The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 142A: Risk Retention Group Managing General Agents, Reinsurance Intermediaries, and Producer Controlled Insurers

• § 6070. Application of chapter

  (a) This chapter applies to risk retention groups domiciled in this State operating under the provisions of chapters 141 and 142 of this title and to persons serving as managing general agents for such risk retention groups.

  (b) The provisions of chapter 131, subchapter 2 of this title, pertaining to producer controlled insurers, shall apply to risk retention groups chartered in this State. (Added 1993, No. 235 (Adj. Sess.), § 9j, eff. Oct. 1, 1994; amended 2013, No. 103 (Adj. Sess.), § 4, eff. April 14, 2014.)

• § 6071. Definitions

  As used in this chapter:

  (1)(A) “Managing general agent” means any person who:

  (i) manages all or part of the insurance business of a risk retention group and acts as an agent for such risk retention group, and, who, either separately or together with affiliates, underwrites gross written premium in any one-quarter or year that exceeds the greater of:

  (I) 25 percent of the risk retention group’s policyholder surplus or capital; or

  (II) $250,000.00; and

  (ii) adjusts or pays, on behalf of the risk retention group, with settlement authority, claims in excess of $25,000.00 per occurrence or $250,000.00 in the aggregate.

  (B) “Managing general agent” shall also mean a person who otherwise would be deemed as such, but for the fact that it underwrites gross written premium of less than the amounts specified above, but during the risk retention group’s preceding fiscal year underwrote in excess of 10 percent of the risk retention group’s gross written premium.

  (C) Notwithstanding the provisions of subdivisions (1)(A) and (B) of this section, the following persons shall not be considered as managing general agents of a risk retention group:

  (i) an officer, director, or employee of the risk retention group or of any person described in subdivisions (ii) and (iii) of this subdivision (C), provided the officer or director is not individually licensed as a managing general agent hereunder;

  (ii) a person affiliated with or under common control with the risk retention group;

  (iii) an association, society, or other entity, or any person under common ownership or control therewith, that has, directly or indirectly, as its owners or members, persons who are policyholders or are eligible to become policyholders of the risk retention group; and

  (iv) an attorney-in-fact of a risk retention group organized as a reciprocal, or any person affiliated with or under common control with the attorney-in-fact.

  (2) “Reinsurance intermediary” has the same meaning as set forth in subdivision 4815(9) of this title.

  (3) “Risk retention group” means a company referred to in section 6070 of this title domiciled in this State.

  (4) “Underwrite” means the authority to accept or reject risk on behalf of the risk retention group. (Added 1993, No. 235 (Adj. Sess.), § 9j, eff. Oct. 1, 1994; amended 2003, No. 55, § 10.)

• § 6072. Licensure

  (a) A person shall not act in the capacity of managing general agent as defined in subdivision 6071(1)(A) of this title for a risk retention group unless such person is licensed under the provisions of this chapter. A person shall not act in the capacity of managing general agent as defined in subdivision 6071(1)(B) of this title for a risk retention group unless within 90 days of the end of the risk retention group’s fiscal year in which such person became a managing general agent, such person becomes licensed under the provisions of this chapter. An officer, director, or employee of a person licensed or exempt from licensure under this chapter shall not be required to be licensed. The Commissioner may exempt any other person upon a finding that the activities to be performed by such person on behalf of a risk retention group are not of the nature or magnitude requiring the protection of this chapter. A person shall not be required to obtain more than one license under this chapter in order to serve as managing general agent for more than one risk retention group.

  (b) No risk retention group shall employ the services of a reinsurance intermediary to solicit, negotiate, or place reinsurance on its behalf, unless such person is licensed as a reinsurance intermediary under the provisions of chapter 131 of this title or under the provisions of another state’s law governing reinsurance intermediaries or is licensed as a managing general agent under this chapter and is acting as such for the risk retention group.

  (c) Application for a license under this section shall be made on a form prescribed by the Commissioner and accompanied by a $30.00 fee plus the initial 12 months’ licensing fee of $150.00.

  (d) The Commissioner shall issue a license to any person who has complied with the requirements of this chapter, unless the Commissioner determines that the applicant; anyone named in the application; or any member, principal, officer, or director of the applicant is not competent or trustworthy or that any controlling person of such applicant is not competent or trustworthy to act as a managing general agent or that any of the foregoing persons have given cause for revocation or suspension of such license or have failed to comply with any prerequisite for the issuance of such license.

