Vermont Legislature SmartTranscripts:

[Chair Matthew Birong]: Welcome back. '1 forty five. We're working off of, draft number two six dash zero five five one, an act relating to alcoholic beverages. And today, got witness testimony. There's been some suggested language that came in for us to discuss. Find it on your new document on your documents page. And let's see. Is this updated or is this the old direction?

[Mary Block, Deputy Commissioner of Insurance (Vermont DFR)]: I don't know you took those up here.

[Chair Matthew Birong]: Okay. So this we're still working off the old right now. Okay. Thank you for that clarification. Yeah. So we are, having some conversations about some proposals that will be forthcoming. So I am gonna start things off with guests. Justin, how are you?

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: I'm good. How are you?

[Chair Matthew Birong]: Good. Good. Good. Would you like to start us off, sir?

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: Yes. Hello, committee members. For the record, my name is Justin Hijack. I'm the owner and operator of the Maine and Mountain Barn Motel in Ludlow, Vermont. We are a cocktail forward restaurant where alcohol represents a significant portion of our gross sales. And I guess I'm not here to oppose public safety, but to speak to the economic practicality and policy design. And would you like me to keep going?

[Chair Matthew Birong]: Oh, yeah. Yeah. Please, please, please. Yes. The table is yours. Yeah. Feel free to speak. Yes.

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: No problem at all.

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: Vermont already operates under long standing dram shop liability laws. And as a licensee, we are retrained regularly, subjected to significant penalties, and fully liable for negligent service. My concern is not with responsibility. It is with policy design, specifically whether a blanket liquor liability insurance mandate effectively addresses public safety or whether it instead transfers financial risk in a way that may create disproportionate burdens on responsible operators. Liquor liability exposure is not equal across all establishments. A high volume cocktail restaurant carries different underwriting risk than a small inn or a cafe with incidental wine sales. A blanket mandate does not reflect the actuarial realities insurers themselves recognize. Market availability and pricing instability. The liquor liability insurance market is tightening nationally. Premium volatility and carrier withdrawal are increasing, and mandating purchase does not guarantee availability. If the legislature believes mandatory insurance is necessary, I would respectfully suggest a tiered or revenue based threshold. A one size fits all mandate may unintentionally penalize responsible compliant operators. I support responsible alcohol service. I support realistic standards. I do not support a universal liquor liability insurance mandate that applies equally to all establishments regardless of business model or risk profile. Vermont already has and operates under Tram Shop Laws regulations. These laws date back to the repeal of the prohibition age in nineteen thirties, and licensees can be held civilly liable for negligent service. Drinking culture has changed significantly since the nineteen thirties. Enforcement standards have evolved, compliance expectations have increased, and technology has improved accountability, point of sale tracking, surveillance, ID verification. We are not operating in a loosely regulated environment. Mandatory training. We are required to be retrained every two years. That is not optional. Noncompliance carries significant penalties. Enforcement consequences. It re our suspension, fines, loss of license, civil liability exposure under tramps tram shop statutes. This is already a high accountability framework. Excuse me. I I wrote this on my notes, so bear with me. I wasn't prepared. This is only a few days ago.

[Chair Matthew Birong]: No problem. Take your time. Relax. It's fine.

