Chapter 390. Rules Governing Insurance Premium Finance Companies
14VAC5-390-10. Licensing.
A. Each application for a license or the renewal of a license as an insurance premium finance company shall be made on the applicable form prescribed and provided by the Commission. It shall be completed in accordance with the instructions accompanying the form and shall be submitted with the applicable fee and all required documents.
B. Each application for a license as an insurance premium finance company shall be accompanied by an individual questionnaire on a form prescribed by the Commission. The questionnaire shall be duly completed and executed in the following manner:
1. In the case of a sole proprietor, by the sole proprietor:
2. In the case of a partnership, by each partner; or
3. In the case of a corporation, by each officer, director, and any individual who owns or controls directly or indirectly more than 10% of the outstanding voting securities.
Individual questionnaires need not be completed and filed with applications for renewal of a license if the person required to file an individual questionnaire certifies under penalty of perjury that no change has occurred requiring an answer different from any given on the individual questionnaire last filed with the Commission.
C. Licenses are not transferable.
D. When a person ceases to be an officer, director, or ceases to have ownership or control of more than 10% of the outstanding voting securities of a licensed corporation or when a person becomes an officer, director or owner or controller of more than 10% of the outstanding voting securities of a licensed corporation, the Commission shall, within 30 days after the event, be notified of the facts in writing in detail. The notice shall be accompanied by a duly completed individual questionnaire for any new officer, director, or owner or controller of more than 10% of the outstanding voting securities. Each licensee shall supply such additional information as the Commission may request.
E. The Commission shall, within 10 days after the event be advised of the facts in writing in detail if any licensee or any person who is a partner of a licensee or who is an officer, director, or who owns or controls more than 10% of the outstanding voting securities of a licensee shall be:
1. Convicted of any crime (other than a misdemeanor resulting from the operation of a motor vehicle); or
2. Refused a license as an insurance premium finance company or an insurance agent or agency in any other jurisdiction; or
3. Declared bankrupt, or who has petitioned for the protection of the National Bankruptcy Code (11 USC § 101 et seq.), or has made an assignment for the benefit of creditors.
F. The Commission may waive as to any insurance premium finance company any or all of the provisions of subsections B through E, inclusive.
G. No license to engage in the business of financing premiums shall be issued to any individual, partnership, or corporation that is a licensed insurance agent. Nothing in this section shall be deemed to invalidate licenses for premium finance and insurance agent businesses issued to a single individual, partnership, or corporation prior to the effective date of this chapter.
Statutory Authority
§ 38.2-4700 et seq. of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 1, eff. September 1, 1989.
14VAC5-390-20. Forms.
A. Every insurance premium finance company shall prepare and file with the commission for its approval the following forms:
1. Insurance Premium Finance Contract and any forms amending such contract;
2. Notice of Overdue Payment or Intent to Cancel; and
3. Notice of Cancellation.
B. All forms used by the insurance premium finance company for delivery or mailing to a customer or an insurer shall be printed in 8-point type or greater and shall disclose:
1. The name of the licensee exactly as it appears on the license, provided that a licensee may use a legally filed assumed or fictitious name. The licensee shall provide the Bureau of Insurance with proof that an assumed or fictitious name has been legally filed in the appropriate circuit court before the assumed or fictitious name may be used on an insurance premium finance contract;
2. The address of the licensee, except that forms filed with the commission pursuant to subsection A of this section shall include the street address; and
3. The telephone number of the licensee.
C. Every form filed with the commission shall be filed in duplicate. If the form is approved, the commission shall stamp both copies APPROVED with the date of approval. One copy, so stamped, will be returned to the licensee, and the other copy will be retained for the commission's files.
D. No licensee shall make use of any form required to be filed with the commission that has not been given final approval pursuant to subsection C of this section. In no instance shall tentative approval of a form be deemed to constitute final approval.
E. Under no circumstances shall any insurance premium finance contract provide for:
1. The financing of any additional premium under any insurance contract listed thereon without either the written consent of the insured or payment of the appropriate down payment by the insured, such consent being given or such down payment being made at the time such additional premium is financed;
2. The financing of notary public fees, fees for obtaining records of the Department of Motor Vehicles, motor club membership fees, or any other charges, costs, or fees other than premiums, taxes, or other fees relative to the policies of insurance.