  (e) If the applicant for a license is a nonresident that has not duly registered to do business in this State, such applicant, as a condition precedent to receiving or holding a license, shall designate the Secretary of State as agent for service of process in the manner, and with the same legal effect, provided for by section 3370 of this title for designation of service of process upon unauthorized insurers and shall also furnish the Secretary of State with the name and address of a resident of this State upon whom notices or orders of the Commissioner or process affecting such nonresident licensee may be served. Such licensee shall promptly notify the Secretary of State in writing of every change in its designated agent for service of process.

  (f) A license issued under this chapter shall continue in force not longer than 12 months but shall expire as of 12:01 a.m. on the first day of April of the year next following date of issuance unless the licensee previously filed with the Commissioner, on forms prescribed and furnished by the Commissioner, a request for renewal of such license for an ensuing 12-month period. Such request must be accompanied by payment of a renewal fee equal to the initial licensing fee for such license. (Added 1993, No. 235 (Adj. Sess.), § 9j, eff. Oct. 1, 1994; amended 2021, No. 105 (Adj. Sess.), § 245, eff. July 1, 2022.)

• § 6073. Contract required

  (a) No risk retention group shall enter into a managing general agent relationship unless there is in force a written contract between the parties that sets forth the respective responsibilities of each party.

  (b) The contract shall contain the following minimum provisions:

  (1) The method for determining compensation and other amounts payable under the contract, and the terms for payment thereof shall be fair and reasonable.

  (2) The contract may be terminated by the risk retention group for cause upon written notice.

  (3) The authority to underwrite or settle claims may be suspended by the risk retention group during the pendency of any dispute regarding the cause for termination.

  (4) The contract shall not result in the transfer of substantial control of the risk retention group or any of the powers vested in the members or board of directors, by statute, articles of incorporation, or bylaws.

  (5) Separate records of all business written under the contract shall be maintained. The risk retention group shall have access to and the right to copy all accounts and records related to its business in a form usable by the risk retention group.

  (6) The required use of underwriting, rating, and claims settlement and, if applicable, reinsurance cession standards and procedures approved by the risk retention group.

  (c) Within 30 days of entering into a contract with a managing general agent, the risk retention group shall provide written notification thereof to the Commissioner. Such notice of appointment shall include a statement of duties that the applicant is expected to perform on behalf of the risk retention group, the lines of insurance for which the applicant is to be authorized to act, a summary of the minimum contract provisions set forth in subsection (b) of this section and any other information reasonably requested by the Commissioner. Information contained in such notification shall be entitled to confidential treatment in accordance with section 6052 of this title. The risk retention group shall give the Commissioner notice of termination of a contract with a managing general agent within 10 days of termination. (Added 1993, No. 235 (Adj. Sess.), § 9j, eff. Oct. 1, 1994.)

• § 6074. Examination authority

  (a) The Commissioner may examine the books and records of a managing general agent or any affiliate thereof pertaining to or arising out of transactions with a risk retention group if the Commissioner reasonably believes that such examination is necessary.

  (b) All examination reports, work papers, recorded information, documents and copies thereof produced by, obtained by, or disclosed to the Commissioner or any other person in the course of an examination made under this section are confidential and are not subject to subpoena and may not be made public by the Commissioner or any other person, except as otherwise provided in this section. The Commissioner is authorized to use and make public any report, work paper, or other documents, or any other information discovered or developed during the course of any examination conducted pursuant to this section in the furtherance of any legal or regulatory action. (Added 1993, No. 235 (Adj. Sess.), § 9j, eff. Oct. 1, 1994.)

• § 6075. Hearing; penalties

  (a) If the Commissioner determines, after notice and hearing, that any person licensed under this chapter (i) has violated any provision of this chapter or rules adopted under this chapter, (ii) is not competent or trustworthy, or (iii) has engaged in any activity or has failed to do any act that if known at the time of licensing would have been grounds to refuse licensing, the Commissioner may impose one or more of the following penalties:

  (1) order the revocation, suspension, or nonrenewal of the person’s license;

  (2) order the termination, suspension, or modification of the contract between such person and the risk retention group; or

  (3) impose an administrative penalty of not less than $100.00 nor more than $1,000.00 for each violation under this chapter.

  (b) In imposing any such penalty, the Commissioner shall take into account the seriousness of the violation, whether or not it was willful, and the licensee’s past record of compliance with this chapter.

  (c) Any hearing conducted under this chapter shall be conducted in accordance with 3 V.S.A. chapter 25. (Added 1993, No. 235 (Adj. Sess.), § 9j, eff. Oct. 1, 1994; amended 2021, No. 105 (Adj. Sess.), § 246, eff. July 1, 2022.)