Vermont Legislature SmartTranscripts:

[David Cameron, Administrative Services Director, DFR]: Of DFR. Oh, we're not live.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: So good afternoon, or good morning, everyone. This is the House Commerce and Economic Development Committee. Today is Thursday, February 12. It is 10:00 in the morning, and we are here with the Department of Financial Regulations to hear their budget presentation.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Thank you for having us. I'm Kai Samson, commissioner

[David Cameron, Administrative Services Director, DFR]: of DFR. David Cameron, administrative services director of DFR.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: And we have online all the deputies in case there are detailed questions about their divisions and their budget and operations. But I'll go through the materials that were sent to the committee. And I think between Dave and I, we can handle most questions. But, again, the deputies are available. Starting with the overview, we are, of course, as you know, quite well, 100% special fund funded, and the funds are listed there. In terms of the high level overview of what's in this budget, it is a 2.9% increase over the current year. 86% is of that increase is driven by salaries and benefits. You'll see later that there's no additional positions in this budget. There's also no additional programming, so it's what I would call a level service budget. Overall, the budget, not just the increase, but the overall budget is 83% salaries and benefits and consulting makes up a piece of that as well. Other highlights include that there was a savings in our space. This year, we moved into this fiscal year, we moved into a space that had been offline and renovated, signed a new lease. And footprint wise, I think we're a little smaller at this point, which, you know, works with the hybrid environment we're in. And, yeah, welcome welcome any of you to check out. It's the same building, the same location, 89 Main Street, but our biggest kind of single space we we are kind of fractured a little bit on the 2nd Floor, but our biggest single area is is totally renovated and the HVAC was fixed. And yeah. So that's that's nice. So if any and you wanna take a a walk at lunch and come visit us, let us know, and we'll set that up. Any questions on just a high level overview? Moving on. I know sometimes you get commission statements and vision statements of departments. I've always liked what's in statute for DFR, and that's a VSA section 10. I won't read it. It's it's here, but it essentially, I think, captures well our responsibility to our domestic insurers around solvency, our responsibility and oversight of markets, but also in that second piece that everything we do around individual entity and market regulation has to be done in such a way as to protect consumers against unfair and unconscionable practices and to provide consumer education. So I think that's educating consumers is is a big part of of our mission and something that I hope to enhance in my Next slide shows, obviously not everyone, have 110 positions, that's unchanged, but shows kind of organizationally how we're divided into four divisions. We also have elite the legal services division run by general counsel and a little bit different than many of the departments and agencies, our legal staff is employees of DFR. They are not assistant AGs or they don't work up through the attorney general. And then yeah. So we have the legal division and then the four divisions, banking, insured, securities, and captives.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Do you have any vacancies in those?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: We have 10 total vacancies right now. So we're running about is 11 or 10?

[David Cameron, Administrative Services Director, DFR]: I think it's 11.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah. So we have an exactly 10% vacancy rate right now. And I think budgetarily, we have a vacancy save or, you know, a vacancy saving six and

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: a half.

[David Cameron, Administrative Services Director, DFR]: Six and a half. Yeah. This is about yeah.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: You're actively trying to hire those?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yes. Yep. Yeah. I'd say a good amount of them are in the captive division right now. I think deputy Brown has six or seven openings. So

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: That's right. Eight, actually.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Eight?

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Yes. Are

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: we doing a PSA for for people who wanna work with captives? Is that part of this?

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Ahead. Yeah.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I mean, do you wanna talk a little bit about recruitment efforts?

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Or Yeah. Yeah.

[David "Dave" Bosch, Member, House Commerce and Economic Development Committee]: I Okay.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: You wanna you wanna talk about I mean, Christine, deputy Brown, has a a long history in the division, so she's kinda worked her way up like most of our deputies and leadership. And I think, Christine, if you wanna just talk about the opportunities and challenges and, you know, what's different, but also how you're recruiting for at least those positions in your area.

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: Yeah, sure. I'm happy to. Thank you. So, you know, I think as we're all aware, there are some challenges in the workforce, especially with respect to, hiring, CPAs and individuals that have an accounting background, which is primarily where we got most of our talent, in the past. So we're having to branch out a little bit, which has actually been a great opportunity because our most recent hires are not, don't have, the CPA license, but they have other licenses that complement our team. We have, somebody who has underwriting experience, another person who we've hired recently with actuarial experience, investment experience. So they're rounding out the team. But, where we're seeing some challenge right now is just in our recruiting efforts is getting people with the talent, that we need to do our work because it is very specialized. And so, you know, we're we're needing to compete with industry as well. And so just making sure people understand the value proposition that working for the state has, because we certainly can't compete most times with salaries that are offered in the private sector in these, specific jobs like accounting and finance. But we are actively recruiting and we have gotten, like I said, we've had some great hires recently, and we need to make sure that we're hiring the right people because what I've heard from our supervisors is, you know, training takes a lot of effort and time, and they're happy to do it if we get the right individuals who, are going to complement our team. But if it's somebody who isn't a good fit, it's a lot of effort to put in. So we're also needing to be a little bit choosy in who we bring on.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: We're hearing that across industry that people are happy to train for fit. And yeah, I don't think there's an issue we haven't heard that from as we talk to businesses across the state right now.

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: Yeah, it's a challenge. But the good news is we have a very tenured staff overall, and, we are looking at ways to be able to streamline a little bit as we're recruiting so that we're not all stressed out and overworked. So I'm working closely with our supervisors and teams to just make sure that we're keeping up with the work, because our reputation in the industry is reliant on the fact that we were kind of at the speed of business. So we don't wanna be dropping any balls, but we're certainly, and we're not doing that. So rest assured, we're, managing right now, but certainly will be helpful if we can start filling these positions.

[David "Dave" Bosch, Member, House Commerce and Economic Development Committee]: You know, in talking about this, I'm hearing a lot about CPAs and licenses and things like that. And I'm thinking about some of the kids we have that are coming out of high school, coming out of college with maybe just a certificate or associate degree in accounting or something like that. Is there a path for them through you guys? Like, well, I guess I wanna know is entry level.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah. So that's a great question. A question I I checked in with Christine on just recently, and Christine jump in. But because it's similar on the on the insurance division and the captive division share job descriptions and, and career ladder. It's a very, good career ladder in terms of different an an ability to promote with experience, but you do need, it's hard, I think, if not impossible at our entry level job, an insurance examiner one to hire right out of college. Is that correct? Because they require I think it requires, like, two years of the equivalent of insurance operations experience. Is that am I somewhere close to the truth there?

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: Yeah. I you know, I think with an e one, there's a little examiner one, there's a little more flexibility.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: And you wouldn't need the certification. Right. Yeah, but there's an expectation to be on a path to get it.

[Mary Block, Deputy Commissioner of Insurance, DFR]: That's right.

