A New Castle County Superior Court ruled on Jan. 2 that a 2005 insurance regulation wrongfully prohibited the practice of non-renewing homeowners insurance policies on the basis that claims were made. The regulation also barred insurers from treating questions from policyholders as claims. In a statement, Denn said he will appeal the decision to the Delaware Supreme Court.
The case was brought by the American Insurance Association and the Property and Casualty Insurers Association of America. The groups contended that the rule is, in effect, a statute and that only the legislature had the power to adopt it. Denn said Delaware was the only state in the region with no regulatory protection regarding the nonrenewal of homeowners policies. He noted that nothing in the regulation prevented insurers from increasing rates and premiums.
Richard Stokes, regional manager and counsel for PCI, praised the decision and said his organization would likely oppose a legislative prohibition as well. "The regulation was much more restrictive than what other states do and more restrictive that it needed to be," he said.
Denn, a first-term Democrat, is working with Democratic sponsors State Sen. David Sokola, a member of the Senate Insurance Committee and State Rep. Valerie Longhurst, a member of the House Economic Development, Banking and Insurance Committee, on a new bill to re-create the same restriction as the overturned regulation.
“It is completely unfair for insurance companies to punish homeowners for making routine claims against their homeowners insurance,” Sokola said in a statement. “I am disappointed that the court has prevented the Insurance Department from prohibiting this practice, and I hope the General Assembly will work with Commissioner Denn to pass this legislation promptly so homeowners can once again be protected.”
A similar bill was proposed during the 2005 legislative session, but did not win approval.
“Now that the legislature may be the only body that can protect homeowners from these unfair practices, I hope the House will take this issue more seriously,” Longhurst said in a statement.
In 2006, the top five writers of homeowners multiperil in Delaware, according to A.M. Best Co. state/line data, were: State Farm Group, with 29% market share; Nationwide Group, with 14.8%; Allstate Insurance Group, with 10%; Liberty Mutual Insurance Cos., with 6.6%; and USAA Group, with 4.3%.