House committee reviews H.1307 to clarify insurance rules, bar discrimination against affordable housing

House Committee on Commerce & Economic Development members on Wednesday reviewed H.1307, a Department of Financial Regulation (DFR) bill that would update Vermont’s insurance statutes to broaden agency authority, change timing on rate filings, add an explicit prohibition on insurer actions tied to affordable-housing status, and make a series of technical and governance changes for captive insurers.

The bill matters because it touches both consumer-facing rate and non‑discrimination protections and industry-facing technical rules for the captive insurance sector that is economically significant in Vermont.

Legislative Counsel Maria Bridal led a section-by-section walkthrough of the bill, saying the proposals were “originated with the Department of Financial Regulation” and intended largely as clarifying or technical changes. Bridal said the draft expands the set of entities covered by Title 8 provisions so the department’s confidentiality and oversight language is not constrained only to Title 8 and Title 9, chapter 150 (Vermont’s Uniform Securities Act). Bridal also noted standardizing non‑gendered language throughout the statutes.

Emily Brown, Department of Financial Regulation, described the bill’s affordable-housing provision as an effort to “prevent insurers from discriminating against affordable housing.” The provision would bar an insurer that issues a policy in Vermont from inquiring about, canceling, refusing to issue or renew, increasing premiums for, or limiting coverage on the basis of any of the following: (1) whether the building contains dwelling units required to be affordable under statute, regulation, restrictive declaration, or regulatory agreement with a government entity; (2) whether tenants or shareholders receive government rental assistance, including Section 8 vouchers; (3) the level or source of tenants’ income; or (4) whether a building is owned by a limited-equity cooperative, public housing agency, or cooperative housing corporation.

Brown told the committee DFR believes current Vermont law already prohibits unfair discrimination in ratemaking, but the department wanted to make the prohibition explicit. She said New York law was used as a model for some language and offered to circulate that language to the committee.

DFR and industry witnesses raised two implementation issues for the affordable-housing language. First, DFR recommended locating the prohibition in the state’s Unfair Trade Practices chapter (chapter 129) rather than the rate chapter so the rule would also apply to surplus-lines (nonadmitted) carriers that are not subject to the department’s rate-filing authority. Second, DFR said the bill as drafted would also prevent a narrow set of insurers that write only for affordable-housing entities from collecting information they currently use to price and offer that specialized coverage. Brown said DFR’s preferred fix was to remove the blanket prohibition on asking the question (the ‘‘inquire’’ clause) so insurers could collect eligibility data without underwriting or rating on it, but she offered an alternative: an explicit exemption for insurers whose sole business is providing coverage to affordable-housing owners or operators.

Industry representatives said they largely supported the clarifying nature of the changes but flagged the surplus-lines issue for further review. Kevin Mead of the Vermont Captive Insurance Association (VCIA) told the committee the captive-focused portions reflect industry requests gathered in annual meetings and that the industry “remain[s] confident that, this will present, a unified and effective framework for that industry to operate and grow within the state of Vermont.” Jamie Fean, representing the American Property and Casualty Insurance Association (APCIA), said APCIA’s members do not generally collect affordable-housing status and welcomed the department’s plan to issue implementation guidance; APCIA also asked for more time and clarity on the proposed rate-filing timing change.

Specific, notable provisions discussed

- Rate-filing timing (Section 3): Current law requires certain insurers to file supporting information not later than 15 days after a rate’s effective date. The bill would instead require specified filings at least 30 days before the proposed effective date so the commissioner can review and, if necessary, act before rates take effect. DFR asked the committee for a date‑certain effective date for this change (DFR suggested July 1) so carriers can plan filings that are already in process.

- Affordable-housing nondiscrimination (Section 4): The draft creates an explicit prohibition on insurer practices that target properties, tenants, or shareholders tied to affordable‑housing status or government rental assistance. DFR emphasized the department’s market survey finding that most insurers do not collect affordable‑housing status as part of routine underwriting.

- Surplus-lines scope: Locating the prohibition in the rate chapter could leave surplus-lines (nonadmitted) carriers outside the prohibition. DFR and APCIA recommended placing the language in the Unfair Trade Practices chapter to ensure surplus-lines carriers are covered; APCIA asked for more time to study that change.

- Captive insurance technical and governance updates (Sections 5–14): Multiple changes clarify captive law by (a) pointing captive statutes to Title 8, section 3301 for authorized lines; (b) aligning signing and verification requirements to allow “two individuals authorized by the governing board” (instead of naming corporate officers) so manager-managed limited liability company (LLC) structures are accommodated; (c) confirming limitations that remain in captive law (for example, section 602 language prohibiting pure captives from offering personal motor vehicle or homeowners coverage); (d) clarifying reporting, merger, dormancy, branch, special-purpose, and risk-retention group rules; and (e) ensuring risk-retention-group filings subject to NAIC public-disclosure rules are treated consistently.

- Corporate form accommodation: Several amendments broaden signature and verification language (for filings, capital attestations and articles of merger) so persons authorized by an LLC’s governing board may sign in lieu of specifically named corporate officers. DFR staff explained this change was to avoid gaps when a captive is formed as a manager‑managed LLC rather than a corporation.

Committee action and next steps

No formal vote was taken on H.1307 during the session. Committee staff and DFR will draft amendments suggested during the hearing (including the proposed placement of the affordable-housing language in the Unfair Trade Practices chapter and a date-certain effective date for the new rate-filing timing). The committee indicated it will revisit these amendments and plans to take up H.1307 in a subsequent meeting next week. Several witnesses — including DFR, VCIA, and APCIA representatives — said they would supply suggested drafting language and technical clarifications to staff prior to that meeting.

Quotes

"The proposal here is to make sure that those filings are submitted prior to 30 days prior to the effective date so that before they take effect, the commissioner can take action," Maria Bridal, Legislative Counsel, said while explaining the rate‑filing change.

"So essentially, as Maria said, this prevents insurers from discriminating against affordable housing," Emily Brown, Department of Financial Regulation, said when describing Section 4.

"We remain confident that, this will present, a unified and effective framework for that industry to operate and grow within the state of Vermont," Kevin Mead, Vermont Captive Insurance Association, said in support of the captive-related changes.

Ending

The committee did not vote on H.1307 and asked staff to draft targeted amendments addressing surplus-lines coverage and implementation timing. The committee scheduled further review the following week; no formal action was completed at the Feb. 5 meeting.