Licensing
Any individual applying for a Vermont resident producer’s license must be at least 18 years old and must be a Vermont resident before submitting an application.
Pre-licensing course and exam: Not required
Vermont does not have specific pre-licensing requirements.
Fingerprints/background check
As part of the application process, you must submit fingerprints to the Vermont Department of Insurance. Plan to get fingerprinted after passing the state exam and at least one day before applying for the license.
Controlled business
Controlled business is insurance written primarily for the benefit of the producer or the producer’s family members. Producers are prohibited from obtaining a Vermont insurance license solely to write controlled business.
You may sell a policy to yourself or your family members, but you can’t obtain a license for that sole purpose.
Non-resident license
A licensed producer must meet the following requirements to obtain a nonresident license:
The individual must hold a resident license in their home state and be in good standing.
The individual must complete the appropriate application and submit the required fees to the insurance department/commission in each state they wish to become licensed in.
The individual’s home state must offer equal reciprocity for the state you are attempting to obtain a non-resident license in. Currently, Vermont has reciprocation agreements with all other states.
Temporary license
A Temporary Producer license is valid only if the temporary producer is sponsored and appointed by an insurance company. A Temporary Producer license is issued once in a lifetime per line of authority and is valid for a maximum of 6 months from the date the license is issued.
Inactive status
A Vermont resident producer who is ordered to active military duty may place their license on inactive status until discharge. While the license is inactive, the producer may continue to receive residual (or “trailing”) commissions, but may not solicit or transact any new business.
Renewal maintenance
Vermont insurance licenses are initially issued for 2 years. A producer must renew their license every 2 years, by the last day of the licensee’s birth month.
There is a 30-day grace period for those who fail to renew before expiration. Renewing during this grace period results in a $50 late fee. If the license is not renewed within the grace period, the license expires and all company appointments are canceled.
A producer may have their license reissued within 12 months of expiration without having to test again. When former producers have been without a license for more than 12 months, they must take the pre-licensing course, retest, and get fingerprinted before applying for a new license.
Continuing education
All states, including Vermont, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Individuals licensed in the state of Vermont must complete 24 hours of CE before renewing their license.
Notice of change of name or address
Any change of name or address (residential or business) must be reported by the licensee to the Vermont Department of Insurance within 30 days of relocation. Failure to do so may result in monetary fines and/or suspension of a license.
Company regulations
An insurance company must be authorized by the Department of Insurance to conduct business in Vermont. To receive authorization, the insurance company must present its rate tables and articles of incorporation. These documents must include the nature and purpose of the company’s business intentions, along with the appropriate bylaws and required fees.
Place of business
Every resident insurance producer authorized to conduct business in Vermont must maintain a place of business (with public access) within the state.
Capital and surplus requirement
A company authorized to conduct insurance business in Vermont must maintain minimum corporate standards. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required.
Duties of the Commissioner of Insurance
The Department of Financial Regulation is a state agency that affects the lives of Vermonters through regulation and monitoring of a broad range of financial industry activities. The department’s role is to protect consumers against unfair and unlawful business practices in banking, securities (investments), insurance, and captive insurance, while also ensuring that licensed entities remain financially healthy.
The Commissioner of the Vermont Department of Financial Regulation is a Vermont state government position. The commissioner serves as the chief regulator of the state’s financial services sector. The Commissioner of Insurance is appointed by the Governor for a term of 2 years.
The Commissioner is responsible for establishing and enforcing regulations in the Vermont insurance market in a manner that protects consumers and encourages economic development.
Duties of the Commissioner include:
Investigate all claims and complaints of legal violations relating to insurance.
If the Commissioner finds that laws have been violated, their findings and supporting documents will be forwarded to the state attorney general to pursue prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Audit the books and records of any resident producer as frequently as necessary.
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.
Suspend, revoke or non-renew
The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:
Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license.
Being found guilty of a violation or the noncompliance of insurance regulations and laws.
Committing fraud while attempting to obtain an insurance license.
Commingling policy owners’, insurers’, and beneficiaries’ money with the producer’s own money.
Providing false information in reference to the terms and conditions of an insurance contract.
Having been found guilty of a felony (or misdemeanor involving activities related to the individual’s moral character.)
Having been convicted of violations in reference to unfair trade practices or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than Vermont.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.
Cease and desist
If the Commissioner believes that a producer has violated (or is about to violate) any Vermont insurance regulation, the Commissioner may issue a cease and desist order. Receiving a cease and desist order does not automatically mean the producer’s registration has been suspended or revoked. However, the producer must stop or limit the activity addressed in the order.
Hearing
A recipient of a cease and desist order must comply immediately, but actions taken by the Commissioner are not “final and binding.” Any Vermont resident producer subject to disciplinary action has the right to request a hearing to discuss the merits of the situation.
The Commissioner may also investigate any producer doing business in Vermont to determine whether a hearing is required. If sufficient evidence is found, the Commissioner will issue a notice stating the date and time of the hearing. This notice will be sent to interested parties at least 20 days before the hearing.
If a hearing results in a finding of a known violation of Vermont insurance law, the Commissioner may, in addition to issuing a cease and desist order, impose a civil penalty of up to $15,000 per violation.
Unfair claims settlement practices
Intentionally obstructing or delaying claim payment, or delaying a claims investigation, is a violation of regulation.
Neglecting to provide a prompt response and written explanation of insurance policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.
Failing to pay claims without conducting a thorough investigation is a violation of regulation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle a claim for less than fair market value.
