STATE CORPORATION COMMISSION

Bureau of Insurance

May 10, 2012

Administrative Letter 2012-05

To: All Insurers and Other Interested Parties

Re: Legislation Enacted by the 2012 Virginia General Assembly

We have attached for your reference summaries of certain statutes enacted or amended and re-enacted during the 2012 Session of the Virginia General Assembly. The effective date of these statutes is July 1, 2012, except as otherwise indicated in this letter. Each organization to which this letter is being sent should review the summaries carefully and see that notice of these laws is directed to the proper persons, including appointed representatives, to ensure that appropriate action is taken to effect compliance with these new legal requirements. Copies of individual bills may be obtained at http://lis.virginia.gov/lis.htm or via the links we have provided in the summary headings. You may enter the bill number (not the chapter number) on the Virginia General Assembly Home Page, and you will be linked to the Legislative Information System. You may also link from the Legislative Information System to any existing section of the Code of Virginia. All statutory references made in the letter are to Title 38.2 (Insurance) of the Code of Virginia unless otherwise noted. All references to the Commission refer to the State Corporation Commission. The federal Patient Protection and Affordable Care Act is referred to as PPACA.

Please note that this document is a summary of legislation. It is neither a legal review and interpretation nor a full description of the legislative amendments affecting insurance-related laws during the 2012 Session. Each person or organization is responsible for review of relevant statutes.

/s/ Jacqueline K. Cunningham
Commissioner of Insurance

Chapter 3 (House Bill 1106) - Effective 2/7/2012

The bill amends § 54.1-2900 in the Professions & Occupations title to provide the Board of Medicine the authority to license behavior analysts and assistant behavior analysts and to promulgate emergency regulations within 280 days of the enactment of this legislation [refer to Chapter 876 of the 2011 Virginia Acts of Assembly (House Bill 2467) for more information concerning mandated coverage for autism spectrum disorder and associated treatments, including applied behavioral analysis].

Chapter 156 (Senate Bill 120)

The bill amends § 38.2-4123 (Fraternal Benefit Societies) to make the requirements of the Risk-Based Capital Act (§§ 38.2-5500 et seq.) applicable to fraternal benefits societies. Several amendments are also made to the Risk-Based Capital Act to make trend test requirements consistent among life & health insurers, property & casualty insurers, and health organizations.

Chapter 208 (Senate Bill 266) and Chapter 303 (House Bill 735)

The bill amends Chapter 49 (Continuing Care Provider Registration and Disclosure) to require providers of community-based continuing care (CBCC) to be registered with the Commission as a continuing care provider and to file a statement with the Commission regarding its CBCC program.

Chapter 235 (House Bill 523) and Chapter 346 (Senate Bill 369) Effective 1/01/2013

The bill adds a section to Chapter 21 (Fire Insurance Policies) to require insurers issuing new or renewal policies of fire insurance, or fire insurance in combination with other insurance coverages, which exclude coverage for damage caused by earthquake, to provide a written notice that explicitly states that "earthquake coverage is excluded unless purchased by endorsement." This notice must state that information regarding such coverage is available from the insurer or the agent if earthquake coverage is otherwise available from the insurer.

Chapter 264 (House Bill 127) - Effective 10/01/2012

The bill amends § 8.2-305 (Insurance Policy Provisions) to require property and casualty insurers to include on each declarations page a list of all policy forms and endorsements, including the form numbers and edition dates, that are applicable to the policy. Insurers that use unique identifier numbers for each form and do not use edition dates are only required to place the unique number on the declarations page.

Chapter 273 (House Bill 867) and Chapter 277 (Senate Bill 47)

The bill amends § 38.2-515 and adds a new section to the Unfair Trade Practices chapter (§§ 38.2-500 et seq.) to govern the use of certificates of insurance (COI) in the Commonwealth. The bill prohibits any person from issuing or delivering any COI that attempts to confer any rights upon a third party beyond what the referenced policy of insurance expressly provides. It also prohibits any person from knowingly demanding or requiring the issuance of a COI from an insurer, insurance producer or policyholder, or knowingly preparing or issuing a COI that contains any false or misleading information concerning the policy of insurance referenced in the COI.

