Chap. 268.—An ACT to provide for the supervision, regulation and fixing of
premiums, rates and charges for and with respect to insurance against loss
or damage by, from or as a result of fire, windstorm, tornado, hail, lightning,
explosion, riot and civil commotion on and with respect to risks protected in
whole or in part by automatic sprinklers when such risks are insured in con-
nection with an inspection service, other kinds of insurance which fire insurance
companies and insurers writing fire insurance are authorized to write on or
with respect to such risks, and inland marine insurance on or with res to
risks located in Virginia. {H 109]

Approved March 16, 1948

Be it enacted by the General Assembly of Virginia as follows:

1. Section 1. Scope of act—(a) This act applies to insur-
ance which insurance companies or other insurers (whether
stock, mutual, reciprocal, or inter-insurer, or other type or form
of organization), are authorized to write in this State on or with
respect to risks protected in whole or in part by automatic
sprinklers when such risks are insured in connection with an in-
spection service, and to inland marine insurance on or with respect
to risks located in this State. Inland marine insurance shall be
deemed to include personal property floater (Householders’ Com-
prehensive) insurance and insurance now or hereafter defined by
statute, or by interpretation thereof, or as established by general
custom of the business, as inland marine insurance. This act shall
not apply: (1) to reinsurance, other than joint reinsurance to the
extent stated in section ten; (2) to insurance of vessels or craft,
their cargoes, marine builders’ risks, marine protection and indem-
nity, or other risks commonly insured under marine, as disting-
uished from inland marine insurance policies; (3) to insurance of
hulls of aircraft, including their accessories and equipment, or
against liability arising out of the ownership, maintenance or use
of aircraft; or (4) to any other type of insurance, other than insur-
ance on or with respect to risks protected in whole or in part by
automatic sprinklers when such risks are insured in connection
with an inspection service and other than inland marine insurance.
(b) If any kind of insurance, subdivision or combination there-
of, or type of coverage, subject to this act, is also subject to
regulation by another rate regulatory act of this State, an insurer
to which both acts are otherwise applicable shall file with the State
Corporation Commission (hereinafter referred to as Commission),
a designation as to which rate regulatory act shall be applicable to
it with respect to such kind of insurance, subdivision or combination
thereof, or type of coverage.

Section 2. Making of rates—(a) Rates of the types of insur-
ance to which this act applies shall be made in accordance with
the following provisions: (1) manual, minimum, class rates, rating
schedules or rating plans, shall be made and adopted, except in
the case of specific inland marine rates on risks specially rated;
(2) rates shall not be excessive, inadequate or unfairly discrimina-
tory; and (3) due consideration shall be given to past and prospec-
tive loss experience within and outside this State, to the conflagra-
tion or catastrophe hazard, to a reasonable margin for underwriting
profit and contingencies, to dividends, savings or unabsorbed
premium deposits allowed or returned by insurers to their policy-
holders or members or subscribers, to past and prospective expenses
both countrywide and those specially applicable to this State, and
to all relevant factors within and outside this State; and in the
case of fire insurance rates with respect to risks protected in whole
or in part by automatic sprinklers, consideration shall be given to
the experience of the fire insurance business as to such risks
during a period of not less than the most recent five-year period
for which such experience is available.

(b) The Commission is hereby empowered to investigate and
determine, either upon its own motion or at the request of any
citizen of this State or at the request of any company or other
insurer subject to the provisions of this act, whether or not rates
charged in this State for the types of insurance to which this act
applies are excessive or inadequate or unfairly discriminatory, and
to order such changes therein as are fair and equitable, to all
parties in interest, in accordance with its findings. In any such
investigation and determination, the Commission shall give due
consideration to those factors specified in provisions (1), (2) and
(3) of subsection (a) of this section.

In order to determine whether or not the provisions of this
act are being compiled with, the Commission may inspect or cause
to be inspected, as often as the Commission deems it expedient to
do so, the books and records of any insurer or of any rating organ-
ization filing rates under the provisions of this act on behalf of
insurers.