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: I guess one of the core issues for me is not all bars or restaurants are the same. A cafe selling 10% alcohol is different from a cocktail driven restaurant. A seasonal inn is different from a high volume nightclub. A restaurant with curated cocktails is different from a dive bar, yet the mandate would apply uniformly. Insurance pricing in reality. My liquor liability quote is higher specifically because of a large percentage of my revenue that comes from alcohol. That does not mean we are irresponsible. It does not mean we have claims claim history. It means insure insurers rate based on revenue mix. A blanket mandate disproportionately impacts businesses like mine. Market concerns of which I touched on in my opening statement, insurance markets are tightening nationally. Carriers are exiting hospitalities. Mandating coverage without addressing markets access creates pricing power for insurers. Fairness and realistic standards. I am a proponent of realistic standards. Realistic standards consider differences in business model. Realistic standards recognize existing compliance burdens, and they also avoid overcorrection. Businesses that determine coverage is appropriate should carry it. High risk establishments may reasonably require it, but universal mandates assume universal risk, and I don't believe that assumption is evidence based. I would have some questions for the committee if that is part of my testimony today. And that would be, what are specific data shows uninsured establishments are creating unpaid unpaid claims, and is there evidence that existing dram shop enforcement is failing? Has the state studied the financial impact on small or rural operators, And has the insurance market capacity been evaluated before mandating participation? Some reasonable alternatives could be tiered requirements based on alcohol revenue percentage, higher thresholds for high risk categories, state facilitated insurance pools, delayed implementation pending market review, allow proof of financial responsibility alternatives. In closing, I would like to say that I support accountability and responsible service. My concern is that this mandate addresses financial transfer of risk rather than the root cause of negligent service. Vermont already holds licensees accountable for negligent service. We carry legal exposure, reputational risk, and regulatory oversight. If the goal is to reduce over service and harm, I would encourage the legislator to focus on training, enforcement, and clarity of standards. Insurance is a financial instrument. It transfers risk after the harm occurs. It does not prevent the harm itself. My concern is that the blanket is that a blanket mandate may unintentionally penalize responsible operators while doing little to address the root causes. I respectfully ask the committee to consider whether this proposal improve improves public safety outcomes or simply shifts financial liability within an already regulated framework. I'd like to thank you all for your time and your thoughtful consideration.

[Chair Matthew Birong]: Yeah, thank you very much for that. And be it, I think some of the questions that you're positioning are good questions for the Deputy Commissioner of Financial Briefation News here, perhaps may have some of those like data sets for us to answer cleanly. But there's been a lot of conversations over the years in and around, the statutes that kind of drive the insurance market within Graham shop, things of that nature. So I appreciate that. Mean, a full disclosure for myself, I'm a thirty year hospitality industry veteran. So I understand what's going on right now with the markets very, very clearly. So I definitely am empathetic to what the industry and yourself are experiencing with insurability right now. So I guess I have one question I have for you is when you were trying to in the in the process of attempting to source an insurance carrier, what did that look like? Just to find a carrier?

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: Finding a character carrier, excuse me, is rather hard. I have an insurance broker, the Richards Group, out of Brattleboro, who helps me with all of my insurance claims and insurance coverages. They came back it's hard because as you folks know, the state of Vermont operates with zero bars. We're all considered restaurants. We serve hot meals. However, it doesn't negate the fact that, you know, predominantly, we are a liquor based establishment. We're a bar and motel, so we use motel guest stays as well. Part of the underwriting process is the insurers look at your gross alcohol sales in comparison to your soft drink sales or your food sales. Given that we're predominantly a bar, finding coverage has been rather hard. People insurance companies don't even really wanna look at us. However, I was able to get a quote from the New England Excess Exchange. Dated this past July was my most recent inquiry, and that was about $14,393 for the year to carry as an additional insurance expense.

[Chair Matthew Birong]: And and so but that was the the total for the coverage for the alcohol liability component?

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: That was for the liquor liability

[Chair Matthew Birong]: your other insurances that you have for general liability.

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: Correct. That is just that liquor liability insurance.

[Chair Matthew Birong]: Okay. Yeah. Understood. Do you have any other questions from the committee for Justin? Rep Hooper of Burlington?

[Rep. Robert Hooper (Member, Burlington)]: Probably seems like a really simplistic question at this time, but that particular liability insurance covers,

[Chair Matthew Birong]: excess serving Incidents that could've that that occurred due to alcohol consumption. Yeah, in general, right? It's your general like like liquor liability.

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: Correct.

[Chair Matthew Birong]: So that's above and beyond all the other coverages. And Justin, you don't mind sticking around, we're gonna, you know, talk to our other witnesses right now, but, having your input, could be a resource if you have the time to stay with us.

[Justin Hyjek (Owner, Main + Mountain Bar & Motel, Ludlow)]: I'm happy to stay on.

