{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-1360.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-1360.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-1360.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-1360.html"}],"law_id":66843,"edition_id":1,"section_id":66843,"structure_id":13457,"section_number":"38.2-1360","catch_line":"Required contract provisions","history":"2001, c. 706.","full_text":"No insurer shall retain or act through a managing general agent unless there is in force a written contract between said insurer and its managing general agent that sets forth the responsibilities of each party and where both parties share responsibility for a particular function, specifies the division of such responsibilities, and that contains the following minimum provisions:\n\n1\n\nThe insurer may terminate the contract for cause upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination.2\n\nThe managing general agent will render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis.3\n\nAll funds collected for the account of an insurer will be held by the managing general agent in a fiduciary capacity in a bank that is a qualified United States financial institution. This account shall be used for all payments on behalf of the insurer. The managing general agent may retain no more than three months’ estimated claims payments and allocated loss adjustment expenses. The managing general agent shall maintain a separate bank account for each insurer it represents.4\n\nSeparate records of business written by the managing general agent will be maintained. The insurer shall have reasonable access to and the right to copy all accounts and records related to its business in a form usable by the insurer, and the Commission shall have access to all books, bank accounts and records of the managing general agent in a form usable by the Commission. Such records shall be retained in order to accomplish the purpose of subdivision 9 of this section but in no case for a period of less than five years.5\n\nThe contract may not be assigned in whole or part by the managing general agent.6\n\nAppropriate underwriting guidelines including:\n\t\t\ta. The maximum annual premium volume;\n\t\t\tb. The basis of the rates to be charged;\n\t\t\tc. The types of risks that may be written;\n\t\t\td. Maximum limits of liability;\n\t\t\te. Applicable exclusions;\n\t\t\tf. Territorial limitations;\n\t\t\tg. Policy cancellation provisions; and\n\t\t\th. The maximum policy period.\n\t\t\tThe insurer shall have the right to cancel or nonrenew any policy of insurance subject to the applicable laws and regulations.7\n\nIf the contract permits the managing general agent to settle claims on behalf of the insurer:\n\t\t\ta. All claims must be reported to the insurer in a timely manner.\n\t\t\tb. A copy of the claim file will be sent to the insurer at its request or as soon as it becomes known that the claim:1\n\nHas the potential to exceed one percent of the insurer’s surplus to policyholders as of December 31 of the last completed calendar year, an amount set by the company, or any other amount deemed appropriate by the Commission, whichever is less;2\n\nInvolves a coverage dispute;3\n\nMay exceed the managing general agent’s claims settlement authority;4\n\nIs open for more than six months; or5\n\nIs closed by payment of an amount exceeding one percent of the insurer’s surplus to policyholders as of December 31 of the last completed calendar year, an amount set by the company, or any other amount deemed appropriate by the Commission, whichever is less.\n\t\t\t\tc. All claim files will be the joint property of the insurer and the managing general agent. However, upon entry of an order of liquidation or the appointment of a receiver for the liquidation of an insurer, such files shall become the sole property of the insurer or its estate; the managing general agent shall have reasonable access to and the right to copy the files on a timely basis.