                                 CODE OF VIRGINIA

INSURANCE SALES BY DEPOSITORY INSTITUTIONS AND OTHER LENDING INSTITUTIONS (§
38.2-513.1)

A. No depository institution, in the sale or solicitation of insurance, shall:

   1. Reject an insurance policy required in connection with a loan or extension
   of credit solely because the policy has been issued or underwritten by a
   person who is not associated with such depository institution or its
   affiliate;

   2. Require a debtor, insurer, agent, or surplus lines broker to pay a separate
   charge in connection with the handling of insurance required in connection
   with a loan or extension of credit or other banking product, unless such
   charge would be required when the depository institution or its affiliate is
   the licensed agent or surplus lines broker;

   3. Use any advertisement that would cause a reasonable person to believe
   mistakenly that (i) the federal government or the Commonwealth is responsible
   for the insurance sales activities of, or stands behind the credit of, the
   depository institution or its affiliate; or (ii) the federal government or the
   Commonwealth guarantees any returns on insurance products or is a source of
   payment on any insurance obligation of or sold by the depository institution
   or its affiliate;

   4. Act as an agent unless licensed in accordance with the provisions of
   Chapter 18 (&#xA7; 38.2-1800 et seq.) of this title;

   5. Pay or receive commissions or other valuable consideration except in
   accordance with the provisions of Chapter 18 (&#xA7; 38.2-1800 et seq.) of
   this title; however, nothing herein shall prohibit the payment of compensation
   to a person not licensed under Chapter 18 (&#xA7; 38.2-1800 et seq.) of this
   title for the referral of a customer, provided that (i) such compensation is
   not based on the purchase of insurance by the customer, (ii) such compensation
   is a one-time, nominal fee of a fixed dollar amount for each referral, and
   (iii) the referral does not include a discussion of specific insurance policy
   terms and conditions;

   6. Release insurance information of a customer to any person other than an
   officer, director, employee, agent, or affiliate of the depository
   institution, for the purpose of soliciting or selling insurance, without the
   express written consent of the customer. This provision shall not apply to (i)
   the release of information as otherwise authorized by state or federal law or
   (ii) the transfer of insurance information to an unaffiliated insurer in
   connection with transferring insurance in force on existing insureds of the
   depository institution or its affiliate, or in connection with a merger with
   or acquisition of an unaffiliated insurer. A depository institution or its
   affiliate shall be deemed to be in compliance with this paragraph if it
   complies with Chapter 6 (&#xA7; 38.2-600 et seq.) of this title;

   7. Use, disclose, or release health information obtained from the insurance
   records of a customer for any purpose other than for its activities as a
   licensed agent or surplus lines broker, without the express written consent of
   the customer. A depository institution or its affiliate shall be deemed to be
   in compliance with this paragraph if it complies with Chapter 6 (&#xA7;
   38.2-600 et seq.) of this title;

   8. Extend credit or provide any product or service that is equivalent to an
   extension of credit, lease or sell property of any kind, furnish any services,
   or fix or vary the consideration for any of the foregoing on the condition or
   requirement that the customer obtain insurance from the depository institution
   or its affiliate, or a particular insurer, agent, or surplus lines broker;
   except that nothing shall prohibit the depository institution or its affiliate
   from:
   				a. Engaging in any activity that would not violate section 106 of the Bank
   Holding Company Act Amendments of 1970, as interpreted by the Board of
   Governors of the Federal Reserve System, or
   				b. Informing a customer that (i) insurance is required in order to obtain
   a loan or credit approval; (ii) the loan or credit approval is contingent upon
   the procurement by the customer of acceptable insurance; or (iii) insurance is
   available from the depository institution or its affiliate;

   9. Offer, sell, or require insurance in connection with a loan or extension of
   credit, when an application for a loan or extension of credit from a
   depository institution is pending, unless a written disclosure is given to the
   customer indicating that the customer&#8217;s choice of an insurer will not
   affect the credit decision or credit terms in any way; provided, however, that
   the depository institution may impose reasonable requirements concerning the
   creditworthiness of the insurer and the scope of coverage chosen. Any
   disapproval of an insurer shall be deemed unreasonable if it is not based on
   reasonable standards uniformly applied, relating to the extent of coverage
   required and the financial soundness and the services of an insurer. Such
   standards shall not discriminate against any particular type of insurer, nor
   shall such standards call for disapproval of an insurance policy because the
   policy contains coverage in addition to that required by the creditor. Use of
   the ratings of a nationally recognized rating service shall not be deemed
   unreasonable provided such ratings are based on reasonable standards uniformly
   applied. If an insurer, duly licensed in Virginia, does not possess the
   required rating of a nationally recognized rating service, no person who lends
   money or extends credit shall refuse to accept from the insurer a certificate
   of 100 percent reinsurance issued by another insurer pursuant to &#xA7;
   38.2-136, which does possess the required rating;

