Virginia Law

A. The purposes of this chapter are to protect policyholders and the public against the adverse effects of excessive, inadequate, or unfairly discriminatory insurance rates, and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter. Nothing in this chapter is intended to (i) prohibit or discourage reasonable competition, or (ii) prohibit or encourage uniformity in insurance rates, rating systems and rating plans or practices, except to the extent necessary to accomplish the purposes mentioned above.

B. This chapter shall be liberally interpreted to effect the purposes of this chapter.

1952, c. 317, § 38.1-218; 1986, c. 562.

As used in this chapter:

"Pool" means an arrangement, either voluntary or mandated by law, established on an on-going basis, pursuant to which two or more insurers participate in the sharing of risks on a predetermined basis, which arrangement may operate through an association, syndicate, or other pool arrangement.

"Residual market mechanism" means an arrangement, either voluntary or mandated by law, involving participation by insurers in equitable apportionment among themselves of insurance which may be afforded applicants who are unable to obtain insurance through ordinary methods including any filed and approved plans.

"Virginia Auto Insurance Plan" means that organization established for assigned risks pursuant to the provisions of § 46.2-464.

"Virginia Property Insurance Association" means that organization established pursuant to Chapter 27 (§ 38.2-2700 et seq.) of this title.

"Virginia Workers' Compensation Insurance Plan" means that organization established for assigned risks pursuant to the provisions of § 65.2-820.

1993, c. 985.

This chapter applies only to (i) insurance written through the Virginia Workers' Compensation Insurance Plan, (ii) the coverages provided in the Virginia Automobile Insurance Plan, (iii) the coverages provided pursuant to Chapter 27 (§ 38.2-2700 et seq.) of this title, (iv) home protection contracts as defined by § 38.2-2600, and (v) policies and endorsements of credit involuntary unemployment insurance, as defined in § 38.2-122.1, and policies and endorsements of credit property insurance, as defined in § 38.2-122.2, delivered or issued for delivery in this Commonwealth, and certificates of credit involuntary unemployment insurance and certificates of credit property insurance delivered or issued for delivery in this Commonwealth where the group policy is delivered in another state.

Code 1950, §§ 38-195, 38-247, 38-253.43; 1950, p. 1033; 1952, c. 317, § 38.1-220; 1972, c. 836; 1973, c. 504; 1981, c. 530; 1986, c. 562; 1993, c. 985; 2000, c. 526; 2002, c. 145.

A. 1. Each group, association or other organization of insurers that engages in joint underwriting or joint reinsurance for the insurance to which this chapter applies shall file with the Commission (i) a copy of its constitution, its articles of incorporation, agreement or association, and a copy of its bylaws, rules and regulations governing its activities, all duly certified by the custodian of the originals of the copies, (ii) a list of its members, and (iii) the name and address of a resident of this Commonwealth upon whom notices or orders of the Commission or process may be served.

2. Each such organization of insurers shall notify the Commission promptly of every change in the information required to be filed by this subsection.

3. This subsection shall not apply to the Virginia Automobile Insurance Plan, the Virginia Property Insurance Association and the Virginia Workers' Compensation Insurance Plan.

B. Each group, association or other organization of insurers that engages in joint underwriting for the insurance to which this chapter applies shall be subject to this chapter. Each such organization of insurers that engages in joint reinsurance for the insurance to which this chapter applies shall be subject to § 38.2-2026.

C. If, after providing notice and opportunity to be heard, the Commission finds any activity or practice of any such organization of insurers to be unfair, unreasonable or otherwise inconsistent with this chapter, it shall issue a written order (i) specifying in what respect the activity or practice is unfair, unreasonable or otherwise inconsistent with this chapter, and (ii) requiring the discontinuance of the activity or practice.

Code 1950, §§ 38-218.2, 38-249, 38-253.46; 1952, c. 317, § 38.1-224; 1973, c. 504, § 38.1-279.43; 1986, c. 562; 1993, c. 985.

