Virginia reminds insurers of obligations when terminating agents or licensees
The Commonwealth of Virginia’s Bureau of Insurance recently distributed a bulletin to request that insurers review their appointment terminations to determine whether any were improperly terminated for cause.
Specifically, the bulletin reminded insurers of the following:
"Pursuant to § 38.2-1834.1 of the Code, an insurer or authorized representative of an insurer that terminates an agent or licensee's appointment "for cause" must notify the Bureau of Insurance ("Bureau") within thirty calendar days following the effective date of the termination if the reason for termination is one of the reportable reasons set forth in § 38.2-1831 of the Code, or if the insurer has knowledge the agent was found by a court, government body, or legally authorized self-regulatory organization authorized by law to have engaged in any of the activities in §§ 38.2-1356, 38.2-1363, 38.2-1831 or 38.2-1843 of the Code.
"In addition, § 38.2-1834.1 requires, among other things, that: (i) such termination for cause be certified in writing by an officer or authorized representative of the insurer or agent terminating the relationship; (ii) the insurer send a letter to the Bureau documenting the reason for the termination; and (iii) upon written request of the Bureau, the insurer provide additional information, documents, records or other data pertaining to the termination or activity of the agent or other licensee."
The bulletin was distributed after the Bureau learned that a number of appointments had been terminated “for cause” when in fact the reason for termination was not a reportable reason under the Commonwealth’s code.
A full copy of the bulletin can be found here.
Source: Commonwealth of Virginia Bureau of Insurance, 8/21/2017
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