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.
Pre-licensing course and exam: Not required
Virginia does not have specific pre-licensing requirements.
Fingerprints/background check
As part of the application process, you must submit fingerprints to the Virginia Bureau of Insurance. Plan to get fingerprinted after passing the state exam and at least one day before applying for the license.
Controlled business
Controlled business is insurance written primarily for the benefit of the producer or the producer’s family members. Producers are prohibited from obtaining a Virginia insurance license solely to write controlled business.
You may sell a policy to yourself or to 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 where they want to be licensed.
The individual’s home state must offer equal reciprocity for the state where the non-resident license is being requested. Currently, Virginia has reciprocity 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 only once per line of authority and is valid for a maximum of 6 months from the date the license is issued.
Inactive status
A Virginia resident producer who is ordered to active military duty may place their license on inactive status until discharge. 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
Virginia insurance licenses are initially issued for 2 years. A producer must renew the license every 2 years, by the last day of the licensee’s birth month.
There is a 30-day grace period for producers who fail to renew before expiration. Renewing during the grace period results in a $50 late fee. If the license is not renewed by the end of the grace period, the license expires and all company appointments are canceled.
A producer may have a license reissued within 12 months of expiration without testing again. If a former producer has been without a license for more than 12 months, they must take the pre-licensing course, retest, and be fingerprinted before applying for a new license.
Continuing education
All states, including Virginia, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Individuals licensed in Virginia must complete 24 hours of CE before 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 Virginia Bureau of Insurance within 30 days of relocation. Failure to do so may result in monetary fines and/or suspension of the license.
Company regulations
An insurance company must be authorized by the Bureau of Insurance to conduct business in Virginia. To receive authorization, the insurance company must submit its rate tables and articles of incorporation (including the nature and purpose of the company’s business), along with the appropriate corporate bylaws and required fees.
Place of business
Every resident insurance producer authorized to conduct business in 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 Virginia must meet 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.
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 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, forward findings and supporting documents to the state attorney general for 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 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.
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 relevant information on an application that would have disqualified the individual from receiving a license.
Being found guilty of a violation or noncompliance with 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 about the terms and conditions of an insurance contract.
Having been found guilty of a felony (or a misdemeanor involving activities related to the individual’s moral character).
Having been convicted of violations related to unfair trade practices 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.
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 violated (or is about to violate) an insurance regulation in Virginia, the Commissioner may issue a cease and desist order. 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
A recipient of a cease and desist order must comply immediately. However, actions taken by the Commissioner are not “final and binding.” Any Virginia resident producer subject to disciplinary action has the right to request a hearing to discuss the merits of the situation.
The Commissioner may also investigate any producer doing business in Virginia to determine whether a hearing is required. If sufficient evidence is found, the Commissioner will issue a notice stating the date and time of the hearing. This notice will be sent to interested parties at least 20 days before the hearing.
If a hearing results in a finding that Virginia insurance law was violated, 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
Intentionally obstructing or delaying claim payment, or delaying a claim investigation, is a violation of regulation.
Failing to provide a prompt response and a written explanation of policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.
Paying claims without conducting a thorough investigation is a violation of regulation.
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 a claim for less than fair market value.
Policy forms
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 life insurance policy (or other form) conflicts with Virginia state law, the policy will be amended to meet the minimum conformity required by 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. Records must show every contract placed, the named insured, changes or amendments, and premiums received with each transaction. The Bureau of Insurance (or a representative appointed on its behalf) may inspect records at any time.
Fraudulent producer representation
An insurance producer who represents to the public that they are licensed to conduct insurance business in 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 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.
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
Communication through newspapers, magazines, radio, or television that is intended to deliver false information about insurance is a violation of NAIC regulation.
Defamation
The intentional and malicious circulation of written or oral information intended for direct or indirect dissemination of derogatory statements is prohibited.
Publishing or circulating inaccurate information about 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 or intimidation for the 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 who makes false statements on an insurance application, is in violation of NAIC regulation.
Illegal inducements
In 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. A producer who participates in this activity is subject to license suspension 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 practice intended to directly or indirectly favor an applicant or insured is prohibited. Denying insurance coverage based on an individual’s blindness or partial blindness 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.
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.
Furthermore, producers in Virginia are prohibited from receiving any payment for the sale, solicitation, or negotiation of insurance outside of commissions and/or salary.
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.
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.
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 implication that policies are approved, or that a company’s financial condition is endorsed, by any government agency or by any independent group, individual, organization, or society.
Any false or untrue statements about 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 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.
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 intended to prevent calls from telemarketers. Unsolicited sales calls must follow these provisions:
No call may be placed outside 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 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.
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