   10. Sell an insurance policy unless:
   				a. A clear and conspicuous disclosure is given, in writing, where
   practicable, to the customer prior to the sale stating that such insurance
   policy (i) is not a deposit; (ii) is not insured by the Federal Deposit
   Insurance Corporation or any other federal government agency; (iii) is not
   guaranteed by the depository institution or, if appropriate, its affiliate or
   any person soliciting or selling insurance on its premises; and (iv) where
   appropriate, involves investment risk, including the potential loss of
   principal, and
   				b. Written acknowledgment of the disclosure is obtained from the customer
   at the time the customer receives the disclosure or at the time of the initial
   purchase of the insurance policy;

   11. Solicit or sell insurance, other than credit insurance or flood insurance,
   unless such solicitation or sale is completed through documents separate from
   any credit transactions;

   12. Include the expense of insurance premiums, other than credit insurance
   premiums, title insurance premiums, or flood insurance premiums, in the
   primary credit transaction without the express written consent of the
   customer; or

   13. Solicit or sell insurance unless (i) its insurance sales activities are,
   to the extent practicable, physically segregated from areas where retail
   deposits are routinely accepted; (ii) it maintains separate and distinct books
   and records relating to such insurance transactions for the three previous
   calendar years; and (iii) it makes all such books and records available to the
   Commission for inspection upon reasonable notice.

B. As used in this section:
			&#8220;Affiliate&#8221; means any company that controls, is controlled by, or
is under common control with another company.
			&#8220;Credit insurance&#8221; means the lines of insurance defined in
&#xA7;&#xA7; 38.2-103, 38.2-108, 38.2-122.1, and 38.2-122.2.
			&#8220;Customer&#8221; means an individual who obtains, applies for, or is
solicited to obtain insurance.
			&#8220;Depository institution&#8221; means any bank or savings association.
			&#8220;Insurance information&#8221; means information concerning the
premiums, terms, and conditions of insurance coverage, including expiration
dates and rates, and insurance claims of a customer contained in the records of
a depository institution or its affiliate.

C. Notwithstanding anything to the contrary, the provisions of this section,
except subdivision A. 10., shall also apply to any person who lends money or
extends credit and who sells or solicits any insurance as classified and defined
in Article 2 (&#xA7; 38.2-101 et seq.) of Chapter 1 of this title in connection
therewith. However, this section shall not apply to premium finance companies
licensed under Chapter 47 (&#xA7; 38.2-4700 et seq.) of this title or agents who
extend credit as authorized in &#xA7; 38.2-1806 to the extent that such premium
finance companies or agents are not affiliated with a depository institution.

D. If the customer agrees, the written disclosures and acknowledgements required
by subsection A of this section may be provided electronically. Such disclosures
shall be provided in a format that the customer may retain and reproduce for
later reference. When a purchase of insurance is made by telephone, the
disclosures and acknowledgements required by subsection A of this section may be
given orally, provided that (i) such disclosures are mailed or provided in
electronic form within three working days after the sale, solicitation, or offer
of the insurance policy; (ii) documentation is maintained showing that oral
acknowledgement was given by the customer; and (iii) a reasonable effort is made
to obtain written acknowledgement from the customer.

E. The Commission shall have the power to examine and investigate the affairs of
any person to whom this section applies to determine whether that person has
violated this section. If a violation of this section is found, the person in
violation shall be subject to the same procedures and penalties as are
applicable to other provisions of this chapter.

F. Except as provided for specifically in subsection A, this section shall not
prevent or restrict a depository institution or its affiliate from engaging
directly or indirectly, either by itself or in conjunction with an affiliate, or
any other person, in any activity authorized or permitted under state or federal
law.

HISTORY: 2001, c. 371; 2002, c. 76.