§ 6053. Risk retention groups not chartered in this State

Risk retention groups chartered and licensed in states other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows:

(1) Notice of operations and designation of Secretary of State as agent. Before offering insurance in this State, a risk retention group shall submit to the Commissioner:

(A) a statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, charter date, its principal place of business, and such other information, including information on its membership, as the Commissioner of this State may require to verify that the risk retention group is qualified under subdivision 6051(11) of this title;

(B) a copy of its plan of operations and feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed; provided, however, that the provision relating to the submission of a plan of operation or feasibility study shall not apply with respect to any line or classification of liability insurance which:

(i) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986; and

(ii) was offered before such date by any risk retention group which had been chartered and operating for not less than three years before such date; and

(iii) the risk retention group shall submit a copy of any revision to its plan of operation or feasibility study required by subsection 6052(b) of this title at the time that such revision has become effective in its chartering state; and

(C) a statement of registration, for which a filing fee shall be determined by the Commissioner, which designates the Secretary of State as its agent for the purpose of receiving service of legal documents or process.

(2) Financial condition. Any risk retention group doing business in this State shall submit to the Commissioner:

(A) a copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist, under criteria established by the National Association of Insurance Commissioners;

(B) a copy of each examination of the risk retention group as certified by the Commissioner or public official conducting the examination; and

(C) upon request by the Commissioner, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group.

(3) Taxation. Each risk retention group subject to the provisions of this section shall be liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State as provided in 32 V.S.A. § 8551, and shall report to the Commissioner the net premiums written for risks resident or located within this State. Such risk retention group shall be subject to taxation, and any applicable fines and penalties related thereto, on the same basis as a foreign admitted insurer.

(4) Compliance with Unfair Claims Settlement Practices Law. Any risk retention group, its agents and representatives shall comply with the Unfair Claims Settlement Practices Act of this State, subdivision 4724(9) of this title.

(5) Deceptive, false, or fraudulent practices. Any risk retention group shall comply with subdivisions 4724(1)-(5) of this title regarding deceptive, false, or fraudulent acts or practices.

(6) Examination regarding financial condition. Any risk retention group may be required to submit to an examination by the Commissioner to determine its financial condition if the Commissioner of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within 60 days after a request by the Commissioner of this State. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the Examiner Handbook of the National Association of Insurance Commissioners.

(7) Notice to purchasers. Risk retention groups shall be required to notify purchasers as required by 15 U.S.C. § 3902(a)(1)(I).

(8) Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are hereby prohibited:

(A) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and

(B) The solicitation or sale of insurance by, or operation of, a risk retention group that is in hazardous financial condition or financially impaired.

(9) Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this State if an insurance company, other than an affiliated risk retention group, captive or other policyholder-owned insurance company, or a risk retention group all of whose members are insurance companies, is directly or indirectly a member or owner of such risk retention group.

(10) Prohibited coverage. The terms of any insurance policy issued by any risk retention group shall not provide, or be construed to provide, coverage prohibited generally by statute of this State or declared unlawful by the highest court of this State whose law applies to such policy. This subsection shall not be construed to require the preapproval of forms by the Commissioner.

(11) Delinquency proceedings. After an examination under subdivision 6053(6) of this title, a risk retention group not chartered in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment within the meaning of chapter 145 of this title.

(12) Penalties. A risk retention group subject to this section that violates any provision of this chapter will be subject to the fines and the penalties including revocation of its right to do business in this State, applicable to licensed insurers generally under this title.

(13) Operation prior to enactment of this chapter. In addition to complying with the requirements of this section, any risk retention group operating in this State prior to enactment of this chapter shall, within 30 days after December 31, 1992, comply with the provision of subdivision (1)(A) of this section. (Added 1991, No. 249 (Adj. Sess.), § 23, eff. Dec. 31, 1992; amended 1993, No. 40, § 10, eff. June 3, 1993.)