Licensing

Any individual applying for a West Virginia resident producer’s license must:

• Be at least 18 years old
• Be a resident of West Virginia before submitting an application

Required pre-licensing course and exam

Before you can sit for the pre-licensing exam, West Virginia requires you to successfully complete a pre-licensing course approved by the Department of Insurance.

Fingerprints/background check

As part of the application process, you must submit fingerprints to the West Virginia Department of Insurance. Plan to get fingerprinted after you pass the state exam and at least one day before you apply for the license.

Controlled business

Controlled business is insurance written solely in the interest of the producer or the producer’s family members. Producers are prohibited from obtaining a West Virginia insurance license for the purpose of writing controlled business.

You may sell a policy to yourself or your family members, but you can’t obtain a license for that sole purpose.

Non-resident license

A licensed producer must meet the following requirements to obtain a nonresident license:

• The individual must hold a resident license in their home state and be in good standing.

• The individual must complete the appropriate application and submit the required fees to the insurance department/commission in each state they wish to become licensed in.

• The individual’s home state must offer equal reciprocity for the state you are attempting to obtain a non-resident license in. Currently, West Virginia has reciprocation agreements with all other states.

Temporary license

A Temporary Producer license is valid only if the temporary producer is sponsored and appointed by an insurance company. A Temporary Producer license is issued once per line of authority (once in a lifetime per line) and is valid for a maximum of 6 months from the date the license is issued.

Inactive status

A West Virginia resident producer who is ordered to active military duty may place their license on inactive status until they are discharged. While the license is inactive, the producer may continue to receive residual (or “trailing”) commissions, but may not solicit or transact any new business.

Renewal maintenance

West Virginia insurance licenses are initially issued for 2 years. A producer must renew their license every 2 years, by the last day of the licensee’s birth month.

There is a 30-day grace period for those failing to renew prior to expiration. Renewing during this grace period results in a $50 late fee. If the license is not renewed during the grace period, the license expires and all company appointments are canceled.

A producer may have their license reissued within 12 months of expiration without having to test again. If a former producer has been without a license for more than 12 months, they must take the pre-licensing course, retest, and get fingerprinted before applying for a new license.

Continuing education

All states, including West Virginia, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Individuals licensed in the state of West Virginia must complete 24 hours of CE prior to renewing their license.

Notice of change of name or address

Any change of name or address (residential or business) must be reported by the licensee to the West Virginia Department of Insurance within 30 days of relocation. Failure to do so may result in monetary fines and/or suspension of a license.

Company regulations

An insurance company must be authorized by the Department of Insurance to conduct business in West Virginia. To receive authorization, the insurance company must present its rate tables and articles of incorporation (including the nature and purpose of the company’s business intentions), along with the appropriate corporate bylaws and required fees.

West Virginia Life and Health Insurance Guaranty Association

The West Virginia Life and Health Insurance Guaranty Association protects policyowners, insureds, beneficiaries, and annuitants if a licensed member insurer becomes financially impaired or insolvent.

Coverage applies only to insurers authorized to transact insurance in West Virginia and only after a court has declared the insurer impaired or insolvent.

For any one insured life, the association will not pay more than $300,000 in the aggregate, regardless of the number of policies or types of coverage held with the insolvent insurer.

Within this overall $300,000 limit, the association will not pay more than:

• $300,000 in life insurance death benefits
• $100,000 in life insurance cash surrender values
• $100,000 in health insurance benefits
• $100,000 in present value of annuity benefits

For health benefit plans, the association’s liability may not exceed $500,000 with respect to any one individual.

Special limits apply to certain unallocated annuity contracts:

• For unallocated annuities funding governmental retirement plans under Internal Revenue Code §§ 401(k), 403(b), or 457, the limit is $150,000 in present value per participating individual.
• For certain other covered unallocated annuity contracts, a limit of $1,000,000 per contract holder applies.

In all cases, the association cannot pay more than the amount the insurer would have owed under the policy or contract.

