38.2-1812 - Payment and sharing of commissions.
§ 38.2-1812. Payment and sharing of commissions.
A. No insurer shall pay directly or indirectly any commission or othervaluable consideration to any person for services as an agent or a surpluslines broker within this Commonwealth unless the person is then a dulyappointed agent of such insurer and, at the time of the transaction out ofwhich arose the right to such commission or other valuable consideration,held a valid license as an agent, or valid license as a surplus lines broker,for the class of insurance involved.
B. No person other than a duly licensed and appointed agent or a surpluslines broker may accept any such commission or other valuable considerationunless such person, at the time of the transaction out of which arose theright to such commission or other valuable consideration, held a validlicense as an agent or surplus lines broker for the class of insuranceinvolved.
C. An agent of a home service insurer who is assigned a debit may receive,and the insurer may pay, commissions on business written on the debit priorto the agent's becoming licensed and appointed, provided that the insurancewas sold by a duly licensed and appointed agent, and further provided thatthe agent receiving the commission is duly licensed and, if appropriate,appointed on the day such commissions are paid to and received by him.
D. This provision shall not prevent the payment or receipt of renewal orother deferred commissions or compensation to or by any person if the personwas duly licensed and appointed, where the appointment was necessary, at thetime of the transactions out of which arose the right to such renewals ordeferred commissions or compensation.
E. This provision shall not prevent the payment of commissions to a tradename which has been filed with the Bureau of Insurance pursuant to subsectionE of § 38.2-1822.
F. Except as provided in subdivision B 8 of § 38.2-1821.1, no agent orsurplus lines broker shall directly or indirectly share his commissions orother compensation received or to be received by him on account of atransaction under his license with any person not also then licensed underthis chapter, for the class of insurance involved in the transactions. Noagent or surplus lines broker not then licensed and qualified for the sameclass of insurance shall receive any commission or other compensation. Thisprovision shall not affect payment of the regular salaries due employees ofthe licensee.
G. Notwithstanding any contrary provision of law, each insurer shall acceptand honor each request by a policyholder for a change of insurance agent ofrecord, which change shall be effective on the date of the next renewal ofthe policy, unless the policyholder withdraws the request in writing,provided that the change of insurance agent of record shall not be effectiveunless the proposed new insurance agent of record is a duly appointed agentof the insurer. Prior to the effective date of the change, the insurer shallprovide written notice of the change to the current insurance agent ofrecord. The new insurance agent of record shall be paid all commissionspayable on the policy effective not later than the next renewal date of thepolicy following the policyholder's requested change, excluding anycommissions or other compensation payable under an insurer's retirement ordeferred compensation plan with the insurance agent. A request for a changeof insurance agent of record shall be in writing and shall include (a) thepolicyholder's name and address; (b) the insurer's name and address; (c) thepolicy number; (d) the name and address of the new insurance agent of record;(e) the date of the request; (f) the signature of the policyholder; and (g)the signature of acceptance by the new insurance agent. This subsection shallnot require an insurer to appoint an insurance agent of record, alter aninsurer's existing contract with an insurance agent that provides for directcompensation in lieu of commission, or require the payment of fullcommissions to a new insurance agent where the original writing insuranceagent or current insurance agent continues to have responsibility forprocessing and matters relating to the policyholder. For the purposes of thissubsection, "insurance agent" and "insurance agent of record" shall meanonly a limited lines property and casualty agent, a property and casualtyinsurance agent, a personal lines agent, a restricted nonresident propertyand casualty agent, or a restricted nonresident personal lines agent, as suchterms are defined in § 38.2-1800. The provisions of this subsection shall notapply to insurers who provide a process that (i) permits the insured tochange the insurance agent of record under terms that are at least asfavorable to the insured as the provisions of this subsection and (ii)equitably allocates commissions between the current and new insurance agents.
(1979, c. 513, § 38.1-327.11; 1986, c. 562; 1987, c. 521; 1999, c. 97; 2001,c. 706; 2002, c. 323.)