Delaware Insurance Commissioner Trinidad Navarro has updated a bulletin to remind insurance adjusters that state law bars the solicitation of business from consumers during a loss-producing event.

Navarro wrote that when this happens, it not only makes an already difficult situation challenging for consumers but can result in adjuster license revocation and an administrative penalty of up to $1,000 for each violation.

Under the last revision of the bulletin, following the passage of SB 80 in 2021, property insurance carriers are limited in policy assignability only to persons or entities that have the legal authority to represent the insured and explicitly prohibit the assignment of the rights and benefits to any other person.

“The department recognizes that consumers are often unclear about the roles of adjusters and contractors in the claims settlement process,” the Feb. 13 bulletin states. “Therefore, it is requesting insurance companies to evaluate and enhance methods for educating policyholders about these roles. Additionally, the department underscores that adjusters must fully understand their duties and obligations during claims processing.”

Navarro encourages insurers to complete a list of tasks to better inform adjusters and policyholders about the roles of adjusters and contractors.

Those tasks include:

• • Developing disclosures and other communication materials for policyholders that decode adjuster jargon to adequately and fairly explain the differences between company adjusters, independent adjusters, and public adjusters; warning customers of conflicts of interest; and communicating the role of insurance producers in the adjusting process.
  • Ensuring company adjusters and independent adjusters are trained to explain the distinctions between their services and those of a public adjuster.
  • Verifying the license of anyone performing the tasks of a public adjuster on claims
  • Encouraging all adjusters to explain their authority and what they are restricted from doing when assisting with a claim.

“Insurance companies are cautioned against hiring a contractor if the individual or entity is also acting as any type of adjuster on the same claim,” the bulletin states.

The bulletin also includes what contractors can and cannot do under Delaware law.

Earlier this month, Navarro issued a separate bulletin warning consumers and insurers about the risks of using artificial intelligence (AI) in the claims process.

While AI can improve and speed up customer service, Navarro warns that it can also “present unique risks to consumers, including the potential for inaccuracy, unfair discrimination, data vulnerability, and lack of transparency and explainability.”

“AI is transforming the insurance industry and is increasingly deployed across all stages of the insurance lifecycle, presenting both opportunities and risks. By issuing this bulletin, we’re putting insurers on notice that these systems may not circumvent our existing regulatory standards, and that they must take all possible steps to ensure no consumer harm is created,” said Navarro, in a Feb. 6 press release.

“While we issue guidance to carriers regularly, we’re highlighting this effort to the public to ensure that policyholders are aware that AI may be used in their insurance products, the marketing they receive, the pricing and claims management they experience, in insurance fraud detection, and in other areas that may impact their consumer experience – and that they have all the same rights as it relates these activities. Consumer protection remains our top priority.”

The release notes that Delaware is one of 22 jurisdictions that adopted guidance similar to the National Association of Insurance Commissioners (NAIC) Model Bulletin on AI last year.

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