The association does not provide coverage for:

• Policies issued by insurers not authorized to transact insurance in West Virginia
• Self-funded employer or association plans
• Stop-loss or administrative-services-only contracts
• Policies or portions of policies in which the policyholder assumed the investment risk
• Interest rates or dividends that exceed statutory limits

Insurance companies and producers are prohibited from using the existence of the West Virginia Life and Health Insurance Guaranty Association as an inducement to purchase insurance.

Place of business

Every resident insurance producer authorized to conduct business in West Virginia must maintain a place of business (with public access) within the state.

Capital and surplus requirement

A company authorized to conduct insurance business in West Virginia must maintain minimum corporate standards. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required.

Medigap policies

To reduce confusion about the many types of Medicare supplement policies available, federal law requires national standardization of Medigap policies. Insurers must offer a limited number of standardized Medigap plans developed by the NAIC.

Currently, the available plans are A, B, C, D, F, G, K, L, M, and N. Plans E, H, I, and J have been eliminated. In addition, Plans C and F are not available to individuals who became newly eligible for Medicare on or after January 1, 2020.

Plan A includes the “core” benefits (Parts A and B co-payments, 365 additional days of hospitalization, and the first 3 pints of blood). If an insurer sells any Medigap policies in the state, it must offer Plan A.

A Buyer’s Guide and an Outline of Coverage are delivered at the time of application, prior to accepting any premium payment.

Duties of the Commissioner of Insurance

The West Virginia Commissioner of Insurance is a state executive position in the West Virginia government. The Commissioner is the chief executive of the West Virginia Department of Insurance, which regulates insurance companies operating in West Virginia.

The commissioner of insurance is an appointed position in West Virginia. The governor nominates a candidate to the state Senate, and the state Senate confirms the nominee. The commissioner serves at the will and pleasure of the governor for the term for which the governor was elected and remains in office until their successor has been appointed and qualified. The commissioner’s initial appointment is for a period of six years.

The Commissioner is responsible for establishing and enforcing regulations in the West Virginia insurance market in a manner that protects consumers and encourages economic development.

Duties of the Commissioner include:

• Investigate all claims and complaints of legal violations relating to insurance.

• If the Commissioner finds that laws have been violated, their findings and supporting documents will be forwarded to the state attorney general to pursue prosecution.

• Monitor transactions of all companies including domestic, foreign, and alien insurance companies.

• Audit the books and records of any resident producer as frequently as necessary.

• Collect all fees associated with producers and insurers.

• Determine and administer fines associated with violations for insurers and producers.

• Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.

• Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

The Commissioner does not have the authority to arrest, issue injunctions, or sentence jail time. The Commissioner can start the process, but it takes a law officer to arrest and a judge or court of law to issue injunctions or sentence jail time. The Commissioner will refer any illegal activity to the state’s Attorney General for prosecution.

Suspend, revoke or non-renew

The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:

• Providing false information on the application for an insurance license.

• Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license.

• Being found guilty of a violation or the noncompliance of insurance regulations and laws.

• Committing fraud while attempting to obtain an insurance license.

• Commingling policy owners’, insurers’, and beneficiaries’ money with the producer’s own money.

• Providing false information in reference to the terms and conditions of an insurance contract.

• Having been found guilty of a felony (or misdemeanor involving activities related to the individual’s moral character.)

• Having been convicted of violations in reference to unfair trade practices or fraud.

• Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.

• Having had a prior insurance license revoked or suspended in a state other than West Virginia.

• Using another person’s identity and forging their name on an insurance application.

• Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

If the Commissioner believes that a producer has (or is about to) violate any insurance regulation in West Virginia, they may issue a cease and desist order. Receiving a cease and desist order does not mean the producer’s registration has been suspended or revoked. However, the producer must stop or limit the activity addressed in the order.

Hearing

A recipient of a cease and desist order must comply immediately, but actions taken by the Commissioner are not “final and binding.” Any West Virginia resident producer subject to disciplinary action has the right to request a hearing to discuss the merits of the situation.