Chapter 293 (House Bill 133)

The bill amends § 38.2-325 (Insurance Policy Provisions) to permit property and casualty insurers to post policy forms and endorsements that do not contain personally identifiable information on their public websites, in lieu of any other method of delivery.

Chapter 294 (House Bill 209) - Effective 1/01/2013

The bill amends and reenacts the Continuing Education (CE) article of the Insurance Agents chapter (Article 7 of Chapter 18, §§ 38.2-1866 et seq.) of this title relating to CE requirements for insurance agents. The bill provides a process by which an agent may correct errors and effect compliance with CE requirements; impacts credit hour requirements; eliminates certain monetary penalties; and changes the deadline for completing CE courses. The bill also eliminates certain requirements for a status report to agents and shortens the time for appeals to the Insurance Continuing Education Board.

Chapter 371 (House Bill 1202) and Chapter 561 (Senate Bill 140)

The bill adds a section to the Fire Insurance Policies chapter (§§ 38.2-2100 et seq.) to require insurers writing fire policies, or fire policies in combination with other coverages, to provide coverage of at least $250 for the cost of services provided by volunteer fire departments, which are not fully funded by real estate taxes or other property taxes.

Chapter 413 (House Bill 313)

The bill amends and reenacts § 38.2-1815 (Insurance Agents) to add language requiring the Commission to review annually the results of the life and annuities licensing examinations and revise the content of the examinations to further the goal of achieving a pass rate in accordance with the 2011 NAIC State Licensing Handbook or any successor publication adopted by the NAIC. The Commission shall also report to the General Assembly on its findings and any related changes it has implemented regarding the life and annuities licensing examination.

Chapter 447 (House Bill 871)

The bill amends and reenacts § 38.2-1800 (Insurance Agents) to change the definition of "limited burial insurance authority" from the authority to sell, solicit, or negotiate burial insurance society memberships to burial insurance society memberships or group insurance certificates where the memberships or certificates are used solely to fund preneed funeral contracts. The bill also removes the $10,000 cap on burial insurance society memberships or group life insurance certificates that are used solely to fund preneed funeral contracts.

Chapter 476 (Senate Bill 387) and Chapter 507 (House Bill 552)

The bill revises a number of sections in various titles, including §§ 38.2-3323 (Life Insurance Policies) and 38.2-3409 (Accident and Sickness Insurance Provisions) in this title, to replace the term "mental retardation" with the term "intellectual disability" when referring to a child's inability to maintain self-sustaining employment.

Chapter 539 (House Bill 1139) - Effective 1/01/2013

The bill amends the Reinsurance Article of the Reports, Reserves and Examinations chapter (Article 3.1 of Chapter 13, §§ 38.2-1316.1 et seq.) setting forth the requirements for certified reinsurers; assignment of ratings; reduction in collateral; qualified jurisdictions; management of concentration risk; and diversification of reinsurance programs. These requirements will become effective six months after the effective date of the legislation (1/01/2013).

Chapter 584 (Senate Bill 532)

The bill amends and reenacts provisions of the Assessment for Administration of Insurance Laws chapter (§§ 38.2-400 et seq.) to revise the provisions for collecting the assessment on insurers for the maintenance of the Bureau of Insurance. New language provides for a penalty of $50 for each day the annual maintenance assessment report is filed past its due date.

Chapter 589 (Senate Bill 591)

The bill amends § 38.2-3420 (Accident and Sickness Insurance Provisions) to increase the number of Virginia residents who may be covered employees of a bank-sponsored multiple employer welfare arrangement (MEWA) from 50 to 500, and adds a new subdivision to require that the bank-sponsored MEWA be subject to solvency examination authority and reserve adequacy requirements in its domiciliary contiguous state.

