Virginia State Regulations & NAIC Insurance Law

Licensing

Any individual applying for a Virginia resident producer’s license must be at least 18 years old and must be a resident of Virginia before submitting an application.

In Virginia, an applicant who is at least 18 years of age and has satisfied the Commission of good character, a good reputation for honesty and compliance with the other licensing requirements is entitled to receive the license (Va. Code § 38.2-1820(A)).

Pre-licensing course and exam

A Virginia resident may obtain a property and casualty, personal lines, life and annuities or health agent license only after passing an examination in a form and manner prescribed by the State Corporation Commission (Va. Code §§ 38.2-1814(A), 38.2-1815(A), 38.2-1815.1(A)). The Bureau of Insurance lists passing the licensing examination as the first step in applying for an individual license, and an applicant for a Title license must also complete a 16-hour pre-licensing study course (State Corporation Commission, Apply for an Individual Virginia Insurance License).

In Virginia, a resident applicant who fails the licensing examination three times must wait 30 calendar days before retaking it, and an applicant who passes must obtain the license within 183 calendar days, or the examination grade becomes invalid and the applicant must reapply for the examination (Va. Code § 38.2-1817(B), (F)).

Fingerprints/background check

The Commissioner reviews an applicant’s background before issuing a license, and many states require applicants to submit fingerprints for a state and FBI criminal history check as part of the application. Virginia is one of them: each Virginia resident applying for a new license must be fingerprinted, and the fingerprints are sent through the Central Criminal Records Exchange to the FBI for a state and national criminal history records search (Va. Code § 38.2-1819(B)).

Controlled business

Controlled business is insurance written on the producer’s own life, property or interests, or on those of the producer’s family, employer or a business the producer controls.

Non-resident license

A producer licensed in another state can obtain a Virginia nonresident license without taking Virginia’s examination. Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:

• Is currently licensed as a resident, and in good standing, in the home state
• Has applied (the home-state application or the Uniform Application) and paid the fees
• Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held.

Virginia follows the model: a resident of another state receives a Virginia nonresident agent license if the applicant is currently licensed as a resident and in good standing in the home state, has requested the license and paid the fees, has submitted the home-state application or the Uniform Application, and lives in a home state that issues nonresident agent licenses to Virginia residents on the same basis (Va. Code § 38.2-1836(A)). A nonresident agent who moves to another state files a change of address, with a certification from the new home state, within 30 calendar days (Va. Code § 38.2-1836(E)). Virginia’s rule for a resident agent who moves away is its own: his license authority ends as soon as he moves his residence out of the Commonwealth, whether or not the Commission has been notified, and every agent reports a change of residence address within 30 calendar days (Va. Code § 38.2-1826(A), (D)). A person licensed for the same lines in a prior home state who applies for a Virginia resident license takes no examination if still licensed there, or if the application is received within 90 calendar days of the cancellation of that license and the applicant was then in good standing (Va. Code § 38.2-1817(G)).

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

• The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
• A member or employee of a business entity producer, on the death or disability of its designated producer
• The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

In Virginia, only one temporary life and health license and one temporary property and casualty license may be issued to any individual during a lifetime, each valid for 180 calendar days, and no examination is required (Va. Code § 38.2-1830(C)-(D)). The Commission issues one in these cases: on an agent’s death, to his personal representative, surviving spouse, employee, child or next of kin; on an agent’s inability to act because of sickness, injury or mental incapacity, to his spouse, child, next of kin, employee or legal representative; on the sale of the agent’s business, to a person employed in the business; and to an applicant who is to be an appointed agent of a home service insurer (Va. Code § 38.2-1830(A)). The Commission may renew a temporary license for good cause shown (Va. Code § 38.2-1830(G)).

Military service

A Virginia agent who cannot comply with the license renewal requirements because of military service or another extenuating circumstance, such as a long-term illness or incapacity, may request a waiver of those requirements; the documentation must reach the Commission by the last day of the renewal period, and the Commission approves or disapproves the request within 30 calendar days (Va. Code § 38.2-1825.1(F)). A waiver of the continuing education requirements, for military service or another extenuating circumstance such as a long-term illness or incapacity, is requested from the Continuing Education Board, so as to be received no later than the last day of the two-year period (Va. Code § 38.2-1868.1(C)).

