AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO THE DELAWARE INSURANCE GUARANTY ASSOCIATION ACT.

This Act updates the Delaware Insurance Guaranty Association (DIGA) Act to more closely align it with the National Association of Insurance Commissioners (NAIC) and National Conference of Insurance Guaranty Funds (NCIGF) Model Acts. DIGA in a non-profit association, established under Chapter 42, Title 18 of the Delaware Code as a safety net to protect residents of this state when a covered property and casualty claim arises from an insolvency of a member insurance company. DIGA is fully funded by assessments levied on member insurance companies and remaining assets from insolvent insurance companies. Section 1 clarifies the types of insurance that do not fall under this chapter. Section 2 clarifies the definition of what is excluded from the definition of a “covered claim” and adds “ocean maritime insurance” to this chapter. Section 3 provides for an increase in the maximum amount of covered claims from $300,000 to $500,000 (workers compensation coverage remains unlimited) and specifies when the Association would be relieved of any obligation to defend an insured on a covered claim. Section 3 permits procedures to be established for DIGA to retrieve net worth information from an insured, with consequences if the information is not provided in a timely basis. Section 3 also provides DIGA with the ability to bring an action against any third-party administrator or other party who refuses to release information related to an insolvent company interfering with DIGA’s ability to carry out its duties. Section 3 also provides DIGA with the authority, subject to approval by the Commissioner, to provide claims-handling services to any “run-off insurer” provided the Association expenses related thereto are fully reimbursed. Section 4 renames § 4212 (formerly non-duplication of recovery) and clarifies that all other insurance coverage (excluding Medicare) is primary to DIGA coverage. Section 5 removes unecessary language regarding the Board of Director’s functions in relation to making recommendations on the status of member insurers. Section 6 provides the Board of Directors the right to request financial and other information from the liquidator, receiver, or statutory successor of an insolvent insurer covered by this chapter.