Commissioner Stewart Outlaws “Widow’s Penalty” In Setting Auto Insurance Rates

Says Practice Is Not Supported By Facts

DOVER, DE – Insurance Commissioner Karen Weldin Stewart announced today that she will not approve any auto insurance company’s rate submission that includes a “widow’s penalty,” under which a widow or widower is charged a higher rate based solely on the change in his or her marital status following the loss of a spouse.

“This so-called ‘widow’s penalty’ is completely unfair,” said the Commissioner. “Becoming a single driver because of the death of your spouse is not the same as being a young, inexperienced single driver. I will not approve any auto insurance rate filings that cannot provide actuarially sound data for including widows and widowers in a higher single rate category.”

Automobile insurance companies are permitted to charge inexperienced drivers, such as teenagers, a high premium because some actuarial studies show that young single drivers file more claims than young married drivers. However, the Delaware Insurance Department is not aware of any such data showing that older single drivers exhibit the same behavior when compared to older married drivers.

The Insurance Department recognizes that marital status is not the only reason why auto insurance premiums can change following the loss of a spouse. For instance, many companies offer multi-policy discounts for having both life and auto policies with that company.  If one of those policies ends, such as a life insurance policy after a spouse dies, that discount may be cancelled. Also, a married couple on a policy might have their driving records considered together when determining the premium.  When one spouse dies, the premium will change to reflect the risk of the remaining driver.  If that driver has a better driving record than his or her spouse, the premium may go down. However, the reverse is also true.

The new policy, contained in Auto Bulletin No. 23, is effective immediately and is directed to all insurers writing automobile insurance coverage in Delaware. Commissioner Stewart reminds consumers that the policy only applies to rate reviews going forward, so current policyholders should shop around and get quotes from other insurance companies if their auto premium has recently increased.

The full text of Auto Bulletin 23 may be found at http://www.delawareinsurance.gov/departments/documents/bulletins/autobull23.pdf

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Delaware Department of Insurance |www.delawareinsurance.gov | 302-674-7300

Media Contact:  Jerry Grant  (302) 674-7303

Commissioner Stewart Issues Bulletin Prohibiting Price Optimization

Says Practice Punishes Loyal Customers

DOVER, DE – Insurance Commissioner Karen Weldin Stewart announced today that she is forbidding property and casualty insurers from using so-called “price optimization” when setting rates for personal lines of insurance such as automobile and homeowners’ policies.

Commissioner Stewart said, “The use of price optimization results in insurance companies charging different premiums for two consumers who have the same risk profile.  This amounts to unfair discrimination, which is expressly prohibited by Delaware law.  Price optimization penalizes customers who are loyal to their insurance company, and I won’t allow it in our state.”

Price optimization occurs when an insurer uses information obtained through sophisticated data-mining technology to charge a particular customer a higher premium because the data indicates that the customer is unlikely to notice, shop around, or object. The practice has been called a “customer loyalty penalty” and has been outlawed in ten other states and the District of Columbia during the past year.

“Delawareans are required by law to buy auto insurance, and having homeowners’ insurance is required by mortgage companies,” said Commissioner Stewart.  “These are not luxury items.  It is not fair for insurance companies to set premiums based on whether or not the policyholder is statistically likely to shop around.”

Title 18 of the Delaware Code prohibits charging unfairly discriminatory rates, requires that the rates be based upon risk, and requires differences among risks to have a demonstrable probable effect on losses or expenses.  While risk classification is widely accepted as a legitimate insurance actuarial principle, and Delaware insurance laws permit insurers to classify certain risks, the fundamental factor underlying insurance rates is that they fairly reflect the risk of loss and the associated expenses of servicing and maintaining a policy.

Commissioner Stewart reminds consumers “always to shop around and compare rate quotes before purchasing auto or homeowners’ insurance. If you have a question regarding your rates, call your insurance company.  If you don’t receive a satisfactory response, call our Consumers Division at 674-7310 or 1-800-282-8611.”

The full text of Domestic/Foreign Insurers Bulletin No. 78 announcing the Commissioner’s policy can be found at http://www.delawareinsurance.gov/departments/documents/bulletins/domestic-foreign-insurers-bulletin-no78.pdf?updated .

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Delaware Department of Insurance |www.delawareinsurance.gov | 302-674-7300

Media Contact:  Jerry Grant  (302) 674-7303

(DOVER, DE) – Insurance Commissioner Karen Weldin Stewart today released Delaware’s Qualified Health Plan rates for Plan Year 2016.  The Commissioner, after review, submitted her approved rates to the Centers for Medicare & Medicaid Services (CMS) in August. CMS has final authority on the rates. CMS concurred with the Commissioner’s recommendations and announced their approval on September 21, 2015.

It is the Commissioner’s duty to evaluate the reasonableness of rates to ensure rates are not excessive, inadequate or unfairly discriminatory.

The Commissioner recommended approval of a 22.4% rate increase in the individual market for Highmark Blue Cross Blue Shield of Delaware, a reduction of 3.0% from Highmark’s June request of 25.4%.  Highmark had made a second request in late August for an additional 8% increase, for an overall rate hike of more than 33% which the Commissioner rejected out of hand.

Aetna Life Insurance Company’s request for a 16% increase in the individual market was also approved. In the small group market, Highmark’s request for a 12.7% increase was granted, as was Aetna’s request for a 6.1% decrease.

“My actuaries took a hard look at Highmark’s submitted rate request, and we were able to reduce it by 3.0%,” said Commissioner Stewart. “But Blue Cross franchisees across the country are making requests for increases of 25% or more, claiming the Affordable Care Act has unleashed pent-up demand by persons who have not seen a doctor for years.  Regulators have been approving significant rate increases throughout the country.”

