ENGROSSED
H. B. 2596
(By Delegates Beane, G. White, Pethtel
and H. White)
[Introduced March 1, 2001; referred to the
Committee on Banking and Insurance.]
A BILL to amend article twelve, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
thirty-four, relating to specialty licenses for companies
selling credit insurance; annual fee, appointment by licensed
insurers, compensation, revocation and suspension of license,
exception from examination and continuing education
requirements, and commissions.
Be it enacted by the Legislature of West Virginia:
That article twelve, chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended by adding thereto a new section, designated section thirty-
four, to read as follows:
ARTICLE 12. AGENTS, BROKERS, SOLICITORS AND EXCESS LINE.
§33-12-34. Specialty license for credit insurance.
(a) Purpose. -- This section authorizes the insurance
commissioner to issue specialty licenses to companies for the sale
of credit insurance.
(b)Definitions. -- The following words when used in this
section shall have the following meanings:
(1) "Authorized insurer" means an insurer that is licensed by
the commissioner to transact insurance in West Virginia.
(2) "Authorized representative" is any employee of the company
who is authorized by the company to act on behalf of the company
for the company's operations in this state in which credit
insurance will be sold.
(3) "Company" is any firm, partnership, corporation or limited
liability company whose primary business involves consumer
transactions and which sells credit insurance incident to its
primary business.
(4) "Credit insurance" means:
(A) Credit life insurance;
(B) Credit accident and sickness insurance;
(C) Credit insurance as defined in section ten, article one of
this chapter; and
(D) Credit personal property; and
(E) Any other credit related insurance approved by the
commissioner.
(5) "Managing employee" is a salaried full-time employee of
the specialty licensee that is responsible for the supervision of
the other employees engaged in the placement of insurance under
this section.
(6) "Credit Personal Property Insurance" is insurance that
provides coverage on the risk of damage or loss to personal
property up to the amount of the outstanding debt in a consumer
credit transaction for personal property that is purchased in
connection with or in relation to the personal or consumer loan,
installment sale or consumer credit transaction. For purposes of
this section, it must be sold through a group; there must be no
individual underwriting; and no consumer may be denied coverage.
(7) "Specialty license" means the authorization by the
commissioner for a company to transact credit insurance as agent of
an authorized insurer.
(8) "Specialty licensee" is the company that obtains a
specialty license.
(c) The commissioner may issue a specialty license to any
company.
(d) As a prerequisite for issuance of a specialty license
under this section, there shall be filed with the commissioner a
written application for a specialty license, signed by an
authorized representative of the company, in such form or forms,
and supplements thereto, and containing such information, as the commissioner may prescribe. The specialty licensee shall pay to
the insurance commissioner an annual fee of two hundred dollars.
(e) On appointment of the specialty licensee by an authorized
insurer, a specialty licensee or any employee of the specialty
licensee acts as the agent of the insurer authorized to engage in
the business of insurance under this code in the sale of credit
insurance. The authority conferred under this section specifically
permits only the sale of group credit insurance: Provided, That
individual underwriting is permitted only to exclude pre-existing
conditions from coverage.
(f) A specialty license issued under this article authorizes
an employee of the specialty licensee to act as an agent with
respect to the kinds of insurance specified in this article if the
employee:
(1) Has been trained with respect to disclosures that are
required to be made to customers in connection with the sale of
credit insurance.
(2) Is acting on behalf of and under the supervision of the
license holder and the managing employee; and
(3) Is not directly compensated based on the amount of
insurance sold by the employee under this article.
(g) The specialty licensee and the managing employee shall
directly supervise and be responsible for the actions of its
employees in the transaction of credit insurance as authorized by this section.
(h) In the event that any provision of this section or
applicable provisions of the insurance code is violated by a
specialty licensee or its employees operating under his or her
direction, the commissioner may:
(1) After notice and a hearing, revoke or suspend a specialty
license issued under this section in accordance with the provisions
of section thirteen, article two of this chapter; or
(2) After notice and hearing, impose such other penalties as
exist under this chapter, including suspending the transaction of
insurance where violations of this section have occurred, as the
commissioner deems considers to be necessary or convenient to carry
out the purposes of this section.
(i) Neither a company licensed under this article nor its
employees shall be subject to an examination for licensure or to
the continuing education requirements of section two-a of this
article.
(j) The customer shall be provided notice at the time of sale
of the following: (i) a description of the coverage; (ii) the
purchase of insurance is not a prerequisite to the issuance of the
loan; (iii) the proceeds from the insurance will be used to pay the
outstanding amount of the loan; (iv) the policy or certificate may
be canceled at any time; (v) upon cancellation of the policy or
early payoff of the loan, any unearned premiums will be refunded to the customer; (vi) the consumer may obtain insurance elsewhere; and
(vii) if the policy is decreasing term, that the value will
decrease with each payment.
(jk) The sale of credit insurance under this section may only
be made incident to the primary business of the company which is a
consumer transaction. The sale of credit insurance not made in
conjunction with a consumer transaction shall not be permitted.
(kl) A specialty licensee may not in any manner advertise,
represent, or otherwise hold out the specialty licensee or any
employee of the specialty licensee as a licensed insurance agent
under another section or article of this chapter unless the entity
or individual actually holds the applicable license.
(lm) A specialty licensee may receive commissions or other
compensation for services rendered in connection with the sale of
credit insurance under this section.
(mn) The specialty licensee shall maintain a list of the
locations in this state where its employees are selling insurance
and the name and address of its managing employee. This list shall
be submitted to the commissioner annually, and any changes to this
list shall be submitted to the commissioner quarterly.
(no) Notwithstanding any other provision of this section, a
company may elect to sell credit insurance through individuals who
are licensed as agents in accordance with this article. Under
those circumstances, the company need not be licensed as a specialty licensee under this section.
This section is new; therefore, strike-throughs and
underscoring have been omitted.