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2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 131 - Licensing Requirements › § 4821. Maintenance of books and records

§ 4821. Maintenance of books and records
(a) General requirement. All claim files will be the joint property of the insurer or reinsurer and the contracting party. However, upon an order of liquidation of the insurer or reinsurer, such files shall become the sole property of the insurer, reinsurer, or its estate; both parties shall have reasonable access to and the right to copy the files on a timely basis.
(b) Managing general agents. Managing general agents shall maintain separate records of business written. The insurer shall have access and right to copy all accounts and records related to its business in a form usable by the insurer and the Commissioner shall have access to all books, bank accounts, and records of the managing general agent in a form usable to the Commissioner. Such records shall be retained according to section 3568 of this title.
(c) Reinsurance intermediary-brokers and managers. For at least ten years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-broker or manager, the reinsurance intermediary will keep a complete record for each transaction showing:
(1) the type of contract, limits, underwriting restrictions, classes, or risks and territory;
(2) period of coverage, including effective and expiration dates, cancellation provisions, notice required of cancellation, and, in the case of reinsurance intermediary-managers, the disposition of outstanding reserves on covered risks;
(3) reporting and settlement requirements of balances;
(4) rate used to compute the reinsurance premium;
(5) names and addresses of assuming reinsurers;
(6) rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance intermediary;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the reinsurance intermediary, including the identity of retrocessionaires and percentage of each contract assumed or ceded;
(10) financial records, including premium and loss accounts;
(11) when the reinsurance intermediary procures or places a reinsurance contract on behalf of a licensed ceding insurer:
(A) directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
(B) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative; and
(12) the insurer will have reasonable access and the right to copy and audit all accounts and records maintained by the reinsurance intermediary related to its business in a form usable by the insurer.
(d) Broker controlled property casualty companies. The controlling broker shall maintain separately identifiable records of business written for the controlled insurer. (Added 1991, No. 249 (Adj. Sess.), § 18, eff. Jan. 1, 1993.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 131 - Licensing Requirements › § 4822. Sanctions

§ 4822. Sanctions
If the Commissioner determines, after notice and hearing, that any person has violated any provision of this subchapter, the Commissioner may:
(1) for each separate violation, impose a penalty up to $25,000.00;
(2) revoke or suspend the person’s license;
(3) order the managing general agent, reinsurance intermediary, or controlling producer to reimburse the insurer or reinsurer, or the rehabilitator or liquidator of the insurer or reinsurer for any losses incurred that are caused by a violation of this subchapter; and
(4) order the controlling producer to cease placing business with the controlled insurer. (Added 1991, No. 249 (Adj. Sess.), § 18, eff. Jan. 1, 1993.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 131 - Licensing Requirements › § 4823. Other requirements of managing general agents and reinsurance intermediaries

§ 4823. Other requirements of managing general agents and reinsurance intermediaries
(a) Managing general agents and reinsurance intermediaries shall not:
(1) commit the insurer or reinsurer to participate in insurance or reinsurance syndicates;
(2) appoint any producer without assuring that the producer is lawfully licensed to transact the type of insurance for which he or she is appointed;
(3) pay or commit the insurer to pay a claim, net of reinsurance or retrocessions, that exceeds one percent of the insurer’s or reinsurer’s policyholders’ surplus as of December 31 of the last completed calendar year without prior approval of the insurer or reinsurer;
(4) collect any payment from a reinsurer or retrocessionaire or commit the insurer or reinsurer to any claim settlement with a reinsurer or retrocessionaire without prior approval of the insurer or reinsurer. If prior approval is given, a report must be promptly forwarded to the insurer or reinsurer;
(5) permit its subproducer to serve on the insurer’s board of directors;
(6) jointly employ an individual who is employed with the insurer or reinsurer unless such reinsurance intermediary-manager is under common control with the reinsurer subject to chapter 101, subchapter 13 of this title;
(7) appoint a sub-managing general agent or sub-reinsurance intermediary-manager; or
(8) pay interim profits until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business, or a later period set by the Commissioner for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to subdivision 4819(a)(2) or 4819(c)(3) of this title, if the managing general agent or reinsurance intermediary set reserves.
(b) The reinsurance intermediary shall:
(1) disclose in writing to the insurer any relationship with the ceding or assuming insurer and the rates, terms, and purposes of commissions, charges, and other fees that the reinsurance intermediary-manager may levy against the reinsurer; and
(2) provide the reinsurer with a statement of its financial condition.
(c) The acts of the reinsurance intermediary-manager shall be deemed to be the acts of the reinsurer on whose behalf it is acting within the scope of its actual or apparent authority. (Added 1991, No. 249 (Adj. Sess.), § 18, eff. Jan. 1, 1993.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 131 - Licensing Requirements › § 4826. Uniform interstate licensing

