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House Calendar
Friday, January 31, 2014
25th DAY OF THE ADJOURNED SESSION
House Convenes at 9:30 A.M.
TABLE OF CONTENTS
Page No.
ACTION CALENDAR
Third Reading
H. 373
Updating and reorganizing Title 33 ................................................... 368
H. 735
Executive Branch and Judiciary fees ................................................. 368
NOTICE CALENDAR
Favorable with Amendment
H. 260
Insurance notices by electronic means .............................................. 368
Rep. Young for Commerce and Economic Development
Senate Proposal of Amendment
H. 198
The Legacy Insurance Management Act ........................................... 383
Consent Calendar
H.C.R. 206
Congratulating Green Mountain RSVP on its 40th anniversary of
community service ......................................................................................... 397
H.C.R. 207
Congratulating the Rutland Gift-of-Life Marathon on establishing
a new national one-day blood donation record .............................................. 397
H.C.R. 208
Recognizing the role of registered nurses in the delivery of quality
health care in Vermont .................................................................................. 397
H.C.R. 209
Congratulating the Vermont Cynic on its 130th anniversary .... 397
H.C.R. 210
Congratulating the 2013 Woodstock Union High School Wasps
Division III championship football team ....................................................... 397
H.C.R. 211
In memory of Chet Briggs of Calais .......................................... 397
H.C.R. 212
Recognizing the innovative cross-cultural mission of the Izdahar
arts exchange organization ............................................................................ 398
H.C.R. 213
In memory of Margaret Hurley Franzen of Montpelier ............ 398
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ORDERS OF THE DAY
ACTION CALENDAR
Third Reading
H. 373
An act relating to updating and reorganizing Title 33
H. 735
An act relating to Executive Branch and Judiciary fees
NOTICE CALENDAR
Favorable with Amendment
H. 260
An act relating to insurance notices by electronic means
Rep. Young of Glover,
for the Committee on
Commerce and Economic
Development,
recommends the bill be amended by striking all after the
enacting clause and inserting in lieu thereof the following:
* * * Electronic Insurance Notices * * *
Sec. 1.
8 V.S.A. § 3666 is added to read:
§ 3666.
DELIVERY OF NOTICES BY ELECTRONIC MEANS
(a)
As used in this section:
(1) “Delivered by electronic means” includes:
(A)
delivery to an electronic mail address at which a party has
consented to receive notice; and
(B)
posting on an electronic network, together with separate notice to
a party sent to the electronic mail address at which the party has consented to
receive notice of the posting.
(2) “Party” means an applicant, an insured, or a policyholder.
(b)
Subject to subsection (d) of this section, any notice to a party required
under section 3880, 3881, 4224, 4225, 4712, or 4713 of this title may be but is
not required to be delivered by electronic means provided the process used to
obtain consent of the party to have notice delivered by electronic means meets
the
requirements
of
9 V.S.A.
chapter
20
(the
Uniform
Electronic
Transactions Act).
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(c)
Delivery of a notice pursuant to subsection (b) of this section shall be
considered equivalent to any delivery method required under section 3883,
4226, or 4714 of this title, including delivery by first-class mail, certified mail,
or certificate of mailing.
(d)
A notice may be delivered by electronic means by an insurer to a party
under this section if:
(1)
The party has affirmatively consented to such method of delivery
and not subsequently withdrawn consent.
(2)
The party, before giving consent, is provided with a clear and
conspicuous statement informing the party of:
(A)
the right of the party to have the notice provided or made
available in paper or another nonelectronic form at no additional cost;
(B)
the right of the party to withdraw consent to have notice
delivered by electronic means;
(C) whether the party’s consent applies:
(i)
only to the particular transaction as to which the notice must be
given; or
(ii)
to identified categories of notices that may be delivered by
electronic means during the course of the party’s relationship with the insurer;
(D)
how, after consent is given, the party may obtain a paper copy of
a notice delivered by electronic means at no additional cost; and
(E)
the procedures the party must use to withdraw consent to have
notice delivered by electronic means and to update information needed to
contact the party electronically.
(3)
The party:
(A)
before giving consent, is provided with a statement of the
hardware and software requirements for access to and retention of a notice
delivered by electronic means; and
(B)
consents electronically and confirms consent electronically, in a
manner that reasonably demonstrates that the party can access information in
the electronic form that will be used for notices delivered by electronic means
as to which the party has given consent.
(4)
After consent of the party is given, the insurer, in the event a change
in the hardware or software requirements needed to access or retain a notice
delivered by electronic means creates a material risk that the party will not be
able to access or retain a subsequent notice to which the consent applies:
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(A)
provides the party with a statement of:
(i)
the revised hardware and software requirements for access to
and retention of a notice delivered by electronic means; and
(ii)
a revised statement required by subdivision (2) of this
subsection; and
(B)
the party affirmatively consents to continued delivery of notices
by electronic means.
(e)
Every notice delivered pursuant to subsection (b) of this section shall
include the statement required by subdivision (d)(2) of this section.
This
section does not otherwise affect the content or timing of any notice required
under chapter 105, 113, or 128 of this title.
(f)
If a provision of chapter 105, 113, or 128 of this title requiring notice to
be provided to a party expressly requires verification or acknowledgment of
receipt of the notice, the notice may be delivered by electronic means only if
the method used provides for verification or acknowledgment of receipt.
Upon
notification to the insurer that the electronic notice was not deliverable, the
insurer shall send a paper copy of the notice as otherwise required by law.
(g)
The legal effectiveness, validity, or enforceability of any contract or
policy of insurance may not be made contingent upon obtaining electronic
consent or confirmation of consent of a party in accordance with subdivision
(d)(3)(B) of this section.
(h)(1)
A withdrawal of consent by a party does not affect the legal
effectiveness, validity, or enforceability of a notice delivered by electronic
means to the party before the withdrawal of consent is effective.
(2)
A withdrawal of consent by a party is effective within 30 days after
receipt of the withdrawal by the insurer.
(3)
Failure to comply with subdivision (d)(4) of this section shall be
treated as a withdrawal of consent for purposes of this section.
(i)
A party who does not consent to delivery of notices by electronic means
under subsection (b) of this section or who withdraws his or her consent shall
not be subjected to any additional fees or costs for having notices provided or
made available in paper or another nonelectronic form.
(j)
This section shall not be construed to modify, limit, or supersede the
provisions
of
the
federal
Electronic
Signatures
in
Global
and
National
Commerce Act, 15 U.S.C. chapter 96, relating to the use of an electronic
record to provide or make available information that is required to be provided
or made available in writing to a party.
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Sec. 2.
INTERPRETATION
The delivery of notice in accordance with Sec. 1 of this act is intended and
shall be construed to meet the requirements of State insurance regulation 78-
01, section 1, as revised.
Sec. 3.
STATEMENT OF CONSUMER RIGHTS; ELECTRONIC NOTICES
The Commissioner of Financial Regulation shall issue a bulletin regarding
the statement to be provided to a party under 8 V.S.A. § 3666(d)(2).
The
bulletin shall require insurance companies to clearly and conspicuously inform
the party of the types of notices (cancellation and nonrenewal) permitted to be
delivered by electronic means; the risks associated with electronic notifications
and the party’s assumption of those risks if he or she consents to receive
electronic notifications; the party’s right to receive notices by mail at no
additional cost; and any other provisions the Commissioner deems necessary to
protect the interests of Vermonters and otherwise carry out the purposes of this
act.
In addition, the bulletin shall provide guidance to insurers on the
appropriate form of the electronic notices and their provisions as well as on the
specific
withdrawal
of
consent
procedures
required
under
8 V.S.A.
§ 3666(d)(2)(D).
* * * Credit for Reinsurance * * *
Sec. 4.
8 V.S.A. § 3634a is amended to read:
§ 3634a.
CREDIT FOR REINSURANCE
(a)
It is the purpose of this section to permit credit for reinsurance on the
annual statement of an insurer filed under section 3561 of this title only in
connection with:
(1)
assuming insurers licensed in this state;
(2)
accredited reinsurers;
(3)
insurers licensed in a state whose reinsurance standards are
substantially similar to this State; or
(4)
insurers maintaining qualified trusts protect the interest of insureds,
claimants, ceding insurers, assuming insurers, and the public generally.
