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2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 139 - Health Maintenance Organization › § 5112. Statutory construction and relationship to other laws

§ 5112. Statutory construction and relationship to other laws
Except as provided in this chapter, and except as provided in section 3315 and chapter 112, subchapter 2 of this title, provisions of the insurance laws and specifically provisions of chapters 123 and 125 of this title shall not be applicable to any health maintenance organization granted a certificate of authority under this chapter. (Added 1979, No. 117 (Adj. Sess.); amended 1991, No. 52, § 5, eff. June 6, 1991; 1991, No. 160 (Adj. Sess.), § 44, eff. May 11, 1992; 1993, No. 30, § 13, eff. May 21, 1993; 2001, No. 71, § 10a, eff. June 16, 2001; 2005, No. 191 (Adj. Sess.), § 19; 2021, No. 105 (Adj. Sess.), § 243, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 139 - Health Maintenance Organization › § 5113. Severability

§ 5113. Severability
If any section, term, or provision of this chapter shall be adjudged invalid for any reason, such judgment shall not affect, impair, or invalidate any other section, term, or provision of this chapter, but the remaining section, terms, and provisions shall be and remain in full force and effect. (Added 1979, No. 117 (Adj. Sess.).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 139 - Health Maintenance Organization › § 5114. Part-time employees

§ 5114. Part-time employees
A health maintenance organization shall not exclude part-time employees or refuse to offer the same benefits to part-time employees as it offers to the employee groups of which the part-time employees would be members if they were full-time employees. The insurer shall offer to include the part-time employees as part of the employer’s employee group, at the full rate to be paid by the employer, at a rate prorated between the employer and the employee, or at the employee’s expense. “Part-time employee” means any employee who works a minimum of at least 17 1/2 hours per week. (Added 1989, No. 34, § 4.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 139 - Health Maintenance Organization › § 5115. Duty of nonprofit health maintenance organizations

§ 5115. Duty of nonprofit health maintenance organizations
Any nonprofit health maintenance organization subject to this chapter shall offer nongroup plans to individuals in accordance with 33 V.S.A. § 1811 without discrimination based on age, gender, industry, and medical history, except as allowed by subdivisions 4080g(b)(7)(B)(ii) and 4080g(c)(8)(B)(ii) of this title and by 33 V.S.A. § 1811(f)(2)(B). (Added 1991, No. 160 (Adj. Sess.), § 45, eff. July 1, 1993; amended 2005, No. 191 (Adj. Sess.), § 54; 2021, No. 105 (Adj. Sess.), § 244, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6004. Minimum capital and surplus; letter of credit

§ 6004. Minimum capital and surplus; letter of credit
(a) Prior to issuing any policies of insurance or entering into any contracts of reinsurance, each captive insurance company shall possess and thereafter maintain unimpaired paid-in capital and surplus of:
(1) in the case of a pure captive insurance company, not less than $250,000.00;
(2) in the case of an association captive insurance company, not less than $500,000.00;
(3) in the case of an industrial insured captive insurance company, not less than $500,000.00;
(4) in the case of an agency captive insurance company, not less than $500,000.00;
(5) in the case of a risk retention group, not less than $1,000,000.00; and
(6) in the case of a sponsored captive insurance company, not less than $100,000.00.
(b) The Commissioner may prescribe additional capital and surplus based upon the type, volume, and nature of insurance business transacted.
(c) Capital and surplus may be in the form of cash, marketable securities, a trust approved by the Commissioner and of which the Commissioner is the sole beneficiary, or an irrevocable letter of credit issued by a bank approved by the Commissioner. The Commissioner may reduce or waive the capital and surplus amounts required by this section pursuant to a plan of dissolution for the company approved by the Commissioner.
(d) Within 30 days after commencing business, each captive insurance company shall file with the Commissioner a statement under oath of its president and secretary certifying that the captive insurance company possessed the requisite unimpaired paid-in capital and surplus prior to commencing business. (Added 1981, No. 28; amended 1993, No. 40, § 3, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9d; 1999, No. 38, § 6, eff. May 20, 1999; 2003, No. 55, § 7; 2007, No. 178 (Adj. Sess.), § 5; 2009, No. 137 (Adj. Sess.), § 18, eff. May 29, 2010; 2011, No. 78 (Adj. Sess.), § 37, eff. April 2, 2012; 2015, No. 20, § 2, eff. May 7, 2015; 2017, No. 12, § 5, eff. May 1, 2017; 2019, No. 110 (Adj. Sess.), § 3, eff. June 15, 2020; 2021, No. 25, § 22, eff. May 12, 2021.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6005. Dividends