[Chair Matthew Birong]: Thank you. I think I'm gonna shift over next to Amy Spear, President of Vermont Chamber, joining us via Zoom.

[Amy Spear (President, Vermont Chamber of Commerce)]: Good afternoon, committee. Give me a thumbs up if you could hear me. I'm having some trouble with my technology. Good? Okay. Perfect.

[Chair Matthew Birong]: Audio audio is Chris. We got nothing on video.

[Amy Spear (President, Vermont Chamber of Commerce)]: Okay, so hopefully the video will come through. But for the record, my name is Amy Spear. I'm the President of the Vermont Chamber of Commerce. Our mission is to advance the Vermont economy through advocacy, community and resources. An important piece for this conversation is that Vermont Independent Restaurants, or also known as VTIR, is a working partner of the Vermont Chamber, and they are charged with preserving and advancing Vermont's restaurant and bar industry. So, we really appreciate the opportunity to weigh in on this bill, in particular, the mandatory liquor liability insurance, the edit that will be coming, if it's not in your current draft from the Department of Liquor and Lottery that they'll be requesting. So, we are in concurrence with the DLL recommendation to request the repeal of the mandatory liquor liability insurance requirement. After reviewing national insurance market conditions, Vermont specific dynamics, member feedback, we believe that a repeal is prudent and proportional response to current market realities. Looking nationally, for example, the current challenges in the liquor liability insurance market are part of a broader national shift affecting casualty insurance lines generally. Across the country, insurers are navigating higher overall liability claim costs across multiple sectors, increased defense and litigation expenses, greater unpredictability and jury outcomes, reinsurance market tightening and reduced capacity, adjustments in underwriting appetite across certain lines. And these dynamics are affecting many industries, not solely hospitality. Liquor liability coverage is influenced by the same national casualty and reinsurance pressures impacting commercial auto general liability and umbrella coverage. Importantly, these trends are macroeconomic and legal system driven. They do not reflect changes in the professionalism or responsibility of Vermont's hospitality operators, just as you've heard from the previous witness. Looking at Vermont's market dynamics, Vermont's insurance market is particularly sensitive to volatility because it's small and it's concentrated. So, characteristics, looking at a limited risk pool, a predominance of small independently owned businesses, seasonal revenue patterns, fewer carriers actively writing liquor liability policies, just a few things that are impacting the current market. Then smaller markets in general, pricing can fluctuate more significantly in response to national trends. We're becoming an outlier here because of our small scale. Underwriting adjustments made at a national level are often applied broadly, even where local loss experience remains stable. From member feedback, businesses are reporting in the hospitality space significant year over year premium increases. When I say significant, I'm talking in the 20 to 40% range for increase year over year, and it's not the first year of double digit increases. Reduced carrier participation, and greater unpredictability in renewal times. Restaurant and hospitality establishments typically operate on single digit net margins. Substantial insurance volatility can meaningfully impact long term operating decisions. When we're considering the policy question is not whether alcohol service carries risk, we acknowledge that it does, and that is why Vermont maintains a comprehensive liability and regulatory framework. The question is whether a universal insurance mandate remains an effective tool when the marketplace for that product is unstable and heavily influenced by national market forces. The statutory mandate functions best when coverage is broadly available, competitively priced, and predictable. In the current casualty insurance environment, that assumption does not consistently hold true. Repealing the mandate for liquor liability insurance does not remove accountability. Civil liability standards remain intact. Vermont's dram shop framework remains intact. Licensing oversight remains intact, and responsible service laws and enforcement remain intact. This proposal addresses only the purchasing mandate. It doesn't alter the underlying liability structure that Vermont has. Again, just talking briefly about responsible operators and existing safeguards in our state, Vermont's hospitality businesses are deeply rooted in their communities, just as you heard from the previous witness. They depend on long term customer trust, local reputation, and responsible stewardship of their licenses. And responsible alcohol service in Vermont is governed by statutory dram shop liability, criminal statutes, licensing oversight, education and compliance requirements, and local and state law enforcement. And I just want to reemphasize that those safeguards all remain intact whether or not there's a mandated liquor liability insurances. Did someone say something?