Policy forms
Vermont is a “file and use” state. A file and use filing is a submission that must be filed with the Department, but the insurer may begin using it as soon as it is filed. The insurer does not have to wait for Department approval before using it.
File and use does not mean an insurer can submit anything it wants. The submission must still comply with the law, regulations, and bulletins.
If the wording on a life insurance policy (or other form) conflicts with Vermont state law, the policy will be amended to minimum conformity with state statutes.
The amount of interest that may be charged on a life insurance policy loan is also regulated by state law, and policy provisions must comply with these statutory limits.
Record maintenance
Complete and accurate records must be kept at the producer’s place of business for a minimum of 3 years. Records must show every contract placed, the named insured, changes or amendments, and premiums received with each transaction. Records may be inspected at any time by the Department of Insurance or any representative appointed on its behalf.
Fraudulent producer representation
An insurance producer who represents to the public that they are licensed to conduct insurance business in Vermont, but has not passed the appropriate licensing examination, is in violation of regulation. This includes any public communication, such as advertisements, letterheads, circulars, business cards, and other methods of representation.
A producer found guilty of conducting business in Vermont in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.
Misrepresentation
Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information with the sole purpose of inducing lapse, exchange, conversion, forfeiture, or surrender is a violation as well (twisting).
False advertising
Communication involving the publication of newspapers, magazines, radio, or television that is intended to deliver false information in reference to insurance is a violation of NAIC regulation.
Defamation
The intentional and malicious circulation of written or oral information intended for the direct or indirect dissemination of derogatory statements is prohibited.
Publishing and circulating inaccurate information regarding the financial condition of an insurer, person, or competitor in the insurance industry is a violation of NAIC regulation.
Boycott, coercion and intimidation
Participation in any boycott or activity involving coercion and intimidation for the sole purpose of retaining business, or that results in a monopoly of insurance business, is prohibited.
False financial statements
Any licensed producer who makes false statements containing inaccurate material facts, or makes false statements on an application for insurance, is in violation of NAIC regulation.
Illegal inducements
In Vermont, it is prohibited to induce the purchase of insurance by offering anything with a monetary value in excess of $10. It is also prohibited to accept anything with a monetary value in excess of $10 from a client. Any producer participating in this activity is subject to suspension of their license and a monetary fine.
Unfair discrimination
Discriminating on the basis of class, race, marital status, or sexual preference is a violation of regulation. Any unfair discriminatory practices intended to directly or indirectly favor an applicant or insured are prohibited. Denying insurance coverage based on blindness or partial blindness is considered discrimination and is a violation of NAIC regulation.
Errors & Omissions
Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O covers negligence and unintentional mistakes that cause financial harm to clients. It does not cover intentional misconduct, criminal acts, or regulatory fines.
Rebating
Vermont licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.
Furthermore, producers in Vermont are also prohibited from receiving any payment for the sale, solicitation, or negotiation of insurance outside of commissions and/or salary.
Sharing commission
Splitting or sharing commissions with another licensed producer is allowed. Both parties must be licensed in the line of business in which the commission is to be split.
Twisting
Providing false information or expressing derogatory ideas about the financial condition of a competitor company with the intent to cause an existing policy to lapse or be surrendered is a violation of the law. Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information are prohibited.
Unfair marketing practices
The Department of Insurance is responsible for establishing minimum standards for full and fair disclosure of policy content. The Department also requires standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:
Any implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization, or society.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.
Gramm-Leach Bliley Act (GLBA)
This law repealed the Glass-Steagall Act of 1933, allowing consolidation of commercial banks, investment institutions, and insurance companies. GLBA established a framework of responsibilities for federal and state regulators across these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.
McCarran-Ferguson Act
Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. It grants insurers a limited exemption from federal antitrust legislation.
National Association of Insurance Commissioners (NAIC)
The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
Fair Credit Reporting Act of 1971
The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer reporting agencies collect, share, and use personal data. It applies to insurance underwriting when insurers obtain consumer reports such as credit history, MIB files, or investigative consumer reports.
If an insurer takes adverse action, such as denying coverage or charging higher premiums, based on a consumer report, the applicant must be notified within 3 business days. The applicant then has 60 calendar days to request a copy of the report and dispute any incorrect or incomplete information.
Privacy Act of 1974
The Privacy Act of 1974 is a federal law that regulates how U.S. government agencies handle personal information. It applies only to federal agencies, not to private insurance companies.
When an applicant signs an insurance application, they typically give consent for the insurer to access consumer reports such as MIB files, credit reports, and investigative consumer reports. This process is regulated by the Fair Credit Reporting Act, not the Privacy Act.
A signed application generally authorizes the insurer to access this information for up to 30 months. If the report is not obtained within that time, a new authorization must be secured. This rule comes from the Fair Credit Reporting Act.
Telemarketing
The DO NOT CALL registry is a list of telephone numbers intended to prevent calls from telemarketers. Unsolicited sales calls must be made in accordance with the following provisions:
No call may be placed outside of the hours of 8 am to 9 pm local time where the call is received.
The sales nature of the call must be disclosed, and the nature of the product/service being offered must be disclosed.
The caller must identify themselves and the broker/dealer they represent.
If a prize is being offered, the prize cannot be contingent on purchase.
CAN-Spam
When an unsolicited e-mail is sent the sender must:
Use the word advertisement or the letters ADV on the subject line.
Notate the physical location from where the email originated.
Give the recipient the opportunity to opt out of ever receiving another email from the sender.
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