(c) Rates made in accordance with this section may be used
subject to the provisions of this act.
(d) The term “rate” or “rates” wherever used in this act shall
be deemed to mean rate of premium, policy fee, membership fee,
or any other charge made by an insurer for or in connection with
a contract or policy of insurance of the type to which this act
applies.

Section 3. Rate filings—(a) Every insurer writing in this
State insurance to which this act applies shall file with the Com-
mission (except as to such inland marine risks as by general
custom of the business are not written according to manual rates
or rating plans) every manual, minimum, class rate, rating sche-
dule or rating plan and every other rating rule, and every modi-
fication of any of the foregoing which it proposes to use. Every
such filing shall indicate the character and extent of coverage
contemplated and shall state the proposed effective date thereof.
When a filing is not accompanied by the information upon which
the insurer supports such filing, and the Commission does not have
sufficient information to determine whether such filing meets the
requirements of this act, the Commission many require such
insurer to furnish the information upon which it supports the
filing. A filing and any supporting information shall be deemed to
be a public record. Specific inland marine rates on risks specially
rated, made by a rating organization, shall be filed with the
Commission.

(b) An insurer may satisfy its obligation to make rate filings
by becoming a member of, or a subscriber to, a licensed rating
organization which makes such filings, and by authorizing the
Commission to accept such filings on its behalf; provided that
nothing contained in this act shall be construed as requiring any
insurer to become a member of or a subscriber to any rating
organization.

(c) Upon a filing being made with the Commission it shall
determine whether publication of notice as to such filing is
necessary. If the Commission determines that publication of notice
of a filing is required, such notice shall be published in such form
and for such time as the Commission may prescribe, not to exceed
once a week for four consecutive weeks in a newspaper or news-
papers of general circulation and published in Virginia. Upon com-
pletion of publication or prior thereto the Commission shall deter-
mine whether a hearing should be had before acting upon the
filing. If the Commission shall determine that a hearing should be
held, it shall order the same and notify the person making the
filing and such other persons as it may deem interested therein.
Such hearing shall be held within a reasonable time, not less than
ten days, after the date of the order fixing the hearing. Upon
determination that publication of notice of a filing is unnecessary,
or upon completion of such publication when required and when
no hearing is ordered, or upon completion of such hearing, there-
upon or as soon thereafter as may be practical the Commission
shall act upon said filing, either approving the same as filed or
with such modifications as the Commission may determine, or
disapproving said filing. In the event of approval with modifications
or disapproval of a filing the order of such approval or of disap-
proval shall state the reasons therefor.

(d) Until October one, nineteen hundred forty-eight, an in-
surer may continue to use the rate or rates which it has been
using in this State as to the types of insurance to which this act
applies. On and after October one, nineteen hundred forty-eight,
subject to the exceptions specified in subsections (e) and (f) of
this section, no filing shall become effective or be used until it has
been approved by the Commission; provided, however, that a
rate produced in accordance with a rating schedule or rate plan
previously approved by the Commission may be used pending such
approval.

(e) Specific inland marine rates on risks specially rated by a
rating organization shall become effective and may be used when
filed; provided, if the Commission finds that any such filing does
not meet the requirements of this act, it shall send to the rating
organization which made such filing a written notice of disapproval
thereof; such written notice of disapproval shall specify in what
respect the Commission finds that the filing fails to meet the
requirements of this act and shall state when, within a reasonable
period thereafter, such filing shall be deemed no longer effective.
Disapproval shall not affect any contract or policy made or issued
prior to. the expiration of the period set forth in the disapproval
notice.

(f) Under such rules and regulations as it shall adopt the
Commission may, by written order, suspend or modify the require-
ment of filing as to any kind of insurance to which this act applies,
where the rates therefor cannot practically be filed before they are
used. Such orders, rules and regulations shall be made known to
insurers and rating organizations affected thereby. The Commission
may make such examination or require such information as it may
deem advisable to ascertain whether any rates affected by such
order meet the standards set forth in subdivision (2) of subsection
(a) of section two.

(g) Upon the written application of the insured, stating his
reasons therefor, filed with and approved by the Commission, a
rate in excess of that provided by a filing otherwise applicable may
be used on any specific risk.

