General Provisions

V.S.A. tit. 8, ch. 141, subch. 1

in effect

8 V.S.A. § 6001 Definitions

6001. Definitions As used in this chapter, unless the context requires otherwise: (1) “Affiliated company” means any company in the same corporate system as a parent, an industrial insured, or a member organization by virtue of common ownership, control, operation, or management. (2) “Agency captive insurance company” means a captive insurance company that is owned or directly or indirectly controlled by one or more insurance agencies or brokerages licensed under the laws of any state and that only insures risks of policies that are placed by or through such agency or agencies, or brokerage or brokerages, as applicable. (3) “Association” means any legal association of individuals, corporations, limited liability companies, partnerships, associations, or other entities, the member organizations of which or which does itself, whether or not in conjunction with some or all of the member organizations: (A) own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; or (B) have complete voting control over an association captive insurance company incorporated as a mutual insurer; or (C) constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or (D) have complete voting control over an association captive insurance company formed as a limited liability company. (4) “Association captive insurance company” means any company that insures risks of the member organizations of the association and that also may insure the risks of affiliated companies of the member organizations and the risks of the association itself. (5) “Captive insurance company” means any pure captive insurance company, association captive insurance company, sponsored captive insurance company, industrial insured captive insurance company, agency captive insurance company, risk retention group, affiliated reinsurance company, or special purpose financial insurance company formed or licensed under the provisions of this chapter. For purposes of this chapter, a branch captive insurance company shall be a pure captive insurance company with respect to operations in this State, unless otherwise permitted by the Commissioner. (6) “Commissioner” means the Commissioner of Financial Regulation. (7) “Controlled unaffiliated business” means any person: (A) that is not in the corporate system of a parent and its affiliated companies in the case of a pure captive insurance company, or that is not in the corporate system of an industrial insured and its affiliated companies in the case of an industrial insured captive insurance company; (B) that has an existing contractual relationship with a parent or one of its affiliated companies in the case of a pure captive insurance company, or with an industrial insured or one of its affiliated companies in the case of an industrial insured captive insurance company; and (C) whose risks are managed by a pure captive insurance company or an industrial insured captive insurance company, as applicable, in accordance with section 6019 of this title. (8) “Excess workers’ compensation insurance” means, in the case of an employer that has insured or self-insured its workers’ compensation risks in accordance with applicable State or federal law, insurance in excess of a specified per-incident or aggregate limit established by the Commissioner. (9) “Industrial insured” means an insured: (A) 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; (B) whose aggregate annual premiums for insurance on all risks total at least $25,000.00; and (C) who has at least 25 full-time employees. (10) “Industrial insured captive insurance company” means any company that insures risks of the industrial insureds that comprise the industrial insured group, and that may insure the risks of the affiliated companies of the industrial insureds and the risks of the controlled unaffiliated business of an industrial insured or its affiliated companies. (11) “Industrial insured group” means any group of industrial insureds that collectively: (A) own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer; (B) have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; or (C) constitute all of the subscribers of an industrial insured captive insurance company formed as a reciprocal insurer; or (D) have complete voting control over an industrial insured captive insurance company formed as a limited liability company. (12) “Member organization” means any individual, corporation, limited liability company, partnership, association, or other entity that belongs to an association. (13) “Mutual corporation” means a corporation organized without stockholders and includes a nonprofit corporation with members. (14) “Parent” means a corporation, limited liability company, partnership, other entity, or individual, that directly or indirectly owns, controls, or holds with power to vote more than 50 percent of the outstanding voting: (A) securities of a pure captive insurance company organized as a stock corporation; or (B) membership interests of a pure captive insurance company organized as a nonprofit corporation; or (C) membership interests of a pure captive insurance company organized as a limited liability company. (15) “Pure captive insurance company” means any company that insures risks of its parent and affiliated companies or controlled unaffiliated business. (16) “Risk retention group” means a captive insurance company organized under the laws of this State pursuant to the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et seq., as amended, as a stock or mutual corporation, a reciprocal or other limited liability entity. Added 1981, No. 28; amended 1981, No. 145 (Adj. Sess.); 1985, No. 170 (Adj. Sess.), § 3, eff. May 7, 1986; 1987, No. 168 (Adj. Sess.), § 1, eff. May 3, 1988; 1989, No. 225 (Adj. Sess.), § 25; 1991, No. 101, § 18; 1993, No. 40, § 1, eff. June 3, 1993; 1995, No. 180 (Adj. Sess.), § 38; 1997, No. 49, §§ 7, 8, eff. June 26, 1997; 1999, No. 38, § 4, eff. May 20, 1999; 2001, No. 71, § 11, eff. June 16, 2001; 2003, No. 55, § 7; 2005, No. 122 (Adj. Sess.), § 3; 2007, No. 49, §§ 8, 14; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2017, No. 12, § 3, eff. May 1, 2017; 2017, No. 134 (Adj. Sess.), § 9.