The
General Assembly hereby declares its intent is to ensure adequate regulation of
insurers and reinsurers and adequate protection for those to whom they owe
obligations.
In furtherance of that State interest, the General Assembly hereby
provides a mandate that upon the insolvency of a non-U.S insurer or reinsurer
that provides security to fund its U.S. obligations in accordance with this
section, the assets representing the security shall be maintained in the United
States and claims shall be filed with and valued by the state insurance
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commissioner with regulatory oversight, and the assets shall be distributed in
accordance with the insurance laws of the state in which the trust is domiciled
that are applicable to the liquidation of domestic U.S. insurance companies.
The General Assembly declares that the matters contained in this section are
fundamental to the business of insurance in accordance with 15 U.S.C.
§§ 1011-1012.
(b)
Credit for reinsurance shall be allowed a domestic ceding insurer as
either an asset or a deduction from liability on account of reinsurance ceded
only when the reinsurer meets the requirements of subsections (c), (d), (e), or
(f) of this section subdivision (1), (2), (3), (4), (5) or (6) of this subsection.
Reinsurers meeting the requirements of subsection (e) or (f) of this section
shall also meet the requirements of subsection (g) of this section.
Credit shall
be allowed under subdivision (1), (2), or (3) of this subsection only with
respect to cessions of those kinds or classes of business which the assuming
insurer is licensed or otherwise permitted to write or assume in its state of
domicile or, in the case of a U.S. branch of an alien assuming insurer, in the
state through which it is entered and licensed to transact insurance or
reinsurance.
Credit shall be allowed under subdivision (3) or (4) of this
subsection only if the applicable requirements of subdivision (7) of this
subsection have been satisfied.
(c)(1)
Credit shall be allowed when the reinsurance is ceded to an assuming
insurer which is licensed to transact insurance or reinsurance in this State.
(d) (2)
Credit shall be allowed when the reinsurance is ceded to an
assuming insurer which is accredited by the Commissioner as a reinsurer in
this State.
An accredited reinsurer is one which:
(1)(A)
files with the Commissioner evidence of its submission to this
State’s jurisdiction;
(B) submits to this State’s authority to examine its books and records;
(C)
is licensed to transact insurance or reinsurance in at least one
state, or in the case of a United States U.S. branch of an alien assuming insurer
is entered through and licensed to transact insurance or reinsurance in at least
one state;
(D)
files with the Commissioner on or before March 1 of each year a
copy of its annual statement filed with the insurance department of its state of
domicile and files on or before June 1 of each year a copy of its most recent
audited financial statement;
(E)
files with the Commissioner its charter, bylaws, and any other
material required by the Commissioner; and
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(F)
pays an initial fee of $500.00 and thereafter an annual fee of
$200.00 on or before March 1 of each year; and
(G)
demonstrates to the satisfaction of the Commissioner that it has
adequate financial capacity to meet its reinsurance obligations and is otherwise
qualified to assume reinsurance from domestic insurers.
An assuming insurer
is
deemed
to
meet
this
requirement,
provided
that
at
the
time
of
its
application it:
(2)(A)(i)
maintains a surplus for policyholders which that is not less
than $20,000,000.00 and whose accreditation has not been denied by the
Commissioner within 90 days of its submission; or
(B)(ii)
maintains a surplus for policyholders in an amount less than
$20,000,000.00 and whose accreditation has been approved the Commissioner.
(e)(1)(3)(A)
Credit shall be allowed when the reinsurance is ceded to an
assuming insurer which is domiciled and licensed in, or in the case of a United
States U.S. branch of an alien assuming insurer is entered through, a state
which that employs standards regarding credit for reinsurance substantially
similar to those applicable under this statute and the assuming insurer or
United States U.S. branch of an alien assuming insurer:
(A)(i)
maintains a surplus for policyholders in an amount not less
than $20,000,000.00; and
(B)(ii)
submits to the authority of this State to examine its books and
records.
(2)(B)
The
requirement
of subdivision
(e)(1)(A)
of
this
section
subdivision (3)(A)(i) of this subsection does not apply to reinsurance ceded
and assumed pursuant to pooling arrangements among insurers in the same
holding company system.
(f)(1)(4)(A)
Credit shall be allowed when the reinsurance is ceded to an
assuming insurer which maintains a trust fund in a qualified United States U.S.
financial institution, approved by the commissioner as defined in subdivision
(d)(2) of this section, for the payment of the valid claims of its United States
U.S. policyholders and ceding insurers, their assigns and successors in interest.
The assuming insurer shall report annually to the Commissioner information
required by the Commissioner and substantially the same as that required to be
reported on the National Association of Insurance Commissioners’ Annual
Statement form by licensed insurers to enable the Commissioner to determine
the sufficiency of the trust fund.
No later than On or before February 28 of
each year, the trustees of the trust shall report to the Commissioner in writing
setting forth the balance of the trust and listing the trust’s investments at the
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preceding year-end and shall certify the date of termination of the trust, if so
planned, or certify that the trust shall not expire prior to the next following
December 31.
(2)
A trust and trust instrument maintained pursuant to subdivision (1)
of this subsection this subdivision shall:
(A)(i) be established in a form and upon such terms approved by the
Commissioner;
(B)(ii)
provide that contested claims shall be valid and enforceable
upon the final order of any court of competent jurisdiction in the United States;
(C)(iii)
vest legal title to its assets in the trustees of the trust for its
United States U.S. policyholders and ceding insurers, their assigns and
successors in interest;
(D)(iv)
be
subject
to
examination
as
determined
by
the
Commissioner; and
(E)(v)
remain in effect for as long as the assuming insurer shall have
outstanding obligations due under the reinsurance agreements subject to the
trust; and
(vi)
be filed with the commissioner of every state in which the
ceding insurer beneficiaries of the trust are domiciled.
(3)(B)
In the case of a single assuming insurer, the trust shall consist
of a trusteed account representing the assuming insurer’s liabilities attributable
to business written in the United States and, in addition, the assuming insurer
shall maintain a trusteed surplus of not less than $20,000,000.00, except at any
time after the assuming insurer has permanently discontinued underwriting
new business secured by the trust for at least three full years, the commissioner
with principal regulatory oversight of the trust may authorize a reduction in the
required trusteed surplus, but only after a finding, based on an assessment of
the risk, that the new required surplus level is adequate for the protection of
U.S. ceding insurers, policyholders, and claimants in light of reasonably
foreseeable adverse loss development.
The risk assessment may involve an
actuarial review, including an independent analysis of reserves and cash flows,
and shall consider all material risk factors, including when applicable the lines
of business involved, the stability of the incurred loss estimates, and the effect
of the surplus requirements on the assuming insurer’s liquidity or solvency.
The minimum required trusteed surplus may not be reduced to an amount less
than 30 percent of the assuming insurer’s liabilities attributable to reinsurance
ceded by U.S. ceding insurers covered by the trust.
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(4)(C)
In the case of a group including incorporated and individual
unincorporated underwriters, the trust shall consist of a trusteed account
representing the group’s liabilities attributable to business written in the United
States and, in addition, the group shall maintain a trusteed surplus of which
$100,000,000.00 shall be held jointly for the benefit of United States U.S.
ceding insurers of any member of the group; the incorporated members of the
group shall not engage in any business other than underwriting as a member of
the group and shall be subject to the same level of solvency regulation and
control by the group’s domiciliary regulator as are
the
unincorporated
members; and the group shall make available to the Commissioner an annual
certification of the solvency of each underwriter by the group’s domiciliary
regulator and its independent public accountants.
