Senate Finance hears DFR briefing on rising insurance costs, flood impacts and proposed fixes
January 18, 2025 | Finance, SENATE, Committees, Legislative , Vermont
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Montpelier — On Jan. 17 the Vermont Senate Committee on Finance received a wide-ranging briefing from the Department of Financial Regulation on the state’s insurance markets, including property and casualty, life and long‑term care coverage, and the major‑medical health market that serves individuals and employer groups.
Deputy Commissioner of Insurance Emily Brown told the committee the department’s mission is “to assure the solvency, liquidity, stability, and efficiency of all such organizations offering financial services,” and outlined how national catastrophes and reinsurance costs are driving premium increases that reach Vermont policyholders.
Why it matters: Premium and coverage problems in property, auto and health insurance affect large numbers of households and employers and interact with hospital finances, flood recovery and state budgets. Brown said the department is pursuing regulatory and legislative steps intended to ensure rates are supported by local data and to limit unfair underwriting practices that could penalize housing providers serving people in need.
Property and casualty
Brown said Vermont’s homeowners and auto premiums remain relatively low by national measures but are increasing. Citing National Association of Insurance Commissioners (NAIC) data, she said Vermont homeowners’ premiums rank among the lower end nationally and auto premiums were near the low end as well. She said inflation, higher labor and materials costs, and rising reinsurance prices (the insurance that insurers buy to protect themselves against large losses) are raising costs for insurers and, ultimately, policyholders.
The department carried out a 2023 flood data call to see how insurers handled flood claims after recent high‑water events. Brown reported that only a small share of Vermonters carry flood insurance under the National Flood Insurance Program (NFIP) — about 3% — and that many homeowners’ flood damage was not covered for that reason. The department posted 2023 data online and expects 2024 results in coming weeks.
Brown said the department has tightened its rate‑review checkpoints over the past five years and plans to bring a legislative change that would more clearly authorize the department to require insurers to file supported rates and forms before using them in the market (the department described the proposal as aligning statute with the department’s current practice to treat many filings as ‘‘file‑and‑use’’ with substantive review).
Workers’ compensation results were a noted bright spot: Brown said the voluntary workers’ comp market is seeing a year‑over‑year decrease of roughly 7.4% and the assigned risk market a decline of about 11.3%.
Flood insurance, availability and consumer education
Brown and committee members discussed the low take‑up of flood insurance; she said the department is encouraging private inland‑flood products that could offer smaller, lower‑cost coverage options for properties not in mapped high‑risk zones. She also said the department issued a consumer advisory and intends to expand consumer education so households understand available flood coverage options and what is covered by homeowners policies.
Life and long‑term care insurance
On life insurance Brown said product complexity is increasing — index‑linked and market‑linked annuities and other hybrid products require more review time — and noted Vermont’s participation in the Interstate Insurance Product Regulation Commission (IPRC) product‑standards compact. On long‑term care she said carriers are seeking large rate increases on long‑tail policies sold in the 1990s and 2000s; multistate discussions via NAIC are under way to balance company solvency with affordability for policyholders.
Health insurance and market structure
Brown emphasized that Vermont’s state‑regulated major‑medical market covers roughly 80,000 lives; the remainder of the state’s residents are covered by Medicare, Medicaid (a state–federal program overseen by the Department of Vermont Health Access) or self‑insured ERISA plans that the state does not regulate. She reiterated that the Green Mountain Care Board approves rate requests for plans sold on the individual and small‑group exchange and that the department oversees insurer solvency but not all rate decisions.
Brown outlined several drivers of rising premium pressure for the commercial (employer and individual) market: higher health‑care provider costs, hospitals shifting unrecovered costs into commercial rates, and loss of some Medicare Advantage participation that reflects broader affordability pressures. She stressed the market is multi‑faceted and that there is no single fix: ‘‘We all — there’s no one solution,’’ Brown said.
Stop‑loss, HRAs/HSAs and self‑insurance trends
The department plans revisions to stop‑loss regulation, Brown said, as employers of any size increasingly consider self‑insured and level‑funded arrangements that transfer some claims risk to employers. Committee discussion and later remarks by the state Health Care Advocate summarized how HRAs (employer funded) and HSAs (tax‑advantaged savings tied to high‑deductible plans) shift where and how out‑of‑pocket costs are borne; a 2020 Vermont household survey cited in committee remarks showed HSAs in roughly one‑third of plans and HRAs in roughly 13%.
Market concentration and oversight
Brown said Blue Cross Blue Shield Vermont is the state’s domestic health insurer and accounts for the largest market share in the fully insured market; MVP and Cigna were identified as other carriers (Cigna’s fully insured membership in Vermont was described as small, roughly 2,000 covered lives). She said that state rate review, solvency oversight, and federal programs such as CMS risk‑adjustment and reinsurance arrangements interact to stabilize, or sometimes destabilize, market competition.
Proposals and next steps
Brown told senators the department will present a rate‑review statutory change this session to clarify premarket review authority; she also said the department will bring proposed revisions to stop‑loss regulation and will advance an anti‑discrimination clarification aimed at insurers, intended to prevent insurers from using an owner’s participation in affordable‑housing programs to raise or deny rates for the property (Brown said the language would make explicit protections already implicit in law). The department expects to share 2024 flood‑claims data and continue education and outreach for consumers.
Committee members asked about options such as reference‑based pricing and where the state’s authority reaches (Brown and the Health Care Advocate noted legal and federal constraints, especially for ERISA/self‑insured plans). Members also pressed the department on data gaps; Brown acknowledged limitations and said the department is strengthening data collection and actuarial review processes.