[Chair Matthew Birong]: No, that was just the door. Keith, apologies. No, no, we're all good here.

[Amy Spear (President, Vermont Chamber of Commerce)]: Insurance provides financial certainty. It supports long term planning and strengthens professional risk management standards, even when not contractually required. Many operators elect to carry coverage because it's a prudent and responsible business decision. However, the market is not there right now. The concern before the legislature is not a lack of willingness to ensure, it's the instability and unpredictability of the current marketplace. So, we see the repeal of the mandate, it does not represent a retreat from accountability. It recognizes that a universal statutory requirement presumes a consistently functioning insurance market. When coverage becomes volatile, constrained, or misaligned with scale of risk, regulatory flexibility becomes appropriate. I would say this is a case here. And also important to note that negligent conduct does remain subject to civil liability with or without mandatory liquor liability insurance. I think I'll stop it there. I apologize that my camera did not come on for this testimony, but I'm happy to take any questions you might have about the landscape in which operators are working in Vermont, or maybe what they're seeing at scale in the state. Would love any questions if you have them.

[Chair Matthew Birong]: Any questions from the table? Want to ask you folks first, because I could talk about this all day. So aside from from Justin, as far as the stress within your membership, that this is putting on financially, So a 20 to 40% year over year. And so some of the tweaks that were made just for like a historical content, there were some changes to statute made a few years ago, and I hope to sort of anchor in what is the the based rating for the state that then the qualifications or actuary assessment on the operators it's built from. Do you want to give a little background on that just for historical context on how we got here?

[Amy Spear (President, Vermont Chamber of Commerce)]: Yes, happy to. As Chair Birong mentioned, I think we've been engaged in this conversation for about six years now on behalf of the hospitality industry. So it's something that we've been following and paying close attention to for some time. It started as conversations with members as they often do when we find an issue with I'm seeing year over year increases in my liquor liability insurance. I don't have access to liquor liability. So in 2023, fast forward a little bit there, there was some significant dram shop law changes that were made, and that moved us from strict liability to negligence for all provisions other than, I believe it was serving after hours and serving underage. At the time before the Strand Shop Law changes, Vermont had an ISO rating of a 10. ISO is a widely accepted insurance rating that's used across different types of lines, but it's rating how risky is that pool. And Vermont was ranked the riskiest pool as possible because of the way our dram shop laws were written. It was us in Alabama that were ranked the worst in the nation to procure liquor liability insurance. So thank you to the legislature at that time, dram shop laws revisions were passed, and our ISO rating was changed from a 10 to a five. That was a really important change. We're in line with our neighbors and we're right in the middle of the pack in terms of how the insurance markets view Vermont's risk pool. However, there's still those underlying reinsurance market challenges. Is that helpful, Chair? Would you like me to go deeper?

[Chair Matthew Birong]: No, I think that helps just to kind of give like an understanding. You know, we were trying to work with that ISO rating where we were one of the highest in the nation as the baseline, that change did get it down into a regionally appropriate, wrong word, but equal starting point. But then it's just the nature of the market recently has just really driven an extreme uptick in the year over year increases. So, I just wanted to have that laid out for the committee because we have several new members who weren't here when we discussed this stuff years ago. Yeah, thank you.

[Amy Spear (President, Vermont Chamber of Commerce)]: Thank you for bringing that up.

[Chair Matthew Birong]: Yeah, no, and thank you. So, I do wanna be conscious of time because we do have a couple of other people that we wanna get to today. Are there any questions for Amy right now before we shift? Nope, seeing no hands. All right, Amy, do you mind hanging out in case something pops up?

[Amy Spear (President, Vermont Chamber of Commerce)]: Yep, absolutely.

[Chair Matthew Birong]: Thank you so much. I think I want to shift over to, Mary Bock now, Deputy Commissioner of Insurance Department of Financial Regulation. Hi, Mary.