The Commissioner also has the authority to investigate any producer doing business in West Virginia to determine whether a hearing is required. If sufficient evidence is found, the Commissioner will issue a notice with the date and time of the hearing. This notice will be sent to interested parties at least 20 days prior to the hearing.

If a hearing results in a finding of a known violation of West Virginia insurance law, the Commissioner may, in addition to issuing a cease and desist order, impose a civil penalty of up to $15,000 per violation.

Unfair claims settlement practices

• The intentional obstruction and delay of claims payment, or the delay of a claims investigation, is a violation of regulation.

• Neglecting to provide a prompt response and written explanation of insurance policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.

• Failure to provide claims without launching a thorough investigation is a violation of regulation.

• Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.

• Denying a claim without conducting a thorough investigation.

• Attempting to settle a claim for less than fair market value.

Policy forms

West Virginia is a “file and use” state. A file and use filing is a submission that must be filed with the Department, but the insurer may begin using it as soon as it is filed. The insurer does not have to wait for Department approval before using it.

File and use does not mean an insurer can submit anything it wants. The submission must still comply with the law, regulations, and bulletins.

If the wording on a health insurance policy (or other form) conflicts with West Virginia state law, the policy will be amended to minimum conformity with state statutes.

The amount of interest that may be charged on a life insurance policy loan is also regulated by state law, and policy provisions must comply with these statutory limits.

Record maintenance

Complete and accurate records must be kept at the producer’s place of business for a minimum of 3 years. The records must show every contract placed, the named insured, changes or amendments, and premiums received with each transaction. Records may be inspected at any given point in time by the Department of Insurance or any representative appointed on their behalf.

Fraudulent producer representation

An insurance producer who represents to the public that they are licensed to conduct insurance business in West Virginia, but has not passed the appropriate licensing examination, is in violation of regulation. This includes any public communication, such as advertisements, letterheads, circulars, business cards, and other methods of representation.

A producer found guilty of conducting business in West Virginia in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

• Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited.

• Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.

• Providing inaccurate or incomplete information with the sole purpose of inducing lapse, exchange, conversion, forfeiture, or surrender is a violation as well (twisting).

False advertising

Communication through newspapers, magazines, radio, or television that is intended to deliver false information in reference to insurance is a violation of NAIC regulation.

Defamation

• The intentional and malicious circulation of written or oral information intended for the direct or indirect dissemination of derogatory statements is prohibited.

• Publishing and circulating inaccurate information regarding the financial condition of an insurer, person, or competitor in the insurance industry is a violation of NAIC regulation.

Boycott, coercion and intimidation

Participation in any boycott or activity involving coercion and intimidation for the sole purpose of retaining business, or that results in a monopoly of insurance business, is prohibited.

False financial statements

Any licensed producer who makes false statements containing inaccurate material facts, or makes false statements on an application for insurance, is in violation of NAIC regulation.

Illegal inducements

In West Virginia, it is prohibited to induce the purchase of insurance by offering anything with a monetary value in excess of $10. It is also prohibited to accept anything with a monetary value in excess of $10 from a client. Any producer participating in this activity will be subject to suspension of their license and a monetary fine.

Unfair discrimination

Discriminating on the basis of class, race, marital status, or sexual preference is a violation of regulation. Any unfair discriminatory practices intended to directly or indirectly favor an applicant or insured are prohibited. Denying insurance coverage based on the blindness or partial blindness of an individual is considered discrimination and is a violation of NAIC regulation.

Errors & Omissions

Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O covers negligence and unintentional mistakes that cause financial harm to clients. It does not cover intentional misconduct, criminal acts, or regulatory fines.

Children covered as dependents

Newborn children must be covered as a dependent from the moment of birth by their parent’s policy. Adopted children (even unborn) are covered by the adoptive parent’s policy from the moment the adoption becomes legal. The newborn or newly adopted child may be enrolled within 30 days without any pre-existing condition limitations.

A dependent child may remain on a parent’s policy until age 26, regardless of student status. However, a mentally or physically handicapped child (any age) can be covered as a dependent on their parents policy until they become self supporting.

