Vermont § 6002 - Licensing; authority

§ 6002. Licensing; authority

• (a) Any captive insurance company, when permitted by its articles of association, charter,
  or other organizational document, may apply to the Commissioner for a license to conduct
  insurance business comprised in section 3301 of this title and may grant annuity contracts
  as defined in section 3717 of this title and may accept or transfer risk by means of a parametric contract; provided, however,
  that: (1) No pure captive insurance company may insure any risks other than those of its parent
  and affiliated companies or controlled unaffiliated business. (2) No agency captive insurance company may do any insurance business in this State unless: (A) an insurance agency or brokerage that owns or controls the agency captive insurance
  company remains in regulatory good standing in all states in which it is licensed; (B) it insures only the risks of the commercial policies that are placed by or through
  an insurance agency or brokerage that owns or directly or indirectly controls the
  agency captive insurance company and, if required by the Commissioner in the Commissioner’s
  discretion, it provides the Commissioner the form of such commercial policies; (C) it discloses to the original policyholder or policyholders, in a form or manner approved
  by the Commissioner, that the agency captive insurance company as a result of its
  affiliation with an insurance agency or brokerage may enter into a reinsurance or
  other risk-sharing agreement with the agency or brokerage; and (D) if required by the Commissioner in the Commissioner’s discretion, the business written
  by an agency captive insurance company is: (i) Fronted by an insurance company licensed under the laws of any state. (ii) Reinsured by a reinsurer authorized or approved by the State of Vermont. (iii) Secured by a trust fund in the United States for the benefit of policyholders and
  claimants or funded by an irrevocable letter of credit or other arrangement that is
  acceptable to the Commissioner. The Commissioner may require the agency captive insurance
  company to increase the funding of any security arrangement established under this
  subdivision. If the form of security is a letter of credit, the letter of credit shall
  be issued or confirmed by a bank approved by the Commissioner. A trust maintained
  pursuant to this subdivision shall be established in a form and upon terms approved
  by the Commissioner. (3) No association captive insurance company may insure any risks other than those of
  its association, those of the member organizations of its association, and those of
  a member organization’s affiliated companies. (4) No industrial insured captive insurance company may insure any risks other than those
  of the industrial insureds that comprise the industrial insured group, those of their
  affiliated companies, and those of the controlled unaffiliated business of an industrial
  insured or its affiliated companies. (5) No risk retention group may insure any risks other than those of its members and owners. (6) No captive insurance company may provide personal motor vehicle or homeowner’s insurance
  coverage or any component thereof. (7) No captive insurance company may accept or cede reinsurance except as provided in
  section 6011 of this title. (8) Any captive insurance company may provide excess workers’ compensation insurance to
  its parent and affiliated companies, unless prohibited by the federal law or laws
  of the state having jurisdiction over the transaction. Any captive insurance company,
  unless prohibited by federal law, may reinsure workers’ compensation of a qualified
  self-insured plan of its parent and affiliated companies. (9) Any captive insurance company that insures risks described in subdivisions 3301(a)(1)
  and (2) of this title shall comply with all applicable State and federal laws. (10) Any captive insurance company that transfers risk by means of a parametric contract
  shall comply with all applicable State and federal laws and regulations. (b) No captive insurance company shall do any insurance business in this State unless: (1) it first obtains from the Commissioner a license authorizing it to do insurance business
  in this State; (2) its board of directors or committee of managers or, in the case of a reciprocal insurer,
  its subscribers’ advisory committee holds at least one meeting each year in this State; (3) it maintains its principal place of business in this State; and (4) 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 captive insurance company,
  the Commissioner shall be an agent of such captive insurance company upon whom any
  process, notice, or demand may be served. (c)(1) Before receiving a license, a captive insurance company shall: (A) File with the Commissioner a copy of its organizational documents and any other statements
  or documents required by the Commissioner. (B) Submit to the Commissioner for approval a description of the coverages, deductibles,
  coverage limits, and rates, together with such additional information as the Commissioner