[Mary Block, Deputy Commissioner of Insurance (Vermont DFR)]: Hello, good afternoon. So for the record, Mary Block, I'm the Deputy Commissioner of Insurance. I think Amy and Justin did most of my job for me, but I'll talk you through what we know about the liquor liability insurance market generally and in Vermont and some of what's happened over time. So as has been noted, the liquor liability insurance market across the nation is what we refer to as a hard market, a very hard market at this point. Liquor liability insurance has always been a specialty line of insurance. It is an extra risky line of insurance if you think about it from that perspective. Insurance coverage is based almost entirely on risk. And so insurance carriers look at what are the risks that, there is going to be a claim with respect to a particular liquor liability insured and what is the potential cost of one of those claims. There's a lot of things that affect that. Amy raised the reinsurance market, which has become problematic across a lot of the property and casualty lines of insurance. It is that layer of insurance that insurers buy in order to help protect themselves if they can't pay claims. That tends to be a global market. It is tight right now for a lot of reasons, but the property and casualty market has been somewhat pummeled by a variety of catastrophic events, particularly on the property side, climate related things, wildfires, earthquakes, big, big events. So that affects the reinsurance market globally. Liquor liability is also unfortunately subject to a lot of some of the other rising costs that we're all experiencing. Because when you have a liquor liability claim, it tends to involve property damage or medical issues. People get into accidents. There's a lot of medical costs, as we all know from reading the news in Vermont. In particular, health care costs here are incredibly high. That affects those prices as well, right? Because an insurer has to take into account how much that claim might cost them, and how quickly they're going to hit the maximums for that policy when a particular claim, is made. There are litigation risks also that play into this. Obviously, Vermont is not particularly heavily litigious and we are a small market. So when looking at our market, insurers look at national trends as well. So liquor liability litigation can be costly, can have those runaway jury, nuclear jury verdicts that can cost substantial sums of money. And so that plays into the issue as well. The changes that we made in 2023, hard to believe, did actually positively impact our insurance market. We went from that ISO rated 10 to an ISO rating of five, talking to the brokers and to some of the insurers, admitted insurers that write in the state of Vermont. Our increases are not as high as our neighbors' increases. Our prices really aren't coming down. Their prices are rising to meet us because they are still experiencing that hard market as well as us. We've stabilized a little bit generally and they're rising faster to even out with us. So it's still a pretty difficult market. There's a little bit more activity in the surplus lines market. So we'll get into the insurance weeds. There are referred to as the admitted market, which are the carriers that are regulated by our department, for example. There is what's referred to as a surplus night or a non admitted market, which are carriers that write supplemental risk, excess risk that are not regulated directly by us, but that are regulated by the state they're located in. They tend to take on the types of risks that standard traditional insurers are less comfortable with. So a lot of the reliability insurance is written in the surplus lines market. And from what we're hearing, there is some improving capacity in the surplus lines market for liquor liability insurance in the state of Vermont. We are a small market. And so one of the balancing acts with a small market is to figure out when we want to pull a lever, how hard do we pull that lever without driving business out of our state? Because to be blunt, insurers don't have to write in the state of Vermont. And if what we regulate, what we require becomes more expensive than the small market that they're going to write in is worth, it's very simple for them to just walk away. And so that's a balancing act from a competitive perspective that we always need to take into account. But we are hearing that it is freeing up a little bit. We are hearing that our rates are going up slower than everybody else's rates. So there's some good news. Everybody's rates are going up. Ours are going up slower. How's that? So we did have some impact when we made those changes in 2023. With respect specifically to the mandate, DFR is generally never in support of mandating a specific amount of insurance because the market dictates availability. And if you're not careful about how much you mandate, you may completely write some businesses out of the market. They may just not be able to acquire the insurance. And so we generally like to let the market control, let insurance determine what is the appropriate risk for them to take. And so look for what kind of insurance they feel is most appropriate for their business And let insurers determine how they want to manage that risk and how much of that risk they want to take on. Mandating coverage does not make coverage available, think, as Justin said. So you could mandate coverage and then there would be businesses that would be unable to get it at all. So you have to be very careful. The level that if we were to keep the mandate, which I don't recommend doing, we would have to set that level at such a low level to ensure that everybody would be able to meet it, that it would not provide much coverage, to be honest. And letting businesses determine what they can afford and what they're willing to take versus setting a floor that everybody may just sink to, doesn't seem to be the most appropriate in our opinion. A little bit about how insurers think about risk from a liquor liability perspective. As Justin mentioned, the fact that they are liquor heavy. Insurers look at alcohol to food ratios, because obviously the more alcohol, the less food, the more likely there is to be somebody who's out of control and is likely to have an issue. They also look at how late a business is open at night, because the longer you're open, the less food you sell, the more likely somebody's going to over imbibe. They also take into account college towns, which Chittenden County is full of colleges, because obviously young people are more risky than those of us who go out and have a couple beers with our dinner on a Friday night. And so all of those things play into how much liquor liability insurance you might be able to get and how expensive that might be. And there are other factors, obviously, around what kind of business you're operating. It's different if you're a true restaurant versus a bar. It's different if you're a country club, versus an event venue where you're having a concert and people are mostly drinking and having a little bit of food. So all of those differences play into how an insurer thinks about what that risk is, how likely that risk is to occur, and how often and how much it's going to cost.