Rebating

West Virginia licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Furthermore, producers in West Virginia are also prohibited from receiving any payment for the sale, solicitation or negotiation of insurance outside of commissions and/or salary.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split.

Suitability in annuity transactions

When recommending an annuity, a producer must have reasonable grounds to believe the recommendation is suitable based on the consumer’s financial needs and objectives.

Suitability is based on factors such as:

• Age
• Income and financial status
• Financial objectives
• Tax status
• Risk tolerance
• Liquidity needs
• Existing assets

Producers must make reasonable efforts to obtain relevant financial information before making a recommendation.

If a consumer refuses to provide information, the refusal must be documented.

Insurers are responsible for supervising annuity recommendations.

Twisting

Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of the law. Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information is prohibited.

Replacement of life insurance

Replacement occurs when a new life insurance policy is purchased and, as a result, an existing life policy is lapsed, surrendered, forfeited, assigned, or otherwise reduced in value.

When replacement is involved, the producer must:

• Provide the applicant with a notice regarding replacement
• Obtain a list of existing life insurance policies to be replaced
• Submit required replacement documentation to the insurer

The replacing insurer must notify the existing insurer and maintain required replacement records.

Failure to comply with replacement requirements may result in fines or license discipline.

Replacement of accident and health insurance

Replacement rules also apply when a new individual accident and health policy is purchased and an existing policy is terminated or reduced in benefits.

When replacement is involved, the producer must:

• Provide proper disclosure to the applicant
• Explain material differences in benefits, exclusions, and limitations
• Disclose any new waiting periods or limitations under the new policy

Improper replacement is considered an unfair trade practice.

Unfair marketing practices

The Department of Insurance is responsible for establishing minimum standards for the full and fair disclosure of policy content. The Department also requires standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:

• Any implication that policies are approved or that the financial condition of a company is endorsed by any government agency or by any independent group, individual, organization, or society.

• Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

This law repealed the Glass-Steagall Act of 1933, allowing consolidation of commercial banks, investment institutions, and insurance companies. GLBA established a framework of responsibilities for federal and state regulators across these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

McCarran-Ferguson Act

Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation.

National Association of Insurance Commissioners (NAIC)

The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

Fair Credit Reporting Act of 1971

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer reporting agencies collect, share, and use personal data. It applies to insurance underwriting when insurers obtain consumer reports such as credit history, MIB files, or investigative consumer reports.

If an insurer takes adverse action, such as denying coverage or charging higher premiums, based on a consumer report, the applicant must be notified within 3 business days. The applicant then has 60 calendar days to request a copy of the report and dispute any incorrect or incomplete information.

Privacy Act of 1974

The Privacy Act of 1974 is a federal law that regulates how U.S. government agencies handle personal information. It applies only to federal agencies, not to private insurance companies.

When an applicant signs an insurance application, they typically give consent for the insurer to access consumer reports such as MIB files, credit reports, and investigative consumer reports. This process is regulated by the Fair Credit Reporting Act, not the Privacy Act.

A signed application generally authorizes the insurer to access this information for up to 30 months. If the report is not obtained within that time, a new authorization must be secured. This rule comes from the Fair Credit Reporting Act.

Telemarketing

The DO NOT CALL registry is a list of telephone numbers, and the DO NOT CALL registry is intended to prevent calls from telemarketers. Unsolicited sales calls must be made in accordance with the following provisions:

• No call may be placed outside of the hours of 8 am to 9 pm local time where the call is received.

• The sales nature of the call must be disclosed and the nature of the product/service being offered must be disclosed.

• The caller must identify themselves and the broker/dealer they represent.

• If a prize is being offered, the prize cannot be contingent on purchase.

CAN-Spam

When an unsolicited e-mail is sent the sender must:

• Use the word advertisement or the letters ADV on the subject line.

• Notate the physical location from where the email originated.

• Give the recipient the opportunity to opt out of ever receiving another email from the sender.