F. No licensee shall accept any form which is signed in blank or is lacking any information required by such form except that if the insurance policy has not been issued at the time the insured signs the agreement, the policy number may be left blank and inserted on a copy of the agreement after the insurance policy has been issued. In all cases, the name of the insurer, broker, or residual market facility must be shown. A legible copy of the insurance premium finance contract shall be delivered to each insured at the time the contract is signed.
G. Any power of attorney authorizing a licensee to cancel an insurance policy shall appear on the face of the insurance premium finance contract.
H. All fees charged in connection with the financing of insurance policies shall be stated in the insurance premium finance contract.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 2, eff. September 1, 1989; amended, Virginia Register Volume 18, Issue 12, eff. February 1, 2002.
14VAC5-390-30. Records.
A. If the licensee engages in any other business, the records relating to the insurance premium finance business shall be kept separate from the records of any other business.
B. Every insurance premium finance contract, all documents relating thereto, and copies of all documents delivered to an insured, shall be retained so as to be readily available for inspection at all reasonable hours during the term of the contract and for a period of three years thereafter. Such retention may be in an electronic format.
C. All records shall be maintained at locations as designated in the application for license or at such other locations as the licensee shall designate by written notice to the commission. Each licensee shall keep records for each insurance premium finance contract, other than those acquired as security for a debt, that shall include the following information:
1. Date of contract or of acquisition;
2. Name and address of insured;
3. Premium for each insurance policy financed;
4. Principal balance at acquisition;
5. Amount of service charge;
6. Time balance;
7. Total finance charge;
8. Annual percentage rate;
9. Number, interval and amount of payments;
10. Distribution of the proceeds showing the date, amount, purpose and name of all persons to whom any part of the proceeds was paid.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 3, eff. September 1, 1989; amended, Virginia Register Volume 18, Issue 12, eff. February 1, 2002.
14VAC5-390-40. Cancellation of insurance.
A. No licensee shall cancel a policy of insurance unless the insurance premium finance contract contains an authorization for the licensee to cancel any insurance policy listed therein. Except as provided in subsection C of this section, no licensee shall cancel a policy of insurance for any default other than a default in the payment of money due the licensee or a default consisting of the transfer of the policy of insurance to a third party.
B. No notice of intent to cancel may be given prior to default in the insurance premium finance contract. Prior to any cancellation, the licensee shall advise the insured and the agent in writing of its intent to cancel insurance policies referred to in the notice, unless all payments in default are received within 10 days of the date the notice is mailed or delivered; or, if the default consists of a transfer of the policy, unless the transferee, within 10 days of the date the notice is mailed or delivered, assumes or discharges the transferor's debt to the licensee.
C. After providing the appropriate notice of intent to cancel, the licensee may exercise its right to cancel if the default has not been cured or if the additional premium has not been financed or otherwise paid. A copy of the notice of cancellation shall be mailed or delivered to the insured and insurance agent with an effective date of cancellation no earlier than five days after its mailing or delivery. No later than the effective date of cancellation, the licensee shall send the notice of cancellation to the insurer, provided the default remains uncured. If more than one insurance policy is listed on an insurance premium finance contract, a licensee shall not cancel one insurance policy without cancelling all such policies listed thereon.
D. Every insurer, upon receipt of such notice, shall, subject to subsection E hereof, cancel such insurance policy or policies as of the date specified in such notice and shall promptly notify, in writing, the insured, the insurance agent and the licensee of such cancellation. Such notification shall include but not be limited to the following information:
1. Insured's complete name;
2. Producer's name;
3. Policy number;
4. Effective date of the policy;
5. Effective date of cancellation;
6. Total policy premium;
7. Reason for cancellation.
No insurer shall cancel any insurance policy when notified by the licensee unless such insurer has received a copy of a power of attorney signed by the insured authorizing such cancellation. No insurer shall require the return or surrender of the insurance policy as a prerequisite to such cancellation.
