§ 3368. Transacting business without certificate of authority prohibited
(a) It shall be unlawful for any insurer to enter into a contract of insurance as an insurer
or to transact insurance business in this State as set forth in subsection (b) of
this section, without a certificate of authority from the Commissioner of Financial
Regulation, provided that this subsection shall not apply to:
(1) The lawful transaction of surplus lines insurance.
(2) The lawful transaction of reinsurance by insurers.
(3) Transactions in this State involving a policy lawfully solicited, written, and delivered
outside this State covering only subjects of insurance not resident, located, or expressly
to be performed in this State at the time of issuance and which transactions are subsequent
to the issuance of such policy.
(4) Transactions in Vermont involving group or blanket insurance and group annuities if:
(A) the master policy was lawfully issued and delivered in a state in which the insurer
was authorized to do an insurance business;
(B)(i) no more than 25 of the certificate holders are Vermont residents; or
(ii) the master policy covers one or more certificate holders who reside in Vermont, are
employed at a workplace located outside Vermont, and have obtained insurance coverage
through the workplace;
(C) the person or entity holding the master policy exists primarily for purposes other
than to procure insurance, is not a Vermont corporation or resident, and does not
have its principal office in Vermont; and
(D) the policy is not offered for sale by an agent or broker licensed in Vermont, offered
by mail to a Vermont resident, directly advertised to a Vermont resident, or marketed
in Vermont in a similar manner.
An insurer exempted from the requirements of this subsection by the provisions of
this subdivision shall not issue or deliver a policy or certificate to a resident
of Vermont without including a notice approved by the Commissioner that the policy
or certificate is not subject to regulation by Vermont.
(5) Transactions involving contracts issued by a life insurance or annuity company, organized
and operated without profit, to any private shareholder or individual exclusively
for the purpose of aiding and strengthening educational institutions by issuing insurance
and annuity contracts only to or for the benefit of such institutions and individuals
engaged in the service of such institution.
(6) Transactions involving any insurance company or underwriter issuing contracts of insurance
to industrial insured, or to industrial insureds, or to contracts of insurance issued
to an industrial insured. For purposes of this section, an “industrial insured” is:
(A) an insured who procures the insurance of any risk or risks by use of the services
of a full-time employee acting as an insurance manager or buyer; and
(B) whose aggregate annual premiums for insurance on all risks total at least $25,000.00;
and
(C) has at least 25 full-time employees.
(7) Transactions involving wet marine and transportation insurance covering property in
the course of transportation by land, air, or water, to, from, or through this State
and including any preparation or storage incidental thereto.
(8) Transactions in this State involving insurance on the property or operations of aircraft
or railroads engaged in interstate or foreign commerce.
(9) Transactions in this State involving a policy of insurance or annuity contract issued
prior to July 1, 1968, with regard to subdivisions (1) through (7) of this subsection
(a) and prior to July 1, 1980, with regard to subdivision (8) of this subsection (a).
(b) Any of the following acts in this State, effected by mail or otherwise by an unauthorized
insurer, shall be included among those deemed to constitute transacting insurance
business in this State:
(1) the issuance or delivery of contracts of insurance to residents of this State;
(2) the solicitation of applications for such contracts;
(3) the collection of premium, membership fees, assessments, or other considerations for
such contracts; or
(4) the transaction of matters subsequent to the execution of such contracts and arising
out of them.
(c) Any insurer that violates subsection (a) of this section shall be required to pay
an administrative penalty of not less than $500.00 nor more than $5,000.00 for each
violation.
(d) The failure of an insurer to obtain a certificate of authority shall not impair the
validity of any act or contract of such insurer and shall not prevent such insurer
from defending any action in any court of this State, but no insurer transacting insurance
business in this State without a certificate of authority shall be permitted to maintain
an action in any court of this State to enforce any right, claim, or demand arising
out of the transaction of such business until such insurer shall have obtained a certificate
of authority, and, with respect to contracts solicited, issued, or delivered after
passage of this act, an insurer shall not maintain an action in this State upon such
contract if, at the time of soliciting, issuing, or delivering such contract, it was
doing business in this State without lawful authority. Nor shall an action be maintained
in any court of this State by any successor or assignee of such insurer on any such
right, claim, or demand originally held by such insurer until a certificate of authority
shall have been obtained by such insurer or by an insurer that has acquired all or
substantially all of its assets, and with respect to contracts solicited, issued,
or delivered after passage of this act, a successor or assignee of such contract shall
not maintain an action in this State upon such contract if, at the time of soliciting,
issuing, or delivering such contract, the insurer was doing business in this State
without lawful authority. (Added 1967, No. 353 (Adj. Sess.), § 1; amended 1979, No. 197 (Adj. Sess.), § 13; 1989, No. 106, § 1, eff. Sept. 1, 1989; 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 167 (Adj. Sess.), § 1; 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)