§ 6005. Dividends
No captive insurance company may pay a dividend out of, or other distribution with respect to, capital or surplus without the prior approval of the Commissioner. Approval of an ongoing plan for the payment of dividends or other distributions shall be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the Commissioner. Notwithstanding the provisions of 11B V.S.A. chapter 13, a captive insurance company or incorporated protected cell organized under the provisions of Title 11B may make such distributions as are in conformity with its purposes and approved by the Commissioner. (Added 1981, No. 28; amended 1993, No. 40, § 4, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9e; 1997, No. 49, § 10, eff. June 26, 1997; 1999, No. 38, § 7, eff. May 20, 1999; 2003, No. 55, § 7; 2019, No. 3, § 1, eff. April 18, 2019.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6008. Examinations and investigations

§ 6008. Examinations and investigations
(a) Whenever the Commissioner determines it to be prudent, but not less frequently than once every five years, the Commissioner shall personally, or by some competent person appointed by the Commissioner, inspect and examine each captive insurance company to ascertain its financial condition, its ability to fulfill its obligations, and whether it has complied with the provisions of this chapter. The expenses and charges of the examination shall be paid to the State by the company or companies examined.
(b) The provisions of section 3576 of this title shall apply to examinations conducted under this section.
(c) All examination reports, preliminary examination reports or results, working papers, recorded information, documents and copies thereof produced by, obtained by, or disclosed to the Commissioner or any other person in the course of an examination made under this section are confidential and are not subject to subpoena and may not be made public by the Commissioner or an employee or agent of the Commissioner without the written consent of the company, except to the extent provided in this subsection. Nothing in this subsection shall prevent the Commissioner from using such information in furtherance of the Commissioner’s regulatory authority under this title. The Commissioner may, in the Commissioner’s discretion, grant access to such information to public officers having jurisdiction over the regulation of insurance in any other state or country, or to law enforcement officers of this State or any other state or agency of the federal government at any time, so long as such officers receiving the information agree in writing to hold it in a manner consistent with this section. (Added 1981, No. 28; amended 1983, No. 195 (Adj. Sess.), § 5(b); 1993, No. 235 (Adj. Sess.), § 9g, eff. June 21, 1994; 1997, No. 49, § 13, eff. June 26, 1997; 1999, No. 38, § 10, eff. May 20, 1999; 2003, No. 55, § 7; 2003, No. 105 (Adj. Sess.), § 8; 2019, No. 3, § 3, eff. April 18, 2019.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6009. Grounds and procedures for suspension or revocation of license

§ 6009. Grounds and procedures for suspension or revocation of license
(a) The license of a captive insurance company may be suspended or revoked by the Commissioner for any of the following reasons:
(1) insolvency or impairment of capital or surplus;
(2) failure to meet the requirements of section 6004 of this title;
(3) refusal or failure to submit an annual report, as required by this chapter, or any other report or statement required by law or by lawful order of the Commissioner;
(4) failure to comply with the provisions of its own charter, bylaws, or other organizational document;
(5) failure to submit to or pay the cost of examination or any legal obligation relative thereto, as required by this chapter;
(6) use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders; or
(7) failure otherwise to comply with the laws of this State.
(b) If the Commissioner finds, upon examination, hearing, or other evidence, that any captive insurance company has violated any provision of subsection (a) of this section, the Commissioner may suspend or revoke such company’s license if the Commissioner deems it in the best interests of the public and the policyholders of such captive insurance company, notwithstanding any other provision of this title. (Added 1981, No. 28; amended 1997, No. 49, § 14, eff. June 26, 1997; 1999, No. 38, § 11, eff. May 20, 1999; 2003, No. 55, § 7.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6010. Legal investments