The department’s briefing closed with an offer to return with specific legislative language and with the department’s 2024 data when available.
Deputy Commissioner of Insurance Emily Brown told the committee the department’s mission is “to assure the solvency, liquidity, stability, and efficiency of all such organizations offering financial services,” and outlined how national catastrophes and reinsurance costs are driving premium increases that reach Vermont policyholders.
Why it matters: Premium and coverage problems in property, auto and health insurance affect large numbers of households and employers and interact with hospital finances, flood recovery and state budgets. Brown said the department is pursuing regulatory and legislative steps intended to ensure rates are supported by local data and to limit unfair underwriting practices that could penalize housing providers serving people in need.
Property and casualty
Brown said Vermont’s homeowners and auto premiums remain relatively low by national measures but are increasing. Citing National Association of Insurance Commissioners (NAIC) data, she said Vermont homeowners’ premiums rank among the lower end nationally and auto premiums were near the low end as well. She said inflation, higher labor and materials costs, and rising reinsurance prices (the insurance that insurers buy to protect themselves against large losses) are raising costs for insurers and, ultimately, policyholders.
The department carried out a 2023 flood data call to see how insurers handled flood claims after recent high‑water events. Brown reported that only a small share of Vermonters carry flood insurance under the National Flood Insurance Program (NFIP) — about 3% — and that many homeowners’ flood damage was not covered for that reason. The department posted 2023 data online and expects 2024 results in coming weeks.
Brown said the department has tightened its rate‑review checkpoints over the past five years and plans to bring a legislative change that would more clearly authorize the department to require insurers to file supported rates and forms before using them in the market (the department described the proposal as aligning statute with the department’s current practice to treat many filings as ‘‘file‑and‑use’’ with substantive review).
Workers’ compensation results were a noted bright spot: Brown said the voluntary workers’ comp market is seeing a year‑over‑year decrease of roughly 7.4% and the assigned risk market a decline of about 11.3%.
Flood insurance, availability and consumer education
Brown and committee members discussed the low take‑up of flood insurance; she said the department is encouraging private inland‑flood products that could offer smaller, lower‑cost coverage options for properties not in mapped high‑risk zones. She also said the department issued a consumer advisory and intends to expand consumer education so households understand available flood coverage options and what is covered by homeowners policies.
Life and long‑term care insurance
On life insurance Brown said product complexity is increasing — index‑linked and market‑linked annuities and other hybrid products require more review time — and noted Vermont’s participation in the Interstate Insurance Product Regulation Commission (IPRC) product‑standards compact. On long‑term care she said carriers are seeking large rate increases on long‑tail policies sold in the 1990s and 2000s; multistate discussions via NAIC are under way to balance company solvency with affordability for policyholders.
Health insurance and market structure
Brown emphasized that Vermont’s state‑regulated major‑medical market covers roughly 80,000 lives; the remainder of the state’s residents are covered by Medicare, Medicaid (a state–federal program overseen by the Department of Vermont Health Access) or self‑insured ERISA plans that the state does not regulate. She reiterated that the Green Mountain Care Board approves rate requests for plans sold on the individual and small‑group exchange and that the department oversees insurer solvency but not all rate decisions.
Brown outlined several drivers of rising premium pressure for the commercial (employer and individual) market: higher health‑care provider costs, hospitals shifting unrecovered costs into commercial rates, and loss of some Medicare Advantage participation that reflects broader affordability pressures. She stressed the market is multi‑faceted and that there is no single fix: ‘‘We all — there’s no one solution,’’ Brown said.
Stop‑loss, HRAs/HSAs and self‑insurance trends
The department plans revisions to stop‑loss regulation, Brown said, as employers of any size increasingly consider self‑insured and level‑funded arrangements that transfer some claims risk to employers. Committee discussion and later remarks by the state Health Care Advocate summarized how HRAs (employer funded) and HSAs (tax‑advantaged savings tied to high‑deductible plans) shift where and how out‑of‑pocket costs are borne; a 2020 Vermont household survey cited in committee remarks showed HSAs in roughly one‑third of plans and HRAs in roughly 13%.
Market concentration and oversight
Brown said Blue Cross Blue Shield Vermont is the state’s domestic health insurer and accounts for the largest market share in the fully insured market; MVP and Cigna were identified as other carriers (Cigna’s fully insured membership in Vermont was described as small, roughly 2,000 covered lives). She said that state rate review, solvency oversight, and federal programs such as CMS risk‑adjustment and reinsurance arrangements interact to stabilize, or sometimes destabilize, market competition.
Proposals and next steps
Brown told senators the department will present a rate‑review statutory change this session to clarify premarket review authority; she also said the department will bring proposed revisions to stop‑loss regulation and will advance an anti‑discrimination clarification aimed at insurers, intended to prevent insurers from using an owner’s participation in affordable‑housing programs to raise or deny rates for the property (Brown said the language would make explicit protections already implicit in law). The department expects to share 2024 flood‑claims data and continue education and outreach for consumers.
Committee members asked about options such as reference‑based pricing and where the state’s authority reaches (Brown and the Health Care Advocate noted legal and federal constraints, especially for ERISA/self‑insured plans). Members also pressed the department on data gaps; Brown acknowledged limitations and said the department is strengthening data collection and actuarial review processes.
The department’s briefing closed with an offer to return with specific legislative language and with the department’s 2024 data when available.
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