[Chair Matthew Birong]: There's so many variables. And also, if I recall those in different aspects of entertainment too, Like tables, dartboards, those are all factors that escalate. Yes. Represent Hooper looks like he has a question.

[Rep. Robert Hooper (Member, Burlington)]: I blame this question on being full of people. Well, that's clear. Specifically, dropping this kind of insurance, what kind of claim is no longer? Yeah. Does it impact the ability for somebody to recover damages for somebody who drives out of the place or drunk and they run into somebody? What's the bottom line impact on non affected, non participant individuals?

[Mary Block, Deputy Commissioner of Insurance (Vermont DFR)]: So right now, this coverage is not mandated. So essentially, we would just not be changing the current status. A lot of businesses that sell alcohol have liquor liability insurance anyway, because they know they need to manage their risk. But they're not required to have it. They may be required if they rent their space, because a lot of landlords will require them to have liquor liability insurance. There's lots of things that factor into the fact that there are lots of businesses in Vermont that sell alcohol that have liquor liability insurance, even though they don't have to have it. That liquor liability insurance covers the liability of the business that served the alcohol in the ultimate lawsuit, potentially, that occurs when something happens. So that accident happens. There will be the owner of the business may be pulled in to determine whether they had negligence in the sale of the alcohol. And that's negligence decision that a court will have to make about whether or not they knew that person had been drinking too much, or they should have known that person had been drinking too much. If they didn't, they're still not going to be liable and their liquor liability insurance is still not going to cover anything. If they had some liability, then that coverage would be there to assist with that. There would also, in all likelihood, be coverage from the auto insurance company potentially of the person who actually had the accident. And then the court decides whether there's over and above any insurance coverage. Somebody's on the hook for extra money. But piece of insurance that would cover the bar owner who was negligent in the sale of that alcohol would be the piece that we would not be requiring, which we don't today. So we're really saying we're not going to change the state.

[Chair Matthew Birong]: I want to hit the pause button right there. Want to get over to, Commissioner Knight. She I know she has on a clock to get to another committee in a little while. So, if you don't mind, we can circle back for some more questions perhaps. But I wanted to give the commissioner an opportunity to speak to this. She has to get down to Yes. I appreciate it.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Wedding night. Richard, God bless you. Department of Liquor and Lottery. So this was passed in 2023, and the motivation was to actually improve the ability of our licensees, the Vermont businesses, to secure, liquor liability insurance. That's proven to not be the case as, you hear from Justin and Amy and deputy commissioner Block. We testified two years ago, said that it was not necessary. We have, as you've heard, plenty of safeguards around, over serving, you know, we have mandatory education, etcetera. This is not a safety issue. It's not a public safety issue. What drove this bill is not public safety. So since two years, we put this in a sunset, we have consistently heard from our licensees that they continue to not be able to find liquor liability insurance or afford it, as the deputy commissioner and Justin and Amy have explained. So, again, we think it's not necessary, and it's causing our businesses to find it very difficult to operate, in the state of Vermont. We do not The department does not require liquor liability insurance as a condition of licensing. It's only the exceptions of those that have had violations. So we're suggesting that the mandate be repealed. And that's what we have said in the press. Great testimony.