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

A Virginia individual agent’s license is renewed every two years, based on the agent’s month and year of birth: it expires at the end of the agent’s birth month in even-numbered years for an agent born in an even-numbered year, and in odd-numbered years for one born in an odd-numbered year, and a license whose renewal application and fee are not received terminates automatically (Va. Code § 38.2-1825.1(A)).

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

In Virginia, an agent whose license terminates for failure to renew may, within 12 months of the renewal date, reinstate it without the examination by submitting a renewal application, paying a reinstatement fee of double the renewal processing fee and satisfying continuing education (Va. Code § 38.2-1825.1(E)). The Bureau of Insurance adds that the reinstatement fee is paid in addition to the original renewal fee, and gives the renewal fee as $10 and the reinstatement fee as $20 per line of authority (State Corporation Commission, License Renewals).

Continuing education

In Virginia, every resident and nonresident life and annuities, health, property and casualty, personal lines and title insurance agent, and every insurance consultant, furnishes evidence every two years that the continuing education requirements have been met (Va. Code § 38.2-1866(A)). Individuals licensed in Virginia must complete continuing education before renewing their license. Virginia’s statute sets the hours for each two-year period: 16 for an agent holding a life and annuities or health license, or both; 16 for a personal lines or property and casualty license; 16 for a title license; and 24, with at least 8 in each category, for an agent licensed in more than one category, with 3 hours of the total in insurance ethics (Va. Code § 38.2-1866(C)-(E), (G)-(H)).

Notice of change of name or address

A Virginia agent reports any change in residence address, email address or name within 30 calendar days to the Commission and to every insurer for which the agent is appointed (Va. Code § 38.2-1826(A)).

The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. A producer who does business under any name other than their legal name must notify the regulator before using it. In Virginia, that notice may be given with the license application or within 30 calendar days after the assumed or fictitious name is adopted (Va. Code § 38.2-1822(E)).

Company regulations

An insurance company must be authorized by the Bureau of Insurance to conduct business in Virginia. In Virginia, every insurer must obtain a license from the State Corporation Commission before transacting the business of insurance, and a foreign or alien insurer must also obtain a certificate of authority, in addition to the license (Va. Code §§ 38.2-1024(A), 38.2-1027). The Commission grants the license only when it is satisfied that the insurer has paid the required fees, made any required deposit, has the minimum capital and surplus required, and has filed the financial statements and other documents it considers necessary (Va. Code § 38.2-1024(B)); a foreign corporation files a copy of its articles of incorporation with its application for a certificate of authority (Va. Code § 13.1-759(B)).

Capital and surplus requirement

A company authorized to conduct insurance business in Virginia must meet minimum corporate standards. The insurer’s license expires on the next June 30 after it takes effect and is renewed every year, and the Commission may refuse to renew it, or renew it subject to restrictions, if it finds an impairment of required capital and surplus (Va. Code §§ 38.2-1024(A), 38.2-1025). In Virginia, a domestic insurer whose capital and surplus is impaired is ordered to eliminate the impairment within no more than ninety days, and may be barred from issuing new policies meanwhile (Va. Code § 38.2-1035(A)); a foreign insurer that fails to restore its capital and surplus as ordered may have its license suspended or revoked (Va. Code § 38.2-1036).

Duties of the Commissioner of Insurance

The Virginia Commissioner of Insurance is an appointed position in Virginia state government. The Commissioner is the head of the Bureau of Insurance, which is a division of the Virginia State Corporation Commission. The Commissioner is appointed by the State Corporation Commission, which is charged with the execution of the insurance laws, and the Commission’s members are elected by the General Assembly for terms of six years (Va. Code §§ 12.1-16, 38.2-200(A); Va. Const. art. IX, § 1).

The Commissioner is responsible for establishing and enforcing regulations in the Virginia insurance market in a way 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, refer the findings and supporting documents for criminal 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. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate. In Virginia, these are the State Corporation Commission’s powers: it may examine and investigate the business affairs of any person engaged in the business of insurance in the Commonwealth, all agents included, and examine their records (Va. Code § 38.2-1809(A)); it must examine every licensed insurer at least once every five years, and may examine any licensed person whenever it considers it expedient for the protection of the interests of the people of the Commonwealth (Va. Code § 38.2-1317(A)-(B)).