§ 4826. Uniform interstate licensing
Notwithstanding the provisions of subchapters 1 and 2 of this chapter or of chapter 142A of this title, the Commissioner may enter into reciprocal, cooperative, coordinating, and information sharing agreements with any other insurance producer licensing agency of any other jurisdiction in order to promote uniformity and efficiency of producer licensing among jurisdictions. Such agreements may be used to resolve conflicts arising from inconsistent licensing requirements of the laws of this State with the laws and regulations of any other jurisdiction. The Commissioner may approve a uniform producer license application or renewal form with tax or child support certification provisions that vary in form but not legal effect from those provided in 15 V.S.A. § 795 or 32 V.S.A. § 3113. The provisions of this subchapter shall apply to licenses granted under the provisions of chapters 131 and 142A of this title. (Added 1999, No. 38, § 2, eff. May 20, 1999.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4831. Definitions

§ 4831. Definitions
As used in this chapter, unless the context clearly requires otherwise:
(1) “Attorney” means the attorney-in-fact of a reciprocal insurer.
(2) “Reciprocal” insurance is that resulting from an interchange among persons, known as subscribers, of reciprocal agreements of indemnity, the interchange being effectuated through an attorney-in-fact common to all such persons.
(3) “Subscribers” are persons who enter into reciprocal insurance agreements under this chapter. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4832. Scope of chapter; existing insurers

§ 4832. Scope of chapter; existing insurers
(a) All authorized reciprocal insurers shall be governed by those provisions of this chapter not expressly made applicable to domestic reciprocal insurers.
(b) Existing authorized reciprocal insurers shall after March 31, 1971 comply with this chapter, and shall make such amendments to their subscribers’ agreement, power of attorney, policies, and other documents and accounts and perform such other acts as may be required for such compliance. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4833. Insuring powers of reciprocals

§ 4833. Insuring powers of reciprocals
(a) A reciprocal insurer may, upon qualifying therefor as provided for by this title, transact any kind or kinds of insurance defined by this title, other than life or title insurances.
(b) Such an insurer may purchase reinsurance upon the risk of any subscriber or subscribers, and may assume or cede reinsurance as to any kind of insurance it is authorized to transact direct. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 1997, No. 49, § 1, eff. June 26, 1997.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4834. Name; suits

§ 4834. Name; suits
A reciprocal insurer shall:
(1) Have and use a business name. The name shall include the word “reciprocal,” or “interinsurer,” or “interinsurance,” or “exchange,” or “underwriters,” or “underwriting,” or “association.”
(2) Sue and be sued in its own name. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 1997, No. 49, § 2, eff. June 26, 1997.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4835. Attorney

§ 4835. Attorney
(a) The attorney of a foreign reciprocal insurer, which is duly authorized to transact insurance in this State, shall not, by virtue of discharge of its duties as such attorney with respect to the insurer’s transactions in this State, be deemed to be doing business in this State within the meaning of any laws of this State applying to foreign persons, firms, or corporations.
(b) The subscribers and the attorney-in-fact comprise a reciprocal insurer and a single entity as to all operations under the insurer’s certificate of authority. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4836. Organization of reciprocal insurer

