of
directors, and with the written approval of the Insurance Commissioner, be designated as a domestic surplus lines insurer. Such insurers
may write surplus lines insurance in any jurisdiction, including this State.
(b) In this State, a Delaware domestic surplus lines insurer may only insure a Delaware risk when such coverage is procured pursuant
to this chapter governing surplus lines insurance, and the premium shall be subject to surplus lines premium tax pursuant to § 1917 of
this title.
(c) A domestic surplus lines insurer may not issue a policy designed to satisfy the motor vehicle financial responsibility requirements
of this State (§ 2118(c) of Title 21), the Workers’ Compensation Act (§ 2372(a) of Title 19), or any other law of this State mandating
insurance coverage by a licensed insurance company.
(d) A domestic surplus lines insurer must agree to abide by all the requirements of this chapter, and all other requirements of the
Delaware Code applicable to Delaware domestic insurers, unless otherwise exempted. The provisions of Chapters 42 and 44 of this title
will not apply to a domestic surplus lines insurer.
(78 Del. Laws, c. 176, § 4.)
§ 1933. Withdrawal of eligibility as a surplus lines insurer.
(a) If at any time the Commissioner has reason to believe that a nonadmitted insurer currently eligible as a surplus lines insurer:
(1) Is in unsound financial condition or has acted in an untrustworthy manner; or
(2) No longer meets the requirements for eligibility set forth in § 1931 of this title; or
Page 131
Title 18 - Insurance Code
(3) Has wilfully violated the laws of this State; or
(4) Does not conduct a proper claims practice;
the Commissioner may declare such insurer no longer an eligible surplus lines insurer, upon notice and hearing.
(b) The Commissioner shall promptly mail notice of any such declaration to the regulatory authority of the domiciliary jurisdiction of
the insurer. The Commissioner shall also publish notice of all such declarations electronically.
(78 Del. Laws, c. 176, § 4.)
§ 1934. Legal process against surplus line insurer.
(a) A nonadmitted insurer shall be sued, upon any cause of action arising in this State under any contract issued by it as a surplus line
contract pursuant to this law, in the Superior Court of this State.
(b) Service of legal process against the insurer may be made in any such action by service of 2 copies thereof upon the Commissioner
and payment of the service of process fee specified in § 701 of this title. The Commissioner shall forthwith mail a copy of the process
served to the person designated by the insurer in the policy for the purpose by prepaid registered or certified mail with return receipt
requested. If no such person is so designated in the policy, the Commissioner shall in like manner mail a copy of the process to the broker
through whom such insurance was procured, or to the insurer at its principal place of business, addressed to the address of the broker or
insurer, as the case may be, last of record with the Commissioner. Upon service of process upon the Commissioner and mailing of the
same in accordance with this provision, the Court shall be deemed to have jurisdiction in personam of the insurer.
(c) A nonadmitted insurer issuing such policy shall be deemed thereby to have authorized service of process against it in the manner
and to the effect as provided in this section. Any such policy shall contain a provision stating the substance of this section and designating
the person to whom the Commissioner shall mail process as provided in subsection (b) of this section.
(18 Del. C. 1953, § 1919; 56 Del. Laws, c. 380, § 1; 78 Del. Laws, c. 176, § 4.)
§ 1935. Requirements for eligible surplus lines insurers.
(a) An eligible surplus lines insurer shall furnish at least annually to the Commissioner an annual financial statement in a form acceptable
to the Commissioner.
(b) An eligible surplus lines insurer shall pay annual fees pursuant to § 701 of this title.
(c) The requirements for rate and form filing contained in this title shall not apply to surplus lines insurance.
(18 Del. C. 1953, § 1907; 56 Del. Laws, c. 380, § 1; 57 Del. Laws, c. 351; 70 Del. Laws, c. 186, § 1; 78 Del. Laws, c. 176, § 4.)
§ 1936. Application and qualifications for approval.
(a) The Commissioner shall from time to time publish a list of surplus lines insurers deemed by him or her eligible to place business
on Delaware risks currently.
(b) No foreign or alien insurer shall become listed as a surplus lines insurer eligible in Delaware unless a completed application as
prescribed by the Commissioner is received and the insurer has paid the application fee pursuant to § 701 of this title.
(78 Del. Laws, c. 176, § 4; 70 Del. Laws, c. 186, § 1.)
Subchapter IV
Miscellaneous
§ 1941. Applicability.
This chapter shall apply to all nonadmitted insurance business in which this State is the home state of the insured as defined in this
chapter.
(78 Del. Laws, c. 176, § 5.)
§ 1942. Reserved power of this State to alter or repeal chapter.
All provisions of this chapter may be altered from time to time or repealed.
(78 Del. Laws, c. 176, § 5.)
§ 1943. Short title.
This chapter constitutes and may be cited as the “Delaware Nonadmitted Insurance Act.”
(78 Del. Laws, c. 176, § 5.)
§ 1944. Penalties and violations.
(a) Penalties cited in this chapter are not exclusive remedies. In addition to any penalty provided herein, including any suspension,
revocation or refusal to renew a license, any person, firm, association or corporation violating any provision of this chapter may also be
assessed penalties under § 2308 or § 2411 of this title.
Page 132
Title 18 - Insurance Code
(b) Whenever the Commissioner believes, from evidence satisfactory to him or her, that a person is violating or about to violate the
provisions of this chapter, the Commissioner may cause a complaint to be filed in a court of competent jurisdiction for restitution and
to enjoin and restrain the person from continuing the violation or engaging in or doing any act in furtherance thereof. The court shall
have jurisdiction of the proceeding and shall have the power to make and enter an order of judgment awarding such preliminary or final
injunctive relief and restitution as in its judgment is proper.
(78 Del. Laws, c. 176, § 5; 70 Del. Laws, c. 186, § 1.)
§ 1945. Urgency.
This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety, and support of the
state government and its existing institutions, and shall go into immediate effect. The facts constituting the necessity are: In order to
forestall preemption on June 16, 2011, of state statutes pertaining to surplus line insurance taxation, eligibility, and broker licensure by
the Nonadmitted and Reinsurance Reform Act of 2010 [15 U.S.C. § 8201 et seq.], a part of the federal Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 [12 U.S.C. § 5301], it is necessary that this act take effect immediately.
(78 Del. Laws, c. 176, § 5.)
Page 133
Title 18 - Insurance Code
Part I
Insurance
Chapter 20
Rental Car Insurance Producer Limited License Act
§ 2001. Short title.
This chapter shall be known as the “Rental Car Insurance Producer Limited License Act.”
(73 Del. Laws, c. 189, § 1.)
§ 2002. Definitions.
As used in this chapter:
(1) “Limited license” means the authority of a person or entity authorized to sell certain coverages relating to the rental of vehicles
pursuant to this chapter.
(2) “Rental agreement” means any written agreement setting forth the terms and conditions governing the use of a vehicle provided
by the rental company for rental or lease.
(3) “Rental company” means any person or entity in the business of providing primarily motor vehicles to the public under a rental
agreement for a rental period not to exceed 90 days.
(4) “Renter” means any person obtaining the use of a vehicle from a rental company under the terms of a rental agreement for a
rental period not to exceed 90 days.
(5) “Vehicle” or “rental vehicle” means a motor vehicle of the private passenger type including passenger vans, minivans and sport
utility vehicles, and of the cargo type, including cargo vans, pickup trucks with a gross vehicle weight of less than 26,000 pounds and
which do not require the operator to possess a commercial driver’s license.
(73 Del. Laws, c. 189, § 1.)
§ 2003. General rules.
(a) The Commissioner may issue to a rental company that has complied with the requirements of this chapter a limited license
authorizing the limited licensee to offer or sell insurance in connection with the rental of vehicles.
(b) As a prerequisite for issuance of a limited license under this chapter, there shall be filed with the Commissioner a written application
for a limited license signed by an officer of the applicant, in such form or forms, and supplement thereto, and containing such information
as the Commissioner may prescribe.
(c) The rental company licensed pursuant to subsection (a) of this section may offer or sell insurance only in connection with and
incidental to the rental of vehicles, whether at the rental office or by preselection of coverage in master, corporate, group rental or individual
agreements, in any of the following general categories:
(1) Personal accident insurance covering the risks of travel, including but not limited to accident and health insurance that provides
coverage, as applicable, to renters and other rental vehicle occupants for accidental death or dismemberment and reimbursement for
medical expenses resulting from an accident that occurs during the rental period;
(2) Liability insurance which, at the exclusive option of the rental company, may include uninsured and underinsured motorist
coverage, whether offered separately or in combination with other liability insurance, that provides protection, as applicable, to renters
and other authorized drivers of rental vehicles for liability arising from the operation of the rental vehicle;
(3) Personal effects insurance that provides coverage, as applicable, to renters and other vehicle occupants for the loss of or damage
to personal effects that occurs during the rental period;
(4) Roadside assistance and emergency sickness protection programs; and
(5) Any other travel or vehicle related coverage that a rental company offers in connection with and incidental to the rental of vehicles.
(d) No insurance may be offered or sold by a limited licensee pursuant to this chapter unless:
(1) The rental period of the rental agreement does not exceed 90 consecutive days;
(2) At every rental location where rental agreements are executed, brochures or other written materials are readily available to the
prospective renter that:
a. Summarize clearly and correctly the material terms of coverage offered to renters, including the identity of the insurer;
b. Disclose that the coverage offered by the rental company may provide a duplication of coverage already provided by a renter’s
personal automobile insurance policy, homeowner’s insurance policy, personal liability insurance policy or other source of coverage;
c. State that the purchase by the renter of the kinds of coverage specified in this section is not required in order to rent a vehicle; and
d. Describe the process for filing a claim in the event the renter elects to purchase coverage and in the event of a claim; and
Page 134
Title 18 - Insurance Code
(3) Evidence of coverage in the rental agreement is disclosed to every renter who elects to purchase such coverage.
(e) Any limited license issued under this chapter shall also authorize any employee of the limited licensee to act individually on behalf
and under the supervision of the limited licensee with respect to the kinds of coverage specified in this chapter.
(f) Each rental company licensed pursuant to this chapter shall conduct a training program in which employees being trained shall
receive basic instruction about the kinds of coverage specified in this chapter and offered for purchase by prospective renters of rental
vehicles.
(g) Notwithstanding any other provision of this chapter or any rule adopted by the Commissioner, a limited licensee pursuant to this
chapter shall not be required to treat moneys collected from renters purchasing such insurance when renting vehicles as funds received
in a fiduciary capacity or to hold such funds in separate trust accounts.
(h) No limited licensee under this chapter shall advertise, represent or otherwise hold itself or any of its employees out as licensed
insurers, insurance agents or insurance brokers.
(73 Del. Laws, c. 189, § 1.)
§ 2004. Termination of limited license.
In the event that any provision of this chapter is violated by a limited licensee, the Commissioner may:
(1) After notice and a hearing, revoke or suspend a limited license issued under this chapter.
(2) After notice and hearing, impose such other penalties, including suspending the transaction of insurance at specific rental locations
where violations of this chapter have occurred, as the Commissioner deems to be necessary or convenient to carry out the purposes
of this chapter.
(73 Del. Laws, c. 189, § 1.)
§ 2005. Rules and regulations.
The Commissioner may issue reasonable rules and regulations for the implementation and administration of this chapter.
(73 Del. Laws, c. 189, § 1.)
§ 2006. Fees.
The fee for this limited license shall be $300 per year, per company.
(73 Del. Laws, c. 189, § 1.)
Page 135
Title 18 - Insurance Code
Part I
Insurance
Chapter 20A
Portable Electronic Device Insurance Producer Limited License Act
§ 2050. Short title.
This chapter shall be known as the “Portable Electronic Device Insurance Producer Limited License Act”.
(78 Del. Laws, c. 359, § 5.)
§ 2051. Definitions.
As used in this chapter:
(1) “Customer” means a person who purchases portable electronics or services.
(2) “Enrolled customer” means a customer who elects coverage under a portable electronics insurance policy issued to a vendor
of portable electronics.
(3) “Location” means any physical location in the State or any website, call center site or similar location directed to residents of
the State.
(4) “Portable electronics” means electronic devices that are portable in nature, their accessories and services related to the use of
the device.
(5) a. “Portable electronics insurance” means insurance providing coverage for the repair or replacement of portable electronics
which may provide coverage for portable electronics against any 1 or more of the following: loss, theft, inoperability due to mechanical
failure, malfunction, damage, or other similar cause of need for repair or replacement.
b. “Portable electronics insurance” does not include:
1. A service contract or extended warranty providing coverage limited to the repair, replacement or maintenance of property
for the operational or structural failure of property due to a defect in materials, workmanship, accidental damage from handling
power surges, or normal wear and tear;
2. A policy of insurance covering a seller’s or a manufacturer’s obligations under a warranty; or
3. A homeowner’s, renter’s, private passenger automobile, commercial multi-peril, or similar policy.
(6) “Portable electronics transaction” means:
a. The sale or lease of portable electronics by a vendor to a customer; or
b. The sale of a service related to the use of portable electronics by a vendor to a customer.
(7) “Supervising entity” means a business entity that is a licensed insurer or insurance producer that is appointed by an insurer to
supervise the administration of a portable electronics insurance program.
(8) “Vendor” means a person in the business of engaging in portable electronics transactions directly or indirectly.
(78 Del. Laws, c. 359, § 5.)
§ 2052. Licensure of vendors.
(a) A vendor is required to hold a limited lines license to sell or offer coverage under a policy of portable electronics insurance.
(b) A limited lines license issued under this section shall authorize any employee or authorized representative of the vendor to sell or
offer coverage under a policy of portable electronics insurance to a customer at each location at which the vendor engages in portable
electronics transactions.
(c) The supervising entity shall maintain a registry of vendor locations which are authorized to sell or solicit portable electronics
insurance coverage in this State. Upon request by the Commissioner and with 10 days’ notice to the supervising entity, the registry shall
be open to inspection and examination by the Commissioner during regular business hours of the supervising entity.
(d) Notwithstanding any other provision of law, a license issued pursuant to this section shall authorize the licensee and its employees
or authorized representatives to engage in those activities that are permitted in this section.
(78 Del. Laws, c. 359, § 5.)
§ 2053. Requirements for sale of portable electronics insurance.
(a) At every location where portable electronics insurance is offered to customers, brochures or other written materials must be made
available to a prospective customer which:
(1) Disclose that portable electronics insurance may provide a duplication of coverage already provided by a customer’s homeowner’s
insurance policy, renter’s insurance policy or other source of coverage;
Page 136
Title 18 - Insurance Code
(2) State that the enrollment by the customer in a portable electronics insurance program is not required in order to purchase or lease
portable electronics or services;
(3) Summarize the material terms of the insurance coverage, including:
a. The identity of the insurer;
b. The identity of the supervising entity;
c. The amount of any applicable deductible and how it is to be paid;
d. Benefits of the coverage; and
e. Key terms and conditions of coverage such as whether portable electronics may be repaired or replaced with similar make and
model reconditioned or nonoriginal manufacturer parts or equipment;
(4) Summarize the process for filing a claim, including a description of how to return portable electronics and the maximum fee
applicable in the event the customer fails to comply with any equipment return requirements; and
(5) State that an enrolled customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and
the person paying the premium shall receive a refund or credit of any applicable unearned premium.
(b) Portable electronics insurance may be offered on a month-to-month or other periodic basis as a group or master commercial inland
marine policy issued to a vendor of portable electronics for its enrolled customers.
(c) Eligibility and underwriting standards for customers electing to enroll in coverage shall be established for each portable electronics
insurance program.
(78 Del. Laws, c. 359, § 5.)
§ 2054. Authority of vendors of portable electronics.
(a) The employees and authorized representatives of vendors may sell or offer portable electronics insurance to customers and shall
not be subject to licensure as an insurance producer under this chapter provided that:
(1) The vendor obtains a limited lines license to authorize its employees or authorized representatives to sell or offer portable
electronics insurance pursuant to this section;
(2) The insurer issuing the portable electronics insurance either directly supervises or appoints a supervising entity to supervise
the administration of the program including development of a training program for employees and authorized representatives of the
vendors. The training required by this paragraph shall comply with the following:
a. The training shall be delivered to employees and authorized representatives of vendors who are directly engaged in the activity
of selling or offering portable electronics insurance.
b. The training may be provided in electronic form. However, if conducted in an electronic form the supervising entity shall
implement a supplemental education program regarding the portable electronics insurance product that is conducted and overseen
by licensed employees of the supervising entity; and
c. Each employee and authorized representative shall receive basic instruction about the portable electronics insurance offered to
customers and the disclosures required by this section; and
(3) No employee or authorized representative of a vendor of portable electronics shall advertise, represent or otherwise hold himself
or herself out as a nonlimited lines licensed insurance producer.
(b) The charges for portable electronics insurance coverage may be billed and collected by the vendor of portable electronics. Any
charge to the enrolled customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics
or related services shall be separately itemized on the enrolled customer’s bill. If the portable electronics insurance coverage is included
with the purchase or lease of portable electronics or related services the vendor shall clearly and conspicuously disclose to the enrolled
customer that the portable electronics insurance coverage is included with the portable electronics or related services. Vendors billing and
collecting such charges shall not be required to maintain such funds in a segregated account provided that the vendor is authorized by the
insurer to hold such funds in an alternative manner and remits such amounts to the supervising entity within 60 days of receipt. All funds
received by a vendor from an enrolled customer for the sale of portable electronics insurance shall be considered funds held in trust by
the vendor in a fiduciary capacity for the benefit of the insurer. Vendors may receive compensation for billing and collection services.
(78 Del. Laws, c. 359, § 5; 70 Del. Laws, c. 186, § 1.)
§ 2055. Suspension or revocation of license.
If a vendor of portable electronics or its employee or authorized representative violates any provision of this section, the Commissioner
may do any of the following:
(1) After notice and hearing, impose fines not to exceed $500 per violation or $5,000 in the aggregate for such conduct.
(2) After notice and hearing, impose other penalties that the commissioner deems necessary and reasonable to carry out the purpose
of this chapter, including:
a. Suspending the privilege of transacting portable electronics insurance pursuant to this section at specific business locations
where violations have occurred; and
Page 137
Title 18 - Insurance Code
b. Suspending or revoking the ability of individual employees or authorized representatives to act under the license.
(78 Del. Laws, c. 359, § 5.)
§ 2056. Termination of portable electronics insurance.
Notwithstanding any other provision of law:
(1) An insurer may terminate or otherwise change the terms and conditions of a policy of portable electronics insurance only upon
providing the policyholder and enrolled customers with at least 30 days’ notice.
(2) If the insurer changes the terms and conditions, then the insurer shall provide the vendor policyholder with a revised policy
or endorsement and each enrolled customer with a revised certificate, endorsement, updated brochure, or other evidence indicating a
change in the terms and conditions has occurred and a summary of material changes.
(3) Notwithstanding paragraph (1) of this section, an insurer may terminate an enrolled customer’s enrollment under a portable
electronics insurance policy upon 15 days’ notice for discovery of fraud or material misrepresentation in obtaining coverage or in the
presentation of a claim thereunder.
(4) Notwithstanding paragraph (1) of this section, an insurer may immediately terminate an enrolled customer’s enrollment under
a portable electronics insurance policy:
a. For nonpayment of premium;
b. If the enrolled customer ceases to have an active service with the vendor of portable electronics; or
c. If an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance
policy and the insurer sends notice of termination to the enrolled customer within 30 calendar days after exhaustion of the limit.
However, if notice is not timely sent, enrollment shall continue notwithstanding the aggregate limit of liability until the insurer sends
notice of termination to the enrolled customer.
(5) Where a portable electronics insurance policy is terminated by a policyholder, the policyholder shall mail or deliver written notice
to each enrolled customer advising the enrolled customer of the termination of the policy and the effective date of termination. The
written notice shall be mailed or delivered to the enrolled customer at least 30 days prior to the termination.
(6) Whenever notice or correspondence with respect to a policy of portable electronics insurance is required pursuant to this section
or is otherwise required by law, it shall be in writing and sent within the notice period, if any, specified within the statute or regulation
requiring the notice or correspondence. Notwithstanding any other provision of law, notices and correspondence may be sent either
by mail or by electronic means as set forth in this paragraph. If the notice or correspondence is mailed, it shall be sent to the vendor
of portable electronics at the vendor’s mailing address specified for such purpose and to its affected enrolled customers’ last known
mailing addresses on file with the insurer. The insurer or vendor of portable electronics, as the case may be, shall maintain proof of
mailing in a form authorized or accepted by the United States Postal Service or other commercial mail delivery service. If the notice or
correspondence is sent by electronic means, it shall be sent to the vendor of portable electronics at the vendor’s electronic mail address
specified for such purpose and to its affected enrolled customers’ last known electronic mail address as provided by each enrolled
customer to the insurer or vendor of portable electronics, as the case may be. For purposes of this paragraph, an enrolled customer’s
provision of an electronic mail address to the insurer or vendor of portable electronics, as the case may be, shall be deemed consent
to receive notices and correspondence by electronic means. The insurer or vendor of portable electronics, as the case may be, shall
maintain proof that the notice or correspondence was sent.
(7) Notice or correspondence required by this section or otherwise required by law may be sent on behalf of an insurer or vendor,
as the case may be, by the supervising entity appointed by the insurer.
(78 Del. Laws, c. 359, § 5.)
§ 2057. Application for license and fees.
(a) A person applying for a license under this chapter shall make application to the Insurance Commissioner on forms prescribed by the
Commissioner and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application
are true, correct and complete to the best of the person’s knowledge and belief.
(b) The application shall:
(1) Provide the name, residence address, and other information required by the Insurance Commissioner for an employee or officer
of the vendor that is designated by the applicant as the person responsible for the vendor’s compliance with the requirements of this
chapter. However, if the vendor derives more than 50% of its revenue from the sale of portable electronics insurance the information
noted above shall be provided for all officers, directors, and shareholder of record having beneficial ownership of 10% or more of any
class of securities registered under the federal securities law; and
(2) The location of the applicant’s home office.
(c) Any vendor engaging in portable electronics insurance transactions on or before January 1, 2013, must apply for licensure within
90 days of the application being made available by the Insurance Commissioner. Any applicant commencing operations after January 1,
2013, must obtain a license prior to offering portable electronics insurance.
Page 138
Title 18 - Insurance Code
(d) Initial licenses issued pursuant to this chapter shall be valid for a period of 24 months and expire on February 28 of the renewal
year assigned by the Insurance Commissioner.
(e) Each vendor of portable electronics licensed under this chapter shall pay to the Insurance Commissioner a fee as prescribed by
the Commissioner but in no event shall the fee exceed $1,000 for an initial portable electronics limited lines license and $500 for each
renewal thereof.
(78 Del. Laws, c. 359, § 5.)
Page 139
Title 18 - Insurance Code
Part I
Insurance
Chapter 20B
Self-Service Storage Producer Limited License Act.
(81 Del. Laws, c. 437, § 4.)
§ 2060. Short title
This chapter shall be known as the “Self-Service Storage Producer Limited License Act.”
(81 Del. Laws, c. 437, § 4.)
§ 2061. Definitions
As used in this chapter:
(1) “Occupant” means a person or the person’s sublesee, successor, or assign entitled to the use of a storage space or spaces at a
self-service storage facility, to the exclusion of others.
(2) “Owner” means the owner, operator, lessor, or sublessor of a self-service storage facility, him or her agent or any other person
authorized by him or her to manage the facility or to receive rent from an occupant under a rental agreement.
(3) “Personal property” means movable property that is not affixed to land and includes but is not limited to all of the following:
a. Goods, wares, merchandise, household items, and furnishings.
b. Vehicles, motor vehicles, trailers, and semitrailers.
c. Watercraft and motorized watercraft.
(4) “Self-service storage facility” means any real property designed and used for the purpose of renting or leasing individual storage
space to occupants who are to have access to such for the purpose of storing and removing personal property.
(5) “Self-service storage insurance” means insurance offered in connection with and incidental to the rental of space at a self-service
storage facility.
(6) “Self-service storage producer” means an owner who is licensed under this section.
(70 Del. Laws, c. 186, § 1; 81 Del. Laws, c. 437, § 4.)
§ 2062. Licensure of self-service storage producers
(a) The Commissioner may issue to an owner that has complied with the requirements of this chapter a limited lines license authorizing
the owner to offer, sell, solicit, or negotiate the kinds of insurance prescribed in this section in connection with and incidental to the rental
of space at a self-service storage facility.
(b) As a prerequisite for the issuance of a limited lines license under this chapter, a written application in a form and manner prescribed
by the Commissioner must be filed with the Commissioner. The application must specify all locations in this State at which the selfservice storage producer may conduct business under the license.
(1) An owner is only required to obtain 1 self-service storage producer license for all of its self-service storage facility locations in
the state where insurance is transacted.
(2) The self-service storage producer must notify the department within 30 days after commencing business under the self-service
storage producer’s license at any additional locations in this State or of those locations in this State that cease to do business under
the license.
(c) A self-service storage producer may offer or sell insurance only in connection with and incidental to the rental of space at a selfservice storage facility on a master, corporate, commercial, group, or individual policy basis and only with respect to personal property
insurance that provides primary coverage to occupants at the self-service storage facility where the insurance is transacted for the loss
of or damage to personal property that occurs at that facility or when such property is in transit during the period of the self-service
storage rental agreement.
(d) A self-service storage producer may not offer or sell insurance under this section unless each of the following:
(1) The self-service storage producer makes readily available to the prospective purchaser brochures or other written materials that
do all of the following:
a. Summarize the material terms of insurance coverage offered to occupants, including the identity of the insurer, price, benefits,
deductibles, exclusions, and conditions, or provide the actual terms of insurance coverage.
b. Disclose that the policies offered by the self-service storage producer may provide a duplication of coverage already provided
by an occupant’s homeowner’s insurance policy, renter’s insurance policy, vehicle insurance policy, watercraft insurance policy, or
other source of property insurance coverage. This disclosure must be prominently displayed in the brochure or other written materials
in at least 12-point type bold print.
Page 140
Title 18 - Insurance Code
c. State that the insurance prescribed in this section is primary coverage over any other coverage covering the same loss.
d. State that if insurance is required as a condition of rental, the requirement may be satisfied by the occupant purchasing the
insurance prescribed in this section or by presenting evidence of other applicable insurance coverage and that the purchase of the
insurance prescribed in this section is not required in order to rent storage space. This statement must be prominently displayed in
the brochure or other written materials in at least 12-point type bold print.
e. Describe the process for filing a claim.
f. Include contact information for filing a complaint with the Commissioner.
(2) All costs related to the insurance are stated in writing.
(3) Evidence of coverage in a form approved by the insurer is provided to every occupant who purchases the coverage.
(4) The insurance is provided by an insurer authorized to transact the applicable kinds of insurance in this State or by a surplus lines
insurer authorized under Chapter 19 of this title.
(e) An employee or authorized representative of a self-service storage producer may act on behalf of and under the supervision of
the self-service storage producer in matters relating to the conduct of business under the license that is issued under this section if all
of the following:
(1) The conduct of an employee or authorized representative of a self-service storage producer acting within the scope of employment
or agency is deemed the conduct of the self-service storage producer for purposes of this section.
(2) The self-service storage producer must maintain a register, on a form the Commissioner requires, of each employee or authorized
representative of the self-service storage producer who offers the insurance prescribed in this section on behalf of the self-service
storage producer, and must submit the register for inspection by the Commissioner upon request. Such register must also include a
certification that each employee or authorized representative of the self-service storage producer who offers the insurance prescribed
in this section has completed the training program set forth in paragraph (e)(3) of this section below.
(3) Each self-service storage producer must provide or cause a licensed producer to provide a training program approved by
the Commissioner that gives employees and authorized representatives of the self-service storage producer who offer the insurance
prescribed in this section on behalf of the self-service storage producer basic instruction about the provisions of this section, including
all of the following:
a. General information about homeowners, renters, business, and similar insurance that an occupant may have that may provide
coverage for property stored at a self-service storage facility.
b. General information about the material terms of insurance coverage offered to occupants including the price, benefits,
deductibles, exclusions, and conditions of the insurance.
c. The provisions of this section including the required disclosures set forth in this section.
(81 Del. Laws, c. 437, § 4.)
§ 2063. Prohibitions
A self-service storage producer may not:
(1) Offer or sell insurance except in connection with and incidental to the rental of space at a self-service storage facility.
(2) Advertise, represent, or otherwise portray itself or any of its employees or authorized representatives as licensed insurers or
insurance producers.
(81 Del. Laws, c. 437, § 4.)
§ 2064. Suspension or revocation of license
The Commissioner may suspend, revoke, or refuse to renew a limited lines license issued under this chapter after notice and opportunity
for a hearing if the self-service storage producer, or employee or authorized representative of the self-service storage producer who offers
or sells limited lines insurance on behalf of the self-service storage producer, has done any of the following:
(1) Violated any provision of this chapter or this title.
(2) Operated without a limited lines license as required under this chapter.
(3) Failed to make readily available the disclosures required under § 2062(d) this title.
(4) Offered or sold unapproved insurance products.
(5) Failed to train employees or authorized representatives as required under this chapter.
(6) Misrepresented pertinent facts or policy provisions concerning the insurance prescribed in this chapter.
(81 Del. Laws, c. 437, § 4.)
§ 2065. Additional penalties
Instead of, or in addition to, suspending or revoking a limited lines license issued under this chapter, the Commissioner may impose
on the self-service storage producer administrative penalties as set forth in Chapter 3 of this title.
(81 Del. Laws, c. 437, § 4.)
Page 141
Title 18 - Insurance Code
§ 2066. Exclusions
(a) An insurer may pay, and a self-service storage producer may receive, a commission, service fee, or other valuable consideration
dependent on the sale of insurance.
(b) A self-service storage producer may pay, and its employees or authorized representatives may receive, production payments or
incentive payments if the payments are not dependent on the sale of insurance.
(c) An owner is not required to be licensed under this section solely to display and make available to occupants and prospective
occupants brochures and other promotional materials created by or on behalf of an authorized insurer or by a surplus lines insurer.
(81 Del. Laws, c. 437, § 4.)
§ 2067. Enforcement
(a) If any of the provisions of this chapter are not satisfied by a self-storage producer, the sale of self-storage insurance by that producer
is pursuant to the terms of Chapter 17 of this title.
(b) The self-storage producer offering, selling, soliciting and negotiating self-storage insurance is subject to Chapter 17 of this title, to
the extent not inconsistent with this chapter, and Chapter 23 of this title.
(81 Del. Laws, c. 437, § 4.)
Page 142
Title 18 - Insurance Code
Part I
Insurance
Chapter 21
Unauthorized Insurers — Prohibitions, Process and Advertising
§ 2101. Representing or aiding unauthorized insurer prohibited.
