                                 CODE OF VIRGINIA

PAYMENT AND SHARING OF COMMISSIONS (§ 38.2-1812)

A. No insurer shall pay directly or indirectly any commission or other valuable
consideration to any person for services as an agent or a surplus lines broker
within this Commonwealth unless the person is then a duly appointed agent of
such insurer and, at the time of the transaction out of which arose the right to
such commission or other valuable consideration, held a valid license as an
agent, or valid license as a surplus lines broker, for the class of insurance
involved.

B. No person other than a duly licensed and appointed agent or a surplus lines
broker may accept any such commission or other valuable consideration unless
such person, at the time of the transaction out of which arose the right to such
commission or other valuable consideration, held a valid license as an agent or
surplus lines broker for the class of insurance involved.

C. An agent of a home service insurer who is assigned a debit may receive, and
the insurer may pay, commissions on business written on the debit prior to the
agent&#8217;s becoming licensed and appointed, provided that the insurance was
sold by a duly licensed and appointed agent, and further provided that the agent
receiving the commission is duly licensed and, if appropriate, appointed on the
day such commissions are paid to and received by him.

D. This provision shall not prevent the payment or receipt of renewal or other
deferred commissions or compensation to or by any person if the person was duly
licensed and appointed, where the appointment was necessary, at the time of the
transactions out of which arose the right to such renewals or deferred
commissions or compensation.

E. This provision shall not prevent the payment of commissions to a trade name
which has been filed with the Bureau of Insurance pursuant to subsection E of
&#xA7; 38.2-1822.

F. Except as provided in subdivision B 8 of &#xA7; 38.2-1821.1, no agent or
surplus lines broker shall directly or indirectly share his commissions or other
compensation received or to be received by him on account of a transaction under
his license with any person not also then licensed under this chapter, for the
class of insurance involved in the transactions. No agent or surplus lines
broker not then licensed and qualified for the same class of insurance shall
receive any commission or other compensation. This provision shall not affect
payment of the regular salaries due employees of the licensee.

G. Notwithstanding any contrary provision of law, each insurer shall accept and
honor each request by a policyholder for a change of insurance agent of record,
which change shall be effective on the date of the next renewal of the policy,
unless the policyholder withdraws the request in writing, provided that the
change of insurance agent of record shall not be effective unless the proposed
new insurance agent of record is a duly appointed agent of the insurer. Prior to
the effective date of the change, the insurer shall provide written notice of
the change to the current insurance agent of record. The new insurance agent of
record shall be paid all commissions payable on the policy effective not later
than the next renewal date of the policy following the policyholder&#8217;s
requested change, excluding any commissions or other compensation payable under
an insurer&#8217;s retirement or deferred compensation plan with the insurance
agent. A request for a change of insurance agent of record shall be in writing
and shall include (a) the policyholder&#8217;s name and address; (b) the
insurer&#8217;s name and address; (c) the policy number; (d) the name and
address of the new insurance agent of record; (e) the date of the request; (f)
the signature of the policyholder; and (g) the signature of acceptance by the
new insurance agent. This subsection shall not require an insurer to appoint an
insurance agent of record, alter an insurer&#8217;s existing contract with an
insurance agent that provides for direct compensation in lieu of commission, or
require the payment of full commissions to a new insurance agent where the
original writing insurance agent or current insurance agent continues to have
responsibility for processing and matters relating to the policyholder. For the
purposes of this subsection, &#8220;insurance agent&#8221; and &#8220;insurance
agent of record&#8221; shall mean only a limited lines property and casualty
agent, a property and casualty insurance agent, a personal lines agent, a
restricted nonresident property and casualty agent, or a restricted nonresident
personal lines agent, as such terms are defined in &#xA7; 38.2-1800. The
provisions of this subsection shall not apply to insurers who provide a process
that (i) permits the insured to change the insurance agent of record under terms
that are at least as favorable to the insured as the provisions of this
subsection and (ii) equitably allocates commissions between the current and new
insurance agents.

HISTORY: 1979, c. 513, § 38.1-327.11; 1986, c. 562; 1987, c. 521; 1999, c. 97;
2001, c. 706; 2002, c. 323.