\n\t\t\t\td. Any settlement authority granted to the managing general agent may be terminated for cause upon the insurer’s written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination.8\n\nWhere electronic claims files are in existence, the contract must address the timely transmission of the data.9\n\nIf the contract provides for a sharing of interim profits by the managing general agent, and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid to the managing general agent until the profits have been verified pursuant to subsection B of § 38.2-1361 (i) one year after they are earned for property insurance business and health insurance business and (ii) five years after they are earned on casualty insurance business.10\n\nThe managing general agent shall not:\n\t\t\ta. Bind reinsurance contracts or similar risk sharing arrangements, except that a managing general agent who acts on behalf of a ceding insurer may bind facultative reinsurance contracts by placing individual risks pursuant to obligatory facultative agreements provided that the contract between the insurer and the managing general agent contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules;\n\t\t\tb. Commit the insurer to participate in insurance or reinsurance syndicates;\n\t\t\tc. Appoint any agent unless (i) the agent is lawfully licensed to transact the type of insurance for which he is appointed and (ii) the insurer has notified the Commission of the managing general agent’s authorization to appoint agents on its behalf;\n\t\t\td. Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which amount shall not exceed one percent of the insurer’s surplus to policyholders as of December 31 of the last completed calendar year;\n\t\t\te. Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer;\n\t\t\tf. Permit any agent appointed by the managing general agent to serve on the insurer’s board of directors;\n\t\t\tg. Jointly employ an individual who is employed with the insurer; or\n\t\t\th. Utilize or engage a submanaging general agent.","order_by":null,"text":{"0":{"id":242373,"text":"No insurer shall retain or act through a managing general agent unless there is in force a written contract between said insurer and its managing general agent that sets forth the responsibilities of each party and where both parties share responsibility for a particular function, specifies the division of such responsibilities, and that contains the following minimum provisions:","type":"section","prefixes":[""],"prefix":"","entire_prefix":"","prefix_anchor":"","level":1,"next_prefix":"1"},"1":{"id":242374,"text":"The insurer may terminate the contract for cause upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination.","type":"section","prefixes":["1"],"prefix":"1","entire_prefix":"1","prefix_anchor":"1","level":1,"prior_prefix":"","next_prefix":"2"},"2":{"id":242375,"text":"The managing general agent will render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis.","type":"section","prefixes":["2"],"prefix":"2","entire_prefix":"2","prefix_anchor":"2","level":1,"prior_prefix":"1","next_prefix":"3"},"3":{"id":242376,"text":"All funds collected for the account of an insurer will be held by the managing general agent in a fiduciary capacity in a bank that is a qualified United States financial institution. This account shall be used for all payments on behalf of the insurer. The managing general agent may retain no more than three months’ estimated claims payments and allocated loss adjustment expenses. The managing general agent shall maintain a separate bank account for each insurer it represents.","type":"section","prefixes":["3"],"prefix":"3","entire_prefix":"3","prefix_anchor":"3","level":1,"prior_prefix":"2","next_prefix":"4"},"4":{"id":242377,"text":"Separate records of business written by the managing general agent will be maintained. The insurer shall have reasonable access to and the right to copy all accounts and records related to its business in a form usable by the insurer, and the Commission shall have access to all books, bank accounts and records of the managing general agent in a form usable by the Commission. Such records shall be retained in order to accomplish the purpose of subdivision 9 of this section but in no case for a period of less than five years.","type":"section","prefixes":["4"],"prefix":"4","entire_prefix":"4","prefix_anchor":"4","level":1,"prior_prefix":"3","next_prefix":"5"},"5":{"id":242378,"text":"The contract may not be assigned in whole or part by the managing general agent.","type":"section","prefixes":["5"],"prefix":"5","entire_prefix":"5","prefix_anchor":"5","level":1,"prior_prefix":"4","next_prefix":"6"},"6":{"id":242379,"text":"Appropriate underwriting guidelines including:\n\t\t\ta. The maximum annual premium volume;\n\t\t\tb. The basis of the rates to be charged;\n\t\t\tc. The types of risks that may be written;\n\t\t\td. Maximum limits of liability;\n\t\t\te. Applicable exclusions;\n\t\t\tf. Territorial limitations;\n\t\t\tg. Policy cancellation provisions; and\n\t\t\th. The maximum policy period.