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Engrossed Version House Bill 2596 History

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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.

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