STATE CORPORATION COMMISSION
Bureau of Insurance
July 1, 2016
Administrative Letter 2016-05
TO: All Companies Licensed to Write Fire and Fire in
Combination with Other Coverages Including Policies Providing Homeowners
Coverage, Coverage on Owner-Occupied Dwellings, and Coverage for Tenants; and
Interested Parties
RE: Mandatory Notices; Withdrawal of Administrative Letter
2015-05
This administrative letter compiles information provided in a
previous administrative letter about notices required by a number of statutes
when issuing certain property insurance policies and provides guidance as to
when and how such notices should be provided. This letter also reflects the
changes made to the statutes referenced below by Chapter 4 of 2016 Acts of the
Assembly (House Bill 307), which is effective January 1, 2017. Consequently,
the following administrative letter is hereby withdrawn: 2015-05.
The notices described in this letter are not subject to
approval by the Bureau of Insurance (Bureau), and should not be filed with the
Bureau. Unless otherwise specified in the statute, insurers have flexibility as
to the manner in which the notice is provided. For example, a stuffer may be
used at the time a policy is mailed to an insured, or the notice may be
prominently displayed on the application. However, the notice must not be
ambiguous or obscure and must be given no later than at the time the new or
renewal policy is delivered.1
Except as noted below, the policies to which the notice
requirements identified in this letter apply 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. The notice requirements addressed in this letter
do not apply to surplus lines policies or mutual assessment fire policies,
except that the notice required by Section 38.2-305 of the Code of
Virginia must be provided when issuing mutual assessment fire policies.
Important Information to Policyholders Notice
Subsection B of § 38.2-305
of the Code of Virginia requires that a specific
notice be provided with each new or renewal insurance
policy, contract, certificate, or evidence of coverage issued to a policyholder, covered person, or enrollee. This notice must read substantially the same as the notice in the Code. Examiners
frequently find that this notice is not
given when policies are
renewed or when a renewal
certificate is issued.
The insurer should ensure that this notice is being given when required. This notice applies to all classes
of insurance except those exempted in § 38.2-300
of the Code of Virginia,
and except as specifically
noted in subsection E of § 38.2-305 of the Code
of Virginia.
Replacement Cost Coverage
Section 38.2-2118 of the Code of
Virginia requires every insurer writing new or renewal insurance policies on
owner-occupied dwellings and appurtenant structures that have replacement cost
provisions to provide a notice with the policy (1) outlining the minimum
coverage requirement necessary to make the replacement cost provision fully
effective, and (2) the effect on a claim payment of not meeting the minimum
coverage requirement.
Functional Replacement Cost Coverage
Subsection C of § 38.2-2119 of the
Code of Virginia requires all insurers offering coverage on a functional
replacement cost basis to enclose with all new business policies a notice
printed in boldface type containing the following statement,
Important Notice
The coverage under this policy applies on a function
replacement cost basis which means that under certain conditions, claims may be
settled for less than the actual cash value of the property insured.
Coverage for Water that Backs Up Through Sewers and Drains
Section 38.2-2120 of the Code of
Virginia provides that any insurer who issues or delivers a homeowners
insurance policy (including a tenant's personal property policy) as defined in § 38.2-130 of the Code of
Virginia in the Commonwealth shall offer, as an option, coverage
insuring against loss caused or resulting from water which backs up through
sewers or drains. This offer must accompany all new and renewal policies.
Building Ordinance or Law Coverage
Section 38.2-2124 of the
Code of Virginia
requires any insurer that issues a policy of fire insurance, or fire insurance
in combination with other coverage, to provide a written offer of coverage for the repair or replacement of property in accordance with applicable ordinances or laws that regulate construction, repair, or demolition. This offer must accompany all new and renewal policies.
Flood Notice
Section 38.2-2125 of the Code of
Virginia requires any insurer that issues a policy of fire insurance
or fire insurance in combination with other coverage that excludes coverage for damage due to flood, surface water, waves, tidal water, or any other overflow
of
a body of water to provide written notice that explicitly states (1) that flood damage is excluded;
(2) that information about flood
insurance is available from the insurer, the insurance
agent, or the National Flood Insurance Program; and (3) that contents coverage is available on the flood policy for an additional
premium. This notice must
accompany all new and renewal
policies.