[Chair Matthew Birong]: Yes. Thank you.

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Okay. Question? Sorry. That's your your job.

[Chair Matthew Birong]: In my head, you know, was going with my next one. So the testament theme, amount of work we've done together. Any questions for the commissioner? She's got about three and a half minutes. Oh, sorry. Representative Hango.

[Vice Chair Lisa Hango]: It may not be for you, Commissioner. It might be for the Deputy Commissioner of Insurance. But will those licensees who are required to have liability insurance, have had violations in the past, be able to find going forward, to be able to get that insurance?

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Oh, that's not a question for me.

[Vice Chair Lisa Hango]: I didn't

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: think I

[Mary Block, Deputy Commissioner of Insurance (Vermont DFR)]: would say that right now, licensees are generally able to find insurance. The question is how expensive. There is insurance out there, we deal with a number of carriers that offer. Our ED is very expensive. If you have violations, it is incredibly expensive. If you have put a target on your back, you are at much higher risk at that point. Well,

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: and I would argue if you have a violation and we require it, there's obvious reasons why we require it. You've demonstrated you can't abide by the rules and regulations, and you're making it unsafe. Therefore, you need, like, reliability insurance. And if it's expensive, lesson learned, maybe.

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: Thank you.

[Chair Matthew Birong]: Yes. Anything else for the commissioner? No. You very

[Commissioner Wendy Knight (Department of Liquor and Lottery)]: Thank you.

[Chair Matthew Birong]: We'll circle back on those other components next week.

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: Yeah, no problem. No problem.

[Chair Matthew Birong]: So do we have further questions for the deputy commissioner, Dave Hark?

[Rep. Robert Hooper (Member, Burlington)]: Alright.

[Chair Matthew Birong]: I'll I'm gonna go, off script with another witness right now and, invite up Adam Nekatherine. He has chief that were very engaged in this conversation back in 2023.

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: Mister chair, members of the committee, Adam Nugent, Nugent Group, Vermont Association for Justice. With the Vermont Association for Justice, we're gonna bring you a different perspective on this matter and raise some concerns about the direction of changing the current law. And bear with me because 95% of this interest we work with is in the judiciary committees. So I'm about to bring you into a different space in the law. And it will be another perspective from the regulator supervising accountability for the business or the insurance supervisor, making sure there's safety and soundness in insurers that sell products to Vermont businesses. But instead, consider this. Someone crosses the center line at 02:00 in the morning, and the voice I'm bringing to the table is your constituent that now is facing lifelong catastrophic injuries. And the good news is, compared to when we started working on this issue, my circa '95. So since then, when I started working on drunk driving issues, 1995, governor Dean, it was a epidemic. Drunk driving, deaths, and irresponsible consumption of alcohol was the crisis of the day. And so when we think about a success story, this is one of them. But we are not where it started action for twenty five years starting really, you know, when I was in high school, graduating 1989, Mothers Against Drunk Driving, it really started in the late eighties that we need to drive at responsible behavior with the consumption of alcohol. To jump to the very end, mister chair, and then unpack it between here and there. I I harking to, Justin. I had testimony saying one size may not fit all, and that we may have more work to do on this issue. But the current law, despite what you've heard, is that we require insurance for the risky behavior of selling alcohol. We also require insurance for automobiles on the road. And so it is to a certain extent, you know, an unusual requirement, but they are risky behaviors where people get hurt and they get hurt badly. Now this about when someone's hurt, The question is not whether there will be cost, whether someone will pay, it is a question of who will pay. We know the first person that's going to pay is the victim that's been hurt. Lost wages, loss of limb, property destroyed, breadwinning potential lost. I mean, it's catastrophic that injuries that can occur. And so taxpayers come to the table next. So after the victim, it's well, who's gonna cover the health costs? Well, Blue Cross Blue Shield and Medicaid are doing a lot of that. And so when you get to the property and casualty insurance questions, it becomes about reconciling buying the culpable parties and making sure that the insurance or their financial responsibility is sharing the burden of the loss that's occurred. And so if an insurance mandate isn't the right fit because it's financial responsibility that we're saying is the public policy, that'd be another way to look at this. Insurance is the great collector of that risk and serving alcohol. I'm not here thinking of the cafe, or the restaurant, or the small brewer, where there's a lot of small business responsibility. Our involvement in Senate House judiciary, most recently, where we were partners engaged on rewriting the dram shop law, and I'm a little surprised here at 10 becomes a five based on these changes. We were skeptical about that rating, and that I only have that sentiment even more now based on the depth of the changes, we're clarifying. It's still strict liability.

