Consumers won nearly 90% of arbitration cases in 2019

The Delaware Department of Insurance announced that its arbitration services program earned residents $839,466 in awards during 2019. Considering overlap from the previous year, 354 settlements occurred, and 144 cases were heard. Residents prevailed in about 90% of all cases. In total, the Department opened 502 cases last year.

“Arbitration is one of the many pro-consumer tools our office provides to the public,” said Commissioner Trinidad Navarro. “We want residents to know that when an insurance company isn’t working with them on an issue, they can come to us for help instead of using their hard-earned money to hire a lawyer and spend too much valuable time on the problem.”

The arbitration services offered by the department allow all residents to pursue solutions to auto, home, and health insurance-related issues without requiring the consumer to have the ability to obtain and afford an attorney. These services can assist with insurance disputes when companies will not pay or are offering an unacceptable amount for things like medical costs, lost wages, and car and home damage. Arbitration involves filing a formal complaint against a company to be reviewed and decided by independent experts. While department arbitrators do not provide legal advice, they do guide members of the public through the informal process. The process takes about 90 days, which is much quicker than court cases.

“Imagine driving off a car lot in a newly purchased vehicle, only to have that joy and excitement is shattered by a car accident just days later. Your insurance company offers you only a small portion of the car’s worth and is unwilling to work with you on the claim. You may be awarded a claim by your insurance company – but you don’t have to accept it. By reaching out to the Department of Insurance, the arbitration team can engage the insurance company on your behalf to help you get a more acceptable payment,” said Commissioner Navarro.

The department recommends contacting the Consumer Services Division for assistance interacting with the insurance company, as this service is available to residents who have previously attempted to solve the matter with an insurance company multiple times. Arbitration request forms and more information can be found at insurance.delaware.gov/services/arbitration.

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Fraud Bureau saw a 10% uptick in reports last year

The Delaware Department of Insurance made great strides in fraud detection and response during 2019. Throughout the year, 6 criminal arrests that included 21 charges were recommended from the Department’s Fraud Prevention Bureau to the Department of Justice, and 16 civil cases were brought forward resulting in more than $21,000 in fines. The Bureau received 551 referral cases in 2019.

“I want to commend our Fraud Prevention Bureau for their work identifying deceitful activity and helping to bring those who would defraud Delaware residents and companies to justice. Their efforts continue to send a strong message that fraud will not go unnoticed here, which can prevent future crimes,” said Commissioner Trinidad Navarro. “Through this work, we can help keep insurance premiums from rising by helping to make sure companies do not have to pay out fraudulent claims.”

Commissioner Navarro, who has a background in law enforcement, served as Vice-Chair of the National Association of Insurance Commissioners’ Antifraud Task Force over the last year and has championed fraud awareness and reporting. He was named Chair of the national Antifraud Task Force last week. The Department has experienced an increase reports over the past several years, with an approximate 23% increase since 2015.

In one prominent 2019 case, a resident was arrested after posing as family member who was terminally ill and facing imminent end-of life to open a life insurance policy. This was conducted through forgery of the family member’s identification, confirmation, and consent. After naming themself the sole beneficiary, the individual then attempted to collect $50,000 on the policy two days after the family member’s death. Charges included insurance fraud, identity theft, second-degree forgery, and crime against a vulnerable adult.

From identity theft to insurance healthcare fraud, hundreds of tips are investigated every year. In 2019, the most common schemes were seen through the application for auto insurance process, with individuals living outside the state attempting to save on premium costs by using Delaware addresses. Suspected to have risen due to possible economic factors, instances of application submissions occurring after an accident took place also grew. In addition to investigating tips from the public and insurance companies, the Bureau works with law enforcement in locating life insurance policies in death investigations.

The Fraud Prevention Bureau is fully funded by annual assessment fees, not taxpayer dollars, and employs 13 fulltime staff with extensive law enforcement and insurance investigative backgrounds and training, including credentials as Certified Fraud Specialists and Accredited Healthcare Fraud Investigators.

The Bureau facilitates the detection of insurance fraud and works to reduce fraud occurrence through enforcement and deterrence. Additionally, the Bureau requires restitution for deceptively obtained insurance benefits, and by doing so reduces the amount of premium dollars used to pay fraudulent claims, in turn decreasing the likelihood of premium increases.

The Delaware Department of Insurance Fraud Bureau can be reached toll free at (800) 632-5154, or (302) 672-7350, or by emailing fraud@delaware.gov. Reporting known or suspected fraud is free of charge and can be done confidentially.

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Delaware Commissioner selected from leaders across the country to head important consumer-focused committee

Delaware Insurance Commissioner Trinidad Navarro was appointed Chair of the National Association of Insurance Commissioner’s Antifraud Task Force this week. Commissioner Navarro previously served as Vice-Chair of the committee, and served in law enforcement for much of his career before his election to Insurance Commissioner in 2016. The committee’s work takes on an inclusive consumer protection approach that encompasses identification and reduction of criminal efforts both by and against consumers.

“From my experience as a law enforcement officer to today, I have always prioritized the protection of our residents, and that means being proactive as well as responsive,” said Commissioner Navarro. “Fraud impacts everyone – even if you aren’t the target of a scheme. When an organization takes advantage of a consumer, it hurts the public trust as well as the customer’s wallet. When a resident commits fraud and takes money from an insurer, the companies make themselves whole by increasing costs on policyholders, even though it’s not their fault. Solutions to the problem are important, but we need to focus on stopping fraud before it starts.”

