House Commerce Committee reports H.137 favorably after revisions to insurance, Medigap and money‑transmission rules

The House Commerce and Economic Development Committee voted 11-0 on Wednesday to report H.137 favorably to the House floor after members reviewed a 32‑page, 23‑section strike‑all amendment that updates multiple parts of Vermont insurance law.

Maria Bridal of Legislative Council opened the committee review, saying, “So we are looking at the Commerce Committee Report, which is a strike all amendment to h 1 37.” The committee’s discussion covered confidentiality rules for Department of Financial Regulation filings, expanded authority for captive insurance entities, new exemptions for some payroll processors from Vermont money‑transmission licensing, an extension of the moratorium on virtual‑currency kiosks, and substantial changes to the state review process for Medicare supplement (Medigap) rate filings.

Why it matters: H.137 bundles mainly insurance technical and policy changes that affect insurers, small payroll processors that currently pay money‑transmission fees, and Medicare supplement policyholders. Committee members were told the fee‑exemption language would affect very few firms and have a minimal fiscal effect on the Department of Financial Regulation (DFR) special fund that pays for regulatory work.

Key provisions and discussion

Confidentiality and procedure. The bill broadens the confidentiality statute that covers DFR examination and investigation reports so that the protections apply to all persons regulated by the commissioner, not only those previously listed in Title 8 and Title 9, Chapter 150. The bill also updates cross‑references to reflect more recent changes in related statutes and moves a rule filing deadline for property and casualty rate filings from “15 days after the effective date” to filings “30 days prior to the effective date.” Committee members were told the commissioner has generally required filings earlier in practice.

Captive insurance and related cleanups. Several sections (5–14) revise captive‑insurance provisions: they broaden the types of insurance captives may write or reinsure (subject to the commissioner’s approval), add conforming references to modern LLC and mutual‑insurer law (chapter renumbering), and expand who may sign filings (to accommodate LLCs and mutuals that lack traditional corporate officers). Committee members and staff described these as largely technical or model‑law conforming changes.

Affordable‑housing protections. The bill adds a clarification to Vermont’s unfair‑insurance practices statute that carriers may not make adverse coverage decisions for housing that meets specified affordable‑housing criteria (including units required to be affordable by local, state or federal rules, tenants receiving rental assistance such as Section 8, limited‑equity cooperatives, or properties owned by public housing agencies). Committee members asked whether this was duplicative of existing law; staff said it was intended to clarify and remove ambiguity.

Money‑transmission exemptions. Section 15 would add three exemptions from Vermont money‑transmission licensing for certain payroll‑related service providers: (1) entities that perform payroll calculations and related administrative payroll tasks but do not engage in covered money‑transmission business; (2) payroll processors that do not serve employers headquartered in Vermont; and (3) processors that meet size limits (no more than 25 Vermont employers, no more than 500 employers nationally, and fewer than 300 Vermont resident employees). The proposal also includes conduct and fitness requirements (for example, no felony convictions and no revoked financial or professional licenses for controlling individuals) and requires payroll funds the company holds to be kept in segregated, federally insured trust or deposit accounts for customers’ benefit.

Fiscal office and fees. The Joint Fiscal Office presented a fiscal note saying DFR expects the exemption language to affect fewer than five current fee payees; staff characterized the revenue effect as minimal. “They see this impacting fewer than 5 current payees of the fee,” a Joint Fiscal Office staffer said during the hearing. Committee members pressed for how exemptions would be verified; DFR’s existing statute allows the commissioner to require documentation to demonstrate eligibility for an exemption.

Medigap rate‑review changes. Sections 20 and 21 make several procedural changes for Medicare supplement (Medigap) rate filings. Among the changes: (a) require DFR to post a filing’s basic facts on its website within five business days of receiving a rate‑increase request (insurer name, composite average requested increase, plan‑by‑plan increases, effective date, filing tracking number and instructions for submitting comments); (b) raise the threshold that automatically triggers additional process from a composite average requested increase of more than 3% to more than 10% for carriers that cover 5,000 or more lives in Vermont; (c) repeal the statute that required a separate independent actuarial analysis (33 V.S.A. §6706 was listed for repeal in the draft); and (d) retain a public‑hearing trigger if the Department of Disabilities, Aging and Independent Living, the Office of the Health Care Advocate or at least 25 affected policyholders request a hearing within 30 days of posting. Under the bill, the commissioner retains discretion to hold a hearing even where the thresholds are not met. Staff explained the independent analysis historically has produced actuarial results similar to DFR’s actuaries and that the change removes a duplicative review step while preserving public‑comment and hearing opportunities.

Virtual‑currency kiosks. The committee extended last year’s moratorium on in‑store kiosks that sell virtual currency and take cash deposits; the department’s report on consumer risks recommended disclosures, refund rules and outreach for vulnerable customers, but the committee said it was not yet satisfied that protections would be sufficient and extended the moratorium for another year.

Vote, next steps and effective dates. The committee voted to report H.137 favorably by roll call (11‑0‑0). Committee members and staff noted that most provisions take effect July 1, while the Medigap changes take effect Jan. 1 of the stated year in the draft.

Votes at a glance: H.137 — reported favorably, 11‑0‑0. Roll‑call yes votes recorded by the committee clerk: Representative Brandt; Representative Burkhardt; Representative Felvis; Representative Higley; Representative Holcomb; Representative Kimball; Representative Masland; Representative Odey; Representative Wozozak; Representative Canfield; Representative Kornheiser. The clerk reported the result as 11‑0‑0 and the bill will be sent to the House floor with a favorable committee recommendation.

What the committee did not decide. The committee did not alter fee amounts and did not retain the independent actuarial cost assessment process; it left procedural verification details to DFR where the statute already authorizes documentation for exemptions. Several members asked for additional background on how the 10% Medigap threshold was chosen; staff said the Department of Financial Regulation and the Office of the Health Care Advocate recommended the change.

What’s next. With the favorable report, H.137 moves to the House floor. Members indicated they may return to parts of the bill during floor debate and that some sections could be refined in subsequent sessions or in a fee bill that periodically updates regulatory fees.