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: We do have, our industry has a program, it's called the Vermont Captive Insurance Emerging Leaders, which Brittany Nevins from the Department of Economic Development helped, form, and they are very active with recruiting. So is our department actually, we've been tabling at the Grossman School of Business at UVM, and we're also going to their career fair. So, you know, we're working with industry, and the department is also doing our own work to try to recruit from colleges. But to your point, the high school outreach, I think, is really important to make sure that kids know that there are jobs here and they can stay in the state and get some good jobs that are here. They don't have to move out. So we're expanding our efforts to go to high schools to make them aware of the captive insurance industry.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: And thanks for bringing up the University of Vermont. Like, we're actively trying to tap into, like, as of, like, the last couple weeks, they've recently set up a co op program for their business students where they're you know, it's a if you're familiar with co op programs, like a full semester of of work that they get credit for towards their degree. And we're we're looking at co op opportunities to leverage that in the examination and analysis space, which is where on the insurance and captive end. So we actually have in the process of getting open postings for because we have a budget for a certain amount of interns every year that's in this budget, and that's worked out well rotating interns through the divisions. But what we can do if we get the right candidate is is kind of reposition that budget to have rather than someone rotating through all divisions, say, you're a co op student. You've got, you know, more discrete goals in terms of learning a certain element of accounting or whatever. So we'll put you in, you know, captives or insurance or even, you know, bank and securities examiner positions. So getting the word out that way and getting student and even if that student doesn't end up department, I think Vermont, as you all know, is a word-of-mouth state. Right? So if they tell you know, they may come back in several years. I mean, they're just gonna understand regulation and what I call I'm a CPA, so I've been in the in many different roles as a CPA, and I see what we do as regulatory audit. CPAs think in terms of is it tax or audit, or is it controllership, you know, like financial statement preparation. And what we do is regulatory audit for those positions. So but I don't think there's a lot of awareness of that as a career path.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Kai, is there is there any money in your budget that you bring somebody on, they need more training that you would pay for the training or help them pay for the training?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I think we do a great job paying for training. It's it's we don't often say no. And I don't know if you have any specifics on that, but we we build training's super important because, you know, the risks in the industry fast in all of those industries, and so we need to be on top of the training. We also get a, you know, a a really good amount of free topical training from the associations we're in. NAIC, NASA, CSBS. You know, these are all opportunities where the states are working together to make sure we're all keeping up with with industry and where what the risks are. But I don't feel like we have a challenge accessing or paying for the training that's necessary to

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: folks. UVM, the only school does Long State University have any programs that you could be able to partner with them at all?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I'm sure they do. UVM has has the, I think, the biggest accounting program. I know Norwich has an accounting program. Not sure if any of the deputies or Dave, if you're aware of any partnerships. I'm sure we've had and we've had interns, you know, from many different you know, we had last year. It was like Dartmouth, UVM, and Case Western. Thank you. It was on the tip of my tongue. So it was a Vermonter who was at Case Western and had a summer internship with us. You know, we've we've worked with

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: setting up loan forgiveness programs for students in nursing, say if they stay in Vermont, they work for one of the hospitals, then we pay x amount every year on theirs for giving their loans. And I'm wondering if because this is an industry that's not just needed by you, but we need more CPAs to the banking more, I wonder if that's something that we should be thinking about, if we could create something in DSAC that would help provide student loans. We also have the Green Mountain Retention Program at UVM Office of Engagement that you might be able to do. If any of these interns, if they stay in Vermont and work, they'll get $5,000 loan forgiveness if they stay for two years. So that might be something field? Yes. Oh, okay. Yeah. So that might be something you can utilize.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: In our recruiting. Yeah. Yeah. Thank you for I wasn't aware of that. While we're on this topic, because we're talking about CPAs and we have a fair amount of them and it it kind of is is a great kind of qualification to get into the open positions we have. There is a bill. So so within the CPA industry or nationwide in the mid two thousands, the states all moved. It's all state granted license. The states all moved to a 150 credit hour requirement. And that was to with an idea of so basically, you know, a four year degree plus 30 plus a year. So five years of credits, and that gave rise to a lot of these accelerated masters in accounting programs, but it also was a barrier to entry. Some of this is opinion, but I think that opinion is coming to fruition. Anyway, forward now twenty, almost twenty years, and states are going back to the old four year requirement because the the options for business students, students that are kind of in that realm, it's just not creating the pipeline we need. So I believe 22 states at this point have a bill in process or have already gone back to the four year requirement. That's enough of a critical mass, I think, a four year degree requirement that and this is for the ability to sit for the CPA exam and get licensed. And again, that's each state's kind of jurisdiction. So Vermont has joined these these 21 other states. I might have the exact number wrong, and has a bill. And the Vermont Society of CPAs has has put that bill forward, and I think it goes to Is that the ops? Yeah. Not sure if it's if it's moving. I I don't know if timing wise they got it on the secretary secretary of of state's state's radar in time. So I don't know the details there, but I would say from our point of view and what we see, that would be a huge help to not be behind not be a state who's behind on moving to a to to be a state where you can get certified. I got certified with with, you know, not not needing 150 credit hours. Many people did. And, anyway, that's something that I would be in strong favor of, and I think is something concrete that the sooner we move it forward, the better because it is a workforce issue, without a doubt. We don't wanna be a state that the graduates like, well, I'm not gonna practice. I'm not gonna take my first job in Vermont because then I got to go do a whole extra year of school or a state where a recruiter or where an employer has to say, I can't get this person certified or I have to help them pay for school for an extra year. So, anyway, if if any of you have questions about that, I feel pretty passionately about we I

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: think we we can have a conversation with chair Byron. Right now, we're gonna try to encourage them to take that bill up.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Thank you.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: I had

[Edye Graning, Vice Chair, House Commerce and Economic Development Committee]: a question regarding recruiting. Have you run into any external barriers, the ubiquitous housing one that we hear about in industry and various other places? In other words, has there been anything outside the department that's been a barrier, such as lack of policy, something of that sort, for your specific jobs?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I'll let the deputies weigh in on that. I'll just make one statement that, you know, this talent pool exists nationally. Right? So so it it how you know, housing is certainly a challenge. It's just getting people to you know, Vermont's a a very different place, and we we love it and like it. We're all here, but it's a it's a different place to recruit someone into. So very, you know, very broadly. Yeah. And, you know, we could ask Joe how he decided to go from Virginia to Vermont as someone originally from New Jersey. But but, do the deputies wanna respond to that at all in terms of concrete examples and a recruitment where it kind of maybe fell apart because of housing or external forces?

[Mary Block, Deputy Commissioner of Insurance, DFR]: Hi, everybody. Mary Block, deputy commissioner of insurance for the record. We had been trying to, for over a year, can recruit for an actuary position. We don't have any actuaries currently in the department. We use contract actuaries, and we had been hoping to bring in a property and casualty actuary. Actuaries are difficult to recruit for even in the industry, So we went through a lot jumped through a lot of hoops to get the salary up some and so forth, but had a lot of trouble attracting candidates and had one in particular that, you know, we were close on, but he just could not make the move to Vermont. The cost was just not was just prohibitive from his perspective given that we pay a little lower than the industry and would be asking him to move to some place that was gonna cost him more to live. So it is it is it has definitely been a problem from time to time, and, you know, we've we've pretty much when we we are recruiting our and having interviews are are making sure that people have sort of explored that, the issues of moving to Vermont before they make a commitment to a position because we want to make sure that they understand what, know, sort of what the housing market is like and so forth.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Go ahead, Mike. So I you know, talking about do

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: you have nine positions open? I I just did it because I was curious, you know, the definitions of those positions. But when I checked HR in Vermont, I showed two positions, DFR public information and outreach coordinator, and then paid intern. Mhmm.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: So I must be looking in the wrong spot.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: You you should have open recruiting position positions being recruited.