§ 4836. Organization of reciprocal insurer
(a) Two or more persons may organize a domestic reciprocal insurer and make application to the Commissioner for a certificate of authority to transact insurance.
(b) The proposed attorney shall fulfill the requirements of and shall execute and file with the Commissioner when applying for a certificate of authority a declaration setting forth:
(1) the name of the insurer;
(2) the location of the insurer’s principal office, which shall be the same as that of the attorney and shall be maintained within this State;
(3) the kinds of insurance proposed to be transacted;
(4) the names and addresses of the original subscribers;
(5) the designation and appointment of the proposed attorney and a copy of the power of attorney;
(6) the names and addresses of the officers and directors of the attorney, if a corporation, or its members, if a firm or a limited liability company;
(7) the powers of the subscribers’ advisory committee and the names and terms of office of the members thereof;
(8) that all monies paid to the reciprocal shall, after deducting therefrom any sum payable to the attorney, be held in the name of the insurer and for the purposes specified in the subscribers’ agreement;
(9) a statement that each of the original subscribers has in good faith applied for insurance of a kind proposed to be transacted, and that the insurer has received from each such subscriber the full premium or premium deposit required for the policy applied for, for a term of not less than six months at an adequate rate previously filed with and approved by the Commissioner;
(10) a statement of the financial condition of the insurer, a schedule of its assets, and a statement that the surplus as required by this title is on hand; and
(11) a copy of each policy, endorsement, and application form it then proposes to issue or use.
(c) The declaration shall be acknowledged by the attorney in the manner required for the acknowledgment of deeds. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 1997, No. 49, § 3, eff. June 26, 1997; 2003, No. 55, § 1; 2021, No. 105 (Adj. Sess.), § 231, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4837. Certificate of authority

§ 4837. Certificate of authority
(a) The certificate of authority of a reciprocal insurer shall be issued to its attorney in the name of the insurer.
(b) The Commissioner may refuse, suspend, or revoke the certificate of authority, in addition to other grounds therefor, for failure of the attorney to comply with any applicable provisions of this title. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4838. Power of attorney

§ 4838. Power of attorney
(a) The rights and powers of the attorney of a reciprocal insurer shall be as provided in the power of attorney given it by the subscribers. A valid power of attorney shall be in writing, executed by the subscriber, and duly executed by the attorney-in-fact.
(b) The power of attorney must set forth:
(1) the powers of the attorney;
(2) the general services to be performed by the attorney;
(3) the maximum amount to be deducted from advance premiums or deposits to be paid to the attorney and the general items of expense in addition to losses, to be paid by the insurer; and
(4) except as to nonassessable policies, a provision for a contingent several liability of each subscriber in a specified amount.
(c) The power of attorney may:
(1) provide for the right of substitution of the attorney and revocation of the power of attorney and rights thereunder;
(2) impose such restrictions upon the exercise of the power as are agreed upon by the subscribers;
(3) provide for the exercise of any right reserved to the subscribers directly or through their advisory committee; and
(4) contain other lawful provisions deemed advisable.
(d) The terms of any power of attorney or agreement collateral thereto shall be reasonable and equitable, and no such power or agreement shall be used or be effective in this State until approved by the Commissioner. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 2009, No. 137 (Adj. Sess.), § 16, eff. May 29, 2010; 2013, No. 29, § 45, eff. May 13, 2013.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4839. Modifications

§ 4839. Modifications
Modifications of the terms of the subscribers’ agreement or of the power of attorney of a domestic reciprocal insurer shall be made jointly by the attorney and the subscribers’ advisory committee. No such modification shall be effective retroactively, nor as to any insurance contract issued prior thereto. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4840. Attorney’s bond

§ 4840. Attorney’s bond
(a) Concurrently with the filing of the declaration provided for in section 4836 of this title, the attorney of a domestic reciprocal insurer shall file with the Commissioner a bond in favor of this State for the benefit of all persons damaged as a result of breach by the attorney of the conditions of his or her bond which shall be executed by the attorney and by an authorized corporate surety, and which shall be in the form as set forth in subsection (b) of this section. The bond shall be executed subject to the Commissioner’s approval.
(b) The bond shall be in the penal sum of $250,000.00 aggregate in form, conditioned that the attorney will faithfully account for all monies and other property of the insurer coming into his or her hands, and that he or she will not withdraw or appropriate to his or her own use from the funds of the insurer, any monies or property to which he or she is not entitled under the power of attorney.
(c) The bond shall provide that it is not subject to cancellation unless 30 days’ notice in writing of cancellation is given both the attorney and the Commissioner.
(d) The Commissioner may waive or reduce the requirements of this section for an attorney that is under common ownership or control with a reciprocal insurer. The Commissioner may reduce by 50 percent the bond amount required by this section for an attorney that is not under common ownership or control with a reciprocal insurer if the Commissioner finds sufficient evidence of financial responsibility, notwithstanding the reduction of the bond amount. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 1997, No. 49, § 4, eff. June 26, 1997; 2003, No. 55, § 2; 2007, No. 178 (Adj. Sess.), § 9.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4841. Deposit in lieu of bond

