TITLE 38.2. INSURANCE.

§ 38.2-231. See § 13.1-543; SB 879.

§§ 38.2-231, 38.2-2113, and 38.2-2208 amended.
Insurance notices. Provides that a cancellation, nonrenewal or certain other notices regarding motor vehicle, homeowners, and certain liability insurance policies are effective if the insurer (i) obtains a written receipt from the United States Postal Service showing the date of mailing and the number of items mailed and (ii) retains a mailing list showing the name and address of the insured to whom the notices were mailed, together with a signed statement that the United States Postal Service receipt corresponds to the insurer's mailing list. SB 1131; CH. 387.

§ 38.2-406 amended.
Insurance administration assessment; company reports. Allows insurance companies to file assessment reports either on a form furnished by the State Corporation Commission or on a form furnished by the insurer or its vendor if the form has been approved by the Commission. Currently, the reporting forms must be furnished by the Commission. SB 853; CH. 371.

§ 38.2-508.5 added.
Health insurance; re-underwriting individuals. Prohibits any health insurer from adjusting premiums, benefits, or contractual terms of existing individual health insurance coverage based upon its reevaluating of the individual's health status or claim experience, at the renewal date of the insurance contract. This prohibition does not apply to adjustments to the premium, or rescission of, or amendments to the insurance contract, if the insurer, subsequent to issuing the policy, learns of information that was not disclosed in the underwriting process and that, if known, would have resulted in higher premiums. Such adjustments, rescission or amendment is also permitted (i) when an insurer provides certain lifestyle-based good health discounts and (ii) when an insurer removes waivers or riders that limit coverage for specific named preexisting conditions. HB 1826; CH. 699.

§ 38.2-517 amended.
Insurance; unfair settlement practices; replacement and repair. Prohibits insurance companies and their representatives from failing to disclose to its insured or claimant, at any time that it recommends the use of a designated replacement or repair facility or service or products of a designated manufacturer, that (i) such person is not obligated to use such facilities, services, or materials and (ii) the insurer has a financial interest in the replacement or repair facility, if the insurer has such an interest. HB 2267; CH. 361.

§ 38.2-602 amended; § 38.2-613.2 added.
Insurance information security programs. Requires insurance institutions, agents, and insurance-support organizations to implement a comprehensive information security program to safeguard the privacy of consumer information. The measure is required pursuant to the federal Gramm-Leach-Bliley Act and is based on model language adopted by the National Association of Insurance Commissioners. SB 878; CH. 729.

§§ 38.2-604, 38.2-604.1, and 38.2-612.1 amended.
Insurance information privacy. Permits the oral communication of an insurer's privacy practices provided that the insured is given written notice of such practices if a policy is issued. The bill also permits agents to be in compliance with notice requirements if the notice has been given within the previous 12 months. HB 2524; CH. 266.

§ 38.2-612 amended.
Property insurance; adverse underwriting decisions. Prohibits an insurer from basing an adverse underwriting decision solely on the loss history of a previous owner of the property to be insured. HB 1948; CH. 415.

§§ 38.2-1800, 38.2-1824, 38.2-2411, and 38.2-2412. See § 19.2-152.1; HB 1905.

§ 38.2-1800 amended.
Insurance agent licensing. Increases the maximum amount of burial association group life insurance certificate that may be solicited with respect to members of such an association, pursuant to a limited burial insurance authority, to $7,500. Currently the maximum is $5,000. HB 1937; CH. 412.

