Chap. 401.—An ACT to provide for the supervision, regulation and fixing of
premiums, rates and charges for and with respect to casualty insurance, includ-
ing fidelity, guaranty, indemnity and surety bonds and all forms of motor vehicle
insurance; to prescribe penalties for violations; and to repeal Chapter 231.
Acts of Assembly, 1932, approved March 23, 1932, as amended, and Section 3
of Chapter 449, Acts of Assembly, 1928, approved March 26, 1928. [H 104]

Approved April 1, 1948

Re it enacted by the General Assembly of Virginia:

1. Section 1. Scope of Act—(a) This act applies to casualty
insurance (including fidelity, guaranty, indemnity and surety bonds),
and to all forms of motor vehicle insurance which insurance companies
or other insurers (whether stock, mutual, reciprocal, or inter-insurers,
or other type or form of organization) are authorized to write on or
with respect to risks or operations in this State, except:

(1) Reinsurance, other than joint reinsurance to the extent stated
in section nine of this act;

(2) Accident and health insurance ;

(3) Insurance against loss of or damage to aircraft or against liabil-
ity (other than workmen’s compensation and employers’ liability), arising
out of the ownership, maintenance or use of aircraft ;

(4) Fire, theft, collision and other physical damage insurance on
insured motor vehicles ;

(5) Title insurance.

(b) If any kind of insurance, subdivision or combination thereof,
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 insur-
ance, subdivision or combination thereof, or type of coverage.

Section 2. Making of rates.—(a) All rates shall be made in accord-
ance with the following provisions:

(1) Due consideration shall be given to past and prospective loss
experience within and outside this State, to catastrophe hazards, if any,
to a reasonable margin for underwriting profit and contingencies, to
dividends, savings or unabsorbed premium deposits allowed or returned
by insurers to their policyholders, members or subscribers, to past and
prospective expenses both countrywide and those especially applicable to
this State, and to all other relevant factors within and outside this State;

(2) The systems of expense provisions included in the rates for use
by any insurer or group of insurers may differ from those of other insur-
ers or groups of insurers to reflect the requirements of the operating
methods of any such insurer or group with respect to any kind of insur-
ance, or with respect to any subdivision or combination thereof for which
subdivision or combination separate expense provisions are applicable:

(3) Risks may be grouped by classification for the establishment of
rates and minimum premiums. Classification rates may be modified to
produce rates for individual risks in accordance with rating plans which
establish standards for measuring variations in hazards or expense pro-
visions, or both. Such standards may measure any differences among
risks that can be demonstrated to have a probable effect upon losses or
expenses ;

(4) Rates shall not be excessive, inadequate or unfairly
discriminatory.

(b) Except to the extent necessary to meet the provisions of sub-
division (4) of subsection (a) of this section, uniformity among insurer:
in any matters within the scope of this section is neither required no:
prohibited.

(c) The Commission is hereby empowered to investigate and deter
mine, either upon its own motion or at the request of any citizen of thi:
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), (3), and
(4), of subsection (a) of this section.

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

(d) Rates made in accordance with this section may be used subject
to the provisions of this act.

(e) 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 shall file with the Com-
mission every manual of classifications, rules and rates, every rating plan
and every modification of any of the foregoing which it proposes to use.
Every such filing shall state the proposed effective date thereof, and shall
indicate the character and ~ of the coverage contemplated. When a
filing is not accompanied by the information upon which the insurer
supports such filing, and the Commission does not have sufficient informa-
tion to determine whether such filing meets the requirements of the act,
it may require such insurer to furnish the information upon which it
supports such filing. A filing and any supporting information shall be
open to public inspection.

(b) An insurer may satisfy its obligation to mallee such 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 deter-
mine 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 Com-
mission may prescribe, not to exceed once a week for four consecutive
weeks in a newspaper or newspapers of general circulation and published
in Virginia. Upon completion of publication or prior thereto the Com-
mission shall determine 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, thereupon 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 disap-
proving said filing. In the event of approval with modifications or
disapproval of a filing, the order of such approval or of disapproval shall
state the reasons therefor.

(d) Until October one, nineteen hundred forty-eight, an insurer
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 Oct-
ober 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
rating plan previously approved by the Commission may be used pending
such approval.

(e) Any special filing with respect to a fidelity, guaranty, indemnity
or surety bond required by law or by court or executive order or by order,
rule or regulation of a public body, not covered by a previous filing, shall
become effective when filed and shall be deemed to meet the requirements
of this act until such time as the Commission reviews the filing and so
long thereafter as the filing remains in effect; provided, however, that if
at any time after a special fidelity, guaranty, indemnity or surety filing
subject to this subsection has become effective, the Commission finds that
such filing does not meet the requirements of this act, it shall send to the
insurer or rating organization which made such filing written notice of
disapproval of such filing specifying therein in what respects the Com-
mission finds that such filing fails to meet the requirements of this act
and stating when, within a reasonable period thereafter, such filing shall
be deemed no longer effective. Said disapproval shall not affect any con-
tract made or issued prior to the expiration of the period set forth in said
notice.