(5)(D)
In the case of a group of incorporated insurers under common
administration which complies with the filing requirements contained in
subsection (d) subdivision (b)(2) of this section, and which has continuously
transacted an insurance business outside the United States for at least three
years immediately prior to making application for accreditation;, and submits
to this State’s authority to examine its books and records and bears the expense
of the examination, and which has aggregate policyholders’ surplus of
$10,000,000,000.00;, the trust shall be in an amount equal to the group’s
several liabilities attributable to business ceded by United States U.S. ceding
insurers to any member of the group pursuant to reinsurance contracts issued in
the name of such group;, plus the group shall maintain a joint trusteed surplus
of which $100,000,000.00 shall be held jointly for the benefit of United States
U.S. ceding insurers of any member of the group as additional security for any
such liabilities, and each member of the group shall make available to the
Commissioner an annual certification of the member’s solvency by the
member’s domiciliary regulator and its independent public accountant.
(5)
Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that has been certified by the Commissioner as a reinsurer in
this State and secures its obligations in accordance with the requirements of
this subdivision.
(A)
In order to be eligible for certification, the assuming insurer
shall:
(i)
be domiciled and licensed to transact insurance or reinsurance
in
a
qualified
jurisdiction,
as
determined
by
the
Commissioner
under
subdivision (C) of this subdivision (5);
(ii)
maintain minimum capital and surplus, or its equivalent, in an
amount to be determined by the Commissioner by rule;
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(iii)
maintain financial strength ratings from two or more rating
agencies deemed acceptable by the Commissioner by rule;
(iv)
agree to submit to the jurisdiction of this State, appoint the
Commissioner as its agent for service of process in this State, and agree to
provide
security
for
100
percent
of
the
assuming
insurer’s
liabilities
attributable
to
reinsurance
ceded
by
U.S.
ceding
insurers
if
it
resists
enforcement of a final U.S. judgment;
(v)
agree to meet applicable information filing requirements as
determined by the Commissioner, both with respect to an initial application for
certification and on an ongoing basis; and
(vi)
the assuming insurer must satisfy any other requirements for
certification deemed relevant by the Commissioner.
(B)
An
association,
including
incorporated
and
individual
unincorporated underwriters, may be a certified reinsurer.
In order to be
eligible
for
certification,
in
addition
to
satisfying
the
requirements
of
subdivision (A) of this subdivision (5):
(i)
the association shall satisfy its minimum capital and surplus
requirements through the capital and surplus equivalents, net of liabilities, of
the association and its members, which shall include a joint central fund that
may be applied to any unsatisfied obligation of the association or any of its
members, in an amount determined by the Commissioner to provide adequate
protection;
(ii)
The incorporated members of the association shall not be
engaged in any
business other than underwriting as a member of the
association and shall be subject to the same level of regulation and solvency
control by the association’s domiciliary regulator as are the unincorporated
members; and
(iii)
Within 90 days after its financial statements are due to be
filed with the association’s domiciliary regulator, the association shall provide
to the Commissioner an annual certification by the association’s domiciliary
regulator of the solvency of each underwriter member; or, if a certification is
unavailable, financial statements, prepared by independent public accountants,
of each underwriter member of the association.
(C)
The Commissioner shall create and publish a list of qualified
jurisdictions under which an assuming insurer licensed and domiciled in such
jurisdiction is eligible to be considered for certification by the Commissioner
as a certified reinsurer.
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(i)
In order to determine whether the domiciliary jurisdiction of a
non-U.S.
assuming
insurer
is
eligible
to
be
recognized
as
a
qualified
jurisdiction,
the
Commissioner
shall
evaluate
the
appropriateness
and
effectiveness of the reinsurance supervisory system of the jurisdiction, both
initially and on an ongoing basis, and consider the rights, benefits, and extent
of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers
licensed and domiciled in the United States.
A qualified jurisdiction shall
agree to share information and cooperate with the Commissioner with respect
to all certified reinsurers domiciled within that jurisdiction.
A jurisdiction may
not
be
recognized
as
a
qualified
jurisdiction
if
the
Commissioner
has
determined that the jurisdiction does not adequately and promptly enforce final
U.S. judgments and arbitration awards.
Additional factors may be considered
in the discretion of the Commissioner.
(ii)
A list of qualified jurisdictions shall be published through the
NAIC committee process.
The Commissioner shall consider this list in
determining
qualified
jurisdictions.
If
the
Commissioner
approves
a
jurisdiction
as
qualified
that
does
not
appear
on
the
list
of
qualified
jurisdictions,
the
Commissioner
shall
provide
thoroughly
documented
justification in accordance with criteria to be developed by rule.
(iii)
U.S. jurisdictions that meet the requirement for accreditation
under the NAIC financial standards and accreditation program shall be
recognized as qualified jurisdictions.
(iv) If a certified reinsurer’s domiciliary jurisdiction ceases to be a
qualified jurisdiction, the Commissioner has the discretion to suspend the
reinsurer’s certification indefinitely, in lieu of revocation.
(D)
The Commissioner shall assign a rating to each certified
reinsurer, giving due consideration to the financial strength ratings that have
been assigned by rating agencies deemed acceptable to the Commissioner by
rule.
The Commissioner shall publish a list of all certified reinsurers and their
ratings.
(E)
A certified reinsurer shall secure obligations assumed from U.S.
ceding insurers under this subsection at a level consistent with its rating, as
specified in rules adopted by the Commissioner.
(i)
In order for a domestic ceding insurer to qualify for full
financial statement credit for reinsurance ceded to a certified reinsurer, the
certified
reinsurer
shall
maintain
security
in
a
form
acceptable
to
the
Commissioner and consistent with the provisions of subsection (c) of this
section or in a multibeneficiary trust in accordance with subdivision (4) of this
subsection, except as otherwise provided in this subdivision.
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(ii)
If a certified reinsurer maintains a trust to fully secure its
obligations subject to subdivision (4) of this subsection and chooses to secure
its obligations incurred as a certified reinsurer in the form of a multibeneficiary
trust, the certified reinsurer shall maintain separate trust accounts for its
obligations incurred under reinsurance agreements issued or renewed as a
certified reinsurer with reduced security as permitted by this subsection or
comparable laws of other U.S. jurisdictions and for its obligations subject to
subdivision (4) of this subsection.
It shall be a condition to the grant of
certification under this subdivision (5) that the certified reinsurer shall have
bound itself, by the language of the trust and agreement with the commissioner
with principal regulatory oversight of each such trust account, to fund, upon
termination of any such trust account, out of the remaining surplus of such
trust any deficiency of any other such trust account.
(iii)
The minimum trusteed surplus requirements provided in
subdivision (4) of this subsection are not applicable with respect to a
multibeneficiary trust maintained by a certified reinsurer for the purpose of
securing obligations incurred under this subsection, except that such trust shall
maintain a minimum trusteed surplus of $10,000,000.00.
(iv)
With respect to obligations incurred by a certified reinsurer
under this subsection, if the security is insufficient, the Commissioner shall
reduce the allowable credit by an amount proportionate to the deficiency and
has the discretion to impose further reductions in allowable credit upon finding
that there is a material risk that the certified reinsurer’s obligations will not be
paid in full when due.
(v)
For purposes of this subdivision (5), a certified reinsurer
whose certification has been terminated for any reason shall be treated as a
certified reinsurer required to secure 100 percent of its obligations.
(I) As used in this subdivision (5), the term “terminated” refers
to revocation, suspension, voluntary surrender, and inactive status.
(II)
If the Commissioner continues to assign a higher rating as
permitted by other provisions of this section, this requirement does not apply
to a certified reinsurer in inactive status or to a reinsurer whose certification
has been suspended.
(F)
If an applicant for certification has been certified as a reinsurer in
an NAIC accredited jurisdiction, the Commissioner has the discretion to defer
to that jurisdiction’s certification and has the discretion to defer to the rating
assigned by that jurisdiction, and such assuming insurer shall be considered to
be a certified reinsurer in this State.
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(G)
A certified reinsurer that ceases to assume new business in this
State may request to maintain its certification in inactive status in order to
continue to qualify for a reduction in security for its in-force business.
An
inactive certified reinsurer shall continue to comply with all applicable
requirements of this subsection, and the Commissioner shall assign a rating
that takes into account, if relevant, the reasons why the reinsurer is not
assuming new business.
