CHAPTER 363

An Act to amend Title 38.1 of the Code of Virginia by adding thereto a
new section numbered 88.1-78, relating to management and exclusive
agency contracts of domestic insurers.

[H 308]

Approved April 2, 1954
Be it enacted by the General Assembly of Virginia:

1. That Title 38.1 of the Code of Virginia be amended by adding thereto
a new section numbered 38.1-78 as follows:

§ 38.1-78. Management and exclusive agency contracts.—No stock
or mutual insurance company, cooperative nonprofit life benefit company,
life and casualty cooperative or assessment company, burial society, fra-
ternal benefit society or mutual assessment fire insurance company in-
corporated under the laws of this State, hereinafter called the insurer,
shall make or enter into any contract whereby any person is granted or
is to enjoy in fact the control and management of such insurer, or the
controlling or preemptive right to produce substantially all insurance
business for such insurer, unless such contract is filed with and approved
by the State Corporation Commission. Any approval or disapproval shall
be delivered to the insurer in writing and in the case of disapproval the
grounds therefor shall be stated.

The Commission may disapprove any such contract which:

— (1) Subjects the insurer to excessive charges for expenses or com-
missions; or

(2) Does not contain fair and adequate standards of performance; or

(3) Is to extend for an unreasonable length of time; or

(4) Contains other inequitable provisions or provisions which may
jeopardize the security of policyholders.

The provisions of this act shall not affect contracts heretofore made
but shall apply to all renewals thereof made after the effective date of
this act.