Own Risk and Solvency Assessment

V.S.A. tit. 8, ch. 101, subch. 7A

in effect

8 V.S.A. § 3581 Purpose; scope; intent

3581. Purpose; scope; intent (a) The purpose of this subchapter is to provide the requirements for maintaining a risk management framework and completing an Own Risk and Solvency Assessment (ORSA) and provide guidance and instructions for filing an ORSA Summary Report with the Commissioner. (b) The requirements of this subchapter shall apply to all insurers domiciled in this State unless exempt under section 3586 of this subchapter. (c) The General Assembly finds and declares that the ORSA Summary Report will contain confidential and sensitive information related to an insurer’s or insurance group’s identification of risks material and relevant to the insurer or insurance group filing the report. This information will include proprietary and trade secret information that has the potential for harm and competitive disadvantage to the insurer or insurance group if the information is made public. It is the intent of the General Assembly that the summary report required under this subchapter shall be a confidential document filed with the Commissioner, that it shall be shared only as stated in this subchapter and to assist the Commissioner in the performance of his or her duties, and that in no event shall the summary report be subject to public inspection and copying under the Public Records Act. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3582 Definitions

3582. Definitions As used in this subchapter: (1) “Insurance group” means those insurers and affiliates included within an insurance holding company system as defined in subdivision 3681(6) of this title. (2) “Insurer” shall have the same meaning as in subdivision 3681(7) of this title. (3) “NAIC” means the National Association of Insurance Commissioners. (4) “Own Risk and Solvency Assessment” or “ORSA” or “assessment” means a confidential, internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group and conducted by that insurer or insurance group, of the material and relevant risks associated with the insurer’s or insurance group’s current business plan and the sufficiency of capital resources to support those risks. (5) “Guidance Manual” means the current version of the Own Risk and Solvency Assessment Guidance Manual developed and adopted by the NAIC, as may be amended from time to time. A change in the Manual shall be effective on the January 1 following the calendar year in which the changes have been adopted by the NAIC. (6) “Summary report” means a confidential high-level summary of an insurer or insurance group’s ORSA. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3583 Risk management framework

3583. Risk management framework An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3584 ORSA requirement

3584. ORSA requirement Subject to section 3586 of this subchapter, an insurer or the insurance group of which the insurer is a member shall regularly conduct an ORSA consistent with a process comparable to the Guidance Manual. The assessment shall be conducted no less than annually but also at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3585 Summary report

3585. Summary report (a) Upon the Commissioner’s request and no more than once each year, an insurer shall submit to the Commissioner a summary report or any combination of reports that together contain the information described in the Guidance Manual applicable to the insurer or the insurance group of which it is a member. Notwithstanding any request from the Commissioner, if the insurer is a member of an insurance group, the insurer shall submit the report required by this subsection if the Commissioner is the lead state commissioner of the insurance group as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC. (b) Each report shall include a signature of the insurer or insurance group’s chief risk officer or other executive having responsibility for the oversight of the insurer’s enterprise risk management process attesting to the best of his or her belief and knowledge that the insurer applies the enterprise risk management process described in the summary report and that a copy of the report has been provided to the insurer’s board of directors or the appropriate committee thereof. (c) An insurer may comply with subsection (a) of this section by providing the most recent and substantially similar report provided by the insurer or another member of an insurance group of which the insurer is a member to the commissioner of another state or to a supervisor or regulator of a foreign jurisdiction if that report provides information that is comparable to the information described in the Guidance Manual. Any such report in a language other than English must be accompanied by a translation of that report into the English language. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3586 Exemption

3586. Exemption (a) An insurer shall be exempt from the requirements of this subchapter if: (1) the insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000.00; and (2) the insurance group of which the insurer is a member has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000.00. (b) If an insurer qualifies for exemption under subdivision (a)(1) of this section but the insurance group of which the insurer is a member does not qualify for exemption under subdivision (a)(2), then any summary report required under section 3585 of this subchapter shall include every insurer within the insurance group. This requirement may be satisfied by the submission of more than one summary report for any combination of insurers, provided any combination of reports includes every insurer within the insurance group. (c) If an insurer does not qualify for exemption under subdivision (a)(1) of this section but the insurance group of which it is a member qualifies for exemption under subdivision (a)(2), then the only summary report required under section 3585 of this subchapter shall be the report applicable to that insurer. (d) An insurer that does not qualify for exemption under subsection (a) of this section may apply to the Commissioner for a waiver from the requirements of this subchapter based upon unique circumstances. In deciding whether to grant the insurer’s request for waiver, the Commissioner may consider the type and volume of business written, ownership and organizational structure, and any other factor the Commissioner considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the Commissioner shall coordinate with the lead State Commissioner and with the other domiciliary Commissioners in considering whether to grant the insurer’s request for a waiver. (e) Notwithstanding the exemptions stated in this section: (1) The Commissioner may require that an insurer maintain a risk management framework, conduct an ORSA, and file an ORSA Summary Report based on unique circumstances including the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests. (2) The Commissioner may require that an insurer maintain a risk management framework, conduct an ORSA assessment, and file a summary report if the insurer has risk based capital for company action level event as set forth in section 8303 of this title, meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Department Regulation I-93-2, sections 3-4, or otherwise exhibits qualities of a troubled insurer as determined by the Commissioner. (f) If an insurer that qualifies for an exemption under subsection (a) of this section subsequently no longer qualifies for that exemption due to changes in premium as reflected in the insurer’s most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer shall have one year following the year the threshold is exceeded to comply with the requirements of this subchapter. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3587 Contents of ORSA summary report

