2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 157 - Transfer and Assumption of Insurance Contracts › § 8204. Assumption, transfer, and notice requirements

§ 8204. Assumption, transfer, and notice requirements
(a) Except as provided in, and subject to, subsection 8207(d) of this title, the transferring insurer shall provide or cause to be provided to each policyholder a notice of transfer by first-class mail, addressed to the policyholder’s last known address or to the address to which premium notices or other policy documents are sent or, with respect to home service business, by personal delivery with receipt acknowledged by the policyholder. A notice of transfer shall also be sent to the transferring insurer’s agents or brokers of record on the affected policies.
(b) The notice of transfer shall state or provide:
(1) the date the transfer and novation of the policyholder’s contract of insurance is proposed to take place;
(2) the name, address, and telephone number of the assuming and transferring insurer;
(3) that the policyholder has the right to either consent to or reject the transfer and novation;
(4) the procedures and time limit for consenting to or rejecting the transfer and novation;
(5) a summary of any effect that consent to or rejection of the transfer and novation will have on the policyholder’s rights, including disclosure of the possible loss of insurability;
(6) a statement that the assuming insurer is licensed to write the type of business being assumed in the state where the policyholder resides, or is otherwise authorized, as provided in this chapter, to assume such business;
(7) the name and address of the person at the transferring insurer to whom the policyholder should send a written statement of acceptance or rejection of the transfer and novation;
(8) the address and telephone number of the insurance department of the state where the policyholder resides so that the policyholder may write or call the insurance department for further information regarding the financial condition of the assuming insurer; and
(9) the following financial data for both companies:
(A) ratings for the last five years if available or for such lesser period as is available from two nationally recognized insurance rating services acceptable to the Commissioner, including the rating service’s explanation of the meaning of the ratings. If ratings are unavailable for any year of the five-year period, this fact shall also be disclosed, together with those ratings that are available;
(B) balance sheets as of December 31 for the previous three years if available or for such lesser period as is available and as of the date of the most recent quarterly statement;
(C) a copy of the management’s discussion and analysis that was filed as a supplement to the previous year’s annual statement; and
(D) an explanation of the reason for the transfer.
(c) The form contained in section 8208 of this title may be used as general guidance in complying with the requirements of subsection (b) of this section.
(d) The notice of transfer shall include a pre-addressed, postage-paid response card that a policyholder may return as his or her written statement of acceptance or rejection of the transfer and novation.
(e) Prior approval by the Commissioner is required for any transaction where an insurer domiciled in this State assumes or transfers obligations or risks on contracts of insurance under an assumption reinsurance agreement. An insurer domiciled in this State shall not assume obligations or risks on contracts of insurance issued to or owned by policyholders residing in any other state unless it is licensed in the other state or the insurance regulatory official of that state has approved the assumption.
(f) Prior to the transfer of any of the obligations or risks on contracts of insurance issued to or owned by residents of this State that is the subject of this chapter, any licensed foreign insurer that enters into an assumption reinsurance agreement shall obtain the Commissioner’s approval under subsection (g) of this section or shall apply to the Commissioner for a determination that the requirements imposed on the transaction by the state of domicile of each participating insurer are substantially similar to the requirements of this chapter. An insurer making a request for a determination of substantial similarity shall file or cause to be filed with the Commissioner the assumption certificate, a copy of the proposed notice of transfer, an analysis of the requirements to be imposed by its state of domicile, and an affidavit that the transaction is subject to requirements substantially similar to this chapter. The Commissioner shall review the submissions and determine whether the requirements are substantially similar to the requirements of this chapter. If the law of the state of domicile permits the policyholder a longer period of time for consent or rejection than provided by section 8205 of this title, the Commissioner may, at the request of the insurer, waive the time limitations in section 8205 of this title in determining substantial similarity. If the Commissioner does not act on the insurer’s request for a determination of substantial similarity within 30 days of receipt, the insurer’s request shall be deemed approved. If the Commissioner determines that the requirements imposed on the licensed foreign insurers are not substantially similar to the requirements of this chapter, then the requirements of subsection (g) of this section shall apply to the transfer.
(g) Any licensed foreign insurer that enters into an assumption reinsurance agreement that proposes to transfer the obligations or risks on contracts of insurance issued to or owned by residents of this State, subject to all other requirements of this chapter with respect to residents of this State, shall submit the transaction to the Commissioner for approval. If the Commissioner does not act on the insurer’s request within 60 days of receipt, the insurer’s request shall be deemed approved. The Commissioner may extend by not more than an additional 30 days the period within which he or she may so affirmatively approve or disapprove any such transaction by giving notice to the insurer of such extension before expiration of the initial 60-day period. At the end of any such period of extension and in the absence of an affirmative approval or disapproval, any such transaction shall be deemed approved.
(h) The following factors, along with such other factors as the Commissioner deems appropriate under the circumstances, shall be considered by the Commissioner in reviewing a request for approval:
(1) the financial condition of the transferring and assuming insurers and the effect the transaction is expected to have on the financial condition of each company;
(2) the competence, experience, and integrity of those persons who control the operation of the assuming insurer;
(3) any plans the assuming party has with respect to the administration of the policies subject to the proposed transfer;
(4) whether the transfer is fair and reasonable to the policyholders of both companies; and
(5) whether the notice of transfer to be provided by the insurer is fair, adequate, and not misleading.
(i) No insurer shall transfer obligations or risks on contracts of insurance issued to or owned by residents of this State to any insurer that is not licensed in this State.
(j) Except as provided in, and subject to, subsection 8207(d) of this title, the Commissioner may modify the notice requirements of this chapter if the Commissioner determines that the transfer is between affiliates or that the transfer is not contemplated within the purposes of this chapter. (Added 1993, No. 235 (Adj. Sess.), § 7; amended 1993, No. 235 (Adj. Sess.), § 11a, eff. July 1, 1996; 2009, No. 137 (Adj. Sess.), § 7f; 2021, No. 105 (Adj. Sess.), § 269, eff. July 1, 2022.)