8 V.S.A. § 6002 Licensing; authority

6002. Licensing; authority (a) Any captive insurance company, when permitted by its articles of association, charter, or other organizational document, may apply to the Commissioner for a license to conduct insurance business comprised in section 3301 of this title and may grant annuity contracts as defined in section 3717 of this title and may accept or transfer risk by means of a parametric contract; provided, however, that: (1) No pure captive insurance company may insure any risks other than those of its parent and affiliated companies or controlled unaffiliated business. (2) No agency captive insurance company may do any insurance business in this State unless: (A) an insurance agency or brokerage that owns or controls the agency captive insurance company remains in regulatory good standing in all states in which it is licensed; (B) it insures only the risks of the commercial policies that are placed by or through an insurance agency or brokerage that owns or directly or indirectly controls the agency captive insurance company and, if required by the Commissioner in the Commissioner’s discretion, it provides the Commissioner the form of such commercial policies; (C) it discloses to the original policyholder or policyholders, in a form or manner approved by the Commissioner, that the agency captive insurance company as a result of its affiliation with an insurance agency or brokerage may enter into a reinsurance or other risk-sharing agreement with the agency or brokerage; and (D) if required by the Commissioner in the Commissioner’s discretion, the business written by an agency captive insurance company is: (i) Fronted by an insurance company licensed under the laws of any state. (ii) Reinsured by a reinsurer authorized or approved by the State of Vermont. (iii) Secured by a trust fund in the United States for the benefit of policyholders and claimants or funded by an irrevocable letter of credit or other arrangement that is acceptable to the Commissioner. The Commissioner may require the agency captive insurance company to increase the funding of any security arrangement established under this subdivision. If the form of security is a letter of credit, the letter of credit shall be issued or confirmed by a bank approved by the Commissioner. A trust maintained pursuant to this subdivision shall be established in a form and upon terms approved by the Commissioner. (3) No association captive insurance company may insure any risks other than those of its association, those of the member organizations of its association, and those of a member organization’s affiliated companies. (4) No industrial insured captive insurance company may insure any risks other than those of the industrial insureds that comprise the industrial insured group, those of their affiliated companies, and those of the controlled unaffiliated business of an industrial insured or its affiliated companies. (5) No risk retention group may insure any risks other than those of its members and owners. (6) No captive insurance company may provide personal motor vehicle or homeowner’s insurance coverage or any component thereof. (7) No captive insurance company may accept or cede reinsurance except as provided in section 6011 of this title. (8) Any captive insurance company may provide excess workers’ compensation insurance to its parent and affiliated companies, unless prohibited by the federal law or laws of the state having jurisdiction over the transaction. Any captive insurance company, unless prohibited by federal law, may reinsure workers’ compensation of a qualified self-insured plan of its parent and affiliated companies. (9) Any captive insurance company that insures risks described in subdivisions 3301(a)(1) and (2) of this title shall comply with all applicable State and federal laws. (10) Any captive insurance company that transfers risk by means of a parametric contract shall comply with all applicable State and federal laws and regulations. (b) No captive insurance company shall do any insurance business in this State unless: (1) it first obtains from the Commissioner a license authorizing it to do insurance business in this State; (2) its board of directors or committee of managers or, in the case of a reciprocal insurer, its subscribers’ advisory committee holds at least one meeting each year in this State; (3) it maintains its principal place of business in this State; and (4) it appoints a registered agent to accept service of process and to otherwise act on its behalf in this State, provided that whenever such registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the Commissioner shall be an agent of such captive insurance company upon whom any process, notice, or demand may be served. (c)(1) Before receiving a license, a captive insurance company shall: (A) File with the Commissioner a copy of its organizational documents and any other statements or documents required by the Commissioner. (B) Submit to the Commissioner for approval a description of the coverages, deductibles, coverage limits, and rates, together with such additional information as the Commissioner may reasonably require. In the event of any subsequent material change in any item in such description, the captive insurance company shall submit to the Commissioner for approval an appropriate revision and shall not offer any additional kinds of insurance until a revision of such description is approved by the Commissioner. The captive insurance company shall inform the Commissioner of any material change in rates within 30 days following the adoption of such change. (2) Each applicant captive insurance company shall also file with the Commissioner evidence of the following: (A) the amount and liquidity of its assets relative to the risks to be assumed; (B) the adequacy of the expertise, experience, and character of the person or persons who will manage it; (C) the overall soundness of its plan of operation; (D) the adequacy of the loss prevention programs of its insureds; (E) its beneficial ownership, sponsorship, or membership; and (F) such other factors deemed relevant by the Commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations. (3) Information submitted pursuant to this subsection, including any subsequent updates, amendments, or revisions of or to such information, shall be and remain confidential, and may not be made public by the Commissioner or an employee or agent of the Commissioner without the written consent of the company, except that: (A) The Commissioner may, in the Commissioner’s discretion, disclose or publish or authorize the disclosure or publication of any such record or report or any part thereof in the furtherance of legal or regulatory proceedings brought as a part of the Commissioner’s official duties. The Commissioner may, in the Commissioner’s discretion, disclose or publish or authorize the disclosure or publication of any such record or report or any part thereof to criminal law enforcement authorities for use in the exercise of such authority’s duties in such manner as the Commissioner may deem proper. (B) The Commissioner may, in the Commissioner’s discretion, disclose such information to a public officer having jurisdiction over the regulation of insurance and with other state, federal, or international agencies, provided that: (i) such public official shall agree in writing to maintain the confidentiality of such information; and (ii) the laws of the state or foreign government in which such public official serves require such information to be and to remain confidential. (C) Neither the Commissioner nor any person who received documents pursuant to this subsection, material, or information while acting under the authority of the Commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, material, or information. (D) Nothing in this subsection (c) shall excuse the applicant from making any required disclosure under this chapter. (d) Each captive insurance company shall pay to the Commissioner a nonrefundable fee of $500.00 and each special purpose financial insurance company shall pay to the Commissioner a nonrefundable fee of $5,000.00 for examining, investigating, and processing its application for license, and for issuing same, and the Commissioner is authorized to retain legal, financial, and examination services from outside the Department, the reasonable cost of which may be charged against the applicant. The provisions of section 3576 of this title shall apply to examinations, investigations, and processing conducted under the authority of this section. In addition, each captive insurance company shall pay a license renewal fee for each year thereafter of $500.00, and each special purpose financial insurance company shall pay to the Commissioner a nonrefundable fee of $5,000.00. (e) If the Commissioner is satisfied that the documents and statements that such captive insurance company has filed comply with the provisions of this chapter, and that such captive insurance company has been duly organized, the Commissioner may grant a license authorizing it to do insurance business in this State until April 1 thereafter, which license may be renewed. Added 1981, No. 28; amended 1987, No. 47, § 2, eff. May 13, 1987; 1987, No. 168 (Adj. Sess.), § 2, eff. May 3, 1988; 1993, No. 40, § 2, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9c, eff. June 21, 1994; 1997, No. 49, § 9, eff. June 26, 1997; 1999, No. 38, § 5, eff. May 20, 1999; 1999, No. 84 (Adj. Sess.), § 10, eff. April 19, 2000; 2003, No. 55, § 7; 2003, No. 105 (Adj. Sess.), § 18, eff. May 4, 2004; 2007, No. 49, § 9; 2009, No. 134 (Adj. Sess.), § 25; 2013, No. 29, § 47, eff. May 13, 2013; 2017, No. 12, § 4, eff. May 1, 2017; 2017, No. 90 (Adj. Sess.), § 1, eff. March 8, 2018; 2019, No. 110 (Adj. Sess.), § 1, eff. June 15, 2020; 2021, No. 25, § 21, eff. May 12, 2021; 2021, No. 139 (Adj. Sess.), § 18, eff. May 27, 2022; 2023, No. 12, § 6, eff. May 8, 2023; 2023, No. 110 (Adj. Sess.), §§ 3, 8, eff. July 1, 2024; 2025, No. 23, § 5, eff. July 1, 2025.

8 V.S.A. § 6003 Names of companies

6003. Names of companies No captive insurance company shall adopt a name that is the same, deceptively similar, or likely to be confused with or mistaken for any other existing business name registered in the State of Vermont. Added 1981, No. 28.

8 V.S.A. § 6004 Minimum capital and surplus; letter of credit

6004. Minimum capital and surplus; letter of credit (a) Prior to issuing any policies of insurance or entering into any contracts of reinsurance, each captive insurance company shall possess and thereafter maintain unimpaired paid-in capital and surplus of: (1) in the case of a pure captive insurance company, not less than $250,000.00; (2) in the case of an association captive insurance company, not less than $500,000.00; (3) in the case of an industrial insured captive insurance company, not less than $500,000.00; (4) in the case of an agency captive insurance company, not less than $250,000.00; (5) in the case of a risk retention group, not less than $1,000,000.00; and (6) in the case of a sponsored captive insurance company, not less than $100,000.00. (b) The Commissioner may prescribe additional capital and surplus based upon the type, volume, and nature of insurance business transacted. (c) Capital and surplus may be in the form of cash, marketable securities, a trust approved by the Commissioner and of which the Commissioner is the sole beneficiary, or an irrevocable letter of credit issued by a bank approved by the Commissioner. The Commissioner may reduce or waive the capital and surplus amounts required by this section pursuant to a plan of dissolution for the company approved by the Commissioner. (d) Within 30 days after commencing business, each captive insurance company shall file with the Commissioner a statement under oath of its president and secretary or, in the case of a captive insurance company formed as a limited liability company or as a reciprocal insurer, of two individuals authorized by the governing board certifying that the captive insurance company possessed the requisite unimpaired, paid-in capital and surplus prior to commencing business. Added 1981, No. 28; amended 1993, No. 40, § 3, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9d; 1999, No. 38, § 6, eff. May 20, 1999; 2003, No. 55, § 7; 2007, No. 178 (Adj. Sess.), § 5; 2009, No. 137 (Adj. Sess.), § 18, eff. May 29, 2010; 2011, No. 78 (Adj. Sess.), § 37, eff. April 2, 2012; 2015, No. 20, § 2, eff. May 7, 2015; 2017, No. 12, § 5, eff. May 1, 2017; 2019, No. 110 (Adj. Sess.), § 3, eff. June 15, 2020; 2021, No. 25, § 22, eff. May 12, 2021; 2023, No. 110 (Adj. Sess.), § 4, eff. July 1, 2024; 2025, No. 23, § 6, eff. July 1, 2025.

8 V.S.A. § 6005 Dividends

6005. Dividends No captive insurance company may pay a dividend out of, or other distribution with respect to, capital or surplus without the prior approval of the Commissioner. Approval of an ongoing plan for the payment of dividends or other distributions shall be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the Commissioner. Notwithstanding the provisions of 11B V.S.A. chapter 13, a captive insurance company or incorporated protected cell organized under the provisions of Title 11B may make such distributions as are in conformity with its purposes and approved by the Commissioner. Added 1981, No. 28; amended 1993, No. 40, § 4, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9e; 1997, No. 49, § 10, eff. June 26, 1997; 1999, No. 38, § 7, eff. May 20, 1999; 2003, No. 55, § 7; 2019, No. 3, § 1, eff. April 18, 2019.