Chapter 634 (House Bill 1273) and Chapter 641 (Senate Bill 450)

The bill adds a new section to the General Provisions Article in the Accident and Sickness Insurance Provisions chapter (Article 1 of Chapter 34 §§ 38.2-3400 et seq.) and also amends §§ 38.2-4214 (Health Services Plans) and 38.2-4319 (Health Maintenance Organizations) to make the new provision applicable to health services plans and HMOs. The bill requires a policy, contract, or plan, or certificate or evidence of coverage, which includes coverage for cancer chemotherapy drugs administered orally and intravenously or by injection, to provide that the criteria for establishing cost sharing applicable to orally administered cancer chemotherapy drugs and cancer chemotherapy drugs administered intravenously or by injection is consistently applied within the same plan.

Chapter 673 (Senate Bill 646)

The bill amends § 38.2-102 (General Provisions) to revise part of the definition of life insurance to include additional benefits incidental to a loss in the event of death, dismemberment or loss by accident or accidental means.

Chapter 734 (House Bill 872) and Chapter 735 (Senate Bill 520) – Effective 1/01/2013

The bill adds a new article to the Insurance Agents chapter (§§ 38.2-1800 et seq.), which provides for the licensing and regulation of public adjusters by the State Corporation Commission. Public adjusting is defined as investigating, negotiating, adjusting or providing advice to an insured in relation to first party claims arising under insurance contracts that insure real or personal property of an insured for the purpose of effecting the settlement of a claim on behalf of the insured. In addition to standards of conduct, the provisions address the fees that public adjusters may charge as well as the provisions which must be contained in a public adjuster's written contract with the insured.

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June 1, 2012

Administrative Letter 2012-06

To: All Property and Casualty Insurers and Other Interested Parties

Re: Legislation Enacted by the 2012 Virginia General Assembly – Clarification of House Bill 523 (and companion Senate Bill 369), House Bill 127, and House Bill 1202 (and companion Senate Bill 140)

The Bureau is issuing this administrative letter as further explanation of House Bill 523 (and companion Senate Bill 369), House Bill 127 and House Bill 1202, (and companion Senate Bill 140) as summarized in Administrative Letter 2012-05. Please see the bolded language below for additional clarification.

Chapter 235 (House Bill 523) and Chapter 346 (Senate Bill 369) – Effective January 1, 2013

These bills add a section to Chapter 21 (Fire Insurance Policies) to require insurers issuing new or renewal policies of fire insurance, or fire insurance in combination with other insurance coverages, which exclude coverage for damage caused by earthquake, to provide a written notice that explicitly states that "earthquake coverage is excluded unless purchased by endorsement."  This notice must state that information regarding such coverage is available from the insurer or the agent if earthquake coverage is otherwise available from the insurer. 

The policies to which the law applies include all fire policies and fire policies in combination with other coverages, including but not limited to mobile home policies, dwelling fire policies, homeowners policies, renters policies, commercial fire policies, commercial package policies providing fire coverage, and master policies providing mortgage force-placed fire coverage that are issued in Virginia. This provision does not apply to surplus lines policies nor does it apply to mutual assessment fire policies.

Insurers may use notices that unambiguously set forth the information required by the law even if the language of the notice is not in the precise language that is quoted in the new section. 

Chapter 264 (House Bill 127) – Effective October 1, 2012

This bill amends § 38.2-305 (Insurance Policy Provisions) to require property and casualty insurers to include on each declarations page a list of all policy forms and endorsements, including the form numbers and edition dates, that are applicable to the policy.  Insurers that use unique identifier numbers for each form and do not use edition dates are only required to place the unique number on the declarations page. 

One example of a unique identifier would be a number with a suffix that changes with each revision (for example, 54231.1 for the first edition and 54231.2 for the second edition).

The bill does not require insurers to list the name of the form nor does it require insurers to list notices or other pieces of correspondence that they send to their policyholders. 

Chapter 371 (House Bill 1202) and Chapter 561 (Senate Bill 140)

These bills add a section to the Fire Insurance Policies chapter (§§ 38.2-2100 et seq.) to require insurers writing fire policies, or fire policies in combination with other coverages, to provide coverage of at least $250 for the cost of services provided by volunteer fire departments, which are not fully funded by real estate taxes or other property taxes. 