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: Yeah, I can speak for the captive division. We've had the positions open, haven't received or done interviews, haven't received, you know, anybody who's met our qualifications. So then close it out, wait a little bit, repost. So we're in that phase right now where there aren't any active positions, but one is gonna be, posted by the end of this week. And, you know, we're gonna start doing it again, but we, you know, interviewing is also time consuming. So we tend to, if we go through a cycle, we tend to take a little break and then we'll repost in a bit. So that's why you're not seeing them, but we are actively trying to fill the positions.

[Mary Block, Deputy Commissioner of Insurance, DFR]: And I'll say for me, because I think the rest of the bulk of the rest of them belong to the insurance division. We have two that we are checking references on, so we're pretty close to making offers. So they are no longer publicly posted. And and then we have a couple of others that we are, like Christine, have not reposted, and I'm actually considering, potentially changing those positions to something that might be to to RFR them to another role that might be easier to recruit for to get to be able to get people in into other areas where we also need help. So sometimes the actuary position, for example, we've decided we're just we're just not gonna make it there, so we're going to restructure that position into an examiner position and and fill it that way because we can use those resources there as well.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: And I know there's a securities position that's you guys know what the RFR process is? That's like through HR to a request for review probably stands for. But to take it like a pay grade, whatever, we'd like to repurpose this position into this, and that's there's a process for that classifying it, etcetera. So securities has an open position that's going through the RFR, so it won't be posted until or recruited for until we get that finished.

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: And just to add, we're also taking a similar approach with some of our open positions that we've been unsuccessful looking at our structure and where our needs are.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Has the return to office initiative affected your department?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: We haven't had any, that I can think of any resignations, but, you know, there's there's certainly, you know, folks that are struggling with how to make that work that we're working with. We've got enough flexibility, I think, that we've been able to, move through that without resignations or big disruptions.

[Herb Olson, Member, House Commerce and Economic Development Committee]: Thanks. Thanks for this. I'm struck by, some of these positions are pretty specialized.

[Edye Graning, Vice Chair, House Commerce and Economic Development Committee]: Yeah.

[Herb Olson, Member, House Commerce and Economic Development Committee]: Know, actuaries, sort of high level examiners, that kind of thing. And I can imagine that's kind of tough sometimes to get those hired through, you know, our civil service kind

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: of thing.

[Herb Olson, Member, House Commerce and Economic Development Committee]: My sense, and maybe you confirm this or not, that when you get into that situation, you take a look at other ways that you can contact.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Right.

[Herb Olson, Member, House Commerce and Economic Development Committee]: And get resources, I guess, from the industry that's being examined or accurate or kind of review kind of thing. Yeah. And then you get, I don't know whether that's counted as revenue, or whether it's, accounted for somewhere else. Right. But it seemed, number one, it seems like that's a good way to make sure you can actually keep doing jobs. Yes. And also maybe a cost effective way in term depending. I mean, you need I think you need some of these folks on staff to understand that. But it's also if you have a one off or maybe a three year exam, it's a good way to my recollection. It was a good way to take keep the job going without having to dip into Right.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yep. No. Your recollection, everything you said, agree with. And so that's our relief valve. So we have open contracts, call it a stable of contractors that are ready to do this kind of work, and they allow us to avoid disruption to exam cycles, etcetera. It is significantly more costly when we bill that through to the to the regulated entities, which we do. So there's a lot of downsides to it. We wanna stay cost competitive, particularly on the captive side. And but, you know, we all we also wanna be cost efficient and, you know, not be a drag on on in in all areas. The thing I always wanted to avoid so, yeah, it's there to relief out, but the other downside to using contractors is that when you do an examination, it's a great opportunity to train new staff, it's a great opportunity to learn and be closer to the company. And if you're outsourcing that, everything that that contractor learned for, you know, x $100 per hour walks away. And and we do pair our staff with so we supplement with contractors, etcetera. But but you're absolutely right. It it it it's why we're not here with our hair on, you know, freaking out because we have 10 open positions because we can absorb that through our contracting capacity. But the the where we wanna be is in house as much as possible. That's better for the Vermont economy too, frankly, right, to employ someone that's revenue neutral essentially to the state. Not quite, but there's a lot of build back of our employed folks as well.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Oh, yeah.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Sure. So on on examinations. Yeah.

[Herb Olson, Member, House Commerce and Economic Development Committee]: It it is that counted as revenue, or is it counted as

[David Cameron, Administrative Services Director, DFR]: It's counted as

[Herb Olson, Member, House Commerce and Economic Development Committee]: something else.

[David Cameron, Administrative Services Director, DFR]: It's not a reimbursement of expenditures, kind of as revenue. So it shows on

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: the revenue side. So when we bill back, it comes back as as revenue.

[Herb Olson, Member, House Commerce and Economic Development Committee]: Otherwise, we wouldn't have the spending abilities. Special fund or

[David Cameron, Administrative Services Director, DFR]: had had a Any special funds. Yeah.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Okay. Yep.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Moving on. The next slide, speaking of staff, is our engagement survey results, the most recent. Since my first, you know, go around with with, DFR, We've always enjoyed higher than average, in some cases, significant higher than statewide average engagement results. It's something we're proud of. I think we have good retention, good kind of camaraderie in the department, particularly in the within the divisions. And, you know, no no score is high enough. We're always trying to trying to use this as a gauge in how we're doing in these different areas, but we're happy to see that at least relative statewide, we're we're doing well in terms of people's job satisfaction and all the the different categories there. To me, what's most important is that and I think this maybe helps these scores is that for me, job satisfaction has always come from knowing that what I'm doing and and what its impact is, you know, toward the broader organization. And I think regulation and how it works in our divisions, I think we enjoy the privilege of what we do is pretty tangible, whether you're helping a consumer, whether you're examining a company for solvency and applying your skills there, or reviewing insurance policies and rates. You know, these are all so much of this is is pretty easy to understand the consumer protection or or regulation of a markets and what our function is. So I think that does help our employees feel engaged. It's it's not difficult to understand the importance of the role to Vermonters.