  may reasonably require. In the event of any subsequent material change in any item
  in such description, the captive insurance company shall submit to the Commissioner
  for approval an appropriate revision and shall not offer any additional kinds of insurance
  until a revision of such description is approved by the Commissioner. The captive
  insurance company shall inform the Commissioner of any material change in rates within
  30 days following the adoption of such change. (2) Each applicant captive insurance company shall also file with the Commissioner evidence
  of the following: (A) the amount and liquidity of its assets relative to the risks to be assumed; (B) the adequacy of the expertise, experience, and character of the person or persons
  who will manage it; (C) the overall soundness of its plan of operation; (D) the adequacy of the loss prevention programs of its insureds; (E) its beneficial ownership, sponsorship, or membership; and (F) such other factors deemed relevant by the Commissioner in ascertaining whether the
  proposed captive insurance company will be able to meet its policy obligations. (3) Information submitted pursuant to this subsection, including any subsequent updates,
  amendments, or revisions of or to such information, shall be and remain confidential,
  and may not be made public by the Commissioner or an employee or agent of the Commissioner
  without the written consent of the company, except that: (A) The Commissioner may, in the Commissioner’s discretion, disclose or publish or authorize
  the disclosure or publication of any such record or report or any part thereof in
  the furtherance of legal or regulatory proceedings brought as a part of the Commissioner’s
  official duties. The Commissioner may, in the Commissioner’s discretion, disclose
  or publish or authorize the disclosure or publication of any such record or report
  or any part thereof to criminal law enforcement authorities for use in the exercise
  of such authority’s duties in such manner as the Commissioner may deem proper. (B) The Commissioner may, in the Commissioner’s discretion, disclose such information
  to a public officer having jurisdiction over the regulation of insurance and with
  other state, federal, or international agencies, provided that: (i) such public official shall agree in writing to maintain the confidentiality of such
  information; and (ii) the laws of the state or foreign government in which such public official serves require
  such information to be and to remain confidential. (C) Neither the Commissioner nor any person who received documents pursuant to this subsection,
  material, or information while acting under the authority of the Commissioner shall
  be permitted or required to testify in any private civil action concerning any confidential
  documents, material, or information. (D) Nothing in this subsection (c) shall excuse the applicant from making any required
  disclosure under this chapter. (d) Each captive insurance company shall pay to the Commissioner a nonrefundable fee of
  $500.00 and each special purpose financial insurance company shall pay to the Commissioner
  a nonrefundable fee of $5,000.00 for examining, investigating, and processing its
  application for license, and for issuing same, and the Commissioner is authorized
  to retain legal, financial, and examination services from outside the Department,
  the reasonable cost of which may be charged against the applicant. The provisions
  of section 3576 of this title shall apply to examinations, investigations, and processing conducted under the authority
  of this section. In addition, each captive insurance company shall pay a license renewal
  fee for each year thereafter of $500.00, and each special purpose financial insurance
  company shall pay to the Commissioner a nonrefundable fee of $5,000.00. (e) If the Commissioner is satisfied that the documents and statements that such captive
  insurance company has filed comply with the provisions of this chapter, and that such
  captive insurance company has been duly organized, the Commissioner may grant a license
  authorizing it to do insurance business in this State until April 1 thereafter, which
  license may be renewed. (Added 1981, No. 28; amended 1987, No. 47, § 2, eff. May 13, 1987; 1987, No. 168 (Adj. Sess.), § 2, eff. May 3, 1988; 1993, No. 40, § 2, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9c, eff. June 21, 1994; 1997, No. 49, § 9, eff. June 26, 1997; 1999, No. 38, § 5, eff. May 20, 1999; 1999, No. 84 (Adj. Sess.), § 10, eff. April 19, 2000; 2003, No. 55, § 7; 2003, No. 105 (Adj. Sess.), § 18, eff. May 4, 2004; 2007, No. 49, § 9; 2009, No. 134 (Adj. Sess.), § 25; 2013, No. 29, § 47, eff. May 13, 2013; 2017, No. 12, § 4, eff. May 1, 2017; 2017, No. 90 (Adj. Sess.), § 1, eff. March 8, 2018; 2019, No. 110 (Adj. Sess.), § 1, eff. June 15, 2020; 2021, No. 25, § 21, eff. May 12, 2021; 2021, No. 139 (Adj. Sess.), § 18, eff. May 27, 2022; 2023, No. 12, § 6, eff. May 8, 2023; 2023, No. 110 (Adj. Sess.), §§ 3, 8, eff. July 1, 2024; 2025, No. 23, § 5, eff. July 1, 2025.)