Notwithstanding any other provision of law, insurers and rate service organizations participating in joint reinsurance pools organized for the purpose of establishing a residual market mechanism may, in connection with such purpose, act in cooperation with each other in the making of rates, rating systems, policy forms, underwriting rules, surveys, inspections, investigations, the furnishing of statistical or other information on losses and expenses, or the conduct of research.

1993, c. 985.

A. Each insurer writing in this Commonwealth a class of insurance to which this chapter applies shall file with the Commission every manual of classifications, minimum rate, class rate, rating schedule, rating plan, rating rule, and every modification of any of the foregoing that it proposes to use. Every filing shall indicate the character and extent of coverage contemplated. When a filing is not accompanied by the information upon which the insurer supports the filing, and the Commission does not have sufficient information to determine whether the filing meets the requirements of this chapter, the Commission may require the insurer to furnish the information upon which it supports the filing. A filing and any supporting information shall be a public record. Upon filing any rate to which this chapter is applicable, the insurer shall give notice to the Division of Consumer Counsel of the Office of the Attorney General that such rate has been filed with the Commission and such insurer shall so certify to the Commission in its rate filing. For the purposes of this section, a group or fleet of insurers operating under the same general management may be considered an insurer.

B. Each insurer shall submit with each rate filing so much of the following information as deemed appropriate by the Commission:

1. Number of exposures;

2. Direct premiums written;

3. Direct premiums earned;

4. Direct losses paid identified by such period as the Commission may require;

5. Number of claims paid;

6. Direct losses incurred during the year, direct losses incurred during the year which occurred and were paid during the year, and direct losses incurred during the year which were reported during the year but were not yet paid;

7. Any loss development factor used and supporting data thereon;

8. Number of claims unpaid;

9. Loss adjustment expenses paid identified by such period as the Commission may require;

10. Loss adjustment expenses incurred during the year, loss adjustment expenses incurred during the year for losses which occurred and were paid during the year, and loss adjustment expenses incurred during the year for losses which were reported during the year but were not yet paid;

11. Other expenses incurred, separately by category of expense, excluding loss adjustment expenses;

12. Investment income on assets related to reserve and allocated surplus accounts;

13. Total return on allocated surplus;

14. Any loss trend factor used and supporting data thereon;

15. Any expense trend factor used and supporting data thereon; and

16. Such other information as may be required by rule of the Commission, including statewide rate information presented separately for Virginia and each state wherein the insurer writes the line, subline or rating classification for which the rate filing is made and which the Commission deems necessary for its consideration.

C. Where actual experience does not exist or is not credible, the Commission may allow the use of estimates for the information required by subdivisions 1 through 15 of subsection B of this section and may require the insurer to submit such information as the Commission deems necessary to support such estimates.

D. The Commission shall develop uniform statements or formats specifying the information categories specified in this section. Such statements or formats shall be utilized by all insurers in all rate filings.

E. In determining the appropriateness of rates for credit involuntary unemployment insurance and credit property insurance, the Commission may not approve any rate that is calculated based upon loss experience producing a loss ratio of less than forty percent on and after January 1, 2001, forty-five percent on and after January 1, 2003, and fifty percent on and after January 1, 2005. For the purposes of this subsection, loss experience includes: paid losses, paid loss adjustment expense, any change in case reserves, change in incurred but not reported losses, and any special considerations for catastrophe or comprehensive coverage.

Code 1950, §§ 38-253.26, 38-253.72; 1950, p. 381; 1952, c. 317, § 38.1-241; 1972, c. 836; 1973, c. 504; 1986, c. 562; 1987, c. 697; 1988, c. 189; 2000, c. 526.

An insurer may satisfy its obligation to make the rate filings required in § 38.2-2003 by becoming a member of or a subscriber to a rate service organization that makes such filings and that is licensed pursuant to § 38.2-1914, and by authorizing the Commission to accept the filings on its behalf. Filings made by rate service organizations shall meet the requirements of § 38.2-2003. No insurer shall be required to become a member of or a subscriber to any rate service organization.

Code 1950, §§ 38-253.27, 38-253.73; 1952, c. 317, § 38.1-242; 1972, c. 836; 1973, c. 504; 1986, c. 562.