(h) On and after July one, nineteen hundred forty-eight,
no insurer shall make or issue a contract or policy of insurance, of
the type to which this act applies, except in accordance with the
filings which are in effect for said insurer as provided in this act or
in accordance with subsections (d), (e) or (f) of this section; pro-
vided this subsection shall not apply to such contracts or policies for
inland marine risks as to which filings are not required.

Section 4. Rating organizations—(a) A corporation, an un-
incorporated association, a partnership or an individual, whether
located within or outside this State, may make application to the
Commission for license as a rating organization for such kinds
of insurance or subdivision or class or risk or a part or combination
thereof, to which this act applies and as are specified in such
application and shall file therewith (1) a copy of its constitution,
its articles of agreement or association or its certificate of incor-
poration and its by-laws, rules and regulations governing the
conduct of its business, (2) a list of its members and subscribers,
(3) the name and address of a resident of this State upon whom
notices or orders of the Commission or process affecting such
rating organization may be served and (4) a statement of its
qualifications as a rating organization. If the Commission finds that
the applicant is competent, trustworthy and otherwise qualified to
act as a rating organization and that its constitution, articles of
agreement or association or certificate of incorporation, and its by-
laws, rules and regulations, governing the conduct of its business
conform to the requirements of this act, the Commission shall issue
a license specifying the kinds of insurance, or subdivision or class of
risk or part or combination thereof for which the applicant is author-
ized to act as a rating organization. Every such application shall
be granted or denied in whole or in part by the Commission within
a reasonable time after the filing thereof with it. Licenses issued
pursuant to this section shall remain in effect for three years unless
sooner suspended or revoked by the Commission. The fee for said
license shall be twenty-five dollars. Any license issued pursuant
to this section may be suspended or revoked by the Commission,
after hearing upon reasonable notice, in the event the rating or-
goueahigh ceases to meet the requirements of this subsection.

very rating organization licensed in accordance with the provi-
sions of this act shall notify the Commission promptly of every
change in (1) its constitution, its articles of agreement or associa-
tion, or its certificate of incorporation, and its by-laws, rules and
regulations governing the conduct of its business, (2) its list of
members and subscribers and (3) the name and address of the
resident of this State designated by it upon whom notices or
orders of the Commission or process affecting such rating organiza-
tion may be served.

(b) Subject to rules and regulations which have been approved
by the Commission as reasonable, each rating organization licensed
in accordance with the provisions of this act shall permit any in-
surer, not a member, to be a subscriber to its rating services for
any kind of insurance or subdivision or class of risk or a part or
combination thereof, to which this act applies and for which it
is authorized to act as a rating organization. Notice of proposed
changes in such rules and regulations shall be given to subscribers.
Each such rating organization shall furnish its rating services
without discrimination to its members and subscribers. The reason-
ableness of any rule or regulation in its application to subscribers,
or the refusal of any such rating organization to admit an insurer as
a subscriber shall, at the request of any subscriber or any such in-
surer, be reviewed by the Commission at a hearing held upon at
least ten days’ written notice to such rating organization and to
such subscriber or insurer. If the Commission finds that such rule
or regulation is unreasonable in its application to subscribers, it
shall order a revocation of the rule or regulation as to subscribers.
If a rating organization subject to the provisions of this act fails
to grant or reject an insurer’s application for subscribership within
thirty days after it was made, the insurer may request a review
by the Commission as if the application had been rejected. If the
Commission finds that the insurer has been refused admittance to
the rating organization as a subscriber without justification, it
shall order the rating organization to admit the insurer as a sub-
scriber. Jf it finds that the action of the rating organization was
justified, the Commission shall affirm the action of the rating
organization.

(c) No rating organization subject to the provisions of this
act shall adopt any rule the effect of which would be to prohibit
or regulate the payment of dividends, savings or unabsorbed
premium deposits allowed or returned by insurers to their policy-
helders, members or subscribers.

