Virginia Law

Article 5. Licensing of Insurers.

A. No insurer unless authorized pursuant to Chapter 48 (§ 38.2-4805.1 et seq.) shall transact the business of insurance in this Commonwealth until it has obtained a license from the Commission. For a foreign or alien insurer or reciprocal, this license shall be in addition to the certificate of authority required by § 38.2-1027. Each application for a license to transact the business of insurance in this Commonwealth shall be accompanied by a nonrefundable license application fee of $500. The fee shall be collected by the Commission and paid directly into the state treasury and credited to the Bureau of Insurance's maintenance fund as provided in subsection B of § 38.2-400. The license shall be signed by a member or other duly authorized agent of the Commission and shall expire on the next June 30 after the date on which it becomes effective, subject to renewal pursuant to § 38.2-1025.

B. The Commission shall not grant a license to do the business of insurance in this Commonwealth to any insurer until it is satisfied that, from the evidence it requires under uniform procedures suitable to and applied equally to all classes of insurers, the insurer:

1. Has paid all fees, taxes, and charges required by law;

2. Has made any deposit required by this title;

3. Has the minimum capital and surplus if a stock insurer, the minimum surplus if a mutual or a reciprocal insurer, and the minimum trusteed surplus if an alien insurer, prescribed in this title for insurers transacting the same class of insurance;

4. Has filed a financial statement or statements and any reports, certificates or other documents the Commission considers necessary to secure a full and accurate knowledge of its affairs and financial condition;

5. Is solvent and its financial condition, method of operation, and manner of doing business are such as to satisfy the Commission that it can meet its obligations to all policyholders; and

6. Has otherwise complied with all the requirements of law.

Code 1950, §§ 38-31 to 38-33, 38-505, 38-514; 1952, c. 317, §§ 38.1-85, 38.1-86; 1978, cc. 4, 20; 1981, c. 605; 1986, c. 562; 1994, c. 316; 2017, c. 655.

Each insurer licensed to transact the business of insurance in this Commonwealth shall obtain an annual renewal of its license from the Commission. The Commission may refuse to renew the license of any insurer or may renew the license, subject to any restrictions considered appropriate by the Commission, if it finds an impairment of required capital and surplus or if it finds that the insurer has not satisfied all the conditions set forth in subsection B of § 38.2-1024. The Commission shall not fail to renew the license of any insurer to transact the business of insurance without giving the insurer ten days' notice and giving it an opportunity to be heard. The hearing may be informal, and the required notice may be waived by the Commission and the insurer.

Code 1950, § 38-57; 1952, c. 317, § 38.1-98; 1986, c. 562.

A. When a domestic insurer or its agents are subject to regulatory costs in another state that are greater than those imposed in this Commonwealth upon insurers domiciled in that state or their agents, then the regulatory costs imposed by this Commonwealth on those foreign insurers or their agents shall be increased to equal the regulatory costs imposed by the other state on the domestic insurer or its agents. For the purpose of this section, regulatory cost includes (i) any deposits of securities, (ii) payment of taxes, fines, penalties or fees exacted for the privilege of doing business or (iii) any restitutions, obligations or conditions necessary for doing business.

B. For the purposes of this section an alien insurance company shall be considered domiciled in the state wherein it has the largest amount of its assets held in trust and on deposit for the benefit of its policyholders, or of its policyholders and creditors in the United States. An insurance company incorporated in Canada shall be considered domiciled in Canada.

C. Any foreign or alien insurance company subject to this section shall annually, on or before March 1, file a report with the Department of Taxation which compares the regulatory costs imposed on such insurer by this Commonwealth during the preceding calendar year to the regulatory costs that would have been imposed on a similar insurer domiciled in this Commonwealth by such insurer's state of domicile during the preceding calendar year. This report shall be filed on a form and in such detail as prescribed by the Department of Taxation. Amounts owed due to the equalization of the regulatory costs imposed on such insurer by this Commonwealth and the regulatory costs of such insurer's state of domicile shall be remitted to the Department of Taxation on or before March 1 of each year. Upon the failure of any insurance company to pay amounts due under this section before the date herein prescribed, the Department of Taxation shall impose a penalty of 10 percent of the amount due and interest shall be charged at a rate established pursuant to § 58.1-15 for the period between the due date and the date of full payment.

Code 1950, §§ 38-12, 38-13; 1952, c. 317, § 38.1-87; 1986, c. 562; 1998, c. 60; 2011, c. 850.