§ 6010. Legal investments
(a)(1) Except as may be otherwise authorized by the Commissioner, agency captive insurance companies, association captive insurance companies, sponsored captive insurance companies, protected cells in sponsored captive insurance companies, and risk retention groups shall:
(A) comply with the investment requirements contained in sections 3461 through 3472 of this title, as applicable; or
(B) submit for approval by the Commissioner the investment policy of the company. In reviewing the investment policy, the Commissioner shall consider diversification as to both type and issue; limits on the aggregate investment that may be made in any category of investment; limits on the aggregate investment in any one business, issuer, or risk; liquidity; and matching of assets and liabilities. The Commissioner shall determine whether the investment policy provides for the reasonable preservation, administration, and management of assets with respect to the risks associated with the company’s transactions and whether the investment policy supports the approved business plan. Subdivision 6002(c)(3) of this title shall apply to all information submitted pursuant to this subsection.
(2) The Commissioner may require any company subject to this subsection to limit or withdraw from certain investments or discontinue certain investment practices if the Commissioner determines that such investments or practices of the company might be hazardous to the policyholders or the general public.
(3) Section 3463a of this title shall apply to agency captive insurance companies, association captive insurance companies, and risk retention groups except to the extent it is inconsistent with approved accounting standards in use by the company. Notwithstanding any other provision of this title to the contrary, the Commissioner may approve the use of alternative, reliable methods of valuation and rating.
(b) No pure captive insurance company or industrial insured captive insurance company shall be subject to any restrictions on allowable investments, including those limitations contained in sections 3461-3472 of this title; provided, however, that the Commissioner may prohibit or limit any investment that threatens the solvency or liquidity of any such company.
(c) No pure captive insurance company may make a loan to or an investment in its parent company or affiliates without prior written approval of the Commissioner, and any such loan or investment must be evidenced by documentation approved by the Commissioner. Loans of minimum capital and surplus funds required by section 6004 of this title are prohibited. (Added 1981, No. 28; amended 1991, No. 101, § 20; 1993, No. 40, § 6, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9h, eff. June 21, 1994; 1999, No. 38, § 12, eff. May 20, 1999; 2001, No. 71, § 13, eff. June 16, 2001; 2003, No. 55, § 7; 2005, No. 36, § 14, eff. June 1, 2005; 2017, No. 12, § 7, eff. May 1, 2017; 2019, No. 3, § 4, eff. April 18, 2019; 2019, No. 110 (Adj. Sess.), § 7, eff. June 15, 2020.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6011. Reinsurance

§ 6011. Reinsurance
(a) Any captive insurance company may provide reinsurance, comprised in subsection 3301(a) of this title, on risks ceded by any other insurer, and may provide reinsurance of annuity contracts as defined in section 3717 of this title that are granted by any other insurer.
(b) Any captive insurance company may take credit for the reinsurance of risks or portions of risks ceded to reinsurers complying with the provisions of subsections 3634a(a) through (e) of this title. Prior approval of the Commissioner shall be required for ceding or taking credit for the reinsurance of risks or portions of risks ceded to reinsurers not complying with subsections 3634a(a) through (e) of this title, except for business written by an alien captive insurance company outside the United States.
(c) In addition to reinsurers authorized under the provisions of section 3634a of this title, a captive insurance company may take credit for the reinsurance of risks or portions of risks ceded to a pool, exchange, or association acting as a reinsurer that has been authorized by the Commissioner. The Commissioner may require any other documents, financial information, or other evidence that such a pool, exchange, or association will be able to provide adequate security for its financial obligations. The Commissioner may deny authorization or impose any limitations on the activities of a reinsurance pool, exchange, or association that, in the Commissioner’s judgment, are necessary and proper to provide adequate security for the ceding captive insurance company and for the protection and consequent benefit of the public at large.
(d) For all purposes of this chapter, insurance by a captive insurance company of any workers’ compensation qualified self-insured plan of its parent and affiliates shall be deemed to be reinsurance. (Added 1981, No. 28; 1985, No. 170 (Adj. Sess.), § 1, eff. May 7, 1986; amended 1987, No. 168 (Adj. Sess.), § 3, eff. May 3, 1988; 1991, No. 249 (Adj. Sess.), § 24; 93, No. 40, §§ 7, 8, eff. June 3, 1993; 1999, No. 38, § 13, eff. May 20, 1999; 2003, No. 55, § 7; 2005, No. 122 (Adj. Sess.), § 4; 2023, No. 32, § 1, eff. July 1, 2023.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6013. Exemption from compulsory associations

§ 6013. Exemption from compulsory associations
No captive insurance company shall be permitted to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this State, nor shall any such captive insurance company, or any insured or affiliate thereof, receive any benefit from any such plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company. (Added 1981, No. 28; amended 1997, No. 49, § 15, eff. June 26, 1997; 2003, No. 55, § 7.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6015. Rules and regulations

§ 6015. Rules and regulations
The Commissioner may adopt and from time to time amend such rules relating to captive insurance companies as are necessary to enable the Commissioner to carry out the provisions of this chapter. (Added 1981, No. 28; amended 2003, No. 55, § 7.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6016. Laws applicable

§ 6016. Laws applicable
No provisions of this title, other than those contained in this chapter or contained in specific references contained in this chapter, shall apply to captive insurance companies. Risk retention groups shall have the privileges and be subject to the provisions of chapter 142 of this title in addition to the applicable provisions of this chapter. (Added 1981, No. 28; amended 2003, No. 55, § 7.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6017. Captive Insurance Regulatory and Supervision Fund