(a) No person shall in this State directly or indirectly act as agent for, or otherwise represent or aid on behalf of another, any insurer
not then authorized to transact such business in this State in the solicitation, negotiation, procurement or effectuation of insurance or
annuity contracts, or renewal thereof, or forwarding of applications for insurance or annuities, or the dissemination of information as to
coverage or rates, or inspection of risks, or fixing of rates, or investigation or adjustment of claims or losses, or collection or forwarding of
premiums, or in any other manner represent or assist such an insurer in the transaction of insurance with respect to subjects of insurance
resident, located or to be performed in this State.
(b) This section does not apply to:
(1) Matters authorized to be done by the Commissioner under the Unauthorized Insurers Process Act, §§ 2103-2108 of this title;
(2) Transactions as to which the insurer is not required to have a certificate of authority pursuant to § 506 (exceptions to certificate
of authority requirement) of this title;
(3) A licensed adjuster or attorney-at-law representing such an insurer from time to time in his or her professional capacity;
(4) Persons in this State who secure and furnish information for the purposes of group life insurance, group or blanket health
insurance or annuity coverages, or for enrolling individuals under such plans or issuing certificates thereunder or otherwise assisting
in administering such plans where no commission is paid for such services and the master policy or contract was lawfully solicited,
issued and delivered in and pursuant to the laws of a state in which the insurer was then authorized to transact insurance;
(5) The employee, compensated on salary only, of a Delaware employer who on behalf of the employer assists in the procurement
or administration of insurance coverages on the property, risks and insurable interests of the employer.
(18 Del. C. 1953, § 2101; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2102. Purpose of Unauthorized Insurers Process Act and Unauthorized Insurers False Advertising Process
Act.
The purpose of §§ 2103 through 2108 (Unauthorized Insurers Process Act) and §§ 2109 through 2111 (Unauthorized Insurers False
Advertising Process Act) of this title is to subject certain insurers to the jurisdiction of the Commissioner and the courts of this State
in suits and disciplinary proceedings as provided therein, by or on behalf of insureds or beneficiaries under insurance contracts or the
Commissioner. The General Assembly declares its concern that many Delaware residents hold insurance policies delivered in this State by
unauthorized insurers, other than as to surplus line coverages written pursuant to Chapter 19 of this title, thus presenting to such residents
the often insuperable obstacle of resort to distant courts for the assertion of legal rights under their policies, and that such insurers may
induce residents to purchase insurance through false advertising sent into this State. In furtherance of such state interest, the General
Assembly herein provides a method of substituted service of process upon such insurers, declares that in so doing it exercises its power
to protect Delaware residents, to define, for the purposes of this chapter, what constitutes doing business in this State, and also exercises
powers and privileges available to the State under 15 U.S.C. § 1011 et seq., as amended, which declares that the business of insurance
and every person engaged therein shall be subject to the laws of the several states.
(18 Del. C. 1953, § 2102; 56 Del. Laws, c. 380, § 1.)
§ 2103. Unauthorized Insurers Process Act; title; interpretation.
(a) Sections 2103 through 2108 of this title constitute and may be cited as the “Unauthorized Insurers Process Act.”
(b) The act shall be so interpreted as to effectuate its general purpose to make uniform the laws of those states which enact it.
(18 Del. C. 1953, § 2103; 56 Del. Laws, c. 380, § 1.)
§ 2104. Commissioner as process agent.
Solicitation, effectuation or delivery of any insurance contract, by mail or otherwise, within this State by an unauthorized insurer, or
the performance within this State of any other service or transaction connected with such insurance by or on behalf of such insurer shall
be deemed to constitute an appointment by such insurer of the Commissioner and his or her successors in office as its attorney, upon
whom may be served all lawful process issued within this State in any action or proceeding against such insurer arising out of any such
contract or transaction, and shall be deemed to signify the insurer’s agreement that any such service of process shall have the same legal
effect and validity as personal service of process upon it in this State.
(18 Del. C. 1953, § 2104; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2105. Service of process.
(a) Service of process upon any such insurer pursuant to § 2104 of this title shall be made by delivering to and leaving with the
Commissioner or some person in apparent charge of his or her office 2 copies thereof and the payment to him or her of the fees as
Page 143
Title 18 - Insurance Code
prescribed by § 701 of this title. The Commissioner shall forthwith mail by registered or certified mail 1 of the copies of such process to
the defendant at its principal place of business last known to the Commissioner, and shall keep a record of all process so served upon him
or her. Such service of process is sufficient, provided notice of such service and a copy of the process are sent within 10 days thereafter
by registered or certified mail by plaintiff’s attorney to the defendant at its last known principal place of business, and the defendant’s
receipt or receipt issued by the post office with which the letter is registered or certified, showing the name of the sender of the letter and
the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff’s attorney showing a compliance
herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear,
or within such further time as the court may allow.
(b) Service of process in any such action, suit or proceeding shall in addition to the manner provided in subsection (a) of this section
above be valid if served upon any person within this State who, in this State on behalf of such insurer, is:
(1) Soliciting insurance; or
(2) Making any contract of insurance or issuing or delivering any policies or written contracts of insurance; or
(3) Collecting or receiving any premium for insurance, and a copy of such process is sent within 10 days thereafter by registered
or certified mail by the plaintiff’s attorney to the defendant at the last known principal place of business of the defendant, and the
defendant’s receipt, or the receipt issued by the post office with which the letter is registered or certified, showing the name of the
sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff’s attorney
showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant
is required to appear, or within such further time as the court may allow.
(c) No plaintiff or complainant shall be entitled to a judgment by default under this section until the expiration of 30 days from the
date of the filing of the affidavit of compliance.
(d) Nothing in this section shall limit or abridge the right to serve any process, notice or demand upon any insurer in any other manner
now or hereafter permitted by law.
(18 Del. C. 1953, § 2105; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2106. Exemptions from service of process provisions.
Sections 2104 and 2105 of this title shall not apply to surplus line insurance lawfully effectuated under Chapter 19 of this title, or
to reinsurance, or to any action or proceeding against an unauthorized insurer arising out of any of the following where the policy or
contract contains a provision designating the Commissioner as its attorney for the acceptance of service of lawful process in any action
or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such policy, or where the insurer enters a general
appearance in any such action:
(1) Wet marine and transportation insurance;
(2) Insurance on or with respect to subjects located, resident or to be performed wholly outside this State, or on vehicles or aircraft
owned and principally garaged outside this State;
(3) Insurance on property or operations of railroads engaged in interstate commerce; or
(4) Insurance on aircraft or cargo of such aircraft, or against liability, other than employer’s liability, arising out of the ownership,
maintenance or use of such aircraft.
(18 Del. C. 1953, § 2106; 56 Del. Laws, c. 380, § 1.)
§ 2107. Defense of action by unauthorized insurer.
(a) Before an unauthorized insurer files or causes to be filed any pleading in any action or proceeding instituted against it under §§
2104 and 2105 of this title, such insurer shall:
(1) Procure a certificate of authority to transact insurance in this State; or
(2) Deposit with the clerk of the court in which such action or proceeding is pending cash or securities, or file with such clerk a bond
with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of
any final judgment which may be rendered in such action. The court may in its discretion make an order dispensing with such deposit
or bond where the insurer makes a showing satisfactory to the court that it maintains in a state of the United States funds or securities,
in trust or otherwise, sufficient and available to satisfy any final judgment which may be entered in such action or proceeding, and
that the insurer will pay any final judgment entered therein without requiring suit to be brought on such judgment in the state where
such funds or securities are located.
(b) The court in any action or proceeding in which service is made in the manner provided in § 2105 of this title may, in its discretion,
order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection
(a) of this section above, and to defend such action.
(c) Nothing in subsection (a) of this section above is to be construed to prevent an unauthorized insurer from filing a motion to quash
or to set aside the service of any process made in the manner provided in § 2105 of this title on the ground either:
(1) That such unauthorized insurer has not done any of the acts enumerated in § 2104 of this title; or
Page 144
Title 18 - Insurance Code
(2) That the person on whom service was made pursuant to § 2105(b) of this title was not doing any of the acts therein enumerated.
(18 Del. C. 1953, § 2107; 56 Del. Laws, c. 380, § 1.)
§ 2108. Attorneys’ fees.
In any such action against an unauthorized insurer, if the insurer has failed for 30 days after demand prior to the commencement of
the action to make payment in accordance with the terms of the contract, and it appears to the court that such refusal was vexatious and
without reasonable cause, the court shall allow to the plaintiff reasonable attorneys fees and include such fees in any judgment that may
be rendered in such action, and in no event shall such fees be less than $100. Failure of an insurer to defend any such action shall be
deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause.
(18 Del. C. 1953, § 2108; 56 Del. Laws, c. 380, § 1.)
§ 2109. Unauthorized Insurers False Advertising Process Act; title.
Sections 2102 and 2109 through 2111 of this title constitute and may be referred to as the “Unauthorized Insurers False Advertising
Process Act.”
(18 Del. C. 1953, § 2109; 56 Del. Laws, c. 380, § 1.)
§ 2110. Notice to domiciliary supervisory official.
No unauthorized insurer through any estimate, illustration, circular, pamphlet, letter, announcement, statement or any other means or
medium shall misrepresent to any person in this State as to its financial condition or the terms of any contract issued or to be issued by
it or the advantages thereof, or the dividends or share to be received thereon. Whenever the Commissioner has reason to believe that any
such insurer is so misrepresenting, he or she shall so notify the insurer and the insurance supervisory official of the insurer’s domiciliary
state or province by registered or certified mail.
(18 Del. C. 1953, § 2110; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2111. Action by Commissioner.
(a) If within 30 days following the giving of the notice provided for in § 2110 of this title the insurer has not ceased such dissemination,
and if the Commissioner has reason to believe that such insurer is soliciting, issuing or delivering contracts of insurance to residents of
this State or collecting premiums on such contracts or performing any other transaction in connection with such insurance, and that a
proceeding by him or her in respect to such matters would be to the interest of the public, he or she shall take action against such insurer
under Chapter 23 of this title.
(b) If upon such hearing the Commissioner finds that the insurer has misrepresented, as referred to in § 2110 of this title, he or she
shall by order on such hearing require the insurer to cease and desist from such violation, and shall mail a copy of the order by registered
or certified mail to the insurer at its principal place of business last of record with the Commissioner and to the insurance supervisory
official of the insurer’s domiciliary state or province. Each violation thereafter of such desist order shall subject the insurer to a penalty
of $5,000, to be recovered by a civil action brought against the insurer by the Commissioner. Service of process upon the insurer in such
action may be made upon the Commissioner pursuant to § 2105 or Chapter 23 of this title or in any other lawful manner.
(18 Del. C. 1953, § 2111; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 278, § 4; 70 Del. Laws, c. 186, § 1.)
§ 2112. Suits instituted by Commissioner.
(a) Any foreign or alien insurer not thereunto authorized by the Commissioner, who, by mail or otherwise, solicits insurance business
in this State or transacts insurance business in this State as defined by § 103 of this title, thereby submits itself to the jurisdiction of
the courts of this State in any action, suit or proceeding instituted by or on behalf of the Commissioner arising out of such unauthorized
solicitation of insurance business, including, but not limited to, an action for injunctive relief by the Commissioner.
(b) Process against such unauthorized insurer may be served in the manner provided in § 2307 of this title, except that the insurer shall
have 40 days from the date of such service within which to plead, answer or otherwise defend the action.
(18 Del. C. 1953, § 2112; 56 Del. Laws, c. 380, § 1.)
Page 145
Title 18 - Insurance Code
Part I
Insurance
Chapter 23
Unfair Practices in the Insurance Business
§ 2301. Declaration of purpose.
(a) The purpose of this chapter is to regulate trade practices in the business of insurance in accordance with the intent of Congress
as expressed in the Act of Congress of March 9, 1945, 15 U.S.C. § 1011 et seq., by defining or providing for the determination of all
such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the
trade practices so defined or determined.
(b) Section 2301 through § 2316 of this title constitute and may be cited as the Unfair Trade Practices Act.
(18 Del. C. 1953, § 2301; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1.)
§ 2302. Definitions.
When used in this chapter:
(1) “Abuse” means the occurrence of 1 or more of the following acts between family members, current or former household members,
or current or former intimate partners:
a. Intentionally or recklessly causing or attempting to cause physical injury, or a sexual offense as defined in § 761 of Title 11;
b. Intentionally or recklessly placing or attempting to place another individual in reasonable apprehension of physical injury or
sexual offense to himself or herself or another;
c. Intentionally or recklessly damaging, destroying or taking the tangible property of another individual;
d. Insulting, taunting or challenging another individual or engaging in a course of alarming or distressing conduct in a manner
which is likely to provoke a violent or disorderly response or which is likely to cause humiliation, degradation or fear in another
individual;
e. Trespassing on or in property of another individual, or on or in property from which the trespasser has been excluded by court
order;
f. Child abuse, as defined in Chapter 9 of Title 16;
g. Unlawful imprisonment, kidnapping, interference with custody and coercion, as defined in Title 11;
h. Any other conduct which a reasonable individual under the circumstances would find threatening or harmful.
(2) “Commissioner” shall mean the Commissioner of Insurance of this State.
(3) “Insurance policy” or “insurance contract” shall mean any contract of insurance, indemnity, medical or hospital service,
suretyship, or annuity issued, proposed for issuance or intended for issuance by any person.
(4) “Person” shall mean any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer,
fraternal benefit society and other legal entity engaged in the business of insurance, including agents, brokers and adjusters. Person
shall also mean medical service plans and hospital service plans as defined in § 6302 of this title. For purposes of this chapter, medical
hospital service plans shall be deemed to be engaged in the business of insurance.
(5) “Service contract” is intended to cover the product issued by medical and hospital service plans and should be changed to conform
to the laws of each state.
(18 Del. C. 1953, § 2302; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 250, §
1.)
§ 2303. Unfair methods of competition and unfair or deceptive acts or practices prohibited.
No person shall engage in this State in any trade practice which is defined in this chapter as, or determined pursuant to this chapter to
be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.
(18 Del. C. 1953, § 2303; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1.)
§ 2304. Unfair methods of competition and unfair or deceptive acts or practices defined.
The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of insurance policies. — No person shall make, issue, circulate or cause to be made,
issued or circulated any estimate, circular, statement, sales presentation, omission or comparison which:
a. Misrepresents the benefits, advantages, conditions or terms of any insurance policy;
b. Misrepresents the dividends or share of the surplus to be received on any insurance policy;
c. Makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy;
d. Is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which
any life insurer operates;
Page 146
Title 18 - Insurance Code
e. Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof;
f. Is a misrepresentation for the purpose of inducing or tending to induce to the lapse, forfeiture, exchange, conversion or surrender
of any insurance policy;
g. Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or
h. Misrepresents any insurance policy as being shares of stock.
(2) False information and advertising generally. — No person shall make, publish, disseminate, circulate or place before the public,
or cause, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine
or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other
way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business
of insurance or with respect to any person in the conduct of the insurance business, which is untrue, deceptive or misleading.
(3) Defamation. — No person shall make, publish, disseminate or circulate, directly or indirectly, or aid, abet or encourage the
making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which
is false, or maliciously critical of or derogatory to the financial condition of an insurer, or of an organization proposing to become an
insurer, and which is circulated to injure any person engaged or proposing to engage in the business of insurance.
(4) Boycott, coercion and intimidation. — No person shall enter into any agreement to commit, or by any concerted action commit,
any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of or any monopoly in any business
of insurance.
(5) Interlocking ownership, management. — a. Any insurer may retain, invest in or acquire the whole or any part of the capital stock
of any other insurer or insurers, or have a common management with any other insurer or insurers, unless such retention, investment,
acquisition or common management is inconsistent with any other provision of this title, or unless by reason thereof the business of
such insurers with the public is conducted in a manner which substantially lessens competition generally in the insurance business or
tends to create any monopoly therein.
b. Any person otherwise qualified may be a director of 2 or more insurers which are competitors, unless the effect thereof is to
lessen substantially competition between insurers generally or tends materially to create any monopoly.
(6) Prohibited political contributions; penalty. — a. No insurer or bank acting as an insurer pursuant to § 761(a)(14) of Title 5 shall
directly or indirectly pay or use, or offer, consent or agree to pay or use, any money or property for or in aid of any candidate for the
office of Insurance Commissioner of the State, or for nomination for such office, or for the reimbursement or indemnification of any
person for money or property so used.
b. Any officer, director, stockholder or agent of any insurer which violates any of the provisions of this section, who participates
in, aids, abets or advises or consents to any such violation, or any person who solicits or knowingly receives any money or property
in violation of this section, shall, in addition to any other penalties imposed by law, be punished by imprisonment for not more than
1 year and a fine of not more than $1,000; and any officer or director abetting in any contribution made in violation of this section
shall be liable to the insurer for the amount so contributed.
(7) Illegal dealing in premiums; excess charges for insurance. — a. No person shall wilfully collect any sum as premium or charge
for insurance, which insurance is not then provided or is not in due course to be provided (subject to acceptance of the risk by the
insurer) by an insurance policy issued by an insurer as authorized by this title.
b. No person shall wilfully collect as premium or charge for insurance any sum in excess of the premium or charge applicable to
such insurance, and as specified in the policy, in accordance with the applicable classifications and rates as filed with and approved by
the Commissioner; or, in cases where classifications, premiums or rates are not required to be so filed and approved, such premiums
and charges shall not be in excess of those specified in the policy and as fixed by the insurer. This provision shall not be deemed
to prohibit the charging and collection by surplus lines brokers licensed under Chapter 19 of this title of the amount of applicable
state and federal taxes and nominal service charge to cover communication expenses, in addition to the premium required by the
insurer, nor shall it be deemed to prohibit the charging and collection by a life insurer of amounts actually to be expended for medical
examination of an applicant for life insurance or for reinstatement of a life insurance policy.
(8) Insurance as inducement to purchase. — No person shall directly or indirectly participate in any plan to offer or effect any kind
or kinds of life or health insurance or annuities as an inducement to or in connection with the purchase by the public of any goods,
securities, commodities, services or subscriptions to periodicals. This section shall not apply as to insurance written in connection with
an indebtedness if the purpose of such insurance is to pay the indebtedness in case of death or disability of the insured.
(9) Insurer name; deceptive use prohibited. — No person who is not an insurer shall assume or use any name which deceptively
implies or suggests that it is an insurer. This section shall not preclude a corporation heretofore or hereafter formed under the laws of
this State from using such a name between the date it is incorporated and the date it begins to engage in any business, if during such
period the corporate activities are limited to its organization or reorganization or to those activities it would be permitted to engage
in, if it were an insurer, under § 4904(2) of this title.
(10) Service and processing charges by mortgagee prohibited. — No mortgagee or agent of any mortgagee shall accept or receive any
monetary charge or fee from a mortgagor for handling, servicing or processing insurance policies or endorsements or for the issuances
Page 147
Title 18 - Insurance Code
or cancellation of such policies, or property located within this State; provided that this provision shall not apply to charges or fees of
an insurance department or division of a corporation established under Chapter 7 or regulated under Chapter 9 of Title 5.
(11) False statements and entries. — a. No person shall knowingly file with any supervisory or other public official, or knowingly
make, publish, disseminate, circulate or deliver to any person, or place before the public, or knowingly cause directly or indirectly,
to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false, material statement of
fact as to the financial condition of an insurer.
b. No person shall knowingly make any false entry of a material fact in any book, report or statement of any insurer with intent
to deceive any agent or examiner lawfully appointed to examine into its condition or into any of the affairs, or any public official to
whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs,
or, with like intent, knowingly omit to make a true entry of any material fact pertaining to the business of such insurer in any book,
report or statement of such insurer.
c. No person shall advertise the capital or assets of any insurer without in the same advertisement setting forth the amount of
the insurer’s liabilities.
(12) Stock operations and advisory board contracts. — a. No person shall offer, issue or deliver or permit its agents, officers or
employees to offer, issue or deliver agency company stock or other capital stock, or benefit certificates or shares in any commonlaw corporation, or securities or any special or advisory board contracts of any kind promising returns and profits as an inducement
to insurance.
b. No insurer authorized or proposing to be authorized to transact insurance in this State shall offer, issue or deliver, or permit
its agents, officers or employees to offer, issue or deliver in any other state any such agency company stock, certificates, shares or
contracts as inducement to insurance.
(13) Unfair discrimination; life insurance, annuities, and health insurance. — a. No person shall make or permit any unfair
discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance
or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.
b. No person shall make or permit any unfair discrimination between individuals of the same class and of essentially the same
hazard in the amount of premium, policy fees or rates charged for any policy or contract of accident or health insurance or in the
benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.
(14) Rebates; life, health and annuity contracts. — Except as otherwise expressly provided by law, no person shall knowingly permit
or offer to make or make any contract of life insurance, life annuity or accident and health insurance, or agreement as to such contract
other than as plainly expressed in the insurance contract issued thereon, or pay or allow, or give or offer to pay, allow or give directly
or indirectly, or knowingly accept, as inducement to such insurance or annuity, any rebate of premiums payable on the contract, or any
special favor or advantage in the dividends or other benefits thereon, or any paid employment or contract for services of any kind, or
any valuable consideration or inducement whatever not specified in the contract, or directly or indirectly give, or sell, or purchase or
offer or agree to give, sell or purchase, or allow as an inducement to such insurance contract or annuity or, in connection therewith and
whether or not specified in the policy or contract, any agreement of any form or nature promising returns and profits, or any stocks,
bonds or other securities, or interest present or contingent therein or as measured thereby, or any insurer or any insurance company or
other corporation, association or partnership, or any dividends or profits accrued thereon, or to accrue thereon, or anything of value
whatsoever not specified in the contract.
(15) Unfair discrimination, rebates prohibited; property, casualty, surety insurance. — a. No property, casualty or surety insurer or
any employee or representative thereof, and no broker, agent or solicitor shall pay, allow or give, or offer to pay, allow or give, directly
or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction
of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon,
or any valuable consideration or inducement whatever, not specified or provided for in the policy, except to the extent provided for in
an applicable filing with the Commissioner as provided by law.
b. No insured named in a policy, nor any employee of such insured, shall knowingly receive or accept directly or indirectly any
such rebate, discount, abatement, credit or reduction of premium, or any such special favor or advantage or valuable consideration
or inducement.
c. No such insurer shall make or permit any unfair discrimination between insureds or property having life insuring or risk
characteristics, in the premium or rates charged for insurance, or in the dividends or other benefits payable thereon, or in any other
of the terms and conditions of the insurance.
d. Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to licensed
agents, brokers or solicitors, or as prohibiting any insurer from allowing or returning to its participating policyholders, members
or subscribers dividends, savings or unabsorbed premium deposits. In this section “insurance” includes suretyship, and “policy”
includes bond. This section does not apply to wet marine and transportation insurance.
e. Nothing in paragraph (13) or paragraph (14) of this section shall be construed as including within the definition of discrimination
or rebates any of the following practices:
Page 148
Title 18 - Insurance Code
1. In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their
premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that any such bonuses or
abatement or premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders;
2. In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have
continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents
the saving in collection expenses;
3. Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the
end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year;
4. Reduction of premium rates for policies of large amounts, but not exceeding savings in issuance and administration expenses
reasonably attributable to such policies as compared with policies of similar plans issued in smaller amounts;
5. Reduction in premium rates for life or health insurance policies on annuity contracts on salary savings, payroll deductions,
preauthorized checks, bank drafts or similar plans in amounts reasonably commensurate with the savings made by the use of
such plans.
f. Nothing in this chapter shall be construed as including within the definition of securities as inducement to purchase insurance,
the selling or offering for sale, contemporaneously with life insurance or mutual fund shares or face amount certificates of regulated
investment companies under offerings registered with the Securities and Exchange Commission where such shares or such face
amount certificates or such insurance may be purchased independently of and not contingent upon purchase of the other, at the same
price and upon similar terms and conditions as where purchased independently.
(16) Unfair claim settlement practices. — No person shall commit or perform with such frequency as to indicate a general business
practice any of the following:
a. Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
b. Failing to acknowledge and act reasonably promptly upon communication with respect to claims arising under insurance
policies;
c. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
d. Refusing to pay claims without conducting a reasonable investigation based upon all available information;
e. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
f. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become
reasonably clear;
g. Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by such insureds;
h. Attempting to settle a claim for less than the amount to which a reasonable person would have believed that person’s own self
was entitled by reference to written or printed advertising material accompanying or made part of an application;
i. Attempting to settle claims on the basis of an application which was altered without notice to or knowledge or consent of the
insured;
j. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which
the payments are being made;
k. Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the
purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
l. Delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to submit a
preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions
contain substantially the same information;
m. Failing to promptly settle claims, where liability has become reasonably clear under one portion of the insurance policy coverage
in order to influence settlements under other portions of the insurance policy coverage;
n. Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable
law for denial of a claim or for the offer of a compromise settlement.
(17) Failure to maintain complaint handling procedures. — Failure of any person to maintain a complete record of all the complaints
which it has received since the date of its last examination as otherwise required in this title. This record shall indicate the total number of
complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints and the time it took
to process each complaint. For purposes of this subsection, “complaint” shall mean any written communication primarily expressing
a grievance.
(18) Misrepresentation in insurance applications. — a. Making false or fraudulent statements or representations on or relative to an
application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any insurers, agent,
broker or individual.
b. No agent, broker, solicitor, examining physician, applicant or other person shall knowingly or wilfully make any false or
fraudulent statement or representation in or with reference to any application for insurance or, for the purpose of obtaining any
Page 149
Title 18 - Insurance Code
money or benefit, knowingly or wilfully present or cause to be presented a false or fraudulent claim or any proof in support of such a
claim for the payment of the loss upon a contract of insurance or prepare, make or subscribe a false or fraudulent account, certificate,
affidavit or proof of loss or other document or writing with intent that the same may be presented or used in support of such a claim.
(19) Fictitious groups. — a. No insurer, whether an authorized insurer or an unauthorized insurer, shall make available through any
rating plan or form property, casualty or surety insurance to any firm, corporation or association of individuals or make any preferred
rate or premium based upon any fictitious grouping of such firm, corporation or association.
b. No form or plan of insurance covering any group or combination of persons or risks shall be written or delivered within or
outside this State to cover persons or risks in this State at any preferred rate or on any form other than as offered to persons not in
such group or combination and to the public generally, unless such form, plan of insurance and the rates or premium to be charged
therefor have been submitted to and approved by the Commissioner as being not unfairly discriminatory and as not otherwise being
in conflict with subdivision a. above or with any provision of Chapter 25 of this title (Rates and Rating Organizations) to the extent
that such Chapter 25 is, by its terms, applicable thereto.
c. This section does not apply to life insurance, health insurance, annuity contracts or wet marine and transportation insurance.
(20) “Twisting” prohibited. — No person shall make or issue or cause to be made or issued any written or oral statement
misrepresenting or making incomplete comparisons as to the terms, conditions or benefits contained in any policy for the purpose of
inducing or attempting or tending to induce the policyholder to lapse, forfeit, surrender, retain, exchange or convert any insurance policy.
(21) Insurance on public construction contracts. — a. No officer or employee of this State or of any public agency, public authority
or public corporation (except a public corporation or public authority created pursuant to agreement or compact with another state) and
no person acting or purporting to act on behalf of such officer or employee or public agency or public authority or public corporation
shall, with respect to any public building or construction contract which is about to be or which has been competitively bid, require
the bidder to make application to (or furnish financial data to) or to obtain or procure any of the surety bonds or contracts of insurance
specified in connection with such contract or specified by any law, general, special or local from a particular insurer or agent or broker.
b. No such officer or employee or any person acting or purporting to act on behalf of such officer or employee shall negotiate,
make application for, obtain or procure any of such surety bonds or contracts of insurance (except contracts of insurance for builder’s
risk or owner’s protective liability) which can be obtained or procured by the bidder, contractor or subcontractor.
c. This section shall not, however, prevent the exercise by such officer or employee on behalf of the State or such public agency,
public authority or public corporation of its right to approve the form, sufficiency or manner of execution of the surety bonds or
contracts of insurance furnished by the insurer selected by the bidder to underwrite such bonds or contracts of insurance.
d. Any provisions in any invitation for bids or in any of the contract documents in conflict with this section are declared to be
contrary to the public policy of this State.
e. A violation of this section shall be subject to the penalties provided by § 2308(a) of this title.
(22) Unfair discrimination in the value of insurance policies and premiums based on race, color, religion, sexual orientation, gender
identity or national origin; penalty. — a. It is an unlawful practice for any insurance company licensed to do business in this State
to discriminate in any way because of the insured’s race, color, religion, sexual orientation, gender identity, or national origin, or to
make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated,
circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet,
letter, or poster, or over any radio or television station, or in any other way, to include the writing of any policy or the application therefor,
an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of
insurance or with respect to any person in the conduct of the insurance business, which discriminates in any way because of the insured’s
race, color, religion, sexual orientation, gender identity, or national origin or to classify or refer to any individual on the basis of race,
color, religion, sexual orientation, gender identity, or national origin.
b. For purposes of this paragraph (22):
1. “Gender identity” means a gender-related identity, appearance, expression or behavior of a person, regardless of the person’s
assigned sex at birth.
2. “Protective hairstyle” includes braids, locks, and twists.
3. “Race” includes traits historically associated with race, including hair texture and a protective hairstyle.
4. “Sexual orientation” includes heterosexuality, homosexuality, or bisexuality.
c. [Repealed.]
d. The Department of Insurance is empowered, as hereinafter provided, to prevent any licensed or authorized insurance company
from engaging in any discriminatory practices as set forth in paragraph (22)a. of this section.
e. Whenever a charge is filed with the Department by or on behalf of a person claiming to have been discriminated against in the
purchase of insurance because of race, religion, sexual orientation, gender identity, color or national origin, the Department shall
serve a copy of the charge on such insurance company and shall make an investigation thereof. Charges shall be in writing and shall
contain such information and be in such form as the Department requires. Such charges shall not be made public by the Department.
If the Department determines after such investigation that there is reasonable cause to believe that the charge is not true, it shall
Page 150
Title 18 - Insurance Code
dismiss the charge and promptly notify the person claiming to have been discriminated against and the respondent of its action. Such
notice shall be in writing and shall set forth the facts upon which the decision is based.
f. If the Department determines, after the investigation referred to in paragraph (22)e. of this section, that there is reasonable cause
to believe that the charge is true, the Department shall endeavor to eliminate any such alleged unlawful practice by informal methods
of conference, conciliation and persuasion. Nothing said or done during and as a part of such conciliation endeavors may be made
public by the Department, its officers or employees or used as evidence in a subsequent proceeding without the written consent
of the persons concerned. The Department shall make its determination on reasonable cause as promptly as possible and, so far as
practicable, not later than 120 days from the filing of the charge. A charge under paragraph (22)e. of this section must be filed within
90 days after the alleged unlawful discriminatory practice or 120 days after discovery thereof, whichever is the later.
g. If the Department determines, after attempting to secure voluntary compliance under paragraph (22)f. of this section, that it
is unable to secure from the respondent a conciliation agreement acceptable to the Department and to the person aggrieved, which
determination shall not be reviewable in any court, the Department shall issue and cause to be served upon the respondent a complaint
stating the facts upon which the allegation of the unlawful discriminatory practice is based together with a notice of hearing before
the Commissioner or the Commissioner’s agent, at a place therein fixed not less than 5 days after the serving of such complaint.