• 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 producer licenses and insurer certificates of authority.

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

The Bureau of Insurance also registers, examines, and investigates (title) real estate settlement agents and agencies.

Sidenote

Know this...

The Commissioner does not arrest, issue injunctions or sentence jail time, but can start the process: a law enforcement officer may make an arrest, the State Corporation Commission itself issues injunctions against violations of the insurance laws (Va. Code § 38.2-220), and a court sentences jail time on a criminal conviction. The Commissioner may refer illegal activity for criminal prosecution.

In Virginia, the State Corporation Commission itself has the powers of a court of equity to issue temporary and permanent injunctions against violations of the insurance laws, and to enforce them by civil penalty or imprisonment (Va. Code § 38.2-220).

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.

• Providing materially incorrect, misleading, incomplete or untrue information in the license application or any other document filed with the Commission (Va. Code § 38.2-1831(1)).

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

• Committing fraud while attempting to obtain an insurance license.

• Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.

• Providing false information about the terms and conditions of an insurance contract.

• Having been convicted of a felony.

• Having admitted or been found to have committed any insurance unfair trade practice or fraud.

• Engaging in fraudulent activities that involve dishonest, coercive, untrustworthy, or financially irresponsible practices.

• Having had a prior insurance license revoked or suspended in a state other than Virginia. Under the NAIC’s model act, a license denied in another state is also a ground.

• 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

In Virginia, the State Corporation Commission may order a person to cease and desist if it finds, at the hearing on the charges, that a violation of the insurance laws is about to be or has been committed (Va. Code § 38.2-219(B)). A cease and desist order does not suspend or revoke the recipient’s registration, but it does require the recipient to stop or limit the activity addressed in the order.

Hearing and penalties

A person facing action by the Commissioner is entitled to notice and an opportunity for a hearing, within time limits set by Virginia law, and may ask a court to review the final order.

In Virginia the hearing comes first: the Commission serves a statement of the charges with notice of a hearing at least ten days after service, and orders a person to cease and desist only if it finds at the hearing that there is about to be, or has been, a violation (Va. Code § 38.2-219). A license may not be revoked or suspended until the licensee has had an opportunity to be heard, on at least ten calendar days’ written notice if a hearing is requested (Va. Code § 38.2-1832(A)).

A violation of the insurance laws can bring a civil penalty in addition to action against a license. State law sets the maximum, usually per violation and often with a cap on the total, and a higher tier commonly applies to a violation that was knowing or flagrant. Some violations are also crimes.

In Virginia, a knowing or willful violation carries a penalty of up to $5,000 for each violation, and a violation without knowledge or intent up to $1,000, with a series of similar violations from one act capped at $10,000 (Va. Code § 38.2-218(A)-(B)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice. Virginia’s statute applies only the second test: its list of unfair claim settlement practices reaches a practice committed with such frequency as to indicate a general business practice (Va. Code § 38.2-510(A)). The list includes failing to adopt and implement reasonable standards for the prompt investigation of claims and refusing arbitrarily and unreasonably to pay claims, and the Commission’s rules add that an insurer shall not unreasonably refuse to pay any claim in accordance with the provisions of the policy (Va. Code § 38.2-510(A)(3)-(4); 14VAC5-400-70(E)).

• Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.

• Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.

• Refusing to pay claims without conducting a reasonable investigation.

• Making settlement decisions based on information in 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 or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Commissioner.

In Virginia, a life insurance, annuity or accident and sickness policy form, and the application, rider and endorsement forms used with it, must be filed with and approved in writing by the Commission before it is delivered or used. A form neither approved nor disapproved within 30 days of filing, or within an extension of up to 30 more days, is deemed approved, but may not be used until the insurer has filed written notice of its intent to use it at least 10 days before use (Va. Code § 38.2-316(A)-(C), (E)). A property and casualty policy form or endorsement of the kinds the rate chapter covers must likewise be filed and approved in writing, and one not acted on in the same periods is deemed approved only if written notice of the intent to use it has been filed with the Commission (Va. Code § 38.2-317(A), (C)).

Under the usual conformity rule, which many states’ insurance codes write into law, a policy provision that conflicts with state law does not make the policy invalid: the policy is read as amended to conform to the law. In Virginia, a policy or form containing a provision that does not comply with the insurance laws is valid, but is construed and applied in accordance with the provisions those laws require (Va. Code § 38.2-318(A)).