Before transacting any insurance business in this Commonwealth, each foreign or alien insurer or reciprocal shall obtain a certificate of authority and shall comply with the applicable provisions of Article 17 (§ 13.1-757 et seq.) of Chapter 9 of Title 13.1 in the case of a stock insurer, of Article 14 (§ 13.1-919 et seq.) of Chapter 10 of Title 13.1 in the case of a mutual insurer, and of Article 1 (§ 38.2-1200 et seq.) of Chapter 12 in the case of a reciprocal. The certificate shall be in addition to the license to transact the business of insurance required by § 38.2-1024.

Code 1950, §§ 38-32, 38-34; 1952, c. 317, § 38.1-83; 1956, c. 431; 1986, c. 562; 2017, c. 655.

No stock insurer shall be licensed to transact the business of insurance in this Commonwealth unless it has fully paid in capital stock of at least one million dollars and surplus of at least three million dollars.

Code 1950, §§ 38-29, 38-33, 38-36, 38-330; 1952, c. 317, §§ 38.1-88, 38.1-89; 1966, c. 580; 1977, c. 322; 1978, c. 20; 1986, c. 562; 1991, c. 261.

No mutual insurer shall be licensed to transact the business of insurance in this Commonwealth unless it has a surplus of at least $1,600,000.

Code 1950, § 38-514; 1952, c. 317, § 38.1-94; 1966, c. 580; 1978, c. 20; 1986, c. 562; 1991, c. 261.

No domestic or foreign mutual insurer shall issue policies without contingent liability unless, at the time of issue, the insurer has at least four million dollars of surplus. In the case of an alien insurer, policies without contingent liability shall not be issued unless, at the time of issue, the insurer has at least four million dollars of trusteed surplus.

However, any mutual insurer that on June 30, 1991, was authorized to issue and was engaged in issuing policies without contingent liability may continue to do so, until July 1, 1994, by maintaining at all times the minimum surplus if a domestic or foreign insurer, and the minimum trusteed surplus if an alien insurer, required at the time of authorization.

Code 1950, § 38-508; 1952, c. 317, § 38.1-95.1; 1966, c. 580; 1977, c. 322; 1986, c. 562; 1987, c. 520; 1991, c. 261.

A. No alien insurer shall be licensed to transact the business of insurance in this Commonwealth unless it (i) has a "trusteed surplus," as defined in subsection B of this section, of at least four million dollars and (ii) has filed with the Commission a certificate from the supervising insurance official of the state of entry certifying that it is authorized to write the classes of insurance it proposes to write in this Commonwealth or it has filed with the Commission a certificate of the supervising insurance official of its domiciliary country that it is authorized there to transact the kind of insurance business it proposes to transact in this Commonwealth.

B. "Trusteed surplus" of an alien insurer means the excess of the aggregate value of the assets set forth in subsection C of this section over the aggregate net amount of all of its liabilities in the United States.

C. 1. General state deposits are all of the alien insurer's assets within the United States on deposit with officers of any state for the benefit and security of all of its policyholders and creditors in the United States.

2. Special state deposits are all of the alien insurer's assets in the United States, other than general state deposits, which are on deposit with officers of any state for the benefit and security of its policyholders and creditors in the state of deposit, or for the benefit and security of certain classes of its policyholders and creditors either in the state of deposit or in the United States. The value of special state deposits shall in no event exceed the value of the liability secured by the special state deposits.

3. Trusteed assets are all of its assets in the United States, other than general state deposits and special state deposits, held by any trustee for the benefit and security of all of its policyholders and creditors in the United States.

4. Interest receivable includes any interest collectable by the state or trustee that is receivable, due and accrued on the general state deposits, the special state deposits, and the trusteed assets of the alien insurer.

D. An alien insurer's liabilities in the United States are all of the reserves and other liabilities incurred by the alien insurer in the United States, from which may be deducted:

1. An amount equal to the reinsurance credits allowed by Article 3.1 (§ 38.2-1316.1 et seq.) of Chapter 13;

2. From the amount of such liabilities for unearned premiums, the unearned portion of premiums receivable by an alien insurer from its agents or policyholders under policies issued by it in the United States and not more than ninety days past due on the date of such statement;

3. Those liabilities in the United States pertaining to any asset in the United States of the alien insurer other than the assets described in subsection C of this section. This deduction shall be allowed only to the extent considered appropriate by the Commission and shall in no case exceed that portion of the value of the asset that is applicable to the liability pertaining to the asset; and

4. The amount of the unpaid principal and interest of any loan made by the alien insurer to the holder of, and solely on the security of, any life insurance policy or annuity contract issued or assumed by it on the life of or to any person in the United States. This amount shall in no case exceed the amount of the reserve it is required to maintain on the policy or annuity contract.

Code 1950, §§ 38-38, 38-514; 1952, c. 317, § 38.1-95; 1966, c. 580; 1977, c. 322; 1978, c. 20; 1985, c. 243; 1986, c. 562; 1991, c. 261.

