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H.137
IntroducedbyRepresentativesMarcotteofCoventry,BoschofClarendon,
Carris-DuncanofWhitingham,CooperofPownal,Dukeof
Burlington,GraningofJericho,MicklusofMilton,Olsonof
Starksboro,andWhiteofBethel
ReferredtoCommitteeon
Date:
Subject:Insurance;captiveinsurance;propertyandcasualty;regulation
Statementofpurposeofbillasintroduced:Thisbillproposestomakevarious
amendmentstoVermontlawprimarilyasitpertainstotheregulationof
insuranceproductsandservicessubjecttothejurisdictionoftheDepartmentof
FinancialRegulation.
Anactrelatingtotheregulationofinsuranceproductsandservices
ItisherebyenactedbytheGeneralAssemblyoftheStateofVermont:
Sec.1.8V.S.A.§ 23isamendedtoread:
§23.CONFIDENTIALITYOFINVESTIGATIONANDEXAMINATION
REPORTS
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(a)Thissectionshallapplytoallpersonslicensed,authorized,or
registered,orrequiredtobelicensed,authorized,orregistered,underthistitle
orunder9V.S.A.chapter150bytheCommissioner.
(b)Regardlessofsource,allrecordsofinvestigations,including
informationpertainingtoacomplaintbyorforaconsumer,andallrecordsand
reportsofexaminationsbytheCommissioner,whetherinthepossessionofa
supervisoryagencyoranotherperson,shallbeconfidentialandprivileged,
shallnotbemadepublic,andshallnotbesubjecttodiscoveryorintroduction
intoevidenceinanyprivatecivilaction.Nopersonwhoparticipatedonbehalf
oftheCommissionerinaninvestigationorexaminationshallbepermittedor
requiredtotestifyinanysuchcivilactionastoanyfindings,
recommendations,opinions,results,orotheractionsrelatingtothe
investigationorexamination.
(c)TheCommissionermay,inhisorhertheCommissioner’sdiscretion,
discloseorpublishorauthorizethedisclosureorpublicationofanysuch
recordorreportoranypartthereofinthefurtheranceoflegalorregulatory
proceedingsbroughtasapartoftheCommissioner’sofficialduties.The
Commissionermay,inhisorhertheCommissioner’sdiscretion,discloseor
publishorauthorizethedisclosureorpublicationofanysuchrecordorreport
oranypartthereof,tocivilorcriminallawenforcementauthoritiesforusein
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theexerciseofsuchauthority’sduties,insuchmannerastheCommissioner
maydeemproper.
(d)Forthepurposesofthissection,recordsofinvestigationsandrecords
andreportsofexaminationsshallincludejointexaminationsbythe
Commissionerandanyothersupervisoryagency.Recordsofinvestigations
andreportsofexaminationsshallalsoincluderecordsofexaminationsand
investigationsconductedby:
(1)anyagencywithsupervisoryjurisdictionovertheperson;and
(2)anyagencyofanyforeigngovernmentwithsupervisoryjurisdiction
overanypersonsubjecttothejurisdictionoftheDepartment,whensuch
recordsareconsideredconfidentialbysuchagencyorforeigngovernmentand
therecordsareinthepossessionoftheCommissioner.
Sec.2.8V.S.A.§ 3303isamendedtoread:
§3303.MUTUALCOMPANIES;DIRECTORS,CHARTERPROVISIONS
ASTO
Thearticlesofassociationorbylawsofamutualinsurershallsetforththe
mannerinwhichitsboardofdirectorsorothergoverningbodyshallbe
elected,andinwhichmeetingsofpolicyholdersshallbecalled,held,and
conducted,subjecttosuchproceduresasmayberequiredbythe
Commissionerundersection75subsection15(a)ofthistitle.
Sec.3.8V.S.A.§ 4688(a)isamendedtoread:
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(a)Filingsastocompetitivemarkets.Exceptwithrespecttofilings
submittedpursuanttosection4687ofthistitle,inacompetitivemarket,every
insurershallfilewiththeCommissionerallratesandsupplementaryrate
information,andsupportinginformationthataretobeusedinthisState,
providedthatsuchratesandinformationneednotbefiledforspecificallyrated
inlandmarinerisksorsuchotherrisksthataredesignatedbyregulationofthe
Commissionerasnotrequiringafiling.Suchrates,supplementaryrate
information,andsupportinginformationshallbeprovidedtothe
Commissionernotlaterthan15daysafter30dayspriortotheeffectivedate.
Aninsurermayadoptbyreference,withorwithoutdeviationormodification,
providedthatsaiddeviationormodificationisreadilyidentifiable,therates,
supplementaryrateinformation,andsupportinginformationfiledbyanother
insureroranadvisoryorserviceorganizationwithwhichitisaffiliated;
provided,however,suchanadoptionshallnotrelieveaninsurerfromany
otherrequirementsofthischapter.
Sec.4.8V.S.A.§ 4685aisaddedtoread:
§ 4685a.AFFORDABLEHOUSINGINSURANCE;UNFAIR
DISCRIMINATION
(a)AninsurerthatissuesordeliversinthisStateapolicyofinsurance
coveringlossofordamagetorealpropertycontainingunitsforresidential
purposesorlegalliabilityofanownerorrenterofsuchrealpropertyshallnot
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inquireaboutonanapplication,norshallaninsurercancel,refusetoissue,
refusetorenew,orincreasethepremiumofapolicy,orexclude,limit,restrict,
orreducecoverageunderapolicybasedon,thefollowing:
(1)whethertheresidentialbuildingcontainsdwellingunitsthatare
requiredtobeaffordabletoresidentsataspecificincomelevelpursuanttoa
statute,regulation,restrictivedeclaration,orregulatoryagreementwithalocal,
State,orfederalgovernmententity;
(2)whethertherealpropertyownerortenantsofsuchresidential
buildingortheshareholdersofacooperativehousingcorporationreceive
rentalassistanceprovidedbyalocal,State,orfederalgovernmententity,
includingthereceiptoffederalvouchersissuedunderSection8oftheU.S.
HousingActof1937,42 U.S.C.§ 1437f;
(3)thelevelorsourceofincomeofthetenantsoftheresidential
buildingortheshareholdersofacooperativehousingcorporation;or
(4)whethertheresidentialbuildingisownedbyalimited-equity
cooperative,publichousingagency,orcooperativehousingcorporation.
(b)Nothinginthissectionshallprohibitaninsurerfromcancelling,
refusingtoissue,refusingtorenew,orincreasingthepremiumofaninsurance
policy,orexcluding,limiting,restricting,orreducingcoverageunderapolicy,
duetootherfactorsthatarepermittedornotprohibitedbyanyothersectionof
thischapter.
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Sec.5.8V.S.A.§ 6002(a)isamendedtoread:
(a)Anycaptiveinsurancecompany,whenpermittedbyitsarticlesof
association,charter,orotherorganizationaldocument,mayapplytothe
Commissionerforalicensetodoanyandallconductinsurancebusiness
comprisedinsubdivisions3301(a)(1),(2),(3)(A)-(C),(E)-(Q),and(4)-(9)
section3301ofthistitleandmaygrantannuitycontractsasdefinedinsection
3717ofthistitleandmayacceptortransferriskbymeansofaparametric
contract;provided,however,that:
(1)Nopurecaptiveinsurancecompanymayinsureanyrisksotherthan
thoseofitsparentandaffiliatedcompaniesorcontrolledunaffiliatedbusiness.
(2)Noagencycaptiveinsurancecompanymaydoanyinsurance
businessinthisStateunless:
(A)aninsuranceagencyorbrokeragethatownsorcontrolsthe
agencycaptiveinsurancecompanyremainsinregulatorygoodstandinginall
statesinwhichitislicensed;
(B)itinsuresonlytherisksofthecommercialpoliciesthatareplaced
byorthroughaninsuranceagencyorbrokeragethatownsordirectlyor
indirectlycontrolstheagencycaptiveinsurancecompanyand,ifrequiredby
theCommissionerinhisorhertheCommissioner’sdiscretion,itprovidesthe
Commissionertheformofsuchcommercialpolicies;
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(C)itdisclosestotheoriginalpolicyholderorpolicyholders,ina
formormannerapprovedbytheCommissioner,thattheagencycaptive
insurancecompanyasaresultofitsaffiliationwithaninsuranceagencyor
brokeragemayenterintoareinsuranceorotherrisk-sharingagreementwith
theagencyorbrokerage;and
(D)ifrequiredbytheCommissionerinhisorherthe
Commissioner’sdiscretion,thebusinesswrittenbyanagencycaptive
insurancecompanyis:
(i)Frontedbyaninsurancecompanylicensedunderthelawsof
anystate.
(ii)ReinsuredbyareinsurerauthorizedorapprovedbytheState
ofVermont.
(iii)SecuredbyatrustfundintheUnitedStatesforthebenefitof
policyholdersandclaimantsorfundedbyanirrevocableletterofcreditor
otherarrangementthatisacceptabletotheCommissioner.TheCommissioner
mayrequiretheagencycaptiveinsurancecompanytoincreasethefundingof
anysecurityarrangementestablishedunderthissubdivision.Iftheformof
securityisaletterofcredit,theletterofcreditshallbeissuedorconfirmedby
abankapprovedbytheCommissioner.Atrustmaintainedpursuanttothis
subdivisionshallbeestablishedinaformandupontermsapprovedbythe
Commissioner.