A. Rates for the classes of insurance to which this chapter applies shall not be excessive, inadequate, or unfairly discriminatory. All rates and all changes and amendments to rates to which this chapter applies for use in this Commonwealth shall consider loss experience and other factors within Virginia if relevant and actuarially sound; however, other data, including countrywide, regional or other state data, may be considered where such data is relevant and where a sound actuarial basis exists for considering data other than Virginia-specific data.

B. 1. In making rates for the classes of insurance to which this chapter applies, separate consideration shall be given to (i) past and prospective loss experience within and outside this Commonwealth, (ii) conflagration or catastrophe hazards, (iii) a reasonable margin for underwriting profit and contingencies, (iv) dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers, (v) past and prospective expenses both countrywide and those specifically applicable to this Commonwealth, (vi) investment income earned or realized by insurers from their unearned premium and loss reserve and the Commission may give separate consideration to investment income earned on surplus funds, (vii) the loss reserving practices, standards and procedures utilized by the insurer, and (viii) all other relevant factors within and outside this Commonwealth. When actual experience or data does not exist, the Commission may consider estimates.

2. In the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent five-year period for which such experience is available.

3. [Repealed.]

In the case of workers' compensation insurance rates for volunteer firefighters or volunteer emergency medical services personnel written through the Virginia Worker's Compensation Insurance Plan, the rates shall be calculated based upon the combined experience of both volunteer firefighters or volunteer emergency medical services personnel and paid firefighters or paid emergency medical services personnel, so that the resulting rate is the same for both volunteer and paid members, but in no event shall resulting premiums be less than $40 per year for any volunteer firefighter or volunteer emergency medical services personnel.

C. For the classes of insurance to which this chapter applies (i) the systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group for any class of insurance, or for any subdivision or combination of insurance for which separate expense provisions apply, and (ii) risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in hazards, expense provisions, or both. The standards may measure any difference among risks that can be demonstrated to have a probable effect upon losses or expenses.

D. All rates, rating schedules or rating plans and every manual of classifications, rules and rates, including every modification thereof, approved by the Commission under this chapter, shall be used until a change is approved by the Commission.

Code 1950, §§ 38-208, 38-253.21, 38-253.68; 1950, p. 403; 1952, c. 317, § 38.1-252; 1962, c. 253; 1970, c. 186; 1972, c. 836; 1973, c. 504; 1986, c. 562; 1987, c. 697; 1996, c. 250; 2002, c. 145; 2015, cc. 502, 503.

A. Except as provided in § 38.2-2010, no filing shall become effective, be applied, or be used in this Commonwealth until it has been approved by the Commission. However, a rate produced in accordance with a rating schedule or rating plan, previously approved by the Commission, may be used pending the approval.

B. A filing shall be deemed to meet the requirements of this chapter and to become effective unless disapproved by the Commission within sixty days of the time that the filing was made. However, the Commission may extend the waiting period for thirty additional days by written notice to the filer before the sixty-day period expires.

C. If a filing is not accompanied by the information necessary for the Commission to determine if the requirements of § 38.2-2005 are satisfied, the Commission shall so inform the filer within sixty days of the initial filing. The filing shall be deemed to be made when the necessary information is furnished.

D. The provisions of subsection B of this section shall be suspended when the Commission has ordered a hearing to be held under the provisions of § 38.2-2007.

Code 1950, §§ 38-210, 38-253.29, 38-253.75; 1952, c. 317, § 38.1-253; 1986, c. 562; 1987, c. 697.

No rate charged in connection with a credit involuntary unemployment insurance policy, endorsement, or certificate issued in this Commonwealth, and no rate charged in connection with a credit property insurance policy, endorsement, or certificate issued in this Commonwealth, shall be used unless it has been filed with the Commission pursuant to the provisions of this chapter to be approved for use on or after April 1, 2001, April 1, 2003, and April 1, 2005, as set forth in subsection E of § 38.2-2003.

2000, c. 526.