The policies to which the law applies include all fire policies and fire policies in combination with other coverages, including but not limited to mobile home policies, dwelling fire policies, homeowners policies, renters policies, commercial fire policies, commercial package policies providing fire coverage, and master policies providing mortgage force-placed fire coverage that are issued in Virginia. This provision does not apply to surplus lines policies nor does it apply to mutual assessment fire policies.

This provision applies to policies issued or renewed on or after July 1, 2012.

Any questions regarding this administrative letter may be referred to: Rebecca Nichols, Principal Insurance Examiner, Bureau of Insurance, State Corporation Commission, rebecca.nichols@scc.virginia.gov, telephone (804) 371-9331.

/s/ Jacqueline K. Cunningham
Commissioner of Insurance

DEPARTMENT OF ENVIRONMENTAL QUALITY

Total Maximum Daily Load Study for James River, Stonewall Creek, Walkers Ford Creek, Wreck Island Creek, Phelps Branch, North Creek, and Bent Creek in Appomattox County and Buffalo River, Long Branch, Mill Creek, Buffalo River, Rutledge Creek, and Turner Creek in Amherst County

The Virginia Department of Environmental Quality (DEQ) will host a public meeting on a water quality study for the Amherst County streams on Monday, June 25, 2012. The meeting will start at 6 p.m. in the Central Virginia Community College Amherst Center located at 200 Richmond Highway, Suite 103, Amherst VA 24521. The purpose of the meeting is to provide information and discuss the study with interested local community members and local government.

DEQ will host a public meeting on a water quality study for the Appomattox County streams on Thursday, June 28, 2012. The meeting will start at 6 p.m. in the J. Robert Jamerson Memorial Library in Appomattox County located at 157 Main Street, Appomattox VA 24522. The purpose of the meeting is to provide information and discuss the study with interested local community members and local government.

James River (VAC-H05R_JMS01A00and VAC-H08R_JMS01A00) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Stonewall Creek (VAC-H05R_STW01A08) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Walkers Ford Creek (VAC-H-5R_WKF01A10) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Wreck Island Creek (VAC-H06R_WIC01A00) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Phelps Branch (VAC-H06R_PLP01A08) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the aquatic life use. The impairment is based on benthic macroinvertebrate bioassessments.

North Creek (VAC-H06R_NOT01A10) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Bent Creek (VAC-H07R_BTC01A00) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Buffalo River (VAC-H11R_BUF01A00, VAC-H11R_BUF02A00, and VAC-H11R_BUF03A00) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the Primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Long Branch (VAC-H11R_LOB02A04) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the aquatic life use. The impairment is based on benthic macroinvertebrate bioassessments.

Mill Creek (VAC-H11R_MIN01A08) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Buffalo River (VAC-H11R_BUF04A08) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the aquatic life use. The impairment is based on benthic macroinvertebrate bioassessments.

Rutledge Creek (VAC-H12R_RTD01A00) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Rutledge Creek (VAC-H12R_RTD01A00) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the Aquatic Life Use. The impairment is based on benthic macroinvertebrate bioassessments.

Turner Creek (VAC-H12R_THR01A08) was identified in Virginia's Water Quality Assessment Integrated Report as impaired for not supporting the primary contact use. The impairment is based on water quality monitoring data reports of sufficient exceedances of Virginia's water quality standard for bacteria.

Section 303(d) of the Clean Water Act and § 62.1-44.19:7 C of the Code of Virginia require DEQ to develop total maximum daily loads (TMDLs) for pollutants responsible for each impaired water contained in Virginia's 303(d) TMDL Priority List and Report and subsequent Water Quality Assessment Reports.

During the study, DEQ will develop a TMDL for the impaired water. A TMDL is the total amount of a pollutant a water body can contain and still meet water quality standards. To restore water quality, pollutant levels have to be reduced to the TMDL amount.