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(3)Noassociationcaptiveinsurancecompanymayinsureanyrisks
otherthanthoseofitsassociation,thoseofthememberorganizationsofits
association,andthoseofamemberorganization’saffiliatedcompanies.
(4)Noindustrialinsuredcaptiveinsurancecompanymayinsureany
risksotherthanthoseoftheindustrialinsuredsthatcomprisetheindustrial
insuredgroup,thoseoftheiraffiliatedcompanies,andthoseofthecontrolled
unaffiliatedbusinessofanindustrialinsuredoritsaffiliatedcompanies.
(5)Noriskretentiongroupmayinsureanyrisksotherthanthoseofits
membersandowners.
(6)Nocaptiveinsurancecompanymayprovidepersonalmotorvehicle
orhomeowner’sinsurancecoverageoranycomponentthereof.
(7)Nocaptiveinsurancecompanymayacceptorcedereinsurance
exceptasprovidedinsection6011ofthistitle.
(8)Anycaptiveinsurancecompanymayprovideexcessworkers’
compensationinsurancetoitsparentandaffiliatedcompanies,unless
prohibitedbythefederallaworlawsofthestatehavingjurisdictionoverthe
transaction.Anycaptiveinsurancecompany,unlessprohibitedbyfederallaw,
mayreinsureworkers’compensationofaqualifiedself-insuredplanofits
parentandaffiliatedcompanies.
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(9)Anycaptiveinsurancecompanythatinsuresrisksdescribedin
subdivisions3301(a)(1)and(2)ofthistitleshallcomplywithallapplicable
Stateandfederallaws.
(10)Anycaptiveinsurancecompanythattransfersriskbymeansofa
parametriccontractshallcomplywithallapplicableStateandfederallawsand
regulations.
Sec.6.8V.S.A.§ 6004(d)isamendedtoread:
(d)Within30daysaftercommencingbusiness,eachcaptiveinsurance
companyshallfilewiththeCommissionerastatementunderoathofits
presidentandsecretaryortwoindividualsauthorizedbythegoverningboard
certifyingthatthecaptiveinsurancecompanypossessedtherequisite
unimpaired,paid-incapitalandsurpluspriortocommencingbusiness.
Sec.7.8V.S.A.§ 6006isamendedtoread:
§6006.FORMATIONOFCAPTIVEINSURANCECOMPANIESINTHIS
STATE
***
(h)Otherthancaptiveinsurancecompaniesformedaslimitedliability
companiesunder11V.S.A.chapter21chapter25orasnonprofitcorporations
underTitle11B,captiveinsurancecompaniesformedascorporationsunderthe
provisionsofthischaptershallhavetheprivilegesandbesubjecttothe
provisionsofTitle11Aaswellastheapplicableprovisionscontainedinthis
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chapter.Intheeventofconflictbetweentheprovisionsofsaidgeneral
corporationlawandtheprovisionsofthischapter,thelattershallcontrol.
(i)Captiveinsurancecompaniesformedundertheprovisionsofthis
chapter:
(1)Aslimitedliabilitycompaniesshallhavetheprivilegesandbe
subjecttotheprovisionsof11V.S.A.chapter21chapter25aswellasthe
applicableprovisionscontainedinthischapter.Intheeventofaconflict
betweentheprovisionsof11V.S.A.chapter21chapter25andtheprovisions
ofthischapter,thelattershallcontrol.
(2)Asnonprofitcorporationsshallhavetheprivilegesandbesubjectto
theprovisionsofTitle11Baswellastheapplicableprovisionscontainedin
thischapter.IntheeventofconflictbetweentheprovisionsofTitle11Band
theprovisionsofthischapter,thelattershallcontrol.
(3)Asmutualinsurersshallhavetheprivilegesandbesubjecttothe
provisionsofsections3303and3311ofthistitleaswellastheapplicable
provisionscontainedinthischapter.Intheeventofaconflictbetweenthe
provisionsofsections3303and3311ofthistitleandtheprovisionsofthis
chapter,thelattershallcontrol.
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***
Sec.8.8V.S.A.§ 6006a(a)isamendedtoread:
(a)Anycaptiveinsurancecompanymeetingthequalificationssetforthin
subdivision6006(j)(1)ofthistitlemaymergewithanyotherinsurer,whether
licensedinthisStateorelsewhere,inthefollowingmanner:
(1)Theboardofdirectorsofeachinsurershall,byaresolutionadopted
byamajorityvoteofthemembersofsuchboard,approveajointagreementof
mergersettingforth:
(A)thenamesoftheinsurersproposedtomerge,andthenameofthe
insurerintowhichtheyproposetomerge,whichishereafterdesignatedasthe
survivingcompany;
(B)thetermsandconditionsoftheproposedmergerandthemodeof
carryingthesameintoeffect;
(C)themannerandbasisofconvertingtheownershipinterests,if
applicable,inotherthanthesurvivinginsurerintoownershipinterestsorother
consideration,securities,orobligationsofthesurvivinginsurer;
(D)arestatementofsuchprovisionsofthearticlesofincorporation
ofthesurvivinginsurerasmaybedeemednecessaryoradvisabletogiveeffect
totheproposedmerger;and
(E)anyotherprovisionswithrespecttotheproposedmergerasare
deemednecessaryordesirable.
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(2)Theresolutionoftheboardofdirectorsofeachinsurerapproving
theagreementshalldirectthattheagreementbesubmittedtoavoteofthe
shareholders,members,orpolicyholders,asthecasemaybe,ofeachinsurer
entitledtovoteinrespectthereofatadesignatedmeetingthereof,orvia
unanimouswrittenconsentofsuchshareholders,members,orpolicyholdersin
lieuofameeting.Noticeofthemeetingshallbegivenasprovidedinthe
bylaws,charter,orarticlesofassociation,orothergovernancedocument,as
thecasemaybe,ofeachinsurerandshallspecificallyreflecttheagreementas
amattertobeconsideredatthemeeting.
(3)Theagreementofmergersoapprovedshallbesubmittedtoavoteof
theshareholders,members,orpolicyholders,asthecasemaybe,ofeach
insurerentitledtovoteinrespectthereofatthemeetingdirectedbythe
resolutionoftheboardofdirectorsofsuchcompanyapprovingtheagreement,
andtheagreementshallbeunanimouslyadoptedbytheshareholders,
members,orpolicyholders,asthecasemaybe.
(4)Followingtheadoptionoftheagreementbyanyinsurer,articlesof
mergershallbeadoptedinthefollowingmanner:
(A)Upontheexecutionoftheagreementofmergerbyallofthe
insurerspartiesthereto,thereshallbeexecutedandfiled,inthemanner
hereafterprovided,articlesofmergersettingforththeagreementofmerger,
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thesignaturesoftheseveralinsurerspartiesthereto,themannerofits
adoption,andthevotebywhichadoptedbyeachinsurer.
(B)Thearticlesofmergershallbesignedonbehalfofeachinsurer
byadulyauthorizedofficerorindividualauthorizedbythegoverningboard,
insuchmultiplecopiesasshallberequiredtoenabletheinsurerstocomply
withtheprovisionsofthissubchapterwithrespecttofilingandrecordingthe
articlesofmerger,andshallthenbepresentedtotheCommissioner.
(C)TheCommissionershallapprovethearticlesofmergerifheor
shetheCommissionerfindsthatthemergerwillpromotethegeneralgoodof
theStateinconformitywiththosestandardssetforthinsection3305ofthis
title.IfheorshetheCommissionerapprovesthearticlesofmerger,heorshe
theCommissionershallissueacertificateofapprovalofmerger.
(5)Theinsurershallfilethearticlesofmerger,accompaniedbythe
agreementofmergerandthecertificateofapprovalofmerger,withthe
SecretaryofStateandpayallfeesasrequiredbylaw.IftheSecretaryofState
findsthattheyconformtolaw,heorshetheSecretaryshallissueacertificate
ofmergerandreturnittothesurvivinginsureroritsrepresentatives.The
mergershalltakeeffectuponthefilingofarticlesofmergerwiththeSecretary
ofState,unlessalatereffectivedateisspecifiedtherein.
(6)Thesurvivinginsurershallfileacopyofthecertificateofmerger
fromtheSecretaryofStatewiththeCommissioner.
