Mont. Admin. R. tit. 6 | Mont. Admin. R. Title 6 — State Auditor

Chapter 6.1 Organizational Rule

Subchapter 6.1.1 Organizational Rule

Mont. Admin. R. 6.1.101 Organizational Rule

(1) The following is a description of the organization of the Office of the State Auditor, ex officio Commissioner of Insurance, ex officio Commissioner of Securities.

(a) The position of the State Auditor was created by Article VII, section 1, of the 1889 Constitution of Montana and was continued by Article VI, section 1, of the 1972 Constitution. The position of State Auditor, ex officio Commissioner of Insurance, was created by 2-15-1903, MCA, effective January 1, 1961. The position of State Auditor, ex officio Commissioner of Securities, was created by 2-15-1901, MCA, effective July 1, 1961. The Office of the State Auditor operates as a criminal justice agency.

(b) The State Auditor is the department head and is elected by the qualified voters of Montana as provided by law at a statewide general election and holds office for a term of four years, and until a successor is elected and qualified. The State Auditor is responsible for the administration of the Office of the State Auditor and its divisions, and serves as both ex officio Commissioner of Insurance and ex officio Securities Commissioner. The State Auditor also serves as a member of the Board of Land Commissioners, the Board of State Canvassers, and the Crop Hail Insurance Board.

(c) The Deputy State Auditor is the highest-ranking appointment in the agency. The Deputy State Auditor provides oversight of the Insurance, Securities, and Central Management Divisions.

(d) The Office of the State Auditor consists of four divisions and separate Government Affairs Unit and Communications Unit. The divisions are further divided into bureaus or units, headed by chiefs, directors, or deputies. A list of the divisions and units follows:

(i) Insurance Division;

(ii) Securities Division;

(iii) Legal Services Division;

(iv) Central Management Division;

(v) Communications Unit;

(vi) Government Affairs Unit.

(2) The functions of the divisions and units follow:

(a) As a matter of law, the State Auditor’s Office works to ensure compliance with the Montana insurance and securities laws, promotes captive insurance formations, supports capital formation in the state, and assists consumers with complaints involving the securities and insurance industries. The State Auditor is charged with licensing, registering, and regulating insurance companies and producers, securities issuers, broker-dealers, salespersons, investment advisers, and investment adviser representatives who conduct business in the State of Montana.

(b) The Insurance Division is headed by the deputy insurance commissioner. The Insurance Division is responsible for providing protection for Montana insurance consumers and resolving insurance consumer inquiries and complaints involving agents, coverage, and companies, and for administering the Montana Insurance Code. The division monitors the financial solvency of insurance companies operating in Montana through financial analyses and examinations; collects premium taxes and company fees paid by insurance companies operating in Montana; reviews rate and form filings to ensure compliance with the Montana Insurance Code; and licenses and provides continuing education to insurance producers, agencies, and adjustors. The division also investigates criminal and civil insurance fraud, complaints, as well as other violations of the Montana Insurance Code. The division is comprised of the following six bureaus: Examinations and Captives, Producer Licensing and Market Conduct, Rates, Forms, Insurance Consumer Services, and Investigations.

(c) The Securities Division is headed by the deputy securities commissioner. The Securities Division educates Montana consumers and investors, promotes capital formation, oversees Montana’s intrastate securities industry, and is responsible for the administration of the Securities Act of Montana. The division is responsible for registering securities, security issuers, broker-dealers, salespersons, investment advisers, and investment adviser representatives, and conducting examinations of state-registered investment adviser firms. The division also investigates unregistered or fraudulent securities transactions as well as other violations of the Securities Act of Montana.

(d) The Legal Services Division is headed by the chief legal counsel. The division provides legal support for the agency. The Legal Services Division handles agency legal questions, advisory memoranda and opinion requests, administrative actions, court proceedings, and other legal matters. The division enforces Montana’s securities and insurance laws, holds bad actors accountable through prosecution of criminal and civil cases, and represents the commissioner and the agency in legal matters. The division also handles public records requests.

(e) The Central Management Division is headed by the deputy auditor. The division provides administrative support in the areas of accounting and budget, human resources, and information technology. Additionally, the Central Management Division provides support in fulfilling the commissioner’s duties as a member of the Board of Land Commissioners and Crop Hail Insurance Board. The division is also a conduit for the distribution of the state fire and police retirement program. The division consists of the following three units: Accounting, Fiscal and Budget; Human Resources; and Information Technology.