8 V.S.A. § 6006 Formation of captive insurance companies in this State

6006. Formation of captive insurance companies in this State (a) Subject to the approval of the Commissioner, a captive insurance company may be formed as any type of entity permissible under Vermont law. (b)-(c) [Repealed.] (d) A captive insurance company incorporated or organized in this State shall have one or more incorporators or one or more organizers, at least one of which shall be a resident of this State. (e)(1) Before any required formation documents are transmitted to the Secretary of State, the incorporators or organizers shall petition the Commissioner to issue a certificate setting forth the Commissioner’s finding that the establishment and maintenance of the proposed entity will promote the general good of the State. In arriving at such a finding, the Commissioner shall consider: (A) the character, reputation, financial standing, and purposes of the incorporators or organizers; (B) the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors or members of the governing board; and (C) such other aspects the Commissioner deems advisable. (2) The formation documents, the certificate, and the organization fee shall be transmitted to the Secretary of State, who shall record both the formation documents and the certificate. (f) The capital stock of a captive insurance company incorporated as a stock insurer may be authorized with no par value. (g) In the case of a captive insurance company: (1) formed as a corporation, at least one of the members of the board of directors shall be a resident of this State; (2) formed as a reciprocal insurer, at least one of the members of the subscribers’ advisory committee shall be a resident of this State; or (3) formed as a limited liability company, at least one of the managers shall be a resident of this State. (h) Other than captive insurance companies formed as limited liability companies under 11 V.S.A. chapter 25 or as nonprofit corporations under Title 11B, captive insurance companies formed as corporations under the provisions of this chapter shall have the privileges and be subject to the provisions of Title 11A as well as the applicable provisions contained in this chapter. In the event of conflict between the provisions of said general corporation law and the provisions of this chapter, the latter shall control. (i) Captive insurance companies formed under the provisions of this chapter: (1) As limited liability companies shall have the privileges and be subject to the provisions of 11 V.S.A. chapter 25 as well as the applicable provisions contained in this chapter. In the event of a conflict between the provisions of 11 V.S.A. chapter 25 and the provisions of this chapter, the latter shall control. (2) As nonprofit corporations shall have the privileges and be subject to the provisions of Title 11B as well as the applicable provisions contained in this chapter. In the event of conflict between the provisions of Title 11B and the provisions of this chapter, the latter shall control. (3) As mutual insurers shall have the privileges and be subject to the provisions of sections 3303 and 3311 of this title as well as the applicable provisions contained in this chapter. In the event of a conflict between the provisions of sections 3303 and 3311 of this title and the provisions of this chapter, the latter shall control. (j) The provisions of chapter 101, subchapters 3 and 3A of this title, pertaining to mergers, consolidations, conversions, mutualizations, redomestications, and mutual holding companies, shall apply in determining the procedures to be followed by captive insurance companies in carrying out any of the transactions described therein, except that: (1) If the shareholders, members, or policyholders of the captive insurance company have unanimously approved of the merger, the procedures set forth in section 6006a of this title shall apply. (2) The Commissioner may, upon request of an insurer party to a merger authorized under this subsection, waive the requirement of subdivision 3424(6) of this title. (3) The Commissioner may waive the requirements for public notice and hearing or, in accordance with rules that the Commissioner may adopt addressing categories of transactions, modify the requirements for public notice and hearing. If a notice of public hearing is required, but no one requests a hearing ten days before the day set for the hearing, then the Commissioner may cancel the hearing. (4) The provisions of subsections 3423(f) and (h) of this title shall not apply, and the Commissioner may waive or modify the requirement of subdivision 3423(b)(4) of this title, with respect to market value of a converted company as necessary or desirable to reflect applicable restrictions on ownership of companies formed under this chapter. (5) An alien insurer may be a party to a merger authorized under this subsection, provided that the requirements for a merger between a captive insurance company and a foreign insurer under section 3431 of this title shall apply to a merger between a captive insurance company and an alien insurer under this subsection. Such alien insurer shall be treated as a foreign insurer under section 3431 and such other jurisdictions shall be the equivalent of a state for purposes of section 3431. (6) The Commissioner may issue a certificate of general good to permit the formation of a captive insurance company that is established for the purpose of consolidating or merging with or assuming existing insurance or reinsurance business from an existing licensed captive insurance company. The Commissioner may, upon request of such newly formed captive insurance company, waive or modify the requirements of subdivisions 6002(c)(1)(B) and (2) of this title. (7) The Commissioner may waive or modify application of the provisions of chapter 132 and chapter 101, subchapters 3 and 3A of this title and the provisions of Titles 11, 11A, and 11B in order to permit mergers of a non-insurer subsidiary of a captive insurance company with and into the captive insurance company or another of its subsidiaries without approval of the shareholders, members, or subscribers of such captive insurance company and without making available to the shareholders, members, or subscribers dissenters’ rights otherwise made available in such a merger; provided, however, that the board of directors, managers, or subscribers’ advisory committee of each of the merging entities shall approve such merger. The Commissioner may condition any such waiver or modification upon a good faith effort by the captive insurance company to provide notice of the merger to its shareholders, members, or subscribers. (k) Captive insurance companies formed as reciprocal insurers under the provisions of this chapter shall have the privileges and be subject to the provisions of chapter 132 of this title in addition to the applicable provisions of this chapter. In the event of a conflict between the provisions of chapter 132 and the provisions of this chapter, the latter shall control. However, in approving assessments levied upon subscribers of a captive insurance company formed as a reciprocal insurer, the Commissioner may exempt the company from any provision of sections 4850 (assessments), 4851 (time limit for assessments), and 4852 (aggregate of liability) of chapter 132. To the extent a reciprocal insurer is made subject to other provisions of this title pursuant to chapter 132, such provisions shall not be applicable to a reciprocal insurer formed under this chapter unless such provisions are expressly made applicable to captive insurance companies under this chapter. The Commissioner may exempt a company’s attorney-in-fact from the provisions of section 4840 (attorney’s bond) of chapter 132 if: (1) the reciprocal insurer is formed as an association captive; (2) each member of the reciprocal insurer qualifies as “industrial insured” pursuant to subdivision 6001(9) of this subchapter; or (3) the reciprocal insurer is an incorporated protected cell of a sponsored captive insurance company. (l) The articles of incorporation or bylaws of a captive insurance company formed as a corporation may authorize a quorum of its board of directors to consist of no fewer than one-third of the fixed or prescribed number of directors determined under 11A V.S.A. § 8.24(a) or under 11B V.S.A. § 8.24. (m) The subscribers’ agreement or other organizing document of a captive insurance company formed as a reciprocal insurer may authorize a quorum of its subscribers’ advisory committee to consist of no fewer than one-third of the number of its members. (n) With the Commissioner’s approval, a captive insurance company organized as a stock insurer may convert to a nonprofit corporation with one or more members by filing with the Secretary of State an irrevocable election for such conversion, provided that: (1) the irrevocable election shall certify that, at the time of the company’s original organization and at all times thereafter, the company conducted its business in a manner not inconsistent with a nonprofit purpose; and (2) at the time of the filing of its irrevocable election, the company shall file with both the Commissioner and the Secretary of State amended and restated articles of incorporation consistent with the provisions of this chapter and with Title 11B, duly authorized by the corporation. (o) The following provisions of Title 11B shall not apply to captive insurance companies that are nonprofit corporations: (1) subsection 2.02(c) (relating to the signing of articles of incorporation by directors); and (2) section 11.02, in the case of any merger in which a captive insurance company merges with and into a captive insurance company organized as a nonprofit corporation under Title 11B where the latter is the surviving corporation. (p) In the case of a captive insurance company formed as a limited liability company, a reciprocal insurance company, or mutual insurance company, any proxy executed by the members, subscribers, and policyholders of each shall be valid if executed and transmitted in compliance with 11A V.S.A. § 7.22. (q) With the Commissioner’s prior written approval, a captive insurance company may establish one or more separate accounts and may allocate to them amounts to provide for the insurance of risks of certain of its parents, affiliates, or members, as the case may be, subject to the following: (1) The income, gains, and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains, or losses of the captive insurance company. (2) Amounts allocated to a separate account in the exercise of the power granted by this subsection are owned by the captive insurer, and the captive insurer may not be nor hold itself out to be a trustee with respect to such amounts. (3) Unless otherwise approved by the Commissioner, assets allocated to a separate account shall be valued in accordance with the rules otherwise applicable to the captive insurer’s assets. (4) If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the captive insurer may conduct. (5) No sale, exchange, or other transfer of assets may be made by such captive insurer between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in the case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made and unless such transfer, whether into or from a separate account is made by a transfer of cash or by a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the Commissioner. The Commissioner may approve other transfers among such accounts if, in his or her opinion, such transfers would be equitable. (6) To the extent such captive insurer deems it necessary to comply with any applicable federal or State laws, such captive insurer, with respect to any separate account, including any separate account that is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of such account, including special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business of such account. Added 1981, No. 28; 1989, No. 72, § 1; amended 1989, No. 72, § 1; 1991, No. 41, § 5; 1993, No. 85, § 3(d), eff. Jan. 1, 1994; 1995, No. 179 (Adj. Sess.), § 1d, eff. Jan. 1, 1997; 1997, No. 49, § 11, eff. June 26, 1997; 1997, No. 100 (Adj. Sess.), § 2, eff. April 16, 1998; 1999, No. 38, § 8, eff. May 20, 1999; 1999, No. 86 (Adj. Sess.), § 8, eff. April 27, 2000; 2003, No. 55, § 7; 2003, No. 105 (Adj. Sess.), § 19, eff. May 4, 2004; 2005, No. 36, §§ 11, 12, 13, eff. June 1, 2005; 2007, No. 178 (Adj. Sess.), § 10; 2009, No. 42, § 30a; 2009, No. 137 (Adj. Sess.), §§ 19, 20, eff. May 29, 2010; 2013, No. 29, § 48, eff. May 13, 2013; 2013, No. 103 (Adj. Sess.), § 5, eff. April 14, 2014; 2015, No. 20, § 1, eff. May 7, 2015; 2017, No. 12, § 6, eff. May 1, 2017; 2019, No. 3, § 2, eff. April 18, 2019; 2019, No. 110 (Adj. Sess.), § 3A, eff. June 15, 2020; 2021, No. 25, § 26, eff. May 12, 2021; 2025, No. 23, § 7, eff. July 1, 2025.

