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2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7002. License required

§ 7002. License required
(a) No person shall engage in the business of an insurance premium finance company in the State without first having obtained a license as an insurance premium finance company from the Commissioner.
(b) The annual license fee shall be $200.00. Licenses may be renewed from year to year as of July 1 of each year upon payment of the fee of $200.00. The license fee shall be paid to the Commissioner.
(c) The Commissioner shall have authority, at any time, to require the applicant to disclose fully the identity of all stockholders, partners, officers, and employees and he or she may, in his or her discretion, refuse to issue or renew a license in the name of any firm, partnership, or corporation if he or she is not satisfied that any officer, employee, stockholder, or partner thereof who may materially influence the applicant’s conduct meets the standards of this chapter.
(d) This section shall not apply to any building or savings and loan association, bank, trust company, licensed lender, or credit union authorized to do business in this State, nor to an insurance company or to an insurance agent or insurance broker licensed to do business in this State financing premiums on policies written by such agent or broker; provided, however, that all other provisions of this chapter shall apply to the financing of insurance premiums. (Added 1983, No. 77, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7003. Issuance and renewal of license

§ 7003. Issuance and renewal of license
(a) Upon the filing of an application and the payment of the license fee, the Commissioner shall make an investigation of each applicant and shall issue a license, if the applicant is qualified in accordance with this chapter. If the Commissioner does not so find, he or she shall within 30 days after he or she has declined such application, at the request of the applicant, give the applicant a full hearing.
(b) The Commissioner shall issue or renew a license as may be applied for when he or she is satisfied that the person to be licensed:
(1) is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;
(2) has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for; and
(3) if a corporation, is a corporation incorporated under the laws of this State or a foreign corporation authorized to transact business in this State. (Added 1983, No. 77, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7004. Revocation or suspension of license; appeal

§ 7004. Revocation or suspension of license; appeal
(a) The Commissioner may revoke or suspend the license of any insurance premium finance company when after investigation the Commissioner finds that:
(1) the license issued to such company was obtained by fraud;
(2) there was any misrepresentation or material omission in the application for the license;
(3) the holder of such license has otherwise shown himself or herself untrustworthy or incompetent to act as an insurance premium finance company; or
(4) such company has violated any of the provisions of this chapter.
(b) Before the Commissioner shall revoke, suspend, or refuse to renew the license of any insurance premium finance company, the licensee shall be entitled to a hearing in accordance with 3 V.S.A. chapter 25, the Vermont Administrative Procedure Act. In lieu of revoking or suspending the license for any of the causes enumerated in this section, after hearing as provided in this section, the Commissioner may subject such company to a penalty of not more than $200.00 for each offense when in the Commissioner’s judgment the Commissioner finds that the public interest would not be harmed by the continued operation of such company. The amount of any penalty shall be paid by such company to the Commissioner.
(c) If the Commissioner refuses to issue to any person a license as an insurance premium finance company, or the Commissioner revokes, suspends, or refuses to renew the license of any insurance premium finance company, or the Commissioner imposes a penalty on such company after a hearing as provided under subsection (b) of this section, the applicant or licensee may appeal from such refusal to issue a license or from such adjudication in accordance with 3 V.S.A. chapter 25, the Vermont Administrative Procedure Act. (Added 1983, No. 77, § 1; amended 2021, No. 105 (Adj. Sess.), § 247, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7005. Books and records

§ 7005. Books and records
(a) Every insurance premium finance company shall maintain complete and accurate records of each of its insurance premium finance transactions and these records shall be open to examination and investigation by the Commissioner. The Commissioner may at any time during regular business hours examine such records at any location at which such records are maintained. The reasonable and necessary expenses for the examination and investigation, as determined by the Commissioner, shall be paid by the insurance premium finance company.
(b) Every insurance premium finance company shall preserve its records of such insurance premium finance transactions, including cards used in a card system, if any, for at least two years after making the final entry in respect to any insurance premium finance agreement. The preservation of records in photographic, microfilm, microfiche, computer, or data processing form shall constitute compliance with this requirement. (Added 1983, No. 77, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7006. Form of insurance premium finance agreement