The complaint may be amended at any reasonable time provided that the respondent has sufficient time to respond thereto. Related
proceedings may be consolidated for hearing.
h. A respondent shall have the right to file an answer to the complaint against the respondent and may amend the respondent’s
own answer at any reasonable time. The respondent and the person aggrieved shall be parties and may appear at any stage of the
proceedings, with or without counsel. All testimony shall be taken under oath and shall be reduced to writing.
i. If the Commissioner or the Commissioner’s agent finds that the respondent has engaged in an unlawful discriminatory practice,
the Commissioner or the Commissioner’s agent shall state its findings of fact in writing and shall issue and cause to be served on
the respondent and the person or persons aggrieved by such unlawful discriminatory practice an order requiring the respondent to
cease and desist from such unlawful practice. Such order may further require such respondent to make reports from time to time
showing the extent to which the respondent has complied with the order. If the Commissioner or the Commissioner’s agent finds
that the respondent has not engaged in any unlawful discriminatory practice, the Commissioner or the Commissioner’s agent shall
state those findings of fact in writing and shall issue and cause to be served on the respondent and the person or persons alleged in
the complaint to be aggrieved an order dismissing the complaint.
j. 1. Any complainant or aggrieved party, or respondent or intervenor or the Commissioner or the Commissioner’s agent may
obtain an order of the Court of Chancery for enforcement of the Commissioner’s order. The proceeding for enforcement is initiated
by filing a petition in the Court of Chancery. Copies of the petition shall be served upon all parties of record. Within 30 days after the
service of the petition upon the Commissioner or the Commissioner’s agent or its filing by the Commissioner or the Commissioner’s
agent or within such further time as the Court may allow, the Commissioner or the Commissioner’s agent shall transmit to the Court
the original or a certified copy of the entire record upon which the order is based, including any transcript of testimony, which need
not be printed. By stipulation of all parties to the proceeding, the record may be shortened. The Court may reverse or modify the
order if substantial rights of the petitioner have been prejudiced or the findings of fact of the Department are clearly erroneous.
The Court shall have power to grant such temporary relief or restraining order as it deems just and to enter an order enforcing, as
modified, or setting aside in whole or in part the order of the Commissioner or the Commissioner’s agent or remand the case to the
Department for further proceedings.
2. A proceeding under this section must be initiated within 30 days after a copy of the order of the Commissioner or the
Commissioner’s agent is received. If no proceeding is so initiated, the Commissioner or the Commissioner’s agent may obtain
a decree of the Court for enforcement of its order upon showing that a copy of the petition for enforcement was served on the
respondent and that the respondent is subject to the jurisdiction of the Court.
k. After a charge has been filed and until the record has been filed in the Court of Chancery as herein provided, the proceeding
may at any time be ended by agreement between the Commissioner or the Commissioner’s agent and the parties for the elimination
of the alleged unlawful discriminatory practice, approved by the Commissioner or the Commissioner’s agent and the Commissioner
or the Commissioner’s agent may at any time, upon reasonable notice, modify or set aside, in whole or in part, any finding or order
made or issued by it.
l. The Superior Court of the county where the violation is alleged to have occurred shall have jurisdiction to hear an appeal from
any decision made by the Commissioner or the Commissioner’s agent, except as provided in paragraph (22)j. of this section. Such
appeal shall be on the record only.
m. In the event that the Court determines that the respondent has engaged in an unlawful discriminatory practice causing economic
loss to the petitioner, the respondent shall reimburse or refund to the petitioner, with reasonable interest added thereto, a sum equal
to the amount of the economic loss suffered by the petitioner.
(23) Tying arrangements; cancellation; disclosure. — a. No person who has received the name of any actual or potential borrower
from any bank or trust company which engages, directly or indirectly, in any activity authorized by § 761(a)(14) of Title 5 shall, with
respect to such borrower:
Page 151
Title 18 - Insurance Code
1. Engage in any of the activities prohibited to such bank or trust company by § 929 of Title 5;
2. Refuse to allow such borrower to exercise any rights of cancellation or refund set forth in § 930 of Title 5, all of which
rights shall be applicable to such borrower;
3. Fail to take any action required of a bank or trust company under § 930 of Title 5, all of which shall be required of such
person; or
4. In connection with any application for a policy of insurance submitted to such person by such borrower, or in connection
with any policy of insurance thereafter issued to such borrower by such person, fail to disclose or cause to be disclosed to such
borrower that such policy, if and when issued, is not a direct liability of such bank or trust company, and that only the assets of
the insurer issuing such policy are applicable to the payment and satisfaction of claims made thereunder.
b. The prohibitions set forth in paragraphs (23)a.2. and 3. of this section shall be applicable only with respect to “an individual
borrower,” as defined in § 930(f) of Title 5.
c. The Commissioner shall by regulation promulgated after consultation with the Bank Commissioner provide for the adequate
disclosure of the prohibitions set forth in this paragraph.
(24) Discriminatory practices against victims of abuse regarding life and health insurance. — A person or entity engaged in the
business of life and/or health insurance in this State may not:
a. Deny, refuse to issue, refuse to renew, refuse to reissue, cancel or otherwise terminate an insurance policy or restrict coverage
on any individual because that individual is, has been or may be the subject of abuse or seeks, has sought or should have sought,
medical or psychological treatment for abuse, protection from abuse or shelter from abuse;
b. Add any surcharge or rating factor to a premium of an insurance policy because of an individual’s history of, status as, or
potential to be subject to abuse;
c. Exclude or limit coverage for losses or deny a claim incurred by an insured as a result of abuse or the potential for abuse; or
d. Ask an insured or an applicant for insurance whether that individual is, has been or may be the subject of abuse, or seeks, has
sought or should have sought medical or psychological treatment specifically for abuse, protection from abuse or shelter from abuse.
(25) Discriminatory practices against victims of abuse regarding homeowner’s and private passenger motor vehicle insurance. —
A person or entity engaged in the business of homeowner’s and/or private passenger motor vehicle insurance in this State may not:
a. Deny, refuse to issue, refuse to renew, refuse to reissue, cancel or otherwise terminate a homeowner’s and/or private passenger
motor vehicle insurance policy or restrict coverage on any individual solely because that individual or a member of that individual’s
family or household is, has been or may be the subject of abuse or seeks, has sought or should have sought, medical or psychological
treatment for abuse, protection from abuse or shelter from abuse. Nothing in this section shall be construed to prohibit a person from
denying, refusing to issue, renew or reissue, cancelling or otherwise terminating an insurance policy based on any existing insurance
statute, provided that the insurer routinely underwrites individuals in the same manner without regard to the individual’s abuse status,
abuse history or abuse-related claim history and that any such action does not have the purpose or effect of treating abuse status as an
underwriting criterion, is not based on any actual or perceived correlation between a type of claim or other underwriting information
and abuse and is otherwise permissible by law.
b. Add any surcharge or rating factor to a premium of a homeowner’s insurance policy solely because of a history of, status as or
potential to be a subject of abuse of the applicant or insured or of a member of the family or household of the insured. Nothing in this
section shall be construed to prohibit a person from rating or surcharging a policy in accordance with any existing insurance statute
provided that the insurer routinely rates or surcharges individuals in the same manner without regard to the individual’s abuse status,
abuse history or abuse-related claims history, and any such action does not have the purpose or effect of treating abuse status as an
underwriting criterion, is not based on any actual or perceived correlation between a type of claim or other underwriting information
and abuse and is otherwise permissible by law.
c. Deny coverage for property damage claims or medical payment coverage for an insured, if such coverage is available and
purchased under the policy, as a result of abuse, even if such losses are caused by the intentional act, the fraudulent or criminal act
or the failure to act of a co-insured and would otherwise have come under a policy’s intentional act, criminal act, family, household
or similar exclusion, unless:
1. The claim or coverage is ordinarily denied in the same manner to an insured or claimant who is not a victim of abuse;
2. There is collusion or fraudulent acts by the party seeking the insurance coverage or benefits; or
3. The innocent co-insured refuses to cooperate with any law enforcement investigation, the results of which would be made
available to the insurer to verify that the claim for loss resulted from a co-insured’s wrongful act or omission.
The innocent co-insured shall, at a minimum, be entitled to recover a pro-rata share of the loss of real or personal property and
the entire amount of additional living expenses, as the policy may so provide.
Nothing in this subsection shall be construed to prohibit a person from refusing to defend or indemnify the perpetrator of the
wrongful act or omission against any claim for liability arising from such individual’s wrongful act or omission. The insurer shall
retain the right to subrogate against the wrongdoer for any losses incurred by the injured party, including a wrongdoer who was a
co-insured with the victim.
Page 152
Title 18 - Insurance Code
d. Ask an insured or an applicant for homeowner’s and/or private passenger motor vehicle insurance whether that individual is,
has been or may be the subject of abuse or seeks, has sought or should have sought medical or psychological treatment specifically
for abuse, protection from abuse or shelter from abuse.
e. A person shall not be held civilly or criminally liable for any cause of action which may be brought because of compliance with
this section. Nothing herein shall preclude any action or investigation against an insurer to enforce this paragraph. Nothing in this
section shall preclude a person’s obligations to report suspected fraudulent activities to the Insurance Department Fraud Prevention
Bureau pursuant to Chapter 24 of this title.
Nothing in paragraph (24) of this section and this paragraph (25) shall be construed to prohibit a person from declining to issue an
insurance policy insuring the life of an individual who is or has been the subject of abuse if the perpetrator of the abuse is the applicant
or would be the owner of the insurance policy. Nothing in paragraph (24) of this section and this paragraph (25) shall be construed to
prohibit a person from underwriting or rating a risk on the basis of a preexisting physical or mental condition, even if such condition
had been caused by abuse, provided that:
The person routinely underwrites or rates such condition in the same manner with respect to an insured or an applicant who is not
a victim of abuse;
No person shall refuse to insure, refuse to continue to insure, limit the amount, extent or kind of coverage available to an individual,
or charge a different rate for the same coverage solely because of a physical or mental condition, except where the refusal, limitation
or rate differential is based on sound actuarial principles;
The fact that an individual is, has been or may be the subject of abuse may not be considered a physical or mental condition; and
Such underwriting or rating is not used to evade the intent of this law or any other provision of law. A person shall not be held
civilly or criminally liable for any cause of action which may be brought because of compliance with paragraph (24) of this section
and this paragraph (25).
(26) Failure to respond to regulatory inquiries. — No person shall, with such frequency as to indicate a general business practice, fail
to provide preliminary substantive responses to inquiries from the Department of Insurance regarding the denial of claims, cancellation,
nonrenewal, or refusal of benefits, refusal to pre-authorize benefits, or violations of this title, within 21 calendar days of such inquiry.
A response in compliance with this paragraph shall not preclude the provision of additional information responsive to the inquiry.
(27) Use of credit scoring. — No person may use consumer reports or credit scores in any manner prohibited by Chapter 83 of this title.
(28) Volunteer firefighters and ambulance personnel. — No insurance carrier shall take any negative underwriting action against a
policyholder, including, but not limited, to adjustment of rates or termination of a policy, based solely on the membership of a person
covered by the policy in a volunteer fire company certified by the Delaware State Fire Prevention Commission or its successor or in
a nonprofit organization that provides ambulance and/or rescue services within this State, including, but not limited to, organizations
such as volunteer fire companies, the Veterans of Foreign Wars and the American Legion. This paragraph shall not prevent a carrier
from taking underwriting action that is permitted by contract and applicable law, provided that the stated basis for such underwriting
action is not a pretense for violating this paragraph.
(29) Discriminatory practices against living donor. —
a. It is an unlawful practice for a person to do any of the following solely on the basis of an individual’s status as a living donor and
without any unique and material actuarial risks in accordance with sound actuarial principles and actual and reasonably anticipated
and expected experience of the individual on the basis of the individual’s status as a living organ donor:
1. Deny an insurance policy.
2. Cancel an insurance policy.
3. Refuse to issue an insurance policy.
4. Determine the process or premium for an insurance policy.
5. Otherwise vary a term or condition in an insurance policy.
b. It is an unlawful practice for a person to prohibit an individual from donating all or part of an organ or tissue as a condition
of receiving or continuing to receive an insurance policy.
c. For purposes of this paragraph (29):
1. “Living donor” means an individual who has donated all or part of an organ or tissue and was alive at the time of the donation.
2. A. “Organ” means a human kidney, liver, heart, lung, pancreas, esophagus, stomach, small or large intestine or portion of
the gastrointestinal tract, or another part of the human body designated by the Commissioner by regulation.
B. “Organ” includes blood vessels recovered during the recovery of an organ if the blood vessels are intended for use in
organ transplantation.
3. A. “Tissue” means a portion of the human body other than an organ, including a human eye, skin, bone, bone marrow, heart
valve, spermatozoon, ova, artery, vein, tendon, ligament, or pituitary gland or fluid.
B. “Tissue” does not include blood or a blood derivative, unless the blood or blood derivative is donated for the purpose
of research or education.
Page 153
Title 18 - Insurance Code
d. The Commissioner shall develop and make publicly available informational materials relating to living donors and the live
donation of organs and tissue and the access of living donors to insurance provided under this paragraph (29).
(18 Del. C. 1953, § 2304; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 65 Del. Laws, c. 195, § 1; 66 Del. Laws, c. 297, §
1; 67 Del. Laws, c. 223, §§ 25, 26, 40; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 250, § 1; 70 Del. Laws, c. 510, §§ 1, 2; 75 Del.
Laws, c. 55, § 2; 76 Del. Laws, c. 175, § 2; 76 Del. Laws, c. 395, § 1; 77 Del. Laws, c. 90, §§ 13, 14; 79 Del. Laws, c. 47, § 16;
81 Del. Laws, c. 78, § 4; 83 Del. Laws, c. 13, § 12; 83 Del. Laws, c. 195, § 4; 83 Del. Laws, c. 292, § 1.)
§ 2305. Favored agent or insurer; coercion of debtors.
(a) No person shall:
(1) Require, as a condition precedent, concurrent or subsequent to the loaning of money upon the security of any real or personal
property or to the selling of any such property under contract or extension of credit or any renewal thereof, that the owner of the
property to whom the money is to be loaned or the vendee of the property so being sold, shall place, continue or renew any policy
of insurance covering or to cover such property or covering any liability related to such property or the use thereof or that the person
to whom such money or credit is extended or whose obligation the creditor is to acquire or finance negotiate any policy or contract
of insurance through a particular insurance agent, broker or in a particular insurer or group of insurers or agent or broker or group of
agents or brokers, except that this provision shall not prevent the exercise by any such lender or vendor upon a reasonable basis of the
right to approve or disapprove of the insurer and representative selected to underwrite the insurance. Such basis shall relate only to:
a. The adequacy and terms of the coverage with respect to the interest of the vendor or lender to be insured thereunder;
b. The financial standards to be met by the insurer; and
c. The ability of the insurer or representative to service the policy;
(2) Unreasonably disapprove the insurance policy provided by a borrower for the protection of the property securing the credit or lien;
(3) Require directly or indirectly that any borrower, mortgagor, purchaser, insurer, broker or agent pay a separate charge to substitute
the insurance policy of one insurer for that of another; or
(4) Use or disclose information resulting from a requirement that a borrower, mortgagor or purchaser furnish insurance of any kind
on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of mortgagee, vendor
or lender or is to the detriment of the borrower, mortgagor, purchaser, insurer or the agent or broker complying with such a requirement.
(b) (1) Paragraph (a)(3) of this section does not include the interest which may be charged on premium loans or premium advancements
in accordance with the security instrument.
(2) For purpose of paragraph (a)(2) of this section, such disapproval shall be deemed unreasonable if it is not based solely on
reasonable standards uniformly applied, relative to the extent of coverage required and the financial soundness and the services of an
insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of
an insurance policy because such policy contains coverage in addition to that required.
(3) The Commissioner may investigate the affairs of any person to whom this subsection applies to determine whether such person
has violated this subsection. If a violation of this subsection is found, the person in violation shall be subject to the same procedures
and penalties as are applicable under other provisions of this chapter.
(4) For purposes of this section, “person” includes any individual, corporation, association, partnership or other legal entity.
(c) The Commissioner shall by regulation provide for the adequate disclosure of the prohibitions set forth in subsections (a) and (b)
of this section and any other similar provisions of law.
(18 Del. C. 1953, § 2305; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 67 Del. Laws, c. 223, § 27.)
§ 2305A. Banks acting as insurance agents or brokers.
(a) Banks and subsidiaries thereof first authorized to conduct the business of insurance pursuant to § 761(a)(14) of Title 5 shall not act
as insurance agents or brokers unless duly licensed to act as such pursuant to the provisions of Chapter 17 of this title; provided, that such
banks or subsidiaries thereof may sell insurance pursuant to subsections (b) and (c) of this section without separate license if such sales are
conducted exclusively by an individual, partnership or corporation duly licensed as an agent or broker under Chapter 17 of this title with
whom such bank or subsidiary thereof shall have contracted. All of the business of acting as an insurance agent or broker undertaken by or
on behalf of a bank or subsidiary thereof shall be subject to the provisions of Chapter 17 of this title regulating insurance agents or brokers
generally; provided, that the prohibition against sharing commissions set forth in § 1739 of this title shall not apply to an agent employed,
or contracting with, a bank with respect to the commissions earned by such agent on insurance sold through or on behalf of said bank.
(b) Subject to subsection (c) of this section, banks or subsidiaries thereof first authorized to conduct the business of insurance pursuant
to § 761(a)(14) of Title 5 which are either licensed as insurance agents or brokers, or which shall have contracted with an independent
individual, partnership or corporation so licensed, may sell insurance both on branch premises and at other, nonbranch locations.
(c) Until July 1, 1994, all sales of insurance to the Delaware public by a bank or subsidiary thereof, or an individual, partnership or
corporation licensed as an agent or broker with whom a bank or subsidiary has contracted for the sale of insurance, shall, at each branch
office or other location, be conducted under the supervision of 1 or more insurance agents or brokers, located on the premises, who have
been licensed and have actual experience as insurance agents or brokers for a period of not less than 5 years.
Page 154
Title 18 - Insurance Code
(d) Nothing in this section shall be construed as derogating from the authority of any bank or subsidiary thereof whose power to conduct
the business of insurance first derives from its charter, or otherwise by operation of law other than § 761(a)(14) of Title 5.
(67 Del. Laws, c. 223, § 36.)
§ 2306. Power of Commissioner.
The Commissioner shall have power to examine and investigate the affairs of every person engaged in the business of insurance in this
State in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive
act or practice prohibited by § 2303 of this chapter.
(18 Del. C. 1953, § 2306; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1.)
§ 2307. Procedures as to defined and undefined practices; hearings; witnesses; appearances; production of
books and service of process.
(a) Whenever the Commissioner shall have reason to believe that any such person has been engaged or is engaging in this State in any
unfair method of competition or in any unfair or deceptive act or practice, whether or not defined in § 2304 or § 2305 of this title, and
that a proceeding by him or her in respect thereto would be in the interest of the public, he or she shall issue and serve upon such person
a statement of the charges in that respect and a notice of a hearing thereon to be held at a time and place fixed in the notice, which shall
not be less than 10 days after the date of the service thereof.
(b) At the time and place fixed for such hearing, such person shall have an opportunity to be heard and to show cause why an order should
not be made by the Commissioner requiring such person to cease and desist from the acts, methods or practices so complained of. Upon
good cause shown, the Commissioner shall permit any person to intervene, appear and be heard at such hearing by counsel or in person.
(c) If such report charges a violation of this chapter, and if such method of competition, act or practice has not been discontinued, the
Commissioner may, through the Attorney General, at any time after the service of such report, cause an action to be instituted to enjoin
and restrain such person from engaging in such method, act or practice. In such action the court may grant a restraining order or injunction
upon such terms as may be just, but the State shall not be required to give security before the issuance of any such order or injunction.
If a stenographic record of the proceedings in the hearing before the Commissioner was made, a certified transcript thereof including all
evidence taken and the report and findings shall be received in evidence in such action.
(d) If the Commissioner’s report made under subsection (a) above, or order on hearing made under § 332 of this title does not charge
a violation of this chapter, then any intervenor in the proceedings may appeal therefrom within the time and in the manner provided in
this title for appeals from the Commissioner generally.
(e) Nothing contained in this chapter shall require the observance at any such hearing of formal rules of pleading or evidence:
(1) The Commissioner may hold a hearing in Dover or any other place of convenience to parties and witnesses, as the Commissioner
determines. The Commissioner, or his or her deputy or assistant, shall preside at the hearing and shall expedite the hearing and all
procedures involved therein.
(2) Any party to the hearing shall have the right to appear in person and by counsel, to be present during the giving of all evidence, to
have a reasonable opportunity to inspect all documentary and other evidence and to examine and cross-examine witnesses, to present
evidence in support of his or her interest and to have subpoenas issued by the Commissioner to compel attendance of witnesses and
production of evidence in his or her behalf. Testimony may be taken orally or by deposition and any party shall have such right of
introducing evidence by interrogatories or deposition as may obtain in a Court of Chancery.
(3) Upon good cause shown the Commissioner shall permit to become a party to the hearing by intervention, if timely, only such
persons, not original parties thereto, whose pecuniary interests are to be directly and immediately affected by the Commissioner’s order
made upon the hearing.
(4) Formal rules of pleading or evidence need not be observed at any hearing.
(5) The Commissioner, upon such hearings, as to the subject of any examination, investigation or hearing being conducted by him
or her, may administer oaths or affirmations, examine and cross-examine witnesses, receive oral evidence and receive documentary
evidence and shall have the power to subpoena witnesses, compel their attendance and require the production of books, papers, records,
correspondence or other documents which he or she deems relevant to the inquiry. Any delegation by the Commissioner of power of
subpoena shall be in writing. The Commissioner, upon such hearing, may, and upon the request of any party, shall, at such person’s
expense, cause a stenographic record to be made of all the evidence and all the proceedings had at such hearing. If transcribed, a
copy of such record shall be furnished for the Commissioner without cost to the Commissioner or the State and shall be part of the
Commissioner’s record of the hearing; and a copy shall likewise be furnished to any other party to the hearing, at the request and
expense of such other party. If no stenographic record is made, and if a judicial review is sought, the Commissioner shall prepare a
statement of the evidence and proceedings for use or review.
(f) Subpoenas of witnesses shall be served in the same manner and at the same cost as if issued by the Court of Chancery. In case of a
refusal of any person to comply with any subpoena issued hereunder or to testify with respect to any matter concerning which he or she
may be lawfully interrogated, the Court of Chancery of the county where such party resides, on application of the Commissioner, may
Page 155
Title 18 - Insurance Code
issue an order requiring such person to comply with such subpoena and to testify and any failure to obey any such order of the Court may
be punished by the Court as a contempt thereof. Any person knowingly testifying falsely under oath or making a false affirmation as to
any matter material to any such examination, investigation or hearing shall upon conviction thereof be guilty of perjury.
(g) Witness fees and mileage, if claimed, shall be allowed the same as for testimony in the Court of Chancery. Witness fees, mileage
and the actual expense necessarily incurred in securing attendance of witnesses and their testimony shall be itemized and shall be a part
of examination expense to be paid by the person being examined where payment of examination expense by such person is otherwise
provided for in this title, or paid by the person as to whom such proceedings, other than as part of an examination, are held if in such
proceedings such person is found to have been in violation of the law or by the person, if other than the Commissioner, at whose request
the hearing is held.
(h) (1) Statements of charges, orders and other processes of the Commissioner under this chapter may be served by any one duly
authorized by the Commissioner, either in the manner provided by law for service of process in civil actions or by registering and mailing
a copy thereof to the person affected by such statement, notice, order or other process at his or her or its residence or principal office or
place of business. The verified return by the person so serving such statement, notice, order or other process, setting forth the manner of
such service, shall be proof of the same and the return postcard receipt for such statement, notice, order or other process, registered and
mailed as aforesaid, shall be proof of the service of the same.
(2) Service of all process, statements of charges, and notices under this chapter upon unauthorized insurers shall be made by any
deputy or employee of the Department delivering to and leaving with the Commissioner or some person in apparent charge of his or
her office, 2 copies thereof, or in the manner provided for by § 2105(b) of this title.
(3) The Commissioner shall forward all such process, statements of charges and notices to the insurer in the manner provided in
§ 2105(a) of this title.
(4) No default shall be taken against any such unauthorized insurer until expiration of 30 days after date of forwarding by the
Commissioner under paragraph (h)(3) of this section above or date of service of process if under § 2105(b) of this title.
(5) Section 2105 of this title shall apply as to all process, statements of charges and notices under this section.
(18 Del. C. 1953, § 2307; 56 Del. Laws, c. 380; 59 Del. Laws, c. 200, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2308. Cease and desist and penalty orders and modifications thereof.
(a) If, after such hearing, the Commissioner shall determine that the person charged has engaged in an unfair method of competition,
or an unfair or deceptive act or practice, the Commissioner shall reduce such findings to writing and shall issue and cause to be served
upon the person charged with the violation a copy of such findings and an order requiring such person to cease and desist from engaging
in such method of competition, act or practice and if the act or practice is a violation of § 2304 or § 2305 of this title, the Commissioner
may at the Commissioner’s discretion order any 1 or more of the following:
(1) Payment of a monetary penalty of not more than $1,000 for each and every act or violation but not to exceed an aggregate penalty
of $100,000 unless the person knew or reasonably should have known the person was in violation of this chapter, in which case the
penalty shall not be more than $10,000 for each and every act or violation but not to exceed an aggregate penalty of $150,000 in any
6-month period;
(2) Suspension or revocation of the person’s license if the person knew or reasonably should have known the person was in violation
of this chapter; or
(3) Such other relief as is reasonable and appropriate.
(b) Until the expiration of the time allowed under § 2309 of this title for filing a petition for review (by appeal or writ of certiorari), if
no such petition has been duly filed within such time, or if a petition for review has been filed within such time, then until the transcript
of the record of the proceeding has been filed in the Chancery Court, as hereinafter provided, the Commissioner may at any time, upon
such notice and in such manner as he or she shall deem proper, modify or set aside in whole or in part any order issued by him or her
under this section.
(c) After the expiration of the time allowed for filing such a petition for review, if no such petition has been duly filed within such
time, the Commissioner may at any time, after notice and opportunity for hearing, reopen and alter, modify or set aside, in whole or in
part, any order issued by him or her under this section, whenever in his or her opinion conditions of fact or of law have so changed as
to require such action or if the public interest shall so require.
(d) Such desist order shall become final upon expiration of the time allowed for appeals from the Commissioner’s orders, if no such
appeal is taken, or, in the event of such an appeal, upon final decision of the Court if the Court affirms the Commissioner’s order or
dismisses the appeal. An intervenor in such hearing shall have the right to appeal as provided in § 328 of this title.
(e) In event of such an appeal, to the extent that the Commissioner’s order is affirmed the Court shall issue its own order commanding
obedience to the terms of the Commissioner’s order.
(f) No order of the Commissioner pursuant to this section or order of court to enforce it shall in any way relieve or absolve any person
affected by such order from any other liability, penalty or forfeiture under law.
(g) Violation of any such desist order shall be deemed to be and shall be punishable as a violation of this title.
Page 156
Title 18 - Insurance Code
(h) This section shall not be deemed to affect or prevent the imposition of any penalty provided by this title or by other law for violation
of any other provision of this chapter, whether or not any such hearing is called or held or such desist order issued.
(18 Del. C. 1953, § 2308; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 55, §
1.)
§ 2309. Judicial review of orders.
(a) Except as to matters arising under Chapter 25 of this title, an appeal from the Commissioner shall be taken only from an order
on hearing or as to a matter on which the Commissioner has refused or failed to hold a hearing after application therefor under § 323
of this title or as to a matter as to which the Commissioner has refused or failed to make his or her order on hearing as required by §
324 of this title.
(b) Any person subject to an order of the Commissioner under § 2308 or § 2311 of this title and who was a party to such hearing
or whose pecuniary interests are directly and immediately affected by any such refusal or failure, and who is aggrieved by such order,
refusal or failure, may obtain an appeal from the Commissioner’s order by filing in the Court of Chancery in any county, within 60 days
from the date of such order, a written verified petition praying that the order of the Commissioner be set aside. The petition shall state the
grounds upon which the review is sought, together with a bond with good and sufficient sureties to be approved by the Court conditioned
to pay all costs which may be assessed against the appellant or petitioner in such proceedings. If the appeal is from the Commissioner’s
order on hearing, the petitioner shall also deliver to the Commissioner a sufficient number of copies of the petition and the Commissioner
shall mail or otherwise furnish a copy thereof to the other parties to the hearing to the same extent as a copy of the Commissioner’s order
is required to be furnished to the hearing parties under § 324 of this title. A copy of such petition shall be forthwith served upon the
Commissioner, and thereupon the Commissioner shall certify and file in such Court a transcript of the entire record in the proceeding,
including all the evidence taken and the report and order of the Commissioner. Upon such filing of the petition and transcript such Court
shall have jurisdiction of the proceeding and of the question determined therein, shall determine whether the filing of such petition shall
operate as a stay of such order of the Commissioner and shall have power to make and enter upon the pleadings, evidence and proceedings
set forth in such transcript a decree modifying, affirming or reversing the order of the Commissioner, in whole or in part. The findings
of the Commissioner as to the facts, if supported by the evidence, shall be conclusive.
(c) To the extent that the order of the Commissioner is affirmed, the Court shall thereupon issue its own order commanding obedience
to the terms of such order of the Commissioner. If either party shall apply to the Court for leave to adduce additional evidence and shall
show to the satisfaction of the Court that such additional evidence is material and that there were reasonable grounds for the failure to
adduce such evidence in the proceeding before the Commissioner, the Court may order such additional evidence to be taken before the
Commissioner and thereby adduced upon the hearing in such manner and upon such terms and conditions as to the Court may seem proper.
The Commissioner may modify his or her findings of fact or make new findings by reason of the additional evidence so taken, and he or
she shall file such modified or new findings, which, if supported by the evidence, shall be conclusive, and his or her recommendation, if
any, for the modification or setting aside of his or her original order, with the return of such additional evidence.