\n\t\t\tThe insurer shall have the right to cancel or nonrenew any policy of insurance subject to the applicable laws and regulations.","type":"section","prefixes":["6"],"prefix":"6","entire_prefix":"6","prefix_anchor":"6","level":1,"prior_prefix":"5","next_prefix":"7"},"7":{"id":242380,"text":"If the contract permits the managing general agent to settle claims on behalf of the insurer:\n\t\t\ta. All claims must be reported to the insurer in a timely manner.\n\t\t\tb. A copy of the claim file will be sent to the insurer at its request or as soon as it becomes known that the claim:","type":"section","prefixes":["7"],"prefix":"7","entire_prefix":"7","prefix_anchor":"7","level":1,"prior_prefix":"6","next_prefix":"71"},"8":{"id":242381,"text":"Has the potential to exceed one percent of the insurer’s surplus to policyholders as of December 31 of the last completed calendar year, an amount set by the company, or any other amount deemed appropriate by the Commission, whichever is less;","type":"section","prefixes":["7","1"],"prefix":"1","entire_prefix":"71","prefix_anchor":"71","level":2,"prior_prefix":"7","next_prefix":"72"},"9":{"id":242382,"text":"Involves a coverage dispute;","type":"section","prefixes":["7","2"],"prefix":"2","entire_prefix":"72","prefix_anchor":"72","level":2,"prior_prefix":"71","next_prefix":"73"},"10":{"id":242383,"text":"May exceed the managing general agent’s claims settlement authority;","type":"section","prefixes":["7","3"],"prefix":"3","entire_prefix":"73","prefix_anchor":"73","level":2,"prior_prefix":"72","next_prefix":"74"},"11":{"id":242384,"text":"Is open for more than six months; or","type":"section","prefixes":["7","4"],"prefix":"4","entire_prefix":"74","prefix_anchor":"74","level":2,"prior_prefix":"73","next_prefix":"75"},"12":{"id":242385,"text":"Is closed by payment of an amount exceeding one percent of the insurer’s surplus to policyholders as of December 31 of the last completed calendar year, an amount set by the company, or any other amount deemed appropriate by the Commission, whichever is less.\n\t\t\t\tc. All claim files will be the joint property of the insurer and the managing general agent. However, upon entry of an order of liquidation or the appointment of a receiver for the liquidation of an insurer, such files shall become the sole property of the insurer or its estate; the managing general agent shall have reasonable access to and the right to copy the files on a timely basis.\n\t\t\t\td. Any settlement authority granted to the managing general agent may be terminated for cause upon the insurer’s written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination.","type":"section","prefixes":["7","5"],"prefix":"5","entire_prefix":"75","prefix_anchor":"75","level":2,"prior_prefix":"74","next_prefix":"8"},"13":{"id":242386,"text":"Where electronic claims files are in existence, the contract must address the timely transmission of the data.","type":"section","prefixes":["8"],"prefix":"8","entire_prefix":"8","prefix_anchor":"8","level":1,"prior_prefix":"75","next_prefix":"9"},"14":{"id":242387,"text":"If the contract provides for a sharing of interim profits by the managing general agent, and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid to the managing general agent until the profits have been verified pursuant to subsection B of § 38.2-1361 (i) one year after they are earned for property insurance business and health insurance business and (ii) five years after they are earned on casualty insurance business.","type":"section","prefixes":["9"],"prefix":"9","entire_prefix":"9","prefix_anchor":"9","level":1,"prior_prefix":"8","next_prefix":"10"},"15":{"id":242388,"text":"The managing general agent shall not:\n\t\t\ta. Bind reinsurance contracts or similar risk sharing arrangements, except that a managing general agent who acts on behalf of a ceding insurer may bind facultative reinsurance contracts by placing individual risks pursuant to obligatory facultative agreements provided that the contract between the insurer and the managing general agent contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules;\n\t\t\tb. Commit the insurer to participate in insurance or reinsurance syndicates;\n\t\t\tc. Appoint any agent unless (i) the agent is lawfully licensed to transact the type of insurance for which he is appointed and (ii) the insurer has notified the Commission of the managing general agent’s authorization to appoint agents on its behalf;\n\t\t\td. Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which amount shall not exceed one percent of the insurer’s surplus to policyholders as of December 31 of the last completed calendar year;\n\t\t\te. Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer;\n\t\t\tf. Permit any agent appointed by the managing general agent to serve on the insurer’s board of directors;\n\t\t\tg. Jointly employ an individual who is employed with the insurer; or\n\t\t\th. Utilize or engage a submanaging general agent.","type":"section","prefixes":["10"],"prefix":"10","entire_prefix":"10","prefix_anchor":"10","level":1,"prior_prefix":"9"}},"ancestry":[{"id":13457,"edition_id":1,"name":"Licensing of Managing General Agents","identifier":"9","label":"article","depth":3,"order_by":1,"parent_id":13289,"metadata":{},"date_created":"2026-06-26 03:44:55","date_modified":"2026-06-26 03:44:55","permalink":{"id":211857,"object_type":"structure","relational_id":13457,"identifier":"9","token":"38.2\/13\/9","url":"\/38.2\/13\/9\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13289,"edition_id":1,"name":"Reports, Reserves and Examinations, Insurance Holding Companies, Reinsurance Intermediaries, and Managing General Agents","identifier":"13","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:44:35","date_modified":"2026-06-26 03:44:35","permalink":{"id":211347,"object_type":"structure","relational_id":13289,"identifier":"13","token":"38.2\/13","url":"\/38.2\/13\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":82605,"structure_id":13457,"section_number":"38.2-1358","catch_line":"Definitions","url":"\/38.2-1358\/","token":"38.2\/13\/9\/38.2-1358","metadata":false},{"id":84337,"structure_id":13457,"section_number":"38.2-1359","catch_line":"Licensure","url":"\/38.2-1359\/","token":"38.2\/13\/9\/38.2-1359","metadata":false},{"id":66843,"structure_id":13457,"section_number":"38.2-1360","catch_line":"Required contract provisions","url":"\/38.2-1360\/","token":"38.2\/13\/9\/38.2-1360","metadata":false},{"id":57894,"structure_id":13457,"section_number":"38.2-1361","catch_line":"Duties of insurers utilizing managing general agents","url":"\/38.2-1361\/","token":"38.2\/13\/9\/38.2-1361","metadata":false},{"id":54417,"structure_id":13457,"section_number":"38.2-1362","catch_line":"Examination authority","url":"\/38.2-1362\/","token":"38.2\/13\/9\/38.2-1362","metadata":false},{"id":83354,"structure_id":13457,"section_number":"38.2-1363","catch_line":"Penalties and liabilities; grounds for placing on probation, refusal to issue or renew, revocation, or suspension of license","url":"\/38.2-1363\/","token":"38.2\/13\/9\/38.2-1363","metadata":false},{"id":69749,"structure_id":13457,"section_number":"38.2-1364","catch_line":"Requirement to report to Commission","url":"\/38.2-1364\/","token":"38.2\/13\/9\/38.2-1364","metadata":false}],"previous_section":{"id":84337,"structure_id":13457,"section_number":"38.2-1359","catch_line":"Licensure","url":"\/38.2-1359\/","token":"38.2\/13\/9\/38.2-1359","metadata":false},"next_section":{"id":57894,"structure_id":13457,"section_number":"38.2-1361","catch_line":"Duties of insurers utilizing managing general agents","url":"\/38.2-1361\/","token":"38.2\/13\/9\/38.2-1361","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-1360\/","history_text":"

This law was first created in 2001. The record of its establishment is cataloged in chapter 706<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year.<\/p>","references":[{"id":58348,"section_number":"38.2-1347","catch_line":"Definitions","order_by":null,"url":"\/38.2-1347\/"},{"id":57894,"section_number":"38.2-1361","catch_line":"Duties of insurers utilizing managing general agents","order_by":null,"url":"\/38.2-1361\/"}],"refers_to":[{"id":57894,"section_number":"38.2-1361","catch_line":"Duties of insurers utilizing managing general agents","order_by":null,"url":"\/38.2-1361\/"}],"permalink":{"id":211867,"object_type":"law","relational_id":66843,"identifier":"38.2-1360","token":"38.2\/13\/9\/38.2-1360","url":"\/38.2-1360\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-1360\/","token":"38.2\/13\/9\/38.2-1360","dublin_core":{"Title":"Required contract provisions","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-1360","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

No insurer<\/span> shall retain or act through a managing general agent<\/span> unless there is in force a written contract<\/span> between said insurer<\/span> and its managing general agent<\/span> that sets forth the responsibilities of each party<\/span> and where both parties share responsibility for a particular function, specifies the division of such responsibilities, and that contains the following minimum provisions:<\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The insurer<\/span> may terminate the contract<\/span> for cause upon written notice to the managing general agent<\/span>. The insurer<\/span> may suspend the underwriting authority of the managing general agent<\/span> during the pendency of any dispute regarding the cause for termination. