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ACT NO. 38

(H.390)

Examination of Insurers, Licensing of Agents

and Captive Insurance Companies

This act amends Vermont insurance laws in five areas. First, the authority, use and procedure of the Commissioner of the Department of Banking, Insurance, Securities and Health Care Administration with respect to the to insurance examinations is clarified that it governs market conduct examinations as well as financial examinations. The law for the examinations with respect to health maintenance organizations and managed care organizations is also clarified. Second, the Commissioner is given several tools to conform the Vermont system of producer licensing to fit into a nationwide uniform system. Third, two new types of captive insurers are authorized: branch captives and sponsored captives. Branch captives are a unit of an existing offshore captive insurer, licensed in Vermont to write employee benefit business for its owners and affiliates onshore. Sponsored captives are established using the capital provided by an insurer or reinsurer while providing fronted insurance coverage to discrete entities. Fourth, Vermont risk retention groups are permitted to offer coverage for punitive and multiple damages. And fifth, the law is updated to make clear that continuing care retirement communities are insurers and are regulated as such under Vermont law, including the law on receivership.

Effective Date: May 20, 1999