(f) Under such rules and regulations as it shall adopt the Com-
mission may, by written order, suspend or modify the requirement of
filing, provided in this act, as to any kind of insurance subdivision or
combination thereof, or as to classes of risks, the rates for which cannot
practicably be filed before they are used. Such orders, rules and regula-
tions shall be made known to insurers and rating organizations affected
therebv. The Commission may make such examination as it may deem
advisable to ascertain whether any rates affected by such order meet the
standards set forth in subdivision (4) 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 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.

Section 4. Rating organizations—(a) A corporation, an unincor-
porated 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 subdivisions
thereof within the scope of this act as are specified in its application and
shall file therewith (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 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 affect-
ing 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 require-
ments of law, it shall issue a license specifying the kinds of insurance or
subdivision thereof for which the applicant is authorized to act as a rating
organization. Every such application shall be granted or denied in whole
or in part by the Commission within sixty days of the date of its filing
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. Licenses issued pursuant
to this section may be suspended or revoked by the Commission, after
hearing upon notice, in the event the rating organization ceases to meet
the requirements of this subsection. Every rating organization shall notify
the Commission promptly of every change in (1) its constitution, its
articles of agreement or association 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 organization may be
served.

(b) Subject to rules and regulations which have been approved by
the Commission as reasonable, each such rating organization shall permit
any insurer, not a member, to be a subscriber to its rating services for
any kind of insurance or subdivision thereof 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 rating organization
shall furnish its rating services without discrimination to its members
and subscribers. The reasonableness of any rule or regulation in its appli-
cation to subscribers, or the refusal of any rating organization to admit
an insurer as a subscriber, shall, at the request of any subscriber or any
such insurer, be reviewed by the Commission at a hearing held upon at
least ten days’ written notice to such rating organization and to such sub-
scriber or insurer. If the Commission finds that such rule or regulation is
unreasonable in its application to subscribers, it shall order that such rule
or regulation shall not be applicable to subscribers. If the rating organiza-
tion 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 Commis-
sion 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 subscriber. If the Commission
finds that the action of the rating organization was justified, it shall make
an order affirming its action.

(c) No rating organization 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
policyholders, 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 Commission may review such cooper-
ative 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 other-
wise inconsistent with the provisions of this act, and requiring the dis-
continuance of such activity or practice.

(e) A rating organization may subscribe for or purchase actuarial,
technical or other services, and any such services shall be available to all
members of the rating organization without discrimination.

(£) As to the types of insurance to which this.act applies, for which
it files rates, the rating organization 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 reason-
able rules governing their submission and the correction of any errors or
omissions therein. Such rules shall contain a provision that in the event
any company or other 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 the attention of such company or other
insurer by the rating organization, it shall be the duty of the rating organi-
zation to notify the Commission thereof. All information so submitted for
examination shall be confidential but shall be available to the Commission
upon its request.

Section 5. Deviations—Every member of or subscriber to a rating
organization shall adhere to the filings made on its behalf by such organi-
zation except that any such insurer may make written application to the
Commission for permission to file a uniform percentage decrease or
increase to be applied to the premiums produced by the rating system so
filed for a kind of insurance or for a class of insurance which ts found
by the Commission to be a proper rating unit for the application of such
uniform percentage decrease or increase, or for a subdivision of a kind
of insurance (1) comprised of a group of manual classifications which is
treated as a separate unit for rate making purposes, or (2) for which
separate expense provisions are included in the filings of the rating
organization. Such application shall specify the basis for the modification
and shall be accompanied by the data upon which the applicant relies. A
copy of the application and data shall be sent simultaneously to such
rating organization. The Commission shall set a time and place for a
hearing at which the 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 appli-
cant, waive such hearing. The Commission shall issue an order permitting
the modification for such insurer to be filed if it finds it to be justified
and it shall thereupon become effective. It shall issue an order denying
such application if it finds that the modification is not justified or that the
resulting premiums would be excessive, inadequate or unfairly discrimin-
atory. Each deviation permitted to be filed shall be effective for a period
of one year from the date of such permission unless terminated sooner
with the approval of the Commission, provided 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 may appeal to the Commission from the action or
decision of such rating organization in approving or rejecting any pro-
posed 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 organization, 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 rating 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 direct-
ing the rating organization to make an addition to its filings, on behalf
of its members and subscribers, in a manner consistent with findings of
the Commission, within a reasonable time after the issuance of such order.

If such appeal is based upon the failure of the rating organization to
make a filing on behalf of such member or subscriber which is based on
a system of expense provisions, which differs, in accordance with the
right granted in subdivision (2) of subsection (a) of section two, from
the system of expense provisions included in a filing made by the rating
organization, the Commission shall, if it grants the appeal, order the
rating organization to make the requested filing for use by the appellant.
In deciding such appeal the Commission shall apply the standards set
forth in section two. .