8 V.S.A. § 6006a Mergers

6006a. Mergers (a) Any captive insurance company meeting the qualifications set forth in subdivision 6006(j)(1) of this title may merge with any other insurer, whether licensed in this State or elsewhere, in the following manner: (1) The board of directors of each insurer shall, by a resolution adopted by a majority vote of the members of such board, approve a joint agreement of merger setting forth: (A) the names of the insurers proposed to merge, and the name of the insurer into which they propose to merge, which is hereafter designated as the surviving company; (B) the terms and conditions of the proposed merger and the mode of carrying the same into effect; (C) the manner and basis of converting the ownership interests, if applicable, in other than the surviving insurer into ownership interests or other consideration, securities, or obligations of the surviving insurer; (D) a restatement of such provisions of the articles of incorporation of the surviving insurer as may be deemed necessary or advisable to give effect to the proposed merger; and (E) any other provisions with respect to the proposed merger as are deemed necessary or desirable. (2) The resolution of the board of directors of each insurer approving the agreement shall direct that the agreement be submitted to a vote of the shareholders, members, or policyholders, as the case may be, of each insurer entitled to vote in respect thereof at a designated meeting thereof, or via unanimous written consent of such shareholders, members, or policyholders in lieu of a meeting. Notice of the meeting shall be given as provided in the bylaws, charter, or articles of association, or other governance document, as the case may be, of each insurer and shall specifically reflect the agreement as a matter to be considered at the meeting. (3) The agreement of merger so approved shall be submitted to a vote of the shareholders, members, or policyholders, as the case may be, of each insurer entitled to vote in respect thereof at the meeting directed by the resolution of the board of directors of such company approving the agreement, and the agreement shall be unanimously adopted by the shareholders, members, or policyholders, as the case may be. (4) Following the adoption of the agreement by any insurer, articles of merger shall be adopted in the following manner: (A) Upon the execution of the agreement of merger by all of the insurers parties thereto, there shall be executed and filed, in the manner hereafter provided, articles of merger setting forth the agreement of merger, the signatures of the several insurers parties thereto, the manner of its adoption, and the vote by which adopted by each insurer. (B) The articles of merger shall be signed on behalf of each insurer by a duly authorized officer or, in the case of an insurer formed as a limited liability company or as a reciprocal insurer, by an individual authorized by the governing board, in such multiple copies as shall be required to enable the insurers to comply with the provisions of this subchapter with respect to filing and recording the articles of merger, and shall then be presented to the Commissioner. (C) The Commissioner shall approve the articles of merger if the Commissioner finds that the merger will promote the general good of the State in conformity with those standards set forth in section 3305 of this title. If the Commissioner approves the articles of merger, the Commissioner shall issue a certificate of approval of merger. (5) The insurer shall file the articles of merger, accompanied by the agreement of merger and the certificate of approval of merger, with the Secretary of State and pay all fees as required by law. If the Secretary of State finds that they conform to law, the Secretary shall issue a certificate of merger and return it to the surviving insurer or its representatives. The merger shall take effect upon the filing of articles of merger with the Secretary of State, unless a later effective date is specified therein. (6) The surviving insurer shall file a copy of the certificate of merger from the Secretary of State with the Commissioner. (b) When such merger has been effected as provided in this section: (1) The several insurers parties to the agreement of merger shall be a single captive insurance company that shall be the surviving insurer a party to the agreement of merger into which it has been agreed the other insurers parties to the agreement shall be merged, which surviving insurer shall survive the merger. (2) The separate existence of all of the insurers parties to the agreement of merger, except the surviving captive insurance company, shall cease. (3) The single captive insurance company shall have all of the rights, privileges, immunities, and powers and shall be subject to all of the duties and liabilities of a captive insurance company organized under this chapter. (4) The single captive insurance company shall possess all the rights, privileges, immunities, powers, and franchises of a public as well as of a private nature of each of the insurers so merged; and all property, real, personal, and mixed, and all debts due on whatever account, including subscriptions to shares of capital stock, and all other choses in action and all and every other interest, of or belonging to or due to each of the insurers so merged shall be taken and deemed to be transferred to and vested in such single captive insurance company without further act or deed; and the title to any real estate, or any interest therein, under the laws of this State vested in any such insurers shall not revert or be in any way impaired by reason of the merger. (5) The single captive insurance company shall be responsible and liable for all the liabilities and obligations of each of the insurers so merged in the same manner and to the same extent as if the single insurer had itself incurred the same or contracted therefor, and any claim existing or action or proceeding pending by or against any of the insurers may be prosecuted to judgment as if the merger had not taken place. Neither the rights of creditors nor any liens upon the property of any insurers shall be impaired by the merger, but such liens shall be limited to the property upon which they were liens immediately prior to the time of the merger unless otherwise provided in the agreement of merger. (6) The articles of association or other governing document of the surviving captive insurance company shall be supplanted and superseded to the extent, if any, that any provision or provisions of the articles are restated in the agreement of merger as provided in subsection (a) of this section, and such articles of association or other governing document shall be deemed to be thereby and to that extent amended. (c)(1) In the case of a merger between a domestic and a foreign or alien insurer, the articles of merger shall be regarded as executed by the proper officers of said foreign or alien insurer when such officers are duly authorized to execute same through such action on the part of the directors, shareholders, members, or policyholders, as the case may be, of said foreign or alien insurer as may be required by the laws of the state where the same is incorporated, and upon execution, the articles of merger shall be submitted to the insurance commissioner or other officer at the head of the insurance department of the jurisdiction where such foreign or alien insurer is domiciled. No merger shall take effect until it has been approved by the insurance official of the jurisdiction where the foreign or alien insurer is domiciled nor until a certificate of his or her approval has been filed with the Commissioner, provided that such submission to and approval by the proper official of the other jurisdiction shall not be required unless the same are required by the laws of the foreign or alien jurisdiction. Provided, further, that the domestic captive insurance company involved in the merger shall not through anything contained in this section be relieved of any of the procedural requirements enumerated elsewhere in this section. (2) A merger between a domestic and a foreign or alien captive insurance company shall not take effect unless and until the surviving captive insurance company, if such is a foreign or alien insurer, files with the Commissioner a power of attorney appointing the Commissioner the attorney for service of the foreign or alien insurer, upon whom all lawful process against the insurers may be served. Said power of attorney shall be irrevocable if the foreign or alien insurer has outstanding in this State any contract of insurance, or other obligation whatsoever, and shall by its terms so provide. Service upon the Commissioner shall be deemed sufficient service upon the insurer. Added 2021, No. 25, § 27, eff. May 12, 2021; amended 2021, No. 139 (Adj. Sess.), § 19, eff. May 27, 2022; 2025, No. 23, § 8, eff. July 1, 2025.