(6)
Credit shall be allowed when the reinsurance is ceded to an
assuming insurer not meeting the requirements of subdivision (1), (2), (3), (4)
or (5) of this subsection, but only as to the insurance of risks located in
jurisdictions where the reinsurance is required by applicable law or regulation
of that jurisdiction.
(g)(7)
If the assuming insurer is not licensed or accredited or certified to
transact insurance or reinsurance in this State, the credit permitted by
subsections (e) and (f) of this section subdivisions (3) and (4) of this
subsection shall not be allowed unless the assuming insurer agrees in the
reinsurance agreements:
(1)(A)
that in the event of the failure of the assuming insurer to perform
its obligations under the terms of the reinsurance agreement, the assuming
insurer, at the request of the ceding insurer, shall submit to the jurisdiction of
any court of competent jurisdiction in any state of the United States, will
comply with all requirements necessary to give such court jurisdiction, and
will abide by the final decision of such court or of any appellate court in the
event of an appeal; and
(2)(B)
to designate the Commissioner, the Secretary of State, or a
designated attorney as its true and lawful attorney upon whom may be served
any lawful process in any action, suit, or proceeding instituted by or on behalf
of the ceding company.
This provision is not intended to conflict with or
override the obligation of the parties to a reinsurance agreement to arbitrate
their disputes, if this obligation is created in the agreement.
(8)
If
the
assuming
insurer
does
not
meet
the
requirements
of
subdivision
(1),
(2)
or
(3)
of
this
subsection,
the
credit
permitted
by
subdivision (4) or (5) of this subsection shall not be allowed unless the
assuming insurer agrees in the trust agreements to the following conditions:
(A)
Notwithstanding any other provisions in the trust instrument to
the contrary, if the trust fund is inadequate because it contains an amount less
than the amount required by subdivisions (4)(B)–(D) of this subsection or if
the grantor of the trust has been declared insolvent or placed into receivership,
rehabilitation, liquidation, or similar proceedings under the laws of its state or
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country
of
domicile,
the
trustee
shall
comply
with
an
order
of
the
Commissioner with regulatory oversight over the trust or with an order of a
court
of
competent
jurisdiction
directing
the
trustee
to
transfer
to
the
Commissioner with regulatory oversight all of the assets of the trust fund.
(B)
The assets shall be distributed by and claims shall be filed with
and valued by the Commissioner with regulatory oversight in accordance with
the laws of the state in which the trust is domiciled that are applicable to the
liquidation of domestic insurance companies.
(C)
If the commissioner with regulatory oversight determines that the
assets of the trust fund or any part thereof are not necessary to satisfy the
claims of the U.S. ceding insurers of the grantor of the trust, the assets or part
thereof shall be returned by the commissioner with regulatory oversight to the
trustee for distribution in accordance with the trust agreement.
(D)
The grantor shall waive any right otherwise available to it under
U.S. law that is inconsistent with this provision.
(9)
If an accredited or certified reinsurer ceases to meet the requirements
for accreditation or certification, the Commissioner may suspend or revoke the
reinsurer’s accreditation or certification.
(A)
The Commissioner
must
give
the
reinsurer
notice
and
opportunity for hearing.
The Commissioner may suspend or revoke a
reinsurer’s accreditation or certification without a hearing if:
(i)
the reinsurer waives its right to hearing;
(ii) the Commissioner’s order is based on regulatory action by the
reinsurer’s domiciliary jurisdiction or the voluntary surrender or termination of
the reinsurer’s eligibility to transact insurance or reinsurance business in its
domiciliary jurisdiction or in the primary certifying state of the reinsurer under
subdivision (5)(F) of this subsection; or
(iii)
the
Commissioner
finds
that
an
emergency
requires
immediate action and a court of competent jurisdiction has not stayed the
Commissioner’s action.
(B) While a reinsurer’s accreditation or certification is suspended, no
reinsurance
contract
issued
or
renewed
after
the
effective
date
of
the
suspension qualifies for credit except to the extent that the reinsurer’s
obligations under the contract are secured in accordance with subsection (c) of
this section. If a reinsurer’s accreditation or certification is revoked, no credit
for reinsurance may be granted after the effective date of the revocation except
to the extent that the reinsurer’s obligations under the contract are secured in
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accordance with subdivision (5)(E) of this subsection or subsection (c) of this
section.
(10)
Concentration Risk.
(A)
A ceding insurer shall take steps to manage its reinsurance
recoverables proportionate to its own book of business.
A domestic ceding
insurer shall notify the Commissioner within 30 days after reinsurance
recoverables from any single assuming insurer or group of affiliated assuming
insurers exceeds 50 percent of the domestic ceding insurer’s last reported
surplus to policyholders or after it is determined that reinsurance recoverables
from any single assuming insurer or group of affiliated assuming insurers is
likely to exceed this limit.
The notification shall demonstrate that the exposure
is safely managed by the domestic ceding insurer.
(B)
A ceding insurer shall take steps to diversify its reinsurance
program.
A domestic ceding insurer shall notify the Commissioner within 30
days after ceding to any single assuming insurer or group of affiliated
assuming insurers more than 20 percent of the ceding insurer’s gross written
premium in the prior calendar year or after it has determined that the
reinsurance ceded to any single assuming insurer or group of affiliated
assuming insurers is likely to exceed this limit.
The notification shall
demonstrate that the exposure is safely managed by the domestic ceding
insurer.
(h)(c)
Reduction from liability for reinsurance ceded by a domestic insurer
to
an
assuming
insurer.
A
domestic
insurer
that
does
not
meet
the
requirements of subsections (a) through (g) of this section shall be allowed a
reduction in liability: An asset or a reduction from liability for the reinsurance
ceded
by
a
domestic
insurer
to
an
assuming
insurer
not
meeting
the
requirements of subsection (b) of this section shall be allowed in an amount not
exceeding the liabilities carried by the ceding insurer.
The reduction shall be
(1)
in an amount not exceeding the liabilities carried by the ceding
insurer; and
(2)
in the amount of funds held by or on behalf of the ceding insurer,
including funds held in trust for the ceding insurer, under a reinsurance
contract with such assuming insurer as collateral for the payment of obligations
thereunder, if such collateral is held in the United States subject to withdrawal
solely by, and under the exclusive control of, the ceding insurer; or, in the case
of a trust, held in a qualified United States U.S. financial institution approved
by the Commissioner.
Such collateral shall be in the form of:, as defined in
subdivision (d)(2) of this section.
This security may be in the form of:
(A)(1)
cash;
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(B)(2)
securities listed by the Securities Valuation Office of the
National Association of Insurance Commissioners and qualifying as admitted
assets; or
(C)(3)
clean, irrevocable, unconditional letters of credit, issued or
confirmed by a qualified United States U.S. financial institution, approved by
the Commissioner as defined in subdivision (d)(1) of this section, which are
effective no later than December 31 in respect of the year for which filing is
being made, and in the possession of the ceding company on or before the
filing date of its annual statement.
Letters of credit meeting applicable
standards
of
issuer
acceptability
as
of
the
dates
of
their
issuance
or
confirmation shall, notwithstanding the issuing or confirming institution’s
subsequent
failure
to
meet
applicable
standards
of
issuer
acceptability,
continue to be acceptable as security until their expiration, extension, renewal,
modification, or amendment, whichever first occurs; or
(D)(4)
any other form of collateral acceptable to the Commissioner.
(d)(1) For purposes of subdivision (c)(3) of this section, a “qualified U.S.
financial institution” means an institution that:
(A)
is organized or, in the case of a U.S. office of a foreign banking
organization, licensed under the laws of the United States or any state thereof;
(B)
is regulated, supervised, and examined by federal or state
authorities having regulatory authority over banks and trust companies; and
(C)
has been determined by either the Commissioner or the Securities
Valuation Office of the National Association of Insurance Commissioners to
meet such standards of financial condition and standing as are considered
necessary and appropriate to regulate the quality of financial institutions whose
letters of credit will be acceptable to the Commissioner.