Insurance Credit Score Disclosure Notice
Any insurer issuing or delivering a homeowners or tenant policy that uses credit information contained in a consumer
report for underwriting, tier placement, or rating an applicant or insured shall disclose, on the insurance
application, at the time the application is taken, or at renewal if no previous notice has been given, the information required by § 38.2- 2126 A 1 of the
Code of Virginia.
Insurance Credit Score Adverse Action Notice
Subsection A 2 of § 38.2-2126
of the Code of Virginia
requires insurers that take adverse actions, based in whole or in part, upon credit information to provide
notice to applicants or insureds (on owner-occupied and tenant residential property policies) that the adverse action was based in whole or in part on credit. The notice must also provide
a statement of the primary factors or characteristics that were used as the basis for the adverse
action, or notify
the applicant or insured that he may request such information.
For the purposes
of § 38.2-2126
of the Code of Virginia,
an adverse action is defined as a denial,
nonrenewal or cancellation of, an increase in any charge for or refusal to apply a discount,
or placement in less favorable tier, or a reduction
or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with underwriting, tier placement, or rating. Adverse action includes, but is not limited to, circumstances where the applicant
or insured (i) did not receive
the insurer's most favorable
rate, (ii) was not placed in the insurer's
best tier, and (iii) when there are multiple insurers available within a group of insurers, the applicant
or insured did not receive coverage with the group's most favorably priced insurer. In the case of renewals,
the circumstances listed in (i), (ii), and (iii) are not adverse
actions if, due to the insured's
credit information, the insured
is not receiving a less favorable
rate, or placed in a less favorable
tier or company than during the policy period
immediately preceding the renewal policy.
Notice of Change in
Deductible
Section 38.2-2127 of the Code of Virginia
requires an insurer to provide a written notice whenever it unilaterally changes the deductible
on a policy written to insure an owner-occupied dwelling (homeowners and dwelling fire policies). The notice must (1) state that the deductible has changed and (2)
explain how the new deductible will be applied. The law prohibits the insurer
from changing the deductible except at renewal. Insurers should be aware that
the law is not limited to changes in the deductible because of the territory or
location of the property. For example, if the insurer unilaterally changes the
deductible because of the insured's loss history, the notice must be given.
NOTE: Deductibles may only be unilaterally changed
at renewal. Therefore, insurers are prohibited from changing
a deductible unilaterally during the policy term, including
the 90-day underwriting period once coverage is bound. Where the need arises
to make a change in a deductible during the underwriting period, insurers must cancel the policy and offer to write with a different deductible. However, insurers may make changes, such as increasing deductibles or increasing limits, during the underwriting period if the insured
agrees to such changes,
or if the application,
signed by the insured,
advises the
insured that the deductible
may
be changed.
Earthquake Notice
Section 38.2-2129 of the Code of Virginia
requires 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, "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. 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 law.
All insurers issuing
policies covering fire and fire in combination with other coverages including
policies providing homeowners coverage, coverage on owner-occupied dwellings,
and coverage for tenants should review this letter and make the changes
required by 2016 Acts of the Assembly c. 558 (House Bill 307) by the effective
date of the legislation, January 1, 2017.
Questions about this
administrative letter should be directed to Bureau of Insurance Manager, P&C
Market Conduct Section, telephone (804)
371-9826, or email bureauofinsurance@scc.virginia.gov.
_________________________________
1Additional information may be found in the Common
Problems Found During Examinations Identified by the Property and Casualty
Market Conduct and Consumer Services Sections that is located at http://scc.virginia.gov/boi/laws.aspx.
/s/ Jacqueline K. Cunningham
Commissioner of Insurance
July 1, 2016
Administrative Letter 2016-06
TO: All Insurers Licensed to Write Motor Vehicle Policies and
Interested Parties
RE: Mandatory Notices; Withdrawal of Administrative Letter
2015-06
This administrative letter compiles information provided in a
previous administrative letter about notices required by a number of statutes
when issuing motor vehicle insurance policies and provides guidance as to when
and how such notices should be provided. This letter also reflects the changes
made to the statutes referenced below by Chapter 558 of the 2016 Acts of the
Assembly (House Bill 307), which is effective January 1, 2017. Consequently,
the following administrative letter is hereby withdrawn: 2015-06.
The notices described in this letter are not subject to
approval by the Bureau of Insurance, and should not be filed with the Bureau.