[Edye Graning, Vice Chair, House Commerce and Economic Development Committee]: Am I correct in understanding that the growth one is a measure of people's satisfaction with their individual growth as opposed to maybe, you know, what's the overall work.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Kudos to Dave for putting the definitions in here for me. Growth is I have the opportunity to learn and grow professionally. So Yeah. It goes back to the training discussion and and the career ladders. I think for the most part, can see a career within the department and advancement within the department and feel supported to get there. Good. So the next two slides are who we regulate and how we regulate. And this is, you know, given given to you by division. I think maybe we'll jump to questions here. I guess I could summarize this, but you guys are so familiar with with us. But, you know, we regulate licensed individuals, licensed entities in all those areas. And then, you know, there's usually a difference between our domestic insurers, domestic state chartered banks versus regulation authority we have over more on the consumer side for national entities. So that's what you see here. The one thing to call out, of course, I think you guys have learned this over the years with us, but you know, it doesn't seem like for instance, in insurance that we need 225,000 agents in the state of Vermont, but that's several categories rolled into that. But it's also the fact that these national companies who do a lot of direct phone stuff, they're just gonna license their entire staff, and and that's where some of the revenue comes from or a lot of the revenue comes from. So from a compliance point of view, a company is gonna they're not gonna say, oh, it's Vermont calling. Let's send them over to to, you know, mister Olson to because he's licensed in Vermont. It's just they probably I would guess that through compliance and enforcement actions by the state, it's not worth the risk. So they just license everyone in all 50 their entire territory, and you see that across divisions as well. That kind of explains what may have been a question like, why do we have over 200,000 insurance licensed individuals in Vermont in a state with 600 I don't know how many thousand adults, 400,000 adults born out of it. So that's who we regulate. How we regulate, you know, we talked about exams a lot. Those are, you know, statutorily or accreditation required across divisions. Our responsibility to look at our regulated entities. Big one here, of course, is on the insurance end is the rates and forms. So forms are other word for the policy. So review of every some level of review of every insurance policy and rate that that hits the market in Vermont. So that's big in the insurance division. You'll see some data, five year averages around consumer inquiries and complaints, consumer assistance. As I said, that's something that I do hope to grow in in our department. And I because I think there's a lack of awareness of who we are and the assistance we can offer, whether it's a complaint or just navigation assistance. Like, you know, if you need to call someone and understand the difference between an APR and another metric, like, we can help. So I'm I'm fond of saying I want more complaints, not because I want more unhappy consumers, but because that would be a metric that more people know we're here to help. And I think that's that's something that we enjoy doing and can do more of. And I think the limiting factor is just awareness of that you can call us and ask questions. We have those functions in all divisions.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Yeah. Do you have enough staff to do the investigations and the annual or regular monitoring that you need to do? Like, do you you don't get reports on that anymore? And so I'm just curious how that's going. Have no insight into how that's going.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: So market conduct investigations or like individual you have a complaint against a company or

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Oh, I'm sorry. Annual reviews of all of the institutions that you're required to review on a regular basis, Yes, banking and

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: yeah, and that gets to Rep Olson's comment that went, you know, yeah, we're a little low on staff right now in the captive area, but they can leverage contractors, etcetera. Yeah.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: State banks, state credit unions, like, are you feeling like they're on the cycle that they're supposed to be on?

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Is it You

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: want to take that one? Do the banking piece, Aaron?

[Aaron, Deputy Commissioner of Banking, DFR]: Sure. Sure. Yeah. Do have adequate staff to do all of our banks and credit unions. And I might have explained before, we also partner with our federal regulatory partners so that we also do joint reviews and we even alternate our exams so that we can all all get a get a taste of what's going on in these institutions on a regular basis.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Just to follow-up on that, I know over the years since I've been here, we've seen a huge decline in in state chartered banks and credit unions. So does that in turn change the need for the amount of staff that you have?

[Aaron, Deputy Commissioner of Banking, DFR]: Yeah. You know, that that trend has continued. I think this presentation a year ago showed that we had 11 state chartered credit unions. We've had a lot of those institutions merge out. On the other side, our licensee population, the companies that we regulate, so the the money transmitters of the world, those industries are somewhat dynamic and growing. Mean, we've had many conversations over cryptocurrency and virtual currency kiosk operators. And so that sort of also fills up our time, even though we have less of the charters that we need to oversee.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Yeah, understood.

[Herb Olson, Member, House Commerce and Economic Development Committee]: I need to refresh my memory on something. So I know a lot of the functions that used to be in the department being on the care board, but I think I remember that some are still, in terms of complaints and periodic exams, things like that. Is that is that with you, or is that over

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: So we we have everything but rate review.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Right.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: So we review, like, the QH the the the exchange policies. The rate goes to the Green Mountain Care Board. We work with Diva to look at plan design, to review the the policies, etcetera.

[Herb Olson, Member, House Commerce and Economic Development Committee]: And compliance, and I think there are some provisions for periodic exams of health insurance companies.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Is that That's that's all with us. Yep. I mean, I think the easiest way to think of it is everything but the rate.

[Edye Graning, Vice Chair, House Commerce and Economic Development Committee]: There we go. Yep.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Even external appeals. Right, Mary? We still have that?

[Mary Block, Deputy Commissioner of Insurance, DFR]: Yes. We have external appeals. And we have rates for everything, all other supplemental health products. So Medicare supplement policies, short term limited duration, you know, hospital indemnity policies. The only thing we don't have is the review of essentially what you think of as major medical or comprehensive health insurance rates, those belong to the care board.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Alright. Next slide shows, kind of a the the most recent completed fiscal year twenty five where we landed in terms of, revenue just just for, you know, we don't obviously collect the tax revenue, but in terms of the impact of this industry on the state, total revenue, Dave put in the the tax revenue from each of those divisions, entities in those divisions, and then the expenditures. So basically, that, you know, the budget for that year for for our divisions, for those by division. So that's kind of a look look into the most completed fiscal year.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: It's looking budget. It's in the block.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yes. That's good. It would take a lot of budget increase to not be.

[Edye Graning, Vice Chair, House Commerce and Economic Development Committee]: That's not the ask. Correct.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: So then you see the the budget overview.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: 10? K. Hip on that one. Alright. You like that one?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: So those those are the organizations that we work across the 50 states and the different divisions and

[David Cameron, Administrative Services Director, DFR]: yeah.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: But rep slide 10 shows the high level breakdown of our of our current

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Mhmm.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Which gets to, you know, 21,400,000.0. It shows you the year over year, the last actual last or the current year budget and where we are now. And it's, again, a 2.9% increase. And then we get into details. So I don't know if you want to add anything to this budget interview overview, and then you've got the slides that are too small for me to read in this piece of paper, but

[David Cameron, Administrative Services Director, DFR]: Yeah, no, I think it's a good spot to open up for questions.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: I

[Monique Priestley, Clerk, House Commerce and Economic Development Committee]: noticed that looking at the challenges that you had listed on slide three, something like that, about some of it was just wages, some of it was staffing. Then the last one was IT modernization. And I know that's expensive and it's difficult and all that stuff. And so I'm guessing there's probably not much in the budget for that. But could you just give us a little, like, what is the challenge with your IT at this point?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: So I think the number one thing we're working on and we're in kind of the project planning phase with the agency of digital services, so there's not really a price tag in this budget at this point, is really kind of document retention, you know, or document management. We've got different things going on in different divisions. We're using, you know, Microsoft SharePoint for things that's really not the best tool for. So that's the exploration of that project to see, you know, what what can we do to make that more efficient. Is there is there is there another area within captives, Christine, in terms of just like, I think we're we're somewhat on an access database for licensing information that there's better opt or like tracking licensing that there's there's some more efficient tools out there. Is that is that right, Christine?