(2) A “qualified U.S. financial institution” means, for purposes of those
provisions of this section specifying those institutions that are eligible to act as
a fiduciary of a trust, an institution that is:
(A)
organized or, in the case of a U.S. branch or agency office of a
foreign banking organization, licensed under the laws of the United States or
any state thereof and has been granted authority to operate with fiduciary
powers; and
(B)
regulated,
supervised,
and
examined
by
federal
or
state
authorities having regulatory authority over banks and trust companies.
(i)(e)
Notwithstanding the provisions of this subsection to the contrary, the
Commissioner shall allow credit for reinsurance ceded and assumed to a
pooling arrangement that has the following characteristics:
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(1)
the majority of the pooling members are licensed to transact business
in this State, or are licensed in a state that is accredited with the National
Association
of
Insurance
Commissioners,
or
are
approved
by
the
Commissioner;
(2)
the members of the pool are subject to joint and several liability;
(3)
all members of the pool agree to file with the Commissioner,
annually on or before March 1, a copy of the member’s annual statement filed
with the insurance department of its state of domicile; and
(4)
the manager of the pool files with the Commissioner, annually on or
before December 1, a request to be exempted from the provisions of
subdivisions (a)(1) through (4) subdivisions (b)(1) through (4) of this section.
(f)
The Commissioner may adopt rules implementing the provisions of this
section.
(g)
This section shall apply to all cessions after the effective date of this
section under reinsurance agreements that have an inception, anniversary, or
renewal date not less than six months after the effective date of this section.
* * * Effective Dates * * *
Sec. 5.
EFFECTIVE DATES
This act is effective on passage except that Secs. 1 and 2 of this act shall
take effect on January 1, 2015 and shall apply to all policies and certificates
delivered, issued for delivery, or renewed in this State on or after that date.
and that after passage the title of the bill be amended to read: “An act relating
to electronic insurance notices and credit for reinsurance”.
( Committee Vote: 10-0-1)
Senate Proposal of Amendment
H. 198
An act relating to the Legacy Insurance Management Act
The Senate proposes to the House to amend the bill by striking all after the
enacting clause and inserting in lieu thereof the following:
Sec. 1.
TITLE
This act shall be known as the “Legacy Insurance Management Act.”
Sec. 2.
FINDINGS AND PURPOSE
(a)
The Vermont General Assembly finds:
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(1)
Vermont is a competitive location for highly successful financial
services firms as a result of its leadership in the field of captive insurance.
Vermont’s ability to modernize key aspects of its insurance laws has been a
key to the State’s success.
(2)
The management of closed blocks of commercial insurance policies
and reinsurance agreements has been a productive and successful sector of the
insurance industry for decades in other jurisdictions.
(3)
Vermont’s respected, sophisticated, and experienced insurance
regulatory apparatus makes it an ideal jurisdiction to establish a non-admitted
insurance and reinsurance management industry.
(4)
A
new
non-admitted
insurance
and
reinsurance
management
industry has the potential to attract investment, create well-paying jobs, and
generate tax revenue for Vermont.
(b)
The purpose of this act is to regulate the receipt and management by
solvent Vermont companies of closed blocks of non-admitted commercial
insurance policies and reinsurance agreements.
Sec. 3.
8 V.S.A. chapter 147 is added to read:
CHAPTER 147.
LEGACY INSURANCE TRANSFERS
§ 7111.
DEFINITIONS
As used in this chapter:
(1)
“Assuming
company”
means
a Vermont-domiciled
company
established specifically to acquire a closed block under a legacy insurance
transfer plan approved by the Commissioner.
(2) “Closed block” means a block, line, or group of commercial
non-admitted insurance policies or reinsurance agreements or both:
(A)
which a transferring insurer has ceased to offer, write, or sell to
new applicants;
(B)
for which all policy periods have been fully expired for not less
than 60 months;
(C)
for which active premiums are no longer being paid; and
(D)
which is not workers’ compensation, health, life, or any other
personal line of insurance.
(3)
“Comment period” means the 60-day period starting on the date
notice is issued by an assuming company under subsection 7112(h) of this
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chapter.
The Commissioner may, in his or her discretion, extend the comment
period for up to an additional 30 days.
(4) “Commissioner” means the Commissioner of Financial Regulation.
(5) “Controlling party” means a person having “control” of an assuming
company or transferring insurer. “Control” shall have the same meaning as in
section 3681 of this title.
(6) “Department” means the Department of Financial Regulation.
(7)
“Domicile regulator” means the primary insurance regulatory
authority of the domicile jurisdiction of a transferring insurer.
(8)
“Inward reinsurance agreement” means a contract of reinsurance
between a transferring insurer and another insurance company with respect to
which a transferring insurer is a party as the reinsurer.
(9)
“Inward reinsurance counterparty” means an insurance company,
other than the transferring insurer, that is a party to an inward reinsurance
agreement as the reinsured.
(10)
“Legacy insurance transfer” means the transfer of a closed block in
accordance with the requirements of this chapter.
(11) “Legacy insurance transfer plan” or “plan” means a plan that sets
forth
all
provisions
and
includes
all
documentation regarding
a
legacy
insurance transfer required under subsection 7112(b) of this chapter.
(12)
“Non-admitted insurance” means any property and casualty
insurance permitted to be placed directly or through a surplus lines broker with
a non-admitted insurer eligible to accept such insurance.
(13)
“Non-admitted insurer” means, with respect to a state, an insurer
not licensed to engage in the business of insurance in such state.
The term
does not include a risk retention group or a captive insurance company.
(14) “Outward reinsurance agreement” means a contract of reinsurance
between a transferring insurer and another insurance company with respect to
which a transferring insurer is a party as the reinsured.
(15) “Outward reinsurance counterparty” means an insurance company,
other than the transferring insurer, that is a party to an outward reinsurance
agreement as the reinsurer.
(16) “Party” means:
(A)
the assuming company;
(B)
the transferring insurer;
- 386 -
(C)
with respect to any policy to be transferred under a plan, each
policyholder;
(D)
with
respect
to
any
inward
reinsurance
agreement
to
be
transferred under a plan, each inward reinsurance counterparty; and
(E)
any other person the Commissioner approves as a party with
respect to such proceeding.
(17) “Plan summary” means a written statement of the key terms and
provisions of a plan as required under subdivision 7112(b)(19) of this chapter.
(18) “Policy” means a contract of property and casualty insurance that is
neither a contract of reinsurance nor a contract of workers’ compensation,
health, life, or any other personal line of insurance.
(19) “Policyholder” means the person identified as the policyholder or
first named in a policy.
(20) “Reinsurance agreement” means an inward reinsurance agreement
or an outward reinsurance agreement.
(21)
“Reinsurance
agreement
counterparty”
means
an
inward
reinsurance agreement counterparty or an outward reinsurance counterparty.
(22)
“Transferring insurer” means a non-admitted insurer that is
transferring a closed block to an assuming company under a legacy insurance
transfer plan.
§ 7112.
APPLICATION; FEE; PLAN
(a)
An assuming company shall file a plan with the Commissioner and, at
the time of filing, shall pay to the Commissioner the fee described in
subdivision 7116(a)(1) of this chapter.
(b)
A plan shall include the following:
(1)
A list of all policies and inward reinsurance agreements in the closed
block to be transferred under the plan.
(2)
A list of all outward reinsurance agreements attaching to policies or
inward reinsurance agreements in the closed block.
(3)
A list of all policyholders and inward reinsurance counterparties to
policies
and
inward
reinsurance
agreements
in
the
closed
block
to
be
transferred under the plan.
(4)
The identities of the transferring insurer and the assuming company
and their respective controlling parties, if any.
- 387 -
(5)
Certificates issued by the domicile regulator of the transferring
insurer and, if applicable, of any controlling party that is a regulated insurance
company, in each case attesting to the good standing of the transferring insurer
and the controlling party under the insurance regulatory laws of the jurisdiction
of their respective domiciles; or, if any such certificate is not obtainable under
the laws or practices of a domicile regulator, a certificate of the transferring
insurer or the controlling party, as applicable, attesting to the foregoing,
verified by oath of two of its executive officers.