A. When a filing has been made with the Commission, the Commission shall determine whether publication of notice of the filing is necessary. If the Commission determines that such publication is required, the notice shall be published in the form and for the time prescribed by the Commission, not to exceed once a week for four consecutive weeks, in a newspaper or newspapers of general circulation published in the Commonwealth.

B. Prior to publication or upon completion of publication, the Commission shall determine whether a hearing should be held before acting upon the filing. If the Commission determines that a hearing should be held, it shall order one to be held within a reasonable time, but not less than ten days after issuing the order setting the hearing. The Commission shall notify the person making the filing and any other person it deems interested in the filing of the hearing.

C. Upon determination that publication of notice of a filing is unnecessary, upon completion of any required publication when no hearing is ordered, or upon completion of a hearing, the Commission shall (i) approve the filing as submitted or with any modifications deemed appropriate by the Commission, or (ii) disapprove the filing. If a filing is approved with modifications, or is disapproved, the order of such approval or disapproval shall state the reasons for the decision.

Code 1950, §§ 38-209, 38-253.28, 38-253.74; 1952, c. 317, § 38.1-254; 1986, c. 562.

The Commission may investigate and determine, (i) upon its own motion, (ii) at the request of any citizen of this Commonwealth, or (iii) at the request of any insurer subject to this chapter, whether rates in this Commonwealth for the insurance to which this chapter applies are excessive, inadequate or unfairly discriminatory. In accordance with its findings, the Commission may order changes in the rates that are fair and equitable to all interested parties. In any investigation and determination, the Commission shall give due consideration to those factors specified in subsection B of § 38.2-2005.

Code 1950, §§ 38-212, 38-253.23, 38-253.69; 1952, c. 317, § 38.1-255; 1986, c. 562.

Repealed by Acts 1993, c. 985, effective January 1, 1994.

The Commission, by order, may suspend or modify the filing requirement of this chapter for any kind of insurance or subdivision or combination of insurance, or for classes of risks, where the rates for the insurance cannot practicably be filed before they are used. The order shall be made known to insurers and rate service organizations affected by it. The Commission may make any examination it deems advisable to determine whether any rates affected by the order meet the standards set out in subsection A of § 38.2-2005.

Code 1950, §§ 38-253.31, 38-253.77; 1952, c. 317, § 38.1-259; 1986, c. 562.

To promote uniform administration of rate regulatory laws, the Commission and each insurer and each rate service organization subject to this chapter may (i) exchange information and experience data with insurance supervisory officials, insurers, and rate service organizations in other states, and (ii) consult with them regarding rate making and the application of rating schedules and rating plans. Reasonable rules and plans may be promulgated by the Commission for the interchange of data necessary for the application of rating plans.

Code 1950, §§ 38-218, 38-253.37, 38-253.38, 38-253.83, 38-253.84; 1952, c. 317, § 38.1-260; 1986, c. 562.

A. The Commission may promulgate reasonable rules and statistical plans for each of the rating systems on file with it, which may be modified from time to time. These rules and plans shall be used by each insurer in the recording and reporting of its loss and countrywide expense experience, so that the experience of all insurers may be made available, at least annually, in the form and detail as may be necessary to aid the Commission in determining whether rating systems comply with the standards set forth in subsection A of § 38.2-2005. The rules and plans may also provide for the recording and reporting of expense experience items that are specially applicable to this Commonwealth and cannot be determined by prorating the countrywide expense experience.

B. In promulgating the rules and plans, the Commission shall give due consideration to (i) the rating systems on file with it and (ii) the rules and the form of the plans used for rating systems in other states so that the rules and plans may be as uniform as practicable among the several states. No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it or on its behalf.

C. The Commission may designate one or more rate service organizations or other agencies to assist it in gathering the experience data and making compilations of it. The compilations shall be made available, subject to reasonable rules promulgated by the Commission, to insurers and rate service organizations.

Code 1950, §§ 38-253.36, 38-253.82; 1952, c. 317, § 38.1-261; 1986, c. 562.

Subject to the Commission's approval, a rate in excess of that provided by an applicable filing may be used for a specific risk upon the filing of (i) written application of an insurer stating its reasons for the increased rate, accompanied by (ii) the written consent of the insured or prospective insured.