§ 6017. Captive Insurance Regulatory and Supervision Fund
(a)(1) There is hereby created a fund to be known as the Captive Insurance Regulatory and Supervision Fund for the purpose of providing the financial means for the Commissioner of Financial Regulation to administer this chapter, chapter 142, and chapter 142A of this title and for reasonable expenses incurred in promoting the captive insurance industry in Vermont. The transfer of 11 percent of the premium tax under subsection 6014(h) of this title and all fees and assessments received by the Department pursuant to the administration of these chapters shall be credited to this Fund. Of this amount, not more than three percent of the premium tax under section 6014 may be expended by the Agency of Commerce and Community Development, with approval of the Secretary of Administration, for promotional expenses. All fees received by the Department from reinsurers who assume risk solely from captive insurance companies and are subject to the provisions of subsections 3634a(a) through (f) of this title shall be deposited into the Captive Insurance Regulatory and Supervision Fund. All fines and administrative penalties, however, shall be deposited directly into the General Fund.
(2) All payments from the Captive Insurance Regulatory and Supervision Fund for the maintenance of staff and associated expenses, including contractual services as necessary, shall be disbursed from the State Treasury only upon warrants issued by the Commissioner of Finance and Management, after receipt of proper documentation regarding services rendered and expenses incurred.
(b) At the end of each fiscal year, the balance in the Captive Insurance Regulatory and Supervision Fund shall be transferred to the General Fund.
(c) The Commissioner of Finance and Management may anticipate receipts to the Captive Insurance Regulatory and Supervision Fund and issue warrants based thereon. (Added 1987, No. 47, § 4, eff. May 13, 1987; amended 1989, No. 72, § 3; 1989, No. 225 (Adj. Sess.), § 25; 1995, No. 180 (Adj. Sess.), § 38; 1995, No. 190 (Adj. Sess.), § 1; 1999, No. 49, § 219; 2003, No. 55, § 7; 2003, No. 80 (Adj. Sess.), § 76, eff. March 8, 2004; 2009, No. 42, § 22; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 179 (Adj. Sess.), § E.801.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6018. Delinquency

§ 6018. Delinquency
Except as otherwise provided in this chapter, the terms and conditions set forth in chapter 145 of this title shall apply in full to captive insurance companies formed or licensed under this chapter; however, the assets of a separate account established under subsection 6006(q) of this chapter shall not be used to pay any expenses or claims other than those attributable to such separate account. (Added 1987, No. 168 (Adj. Sess.), § 4, eff. May 3, 1988; amended 1993, No. 40, § 9, eff. June 3, 1993; 1999, No. 38, § 15, eff. May 20, 1999; 2003, No. 55, § 7; 2007, No. 49, § 12; 2013, No. 103 (Adj. Sess.), § 6, eff. April 14, 2014; 2019, No. 110 (Adj. Sess.), § 9, eff. June 15, 2020.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6019. Rules for controlled unaffiliated business

§ 6019. Rules for controlled unaffiliated business
The Commissioner may adopt rules establishing standards to ensure that a parent or its affiliated company, or an industrial insured or its affiliated company, is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by a pure captive insurance company or an industrial insured captive insurance company, respectively; provided, however, that, until such time as rules under this section are adopted, the Commissioner may approve the coverage of such risks by a pure captive insurance company or an industrial insured captive insurance company. (Added 1997, No. 49, § 16, eff. June 26, 1997; amended 2003, No. 55, § 7; 2007, No. 49, § 13.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6024. Dormant captive insurance companies

§ 6024. Dormant captive insurance companies
(a) As used in this section, unless the context requires otherwise, “dormant captive insurance company” means a captive insurance company that has:
(1) ceased transacting the business of insurance, including the issuance of insurance policies; and
(2) no remaining liabilities associated with insurance business transactions or insurance policies issued prior to the filing of its application for a certificate of dormancy under this section.
(b) A captive insurance company domiciled in Vermont that meets the criteria of subsection (a) of this section may apply to the Commissioner for a certificate of dormancy. The certificate of dormancy shall be subject to renewal every five years and shall be forfeited if not renewed within such time.
(c) A dormant captive insurance company that has been issued a certificate of dormancy shall:
(1) possess and thereafter maintain unimpaired, paid-in capital and surplus of not less than $25,000.00; provided, however, that if the dormant captive insurance company had never capitalized, it shall not be required to add capital upon entering dormancy;
(2) prior to March 15 of each year, submit to the Commissioner a report of its financial condition, verified by oath of two of its executive officers, in a form as may be prescribed by the Commissioner; and
(3) pay a license renewal fee of $500.00.
(d) A dormant captive insurance company shall not be subject to or liable for the payment of any tax under section 6014 of this chapter.
(e) A dormant captive insurance company shall apply to the Commissioner for approval to surrender its certificate of dormancy and resume conducting the business of insurance prior to issuing any insurance policies.
(f) A certificate of dormancy shall be revoked if a dormant captive insurance company no longer meets the criteria of subsection (a) of this section.
(g) The Commissioner may establish guidelines and procedures as necessary to carry out the provisions of this section. (Added 2013, No. 103 (Adj. Sess.), § 1, eff. April 14, 2014; amended 2015, No. 74 (Adj. Sess.), § 2, eff. April 13, 2016; 2017, No. 12, § 8, eff. May 1, 2017; 2019, No. 110 (Adj. Sess.), § 2, eff. June 15, 2020.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6031. Formation