§ 4841. Deposit in lieu of bond
In lieu of the bond required under section 4840 of this title, the attorney may maintain on deposit in the office of the Commissioner, subject to the same conditions as the bond, a like amount in:
(1) cash;
(2) securities qualified as insurer investments; or
(3) a letter of credit issued for the benefit of and acceptable to the Commissioner. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 1997, No. 49, § 5, eff. June 26, 1997; 2003, No. 55, § 3.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4842. Action on bond

§ 4842. Action on bond
Action on the attorney’s bond or to recover against any such deposit made in lieu thereof may be brought at any time by one or more subscribers suffering loss through a violation of its conditions, or by a receiver or liquidator of the insurer. Amounts recovered on the bond shall be deposited in and become part of the insurer’s funds. The total aggregate liability of the surety shall be limited to the amount of the penalty of such bond. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4843. Services of process; judgment

§ 4843. Services of process; judgment
(a) Legal process shall be served upon a domestic reciprocal insurer by serving the insurer’s attorney at his or her principal office.
(b) Any judgment based upon legal process so served shall be binding upon each of the insurer’s subscribers as their respective interests may appear, but in an amount not exceeding their respective contingent liabilities, if any, the same as though personal service of process was had upon each such subscriber. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4844. Contributions to insurer

§ 4844. Contributions to insurer
The attorney or other parties may advance to a domestic reciprocal insurer upon reasonable terms such funds as it may require from time to time in its operations. Sums so advanced shall not be treated as a liability of the insurer and, except upon liquidation of the insurer, shall not be withdrawn or repaid except out of the insurer’s realized earned surplus in excess of its minimum required surplus. No such withdrawal or repayment shall be made without the prior written approval of the Commissioner. This section does not apply to bank loans or to other loans made upon security. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4845. Financial condition; method of determining

§ 4845. Financial condition; method of determining
In determining the financial condition of a reciprocal insurer, the Commissioner shall apply the following rules:
(1) The Commissioner shall charge as liabilities the same reserves as are required of incorporated insurers issuing nonassessable policies on a reserve basis.
(2) The surplus deposits of subscribers shall be allowed as assets, except that any premium deposit delinquent for 90 days shall first be charged against such surplus deposit.
(3) The surplus deposits of subscribers shall not be charged as a liability.
(4) All premium deposits delinquent less than 90 days shall be allowed as assets.
(5) An assessment levied upon subscribers, and not collected, shall not be allowed as an asset.
(6) The contingent liability of subscribers shall not be allowed as an asset.
(7) The computation of reserves shall be based upon premium deposits other than membership fees and without any deduction for expenses and the compensation of the attorney. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 2003, No. 55, § 4.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4846. Subscribers

§ 4846. Subscribers
Any individual or entity that is duly organized under the laws of this State or the laws of another jurisdiction may make application for, enter into agreement for, and hold policies or contracts in or with and be a subscriber of any domestic, foreign, or alien reciprocal insurer. Any corporation organized under the laws of this State, including nonprofit corporations organized under the provisions of Title 11B of the Vermont Statutes Annotated, shall, in addition to the rights, powers, and franchises specified in its articles of incorporation, have full power and authority as a subscriber to exchange insurance contracts through such reciprocal insurer. The right to exchange such contracts is declared to be incidental to the purposes for which such corporations are organized and to be as fully granted as the rights and powers expressly conferred upon such corporations. Government or governmental agencies, state or political subdivisions thereof, boards, associations, estates, trustees, or fiduciaries are authorized to exchange nonassessable reciprocal interinsurance contracts with each other and with individuals and lawful entities to the same extent that individuals and lawful entities are herein authorized to exchange reciprocal interinsurance contracts. Any officer, representative, trustee, receiver, or legal representative of any such subscriber shall be recognized as acting for or on its behalf for the purpose of such contract but shall not be personally liable upon such contract by reason of acting in such representative capacity. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 1997, No. 49, § 6, eff. June 26, 1997; 2009, No. 137 (Adj. Sess.), § 17, eff. May 29, 2010; 2021, No. 105 (Adj. Sess.), § 232, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4847. Subscribers’ advisory committee