§ 7006. Form of insurance premium finance agreement
(a) An insurance premium finance agreement shall:
(1) be dated and signed by or on behalf of the insured, and the printed portion thereof shall be in at least eight-point type;
(2) contain the name and place of business of the insurance agent or broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by the insured, the name and place of business of the insurance premium finance company to which payments are to be made, a brief description of the insurance contracts involved, and the amount of premiums under the insurance contracts; and
(3) set forth the following items where applicable:
(A) the total amount of the premiums;
(B) the amount of the down payment;
(C) the principal balance (the difference between subdivisions (A) and (B) of this subdivision (3));
(D) the amount of the interest;
(E) the balance payable by the insured (total of items listed in subdivisions (C) and (D) of this subdivision (3));
(F) the number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof; and
(G) the annual percentage rate of interest charged under the agreement.
(b) The items set out in subdivision (a)(3) of this section need not be stated in the sequence or order in which they appear in such subdivision (a)(3), and additional items may be included only to explain the computations made in determining the amount to be paid by the insured. (Added 1983, No. 77, § 1; amended 2021, No. 105 (Adj. Sess.), § 248, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7007. Limitation on interest and other charges

§ 7007. Limitation on interest and other charges
(a) An insurance premium finance company shall not charge, contract for, receive, or collect an interest charge or any fee, other than as permitted by this chapter.
(b) The interest is to be computed on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the insurance premium finance agreement) from the effective date of the insurance contract, for which the premiums are being advanced, to and including the date when the final installment of the insurance premium finance agreement is payable.
(c) The interest rate shall not exceed the rates permitted by 9 V.S.A. § 41a(b)(5), or a nonrefundable charge of $15.00 per insurance premium finance agreement, whichever is greater, except as provided in this section. If the insurance policy that is the subject of the insurance premium finance agreement is for other than personal, family, or household purposes, then the parties to the contract may agree upon any rate of interest that shall be stated in the insurance premium finance agreement. The interest permitted by this subsection anticipates timely repayment in consecutive monthly installments equal in amount for a period of one year. For repayment in greater or lesser periods or in unequal, irregular, or other than monthly installments, the interest may be computed at an equivalent effective rate having due regard for the timely payments of installments.
(d) Notwithstanding the provisions of any insurance premium finance agreement, an insured may prepay the obligation in full at any time. In such event, the insured shall receive a refund credit, which refund credit shall be computed according to the actuarial method on the assumption that all payments were made as originally scheduled. Where the amount of the refund credit is less than $1.00, no refund need be made, unless specifically requested by the insured. (Added 1983, No. 77, § 1; amended 2021, No. 105 (Adj. Sess.), § 249, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7008. Delinquency and collection charges

§ 7008. Delinquency and collection charges
(a) An insurance premium finance agreement may provide for the payment by the insured of a delinquency charge of $1.00 to a maximum of five percent of the amount of the delinquent installment that is in default for a period of five days or more, whichever is greater.
(b) An insurance premium finance agreement may provide for payment of reasonable collection and court costs, and attorney’s fees of not more than 25 percent of the outstanding indebtedness.
(c) None of the charges referred to in this section shall be considered directly or indirectly in determining whether a violation of the usury laws has occurred under an insurance premium finance agreement. (Added 1983, No. 77, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7009. Cancellation of insurance contract upon default

§ 7009. Cancellation of insurance contract upon default
(a) When an insurance premium finance agreement contains a power of attorney enabling the insurance premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the insurance premium finance company unless such cancellation is effectuated in accordance with this section.
(b) Not less than ten days’ written notice shall be mailed to the insured, at his or her last known address as shown on the records of the insurance premium finance company, of the intent of the insurance premium finance company to cancel the insurance contract unless the default is cured within such 10-day period.
(c) After expiration of such 10-day period, the insurance premium finance company may thereafter cancel such insurance contract or contracts by mailing to the insurer a notice of cancellation. The insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself or herself, but without requiring the return of the insurance contract or contracts. Such cancellation shall be effective no less than 10 days after mailing of the notice to the insurer. The insurance premium finance company shall also mail at least 10 days’ notice of cancellation to the insured at his or her last known address as shown on the records of the insurance premium finance company. However, if the policy being cancelled is a policy defined in subdivision 4222(1) of this title, then the notice of cancellation shall be given by certified mail, return receipt requested, to the insured by the insurance premium finance company.
(d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agency, mortgagee, or other third party on or before the second business day after the day it receives the notice of cancellation from the insurance premium finance company and shall determine the effective date of cancellation taking into consideration the number of days’ notice required to complete the cancellation. (Added 1983, No. 77, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7010. Return premiums