[Chair Matthew Birong]: Is that Roman at numero Roman at four, if

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: I recall? Statute. Yeah. Probably. But there were two negligence, and there's two strict. And if you serve after hours or serve someone underage, you're you're with them until they're sober. That's it's strict liability. If you overserve or serve an arguably intoxicated person, that's a negligence question that's gonna go to a jury. Now despite your sentiment, Vermont is the least litigious state in the nation, and there are no jackpot justice verdicts. Here's why. Vermont has the strictest jury standard for civil verdicts in the country, one of a handful of states. And so for a plaintiff who's been hurt to get the insurance company of the bar that served to pay them damages, they have to prove is this an 11 member committee?

[Chair Matthew Birong]: It is. They have to

[Adam Necrason (Necrason Group, for the Vermont Association for Justice)]: get all 11 of you and your assistant to agree unanimously that they have met their burden of proof that the bar over served. It's a very if one of you in that jury say no, the defendant prevails and the insurance company won't pay. And so that's why we are the state with the least court reform, where the legislature weighs in to create special immunities because jury verdicts in Vermont are rare, they're low, and they're we're not a litigious community. But when people are hurt, it's the car insurance company that pay the for the that the of the person that got hurt. First, go to your own car insurance. I got medical bills, and I'm out of work. I bought my underinsured motorist coverage for a reason. Those lawyers for that insurance company now who else is at this reconciliation table with me? And it's gonna be very hard to prove that a nightclub I mean, forget about the cafe and the restaurants. They're so much responsible environment, but it's 1230 just off Church Street, a lot of college kids. And in house judiciary, we were able to bring forward a story of a woman catastrophically injured by being adjacent to someone swinging a bottle, that somebody they were angry at, they get lifelong injury, loss of eye. They're just literally next to this, not part of it. Turns out the bar, nightclub, uninsured. So this person has lifelong damages, and they're not going to get any financial recovery. So that motivated the judiciary committee to to bring forward what is the current law. The agencies have not followed through on it. They have their reasons. They wanna relitigate that here or look for some tailoring. Could make sense because I I know that it was you know, when you read it, it just it says, make sure they have insurance agency, you figure it out. And that's a classic legislative first pass to hope that the agencies can sort the details out. I'm just elevating above insurance mandates to financial responsibility and making sure to bring to the table constituents who are left irreparably harmed and potentially without recovery. It's not common. We are a responsible state. Drunk driving happens all the time. Go to the courthouse every Monday. They're there. I would venture very little of that is coming from responsible servers, and then there's the over served story. So

[Chair Matthew Birong]: Happy to follow-up. No, no, no, of course. Any questions for Mr. Nugent? Any questions for the other guests that we have in the room right now on this piece? All right. So as you folks can tell who were, were after this conversation a couple of years ago, but also new to the committee, this is a very deep conversation in and around insurance liability. So this was, I think it was a really helpful table set to the opinions on this. So we'll have to take this conversation up again the next time we discuss the bill because there was some other changes that were being discussed in the writing. So, I wanted to have this block of time today though, to really be able to amplify this conversation around this insurance liability, meaning provision. Alright. Last call from the table. If not, we'll take a break until 02:45 when we are scheduled to discuss and possibly vote h six nine four, the Bennington charter per TV town manager contracts. Seeing no answer questions.