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Sec.9.8V.S.A.§ 6007(b)isamendedtoread:
(b)PriortoMarch1ofeachyear,andpriortoMarch15ofeachyearinthe
caseofpurecaptiveinsurancecompanies,associationcaptiveinsurance
companies,sponsoredcaptiveinsurancecompanies,industrialinsuredcaptive
insurancecompanies,oragencycaptiveinsurancecompanies,eachcaptive
insurancecompanyshallsubmittotheCommissionerareportofitsfinancial
condition,verifiedbyoathoftwoofitsexecutiveofficersortwoindividuals
authorizedbythegoverningboard.Eachcaptiveinsurancecompanyshall
reportusinggenerallyacceptedaccountingprinciples,statutoryaccounting
principles,orinternationalfinancialreportingstandardsunlessthe
Commissionerrequires,approves,oracceptstheuseofanyother
comprehensivebasisofaccounting,ineachcasewithanyappropriateor
necessarymodificationsoradaptationsthereofrequiredorapprovedor
acceptedbytheCommissionerforthetypeofinsuranceandkindsofinsurers
tobereportedupon,andassupplementedbyadditionalinformationrequired
bytheCommissioner.Asusedinthissection,statutoryaccountingprinciples
shallmeantheaccountingprinciplescodifiedintheNAICAccounting
PracticesandProceduresManual.Uponapplicationforadmission,acaptive
insurancecompanyshallselect,withexplanation,anaccountingmethodfor
reporting.Anychangeinacaptiveinsurancecompany’saccountingmethod
shallrequirepriorapproval.Exceptasotherwiseprovided,eachriskretention
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groupshallfileitsreportintheformrequiredbysubsection3561(a)ofthis
title,andeachriskretentiongroupshallcomplywiththerequirementssetforth
insection3569ofthistitle.TheCommissionershallbyruleproposethe
formsinwhichpurecaptiveinsurancecompanies,associationcaptive
insurancecompanies,sponsoredcaptiveinsurancecompanies,andindustrial
insuredcaptiveinsurancecompaniesshallreport.Subdivision6002(c)(3)of
thistitleshallapplytoeachreportfiledpursuanttothissection,exceptthat
suchsubdivisionshallnotapplytoreportsfiledbyriskretentiongroups.
Sec.10.8V.S.A.§ 6011(a)isamendedtoread:
(a)Anycaptiveinsurancecompanymayprovidereinsurance,ofpolicies
approvedbytheCommissionercomprisedinsubsection3301(a)section3301
ofthistitle,onrisksofitsparent,affiliatedcompanies,andcontrolled
unaffiliatedbusinesscededbyanyotherinsurer,andmayprovidereinsurance
ofannuitycontractsasdefinedinsection3717ofthistitlethataregrantedby
anyotherinsurer.
Sec.11.8V.S.A.§ 6024(c)isamendedtoread:
(c)Adormantcaptiveinsurancecompanythathasbeenissuedacertificate
ofdormancyshall:
(1)possessandthereaftermaintainunimpaired,paid-incapitaland
surplusofnotlessthan$25,000.00;provided,however,thatifthedormant
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captiveinsurancecompanyhadnevercapitalized,itshallnotberequiredto
addcapitaluponenteringdormancy;
(2)priortoMarch15ofeachyear,submittotheCommissionerareport
ofitsfinancialcondition,verifiedbyoathoftwoofitsexecutiveofficersor
individualsauthorizedbyitsgoverningboard,inaformasmaybeprescribed
bytheCommissioner;and
(3)payalicenserenewalfeeof$500.00.
Sec.12.8V.S.A.§ 6045isamendedtoread:
§6045.BRANCHCAPTIVEREPORTS
PriortoMarch15ofeachyear,orwiththeapprovaloftheCommissioner
within75daysafteritsfiscalyear-end,abranchcaptiveinsurancecompany
shallfilewiththeCommissioneracopyofallreportsandstatementsrequired
tobefiledunderthelawsofthejurisdictioninwhichthealiencaptive
insurancecompanyisformed,verifiedbyoathoftwoofitsexecutiveofficers
orindividualsauthorizedbythegoverningboard.IftheCommissioneris
satisfiedthattheannualreportfiledbythealiencaptiveinsurancecompanyin
itsdomiciliaryjurisdictionprovidesadequateinformationconcerningthe
financialconditionofthealiencaptiveinsurancecompany,theCommissioner
maywaivetherequirementforcompletionofthecaptiveannualstatementfor
businesswritteninthealienjurisdiction.
Sec.13.8V.S.A.§ 6048d(c)(2)isamendedtoread:
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(2)Thespecialpurposefinancialinsurancecompanyshallsubmitan
affidavitofitspresident,avicepresident,thetreasurer,orthechieffinancial
officer,oranindividualauthorizedbythegoverningboardthatincludesthe
followingstatements,tothebestofsuchperson’sknowledgeandbeliefafter
reasonableinquiry:
(A)theproposedorganizationandoperationofthespecialpurpose
financialinsurancecompanycomplywithallapplicableprovisionsofthis
chapter;
(B)thespecialpurposefinancialinsurancecompany’sinvestment
policyreflectsandtakesintoaccounttheliquidityofassetsandthereasonable
preservation,administration,andmanagementofsuchassetswithrespectto
therisksassociatedwiththereinsurancecontractandtheinsurance
securitizationtransaction;and
(C)thereinsurancecontractandanyarrangementforsecuringthe
specialpurposefinancialinsurancecompany’sobligationsundersuch
reinsurancecontract,includinganyagreementsorotherdocumentationto
implementsucharrangement,complywiththeprovisionsofthissubchapter.
Sec.14.8V.S.A.§ 6052(g)isamendedtoread:
(g)Thissubsectionestablishesgovernancestandardsforariskretention
group.
(1)Asusedinthissubsection:
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(A)“Boardofdirectors”or“board”meansthegoverningbodyofa
riskretentiongroupelectedbyriskretentiongroupmemberstoestablish
policy,electorappointofficersandcommittees,andmakeothergoverning
decisions.
(B)“Director”meansanaturalpersondesignatedinthearticlesof
theriskretentiongroupordesignated,elected,orappointedbyanyother
manner,name,ortitletoactasamemberofthegoverningbodyoftherisk
retentiongroup.
(C)(i)“Independentdirector”meansadirectorwhodoesnothavea
materialrelationshipwiththeriskretentiongroup.Adirectorhasamaterial
relationshipwithariskretentiongroupifheorshethedirector,oramember
ofhisorherthedirector’simmediatefamily:
(I)(i)Inany12-monthperiod,receivesfromtheriskretention
group,orfromaconsultantorserviceprovidertotheriskretentiongroup,
compensationorotheritemoritemsofvalueinanamountequaltoorgreater
thanfivepercentoftheriskretentiongroup’sgrosswrittenpremiumortwo
percentoftheriskretentiongroup’ssurplus,asmeasuredattheendofany
fiscalquarterfallinginsuch12-monthperiod,whicheverisgreater.This
provisionalsoappliestocompensationoritemsofvaluereceivedbyany
businesswithwhichthedirectorisaffiliated.Suchmaterialrelationshipshall
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continueforoneyearafterreceiptoftheitemoritemsofvalueorthe
compensationfallsbelowthethresholdestablishedinthissubdivision.
(II)(ii)Hasarelationshipwithanauditorasfollows:Isaffiliated
withoremployedinaprofessionalcapacitybyacurrentorformerinternalor
externalauditoroftheriskretentiongroup.Suchmaterialrelationshipshall
continueforoneyearaftertheaffiliationoremploymentends.
(aa)(iii)Isemployedasanexecutiveofficerofanotherbusiness
entitythatisaffiliatedwiththeriskretentiongroupbyvirtueofcommon
ownershipandcontrol,ifsuchentitymeetsallofthefollowingcriteria:
(AA)(I)theentityisnotaninsuredoftheriskretentiongroup;
(BB)(II)theentityhasacontractualrelationshipwiththerisk
retentiongroup;and
(CC)(III)thegoverningboardoftheentityincludesexecutive
officersoftheriskretentiongroup,unlessamajorityofthemembershipof
suchentity’sgoverningboardiscomposedofindividualswhoaremembersof
thegoverningboardoftheriskretentiongroup.
(bb)(IV)Suchmaterialrelationshipshallcontinueuntilthe
employmentorserviceends.
(ii)(iv)Notwithstandingsubdivision(i)subdivisions(i)–(iii)of
thissubdivision(g)(1)(C),adirectorwhoisadirectorindirectownerofthe
riskretentiongroupisdeemedtobeindependent;andanofficer,director,or
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employeeofaninsuredoftheriskretentiongroupisdeemedtobe
independent,unlesssomeotherrelationshipofsuchofficer,director,or
employeequalifiesasamaterialrelationship.
(D)“Materialserviceprovider”includesacaptivemanager,auditor,
accountant,actuary,investmentadvisor,attorney,managinggeneral
underwriter,orotherpersonresponsibleforunderwriting,determinationof
rates,premiumcollection,claimsadjustmentorsettlement,orpreparationof
financialstatements,whoseaggregateannualcontractfeesareequaltoor
greaterthanfivepercentoftheriskretentiongroup’sannualgrosswritten
premiumortwopercentofitssurplus,whicheverisgreater.Itdoesnotmean
defensecounselretainedbyariskretentiongroup,unlesshisorherthedefense
counsel’sannualfeeshavebeenequaltoorgreaterthanfivepercentofarisk
retentiongroup’sannualgrosspremiumortwopercentofitssurplus,
whicheverisgreater,duringthreeormoreofthepreviousfiveyears.
***
(9)Thepresidentor,chiefexecutiveofficer,orindividualauthorizedby
theboardofdirectorsofariskretentiongroupshallpromptlynotifythe
Commissionerinwritingofanyknownmaterialnoncompliancewiththe
governancestandardsestablishedinthissubsection.
Sec.15.EFFECTIVEDATE
Thisactshalltakeeffectonpassage.
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Sec.1.8V.S.A.§ 23isamendedtoread:
§23.CONFIDENTIALITYOFINVESTIGATIONANDEXAMINATION
REPORTS
(a)Thissectionshallapplytoallpersonslicensed,authorized,or
registered,orrequiredtobelicensed,authorized,orregistered,underthistitle
orunder9V.S.A.chapter150bytheCommissioner.
