FORMERLY HOUSE BILL NO. 374
AN ACT TO AMEND TITLE 18, DELAWARE INSURANCE CODE, BY AMENDING CHAPTER 5 TO CREATE A BOARD OF ARBITRATION REGARDING THE CANCELLATION OF CERTAIN INSURANCE AGENCY CONTRACTS.
Be it enacted by the General Assembly of the State of Delaware :
Section 1. Chapter 5, Title 18, Delaware Code, is amended by inserting a new section to read as follows:
§ 529. Arbitration of cancellation of insurance contracts
(a) Every insurance company shall notify the Insurance Commissioner or his successor and the agency involved, of the intent to cancel an agency contract, except life, whether it be written or verbal, 30 days prior to the issuance of the notice of cancellation.
(b) Except in the case where fraud exists or where an agency is in arrears of money owed, of more than 60 days to the insurance company in question, no insurance company may cancel an agency without giving 12 months notice. This notice shall be in writing and upon the option of the company may prohibit the agency from writing any new business in this particular company, but will allow the agency to renew all existing business in this 12 month period and will allow the agency to have binding authority, to make endorsements or other changes to existing business and will pay the same rate of commission for the 12 month period.
(c) The Insurance Commissioner shall appoint an Arbitration Board to arbitrate the cancellation of agency contracts. This Board shall consist of three arbiters appointed by the Insurance Commissioner. One of these arbiters shall be from the Insurance Department; the remaining two from the insurance industry.
(d) The purpose of this Board is to determine whether an agency cancellation will adversely effect the public interest. If
such a determination is made, the Board shall prescribe a method of cancellation to be followed by both parties. The decision of the Board of Arbitration shall be binding upon the company and agency involved.
Section 2. This Act shall be effective July 1, 1971.
Approved July 1, 1971.