Licensing

To apply for a Virginia resident producer’s license, an individual must:

• Be at least 18 years old.
• Be a resident of Virginia before submitting the 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 may not obtain a Virginia insurance license for the sole purpose of writing controlled business.

You may sell a policy to yourself or to family members, but you can’t get licensed only for that purpose.

Non-resident license

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

• The individual must have a Virginia resident producer license 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 individual is applying for a non-resident license. Currently, 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 a once-in-a-lifetime license 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 (“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 late renewals.
• 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 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 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 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 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 present rate tables and articles of incorporation that include the nature and purpose of the company’s business intentions, along with the appropriate corporate bylaws and 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 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.

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 establishes and enforces regulations in the 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, forward findings and supporting documents 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 producer licenses and certificates of authority for insurers.
• 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 have the authority to arrest, issue injunctions, or sentence jail time. The Commissioner can start the process, but a law officer must make an arrest and a judge or court must issue injunctions or impose jail time. The Commissioner refers 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 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.
• Having engaged in fraudulent activities involving 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, by itself, suspend or revoke the recipient’s registration. Instead, it requires the producer to stop or limit the activity addressed in the order.

Hearing

A cease and desist order must be followed immediately, but the Commissioner’s actions 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 issues a notice of hearing with the date and time. This notice is 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 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.
• Failing to pay 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

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 applicable laws, regulations, and bulletins.

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

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. Records may be inspected at any time by the Bureau of Insurance or a representative appointed on its behalf.

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 public communications 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 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 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

• Intentionally and maliciously circulating written or oral information intended for 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 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 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 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 only honest mistakes that result in (financial) damage to customers or prospects. It does not cover violations of insurance regulation.

Rebating

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.

Producers in 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

Splitting or sharing 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 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 involve:

• 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 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 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. It grants insurers a limited exemption from federal antitrust legislation.

National Association of Insurance Commissioners (NAIC)

The NAIC is the U.S. standard-setting and regulatory support organization 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 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

If an applicant is denied insurance, employment, or credit due to information collected, this regulation grants access to the information and the reasons for the denial. After receiving notice that an adverse underwriting decision has been made (which must be communicated within 3 days), an individual has 90 business days to request a copy of the report.

Privacy Act of 1974

This regulation provides a system for the collection, use, and dissemination of information gathered during underwriting. When an applicant for insurance signs the application (notice regarding insurance information practices), they give the insurer the right to check driving records, MIB, and consumer investigative reports. A signed application authorizes the insurer to collect information for 30 months. If the insurer has not done so by then, a new authorization must be obtained.

Telemarketing

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

Insurance Guaranty Association

The Virginia Insurance Guaranty Association is made up of authorized insurers and is controlled by a board. Joining the association is part of the authorization process that admits insurance companies to conduct business in Virginia. This is not unique to Virginia; insurers must be authorized in every state where they transact business.

Once authorized, any insurer doing business in Virginia must contribute to the Virginia Insurance Guarantee Fund, which is intended to indemnify policy owners of insurance companies that have become insolvent (up to $100,000 cash and $300,000 total benefits).

Auto insurance state minimum

The “state minimum” auto insurance is the minimum amount of car insurance you must carry in Virginia to legally drive. It helps ensure you can pay for others’ injuries and damages if you cause a car accident. Driving without adequate coverage can result in financial repercussions such as fines, license suspensions, vehicle impoundment, and even jail time.

Auto insurance is typically structured as a split limit policy with coverage minimums represented by numbers and slashes. The first number is BI coverage per person, the second is BI coverage per incident (if multiple people are injured), and the third is PD per incident.

In Virginia, the state minimum is 25/50/20. This covers up to $25,000 of bodily injury protection per person, up to $50,000 of bodily injuries per incident, and up to $20,000 of property damage per incident.