8 V.S.A. § 6006b Redomestication

6006b. Redomestication (a) Any foreign or alien insurer that qualifies for licensure as a captive insurance company in this State may redomesticate to this State by complying with all of the requirements of law relative to the organization and licensing of a captive insurance company and by filing with the Secretary of State its articles of association, charter, or other organization document, together with appropriate amendments thereto adopted in accordance with the laws of this State bringing such articles of association, charter, or other organizational document into compliance with the laws of this State, along with a certificate of general good issued by the Commissioner and a filing fee per section 3440 of this title. An insurer becoming a domestic captive insurance company through this redomestication process shall pay to the Commissioner such fees as would otherwise be payable by a captive insurance company organizing and becoming licensed or transacting business in this State. The Commissioner may issue a conditional license prior to the effective date of the redomestication in order to facilitate the transaction and provide notice of approval of the transaction to the outgoing jurisdiction. The domestic insurer shall be entitled to the necessary or appropriate certificates and licenses to continue its business and to transact business in this State and shall be subject to the authority and jurisdiction of this State. No insurer redomesticating into this State as a captive insurance company need merge, consolidate, transfer assets, or otherwise engage in any other reorganization, other than as specified in this section. (b) Upon the approval of and compliance with such conditions as may be imposed by the Commissioner, any captive insurance company may transfer its domicile, in accordance with the laws thereof, to any other state or jurisdiction and upon such a transfer shall cease to be a domestic captive insurance company, and its corporate or other legal existence in this State shall cease upon the filing of articles of redomestication with the Secretary of State, or upon such later date if a delayed effective date is specified in the articles of redomestication, accompanied by a certificate of approval of redomestication issued by the Commissioner and proof of acceptance of the insurer by the Secretary of State or analogous officer of the jurisdiction to which the captive insurance company is redomesticating, and upon payment to the Secretary of State of a filing fee per section 3438 of this title. Said articles of redomestication shall contain, at a minimum, the following information: (1) the name, organizational form, date of formation, and jurisdiction of formation of the redomesticating entity; (2) the jurisdiction to which the redomesticating entity will be transferring its domicile and its name following the redomestication date; (3) the registered office and agent of the redomesticating entity following the redomestication date; and (4) a statement that the redomestication has been approved by the appropriate vote of the shareholders or other owners of the redomesticating entity. (c) Upon redomestication in accordance with this section, the foreign or alien insurer shall become a captive insurance company organized under the laws of this State and have all the rights, privileges, immunities, and powers, and be subject to all applicable laws, duties, and liabilities, of domestic insurers of the same type. Such captive insurance company shall possess all rights that obtained prior to the redomestication to the extent permitted by the laws of this State and shall be responsible and liable for all the liabilities and obligations that obtained prior to the redomestication. The certificate of authority, agents, appointments and licenses, rates, and other items that the Commissioner allows, in his or her discretion, that are in existence at the time any insurer transfers its corporate domicile to this or any other state or jurisdiction by redomestication pursuant to this section shall continue in full force and effect upon such transfer. All outstanding policies of any transferring insurer shall remain in full force and effect. Added 2021, No. 25, § 28, eff. May 12, 2021.

8 V.S.A. § 6007 Reports and statements

6007. Reports and statements (a) Captive insurance companies shall not be required to make any annual report except as provided in this chapter. (b) Prior to March 1 of each year, and prior to March 15 of each year in the case of pure captive insurance companies, association captive insurance companies, sponsored captive insurance companies, industrial insured captive insurance companies, or agency captive insurance companies, each captive insurance company shall submit to the Commissioner a report of its financial condition, verified by oath of two of its executive officers or, in the case of a captive insurance company formed as a limited liability company or as a reciprocal insurer, of two individuals authorized by the governing board. (c) Each captive insurance company shall report using generally accepted accounting principles, statutory accounting principles, or international financial reporting standards unless the Commissioner requires, approves, or accepts the use of any other comprehensive basis of accounting, in each case with any appropriate or necessary modifications or adaptations thereof required or approved or accepted by the Commissioner for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the Commissioner. As used in this section, “statutory accounting principles” means the accounting principles codified in the NAIC Accounting Practices and Procedures Manual. Upon application for admission, a captive insurance company shall select, with explanation, an accounting method for reporting. Any change in a captive insurance company’s accounting method shall require prior approval. (d) The Commissioner shall by rule propose the forms in which pure captive insurance companies, association captive insurance companies, sponsored captive insurance companies, and industrial insured captive insurance companies shall report. (e) On or before March 1 of each year, in a form and manner prescribed by the Commissioner, each risk retention group shall file with the National Association of Insurance Commissioners (NAIC) a copy of its annual statement convention blank, the signed jurat page, the actuarial certification, and any other additional filings prescribed by the Commissioner for the preceding year. Any amendments and addendums to the annual statement filing subsequently filed with the Commissioner shall also be filed with the NAIC. (f) Each year, in a form and manner prescribed by the Commissioner, each risk retention group shall file with the NAIC a copy of the quarterly statements exhibiting its condition and affairs for the period beginning on January 1 of the current calendar year through and including the last day of the quarter for which the report is being made. The first quarterly statement shall be filed on or before May 15. The second quarterly statement shall be filed on or before August 15. The third quarterly statement shall be filed on or before November 15. If any of the dates specified in this subsection falls on a day other than a business day, then the quarterly statement is due on or before the first business day preceding such date. Information filed with the NAIC shall include a jurat page. A copy of any amendments and addendums to a quarterly statement subsequently filed with the Commissioner shall also be filed with the NAIC. (g) The Commissioner may adopt by rule additional filing requirements for risk retention groups. All risk retention group annual and quarterly financial statements shall be filed electronically with the NAIC. (h) Any pure captive insurance company, association captive insurance company, sponsored captive insurance company, industrial insured captive insurance company, or agency captive insurance company may make written application for filing the required report on a fiscal year-end. If an alternative reporting date is granted: (1) the annual report is due 75 days after the fiscal year-end; and (2) in order to provide sufficient detail to support the premium tax return, the captive insurance company shall file prior to March 15 of each year for each calendar year-end, the premium schedule of the “Vermont Captive Insurance Company Annual Report.” (i) Subdivision 6002(c)(3) of this title shall apply to each report filed pursuant to this section, except that such subdivision shall not apply to a report filed by a risk retention group. Added 1981, No. 28; amended 1991, No. 101, § 19; 1993, No. 40, § 5, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9f, eff. June 21, 1994; 1997, No. 49, § 12, eff. June 26, 1997; 1997, No. 100 (Adj. Sess.), § 3, eff. April 16, 1998; 1999, No. 38, § 9, eff. May 20, 1999; 2001, No. 71, § 12, eff. June 16, 2001; 2003, No. 55, § 7; 2007, No. 49, § 10; 2009, No. 42, § 17, eff. May 27, 2009; 2009, No. 137 (Adj. Sess.), § 21, eff. May 29, 2010; 2011, No. 78 (Adj. Sess.), § 38, eff. April 2, 2012; 2015, No. 74 (Adj. Sess.), § 1, eff. April 13, 2016; 2017, No. 12, § 1, eff. May 1, 2017; 2017, No. 90 (Adj. Sess.), § 2, eff. March 8, 2018; 2021, No. 25, § 23, eff. May 12, 2021; 2021, No. 139 (Adj. Sess.), § 13, eff. May 27, 2022; 2023, No. 110 (Adj. Sess.), § 17, eff. July 1, 2024; 2025, No. 23, § 9, eff. July 1, 2025; 2025, No. 77 (Adj. Sess.), § 2, eff. July 1, 2026.