Unless otherwise specified in the statute, insurers have flexibility as to the
manner in which the notice is provided. For example, when the statute requires
a notice to be given on a new policy, a stuffer may be used at the time a
policy is mailed to an insured, or the notice may be prominently displayed on
the application. However, the notice must not be ambiguous or obscure and must
be given not later than when the new policy is delivered.1
Important Information to Policyholders Notice
Subsection B of § 38.2-305 of the Code
of Virginia requires that a specific notice be provided with each new or
renewal insurance policy, contract, certificate, or evidence of coverage issued
to a policyholder, covered person, or enrollee. This notice must read
substantially the same as the notice in the Code. Examiners frequently find that
this notice is not given when policies are renewed or when a renewal
certificate is issued. Insurers should ensure that this notice is given when
required. This notice applies to all classes of insurance except those exempted
in § 38.2-305 of the Code of
Virginia, and except as specifically noted in subsection E of § 38.2-305 of the Code
of Virginia.
Point Surcharge Notice
Subsection A of § 38.2-1905 of the Code of
Virginia requires insurers to provide notice in writing to a named
insured anytime the insurer increases the premium or charges points as a result
of a motor vehicle accident. Furthermore, such notice shall inform the named
insured that he may appeal the decision of the insurer to the Commissioner if
he believes the action of the insurer is without just cause. In addition, the
notice shall include the requirement that the appeal be in writing and made
within 60 days of the receipt of the notice of any premium increase adjustment
or any point charge resulting from a motor vehicle accident.
Offer of Medical Expense and Income Loss Coverages
Section 38.2-2202 A of the
Code of Virginia requires insurers issuing new policies in Virginia insuring
the ownership, maintenance, or use of a motor vehicle offer at least $2000 in
coverage for medical expense benefits and at least $100 per week in income loss
benefits. This section requires that insurers include the IMPORTANT NOTICE
provided in the statute with the policy. This notice is not required be
provided on renewal policies. The notice must be in boldface type and read
exactly as stated in the statute. However,
insurers are not precluded from offering
of both higher and lower limits.
Notice that UM/UIM Limits May Be Reduced
Subsection B of § 38.2-2202 of the Code
of Virginia requires insurers issuing new policies covering the ownership,
maintenance, or use of a motor vehicles to provide notice that the named
insured may reduce his uninsured/underinsured motorist limits to limits less
than the liability limits on the policy. The notice must be in boldface type
and read exactly as stated in the statute. Once any named insured has reduced
the limits on the uninsured/underinsured motorists coverage below those on the
liability coverage, the election is binding on all insureds.
Warning Concerning Cancellation of Motor Vehicle Liability
Policy
Section 38.2-2210 of the Code of
Virginia requires that a specific notice be printed in boldface type on or
attached to an application for motor vehicle insurance as defined in § 38.2-2212 of the Code of
Virginia. The Bureau frequently finds that this notice is not provided on or
with the application. Insurers should review their applications to ensure
compliance with all of the requirements of this section of the Code. The notice
required by this section shall be given to an applicant within 10 days of the
date of the application in the event the applicant is not provided a written copy
of the application and the coverage has been bound by the insurer.
Insurance Credit Score Disclosure Notice
Any insurer issuing or delivering
a policy of motor vehicle
insurance, as defined in § 38.2-2212, that uses credit information contained
in a consumer report for
underwriting, tier placement, or rating an applicant or insured shall disclose, on
the insurance application, at the time the application is taken, or at renewal if no previous notice has been given, the information
required by Subdivision A 1 of § 38.2-2234 of the Code of Virginia.
Insurance Credit Score Adverse Action Notice
Subdivision A 2 of § 38.2-2234 of the
Code of Virginia requires insurers that take adverse actions, based in whole or
in part, upon credit information to provide notice to applicants or insureds on
policies of motor vehicle insurance, as
defined in § 38.2-2212 of the Code of Virginia that the adverse
action was based in whole or in part on credit. The notice must either provide
a statement of the primary factors or characteristics that were used as the
basis for the adverse action, or notify the applicant or insured that he may
request such information. For the purposes of § 38.2-2234 of the Code of
Virginia, an adverse action is defined as a denial, nonrenewal or cancellation
of, an increase in any charge for or refusal to apply a discount, or placement
in a less favorable tier, or a reduction or other adverse or unfavorable change
in the terms of coverage or amount of, any insurance, existing or applied for,
in connection with underwriting, tier placement, or rating. Adverse action
includes, but is not limited to, circumstances where the applicant or insured
(i) did not receive the insurer's most favorable rate, (ii) was not placed in
the insurer's best tier, and (iii) when there are multiple insurers available
within a group of insurers, the applicant or insured did not receive coverage
with the group's most favorably priced insurer. In the case of renewals, the
circumstances listed in (i), (ii), and (iii) are not adverse actions if, due to
the insured's credit information, the insured is not receiving a less favorable
rate, or placed in a less favorable tier or company than during the policy
period immediately preceding the renewal policy.