(f) The Government Affairs Unit is headed by the Government Affairs Director. The unit coordinates agency interactions with legislative bodies, executive offices, and other governmental entities, and provides agency support on legislative requests and implementation of new laws.

(g) The Communications Unit is headed by the chief of staff. The unit handles public inquiries and distributes information to the public.

(3) General inquiries regarding the Office of the State Auditor may be addressed to the State Auditor at 840 Helena Avenue, Helena, MT 59601 or online at csimt.gov. Specific inquiries regarding the functions of a particular division may be addressed to the deputy in charge of that division. All requests for hearings, declaratory rulings, and participation in rulemaking may be addressed to the State Auditor unless the notice in the Montana Administrative Register makes specific provisions for submissions.

(4) Organizational chart of the Office of the State Auditor.

History

Authorizing statute(s): 2-4-201(1), MCA
History: NEW, Eff. 4/4/75; AMD, Eff. 10/31/78; AMD, Eff. 6/29/79; AMD, Eff. 12/31/89; AMD, Eff. 9/30/93; AMD, Eff. 6/30/96; AMD, Eff. 9/30/08; AMD, Eff. 3/31/14; AMD, Eff. 12/31/17; AMD, Eff. 9/30/22; AMD, Eff. 12/31/22; AMD, Eff. 11/5/25.

Chapter 6.2 Overall Office Rules

Subchapter 6.2.1 Procedural Rules

Mont. Admin. R. 6.2.101 Incorporation of Model Procedural Rules by the Insurance Department

(1) The insurance department has adopted the Attorney General's Model Procedural Rules by reference to such rules as stated in ARM 1.3.101 through 1.3.233 with the exceptions enumerated in this chapter.

(2) The insurance department has adopted the Secretary of State's Model Organizational and Procedural Rules by reference to such rules as stated in ARM 1.4.101 through 1.4.109.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 2-4-201, 33-1-313, MCA
History: NEW, Eff. 4/4/75; AMD, 1985 MAR p. 1238, Eff. 8/30/85; AMD, 2017 MAR p. 1889, Eff. 10/14/17; AMD, 2025 MAR, Notice No. 6-291, Eff. 1/11/25.

Mont. Admin. R. 6.2.120 Incorporation of Model Procedural Rules by the Securities Department

(1) The securities department has adopted the Attorney General's Model Procedural Rules by reference to such rules as stated in ARM 1.3.101 through 1.3.233 with the exceptions enumerated in this chapter.

(2) The securities department has adopted the Secretary of State's Model Organizational and Procedural Rules by reference to such rules as stated in ARM 1.4.101 through 1.4.109.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 2-4-201, 30-10-107, MCA
History: NEW, 1985 MAR p. 1238, Eff. 8/30/85; AMD, 2017 MAR p. 1889, Eff. 10/14/17; AMD, 2025 MAR, Notice No. 6-291, Eff. 1/11/25.

Mont. Admin. R. 6.2.121 Orders

(1) All orders issued pursuant to the Securities Act of Montana shall be signed by the Securities Commissioner or a designee of the Securities Commissioner.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, MCA
History: NEW, 1985 MAR p. 1238, Eff. 8/30/85; AMD, 2017 MAR p. 1889, Eff. 10/14/17.

Mont. Admin. R. 6.2.122 Temporary Cease and Desist Orders

(1) If the commissioner issues a temporary cease and desist order, the respondent has 15 days from receipt of the order to make a written request for a contested case hearing on the allegations contained in the order. The hearing must be held within 30 days of the commissioner's receipt of the hearing request unless the time is extended by agreement of the parties or by order of the hearing examiner. If the respondent does not request a hearing within 15 days of receipt of the order by the respondent and the commissioner does not order a hearing, the order becomes final.

History

Authorizing statute(s): Sec. 30-10-107 MCA
Implementing statute(s): Sec. 30-10-305 MCA
History: NEW, 1985 MAR p. 1238, Eff. 8/30/85; AMD, 1988 MAR p. 1888, Eff. 8/26/88.