§ 4847. Subscribers’ advisory committee
(a) The advisory committee of a domestic reciprocal insurer exercising the subscribers’ rights shall be selected under such rules as the subscriber adopts.
(b) Not less than two-thirds of the committee shall be subscribers.
(c) The committee shall:
(1) supervise the finances of the insurer;
(2) supervise the insurer’s operations to such extent as to ensure conformity with the subscribers’ agreement and power of attorney;
(3) procure the audit of the accounts and records of the insurer and of the attorney at the expense of the insurer; and
(4) have such additional powers and functions as may be conferred by the subscribers’ agreement. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 2003, No. 55, § 5; 2021, No. 105 (Adj. Sess.), § 233, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4848. Subscribers’ liability

§ 4848. Subscribers’ liability
(a) The liability of each subscriber, other than as to a nonassessable policy, for the obligations of the reciprocal insurer shall be an individual, several and proportionate liability, and not joint.
(b) Except as to a nonassessable policy, each subscriber shall have a contingent assessment liability, in the amount provided for in the power of attorney or in the subscribers’ agreement, for payment of actual losses and expenses incurred while his or her policy was in force.
(c) Each assessable policy issued by the insurer shall contain a statement of the contingent liability, set in type of the same prominence as the insuring clause. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 2013, No. 29, § 46, eff. May 13, 2013.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4849. Subscribers’ liability on judgment

§ 4849. Subscribers’ liability on judgment
(a) No action shall lie against any subscriber upon any obligation claimed against the insurer until a final judgment has been obtained against the insurer and remains unsatisfied for 30 days.
(b) Any such judgment shall be binding upon each subscriber only in such proportion as his or her interests may appear and in amount not exceeding his or her contingent liability, if any. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4850. Assessments

§ 4850. Assessments
(a) Assessments may from time to time be levied upon subscribers of a domestic reciprocal insurer liable therefor under the terms of their policies by the attorney upon approval in advance by the subscribers’ advisory committee and the Commissioner; or by the Commissioner in liquidation of the insurer.
(b) Each subscriber’s share of a deficiency for which an assessment is made, but not exceeding in any event his or her aggregate contingent liability as computed in accordance with section 4852 of this title, shall be computed by applying to the premium earned on the subscriber’s policy or policies during the period to be covered by the assessment, the ratio of the total deficiency to the total premiums earned during such period upon all policies subject to the assessment.
(c) In computing the earned premiums for the purposes of this section, the gross premium received by the insurer for the policy shall be used as a base, deducting therefrom solely charges not recurring upon the renewal or extension of the policy.
(d) No subscriber shall have an offset against any assessment for which he or she is liable, on account of any claim for unearned premium or losses payable. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4851. Time limit for assessments

§ 4851. Time limit for assessments
Every subscriber of a domestic reciprocal insurer having contingent liability shall be liable for, and shall pay his or her share of, any assessment, as computed and limited in accordance with this chapter, if:
(1) while his or her policy is in force or within one year after its termination, he or she is notified by either the attorney or the Commissioner of his or her intentions to levy such assessment; or
(2) if an order to show cause why a receiver, conservator, rehabilitator, or liquidator of the insurer should not be appointed is issued while his or her policy is in force or within one year after its termination. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4852. Aggregate liability

§ 4852. Aggregate liability
No one policy or subscriber as to a policy shall be assessed or charged with an aggregate of contingent liability as to obligations incurred by a domestic reciprocal insurer in any one calendar year, in excess of the amount provided for in the power of attorney or in the subscribers’ agreement, computed solely upon premium earned on such policy during that year. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4853. Nonassessable policies

§ 4853. Nonassessable policies
(a) If a reciprocal insurer has a surplus of assets over all liabilities at least equal to the minimum capital stock and surplus required to be maintained by a domestic stock insurer authorized to transact like kinds of insurance, upon application of the attorney and as approved by the subscribers’ advisory committee, the Commissioner shall issue his or her certificate authorizing the insurer to extinguish the contingent liability of subscribers under its policies then in force in this State, and to omit provisions imposing contingent liability in all policies delivered or issued for delivery in this State for so long as all of the surplus remains unimpaired.
(b) Upon impairment of such surplus, the Commissioner shall immediately revoke the certificate. The revocation shall not render subject to contingent liability any policy then in force and for the remainder of the period for which the premium has previously been paid; but after the revocation no policy shall be issued or renewed without providing for contingent assessment liability of the subscriber.
(c) The Commissioner shall not authorize a domestic reciprocal insurer so to extinguish the contingent liability of any of its subscribers or in any of its policies to be issued, unless it is qualified to and does extinguish the liability of all its subscribers and in all policies for all kinds of insurance transacted by it. Nevertheless, if required by the laws of another state in which the insurer is transacting insurance as an authorized insurer, the insurer may issue policies providing for the contingent liability of such of its subscribers as may acquire such policies in that state, and need not extinguish the contingent liability applicable to policies previously in force in that state. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 2021, No. 105 (Adj. Sess.), § 234, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4854. Subscribers’ share in assets