No domestic insurer shall be licensed to transact the business of insurance in this Commonwealth until it has furnished the Commission with a statement under the seal of the insurer, verified by the president or treasurer or two of its directors, showing (i) the amount of surplus, (ii) the amount of capital stock fully paid in, (iii) the amount of actual cash in its treasury, (iv) the amount invested with a list of the investments and their cash value, and (v) any other information the Commission requires. In its discretion the Commission may make or direct to be made an examination of the insurer to ascertain if it is entitled to the license.

Code 1950, § 38-505; 1952, c. 317, § 38.1-91; 1960, c. 289; 1966, c. 580; 1986, c. 562.

No foreign insurer shall be licensed to transact the business of insurance in this Commonwealth until it has filed with the Commission a certificate from the supervising insurance official of the state in which it is incorporated certifying that it is authorized to write the classes of insurance it proposes to write in this Commonwealth.

Code 1950, §§ 38-36, 38-330; 1952, c. 317, § 38.1-89; 1966, c. 580; 1977, c. 322; 1978, c. 20; 1986, c. 562.

Any domestic mutual insurer or mutual assessment property and casualty insurer may, without pledging any of its assets, provide a guaranty fund sufficient to defray the expenses of its organization and its initial minimum surplus required to obtain a license to do the business of insurance. The fund may be increased with the prior approval of the Commission by receiving advances or by borrowing funds upon an agreement that the funds, including interest at a rate not exceeding the one-year treasury bill interest rate plus three percentage points at the time the loan is made or renewed, shall be repaid only if the insurer has sufficient earned surplus. The agreement shall provide that the insurer may repay the advances or loans or any part of them whenever it is able to do so in accordance with the requirements of this article. No commission or brokerage shall be paid in acquiring the funds. No repayments of principal, either in whole or in part, and no payments of interest, shall be made without the prior written approval of the Commission. Neither the principal advanced or borrowed nor any interest accrued thereon under this provision shall form a part of the legal liabilities of the insurer until the Commission approves the repayment of such principal or the payment of interest thereon. However, all statements published or filed by the insurer shall show accrued interest and the amount of principal remaining unpaid. All claims under the instrument shall be subordinated to policyholder, claimant and beneficiary claims as well as debts owed to all other classes of creditors.

Code 1950, § 38-512; 1952, c. 317, § 38.1-92; 1960, c. 291, § 38.1-92.1; 1970, c. 595; 1980, c. 187; 1986, c. 562; 1994, c. 503.

A. Each domestic insurer shall maintain at all times the minimum surplus if a mutual insurer, and the minimum capital and surplus if a stock insurer, required by §§ 38.2-1028, 38.2-1029 or § 38.2-1030. If the Commission finds that (i) the minimum capital and surplus of a domestic stock insurer is impaired or (ii) the minimum surplus of a domestic mutual insurer is impaired, the Commission shall issue an order requiring the insurer to eliminate the impairment within a period not exceeding ninety days. The Commission may by order served upon the insurer prohibit the insurer from issuing any new policies while the impairment exists.

B. Any domestic mutual insurer may make an assessment upon its assessable members for an amount that will provide funds to cover all or any part of the impairment. However, no member shall be liable for an assessment exceeding the limit specified in his policy, and no assessment shall be made upon any member under a nonassessable policy. The assessment shall be made upon each assessable member in proportion to the liability as expressed in the policy. With the prior approval of the Commission, the deficiency may be made up from advances or borrowed funds and subject to the restrictions provided in § 38.2-1034 for obtaining guaranty funds.

C. If at the expiration of the designated period the insurer has not satisfied the Commission that the impairment has been eliminated, an order for the rehabilitation or liquidation of the insurer may be entered as provided in Chapter 15 (§ 38.2-1500 et seq.) of this title.

Code 1950, § 38-511; 1952, c. 317, §§ 38.1-90, 38.1-93; 1966, c. 580; 1977, c. 322; 1986, c. 562.

Each foreign and each alien insurer shall maintain at all times the minimum surplus, capital and surplus, or trusteed surplus required by §§ 38.2-1028, 38.2-1029, 38.2-1030 or § 38.2-1031. If the Commission finds an impairment of (i) the required minimum capital and surplus of any foreign stock insurer, (ii) the required minimum surplus of any foreign mutual insurer, or (iii) the required minimum trusteed surplus of any alien insurer, the Commission may order the insurer to eliminate the impairment and restore the minimum capital and surplus, minimum surplus or minimum trusteed surplus, to the amount required by law. The Commission may, by order served upon the insurer, prohibit the insurer from issuing any new policies while the impairment exists. If the insurer fails to comply with the Commission's order within a period of not more than ninety days, the Commission may, in the manner set out in Article 6 (§ 38.2-1040 et seq.) of this chapter, suspend or revoke the license of the insurer to transact the business of insurance in this Commonwealth.