(6)
A letter of no objection, or the equivalent, from the domicile
regulator of the transferring insurer confirming that the regulator has no
objection to the transfer of the closed block under the plan; or, if any such
certificate is not obtainable under the laws or practices of a domicile regulator,
a certificate of the transferring insurer or the controlling party, as applicable,
attesting to the foregoing, verified by oath of two of its executive officers.
(7)
A list of policies and inward reinsurance agreements in the closed
block to be transferred under the plan, if any, which by their terms and
conditions prohibit assignment and assumption of the rights, liabilities, and
obligations of the transferring insurer without the prior written consent of the
respective policyholder or inward reinsurance counterparty, together with a
statement describing such terms and conditions of any such policy or inward
reinsurance agreement.
(8)
The most recent audited financial statements and annual reports of
the transferring insurer filed with its domicile regulator and such other
financial information, if any, with respect to the transferring insurer or any
controlling
party
of
the
transferring
insurer,
as
the
Commissioner may
reasonably require.
(9)
An actuarial study or opinion in a form satisfactory to the
Commissioner that quantifies the liabilities to be transferred to the assuming
company under the policies or inward reinsurance agreements in the closed
block.
(10)
A statement of the outward reinsurance agreement assets, if any,
attaching to any policy or inward reinsurance agreement in the closed block.
(11)
Three years of pro-forma financial statements demonstrating the
solvency of the assuming company.
(12)
Officer’s certificates of the transferring insurer and the assuming
company attesting that each has obtained all required internal approvals and
authorizations regarding the plan and completed all necessary and appropriate
actions relating thereto.
- 388 -
(13)
The form of notice to be provided under the plan to any
policyholder or inward reinsurance counterparty in connection with any policy
or inward reinsurance agreement in the closed block and how such notice shall
be provided.
(14)
The form of notice to be provided under the plan to any outward
reinsurance
counterparty
attaching
to
any
policy
or
inward
reinsurance
agreement in the closed block and how such notice shall be provided.
(15)
A
statement
describing
any
pending
dispute
between
the
transferring insurer and any policyholder or inward reinsurance counterparty in
connection with any policy or inward reinsurance agreement in the closed
block or any disputed claim by a third party with respect to any policy or
inward reinsurance agreement in the closed block.
(16)
A
statement
describing
the
assuming
company’s
proposed
investment policies, officers, directors, key employees, and other arrangements
regarding matters such as:
(A)
any
contemplated
third-party
claims
management
and
administration arrangements;
(B)
operations, management, and solvency relating to the closed
block; and
(C)
a detailed plan for annual or other periodic financial reporting to
the Commissioner, including an annual financial audit with actuarial opinion.
(17)
A statement from the assuming company consenting to the
jurisdiction
of
the
Commissioner
with
regard
to
ongoing
oversight of
operations, management, and solvency relating to the closed block, including
the authority of the Commissioner to conduct examinations under section 7117
of this chapter and to set reasonable standards for oversight of the assuming
company, including oversight standards relating to:
(A)
material transactions with affiliates;
(B)
adequacy of surplus; and
(C)
dividends and other distributions, including limitations on
extraordinary dividends.
(18)
A statement from the assuming company submitting to the
jurisdiction and authority of the Commissioner of Insurance, or the equivalent
regulatory
authority,
in
states
in
which
policyholders
or
reinsurance
counterparties reside, for the purposes of implementing each such state’s
Unfair Claims Settlement Practices Act, or its equivalent, if any, in such state’s
- 389 -
market conduct statutory framework; and confirmation of the delivery of such
statements of submission.
(19)
A plan summary which includes all information regarding the plan
as reasonably required by the Commissioner.
(20)
The statement described in subsection (c) of this section regarding
the information and documents submitted as part of or with respect to a plan
which are confidential.
(21)
Any other information the Commissioner may reasonably require
with respect to the plan in the exercise of his or her discretion.
(c)(1)
Information in the plan identifying policyholders and reinsurance
counterparties shall be exempt from public inspection and copying under the
Public Records Act.
(2)
The
plan shall
include
a
statement
of
the
information
and
documentation included in the plan that the assuming company or the
transferring
insurer
requests
be
given
confidential
treatment.
The
Commissioner
shall
determine
whether
information
designated
in
the
statement, including any information designated as trade secrets, is exempt
from public inspection and copying under the Public Records Act.
If such
information is exempt, it shall not be subject to subpoena and shall not be
made public by the Commissioner or by any other person; provided, however,
the Commissioner may in his or her discretion grant access to such information
to public officers having jurisdiction over the regulation of insurance in any
other state or country, to public officers of a foreign or alien financial
regulatory authority, or to state or federal law enforcement officers pursuant to
a validly issued subpoena or search warrant; provided that such officers
receiving the information agree in writing to hold it in a manner consistent
with this subsection.
(d)
Within 10 business days of the date the application is filed and the fee
payable under subsection (a) of this section is paid in full, the Commissioner
shall notify the assuming company whether the plan is complete.
In his or her
discretion, the Commissioner may extend the 10-business-day application
review period for an additional 10 business days.
With the written consent of
the assuming company, the application review period may be extended beyond
20 business days.
(e)
Upon submission of a plan, the assuming company shall have a
continuing obligation to notify the Commissioner promptly and in a full and
accurate manner of any material change to information in the plan.
(f)
If the Commissioner notifies the assuming company that the plan is not
- 390 -
complete, the Commissioner shall specify any modifications, supplements, or
amendments to the plan that are required, and any additional information or
documentation
with
respect
to
the
plan
that
must
be
provided
to
the
Commissioner before the Commissioner issues the notice
referenced in
subsection (d) of this section.
(g)
If the Commissioner notifies the assuming company that the plan is
complete, the Commissioner shall set a date, time, and place for a hearing on
the plan as required under subsection (m) of this section.
(h)
Within 30 days of the date the Commissioner notifies the assuming
company under subsection (g) of this section that the plan is complete, the
assuming company shall cause direct written notice to be provided, in the form
and manner specified in the plan, to all policyholders and reinsurance
counterparties listed in the plan.
The notice shall:
(1)
comply with the plan and the provisions of 3 V.S.A. § 809(b);
(2)
include the plan summary;
(3)
describe the effect of the plan and the transfer on each policyholder
and reinsurance counterparty and on his or her respective policy or reinsurance
agreement, as applicable;
(4)
state
the
right
of
each
policyholder
or
inward
reinsurance
counterparty to:
(A)
accept or object to the plan, together with a description of the
means by which a policyholder or inward reinsurance counterparty may
expressly accept or object to the plan and the effect of such acceptance or
objection;
(B)
file written comments on the plan with the Commissioner; and
(C)
appear and present evidence on the plan at the hearing;
(5)
describe the terms and conditions under which a policyholder or
inward reinsurance counterparty shall be deemed to have accepted the plan;
(6)
specify the date, time, and place of the hearing on the plan;
(7)
include
all
other
information
reasonably
required
by
the
Commissioner; and
(8)
be published in two newspapers of general nationwide circulation on
two separate occasions, as determined by the Commissioner.
(i)
During the comment period:
(1)
any party may file written comments on the plan with the
- 391 -
Commissioner;
(2)
any policyholder or inward reinsurance counterparty may, by
delivery of such notice in accordance with the terms and conditions of the plan
and prior to the expiration of the comment period, provide an express written
notice that he or she accepts or objects to the plan; and
(3)
the assuming company shall file with the Commissioner such
additional
documentation
and
information
regarding
the
plan
as
the
Commissioner may reasonably require.
(j)
In the event that, prior to the expiration of the comment period, any
policyholder or inward reinsurance counterparty provides express written
notice that he or she objects to the plan and specifies the policy or agreement
with respect to which such objection is made, the assuming company shall, not
later than 15 days after the end of the comment period, submit to the
Commissioner either:
(1)
an amended list of policies and reinsurance agreements in the plan,
excluding such policyholder or inward reinsurance counterparty
and its
respective policy or inward reinsurance agreement from the plan; or
(2)
an express written notice from such policyholder or inward
reinsurance counterparty accepting the plan and consenting to the transfer
having the full force and effect of a statutory novation of its respective policy
or reinsurance agreement, as applicable, and withdrawing and rescinding its
prior notice of objection.