§ 6031. Formation
(a) One or more sponsors may form a sponsored captive insurance company under this chapter. In addition to the general provisions of this chapter, the provisions of this subchapter shall apply to sponsored captive insurance companies.
(b) Subject to the approval of the Commissioner, a sponsored captive insurance company may be formed as any type of entity permissible under Vermont law. (Added 2003, No. 55, § 9; amended 2005, No. 122 (Adj. Sess.), § 5; 2009, No. 137 (Adj. Sess.), § 23, eff. May 29, 2010; 2019, No. 3, § 5, eff. April 18, 2019.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6032. Definitions

§ 6032. Definitions
As used in this subchapter, unless the context requires otherwise:
(1) “General account” means all assets and liabilities of the sponsored captive insurance company not attributable to a protected cell.
(2) “Incorporated protected cell” means a protected cell that, subject to the approval of the Commissioner, is formed as any type of entity permissible under Vermont law, separate from the sponsored captive insurance company of which it is a part.
(3) “Participant” means an entity as defined in section 6036 of this title, and any affiliates thereof, that are insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to such participant’s pro rata share of the assets of one or more protected cells identified in such participant contract.
(4) “Participant contract” means a contract by which a sponsored captive insurance company insures the risks of a participant and limits the losses of each such participant to its pro rata share of the assets of one or more protected cells identified in such participant contract.
(5) “Protected cell” means a separate account established by a sponsored captive insurance company formed or licensed under the provisions of this chapter, in which assets are maintained for one or more participants in accordance with the terms of one or more participant contracts to fund the liability of the sponsored captive insurance company assumed on behalf of such participants as set forth in such participant contracts, and shall include an “incorporated protected cell,” as defined in this section.
(6) “Sponsor” means any entity that meets the requirements of section 6035 of this title and is approved by the Commissioner to provide all or part of the capital and surplus required by applicable law and to organize and operate a sponsored captive insurance company.
(7) “Sponsored captive insurance company” means any captive insurance company:
(A) in which the minimum capital and surplus required by applicable law is provided by one or more sponsors;
(B) that is formed or licensed under the provisions of this chapter;
(C) that insures the risks only of its participants or, subject to Commissioner approval, other parties unaffiliated with a participant, through separate participant contracts; and
(D) that funds its liability to each participant through one or more protected cells and segregates the assets of each protected cell from the assets of other protected cells and from the assets of the sponsored captive insurance company’s general account. (Added 2003, No. 55, § 9; amended 2011, No. 21, § 21; 2011, No. 78 (Adj. Sess.), § 35, eff. April 2, 2012; 2013, No. 103 (Adj. Sess.), § 7, eff. April 14, 2014; 2015, No. 20, § 3, eff. May 7, 2015; 2019, No. 3, § 6, eff. April 18, 2019; 2021, No. 139 (Adj. Sess.), § 15, eff. May 27, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6033. Supplemental application materials

§ 6033. Supplemental application materials
In addition to the information required by subdivisions 6002(c)(1) and (2) of this title, each applicant-sponsored captive insurance company shall file with the Commissioner the following:
(1) materials demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the Commissioner, and how it will report such experience to the Commissioner;
(2) a statement acknowledging that all financial records of the sponsored captive insurance company, including records pertaining to any protected cells, shall be made available for inspection or examination by the Commissioner or the Commissioner’s designated agent;
(3) all contracts or sample contracts between the sponsored captive insurance company and any participants; and
(4) evidence that expenses shall be allocated to each protected cell in a fair and equitable manner. (Added 2003, No. 55, § 9.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6034b. Separate accounts of protected cells