(b)Regardlessofsource,allrecordsofinvestigations,including
informationpertainingtoacomplaintbyorforaconsumer,andallrecords
andreportsofexaminationsbytheCommissioner,whetherinthepossessionof
asupervisoryagencyoranotherperson,shallbeconfidentialandprivileged,
shallnotbemadepublic,andshallnotbesubjecttodiscoveryorintroduction
intoevidenceinanyprivatecivilaction.Nopersonwhoparticipatedon
behalfoftheCommissionerinaninvestigationorexaminationshallbe
permittedorrequiredtotestifyinanysuchcivilactionastoanyfindings,
recommendations,opinions,results,orotheractionsrelatingtothe
investigationorexamination.
(c)TheCommissionermay,inhisorhertheCommissioner’sdiscretion,
discloseorpublishorauthorizethedisclosureorpublicationofanysuch
recordorreportoranypartthereofinthefurtheranceoflegalorregulatory
proceedingsbroughtasapartoftheCommissioner’sofficialduties.The
Commissionermay,inhisorhertheCommissioner’sdiscretion,discloseor BILLASPASSEDBYTHEHOUSE H.137
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publishorauthorizethedisclosureorpublicationofanysuchrecordorreport
oranypartthereof,tocivilorcriminallawenforcementauthoritiesforusein
theexerciseofsuchauthority’sduties,insuchmannerastheCommissioner
maydeemproper.
(d)Forthepurposesofthissection,recordsofinvestigationsandrecords
andreportsofexaminationsshallincludejointexaminationsbythe
Commissionerandanyothersupervisoryagency.Recordsofinvestigations
andreportsofexaminationsshallalsoincluderecordsofexaminationsand
investigationsconductedby:
(1)anyagencywithsupervisoryjurisdictionovertheperson;and
(2)anyagencyofanyforeigngovernmentwithsupervisoryjurisdiction
overanypersonsubjecttothejurisdictionoftheDepartment,whensuch
recordsareconsideredconfidentialbysuchagencyorforeigngovernmentand
therecordsareinthepossessionoftheCommissioner.
Sec.2.8V.S.A.§ 3303isamendedtoread:
§3303.MUTUALCOMPANIES;DIRECTORS,CHARTERPROVISIONS
ASTO
Thearticlesofassociationorbylawsofamutualinsurershallsetforththe
mannerinwhichitsboardofdirectorsorothergoverningbodyshallbe
elected,andinwhichmeetingsofpolicyholdersshallbecalled,held,and BILLASPASSEDBYTHEHOUSE H.137
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conducted,subjecttosuchproceduresasmayberequiredbytheCommissioner
undersection75subsection15(a)ofthistitle.
Sec.3.8V.S.A.§ 4688(a)isamendedtoread:
(a)Filingsastocompetitivemarkets.Exceptwithrespecttofilings
submittedpursuanttosection4687ofthistitle,inacompetitivemarket,every
insurershallfilewiththeCommissionerallratesandsupplementaryrate
information,andsupportinginformationthataretobeusedinthisState,
providedthatsuchratesandinformationneednotbefiledforspecifically
ratedinlandmarinerisksorsuchotherrisksthataredesignatedbyregulation
oftheCommissionerasnotrequiringafiling.Suchrates,supplementaryrate
information,andsupportinginformationshallbeprovidedtothe
Commissionernotlaterthan15daysafter30dayspriortotheeffectivedate.
Aninsurermayadoptbyreference,withorwithoutdeviationormodification,
providedthatsaiddeviationormodificationisreadilyidentifiable,therates,
supplementaryrateinformation,andsupportinginformationfiledbyanother
insureroranadvisoryorserviceorganizationwithwhichitisaffiliated;
provided,however,suchanadoptionshallnotrelieveaninsurerfromany
otherrequirementsofthischapter.
Sec.4.8V.S.A.§ 4724isamendedtoread:
§ 4724.UNFAIRMETHODSOFCOMPETITIONORUNFAIROR
DECEPTIVEACTSORPRACTICESDEFINED BILLASPASSEDBYTHEHOUSE H.137
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***
(23)Affordablehousing;unfairdiscrimination.
(A)AninsurerthatissuesordeliversinthisStateapolicyof
insurancecoveringlossofordamagetorealpropertycontainingunitsfor
residentialpurposesorlegalliabilityofanownerorrenterofsuchreal
propertyshallnotcancel,refusetoissue,refusetorenew,orincreasethe
premiumofapolicy,orexclude,limit,restrict,orreducecoverageundera
policy,basedonthefollowing:
(i)whethertheresidentialbuildingcontainsdwellingunitsthat
arerequiredtobeaffordabletoresidentsataspecificincomelevelpursuantto
astatute,regulation,restrictivedeclaration,orregulatoryagreementwitha
local,State,orfederalgovernmententity;
(ii)whethertherealpropertyownerortenantsofsuchresidential
buildingortheshareholdersofacooperativehousingcorporationreceive
rentalassistanceprovidedbyalocal,State,orfederalgovernmententity,
includingthereceiptoffederalvouchersissuedunderSection8oftheU.S.
HousingActof1937,42 U.S.C.§ 1437f;
(iii)thelevelorsourceofincomeofthetenantsoftheresidential
buildingortheshareholdersofacooperativehousingcorporation;or
(iv)whethertheresidentialbuildingisownedbyalimited-equity
cooperative,publichousingagency,orcooperativehousingcorporation. BILLASPASSEDBYTHEHOUSE H.137
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(B)Nothinginthissectionshallprohibitaninsurerfromcancelling,
refusingtoissue,refusingtorenew,orincreasingthepremiumofaninsurance
policy,orexcluding,limiting,restricting,orreducingcoverageunderapolicy,
duetootherfactorsthatarepermittedornotprohibitedbyanyothersectionof
thischapter.
Sec.5.8V.S.A.§ 6002(a)isamendedtoread:
(a)Anycaptiveinsurancecompany,whenpermittedbyitsarticlesof
association,charter,orotherorganizationaldocument,mayapplytothe
Commissionerforalicensetodoanyandallconductinsurancebusiness
comprisedinsubdivisions3301(a)(1),(2),(3)(A)-(C),(E)-(Q),and(4)-(9)
section3301ofthistitleandmaygrantannuitycontractsasdefinedinsection
3717ofthistitleandmayacceptortransferriskbymeansofaparametric
contract;provided,however,that:
(1)Nopurecaptiveinsurancecompanymayinsureanyrisksotherthan
thoseofitsparentandaffiliatedcompaniesorcontrolledunaffiliatedbusiness.
(2)Noagencycaptiveinsurancecompanymaydoanyinsurance
businessinthisStateunless:
(A)aninsuranceagencyorbrokeragethatownsorcontrolsthe
agencycaptiveinsurancecompanyremainsinregulatorygoodstandinginall
statesinwhichitislicensed; BILLASPASSEDBYTHEHOUSE H.137
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(B)itinsuresonlytherisksofthecommercialpoliciesthatareplaced
byorthroughaninsuranceagencyorbrokeragethatownsordirectlyor
indirectlycontrolstheagencycaptiveinsurancecompanyand,ifrequiredby
theCommissionerinhisorhertheCommissioner’sdiscretion,itprovidesthe
Commissionertheformofsuchcommercialpolicies;
(C)itdisclosestotheoriginalpolicyholderorpolicyholders,ina
formormannerapprovedbytheCommissioner,thattheagencycaptive
insurancecompanyasaresultofitsaffiliationwithaninsuranceagencyor
brokeragemayenterintoareinsuranceorotherrisk-sharingagreementwith
theagencyorbrokerage;and
(D)ifrequiredbytheCommissionerinhisorhertheCommissioner’s
discretion,thebusinesswrittenbyanagencycaptiveinsurancecompanyis:
(i)Frontedbyaninsurancecompanylicensedunderthelawsof
anystate.
(ii)ReinsuredbyareinsurerauthorizedorapprovedbytheState
ofVermont.
(iii)SecuredbyatrustfundintheUnitedStatesforthebenefitof
policyholdersandclaimantsorfundedbyanirrevocableletterofcreditor
otherarrangementthatisacceptabletotheCommissioner.TheCommissioner
mayrequiretheagencycaptiveinsurancecompanytoincreasethefundingof
anysecurityarrangementestablishedunderthissubdivision.Iftheformof BILLASPASSEDBYTHEHOUSE H.137
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securityisaletterofcredit,theletterofcreditshallbeissuedorconfirmedby
abankapprovedbytheCommissioner.Atrustmaintainedpursuanttothis
subdivisionshallbeestablishedinaformandupontermsapprovedbythe
Commissioner.
(3)Noassociationcaptiveinsurancecompanymayinsureanyrisks
otherthanthoseofitsassociation,thoseofthememberorganizationsofits
association,andthoseofamemberorganization’saffiliatedcompanies.
(4)Noindustrialinsuredcaptiveinsurancecompanymayinsureany
risksotherthanthoseoftheindustrialinsuredsthatcomprisetheindustrial
insuredgroup,thoseoftheiraffiliatedcompanies,andthoseofthecontrolled
unaffiliatedbusinessofanindustrialinsuredoritsaffiliatedcompanies.
(5)Noriskretentiongroupmayinsureanyrisksotherthanthoseofits
membersandowners.
(6)Nocaptiveinsurancecompanymayprovidepersonalmotorvehicle
orhomeowner’sinsurancecoverageoranycomponentthereof.