The Task Force works with insurance regulators across the country, as well as local, state, federal and international law enforcement and antifraud organizations. As Chair, Commissioner Navarro will work to provide guidance and resources for insurance departments across the country and in the U.S. Territories, including tracking and analyzing trends in fraud, one of which is the rapidly changing cybersecurity environment.

“Methods of fraud are always evolving, and with more of our personal data being shared digitally than ever, there is no more important time to place serious emphasis on fraud prevention than now,” said Commissioner Navarro. “To be successful, we have to be clear that a vital piece of protecting our policyholders lies in protecting their data.”

Data, its collection, use, and misuse, has quickly risen as a key issue within the insurance community and the public at large. In 2019, multiple data breaches at insurers impacted more than 100,000 Delaware residents. Commissioner Navarro, with the help of the General Assembly, worked to make sure that Delaware passed the Insurance Data Security Act following these breaches, one of the first states to do so.

Protecting residents and policyholders is central to the Commissioner’s administration. The Department of Insurance Fraud Bureau investigates consumer complaints and inquiries, polices the conduct of carriers, agents, and brokers doing business in Delaware, and prosecutes insurance fraud amongst other duties. From 2015 to date, the Bureau has seen an approximate 23% increase in reports. The department has brought forward 37 civil cases, 54 criminal charges, 18 criminal arrests, and more than $47,400 in civil penalties since 2018. In the same time period, 1,100 fraud tips and referrals have been provided to the office.

The Delaware Department of Insurance Fraud Division can be reached toll free at (800) 632-5154, or (302) 672-7350, or by emailing fraud@delaware.gov. Reporting known or suspected fraud is free of charge, and can be done confidentially.

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Investigations result in discovery and correction of issues impacting consumers

The Delaware Department of Insurance’s Market Conduct Examinations resulted in the receipt of nearly $700,000 in fines during 2019 from more than a dozen companies found to violate the Insurance Code or other related regulations. The fines are contributed to the General Fund, providing funding for state programs and services and reducing taxpayer burden.

“As the state’s largest consumer protection organization, the Department of Insurance takes company examinations very seriously. We don’t just fine a company and move on, we work to ensure that corrective action is completed to improve products and consumer experience while reducing future infractions.” said Commissioner Trinidad Navarro.

The department works to provide remediation requirements to ensure compliance with the Insurance Code and related regulations for violations such as excessive charges, failure to distribute required notices, improper licensing, failure to pay claims in a timely fashion, and other issues impacting consumers. Over 20 exams were completed by the department in 2019, and more than 55 are open or underway.

“It’s important that we emphasize that not all companies being fined are deliberately acting in bad faith,” said Deputy Commissioner Tanisha Merced. “Many companies are unaware of their violations before our team investigates, and act quickly to correct their actions and safeguard consumers.”

For example, LifeShield, whose financial penalty is pending, took immediate action upon release of the company’s examination, implementing positive changes for their customers, and their company as a whole. After thorough consideration, the company decided to cease issuance of new short-term medical insurance policies nationwide and engage a new administrator. It has also hired additional staff to mitigate the risk of future issues. While these actions will cost the company more than $100,000, there will be no impact to consumer premium costs.

“The Department of Insurance’s thorough review process shows how much they care for the wellbeing of Delaware residents, and we hope that our rapid response to their findings does the same,” LifeShield’s president remarked. “Compliance with laws and regulations is of critical importance to us, as is maintaining best practice as we seek to provide the products and services our customers want and need.”

The Department’s examiners conduct investigations of organizations and agents and participate in multi-state enforcement efforts to ensure the consumer safety of residents nationwide. While exams are conducted regularly, the Department also examines companies based on consumer complaints. When issues are discovered through the exam process, positive correction action, fines, and suspension of licenses can occur. In 2018, the Department collected $950,000 in fines. In some cases, where a company’s violations impacted individual customers, the Department will require companies to compensate residents directly.

The Department’s Market Conduct Enforcement Actions and Fines are available online as are all complete and final Market Conduct Examination Reports.

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The federal government’s newly-revamped tool can lead to increased costs.

Commissioner Trinidad Navarro has released a rare consumer alert regarding Medicare’s newly-updated Prescription Plan Finder. Throughout this year’s open enrollment period, which ends on December 7, the Department of Insurance has received numerous complaints about the tool and anticipated prescription drug costs.

The Prescription Plan Finder is used to identify and compare coverage options, however the tool’s focus on premium costs can deflect focus from higher personal costs at the pharmacy counter. The tool can organize responses to show lowest premium costs first, but not the lowest total annual costs, as was typical for previous iterations of the tool. Additionally, if a resident enters multiple medications, they may receive search results for plans that do not cover all of the prescriptions entered. The tool is used by more than 60 million seniors nationwide, and is a function of the federal government.

“Residents using this tool should carefully consider costs in a holistic way to ensure they are getting the best coverage and best price. The plan with the lowest premium may not always be the plan with the lowest total costs,” said Commissioner Navarro. “If you, a family member, or a loved one are enrolled or enrolling in Medicare, I urge you to take your time on the tool and make sure all your plan questions are answered before making your final selections.”

While the Department of Insurance has no direct authority over the tool, the office has reached out to members of our congressional delegation to discuss solutions being considered at the federal level.

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