§ 6034b. Separate accounts of protected cells
With the Commissioner’s prior written approval, a protected cell of a sponsored captive insurance company may establish one or more separate accounts and may allocate to them amounts to provide for the insurance of risks of one or more participants, or controlled unaffiliated business of such participant or participants, subject to the following:
(1) The income, gains, and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains, or losses of the protected cell.
(2) Amounts allocated to a separate account in the exercise of the power granted by this subsection are owned by the protected cell, and the protected cell may not be nor hold itself out to be a trustee with respect to such amounts.
(3) Unless otherwise approved by the Commissioner, assets allocated to a protected cell shall be valued in accordance with the rules otherwise applicable to the protected cell’s assets.
(4) If and to the extent so provided under the applicable contracts that portion of the assets of any such protected cell equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the protected cell may conduct.
(5) No sale, exchange, or other transfer of assets may be made by such protected cell between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in the case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made and unless such transfer, whether into or from a separate account, is made by a transfer of cash or by a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the Commissioner. The Commissioner may approve other transfers among such accounts if, in his or her opinion, such transfers would be equitable.
(6) To the extent such protected cell deems it necessary to comply with any applicable federal or State laws, such protected cell, with respect to any separate account, including any separate account that is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of such account, including special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with such protected cell, to manage the business of such account. (Added 2019, No. 110 (Adj. Sess.), § 6, eff. June 15, 2020.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6034d. Sale, transfer, or assignment of protected cells

§ 6034d. Sale, transfer, or assignment of protected cells
(a) Subject to the prior written approval of the Commissioner, on application of the sponsor and with the prior consent of each participant of the affected protected cell or as otherwise permitted pursuant to a participation agreement, or the consent of the affected incorporated protected cell, a sponsored captive insurance company or a sponsored captive insurance company licensed as a special purpose financial insurance company may sell, transfer, assign, and otherwise convey a protected cell or incorporated protected cell together with all of the protected cell’s assets, rights, benefits, obligations, and liabilities to a new or existing sponsored captive insurance company or sponsored captive insurance company licensed as a special purpose financial insurance company, pursuant to a plan or plans of operation approved by the Commissioner.
(b) Any such sale, transfer, assignment, or conveyance shall be deemed for all purposes to be a continuation of the protected cell’s existence together with all of its assets, rights, benefits, obligations, and liabilities, as a protected cell of the transferee.
(c) Any such sale, transfer, assignment, or conveyance shall not be construed to limit any rights or protections applicable to the transferred protected cell or incorporated protected cell and the transferor sponsored captive insurance company or sponsored captive insurance company licensed as a special purpose financial insurance company under this subchapter or under section 6048n of this title, as applicable, that existed immediately prior to any such sale, transfer, assignment, or conveyance. (Added 2015, No. 74 (Adj. Sess.), § 4, eff. April 13, 2016; amended 2019, No. 110 (Adj. Sess.), § 5, eff. June 15, 2020.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6034f. Annual report; books and records

§ 6034f. Annual report; books and records
(a) For purposes of subsection 6007(b) of this chapter:
(1) Each sponsored captive insurance company shall annually file with the Commissioner such financial reports as the Commissioner requires, which shall include accounting statements detailing the financial experience of each protected cell.
(2) Unless otherwise approved in advance by the Commissioner, a sponsored captive insurance company shall maintain its books, records, documents, accounts, vouchers, and agreements in this State. A sponsored captive insurance company shall make its books, records, documents, accounts, vouchers, and agreements available for inspection by the Commissioner at any time. A sponsored captive insurance company shall keep its books and records in such manner that its financial condition, affairs, and operations can be readily ascertained and so that the Commissioner may readily verify its financial statements and determine its compliance with this chapter.
(3) Unless otherwise approved in advance by the Commissioner, all original books, records, documents, accounts, vouchers, and agreements shall be preserved and kept available in this State for the purpose of examination and inspection and until such time as the Commissioner approves the destruction or other disposition of such books, records, documents, accounts, vouchers, and agreements. If the Commissioner approves the keeping of the items listed in this subdivision outside this State, the sponsored captive insurance company shall maintain in this State a complete and true copy of each such original. Books, records, documents, accounts, vouchers, and agreements may be photographed, reproduced on film, or stored and reproduced electronically. (Added 2021, No. 139 (Adj. Sess.), § 17, eff. May 27, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6035. Qualification of sponsors

