Vermont Governor Peter Shumlin has signed the Vermont Legacy Insurance Management Act (LIMA). The law will add to the state’s growing reputation as a model for states taking a proactive approach to managing their local insurance markets. Vermont is also known as the first state to adopt the single payer healthcare model.
Under the terms of the law, Vermont will create specialized Vermont insurance companies that would acquire commercial policies from other companies wishing to get old policies off their books enabling them to use capital reserves for new initiatives. If the goal of the bill sounds familiar, Vermont has an established captive insurance market and captives perform a similar function. This law, however, would codify a lot of that activity.
LIMA will allow companies no longer active in writing a particular type of insurance policy to transfer those policies to a company that specializes in or continues to service those lines. The law also requires LIMA companies to hold an annual meeting here in Vermont, which will sell hotel rooms, meals and add tourist dollars.
All transfers will be subject to the review and approval of the Vermont Department of Financial Regulation and will be limited to commercial insurance policies. No personal insurance, such as life, health, auto, homeowners, or workers’ compensation, is involved.