(d) An order issued by the Commissioner under § 2308 of this title shall become final:
(1) Upon the expiration of the time allowed for filing a petition for review, if no such petition has been duly filed within such time,
except that the Commissioner may thereafter modify or set aside his or her order to the extent provided elsewhere in this title; or
(2) Upon the final decision of the highest state court, if the court directs that the order of the Commissioner be affirmed or the petition
for review dismissed. From the judgment of the Court of Chancery either the Commissioner or other party to the appeal may appeal
directly to the Supreme Court of the State in the same manner as is provided in civil cases.
(e) No order of the Commissioner under this chapter or order of a court to enforce the same shall in any way relieve or absolve any
person affected by such order from any liability of any other laws of this State.
(18 Del. C. 1953, § 2309; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2310. Judicial review by intervenor.
If after any hearing under § 2306 or § 2311 of this title the Commissioner’s report does not charge a violation of this chapter, then
any intervenor in the proceedings may within 20 days after the service of such report cause a petition for a review of such report to be
filed in the Chancery Court of any county of this State. Upon such review, the Court shall have authority to issue appropriate orders and
decrees in connection therewith, including, if the Court finds that it is in the interest of the public, orders enjoining and restraining the
continuance of any method of competition, act or practice which it finds, notwithstanding such report of the Commissioner, constitutes
a violation of this chapter, and containing penalties pursuant to § 2308 of this title.
(18 Del. C. 1953, § 2311; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1.)
§ 2311. Penalty for violation of cease and desist orders.
(a) Any person who violates a cease and desist order of the Commissioner under § 2308 of this title, and while such order is in effect,
may after notice and hearing and upon order of the Commissioner be subject at the discretion of the Commissioner to any one or more
of the following:
Page 157
Title 18 - Insurance Code
(1) A monetary penalty of not more than $11,500 for each and every act or violation; or
(2) Suspension or revocation of such person’s license; or
(3) Such other relief as is reasonable and appropriate.
(b) Prosecutions for any such violation shall be brought in the Superior Court of the county in which the offense occurred.
(c) At the discretion of the Commissioner and the Attorney General, any fine provided for above may be recovered on behalf of the
State by a civil action brought against the violator.
(18 Del. C. 1953, § 2312; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 67 Del. Laws, c. 260, § 1.)
§ 2312. Regulations.
(a) The Commissioner may, after notice and hearing, promulgate reasonable rules and regulations, as are necessary or proper to identify
specific methods of competition or acts or practices which are prohibited by § 2304 or § 2305 of this title, but the regulations shall not
enlarge upon or extend the provisions of § 2304 or § 2305 of this title. Such regulations shall be subject to review in accordance with
§ 2309 of this title. No such rule or regulation shall extend, modify or conflict with any law of this State or the reasonable implications
thereof.
(b) Wilful violation of any such rule or regulation shall subject the violator to such suspension or revocation of certificate of authority
or license, or to such administrative fine in lieu thereof, as may be applicable under this title for violation of the provision to which such
rule or regulation relates, but no penalty shall apply to any act done or omitted in good faith in conformity with any such rule or regulation,
notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other
authority to be invalid for any reason.
(18 Del. C. 1953, § 2313; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1.)
§ 2313. Provisions of chapter additional to existing law.
The powers vested in the Commissioner by this chapter, shall be additional to any other powers to enforce any penalties, fines or
forfeitures authorized by law with respect to the method, acts and practices hereby declared to be unfair or deceptive.
(18 Del. C. 1953, § 2314; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1.)
§ 2314. Immunity from prosecution.
If any person shall ask to be excused from attending or testifying or from producing any books, papers, records, contracts,
correspondence or other documents at any hearing on the ground that the testimony or evidence required of him or her may tend to
incriminate him or her or subject him or her to a penalty or forfeiture, and shall thereafter notwithstanding this request be directed to
give such testimony or produce such evidence, he or she must nonetheless comply with such direction, but he or she shall not thereafter
be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he or she
may testify or produce evidence thereto, and no testimony so given or evidence produced shall be received against him or her upon any
criminal action, investigation or proceeding. However, no such individual so testifying shall be exempt from prosecution or punishment
for any perjury committed by him or her while so testifying, and the testimony or evidence so given or produced shall be admissible
against him or her upon any criminal action, investigation or proceeding concerning such perjury, nor shall he or she be exempt from
the refusal, suspension or revocation of any license, permission or authority conferred, or to be conferred, pursuant to the Insurance Law
of this State. Any such individual may execute, acknowledge and file in the office of the Commissioner and of the Attorney General a
statement expressly waiving such immunity or privilege in respect to any transaction, matter or thing specified in such statement, and
thereupon the testimony of such person or such evidence in relation to such transaction, matter or thing may be received or produced
before any judge or justice, court, tribunal, grand jury or otherwise, and if so received or produced such individual shall not be entitled
to any immunity or privileges on account of any testimony he or she may so give or evidence so produced.
(18 Del. C. 1953, § 2315; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 200, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2315. Discrimination against individuals over 65 years of age.
(a) No person shall fail to make available to an insured continued coverage for hospital and medical-surgical expenses in health
insurance, group and blanket health insurance, or health service corporation contracts due to such insured’s attaining the age of 65.
(b) No person shall knowingly permit or offer to make or make any contract of health insurance, group or blanket health insurance, or
health service corporation service agreement with an individual 65 years of age or older unless such contract provides benefits equivalent
to the benefits available to insureds under the age of 65 covered by such insurance company; except that such contracts may allow
for reductions in coverage to reflect benefits available under governmentally sponsored health-care programs generally available to
individuals over 65.
(c) Should any insurance company not have a contract available to insureds under the age of 65, the minimum benefits, if any, available
to insureds over 65 must include partial or full coverage of appropriate hospital and surgical-medical expenses as determined by the
Commissioner taking into account the prevailing medical practice in the community and the coverage available under governmentally
sponsored programs generally available to individuals over 65.
Page 158
Title 18 - Insurance Code
(d) The application of subsections (a), (b) and (c) of this section shall not prohibit differential rates to be charged to any category of
risk set forth in this section.
(59 Del. Laws, c. 274, § 1.)
§ 2316. Refusal to issue policy to blind or deaf persons prohibited.
(a) No insurer authorized to issue policies of accident and sickness insurance in the State shall refuse, for the reason of blindness or
deafness, to issue an individual policy of accident and sickness insurance, which provides hospital expense and surgical expense coverage,
to any person residing in the State.
(b) No insurer authorized to issue life insurance policies in the State shall refuse, for the sole reason of blindness or deafness, to issue
a policy of individual life insurance on the life of any such person residing in the State.
(61 Del. Laws, c. 216, § 1.)
§ 2317. Genetics based discrimination.
(a) For purposes of this section:
(1) “Genetic characteristic” means any inherited gene or chromosome, or alteration thereof, that is scientifically or medically believed
to predispose an individual to a disease, disorder, or syndrome, or to be associated with a statistically significant increased risk of
development of a disease, disorder, or syndrome.
(2) “Genetic information” means information about inherited genes or chromosomes, and of alterations thereof, whether obtained
from an individual or family member, that is scientifically or medically believed to predispose an individual to disease, disorder,
or syndrome, or believed to be associated with a statistically significant increased risk of development of a disease, disorder, or
syndrome. “Genetic information” includes information regarding carrier status, information regarding an increased likelihood of future
disease or increased sensitivity to any substance, information derived from laboratory tests that identify mutations in specific genes or
chromosomes, requests for genetic services or counseling, tests of gene products, and direct analysis of genes or chromosomes.
(3) “Genetic test” means a test for determining the presence or absence of an inherited genetic characteristic in an individual, including
tests of nucleic acids such as DNA, RNA and mitochondrial DNA, chromosomes or proteins in order to identify a predisposing genetic
characteristic associated with disease, disorder, or syndrome.
(4) “Insurance” means health coverage as defined in this title or in regulations promulgated by the Insurance Commissioner, not
including disability insurance or long-term care insurance.
(b) A person may not discriminate against any individual in the issuance, denial, or renewal of or in the fixing of the rates, terms, or
conditions for insurance based on any genetic characteristic or genetic information.
(c) No cause of action in the nature of defamation, invasion of privacy or negligence shall arise against any person for disclosing
personal or privileged information in accordance with this section, nor shall such a cause of action arise against any person for furnishing
personal or privileged information to an insurance institution, agent or insurance support organization; provided however, that this section
shall provide no immunity for disclosing or furnishing false information with malice or wilful intent to injure any person. Additionally,
no person shall be found in violation of this section because the person receives genetic information or the results of a genetic test through
inadvertent disclosure by a medical professional.
(71 Del. Laws, c. 457, § 1; 83 Del. Laws, c. 283, § 25.)
§ 2318. Care by advanced practice nurses.
No health insurer, health service corporation or health maintenance organization shall deny benefits for eligible services when the
services are rendered or performed by an advanced practice nurse as long as said advanced practice nurse acts within the scope of practice
and/or definitions pursuant to Title 24. Any contract of insurance issued or issued for delivery in this State by health insurers, health
service corporations or health maintenance organizations shall not exclude advanced practice nurses as providers of services covered in
the contract.
(67 Del. Laws, c. 452, § 1; 69 Del. Laws, c. 319, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2319. Carrier post-claim adjudication audit record requests.
(a) For purposes of this section:
(1) “Carrier” means any entity that provides health insurance in this State. “Carrier” includes an insurance company, health service
corporation, health maintenance organization, and any other entity providing a plan of health insurance or health benefits subject to
state insurance regulation. “Carrier” also includes any third-party administrator or other entity that adjusts, administers, or settles claims
in connection with health benefit plans.
(2) “Carrier” does not mean an entity that provides a plan of health insurance or health benefits designed for issuance to persons
eligible for coverage under Titles XVIII, XIX and XXI of the Social Security Act (42 U.S.C. §§ 1395 et seq., 1396 et seq. and 1397 et
seq.), known as Medicare, Medicaid, or any other similar coverage under state or federal governmental plans.
Page 159
Title 18 - Insurance Code
(3) “Post-claim adjudication audit” means any audit of a claim by a carrier post payment.
(b) Except as set forth in subsection (e) of this section, medical records requests for post-claim adjudication audits are limited to 400
claims for a specific episode of care in a 45-day period per provider. Any request for records pursuant to this section shall be made in
writing.
(c) A provider shall have no less than 45 days and no more than 60 days from the date of the letter to submit all of the requested records.
(d) A provider shall have no less than 30 days and no more than 60 days from the receipt date of the audit result/determination letter
to appeal the audit determination.
(e) This section does not apply to post-claim adjudication audits which are any of the following:
(1) Based on a reasonable belief of fraud, waste, abuse or other intentional misconduct.
(2) Required by, or initiated at the request of a self-insured plan.
(3) Required by the state or federal government or a state or federal government plan.
(82 Del. Laws, c. 111, § 1.)
§ 2320. Discrimination prohibited; pre-exposure prophylaxis medication to prevent HIV infection.
A person engaged in the business of life, disability, or long-term care insurance may not do any of the following solely because an
individual has been prescribed pre-exposure prophylaxis medication to prevent HIV infection:
(1) Deny, refuse to issue, refuse to renew, refuse to reissue, cancel, or otherwise terminate an insurance policy or restrict coverage.
(2) Add any surcharge or rating factor to a premium of an insurance policy.
(3) Otherwise discriminate in the offering, issuance, cancellation, amount of coverage, price, payment of claims, or any other
condition of an insurance policy without additional actuarial justification.
(83 Del. Laws, c. 41, § 1.)
Page 160
Title 18 - Insurance Code
Part I
Insurance
Chapter 24
Insurance Fraud
§ 2401. Title.
This chapter shall be known as and may be cited as the “Delaware Insurance Fraud Prevention Act.”
(69 Del. Laws, c. 463, § 1.)
§ 2402. Purpose.
The purpose of this chapter is to confront aggressively the problem of insurance fraud in the State by facilitating the detection of
insurance fraud, reducing the occurrence of such fraud through administrative enforcement and deterrence, requiring the restitution of
fraudulently obtained insurance benefits and reducing the amount of premium dollars used to pay fraudulent claims.
(69 Del. Laws, c. 463, § 1.)
§ 2403. Definitions.
(a) “Attorney General” means the Attorney General of the State or the Attorney General’s designated representatives.
(b) “Authorized agency” means any appropriate law-enforcement agency.
(c) “Bad faith” means without any reasonable justification.
(d) “Bureau” means the Delaware Insurance Fraud Prevention Bureau established by this chapter.
(e) “Director” means the Director of the Delaware Insurance Fraud Prevention Bureau.
(f) “Financial loss” includes, but is not limited to, loss of earnings, out of pocket and other expenses, repair and replacement costs
and claims payments.
(g) “Insurer” includes, but is not limited to, an authorized insurer, self-insurer, reinsurer, broker, producer or any agent thereof.
(h) “Practitioner” means a licensee of this State authorized to practice medicine, surgery, psychology, chiropractic or law or any other
licensee or business of this State whose services are compensated, directly or indirectly, by insurance proceeds, or a licensee similarly
licensed in any other state, or the practitioner of any nonmedical treatment rendered in accordance with a recognized religious method
of healing.
(i) “Statement” includes, but is not limited to, any notice statement, proof of loss, bill of lading, receipt for payment, invoice, account,
estimate of property damages, bill for services, diagnosis, prescription, hospital or doctor records, x-rays, test result or other evidence
of loss, injury or expense.
(69 Del. Laws, c. 463, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2404. Establishment of Delaware Insurance Fraud Prevention Bureau; Delaware Insurance Fraud
Auxiliary Fund.
(a) The Delaware Insurance Fraud Prevention Bureau is hereby established within the Department of Insurance and authorized to
employ investigators and appropriate support staff as is necessary to carry out its mandate.
(b) The Commissioner shall appoint the full-time supervisory and investigative personnel of the Bureau including the Director and
Chief Investigator, who shall hold their employment at the pleasure of the Commissioner and who shall be qualified by training and
experience to perform the duties of their positions. The Commissioner shall also appoint the clerical and other staff necessary for the
Bureau to fulfill its responsibilities under this chapter.
(c) It shall be the duty of the Bureau:
(1) To initiate independent inquiries and conduct independent investigations when the Bureau has cause to believe that an act of
insurance fraud has been, or is currently being committed;
(2) To review reports or complaints of alleged insurance fraud from federal, state and local police, other law-enforcement authorities,
governmental agencies or units, insurers and the general public and to determine whether such reports require further investigation
and to conduct such investigations;
(3) To conduct independent examinations of insurance fraud, and undertake independent studies to determine the extent of insurance
fraud; and
(4) To enforce § 2118(q)(4) of Title 21 by confiscating license plates of uninsured motorists who have failed to provide proof of
insurance after being afforded an opportunity to prove proof of insurance as required in § 2118(q)(4) of Title 21.
(d) There is hereby created within the Bureau a special revolving fund to be designated as the Delaware Insurance Fraud Auxiliary
Fund which shall be used by the Bureau in the performance of the various functions and duties required of the Bureau by law.
(69 Del. Laws, c. 463, § 1; 75 Del. Laws, c. 59, § 2.)
Page 161
Title 18 - Insurance Code
§ 2405. Evidence, documentation and related materials.
(a) The Commissioner or the Commissioner’s designee, in addition to other provisions of this title, shall have the power and authority
to administer oaths, subpoena witnesses and to compel the production of nonprivileged evidence, in any form, that is relevant or will lead
to the discovery of relevant information regarding fraud investigation. Any natural or other person, as well as any State or governmental
entities may be subpoenaed and shall produce the required evidence or to make such evidence available for inspection by the Bureau in a
timely manner. The Superior Court of the State shall have exclusive jurisdiction regarding the enforcement or lawfulness of a subpoena
on proper application by a party in interest.
(b) If the Bureau seeks evidence, documentation, or related materials located outside this State pertinent to an investigation or
examination, the Bureau may designate representatives or deputies, including officials of the State where the matter is located, to secure
or inspect the evidence, documentation or materials on its behalf.
(c) Subpoenas may be served in any manner that is authorized for service of original process or subpoenas under the Superior Court
Rules of Civil Procedure.
(69 Del. Laws, c. 463, § 1; 70 Del. Laws, c. 422, §§ 1, 2.)
§ 2406. Confidentiality and immunity from subpoena.
(a) All papers, records, documents, reports, materials or other evidence relevant to an insurance fraud investigation or examination
shall remain confidential and shall not be subject to public inspection so long as the Bureau deems it is reasonably necessary to protect
the privacy of the person or matter investigated or examined, to protect the person furnishing the material or to be in the public interest.
(b) Such papers, records, documents, reports, materials or other evidence relevant to an insurance fraud investigation or examination
shall not be subject to subpoena until opened for public inspection by the Bureau.
(69 Del. Laws, c. 463, § 1.)
§ 2407. Insurance fraud.
(a) It shall be a fraudulent insurance act for a person to knowingly, by act or omission, with intent to injure, defraud or deceive:
(1) Present, cause to be presented, prepare, assist, abet, solicit or conspire with another to prepare or make any oral or written
statement with knowledge or belief that it will be presented to an insurer in connection with, or in support of, any application for the
issuance of an insurance policy, containing false, incomplete or misleading information concerning any fact material to the application
for issuance of an insurance policy;
(2) Prepare, present or cause to be presented to any insurer, any oral or written statement including computer-generated documents as
part of, or in support of, a claim for payment or other benefit pursuant to an insurance policy, containing false, incomplete or misleading
information concerning any fact material to such claims;
(3) Assist, abet, solicit or conspire with another to prepare or present any oral or written statement, including computer-generated
documents, that is intended to be presented to any insurer in connection with, or in support of, any claim for payment or other benefit
pursuant to an insurance policy, which contains false, incomplete or misleading information concerning any fact material to the claim; or
(4) Prepare, present or cause to be presented to any insurer or other person, or demand or require the issuance of, a certificate of
insurance that contains any false or misleading information concerning the policy of insurance to which the certificate makes reference,
or assist, abet, solicit or conspire with another to do any of the acts described in this sentence. As used in this section, “certificate of
insurance” means a document or instrument, regardless of how titled or described, that is, or purports to be, prepared or issued by an
insurer or insurance producer as evidence of property or casualty insurance coverage. The term does not include a policy of insurance,
insurance binder, policy endorsement, or automobile insurance identification or information card.
(b) It shall be a fraudulent insurance act for a practitioner to knowingly and wilfully assist, conspire with, or urge any person to violate
any of the provisions of this chapter, or for any person who due to such assistance, conspiracy or urging by said practitioner, knowingly
and wilfully benefits from the proceeds derived from the use of the fraud.
(c) It shall be a fraudulent insurance act for any insurer or any person acting on behalf of such insurer to knowingly, by act or omission,
with intent to injure, defraud or deceive:
(1) Present or cause to be presented to an insurance claimant false, incomplete or misleading information regarding the nature, extent
and terms of insurance coverage which may or might be available to such claimant under any policy of insurance, whether first or
third party.
(2) Present or cause to be presented to any insurance claimant false, incomplete or misleading information regarding or affecting
in any fashion the extent of any claimant’s right to benefit under, or to make a claim against, any policy of insurance whether first
or third party.
(69 Del. Laws, c. 463, § 1; 79 Del. Laws, c. 217, § 2.)
§ 2408. Duties of insurers.
Any insurer which has a reasonable belief that an act of insurance fraud is being, or has been, committed shall send to the Bureau, on
a form prescribed by the Bureau, any and all information and such additional information relating to such act as the Bureau may require.
(69 Del. Laws, c. 463, § 1.)
Page 162
Title 18 - Insurance Code
§ 2409. Immunity.
In the absence of fraud or bad faith, no person shall be subject to civil liability (for libel, slander or any other relevant tort cause of
action by virtue of filing reports, without malice, or furnishing other information, written or oral, without malice, required by this chapter
or required by the Commissioner under the authority granted in this title), and no civil cause of action of any nature shall arise against
such person:
(1) For any information relating to suspected fraudulent insurance acts furnished to or received from law-enforcement officials, their
agents and employees; or
(2) For any information relating to the suspected fraudulent insurance acts furnished to or received from other persons in this title; or
(3) For any such information furnished in reports to the Insurance Department, the National Association of Insurance Commissioners
or any organization established to detect and prevent fraudulent insurance acts, their agents, employees or designees, nor shall the
Commissioner or any employee of the Insurance Department, (acting without malice) in the absence of fraud or bad faith, be subject to
civil liability (for libel, slander or any other relevant tort) and no civil cause of action of any nature shall arise against such person by
virtue of publication of any report or bulletin related to the official activities of the Insurance Department. Nothing herein is intended
to abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person.
(69 Del. Laws, c. 463, § 1.)
§ 2410. Other law-enforcement authorities.
This chapter shall not:
(1) Preempt the authority or relieve the duty of any other law enforcement agency to investigate, examine and prosecute suspected
violations of law;
(2) Prevent or prohibit a person from voluntarily disclosing any information concerning insurance fraud to any law-enforcement
agency other than the Bureau; or
(3) Limit any of the powers granted elsewhere by the laws of this State to the Commissioner of Insurance or the Department of
Insurance to investigate and examine possible violations of law and to take appropriate action.
(69 Del. Laws, c. 463, § 1.)
§ 2411. Enforcement, investigations, hearings, administrative penalties and appeals.
(a) The matters of enforcement, investigations, hearings, administrative penalties and appeals shall be conducted in accordance with
Chapter 3 of this title and Chapter 101 of Title 29 to the extent that such provisions are not in conflict with the provisions set forth in
this chapter.
(b) Upon a showing by a preponderance of evidence that a violation of this chapter has occurred, the Commissioner may impose an
administrative penalty of not more than $10,000 for each act of insurance fraud. An act of insurance fraud may be 1 of several such acts
which taken together comprise a fraudulent insurance scheme. Assessment of the administrative penalty shall be determined by the nature,
circumstances, extent and gravity of the act or acts of insurance fraud, any prior history of such act or acts, the degree of culpability and
such other matters as justice may require.
(c) In the event of nonpayment of the administrative penalty after all rights of appeal have been waived or exhausted, a civil action
may be brought by the Commissioner in Superior Court for the collection of the administrative penalty, including interest, attorneys’ fees
and costs, in the following manner:
(1) A praecipe and complaint shall be filed setting forth that administrative action was taken against the defendant in accordance
with this chapter, that the defendant either voluntarily entered into a consent order which called for the payment of a specified monetary
penalty, or in the alternative, that after proper notice and hearing, the defendant was determined to be in violation of this chapter and that
by order of the Commissioner a specified monetary penalty had been assessed against the defendant, that all rights of appeal have been
waived or exhausted, and that payment in full has not been made in accordance with the terms of the consent order or other order of the
Commissioner. The Department shall attach to the complaint a certified copy of that consent order or other order of the Commissioner.
(2) The Court shall enter judgment in favor of the Department for the amount specified in the complaint upon the Department
establishing the following:
a. The defendant is the same person against whom the consent order or other order of the Commissioner applies; and
b. Payment in full has not been made by or on behalf of the defendant according to the terms of the consent or other order of
the Commissioner.
(3) Any judgment entered shall be final to the same extent as a judgment entered after trial.
(4) Except as otherwise provided in this section the Superior Court Civil Rules shall govern these proceedings.
(d) Any person who is found to have committed an act of insurance fraud, or violated an order of the Commissioner pursuant to a hearing,
shall be liable for costs incurred by the Bureau. The assessment for costs shall be 15% of each penalty assessed pursuant to this section.
(e) In addition to the above, the Commissioner shall have authority to order restitution to the insurer, or self-insured employer of any
insurance proceeds paid pursuant to a fraudulent claim.
Page 163
Title 18 - Insurance Code
(f) The expenses or administrative penalties collected by the Bureau under this chapter are appropriated to the Bureau in accordance
with § 2404 of this title. All moneys received by the Commissioner from insurers and agents pursuant to this chapter shall be transmitted
to the State Treasurer to be deposited in the State Treasury to the credit of the Delaware Insurance Fraud Auxiliary Fund. All such moneys
which are deposited in the Auxiliary Fund shall be appropriated to the Bureau to be used exclusively for the support of the Bureau.
However, the Department may, in its discretion, pay a reward drawn from the assessed administrative penalty to an individual who reports
to the Insurance Department an incident of insurance fraud which results in either an admission or finding of fraud. The reward shall not
exceed the lesser of the assessed administrative penalty or $25,000. In order to be eligible to receive a reward pursuant to this subsection,
a reporting individual must sign a written complaint that subjects the person to the sanctions of § 1233 of Title 11. An insurance carrier
that is the victim of insurance fraud is not eligible to receive a reward pursuant to this subsection for reporting such fraud.
(69 Del. Laws, c. 463, § 1; 71 Del. Laws, c. 331, § 1; 75 Del. Laws, c. 276, § 1; 76 Del. Laws, c. 1, § 1.)
§ 2412. Consent orders.
Any person so requested may enter into a consent order whereby such person, without admitting the conduct complained of, consents
to the imposition of an administrative penalty and when so requested agrees to cease and desist the acts or omissions complained of.
(69 Del. Laws, c. 463, § 1.)
§ 2413. Criminal prosecution.
The imposition of any fine or other sanction under this chapter shall not preclude prosecution for a violation of any of the criminal
laws of this State.
(69 Del. Laws, c. 463, § 1.)
§ 2414. Application of Administrative Procedures Act.
Except as otherwise provided in this chapter, the State Administrative Procedures Act (Chapter 101 of Title 29) applies to and governs
all administrative actions taken by the Bureau.
(69 Del. Laws, c. 463, § 1.)
§ 2415. Funding.
The costs of administration and operation of the Delaware Insurance Fraud Prevention Bureau shall be borne by all of the insurance
companies admitted or authorized to transact the business of insurance in this State. The Commissioner shall assess $ 900 annually against
each insurance company to provide the funds necessary for the operation of the Bureau.
(71 Del. Laws, c. 69, § 2; 78 Del. Laws, c. 205, § 1; 81 Del. Laws, c. 341, § 1.)
Page 164
Title 18 - Insurance Code
Part I
Insurance
Chapter 25
Rates and Rating Organizations
§ 2501. Purpose of chapter; interpretation.
The purpose of this chapter is to promote the public welfare by regulating insurance rates (in accordance with the intent of Congress
as expressed in Public Law 15—79th Congress) and to the end that they shall not be excessive, inadequate or unfairly discriminatory
and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter.
Nothing in this chapter is intended:
(1) To prohibit or discourage reasonable competition; or
(2) To prohibit, or encourage except to the extent necessary to accomplish the aforementioned purpose, uniformity in insurance rates,
rating systems, rating plans or practices.
This chapter shall be liberally interpreted to carry into effect this section.
(18 Del. C. 1953, § 2501; 56 Del. Laws, c. 380, § 1.)
§ 2502. Scope of chapter.
(a) This chapter applies to:
(1) Casualty insurance, including workers’ compensation, and all forms of motor vehicle insurance, on risks or operations in this
State;
(2) Surety insurance;
(3) Fire, marine and inland marine insurance, as used in their generally accepted trade sense, on risks located in this State. Inland
marine insurance shall be deemed to include insurance as defined by statute, or by ruling of the Commissioner;
(4) Health insurance, group health insurance, blanket health insurance, Medicare supplement insurance and health service
corporations; and
(5) Title insurance.
(b) This chapter shall not apply to:
(1) Reinsurance, except joint reinsurance as provided in § 2523 of this title;
(2) Insurance of airborne or waterborne vessels or craft, their cargoes, legal liability of aircraft operators, marine protection and
indemnity, or other risks commonly insured under aviation or marine, as distinguished from inland marine, insurance policies; or
(3) Life insurance.
(c) Nothing in this chapter shall abridge or restrict the freedom of contract between insurers and agents or brokers with respect to
commissions or between insurers and their employees with respect to compensation.
(18 Del. C. 1953, § 2502; 56 Del. Laws, c. 380, § 1; 60 Del. Laws, c. 388, §§ 1, 2; 63 Del. Laws, c. 262, § 3; 70 Del. Laws, c. 186,
§ 1; 73 Del. Laws, c. 402, § 1.)
§ 2503. Making of rates [For applicability of this section, see 81 Del. Laws, c. 108, § 3] [Effective until Jan.
1, 2027].
(a) Rates must be made in accordance with the following provisions:
(1) Manual, minimum, class rates, rating schedules or rating plans shall be made and adopted, except in the case of specific inland
marine rates on risks specially rated;
(2) Rates shall not be excessive, inadequate or unfairly discriminatory;
(3) Due consideration shall be given:
a. To past and prospective loss experience within and outside this State;
b. To the conflagration and catastrophe hazards;
c. To a reasonable margin for underwriting profit and contingencies;
d. To dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or
subscribers;
e. To past and prospective expenses both countrywide and those specially applicable to this State;
f. To all other relevant factors within and outside this State; and
g. In the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period
of not less than the most recent 5-year period for which such experience is available;
Page 165
Title 18 - Insurance Code
(4) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other
insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any
kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense
provisions are applicable;
(5) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be
modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in
hazards or expense provisions or both. Such standards may measure any differences among risks which may have a probable effect
upon losses or expenses;
(6) The Commissioner shall require a reduction in rates for a 3-year period for any person who voluntarily attends and successfully
completes a motor vehicle accident prevention course that is approved by the Division of Motor Vehicles.
a. A motor vehicle accident prevention course under this paragraph (a)(6) must educate an individual taking the course on traffic
stops by a law-enforcement officer as required under § 2713(e) of Title 21. A motor vehicle accident prevention course under
this paragraph (a)(6) must include at least 2 questions on any test given to an individual taking the course to test the individual’s
knowledge of traffic stops by a law-enforcement officer.
b. Motor vehicle accident prevention course instructors that have been certified by the Division of Motor Vehicles are entitled to
the same reduction in rates as those individuals that have successfully completed a motor vehicle accident prevention course, in the
manner set forth in regulations promulgated under this section.
c. The reduction must be for any individually owned vehicle classified as a private passenger vehicle and must be in proportion
to the number who have completed the course in the event that not all members of a group have completed the course.
d. Voluntary attendance does not include any attendance ordered as permitted by a court or required by the Division of Motor
Vehicles pursuant to any violations of Title 21;
(7) The Commissioner shall require a reduction in rates for a 3-year period for any person who voluntarily attends and successfully
completes a motorcycle rider course that is approved by the Division of Motor Vehicles.
a. A motorcycle rider course under this paragraph (a)(7) must educate an individual taking the course on traffic stops by a lawenforcement officer as required under § 2713(e) of Title 21. A motorcycle rider course under this paragraph (a)(7) must include at
least 2 questions on any test given to an individual taking the course to test the individual’s knowledge of traffic stops by a lawenforcement officer.
b. Motorcycle rider course instructors that have been certified by the Division of Motor Vehicles must be entitled to the same
reduction in rates as those individuals that have successfully completed a motorcycle rider course, in the manner set forth in
regulations promulgated under this section.
c. The reduction must be for any individually owned vehicle classified as a motorcycle and licensed for use on the streets and
highways of this State.
d. Voluntary attendance does not include any attendance ordered as permitted by a court or required by the Division of Motor
Vehicles pursuant to any violations of Title 21;
(8) The Commissioner shall require insurers to file an actuarially justified reduction in rates for a 3-year period if all operators of a
vessel voluntarily attend and successfully complete a boating safety education course which is approved by the Department of Natural
Resources and Environmental Control for the purposes of § 2221 of Title 23. The reduction shall be for any individually owned vessel
used exclusively for noncommercial purposes. Voluntary attendance shall not include any attendance ordered as permitted by a court
or required by the Department of Natural Resources and Environmental Control pursuant to any violations of Title 23;
(9) Rate filings concerning automobile collision insurance shall provide for a credit of 5 percent of annual premiums for such coverage
for any individually owned vehicle classified as a private passenger vehicle owned by employees participating in an approved Travelink
Traffic Mitigation Act program created pursuant to subchapter IV of Chapter 20 of Title 30;
(10) An insurer authorized to do business in Delaware cannot increase a renewal rate for a personal automobile insurance policy
based solely on an insured having attained the age of 75 or older;
(11) With respect to personal automobile insurance for an existing insured, an insurer authorized to do business in Delaware may
not charge the insured a higher rate solely based upon a change in his or her marital status due to the death of a spouse.