§ 7010. Return premiums
Whenever a financed insurance contract is cancelled, the insurer shall return whatever gross unearned premiums are due under the insurance contract directly to the insurance premium finance company for the account of the insured or insureds as soon as reasonably possible, but in no event shall the period for payment exceed 60 days after the effective date of cancellation of the insurance contract. In the event that the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the insurance premium finance company shall refund such excess to the insured provided that no such refund shall be required if it amounts to less than $1.00, unless specifically requested by the insured. (Added 1983, No. 77, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 143 - Insurance Premium Finance Companies › § 7011. Penalties for violations

§ 7011. Penalties for violations
Any insurance premium finance company that willfully and knowingly violates the provisions of any section of this chapter shall be fined not more than $2,000.00 for each offense or imprisoned not more than five years, or both. Any insurance premium finance agreement, not invalid for any other reason, in the making or collection of which any act shall have been done that constitutes an offense under this section shall be void and the insurance premium finance company shall have no right to collect or receive any principal, interest, or charges whatsoever. Any insurance premium finance company that violates the provisions of this chapter shall be liable to pay an administrative penalty of not more than $2,000.00 for each such offense. (Added 1983, No. 77, § 1; amended 1995, No. 167 (Adj. Sess.), § 24.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7032. Jurisdiction and venue

§ 7032. Jurisdiction and venue
(a) A delinquency proceeding shall not be commenced under this chapter by anyone other than the Commissioner and a court shall have no jurisdiction to entertain, hear, or determine any proceeding commenced by any other person.
(b) A court of this State shall have no jurisdiction to entertain, hear, or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership of any insurer; or praying for an injunction or restraining order or other relief preliminary to, incidental to, or relating to such proceedings other than in accordance with this chapter.
(c) In addition to other grounds for jurisdiction provided by the law of this State, a court of this State having jurisdiction of the subject matter has jurisdiction over a person served pursuant to the Vermont Rules of Civil Procedure or other applicable provisions of law in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this State:
(1) if the person served is an agent, broker, or other person who has at any time written policies of insurance for or has acted in any manner whatsoever on behalf of an insurer against which a delinquency proceeding has been instituted, in any action resulting from or incident to such a relationship with the insurer; or
(2) if the person served is a reinsurer who has at any time entered into a contract of reinsurance with an insurer against which a delinquency proceeding has been instituted, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; or
(3) if the person served is or has been an officer, director, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence over an insurer against which a delinquency proceeding has been commenced, in any action resulting from such a relationship with the insurer; or
(4) if the person served is or was at the time of the institution of the delinquency proceeding against the insurer holding assets in which the receiver claims an interest on behalf of the insurer, in any action concerning the assets; or
(5) if the person served is obligated to the insurer in any way whatsoever, in any action on or incident to the obligation.
(d) If the court on motion of any party finds that any action should as a matter of substantial justice be tried in a forum outside this State, the court may enter an appropriate order to stay further proceedings on the action in this State.
(e) All actions authorized by this section shall be brought in the Superior Court of Washington County. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7034. Cooperation of officers, owners, and employees

§ 7034. Cooperation of officers, owners, and employees
(a) An officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer’s affairs, shall cooperate with the Commissioner in any proceeding under this chapter or any investigation preliminary to the proceeding. The term “person” as used in this section shall include any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer. “To cooperate” shall include the following:
(1) to reply promptly in writing to any inquiry from the Commissioner requesting such a reply; and
(2) to make available to the Commissioner any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in his or her possession, custody, or control.
(b) A person shall not obstruct or interfere with the Commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental to a delinquency proceeding.
(c) This section shall not be construed to abridge otherwise existing legal rights, including the right to resist a petition for liquidation or other delinquency proceedings, or other orders.
(d) A person described in subsection (a) of this section who fails to cooperate with the Commissioner, or any person who obstructs or interferes with the Commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental to a delinquency proceeding, or who violates any order the Commissioner issued validly under this chapter may:
(1) be sentenced to pay a fine not exceeding $10,000.00 or to undergo imprisonment for a term of not more than one year, or both; or
(2) after a hearing, be subject to the imposition by the Commissioner of a civil penalty not to exceed $10,000.00 and shall be subject further to the revocation or suspension of any insurance licenses issued by the Commissioner. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7035. Continuation of delinquency proceedings

§ 7035. Continuation of delinquency proceedings
Every proceeding heretofore commenced under the laws in effect before May 29, 1991, except a liquidation proceeding in which a liquidation order has been entered by the Superior Court, shall be deemed to have commenced under this chapter for the purpose of conducting the proceeding henceforth, except that in the discretion of the Commissioner the proceeding may be continued, in whole or in part, as it would have been continued had this chapter not been enacted. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7036. Condition on release from delinquency proceedings