Section 7. Information to be furnished insured ; hearing and appeals
of insureds.—Every rating organization and every insurer which makes
its own rates 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 information as to
such rate. Every rating organization and every insurer which makes its
own rates shall provide within this State reasonable means whereby any
person aggrieved by the application of its rating system may be heard,
in person or by his authorized representative, on his written request to
review the manner in which such rating system has been applied in con-
nection 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 proceed in the same manner as if his application
had been rejected. Any party affected by the action of such rating organi-
zation 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.

Section 8. Advisory organization—(a) Every group, association
or other ‘organization of insurers, whether located within or outside this
State, which assists insurers which make their own filings or rating
organizations in rate making, 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 Commission (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 gov-
erning 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 accord-
ance with the provisions of section ten of this act.

(c) If, after a hearing, the Commission finds that the furnishing of
such information or assistance involves any 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 prac-
tice is unfair or unreasonable or otherwise inconsistent with the provi-
sions of this act, and requiring the discontinuance of such act or practice.

(d) No insurer which makes its own filings nor any rating organi-
zation shall support its filings by statistics or adopt rate making
recommendations, furnished to it by an advisory organization 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 organiza-
tion to be in violation of this subsection it may issue an order requiring
the discontinuance of such violation.

Section 9. Joint underwriting reinsurance.—(a) Every group,
association or other organization of insurers which engages in joint
underwriting or joint reinsurance, 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 ten, fifteen and sixteen 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 10. Examinations.—The Commission shall, at least once in
five years, make or cause to be made an examination of each rating organ-
ization licensed in this State as provided in section four and it may, as
often as it may deem it expedient, make or cause to made an examination
of each advisory organization referred to in section eight and of each
group, association or other organization referred to in section nine. 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 officer, 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, documents 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 insur-
ance 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 11. Administration—(a) The Commission 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. 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 prorating of
countrywide expense experience. In promulgating such rules and plans,
the Commission shall give due consideration to the rating systems 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 organizations or other agencies to assist
it in gathering such experience and making compilations thereof, and such
compilations shall be made available, subject to reasonable rules promul-
gated by the Commission, to insurers and rating organizations.

(b) Reasonable rules and plans may be promulgated by the Com-
mission for the interchange of data necessary for the application of rating.

lans.
P (c) In order to further uniform administration of rate regulatory
laws, the Commission and every insurer and rating organization 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 regulations
necessary to effect the purposes of this act.

Section 12. False or misleading information—No person or organi-
zation shall wilfully withhold information from, or knowingly give false
or misleading information to the Commission, any statistical agency
designated by the Commission, any rating organization, 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 fifteen of this act.

Section 13. Assigned risks—Agreements may be made among
insurers with respect to the equitable apportionment among them of
insurance which may be afforded applicants who are in good faith entitled
to but who are unable to procure such insurance through ordinary
methods and such insurers may agree among themselves on the use of
reasonable rate modifications for such insurance, such agreements and
rate modifications to be subject to the approval of the Commission.

Section 14. Virginia Automobile. Rate Administrative Bureau.—
Every insurer writing in this State motor vehicle insurance of the type
coming within the scope of this act shall be a member of the Virginia
Automobile Rate Administrative Bureau heretofore created, organized,
and now existing under the provisions of, and in accordance with, section
four of chapter two hundred thirty-one of the Acts of Assembly of nine-
teen hundred thirty-two, as amended, which Bureau is hereby continued.
The Bureau shall administer such motor vehicle insurance rates and,
subject to the approval of the Commission, shall have the power to make
reasonable rules and regulations necessary to carry out its functions. The
Bureau shall be located in the city of Richmond.
Section 15. Penalties——(a) Any person, organization or insurer
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, organiza-
tion 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 suspen-
sion or revocation of license shall become effective and the suspension or
revocation shall remain in effect for the period fixed by it, unless the
Commission 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 shail 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 16. Hearings and judicial review.—(a) Any person, organi-
zation 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 thereafter 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 Ap-
peals of Virginia from any final order or decision of the Commission with
respect to any matter coming within the purview of this act.

Section 17. Constitutionality—If any section, subsection, subdivi-
sion, paragraph, sentence or clause of this act is held invalid or unconsti-
tutional, such decision shall not affect the remaining portions of this act.

Chapter two hundred thirty-one of the Acts of Assembly of nine-
teen hundred thirty-two, approved March twenty-three, nineteen hundred
thirty-two, as amended, and section three of chapter four hundred forty-
nine of the Acts of Assembly, nineteen hundred twenty-eight, approved
March twenty-six, nineteen hundred twenty-eight, are repealed.

3. All acts and parts of acts inconsistent with the provisions of this
act are repealed to the extent of such inconsistency.

4. This act shall take effect on July one, nineteen hundred forty-
eight.