(12) a. Rate filings for health benefit plans may not include aggregate unit price growth for nonprofessional services that exceed
the following:
1. In 2022, the greater of 3% or Core CPI plus 1%.
2. In 2023, the greater of 2.5% or Core CPI plus 1%.
3. In 2024, 2025, and 2026, the greater of 2% or Core CPI plus 1%.
b. For purposes of this paragraph (a)(12) and paragraphs (a)(13) and (a)(14) of this section:
1. “Core CPI” means the average of the 12 preceding bimonthly indices calculation the over-the-year changes of the Consumer
Price Index for All Urban Consumers in the Philadelphia-Camden-Wilmington Area, all items less food and energy, developed
by the United States Bureau of Labor Statistics.
Page 166
Title 18 - Insurance Code
2. “Health benefit plan” means as defined under §§ 3342A(a)(3)a. and 3559(a)(3)a. of this title.
3. “Inpatient hospital” means noncapitated facility services for medical, surgical, maternity, skilled nursing, and other services
provided in an inpatient facility setting and billed by the facility.
4. “Nonprofessional services” means services categorized as inpatient hospital, outpatient hospital, and other medical services.
“Nonprofessional services” does not include professional services.
5. “Other medical services” means noncapitated ambulance, home health care, durable medical equipment, prosthetics, supplies,
and the facility component of vision exams, dental services, and other services when billed separately from the professional
component.
6. “Outpatient hospital” means noncapitated facility services for surgery, emergency services, lab, radiology, therapy,
observation, and other services provided in an outpatient facility setting and billed by the facility.
7. “Professional services” includes primary care, dental, specialist, therapy, the professional component of laboratory and
radiology, and similar services, other than the facility fee component of hospital-based services.
c. The Commissioner shall annually determine the Core CPI by March 31 of the applicated rate filing year using the bimonthly
indices ending with the bimonthly index issued in January of the applicable rate filing year.
d. The Commissioner shall annually communicate, under § 312(c) of this title, the determination under paragraph (a)(12)c. of
this section to carriers.
(13) All rate filings for health benefit plans subject to §§ 3342B and 3556A of this title must reflect the spending requirements under
§§ 3342B(b)(3) and 3556A(b)(3) of this title.
(14) All rate filings by carriers with health benefit plans that cover more than 10,000 members across all fully-insured products must
reflect progress with achieving the targets described in § 9903(a)(1) of Title 16, and, at a minimum, must have 50% of total cost of
care tied to an alternative payment model contract that meets the Health Care Payment Learning and Action Network (HCP-LAN)
Category 3 definition for shared savings or shared savings with downside risk by 2023, with a minimum of 25% total cost of care
covered by an alternative payment model contract that meets the definition of HCP-LAN Category 3B, which includes only contracts
with downside risk.
(b) Nothing in this section shall be taken to prohibit as unreasonable or unfairly discriminatory the establishment of classifications or
modifications of classifications or risks based upon size, expense, management, individual experience, purpose of insurance location or
dispersion of hazard or any other reasonable considerations provided such classifications and modifications apply to all risks under the
same or substantially similar circumstances or conditions.
(c) Except to the extent necessary to meet the provisions of paragraphs (a)(2) and (9) of this section, uniformity among insurers in any
matters within the scope of this section is neither required nor prohibited.
(18 Del. C. 1953, § 2503; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 175, § 1; 67 Del. Laws, c. 147, § 1; 67 Del. Laws, c. 160, §§
3, 4; 70 Del. Laws, c. 122, § 1; 70 Del. Laws, c. 186 , § 1; 79 Del. Laws, c. 250, § 1; 81 Del. Laws, c. 108, § 2; 81 Del. Laws, c.
350, § 5; 83 Del. Laws, c. 237, § 4; 83 Del. Laws, c. 322, § 1.)
§ 2503. Making of rates [For applicability of this section, see 81 Del. Laws, c. 108, § 3] [Effective Jan. 1,
2027].
(a) Rates must be made in accordance with the following provisions:
(1) Manual, minimum, class rates, rating schedules or rating plans shall be made and adopted, except in the case of specific inland
marine rates on risks specially rated;
(2) Rates shall not be excessive, inadequate or unfairly discriminatory;
(3) Due consideration shall be given:
a. To past and prospective loss experience within and outside this State;
b. To the conflagration and catastrophe hazards;
c. To a reasonable margin for underwriting profit and contingencies;
d. To dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or
subscribers;
e. To past and prospective expenses both countrywide and those specially applicable to this State;
f. To all other relevant factors within and outside this State; and
g. In the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period
of not less than the most recent 5-year period for which such experience is available;
(4) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other
insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any
kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense
provisions are applicable;
Page 167
Title 18 - Insurance Code
(5) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be
modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in
hazards or expense provisions or both. Such standards may measure any differences among risks which may have a probable effect
upon losses or expenses;
(6) The Commissioner shall require a reduction in rates for a 3-year period for any person who voluntarily attends and successfully
completes a motor vehicle accident prevention course that is approved by the Division of Motor Vehicles.
a. A motor vehicle accident prevention course under this paragraph (a)(6) must educate an individual taking the course on traffic
stops by a law-enforcement officer as required under § 2713(e) of Title 21. A motor vehicle accident prevention course under
this paragraph (a)(6) must include at least 2 questions on any test given to an individual taking the course to test the individual’s
knowledge of traffic stops by a law-enforcement officer.
b. Motor vehicle accident prevention course instructors that have been certified by the Division of Motor Vehicles are entitled to
the same reduction in rates as those individuals that have successfully completed a motor vehicle accident prevention course, in the
manner set forth in regulations promulgated under this section.
c. The reduction must be for any individually owned vehicle classified as a private passenger vehicle and must be in proportion
to the number who have completed the course in the event that not all members of a group have completed the course.
d. Voluntary attendance does not include any attendance ordered as permitted by a court or required by the Division of Motor
Vehicles pursuant to any violations of Title 21;
(7) The Commissioner shall require a reduction in rates for a 3-year period for any person who voluntarily attends and successfully
completes a motorcycle rider course that is approved by the Division of Motor Vehicles.
a. A motorcycle rider course under this paragraph (a)(7) must educate an individual taking the course on traffic stops by a lawenforcement officer as required under § 2713(e) of Title 21. A motorcycle rider course under this paragraph (a)(7) must include at
least 2 questions on any test given to an individual taking the course to test the individual’s knowledge of traffic stops by a lawenforcement officer.
b. Motorcycle rider course instructors that have been certified by the Division of Motor Vehicles must be entitled to the same
reduction in rates as those individuals that have successfully completed a motorcycle rider course, in the manner set forth in
regulations promulgated under this section.
c. The reduction must be for any individually owned vehicle classified as a motorcycle and licensed for use on the streets and
highways of this State.
d. Voluntary attendance does not include any attendance ordered as permitted by a court or required by the Division of Motor
Vehicles pursuant to any violations of Title 21;
(8) The Commissioner shall require insurers to file an actuarially justified reduction in rates for a 3-year period if all operators of a
vessel voluntarily attend and successfully complete a boating safety education course which is approved by the Department of Natural
Resources and Environmental Control for the purposes of § 2221 of Title 23. The reduction shall be for any individually owned vessel
used exclusively for noncommercial purposes. Voluntary attendance shall not include any attendance ordered as permitted by a court
or required by the Department of Natural Resources and Environmental Control pursuant to any violations of Title 23;
(9) Rate filings concerning automobile collision insurance shall provide for a credit of 5 percent of annual premiums for such coverage
for any individually owned vehicle classified as a private passenger vehicle owned by employees participating in an approved Travelink
Traffic Mitigation Act program created pursuant to subchapter IV of Chapter 20 of Title 30;
(10) An insurer authorized to do business in Delaware cannot increase a renewal rate for a personal automobile insurance policy
based solely on an insured having attained the age of 75 or older;
(11) With respect to personal automobile insurance for an existing insured, an insurer authorized to do business in Delaware may
not charge the insured a higher rate solely based upon a change in his or her marital status due to the death of a spouse.
(12) a. [Repealed.]
b. For purposes of this paragraph (a)(12) and paragraphs (a)(13) and (a)(14) of this section:
1. “Core CPI” means the consumer Price Index for All Urban Consumers, All Items Less Food & Energy, developed by the
United States Bureau of Labor Statistics.
2. “Health benefit plan” means as defined under §§ 3342A(a)(3)a. and 3559(a)(3)a. of this title.
3. “Inpatient hospital” means noncapitated facility services for medical, surgical, maternity, skilled nursing, and other services
provided in an inpatient facility setting and billed by the facility.
4. “Nonprofessional services” means services categorized as inpatient hospital, outpatient hospital, and other medical services.
“Nonprofessional services” does not include professional services.
5. “Other medical services” means noncapitated ambulance, home health care, durable medical equipment, prosthetics, supplies,
and the facility component of vision exams, dental services, and other services when billed separately from the professional
component.
Page 168
Title 18 - Insurance Code
6. “Outpatient hospital” means noncapitated facility services for surgery, emergency services, lab, radiology, therapy,
observation, and other services provided in an outpatient facility setting and billed by the facility.
7. “Professional services” includes primary care, dental, specialist, therapy, the professional component of laboratory and
radiology, and similar services, other than the facility fee component of hospital-based services.
c., d. [Repealed.]
(13) All rate filings for health benefit plans subject to §§ 3342B and 3556A of this title must reflect the spending requirements under
§§ 3342B(b)(3) and 3556A(b)(3) of this title.
(14) All rate filings by carriers with health benefit plans that cover more than 10,000 members across all fully-insured products must
reflect progress with achieving the targets described in § 9903(a)(1) of Title 16, and, at a minimum, must have 50% of total cost of
care tied to an alternative payment model contract that meets the Health Care Payment Learning and Action Network (HCP-LAN)
Category 3 definition for shared savings or shared savings with downside risk by 2023, with a minimum of 25% total cost of care
covered by an alternative payment model contract that meets the definition of HCP-LAN Category 3B, which includes only contracts
with downside risk.
(b) Nothing in this section shall be taken to prohibit as unreasonable or unfairly discriminatory the establishment of classifications or
modifications of classifications or risks based upon size, expense, management, individual experience, purpose of insurance location or
dispersion of hazard or any other reasonable considerations provided such classifications and modifications apply to all risks under the
same or substantially similar circumstances or conditions.
(c) Except to the extent necessary to meet the provisions of paragraphs (a)(2) and (9) of this section, uniformity among insurers in any
matters within the scope of this section is neither required nor prohibited.
(18 Del. C. 1953, § 2503; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 175, § 1; 67 Del. Laws, c. 147, § 1; 67 Del. Laws, c. 160, §§
3, 4; 70 Del. Laws, c. 122, § 1; 70 Del. Laws, c. 186 , § 1; 79 Del. Laws, c. 250, § 1; 81 Del. Laws, c. 108, § 2; 81 Del. Laws, c.
350, § 5; 83 Del. Laws, c. 237, § 4; 83 Del. Laws, c. 322, § 1; 83 Del. Laws, c. 237, § 14; 83 Del. Laws, c. 322, § 3.)
§ 2504. Rate filings.
(a) Every insurer shall file with the Commissioner, except as to inland marine risks which by general custom of the business are not
written according to manual rates or rating plans, every manual, minimum, class rate, rating schedule or rating plan and every other rating
rule, and every modification of any of the foregoing which it proposes to use. Every such filing shall state the proposed effective date
thereof, and shall indicate the character and extent of the coverage contemplated.
(b) When a filing is not accompanied by the information upon which the insurer supports such filing, and the Commissioner does not
have sufficient information to determine whether such filing meets the requirements of this chapter he or she shall require the insurer to
furnish the information upon which it supports the filing. The information furnished in support of a filing may include:
(1) The experience or judgment of the insurer or rating organization making the filing;
(2) Its interpretation of any statistical data it relies upon; and
(3) The experience of other insurers or rating organizations in conjunction with paragraph (b)(1) of this section; or
(4) Any other relevant factors.
A filing and supporting information shall be open to inspection by parties in interest after the filing becomes effective.
(c) Specific inland marine rates on risks specially rated, made by a rating organization, shall be filed with the Commissioner and shall
become effective when filed and shall be deemed approved and in compliance with the requirements of this chapter until such time as
the Commissioner rejects the filing.
(18 Del. C. 1953, § 2504; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2505. Exemption from filing.
Under such rules and regulations as he or she adopts, the Commissioner may, by written order, suspend or modify the requirement of
filing as to any kind of insurance, subdivision or combination thereof, or as to classes of risks, the rates for which cannot practicably be
filed before they are used. Such orders, rules and regulations shall be made known to insurers and rating organizations affected thereby.
The Commissioner may make such examination as he or she deems advisable to ascertain whether any rates affected by such order meet
the standards set forth in § 2503(a)(2) of this title.
(18 Del. C. 1953, § 2505; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2506. Effective date of filing.
(a) The Commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether
they meet the requirements of this chapter. The filings shall be deemed to meet the requirements of this chapter unless disapproved by
the Commissioner.
(b) Any special filing with respect to a surety or guaranty bond required by law or by court or executive order or by order, rule
or regulation of a public body, not covered by a previous filing, shall become effective when filed and shall be deemed to meet the
requirements of this chapter until such time as the Commissioner rejects the filing.
Page 169
Title 18 - Insurance Code
(c) No filing shall be effective unless filed with the Commissioner not less than 30 days prior to the proposed effective date. Such
filing shall be deemed to meet the statutory requirements unless disapproved by the Commissioner within 30 days of receipt of the filing.
If the Commissioner shall determine that additional time is needed to review a rate filing, the Commissioner shall, within 25 days after
receipt of the filing, notify the filer that the review of the filing shall be extended up to 90 days after the receipt of the filing, unless the
insurer shall agree to a longer term of review.
(d), (e) [Repealed.]
(18 Del. C. 1953, § 2506; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 380, §§ 1, 2; 70 Del. Laws, c. 186, § 1; 77 Del. Laws, c. 93,
§ 1.)
§ 2507. Disapproval of filing.
If within 30 days after a specific inland rate, a special surety or guaranty on a risk specially rated by a rating organization subject to
§ 2504(b) of this title has become effective, the Commissioner finds that such filing does not meet the requirements of this chapter, or
if upon review of any other filing, the Commissioner finds that the same does not meet the requirements of this chapter, he or she shall
specify the reason for his or her disapproval and state that a hearing will be granted within 20 days after request in writing by the insurer
or rating organization which made such filing, issue an order specifying in what respects he or she finds that such filing fails to meet
the requirements of this chapter and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective.
Copies of the order shall be sent to every such insurer and rating organization. The order shall not affect any contract or policy made or
issued prior to the expiration of the period set forth in the order.
(18 Del. C. 1953, § 2507; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 238, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2508. Limitation of disapproval power.
No manual of classifications, rules, rating plans or any modification of any of the foregoing which establishes standards for measuring
variations in hazards or expense provisions or both and which has been filed pursuant to § 2503 of this title shall be disapproved if the
rates produced meet the requirements of this chapter.
(18 Del. C. 1953, § 2508; 56 Del. Laws, c. 380, § 1.)
§ 2509. Excess rates.
Upon the written application of the insured stating his or her reasons therefor, filed with and approved by the Commissioner, a rate in
excess of that provided by a filing otherwise applicable may be used on any specific risk.
(18 Del. C. 1953, § 2509; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2510. Filings for members and subscribers of rating organizations authorized.
Insurer may satisfy its obligation to make filings required by § 2503 of this title by becoming a member of, or a subscriber to, a licensed
rating organization which makes such filings and by authorizing the Commissioner to accept such filings on its behalf. Nothing contained
in this chapter shall be construed as requiring any insurer to become a member of or a subscriber to any rating organization.
(18 Del. C. 1953, § 2510; 56 Del. Laws, c. 380, § 1.)
§ 2511. Licensing of rating organizations.
(a) No rating organization shall make or file rates for risks located in this State without first being licensed therefor under this chapter.
(b) A corporation, an unincorporated association, a partnership or an individual, whether located within or outside this State, may make
application to the Commissioner for license as a rating organization for such kinds of insurance, or subdivision or class of risk or a part
or combination thereof as are specified in its application and shall file therewith:
(1) A copy of its constitution, its articles of agreement of association or its certificate of incorporation, and of its bylaws, rules and
regulations governing the conduct of its business;
(2) A list of its members and subscribers;
(3) The name and address of a resident of this State upon whom notices or orders of the Commissioner or process affecting such
rating organization may be served; and
(4) A statement of its qualifications as a rating organization.
(c) If the Commissioner finds that the applicant is competent, trustworthy and otherwise qualified to act as a rating organization and
that its constitution, articles of agreement or association or certificate of incorporation, and its bylaws, rules and regulations governing the
conduct of its business conform to the requirements of law, he or she may issue a license specifying the kinds of insurance or subdivision
or class of risk or part or combination thereof for which the applicant is authorized to act as a rating organization. Every such application
shall be granted or denied in whole or in part by the Commissioner within a reasonable period after the same has been filed with him or her.
(d) Licenses issued pursuant to this section shall remain in effect for 1 year unless sooner suspended or revoked by the Commissioner.
(e) Licenses issued pursuant to this section may be suspended or revoked by the Commissioner, after hearing upon notice, in the event
the rating organization ceases to meet the requirements of this section.
(18 Del. C. 1953, § 2511; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
Page 170
Title 18 - Insurance Code
§ 2512. Subscribers to rating organizations.
(a) Subject to rules and regulations which have been approved by the Commissioner as reasonable, each rating organization shall
permit any insurer to be a subscriber to its rating services for any kind of insurance, subdivision or class of risk or a part or combination
thereof for which it is authorized to act as a rating organization. Notice of proposed changes in such rules and regulations shall be given
to subscribers. Each rating organization shall furnish its rating services without discrimination to its subscribers.
(b) The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit an
insurer as a subscriber, shall, at the request of any subscriber or any such insurer, be reviewed by the Commissioner at a hearing held
upon at least 10 days’ written notice to such rating organization and to such subscriber or insurer. If the Commissioner finds that such rule
or regulation is unreasonable in its application to subscribers, he or she shall order that such rule or regulation shall not be applicable to
subscribers. If the rating organization fails to grant or reject an insurer’s application for subscribership within 30 days after it was made,
the insurer may request a review by the Commissioner as if the application had been rejected. If the Commissioner finds that the insurer
has been refused admittance to the rating organization as a subscriber without justification, he or she shall order the rating organization
to admit the insurer as a subscriber. If he or she finds that the action of the rating organization was justified, he or she shall make an
order affirming its action.
(18 Del. C. 1953, § 2512; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2513. Notice of changes.
Every rating organization shall notify the Commissioner promptly of every change in:
(1) Its constitution, its articles of agreement or association or its certificate of incorporation and its bylaws, rules and regulations
governing the conduct of its business;
(2) Its list of members and subscribers; and
(3) The name and address of the resident of this State designated by it upon whom notices or orders of the Commissioner or process
affecting such rating organization may be served.
(18 Del. C. 1953, § 2513; 56 Del. Laws, c. 380, § 1.)
§ 2514. Rules not to affect dividends.
No rating organization shall adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings or
unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.
(18 Del. C. 1953, § 2514; 56 Del. Laws, c. 380, § 1.)
§ 2515. Technical services.
Any rating organization may subscribe for or purchase actuarial, technical or other services, and such services shall be available to
all subscribers without discrimination.
(18 Del. C. 1953, § 2515; 56 Del. Laws, c. 380, § 1.)
§ 2516. Examinations and rules.
Any rating organization may provide for the examination of its subscribers’ policies, daily reports, binders, renewal certificates,
endorsements or other evidences of insurance, or the cancellation thereof, and may make reasonable rules governing their submission.
Such rules shall contain a provision that in the event any insurer does not within 60 days furnish satisfactory evidence to the rating
organization of the correction of any error or omission previously called to its attention by the rating organization, the rating organization
shall notify the Commissioner thereof. All information so submitted for examination shall be confidential.
(18 Del. C. 1953, § 2516; 56 Del. Laws, c. 380, § 1.)
§ 2517. Adherence to filings.
No insurer shall make or issue a contract or policy except in accordance with the filings which are in effect for the insurer as provided
in this chapter or in accordance with § 2505 (exemption from filing) or § 2509 (excess rates) of this title. This section shall not apply
to contracts or policies for inland marine risks as to which filings are not required.
(18 Del. C. 1953, § 2517; 56 Del. Laws, c. 380, § 1.)
§ 2518. Deviations.
(a) Every subscriber to a rating organization shall adhere to the filings made on its behalf by such organization except that any such
insurer may make written application to the Commissioner for permission to file a deviation from the class rates, schedules, rating plans,
or rules respecting any kind of insurance, or class of risk within a kind of insurance, or combination thereof. Such application shall specify
the basis for the modification, and a copy thereof shall also be sent simultaneously to such rating organization.
(b) The Commissioner shall set a time and place for a hearing at which the insurer and such rating organization may be heard and shall
give them not less than 10 days’ written notice thereof. If the Commissioner is advised by the rating organization that it does not desire
a hearing, he or she may, upon the consent of the applicant, waive such hearings.
Page 171
Title 18 - Insurance Code
(c) In considering the application for permission to file such deviation, the Commissioner shall give consideration to the available
statistics and the principles for ratemaking as provided in § 2503 of this title. The Commissioner shall issue an order permitting the
deviation for such insurer to be filed if he or she finds it to be justified, and it shall thereupon become effective. He or she shall issue an
order denying such application if he or she finds that the modification is not justified or that the resulting premiums would be excessive,
inadequate, or unfairly discriminatory.
(d) Each deviation permitted to be filed shall be effective continuously from the date of such permission unless terminated sooner with
the approval of the Commissioner or until such time a modification is made to the deviation. All term policies issued pursuant to such
deviations may remain in force until their expiring dates.
(18 Del. C. 1953, § 2518; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; 83 Del. Laws, c. 94, § 1.)
§ 2519. Appeal from rating organization.
Any subscriber to a rating organization may appeal to the Commissioner from the action or decision of such rating organization in
approving or rejecting any proposed change in or addition to the filings of such rating organization.
(18 Del. C. 1953, § 2519; 56 Del. Laws, c. 380, § 1.)
§ 2520. Appeal by insurers and others as to filings.
(a) Any person or organization in interest, aggrieved with respect to any filing which is in effect may make written application to the
Commissioner for a hearing thereon except that the insurer or rating organization that made the filing shall not be authorized to proceed
under this section. Such application shall specify the grounds to be relied upon by the applicant.
(b) If the Commissioner finds that the application is made in good faith, that the applicant would be so aggrieved if his or her grounds
are established, and that such grounds otherwise justify holding such a hearing, he or she shall, within 30 days after receipt of such
application, hold a hearing upon not less than 10 days’ written notice to the applicant and to every insurer and rating organization which
made such filing.
(c) If, after such hearing, the Commissioner finds that the filing does not meet the requirements of this chapter, he or she shall issue an
order specifying in what respects he or she finds that such filing fails to meet the requirements of this chapter and stating when, within
a reasonable period thereafter, such filing shall be deemed no longer effective. Copies of the order shall be sent to the applicant and to
every such insurer and rating organization. The order shall not affect any contract or policy made or issued prior to the expiration of the
period set forth in the order.
(18 Del. C. 1953, § 2520; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2521. Information to be furnished insured.
Every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request
therefor and upon payment of such reasonable charge as it may make, furnish to any insured affected by a rate made by it, or to the
authorized representative of such insured, all information as to such rate.
(18 Del. C. 1953, § 2521; 56 Del. Laws, c. 380, § 1.)
§ 2522. Advisory organizations.
(a) Every group, association or other organization of insurers, whether located within or outside this State, which assists insurers which
make their own filings or rating organizations in rate making, by the collection and furnishing of loss or expense statistics or by the
submission of recommendations, but which does not make filings under this chapter shall be known as an advisory organization.
(b) Every advisory organization shall file with the Commissioner:
(1) A copy of its constitution, its articles of agreement or association or its certificate of incorporation and of its bylaws, rules and
regulations governing its activities;
(2) A list of its members; and
(3) The name and address of a resident of this State upon whom notice or orders of the Commissioner or process issued at his or
her direction may be served.
(c) If, after a hearing, the Commissioner finds that the furnishing of such information or assistance involves any act or practice which
is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, he or she may issue a written order specifying in
what respects such act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter and requiring
the discontinuance of such act or practice.
(d) No insurer which makes its own filing nor any rating organization shall support its filings by statistics or adopt rate making
recommendations, furnished to it by an advisory organization which has not complied with this section or with an order of the
Commissioner involving such statistics or recommendations issued under subsection (c) of this section. If the Commissioner finds such
insurer or rating organization to be in violation of this subsection, he or she may issue an order requiring the discontinuance of such
violation.
(18 Del. C. 1953, § 2522; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
Page 172
Title 18 - Insurance Code
§ 2523. Joint underwriters; joint reinsurers.
(a) Every group, association or other organization of insurers which engages in joint underwriting or joint reinsurance shall be subject
to regulation with respect thereto as herein provided, subject, however, with respect to joint underwriting, to all other provisions of law,
and with respect to joint reinsurance, to § 2524 (examinations) of this title.
(b) If, after a hearing, the Commissioner finds that any activity or practice of any such group, association or other organization is unfair
or unreasonable or otherwise inconsistent with the provisions of this chapter, he or she may issue a written order specifying in what
respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter and requiring the
discontinuance of such activity or practice.
(18 Del. C. 1953, § 2523; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2524. Examinations.
(a) The Commissioner shall, at least once in 5 years, make or cause to be made an examination of each rating organization licensed in
this State, as provided in § 2511 of this title, and he or she may, as often as he or she may deem it expedient, make or cause to be made an
examination of each advisory organization referred to in § 2522 of this title and of each group, association or other organization referred
to in § 2523 of this title. The reasonable costs of any such examination shall be paid by the rating organization, advisory organization
or group, association or other organization examined upon presentation to it of a detailed account of such costs. The officers, manager,
agent and employees of such rating organization, advisory organization or group, association or other organization may be examined at
any time under oath and shall exhibit all books, records, accounts, documents or agreements governing its method of operation.
(b) In lieu of any such examination the Commissioner may accept the report of an examination made by the insurance supervisory
official of another state, pursuant to the laws of such state.
(c) The provisions of § 325 of this title (examination report) apply as to such examinations.
(18 Del. C. 1953, § 2524; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2525. Recording and reporting of loss and expense experience.
(a) The Commissioner shall promulgate reasonable rules and statistical plans, reasonably adapted to each of the rating systems on file
with him or her, which may be modified from time to time and which shall be used hereafter by each insurer in the recording and reporting
of its loss and countrywide expense experience in order that the experience of all insurers may be made available at least annually in such
form and detail as may be necessary to aid him or her in determining whether rating systems comply with the standards set forth in §
2503 of this title. Such rules and plans may also provide for the recording and reporting of expense experience items which are specially
applicable to this State and are not susceptible of determination by a prorating of countrywide expense experience.
(b) In promulgating such rules and plans the Commissioner shall give due consideration to the rating systems on file with him or her
and, in order that such rules and plans may be as uniform as is practicable among the several states, to the rules and to the form of the
plans used for such rating systems in other states. No insurer shall be required to record or report its loss experience on a classification
basis that is inconsistent with the rating system filed by it.
(c) The Commissioner may designate 1 or more rating organizations or other agencies to assist him or her in gathering such experience
and making compilations thereof, and such compilations shall be made available, subject to reasonable rules promulgated by the
Commissioner, to insurers and rating organizations.
(d) Each insurer shall report its loss or expense experience to the lawful rating organization or agency of which it is a member or
subscriber but shall not be required to report its loss or expense experience to any rating organization or agency of which it is not a member
or subscriber. Any insurer not reporting such experience to a rating organization or other agency may be required to report such experience
to the Commissioner. Any report of such experience of any insurer filed with the Commissioner shall be deemed confidential and shall
not be revealed by the Commissioner to any other insurer or other person, but the Commissioner may make compilations including such
experience.
(e) This section does not apply to property or casualty insurers to the extent it conflicts with any of the provisions of § 526A of this
title [repealed].
(18 Del. C. 1953, § 2525; 56 Del. Laws, c. 380, § 1; 65 Del. Laws, c. 270, § 2; 70 Del. Laws, c. 186, § 1; 83 Del. Laws, c. 184, §
2.)
§ 2526. Interchange of rating plan data; consultation; cooperative action in rate making.
(a) Reasonable rules and plans may be promulgated by the Commissioner for the interchange of data necessary for the application
of rating plans.
(b) In order to further uniform administration of rate regulatory laws, the Commissioner and every insurer and rating organization may
exchange information and experience data with insurance supervisory officials, insurers and rating organizations in other states and may
consult with them with respect to rate making and the application of rating systems.
(c) Cooperation among rating organizations or among rating organizations and insurers in rate making or in other matters within the
scope of this chapter is authorized, but the filings resulting from such cooperation are subject to all provisions of this chapter which are
Page 173
Title 18 - Insurance Code
applicable to filings generally. The Commissioner may review such cooperative activities and practices and, if after a hearing he or she
finds that any such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, he or she
may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the
provisions of this chapter and requiring the discontinuance of such activity or practice.
(18 Del. C. 1953, § 2526; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2527. Assigned risk plans.
The Commissioner shall promulgate the necessary regulations to effect:
(1) An equitable apportionment among all the insurers writing automobile insurance in this State of insurance which shall be afforded
applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods;
(2) Reasonable rates for such insurance; and
(3) Such other rules as are necessary to effect and maintain an assigned risk plan.