§ 7036. Condition on release from delinquency proceedings
An insurer subject to delinquency proceedings, whether formal or informal, shall not:
(1) be released from such proceeding, unless the proceeding is converted into a judicial rehabilitation or liquidation proceeding;
(2) be permitted to solicit or accept new business or request or accept the restoration of any suspended or revoked license or certificate of authority;
(3) be returned to the control of its shareholders or private management; or
(4) have any of its assets returned to the control of its shareholders or private management until all payments of or on account of the insurer’s contractual obligations by all guaranty associations, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty associations or a plan of repayment by the insurer shall have been approved by the guaranty association. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7042. Court’s seizure order

§ 7042. Court’s seizure order
(a) The Commissioner may file in the Superior Court of Washington County a petition alleging, with respect to a domestic insurer:
(1) that there exist grounds that would justify a court order for a formal delinquency proceeding against an insurer under this chapter;
(2) that the interests of policyholders, creditors, or the public will be endangered by delay; and
(3) the contents of an order deemed necessary by the Commissioner.
(b) Upon filing a petition under subsection (a) of this section, the court may issue immediately, ex parte and without a hearing, an order directing the Commissioner to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer, and of the premises occupied by it for transaction of its business; and enjoining the insurer and its officers, managers, agents, and employees from disposing of its property and from transacting its business except with the written consent of the Commissioner.
(c) The court shall specify in the order issued under subsection (b) of this section its duration, which shall be such time as the court deems necessary for the Commissioner to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may from time to time hold such hearings as it deems desirable after such notice as it deems appropriate, and may extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the Commissioner fails to commence a formal proceeding under this chapter after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under this chapter shall vacate the seizure order.
(d) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer.
(e) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of the order for a hearing and review of the order. The court shall hold a hearing and review the order not more than 30 days after the request. A hearing under this subsection may be held privately in chambers and it shall be so held if the insurer proceeded against so requests.
(f) If, at any time after the issuance of such an order, it appears to the court that a person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given shall not stay the effect of any order previously issued by the court. (Added 1991, No. 45, § 2, eff. May 29, 1991; amended 2021, No. 105 (Adj. Sess.), § 252, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7043. Confidentiality of hearings

§ 7043. Confidentiality of hearings
Administrative and judicial proceedings under sections 7041 and 7042 of this title, all records of the insurer, other documents, and all Department files and court records and papers, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential except as is necessary to obtain compliance with orders of the Commissioner or the court, unless the Superior Court of Washington County, after privately hearing arguments from the parties in chambers, shall order otherwise; or unless the insurer requests that the matter be made public. Until a court order permitting the matter to be made public issues, or the issuer requests that the matter be made public, all papers filed with the Superior Court of Washington County shall be held in a confidential file. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7052. Rehabilitation orders

§ 7052. Rehabilitation orders
(a) An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this State, shall appoint the Commissioner and the Commissioner’s successors in office the rehabilitator and shall direct the rehabilitator immediately to take possession of the assets of the insurer and to administer them under the general supervision of the court. The filing or recording of the order with the Clerk of the Superior Court of Washington County or town clerk of the town in which the principal business of the company is conducted, or the town in which its principal office or place of business is located, shall impart the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded with that town clerk would have imparted. The order to rehabilitate the insurer shall by operation of law vest title to all assets of the insurer in the rehabilitator.
(b) Any order issued under this section shall require accounting to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in this order but no less frequently than semiannually. Each accounting shall include a report concerning the rehabilitator’s opinion as to the likelihood that a plan under subsection 7053(d) of this title will be prepared by the rehabilitator and the timetable for doing so.
(c) Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer nor shall it be grounds for retroactive revocation or retroactive cancellation of any contracts of the insurer, unless such revocation or cancellation is done by the rehabilitator pursuant to section 7053 of this chapter. (Added 1991, No. 45, § 2, eff. May 29, 1991; amended 2021, No. 105 (Adj. Sess.), § 253, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7054. Actions by and against rehabilitator