3587. Contents of ORSA summary report (a) The summary report shall be prepared consistent with the ORSA Guidance Manual, subject to the requirements of subsection (b) of this section. Documentation and supporting information shall be maintained and made available upon examination or upon request of the Commissioner. (b) The review of the summary report, and any additional requests for information, shall be made using similar procedures currently used in the analysis and examination of multistate or global insurers and insurance groups. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3588 Confidentiality

3588. Confidentiality (a) Documents, materials, or other information, including the summary report, in the possession of or control of the Department that are obtained by, created by, or disclosed to the Commissioner or any other person under this subchapter, is recognized by this State as being proprietary and to contain trade secrets. All such documents, materials, or other information shall be confidential by law and privileged, shall be exempt from public inspection and copying under the Public Records Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The Commissioner, however, is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the Commissioner’s official duties. The Commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. (b) Neither the Commissioner nor any person who received documents, materials, or other ORSA-related information, through examination or otherwise, while acting under the authority of the Commissioner or with whom such documents, materials, or other information are shared pursuant to this subchapter shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (a) of this section. (c) In furtherance of his or her regulatory duties, the Commissioner: (1) may, upon request, share documents, materials, or other ORSA-related information, including the confidential and privileged documents, materials, or information subject to subsection (a) of this section, including proprietary and trade secret documents and materials, with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in section 3695 of this title, with the NAIC and with any third-party consultants designated by the Commissioner, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; and (2) may receive documents, materials, or other ORSA-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade-secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of any supervisory college as defined in section 3695 of this title and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, materials, or information. (3) shall enter into a written agreement with the NAIC or a third-party consultant governing sharing and use of information provided under this subchapter consistent with this subsection that shall: (A) specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant pursuant to this subchapter, including procedures and protocols for sharing by the NAIC with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; (B) specify that ownership of information shared with the NAIC or a third-party consultant under this subchapter remains with the Commissioner and that the NAIC’s or a third-party consultant’s use of the information is subject to the direction of the Commissioner; (C) prohibit the NAIC or third-party consultant from storing the information shared under this subchapter in a permanent database after the underlying analysis is completed; (D) require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant under this subchapter is subject to a request or subpoena to the NAIC or a third-party consultant for disclosure or production; (E) require the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant under this subchapter; and (F) in the case of an agreement involving a third-party consultant, provide for the insurer’s written consent. (d) The sharing of information and documents by the Commissioner under this subchapter shall not constitute a delegation of regulatory authority or rulemaking, and the Commissioner is solely responsible for the administration, execution, and enforcement of the provisions of this subchapter. (e) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials, or other ORSA-related information shall occur as a result of disclosure of such ORSA-related information or documents to the Commissioner under this section or as a result of sharing as authorized under this subchapter. (f) Documents, materials, or other information in the possession or control of the NAIC or a third-party consultant under this subchapter shall be confidential by law and privileged, shall be exempt from public inspection and copying under the Public Records Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

8 V.S.A. § 3589 Sanctions

3589. Sanctions Any insurer failing without just cause to timely file the summary report as required by this subchapter shall be required, after notice and hearing, to pay a penalty of $10,000.00 for each day’s delay, to be recovered by the Commissioner, and the penalty so recovered shall be paid into the General Fund of this State. The maximum penalty under this section is $1,000,000.00. The Commissioner may reduce the penalty if the insurer demonstrates to the Commissioner that the imposition of the penalty would constitute a financial hardship to the insurer. Added 2013, No. 29, § 44, eff. Jan. 1, 2015.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/101Fetched: 10/21/2026