By Pam George
Special to Delaware Business Times
Trinidad Navarro, a former police officer and New Castle County sheriff, became Delaware’s insurance commissioner in January.
“In just our first six months in office, we’ve helped countless people who’ve had issues with insurance companies with respect to claims, with respect to prescription drugs, with respect to reimbursement,” he said.
We sat down with the William Penn High School graduate to discuss his first months on the job and the department’s contributions to Delaware’s economy.
First State rates
Navarro is no stranger to the insurance business. Before becoming a police officer, he worked for his father, who worked in the life and health insurance for more than four decades. “He taught me the business and the importance of serving people,” he said.
Navarro had other reasons for pursuing the office. Some have accused the Delaware Department of Insurance of being “too close” to insurance companies, he said.
Navarro, who said he sent back thousands of insurance companies’ campaign contributions, wanted to change that perception.
He’s started with scrutinizing requests for rate hikes. In the past, rate hikes under 5 percent were “unilaterally approved,” he said. Not on his watch. He assembled a team, including an attorney, to review the 25 or more requests that come in each week. “I’m still learning,” he said of getting others’ input. “But this also gives us multiple perspectives on each case.”
One insurer requested a substantial increase on manufactured homes in coastal Sussex County. Navarro demanded the rationale. “Was there a tornado? Was there a volcanic eruption or tsunami that I was not aware of?” he asked the company’s representative, who reviewed the data and stated it was due to “reinsurance costs.” (Reinsurance refers to the practice of insurers transferring portions of risk portfolios to other parties
to reduce the need to pay a large obligation from insurance claims.)
But many reinsurance costs have come down in the past few years, Navarro noted. “We shot that theory down, as well.” The department hired an independent actuary, who found that the area in question had a low claims history. The company agreed to cut the rate increase in half.
That’s not to say all requests for increases are out of line. Some requests for rate increases are justified, he acknowledged. “They’re not excessive or unfairly discriminatory.”
Navarro’s department has also spotted companies who are not reimbursing at the appropriate rate if at all. Consider a woman with stage four cancer. Her doctor recommended a drug that would not prolong her life but it would improve the quality of it. The insurance company refused to pay.
After calls to the company had proved fruitless, the woman called Rep. Debra Heffernan, of District 6 in Brandywine Hundred, who contacted Navarro. “Within an hour, we had the company agree to pay for her prescription drugs,” he said. “This is what the Department of Insurance is supposed to do — help people and level the playing field.”
When Navarro took office in January, Aetna and Highmark were both in Delaware’s health insurance marketplace. He and his team met with other insurance companies that had left the exchange to talk about their return.
“Because of the uncertainty in Washington, D.C., companies have been lukewarm to come into Delaware,” he said. “Aetna indicated they would stay and request a rate increase. Something changed.”
Aetna left Delaware along with other states. Still, there were blog comments that blamed Navarro’s inexperience for Aetna’s departure.
“It had to do with dollars and cents,” he said. “This is a fluid situation. If Congress does not fund cost-share reductions, the Affordable Care Act will continue to leak oil and bleed out. Let’s get people on both sides of the aisle to fix it.”
Health care might be in flux, but his office did make inroads for consumers with the passage of the Driver Fairness Bill in Delaware last month, which targets unfair discriminatory practices used by automobile insurance companies to determine premium costs.
Now insurance companies can’t use an insurance credit score based on income, gender, sexual orientation, gender identity, education, address, ZIP code, race, ethnic group, religion, marital status or nationality of the consumer as a factor.
Lobbyists for insurance companies balked at taking age out of consideration. A compromise put the age at 75 or older.
The company as the consumer
Businesses are also insurance consumers, and workers compensation rates are a consistent concern for employers. Navarro is a member of the Delaware Workers Compensation Task Force.
“I’ve made it pretty clear that our goal is to lower the cost,” he said. “We have seen multiple states with significant decreases in costs — from 9 to 15 percent.” As in law enforcement, he said, his office is looking to model best practices in these areas. “It’s multifaceted. You start with workplace safety; many companies can lower their costs just by participating in the programs.”
Caps on what health-care professionals can charge for workers comp cases are showing results, he said. “This last year, there was zero percent rate increase from the Delaware Compensation Rating Bureau. This year, I’m seeking a decrease. We will have to see what the actuaries say.”
In the business world, captive insurance is also of key concern. A captive insurer is a property and casualty insurance company owned and controlled by the insured. The captive pays any claims for damages.
Corporate-friendly Delaware is a hospitable place for captive formations; there are just over 1,100. These entities need not have a bricks-and-mortar location, but they must meet the state’s fee requirements and pay taxes.
The captives must also agree to regular examinations by the state — and pay for them.
“They generate significant revenue,” Navarro said. Indeed, last August, the University of Delaware released an economic impact study showing that the Department of Insurance’s captive insurance program contributes nearly $360 million to Delaware’s annual gross domestic product. The study also found that the captive program directly and indirectly supports 2,537 Delaware jobs, creates almost $109 million in additional income and generates over $5 million for the state in tax revenue.
Also in 2016, Captive Review magazine recognized Steve Kinion, director of Delaware’s Bureau of Captive Insurance & Financial Products, as the Captive Insurance Industry Advocate of the Year.
Kinion, however, is a contractor. When Navarro took office, the department began a search for a full-time director who could not only recruit more captives but could also manage staff. (A contractor is not permitted to manage government employees.) A national search and a mountain of resumes did not produce anyone more qualified than Kinion, whose contract was renewed for a year. Meanwhile, Navarro said he will continue the search for a candidate who is equally qualified and wants to live and work in the state.
Be it in business or at home, consumers need to know what they’re buying and compare price, said Navarro, who’s launched an education program to encourage buyers to compare rates the same way they buy oil or a wireless phone service.
Read the fine print. Know what the policy covers and to what degree. If you’ve been traveling in South America for four months, your policy might consider your home “vacant” and therefore not cover damage from the pipes that burst when you were in Bolivia.
He is also educating consumers about the dangers of fraud, both unintentional and intentional. Hitting a deer one day, buying a policy the next and then maintaining that the accident happened after the policy took effect is not a little white lie. It’s fraud. Navarro’s department is also putting the word out that it exists to support the consumers who have issues with their insurer and not just oversee the industry in the state.
Not surprisingly, all these initiatives are keeping Navarro busy. “It’s a full- time job times five,” he said. “But I love it because we are helping people.”