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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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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Delaware’s Department of Insurance is pleased to announce that it is actively recruiting for a qualified independent contractor to staff and run its new Office of Value-Based Health Care Delivery. The Office will assist the Insurance Commissioner and Delaware’s Primary Care Reform Collaborative in evaluating primary care accessibility and affordability statewide.

“Reducing health care costs in Delaware is a key priority of my administration,” said Insurance Commissioner Trinidad Navarro. “The team leading our Office of Value-Based Health Care Delivery needs to possess a high level of expertise in health care transformation and innovation. Together with the Primary Care Reform Collaborative, we intend to identify quantitative tools that will help increase the availability of high quality, cost-efficient health insurance products that have stable, predictable, and affordable rates.”

Earlier this year, members of the General Assembly passed Senate Substitute 1 for Senate Bill No. 116, in order to create the Office. The Office was a recommendation of the Primary Care Reform Collaborative, which is tasked with evaluating the high costs of care in Delaware. In the months since passage, the Collaborative has been working hard to develop recommendations to strengthen Delaware’s primary care system.

“The legislature’s consideration of pro-consumer bills has allowed us to continue to foster an environment where residents are prioritized over profits,” said Leslie W. Ledogar, Esq, the Commissioner’s representative within the working group. “The Office of Value-Based Health Care Delivery epitomizes that vision, and we are grateful for everyone who spent time working on this effort.”

The Request for Proposal may be downloaded from the Office of Management and Budget website. Applicant questions should be directed to the Department’s Regulatory Specialist Leslie W. Ledogar, Esq.

DOVER, DE – Delaware Insurance Commissioner Trinidad Navarro is pleased to announce that there will be another decrease in workers’ compensation insurance rates, effective December 1, 2019.

“I am delighted to approve a decrease in workers’ compensation rates in Delaware for the third year in a row,” stated Commissioner Navarro. “These continued decreases mean significant savings for Delaware businesses both large and small and continues to be an incentive for smaller businesses to relocate to Delaware and employ more Delawareans.”

The Delaware Compensation Rating Bureau workers’ compensation rate decreases were approved on Tuesday, October 8, 2019, after review by the Department of Insurance’s (“Department”) independent actuaries and the State’s Ratepayer Advocate and a public hearing before the Honorable Joshua Martin.  The decreases are an average -12.75% for the residual market and an average of -13.29% for the voluntary market.  It is important to keep in mind that these are average changes and actual changes to a particular policy may vary depending on, among other things, class codes or insureds.

Commissioner Navarro added further, “The continued hard work of everyone involved in this process especially over the last few years continues to ensure that the process is transparent and efficient.  I am also pleased that this is the first year that all actuaries reviewing this filing agreed, not only that another significant drop in workers’ compensation rates was warranted, but that the filing as submitted to the Department needed no changes.  Lastly, I want to again acknowledge the Department’s Workplace Safety Program and its dedicated staff for their work in helping Delaware businesses save up to 19% on premiums for providing a safe working environment.”

Employers who wish to take advantage of the Delaware Workplace Safety Program are encouraged to visit its webpage at www.insurance.delaware.gov/workplacesafety, or call our office directly at (302) 674-7377.

The approved amended DCRB filing No. 1902 can be found at http://www.dcrb.com/shared/d_contents.htm.

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Contact: Tanisha L. Merced, Esq.

Deputy Insurance Commissioner

Office:    (302) 674-7300

Delaware Department of Insurance

http://www.insurance.delaware.gov

Dover Office: 302-674-7300

Consumer Services Division: 1-800-282-8611

DOVER, DE  – The Delaware Department of Insurance has commenced a nationwide search for a new director for its Bureau of Captive Insurance & Financial Products. The job has been posted as an exempt position and the new director will be appointed by the Insurance Commissioner. The new director will be a full-time state employee. The current director, Steve Kinion, has guided the bureau for the last 8 years as it has grown from under 100 captive insurance entities to just over 1,000. Commissioner Navarro stated that he appreciates the leadership Mr. Kinion has provided, but has decided to use the administration transition as an opportunity to restructure the position for a permanent resident state employee. Regarding the search, Commissioner Navarro issued the following statement:

“Captive insurance is an important economic asset to our state. Delaware currently ranks as the third largest domicile in the United States and the fifth largest in the world. The new director will be responsible for working to build on these achievements as I remain committed to growing and strengthening Delaware’s bureau and the State as a leader in captive insurance. I am looking forward to the bureau’s new direction. I will also work with legislators and the Delaware Captive Insurance Association to select the most qualified person for the job.”

The director of the Bureau of Captive Insurance & Financial Products is responsible for regulating Delaware-domiciled captive insurance entities. He/she will oversee the daily operations of the office, articulate the bureau’s goals and objectives, and ensure a stable and competitive environment for captive insurance. Qualified applicants should have knowledge of captive insurance principles and regulations and be able to promote Delaware as an attractive domicile for captive insurance companies. The possession of a Juris Doctorate is required.

For a complete listing of qualifications and responsibilities, please refer to the posting at https://www.jobaps.com/DE/SUP/BulPreview.asp?R1=022017&R2=MUAF43&R3=120300

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Contact:  Vince Ryan

Office: (302) 674-7303

Mobile: (302) 387-7670

Email: vince.ryan@delaware.gov