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: Yes. Thank you. That is correct. The tools that we are using now are pretty antiquated and unsupported. So at this point, it is important for the division. You know, we have a lot of documents in our document management, system that we rely upon and then a database as well. So that's one of the initiatives that we're hoping we can get through this year or in the next couple of years to modernize our systems.

[Kirk White, Ranking Member, House Commerce and Economic Development Committee]: Thanks so much. Commissioner, I was looking to ask about, think it was maybe a slide that pertained to the total general fund revenue. I think you'd shown us a few slides back just before the recognitions. And think this is an opportunity for me to learn a little bit more about how the revenue is generated and the differences between revenues and expenditures. I'm wondering if the appropriate interpretation is that what you see with the rather narrow difference between revenues and expenditures and captive insurance is sort of the white glove nature of Vermont's work in this industry. And I'm also hoping to understand more about the difference between those two columns with respect to securities. Thanks

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: much. So I think can you restate the captive question?

[Kirk White, Ranking Member, House Commerce and Economic Development Committee]: Yeah. Is it the case that in seeing the relative closeness of revenues to expenditures, we're getting a sense of what it takes in terms of personnel, etcetera, to stay at the top of an industry, you know, to sort of have that leading presence.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah. And we do have that leading presence, and I think I'll I'll let I'll let Christine jump in on that one, and then we'll go to securities. We we are I I think, Christine, you used the term, you know, at the pace of business. So, you know, we have an unlike a lot of jurisdictions, we have a talent pool and an infrastructure in place to very nimbly, work with the industry that or or an entity that wants to make a captive, and so that's reflected in in those costs. But, also, there's just a fundamental difference in how, you know, what what the cost of the cost of having a captive in Vermont and any jurisdiction really is comes down to, from a domestic. And, actually, this works for insurance as well. Right? The the cost of being in Vermont as a domestic insurer or captive insurer is the cost of regulation. Right? So that's what you see on the captive line. That exists on the insurance line as well. The benefit is mostly in, premium taxes. And, in captives, the premium taxes, you know, a 100% of the premium is Vermont premium because it's it's, you know, it's a Vermont entity, whereas, you know, ABC Life Insurance Company in Vermont pays premium tax in all the 50 states they do business. You know, because it's a business to business in captives, 100% of that premium is is subject to Vermont tax. What you see in the other divisions, and then I promise I'll I'll I'll let you go and add anything, Christine, and Amanda. But what you see in the other divisions is fees, and costs generated from the more transactional or products offered in Vermont, whether you're domestic or not. So mutual fund fees, which you guys are very familiar with because there was a recent increase there, you know, being able to offer that in Vermont. And what we talked about with with agent licensing and adjuster licensing, that's for any company that chooses to do business in Vermont. So, hopefully, I'm directionally close to your question. I'll I'll I'll see if Christine or Amanda wanna color that a little more.

[Christine Brown, Deputy Commissioner of Captive Insurance, DFR]: Thank you, Kai. From, the captive perspectives, I think you really hit the nail on the head with respect to the cost of regulation. We have a staff of 32 when we are fully staffed, which does allow us to work at the speed of business, which attracts more businesses to come to Vermont. And that's really the premium tax aspect as Kai mentioned that goes over to the general fund is where we collect most of our revenue. We don't have fines and penalties. We don't impose fines and penalties. Generally speaking, we are the companies that we regulate are compliant. Nobody's going way off the deep end where we would need to have fines and penalties because there's no consumer protection really with captives. That aspect isn't something that we necessarily have to worry about. And then with captives also, we have a requirement to have an annual meeting in Vermont. And so there's ancillary benefits, I think, for the Vermont economy associated with captive divisions. So making sure that we're attracting business with the staffing that we have and, you know, our ability to keep up with the work is really important.

[Kirk White, Ranking Member, House Commerce and Economic Development Committee]: Just to make sure that I understand, just to make sure that I get this right, the difference in say revenue versus expenditures for securities is that every transaction is generating revenue or this is something that's got a lot less of that particular industry needs or element of what you offer, that division needs less personnel and that would be true in any state.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yes. I I think yes. Amanda, you wanna go or Dave, you wanna just go through because I think it'll be helpful. Like, in securities, the big revenue drivers, what, the mutual fund fees?

[David Cameron, Administrative Services Director, DFR]: Yeah. It's about $46,000,000.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: And and let's talk Amanda, talk about what that takes on your end to process and collect that money.

[Amanda Smith, Deputy Commissioner of Securities, DFR]: For the record, Amanda Smith, securities deputy. The mutual fund filings that we receive, they come through a national database to us, and we review those notice filing forms just to see the type of offerings that are taking place in Vermont and recording each type of filing that's received, including the revenue for each filing type. So that's at a high level how we process those filings when we receive them. I think that's what you're asking.

[Kirk White, Ranking Member, House Commerce and Economic Development Committee]: Great. Thanks very much.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: So my question is also on the revenue line. How do you set your prices? How often do they change?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Legislature sets our prices for the most part, I think, is that, you know, generally a lot of I mean, when it comes to bill backs, like, for examination bill backs, we we have a process. NAIC, the National Association of Insurance Consures, has guidance. They put out, you know, their own kind of market study, and here's what an examiner should charge per hour based. But it is based on what like, talked about contractors kind of using that as one of the inputs. So for build backs, we, you know, we look at the actual cost of, you know, what we're paying an examiner hourly with load and benefit and all that, then also take as an input the what the what what contractors are charging for a similar thing. And then mutual funds, premium taxes, those are all set in statute. Is

[Michael Boutin, Member, House Commerce and Economic Development Committee]: there an is there

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: an

[Michael Boutin, Member, House Commerce and Economic Development Committee]: inflation piece built into that, or are there is it just a set?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Into the bill backs or the

[Herb Olson, Member, House Commerce and Economic Development Committee]: No.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Into the prices that

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: The fees.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: The fees. Yeah. The fees structure.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I don't believe so. No. They're just set. They're just

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Thank you. We'll get wind of Fraser means we'll get wind of another state increasing their fees. Nevertheless, we're increasing now.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Yeah. We are alive.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: It's out of the city.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: I know. I know.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: There is an interesting and relevant quirk in in the insurance space, which is retaliatory provisions. So and very generally, each state says, if you wanna do business in my state and wanna register as an ABC or pay, you know, pay the you're gonna pay our rate, the greater of our rate in Vermont in statute, or what your state would charge my person to do business in your state. So some of that so so that's why counterintuitively, sometimes we're like, oh, we can make 10 more million if we increase this fee. It's like, no. Because we're already getting that much because the other states are already ahead of us. So there's an escalation of revenue to Vermont, a self balancing kind of thing happening there. And that just since you find it interesting, I find it interesting as well. I I think I think a lot of it is to prevent the motivation to punish out of state entities doing business. It's basically, hey. If you're gonna do that to me, I'm gonna do it to you. And so it kind of takes away the motivation to to jack up your prices to just try to extract money from out of state entities.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: You have to realize too that any of those fees that are that the insurance companies or banks or any bit of pain generally get asked along with their concerns. For sure. We can raise the rates to Vermonters too by being too greedy. Banks also make money.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I mean, I think that's that's true. I should pick up on that point. Like, an insurance premium tax, it it is paid by and remitted by the company. But when you look at an insurance rate filing, premium tax is an explicit component of the rate. It it kind of operates like a sales tax. I mean, it's there's pretty direct relationship to an insurance company and what their premium is gonna be in each state based on what the tax is in that state. You know, it's like a $100 is what we need, but we need a 100 and 2 in state x y z because they have an additional 2% premium tax. It's not it's it's more direct and transparent than in some other areas. You know?