(7)Nocaptiveinsurancecompanymayacceptorcedereinsurance
exceptasprovidedinsection6011ofthistitle.
(8)Anycaptiveinsurancecompanymayprovideexcessworkers’
compensationinsurancetoitsparentandaffiliatedcompanies,unless
prohibitedbythefederallaworlawsofthestatehavingjurisdictionoverthe
transaction.Anycaptiveinsurancecompany,unlessprohibitedbyfederallaw, BILLASPASSEDBYTHEHOUSE H.137
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mayreinsureworkers’compensationofaqualifiedself-insuredplanofits
parentandaffiliatedcompanies.
(9)Anycaptiveinsurancecompanythatinsuresrisksdescribedin
subdivisions3301(a)(1)and(2)ofthistitleshallcomplywithallapplicable
Stateandfederallaws.
(10)Anycaptiveinsurancecompanythattransfersriskbymeansofa
parametriccontractshallcomplywithallapplicableStateandfederallaws
andregulations.
Sec.6.8V.S.A.§ 6004(d)isamendedtoread:
(d)Within30daysaftercommencingbusiness,eachcaptiveinsurance
companyshallfilewiththeCommissionerastatementunderoathofits
presidentandsecretaryor,inthecaseofacaptiveinsurancecompanyformed
asalimitedliabilitycompanyorasareciprocalinsurer,oftwoindividuals
authorizedbythegoverningboardcertifyingthatthecaptiveinsurance
companypossessedtherequisiteunimpaired,paid-incapitalandsurplusprior
tocommencingbusiness.
Sec.7.8V.S.A.§ 6006isamendedtoread:
§6006.FORMATIONOFCAPTIVEINSURANCECOMPANIESINTHIS
STATE
*** BILLASPASSEDBYTHEHOUSE H.137
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(h)Otherthancaptiveinsurancecompaniesformedaslimitedliability
companiesunder11V.S.A.chapter21chapter25orasnonprofitcorporations
underTitle11B,captiveinsurancecompaniesformedascorporationsunder
theprovisionsofthischaptershallhavetheprivilegesandbesubjecttothe
provisionsofTitle11Aaswellastheapplicableprovisionscontainedinthis
chapter.Intheeventofconflictbetweentheprovisionsofsaidgeneral
corporationlawandtheprovisionsofthischapter,thelattershallcontrol.
(i)Captiveinsurancecompaniesformedundertheprovisionsofthis
chapter:
(1)Aslimitedliabilitycompaniesshallhavetheprivilegesandbe
subjecttotheprovisionsof11V.S.A.chapter21chapter25aswellasthe
applicableprovisionscontainedinthischapter.Intheeventofaconflict
betweentheprovisionsof11V.S.A.chapter21chapter25andtheprovisionsof
thischapter,thelattershallcontrol.
(2)Asnonprofitcorporationsshallhavetheprivilegesandbesubjectto
theprovisionsofTitle11Baswellastheapplicableprovisionscontainedin
thischapter.IntheeventofconflictbetweentheprovisionsofTitle11Band
theprovisionsofthischapter,thelattershallcontrol.
(3)Asmutualinsurersshallhavetheprivilegesandbesubjecttothe
provisionsofsections3303and3311ofthistitleaswellastheapplicable
provisionscontainedinthischapter.Intheeventofaconflictbetweenthe BILLASPASSEDBYTHEHOUSE H.137
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provisionsofsections3303and3311ofthistitleandtheprovisionsofthis
chapter,thelattershallcontrol.
***
Sec.8.8V.S.A.§ 6006a(a)isamendedtoread:
(a)Anycaptiveinsurancecompanymeetingthequalificationssetforthin
subdivision6006(j)(1)ofthistitlemaymergewithanyotherinsurer,whether
licensedinthisStateorelsewhere,inthefollowingmanner:
(1)Theboardofdirectorsofeachinsurershall,byaresolutionadopted
byamajorityvoteofthemembersofsuchboard,approveajointagreementof
mergersettingforth:
(A)thenamesoftheinsurersproposedtomerge,andthenameofthe
insurerintowhichtheyproposetomerge,whichishereafterdesignatedasthe
survivingcompany;
(B)thetermsandconditionsoftheproposedmergerandthemodeof
carryingthesameintoeffect;
(C)themannerandbasisofconvertingtheownershipinterests,if
applicable,inotherthanthesurvivinginsurerintoownershipinterestsorother
consideration,securities,orobligationsofthesurvivinginsurer;
(D)arestatementofsuchprovisionsofthearticlesofincorporation
ofthesurvivinginsurerasmaybedeemednecessaryoradvisabletogiveeffect
totheproposedmerger;and BILLASPASSEDBYTHEHOUSE H.137
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(E)anyotherprovisionswithrespecttotheproposedmergerasare
deemednecessaryordesirable.
(2)Theresolutionoftheboardofdirectorsofeachinsurerapproving
theagreementshalldirectthattheagreementbesubmittedtoavoteofthe
shareholders,members,orpolicyholders,asthecasemaybe,ofeachinsurer
entitledtovoteinrespectthereofatadesignatedmeetingthereof,orvia
unanimouswrittenconsentofsuchshareholders,members,orpolicyholdersin
lieuofameeting.Noticeofthemeetingshallbegivenasprovidedinthe
bylaws,charter,orarticlesofassociation,orothergovernancedocument,as
thecasemaybe,ofeachinsurerandshallspecificallyreflecttheagreementas
amattertobeconsideredatthemeeting.
(3)Theagreementofmergersoapprovedshallbesubmittedtoavoteof
theshareholders,members,orpolicyholders,asthecasemaybe,ofeach
insurerentitledtovoteinrespectthereofatthemeetingdirectedbythe
resolutionoftheboardofdirectorsofsuchcompanyapprovingtheagreement,
andtheagreementshallbeunanimouslyadoptedbytheshareholders,
members,orpolicyholders,asthecasemaybe.
(4)Followingtheadoptionoftheagreementbyanyinsurer,articlesof
mergershallbeadoptedinthefollowingmanner:
(A)Upontheexecutionoftheagreementofmergerbyallofthe
insurerspartiesthereto,thereshallbeexecutedandfiled,inthemanner BILLASPASSEDBYTHEHOUSE H.137
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hereafterprovided,articlesofmergersettingforththeagreementofmerger,the
signaturesoftheseveralinsurerspartiesthereto,themannerofitsadoption,
andthevotebywhichadoptedbyeachinsurer.
(B)Thearticlesofmergershallbesignedonbehalfofeachinsurer
byadulyauthorizedofficeror,inthecaseofaninsurerformedasalimited
liabilitycompanyorasareciprocalinsurer,byanindividualauthorizedbythe
governingboard,insuchmultiplecopiesasshallberequiredtoenablethe
insurerstocomplywiththeprovisionsofthissubchapterwithrespecttofiling
andrecordingthearticlesofmerger,andshallthenbepresentedtothe
Commissioner.
(C)TheCommissionershallapprovethearticlesofmergerifheor
shetheCommissionerfindsthatthemergerwillpromotethegeneralgoodof
theStateinconformitywiththosestandardssetforthinsection3305ofthis
title.IfheorshetheCommissionerapprovesthearticlesofmerger,heorshe
theCommissionershallissueacertificateofapprovalofmerger.
(5)Theinsurershallfilethearticlesofmerger,accompaniedbythe
agreementofmergerandthecertificateofapprovalofmerger,withthe
SecretaryofStateandpayallfeesasrequiredbylaw.IftheSecretaryofState
findsthattheyconformtolaw,heorshetheSecretaryshallissueacertificate
ofmergerandreturnittothesurvivinginsureroritsrepresentatives.The BILLASPASSEDBYTHEHOUSE H.137
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mergershalltakeeffectuponthefilingofarticlesofmergerwiththeSecretary
ofState,unlessalatereffectivedateisspecifiedtherein.
(6)Thesurvivinginsurershallfileacopyofthecertificateofmerger
fromtheSecretaryofStatewiththeCommissioner.
Sec.9.8V.S.A.§ 6007(b)isamendedtoread:
(b)PriortoMarch1ofeachyear,andpriortoMarch15ofeachyearin
thecaseofpurecaptiveinsurancecompanies,associationcaptiveinsurance
companies,sponsoredcaptiveinsurancecompanies,industrialinsuredcaptive
insurancecompanies,oragencycaptiveinsurancecompanies,eachcaptive
insurancecompanyshallsubmittotheCommissionerareportofitsfinancial
condition,verifiedbyoathoftwoofitsexecutiveofficersor,inthecaseofa
captiveinsurancecompanyformedasalimitedliabilitycompanyorasa
reciprocalinsurer,oftwoindividualsauthorizedbythegoverningboard.Each
captiveinsurancecompanyshallreportusinggenerallyacceptedaccounting
principles,statutoryaccountingprinciples,orinternationalfinancialreporting
standardsunlesstheCommissionerrequires,approves,oracceptstheuseof
anyothercomprehensivebasisofaccounting,ineachcasewithany
appropriateornecessarymodificationsoradaptationsthereofrequiredor
approvedoracceptedbytheCommissionerforthetypeofinsuranceandkinds
ofinsurerstobereportedupon,andassupplementedbyadditional
informationrequiredbytheCommissioner.Asusedinthissection,statutory BILLASPASSEDBYTHEHOUSE H.137
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accountingprinciplesshallmeantheaccountingprinciplescodifiedinthe
NAICAccountingPracticesandProceduresManual.Uponapplicationfor
admission,acaptiveinsurancecompanyshallselect,withexplanation,an
accountingmethodforreporting.Anychangeinacaptiveinsurance
company’saccountingmethodshallrequirepriorapproval.Exceptas
otherwiseprovided,eachriskretentiongroupshallfileitsreportintheform
requiredbysubsection3561(a)ofthistitle,andeachriskretentiongroupshall
complywiththerequirementssetforthinsection3569ofthistitle.The
Commissionershallbyruleproposetheformsinwhichpurecaptiveinsurance
companies,associationcaptiveinsurancecompanies,sponsoredcaptive
insurancecompanies,andindustrialinsuredcaptiveinsurancecompanies
shallreport.Subdivision6002(c)(3)ofthistitleshallapplytoeachreportfiled
pursuanttothissection,exceptthatsuchsubdivisionshallnotapplytoreports
filedbyriskretentiongroups.