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.

Virginia requires every licensee to keep its records of insurance transactions for the three previous calendar years, apart from quotations the customer did not accept, and to make them available promptly for examination by the Commission without notice during normal business hours (Va. Code § 38.2-1809(B)).

Fraudulent producer representation

In Virginia, no person may act as an agent, which includes selling, soliciting or negotiating insurance, without first obtaining a license (Va. Code § 38.2-1822(A)), and a person who knowingly represents to the public that he is licensed when he is not places before the public an untrue, deceptive or misleading statement about a person in the conduct of his insurance business, which Virginia’s false advertising law forbids in any medium (Va. Code § 38.2-503). Violating the insurance laws is a ground for action against a license (Va. Code § 38.2-1831(2)). 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 Virginia in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

• Misrepresentation is prohibited. This includes creating or distributing policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

• Providing inaccurate or incomplete information (or comparisons) about policy benefits is an example of misrepresentation.

• Providing inaccurate or incomplete information for the purpose of inducing lapse, exchange, conversion, forfeiture, or surrender is also a violation (twisting).

False advertising

Making, publishing or circulating an advertisement, announcement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice under state law, based on the NAIC’s model act. The medium does not matter: the rule reaches newspapers, magazines, radio and television, and also notices, circulars, pamphlets, letters, posters and any other way of placing the statement before the public. Under the model act, such a statement is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice. Some state laws adopt this condition, and others reach a single such statement. Virginia’s statute applies to a person who knowingly makes or circulates such a statement, or knowingly allows it to be made (Va. Code § 38.2-503).

Defamation

Defamation of an insurer is an unfair trade practice under state law, based on the NAIC’s model act: making, publishing or circulating an oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure such insurer. Some states’ laws reach further, to a statement calculated to injure any person engaged in the business of insurance. Virginia’s rule reaches a statement that is false and maliciously critical of, or derogatory to, any person with respect to the business of insurance or in the conduct of that person’s insurance business, calculated to injure that person (Va. Code § 38.2-504). Spreading an untrue rumor that a competing insurer is about to fail is the classic example.

Boycott, coercion and intimidation

Entering into an agreement to commit, or by concerted action committing, any act of boycott, coercion or intimidation that results or tends to result in unreasonable restraint of, or monopoly in, the business of insurance is prohibited.

False financial statements

In Virginia, no person may knowingly file with a public official, or knowingly make, publish, circulate or deliver to any person, a false material statement of fact as to the financial condition of a person (Va. Code § 38.2-506(1)), or make false or fraudulent statements or representations on or relative to an application or any document or communication relating to the business of insurance to obtain a fee, commission, money or other benefit from any insurer, agent, broker, premium finance company or individual (Va. Code § 38.2-512(A)). The rule is not limited to licensed producers: under the NAIC’s model act, it is an unfair trade practice for an insurer or any person engaged in the business of insurance to make false or fraudulent statements or representations on or relative to an application for a policy, for the purpose of obtaining a fee, commission, money or other benefit from any provider or individual person.

Illegal inducements

Offering anything of value not specified in the policy (money, a service, a favor or a gift) as an inducement to buy insurance is prohibited unless state law expressly allows it, and any agreement made as part of the sale must be written into the policy.

Virginia prohibits rebating: except as the law expressly provides, no person may give or offer, as an inducement to an insurance or annuity contract, any rebate of premium payable on the contract or any special favor or advantage in its dividends or other benefits, and no person may receive or accept one (Va. Code § 38.2-509(A)). The law expressly does not treat certain practices as rebates, among them readjusting a group policy’s premium rate on its loss or expense experience, issuing life or accident and sickness policies or annuities on a salary savings or payroll deduction plan at a reduced rate consistent with the savings, and paying commissions to licensed agents (Va. Code § 38.2-509(B)).

