Delaware's insurance law is Title 18 of the Delaware Code (18 Del. C.), with Department of Insurance regulations in 18 DE Admin. Code. Delaware's exams give the state portion a large share of the items, from roughly 35% to 47% depending on the exam, so the rules below carry real weight. General contract and agency concepts are in the shared national guide. This page is Delaware-only.

About the exam

Delaware's exams are delivered by Pearson VUE. Each major-line exam has a general portion and a state portion, scored on a scaled basis. Delaware does not publish a single pass percentage.

• Delaware has no combined Life & Health exam and no combined Property & Casualty exam. Each line is tested separately.
• Retakes: you retake only the portion you failed. You must pass it within one year of passing the other portion, or retake the whole exam.
• Scores are valid for 12 months from the exam date (18 Del. C. 1705(e)). A failed or missed exam means reapplying and paying the fee again.
• The Department does not require a prelicensing course.
• License applications and renewals are electronic only, through NIPR.

The regulator

• The Insurance Commissioner is elected by Delaware voters for a four-year term and then commissioned by the Governor (18 Del. C. 301(b)). If the office becomes vacant, the Governor appoints a replacement (303(b)).
• The Commissioner must examine every licensed insurer at least every five years, and the insurer pays the cost (318, 322). The Commissioner may examine producers' records as often as advisable (319).
• Hearings:
  • A person must apply for a hearing within 90 days of learning of the act complained of.
  • The hearing is held within 30 days of the application, and notice goes out at least 20 days ahead (323, 324).
• Appeals go to Superior Court within 60 days of the order (328).
• Administrative penalties: up to $15,000 per violation for licensees, and $50,000 for insurers (329). The general criminal penalty is up to $2,300 and one year in jail, or $6,900 for a corporation (106).
• Insolvent insurers are handled in the Court of Chancery through rehabilitation or liquidation (5902 and following).
• Pure captive insurers may insure only their parent, its affiliates and certain controlled businesses (6903).

Producer licensing

• A producer is anyone required to be licensed to sell, solicit or negotiate insurance. The terms agent, broker and consultant are used interchangeably with producer (1702(9)).
  • Solicit means trying to sell, or urging someone to apply for a particular kind of insurance from a particular company.
  • Negotiate means conferring with or advising a buyer on a contract's terms.
• The license itself gives no authority to bind an insurer (1702(10)). Adjusters and appraisers hold separate licenses.
• Requirements: at least 18, plus fingerprints sent to the State Bureau of Identification for state and FBI background checks (1706).
• Lines of authority (1707(a)): Life (including annuities), Accident & Health, Property, Casualty, Variable (requires a Life license plus FINRA registration), and Personal Lines.
• Business entities name a responsible licensed producer. If that person's license lapses, the entity's license is suspended until a new one is named.
• Assumed names need the Commissioner's approval before use (1710).
• Exemptions: salaried employees doing clerical or administrative work who receive no commission, and salaried employees advising their own employer on its insurance, need no license (1704).
• Nonresidents are licensed reciprocally (1708). New residents apply within 90 days, with no exam for lines already held (1709).
• Temporary license: up to 180 days, no exam. Examples: a surviving spouse or court-appointed representative of a licensee who dies or becomes disabled, or the designee of a licensee called to active military service (1711).

Keeping the license

• Biennium: each license runs from March 1 to the last day of February in even-numbered years, which is also the CE deadline (Reg. 504).
• Continuing education (Reg. 504-8):
  • 24 credit hours each biennium, including 3 hours of ethics. A credit is 50 minutes.
  • Health producers who sell LTC need 3 hours of Delaware LTC training within the 24.
  • Anyone writing NFIP flood needs a 2-hour flood course.
  • Carryover is capped at 5 credits, and carryover can't count toward ethics.
  • Producers licensed 25+ years, or holding an approved designation, receive 12 automatic credits. These can't count toward ethics.
  • New licensees have no CE in their first biennium.
  • Extension requests are due 30 days before the deadline, and an extension lasts up to 12 months.
  • Keep completion certificates 3 years.
  • Penalties: noncompliance costs up to $2,000 and a one-year suspension. False CE reports cost up to $15,000 and permanent revocation.
• Lapse: a license lapses automatically if fees or CE aren't done, and the Department sends no notice (1707(f)). Within 12 months, you may reapply without an exam:
  • first six months: penalty of double the renewal fee
  • second six months: a fine of $200 to $1,000
• Report within 30 days:
  • a change of name or of physical, mailing or e-mail address (1707(j))
  • an administrative action in another state, counted from final disposition (1719)
  • a criminal prosecution, counted from the initial pretrial hearing (1719)
• Records: policy records are kept at the principal place of business for five years (1707(m)).

Appointments

• An insurer must appoint a producer before the producer acts as its agent. The notice of appointment is filed within 15 days of signing the agency contract or receiving the first application (1715).
• The Commissioner verifies eligibility within 30 days and tells the insurer within 5 days if the producer is ineligible.
• Terminations: report every termination, with or without cause, within 30 days (1716).
  • A copy goes to the producer within 15 days. For-cause notices go by certified mail or overnight carrier.
  • The producer may file comments within 30 days.