8 V.S.A. § 6008 Examinations and investigations

6008. Examinations and investigations (a) Whenever the Commissioner determines it to be prudent, but not less frequently than once every five years, the Commissioner shall personally, or by some competent person appointed by the Commissioner, inspect and examine each captive insurance company to ascertain its financial condition, its ability to fulfill its obligations, and whether it has complied with the provisions of this chapter. The expenses and charges of the examination shall be paid to the State by the company or companies examined. (b) The provisions of section 3576 of this title shall apply to examinations conducted under this section. (c) Subdivision 6002(c)(3) of this title shall apply to all examination reports, preliminary examination reports or results, working 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. Added 1981, No. 28; amended 1983, No. 195 (Adj. Sess.), § 5(b); 1993, No. 235 (Adj. Sess.), § 9g, eff. June 21, 1994; 1997, No. 49, § 13, eff. June 26, 1997; 1999, No. 38, § 10, eff. May 20, 1999; 2003, No. 55, § 7; 2003, No. 105 (Adj. Sess.), § 8; 2019, No. 3, § 3, eff. April 18, 2019; 2023, No. 110 (Adj. Sess.), § 9, eff. July 1, 2024.

8 V.S.A. § 6009 Grounds and procedures for suspension or revocation of license

6009. Grounds and procedures for suspension or revocation of license (a) The license of a captive insurance company may be suspended or revoked by the Commissioner for any of the following reasons: (1) insolvency or impairment of capital or surplus; (2) failure to meet the requirements of section 6004 of this title; (3) refusal or failure to submit an annual report, as required by this chapter, or any other report or statement required by law or by lawful order of the Commissioner; (4) failure to comply with the provisions of its own charter, bylaws, or other organizational document; (5) failure to submit to or pay the cost of examination or any legal obligation relative thereto, as required by this chapter; (6) use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders; or (7) failure otherwise to comply with the laws of this State. (b) If the Commissioner finds, upon examination, hearing, or other evidence, that any captive insurance company has violated any provision of subsection (a) of this section, the Commissioner may suspend or revoke such company’s license if the Commissioner deems it in the best interests of the public and the policyholders of such captive insurance company, notwithstanding any other provision of this title. Added 1981, No. 28; amended 1997, No. 49, § 14, eff. June 26, 1997; 1999, No. 38, § 11, eff. May 20, 1999; 2003, No. 55, § 7.

8 V.S.A. § 6010 Legal investments

6010. Legal investments (a)(1) Except as may be otherwise authorized by the Commissioner, agency captive insurance companies, association captive insurance companies, sponsored captive insurance companies, protected cells in sponsored captive insurance companies, and risk retention groups shall: (A) comply with the investment requirements contained in sections 3461 through 3472 of this title, as applicable; or (B) submit for approval by the Commissioner the investment policy of the company. In reviewing the investment policy, the Commissioner shall consider diversification as to both type and issue; limits on the aggregate investment that may be made in any category of investment; limits on the aggregate investment in any one business, issuer, or risk; liquidity; and matching of assets and liabilities. The Commissioner shall determine whether the investment policy provides for the reasonable preservation, administration, and management of assets with respect to the risks associated with the company’s transactions and whether the investment policy supports the approved business plan. Subdivision 6002(c)(3) of this title shall apply to all information submitted pursuant to this subsection. (2) The Commissioner may require any company subject to this subsection to limit or withdraw from certain investments or discontinue certain investment practices if the Commissioner determines that such investments or practices of the company might be hazardous to the policyholders or the general public. (3) Section 3463a of this title shall apply to agency captive insurance companies, association captive insurance companies, and risk retention groups except to the extent it is inconsistent with approved accounting standards in use by the company. Notwithstanding any other provision of this title to the contrary, the Commissioner may approve the use of alternative, reliable methods of valuation and rating. (b) No pure captive insurance company or industrial insured captive insurance company shall be subject to any restrictions on allowable investments, including those limitations contained in sections 3461-3472 of this title; provided, however, that the Commissioner may prohibit or limit any investment that threatens the solvency or liquidity of any such company. (c) No pure captive insurance company may make a loan to or an investment in its parent company or affiliates without prior written approval of the Commissioner, and any such loan or investment must be evidenced by documentation approved by the Commissioner. Loans of minimum capital and surplus funds required by section 6004 of this title are prohibited. (d) No risk retention group shall make a loan to or investment in its members or affiliates of its members. This prohibition shall not apply to any loan or investment in effect prior to January 1, 2026. Added 1981, No. 28; amended 1991, No. 101, § 20; 1993, No. 40, § 6, eff. June 3, 1993; 1993, No. 235 (Adj. Sess.), § 9h, eff. June 21, 1994; 1999, No. 38, § 12, eff. May 20, 1999; 2001, No. 71, § 13, eff. June 16, 2001; 2003, No. 55, § 7; 2005, No. 36, § 14, eff. June 1, 2005; 2017, No. 12, § 7, eff. May 1, 2017; 2019, No. 3, § 4, eff. April 18, 2019; 2019, No. 110 (Adj. Sess.), § 7, eff. June 15, 2020; 2025, No. 77 (Adj. Sess.), § 1, eff. July 1, 2026.

8 V.S.A. § 6011 Reinsurance

6011. Reinsurance (a) Any captive insurance company may provide reinsurance of policies approved by the Commissioner comprised in section 3301 of this title, on risks of its parent, affiliated companies, and controlled unaffiliated business ceded by any other insurer, and may provide reinsurance of annuity contracts as defined in section 3717 of this title that are granted by any other insurer. (b) Any captive insurance company may take credit for the reinsurance of risks or portions of risks ceded to reinsurers complying with the provisions of subsections 3634a(a) through (e) of this title. Prior approval of the Commissioner shall be required for ceding or taking credit for the reinsurance of risks or portions of risks ceded to reinsurers not complying with subsections 3634a(a) through (e) of this title. (c) In addition to reinsurers authorized under the provisions of section 3634a of this title, a captive insurance company may take credit for the reinsurance of risks or portions of risks ceded to a pool, exchange, or association acting as a reinsurer that has been authorized by the Commissioner. The Commissioner may require any other documents, financial information, or other evidence that such a pool, exchange, or association will be able to provide adequate security for its financial obligations. The Commissioner may deny authorization or impose any limitations on the activities of a reinsurance pool, exchange, or association that, in the Commissioner’s judgment, are necessary and proper to provide adequate security for the ceding captive insurance company and for the protection and consequent benefit of the public at large. (d) For all purposes of this chapter, insurance by a captive insurance company of any workers’ compensation qualified self-insured plan of its parent and affiliates shall be deemed to be reinsurance. Added 1981, No. 28; 1985, No. 170 (Adj. Sess.), § 1, eff. May 7, 1986; amended 1987, No. 168 (Adj. Sess.), § 3, eff. May 3, 1988; 1991, No. 249 (Adj. Sess.), § 24; 93, No. 40, §§ 7, 8, eff. June 3, 1993; 1999, No. 38, § 13, eff. May 20, 1999; 2003, No. 55, § 7; 2005, No. 122 (Adj. Sess.), § 4; 2023, No. 32, § 1, eff. July 1, 2023; 2023, No. 110 (Adj. Sess.), § 6, eff. July 1, 2024; 2025, No. 23, § 10, eff. July 1, 2025.

8 V.S.A. § 6012 Rating organizations; memberships

6012. Rating organizations; memberships No captive insurance company shall be required to join a rating organization. Added 1981, No. 28.

8 V.S.A. § 6013 Exemption from compulsory associations

6013. Exemption from compulsory associations No captive insurance company shall be permitted to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this State, nor shall any such captive insurance company, or any insured or affiliate thereof, receive any benefit from any such plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company. Added 1981, No. 28; amended 1997, No. 49, § 15, eff. June 26, 1997; 2003, No. 55, § 7.

