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