Commissions, fees and premiums

• No commission to anyone who must be licensed and isn't. Renewal commissions may go to someone who was licensed at the time of the sale (1714).
• Referral fees to unlicensed persons must be nominal, one-time, a fixed amount per referral, and not dependent on a purchase or on volume. These limits don't apply to commercial lines.
• A producer working as a consultant for a fee can't also take insurer compensation for the same work.
• Premiums are held in a fiduciary capacity (1706(e), Reg. 505).
  • Commingling means keeping fiduciary funds and other agency funds in one account. It is allowed only with the insurers' written consent and full coverage of the fiduciary funds.
  • Producers who remit within five business days need no separate trust account.

Unfair practices (18 Del. C. 2304)

• Misrepresentation and false advertising.
• Twisting: a misrepresentation or incomplete comparison to induce a lapse, forfeiture, surrender, retention, exchange or conversion.
• Defamation, boycott, coercion or intimidation, and coercing borrowers (2305). A lender may reject an insurer only on reasonable grounds and may not require a particular agent or insurer.
• Rebating: P&C producers may not give inducements not shown in the policy or filed with the Commissioner. Accepting a rebate is also prohibited.
  • Not rebating: commissions paid to licensed producers, dividends, and payroll-deduction savings.
  • Using life or health insurance or annuities as a premium (inducement) to buy goods is prohibited, except credit insurance on the debt.
• Unfair discrimination:
  • on race, color, religion, sexual orientation, gender identity, military status or national origin (2304(22))
  • against victims of abuse, living organ donors and volunteer firefighters
  • life policies may not be refused for blindness or deafness (2316)
  • genetic information may not be used in health insurance, and life insurers may not require genetic tests (2317, 2317A)
• Application fraud to earn a commission. Collecting premium for coverage that doesn't exist.
• Responding to the Department: a preliminary response is due within 21 days (1712(a)(15)).
• Penalties:
  • after a cease and desist order: up to $1,000 per act ($100,000 total), or $10,000 per act ($150,000 in any six months) if the person knew or should have known (2308)
  • violating the order: up to $11,500 per violation (2311)
  • licensing fines: $200 to $20,000 per violation (1712(d))
• License discipline:
  • Probation lasts at most one year.
  • Suspension lasts at most 12 months. Revocation lasts at least 12 months.
  • A person whose license has been suspended or revoked twice may never be relicensed.
  • After a denial, an applicant may demand a hearing within 10 days and may not reapply for one year.

Fraud

• A fraudulent insurance act is done knowingly, with intent to injure, defraud or deceive (2407). Examples include a staged accident or a false certificate of insurance.
• The Fraud Prevention Bureau is part of the Department. For reporting purposes, "insurer" includes producers: anyone with a reasonable belief that fraud has occurred must report it to the Bureau. Good-faith reporters are immune (2408, 2409).
• The Commissioner may impose up to $10,000 per fraudulent act, plus costs and restitution. Rewards for tips are capped at $25,000 (2411).

Claims and P&C rules

• Unfair claims (Reg. 902):
  • acknowledge claim communications within 15 working days
  • begin investigating within 10 working days
  • affirm or deny within 30 days of proof of loss
  • more than 4% of sampled claims in one category in a 12-month period is evidence of a general business practice
• Credit-based insurance scores (Chapter 83, personal lines):
  • Credit can't be the sole basis for an adverse decision.
  • Scores can't use income, gender, sexual orientation, gender identity, education, address, race, religion, marital status or nationality.
  • Adverse-action notices give up to 4 reasons.
  • Disputes are reunderwritten within 30 days.
  • Insurers must make exceptions for extraordinary life circumstances such as divorce, serious illness, identity theft or military deployment.
• Commercial auto: 60 days' notice to cancel or nonrenew, 10 days for nonpayment (3920).
• Commercial liability (other than auto): nonrenewal by certified mail at least 60 days ahead (3911).
• Rates may not be excessive, inadequate or unfairly discriminatory (2503). A consent-to-rate filing lets an insured accept a higher rate on a specific risk. The form is filed within 15 days.
• Surplus lines (Chapter 19):
  • only when coverage isn't available from admitted insurers, and never just for a lower rate
  • the diligent search is done by a surplus lines broker or a Delaware P&C producer
  • tax is 3%
  • policies state that the insurer isn't licensed in Delaware and isn't covered by the guaranty funds
  • life and health generally can't be placed surplus lines
• Premium finance: service charge up to $9 per $100 a year plus $10 per contract. Cancellation for default takes 10 days' notice (4807, 4809).

Guaranty associations

• Delaware Insurance Guaranty Association (P&C):
  • up to $500,000 per claim, and workers' comp in full
  • unearned premium up to $10,000 per policy
  • claims must arise within 30 days after liquidation
  • no punitive damages, and first-party claims by insureds with net worth over $10 million are excluded (4205, 4208)
• Life and Health Insurance Guaranty Association (4403):

• Producers may not use the guaranty association in sales (4419).

Exam traps

• The Commissioner is elected, for four years.
• No prelicensing requirement. CE is 24 hours with 3 of ethics, and the biennium ends on the last day of February in even years.
• File an appointment within 15 days. Report every termination within 30 days.
• A license lapses without notice. Reapply within 12 months, paying double the fee in the first six months.