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The managing general agent<\/span> will render accounts to the insurer<\/span> detailing all transactions and remit all funds due under the contract<\/span> to the insurer<\/span> on not less than a monthly basis. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> All funds collected for the account of an insurer<\/span> will be held by the managing general agent<\/span> in a fiduciary capacity in a bank that is a qualified United States financial institution<\/span>. This account shall be used for all payments on behalf of the insurer<\/span>. The managing general agent<\/span> may retain no more than three months’ estimated claims payments and allocated loss adjustment expenses. The managing general agent<\/span> shall maintain a separate bank account for each insurer<\/span> it represents. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Separate records of business written by the managing general agent<\/span> will be maintained. The insurer<\/span> shall have reasonable access to and the right to copy all accounts and records related to its business in a form usable by the insurer<\/span>, and the Commission<\/span> shall have access to all books, bank accounts and records of the managing general agent<\/span> in a form usable by the Commission<\/span>. Such records shall be retained in order<\/span> to accomplish the purpose of subdivision 9 of this section but in no case for a period of less than five years. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> The contract<\/span> may not be assigned in whole or part by the managing general agent<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Appropriate underwriting guidelines including:\n\t\t\ta. The maximum annual premium volume;\n\t\t\tb. The basis of the rates<\/span><\/span> to be charged;\n\t\t\tc. The types of risks that may be written;\n\t\t\td. Maximum limits of liability;\n\t\t\te. Applicable exclusions;\n\t\t\tf. Territorial limitations;\n\t\t\tg. Policy cancellation provisions; and\n\t\t\th. The maximum policy period.\n\t\t\tThe insurer<\/span> shall have the right to cancel or nonrenew any policy of insurance<\/span> subject to the applicable laws<\/span> and regulations. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> If the contract<\/span> permits the managing general agent<\/span> to settle claims on behalf of the insurer<\/span>:\n\t\t\ta. All claims must be reported to the insurer<\/span> in a timely manner.\n\t\t\tb. A copy of the claim file will be sent to the insurer<\/span> at its request or as soon as it becomes known that the claim: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Has the potential to exceed one percent of the insurer<\/span>’s surplus to policyholders<\/span> as of December 31 of the last completed calendar year, an amount set by the company<\/span>, or any other amount deemed appropriate by the Commission<\/span>, whichever is less; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Involves a coverage dispute; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> May exceed the managing general agent<\/span>’s claims settlement<\/span> authority; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Is open for more than six months; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> Is closed by payment of an amount exceeding one percent of the insurer<\/span>’s surplus to policyholders<\/span> as of December 31 of the last completed calendar year, an amount set by the company<\/span>, or any other amount deemed appropriate by the Commission<\/span>, whichever is less.\n\t\t\t\tc. All claim files will be the joint property of the insurer<\/span> and the managing general agent<\/span>. However, upon entry of an order<\/span> of liquidation<\/span> or the appointment of a receiver for the liquidation<\/span> of an insurer<\/span>, such files shall become the sole property of the insurer<\/span> or its estate; the managing general agent<\/span> shall have reasonable access to and the right to copy the files on a timely basis.\n\t\t\t\td. Any settlement<\/span> authority granted to the managing general agent<\/span> may be terminated for cause upon the insurer<\/span>’s written notice to the managing general agent<\/span> or upon the termination of the contract<\/span>. The insurer<\/span> may suspend the settlement<\/span> authority during the pendency of any dispute regarding the cause for termination. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

8.<\/span> Where electronic claims files are in existence, the contract<\/span> must address the timely transmission of the data. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