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Talking about the difference on the DFI revenue side on captives and then the expenditures is pretty close, but does the fact that you don't have enough staff, that you have to use contractors, count with some of the cost of that expenditure, of your expenditures. Would it cheaper if you had the staff?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah, very generally it'll be cheaper if we use staff rather than Same

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: with you know, banking and insurance, of them. Right?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yes. Yeah. I mean, contracted resources are at a premium.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: You know? Especially if they're having trouble finding people. Right. Yep. Shit. We're all good. Thank you for hearing us out. I just wanted to recognize, you know, we were in conversation during the fall when federal issues were going on, were being laid off and we were worried about, and I think Representative Boutin brought that to my attention, I passed it on to you about making sure that, not by any rule or any regulation, but reaching out to our banks and insurance companies just suggesting that they know that that some of their customers are federal workers that are laid off, that give them some leeway, don't foreclose on them, that type of thing. So, and I think you elevated that to the cabinet as well.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah. That's right. We we were able to get public service to to do a similar communication to their industry. But, yeah, well, thank you for highlighting it. I think we ended up with a bulletin or notice around that. Yeah.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Facing another shutdown shortly?

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Just in one one area, I think. Shut down much because we got ton of money in the past budget.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Mhmm.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Anything else? Very efficient. I thought we had another 15 slides.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: We've got the detailed slides, which

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Ask a question, see if we have time. I'm curious to just to hear you reflect a little. You mentioned before that you're interested in doing more consumer outreach and maybe financial literacy kinds of stuff. So I'm just curious, thoughts you have on that?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah, so I talked about the UVM co op program that we're making a play for. One of the opportunities we'll post there is for, you know, we'll also look for accounting finance majors, but if they have someone in the marketing concentration that wants to work with our outreach teams, you know, and and maybe get a little more youthful in our outreach. That's fair. If I look at, you know, the generation of digital natives that are, you know, can really just have a better instinct for how to reach more people through social media platforms, etcetera. So that that's one area. And then we have a grant program that we didn't talk about. It's it's in the materials here. But that program I'm excited about. We're sitting on nine applications for grants. They can be up to $50,000 each. That money is put in there by statute from enforcement orders. So if we come to a a stipend consent with a entity, that entity has the option to put up to 15% into, a restitution and outreach fund. It's not the full title, but that's essentially what it is. We keep enough in that fund for restitution, which we've been able to provide some meaningful restitution from that fund.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: I think there's about 4 or $500,000

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: in there now, but we kinda reinvigorated that grant program. Joe was instrumental in that along with Mary Richter in our department working with the folks that do outreach with the other divisions. And we had an application out there that closed January 31, and we're reviewing applications now. But that that goes for you know, it's nonprofits and schools. You know? So so we're hoping to see. I haven't seen the applications yet, but we're hoping to kinda leverage that. Yeah. So that's just two areas there.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: One more question. So related to that is, I know one of the greatest needs of our smallest businesses, meaning under five employees, which we have, I don't know, 20,000 of them, something like that, is really about finance training and bookkeeping training. And I'm wondering if that type of technical assistance of a nonprofit that could grant like that? Or is that

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Not not so much on the business end. It's really more

[Michael Boutin, Member, House Commerce and Economic Development Committee]: It's gonna tell you.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Not that that's not a worthy

[David Cameron, Administrative Services Director, DFR]: Yeah.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Pause. You know, as a CPA, I I you know, it's like owning a pickup truck. All of a sudden, you know everyone who needs your help and wants to borrow that pickup truck. And when you're a CPA, everyone's gonna give you your tax questions and your accounting questions. And so I know there's a need there, particularly in that small business segment where the scale isn't there to, like, really outsource and just hire, you know, a CFO or a bookkeeper. And it comes back to what we're saying about just pipeline and shortages in that area. And I had another thought on that, but it has escaped me. Oh, so, yeah, it's it's just it's really more there's plenty of wood to chop and just we've seen some horrible frauds, you know, individual, you know, behavior based, the money's gone. You know? And it's so there's, you know, working together and and, you know, we'll work with the treasurer's office and the AG. Good communication with their relevant staff on this stuff. But, you know, there's so much we can I think awareness of what's out there and what the the next emerging scam is? But, yeah, we had a walk in that was jaw dropping to me just how customized and manipulative and impactful it was. So that that kind of motivates all of us to be like, let's do what we can to get awareness of what it sounds like, what it feels like when you when you get a call and you get manipulated into doing something, into thinking that the bank teller is the enemy, etcetera, if you see those real life stories. So it's really on the individual side. Financial literacy education and just kind of fraud awareness and education. And there's a lot happening now that the deputies can talk about folks on their teams and going out. I know on the security side, the banking side, there's a lot of outreach and school visits and senior center visits.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: I think that's why it's important for us to bring together on suspicious activity, suspicious transactions. Yeah, exactly. Right. Work with the bank to help would alleviate some of those issues.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: I think yeah. The the walk in example we have, that would have been I think that would have been helpful. If if not, completely changed the direction of that. The ability for a bank to put a to just not distribute the funds. Yep.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Yep.

[Amanda Smith, Deputy Commissioner of Securities, DFR]: If I may, Amanda, security deputy, I wanna add that for the past I'm coming up on a two year mark. The Securities Division has been on a mission to visit senior centers across the state and we teach about fraud by playing Bingo. Securities Division is a member of the North American Securities Administrators Association and collectively all administrators come together to form outreach collectively for securities regulators, and we've had a great time and met an enormous amount of just wonderful Vermonters teaching them about fraud through Bingo, and that's been extremely beneficial to the community based on feedback that we've received, and we're hoping this year to be able to hit three senior centers. So that's something that is definitely always on our radar.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Actually, that, I was curious if you all had strategies for kind of getting the general adult middle of consumers that are not on the younger or older end, because I'm thinking particularly as folks are getting into caregiver roles and having to take over family finances and things like that, if there's thinking about education for folks.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: The forgotten Gen X?

