View the complete text of this act

ACT NO. 86


Conversion of Mutual Insurance Companies and Mutual Insurance Holding Companies

This act modernizes Vermont insurance law relating to demutualization, the process by which a mutual insurance company or a mutual insurance holding company

converts from a member-owned to a shareholder-owned company. The act revises the procedures that are in current law for demutualization, with emphasis on providing policyholders with adequate notice, rights, and value for their interests. Three-quarters of the board of directors of the company must approve a demutualization plan. Compensation may be provided in a variety of ways, including cash, shares of the demutualizing company, policy credits, additional policy benefits, or increased policy dividends. For five years, a takeover of a newly demutualized company is restricted, and requires approval of the Commissioner of Banking, Insurance, Securities, and Health Care Administration. The procedure for appealing an order of the Commissioner concerning a demutualization plan is established. The act provides that

the demutualization statutes would apply as well to cooperative fire insurance companies and captive insurance companies.

Effective Date: April 27, 2000