9.<\/span> If the contract<\/span> provides for a sharing of interim profits by the managing general agent<\/span>, and the managing general agent<\/span> has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid to the managing general agent<\/span> until the profits have been verified pursuant to subsection B of § 38.2-1361<\/a> (i) one year after they are earned for property insurance<\/span> business and health insurance<\/span> business and (ii) five years after they are earned on casualty insurance<\/span> business. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

10.<\/span> The managing general agent<\/span> shall not:\n\t\t\ta. Bind reinsurance contracts<\/span> or similar risk sharing arrangements, except that a managing general agent<\/span> who acts on behalf of a ceding insurer<\/span> may bind facultative reinsurance contracts<\/span> by placing individual risks pursuant to obligatory facultative agreements provided that the contract<\/span> between the insurer<\/span> and the managing general agent<\/span> contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission<\/span> schedules<\/span>;\n\t\t\tb. Commit the insurer<\/span> to participate in insurance<\/span> or reinsurance syndicates;\n\t\t\tc. Appoint any agent unless (i) the agent is lawfully licensed to transact the type of insurance<\/span> for which he is appointed and (ii) the insurer<\/span> has notified the Commission<\/span> of the managing general agent<\/span>’s authorization to appoint agents on its behalf;\n\t\t\td. Without prior approval of the insurer<\/span>, pay or commit the insurer<\/span> to pay a claim over a specified amount, net of reinsurance, which amount shall not exceed one percent of the insurer<\/span>’s surplus to policyholders<\/span> as of December 31 of the last completed calendar year;\n\t\t\te. Collect any payment from a reinsurer or commit the insurer<\/span> to any claim settlement<\/span> with a reinsurer, without prior approval of the insurer<\/span>. If prior approval is given, a report must be promptly forwarded to the insurer<\/span>;\n\t\t\tf. Permit any agent appointed by the managing general agent<\/span> to serve on the insurer<\/span>’s board of directors;\n\t\t\tg. Jointly employ an individual who is employed with the insurer<\/span>; or\n\t\t\th. Utilize or engage a submanaging general agent. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nREQUIRED CONTRACT PROVISIONS (\u00a7 38.2-1360)\n\nNo insurer shall retain or act through a managing general agent unless there is\nin force a written contract between said insurer and its managing general agent\nthat sets forth the responsibilities of each party and where both parties share\nresponsibility for a particular function, specifies the division of such\nresponsibilities, and that contains the following minimum provisions:\n\n1. The insurer may terminate the contract for cause upon written notice to the\nmanaging general agent. The insurer may suspend the underwriting authority of\nthe managing general agent during the pendency of any dispute regarding the\ncause for termination.\n\n2. The managing general agent will render accounts to the insurer detailing all\ntransactions and remit all funds due under the contract to the insurer on not\nless than a monthly basis.\n\n3. All funds collected for the account of an insurer will be held by the\nmanaging general agent in a fiduciary capacity in a bank that is a qualified\nUnited States financial institution. This account shall be used for all payments\non behalf of the insurer. The managing general agent may retain no more than\nthree months’ estimated claims payments and allocated loss adjustment\nexpenses. The managing general agent shall maintain a separate bank account for\neach insurer it represents.\n\n4. Separate records of business written by the managing general agent will be\nmaintained. The insurer shall have reasonable access to and the right to copy\nall accounts and records related to its business in a form usable by the\ninsurer, and the Commission shall have access to all books, bank accounts and\nrecords of the managing general agent in a form usable by the Commission. Such\nrecords shall be retained in order to accomplish the purpose of subdivision 9 of\nthis section but in no case for a period of less than five years.\n\n5. The contract may not be assigned in whole or part by the managing general\nagent.