§§ 38.2-1800 and 38.2-1865.1 amended; §§ 38.2-6000 through 38.2-6016 added; §§ 38.2-5700 through 38.2-5707 repealed.
Viatical Settlement Act. Replaces the existing Viatical Settlement Act with a more comprehensive version based on model legislation adopted by the National Association of Insurance Commissioners (NAIC) in 2000. The measure authorizes persons who are licensed by the State Corporation Commission as viatical settlement providers and viatical settlement brokers to negotiate, effectuate, and assume responsibility for viatical settlement contracts. A viatical settlement contract is an agreement by which the owner of an insurance policy may accept an immediate cash payment in exchange for the assignment, transfer, sale, or other conveyance of the death benefit or ownership of the insurance policy. This measure regulates viatical settlements regardless of whether the transaction involves a chronically or terminally ill person. Other provisions (i) adopt new definitions that recognize the securitization activities of viatical settlement brokers and providers, (ii) expand notice and disclosure requirements, and (iii) require brokers and providers to develop anti-fraud plans. Provisions of the act that differ from the NAIC model include (a) specifying that this act does not preempt the Virginia Securities Act and (b) prohibiting the viatication of life insurance policies that are less than two years old except in limited circumstances, including the chronic or terminal illness of the insured. Life and annuities insurance agents are permitted to be licensed as viatical settlement brokers. HB 2613; CH. 717.

§§ 38.2-1833 and 38.2-1834 amended.
Insurance agents; payment of late payment penalties. Clarifies that an insurer's failure to pay penalties imposed as a result of late payment of appointment processing fees and renewal appointment fees constitutes nonpayment of the required fees, and such failure constitutes grounds for termination of the appointment. SB 877; CH. 871.

§ 38.2-1839 amended.
Insurance consultants; contract provisions. Requires any incentives, bonuses, overrides, or any other form of remuneration, whether direct or indirect, to which an insurance consultant is entitled to be specified in the consultant's contract. HB 2802; CH. 621.

§ 38.2-1919 amended.
Insurance; claims experience data. Requires any rate service organization designated by the Commission to gather and compile experience data for any classification of workers' compensation insurance that includes coal mining to report such data annually to the Commission for the most recent five years for which such data is available. SB 978; CH. 222.

§§ 38.2-2102 and 38.2-2107 amended.
Fire insurance; exclusions. Provides that commercial property and casualty insurance policies shall not cover loss or damage from certified acts of terrorism if the insured has refused coverage offered pursuant to the federal Terrorism Risk Insurance Act. The measure also allows simplified and readable policies to be issued to apply on an excess or primary basis if such provisions are clearly stated. HB 2606; CH. 930.

§§ 38.2-2114 and 38.2-2212 amended; §§ 38.2-2126 and 38.2-2234 added.
Use of credit information in insurance transactions. Prohibits insurers from nonrenewing homeowners, renters, or motor vehicle insurance policies based on credit information contained in a consumer report. If credit information is used in part as the basis of nonrenewal, the report must have been procured within 120 days from the date of the nonrenewal. The measure also establishes requirements concerning the use of credit information and credit scores for underwriting, tier placement, or rating purposes with respect to such insurance policies. HB 2535; CH. 543/SB 1284; CH. 553.

§ 38.2-2204 amended.
Motor vehicle insurance; exclusion of named persons. Allows a named insured to exclude any person under personal umbrella and excess insurance policies. The exclusion must be made in writing by the first named insured and acknowledged in writing by the excluded driver. HB 2512; CH. 756/SB 1154; CH. 761.

§ 38.2-2206 amended.
Motor vehicle insurance; uninsured motorist coverage. Authorizes an immune defendant to remain as a party to litigation as an anonymous party if the court refuses to dismiss such defendant. A judgment against the immune defendant in such event is enforceable against the insurer to the same extent as though the judgment was entered in the actual name of the immune defendant. SB 993; CH. 283.

§ 38.2-2616 added.
Home protection companies; arbitration clauses. Permits home protection companies to include in their contracts a provision that requires the contract holder to submit to binding arbitration in any dispute between the contract holder and the home protection company. HB 2544; CH. 799.

