Vermont Department of Financial Regulation

The Vermont Department of Financial Regulation (DFR) is the state agency responsible for regulating the Property & Casualty insurance industry in Vermont. The Department ensures fair insurance practices and protects Vermont consumers.

The Commissioner of Financial Regulation

The Commissioner of Financial Regulation is:

• Appointed by the Governor of Vermont
• No legislative confirmation required - appointment is at Governor's discretion
• Serves at the pleasure of the Governor (no fixed term)
• Responsible for enforcing Vermont Statutes Title 8 (Banking and Insurance)
• Authorized to adopt regulations, review rates, investigate violations, and discipline licensees

Commissioner Powers and Duties

Department Structure

The Vermont Department of Financial Regulation is organized into several divisions:

Insurance Division

The Insurance Division regulates insurance companies and producers:

Contact Information

Rate Regulation in Vermont

Vermont uses a file-and-use system for most P&C insurance:

File-and-Use System

• Insurers file rates and policy forms with the Department
• Rates can be used immediately upon filing (no prior approval required)
• Department reviews rates for compliance within 30-60 days
• Can disapprove rates if found to be excessive, inadequate, or unfairly discriminatory
• Insurers must justify rate changes with actuarial data

Rate Standards

Rates must be:

Exceptions to File-and-Use

Some lines require prior approval:

• Workers' compensation insurance
• Certain high-risk policies
• Policies where public interest demands prior review

Exam Tip: Vermont's file-and-use system allows insurers to implement rates immediately while the Department reviews them. This differs from prior approval states where rates must be approved before use.

Consumer Protection

Vermont's Department of Financial Regulation places strong emphasis on consumer protection:

Consumer Services Division

Services Provided:

• Handle consumer complaints against insurers and producers
• Provide information about insurance coverage and rights
• Mediate disputes between consumers and insurance companies
• Investigate unfair claims practices
• Assist with questions about policy coverage

How Consumers File Complaints:

1. Contact Consumer Services at 1-800-964-1784 or (802) 828-3302
2. File complaint online at dfr.vermont.gov
3. Submit written complaint by mail or email
4. Department investigates and responds within 30-60 days

Vermont Insurance Guaranty Association

Vermont participates in the Vermont Insurance Guaranty Association (VIGA):

Exam Tip: The Vermont Insurance Guaranty Association provides a safety net for policyholders. Unlike bank FDIC insurance which is funded by premiums, VIGA is funded by post-insolvency assessments on surviving insurers.

Vermont Statutes Title 8

Vermont insurance law is codified in Vermont Statutes Annotated Title 8 (Banking and Insurance):

Key Chapters Relevant to P&C Producers

Accessing Vermont Statutes

• Online: legislature.vermont.gov/statutes
• Search: Search for "Title 8" or specific chapter numbers
• Updates: Legislature updates statutes annually

Market Conduct Examinations

The Department conducts market conduct examinations to ensure compliance:

What Market Conduct Exams Review

• Claims Handling: Timeliness, fairness, payment accuracy
• Underwriting Practices: Risk selection, rating, discrimination
• Producer Licensing: Proper appointments and licensing
• Policy Forms: Compliance with filed and approved forms
• Rate Implementation: Proper use of filed rates
• Consumer Complaints: Resolution and handling
• Record Keeping: Proper documentation and retention

Frequency and Triggers

• Routine Exams: Every 3-5 years for larger insurers
• Targeted Exams: Based on consumer complaints or red flags
• Multi-State Exams: Coordinated with other states through NAIC

Consequences of Non-Compliance

• Corrective action plans required
• Fines and penalties for violations
• License suspension or revocation
• Restitution to harmed consumers
• Increased examination frequency

Exam Tip: Market conduct examinations focus on HOW insurers and producers treat consumers in practice, while financial examinations focus on insurer solvency and financial health.

Vermont Regulatory Philosophy

Vermont's approach to insurance regulation emphasizes:

Solvency Regulation

• Ensuring insurers remain financially strong
• Protecting policyholders from insurer insolvency
• Requiring adequate reserves and capital
• Monitoring insurer financial condition

Market Regulation

• Ensuring fair competition
• Preventing unfair trade practices
• Protecting consumers from abuse
• Promoting insurance availability and affordability

Producer Regulation

• Licensing qualified producers
• Ensuring ethical conduct
• Protecting consumers from producer misconduct
• Requiring continuing education for competency

Enforcement Actions

The Commissioner can take various enforcement actions:

Administrative Actions

Criminal Referrals

Serious violations may be referred to:

• Vermont Attorney General's Office
• Federal authorities (for insurance fraud)
• Law enforcement (for criminal conduct)

Next Steps

Understanding Vermont's regulatory structure is foundational. Continue to section 1.2 to learn about Vermont's specific producer licensing requirements.