8 V.S.A. § 6014 Tax on premiums collected

6014. Tax on premiums collected (a) Each captive insurance company shall pay to the Commissioner of Taxes on or before March 15 of each year a tax at the rate of 38-hundredths of one percent on the first 20 million dollars and 285-thousandths of one percent on the next 20 million dollars and 19-hundredths of one percent on the next 20 million dollars and 72-thousandths of one percent on each dollar thereafter on the direct premiums collected or contracted for on policies or contracts of insurance written by the captive insurance company during the year ending December 31 next preceding, after deducting from the direct premiums subject to the tax the amounts paid to policyholders as return premiums which shall include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders; provided, however, that no tax shall be due or payable as to considerations received for annuity contracts. (b) Each captive insurance company shall pay to the Commissioner of Taxes on or before March 15 of each year a tax at the rate of 214-thousandths of one percent on the first 20 million dollars of assumed reinsurance premium, and 143-thousandths of one percent on the next 20 million dollars and 48-thousandths of one percent on the next 20 million dollars and 24-thousandths of one percent on each dollar thereafter. However, no reinsurance tax applies to premiums for risks or portions of risks that are subject to taxation on a direct basis pursuant to subsection (a) of this section. No reinsurance premium tax shall be payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if such transaction is part of a plan to discontinue the operations of such other insurer, and if the intent of the parties to such transaction is to renew or maintain such business with the captive insurance company. No reinsurance premium tax shall be payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of a captive insurance company’s parent or affiliates if the intent of such exchange is to renew or maintain such business with the captive insurance company. (c)(1) The annual minimum aggregate tax to be paid by a captive insurance company calculated under subsections (a) and (b) of this section shall be $7,500.00. The annual maximum aggregate tax to be paid by a captive insurance company calculated under subsections (a) and (b) of this section shall be $200,000.00. (2) The annual minimum aggregate tax to be paid by a sponsored captive insurance company shall be $7,500.00 and shall apply to the sponsored captive insurance company as a whole and not to each protected cell; such cells shall not be subject to the minimum tax. (3) The annual maximum tax to be paid by a protected cell shall be as calculated under subdivision (1) of this subsection. The annual maximum tax to be remitted by a sponsored captive insurance company shall be the aggregate of the tax liabilities of each protected cell. (d) A captive insurance company failing to make returns as required by 32 V.S.A. chapter 211 or failing to pay within the time required all taxes assessed by this section shall be subject to the provisions of 32 V.S.A. § 3202. (e) Subject to the provisions of subsection (c) of this section, two or more captive insurance companies under common ownership and control shall be taxed as though they were a single captive insurance company. (f) As used in this section: (1) “Common ownership and control” shall mean ownership and control of two or more captive insurance companies by the same person or group of persons. (2) “Ownership and control” shall mean: (A) in the case of a stock corporation, the direct or indirect ownership of 80 percent or more of the outstanding voting stock of the corporation; (B) in the case of a mutual or nonprofit corporation, the direct or indirect ownership of 80 percent or more of the surplus and the voting power of such corporation; (C) in the case of a limited liability company, the direct or indirect ownership of 80 percent or more of the membership interests in the limited liability company; (D) in the case of a sponsored captive insurance company, for purposes of this section a protected cell shall be treated as a separate captive insurance company owned and controlled by the protected cell’s participant, but only if: (i) the participant is the only participant with respect to such protected cell; and (ii) the participant is the sponsor or is affiliated with the sponsor of the sponsored captive insurance company through common ownership and control. (g) The tax provided for in this section shall constitute all taxes collectible under the laws of this State from any captive insurance company, and no other occupation tax or other taxes shall be levied or collected from any captive insurance company by the State or any county, city, or municipality within this State, except meals and rooms taxes, sales and use taxes, and ad valorem taxes on real and personal property used in the production of income. (h) Annually, 13 percent of the premium tax revenues collected pursuant to this section shall be transferred to the Department of Financial Regulation for the regulation of captive insurance companies under this chapter. (i) [Repealed.] (j) The tax provided for in this section shall be calculated on an annual basis, notwithstanding policies or contracts of insurance or contracts of reinsurance issued on a multiyear basis. In the case of multiyear policies or contracts, the premium shall be prorated for purposes of determining the tax under this section. (k) A captive insurance company first licensed under this chapter on or after January 1, 2017 shall receive a nonrefundable credit of $5,000.00 applied against the aggregate taxes owed for the first two taxable years for which the company has liability under this section. Added 1981, No. 28; amended 1985, No. 170 (Adj. Sess.), § 2, eff. May 7, 1986; 1987, No. 47, § 3, eff. May 13, 1987; 1989, No. 72, § 2; 1989, No. 225 (Adj. Sess.), § 25(a); 1993, No. 89, §§ 15-17; 1993, No. 152 (Adj. Sess.), § 1, eff. May 16, 1994; 1995, No. 180 (Adj. Sess.), § 38(a); 1999, No. 38, § 14, eff. May 20, 1999; 1999, No. 49, § 218; 1999, No. 84 (Adj. Sess.), § 11, eff. April 19, 2000; 2001, No. 71, § 13a, eff. June 16, 2001; 2003, No. 55, § 7, eff. June 4, 2003, see effective date notes set out below; 2007, No. 49, §§ 11, 15; 2009, No. 42, §§ 18, 21, eff. May 27, 2009; 2009, No. 42, § 20; 2011, No. 21, § 20; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 29, § 49, eff. May 13, 2013; 2017, No. 73, § 30; 2017, No. 90 (Adj. Sess.), § 3, eff. March 8, 2018; 2023, No. 12, § 2, eff. July 1, 2023.

8 V.S.A. § 6015 Rules and regulations

6015. Rules and regulations The Commissioner may adopt and from time to time amend such rules relating to captive insurance companies as are necessary to enable the Commissioner to carry out the provisions of this chapter. Added 1981, No. 28; amended 2003, No. 55, § 7.

8 V.S.A. § 6016 Laws applicable

6016. Laws applicable No provisions of this title, other than those contained in this chapter or contained in specific references contained in this chapter, shall apply to captive insurance companies. Risk retention groups shall have the privileges and be subject to the provisions of chapter 142 of this title in addition to the applicable provisions of this chapter. Added 1981, No. 28; amended 2003, No. 55, § 7.

8 V.S.A. § 6017 Captive Insurance Regulatory and Supervision Fund

6017. Captive Insurance Regulatory and Supervision Fund (a)(1) There is hereby created a fund to be known as the Captive Insurance Regulatory and Supervision Fund for the purpose of providing the financial means for the Commissioner of Financial Regulation to administer this chapter, chapter 142, and chapter 142A of this title and for reasonable expenses incurred in promoting the captive insurance industry in Vermont. The transfer of 13 percent of the premium tax under subsection 6014(h) of this title and all fees and assessments received by the Department pursuant to the administration of these chapters shall be credited to this Fund. Of this amount, not more than three percent of the premium tax under section 6014 may be expended by the Agency of Commerce and Community Development, with approval of the Secretary of Administration, for promotional expenses. All fines and administrative penalties, however, shall be deposited directly into the General Fund. (2) All payments from the Captive Insurance Regulatory and Supervision Fund for the maintenance of staff and associated expenses, including contractual services as necessary, shall be disbursed from the State Treasury only upon warrants issued by the Commissioner of Finance and Management, after receipt of proper documentation regarding services rendered and expenses incurred. (b) At the end of each fiscal year, the balance in the Captive Insurance Regulatory and Supervision Fund shall be transferred to the General Fund. (c) The Commissioner of Finance and Management may anticipate receipts to the Captive Insurance Regulatory and Supervision Fund and issue warrants based thereon. Added 1987, No. 47, § 4, eff. May 13, 1987; amended 1989, No. 72, § 3; 1989, No. 225 (Adj. Sess.), § 25; 1995, No. 180 (Adj. Sess.), § 38; 1995, No. 190 (Adj. Sess.), § 1; 1999, No. 49, § 219; 2003, No. 55, § 7; 2003, No. 80 (Adj. Sess.), § 76, eff. March 8, 2004; 2009, No. 42, § 22; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 179 (Adj. Sess.), § E.801; 2023, No. 110 (Adj. Sess.), § 5, eff. July 1, 2024.