(d) Cooperation among rating organizations or among rating
organizations and insurers in rate making or in other matters within
the scope of this act ‘is hereby authorized, provided the filings
resulting from such cooperation are subject to all the provisions
of this act which are applicable to filings generally. The Commis-
sion may review such cooperative activities and practices and if,
after a hearing, it finds that any such activity or practice is unfair
or unreasonable or otherwise inconsistent with the provisions of
this act, it may issue a written order specifying in what respects
such activity or practice is unfair or unreasonable or otherwise in-
consistent with the provisions of this act, and requiring the dis-
continuance of such activity or practice.

(e) Any rating organization subject to the provisions of this
act may provide for the examination of policies, daily reports,
binders, renewal certificates, endorsements or other evidences of
insurance, or the cancellation thereof, and may make reasonable
rules governing their submission, and for the correction of errors
and omissions therein. Such rules shall contain a provision that in
the event any insurer does not within sixty days furnish satis-
factory evidence to the rating organization of the correction of
any error or omission previously called to its attention by the
rating organization, it shall be the duty of the rating organization
to notify the Commission thereof. All information so submitted for
examination shall be confidential.

(f) Any rating organization subject to the provisions of this
act may subscribe for or purchase actuarial, technical, or other
services and such services shall be available to all members and
subscribers without discrimination.

Section 5. Deviations—Every member of or subscriber to
a rating organization subject to the provisions of this act shall
adhere to the filings made on its behalf by such rating organiza-
tion, except that any such insurer may make written application to
the Commission for permission to file and use a uniform devia-
tion from the class rates, schedules, rating plans or rules respecting
any kind of insurance, or class of risk within a kind of insurance,
or combination thereof, to which this act applies. Such application
shall specify the basis for the deviation and a copy thereof shall
also be sent simultaneously to such rating organization. Upon
receipt of such application the Commission shall set a time and
place for a hearing at which the applicant insurer and such rating
organization may be heard and shall give them not less than ten
days’ written notice thereof. In the event the Commission is advised
by the rating organization that it does not desire a hearing the
Commission may, upon the consent of the applicant, waive such
hearing. In considering the application for permission to file and
use such uniform deviation the Commission shall give consideration
to all available statistics and the principles of rate making as
provided in section two of this act. The Commission shall issue
an order permitting the uniform deviation for such insurer to be
filed and used if it is found to be justified and thereupon the
uniform deviation shall become effective, or the Commission shall
issue an order denying such application if it finds that the resulting
premiums would be excessive, inadequate or unfairly discrimina-
tory. Each deviation as provided for in this section shall be effective
for a period of one year from the date of such permission unless
terminated sooner by or with the approval of the Commission, pro-
vided that ‘for good cause shown the Commission may extend
such permission for a period of not exceeding one year.

Section 6. Appeal by minority—Any member of or subscriber
to a rating organization subject to the provisions of this act may
appeal to the Commission from the action or decision of such
rating organization in approving or rejecting any proposed change
in or addition to the filings of such rating organization and the
Commission shall, after a hearing held upon not less than ten
days’ written notice to the appellant and to such rating organiza-
tion, issue an order approving the action or decision of such rating
organization or directing it to give further consideration to such
proposal, or, if such appeal is from the action or decision of the
tating organization in rejecting a proposed addition to its filings,
the Commission may, in the event it finds that such action or
decision was unreasonable, issue an order directing the rating
organization to make an addition to its filings, on behalf of its
members and subscribers, in a manner consistent with the findings
of the Commission, within a reasonable time after the issuance of
such order.

Section 7. Inspection and surveys.—Each rating organization
subject to the provisions of this act, except a rating organization
making and filing rates with respect to inland marine insurance,
shall inspect each risk specifically rated by it upon schedule and
shall make a written survey of such risk. Such written survey shall
be filed as a permanent record in the office of the rating organ-
ization.