BCBS plans have requested rate hikes greater than 30% in Oklahoma, Tennessee and Minnesota.  Last month Blue Cross Blue Shield New Mexico pulled out of that state’s healthcare exchange when denied a 51.6% increase.

Commissioner Stewart said, “I’m continuing to meet with other insurance companies to persuade them to join Delaware’s Health Insurance Marketplace and increase competition. Insurers have been discouraged by our state’s high health care costs.” According to a 2013 Wall Street Journal report[1] on health care spending nationwide, Delaware ranks third-highest in prescription drug costs, fourth in the cost of physician and clinical services, and ninth in the cost of hospital care.

The Department of Insurance held public information sessions in each county in June to receive comment on the proposed rate increases. Written comments can be found at the department’s website. The department expects to post all of the rates on their website by October 15, 2015. For details visit the Health Insurance Rate Filings page, http://www.delawareinsurance.gov/departments/rates/ratefilings.shtml

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[1] JOURNAL REPORTS: HEALTH CARE Health-Care Costs: A State-by-State Comparison

By LOUISE RADNOFSKY, Updated April 8, 2013 4:00 p.m. ET, http://www.wsj.com/articles/SB10001424127887323884304578328173966380066

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For Immediate Release

For more information: Frank Pyle @ 302-674-7353

 www.delawareinsurance.gov | Main Office: 302-674-7300

Department of Insurance Schedules Public Information Sessions on Workers’ Compensation Rates

DOVER, DE – Insurance Commissioner Karen Weldin Stewart announced today that the Department of Insurance will hold three public information sessions regarding Delaware Compensation Rating Bureau Filing No. 1502, which proposes workers’ compensation insurance rates for the upcoming year:

Tuesday, October 20, 2015, at 2:00 p.m.

Insurance Department

841 Silver Lake Blvd., Dover, DE 19904

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Tuesday, October, 20, 2015, at 7:00 p.m.

Delaware Technical Community College – Owens Campus

Theater Auditorium – Arts & Science Center

21179 College Drive, Georgetown, DE 19947

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Wednesday, October 21, 2015, at 6:00 p.m.

Carvel State Office Building, 2nd Floor Auditorium

820 North French Street, Wilmington, DE 19801

The purpose of the three public information sessions is to provide information to the public on the process followed by the Delaware Compensation Rating Bureau (DCRB) in the preparation and filing of Filing No. 1502, and the process followed by the Department of Insurance in reviewing Filing No. 1502.  The public information sessions are not the forum to discuss or debate the merits of the DCRB rate filing, or whether it should be approved or disapproved.  Those topics will be the subject of a future public administrative hearing.

The docket number assigned to this matter is 2916-2015. A copy of Filing No. 1502 can be located online:

http://www.dcrb.com/dcrb/filings/1502/d_filing_1502.htm

The public is invited to make comments in writing or orally at the public information sessions.  Written comments must be received no later than Monday, October 19, 2015, by 4:00 p.m., and should be addressed to the attention of Rhonda West, Regulatory Specialist, Delaware Department of Insurance, 841 Silver Lake Boulevard, Dover, DE 19904; or can be sent via email to mailto: DOI_WorkersComp@delaware.gov  Any public comment submitted, along with the names and addresses of those submitting public comments, will be published on the Delaware Department of Insurance website and is subject to release under 29 Del. C. §§ 10001 – 10006.

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For Immediate Release
For more information contact Jerry Grant at 302-674-7303

Department of Insurance Recovers Nearly $1 Million for Delaware Consumers through June 2015

Businesses Also Saved Almost $4 Million in Workers Comp Premiums

​DOVER, DE – Insurance Commissioner Karen Weldin Stewart and the Delaware Department of Insurance announced today that its Consumer Services Division has recovered $995,558.73 for consumers during the first six months of 2015. Delaware employers have also saved approximately $3,978,296.00 in workers compensation premiums during the same period through the Department’s Workplace Safety Program.

The Consumer Services Division received 2,345 formal insurance coverage complaints and inquiries regarding automobile, homeowner’s and health policies between January 1 and June 30, and directly recovered $543,052.39 from insurers on Delaware policyholders’ behalf. The Division also conducted arbitration hearings requested by or on behalf of policyholders, which netted consumers $452,506.34 in arbitration awards.

“Our Consumer Services Division staff continues to fight for Delaware consumers,” said Stewart. “We want people to know about their rights and options when dealing with insurance companies. Policyholders can always turn to us for free and unbiased assistance with their insurance questions.”

Commissioner Stewart is also happy that the Workplace Safety Program continues to save workers compensation costs for Delaware businesses.  “I know insurance premiums are a significant part of the cost of operating a business, big or small.  This program is great because it benefits employers and employees.”

The Workplace Safety Program incentivizes employers to establish and maintain safe workplaces. The program provides businesses with the opportunity to earn discounts of up to 19 percent on their workers’ compensation insurance premiums by meeting certain safety requirements and agreeing to undergo periodic inspections. The $3,978,296.00 savings figure, provided by the Delaware Compensation Ratings Bureau, is approximate because businesses may pay their workers compensation insurance premium annually, quarterly, or by some other schedule.

For help with general insurance matters, call the Department at (302) 674-7300. Call (800) 282-8611 for Consumer Services. For more information on the Workplace Safety Program call (302) 674-7377.Go to our website at www.delawareinsurance.gov, and visit our Facebook page, www.facebook.com/DelawareInsurance. Follow us on Twitter @Delaware_DOI.

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For immediate release.
Media Inquiries? Contact: Jerry Grant @ 302-674-7303
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Delaware Dept. of Insurance: www.delawareinsurance.gov | 302-674-7300