Department of Insurance Recovers Nearly $700,000 in Fines through Company Compliance Exams

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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Insurer Fined $487,000 for Selling Bogus ACA Health Insurance Policies

Commissioner Stewart: Beware of Non-compliant Plans

DOVER, DE  – Insurance Commissioner Karen Weldin Stewart today announced she has fined Companion Life Insurance Company $487,000.00 for numerous violations of Delaware’s insurance code, including misrepresenting its limited benefit and short term health insurance plans as compliant with the Affordable Care Act.

The fine results from a market conduct examination of Companion conducted earlier this year by Delaware Insurance Department examiners following numerous complaints from Delaware consumers. Companion, a South Carolina company, entered into a Stipulation and Consent Order agreement with the Department on November 2, in which the company admitted to multiple code violations, including failure to provide consumers with pertinent information relating to plan coverage and failure to conduct periodic audits of the operations of two third-party administrators employed by Companion.

The examination revealed that 242 Delaware consumers had purchased non-compliant plans from Companion. One hundred forty-five policyholders chose to terminate their plans, and Companion refunded premiums totaling $18,008.99. Some consumers chose to keep the policies as a stop-gap measure.

“Consumers have to be careful when choosing a health insurance plan online,” said Commissioner Stewart. “The different plans can be confusing and some do not comply with ACA requirements. Before you purchase a policy, please visit www.choosehealthde.com to connect with ACA-approved health navigators who can provide you with free help in picking a plan that’s right for you.”

A copy of the Stipulation and Consent Order and the Market Conduct Exam Report for the Companion matter may be found at http://delawareinsurance.gov/departments/documents/enforcement/actions.shtml.

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Commissioner Stewart Fines Three Insurers $114,500 for Market Misconduct

Dover, DE-Commissioner Karen Weldin Stewart fined the following companies a total of $114,500 during the second quarter of 2016 for violations of state insurance laws and regulations:

 

Name                                                                       Fine                                           Date
Bankers Life & Casualty Company                   $55,500.00                             4/27/2016
National Health Insurance Company               $25,000.00                             5/11/2016
USAA                                                                $34,000.00                             5/24/2016

The fines result from a market conduct examination of each company’s practices performed by the Delaware Department of Insurance. Details of the companies’ particular violations may be found in the Stipulation and Consent Order entered into by the parties and listed under “Consent Decrees” in the Enforcement Actions & Fines section of the Department website:
http://www.delawareinsurance.gov/departments/documents/enforcement/actions.shtml.
Click on the PDF link in the right-hand column to read each consent decree in its entirety. The market conduct examination report which provides the basis for the fines can be accessed by clicking on the company’s name in the left-hand column.
For more information, call the Department at 1-800-282-8611.
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For more information please contact Jerry Grant at 302-674-7303

Delaware Department of Insurance | www.delawareinsurance.gov | Main Office Phone: 302-674-7300