8 V.S.A. § 6018 Delinquency

6018. Delinquency Except as otherwise provided in this chapter, the terms and conditions set forth in chapter 145 of this title shall apply in full to captive insurance companies formed or licensed under this chapter; however, the assets of a separate account established under subsection 6006(q) of this chapter shall not be used to pay any expenses or claims other than those attributable to such separate account. Added 1987, No. 168 (Adj. Sess.), § 4, eff. May 3, 1988; amended 1993, No. 40, § 9, eff. June 3, 1993; 1999, No. 38, § 15, eff. May 20, 1999; 2003, No. 55, § 7; 2007, No. 49, § 12; 2013, No. 103 (Adj. Sess.), § 6, eff. April 14, 2014; 2019, No. 110 (Adj. Sess.), § 9, eff. June 15, 2020.

8 V.S.A. § 6019 Rules for controlled unaffiliated business

6019. Rules for controlled unaffiliated business The Commissioner may adopt rules establishing standards to ensure that a parent or its affiliated company, or an industrial insured or its affiliated company, is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by a pure captive insurance company or an industrial insured captive insurance company, respectively; provided, however, that, until such time as rules under this section are adopted, the Commissioner may approve the coverage of such risks by a pure captive insurance company or an industrial insured captive insurance company. Added 1997, No. 49, § 16, eff. June 26, 1997; amended 2003, No. 55, § 7; 2007, No. 49, § 13.

8 V.S.A. § 6020 Conversion to or merger with reciprocal insurer

6020. Conversion to or merger with reciprocal insurer (a) An association captive insurance company, risk retention group, industrial insured captive insurance company formed as a stock or mutual corporation, or other insurer approved by the Commissioner may be converted to or merged with and into a reciprocal insurer in accordance with a plan therefore and the provisions of this section. (b) Any plan for such conversion or merger shall provide a fair and equitable plan for purchasing, retiring, or otherwise extinguishing the interests of the stockholders and policyholders of a stock insurer, and the members and policyholders of a mutual insurer, including a fair and equitable provision for the rights and remedies of dissenting stockholders, members, or policyholders. (c) In the case of a conversion authorized under subsection (a) of this section: (1) such conversion shall be accomplished under such reasonable plan and procedure as may be approved by the Commissioner; provided, however, that the Commissioner shall not approve any such plan of conversion unless such plan: (A) satisfies the provisions of subsection (b) of this section; (B) provides for a hearing, of which notice is given or to be given to the captive insurance company, its directors, officers, and policyholders, and, in the case of a stock insurer, its stockholders, and in the case of a mutual insurer, its members, all of which persons shall be entitled to attend and appear at such hearing; provided, however, that if notice of a hearing is given and no director, officer, policyholder, member, or stockholder requests a hearing, the Commissioner may cancel such hearing; (C) provides a fair and equitable plan for the conversion of stockholder, member, or policyholder interests into subscriber interests in the resulting reciprocal insurer, substantially proportionate to the corresponding interests in the stock or mutual insurer; provided, however, that this requirement shall not preclude the resulting reciprocal insurer from applying underwriting criteria that could affect ongoing ownership interests; and (D) is approved: (i) in the case of a stock insurer, by a majority of the shares entitled to vote represented in person or by proxy at a duly called regular or special meeting at which a quorum is present; and (ii) in the case of a mutual insurer, by a majority of the voting interests of policyholders represented in person or by proxy at a duly called regular or special meeting thereof at which a quorum is present; (2) the Commissioner shall approve such plan of conversion if the Commissioner finds that the conversion will promote the general good of the State in conformity with those standards set forth in subdivision 6006(d)(2) of this title; (3) if the Commissioner approves the plan, the Commissioner shall amend the converting insurer’s certificate of authority to reflect conversion to a reciprocal insurer and issue such amended certificate of authority to the company’s attorney-in-fact; (4) upon the issuance of an amended certificate of authority of a reciprocal insurer by the Commissioner, the conversion shall be effective; and (5) upon the effectiveness of such conversion the corporate existence of the converting insurer shall cease and the resulting reciprocal insurer shall notify the Secretary of State of such conversion. (d) A merger authorized under subsection (a) of this section shall be accomplished substantially in accordance with the procedures set forth in sections 3424, 3426, and 3431 of this title, except that, solely for purposes of such merger: (1) the plan of merger shall satisfy the provisions of subsection (b) of this section; (2) the subscribers’ advisory committee of a reciprocal insurer shall be equivalent to the board of directors of a stock or mutual insurance company; (3) the subscribers of a reciprocal insurer shall be the equivalent of the policyholders of a mutual insurance company; (4) if a subscribers’ advisory committee does not have a president or secretary, the officers of such committee having substantially equivalent duties shall be deemed the president or secretary of such committee; (5) the Commissioner may, upon request of an insurer party to a merger authorized under subsection (a) of this section, waive the requirement of subdivision 3424(6) of this title; (6) subdivision 3424(7) of this title shall not apply to such merger; (7) the Commissioner shall approve the articles of merger if the Commissioner finds that the merger will promote the general good of the State in conformity with those standards set forth in subdivision 6006(d)(2) of this title. If the Commissioner approves the articles of merger, the Commissioner shall indorse the Commissioner’s approval thereon and the surviving insurer shall present the same to the Secretary of State at the Secretary of State’s office; (8) notwithstanding section 6004 of this title, the Commissioner may permit the formation, without surplus, of a captive insurance company organized as a reciprocal insurer, into which an existing captive insurance company may be merged for the purpose of facilitating a transaction under this section; provided, however, that there shall be no more than one authorized insurance company surviving such merger; and (9) an alien insurer may be a party to a merger authorized under subsection (a) of this section; provided, that the requirements for a merger between a domestic and a foreign insurer under section 3431 of this title shall apply to a merger between a domestic and an alien insurer under this subsection. Such alien insurer shall be treated as a foreign insurer under section 3431 and such other jurisdictions shall be the equivalent of a state for purposes of section 3431. (e) A conversion or merger under this section shall have all of the effects set forth in subdivisions 3430(3), (4), and (5) of this title, to the extent such effects are not inconsistent with the provisions of this chapter. Added 1997, No. 100 (Adj. Sess.), § 1, eff. April 16, 1998; amended 1999, No. 38, § 16, eff. May 20, 1999; 2003, No. 55, § 7; 2009, No. 137 (Adj. Sess.), § 22, eff. May 29, 2010.

8 V.S.A. § 6024 Dormant captive insurance companies

6024. Dormant captive insurance companies (a) As used in this section, unless the context requires otherwise, “dormant captive insurance company” means a captive insurance company that has: (1) ceased transacting the business of insurance, including the issuance of insurance policies; and (2) no remaining liabilities associated with insurance business transactions or insurance policies issued prior to the filing of its application for a certificate of dormancy under this section. (b) A captive insurance company domiciled in Vermont that meets the criteria of subsection (a) of this section may apply to the Commissioner for a certificate of dormancy. The certificate of dormancy shall be subject to renewal every five years and shall be forfeited if not renewed within such time. (c) A dormant captive insurance company that has been issued a certificate of dormancy shall: (1) possess and thereafter maintain unimpaired, paid-in capital and surplus of not less than $25,000.00; provided, however, that if the dormant captive insurance company had never capitalized, it shall not be required to add capital upon entering dormancy; (2) prior to March 15 of each year, submit to the Commissioner a report of its financial condition, verified by oath of two of its executive officers or, in the case of a captive insurance company formed as a limited liability company or as a reciprocal insurer, of two individuals authorized by its governing board, in a form as may be prescribed by the Commissioner; and (3) pay a license renewal fee of $500.00. (d) A dormant captive insurance company shall not be subject to or liable for the payment of any tax under section 6014 of this chapter. (e) A dormant captive insurance company shall apply to the Commissioner for approval to surrender its certificate of dormancy and resume conducting the business of insurance prior to issuing any insurance policies. (f) A certificate of dormancy shall be revoked if a dormant captive insurance company no longer meets the criteria of subsection (a) of this section. (g) The Commissioner may establish guidelines and procedures as necessary to carry out the provisions of this section. Added 2013, No. 103 (Adj. Sess.), § 1, eff. April 14, 2014; amended 2015, No. 74 (Adj. Sess.), § 2, eff. April 13, 2016; 2017, No. 12, § 8, eff. May 1, 2017; 2019, No. 110 (Adj. Sess.), § 2, eff. June 15, 2020; 2025, No. 23, § 11, eff. July 1, 2025.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/141Fetched: 10/21/2026