§ 38.2-2801 amended.
Medical Malpractice Joint Underwriting Association. Specifies that the limits of liability for policies written in the Medical Malpractice Joint Underwriting Association may not exceed two million for each claimant under any one policy and six million for all claimants under one policy in any one year. Currently, the limits of liability for such policies may not exceed one million for each claimant under any one policy and three million for all claimants under one policy in any one year. This measure will conform this provision with the cap on recovery in medical malpractice actions. The measure has an emergency clause. HB 1777; CH. 488 (effective 3/16/03).

§ 38.2-2801 amended.
Medical Malpractice Joint Underwriting Association; activation. Requires the State Corporation Commission to commence an investigation of the voluntary market for medical malpractice insurance immediately, to determine whether there exists sufficient need to activate the medical malpractice joint underwriting association. The Commission shall activate the association if, after investigation, notice, and hearing, it finds that medical malpractice insurance cannot be made reasonably available in the voluntary market for a significant number of any class, type, or group of providers of health care. The Commission shall report its findings by December 31, 2003. The bill has an emergency clause. SB 1316; CH. 1026 (effective 4/2/03).

§ 38.2-3221 amended.
Annuity contracts; minimum interest rate. Reduces the minimum interest rate on individual deferred annuities issued by insurance companies between April 1, 2003, and July 1, 2005, from three percent to 1.5 percent per year. The interest rate applies to minimum nonforfeiture amounts applicable to net considerations, partial withdrawals, and partial surrenders. The measure has an emergency clause. HB 2609; CH. 440 (effective 3/16/03).

§ 38.2-3418.4 amended.
Health insurance; coverage for reconstructive breast surgery. Provides that notice of the availability of health insurance coverage for reconstructive breast surgery be provided to the policy's subscribers upon enrollment in the policy and annually thereafter. HB 1886; CH. 250.

§ 38.2-3418.13 amended.
Health insurance; mandated coverage for morbid obesity treatment. Requires that the standards and criteria, including those related to diet, used by insurers to approve or restrict access to surgery for morbid obesity shall be based upon current clinical guidelines recognized by the National Institutes of Health. This is intended to clarify whether insurers can consider dietary standards. SB 1081; CH. 462.

§ 38.2-3431 amended.
Essential and standard health services plans. Exempts essential and standard health services plans from mandated provider requirements and allows such plans to include co-payment, co-insurance, deductibles and other cost-sharing arrangements. HB 2234; CH. 645.

§ 38.2-3432.3 amended.
Health insurance exclusion periods for preexisting conditions; pregnancy. Clarifies that the prohibition on excluding health insurance coverage for pregnancy as a preexisting condition does not apply to eligible individuals purchasing individual health insurance coverage. In such cases, the health insurer may impose a preexisting condition exclusion for a pregnancy that exists on the effective date of coverage. This change is intended to resolve an inconsistency with another provision that currently provides that preexisting conditions may not be applied for eligible individuals for individual health insurance coverage. SB 943; CH. 221.

§§ 38.2-3503 and 38.2-3504 amended.
Health insurance policy provisions; refunds of unearned premiums. Clarifies that provisions added by House Bill 1236 (2000) regarding refunds of the unearned portion of premiums are inapplicable to policies that were issued prior to January 1, 2001, and have not been subsequently renewed or extended. The amendments make no substantive change to the legislation enacted in the 2000 Session. SB 944; CH. 377.

§ 38.2-3540.1 amended.
Accident and sickness insurance; claims experience. Requires insurers issuing group accident and sickness insurance policies to provide to policyholders that are large employers, upon request, when providing the policyholder's claims experience record, a summary of claims charges incurred and the amount paid for each claim for the most recent available 24-month period. This record must also include (i) the monthly enrollment in each membership type, and (ii) a listing of claims in excess of $50,000, for the same 24-month period. HB 2803; CH. 654.

