2023 Delaware Code › Title 18 - Insurance Code › Chapter 68. HEALTH-CARE MEDICAL NEGLIGENCE INSURANCE AND LITIGATION › Subchapter V. Joint Underwriting Association › § 6832. Policy forms and rates.

§ 6832. Policy forms and rates.
(a) All policies issued by the Association shall provide for a continuous period of coverage beginning with their respective effective dates and terminating automatically at 12:
01 a.m. 2 years from the date the Association began underwriting operations with respect to their category of coverage, unless sooner terminated in accordance with this chapter. All such policies shall be issued subject to the group retrospective rating plan and the Stabilization Reserve Fund authorized by this chapter. All such policies shall be written so as to apply only to injury or breach of contract:
(1) Which results from acts or omissions during the policy period; and (2) which is discovered and for which written claim is made against the insured not later than 1 year after the end of the policy period. No policy form shall be used by the Association unless it has been filed with the Commissioner and either:
(1) The Commissioner has approved it; or (2) 30 days have elapsed and the Commissioner has not disapproved it as misleading or violative of public policy. All such policies shall be written so as to apply to injury or breach of contract which results from acts or omissions during the policy period, commonly designated as occurrence-type policies.
(b) Cancellation of the Association's policies shall be governed by procedures as determined by the Commissioner, except that the Association may also cancel any of its policies in the event of nonpayment of any Stabilization Reserve Fund charge by mailing or delivering to the insured at the address shown on the policy written notice stating when not less than 10 days thereafter cancellation shall be effective. Notification of any such cancellation shall be given to the appropriate agency for licensure or professional registration to the extent possible.
(c) The rates, rating plans, rating rules, rating classifications and territories applicable to the insurance written by the Association and statistics relating thereto shall be subject to Chapter 25 of this title, giving due consideration to the past and prospective loss and expense experience for health care medical negligence insurance written and to be written in this State, trends in the frequency and severity of losses, the investment income of the Association and such other information as the Commissioner may require. All rates shall be on an actuarially sound basis, giving due consideration to the group retrospective rating plan and the Stabilization Reserve Fund, and shall be calculated to be self-supporting. The Commissioner shall take all appropriate steps to make available to the Association the loss and expense experience of insurers previously writing health care medical negligence insurance in this State.
(d) All policies issued by the Association shall be subject to a nonprofit group retrospective rating plan to be approved by the Commissioner under which the final premium for all policyholders of the Association, as a group, will be equal to the administrative expenses, loss and loss adjustment expenses and taxes, plus a reasonable allowance for contingencies and servicing. Policyholders shall be given full credit for all investment income, net of expenses and a reasonable management fee, on policyholder supplied funds. The standard premium (before retrospective adjustment) for each policy issued by the Association shall be established for portions of the policy period coinciding with the Association's fiscal year on the basis of the Association's rates, rating plans, rating rules, rating classifications and territories then in effect. The maximum final premium for all policyholders of the Association, as a group, shall be limited as provided in this chapter. Subject to the nonprofit group retrospective rating plan required by this subsection, there shall be a strong presumption that the rates filed and premiums for the business of the Association are not unreasonable or excessive.
(e) The Commissioner shall examine the business of the Association as often as the Commissioner deems appropriate to make certain that the group retrospective rating plan is being operated in a manner consistent with this section. If the Commissioner finds that it is not being so operated, the Commissioner shall issue an order to the Association, specifying in what respects its operation is deficient and stating what corrective action shall be taken.
(f) The Association shall certify to the Commissioner the estimated amount of any deficit remaining after the Stabilization Reserve Fund has been exhausted in payment of the maximum final premium for all policyholders of the Association. Within 60 days after such certification the Commissioner shall authorize the members of the Association to commence recoupment of their respective shares of the deficit by 1 of the following procedures:
(1) Applying a surcharge to be determined by the Association at a rate not to exceed 2 percent of the annual premiums on future policies affording those kinds of insurance which form the basis for their participation in the Association under procedures established by the Association; or
(2) Deducting their share of the deficit from past or future premium taxes due the State.
If the Commissioner fails within 60 days to authorize 1 of the above procedures, each member of the Association may commence recoupment of its deficit by the second procedure described above. The Association shall amend the amount of its certification of deficit to the Commissioner as the values of its incurred losses become finalized and the members of the Association shall amend their recoupment procedure accordingly.
(g) In the event that sufficient funds are not available for the sound financial operation of the Association, pending recoupment as provided in subsection (f) of this section, all members shall, on a temporary basis, contribute to the financial requirements of the Association in the manner established by this chapter. Any such contribution shall be reimbursed to the members by recoupment as provided in subsection (f) of this section.
60 Del. Laws, c. 373, §  1;  71 Del. Laws, c. 373, §  3;