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Yes, the forgotten. That's for you too.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah. I think Mary or or Erin or Amanda, any thoughts on anything targeted there? Or

[Mary Block, Deputy Commissioner of Insurance, DFR]: We were actually thinking about so one of the things I've challenged the insurance team to do this year is we'd like to start putting out consumer we don't wanna what we're gonna call it yet. Advisories, education pieces, whatever, like, once a month about, you know, just common insurance topics. Like, I had a fender bender. What do I do now? Or how are insurers using AI? Or what does virtual ingesting mean? And, you know, all of the just some some very simple topical issues that we're planning to start pushing out on a monthly basis. We have actually thought about in the fall prior to open enrollment season for Medicare Supplement and Medicare Advantage, doing something for caregivers around, you know, how do I help my senior? Where can I get resources to help them decide how to do this? You know, it's not just us. We obviously answer those phone calls, but the SHIP plays a huge role there. And just making sure that the SHIP, the health care advocate's office, all of those resources are available. We've done senior centers on occasion to do Medicare supplement education and Medicare Advantage education, but I I we have had some conversations around what can we do for the people who are helping the seniors. I know I did it with my own mother-in-law, and it was and I know you're right. I'm an expert, so to speak. And it was painful for me. Never mind somebody who has no idea how to navigate this. So that is on our radar, hopefully, for the fall to think about how we might help the people who are helping.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Thank you for that.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: That's great. Community bank, their community circle, a few years ago, had a seminar on Medicare and found it very helpful. Don't think people realize that, we don't really have much to do with Medicare or the supplemental plans. When you get into that, you just think that you're just moving into something else. But there's a lot of different things that happen on the supplemental pieces of your gap insurance, and what's best to go with which plans do you go on. So it is complicated, especially when you get to be my age, you don't really want to think too much about that stuff, but you have to. I think that's where a lot of seniors get caught up in getting into plans that they really didn't want to get into or don't need. So it's helpful. Thank you.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: I have two questions. And I think I'm going to do the easier one first, maybe. I don't know if it's easier one. When we did the insurance conference, the insurance companies were talking about climate mitigation strategies and how when it gets pushed out through insurance, because it saves the customer money, it saves insurance company money. And I know we have policies in the state around that, but how are we partnering within government? Are we staffed adequately? Are we looking at this from a budgetary perspective? How do we make sure that we're able to take advantage of all of the best that we hear of nationwide? And do we have bumps when we look at how to integrate them because of our staffing or because of budgetary constraints?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Specific to the insurance division?

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Is that specific topic that started the thought, but it really is all of it. Right? I

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: mean, I think Mary will have some thoughts on this too, but I'll kick it off. When we end up in discussions around that, one thing we see is that flood is our biggest, probably our our highest risk here, not not hurricane, not seawalls, and not, wildfires. And flood, of course, is something that the commercial insurers aren't really exposed on. It's federal. You know, I

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Individuals are, right, significantly exposed on in our flood maps are old. So there are a lot of factors that Sorry, I interrupted.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: No, no, I need more to be able to respond intelligently in terms of direction. Yeah. I I'm not sure I'm answering it.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: So it's

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: I think I I'm wondering if there's a way that we can it looks like Mary might

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: wanna see. Yeah. Mary Mary, save me.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Oh, you didn't know. She's muted.

[Mary Block, Deputy Commissioner of Insurance, DFR]: Let me chime in a little bit because I'm probably a little bit closer to the to the issue than the commissioner is. So we are partnering the flood issue, he mean, he's incredibly correct. Right? The flood issue is really hard because flood mitigation is really hard. This year, the NAIC had they have a there's a bunch of committees. One of those committees relates to climate and climate mitigation, and that committee is going to have a working group that is gonna be focused for the year on flood, whether it's mitigation or how to educate or whatever. So we have volunteered one of my staff, Rosemary who is our head of rates and forms. So the property casualty side is gonna sit on that group and talk through what we might do as a as a state and nationally around flood education and so forth. We're already working closely with the agency of natural resources and the the FEMA support team that's here in Vermont and so forth on a bunch of flood issues. So next week, for example, Rose and I are gonna do the second our second appearance at an ANR. They have a a quick monthly meeting with municipalities, business owners, whoever wants to drop in. It's a drop in call, and we're gonna do a presentation on flood again. We've done that there. We're doing some work with the Waterbury flood group just on educational information. You know, we don't control flood insurance for the most part because most of that is unfortunately federal. There is a small private flood market, and I think some of the work that will happen at the NAIC is, you know, is there anything we can do to increase that private flood market? But a lot of it is around education, and so we'll continue to to do that work, wherever we can to educate. And to educate people about the things that they can control. Like, you know, if you have a car and you have comprehensive coverage on your car, it will a flood will be covered. You know, if you have a house, even though your homeowner's insurance won't cover the flood itself, if you have water backup on your homeowner's insurance, it will cover the backup that happens if drainage systems get flooded. And so trying to educate people about the things they can impact other than a straight flood policy is something that we're working on.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Great. And then also helping to craft state policy so that we're doing things well to mitigate for blood damage, Because that will save all of us money and time and heartache and all of the things that go along with loss.

[Mary Block, Deputy Commissioner of Insurance, DFR]: Yeah. I mean, unfortunately, there's a lot of mitigation programs out there, but they're all, I hate to say, geared up towards the easier things, but, right, there's very specific steps you can take to protect your roof in a hurricane or to, you know, protect your house in a wildfire area. Flood, not so easy.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Just thematically, I was on this working group that I believe the treasurer's office was charged with before I came back to the state, And it's a lot of really interesting discussion about how do we there's a lot of money available when there's a flood. FEMA flood insurance, and that just fixes what was broken and how do we change, how do we influence either at the state level or or federally get waivers, whatever. And I know all states are working on this. Like, instead of you sending me $80,000,000 next time there's a flood or billions of dollars, and we know there's gonna be another flood, can we get a couple $100,000,000 now to fix something so that it doesn't cost that much next time? And if you know, so it's really just that time value of money, which is what investments are. It's quantifying those. And so that was a really interesting discussion. Think, you know, VLCT, natural resources. But and so I think I know that I thought it was a treasurer's office working group. Sorry. I don't remember the specifics of it.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Every time we rebuild what was there without doing something different,

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: we're Perpetuating.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Missing an opportunity to mitigate for future. And that's So my other question is, we value so much as a state, your department, all of the work that you all do. Not only are you helping to keep Vermonters safe in so many ways, all the consumer protection, but you're also bringing in a lot of money to the state. And I worry a lot in times of tight budgets that we're penny wise and pound foolish, and we're not investing where we need it best to ensure that the programs that we have that are strong and working well and bringing in positive dollars, but other things too. So I'm curious if you're How much you can talk about that when the budget is being developed and how difficult How many difficult decisions had to be made? And as you're talking about restructuring positions, trying to get them at the right level, is that really hard to do? And are there things how do we help? How do we support? How do we do the things that need to be done in order to ensure that we're still where we need to be going forward?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Well, thank you for kind comments and the recognition of the work of the department, which is also, you know, a result of the industries that we regulate and the economic impact they have on the state. In terms of budget development, you know, I think when it comes to staffing, we're focused on recruitment and retention, not growth. In terms of, you know, as you were saying that I was like, you know, hold that energy for a a future year when we may need project money for these IT initiatives. At this point, we're in the planning stage, but, you know, there's different ways that we would finance that.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: But that's, you know, that's good information for us too. So when we make our budget letter to appropriations that we will put that in there that, you know, there are things coming that that they will that the FR will need money for. Right. And let's just keep that in the back of our minds that when they come to you, it's gonna be a surprise and be ready to