§ 7054. Actions by and against rehabilitator
(a) A court in this State before which an action or proceeding in which the insurer is a party, or is obligated to defend a party, is pending when a rehabilitation order against the insurer is entered shall stay the action or proceeding for 90 days and such additional time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take such action respecting the pending litigation as he or she deems necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside this State and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer.
(b) A statute of limitations or defense of laches shall not run with respect to any action by or against an insurer between the filing of a petition for appointment of a rehabilitator for that insurer and the order granting or denying that petition. An action by or against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the order of rehabilitation is entered or the petition is denied. The rehabilitator may, upon an order for rehabilitation, within one year or such other longer time as applicable law may permit, institute an action or proceeding on behalf of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7055. Termination of rehabilitation

§ 7055. Termination of rehabilitation
(a) Whenever the Commissioner believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders, or the public, or would be futile, the Commissioner may petition the Superior Court of Washington County for an order of liquidation. A petition under this subsection shall have the same effect as a petition under section 7056 of this title. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition but may order payment from the estate of the insurer of costs and other expenses of defense only if the directors make a showing to the satisfaction of the court that they incurred such expenses in good faith and with a reasonable belief that they would prevail.
(b) The protection of the interests of insureds, claimants, and the public requires the timely performance of all insurance policy obligations. If the payment of policy obligations is suspended in substantial part for a period of six months at any time after the appointment of the rehabilitator and the rehabilitator has not filed an application for approval of a plan under subsection 7053(d) of this title, the rehabilitator shall petition the court for an order of liquidation on grounds of insolvency.
(c) The rehabilitator may at any time petition the Superior Court of Washington County for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of such costs and other expenses of such petition only if the directors make a showing to the satisfaction of the court that they incurred such expenses in good faith and with a reasonable belief that they would prevail. If the court upon a petition or upon its own motion finds that rehabilitation has been accomplished and that grounds for rehabilitation under section 7051 of this title no longer exist, it shall order that the insurer be restored to possession of its property and the control of the business. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7056. Grounds for liquidation

§ 7056. Grounds for liquidation
The Commissioner may petition the Superior Court of Washington County for an order directing the Commissioner to liquidate a domestic insurer or an alien insurer domiciled in this State on the basis of one or more of the following grounds:
(1) one or more grounds for an order of rehabilitation under section 7051 of this title exist, whether or not there has been a prior order directing the rehabilitation of the insurer; or
(2) the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors, or the public. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7058. Continuance of coverage

§ 7058. Continuance of coverage
(a) All policies, including bonds and other noncancellable business, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of:
(1) a period of 30 days from the date of entry of the liquidation orders;
(2) the expiration of the policy coverage;
(3) the date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy;
(4) the liquidator has effected a transfer of the policy obligation pursuant to subdivision 7060(a)(9) of this title; or
(5) the date proposed by the liquidator and approved by the court to cancel coverage.
(b) An order of liquidation under section 7057 of this title shall terminate coverages at the time specified in subsection (a) of this section for purposes of any other statute.
(c) Policies of life or health insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty association or foreign guaranty association.
(d) Policies of life or health insurance or annuities or any period or coverage of such policies not covered by a guaranty association or foreign guaranty association shall terminate under subsections (a) and (b) of this section. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7059. Dissolution of insurer

§ 7059. Dissolution of insurer
The Commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the U.S. branch of an alien insurer domiciled in this State at the time the Commissioner applies for a liquidation order. The court shall order dissolution of the corporation upon petition by the Commissioner upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason. (Added 1991, No. 45, § 2, eff. May 29, 1991; amended 2021, No. 105 (Adj. Sess.), § 255, eff. July 1, 2022.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7061. Notice to creditors and others

§ 7061. Notice to creditors and others
(a) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible:
(1) by first-class mail and either by telegram or telephone to the insurance commissioner of each jurisdiction in which the insurer is doing business;
(2) by first-class mail to any guaranty association or foreign guaranty association which is or may become obligated as a result of the liquidation;
(3) by first-class mail to all insurance agents of the insurer;
(4) by first-class mail to all persons known or reasonably expected to have claims against the insurer including all policyholders, at their last known address as indicated by the records of the insurer; and
(5) by publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator deems appropriate.
(b) Notice to potential claimants under subsection (a) of this section shall require claimants to file with the liquidator their claims together with proper proofs thereof under section 7075 of this title, on or before a date the liquidator shall specify in the notice. Although an earlier date may be set by the liquidator, the last day to file claims shall be no later than 18 months following the order of liquidation. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants shall have a duty to keep the liquidator informed of any changes of address.
(c)(1) Notice under subsection (a) of this section to agents of the insurer and to potential claimants who are policyholders shall include, where applicable, notice that coverage by state guaranty associations may be available for all or part of policy benefits in accordance with applicable state guaranty laws.
(2) The liquidator shall promptly provide to the guaranty associations such information concerning the identities and addresses of such policyholders and their policy coverages as may be within the liquidator’s possession or control, and otherwise cooperate with guaranty associations to assist them in providing to such policyholders timely notice of the guaranty associations’ coverage of policy benefits, including, as applicable, coverage of claims and continuation or termination of coverages.
(d) If notice is given in accordance with this section, the distribution of assets of the insurer under this chapter shall be conclusive with respect to all claimants, whether or not they received notice. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7062. Duties of agents

