Title 8: Banking and Insurance
Chapter 142: RISK RETENTION GROUPS AND PURCHASING GROUPS
8 V.S.A. § 6052. Risk retention groups chartered in this State
§ 6052. Risk retention groups chartered in this State
(a) Pursuant to the provisions of chapter 141 of this title, a risk retention group shall be chartered and licensed to write only liability insurance pursuant to this chapter, must comply with all of the laws, rules, regulations, and requirements applicable to such insurers chartered and licensed in this State under chapter 141 of this title, and with subdivisions 6053(4), (5), (7), and (8) of this title. A risk retention group chartered in this State may provide coverage for payment of punitive damages, the multiplied portion of multiple damages, or other penalties in the nature of compensatory damages, and any such coverage shall be enforceable against such risk retention group in accordance with its terms.
(b) Before it may offer insurance in any state, each risk retention group shall also submit for approval to the Commissioner of this State a plan of operation and feasibility study which includes a description of the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer, together with such additional information as the Commissioner may reasonably require. In considering and approving the risk retention group's plan of operation and any subsequent amendments thereto, the Commissioner may limit the net amount of risk retained by a risk retention group. The risk retention group shall submit for approval by the Commissioner an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, including any material change in the information called for in subsection (c) of this section, but excluding the identity of policyholders and any changes in rates or rating classification systems. The group shall not offer any additional kinds of liability insurance, in this State or in any other state, until a revision of such plan or study is approved by the Commissioner. The risk retention group shall inform the Commissioner of any material changes in rates or rating classification systems, within 30 days of the adoption of such change.
(c)(1) At the time of filing its application for charter, the risk retention group shall provide to the Commissioner in summary form the following information:
(A) the identity of the initial policyholders or members of the group or if the identity is not known or cannot be determined, a description of who is eligible to be a policyholder or a member;
(B) the identity of the persons that organized the group;
(C) the identity of any persons that will act as a managing general agent or reinsurance intermediary for, provide other significant administrative services to, or otherwise influence or control the activities of, the group;
(D) summary descriptions of the services, described in subdivision (C) of this subsection, and of any contracts under which the services are to be performed, including the method of compensation therefor;
(E) the amount and nature of initial capitalization;
(F) plans for the payment of dividends or other distributions of members' capital and surplus; and
(G) the states in which the group intends to file.
(2) The applicant may bind separately any portions of the application or any amendment thereto that contain proprietary information or documents, and request confidential treatment of such portions. As used in this section, "proprietary information or documents" means certain information or documents furnished by or pertaining to any of the persons specified above that would customarily be treated as confidential or sensitive and the disclosure of which could result in harm or prejudice to the person to whom the information or documents pertain or unfair advantage to another person. Such information includes, trade secrets, historical or projected loss data, or case reserves of members or policyholders, actuarial analyses which include such data or reserves, historical or projected financial data not otherwise publicly available, and similar information or documents. The Commissioner shall determine which portions specified by the applicant fall within the definition of proprietary information or documents and treat such portions as confidential. Provided, however, that nothing herein shall excuse the applicant from making any required disclosure under the RRA 1986, this chapter or chapter 141 of this title, or prohibit the Commissioner from disclosing any proprietary information or documents in the furtherance of any legal or regulatory proceeding. Before using proprietary information or documents in a legal or regulatory proceeding that does not involve the applicant or any person named in the application or any amendment thereto, the Commissioner shall first seek to obtain the same information from nonconfidential sources. If unavailable from nonconfidential sources, the Commissioner shall seek to protect the confidential information or documents from unnecessary disclosure. Upon licensing, the Commissioner shall forward to the National Association of Insurance Commissioners all information required under the RRA 1986 to be submitted to each state where the risk retention group proposes to operate and all other information not deemed confidential under this section. Providing notification to the National Association of Insurance Commissioners is in addition to and shall not be sufficient to satisfy the requirements of section 6053 or any other sections of this chapter. In addition, the Commissioner may provide access to confidential application information with respect to risk retention groups to representatives of the National Association of Insurance Commissioners to inspect (but not copy) such information in connection with accreditation examinations, so long as the National Association of Insurance Commissioners agrees in writing to maintain the confidentiality of such information.
(d) The provisions of subsection 6008(c) of this title shall apply to risk retention groups chartered in this State, except that such provisions shall not apply to final examination reports relating to risk retention groups and except that the Commissioner may, in the Commissioner's discretion, grant access to any other examination information covered by subsection 6008(c) of this title to representatives of the National Association of Insurance Commissioners to inspect (but not copy) such information in connection with accreditation examinations, so long as the National Association of Insurance Commissioners agrees in writing to maintain the confidentiality of such information.
(e) The provisions of subchapter 13 of chapter 101 of this title shall apply to risk retention groups chartered in this State. However, no existing rule, regulation, or order promulgated under section 3688 of this title shall apply to a risk retention group chartered in this State unless the rule, regulation, or order or a provision thereof is specific to risk retention groups. The Commissioner shall establish procedures to implement the provisions of subchapter 13 of chapter 101 of this title as applied to risk retention groups chartered in this State by rule, regulation, or order.
(f) The provisions of chapter 159 of this title (risk based capital for insurers) shall apply to risk retention groups chartered in this State, except that the Commissioner may elect not to take regulatory action as otherwise required by sections 8303-8306 of chapter 159 of this title, provided at least one of the following conditions exist:
(1) The Commissioner determines that the risk retention group's members or sponsoring organization, or both, are sufficiently capitalized to support the operations of the risk retention group. As required by the Commissioner, the members or sponsoring organization, or both, shall provide evidence of:
(A) an investment grade credit rating from a nationally recognized statistical rating organization or rating of A- or better by the A. M. Best Company;
(B) an excess of assets over liabilities of at least $100 million; or
(C) an excess of assets over liabilities of at least 10 times the risk retention group's largest net retained per occurrence limit.
(2) Each policyholder qualifies as an industrial insured under the law of his or her home state, or under Vermont law, whichever the Commissioner determines to be more stringent.
(3) The risk retention group's certificate of authority was issued prior to January 1, 2011 and, based on a minimum of five years of solvent operation, is specifically exempted from the requirements for mandatory action in writing by the Commissioner. (Added 1991, No. 249 (Adj. Sess.), § 23, eff. Dec. 31, 1992; amended 1993, No. 235 (Adj. Sess.), § 9i, eff. June 21, 1994; 1997, No. 49, § 17, eff. June 26, 1997; 1999, No. 38, § 20, eff. May 20, 1999; 2009, No. 42, §§ 29, 30, eff. May 27, 2009; 2011, No. 21, § 25; 2011, No. 78 (Adj. Sess.), § 41, eff. April 2, 2012; 2013, No. 103 (Adj. Sess.), § 9, eff. April 14, 2014.)