Sec.10.8V.S.A.§ 6011(a)isamendedtoread:
(a)Anycaptiveinsurancecompanymayprovidereinsurance,ofpolicies
approvedbytheCommissionercomprisedinsubsection3301(a)section3301
ofthistitle,onrisksofitsparent,affiliatedcompanies,andcontrolled
unaffiliatedbusinesscededbyanyotherinsurer,andmayprovidereinsurance
ofannuitycontractsasdefinedinsection3717ofthistitlethataregrantedby
anyotherinsurer. BILLASPASSEDBYTHEHOUSE H.137
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Sec.11.8V.S.A.§ 6024(c)isamendedtoread:
(c)Adormantcaptiveinsurancecompanythathasbeenissuedacertificate
ofdormancyshall:
(1)possessandthereaftermaintainunimpaired,paid-incapitaland
surplusofnotlessthan$25,000.00;provided,however,thatifthedormant
captiveinsurancecompanyhadnevercapitalized,itshallnotberequiredto
addcapitaluponenteringdormancy;
(2)priortoMarch15ofeachyear,submittotheCommissionerareport
ofitsfinancialcondition,verifiedbyoathoftwoofitsexecutiveofficersor,in
thecaseofacaptiveinsurancecompanyformedasalimitedliabilitycompany
orasareciprocalinsurer,oftwoindividualsauthorizedbyitsgoverning
board,inaformasmaybeprescribedbytheCommissioner;and
(3)payalicenserenewalfeeof$500.00.
Sec.12.8V.S.A.§ 6045isamendedtoread:
§6045.BRANCHCAPTIVEREPORTS
PriortoMarch15ofeachyear,orwiththeapprovaloftheCommissioner
within75daysafteritsfiscalyear-end,abranchcaptiveinsurancecompany
shallfilewiththeCommissioneracopyofallreportsandstatementsrequired
tobefiledunderthelawsofthejurisdictioninwhichthealiencaptive
insurancecompanyisformed,verifiedbyoathoftwoofitsexecutiveofficers
or,inthecaseofabranchcaptiveinsurancecompanyformedasalimited BILLASPASSEDBYTHEHOUSE H.137
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liabilitycompanyorasareciprocalinsurer,oftwoindividualsauthorizedby
thegoverningboard.IftheCommissionerissatisfiedthattheannualreport
filedbythealiencaptiveinsurancecompanyinitsdomiciliaryjurisdiction
providesadequateinformationconcerningthefinancialconditionofthealien
captiveinsurancecompany,theCommissionermaywaivetherequirementfor
completionofthecaptiveannualstatementforbusinesswritteninthealien
jurisdiction.
Sec.13.8V.S.A.§ 6048d(c)(2)isamendedtoread:
(2)Thespecialpurposefinancialinsurancecompanyshallsubmitan
affidavitofitspresident,avicepresident,thetreasurer,orthechieffinancial
officeror,inthecaseofaspecialpurposefinancialinsurancecompanyformed
asalimitedliabilitycompanyorasareciprocalinsurer,ofanindividual
authorizedbythegoverningboardthatincludesthefollowingstatements,to
thebestofsuchperson’sknowledgeandbeliefafterreasonableinquiry:
(A)theproposedorganizationandoperationofthespecialpurpose
financialinsurancecompanycomplywithallapplicableprovisionsofthis
chapter;
(B)thespecialpurposefinancialinsurancecompany’sinvestment
policyreflectsandtakesintoaccounttheliquidityofassetsandthereasonable
preservation,administration,andmanagementofsuchassetswithrespectto BILLASPASSEDBYTHEHOUSE H.137
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therisksassociatedwiththereinsurancecontractandtheinsurance
securitizationtransaction;and
(C)thereinsurancecontractandanyarrangementforsecuringthe
specialpurposefinancialinsurancecompany’sobligationsundersuch
reinsurancecontract,includinganyagreementsorotherdocumentationto
implementsucharrangement,complywiththeprovisionsofthissubchapter.
Sec.14.8V.S.A.§ 6052(g)isamendedtoread:
(g)Thissubsectionestablishesgovernancestandardsforariskretention
group.
(1)Asusedinthissubsection:
(A)“Boardofdirectors”or“board”meansthegoverningbodyofa
riskretentiongroupelectedbyriskretentiongroupmemberstoestablish
policy,electorappointofficersandcommittees,andmakeothergoverning
decisions.
(B)“Director”meansanaturalpersondesignatedinthearticlesof
theriskretentiongroupordesignated,elected,orappointedbyanyother
manner,name,ortitletoactasamemberofthegoverningbodyoftherisk
retentiongroup.
(C)(i)“Independentdirector”meansadirectorwhodoesnothavea
materialrelationshipwiththeriskretentiongroup.Adirectorhasamaterial BILLASPASSEDBYTHEHOUSE H.137
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relationshipwithariskretentiongroupifheorshethedirector,oramember
ofhisorherthedirector’simmediatefamily:
(I)(i)Inany12-monthperiod,receivesfromtheriskretention
group,orfromaconsultantorserviceprovidertotheriskretentiongroup,
compensationorotheritemoritemsofvalueinanamountequaltoorgreater
thanfivepercentoftheriskretentiongroup’sgrosswrittenpremiumortwo
percentoftheriskretentiongroup’ssurplus,asmeasuredattheendofany
fiscalquarterfallinginsuch12-monthperiod,whicheverisgreater.This
provisionalsoappliestocompensationoritemsofvaluereceivedbyany
businesswithwhichthedirectorisaffiliated.Suchmaterialrelationshipshall
continueforoneyearafterreceiptoftheitemoritemsofvalueorthe
compensationfallsbelowthethresholdestablishedinthissubdivision.
(II)(ii)Hasarelationshipwithanauditorasfollows:Isaffiliated
withoremployedinaprofessionalcapacitybyacurrentorformerinternalor
externalauditoroftheriskretentiongroup.Suchmaterialrelationshipshall
continueforoneyearaftertheaffiliationoremploymentends.
(aa)(iii)Isemployedasanexecutiveofficerofanotherbusiness
entitythatisaffiliatedwiththeriskretentiongroupbyvirtueofcommon
ownershipandcontrol,ifsuchentitymeetsallofthefollowingcriteria:
(AA)(I)theentityisnotaninsuredoftheriskretentiongroup; BILLASPASSEDBYTHEHOUSE H.137
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(BB)(II)theentityhasacontractualrelationshipwiththerisk
retentiongroup;and
(CC)(III)thegoverningboardoftheentityincludesexecutive
officersoftheriskretentiongroup,unlessamajorityofthemembershipof
suchentity’sgoverningboardiscomposedofindividualswhoaremembersof
thegoverningboardoftheriskretentiongroup.
(bb)(IV)Suchmaterialrelationshipshallcontinueuntilthe
employmentorserviceends.
(ii)(iv)Notwithstandingsubdivision(i)subdivisions(i)–(iii)ofthis
subdivision(g)(1)(C),adirectorwhoisadirectorindirectowneroftherisk
retentiongroupisdeemedtobeindependent;andanofficer,director,or
employeeofaninsuredoftheriskretentiongroupisdeemedtobeindependent,
unlesssomeotherrelationshipofsuchofficer,director,oremployeequalifies
asamaterialrelationship.
(D)“Materialserviceprovider”includesacaptivemanager,auditor,
accountant,actuary,investmentadvisor,attorney,managinggeneral
underwriter,orotherpersonresponsibleforunderwriting,determinationof
rates,premiumcollection,claimsadjustmentorsettlement,orpreparationof
financialstatements,whoseaggregateannualcontractfeesareequaltoor
greaterthanfivepercentoftheriskretentiongroup’sannualgrosswritten
premiumortwopercentofitssurplus,whicheverisgreater.Itdoesnotmean BILLASPASSEDBYTHEHOUSE H.137
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defensecounselretainedbyariskretentiongroup,unlesshisorherthedefense
counsel’sannualfeeshavebeenequaltoorgreaterthanfivepercentofarisk
retentiongroup’sannualgrosspremiumortwopercentofitssurplus,
whicheverisgreater,duringthreeormoreofthepreviousfiveyears.