(k)
Except
as
provided
in
subsection
7114(f)
of
this
chapter, any
policyholder or inward reinsurance counterparty that, prior to the expiration of
the comment period, has not provided express written notice objecting to the
plan shall be deemed to have accepted the plan and the transfer shall have the
full force and effect of a statutory novation of his or her respective policy or
inward reinsurance agreement, as applicable.
(l)
Notwithstanding any provision of this chapter to the contrary, if a policy
or inward reinsurance agreement contains a provision prohibiting the transfer
of the policy or inward reinsurance agreement without the consent of the
policyholder or inward reinsurance counterparty, then such policy or inward
reinsurance agreement shall not be transferred under this chapter unless the
applicable policyholder or inward reinsurance counterparty provides written
consent to the proposed transfer.
(m)
The hearing on the plan shall be held not later than 60 days after the
end of the comment period.
In his or her discretion, the Commissioner may
postpone the hearing for an additional 10 days.
With the written consent of the
- 392 -
assuming company, the hearing may be postponed beyond 70 days.
Each party
participating in the hearing shall bear his or her own costs and attorney’s fees.
§ 7113.
PLAN REVIEW
(a)
The Commissioner may retain an actuary to conduct an actuarial study
quantifying the liabilities under insurance policies and reinsurance agreements
to be transferred to the assuming company under the plan and is authorized to
retain any other legal, financial, and examination services from outside the
Department necessary to assist in plan review.
(b)
In reviewing the plan, the Commissioner shall take into account all
written comments filed with respect to the plan, all evidence taken at the
hearing, and any other factors the Commissioner reasonably deems relevant
with respect to the plan.
In all cases, the Commissioner shall make findings
with respect to each of the following:
(1)
the solvency of the assuming company before and after the
implementation of the proposed plan;
(2) the adequacy of the assuming company’s proposals described in the
statement required under subdivision 7112(b)(16) of this chapter;
(3)
the adequacy of the assuming company’s consent to jurisdiction
required under subdivision 7112(b)(17) of this chapter;
(4)
the ability of the assuming company to comply with all requirements
of the policies and inward reinsurance agreements, including the capacity of
the assuming company regarding the administration of claims in process on or
after the effective date of the transfer;
(5)
whether any outward reinsurance agreement relating to any policy or
policies in the closed block will be adversely affected by the transfer;
(6)
whether the plan materially adversely affects the interests of any
party or outward reinsurance counterparty, including the interests of any
policyholder or inward reinsurance counterparty who has accepted or has been
deemed to have accepted the plan;
(7)
whether policyholders or inward reinsurance counterparties, together
with their respective insurance policies and inward reinsurance agreements,
have been excluded from the plan as required under subsections 7112(j) and (l)
of this chapter; and
(8)
the fairness of the plan to all parties.
§ 7114.
ORDER
(a)
Within 30 days of the date the hearing is held on the plan, the
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Commissioner shall issue an order setting forth the amount of fees payable by
the assuming company under subdivision 7116(a)(2) of this chapter, payable
not later than 14 days after the date of such order.
Upon receipt of such
payment, the Commissioner shall within five days issue an order approving or
disapproving the plan in whole or in part.
Whenever it is not practicable to
issue an order within 30 days, the Commissioner may extend such time up to
an additional 30 days.
If the order approves the plan, the order shall:
(1)
include the terms and conditions of the Commissioner’s oversight
with regard to ongoing oversight of the operations, management, and solvency
relating to the closed block and any specific standards that the assuming
company will be required to comply with, including standards relating to:
(A)
material transactions with affiliates;
(B)
adequacy of surplus; and
(C)
dividends and other distributions, including limitations on
dividends;
(2)
set forth the tax payable by the assuming company under subsection
7116(b) of this chapter, which tax shall be payable not later than 14 days after
the date of such order;
(3)
not be effective until such time as the costs and transfer tax
described in this subsection have been paid in full.
(b)
The Commissioner shall not approve a plan unless the Commissioner
finds that the assuming company has:
(1)
sufficient assets to meet its liabilities;
(2)
sufficient procedures in place for the handling of claims;
(3)
consented to sufficient regulatory oversight by the Department; and
(4)
excluded from the plan any policy or agreement required to be
excluded under subsections 7112(j) and (l) of this chapter.
(c)
An order issued under subsection (a) of this section approving the plan
shall have the full force and effect of a statutory novation with respect to all
policyholders and reinsurance counterparties and their respective policies and
reinsurance agreements under the plan and shall provide that the transferring
insurer shall have no further rights, obligations, or liabilities with respect to
such policies and reinsurance agreements, and that the assuming company shall
have all such rights, obligations, and liabilities as if it, instead of the
transferring insurer, were the original party to such policies and reinsurance
agreements.
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(d)
The Commissioner may issue any other orders he or she reasonably
deems necessary to fully implement an order issued under subsection (a) of
this section.
(e)
No order issued under subsection (a) or (d) of this section shall be
construed to modify or amend the terms of a policy or reinsurance agreement,
other than with respect to matters specifically subject to modification or
amendment under this chapter.
(f)
If a policyholder or inward reinsurance counterparty provides express
written notice that he or she objects to the plan after the comment period has
expired, and provides evidence reasonably satisfactory to the Commissioner
that he or she was not provided notice of the plan in the form and manner
previously approved by the Commissioner, or if an outward reinsurance
counterparty or other party provides express written notice that he or she
objects to a plan, the Commissioner may not approve the plan with respect to
such party unless the Commissioner determines that the plan:
(1)
does not materially adversely affect the objecting party; and
(2)
otherwise complies with the requirements of this chapter.
(g)
At any time before the Commissioner issues the order described in
subsection (a) of this section, the assuming company may file an amendment to
the plan, subject to the Commissioner’s approval.
(h)
At any time before the Commissioner issues the order described in
subsection (a) of this section, the assuming company may withdraw the plan
without prejudice.
Upon such withdrawal, however, the Commissioner shall
issue an order setting forth the amount of fees payable by the assuming
company under subdivision 7116(a)(2) of this chapter, payable not later than
14 days after the date of such order.
§ 7115.
JURISDICTION; APPEALS
(a)
The Commissioner shall have exclusive regulatory jurisdiction with
respect to the review and approval or denial of any plan.
(b)
Any party aggrieved by a final order of the Commissioner may appeal
that order to the Vermont Supreme Court under 3 V.S.A. § 815.
§ 7116.
FEE; COSTS; TRANSFER TAX
(a)
To cover the costs of processing and reviewing a plan under this
chapter, the assuming company shall pay to the Commissioner the following
nonrefundable fees at the times set forth in subsections 7112(a) and 7114(a) of
this chapter:
(1)
an administrative fee in the amount of $30,000.00; and
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(2)
the reasonable costs of persons retained by the Commissioner under
subsection 7113(a) of this chapter.
(b)
When a plan is approved, the assuming company shall pay the
Commissioner a transfer tax equal to the sum of:
(1)
one percent of the first $100,000,000.00 of the gross liabilities
transferred, including direct and assumed unpaid claims, losses, and loss
adjustment expenses with no reductions for amounts ceded; and
(2)
0.5
percent
of
the
gross
liabilities
transferred
that
exceed
$100,000,000.00, including direct and assumed unpaid claims, losses, and loss
adjustment expenses with no reductions for amounts ceded.
(c)
All fees and payments received by the Department under subsection (a)
of this section and 10 percent of the transfer tax under subsection (b) of this
section shall be credited to the insurance regulatory and supervision fund under
section 80 of this title.
The remaining 90 percent of the transfer tax shall be
deposited directly into the general fund.
§ 7117.
EXAMINATIONS
(a)
The Commissioner has the authority to order any assuming company to
produce any records, books, and papers in the possession of the assuming
company or its affiliates necessary to ascertain the financial condition or
legality of conduct of the assuming company.