§ 6035. Qualification of sponsors
A sponsor of a sponsored captive insurance company may be any person approved by the Commissioner in the exercise of his or her discretion, based on a determination that the approval of such person as a sponsor is consistent with the purposes of this chapter. In evaluating the qualifications of a proposed sponsor, the Commissioner shall consider the type and structure of the proposed sponsor entity, its experience in financial operations, financial stability and strength, business reputation, and such other facts deemed relevant by the Commissioner. A risk retention group shall not be a sponsor of a sponsored captive insurance company. (Added 1999, No. 38, § 18, eff. May 20, 1999; amended 1999, No. 80 (Adj. Sess.), § 2, eff. April 11, 2000; 2003, No. 55, § 9; 2005, No. 122 (Adj. Sess.), § 6; 2007, No. 49, § 16; 2011, No. 21, § 24; 2011, No. 78 (Adj. Sess.), § 39, eff. April 2, 2012.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6036. Participants in sponsored captive insurance companies

§ 6036. Participants in sponsored captive insurance companies
(a) Associations, corporations, limited liability companies, partnerships, trusts, risk retention groups, sole proprietorships, and other business entities may be participants in any sponsored captive insurance company formed or licensed under this chapter.
(b) A sponsor may be a participant in a sponsored captive insurance company.
(c) A participant need not be a shareholder of the sponsored captive insurance company or any affiliate thereof.
(d) A participant shall not insure any risks other than its own and the risks of affiliated entities or of controlled unaffiliated entities. (Added 1999, No. 38, § 19, eff. May 20, 1999; amended 2003, No. 55, § 9; 2011, No. 78 (Adj. Sess.), § 40, eff. April 2, 2012; 2015, No. 20, § 6, eff. May 7, 2015; 2019, No. 3, § 7, eff. April 18, 2019.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6037. Investments by sponsored captive insurance companies and protected cells

§ 6037. Investments by sponsored captive insurance companies and protected cells
Notwithstanding the provisions of section 6034 of this title, the assets of two or more protected cells may be combined for purposes of investment, and such combination shall not be construed as defeating the segregation of such assets for accounting or other purposes. Sponsored captive insurance companies and protected cells shall comply with the investment requirements contained in section 6010 of this title. (Added 2003, No. 55, § 9; amended 2019, No. 110 (Adj. Sess.), § 8, eff. June 15, 2020.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6039. Claimant recourse

§ 6039. Claimant recourse
(a) Consistent with the provisions of this subchapter, a creditor of a sponsored captive insurance company shall have recourse against the assets attributable to a protected cell if, and only if it is a creditor of the protected cell. A creditor of a protected cell shall not be entitled to recourse against the assets attributable to any other protected cell or to the assets in the sponsored captive insurance company’s general account.
(b) When a sponsored captive insurance company has an obligation to a creditor arising from a transaction, or otherwise imposed, with respect to a particular protected cell, the obligation:
(1) shall extend only to the assets attributable to that protected cell, and the creditor shall be entitled to recourse only against the assets attributable to that protected cell; and
(2) shall not extend to the assets of any other protected cell or to the assets in the sponsored captive insurance company’s general account, and the creditor shall not be entitled to recourse against the assets attributable to any other protected cell or to the assets of the sponsored captive insurance company’s general account.
(c) When an obligation of a sponsored captive insurance company relates solely to its general account, a creditor shall have recourse only against the assets in the general account.
(d) The establishment of one or more protected cells alone, and without more, shall not constitute or be deemed to be a fraudulent conveyance, an intent by the sponsored captive insurance company to defraud creditors, or the carrying out of business by the sponsored captive insurance company for any other fraudulent purpose. (Added 2015, No. 20, § 8, eff. May 7, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6041. Establishment of a branch captive insurance company

§ 6041. Establishment of a branch captive insurance company
(a) A branch captive insurance company may be established in this State in accordance with the provisions of this chapter. In addition to the general provisions of this chapter, the provisions of this subchapter shall apply to branch captive insurance companies.
(b) No branch captive insurance company shall do any insurance business in this State unless it:
(1) maintains the principal place of business for its branch operations in this State; and
(2) appoints a principal representative in this State who is a resident of this State; and
(3) designates the Commissioner as its agent of such branch captive insurance company upon whom any process, notice, or demand may be served.
(c) As used in this section, principal representative shall mean a person designated as such by the branch captive insurance company as its principal representative on such forms and with such information as required by the Commissioner.
(d) The provisions of subsection 6006(f) of this title shall not apply to branch captive insurance companies formed in this State. (Added 2003, No. 55, § 9; amended 2013, No. 29, § 51, eff. May 13, 2013; 2017, No. 90 (Adj. Sess.), § 4, eff. March 8, 2018.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6042. Definitions