Code 1950, § 38-511; 1952, c. 317, § 38.1-96; 1978, c. 20; 1986, c. 562.

A. Notwithstanding the other provisions of this chapter with respect to minimum required capital and surplus, any insurer which, on June 30, 1991, was licensed to write and was writing any class of insurance in this Commonwealth may continue to write that class of insurance under the appropriate license from the Commission, until July 1, 1994, if it maintains at all times (i) the minimum capital and surplus if a stock insurer, (ii) the minimum surplus if a mutual insurer, and (iii) the minimum trusteed surplus if an alien insurer, required of the insurer as of June 30, 1991.

B. Any insurer not licensed to write a class of insurance in this Commonwealth on June 30, 1991, shall meet all the capital surplus and trusteed surplus requirements of this article before it obtains a license to write that class of insurance.

1952, c. 317, § 38.1-97; 1966, c. 580; 1977, c. 322; 1978, c. 20; 1986, c. 562; 1987, c. 520; 1991, c. 261.

If, after reviewing an insurer's financial condition, method of operation, or manner of doing business, the Commission finds that (i) the insurer cannot, or there is a reasonable expectation that the insurer will not be able to, meet its obligations to all policyholders or (ii) the insurer's continued operation in this Commonwealth is hazardous to policyholders, creditors and the public in this Commonwealth the Commission may order the insurer to take appropriate action to remedy the Commission's concerns. The insurer shall be given ten days' notice prior to issuing the order and shall be given the opportunity to be heard and introduce evidence on its behalf. The hearing may be informal, and the required notice may be waived by the Commission and the insurer. If the insurer fails to comply with the Commission's order within the prescribed time, the Commission may suspend or revoke the license of the insurer to transact the business of insurance in this Commonwealth as set forth in Article 6 (§ 38.2-1040 et seq.) of this chapter.

1978, c. 20, § 38.1-97.2; 1986, c. 562; 1991, c. 261.

A. For the purposes of issuing a temporary or permanent injunction under § 38.2-220 to restrain unlicensed foreign or alien insurers from transacting the business of insurance in this Commonwealth, the following acts, effected by mail or otherwise, shall constitute transacting the business of insurance in this Commonwealth:

1. The issuance or delivery of insurance contracts to residents of this Commonwealth or to corporations authorized to do business in this Commonwealth;

2. The solicitation of applications for such contracts;

3. The collection of premiums, membership fees, assessments or other considerations for such contracts; or

4. The transaction of any other insurance business in connection with such contracts.

B. Process may be served in accordance with § 13.1-758 or in any other manner prescribed by law.

C. This section shall not apply to any nonprofit life insurance or annuity company which is organized and operated for the purpose of issuing insurance and annuity contracts, exclusively to or for the benefit of nonprofit educational or scientific institutions and individuals engaged in the service of those institutions. The clerk of the Commission shall be considered the attorney for service of process in this Commonwealth for all of such insurer's policy and contract holders in this Commonwealth. The appointment shall (i) be irrevocable, (ii) bind the insurer and any successors in interest, and (iii) remain in effect as long as there is in force in this Commonwealth any contract made by the insurer or any obligation arising from the contract.

D. This section shall not apply to the following acts:

1. The procuring of a policy of insurance upon a risk within this Commonwealth in compliance with Chapter 48 of this title;

2. Issuance of contracts of reinsurance;

3. Acts in this Commonwealth involving a policy lawfully solicited, written and delivered outside this Commonwealth covering only subjects of insurance not resident, located, or to be performed in this Commonwealth at the time of issuance of the policy;

4. Acts in this Commonwealth involving a group or blanket insurance policy or a group annuity lawfully issued and delivered in a state where the insurer was licensed to transact the business of insurance;

5. Acts in the Commonwealth involving insurance contracts issued to an "industrial insured." For the purposes of this section, an "industrial insured" is an insured (i) who procures the insurance of any risk or risks other than life and annuity contracts by use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained licensed insurance consultant, (ii) whose aggregate annual premiums for insurance on all risks, except for life, annuity, and accident and sickness insurance, total at least $100,000, (iii) who has at least 25 full-time employees, and (iv) either has gross assets in excess of $3 million or has annual gross revenues in excess of $5 million.

E. Nothing in this section shall apply to nonprofit Railroad Brotherhood or other similar fraternal organizations.

1968, c. 266, § 38.1-98.1; 1986, c. 562; 2008, c. 95.

Except in the case of a risk retention group all of whose members are insurers, no risk retention group, as defined in Chapter 51 of this title, shall be licensed in this Commonwealth if an insurer is directly or indirectly a member or owner of such risk retention group.

1987, c. 585.