§ 7062. Duties of agents
(a) Every person who receives notice in the form prescribed in section 7061 of this title that an insurer which he or she represents as an agent is the subject of a liquidation order shall, within 30 days of such notice, provide to the liquidator (in addition to the information he or she may be required to provide pursuant to section 7034 of this title) the information in the agent’s records related to any policy issued by the insurer through the agent and, if the agent is a general agent, the information in the general agent’s records related to any policy issued by the insurer through an agent under contract to him or her, including the name and address of such sub-agent. A policy shall be deemed issued through an agent if the agent has a property interest in the expiration of the policy, or if the agent has had in his or her possession a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another.
(b) An agent who fails to give notice or file a report of compliance as required in subsection (a) of this section may be subject to payment of a penalty of not more than $1,000.00 and may have his or her license suspended after a hearing held by the Commissioner. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7063. Actions by and against liquidator

§ 7063. Actions by and against liquidator
(a) Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this State, no action shall be brought against the insurer or liquidator, whether in this State or elsewhere, nor shall any such existing actions be maintained or further presented after issuance of such order. The courts of this State shall give full faith and credit to injunctions against actions against the liquidator or the company or the continuation of existing actions against the liquidator or the company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states. Whenever, in the liquidator’s judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this State, he or she may intervene in the action. The liquidator may defend any action in which he or she intervenes under this section at the expense of the estate of the insurer.
(b) The liquidator may, upon or after an order for liquidation, within two years or such time in addition to two years as applicable law may permit, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. Where, by agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim, or for filing any claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case the period had not expired at the date of the filing of the petition; the liquidator may, for the benefit of the estate, take any such action or do any such act, required of or permitted to the insurer, within a period of 180 days subsequent to the entry of an order for liquidation, or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party.
(c) A statute of limitation or defense of laches shall not run with respect to any action against an insurer between the filing of a petition for liquidation against an insurer and the denial of the petition. An action against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the petition is denied. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7064. Collection and list of assets

§ 7064. Collection and list of assets
(a) As soon as practicable after the liquidation order but not later than 120 days thereafter, the liquidator shall prepare in duplicate a list of the insurer’s assets. The list shall be amended or supplemented from time to time as the liquidator may determine. One copy shall be filed in the Superior Court of Washington County and one copy shall be retained for the liquidator’s files. All amendments and supplements shall be similarly filed.
(b) The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation.
(c) A submission to the court for disbursement of assets in accordance with section 7073 of this title fulfills the requirements of subsection (a) of this section. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7066. Fraudulent transfer after petition

§ 7066. Fraudulent transfer after petition
(a) After a petition for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid, for which amount the transferee shall have a lien on the property so transferred. The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the recorder of deeds in the county where any real property in question is located. The exercise by a court of the United States or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.
(b) After a petition for rehabilitation or liquidation has been filed and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:
(1) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid, for which amount the transferee shall have a lien on the property so transferred.
(2) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon his or her order, with the same effect as if the petition were not pending.
(3) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith.
(4) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator.
(c) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (a) of this section shall be personally liable therefore and shall be bound to account to the liquidator.
(d) Nothing in this chapter shall impair the negotiability of currency or negotiable instruments. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 145 - Supervision, Rehabilitation, and Liquidation of Insurers › § 7068. Claims of holders of void or voidable rights

§ 7068. Claims of holders of void or voidable rights
(a) No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance voidable under this chapter shall be allowed unless he or she surrenders the preference, lien, conveyance, transfer, assignment, or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within 30 days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.
(b) A claim allowable under subsection (a) of this section by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment, or encumbrance, may be filed as an excused late filing under section 7074 of this title if filed within 30 days from the date of the avoidance or within the further time allowed by the court under subsection (a) of this section. (Added 1991, No. 45, § 2, eff. May 29, 1991.)