(18 Del. C. 1953, § 2527; 56 Del. Laws, c. 380, § 1; 59 Del. Laws, c. 195, § 1.)
§ 2528. False or misleading information.
(a) No person shall wilfully withhold information from or knowingly give false or misleading information to:
(1) The Commissioner;
(2) Any statistical agency designated by the Commissioner;
(3) Any rating organization or insurer which affects rates or premiums chargeable under this chapter.
(b) Violation of this section shall be subject to the penalties provided in § 106 of this title or in lieu thereof, in the Commissioner’s
discretion, an administrative fine of not over $2,000.
(18 Del. C. 1953, § 2528; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 278, § 6.)
§ 2529. Fleet rates.
Two or more insurers who, by virtue of their business associations in the United States, represent themselves to be or are customarily
known as a “group” or similar insurance trade designation may make the same filings or use the same rates for each such insurer subject
to the provisions of § 2503 of this title, and nothing contained in this chapter shall be construed to prohibit an agreement to make the
same filings or use the same rates and concerted action in connection with such filings or rates by such insurers. This section shall not
apply to 2 or more insurers who are not under the same common executive or general management or control and who act in concert
in underwriting groups or pools.
(18 Del. C. 1953, § 2529; 56 Del. Laws, c. 380, § 1.)
§ 2530. Penalties.
(a) The Commissioner may, if he or she finds that any person or organization has violated this chapter, impose a penalty of not more
than $500 for each such violation, but if he or she finds such violation to be wilful, he or she may impose a penalty of not more than
$1,000 for each such violation in addition to any other penalty provided by law.
(b) The Commissioner may suspend the license of any rating organization or insurer which fails to comply with his or her order within
the time limited by the order or any extension thereof granted by the Commissioner. The Commissioner shall not so suspend a license for
failure to comply with an order until time prescribed for appeal therefrom has expired or, if appealed, until such order has been affirmed.
The Commissioner may determine the period of a suspension, and it shall remain in effect for such period unless he or she modifies or
rescinds the suspension or until the order upon which the suspension is based is modified, rescinded or reversed.
(c) No penalty shall be imposed and no license shall be suspended or revoked except upon a written order of the Commissioner stating
his or her findings, made after a hearing held upon not less than 10 days’ written notice to such person or organization specifying the
alleged violation.
(d) Any party aggrieved by an order or decision of the Commissioner may, within 30 days after Commissioner’s notice, make written
request for hearing thereon pursuant to § 2507 of this title.
(18 Del. C. 1953, § 2530; 56 Del. Laws, c. 380, § 1; 58 Del. Laws, c. 278, § 7; 70 Del. Laws, c. 186, § 1.)
§ 2531. Appeals from Commissioner.
Any order, decision or act of the Commissioner under this chapter is subject to judicial review upon petition of any person aggrieved.
The appeal shall be to the Court of Chancery in any county of this State. A petition for review shall be filed within 60 days from notice
of the order, decision or act. The commencement of the proceeding shall not affect enforcement or validity of the Commissioner’s action
unless the Court determines, after notice to the Commissioner, that a stay of enforcement until further direction of the Court will not
unduly injure the interests of the public. Section 328(d)-(i) (appeal from the Commissioner) of this title shall apply to such appeals.
(18 Del. C. 1953, § 2531; 56 Del. Laws, c. 380, § 1.)
Page 174
Title 18 - Insurance Code
§ 2532. Certain increases in premiums to peace officers or emergency personnel prohibited.
No insurer shall, in issuing or renewing a private automobile insurance policy to a peace officer, member of the Delaware State Police,
ambulance squad member, volunteer or paid, or firefighter, volunteer or paid, with respect to his or her operation of a private motor vehicle,
increase the premium on such policy for the reason that the insured or applicant for insurance has been involved in an accident while
responding to an emergency during his or her hours of duty in an authorized emergency vehicle as defined under § 4106(e) of Title 21.
(64 Del. Laws, c. 80, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2533. Workers’ compensation rates.
The rates and rating plans submitted under this chapter for workers’ compensation shall provide for discounts on workers’ compensation
premiums for those Delaware employers who meet criteria as established by the Commissioner to promote and maintain safety in the
workplace. The Commissioner shall promulgate a regulation which provides an inspection program to establish the eligibility of any
employer for a safe workplace discount, the premium volume to qualify and the percent of discount available to employers.
(67 Del. Laws, c. 63, § 1.)
§ 2534. Workers’ compensation and employers’ liability forms and policies.
(a) Every insurer shall file with the Commissioner all forms, endorsements, contracts or policies proposed for use in Delaware in
connection with workers’ compensation or employers’ liability insurance.
(b) As part of rate or form filing, each insurer shall file its classification of risks and all rules governing applications of classification
system, including rules or practices relating to payroll audits and collection of premiums. All scheduled rating and deviation schedules
shall also be filed with the Commissioner.
(c) Every rating system which provides deviations from normal premium rates shall be uniform in its application to all risks in the class
for which the deviation is made. Deviations may remain in effect for a period of more than 1 year unless terminated by the Commissioner.
(73 Del. Laws, c. 266, § 1.)
§ 2535. Adverse actions on policies relating to provision of medical care for termination of pregnancy.
No insurer may, in issuing or renewing an insurance policy to a health-care professional or health-care organization, increase the
premium on such policy or take other adverse action against any health-care professional or health-care organization who performs or
assists in the provision of reproductive health services, as that term is defined in § 1702 of Title 24, that is legal in this State to an individual
who is from out of the state. This section applies to a policy that covers any medical professional who prescribes medication for the
termination of human pregnancy to an out-of-state patient by means of telehealth.
(83 Del. Laws, c. 327, § 5.)
Page 175
Title 18 - Insurance Code
Part I
Insurance
Chapter 26
Workers’ Compensation Rating
§ 2601. Scope of chapter.
This chapter applies to workers’ compensation and related employer’s liability insurance but shall not apply to reinsurance.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 172, § 10.)
§ 2602. Definitions.
(a) “Accepted actuarial standards” shall mean the standards adopted by the Casualty Actuarial Society in its Statement of Principles
Regarding Property and Casualty Insurance Ratemaking, and the Standards of Practice adopted by the Actuarial Standards Board.
(b) “Advisory organization” shall mean any organization or person which either has 2 or more member insurers or is controlled either
directly or indirectly by 2 or more insurers and which assists insurers in ratemaking related activities. Two or more insurers having
a common ownership or operating in this State under common management or control constitute a single insurer for purposes of this
definition. Advisory organization does not include a joint underwriting association, any actuarial or legal consultant, any employee of an
insurer or insurers under common control or management or their employees or manager.
(c) “Classification system” shall mean the plan, system, or arrangement for recognizing differences in exposure to hazards among
industries, occupations or operations of insurance policyholders.
(d) “Contingencies” shall mean provisions in rates to recognize the uncertainty of the estimates of losses, loss adjustment expenses,
other operating expenses, investment income and profit which comprise those rates. Such provisions may be explicit (i.e., a specific
charge to reflect systematic variations of estimated costs from expected costs), implicit (i.e., a consideration in selecting a single estimate
from a reasonable range of estimates) or both.
(e) “Developed losses” shall mean adjusted losses (including loss adjustment expenses), using accepted actuarial standards, to eliminate
the effect of differences between current payment or reserve estimates and those needed to provide actual ultimate loss (including loss
adjustment expense) payments.
(f) “Expenses” shall mean that portion of any rate attributable to acquisition, filed supervision and collection expenses, general expenses
and taxes, licenses and fees.
(g) “Experience rating” shall mean a rating procedure utilizing past insurance experience of the individual policyholder to forecast
future losses by measuring the policyholder’s loss experience against the loss experience of policyholders in the same classification to
produce a prospective premium credit, debit or unity modification.
(h) “Insurer” shall mean any person licensed to write workers’ compensation insurance under the laws of the State.
(i) “Loss trending” shall mean any procedure for projecting developed losses to the average date of loss for the period during which
the policies are to be effective, including loss ratio trending.
(j) “Market” shall mean the interaction in this State between buyers and sellers of workers’ compensation and employer’s liability
insurance pursuant to the provisions of this chapter.
(k) “Prospective loss costs” shall mean historical aggregate losses and loss adjustment expenses, including all assessments that are
loss-based, projected through development to their ultimate value and through trending to a future point in time, ascertained by accepted
actuarial standards. Prospective loss costs do not include provisions for profit or expenses other than loss adjustment expenses and
assessments that are loss-based.
(l) “Pure premium rate” shall mean that portion of the rate which represents the loss cost per unit of exposure including loss adjustment
expense.
(m) “Rate” or “rates” shall mean rate of premium, policy and membership fee, or any other charge made by an insurer for or in
connection with a contract or policy of workers’ compensation and employer’s liability insurance, prior to application of individual risk
variations based on loss or expense considerations, and does not include minimum premiums.
(n) “Reserve estimates” shall mean provisions for insurer obligations for future payments of loss and/or loss adjustment expenses.
(o) “Statistical plan” shall mean the plan, system or arrangement used in collecting data.
(p) “Supplementary rate information” shall mean any manual or plan of rates, statistical plan, classification system, minimum premium,
policy fee, rating rule, rate-related underwriting rule and any other information needed to determine the applicable premium for an
individual insured and not otherwise inconsistent with the purposes of this chapter, as prescribed by rule of the Commissioner.
(q) “Supporting information” shall mean the experience and judgment of the filer and the experience or data of other insurers or advisory
organizations relied on by the filer, the interpretation of any statistical data relied on by the filer, descriptions of methods used in making
the rates and any other similar information required to be filed by the Commissioner.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 172, § 10.)
Page 176
Title 18 - Insurance Code
§ 2603. Competitive market; hearing.
(a) A competitive market is presumed to exist unless the Commissioner, after a hearing, issues an order stating that a reasonable degree
of competition does not exist in the market. Such order shall expire no later than 1 year after issue.
(b) (1) In determining whether a reasonable degree of competition exists, the Commissioner shall consider the following factors:
a. The number of insurers actively engaged in providing coverage;
b. Market shares and changes in market shares;
c. Ease of entry;
d. Market concentration as measured by the Herfindahl-Hirschman Index;
e. Whether long-term profitability for insurers in the market is unreasonably high in relation to the risks being insured;
f. Whether long-term profitability for insurers in the market is reasonable in relation to industries of comparable business risk; and
g. Generally accepted and relevant tests relating to competitive market structure, market performance and market conduct.
(2) The workers’ compensation insurance market shall not be deemed noncompetitive if the market concentration of the 50 largest
insurers satisfies the United States Department of Justice merger guidelines for an unconcentrated market.
(c) All determinations by the Commissioner shall be made on the basis of findings of fact and conclusions of law.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 172, § 10.)
§ 2604. Ratemaking standards.
(a) Rates shall not be excessive, inadequate or unfairly discriminatory.
(1) Rates in a competitive market are not excessive. Rates in a noncompetitive market are excessive if they are likely to produce a
long-run profit that is unreasonably high in relation to services rendered.
(2) A rate shall not be deemed inadequate unless:
a. 1. It is clearly insufficient to sustain projected losses and expenses; and
2. The rate is unreasonably low, and the use of the rate by the insurer has had or, if continued, will tend to create a monopoly
in the market; or
b. Funds equal to the full, ultimate cost of anticipated losses and loss adjustment expenses are not produced when prospective
loss costs are applied to anticipated payrolls.
(3) Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in
expected losses and expenses. A rate is not unfairly discriminatory because different premiums result for policyholders with different
loss exposures or expense levels.
(b) In determining whether rates comply with standards under subsection (a) of this section, due consideration shall be given to:
(1) Past and prospective loss experiences within and outside this State, in accordance with accepted actuarial principles;
(2) Catastrophe hazards and contingencies;
(3) Past and prospective expenses, within and outside Delaware;
(4) Loadings for leveling premium rates over time for dividends, savings or unabsorbed premium deposits allowed or returned by
insurers to their policyholders, members or subscribers;
(5) A reasonable margin for underwriting profit; and
(6) All other relevant factors within and outside Delaware.
(c) The systems of expense provisions included in the rates for use by an insurer or group of insurers may differ from those of any other
insurers or groups of insurers to reflect the requirements of the operating methods of the insurer or group of insurers.
(d) The rates may contain provisions for contingencies and an allowance permitting a reasonable profit. In determining the
reasonableness of a profit, consideration should be given to all investment income attributable to premiums and the reserves associated
with those premiums.
(69 Del. Laws, c. 163, § 1.)
§ 2605. Review by Commissioner.
The Commissioner may investigate and determine whether or not rates in this State are excessive, inadequate, or unfairly discriminatory.
In any such investigation and determination, the Commissioner shall give due consideration to those factors specified in § 2604 of this
title.
(69 Del. Laws, c. 163, § 1.)
§ 2606. Rules not to affect dividends.
No advisory organization shall adopt any rule that would prohibit or regulate the payment of dividends, savings or unabsorbed premium
deposits allowed or returned by insurers to their policyholders, members or subscribers. A plan for the payment of dividends, savings
Page 177
Title 18 - Insurance Code
or unabsorbed premium deposits allowed or returned by insurers to their policyholders is not considered a rating plan or system. It is an
unfair trade practice to make the payment of a dividend or any portion thereof conditioned upon renewal of the policy or contract.
(69 Del. Laws, c. 163, § 1.)
§ 2607. Membership in advisory organization.
(a) The Commissioner shall designate an advisory organization to assist the Commissioner in gathering, compiling and reporting
relevant statistical information. Every workers’ compensation insurer shall record and report its workers’ compensation experience to the
designated advisory organization as set forth in the uniform statistical plan approved by the Commissioner.
(b) Each workers’ compensation insurer shall be a member of the workers’ compensation advisory organization. Each workers’
compensation insurer may adhere to the policy forms filed by the advisory organization.
(c) Every workers’ compensation insurer shall adhere to a uniform classification system and uniform experience rating plan that has
been filed with the Commissioner by the advisory organization and approved by the Commissioner; provided, however that:
(1) An insurer may develop subclassifications within the uniform classification system for which a rate or rates may be made;
(2) Any subclassification developed under paragraph (c)(1) of this section shall be filed with the advisory organization and the
Commissioner 30 days prior to use; and
(3) If the insurer fails to demonstrate that the data produced under a subclassification can be reported in a manner consistent with the
advisory organization’s uniform statistical plan and classification system, the Commissioner shall disapprove the subclassification.
The advisory organization shall file a rating plan with the Department of Insurance not later than 90 days after the adoption of a healthcare payment system provided for by § 2322B of Title 19 and shall also file a rating plan not later than 90 days after the adoption of
health-care practice guidelines provided for by § 2322C(7) of Title 19. Thereafter, the advisory organization shall file a rating plan at
least annually. Within 60 days of each such rating plan becoming effective pursuant to this chapter, each authorized insurer shall make
a rate filing pursuant to § 2609 of this title.
(d) Subject to the approval of the Commissioner, the advisory organization shall develop and file rules reasonably related to the
recording and reporting of data pursuant to the uniform statistical plan, uniform experience rating plan and the uniform classification
system.
(e) The methodology of the experience rating plan required under subsection (c) of this section shall have as a basis:
(1) Reasonable eligibility standards;
(2) Incentives for loss prevention; and
(3) A premium differential so as to encourage safety.
(f) The uniform experience rating plan shall be the exclusive means of providing prospective premium adjustment based upon
measurement of the loss producing characteristics of an individual insured. An insurer may file a rating plan that provides for retrospective
premium adjustments based upon an insured’s past experience.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 172, § 10; 74 Del. Laws, c. 348, § 1; 76 Del. Laws, c. 1, § 2; 79 Del. Laws, c. 312, §
2; 81 Del. Laws, c. 79, § 29.)
§ 2608. Interchange of rating plan data; consultation; cooperative action in rate making.
(a) Reasonable rules and plans may be promulgated by the Commissioner for the interchange of data necessary for the application
of rating plans.
(b) In order to further conform administration of rate regulatory laws, the Commissioner and every insurer and the advisory organization
designated by the Commissioner may exchange information and experience data with insurance supervisory officials, insurers and
advisory organizations in other states and may consult with them with respect to rate making and the application of rating systems.
(c) Cooperation among advisory organizations or among advisory organizations and insurers in rate making or in other matters within
the scope of this chapter is authorized, but the filings resulting from such cooperation are subject to all provisions of this chapter. The
Commissioner may review such cooperative activities and practices and, if after a hearing any such activity or practice is found to violate
the provisions of this chapter, a written order may be issued specifying that such activity or practice violates the provisions of this chapter
and requiring the discontinuance of such activity.
(69 Del. Laws, c. 163, § 1.)
§ 2609. Rate filings.
(a) Each authorized insurer shall file with the Commissioner all rates, supplementary rate information and any changes and amendments
made by it for use in this State as required in § 2610 of this title. An insurer may establish rates and supplementary rate information based
upon the factors in § 2604 of this title. An insurer may adopt by reference, with or without deviation, the prospective loss costs filed by
the advisory organization or the rates and supplementary rate information filed by another insurer.
(b) An insurer may not make or issue a contract or policy of insurance under this chapter, except in accordance with the filings which
are in effect for the insurer as provided in this chapter.
(c) In addition to other prohibitions in this chapter, no advisory organization shall file rates, supplementary rate information or
supporting information on behalf of an insurer.
Page 178
Title 18 - Insurance Code
(d) A filing made pursuant to this section should provide for a reduction in premium based upon any savings realized by insurers as a
result of workers’ compensation cost containment measures implemented pursuant to legislation adopted by the General Assembly.
(69 Del. Laws, c. 163, § 1; 76 Del. Laws, c. 1, § 3.)
§ 2610. Review of insurance filings.
(a) The Commissioner shall investigate and review each insurance filing under the following guidelines:
(1) The effective date of each workers’ compensation insurance filing shall be the date specified in the filing. The effective date of the
filing may not be earlier than 30 days after the date the filing is received by the Commissioner or the date of receipt of the information
furnished in support of the filing if such supporting information is required by the Commissioner.
(2) Upon written application of the insurer or advisory organization, the Commissioner may authorize a filing, which the
Commissioner has reviewed, to become effective before the expiration of the period described in paragraph (a)(1) of this section.
(3) A filing shall be deemed to meet the requirements of this chapter unless disapproved by the Commissioner within the period
described in paragraph (a)(1) of this section or any extension thereof.
(b) Subject to subsection (a) of this section, a workers’ compensation advisory organization shall file with the Commissioner:
(1) Workers’ compensation rates and rating plans that are limited to prospective loss costs;
(2) Each workers’ compensation policy form to be used by its members;
(3) The uniform classification plan and rules;
(4) The uniform experience rating plan and rules; and
(5) Any other information that the Commissioner requests and is otherwise entitled to receive under this chapter.
(c) Whenever a filing is not accompanied by the information required under this section, the Commissioner shall so inform the filer
within 10 days of the initial filing. The filing shall be deemed to be made when the required information is furnished or when the filer
certifies to the Commissioner that the additional information requested by the Commissioner is not maintained or cannot be provided.
(d) If each rate in a schedule of workers’ compensation rates for specific classifications of risks filed by an insurer is not lower than the
prospective loss costs contained in the schedule of workers’ compensation rates for those classifications filed by an advisory organization
under subsection (b) of this section, and approved by the Commissioner, then the schedule of rates filed by the insurer shall not be subject
to subsection (a) of this section but shall become effective upon filing for the purposes of § 2609 of this title.
(e) Upon the filing of any application by a workers’ compensation advisory organization with the Commissioner relating to rates or
prospective loss costs, the Workers’ Compensation Oversight Panel authorized in Title 19 shall, with the consent of the Attorney General,
retain a member of the Delaware Bar to represent the interests of Delaware workers’ compensation rate-payers during the Commissioner’s
consideration of the application (the “ratepayer advocate”). The cost of the ratepayer advocate shall be borne by the advisory organization.
It is the expectation of the General Assembly that $40,000 should be sufficient to adequately compensate the ratepayer advocate for his
or her services during the course of an application (including any appeals), and compensation for the ratepayer advocate is limited to this
amount, which may be adjusted by the Attorney General for inflation on an annual basis. The Department of Labor shall provide staff
support for the Workers’ Compensation Oversight Panel in carrying out this responsibility.
(f) Applications by a workers’ compensation advisory organization relating to rates or prospective loss costs shall be subject to the
case decision provisions of Title 29, Chapter 101, subchapter III, and the ratepayer advocate shall be considered a party to the case. The
Department of Insurance shall promulgate regulations within 60 days to ensure that the ratepayer advocate has adequate time and means
to properly participate in the hearing required by Title 29, Chapter 101, subchapter III. The advisory organization may, but need not be,
represented by counsel in this proceeding.
(g) The ratepayer advocate shall select an actuary to work with him or her and testify in the rate-setting proceeding outlined in
subsections (e) and (f) of this section. The cost of this actuary shall be borne by the advisory organization. It is the expectation of the
General Assembly that any other actuaries used by the Department of Insurance during the rate-setting process outlined in subsections
(e) and (f) of this section shall be paid for by the Department of Insurance.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 172, § 10; 70 Del. Laws, c. 186, § 1; 79 Del. Laws, c. 55, § 7; 79 Del. Laws, c. 312, §
1.)
§ 2611. Improper rates; hearing.
(a) If the Commissioner finds that a rate is not in compliance with § 2604 of this title, or that a rate had been set in violation of § 2616
of this title, the Commissioner shall order that its use be discontinued for any policy issued or renewed after the date of the order and the
order may prospectively provide for premium adjustment of any such policy then in force. The order shall be issued within 30 days after
the close of a hearing, if one is requested by the insurer, or within a reasonable time as fixed by the Commissioner. The order shall expire
1 year after its effective date unless rescinded earlier by the Commissioner.
(b) If the Commissioner disapproves a rate under subsection (a) of this section, disapproval shall take effect not less than 15 days after
its order and the last previous rate in effect for the insurer shall be reimposed for a period of 1 year unless the Commissioner approves
a rate under subsection (d) or subsection (e) of this section.
Page 179
Title 18 - Insurance Code
(c) All determinations made by the Commissioner under this section shall be in accordance with accepted actuarial standards on the
basis of findings of fact and conclusions of law.
(d) For a period of 1 year after the effective date of a disapproval order under subsection (a) of this section, no rate adopted to replace
one disapproved under such order may be used until it has been filed with the Commissioner and approved within 30 days thereafter.
(e) Whenever an insurer has no legally effective rates pursuant to subsection (a) of this section, the Commissioner shall, on the insurer’s
request, specify interim rates for the insurer that are adequate to protect the interests of all parties. The Commissioner may order that a
specified portion of the premiums be placed in a special reserve established by the insurer. When new rates become legally effective, the
Commissioner shall order the reserved funds or any overcharge in the interim rates to be distributed appropriately, except that minimal
adjustments may not be required.
(69 Del. Laws, c. 163, § 1.)
§ 2612. Restrictions on certain insurers; waiting period.
(a) The Commissioner may require that a particular insurer file any or all of its rates and supplementary rate information 30 days prior
to their effective date, if the Commissioner finds after a hearing that the protection of the interests of the insurer’s insureds and the public
in this State requires closer supervision of its rates.
(b) Upon written application by an insurer, the Commissioner may authorize a filing, which the Commissioner has reviewed, to become
effective before the expiration of the period described in subsection (a) of this section.
(c) The filing shall be approved or disapproved during the waiting period and if not disapproved before the expiration of the waiting
period shall be deemed to meet the requirements of this section.
(d) Any insurer affected by the Commissioner’s actions under this section may request a rehearing by the Commissioner after the
expiration of 12 months from the date of the Commissioner’s former order.
(69 Del. Laws, c. 163, § 1.)
§ 2613. Delay of rates in noncompetitive market.
(a) A 30-day waiting period may be implemented or extended under the following circumstances:
(1) After finding that the market is not competitive, under § 2603 of this title, the Commissioner may adopt a rule requiring that any
subsequent changes in rates or supplementary information be filed with the Commissioner at least 30 days before they become effective.
(2) The Commissioner may extend the waiting period under this section for a period not exceeding 30 additional days by written
notice to the filer before the first 30-day period expires.
(3) Upon written application by an insurer or advisory organization, the Commissioner may authorize a filing, which the
Commissioner has reviewed, to become effective before the expiration of the period described in paragraph (a)(1) or (2) of this section.
(4) The filing shall be approved or disapproved during the waiting period and if not disapproved before the expiration of the waiting
period shall be deemed to meet the requirements of this section.
(b) If a rule is adopted under subsection (a) of this section, the Commissioner may require the filing of supporting data as to classes
of risks or combinations thereof as the Commissioner deems necessary for the proper functioning of the rate monitoring and regulating
process. The supporting data shall include:
(1) The experience and judgment of the filer and, to the extent the filer wishes or the Commissioner requires, the experience and
judgment of other insurers or the advisory organization;
(2) The filer’s interpretation of any statistical data relied upon;
(3) A description of the actuarial and statistical methods employed in setting the rate; and
(4) Any other relevant matters required by the Commissioner.
(c) A rule adopted under this section shall expire not more than 1 year after issue. The Commissioner may renew it after hearings and
appropriate findings under this section.
(d) Whenever a filing is not accompanied by the information as the Commissioner has required under subsection (b) of this section,
the Commissioner shall so inform the insurer within 10 days of the initial filing. The filing shall be deemed to be made when the required
information is furnished.
(69 Del. Laws, c. 163, § 1.)
§ 2614. Challenge and review of application of rating system.
(a) Each advisory organization and every insurer subject to this chapter that makes its own rates shall provide within this State reasonable
means whereby any person aggrieved by the application of its rating system, including, but not limited to, issues of proper formulation
and application of experience modification factors and/or proper classification of employers, may upon that person’s written request be
heard in person or by the person’s authorized representative to review the manner in which such advisory organization’s or insurer’s rating
system, experience rating plan or employer classifications have been applied in connection with the insurance afforded the aggrieved
person.
Page 180
Title 18 - Insurance Code
(b) Any party affected by the action of the advisory organization or the insurer may, within 30 days after written notice of that action,
make application, in writing, for an appeal to the Commissioner, setting forth the basis for the appeal and the grounds to be relied upon
by the applicant.
(c) The Commissioner shall review the application and, if the Commissioner finds that the application is made in good faith and that
it sets forth on its face grounds which reasonably justify holding a hearing, the Commissioner shall conduct a hearing held not less than
20 days after written notice to the applicant and to the advisory organization or insurer. The Commissioner, after hearing, shall affirm
or reverse the action of the advisory organization or insurer.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 573, §§ 1, 2.)
§ 2615. Consent to rate.
Notwithstanding any other provision of this chapter, upon the written consent of the insured, filed with and approved by the Insurance
Commissioner, a rate in excess of that determined in accordance with the other provisions of this chapter may be used on any specific risk.
(69 Del. Laws, c. 163, § 1.)
§ 2616. Acts reducing competition prohibited.
(a) In this section, the word “insurer” includes 2 or more affiliated insurers:
(1) Under common management; or
(2) Under common controlling ownership or under other common effective legal control and in fact engaged in joint or cooperative
underwriting, investment management, marketing, servicing or administration of their business and affairs as insurers.
(b) An insurer or advisory organization may not:
(1) Monopolize or attempt to monopolize, or combine or conspire with any other person or persons, or monopolize the business of
insurance of any kind, subdivision or class thereof;
(2) Agree with any other insurer or advisory organization to charge or adhere to any rate or rating plan other than the uniform
experience rating plan or rating rule except as needed to comply with the requirements of § 2607 of this title;
(3) Make an agreement with any other insurer, advisory organization or other person to unreasonably restrain trade or substantially
lessen competition in the business of insurance of any kind, subdivision or class; or
(4) Make any agreement with any other insurer or advisory organization to refuse to deal with any person in connection with the
sale of insurance.
(c) The fact that 2 or more insurers, whether or not members or subscribers of a common advisory organization, use consistently or
intermittently the same rules, rating plans, rating schedules, rating rules, policy forms, rate classifications, underwriting rules, surveys or
inspections or similar materials is not sufficient in itself to support a finding that an agreement exists.
(d) An advisory organization or member or subscriber thereof may not interfere with the right of any insurer to make its rates
independently of that advisory organization or to charge rates different from the rates made by that advisory organization.
(e) Except as required under § 2607 of this title, an advisory organization may not have or adopt any rule or exact any agreement or
formulate or engage in any program which would require any member, subscriber or other insurer to:
(1) Utilize some or all of its services;
(2) Adhere to its rates, rating plan, rating systems or underwriting rules; or
(3) Prevent any insurer from acting independently.
(69 Del. Laws, c. 163, § 1.)
§ 2617. Advisory organization: permitted activity.
Any advisory organization, in addition to other activities not prohibited, is authorized to:
(1) Develop statistical plans including class definitions;
(2) Collect statistical data from members, subscribers or any other source;
(3) Prepare and distribute pure premium rate data, adjusted for loss development and loss trending, in accordance with its statistical
plan. Such data and adjustments should be in sufficient detail so as to permit insurers to modify such pure premiums based upon their
own rating methods or interpretations of underlying data;
(4) Prepare and distribute manuals of rating rules and rating schedules that do not contain any rules or schedules including final rates
without information outside the manuals;
(5) Distribute information that is filed with the Commissioner and open to public inspection;
(6) Conduct research and collect statistics in order to discover, identify and classify information relating to causes or prevention
of losses;
(7) Prepare and file policy forms and endorsements and consult with members, subscribers and others relative to their use and
application;
Page 181
Title 18 - Insurance Code
(8) Collect, compile and distribute past and current prices of individual insurers if such information is made available to the general
public;
(9) Conduct research and collect information to determine the impact of benefit level changes on pure premium rates;
(10) Prepare and distribute rules and rating values for the uniform experience rating plan; and
(11) Calculate and disseminate individual risk premium modification factors.
(69 Del. Laws, c. 163, § 1.)
§ 2618. Residual market mechanisms.
(a) All insurers authorized to write workers’ compensation and employers’ liability insurance shall participate in a plan providing for
the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to but who are
unable to procure such insurance through ordinary methods. A residual market plan shall be submitted for the Commissioner’s approval
within 60 days of October 16, 1993. Rates for the residual market shall be filed by the advisory organization.
(b) The Commissioner may adopt retrospective rating plans for any risks insured through residual market.
(c) The Commissioner may adopt a schedule debit plan for any risks insured through the plan that do not comply with loss-control
recommendations, have frequency or severity problems or have any exposure that is greater than average for the class.
(d) The Commissioner shall disapprove any filing that does not meet the requirements of § 2604 of this title. A filing shall be deemed
to meet such requirements unless disapproved by the Commissioner within 30 days after the filing is made. In reviewing a filing made
pursuant to this section, the Commissioner shall have the same authority and follow the same procedures prescribed by §§ 2611, 2612
and 2613 of this title. The advisory organization shall make and file the plan of operation, rates, rating plans, rules, and policy forms
under this section.
