Virginia Commercial Auto Forms Deregulation
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So….how many times over the last decade have your carriers complained that Virginia has its own “standard” commercial auto forms, does not follow the ISO program nor does it allow them to file proprietary forms? And…how many carriers, as required by Virginia state insurance statutes, sent you a copy of Administrative Order No. 12048?
So what did Administrative Order No. 12048 announce? Simply stated, Virginia will no longer have its own “standard” commercial auto forms; commercial auto forms in Virginia have been deregulated.
Here is what you need to know. Effective March 1, 2018 carriers may do one of the three following things with regard to their commercial auto program
- They may make their own proprietary/independent filing.
- They may elect to use any rate service organization (ISO, AAIS, MSO) for their commercial auto filing.
- They may continue to use the current Virginia “standard” forms until March 1, 2019.
How does this affect your agency? If none of your carriers elects option #1 or #2 above, then there is no effect, at least not until March 1, 2019. But what if they do elect option #1 or #2? Coverage may expand or contract. Company X may decide to exclude pollution. Company Y may decide to no longer cover non-owned vehicles worldwide. Company Z might decide to change the coverage codes and be more inclusive (or exclusive). My point here is you need to pay attention to how your carriers react to this change and know and understand any changes they may make to their commercial auto program.
There is another issue that this change brings to the table. When a carrier goes away from the current Virginia “standard” forms and replaces that program in its entirety with another program, that will trigger paragraph H., iii of 38.2-231 (the commercial lines cancellation/non-renewal statute). It states that the carrier need not send a “reduction in coverage notice” at renewal if they have replaced their program in its entirety, even if there are reductions in coverage (i.e. a pollution exclusion). So if you know of a change to the policy, a reduction in coverage, what obligation do you have to notify your customer? Assuming that the carrier is sending a complete new set of forms to your customer, probably no more than a notice advising them that their policy has changed and they need to read it. But when they call you with questions, it would be good if you knew the answers.
We have developed a 2-hour CE course that is specific to this change, “WHAT? Deregulation of Commercial Auto Forms?” It is on our education calendar for April 26 from 9:00 a.m. to 11:00 a.m.; the location of the class is our Richmond office. See you there?
Of course, if you have any questions please feel free to call or email me at the IIAV office.
Joseph L. Hudgins, CPCU
IIAV Technical Consultant
Jhudgins@iiav.com