The public comment period on materials presented at the Amherst County meeting will extend from June 25, 2012, to July 25, 2012. For additional information or to submit comments, contact Paula Nash in the Virginia Department of Environmental Quality, Blue Ridge Regional Office, 7705 Timberlake Road, Lynchburg, VA 24502, by telephone (434) 582-6216, or by email paula.nash@deq.viginia.gov.

The public comment period on materials presented at the Appomattox County meeting will extend from June 25, 2012, to July 30, 2012. For additional information or to submit comments, contact Paula Nash in the Virginia Department of Environmental Quality, Blue Ridge Regional Office, 7705 Timberlake Road, Lynchburg, VA 24502, by telephone (434) 582-6216, or by email paula.nash@deq.viginia.gov.

Additional information is also available on the DEQ website at http://www.deq.virginia.gov/Programs/Water/WaterQualityInformationTMDLs/TMDL/TMDLDevelopment/DocumentationforSelectTMDLs.aspx.

STATE LOTTERY DEPARTMENT

Director's Order

The following Director's Order of the State Lottery Department was filed with the Virginia Registrar of Regulations on May 23, 2012. The order may be viewed at the State Lottery Department, 900 East Main Street, Richmond, VA or at the office of the Registrar of Regulations, 910 Capitol Street, 2nd Floor, Richmond, VA.

Director's Order Number Fifty-Six (12)

Virginia Lottery's "Summer Grill-Off Contest" Final Rules for Game Operation (effective May 22, 2012)

STATE WATER CONTROL BOARD

Proposed Consent Order for New Market Poultry, L.L.C.

An enforcement action has been proposed for New Market Poultry, L.L.C. for violations in Shenandoah County. A proposed consent order describes a settlement to resolve unauthorized discharge violations from the New Market Poultry facility. A description of the proposed action is available at the Department of Environmental Quality office named below or online at www.deq.virginia.gov. Steven W. Hetrick will accept comments by email at steven.hetrick@deq.virginia.gov, FAX (540) 574-7878) or postal mail at Department of Environmental Quality, Valley Regional Office, P.O. Box 3000, 4411 Early Road, Harrisonburg, VA 22801, from June 18, 2012, to July 18, 2012.

VIRGINIA CODE COMMISSION

Notice to State Agencies

Contact Information: Mailing Address: Virginia Code Commission, 910 Capitol Street, General Assembly Building, 2nd Floor, Richmond, VA 23219; Telephone: Voice (804) 786-3591; FAX (804) 692-0625; Email: varegs@dls.virginia.gov.

Meeting Notices: Section 2.2-3707 C of the Code of Virginia requires state agencies to post meeting notices on their websites and on the Commonwealth Calendar at http://www.virginia.gov/cmsportal3/cgi-bin/calendar.cgi.

Cumulative Table of Virginia Administrative Code Sections Adopted, Amended, or Repealed: A table listing regulation sections that have been amended, added, or repealed in the Virginia Register of Regulations since the regulations were originally published or last supplemented in the print version of the Virginia Administrative Code is available at http://register.dls.virginia.gov/cumultab.htm.

Filing Material for Publication in the Virginia Register of Regulations: Agencies use the Regulation Information System (RIS) to file regulations and related items for publication in the Virginia Register of Regulations. The Registrar's office works closely with the Department of Planning and Budget (DPB) to coordinate the system with the Virginia Regulatory Town Hall. RIS and Town Hall complement and enhance one another by sharing pertinent regulatory information.

ERRATA

DEPARTMENT OF MINES, MINERALS AND ENERGY

Title of Regulation: 4VAC25-145. Regulations on the Eligibility of Certain Mining Operators to Perform Reclamation Projects.

Publication: 28:20 VA.R. 1573-1575 June 4, 2012.

Correction to Final Regulation:

Page 1573, Title of Regulation, delete "through" and replace with ", 4VAC25-145-20, and"

Page 1575, remove 4VAC25-145-30 in its entirety.

VA.R. Doc. No. R12-2927; Filed May 30, 2012, 2:00 p.m.