§§ 38.2-4300, 38.2-4302, 38.2-4303, and 38.2-4306 amended.
Health maintenance organizations; powers. Permits a health maintenance organization to offer to its subscribers deductibles, copayments, and cost-sharing provisions provided they comply with applicable state law. "Copayment" is defined as an amount an enrollee is required to pay in order to receive a specific health care service. "Deductible" is defined as an amount an enrollee is required to pay out-of-pocket before the health care plan begins to pay the costs associated with health care services. HB 2601; CH. 767/ SB 1195; CH. 752.

§ 38.2-4319 amended; § 38.2-3418.14 added.
Accident and sickness insurance; coverage for lymphedema. Requires health insurers, health care subscription plans and health maintenance organizations to provide coverage for equipment, supplies, complex decongestive therapy, and outpatient self-management training and education for the treatment of lymphedema. HB 1737; CH. 243.

§§ 2.2-3701, 2.2-3705, 38.2-5001, 38.2-5002, 38.2-5004, 38.2-5004.1, 38.2-5005, 38.2-5007, 38.2-5008, 38.2-5009, 38.2-5015, and 38.2-5016 amended; §§ 38.2-5002.1, 38.2-5002.2, 38.2-5009.1, and 38.2-5016.1 added.
Virginia Birth-Related Neurological Injury Program. Authorizes the Workers' Compensation Commission to award up to $100,000 to the parents or legal guardian of an injured infant covered under the Virginia Birth-Related Neurological Injury Program who dies within 180 days of birth. The Program is made subject to the Freedom of Information Act and is required to implement procedures consistent with the Public Procurement Act and the rulemaking provisions of the Administrative Process Act. The Virginia Birth-Related Neurological Injury Fund must be audited annually by a certified public accountant. The Office of the Attorney General is required to provide legal services for the Program. Other changes (i) clarify that a mother is not subject to the Program's exclusive remedy provision with respect to physical injuries she suffers during delivery; (ii) require hospitals to release fetal monitoring strips to the Program or injured infant's legal representative and provide that the failure to provide the information creates a rebuttable presumption of fetal distress; (iii) require the investigation and referral to the Board of Health Professions or Department of Health, as appropriate, of health care providers and participating hospitals if the conduct gives rise to disciplinary action; (iv) require physicians and nurse midwives to inform patients whether they are participants in the Program; (v) require all hospitals to provide a brochure on the Program with post-partum materials if the infant was hospitalized in a neonatal intensive care unit; (vi) require the report of the reviewing panel of physicians to be mailed to the Program and all parties within 60 days after the filing of a petition; and (vii) provide that the Act's exclusive remedy provision applies with respect to claims by an infant's parents or other representative if the claim is derivative of the medical malpractice claim involving the infant's injury. The panel's report is required to confirm whether each element of the definition of a birth-related injury is satisfied, and the panel is to complete such documentation as the Program's board of directors requires. Physician review panel duties will rotate among Eastern Virginia Medical School, University of Virginia School of Medicine, and the Medical College of Virginia on a case-by-case basis. The Commission may require the claimant to procure health insurance for the injured infant, to be paid for from the Fund. The Commission may award unsuccessful petitioners reasonable attorneys' fees and other expenses incurred in filing a claim in good faith. The Program's board is required to consult semiannually with the chief investment officer of the Virginia Retirement System regarding fund management strategies and asset allocations, and the Program's investment advisor shall provide annual statements explaining the expected returns on its equities and fixed income portfolios. The Program's board is directed to (a) develop and implement a policy on handicapped-accessible housing, (b) study and develop options for revising fees for participating providers, and (c) maintain a list of Program participants and, with consent, make the list available to other claimants. The board of director's power to reduce the annual participating physician assessment and the annual participating hospital assessment is eliminated. The board's nonparticipating physician representative is replaced with a citizen member with professional experience working with the disabled community. Two of the other citizen members of the board are required to have a minimum of five years of professional investment experience, one is required to have professional experience working with the disabled community, and one shall be the parent of a disabled child. HB 2048; CH. 897.

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