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Department of Financial Regulation presents flat FY26 budget, flags pharmacy‑benefit manager work and captive‑insurance growth
Summary
The Department of Financial Regulation reported a largely flat FY26 budget to the House Appropriations Committee, noted new regulatory work on pharmacy benefit managers that will be staffed with budgeted positions, and highlighted continued growth in Vermont’s captive insurance industry that drives general‑fund transfers.
The Department of Financial Regulation (DFR) told the House Appropriations Committee on Feb. 21 that its FY26 request carries no new program initiatives but includes funding to support recently authorized positions and ongoing regulatory activity, particularly for pharmacy benefit manager oversight and captive insurance supervision.
“DFR protects the financial welfare of Vermont consumers and facilitates strong, stable, and competitive financial markets,” Acting Commissioner Sandy Bigglestone said. She emphasized that roughly 83% of the department’s budget is salaries and benefits and that staffing expertise is critical to regulating complex financial entities.
Why it matters: DFR supervises insurance, banking, securities and captive insurance companies and returns excess fee and premium tax revenue to the general fund. The department’s work affects insurance availability, investor protection and the regulatory environment that supports Vermont domiciled insurers and captive insurers.
Key points: DFR described three revenue streams that support its operations and that return funds to the general fund: insurer premium taxes (insurance and captive insurance), bank franchise fees, and securities/mutual fund fees. The department reported it remits excess receipts to the general fund and described a FY26 budget increase driven mainly by salary/benefit adjustments and internal service charges.
Pharmacy benefit manager regulation: DFR noted Act 127 (pharmacy‑benefit manager regulation) enacted in the prior session requires licensing/oversight. The department said it is budgeted for three positions to implement PBM oversight; fees tied to PBM licensing are expected to offset these costs.
Captive insurance and market context: DFR’s captive insurance division said Vermont remains a global leader in captive domicile. The division reported licensing growth (dozens of new captives recently and multiple new applications) and noted that pressure in commercial property markets (storms, wildfires, flood) is changing underwriting and reinsurance pricing nationwide — a trend DFR is monitoring. Deputy insurance staff told the committee that flood risk is largely handled through the National Flood Insurance Program, but property and catastrophe risk is a national regulator concern.
Performance and accreditation: DFR cited national accreditation for insurance and captive insurance regulatory standards and pointed to a recent internal PPMB (programmatic performance measures) report used to track performance and continuous improvement across divisions. The department also flagged planned office consolidation (space/lease) as a future cost factor.
Ending: Committee members asked for more granular rate and market data; DFR offered to provide quarterly rate‑filing trends and other supporting numbers. DFR asked the committee to note that while FY26 requests are largely flat, workload and new statutory responsibilities require maintaining experienced staff and accreditation standards.
