Property-casualty trade associations are seeking to prevent the Delaware Dept. of Insurance from enforcing a regulation curbing the right of carriers to non-renew homeowners insurance based on claims history.
On Monday, the Property Casualty Insurance Association of America and the American Insurance Association jointly filed the complaint for declaratory relief in New Castle County Superior Court, seeking to bar the enforcement of Regulation 703.
"The insurance department is attempting to impose new underwriting and nonrenewal restrictions on homeowners' insurers and to create unfair trade practices by regulation, despite the lack of any specific statute in support of such restrictions," said Eric Goldberg, AIA assistant general counsel.
The suit contends that such authority resides only with the state legislature.
In the regulation first proposed last summer, an insurance company could only decline to renew a homeowner's policy if there had been a "substantial change" in the risk of the policy, or if the homeowner failed to repair weather-related damage for which there had been claims and which the insurer requested be fixed.
Delaware Commissioner Matthew Denn today restated his belief that the department has the right to enforce the regulation.
"It's appropriate the suit was filed on Halloween, because it should scare Delaware homeowners," he said.
Mr. Goldberg added that 27 other states and the District of Columbia have enacted legislation addressing the issue of the use of claims history in underwriting homeowners insurance. He said that "Proposed Regulation 703 is far more restrictive than the laws and regulations of these and other jurisdictions."
He noted the regulation goes beyond the model passed by the National Conference of Insurance Legislators earlier this year.
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