(e) The limitation in § 2610(b)(1) of this title shall not apply to the residual market plan filed under this section.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 172, § 10.)
§ 2619. Penalties.
(a) The Commissioner may, upon finding that any person or organization has violated this chapter, impose a penalty of not more than
$500 for each such violation. Upon finding such violation to be wilful, the Commissioner may impose a penalty of not more than $1,000
for each such violation in addition to any other penalty provided by law.
(b) The Commissioner may suspend the license of any advisory organization or insurer which fails to comply with an order within the
time set by the order or any extension thereof granted by the Commissioner. The Commissioner shall not so suspend a license for failure
to comply with an order until time prescribed for appeal therefrom has expired or, if appealed, until such order has been affirmed. The
Commissioner may determine the period of a suspension and it shall remain in effect for such period unless modified or rescinded or until
the order upon which the suspension is based is modified, rescinded or reversed.
(c) Absent a consent decree, no penalty shall be imposed and no license shall be suspended or revoked except upon a written order
of the Commissioner stating the Commissioner’s findings, made after a hearing held after at least 10 days’ written notice to such person
or organization specifying the alleged violation.
(d) Any party aggrieved by an order or decision of the Commissioner may, within 30 days after receiving the Commissioner’s notice,
make written request for a hearing.
(69 Del. Laws, c. 163, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2620. Appeals from Commissioner.
Any order, decision or act of the Commissioner under this chapter is subject to judicial review upon petition of any person aggrieved.
The appeal shall be to the Court of Chancery in any county of this State. A petition for review shall be filed within 60 days from notice
of the order, decision or act. The commencement of the proceeding shall not affect enforcement or validity of the Commissioner’s action
unless the Court determines, after notice to the Commissioner, that a stay of enforcement until further direction of the Court will not
unduly injure the interests of the public. Section 328(d) through (i) (appeal from the Commissioner) of this title shall apply to such appeals.
(69 Del. Laws, c. 163, § 1.)
§ 2621. Transition.
Insurers and the advisory organization are not required to immediately refile rates previously implemented. Any member or subscriber
of an advisory organization is authorized to continue to use all rates and deviations filed or approved for its use until the insurer makes
its own filing to change its rates, either by making an independent filing or by filing and adopting the advisory organization’s prospective
loss costs, or modification thereof.
(69 Del. Laws, c. 163, § 1.)
§ 2622. Effective date.
This chapter shall become effective October 16, 1993.
(69 Del. Laws, c. 163, § 1.)
Page 182
Title 18 - Insurance Code
Part I
Insurance
Chapter 27
The Insurance Contract
Subchapter I
Insurance Contracts Generally
§ 2701. Scope of chapter.
This chapter applies to all insurance contracts and annuity contracts other than:
(1) Reinsurance;
(2) Policies or contracts not issued for delivery in this State nor delivered in this State;
(3) Wet marine and transportation insurance; and
(4) Funding agreements.
(18 Del. C. 1953, § 2701; 56 Del. Laws, c. 380, § 1; 80 Del. Laws, c. 268, § 3.)
§ 2702. “Policy” defined.
“Policy” means the written contract of or written agreement for or effecting insurance, by whatever name called, and includes all
clauses, riders, endorsements and papers which are a part thereof.
(18 Del. C. 1953, § 2702; 56 Del. Laws, c. 380, § 1.)
§ 2703. “Premium” defined.
“Premium” is the consideration for insurance by whatever name called. Any “assessment,” or any “membership,” “policy,” “survey,”
“inspection,” “service” or similar fee or other charge in consideration for an insurance contract is deemed part of the premium.
(18 Del. C. 1953, § 2703; 56 Del. Laws, c. 380, § 1.)
§ 2704. Insurable interest; personal insurance.
(a) Any individual of competent legal capacity may procure or effect an insurance contract upon his or her own life or body for the
benefit of any person, but no person shall procure or cause to be procured any insurance contract upon the life or body of another individual
unless the benefits under such contract are payable to the individual insured or his or her personal representatives or to a person having,
at the time when such contract was made, an insurable interest in the individual insured.
(b) If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits
thereunder accruing upon the death, disablement or injury of the individual insured, the individual insured or his or her executor or
administrator, as the case may be, may maintain an action to recover such benefits from the person so receiving them.
(c) “Insurable interest” as to such personal insurance means that every individual has an insurable interest in the life, body and health
of himself or herself and a person has an insurable interest in the life, body and health of other individuals as follows:
(1) In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection;
(2) In the case of other persons, a lawful and substantial economic interest in having the life, health or bodily safety of the individual
insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement
or injury of the individual insured;
(3) An employer providing life, health, disability, retirement or similar benefits to some or all of its employees or the employees of
its affiliates, or their dependents or beneficiaries, has an insurable interest in the lives of all of its employees or the employees of its
affiliates. The trustee of a trust established by an employer substantially for the benefit of the employer, or for the benefit of some or
all of the employees in which such employer has an insurable interest, or the dependents or beneficiaries of such employees, has the
same insurable interest in the life of such employees as does the employer;
(4) An individual heretofore or hereafter party to a contract or option for the purchase or sale of an interest in a business partnership
or firm or of shares of stock of a corporation or of an interest in such shares, has an insurable interest in the life of each individual
party to such contract and for the purpose of such contract only, in addition to any insurable interest which may otherwise exist as
to the life of such individual; and
(5) The trustee of a trust created and initially funded by an individual has an insurable interest in the life of that individual and the
same insurable interest in the life of any other individual as does any person who is treated as the owner of such trust for federal income
tax purposes without regard to:
a. The identity of the trust beneficiaries;
Page 183
Title 18 - Insurance Code
b. Whether the identity of the trust beneficiaries changes from time to time; and
c. The means by which any trust beneficiary acquires a beneficial interest in the trust.
The trustee of a trust has the same insurable interest in the life of any individual as does any person with respect to proceeds of
insurance on the life of such individual (or any portion of such proceeds) that are allocable to such person’s interest in such trust.
If multiple beneficiaries of a trust have an insurable interest in the life of the same individual, the trustee of such trust has the same
aggregate insurable interest in such life as such beneficiaries with respect to proceeds of insurance on the life of such individual (or
any portion of such proceeds) that are allocable in the aggregate to such beneficiaries’ interest in the trust;
(6) A person obligated to make a payment on the death of an individual to or for the benefit of a person who is designated by such
individual has an insurable interest in the life of such individual. For purposes of this section, group insurance premiums paid on an
experience-rated basis shall be treated as payments for the benefit of the beneficiary of such policy.
(d) An insurer shall be entitled to rely upon all statements, declarations and representations made by an applicant for insurance relative
to the insurable interest of the applicant in the insured, and no insurer shall incur legal liability except as set forth in the policy by virtue
of any untrue statements, declarations or representations so relied upon in good faith by the insurer.
(e) As used in this section and in § 2708(4) of this title, and § 702(c) of this title, except as provided in § 702(c)(3) of this title [sic]:
(1) The term “employee” shall include any and all directors, officers, partners, employees and retired employees and it shall include
any other former employees but only for the purpose of replacing existing life insurance policies that will be surrendered in exchange
for new life insurance policies in an amount not exceeding the insurance being surrendered, except that the amount of new life insurance
may exceed the insurance being surrendered to the extent application of the cash surrender value from the old insurance as a premium
under the new life insurance contract requires a larger amount of insurance to qualify as life insurance, and not be treated as a modified
endowment contract, for federal income tax purposes.
(2) The term “employer” shall include corporations, limited liability companies or partnerships, statutory trusts, business trusts and
other business entities, including associations of employers, and their affiliates.
(3) An “employer-owned life insurance policy” means an insurance contract for which an insurable interest exists under paragraph
(c)(3) of this section, issued for delivery in this State and procured or effected by any employer, or a trust established by an employer,
which employer as defined herein, is incorporated, registered or qualified to do business in this State and has at least 50 employees.
(4) A “trust-owned life insurance policy” means an insurance contract for which an insurable interest exists under paragraph (c)(3)
or (c)(5) of this section, issued for delivery in this State to a trust established under the laws of this State and having a trustee with
its principal place of business in this State.
(5) The term “trust” includes without limitation a business trust.
(6) The term “affiliate” shall have the same meaning as set forth in § 5001(1) of this title.
(f) The insurable interest of an employer or trustee under this section shall be conveyed automatically to another employer or to the
trustee of a trust established by such other employer substantially for its benefit which has acquired by purchase, merger or otherwise
all or part of the first employer’s business. An employer or the trustee of a trust established by such employer substantially for its own
benefit or substantially for the benefit of its employees or their dependents may exchange any policy of insurance issued to itself or to
another employer or the trustee of a trust established by such other employer substantially for its own benefit from which the exchanging
employer has acquired by purchase, merger or otherwise all or part of such other employer’s business for a new policy of insurance issued
to itself without establishing a new insurable interest at the time of such exchange.
(g) The insurable interests recognized in this section may exist cumulatively or concurrently as appropriate to the relationships between
the individual insured and the person having the interest in such individual’s life. The existence of an insurable interest with respect to an
employer-owned life insurance policy or trust-owned life insurance policy shall be governed by this section without regard to an insured’s
state of residency or location. An employer-owned life insurance policy, if delivered to the employer’s principal place of business in this
State or to its registered agent in this State; or in the case of a policy issued to a trust established by an employer, if delivered to the
place of business in Delaware of the trustee of said trust; and a trust-owned life insurance policy, if delivered to the place of business in
Delaware of the trustee of said trust; shall be deemed to have been delivered in this State. The parties to an employer-owned life insurance
policy may arrange for delivery in this State by means other than the method described in the preceding sentence. An employer-owned
life insurance policy may be issued on an individual or group basis, and any group policy shall be exempt from Chapter 31 of this title.
A group insurance policy issued to an employer for the benefit of persons other than the employer, as permitted by § 3102 of this title,
shall not constitute an employer-owned life insurance policy.
(18 Del. C. 1953, § 2704; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 161, §§ 1, 2; 69 Del. Laws, c. 462, §§ 1-3; 70 Del. Laws, c.
186, § 1; 71 Del. Laws, c. 239, § 2; 73 Del. Laws, c. 62, §§ 1, 2; 73 Del. Laws, c. 329, § 63; 78 Del. Laws, c. 117, § 17.)
§ 2705. Insurable interest; exception when certain institutions designated beneficiary.
(a) Life insurance contracts may be entered into in which the person paying the consideration for the insurance has no insurable interest
in the life of the individual insured, where charitable, benevolent, educational or religious institutions, or their agencies, are designated
irrevocably as the beneficiaries thereof.
Page 184
Title 18 - Insurance Code
(b) In making such contracts the person paying the premium shall make and sign the application therefor as owner and shall designate
a charitable, benevolent, educational or religious institution, or an agency thereof, irrevocably as the beneficiary or beneficiaries of such
contract. The application shall be signed also by the individual whose life is to be insured.
(c) Nothing in this section shall be deemed to prohibit any combination of the applicant, premium payer, owner and beneficiary from
being the same person.
(d) Such a contract shall be valid and binding among the parties thereto, notwithstanding the absence otherwise of an insurable interest
in the life of the individual insured.
(18 Del. C. 1953, § 2705; 56 Del. Laws, c. 380, § 1.)
§ 2706. Insurable interest; property.
(a) No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance
except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.
(b) “Insurable interest” as used in this section means any actual, lawful and substantial economic interest in the safety or preservation
of the subject of the insurance free from loss, destruction or pecuniary damage or impairment.
(c) The measure of an insurable interest in property is the extent to which the insured might be directly or indirectly damnified by
loss, injury or impairment thereof.
(18 Del. C. 1953, § 2706; 56 Del. Laws, c. 380, § 1.)
§ 2707. Power to contract; purchase of insurance and annuities by minors.
(a) Any person of competent legal capacity may contract for insurance.
(b) Any minor not less than 15 years of age, with the consent of parent or guardian, if any, unless otherwise emancipated, may,
notwithstanding his or her minority, contract for or own annuities or insurance or affirm by novation or otherwise preexisting contracts
for annuities or insurance upon his or her own life, body, health, property, liabilities or other interests or on the persons of another in
whom the minor has an insurable interest. Such a minor shall, notwithstanding such minority, be deemed competent to exercise all rights
and powers with respect to or under:
(1) Any contract for annuity or for insurance upon his or her own life, body or health; or
(2) Any contract such minor effected upon his or her own property, liabilities or other interests; or
(3) Any contract effected or owned by the minor on the person of another as might be exercised by a person of full legal age and
may at any time surrender his or her interest in any such contracts and give valid discharge for any benefit accruing or money payable
thereunder.
Such a minor shall not, by reason of his or her minority, be entitled to rescind, avoid or repudiate the contract, nor to rescind, avoid or
repudiate any exercise of a right or privilege thereunder, except that such a minor not otherwise emancipated shall not be bound by any
unperformed agreement to pay by promissory note or otherwise any premium on any such annuity or insurance contract.
(c) Any annuity contract or policy of life or disability insurance procured by or for a minor under subsection (b) of this section above
shall be made payable either to the minor or his or her estate or to a person having an insurable interest in the life of the minor.
(18 Del. C. 1953, § 2707; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2708. Consent of insured; life, health insurance.
No life or health insurance contract upon an individual, except a contract of group life insurance or of group or blanket health insurance,
shall be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to
contract, applies therefor or has consented thereto in writing, except in the following cases:
(1) A spouse may effectuate such insurance upon the other spouse;
(2) Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and
maintenance may effectuate insurance upon the life of or pertaining to such minor;
(3) Family policies may be issued insuring any 2 or more members of a family on an application signed by either parent, a stepparent
or by a husband or wife;
(4) An employer, or the trustee of a trust described in § 2704(c)(3) of this title, may effectuate insurance under an employer-owned
life insurance policy, as defined in § 2704(e) of this title, upon any employee in whom it has an insurable interest, and the employer
or trustee, as the case may be, shall not be required to notify employees of the effectuation of such insurance or obtain their consent.
The insurer and any investment sub-advisors shall use best efforts to direct securities transactions relating to such employer-owned
variable life insurance policies utilizing separate accounts, through a securities agent licensed and located in this State, as opposed to
a securities agent licensed and located in another state, unless a better price for the identical security (securities) is available through
the securities agent located in that other state.
(18 Del. C. 1953, § 2708; 56 Del. Laws, c. 380, § 1; 67 Del. Laws, c. 161, § 3; 69 Del. Laws, c. 232, §§ 1, 2; 69 Del. Laws, c. 462,
§ 4; 71 Del. Laws, c. 239, § 3; 80 Del. Laws, c. 376, § 4.)
Page 185
Title 18 - Insurance Code
§ 2709. Alteration of application, life and health insurance.
No alteration of any written application for any life or health insurance policy shall be made by any person other than the applicant
without his or her written consent, except that insertions may be made by the insurer, for administrative purposes only, in such manner
as to indicate clearly that such insertions are not to be ascribed to the applicant.
(18 Del. C. 1953, § 2709; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2710. Application as evidence.
(a) No application for the issuance of any life or health insurance policy or annuity contract shall be admissible in evidence in any
action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy or
contract when issued. This provision shall not apply to industrial life insurance policies.
(b) If any policy of life or health insurance delivered in this State is reinstated or renewed and the insured or the beneficiary or assignee
of the policy makes written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall,
within 30 days after receipt of such request at its home office, deliver or mail to the person making such request a copy of such application
reproduced by any legible means. If such copy is not so delivered or mailed after having been so requested, the insurer shall be precluded
from introducing the application in evidence in any action or proceeding based upon or involving the policy or its reinstatement or renewal.
In the case of such a request from a beneficiary, the time within which the insurer is required to furnish a copy of such application shall
not begin to run until after receipt of evidence satisfactory to the insurer of the beneficiary’s vested interest in the policy or contract.
(c) As to kinds of insurance other than life or health insurance, no application for insurance signed by or on behalf of the insured shall
be admissible in evidence in any action between the insured and the insurer arising out of the policy so applied for, if the insurer has
failed, at the expiration of 30 days after receipt by the insurer of written demand therefor by or on behalf of the insured, to furnish to the
insured a copy of such application reproduced by any legible means.
(18 Del. C. 1953, § 2710; 56 Del. Laws, c. 380, § 1.)
§ 2711. Representations in applications.
All statements and descriptions in any application for an insurance policy or annuity contract by or in behalf of the insured or annuitant
shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts and incorrect statements
shall not prevent a recovery under the policy or contract unless either:
(1) Fraudulent; or
(2) Material either to the acceptance of the risk or to the hazard assumed by the insurer; or
(3) The insurer in good faith would either not have issued the policy or contract, or would not have issued it at the same premium
rate or would not have issued a policy or contract in as large an amount or would not have provided coverage with respect to the
hazard resulting in the loss if the true facts had been made known to the insurer as required either by the application for the policy
or contract or otherwise.
(18 Del. C. 1953, § 2711; 56 Del. Laws, c. 380, § 1.)
§ 2712. Filing, approval of forms.
(a) No basic insurance policy or annuity contract, form, or application form where written application is required and is to be made a
part of the policy or contract or printed rider or endorsement form or form of renewal certificate shall be delivered or issued for delivery in
this State, unless the form has been filed with the Commissioner. This provision shall not apply to surety bonds or to specially rated inland
marine risks nor to policies, riders, endorsements, or forms of unique character designed for and used with relation to insurance upon a
particular subject or which relate to the manner of distribution of benefits or to the reservation of rights and benefits under life or health
insurance policies and are used at the request of the individual policyholder, contract holder, or certificate holder. With respect to group
and blanket health insurance policies issued and delivered to a trust or to an association outside of this State and covering persons resident
in this State, the group certificates to be delivered or issued for delivery in this State shall be filed with the Commissioner pursuant to this
section provided, however, that this requirement shall not apply to an association group having received a waiver from the Commissioner
upon a finding that the association group meets the qualifications set forth in § 3506 of this title. In the case of forms for use in property,
marine (other than wet marine and transportation insurance), casualty, surety and title insurance coverages, the filing required by this
subsection may be made by rating organizations on behalf of their members and subscribers, but this provision shall not be deemed to
prohibit any such member or subscriber from filing any such forms on its own behalf.
(b) Every such filing shall be made not less than 30 days in advance of any such delivery. At the expiration of such 30 days the form
so filed shall be effective unless prior thereto it has been affirmatively acknowledged or disapproved by order of the Commissioner.
Acknowledgment of any such form by the Commissioner shall constitute a waiver of any unexpired portion of such waiting period. The
Commissioner may extend by not more than an additional 30 days the period within which he or she may so affirmatively acknowledge or
disapprove any such form, by giving notice to the insurer of such extension before expiration of the initial 30 days period. At the expiration
of any such period as so extended, and in the absence of such prior affirmative acknowledgment or disapproval, any such form may be
placed in use. The Commissioner may at any time, after notice and for cause shown, withdraw any such acknowledgment or effectiveness.
Page 186
Title 18 - Insurance Code
(c) Any order of the Commissioner disapproving any such form or withdrawing a previous effectiveness shall state the grounds therefor
and the particulars thereof in such detail as reasonably to inform the insurer thereof. Any such withdrawal of a previously effective form
shall be operative at expiration of such period, not less than 30 days after the giving of notice of withdrawal, as the Commissioner shall
in such notice prescribe.
(d) The Commissioner may, by order, exempt from the requirements of this section, for so long as he or she deems proper, any insurance
document or form or type thereof as specified in such order, to which, in his or her opinion, this section may not practicably be applied,
or the filing and review of which are, in his or her opinion, not desirable or necessary for the protection of the public.
(e) Appeals from orders of the Commissioner disapproving any such form or withdrawing a previous effectiveness may be taken as
provided in §§ 327-333 of this title.
(18 Del. C. 1953, § 2712; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 155, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 402, §
3.)
§ 2713. Grounds for disapproval.
The Commissioner shall disapprove any form filed under § 2712 of this title, or withdraw any previous effectiveness thereof, only
on 1 or more of the following grounds:
(1) If it is in any respect in violation of or does not comply with this title.
(2) If it contains or incorporates by reference, where such incorporation is otherwise permissible, any inconsistent, ambiguous, or
misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage
of the contract.
(3) If it has any title, heading or other indication of its provisions which is misleading.
(4) If the benefits provided therein are unreasonable in relation to the premium charged, or if it contains any unjust, unfair or
inequitable provision or provisions.
(5) If it contains a provision or provisions such as to encourage misrepresentation.
(18 Del. C. 1953, § 2713; 56 Del. Laws, c. 380, § 1; 83 Del. Laws, c. 318, § 1.)
§ 2714. Standard provisions.
(a) Insurance contracts shall contain such standard or uniform provisions as are required by the applicable provisions of this title
pertaining to contracts of particular kinds of insurance. The Commissioner may waive the required use of a particular provision in a
particular insurance policy form if:
(1) He or she finds such provision unnecessary for or unrelated to the protection of the insured and inconsistent with the purposes
of the policy; and
(2) The policy is otherwise approved by him or her.
(b) No policy shall contain any provision inconsistent with or contradictory to any standard or uniform provision used or required to
be used, but the Commissioner may approve any substitute provision which is, in his or her opinion, not less favorable in any particular
to the insured or beneficiary than the provisions otherwise required.
(c) In lieu of the provisions required by this title for contracts for particular kinds of insurance, substantially similar provisions required
by the law of the domicile of a foreign or alien insurer may be used when approved by the Commissioner.
(d) A policy issued by a domestic insurer for delivery in another jurisdiction may contain any provision required or permitted by the
laws of such jurisdiction.
(18 Del. C. 1953, § 2714; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2715. Charter or bylaw provisions.
No policy shall contain any provision purporting to make any portion of the charter, bylaws or other constituent document of the insurer
(other than the subscriber’s agreement or power of attorney of a reciprocal insurer) a part of the contract unless such portion is set forth
in full in the policy. Any policy provision in violation of this section shall be invalid.
(18 Del. C. 1953, § 2715; 56 Del. Laws, c. 380, § 1.)
§ 2716. Execution of policies.
(a) Every insurance policy shall be executed in the name of and on behalf of the insurer by its officer, attorney-in-fact, employee or
representative duly authorized by the insurer.
(b) A facsimile signature of any such executing individual may be used in lieu of an original signature.
(c) No insurance contract heretofore or hereafter issued and which is otherwise valid shall be rendered invalid by reason of the apparent
execution thereof on behalf of the insurer by the imprinted facsimile signature of an individual not authorized so to execute as of the
date of the policy.
(18 Del. C. 1953, § 2716; 56 Del. Laws, c. 380, § 1.)
Page 187
Title 18 - Insurance Code
§ 2717. Underwriters’ and combination policies.
(a) Two or more authorized insurers may jointly issue, and shall be jointly and severally liable on, an underwriters’ policy bearing
their names. Any 1 insurer may issue policies in the name of an underwriter’s department and such policy shall plainly show the true
name of the insurer.
(b) Two or more insurers may, with the approval of the Commissioner, issue a combination policy which shall contain provisions
substantially as follows:
(1) That the insurers executing the policy shall be severally liable for the full amount of any loss or damage, according to the terms
of the policy, or for specified percentages or amounts thereof, aggregating the full amount of insurance under the policy; and
(2) That service of process, or of any notice or proof of loss required by such policy, upon any of the insurers executing the policy
shall constitute service upon all such insurers.
(c) This section shall not apply to cosurety obligations.
(18 Del. C. 1953, § 2717; 56 Del. Laws, c. 380, § 1.)
§ 2718. Validity and construction of noncomplying forms.
(a) A policy hereafter delivered or issued for delivery to any person in this State in violation of this title but otherwise binding on the
insurer shall be held valid, but shall be construed as provided in this title.
(b) Any condition, omission or provision not in compliance with the requirements of this title and contained in any policy, rider or
endorsement hereafter issued and otherwise valid shall not thereby be rendered invalid but shall be construed and applied in accordance
with such condition, omission or provision as would have applied had the same been in full compliance with this title.
(18 Del. C. 1953, § 2718; 56 Del. Laws, c. 380, § 1.)
§ 2719. Delivery of policy.
In event the original policy is delivered or is so required to be delivered to or for deposit with any vendor, mortgagee or pledgee of
any motor vehicle, and in which policy any interest of the vendee, mortgagor or pledgor in or with reference to such vehicle is insured, a
duplicate of such policy setting forth the name and address of the insurer, insurance classification of vehicle, type of coverage, limits of
liability, premiums for the respective coverages and duration of the policy, or memorandum thereof containing the same such information,
shall be delivered by the vendor, mortgagee or pledgee to each such vendee, mortgagor or pledgor named in the policy or coming within
the group of persons designated in the policy to be so included. If the policy does not provide coverage of legal liability for injury to
persons or damage to the property of third parties, a statement of such fact shall be printed, written or stamped conspicuously on the face
of such duplicate policy or memorandum. This section does not apply to inland marine floater policies.
(18 Del. C. 1953, § 2719; 56 Del. Laws, c. 380, § 1.)
§ 2720. Assignability.
(a) A policy and its rights and benefits may be assignable or not assignable, as provided by its terms.
(b) Subject to its terms relating to assignability, a life or health insurance policy and its rights and benefits, whether heretofore or
hereafter issued, under the terms of which the beneficiary may be changed upon the sole request of the insured or owner, may be assigned
either by pledge or transfer of title by an assignment executed by the insured or owner alone and delivered to the insurer, whether or
not the pledgee or assignee is the insurer.
(c) Subject to its terms relating to assignability, a property insurance policy, whether heretofore or hereafter issued, under the terms of
which the policy and its rights and benefits are assignable, may provide that the rights and benefits under the insurance policy may only
be assigned to a person who has the legal authority to represent the named insured and may explicitly prohibit assignment of rights and
benefits to any other person, including a property repair contractor. For purposes of this subsection, having “legal authority to represent
the named insured” includes the person named by the named insured as having the named insured’s power of attorney, the person who
is the named insured’s licensed public adjuster, or any other comparable person. Property repair contractors operating in this State may
not subvert the public adjuster licensing requirements in § 1751 of this title through the acquisition of a power of attorney from the
named insured.
(d) Any assignment pursuant to subsection (b) or (c) of this section shall entitle the insurer to deal with the assignee as the owner or
pledgee of the policy or its rights and benefits in accordance with the terms of the assignment until the insurer has received at its home
office written notice of termination of the assignment or pledge or written notice by or on behalf of some other person claiming some
interest in the policy or its rights and benefits in conflict with the assignment.
(18 Del. C. 1953, § 2720; 56 Del. Laws, c. 380, § 1; 83 Del. Laws, c. 93, § 1.)
§ 2721. Payment discharges insurer.
Whenever the proceeds of or payments under a life or health insurance policy or annuity contract heretofore or hereafter issued become
payable in accordance with the terms of such policy or contract, or the exercise of any right or privilege thereunder, and the insurer
makes payment thereof in accordance therewith or in accordance with any written assignment thereof, the person then designated as being
Page 188
Title 18 - Insurance Code
entitled thereto shall be entitled to receive such proceeds or payments and to give full acquittance therefor and such payments shall fully
discharge the insurer from all claims under the policy or contract unless, before payment is made, the insurer has received at its home
office written notice by or on behalf of some other person that such other person claims to be entitled to such payment or some interest
in the policy or contract.
(18 Del. C. 1953, § 2721; 56 Del. Laws, c. 380, § 1.)
§ 2722. Forms for proof of loss to be furnished.
An insurer shall furnish, upon written request of any person claiming to have a loss under an insurance contract issued by such insurer,
forms of proof of loss for completion by such person, but such insurer shall not, by reason of the requirement so to furnish forms, have
any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion.
(18 Del. C. 1953, § 2722; 56 Del. Laws, c. 380, § 1.)
§ 2723. Minor may give acquittance.
Repealed by 72 Del. Laws, c. 310, § 1, effective May 26, 2000.
§ 2724. Claims administration not waiver.
Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be
deemed to constitute a waiver of any provision of a policy or of any defense of the insurer thereunder:
(1) Acknowledgment of the receipt of notice of loss or claim under the policy;
(2) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving
or acknowledging receipt of any such forms or proofs completed or uncompleted;
(3) Investigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such
loss or claim.
(18 Del. C. 1953, § 2724; 56 Del. Laws, c. 380, § 1.)
§ 2725. Exemption of proceeds, life insurance [Repealed].
(18 Del. C. 1953, § 2725; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; repealed by 81 Del. Laws, c. 320, § 7, effective July
11, 2018.)
§ 2726. Exemption of proceeds, health insurance.
Except as may otherwise be expressly provided by the policy or contract, the proceeds or avails of all contracts of health insurance
and of provisions providing benefits on account of the insured’s disability which are supplemental to life insurance or annuity contracts
heretofore or hereafter effected shall be exempt from all liability for any debt of the insured and from any debt of the beneficiary existing
at the time the proceeds are made available for his or her use.
(18 Del. C. 1953, § 2726; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2727. Exemption of proceeds—Group insurance.
(a) A policy of group life insurance or group health insurance or the proceeds thereof payable to the individual insured or to the
beneficiary thereunder, shall not be liable, either before or after payment, to be applied by any legal or equitable process to pay any debt
or liability of such insured individual or his or her beneficiary or of any other person having a right under the policy.
(b) This section shall not apply to group insurance issued pursuant to this title to a creditor covering his or her debtors to the extent that
such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued.
(18 Del. C. 1953, § 2727; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.)
§ 2728. Exemption of proceeds — Annuity contracts; assignability of rights [Repealed].
(18 Del. C. 1953, § 2728; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1; repealed by 81 Del. Laws, c. 320, § 7, effective July
11, 2018.)
§ 2729. Retention of proceeds of policy by company.
(a) Any life insurer shall have power to hold payment of proceeds, as shall have been agreed to in writing by the insurer and the insured
or beneficiary. The insurer shall not be required to segregate funds so held but may hold them as a part of its general corporate assets.
(b) The provisions of this section shall not impair or affect any rights of creditors under §§ 2725-2728 of this title.
(18 Del. C. 1953, § 2729; 56 Del. Laws, c. 380, § 1.)
§ 2730. Collection of overpayments by health insurers and health plans.
(a) Other than recovery for duplicate payments, a health insurer or health plan, whenever it engages in overpayment recovery efforts,
shall provide written notice to the health-care provider that identifies the error made in the processing or payment of the claim and justifies
the overpayment recovery.
Page 189
Title 18 - Insurance Code
(b) A health insurer or health plan shall provide a health-care provider with the opportunity to challenge an overpayment recovery,
including the sharing of claims information, and shall establish written policies and procedures for health-care providers to follow to
challenge an overpayment recovery.