Mont. Admin. R. 6.2.125 Rulemaking, Petition to Adopt, Amend, or Repeal Rule

(1) Section 2-4-315, MCA, authorizes an interested person or member of the legislature acting on behalf of an interested person when the legislature is not in session, to petition an agency to adopt, amend, or repeal a rule.

(a) The petition shall be in writing, signed by or on behalf of the petitioner, and shall contain, a detailed statement of:

(i) the name and address of the petitioner and of any other person known by the petitioner to be interested in the rule sought to be adopted, amended, or repealed;

(ii) sufficient facts to show how the petitioner will be affected by adoption, amendment, or repeal of the rule;

(iii) the rule that the petitioner requests the agency adopt, amend, or repeal. Where amendment of an existing rule is sought, the rule shall be set forth in the petition with proposed deletions interlined and proposed additions underlined; and

(iv) facts and propositions of law in sufficient detail to show the reasons for adoption, amendment, or repeal of the rule.

(b) Legislators may petition the commissioner on behalf of interested parties through an informal letter or memorandum. The petition should include the name of the person or a description of the class of persons on whose behalf the legislator acts. Petitions filed by the appropriate administrative rule review committee of the legislature need not be brought on the behalf of any specifically interested party. Any petition from the legislature or its members should comply with (1)(a)(iii) and (iv).

(2) The petition shall be considered filed when received by CSI.

(3) Upon receipt of the petition, CSI:

(a) may, but is not required to, schedule a hearing or oral presentation of the petitioner's or interested person's views to assist in developing the record;

(b) shall, within 60 days after date of submission of the petition, either:

(i) issue an order denying the petition; or

(ii) initiate rulemaking proceedings in accordance with MAPA.

(4) A decision to deny a petition or to initiate rulemaking procedures must:

(a) be in writing;

(b) be based on record evidence, including any information submitted by the petitioner, the agency, and interested persons; and

History

Authorizing statute(s): 2-4-202, MCA
Implementing statute(s): 2-4-202, 2-4-315, MCA
History: NEW, 2025 MAR, Notice No. 6-291, Eff. 1/11/25.

Subchapter 6.2.2 Debt Collections

Mont. Admin. R. 6.2.201 Purpose and Scope

(1) This subchapter implements for the department and the Department of Revenue the mechanisms provided in Title 17, chapter 4, MCA, for recovery and offset of monetary sums owing to the state of Montana, including, but not limited to, sums related to the provision of services through the programs administered by the department and fines and other fees imposed by the department.

(2) The provisions of this subchapter are not the department's exclusive means of debt collection, but are in addition to any other means of offset, recovery, or other debt collection procedures authorized by law.

History

Authorizing statute(s): 30-10-107, 33-1-313, MCA
Implementing statute(s): 17-4-110, MCA
History: NEW, 2008 MAR p. 943, Eff. 5/9/08; AMD and TRANS, from ARM 6.6.4401, 2017 MAR p. 1889, Eff. 10/14/17.

Mont. Admin. R. 6.2.202 Definitions

For the purpose of this subchapter, the following definitions shall apply:

(1) "Debt" means a monetary sum owed to the state of Montana.

(2) "Department" means the State Auditor's Office.

(3) "Offset" means a deduction from monies due to a person or entity from the state for the purpose of recovering in total or in part a debt owed by the person or entity to the state. An offset is undertaken by the Department of Revenue or other agency designated by law under the authority of 17-4-105, MCA. Offset may include, but is not limited to, an offset of a person's or an entity's state tax refund.

(4) "Recovery" means any measure undertaken by the Department of Revenue, or other agency designated by law, under the authority of 17-4-101, MCA, et seq., in accordance with that agency's rules and policies as a means of recovering a debt owed by a person or entity to the state of Montana. Recovery may include, but is not limited to, assignment to a collection agency and litigation.

History

Authorizing statute(s): 30-10-107, 33-1-313, MCA
Implementing statute(s): 17-4-110, MCA
History: NEW, 2008 MAR p. 943, Eff. 5/9/08; AMD and TRANS, from ARM 6.6.4402, 2017 MAR p. 1889, Eff. 10/14/17.

Mont. Admin. R. 6.2.203 Referral for Recovery and Offset

(1) The department under the authority of 17-4-104, MCA, may refer to the Department of Revenue, or other agency designated by law, for recovery and offset of any debt owed to the department.