§ 6042. Definitions
As used in this subchapter, unless the context requires otherwise:
(1) “Alien captive insurance company” means any insurance company formed to write insurance business for its parents and affiliates and licensed pursuant to the laws of an alien jurisdiction that imposes statutory or regulatory standards in a form acceptable to the Commissioner on companies transacting the business of insurance in such jurisdiction.
(2) “Branch business” means any insurance business transacted by a branch captive insurance company in this State.
(3) “Branch captive insurance company” means any alien captive insurance company licensed by the Commissioner to transact the business of insurance in this State through a business unit with a principal place of business in this State.
(4) “Branch operations” means any business operations of a branch captive insurance company in this State. (Added 2003, No. 55, § 9.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6043. Security required

§ 6043. Security required
In the case of a branch captive insurance company, as security for the payment of liabilities attributable to the branch operations, the Commissioner shall require that either a trust fund funded by assets acceptable to the Commissioner or an irrevocable letter of credit be established and maintained in the United States for the benefit of U.S. policyholders and U.S. ceding insurers under insurance policies issued or reinsurance contracts issued or assumed by the branch captive insurance company through its branch operations. The amount of such security may be no less than the amount set forth in subdivision 6004(a)(1) of this title and the reserves on such insurance policies or such reinsurance contracts, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through the branch operations; provided, however, the Commissioner may permit a branch captive insurance company that is required to post security for loss reserves on branch business by its reinsurer to reduce the funds in the trust account or the amount payable under the irrevocable letter of credit required by this section by the same amount so long as the security remains posted with the reinsurer. If the form of security selected is a letter of credit, the letter of credit must be established by, or issued or confirmed by, a bank chartered in this State or a member bank of the Federal Reserve System. (Added 2003, No. 55, § 9; amended 2005, No. 36, § 15, eff. June 1, 2005; 2009, No. 42, § 25, eff. May 27, 2009.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6043. Security required

§ 6043. Security required
(a) No branch captive insurance company shall be issued a license unless it shall possess and thereafter maintain, as security for the payment of liabilities attributable to the branch operations:
(1) an amount equal to the amount set forth in subdivision 6004(a)(1) of this title as the minimum capital requirement for a pure captive; and in addition
(2) reserves on such insurance policies or such reinsurance contracts as may be issued or assumed by the branch captive insurance company through its branch operations, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through the branch operations; provided, however, the Commissioner may permit a branch captive insurance company to credit against any such reserve requirement any security for loss reserves that the branch captive insurance company may post with a ceding insurer or that may be posted by a reinsurer with the branch captive insurance company, in either case so long as such security remains posted.
(b) Subject to the prior approval of the Commissioner, the amounts required in subsection (a) of this section may be held in the form of:
(1) a trust formed under a trust agreement and funded by assets acceptable to the Commissioner;
(2) an irrevocable letter of credit issued or confirmed by a bank approved by the Commissioner;
(3) with respect to the amounts required in subdivision (a)(1) of this section only, cash on deposit with the Commissioner; or
(4) any combination thereof. (Added 2003, No. 55, § 9; amended 2005, No. 36, § 15, eff. June 1, 2005; 2009, No. 42, § 25, eff. May 27, 2009.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6045. Branch captive reports

§ 6045. Branch captive reports
Prior to March 15 of each year, or with the approval of the Commissioner within 75 days after its fiscal year-end, a branch captive insurance company shall file with the Commissioner a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath of two of its executive officers. If the Commissioner is satisfied that the annual report filed by the alien captive insurance company in its domiciliary jurisdiction provides adequate information concerning the financial condition of the alien captive insurance company, the Commissioner may waive the requirement for completion of the captive annual statement for business written in the alien jurisdiction. (Added 2003, No. 55, § 9; amended 2023, No. 12, § 1, eff. May 8, 2023.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6046. Examination of branch captives

§ 6046. Examination of branch captives
(a) The examination of a branch captive insurance company pursuant to section 6008 of this title shall be of branch business and branch operations only, so long as the branch captive insurance company provides annually to the Commissioner a certificate of compliance, or its equivalent, issued by or filed with the licensing authority of the jurisdiction in which the branch captive insurance company is formed, and demonstrates to the Commissioner’s satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of such jurisdiction.
(b) As a condition of licensure, the alien captive insurance company shall grant authority to the Commissioner for examination of the affairs of the alien captive insurance company in the jurisdiction in which the alien captive insurance company is formed. (Added 2003, No. 55, § 9.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 141 - Captive Insurance Companies › § 6047. Taxation of branch captives

§ 6047. Taxation of branch captives
In the case of a branch captive insurance company, the tax provided for in section 6014 of this title shall apply only to the branch business of such company. (Added 2003, No. 55, § 9.)