(b)
The Commissioner shall exercise his or her authority under subsection
(a) of this section only if he or she has reason to believe the interests of the
assuming company’s policyholders may be adversely affected under the plan.
(c)
The Commissioner may retain, at the assuming company’s expense,
attorneys, actuaries, accountants, and other experts not otherwise a part of the
Commissioner’s staff reasonably necessary to assist with an examination under
this section.
Any persons so retained shall be under the direction and control
of the Commissioner and shall act in a purely advisory capacity.
(d)
Each assuming company that produces records, books, and papers for
examination under this section shall pay the expense of such examination.
§ 7118.
APPLICABLE LAWS
(a)
Chapter 157 (transfer and novation of insurance contracts) of this title
shall not apply to any legacy insurance transfer under this chapter.
(b)
In the event of any conflict between a provision of this chapter and any
other provision of this title, such provision of this chapter shall control.
(c)
A proposed legacy insurance transfer shall be a “contested case” under
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3 V.S.A. chapter 25, except that a “party” shall be limited as defined in
subdivision 7111(16) of this chapter.
§ 7119.
ASSUMING COMPANY; BOARD; PRINCIPAL PLACE OF
BUSINESS; REGISTERED AGENT
No assuming company shall be a party to a legacy insurance transfer under
this chapter unless:
(1)
its board of directors or committee of managers holds at least one
meeting each year in this State;
(2)
it maintains its principal place of business in this State; and
(3)
it appoints a registered agent to accept service of process and to
otherwise act on its behalf in this State; provided that whenever such registered
agent cannot with reasonable diligence be found at the registered office of the
assuming company, the Secretary of State shall be an agent of such assuming
company upon whom any process, notice, or demand may be served.
§ 7120.
POSTING OF PLANS ON WEBSITE
The Commissioner shall require that all plans filed with the Department are
posted on the Department’s website, along with any other notice or other
information the Commissioner deems appropriate, excluding any information
designated as confidential under subsection 7112(c) of this chapter.
§ 7121.
REGULATION OF ASSUMING COMPANIES AND SERVICE
PROVIDERS
(a)
An assuming company shall be subject to all rules adopted by the
Commissioner under this chapter and also shall be subject to:
(1)
chapter 145 (supervision, rehabilitation, and liquidation of insurers)
of this title;
(2)
the market conduct and unfair trade practices provisions of chapter
129 (insurance trade practices) of this title, as deemed applicable by the
Commissioner; and
(3)
in addition to the initial transfer tax required under subsection
7116(b) of this chapter, an annual renewal fee of $300.00.
(b)
An assuming company shall not be subject to the requirements of
chapter
101,
subchapter
9
(Property
and
Casualty
Insurance
Guaranty
Association) of this title.
(c)
The Commissioner may adopt rules regarding the provision of services
to an assuming company by persons other than any director, officer, or
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employee of the assuming company with respect to the administration of
policies and reinsurance agreements assumed by the assuming company under
a legacy insurance transfer, including licensing or other requirements.
(d)
The Commissioner may adopt any other rules necessary or appropriate
to carry out the provisions of this chapter.
Sec. 4.
EFFECTIVE DATE
This act shall take effect on passage.
(For text see House Journal 4/9/2013 & 4/11/2013 )
Consent Calendar
Concurrent Resolutions for Adoption Under Joint Rule 16a
The following concurrent resolutions have been introduced for approval by
the Senate and House and will be adopted automatically unless a Senator or
Representative
requests
floor consideration before today’s adjournment.
Requests for floor consideration in either chamber should be communicated to
the Secretary’s office and/or the House Clerk’s office, respectively. For text of
resolutions, see Addendum to House Calendar and Senate Calendar of
1/30/2014.
H.C.R. 206
House concurrent resolution congratulating Green Mountain RSVP on its
40th anniversary of community service
H.C.R. 207
House concurrent resolution congratulating the Rutland Gift-of-Life Marathon
on establishing a new national one-day blood donation record
H.C.R. 208
House concurrent resolution recognizing the role of registered nurses in the
delivery of quality health care in Vermont
H.C.R. 209
House concurrent resolution congratulating the
Vermont Cynic
on its 130th
anniversary
H.C.R. 210
House concurrent resolution congratulating the 2013 Woodstock Union High
School Wasps Division III championship football team
H.C.R. 211
House concurrent resolution in memory of Chet Briggs of Calais
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H.C.R. 212
House concurrent resolution recognizing the innovative cross-cultural mission
of the Izdahar arts exchange organization
H.C.R. 213
House concurrent resolution in memory of Margaret Hurley Franzen of
Montpelier
Public Hearings
Monday, February 10, 2014, 4:00 - 6:30 p.m. –
The House and Senate
Committees on Appropriations will hold a joint public hearing on Vermont
Interactive Technologies (V.I.T.) to give Vermonters throughout the state an
opportunity to express their views about the state budget for fiscal year 2015.
All 13 V.I.T. sites will be available for the hearing: Bennington, Brattleboro,
Johnson, Lyndonville, Middlebury, Montpelier, Newport, Randolph
Center, Rutland, Springfield, St. Albans, White River Junction and Williston.
V.I.T.'s web site has an up-to-date location listing, including driving directions,
addresses and telephone numbers,
http://www.vitlink.org/
.
The budget hearing will be VIEWABLE via the Internet if your computer has
Flash-based streaming capabilities. Some mobile devices may require
additional software.
Go to
www.vitlink.org/streamingmedia/vtcvitopen.php
.
The Governor’s budget proposal can be viewed at the Department of Finance’s
website:
http://finance.vermont.gov/state_budget/rec
. For information about the
format of this event or to submit written testimony, call the House
Appropriations Committee office at 802/828-5767 or email
tutton@leg.state.vt.us
. Requests for interpreters should be made to the office
by 3:00 p.m. on Monday, January 27, 2014.
February 6, 2014 - House Chamber – 6:00-8:00pm - H112 GMO Labeling –
Senate Agriculture and Senate Judiciary
February 19, 2014 - Room 11 - 7:00p,- 8:30pm - Judicial retention - Joint
Committee on Judicial Retention
February 13, 2014 - House Chamber - 7:00-9:00 pm - H. 586 - Improving the
Quality of State Waters - House Agriculture and Forest Products
Tuesday, February 18, 2014 - Room 11 - 11:00am-12:00pm - Governor's
Proposed FY 2015 State Budget - House Committee on Appropriations
Friday, February 21, 2014 - room 11 - 1:00pm-2:00pm - Governor's Proposed
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FY 2015 State Budget - House Committee on Appropriations
Information Notice
Deadline for Introducing Bills
Pursuant to Rule 40(b) of the Rules and Orders of the Vermont House of
Representatives, during the second year of the biennium, except with the prior
consent of the Committee on Rules, no member may introduce a bill into the
House drafted in standard form after the last day of January.
Pursuant to Rule 40(c) during the second year of the biennium, except with
the prior consent of the Committee on Rules, no committee, except the
Committees on Appropriations, Ways and Means or Government Operations,
may introduce a bill drafted in standard form after the last day of March
(March 31, 2014).
The Committees on Appropriations and Ways and Means
bill may be drafted in standard form at any time, and Government Operations
bills pertaining to city or town charters, may be drafted in standard form at any
time.
Joint Assembly
February 20, 2014 - 10:30 A.M. – Election of two (2) trustees for the
Vermont State Colleges Corporation.
Candidates for the positions of trustee must notify the Secretary of State
in
writing
not later than February 13, 2014 , by 4:30 P.M. pursuant to the
provisions of 2 V.S.A. §12(b).
Otherwise their names will not appear on the
ballots for these positions. Do not use pink mail to deliver notification to the
Secretary of State.
Hand delivery is the best method to insure notification has
been received.
The following rules shall apply to the conduct of these elections:
First:
All nominations for these offices will be presented in alphabetical
order prior to voting.
Second:
There will be only one nominating speech of not more than three
(3) minutes and not more than two seconding speeches of not more than one
(1) minute each for each nominee.