§ 4854. Subscribers’ share in assets
Upon the liquidation of a domestic reciprocal insurer, its assets remaining after discharge of its indebtedness and policy obligations, the return of any contributions of the attorney or other persons to its surplus, and the return of any unused premium, savings, or credits then standing on subscribers’ account, shall be distributed to its subscribers who were such within the 12 months prior to the last termination of its certificate of authority, according to a reasonable formula that the Commissioner approves. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4855. Merger or conversion

§ 4855. Merger or conversion
(a) A domestic reciprocal insurer, upon affirmative vote of not less than two-thirds of its subscribers who vote on such merger pursuant to due notice and the approval of the Commissioner of the terms therefor, may merge with another reciprocal insurer or be converted to a stock or mutual insurer.
(b) Such a stock or mutual insurer shall be subject to the same capital or surplus requirements and shall have the same rights as a like domestic insurer transacting like kinds of insurance.
(c) The Commissioner shall not approve any plan for merger or conversion that is inequitable to subscribers, or that, if for conversion to a stock insurer, does not give each subscriber preferential right to acquire stock of the proposed insurer proportionate to his or her interest in the reciprocal insurer as determined in accordance with section 4854 of this chapter and a reasonable length of time within which to exercise such right. (Added 1971, No. 31, § 1, eff. March 31, 1971.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 132 - Reciprocal Insurers › § 4856. Impaired reciprocals

§ 4856. Impaired reciprocals
(a) If the assets of a domestic reciprocal insurer are at any time insufficient to discharge its liabilities, other than any liability on account of funds contributed by the attorney or others, and to maintain the required surplus, its attorney shall immediately make up the deficiency or levy an assessment upon the subscribers for the amount needed to make up the deficiency, but subject to the limitation set forth in the power of attorney or policy.
(b) If the attorney fails to make up such deficiency or to make the assessment within 30 days after the Commissioner orders him or her to do so, or if the deficiency is not fully made up within 60 days after the date the assessment was made, the insurer shall be deemed insolvent and shall be proceeded against as authorized by this title.
(c) If liquidation of such an insurer is ordered, an assessment shall be levied upon the subscribers for such an amount, subject to limits as provided by this chapter, as the Commissioner determines to be necessary to discharge all liabilities of the insurer, exclusive of any funds contributed by the attorney or other persons, but including the reasonable cost of the liquidation. (Added 1971, No. 31, § 1, eff. March 31, 1971; amended 2021, No. 105 (Adj. Sess.), § 235, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 135 - Insurance Policies › § 4901. Definitions

§ 4901. Definitions
As used in this chapter:
(1) “Insurance policy” means a policy or contract covering any kind of insurance described in this title, including a contract or certificate issued by a fraternal benefit society under chapter 121 of this title or a subscriber contract issued by a medical or hospital service corporation under chapter 123 or 125 of this title.
(2) “Insurer” means any insurance company regulated by this title, including a fraternal benefit society or a medical or hospital service corporation. (Added 1975, No. 36.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 135 - Insurance Policies › § 4902. Disclosure and public information

§ 4902. Disclosure and public information
(a) The Commissioner shall make such rules as he or she considers necessary or desirable for the full, fair, and uniform disclosure and conveyance of useful information to consumers of insurance.
(b) The rules may include requirements that for each or any insurance policy sold or offered for sale in this State an insurer shall prepare and provide or cause to be provided to the policyholder, buyer, or prospective buyer a disclosure statement containing:
(1) a clear and concise outline summarizing and clarifying important features of the policy;
(2) information on cost and on return to or on behalf of policyholders;
(3) such other information that the Commissioner considers appropriate to further the purposes of or reduce violations of chapter 129 of this title; and
(4) a statement that the outline is a summary of the policy or contract issued or applied for and that the policy or contract should be consulted to determine governing contractual provisions.
(c) The Commissioner shall by rule establish standards for the format, content, and distribution of disclosure statements and any other informational materials he or she considers necessary or desirable to promote the purposes of this section. (Added 1975, No. 36.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 135 - Insurance Policies › § 4903. Administrative procedure; withdrawal of approval; judicial review

