Virginia FCRA for Insurance Companies: A Cybersecurity Guide

 

The Virginia Consumer Protection Act (VCPA) and Virginia's application of the Fair Credit Reporting Act (FCRA) create specific regulatory requirements for insurance companies operating in Virginia. These regulations govern how insurers collect, use, and protect consumer data when making underwriting decisions.

 

Key Virginia-Specific FCRA Requirements for Insurance Companies

 

• Virginia Code § 38.2-613 requires insurance companies to provide specific notices when taking an "adverse action" based on credit information
• Under Virginia Insurance Code § 38.2-2126, insurers must provide a specific Virginia notice when denying, canceling, or non-renewing personal insurance policies based on credit information
• Virginia Administrative Code 14VAC5-30-80 mandates special requirements for how insurance companies must secure and store consumer reports
• The Virginia Insurance Data Security Act (effective July 1, 2020) requires insurers to implement a comprehensive information security program specific to insurance data handling

 

Consumer Rights Under Virginia FCRA for Insurance

 

• Virginia consumers have the right to request one free copy annually of their insurance credit score specifically from insurers operating in Virginia
• Virginia residents can dispute inaccuracies directly with the insurance company, not just with credit bureaus (unlike standard FCRA procedures)
• Virginia law provides a 30-day correction period for consumers to address errors before an adverse action becomes final
• Consumers can request a Virginia-specific disclosure of all factors that significantly influenced their insurance score

 

Data Security Requirements for Virginia Insurers

 

• Insurance companies must implement data encryption for all personally identifiable information (PII) stored or transmitted
• Virginia requires multi-factor authentication for any systems containing consumer credit data used for insurance decisions
• Insurers must conduct annual cybersecurity assessments specifically focused on credit data protection
• Data breach notification must occur within 45 days (more stringent than the general 60-day requirement for other industries in Virginia)
• Insurance companies must maintain a written information security program (WISP) that specifically addresses FCRA data

 

Special Insurance Scoring Restrictions in Virginia

 

• Virginia prohibits using medical information in insurance credit scoring without explicit consumer consent
• Insurers cannot use credit inquiries not initiated by the consumer in Virginia insurance scoring models
• Virginia law forbids using credit information older than 7 years in insurance underwriting decisions
• Insurance companies cannot use income, gender, address, zip code, ethnic group, religion, marital status, or nationality as factors in credit-based insurance scores in Virginia

 

Compliance Requirements for Insurance Companies

 

• Designate a Virginia FCRA Compliance Officer responsible for ensuring adherence to state-specific requirements
• Conduct Virginia-specific employee training on FCRA compliance at least annually
• Maintain detailed logs of all consumer report access for at least 5 years (2 years longer than standard FCRA requirements)
• Implement system access controls that limit which employees can access consumer credit information
• Create Virginia-specific consumer disclosure forms that meet both federal FCRA and Virginia requirements

 

Penalties for Non-Compliance in Virginia

 

• Violations can result in fines up to $5,000 per violation from the Virginia Bureau of Insurance
• The Virginia Attorney General can pursue additional penalties under the Virginia Consumer Protection Act
• Consumers can bring private lawsuits with Virginia-specific statutory damages
• Serious violations can lead to license suspension or revocation for insurance companies operating in Virginia
• Non-compliant companies may be required to undergo mandatory cybersecurity audits at their own expense

 

Best Practices for Compliance

 

• Conduct quarterly internal audits of your FCRA data handling practices specific to Virginia requirements
• Implement separate data handling protocols for Virginia customers that meet the state's stricter requirements
• Develop Virginia-specific consumer notification templates pre-approved by legal counsel
• Establish dedicated secure systems for storing and processing credit report data used for insurance decisions
• Create a Virginia consumer rights handbook that clearly explains to consumers their rights under state FCRA laws