Section 8. Information to be furnished insureds; hearings and
appeals of insureds.—Every rating organization and every insurer
which makes its own rates, subject to the provisions of this act,
shall, within a reasonable time after receiving written request
therefor, furnish to any insured affected by a rate made by it, or to
the authorized representative of such insured, all pertinent informa-
tion as to such rate; and every such rating organization and every
such insurer shall provide within this State reasonable means
whereby any person aggrieved by the application of its rating sys-
tem may be heard, in person or by his authirized representative, on
his written request to review the manner in which such rating sys-
tem has been applied in connection with the insurance afforded him.
If the rating organization or insurer fails to grant or reject such
request within thirty days after it is made, the applicant may pro-
ceed in the same manner as if his application had been rejected.
Any party affected by the action of such rating organization or
such insurer on such request may, within thirty days after written
notice of such action, appeal to the Commission, which after a
hearing held upon not less than ten days’ written notice to the
appellant and to such rating organization or insurer, may affirm
or reverse such action. 3

Section 9. Advisory organizations—(a) Every. group, asso-
ciation or other organization of insurers, whether located within or
outside this State, which assists rating organizations in making
rates or which assists insurers which make their own filings, by
the collection and furnishing of loss or expense statistics, or by the
submission of recommendations, but which does not make filings
under this act, shall be known as an advisory organization.

(b) Every advisory organization shall file with the Commis-
sion (1) a copy of its constitution, its articles of agreement or
association or its certificate of incorporation and of its by-laws,
rules and regulations governing its activities, (2) a list of its
members, (3) the name and address of a resident of this State
upon whom notices or orders of the Commission or process (issued
at its direction) may be served, and (4) an agreement that the
Commission may examine such advisory organization in accordance
with the provisions of section eleven of this act.

(c) If, after a hearing, the Commission finds that the furnish-
ing of such information or assistance involves an act or practice
which is unfair or unreasonable or otherwise inconsistent with
the provisions of this act, it may issue a written order specifying
in what respects such act or practice is unfair or unreasonable or
otherwise inconsistent with the provisions of this act, and requiring
the discontinuance of such act or practice.

(d) No insurer which makes its own filings nor any rating
organization, shall support its filings by statistics or adopt rate
making recommendations furnished to it by an advisory organ-
ization which has not complied with this section or with an order
of the Commission involving such statistics or recommendations
issued under subsection (c) of this section. If the Commission
finds such insurer or rating organization to be in violation of this
subsection it may issue an order requiring the discontinuance of
the violation.

Section 10. Joint underwriting or joint reinsurance.—(a)
Every group, association or other organization of insurers which
engages in joint underwriting or joint reinsurance, as to a type of
insurance to which this act applies, shall be subject to regulation
with respect thereto as herein provided, subject, however, with
respect to joint underwriting, to all other provisions of this act
and, with respect to joint reinsurance, to sections eleven, fourteen
and fifteen of this act.

(b) If, after a hearing, the Commission finds that any activity
or practice of any such group, association or other organization is
unfair or unreasonable or otherwise inconsistent with the provisions
of this act, it may issue a written order specifying in what respects
such activity or practice is unfair or unreasonable or otherwise
inconsistent with the provisions of this act, and requiring the
discontinuance of such activity or practice.

Section 11. Examinations.——The Commission shall, at least
once in five years, make or cause to be made an examination of
each rating organization licensed in this State as provided in
section four of this act and may, as often as it may deem to be
expedient, make or cause to be made an examination of each
advisory organization referred to in section nine of this act and ‘of
each group, association or other organization referred to in section
ten of this act. The reasonable costs of any such examination shall
be paid by the rating organization, advisory organization, or group,
association or other organization examined upon presentation to it
of a detailed account of such costs. The officers, manager, agents and
employees of such. rating organization, advisory organization, or
group, association or other organization may be examined at any
time under oath and shall exhibit all books, records, accounts, docu-
ments or agreements governing its method of operation. Such
examinations shall be subject to the provisions of sections forty-one
hundred eighty-two and forty-one hundred eighty-four-a of the
Code of Virginia. In lieu of any such examination the Commission
may accept the report of an examination made by the insurance
supervisory official of another state, pursuant to the laws of such
state. The report of any such examination made in accordance with
the provisions of this section shall not be made public until the
organization, group or association to which it relates has had a
reasonable opportunity to review such report.