§ 4903. Administrative procedure; withdrawal of approval; judicial review
Rules issued under this chapter shall be adopted under 3 V.S.A. chapter 25 and shall be subject to review as provided in that chapter. When a rule is adopted under this chapter and an insurance policy is not in compliance with the rule, the Commissioner may withdraw his or her approval of the policy form in the manner provided in sections 3541-3543 of this title. An insurer may appeal a decision of the Commissioner to withdraw a policy form under 3 V.S.A. § 815 and review shall be confined to the record below. (Added 1975, No. 36.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 137 - Vermont Joint Underwriting Associations › § 4981. Definitions

§ 4981. Definitions
As used in this chapter, unless the context otherwise requires:
(1) “Association” means a joint underwriting association established pursuant to this chapter.
(2) “Commissioner” means the Commissioner of Financial Regulation or a designee.
(3) “Property and casualty insurance” means all insurance covered under chapter 128 of this title relating to property and casualty rate regulation.
(4) “Member” means an insurer that is a member of an association.
(5) “Plan” means the plan of operation of the association approved or proposed by the Commissioner pursuant to this chapter. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986; amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2021, No. 105 (Adj. Sess.), § 236, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 137 - Vermont Joint Underwriting Associations › § 4982. Creation of Vermont joint underwriting associations

§ 4982. Creation of Vermont joint underwriting associations
(a) The Commissioner is hereby authorized, under the terms of this chapter, to establish one or more Vermont joint underwriting associations. The purpose of any such association shall be to provide insurance on a self-supporting basis without subsidy from its members. No such association formed pursuant to this chapter shall be formed for the purpose of providing coverage for pollution exposures.
(b) Each insurer authorized to write, and engaged in writing within this State, property and casualty insurance shall be a member of an association established under this chapter by the Commissioner and shall remain a member as a condition of its authority to write such insurance within this State, except that the Commissioner may exclude classes of insurers for administrative convenience or because it is not practicable to require them to participate.
(c) An association shall be a temporary, nonexclusive, nonprofit unincorporated association constituting a legal entity separate and distinct from its members. All funds and reserves of an association shall be separately held and invested.
(d) An association shall not commence or resume after suspension any of its underwriting operations until the Commissioner, after due hearing and investigation, determines, and the emergency board approves such determination, that a voluntary market of insurance does not exist and that a voluntary market assistance plan has failed to restore availability of the needed insurance coverages. Upon such determination, an association shall be authorized to engage in the underwriting of any specific line of insurance determined to be unavailable in the voluntary market. If, after an association commences its operation, the Commissioner determines that insurance can be made available in the voluntary market, he or she shall suspend the operation of the association. The Commissioner may re-establish the association’s operations if he or she finds after due hearing and investigation that the insurance industry has failed to provide a voluntary market for the specific line of insurance underwritten through the association.
(e) An association shall, subject to the terms and conditions of this chapter, have power on behalf of its members to:
(1) Issue, or to cause to be issued, policies of insurance to qualified applicants, including incidental coverages and subject to limits as specified in the plan of operation. Coverages under such policies may be made available as primary or excess protection.
(2) Underwrite and otherwise service such policies of insurance and adjust and pay losses with respect thereto, or appoint service companies or associations to perform those functions.
(3) Assume or cede 100 percent reinsurance or a lesser percentage on any policy underwritten by the association. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 137 - Vermont Joint Underwriting Associations › § 4983. Board of directors

§ 4983. Board of directors
Each association established under this chapter shall operate subject to the supervision of a board of directors consisting of representatives of four of the members, who shall be elected by the members; an insurance agent licensed and writing insurance in this State, who shall be named by the Commissioner; and two representatives of the group of buyers of the line of insurance provided, to be named by the association of such group, if any exists, or by the Commissioner. A chair and such other officers as may be provided for in the plan shall be elected by the board. The directors shall serve without compensation but shall be reimbursed by the association for their actual and necessary expenses incurred in the performance of their duties. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 137 - Vermont Joint Underwriting Associations › § 4984. Plan of operation