Offer of Rental Reimbursement Coverage
Section 38.2-2230 of the Code of
Virginia requires that every insurer issuing a new or renewal policy of motor
vehicle insurance, as defined in § 38.2-2212 of
the Code of Virginia, which provides comprehensive or collision coverage, must
offer, in writing, to the named insured the option of purchasing rental
reimbursement coverage. This notice must be given by insurers writing motor
vehicle policies insuring as the named insured one individual or a husband and
wife who are residents of the same household where the vehicle is a private
passenger type vehicle. Commercial policies endorsed to provide coverage for
individuals must also provide this notice if the vehicle is a private passenger
type vehicle.
All insurers issuing motor vehicle insurance policies should
review this letter and make the changes required by 2016 Acts of the Assembly
c. 558 (House Bill 307) by the effective date of the legislation, January 1,
2017.
Questions about this administrative letter should be directed
to Bureau of Insurance Manager, P&C Market Conduct, telephone (804)
371-9826, or email bureauofInsurance@scc.virginia.gov.
____________________________
1Additional information may be found in the Common
Problems Found During Examinations Identified by the Property and Casualty
Market Conduct and Consumer Services Sections that is located at http://scc.virginia.gov/boi/laws.aspx.
/s/ Jacqueline K. Cunningham
Commissioner of Insurance
July 1, 2016
Administrative Letter 2016-07
TO: All Companies Licensed, Approved, Registered or Accredited
under Title 38.2 of the Code of Virginia
RE: Implementation of Principle-Based Reserving for Life,
Annuity, and Accident and Health Contracts pursuant to Article 10 of Chapter 13
of the Code of Virginia
During the 2014 General Assembly Session, the Virginia General
Assembly enacted House Bill 631, which added a new Article 10 to Chapter 13 of
Title 38.2 (Standard Valuation Act) of the Code of Virginia. House Bill 631
required insurance companies to use a principle-based reserve basis for life,
annuity, and accident and health contracts, and to use a Valuation Manual
adopted by the National Association of Insurance Commissioners (NAIC). Pursuant
to Virginia Code § 38.2-1379, use of the Valuation Manual will become
effective on January 1 of the first calendar year following the first July 1
when certain conditions have been met, including that at least 42 states/U.S.
jurisdictions have enacted the revised NAIC Standard Valuation Law model, or
substantially similar terms and provisions, and that the NAIC has adopted the
Valuation Manual. The Bureau of Insurance has determined that these conditions
have been met.
In light of the above, the provisions in Virginia Code
§§ 38.2-1379 and 38.2-1380 pertaining to principle-based reserving and use
of the Valuation Manual shall become effective for life, annuity, and accident
and health contracts issued on or after January 1, 2017.
Questions concerning this administrative letter may be
addressed to Gregory D. Walker, Supervisor, Financial Analysis Section -
Domestic Companies, Financial Regulation Division, Bureau of Insurance, State
Corporation Commission, P.O. Box 1157, Richmond, VA 23218, telephone (804)
371-9604, or email greg.walker@scc.virginia.gov.
/s/ Jacqueline K. Cunningham
Commissioner of Insurance
DEPARTMENT OF MEDICAL ASSISTANCE SERVICES
Public Comments on Addiction Treatment
Services Benefit Delivery System Design
The Department of Medical Assistance Services (DMAS) is seeking
public comment in relation to future DMAS initiatives to improve Medicaid
service benefits and delivery systems for individuals with substance use
disorders (SUD), including ensuring that a sufficient continuum of care is
available to effectively treat the physical, behavioral, and mental dimensions
of SUD. DMAS welcomes public comment on the entire addiction treatment services
benefit delivery system design.
For more information regarding the substance use disorder
benefit, please visit
http://www.dmas.virginia.gov
/Content_pgs/bh-sud.aspx.
Public comment submission by mail: Written comments shall be
addressed to Ashley Harrell, Policy and Planning Specialist, Division of
Integrated Care and Behavioral Services, Department of Medical Assistance
Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219.