States differ on promotional gifts. The NAIC’s model act lets producers and insurers give customers non-cash gifts, meals or charitable donations up to an amount the state considers reasonable, as long as the gift is not conditioned on buying or renewing a policy and is offered without unfair discrimination. Each state sets its own limit. Virginia’s rebating law sets no dollar amount: it bars giving, as an inducement to an insurance or annuity contract, any valuable consideration or anything of value not specified in the contract, except under an applicable rating plan authorized in Virginia (Va. Code § 38.2-509(A)). For life insurance and annuities, the Commission’s advertising rules also bar an insurer or agent from offering a gift of substantial value for returning an application, inquiry card or reinstatement application within a specified period of time, and a nonmonetary gift valued at $25 or less is not a gift of substantial value (14VAC5-41-90(M)).

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

• Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
• Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
• Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
• In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind. Virginia’s statute bars refusing to insure, refusing to continue to insure, limiting coverage or charging a different rate solely because of blindness, partial blindness or a mental or physical impairment, in any line of insurance, unless the refusal, limitation or rate differential is based on sound actuarial principles (Va. Code § 38.2-508(3)). It allows refusing, cancelling or limiting coverage solely because of a risk’s geographic location only for a business purpose that is not a mere pretext for unfair discrimination, or where law or regulatory mandate requires it (Va. Code § 38.2-508(4)).

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.

Rebating

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

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 commission is being split. Under the NAIC’s model act, a commission may also be paid to an insurance agency, or to a person who does not sell, solicit or negotiate insurance. Virginia’s statute is narrower: an agent may not share commissions on a transaction with any person not then licensed for the class of insurance involved, apart from regular salaries paid to the licensee’s employees (Va. Code § 38.2-1812(F)), though a person who refers a customer to a licensed agent may receive a one-time nominal fee of a fixed dollar amount for each referral, if the referral does not discuss specific policy terms and the fee does not depend on whether insurance is bought (Va. Code § 38.2-1821.1(B)(8)).

Twisting

Providing false information or expressing derogatory ideas about the financial condition of a competitor company, with the intent to cause an existing policy to lapse or be surrendered, 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 are prohibited.

Under the NAIC’s model act, twisting is a misrepresentation made to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy. A false or maliciously critical statement about a competing insurer’s finances, made to injure it, is defamation. In Virginia, twisting is inducing an insured to terminate an existing policy and purchase a new policy through misrepresentation, a ground for action against a license (Va. Code § 38.2-1831(5)), and no person may misrepresent any material fact for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, replacement or surrender of any insurance policy (Va. Code § 38.2-502(6)).

Unfair marketing practices

The Bureau of Insurance establishes minimum standards for full and fair disclosure of policy content. It also requires standardization and simplification of the terms used to describe insurance coverage. Advertising may not include:

• Any statement or 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, unless that is the fact.

• Any false or untrue statements about the time frame in which claims are paid.

In Virginia, a life insurance or annuity advertisement may not create the impression that the insurer, its financial condition or status, the payment of its claims, or the merits of its policy forms are recommended or endorsed by any governmental entity; where a governmental entity has recommended or endorsed a policy form or plan, that may be stated if the entity authorizes its use in an advertisement (14VAC5-41-140(C)).

Gramm-Leach Bliley Act (GLBA)

This law repealed the parts of the Glass-Steagall Act of 1933 that kept commercial banks and securities firms apart, and allowed the consolidation of commercial banks, investment institutions and insurance companies. GLBA established a framework of responsibilities for federal and state regulators for 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. Since 2021 the exemption does not cover the business of health insurance, apart from narrow activities such as sharing historical loss data (15 U.S.C. § 1013(c)).

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

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681) regulates consumer reporting agencies and the use of consumer reports, such as credit reports, MIB records and investigative reports, including in insurance underwriting.

• When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
• When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA, the Gramm-Leach-Bliley Act and state insurance privacy law.

Under Virginia’s insurance information and privacy law, an authorization signed to collect information for an insurance application, a reinstatement or a change in benefits is valid for no more than 30 months if it involves life, accident and sickness or disability insurance, and two years if it involves property or casualty insurance (Va. Code § 38.2-606(7)(a)).

In Virginia, a person told of an adverse underwriting decision may ask in writing, within 90 business days of the notice, for the specific reasons for it, which the insurer or agent must furnish within 21 business days of receiving the request (Va. Code § 38.2-610(B)).

Telemarketing

The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:

• May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
• Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

• Be identified clearly as an advertisement
• Carry accurate header information and a subject line that is not deceptive
• Include the sender’s valid physical postal address
• Offer a way to opt out, and the sender must honor an opt-out within 10 business days