(2) The department must determine that a debt is uncollectible by the department before the debt may be referred to the Department of Revenue or other agency designated by law.

History

Authorizing statute(s): 30-10-107, 33-1-313, MCA
Implementing statute(s): 17-4-110, MCA
History: NEW, 2008 MAR p. 943, Eff. 5/9/08; AMD and TRANS, from ARM 6.6.4403, 2017 MAR p. 1889, Eff. 10/14/17.

Mont. Admin. R. 6.2.204 Uncollectible Debt

(1) A debt is uncollectible by the department if the department has determined that:

(a) the debt is owing to the department;

(b) the debtor has either not pursued available administrative remedies within the department, or has failed to prevail in the available administrative procedures or remedies within the department, or in any appeal from that administrative procedure or remedy to the state or federal courts;

(d) the department has no administrative means such as recoupment from current payments by which to recover the debt.

(2) The department has made all reasonable efforts to collect a debt when the debt remains owed in whole or in part after:

(a) the department has utilized appropriate notices directed at the debtor's last known address to inform the debtor of the debt owed and the debtor cannot be contacted; or

(b) the department has provided the debtor with an opportunity to enter into a repayment agreement based on a schedule for debt repayment that the department determines is appropriate, and the debtor has failed to cooperate, or the debtor is failing to repay the debt.

(3) A debtor is failing to repay a debt when the debtor has failed to make a monthly or other payment for which the department has mailed notice of delinquency, including a demand for cure of the delinquency within ten days from the date of mailing.

History

Authorizing statute(s): 30-10-107, 33-1-313, MCA
Implementing statute(s): 17-4-110, MCA
History: NEW, 2008 MAR p. 943, Eff. 5/9/08; AMD and TRANS, from ARM 6.6.4404, 2017 MAR p. 1889, Eff. 10/14/17.

Chapter 6.6 Insurance Department

Subchapter 6.6.2 Life Insurance Solicitation

Mont. Admin. R. 6.6.201 Authority

(1) The rules contained in this regulation are adopted and promulgated by the commissioner of insurance under the authority of 33-1-313, MCA.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.202 Purpose

(1) The purpose of this regulation is to require insurers to deliver to purchasers of life insurance information that will improve the buyer's ability to select the most appropriate plan of life insurance for the buyer's needs, improve the buyer's understanding of the basic features of the policy that has been purchased or is under consideration, and improve the ability of the buyer to evaluate the relative costs of similar plans of life insurance.

(2) This regulation does not prohibit the use of additional material that is not a violation of this regulation or any other Montana statute or regulation.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.203 Scope

(1) Except as identified in (2), this regulation shall apply to any solicitation, negotiation, or procurement of life insurance occurring within this state. This regulation shall apply to any issuer of life insurance contracts including fraternal benefit societies.

(2) Unless otherwise specifically included, this regulation shall not apply to:

(a) annuities;

(b) credit life insurance;

(d) life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal Employee Retirement Income Security Act of 1974 (ERISA); or

(e) variable life insurance under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.204 Definitions

For the purposes of this regulation, the following definitions shall apply:

(1) A "buyer's guide" means the current Life Insurance Buyer's Guide adopted by the National Association of Insurance Commissioners (NAIC) or language contained in ARM 6.6.209 or language approved by the commissioner of insurance.

(2) "Current scale of nonguaranteed elements" means a formula or other mechanism that produces values for an illustration as if there is no change in the basis of those values after the time of illustration.

(3) "Generic name" means a short title that is descriptive of the premium and benefit patterns of a policy or a rider.

(4) "Nonguaranteed elements" means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges, or elements of formulas used to determine any of these that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

(5) "Policy data" means a display or schedule of numerical values, both guaranteed and nonguaranteed for each policy year or a series of designated policy years of the following information:

(a) illustrated annual, other periodic, and terminal dividends;

(b) premiums;

(d) cash surrender values and endowment benefits.

