West Virginia insurance law is in Chapter 33 of the West Virginia Code, with rules in Title 114 of the Code of State Rules (W. Va. CSR 114). Producer licensing is in Article 12, unfair trade practices in Article 11, and the Insurance Fraud Prevention Act in Article 41. This guide covers the West Virginia rules on the regulator, licensing, appointments, CE, unfair practices, penalties, fraud reporting, claims and the guaranty associations. The general concepts are in the national Insurance Regulation guide.

About the exam

West Virginia's exams are given by Pearson VUE. Results are reported as a scaled score, and 70 passes.

• West Virginia has no combined Life and Health exam. Candidates take Life and Accident and Sickness separately.
• Prelicensing is required. Candidates for life, accident and health, P&C and personal lines bring the West Virginia prelicensing course completion certificate, which is valid for six months.
• A candidate not licensed within one year of passing must repeat prelicensing and the exam.
• Designations can waive an exam:
  • life: CLU, ChFC, CFP, FLMI, LUTCF
  • health: RHU
  • P&C: CPCU, AAI, ARM, CIC
• The variable life and variable annuity line is earned with FINRA Series 6 or 7, not a state exam.
• An applicant for an initial resident license is fingerprinted. Renewals and nonresident licenses aren't (33-12-37).

The regulator

• The Insurance Commissioner heads the Offices of the Insurance Commissioner and enforces Chapter 33 (33-2-1, 33-2-3).
• The Commissioner is appointed by the Governor with the advice and consent of the Senate, for a six-year term. The Commissioner must be a West Virginia citizen and resident, and must cut all ties to supervised insurers except as a policyholder or claimant (33-2-1).
• Examinations: each domestic insurer is examined at least once every five years. Foreign and alien insurers are also examined at least every five years, though the Commissioner may accept the home state's report (33-2-9).
• Hearings (33-2-13):
  • Held within 45 days of a written demand, with at least 15 days' notice.
  • The order follows within 45 days after the hearing.
  • A rehearing may be requested within 30 days.
  • Appeals go to the Kanawha County circuit court within 30 days (33-2-14).
• A person who doesn't obey an order within 20 days may lose any license (33-2-11). The Commissioner may also order restitution.
• Forms: personal lines forms are filed 60 days before use and are deemed approved if not acted on. Commercial forms are filed but don't need prior approval (33-6-8).
• An insurer needs a license (certificate of authority) from the Commissioner (33-3-1).
• Acting for an unauthorized insurer is unlawful. Fines are up to $20,000 per act, and an unauthorized insurer that violates the law commits a felony (33-44).

Producer licensing (Article 12)

Definitions (33-12-2):

• Sell means exchanging a contract of insurance for money on an insurer's behalf.
• Solicit means attempting to sell, or urging a person to apply for a particular kind of insurance from a particular company.
• Negotiate means conferring with or advising a purchaser about a contract's benefits, terms or conditions.
• The license gives no authority to bind an insurer. That comes from an appointment.
• Anyone who solicits an application is treated as the insurer's agent, not the insured's, in any dispute (33-12-22).

Lines of authority (33-12-9(a)):

• life (including annuities)
• accident and sickness
• property
• casualty
• variable life and variable annuity
• personal lines

Applicants (33-12-6):

• An individual must be at least 18.
• A license may not be used principally to insure the applicant's own property or that of relatives, an employer or employees. This is West Virginia's controlled business rule.
• An agency designates a licensed officer, partner or director responsible for compliance. It reports changes within 10 days (114-2-3.9).
• A producer notifies the Commissioner before using an assumed name (33-12-15).

Not required to be licensed (33-12-4(b)):

• salaried employees in executive, administrative or clerical roles who take no commission
• people who enroll members in group plans without commission

Nonresidents and movers:

• Nonresidents are licensed by reciprocity (33-12-12).
• A resident moving away files the new address and certification within 30 days.
• A producer moving to West Virginia applies within 90 days, with no exam for lines held (33-12-14).

Temporary licenses last up to 180 days (33-12-16). They can go to the spouse or representative of a producer who dies or becomes disabled, or the designee of a producer entering military service.

Solicitors (33-12-19): an agent may sponsor no more than two solicitors, and life agents may have none. A solicitor's license ends when the agent's license does.

Renewal:

• Licenses renew every two years, by the last day of the licensee's birth month.
• There is no grace period. An unrenewed license expires and its appointments are cancelled.
• A license may be reinstated within 12 months without an exam by paying double the renewal fee (33-12-9(c)).
• Producers in military service may ask for a waiver.