(c) A health insurer or health plan shall not initiate overpayment recovery efforts more than 24 months after the original payment for
the claim was made. No such time limit shall apply to overpayment recovery efforts which are:
(1) Based on a reasonable belief of fraud, abuse, or other intentional misconduct;
(2) Required by, or initiated at the request of, a self-insured plan; or
(3) Required by a state or federal government plan.
(d) Nothing in this section shall be deemed to limit a health insurer’s or health plan’s right to pursue recovery of overpayments that
occurred prior to June 14, 2018, where the health insurer or health plan has provided the health-care provider with notice of such recovery
efforts prior to June 14, 2018.
(e) For purposes of this section “health insurer” shall mean any entity or plan that provides health insurance in this State. Such terms
shall include an insurance company, health service corporation, managed care organization, health maintenance organization, and any
other entity providing a plan of health insurance or health benefits subject to state insurance regulation. “Health insurer” shall also include
any third-party administrator or other entity that adjusts, administers or settles claims in connection with health benefit plans.
(f) For purposes of this section, “health plan” shall mean any hospital or medical policy or certificate, major-medical expense insurance,
health service corporation subscriber contract, health maintenance organization subscriber contract, managed care organization subscriber
contract, dental or vision plan. “Health plan” does not include accident-only, credit, Medicaid plans, long-term care or disability income
insurance, coverage issued as a supplement to liability insurance, workers’ compensation or similar insurance or automobile medical
payment insurance.
(g) Waiver prohibited. —
The provisions of this section cannot be waived by contract. Any contractual arrangement in conflict with the provisions of this section
or that purports to waive any requirements of this section is null and void.
(81 Del. Laws, c. 216, § 1.)
Subchapter II
Readability of Automobile Insurance Policy Forms
§ 2740. Statement of policy.
It is the purpose of this subchapter to encourage the Commissioner to promulgate regulations by October 15, 1976, which assure that
automobile insurance policies issued in Delaware, after the effective date of said regulations, will be understandable and readable by a
person of average intelligence and education; or, in the event of the failure of the Commissioner to promulgate such regulations by October
15, 1976, to establish certain basic minimum readability requirements for automobile insurance policy forms. Accordingly, it is intended
that subchapter III of this chapter shall become effective only upon the failure of the Commissioner to promulgate such regulations by
October 15, 1976.
(60 Del. Laws, c. 441, § 2.)
§ 2741. Commissioner’s authority to promulgate readability rules and regulations.
(a) In addition to those general powers granted in § 314 of this title, the Commissioner is hereby authorized and empowered to make
rules and regulations to the extent the Commissioner deems necessary to assure that automobile insurance policy forms as described in §
2742 of this title [expired] are readable and understandable by a person of average intelligence and education; provided, however, that
such rules and regulations shall require, in the manner the Commissioner deems appropriate, that all such automobile insurance policy
forms shall have a total “readability score” of 40 or more on the Flesch Scale, although forms with a Flesch Test Score of less than 40
may be approved where the length of sentences and words are sufficiently compensated for by compliance with other standards set forth
in such rules and regulations.
(b) The Commissioner shall adopt and promulgate readability rules and regulations only after a hearing thereon of which notice has been
given to all persons subject to the Commissioner’s supervision under this title who are to be affected by the proposed rule or regulation.
Any readability rules and regulations so adopted and promulgated shall be effective upon the date specified therein.
(60 Del. Laws, c. 441, § 2.)
Page 190
Title 18 - Insurance Code
Part I
Insurance
Chapter 29
Life Insurance and Annuity Contracts
§ 2901. Scope of chapter.
This chapter, except as to § 2932 of this title, applies only to contracts of life insurance and annuities, other than reinsurance, group
life insurance and group annuities.
(18 Del. C. 1953, § 2901; 56 Del. Laws, c. 380, § 1.)
§ 2902. “Annuity” defined.
For this title an “annuity” is a contract, issued by a person which is not classified by the Internal Revenue Service as exempt from taxation
under § 501(c)(3) of the Internal Revenue Code of 1954 [26 U.S.C. § 501(c)(3)], as subsequently amended, under which obligations
are assumed as to periodic payments for specific term or terms or where the making or continuance of all or some such payments, or the
amount of any such payment, is dependent upon continuance of human life. Such a contract which includes extra benefits of kinds set
forth in §§ 902 (“life insurance” defined) and 903 (“health insurance” defined) of this title shall nevertheless be deemed to be an annuity
if such extra benefits constitute a subsidiary or incidental part of the entire contract.
(18 Del. C. 1953, § 2902; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 155, § 1.)
§ 2903. “Industrial life insurance” defined.
For the purposes of this title “industrial life insurance” is that form of life insurance written under policies of face amount of $1,000
or less bearing the words “industrial policy” imprinted on the face thereof as part of the descriptive matter and under which premiums
are payable monthly or more often.
(18 Del. C. 1953, § 2903; 56 Del. Laws, c. 380, § 1.)
§ 2904. Standard provisions required.
(a) No policy of life insurance, other than pure endowments with or without return of premiums or of premiums and interest, shall be
delivered or issued for delivery in this State unless it contains in substance all of the applicable provisions required by §§ 2905-2916,
inclusive, of this title. This section shall not apply to annuity contracts nor to any provision of a life insurance policy, or contract
supplemental thereto, relating to disability benefits or to additional benefits in the event of death by accident or accidental means.
(b) Any of such provisions or portions thereof not applicable to single premium or nonparticipating or term policies or insurance granted
in exchange for lapsed or surrendered policies shall to that extent not be incorporated therein.
(18 Del. C. 1953, § 2904; 56 Del. Laws, c. 380, § 1.)
§ 2905. Payment of premiums.
There shall be a provision relating to the time and place of payment of premiums.
(18 Del. C. 1953, § 2905; 56 Del. Laws, c. 380, § 1.)
§ 2906. Grace period.
There shall be a provision that a grace period of 30 days or, at the option of the insurer, of 1 month of not less than 30 days, or of 4
weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than monthly shall be allowed
within which the payment of any premium after the first may be made, during which period of grace the policy shall continue in full force.
The insurer may impose an interest charge not in excess of 6% per annum for the number of days of grace elapsing before the payment
of the premium, and, whether or not such interest charge is imposed, if a claim arises under the policy during such period of grace, the
amount of any premium due or overdue, together with interest and any deferred installment of the annual premium, may be deducted
from the policy proceeds. Grace shall date from the premium due date specified in the policy.
(18 Del. C. 1953, § 2906; 56 Del. Laws, c. 380, § 1.)
§ 2907. Entire contract.
There shall be a provision that except as otherwise expressly provided by law, the policy and the application therefor, if a copy of such
application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between the parties and that all
statements contained in the application shall, in the absence of fraud, be deemed representations and not warranties.
(18 Del. C. 1953, § 2907; 56 Del. Laws, c. 380, § 1.)
§ 2908. Incontestability.
There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period
of not more than 2 years after its date of issue, except for:
Page 191
Title 18 - Insurance Code
(1) Nonpayment of premiums; and
(2) At the insurer’s option, provisions relating to benefits in the event of total and permanent disability and provisions granting
additional benefits specifically against death by accident or accidental means.
(18 Del. C. 1953, § 2908; 56 Del. Laws, c. 380.)
§ 2909. Misstatement of age.
There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the premium or
benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased
at the correct age or ages.
(18 Del. C. 1953, § 2909; 56 Del. Laws, c. 380, § 1.)
§ 2910. Dividends.
(a) There shall be a provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall
annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in
the policy, provided the policy is in force and all premiums to that date are paid. Except as hereinafter provided, any dividends becoming
payable shall at the option of the party entitled to elect such option be either:
(1) Payable in cash; or
(2) Applied to any one of such other dividend options as may be provided by the policy. If any such other dividend options are
provided, the policy shall further state which option shall be automatically effective if such party shall not have elected some other
option. If the policy specifies a period within which such other dividend option may be elected, such period shall be not less than 30
days following the date on which such dividend is due and payable. The annually apportioned dividend shall be deemed to be payable
in cash within the meaning of paragraph (a)(1) of this section above even though the policy provides that payment of such dividend
is to be deferred for a specified period, provided such period does not exceed 6 years from the date of apportionment and that interest
will be added to such dividend at a specified rate.
(b) Renewable term policies of 10 years or less may provide that the surplus accrued to such policies shall be determined and apportioned
each year after the second policy year and accumulated during each renewal period and that at the end of the renewal period, on renewal
of the policy by the insured, the insurer shall apply the accumulated surplus as an annuity for the next succeeding renewal term in the
reduction of premiums.
(c) In participating industrial life insurance policies, in lieu of the provision required in subsection (a) of this section above, there shall
be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually in the divisible surplus,
if any, in the manner set forth in the policy.
(d) This section does not apply to insurance issued under nonforfeiture provisions of lapsed or surrendered policies.
(18 Del. C. 1953, § 2910; 56 Del. Laws, c. 380, § 1.)
§ 2911. Policy loan.
(a) There shall be a provision that after 3 full years’ premiums have been paid and after the policy has a cash surrender value and while
no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and
on the sole security thereof, at a rate of interest not exceeding 8% per annum (if payable in advance such interest shall not exceed the rate
of 7.4% per annum for policies issued prior to January 1, 1983) an amount equal to or, at the option of the party entitled thereto, less than
the loan value of the policy. Before approving any policy provision providing for a rate of interest in excess of 6%, the Commissioner
may require assurances by the insurer that the holders of such policies will benefit from the increased earning of the insurer resulting from
the use of such higher rates, through the use of higher dividends or lower premiums, or both. The loan value of the policy shall be at least
equal to the cash surrender value at the end of the then current policy year, and the insurer may deduct, either from such loan value or
from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including any
interest then accrued but not due, any unpaid balance of the premium for the current policy year and interest on the loan to the end of the
current policy year. The policy may also provide that if interest on any indebtedness is not paid when due it shall then be added to the
existing indebtedness and shall bear interest at the same rate and that if and when the total indebtedness on the policy, including interest
due or accrued, equals or exceeds the amount of the loan value thereof, then the policy shall terminate and become void, but not until at
least 30 days’ notice has been mailed by the insurer to the last address on record with the insurer of the insured or other policy owner
and of any assignee of record at the insurer’s home office. The policy shall reserve to the insurer the right to defer the granting of a loan,
other than for the payment of any premium to the insurer, for 6 months after application therefor. Such provision shall also contain a table
showing in figures the loan values each year during the first 20 years of the policy or during the term of the policy whichever is shorter.
The policy, at the insurer’s option, may provide for an automatic premium loan.
(b) (1) Policies issued on or after January 1, 1983, shall provide for policy loan interest rates as follows:
a. A provision permitting a maximum interest rate of not more than 8% per annum; or
b. A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
Page 192
Title 18 - Insurance Code
(2) The rate of interest charged on a policy loan made under paragraph (b)(1)b. of this section shall not exceed the higher of the
following:
a. The published monthly average for the calendar month ending 2 months before the date on which the rate is determined; or
b. The rate used to compute the cash surrender values under the policy during the applicable period plus 1% per annum.
(3) The term “published monthly average” means:
a. Moody’s Corporate Bond Yield Average — Monthly Average Corporates as published by Moody’s Investors Service, Inc. or
any successor thereto; or
b. In the event that the Moody’s Corporate Bond Yield Average — Monthly Average Corporates is no longer published, a
substantially similar average, established by regulation issued by the Commissioner.
(4) If the maximum rate of interest is determined pursuant to paragraph (b)(1)b. of this section, the policy shall contain a provision
setting forth the frequency at which the rate is to be determined for that policy.
(5) The maximum rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently
than once in any 3-month period. At the intervals specified in the policy:
a. The rate being charged may be increased whenever such increase as determined under paragraph (b)(2) of this section would
increase that rate by 1/2% or more per annum;
b. The rate being charged must be reduced whenever such reduction as determined under paragraph (b)(2) of this section would
decrease that rate by 1/2% or more per annum.
(6) The life insurer shall:
a. Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
b. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical
to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except
as provided in paragraph (b)(6)c. of this section below;
c. Send to policyholders with loans reasonable advance notice of any increase in the rate; and
d. Include in the notices required above the substance of the pertinent provisions of paragraphs (b)(1) and (4) of this section.
(7) The loan value of the policy shall be determined in accordance with subsection (a) of this section, but no policy shall terminate
in a policy year as the sole result of a change in the interest rate during that policy year, and the life insurer shall maintain coverage
during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.
(8) The substance of the pertinent provisions of paragraphs (b)(1) and (4) of this section shall be set forth in the policies to which
they apply.
(9) For purposes of this section:
a. The rate of interest on policy loans permitted under this subsection includes the interest rate charged on reinstatement of policy
loans for the period during and after any lapse of a policy.
b. The term “policy loan” includes any premium loan made under a policy to pay 1 or more premiums that were not paid to the
life insurer as they fell due.
c. The term “policyholder” includes the owner of the policy or the person designated to pay premiums as shown on the records
of the life insurer.
d. The term “policy” includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.
(10) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
(11) This subsection shall not apply to any insurance contract issued before January 1, 1983, unless the policyholder agrees in writing
to the applicability of such provisions.
(c) This section shall not apply to term policies or to term insurance benefits provided by rider or supplemental policy provisions or
to industrial life insurance policies.
(18 Del. C. 1953, § 2911; 56 Del. Laws, c. 380, § 1; 60 Del. Laws, c. 195, § 1; 63 Del. Laws, c. 399, § 1.)
§ 2912. Table of installments.
In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy, there shall
be a table showing the amounts of the guaranteed installments.
(18 Del. C. 1953, § 2912; 56 Del. Laws, c. 380, § 1.)
§ 2913. Reinstatement.
There shall be a provision that unless:
(1) The policy has been surrendered for its cash surrender value;
(2) Its cash surrender value has been exhausted; or
(3) The paid-up term insurance, if any, has expired;
Page 193
Title 18 - Insurance Code
the policy will be reinstated at any time within 3 years (or 2 years in the case of industrial life insurance policies) from the date of
premium default upon written application therefor, the production of evidence of insurability satisfactory to the insurer, the payment
of all premiums in arrears with interest at a rate not exceeding 6% per annum compounded annually, and the payment or reinstatement
of any indebtedness to the insurer upon the policy with interest as provided in § 2911 of this title.
(18 Del. C. 1953, § 2913; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 399, § 2.)
§ 2914. Payment of claims.
(a) There shall be a provision that when the benefits under the policy become payable by reason of the death of the insured, settlement
must be made upon receipt of due proof of death, which may consist of a certified copy of the insured’s death certificate or other lawful
evidence providing equivalent information, and, at the insurer’s option, surrender of the policy or proof of the interest of the claimant.
If an insurer specifies a particular period before the expiration of which settlement must be made, the period may not exceed 30 days
from the receipt of such proofs.
(b) There shall be a provision for the payment of interest on the death benefit under the policy as follows:
(1) Interest accrues and is payable from the date of the initial filing of the death benefits claim, which includes due proof of death.
(2) Interest accrues at the rate applicable to the policy for funds left on deposit or, if the insurer has not established a rate for funds
left on deposit, at the 2 year Treasury Constant Maturity Rate as published by the Federal Reserve. In determining the effective annual
rate, the insurer shall use the rate in effect on the date of the filing of the initial death benefits claim.
(c) Interest accrues at the effective annual rate determined in subsection (b) of this section, plus additional interest at a rate of 10%
annually beginning with the date that is 31 calendar days from the latest of paragraphs (c)(1), (2), and (3) of this section to the date the
claim is paid, where it is all of the following:
(1) The date that due proof of death is received by the insurer.
(2) The date the insurer receives sufficient information to determine its liability, the extent of the liability, and the appropriate payee
legally entitled to the proceeds.
(3) The date that legal impediments to payments of proceeds that depend on the action of parties other than the insurer are resolved and
sufficient evidence of the same is provided to the insurer. For purposes of this paragraph (c)(3), “legal impediments to payments” include
the establishment of guardianships and conservatorships; appointments and qualification of trustees, executors, and administrators; and
the submission of information required to satisfy state and federal reporting requirements.
(18 Del. C. 1953, § 2914; 56 Del. Laws, c. 380, § 1; 82 Del. Laws, c. 114, § 1.)
§ 2915. Beneficiary, industrial policies.
An industrial life insurance policy shall have the name of the beneficiary designated thereon or in the application or other form if
attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance of the policy, unless such
beneficiary be irrevocably designated. The policy may also provide that no designation or change of beneficiary shall be binding on the
insurer until endorsed on the policy by the insurer and that the insurer may refuse to endorse the name of any proposed beneficiary who
does not appear to the insurer to have an insurable interest in the life of the insured. The policy may also provide that if the beneficiary
designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period
stated in the policy, which shall not be less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is
a minor, or dies before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder
to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection by marriage,
or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary, or by reason of
having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also include a similar provision
applicable to any other payment due under the policy.
(18 Del. C. 1953, § 2915; 56 Del. Laws, c. 380, § 1.)
§ 2916. Title.
There shall be a title on the policy, briefly describing the same.
(18 Del. C. 1953, § 2916; 56 Del. Laws, c. 380, § 1.)
§ 2917. Excluded or restricted coverage.
A clause in any policy of life insurance providing that such policy shall be incontestable after a specified period shall preclude only a
contest of the validity of the policy and shall not preclude the assertion at any time of defenses based upon provisions in the policy which
exclude or restrict coverage, whether or not such restrictions or exclusions are excepted in such clause.
(18 Del. C. 1953, § 2917; 56 Del. Laws, c. 380, § 1.)
§ 2918. Standard provisions; annuity and pure endowment contracts.
(a) No annuity or pure endowment contract, other than reversionary annuities (also called survivorship annuities) or group annuities
and except as stated herein, shall be delivered or issued for delivery in this State unless it contains in substance each of the provisions
Page 194
Title 18 - Insurance Code
specified in §§ 2919-2924, inclusive, of this title. Any of such provisions not applicable to single premium annuities or single premium
pure endowment contracts shall not, to that extent, be incorporated therein.
(b) This section shall not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under, life insurance
policies.
(18 Del. C. 1953, § 2918; 56 Del. Laws, c. 380, § 1.)
§ 2919. Grace period; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that there
shall be a period of grace of 1 month, but not less than 30 days, within which any stipulated payment to the insurer falling due after the
first may be made, subject at the option of the insurer to an interest charge thereon at a rate to be specified in the contract but not exceeding
6% per annum for the number of days of grace elapsing before such payment, during which period of grace the contract shall continue in
full force, but in case a claim arises under the contract on account of death prior to expiration of the period of grace before the overdue
payment to the insurer or the deferred payments of the current contract year, if any, are made, the amount of such payments, with interest
on any overdue payments, may be deducted from any amount payable under the contract in settlement.
(18 Del. C. 1953, § 2919; 56 Del. Laws, c. 380, § 1.)
§ 2920. Incontestability; annuities.
If any statements, other than those relating to age, sex and identity are required as a condition to issuing an annuity or pure endowment
contract, other than a reversionary, survivorship or group annuity, and subject to § 2922 of this title, there shall be a provision that the
contract shall be incontestable after it has been in force during the lifetime of the person or of each of the persons as to whom such
statements are required, for a period of 2 years from its date of issue, except for nonpayment of stipulated payments to the insurer; and
at the option of the insurer such contract may also except any provisions relative to benefits in the event of disability and any provisions
which grant insurance specifically against death by accident or accidental means.
(18 Del. C. 1953, § 2920; 56 Del. Laws, c. 380, § 1.)
§ 2921. Entire contract; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that the
contract shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon or attached to the contract
when issued, a provision that the contract and the application therefor shall constitute the entire contract between the parties.
(18 Del. C. 1953, § 2921; 56 Del. Laws, c. 380, § 1.)
§ 2922. Misstatement of age or sex; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that if
the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them has been misstated, the amount
payable or benefits accruing under the contract shall be such as the stipulated payment or payments to the insurer would have purchased
according to the correct age or sex and that if the insurer shall make or has made any overpayment or overpayments on account of any
such misstatement, the amount thereof with interest at the rate to be specified in the contract but not exceeding 6% per annum, may be
charged against the current or next succeeding payment or payments to be made by the insurer under the contract.
(18 Del. C. 1953, § 2922; 56 Del. Laws, c. 380, § 1.)
§ 2923. Dividends; annuities.
If an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, is participating, there shall be a
provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.
(18 Del. C. 1953, § 2923; 56 Del. Laws, c. 380, § 1.)
§ 2924. Reinstatement; annuities.
In an annuity or pure endowment contract, other than a reversionary or group annuity, there shall be a provision that the contract may
be reinstated at any time within 1 year from the default in making stipulated payments to the insurer, unless the cash surrender value has
been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract shall be paid or reinstated with interest
thereon at a rate to be specified in the contract, but not exceeding 6% per annum payable annually, and, in cases where applicable, the
insurer may also include a requirement of evidence of insurability satisfactory to the insurer.
(18 Del. C. 1953, § 2924; 56 Del. Laws, c. 380, § 1.)
§ 2925. Standard provisions; reversionary annuities.
(a) Except as stated herein, no contract for a reversionary annuity shall be delivered or issued for delivery in this State unless it contains
in substance each of the following provisions:
(1) Any such reversionary annuity contract shall contain the provisions specified in §§ 2919-2923 of this title except that under §
2919 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue
payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the contract;
Page 195
Title 18 - Insurance Code
(2) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within 3 years
from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the
insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of the contract be paid, or, within
the limits permitted by the then cash values of the contract, reinstated, with interest as to both payments and indebtedness at a rate to
be specified in the contract but not exceeding 6% per annum compounded annually.
(b) This section shall not apply to group annuities or to annuities included in life insurance policies and any of such provisions not
applicable to single premium annuities shall not to that extent be incorporated therein.
(18 Del. C. 1953, § 2925; 56 Del. Laws, c. 380, § 1.)
§ 2926. Limitation of liability.
(a) No policy of life insurance shall be delivered or issued for delivery in this State if it contains any of the following provisions:
(1) A provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than 3 years
after the cause of action has accrued;
(2) A provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the insured
has a specified status, except that a policy may contain provisions excluding or restricting coverage as specified therein in the event
of death under any one or more of the following circumstances:
a. Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act or hazard
of such war or action, or of service in the military, naval or air forces or in civilian forces auxiliary thereto, or from any cause while
a member of such military, naval or air forces of any country at war, declared or undeclared, or of any country engaged in such
military action;
b. Death as a result of aviation or any air travel or flight;
c. Death as a result of a specified hazardous occupation or occupations or avocation;
d. Death while the insured is a resident outside continental United States and Canada; or
e. Death within 2 years from the date of issue of the policy as a result of suicide, while sane or insane.
(b) A policy which contains any exclusion or restriction pursuant to paragraph (a)(2) of this section shall also provide that in the event
of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will pay an amount not less than
a reserve determined according to the Commissioner’s reserve valuation method upon the basis of the mortality table and interest rate
specified in the policy for the calculation of nonforfeiture benefits (or if the policy provides for no such benefits, computed according to a
mortality table and interest rate determined by the insurer and specified in the policy) with adjustment for indebtedness or dividend credit.
(c) This section shall not apply to group life insurance, health insurance, reinsurance or annuities or to any provision in a life insurance
policy or contract supplemental thereto relating to disability benefits or to additional benefits in the event of death by accident or accidental
means.
(d) Nothing contained in this section shall prohibit any provision which in the opinion of the Commissioner is more favorable to the
policyholder than a provision permitted by this section.
(18 Del. C. 1953, § 2926; 56 Del. Laws, c. 380, § 1.)
§ 2927. Prohibited provisions.
(a) No life insurance policy, other than industrial life insurance, shall be delivered or issued for delivery in this State, if it contains
any of the following provisions:
(1) A provision by which the policy purports to be issued or to take effect more than 1 year before the original application for the
insurance was made;
(2) A provision for any mode of settlement at maturity of the policy of less value than the amount insured under the policy, plus
dividend additions, if any, less any indebtedness to the insurer on or secured by the policy and less any premium that may by the terms
of the policy be deducted;
(3) A provision to the effect that the agent soliciting the insurance is the agent of the person insured under the policy or making the
acts or representations of such agent binding upon the person so insured under the policy.
(b) No policy of industrial life insurance shall contain any of the following provisions:
(1) A provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained other
insurance from the same insurer;
(2) A provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment, whether
specified or not, or because the insured has received institutional, hospital, medical or surgical treatment or attention, except a provision
which gives the insurer the right to declare the policy void if the insured has, within 2 years prior to the issuance of the policy, received
institutional, hospital, medical or surgical treatment or attention and if the insured or claimant under the policy fails to show that the
condition occasioning such treatment or attention was not of a serious nature or was not material to the risk;
Page 196
Title 18 - Insurance Code
(3) A provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance, unless
such right be conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal by the insurer
to make such contract.
(18 Del. C. 1953, § 2927; 56 Del. Laws, c. 380, § 1.)
§ 2928. Provisions required by law of other jurisdiction.
The policies of a foreign life insurer when issued in this State may contain any provision which the law of the state, territory, district
or country under which the insurer is organized prescribes shall be in such policies, and the policies of a domestic life insurer may, when
issued or delivered in any other state, territory, district or country, contain any provisions required by the laws thereof, anything in this
chapter to the contrary notwithstanding.
(18 Del. C. 1953, § 2928; 56 Del. Laws, c. 380, § 1.)
§ 2929. Standard nonforfeiture law — Generally.
(a) In the case of policies issued on and after the operative date of this section as defined in subsection (l) of this section, no policy of
life insurance, except as stated in subsection (k) of this section, shall be delivered or issued for delivery in this State unless it shall contain
in substance the following provisions, or corresponding provisions which in the opinion of the Commissioner are at least as favorable
to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified and are essentially in compliance
with subsection (j) of this section:
(1) That, in the event of default in any premium payment, the insurer will grant, upon proper request not later than 60 days after
the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date,
of such amount as may be hereinafter specified. In lieu of such stipulated paid-up nonforfeiture benefit, the insurer may substitute,
upon proper request not later than 60 days after the due date of the premium in default, an actuarially equivalent alternative paid-up
nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier
payment of endowment benefits.
(2) That, upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have
been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance, the insurer will
pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter specified.
(3) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make
such election elects another available option not later than 60 days after the due date of the premium in default.
(4) That if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up
nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth
policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within 30 days after any policy
anniversary, a cash surrender value of such amount as may be hereinafter specified.
(5) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which
provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest
rate and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the
case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the
paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up
nonforfeiture benefits, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the
term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or
paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy.
(6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the
minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation
of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up
additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed statement of the method of computation
of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the
insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the
cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary
for which such values and benefits are consecutively shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable,
be omitted from the policy.
The insurer shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand therefor
with surrender of the policy.
(b) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary,
whether or not required by subsection (a) of this section, shall be an amount not less than the excess, if any, of the present value, on
such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up
additions, if there had been no default, over the sum of:
Page 197
Title 18 - Insurance Code
(1) The then present value of the adjusted premiums as defined in subsections (d), (e), (f) and (g) of this section, corresponding to
premiums which would have fallen due on and after such anniversary; and
(2) The amount of any indebtedness to the insurer on the policy.
Provided, however, that for any policy issued on or after the operative date of subsection (g) of this section as defined therein, which
provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider
or supplemental policy provision, the cash surrender value referred to in the first paragraph of this subsection shall be an amount not less
than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such
rider or supplemental policy provision and the cash surrender value as defined in such paragraph for a policy which provides only the
benefits otherwise provided by such rider or supplemental policy provision.
Provided, further, that for any family policy issued on or after the operative date of subsection (g) of this section as defined therein,
which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse’s
age 71, the cash surrender value referred to in the first paragraph of this subsection shall be an amount not less than the sum of the cash
surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such term insurance on the life
of the spouse and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided
by such term insurance on the life of the spouse.
Any cash surrender value available within 30 days after any policy anniversary under any policy paid up by completion of all premium
payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by subsection (a) of this section, shall
be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including
any existing paid-up additions, decreased by any indebtedness to the insurer on the policy.
(c) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy
anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for
by the policy or, if none is provided for, that cash surrender value which would have been required by this section in the absence of the
condition that premiums shall have been paid for at least a specified period.
(d) This subsection shall not apply to policies issued on or after the operative date of subsection (g) of this section as defined therein.
Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis
and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts stated
in the policy as extra premiums to cover impairments or special hazards, that the present value, at the date of issue of the policy, of all
such adjusted premiums shall be equal to the sum of (1) the then present value of the future guaranteed benefits provided for by the
policy; (2) 2% of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter
defined, if the amount of insurance varies with duration of the policy; (3) 40% of the adjusted premium for the first policy year; (4) 25%
of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent
uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is
less. In applying the percentages specified in (3) and (4) above, no adjusted premium shall be deemed to exceed 4% of the amount of
insurance or level amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the date as of which
the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for
the purpose of this subsection shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing
the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with
duration and the benefits under which have the same present value at the date of issue as the benefits under the policy, provided, however,
that in the case of a policy providing a varying amount of insurance issued on the life of a child under age 10, the equivalent uniform
amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age 10 were the amount
provided by such policy at age 10.
The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to
(1) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during
the period for which premiums for such term insurance benefits are payable, by (2) the adjusted premiums for such term insurance, the
foregoing items (1) and (2) being calculated separately and as specified in the first 2 paragraphs of this subsection except that, for the
purposes of (2), (3) and (4) of the first such paragraph, the amount of insurance or equivalent uniform amount of insurance used in the
calculation of the adjusted premiums referred to in (2) shall be equal to the excess of the corresponding amount determined for the entire
policy over the amount used in the calculation of the adjusted premiums in (1).
Except as otherwise provided in subsections (e) and (f) of this section, all adjusted premiums and present values referred to in this section
shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 Standard Ordinary Mortality Table,
provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated
according to an age not more than 3 years younger than the actual age of the insured and such calculations for all policies of industrial
insurance shall be made on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate
of interest, not exceeding 31/2% per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits.
In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture
Page 198
Title 18 - Insurance Code
benefit, the rates of mortality assumed may not be more than 130% of the rates of mortality according to such applicable table. For
insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other
table of mortality as may be specified by the insurer and approved by the Commissioner.
(e) This subsection shall not apply to ordinary policies issued on or after the operative date of subsection (g) of this section as defined
therein. In the case of ordinary policies issued on or after the operative date of this subsection as defined herein, all adjusted premiums
and present values referred to in this section shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality
Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits provided that
such rate of interest shall not exceed 31/2% per annum except that a rate of interest not exceeding 4% per annum may be used for policies
issued on or after June 21, 1973, and prior to July 8, 1980, and a rate of interest not exceeding 51/2% per annum may be used for policies
issued on or after July 8, 1980, and provided that for any category of ordinary insurance issued on female risks, adjusted premiums and
present values may be calculated according to an age not more