***
(9)Thepresidentorchiefexecutiveofficeror,inthecaseofarisk
retentiongroupformedasalimitedliabilitycompanyorasareciprocal
insurer,anindividualauthorizedbytheboardofdirectorsofariskretention
groupshallpromptlynotifytheCommissionerinwritingofanyknownmaterial
noncompliancewiththegovernancestandardsestablishedinthissubsection.
Sec.15.8V.S.A.§ 2504isamendedtoread:
§2504.EXEMPTIONS
Thischapterdoesnotapplyto:
***
(18)Apersonthatperformspayrollcalculations,preparespayroll
instructions,preparesandfilesStateorfederalincomewithholdingtaxreports
andunemploymentinsurancecompensationreports,orprovidesotherpayroll-
relatedservices,butthatdoesnotengageinthebusinessofpayrollprocessing
servicesorotherwiseengageinthebusinessofmoneytransmissioninthis
Stateorotheractsrequiringalicenseunderthischapter. BILLASPASSEDBYTHEHOUSE H.137
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(19)Apersonthatdoesnotprovidepayrollprocessingservicestoany
employerthathasitsprincipalplaceofbusinessinthisStateandthatdoesnot
otherwiseengageinthebusinessofmoneytransmissioninthisStateorother
actsrequiringalicenseunderthischapter.
(20)Apersonthat:
(A)providespayrollprocessingservicesto25orfeweremployers
thathavetheirprincipalplaceofbusinessinthisState;
(B)providespayrollprocessingservicesto500orfeweremployers,
regardlessofwheretheprincipalplaceofbusinessofeachemployeris
located;
(C)providespayrollprocessingservicesinvolvingtransmissionto
lessthan300Vermontresidentemployees,regardlessofwheretheprincipal
placeofbusinessoftheiremployerislocated;
(D)hasnotbeenconvictedof,orpledguiltyornolocontendereto,a
felonyinadomestic,foreign,ormilitarycourt,andnokeyindividualor
personincontrolofsuchpersonhasbeenconvictedof,orpledguiltyornolo
contendereto,afelonyinadomestic,foreign,ormilitarycourt;
(E)hasneverhadafinancialserviceslicenseorprofessionallicense
revokedinanyjurisdictionandnokeyindividualorpersonincontrolofsuch
personhaseverhadafinancialserviceslicenseorprofessionallicenserevoked BILLASPASSEDBYTHEHOUSE H.137
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inanyjurisdiction,exceptthatasubsequentformalvacationofsuch
revocationshallnotbedeemedarevocation;
(F)doesnototherwiseengageinthebusinessofmoneytransmission
inthisStateorotheractsrequiringalicenseunderthischapter;and
(G)receivesandholdsallmoneyormonetaryvaluereceivedfor
transmissionexclusivelyin:
(i)segregatedtrustaccountswithfederallyinsuredfinancial
institutionsorcreditunionsforthebenefitofitsemployercustomersor
applicablegovernmentalauthorities,suchthatthefundsinsuchaccountsare
notsubjecttoclaimsorliensofitscreditors;or
(ii)depositaccountsatfederallyinsuredfinancialinstitutionsor
creditunionsthatarebothtitledinthenameandtaxidentificationnumberof
thefinancialinstitutionorcreditunionandforthebenefitoftheperson’s
customers.
Sec.16.9V.S.A.§ 42isamendedtoread:
§42.PERMITTEDCHARGES
(a)Exceptforinterestasprovidedinthischapter,alendershallmakeno
chargesagainstaborrowerfortheuseorforbearanceofmoneyotherthan:
*** BILLASPASSEDBYTHEHOUSE H.137
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(7)thereasonablecostofprivatemortgageguarantyinsurancesubject
tosuchlimitationastheCommissionerofFinancialRegulationhasapproved;
and
(8)thereasonablefeesassociatedwithacreditcard,agreeduponbythe
lenderandborrower,includinglatechargesandover-limitcharges;and
(9)discountpoints,attherequestoftheborrowerforthepurposeof
reducing,andwhichinfactresultinabonafidereductionof,theinterestrate
ortime-pricedifferentialapplicabletotheloan.
(b)Aborrowermayprocureanopinionandabstractoftitlefroman
attorneyofhisorhertheborrower’schoiceacceptabletothelender,orhazard
insuranceinacompanyorincompaniesofhisorhertheborrower’schoice
acceptabletothelender,andinsuchcasesthelender’sacceptanceshallnotbe
unreasonablywithheld.
Sec.17.STUDY;BANKS;SUSPICIOUSACTIVITY;TRANSACTION
HOLD
(a)TheCommissionerofFinancialRegulationordesigneeshallstudy
regulatorymodelsthatwouldallowafinancialinstitutiontotakemeasuresto
protectaccountholdersfromfraudulenttransactionsandshallrecommenda
modelforlegislativeconsideration.Thestudyshallincludeareviewof
regulatorymodelsenactedorproposedinotherjurisdictions. BILLASPASSEDBYTHEHOUSE H.137
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(b)Inconductingthestudyrequiredbythissection,theCommissionershall
consultwitharepresentativefromtheVermontBankersAssociation,the
AssociationofVermontCreditUnions,AARPVermont,theOfficeofthe
AttorneyGeneral,VermontLegalAid,andanyotherpersondeemed
appropriatebytheCommissioner.
(c)Amongotherthings,thestudyshallincluderecommendationsregarding
thefollowing:
(1)thefinancialinstitutionssubjecttotheproposedmodel;
(2)whetherspecificaccountholders,suchasseniorsorvulnerable
populations,shouldreceiveheightenedprotection;
(3)notificationandconsultationrequirementsavailabletoanaccount
holdersuspectedtobethevictimoffraudulentactivity;
(4)areasonabletimeperiodforimposingatransactionholdpending
theoutcomeofaninternalinvestigation;
(5)notificationtotheDepartmentofFinancialRegulationand,if
appropriate,lawenforcementorotherthirdpartiesiffraudulentactivityis
suspected;
(6)continuedaccountholderaccesstofundsfortransactionsnot
suspectedofbeingassociatedwithfraudulentactivity; BILLASPASSEDBYTHEHOUSE H.137
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(7)immunityfromcivilliabilityforanyfinancialinstitutionthatactsin
goodfaithforthepurposeofprotectingaccountholdersfromfraudulent
activityandthatotherwisecomplieswithapplicablelegalrequirements;and
(8)anyotherprovisiondeemedappropriatebytheCommissioner.
(d)OnorbeforeNovember15,2025,theCommissionershallprovidea
statusreportontheCommissioner’spreliminaryfindingsand
recommendationstotheChairoftheHouseCommitteeonCommerceand
EconomicDevelopmentandtheChairoftheSenateCommitteeonFinance
and,onorbeforeJanuary15,2026,shallsubmitafinalreportindraftformto
theHouseCommitteeonCommerceandEconomicDevelopmentandthe
SenateCommitteeonFinance.
Sec.18.STUDY;PROTECTIONSFORVICTIMSOFCOERCEDDEBT
(a)TheCommissionerofFinancialRegulationordesigneeshallstudy
regulatorymodelsforprovidingprotectionsandremediesforvictimsof
coerceddebtandshallrecommendamodelappropriateforVermont.In
particular,theCommissionershallreviewtheModelStateCoercedDebtLaw
preparedbytheNationalConsumerLawCenterinMayof2024,aswellas
lawsenactedorproposedinotherjurisdictions.
(b)Inconductingthestudyrequiredbythissection,theCommissionershall
consultwitharepresentativefromtheVermontNetwork,theVermontBankers
Association,theAssociationofVermontCreditUnions,theOfficeofthe BILLASPASSEDBYTHEHOUSE H.137
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AttorneyGeneral,VermontLegalAid,andanyotherpersondeemed
appropriatebytheCommissioner.
(c)Amongotherthings,thestudyshallincluderecommendationsregarding
thefollowing:
(1)adefinitionofcoerceddebt;
(2)whethercoerceddebtshouldincludebothsecuredandunsecured
debt;
(3)therequisiteinformationadebtormustprovideacreditorwhen
allegingcoerceddebt;
(4)proceduresacreditormustfollowregardingtheinvestigationofan
allegationofcoerceddebt,includingceasingcollectioneffortsandnotifying
theDepartmentofFinancialRegulation,theOfficeoftheAttorneyGeneral,
andotherlawenforcementpersonnel,ifappropriate;
(5)whetheracreditreportingagencyshouldremovecoerceddebtfrom
acreditreportand,ifso,theprocessfordoingso;
(6)whetherVermont’sidentitytheftlaw,13V.S.A.§ 2030,shouldbe
expandedtomorespecificallyreferenceinstancesofcoerceddebt;and
(7)anyotherprovisiondeemedappropriatebytheCommissioner.
(d)OnorbeforeJanuary15,2026,theCommissionershallreportthe
Commissioner’sfindingsandrecommendationsindraftformtotheHouse BILLASPASSEDBYTHEHOUSE H.137
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CommitteeonCommerceandEconomicDevelopmentandtheSenate
CommitteeonFinance.
