2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7041. Commissioner’s summary orders and supervision proceedings

§ 7041. Commissioner’s summary orders and supervision proceedings
(a) Whenever the Commissioner has reasonable cause to believe, and determines after a hearing held under subsection (e) of this section, that any domestic insurer has committed or engaged in, or is about to commit or engage in, any act, practice, or transaction that would subject it to delinquency proceedings under this chapter, he or she may make and serve upon the insurer and any other persons involved such orders as are reasonably necessary to correct, eliminate, or remedy such conduct, condition, or ground.
(b) If upon examination or at any other time the Commissioner has reasonable cause to believe and determines that any domestic insurer is in such condition as to render the continuance of its business hazardous to the public or to holders of its policies or certificates of insurance, or if such domestic insurer gives its consent, then the Commissioner shall:
(1) notify the insurer of the determination; and
(2) furnish to the insurer a written list of the Commissioner’s requirements to abate the determination.
(c) If the Commissioner makes a determination to supervise an insurer subject to an order under subsection (a) or (b) of this section, the Commissioner shall notify the insurer that it is under the supervision of the Commissioner. During the period of supervision, the Commissioner may appoint a supervisor to supervise such insurer. The order appointing a supervisor shall direct the supervisor to enforce orders issued under subsections (a) and (b) of this section and may also require that the insurer may not do any of the following things during the period of supervision, without the prior approval of the Commissioner or the supervisor:
(1) dispose of, convey, or encumber any of the insurer’s assets or its business in force;
(2) withdraw from any of the insurer’s bank accounts;
(3) lend any of the insurer’s funds;
(4) invest any of the insurer’s funds;
(5) transfer any of the insurer’s property;
(6) incur any debt, obligation, or liability;
(7) merge or consolidate with another company;
(8) enter into any new reinsurance contract or treaty; or
(9) restrict the writing of new or renewal business.
(d) An insurer subject to an order under this section shall comply with the lawful requirements of the Commissioner and, if placed under supervision, shall have 60 days from the date the supervision order is served within which to comply with the requirements of the Commissioner. In the event of the insurer’s failure to comply with the supervision order, the Commissioner may institute proceedings under section 7051 or 7056 of this title to have a rehabilitator or liquidator appointed, or extend the period of supervision.
(e) The notice of hearing held under subsection (a) of this section and any order issued pursuant to subsection (a) of this section shall be served upon the insurer pursuant to the provisions of 3 V.S.A. chapter 25. The notice of hearing shall state the time and place of hearing and the conduct, condition, or ground upon which the Commissioner may base the order. Unless mutually agreed between the Commissioner and the insurer, the hearing shall occur not less than 10 days nor more than 30 days after notice is served and shall be held at the offices of the Department of Financial Regulation or in some other place convenient to the parties as determined by the Commissioner. Unless the insurer requests a public hearing, hearings and hearing records under subsection (a) of this section shall be private and shall not be subject to the provisions of 1 V.S.A. chapter 5, subchapters 2 and 3 (the Vermont Open Meeting Law and the Public Records Act).
(f)(1) An insurer subject to an order under subsection (b) of this section may request a hearing to review that order. The hearing shall be held as provided in subsection (e) of this section. The request for a hearing shall not stay the effect of the order.
(2) If the Commissioner issues an order under subsection (b) of this section, the insurer may, at any time, waive the opportunity for a hearing before the Commissioner and apply for immediate judicial relief by means of any remedy afforded by law without first exhausting administrative remedies. Subsequent to a hearing before the Commissioner, a party to the proceedings whose interests are substantially affected shall be entitled to judicial review of an order issued by the Commissioner.
(g) During the period of supervision, the insurer may request the Commissioner to review an action taken or proposed to be taken by the supervisor, specifying the reasons why the action complained of is believed not to be in the best interests of the insurer.
(h) If a person has violated a supervision order issued under this section that as to him or her was then still in effect, he or she shall be liable to pay a civil penalty imposed by the Superior Court of Washington County not to exceed $10,000.00.
(i) The Commissioner may apply for, and any court of general jurisdiction may grant, restraining orders, preliminary and permanent injunctions, and other orders as may be deemed necessary and proper to enforce a supervision order.
(j) In the event that a person, subject to the provisions of this chapter, including those persons described in subsection 7034(a) of this title, shall knowingly violate a valid order of the Commissioner issued under the provisions of this section and, as a result of the violation, the net worth of the insurer is reduced or the insurer suffers loss it would not otherwise have suffered, such person shall become personally liable to the insurer for the amount of the reduction or loss. The Commissioner or supervisor is authorized to bring an action on behalf of the insurer in the Superior Court of Washington County to recover the amount of the reduction or loss together with costs. (Added 1991, No. 45, § 2, eff. May 29, 1991; amended 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2015, No. 23, § 6; 2021, No. 105 (Adj. Sess.), § 251, eff. July 1, 2022.)