Code 1950, §§ 38-211, 38-253.32, 38-253.78; 1952, c. 317, § 38.1-262; 1986, c. 562.

No insurer shall make or issue an insurance policy or contract to which this chapter applies, except in accordance with the filings that are in effect for that insurer, or in accordance with an applicable provision in § 38.2-2010 or § 38.2-2013.

Code 1950, §§ 38-253.33, 38-253.79; 1950, p. 381; 1952, c. 317, § 38.1-263; 1986, c. 562; 1993, c. 985.

A. Agreements among insurers may be made for the equitable apportionment among them of insurance that may be afforded applicants who are in good faith entitled to insurance but who are unable to procure it through ordinary methods. Insurers may agree among themselves on the use of reasonable rate modifications for the insurance. The agreements and rate modifications shall be subject to the approval of the Commission.

B. The Commission may require that the agreements contain reasonable performance standards for insurers or agents, or both, with respect to insurance afforded such applicants. The performance standards may contain, but shall not be limited to: (i) original applications, (ii) premium payments, (iii) policy issuance, (iv) policy changes, (v) return premium, (vi) return commission and (vii) administrative procedures for monitoring compliance with the standards.

C. The Commission may approve policy forms and endorsements for use by such insurers with respect to insurance afforded such applicants.

D. All licensed insurers writing workers' compensation insurance in the Commonwealth shall participate in the Virginia Workers' Compensation Insurance Plan, which shall provide for the equitable apportionment among the participants of insurance that may be afforded applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods. Notwithstanding any other provision of law, insurers and rate service organizations participating in the Virginia Workers' Compensation Insurance Plan may, in connection with such participation, act in cooperation with each other in the making of rates, rating systems, policy forms, underwriting rules, surveys, inspections, investigations, the furnishing of statistical or other information on losses and expenses, or the conduct of research. The rates and supplementary rate information to be used by such plan shall be approved by the Commission. Such rates shall reflect residual market experience to the extent actuarially appropriate and shall be set so that the amount received in premiums, together with reasonable investment income earned on those premiums, is reasonably expected to be sufficient to pay claims and losses incurred and reasonable operating expenses of the servicing insurers.

Code 1950, § 38-250; 1952, c. 317, § 38.1-264; 1964, c. 596; 1966, c. 299; 1980, c. 112; 1986, c. 562; 1993, c. 985.

Each rate service organization and each insurer subject to this chapter that makes its own rates shall furnish to any insured affected by those rates, or to the authorized representative of the insured, all pertinent information regarding the rate within a reasonable time after receiving a written request for the information.

Code 1950, §§ 38-215, 38-251, 38-253.47; 1952, c. 317, § 38.1-266; 1986, c. 562.

No rate service organization subject to this chapter shall adopt any rule prohibiting or regulating the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.

Code 1950, §§ 38-253.12, 38-253.58; 1952, c. 317, § 38.1-267; 1986, c. 562.

Each rate service organization and each insurer subject to this chapter that makes its own rates shall provide within this Commonwealth reasonable means whereby any person aggrieved by the application of its rating system may, after written request, be heard in person or by an authorized representative to review the manner in which the rating system has been applied to the insurance afforded him. If the rate service organization or insurer fails to grant or reject the request within thirty days after it is made, the applicant may proceed in the same manner as if his application had been rejected. Any person affected by the action of the rate service organization or the insurer on such request may, within thirty days after written notice of the action, appeal to the Commission. The Commission may affirm or reverse the action after a hearing held upon not less than ten days' written notice to the applicant and to the rate service organization or insurer.

Code 1950, §§ 38-252, 38-253.48; 1952, c. 317, § 38.1-268; 1986, c. 562.