Section 12. Administration.—(a) The Commission, as to the
types of insurance to which this act applies, shall promulgate
reasonable rules and statistical plans, reasonably adapted to each
of the rating systems on file with it, which may be modified from
time to time and which shall be used thereafter by each insurer
in the recording and reporting of its loss and countrywide expense
experience, in order that the experience of all insurers may be
made available at least annually in such form and detail as may
be necessary to aid the Commission in determining whether rating
systems comply with the standards set forth in section two of this
act. Such rules and plans may also provide for the recording and
reporting of expense experience items which are specially applicable
to this State and are not susceptible of determination by a pro-
rating of countrywide expense experience. In promulgating such
rules and plans, the Commission shall give due consideration to the
rating systems subject to the provisions of this act on file with it
and, in order that such rules and plans may be as uniform as is
practicable among the several states, to the rules and to the form
of the plans used for such rating systems in other states. No
insurer shall be required to record or report its loss experience
on a classification basis that is inconsistent with the rating system
filed by it. The Commission may designate one or more rating or-
ganizations or other agencies to assist it in gathering such exper-
ience and making compilations thereof, and such compilations shall
be made available, subject to reasonable rules promulgated by the
Commission, to insurers and rating organizations.

(b) Reasonable rules and plans may be promulgated by the
Commission for the interchange of data necessary for the applica-
tion of rating plans.

(c) In order to further uniform administration of rate regula-
tory laws, the Commission and every insurer and rating organiza-
tion subject to the provisions of this act may exchange information
and experience data with insurance supervisory officials, insurers
and rating organizations in other states and may consult with
them with respect to rate making and the application of rating
systems.

(d) The Commission may make reasonable rules and regula-
tions necessary to effect the purposes of this act.

Section 13. False or misleading information—No person or
organization shall wilfully withhold information from, or know-
ingly give false or misleading information to, the Commission, any
statistical agency designated by the Commission, any rating or-
ganization, or any insurer, which will affect the rates or premiums
chargeable under this act. A violation of this section shall subject
the one guilty of such violation to the penalties provided in section
fourteen of this act.

Section 14. Penalties—(a) Any person, organization or in-
surer found to be guilty of a violation of any provision of this act
shall be subject to a fine of not less than ten dollars ($10.00) nor
more than one thousand dollars ($1,000.00) for each such violation,
such fine to be imposed by the Commission; and the Commission
shall have the right to suspend or revoke or refuse to renew the
license of any person, organization or insurer for violation of any
of the provisions of this act.

(b) The Commission may impose a fine of not less than ten
dollars ($10.00) nor more than one thousand dollars ($1,000.00)
upon, or may suspend or revoke or refuse to renew the license of
any person, organization or insurer which fails to comply with an
order of the Commission within the time limited by such order,
or any extension thereof which the Commission may grant. The
Commission may determine when a suspension or revocation of
license shall become effective and the suspension or revocation
shall remain in effect for the period fixed by it, unless the Com-
mission modifies or rescinds such suspension or revocation or
until the order upon which such suspension or revocation is based
is modified or reversed as the result of an appeal therefrom.

(c) No fine shall be imposed and no license shall be suspended
or revoked except upon written order of the Commission stating its
findings, made after a hearing held upon not less than ten days’
written notice to such person, organization, or insurer specifying
the alleged violation.

Section 15. Hearings and judicial review.—(a) Any person,
organizaton or insurer aggrieved by an order or a decision of the
Commission made without a hearing may, within thirty days after
notice of such order or decision make written request to the
Commission for a hearing thereon. Within a reasonable time there-
after the Commission, after having given not less than ten days’
written notice of the time and place of hearing, shall hear such
party or parties. Within a reasonable time after such hearing the
Commission shall affirm, reverse or modify its previous action,
specifying its reasons therefor. Pending such hearing and decision
thereon the Commission may suspend or postpone the effective date
of the order or decision to which the hearing relates.

(b) The provisions of section thirty-seven hundred thirty-
four of the Code of Virginia shall apply to appeals to the Supreme
Court of Appeals of Virginia from any final order or decision of the
Commission with respect to any matter coming within the pur-
view of this act.

Section 16. Constitutionality—If any section, subsection, sub-
division, paragraph, sentence or clause of this act is held to be
invalid or unconstitutional, such decision shall not affect the re-
maining portions of this act.

2. This act shall take effect on the first day of July, nineteen
hundred forty-eight.