Public comment submission electronically: For ease in
compilation of comments, all submissions must be in Microsoft Word and
submitted as an email attachment to sud@dmas.virginia.gov.
Important Date: To submit public comments, please send comments
to sud@dmas.virginia.gov by 5 p.m. on August 1, 2016. There will be
additional opportunities for public comment. The department will also continue
its longstanding practice of meeting regularly with stakeholder groups,
providing information, and gathering additional input on the important features
of SUD programs.
Contact Information: Emily McClellan, Regulatory
Manager, Division of Policy and Research, 600 East Broad Street, Suite 1300,
Richmond, VA 23219, telephone (804) 371-4300, FAX (804) 786-1680, TDD (800) 343-0634,
or email emily.mcclellan@dmas.virginia.gov.
STATE WATER CONTROL BOARD AND THE DEPARTMENT OF CONSERVATION
AND RECREATION
Total Maximum Daily Load
Implementation Plan for the Little Calfpasture River
The Department of Environmental Quality (DEQ) and the
Department of Conservation and Recreation (DCR) seek written and oral comments
from interested persons on the development of a total maximum daily load (TMDL)
implementation plan (IP) for the Little Calfpasture River in Rockbridge County.
The Little Calfpasture River was listed on the 1996 § 303(d) TMDL Priority
List and Report as impaired due to violations of the state's general (benthic)
standard for aquatic life. This impairment extends for 0.82 miles from the Lake
Merriweather Dam to the confluence with the Maury River.
Section 303(d) of the Clean Water Act and § 62.1-44.19:7 C
of the Code of Virginia require DEQ to develop TMDLs for pollutants responsible
for each impaired water contained in Virginia's § 303(d) TMDL Priority
List and Report. In addition, § 62.1-44.19:7 C of the Code of Virginia
requires expeditious implementation of total maximum daily loads when
appropriate. The IP should provide measurable goals and the date of expected
achievement of water quality objectives. The IP should also include the
corrective actions needed and their associated costs, benefits, and
environmental impacts. DEQ completed a benthic TMDL for the Little Calfpasture
River in January 2009. The TMDL was approved by the Environmental Protection
Agency in April 2010. The TMDL report is available on the DEQ website at http://www.deq.virginia.gov/Programs/Water/WaterQualityInformationTMDLs/TMDL/TMDLDevelopment/ApprovedTMDLReports.aspx.
The Virginia Department of Environmental Quality will host a
public meeting to initiate the development of a TMDL implementation plan for
the Little Calfpasture River on Tuesday, August 2, 2016, at 7 p.m. at the
Goshen Volunteer Fire Hall, 140 Main Street, Goshen VA.
A 30-day public comment period for the meeting begins August 3,
2016, and ends September 1, 2016. Written comments should include the name,
address, and telephone number of the person submitting the comments and should
be sent to Nesha McRae, Department of Environmental Quality, P.O. Box 3000,
Harrisonburg, VA 22801, telephone (540) 574-7850, or email
nesha.mcrae@deq.virginia.gov.
VIRGINIA CODE COMMISSION
Notice to State Agencies
Contact Information: Mailing Address: Virginia
Code Commission, General Assembly Building, 201 North 9th Street, 2nd
Floor, Richmond, VA 23219; Telephone: Voice (804) 786-3591; 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/connect/commonwealth-calendar.
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/documents/cumultab.pdf.
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 GENERAL SERVICES
Title of Regulation: 1VAC30-45. Certification for Noncommercial
Environmental Laboratories.
Publication: 32:22 VA.R.
2754-2805 June 27, 2016
Correction to Final
Regulation:
Page 2785, 1VAC30-45-760 A 1, line 6 after "1VAC30-45-775,"
delete "1VAC30-45-791 through 1VAC30-45-798, and 1VAC30-45-811"
and insert "[ 1VAC30-45-791 1VAC30-45-790 ]
through 1VAC30-45-798, and [ 1VAC30-45-811
1VAC30-45-810 through 1VAC30-45-818 ]"
Page 2785, 1VAC30-45-760 B 1 b, line 2, after "analyte"
insert "or analytes"
Page 2793, 1VAC30-45-791 B 1, line 3, after "organism"
insert "or organisms"
Page 2793, 1VAC30-45-791 B 1, line 4, after "organism"
insert "or organisms"
VA.R. Doc. No. R12-3334; Filed July 4, 2016, 11:31 a.m.