§ 4984. Plan of operation
(a) Within 45 days following the creation of an association pursuant to section 4982 of this title, or such additional time as may be prescribed by the Commissioner, the board of directors of the association shall submit to the Commissioner for review and approval a proposed plan of operation consistent with the provisions of this chapter. If the Commissioner approves the proposed plan, the Commissioner shall certify such approval to the board and the plan shall take effect 10 days after such certification. If the Commissioner disapproves of all or any part of the proposed plan, the Commissioner shall return the plan to the board with a statement in writing of the reasons for the disapproval and any recommendations the Commissioner may make. The board may accept the Commissioner’s recommendations and submit the amended plan to the Commissioner or submit a new plan within 30 days after the return of the disapproved plan to the board. Within 10 days after receipt of the second plan, the Commissioner shall propose a plan and certify it to the board. A plan proposed by the Commissioner shall take effect 10 days after certification to the board.
(b) The plan of operation shall provide for economic, fair, and nondiscriminatory administration, and for the prompt and efficient provision of insurance on a self-supporting basis. The plan shall contain other provisions including preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, administrative expenses, reasonable commission arrangements, reasonable and objective underwriting standards, procedures for acceptance and cession of reinsurance, appointment of servicing carriers or other servicing arrangements or the direct issuance of syndicate policies, procedures for determining amounts of insurance to be provided by the association, provisions for assessment of deficits under section 4986 of this title, and an equitable apportionment among the members in the association’s writings, expenses, servicing allowance, management fees, and losses.
(c) Amendments to the plan may be made by the board of directors of the association, subject to the approval of the Commissioner. The Commissioner may also make amendments to the plan subject to the approval of the board. An amendment to the plan shall take effect not less than 10 days after adoption. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986; amended 2021, No. 105 (Adj. Sess.), § 237, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 137 - Vermont Joint Underwriting Associations › § 4985. Policy forms and rates

§ 4985. Policy forms and rates
(a) The Commissioner shall specify whether policy forms and the rate structure shall be on a claims-made, occurrence, or other basis and coverage shall be provided by an association only on the basis specified by the Commissioner. The Commissioner may specify a claims-made basis only if the contract makes provisions for residual “occurrence” coverage or extended reporting coverage upon the discontinuance of the insured activity in this State of the insured or the termination of the insurance policy by the insured for so long as there is a reasonable probability of a claim for injury for which the insured may be held liable. Provision may be made for a premium charge allocable to any such residual “occurrence” coverage and such premium charges for such residual coverage shall be segregated and separately maintained and calculated to be self-supporting for such purpose, which may include the reinsurance of all or a part of that portion of the risk. All policy forms shall be approved by the Commissioner.
(b) The rates, rating plans, rating rules, and rating classifications applicable to the insurance written by the association shall be approved by the Commissioner after hearing and shall be on an actuarially sound basis calculated to be self-supporting without insured assessments, giving due consideration to the past and prospective loss and expense experience within and without this State for that line of insurance written and to be written in this State, trends in the frequency and severity of losses, the investment income of the association, and such other information as the Commissioner may require.
(c) Policies issued by an association may provide for deductibles and for coinsurance, premium discounts, surcharges, separate classifications that reflect income, and other features not necessarily in current use. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 137 - Vermont Joint Underwriting Associations › § 4986. Deficits

§ 4986. Deficits
(a) In the event an association suffers an underwriting deficit for any year, the board of directors shall so certify to the Commissioner. Such certification shall be subject to the review and approval of the Commissioner. As provided in the plan of operation, but in a term not to exceed one year, each policyholder shall pay to the association a premium contingency assessment that bears the same ratio to the amount of such deficit as his or her premium for such year for insurance written or reinsured by the association bore to the total premiums paid to the association for such year. The association may cancel any policy of any policyholder who fails to pay the premium contingency assessment and need not pay any future claims against that policyholder. Any deficit premium contingency assessment uncollectible against any policyholder shall not be assessed against any other policyholder or policyholders.
(b) In no event shall a deficit incurred by an association be charged directly or indirectly to any insured other than a policyholder insured through an association.
(c) An association shall amend the amount of its certification of deficit to the Commissioner as the values of its incurred losses become finalized, and the members of the association shall upon approval by the Commissioner amend their recoupment procedure accordingly. The board of directors of an association may require all members to contribute on a temporary basis to the financial requirements of the association prior to recoupment of any deficit in such proportion as shall be specified in the plan. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986.)