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: And for for future years.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Yeah. Be ready to appropriate some of those dollars that they bring into the state Right. To reinvest back into the department again. Yeah.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yep. And and, you know, and I think in in terms of how this committee helps, it's, you know, awareness to, you know, the sensitivity that we may have when a fee wants to go up or something. Right? And if the experts behind me say, we you know, we're concerned about that suppressing demand or maybe someone says, maybe I don't need to license all my agents anymore in Vermont. Maybe I will take a scalpel to that and just look at of, you know, understanding, you know, the impacts and the knock on impacts within the industry or the availability of financial services if costs go above a certain amount. So that's something that, you know, you saw our our purpose and statute. Right? We wanna keep competitive market a relatively easy and cost competitive place to do business because people don't do business in Vermont because we have 15,000,000 customers available. We don't. You know? So we we started a disadvantage there. And then the same concept goes on on the captive end. Right? Christine and team are very sensitive to the balance between being the go to place for professional dynamic regulation with a good reputation globally at what that costs versus not pricing ourselves out of competitiveness when it comes to cat domiciles. So being you know? And then, of course, the I mean, that Joe and you guys are talking frequently. It's just keeping those lines of communication open and being able to have offline conversations about difficult issues and sharing that, and we've we've done that. We've done that. So that that type of conversation is and knowing we have a committee that that gets us, so to speak, and having you trust us. And I think you do. So yay.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: We're talking about some mitigation that I think that number of years ago, and they were all blurring out. We on PNC, we were I think we were talking about direct companies that allowing them to ingest products that they could purchase or help purchase with their customers, like, you know, a shut off switch to their water system so that if pipe bursts, it's not going to flood their house and things like that. And trying to remember if there were issues with that or not. Mary, you got

[Mary Block, Deputy Commissioner of Insurance, DFR]: I got it. So we did change statute a few years ago now that so the unfair trade practices statute forty seven twenty four, we changed to allow and it was a national model that was developed at the NAIC. We changed to allow more of that because there is an anti rebating statute. Right? Insurers aren't supposed to give people things to get them to buy policies. That's just inappropriate. So there are provisions in there now that allow insurers to to do what are we referred to as value added services, and we have a process for approving those. So, yes, some of the PNC carriers do give those shutoff valves, for example, particularly in cold weather states. They like to do that because when pipes freeze, you know, having that alert. Some of the life insurers, like John Hancock, for example, has a huge program around wellness benefits, things that help people live longer. Because if you're a life insurer, the longer people pay premium, the better that is from a rate perspective. Right? So, yeah, we have seen those come through, and there's a wide variety of them. We obviously review them to make sure that they have to relate to the risk that the insurer is is insuring. And they can't be crazy. Right? You're not gonna give somebody a car. Right. You know, it has to be reasonable. We have to make sure it's not gonna affect solvency. And so we do that kind of analysis as those things come our way.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Is there is there any place where that information is housed that do you do you provide it on your web page? Because I I would think that people that might wanna, that are looking for an insurer, might look at that and say, geez, they wanna help me stay safer. I wanna make sure that my property is made safe. Maybe I'll check them out.

[Mary Block, Deputy Commissioner of Insurance, DFR]: No, we don't have it on the website. I think it would be a little complicated because it is very dependent on the type of policy and underwriting and so forth. So we could put it out there, but then it might be useless for a person because they don't meet criteria or they know that's not the right kind of policy for them or whatever the case may be. So it would be we we don't put it out there. It would be, I'd say, fairly complicated to do it in a way that wouldn't wind up misleading people.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: This is a place for insurance agents to shine. Yeah. Yes. They they have they they know the products. They work with several insurers, they and can suggest things to insurers too. Hey. In the Vermont market, there seems to be a real appetite for ABC and as can we and as can, you know, you. And but I think agents, that's that's their opportunity to shine. So, you know, we can think about ways to incentivize, you know, more of that. Maybe that's just

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: maybe that's a question and an answer that you provide when you're when you're going out educating people is that there are some insurers that provide this to your agent, right? Because I don't know if anybody in here really knew that, any of the committee members knew that that some of these P and C companies, insurance companies provide those types of rebates.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yeah. And there's a requirement in Vermont law. There's a if you look at your policy, which I won't ask people to raise their hands if they've read their policy, you know, there's a there's a what? A notification of available discounts requirement.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Right. And but it's

[David Cameron, Administrative Services Director, DFR]: a good point.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: You know? That's that's the kind of when when Mary talked about consumer bulletins or outreach, and and we see other departments, other states doing this, and we wanna escalate that. But, you know, it's like, what are the top three basic things that are easy that you you can do? You know? And and it's like, look at that disclosure. And, oh, my kid's a straight a stoop. You know? Let me call. Make sure I'm getting that discount or whatever it is. Safe drive or stuff like that. Like, really quick hits, quick wins. And, you know, that's that's where we wanna focus some of the, you know, kind of consumer bulletins that Mary was was referencing.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: I think, you know, the discussion we had last year on uninsured motorists, know, better understanding. I think we all had a better understanding after we had those conversations of just what what that is and how much it pays.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: The tools are there with with social media and the web to make really digestible short form, somewhat entertaining bits of information that can really help.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Now you've set the bar high.

[David "Dave" Bosch, Member, House Commerce and Economic Development Committee]: I know. I need that college intern. Evictating? That's really high. Yeah. Well, you know,

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: you're right. For insurance and financial services, it's really high, though. Come on. TikTok and Instagram reels, I've seen the most boring things be entertaining.

[Edye Graning, Vice Chair, House Commerce and Economic Development Committee]: So, you

[David Cameron, Administrative Services Director, DFR]: know, just gotta use animals.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Yeah. Exactly. You

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: know? Animals and yep.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Eat tiny things.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Right. Dump ice water challenges with Adam. We'll think of something, and we're open to ideas. Anything else? Thank you for a good discussion.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Thank you, deputy commissioners. Thank you as well, Joe. Thank you all. Thank you for what you do.

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Thank you for supporting what we do.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: Thank you.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Thank you.

[Michael Boutin, Member, House Commerce and Economic Development Committee]: So

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: we're working on next week's budget, next week's budget, next week's agenda. We continue talking with ACCD, we need to hear from tourism, then I think I'd like to explore the grants that BED puts out to better understand those, and I think I'd like to understand how they, the recipients of the grants. I know there's a process, I think we need to make sure that there is a vetting process there, making sure that the grants are spent the way they're supposed to be spent, and what's the return on investment we're getting, definitely depending I think we're getting close on 02/2005. We'll hear tomorrow, we'll hear the suspicious activity language that Jonathan has been working on with the banks. Who drafted that, Jonathan?

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: Maria.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Maria?

[Kai Samson, Commissioner, Department of Financial Regulation (DFR)]: Yep, Maria.

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: Okay. So we'll hear from Maria, think, after the floor tomorrow.

[Jonathan Cooper, Member, House Commerce and Economic Development Committee]: And an updated coerced deck. Yeah,

[Michael Marcotte, Chair, House Commerce and Economic Development Committee]: think we're getting pretty close to these bills. CTE is a whole other animal that need think it's another one that we need to work on too. We're not shy at work, that's for sure. So any questions? Okay. So we'll be back at one. And

[David Cameron, Administrative Services Director, DFR]: then