Senate Insurance and Telecommunications Committee Meeting Minutes

148th General Assembly Second Session

Wednesday, May 4th, 2016 3:00 p.m. Senate Chamber Meeting Room 1st Floor, Legislative Hall

Meeting Attendance Committee Members: Present: Senator Brian Bushweller [email protected] 302-744-4162 Senator [email protected] 302-744-4169

Absent: Senator [email protected] 302-744-4197 Senator David Sokola [email protected] 302-744-4139 Senator Bethany Hall-Long [email protected] 302-744-4138 Senator Harris McDowell [email protected] 302-744-4147

Committee Staff: Glenn Shipley [email protected] 302-744-4035 Laura Wisniewski [email protected] 302-744-4182

Attendees: Organization: Phone/Email: Hardy Drane Department of Insurance [email protected] Rhonda West Department of Insurance [email protected] Shannon Reader Office of Sen. McDowell [email protected] Caitlyn Gordon Senate Staff [email protected]

Senator Brian Bushweller called the meeting to order at 3:01 p.m.

I. MEETING MINUTES.

The meeting minutes from the 4/22/2015 meeting of the Senate Insurance & Telecommunications Committee were circulated, and no objections or changes were received.

II. SB 231 (Bushweller) – AN ACT TO AMEND TITLE 18 OF THE CODE RELATING TO INSURANCE.

SYNOPSIS – This is a housekeeping bill.

Sections 1 and 2 present identical language to that of the first two sections of HB 15 that was passed in June 2015 affecting captive insurance. The title to HB 15 was limited to captive insurance, but the effect of the changes to Sections 309 and 330 would not be limited to captive insurance. There was a question as to whether the amendments to these two provisions were beyond the scope of the title, so the same changes are being made under a broader title heading in this new bill. Section 3 authorizes the Insurance Commissioner to take action against an insurer’s Certificate of Authority to transact business for violations of the Delaware Code outside of Title 18, but which specifically impose obligations upon insurance carriers. While there are provisions in the Insurance Code that discuss the Commissioner’s authority to revoke or suspend a Certificate of Authority, this amendment clarifies that the Insurance Commissioner’s authority over insurance carriers

1 extends to violations of other provisions in the Delaware Code that apply to regulated insurance carriers.

Section 4 corrects an error and deletes Section 2708(4) b, as was originally intended from legislation that passed in 1998.

Section 5 corrects a typographical error.

Senator Bushweller noted that this legislation is simply a housekeeping bill. The Senator then recognized Deputy Insurance Commissioner Hardy Drane to explain the changes in further detail.

Hardy Drane explained that there are five different sections that are being changed. Sections 1 and 2 are a reenactment of a law that was passed last year, but there was an issue with the title. This bill needs to be passed again to reflect regular insurance in the title compared to captive insurance.

Senator Colin Bonini asked if the original bill had an error that was not caught.

Rhonda West stated that when the bill passed in the Senate, Insurance Department officials met with the Senate attorneys to discuss the problem. The error was caught at the time, but the legislation was allowed to be enacted as originally written under the condition that the corrections would be made this session.

Hardy Drane added that changes to section 3 added language which allows the Insurance Commissioner to suspend or revoke the authority of an insurance company.

Senator Bushweller asked if there is a presumption about the Commissioner’s authority without this language in place.

Hardy Drane stated that, as the current Deputy Commissioner, he believes so. If an insurance company has committed any wrongdoings in the state, the only person who could penalize the company would be the Insurance Commissioner. He stated that this legislation makes it clear that, if there is a dispute, then this is how the process would be handled.

Senator Bushweller stated that this legislation is essentially bringing the law into conformity with the current operating rules of the Insurance Commissioner’s office.

Hardy Drane stated that DOI ran the bill by all the industry that operates within the state and they are in agreement.

Senator Bonini asked if this bill would dramatically increase the number of companies that the Insurance Commissioner’s office is allowed to regulate.

Hardy Drane stated that this would only apply to insurance companies.

Hardy Drane then moved to the fourth change, located in Section 4 of the bill, which changes the language in the current statute stating that Section 2708(4) b may have been repealed. This section of the bill would change the wording of the statute to reflect that, as of this time, that part of the statute is repealed.

Senator Bushweller clarified that the language “may have been repealed,” which Section 4 of the bill would change, was presently in the Delaware code.

Hardy Drane continued with the changes in Section 5.

Senator Bushweller asked if there were any further comments about the bill.

With no further questions or comments, SB 231 was signed out of the Senate Insurance and Telecommunications Committee with 5 on its merits (Senators Bushweller, Bonini, Sokola, Cloutier & Hall-Long).

Senator Bushweller adjourned the meeting at 3:10 p.m.

Minutes were prepared by Laura Wisniewski on 5/11/2016.

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