E. Notwithstanding the provisions of subsection D, where notice and a period of time is a prerequisite to cancellation under any statutory, regulatory, or contractual restriction, no insurance policy shall be cancelled until the required notice shall have been given by the insurer and the requisite period of time shall have elapsed, and the insurer shall then cancel the policy as soon as it legally may.
F. Except as provided in § 38.2-1806 of the Code of Virginia, upon any cancellation whenever the insurer has received notice that the return premium has been assigned to a licensee, the insurer shall return any gross unearned premium to the licensee within 30 days after the effective date of cancellation or within 30 days after the completion of any audit whichever is later. If the amount returned is in excess of the amount due the licensee, the excess shall be remitted within 10 business days by the licensee to the insured.
No insurer or agent shall apply any return premium due as a result of a cancellation of a particular policy to any outstanding balance on another policy of the insured.
G. If a balance remains due to the licensee after cancellation of the insurance premium finance contract, such outstanding balance may earn interest at a rate no greater than the rate stated in the insurance premium finance contract.
H. When there is more than one insured, all notices required hereunder shall be given to each insured, unless they reside at the same address.
I. The provisions of this section hereof shall not apply to the financing of life insurance and annuity premiums by licensees.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 4, eff. September 1, 1989; amended, Virginia Register Volume 18, Issue 12, eff. February 1, 2002.
14VAC5-390-50. Surety bond.
No application will be considered unless the applicant files with the Commission a bond in the amount of $50,000 dollars in the form prescribed by and with a corporate surety acceptable to the Commission and conditioned to protect its customers and the public in the manner prescribed by law. This bond must remain in effect at all times.
Statutory Authority
§ 38.2-4700 et seq. of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 5, eff. September 1, 1989.
14VAC5-390-60. Annual report.
A. Each licensee shall furnish to the Commission on forms prescribed by the Commission an annual report of all business conducted in the Commonwealth of Virginia on or before March 1 of each year.
B. At the written request of the licensee, the Commission may extend a licensee's deadline for filing an annual report. The deadline shall not be extended beyond May 1 of the year in which the report is due.
Statutory Authority
§ 38.2-4700 et seq. of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 6, eff. September 1, 1989.
14VAC5-390-70. Miscellaneous.
A. Any insurance agent or broker or any person who, with the authorization or consent of a licensee, shall take any action on behalf on such licensee shall be deemed to be an agent of such licensee as to such action. This supersedes any contrary language in the insurance premium finance contract.
B. Any licensee having knowledge of any violations of law or irregularities committed by an insurance agent or agency shall promptly report such violations or irregularities to the Commission. Violations and irregularities required to be reported shall include, but not be limited to, issuance of dishonored checks, failure to promptly refund unearned premiums and failure to promptly deliver any monies or documents required to be delivered to a licensee.
C. In the event of prepayment of an insurance premium finance contract, interest shall be refunded to the insured on either a short-rate or a pro-rata basis. Upon receipt from an insurer of the gross unearned premium, a licensee shall refund to the insured within 10 business days of such receipt any premium that is due the insured.
D. All refund checks payable to an insured shall be mailed to the insured's last known address. If a refund check is returned to a licensee unclaimed, the licensee shall make a diligent effort to locate the insured. Each licensee shall maintain a separate account for unclaimed refunds due insureds, and the balance of such account, together with a list of the names of such insureds, shall be reported in the licensee's annual report to the Commission. Whenever funds from such an account are disbursed, the licensee shall retain proof of payment to the insureds. The requirements of this section are in addition to the requirements of § 55.1-2524 of the Code of Virginia relating to disposition of unclaimed property.
E. Any company or person violating any provisions of this chapter shall be subject to the penalties provided in §§ 38.2-218, 38.2-219, 38.2-4704, and 38.2-4710 of the Code of Virginia to the extent that they are applicable to such company or person.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Regulation 6, Case No. INS890007, § 7, eff. September 1, 1989; amended, Virginia Register Volume 37, Issue 4, eff. October 12, 2020.
Forms (14VAC5-390)
Application for License as an Insurance Premium Finance Company, VAPF 1.
Application for Renewal of License in Virginia, SCCBOIPF.
Biographical Affidavit.
Bond for Insurance Premium Finance Company, VAPF 4.
Annual Statement.