\n\n6. Appropriate underwriting guidelines including:\n\t\t\ta. The maximum annual premium volume;\n\t\t\tb. The basis of the rates to be charged;\n\t\t\tc. The types of risks that may be written;\n\t\t\td. Maximum limits of liability;\n\t\t\te. Applicable exclusions;\n\t\t\tf. Territorial limitations;\n\t\t\tg. Policy cancellation provisions; and\n\t\t\th. The maximum policy period.\n\t\t\tThe insurer shall have the right to cancel or nonrenew any policy of\ninsurance subject to the applicable laws and regulations.\n\n7. If the contract permits the managing general agent to settle claims on behalf\nof the insurer:\n\t\t\ta. All claims must be reported to the insurer in a timely manner.\n\t\t\tb. A copy of the claim file will be sent to the insurer at its request or as\nsoon as it becomes known that the claim:\n\n 1. Has the potential to exceed one percent of the insurer’s surplus to\n policyholders as of December 31 of the last completed calendar year, an amount\n set by the company, or any other amount deemed appropriate by the Commission,\n whichever is less;\n\n 2. Involves a coverage dispute;\n\n 3. May exceed the managing general agent’s claims settlement authority;\n\n 4. Is open for more than six months; or\n\n 5. Is closed by payment of an amount exceeding one percent of the\n insurer’s surplus to policyholders as of December 31 of the last\n completed calendar year, an amount set by the company, or any other amount\n deemed appropriate by the Commission, whichever is less.\n \t\t\t\tc. All claim files will be the joint property of the insurer and the\n managing general agent. However, upon entry of an order of liquidation or the\n appointment of a receiver for the liquidation of an insurer, such files shall\n become the sole property of the insurer or its estate; the managing general\n agent shall have reasonable access to and the right to copy the files on a\n timely basis.\n \t\t\t\td. Any settlement authority granted to the managing general agent may be\n terminated for cause upon the insurer’s written notice to the managing\n general agent or upon the termination of the contract. The insurer may suspend\n the settlement authority during the pendency of any dispute regarding the\n cause for termination.\n\n8. Where electronic claims files are in existence, the contract must address the\ntimely transmission of the data.\n\n9. If the contract provides for a sharing of interim profits by the managing\ngeneral agent, and the managing general agent has the authority to determine the\namount of the interim profits by establishing loss reserves or controlling claim\npayments, or in any other manner, interim profits will not be paid to the\nmanaging general agent until the profits have been verified pursuant to\nsubsection B of § 38.2-1361 (i) one year after they are earned for property\ninsurance business and health insurance business and (ii) five years after they\nare earned on casualty insurance business.\n\n10. The managing general agent shall not:\n\t\t\ta. Bind reinsurance contracts or similar risk sharing arrangements, except\nthat a managing general agent who acts on behalf of a ceding insurer may bind\nfacultative reinsurance contracts by placing individual risks pursuant to\nobligatory facultative agreements provided that the contract between the insurer\nand the managing general agent contains reinsurance underwriting guidelines\nincluding, for both reinsurance assumed and ceded, a list of reinsurers with\nwhich such automatic agreements are in effect, the coverages and amounts or\npercentages that may be reinsured and commission schedules;\n\t\t\tb. Commit the insurer to participate in insurance or reinsurance syndicates;\n\t\t\tc. Appoint any agent unless (i) the agent is lawfully licensed to transact\nthe type of insurance for which he is appointed and (ii) the insurer has\nnotified the Commission of the managing general agent’s authorization to\nappoint agents on its behalf;\n\t\t\td. Without prior approval of the insurer, pay or commit the insurer to pay a\nclaim over a specified amount, net of reinsurance, which amount shall not exceed\none percent of the insurer’s surplus to policyholders as of December 31 of\nthe last completed calendar year;\n\t\t\te. Collect any payment from a reinsurer or commit the insurer to any claim\nsettlement with a reinsurer, without prior approval of the insurer. If prior\napproval is given, a report must be promptly forwarded to the insurer;\n\t\t\tf. Permit any agent appointed by the managing general agent to serve on the\ninsurer’s board of directors;\n\t\t\tg. Jointly employ an individual who is employed with the insurer; or\n\t\t\th. Utilize or engage a submanaging general agent.\n\nHISTORY: 2001, c. 706.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}