CE (33-12-8; CSR 114-42)

• 24 hours every two years, including 3 hours of ethics.
• Up to 6 hours carry over. Ethics hours carry over only as general credit.
• Up to 2 hours may be earned for membership in an approved professional association.
• Hours earned after the deadline may be carried back for a $5 per hour late fee.
• A course counts only the first time it is taken in a period.
• Missing CE brings automatic suspension, and the producer may request a hearing within 30 days. If CE still isn't done by the end of the next biennium, the license is cancelled.
• Exempt: nonresidents and limited-line producers.
• Product training:
  • annuities: one-time 4 credits before selling
  • long-term care: 8 hours once, then 4 hours each biennium

Appointments and terminations

• The insurer files the appointment within 15 days after the agency contract is signed or the first application is submitted (33-12-18).
• The Commissioner verifies eligibility within 30 days.
• Insurers pay renewal appointment fees by May 31 each year.
• An insurer may not accept business from, or pay commission to, a producer it hasn't appointed (33-12-3(d)).
• Termination: for cause or not, the insurer notifies the Commissioner within 30 days and mails the producer a copy. For-cause notices go by certified mail or overnight carrier. The producer has 30 days to comment (33-12-25).

Reporting

• Name or address change, including email: within 30 days (33-12-9(f)).
• Administrative action elsewhere: within 30 days of final disposition (33-12-34(a)).
• Criminal prosecution: within 30 days of the initial pretrial hearing (33-12-34(b)).
• Suspected fraud: anyone in the insurance business who knows of or reasonably believes fraud occurred must report it (33-41-5). The written report goes to the Insurance Fraud Unit within 14 days (CSR 114-71).

Commissions, gifts and referral fees

• Commissions go only to licensed producers or licensed agencies. Renewal commissions may go to someone licensed at the time of sale (33-12-23).
• Commission sharing with a non-appointed producer requires a written disclosure that that producer can't bind coverage (114-2-4).
• Gifts: promotional items costing $25 or less aren't "valuable consideration," whether or not a policy is bought. Invoices are kept five years (CSR 114-70).
• Referral fees: only a nominal fee, a one-time payment of $25 or less that doesn't depend on a sale.
• An agent's extra fee for expenses already in the premium is an overcharge (Informational Letter 6).

Unfair trade practices (33-11-4)

• Misrepresentation, including calling a policy shares of stock, and twisting (33-11-4(1)(f))
• False advertising
• Defamation
• Boycott, coercion and intimidation
• Unfair discrimination
• Rebating. The insured who knowingly accepts a rebate also violates the law.
• False statements on an application
• Failing to keep a complaint register
• Requiring a borrower to use a particular insurer or agent (33-11-5)

Penalties (33-11-6):

Restitution may include up to $10,000 in noneconomic damages.

Licensing penalties (33-12-24):

• civil penalty up to $5,000. Unpaid penalties lead to suspension or revocation.
• A denied applicant may demand a hearing within 10 days, held within 45 days.
• Grounds include:
  • forgery
  • felony convictions
  • misappropriating funds
  • using notes on the exam
  • unpaid child support
  • a recorded state tax lien

Fraud (33-41-12) seeking $1,000 or more is a felony, punishable by 1 to 10 years and up to $10,000. Below $1,000 it is a misdemeanor. Civil penalties are up to $10,000 per violation.

Claims (CSR 114-14)

• Denials cite the policy provision and tell the claimant they may contact the Commissioner.
• The rule doesn't apply to workers compensation.

Binders and applications

• Binders may be oral or written and last no more than 90 days unless the Commissioner approves longer (33-6-18).
• Application statements are representations, not warranties (33-6-7).

Guaranty associations

• West Virginia Life and Health Insurance Guaranty Association (33-26A):

  • $300,000 life death benefit ($100,000 cash value)
  • $250,000 annuities
  • $500,000 health benefit plans
  • $300,000 disability income and LTC
  • $100,000 other health
  • $300,000 aggregate per life ($500,000 with health benefit plans)

  The summary document is delivered with each policy, and the association can't be used in sales (33-26A-19).

• West Virginia Insurance Guaranty Association (33-26), for P&C:

  • $300,000 per claim
  • unearned premium up to $10,000
  • workers compensation benefits paid in full
  • three accounts: automobile, workers compensation and all other

• Surplus lines placements (33-12C) need a diligent search among admitted insurers. The tax is 4.55%.

Common exam traps

• The Commissioner is appointed for a six-year term.
• West Virginia has no combined L&H exam. Prelicensing certificates are good for 6 months.
• CE is 24 hours with 3 ethics, and up to 6 hours carry over.
• There's no grace period for license renewal.
• Gifts and referral fees are capped at $25.
• Fraud must be reported within 14 days. Fraud of $1,000 or more is a felony.
• Claims are acknowledged within 15 working days.
• Appointments are filed in 15 days, and appointment fees are due May 31.