Cooperation among rate service organizations or among rate service organizations and insurers in rate making or in other matters within the scope of this chapter is authorized if the filings resulting from the cooperation are subject to all the provisions of this chapter that are applicable to filings generally. The Commission may review cooperative activities and practices. If, after providing notice and opportunity to be heard, it finds that any activity or practice is unfair, unreasonable or otherwise inconsistent with this chapter, it shall issue an order (i) specifying in what respects the activity or practice is unfair, unreasonable or otherwise inconsistent with this chapter, and (ii) requiring the discontinuance of the activity or practice.

Code 1950, §§ 38-253.13, 38-253.59; 1952, c. 317, § 38.1-269; 1986, c. 562.

Any rate service organization subject to this chapter may subscribe for or purchase actuarial, technical or other services if these services are available without discrimination to all members of and subscribers to the rate service organization.

Code 1950, §§ 38-204, 38-253.14, 38-253.61; 1952, c. 317, § 38.1-270; 1986, c. 562.

Any rate service organization subject to this chapter for the classes of insurance for which it files rates may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements or other evidences of insurance, or evidences of the cancellation of insurance, and may make reasonable rules governing their submission and the correction of any errors or omissions in them.

Code 1950, §§ 38-205, 38-253.15, 38-253.60; 1952, c. 317, § 38.1-271; 1986, c. 562.

For the purpose of this article, "advisory organization" means any group, association or other organization of insurers, located within or outside this Commonwealth, that assists insurers who make their own filings or rate service organizations in rate making, by the collection and furnishing of loss or expense statistics or by the submission of recommendations, but that does not make filings under this chapter for the kind of insurance involved.

Code 1950, §§ 38-218.1, 38-253.16, 38-253.63; 1952, c. 317, § 38.1-272; 1986, c. 562.

Each advisory organization shall file with the Commission:

1. A copy of its constitution, its articles of agreement or association or its certificate of incorporation, and of its bylaws, rules and regulations governing its activities;

2. A list of its members; and

3. The name and address of a resident of this Commonwealth upon whom may be served notices or orders of the Commission or process issued at its direction.

Code 1950, §§ 38-218.1, 38-253.17, 38-253.64; 1952, c. 317, § 38.1-273; 1986, c. 562.

If after a hearing the Commission finds that the furnishing of information or assistance by any advisory organization involves any act or practice that is unfair, unreasonable or otherwise inconsistent with this chapter, the Commission may issue a written order (i) specifying in what respects the act or practice is unfair, unreasonable or otherwise inconsistent with this chapter, and (ii) requiring the discontinuance of the act or practice.

Code 1950, §§ 38-218.1, 38-253.18, 38-253.65; 1952, c. 317, § 38.1-274; 1986, c. 562.

No insurer that makes its own filings nor any rate service organization shall support its filings by statistics or adopt rate making recommendations furnished to it by an advisory organization that has not complied with (i) the provisions of this article or (ii) any order of the Commission entered under § 38.2-2024, involving such statistics or recommendations. If the Commission finds any insurer or rate service organization to be in violation of this section it may issue an order requiring the discontinuance of the violation.

Code 1950, §§ 38-253.19, 38-253.66; 1952, c. 317, § 38.1-275; 1986, c. 562.

A. Any person aggrieved by an order or a decision of the Commission made under this chapter without a hearing may, within thirty days after notice of the order or decision, make a written request to the Commission for a hearing on the order or decision. Within a reasonable time after the request the Commission, after having given at least ten days' written notice of the time and place of hearing, shall hear the person aggrieved by the order or decision. Within a reasonable time after the hearing the Commission shall affirm, reverse or modify its previous action, specifying its reasons for the affirmation, reversal or modification.

B. Pending the hearing and decision on its previous action, the Commission may suspend or postpone the effective date of the order or decision to which the hearing relates.

Code 1950, §§ 38-218.11, 38-253, 38-253.49; 1952, c. 317, § 38.1-276; 1986, c. 562.

No person shall willfully withhold information from or knowingly give false or misleading information to (i) the Commission, (ii) any statistical agency designated by the Commission, (iii) any rate service organization or (iv) any insurer that will affect the rates or premiums subject to this chapter.

Code 1950, §§ 38-218.6, 38-253.41, 38-253.87; 1952, c. 317, § 38.1-277; 1986, c. 562.