Sec.19.RECOMMENDATION REGARDINGINSURANCEAND
GENETICPRIVACY
OnorbeforeNovember15,2025,andforthepurposeofpreventingunfair
geneticdiscriminationandsafeguardinganindividual’sgeneticprivacy,the
CommissionerofFinancialRegulationshallprovidearecommendationtothe
HouseCommitteeonCommerceandEconomicDevelopmentandtheSenate
CommitteeonFinanceonwhetherVermontshouldenactalawprohibitingor
limitinganinsurancecompany’saccesstoaconsumer’spersonalizedgenetic
reportthatisnotpartoftheconsumer’smedicalrecord.Amongotherthings,
theCommissionershallconsiderwhethertorequirethataninsurance
companyobtainconsumerconsentpriortothedisclosureofgenetic
informationobtainedfromadirect-to-consumerentitytoaninsurance
company,includinganycompanythatoffershealth,long-termcare,life,or
disabilityinsurance.
Sec.20.8V.S.A.§ 4062bisamendedtoread:
§4062b.MEDICARESUPPLEMENTALHEALTHSUPPLEMENT
INSURANCERATEREVIEW
(a)Withinfivebusinessdaysafterreceivinganyrequesttoincreasethe
premiumrateforaMedicaresupplementinsurancepolicyfromthehealth BILLASPASSEDBYTHEHOUSE H.137
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insurancecompany,hospitalormedicalserviceorganization,orhealth
maintenanceorganizationissuingthepolicy,theDepartmentshallpost
informationabouttheratefilingontheDepartment’swebsite,including:
(1)thenameofthehealthinsurancecompany,hospitalormedical
serviceorganization,orhealthmaintenanceorganizationrequestingtherate
increase;
(2)theoverallcompositeaveragerateincreaserequested;
(3)theincreaserequestedbyplantype;
(4)thedateonwhichtheproposedincreasewouldtakeeffect;
(5)theSystemforElectronicRateandFormFiling(SERFF)tracking
numberassociatedwiththefilingandawebaddressforaccessingthefiling
electronically;and
(6)instructionsforsubmittingpubliccommentsandthedeadlinefor
doingso.
(b)Withinfivebusinessdaysofafterreceivingarequestforapprovalof
anycompositeaveragerateincreaseinexcessofthree10percent,oranyother
coveragechangeswhichthattheCommissionerdetermineswillhavea
comparableimpactoncostoravailabilityofcoverageforaMedicare
supplementalsupplementinsurancepolicyissuedbyanygroupornongroup
healthinsurancecompany,hospitalormedicalserviceorganization,orhealth
maintenanceorganization,with5,000ormoretotallivesintheVermont BILLASPASSEDBYTHEHOUSE H.137
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Medicaresupplementinsurancemarket,theCommissionershallnotifythe
DepartmentofDisabilities,Aging,andIndependentLivingandtheOfficeof
theHealthCareAdvocateoftheproposedpremiumincrease.Acomposite
averagerateistheenrollment-weightedaveragerateincreaseofallplans
offeredbyacarrier.
(b)(c)Withinfivebusinessdaysafterreceivingnotificationpursuantto
subsection(a)(b)ofthissection,theDepartmentofDisabilities,Aging,and
IndependentLivingshallinformthemembersoftheAdvisoryBoard
establishedpursuantto33V.S.A.§505oftheproposedpremiumincrease.
(c)(d)(1)TheCommissionershallnotapproveanyrequesttoincrease
Medicaresupplementalsupplementinsurancepremiumratesunlessthe
amountoftherateincreasecomplieswiththestatutorystandardsforapproval
undersections4062,4513,4584,and5104ofthistitle.Anyapprovedrate
increaseshallnotbebasedonanunreasonablechangeinlossratiofromthe
previousyear,unlesstheCommissionermakeswrittenfindingsthatsuch
changeisnecessarytopreventasubstantialadverseimpactonthefinancial
conditionoftheinsurer.Inactingonsuchrateincreaserequests,the
Commissionermaydenytherequest,approvetherateincreaseasrequested,or
approvearateincreaseinanamountdifferentfromtheincreaserequested.A
decisionbytheCommissionerotherthananapprovaloftheraterequested
maybeappealedbytheinsurer,providedthattheburdenofproofshallbeon BILLASPASSEDBYTHEHOUSE H.137
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theinsurertoshowthattheapprovedratedoesnotmeetthestatutory
standardsestablishedunderthissubsection.
(2)Beforeactingontherateincreaserequested,theCommissionermay
makesuchexaminationorinvestigationasheorshetheCommissionerdeems
necessary,includingwhereapplicablethereviewprocesssetforthin
subdivision(3)ofthissubsection.
(3)InreviewinganyMedicaresupplementrateincreaseforwhichan
independentanalysishasbeenperformedpursuantto33V.S.A.§6706and
whereinthecarrier’srequestedcompositeaverageincrease,theindependent
expert’srecommendedcompositeaveragerateincrease,ortheDepartment
actuary’srecommendedcompositeaveragerateincreasedifferbytwo
percentagepointsormore,theCommissionershallholdapublichearing
wheretheinsurer,theDepartment’sactuary,theindependentexpert,any
intervenor,andthepublicwillhavetheopportunitytopresentwrittenandoral
testimonyandwillbeavailabletoanswerquestionsoftheCommissionerand
thosepresent.Thehearingshallbenoticedandheldatatimeandplacesoas
tofacilitatepublicparticipation,andshallberecordedandbecomepartofthe
recordbeforetheCommissioner.IntheCommissioner’sdiscretion,thehearing
maybeconductedthroughinteractive.Ifthecarrier’srequestedcomposite
averageincrease,theindependentexpert’srecommendedcompositeaverage
increase,ortheDepartmentactuary’srecommendedcompositeaverage BILLASPASSEDBYTHEHOUSE H.137
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increasediffersbylessthantwopercentagepoints,theDepartmentandthe
partiesshallconferbyconferencecall,orbyanyotheravailablemedia,to
reviewtheraterequestsandrecommendations.However,apublichearing
maybeheldattheCommissioner’sdiscretionforgoodcauseshown.
(A)Foranyfilingbyahealthinsurancecompany,hospitalor
medicalserviceorganization,orhealthmaintenanceorganizationwith5,000
ormoretotallivesintheVermontMedicaresupplementinsurancemarketin
whichtherequestedcompositeaveragerateincreaseexceeds10percent,the
Commissionershall:
(i)solicitpubliccomment;and
(ii)holdapublichearinginaccordancewiththeDepartmentof
FinancialRegulation’sapplicablerulesregardingadministrativeprocedures
if,notlaterthan30daysaftertheratefilinginformationispostedonthe
Department’swebsitepursuanttosubsection(a)ofthissection,ahearingis
requestedbytheDepartmentofDisabilities,Aging,andIndependentLiving;
bytheOfficeoftheHealthCareAdvocate;orbynotfewerthan25
policyholderswhosepremiumrateswouldbeaffectedbytherequestedrate
increase.
(B)Foranyfilingthatdoesnotmeetthecriteriaspecifiedin
subdivision(A)ofthissubdivision(3),apublichearingmaybeheldinthe
Commissioner’sdiscretion. BILLASPASSEDBYTHEHOUSE H.137
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(C)IntheCommissioner’sdiscretion,ahearingheldpursuanttothis
subdivision(3)maybeconductedthroughadesignatedelectronicmeeting
platform.
(4)Inanyreviewheldinaccordancewiththissubsection,the
CommissionershallpermitinterventionbyanypersonthattheCommissioner
determineswillmateriallyadvancetheinterestsoftheinsuredindividuals.
Theintervenorshallhaveaccessto,andmayusetheinformationofthe
independentexpertappointedunder33V.S.A.§6706.Thereasonableand
necessarycostofinterventionasdeterminedbytheCommissionershallbe
paidbytheaffectedpolicyholdersorcertificateholders.Themaximum
paymentshallbe$2,500.00exceptwhenwaivedbytheCommissionerforgood
causeshown.The$2,500.00maximumamountmaybeadjustedtoreflect,at
theCommissioner’sdiscretion,appropriateinflationfactors.Inanyreview
heldinaccordancewiththissection,theCommissionershallpermit
interventionbyanypersonwhomtheCommissionerdetermineswillmaterially
advancetheinterestsoftheindividualsinsuredunderthepolicy.
(5)Nonproprietary,relevantinformationinanyMedicaresupplement
ratefiling,includinganyanalysisbytheDepartment’sactuaryandthe
independentexpert,shallbemadeavailabletothepublicuponrequest.
(e)ForaMedicaresupplementinsurancepolicywithaneffectivedateof
January1,theinsurershallfileitspremiumraterequestpursuanttothis BILLASPASSEDBYTHEHOUSE H.137
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sectionnotlaterthanJuly1oftheprecedingyear.ForaMedicaresupplement
insurancepolicywithaneffectivedateotherthanJanuary1,theinsurershall
fileitsraterequestpursuanttothissectionnotlaterthansixmonthspriorto
theeffectivedateofthepolicy.
Sec.21.REPEAL
33V.S.A.§ 6706(Medicaresupplementinsurance;independentanalysis)is
repealed.
Sec.22.8V.S.A.§ 2577(f)isamendedtoread:
(f)Moratorium.Toprotectthepublicsafetyandwelfareandsafeguardthe
rightsofconsumers,virtual-currencykiosksshallnotbepermittedtooperate
inVermontpriortoJuly1,20252026.Thismoratoriumshallnotapplytoa
virtual-currencykioskthatwasoperationalinVermontonorbeforeJune30,
2024.
Sec.23.EFFECTIVEDATES
ThisactshalltakeeffectonJuly1,2025,exceptthatSecs.20and21
(Medicaresupplementinsurance)shalltakeeffectonJanuary1,2026.