(6) "Policy summary" means a written statement describing the elements of the policy, including, but not limited to:

(a) a prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION;

(b) the name and address of the insurance agent, or if no agent is involved, a statement of the procedure to be followed in order to receive responses to the inquiries regarding the policy summary;

(c) the full name and home office or administrative office address of the company in which the life insurance policy is to be or has been written;

(d) the generic name of the basic policy and each rider; and

(e) the following amounts, where applicable, for the first five policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns; including at least one age from sixty through sixty-five and policy maturity:

(i) the annual premium for the basic policy;

(ii) the annual premium for each optional rider;

(iii) the amount payable upon death at the beginning of the policy year regardless of the cause of death, other than suicide or other specifically enumerated exclusions, that is provided under the basic policy and each optional rider; with benefits provided under the basic policy and each rider shown separately;

(iv) the total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider; and

(v) any endowment amounts payable under the policy that are not included under cash surrender values above.

(f) the effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the policy summary shall also indicate that the annual percentage rate will be determined by the company in accordance with the provisions of the policy and the applicable law; and

(g) the date on which the policy summary is prepared.

(7) "Prearrangement" means funeral insurance, burial insurance, preneed funeral insurance, prearranged funeral plan, preneed arrangement, or other agreement by or for an individual before that individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-18-201, 33-20-1501, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.205 General Rules

(1) Each insurer shall maintain at its home office or principal office, a complete file containing one copy of each document authorized by the insurer for use pursuant to this regulation. Such file shall contain one copy of each authorized form for a period of three years following the date of its last authorized use.

(2) An agent shall inform the prospective purchaser, prior to commencing a life insurance sales presentation, that he or she is acting as a life insurance agent and inform the prospective purchaser of the full name of the insurance company which the agent is representing to the buyer. In sales situations in which an agent is not involved, the insurer shall identify its full name.

(3) Terms such as financial planner, investment advisor, financial consultant, or financial counseling shall not be used in such a way as to imply that the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales unless such is actually the case.

(4) Any reference to nonguaranteed elements shall include a statement that the item is not guaranteed and is based on the company's current scale of nonguaranteed elements (use appropriate special terms such as "current dividend" or "current rate" scale). If a nonguaranteed element would be reduced by the existence of a policy loan, a statement to that effect shall be included in any reference to nonguaranteed elements. A presentation or depiction of a policy issued after January 1, 2002, that includes nonguaranteed elements over a period of years shall be governed by ARM 6.6.701 through 6.6.718.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.206 Disclosure Requirements

(1) The insurer shall provide, to all prospective purchasers, a buyer's guide and a policy summary prior to accepting the applicant's initial premium or premium deposit, unless the policy for which application is made contains an unconditional refund provision of at least 10 days or unless the policy summary contains such an unconditional refund offer, in which event the buyer's guide and policy summary must be delivered with the policy or prior to delivery of the policy.

(2) The insurer shall provide a policy summary to prospective purchasers where the insurer has identified the policy form as one that will not be marketed with an illustration. The policy summary shall show guarantees only. It shall consist of a separate document with all required information set out in a manner that does not minimize or render any portion of the summary obscure. Any amounts that remain level for two or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. Amounts in ARM 6.6.204(6)(e) shall be listed in total, not on a per thousand or per unit basis. If more than one insured is covered under one policy or rider, death benefits shall be displayed separately for each insured, or for each class of insureds if death benefits do not differ with the class. Zero amounts shall be displayed as a blank space. Delivery of the policy summary shall be consistent with the time for delivery of the Buyer's Guide as specified in (1).

(3) Upon request by the policyholder, the insurer shall furnish either policy data or an in-force illustration as follows:

(a) For policies issued prior to January 1, 2002, the insurer shall furnish policy data, or, at its option, an in-force illustration meeting the requirements of ARM 6.6.207.

(b) For policies issued after January 1, 2002, that were declared not to be used with an illustration, the insurer shall furnish policy data, limited to guaranteed values, if it has chosen not to furnish an in-force illustration meeting the requirements of this regulation.

(c) If the policy was issued after January 1, 2002, and declared to be used with an illustration, an in-force illustration shall be provided.

(d) Unless otherwise requested, the policy data shall be provided for 20 consecutive years beginning with the previous policy anniversary. The statement of policy data shall include nonguaranteed elements according to the current scale, the amount of outstanding policy loans, and the current policy loan interest rate. Policy values shown shall be based on the current application of nonguaranteed elements in effect at the time of the request. The insurer may charge a commercially reasonable fee for the preparation of the statement.

(4) If a life insurance company changes its method of determining scales of nonguaranteed elements on existing policies, it shall, no later than when the first payment is made on the new basis, advise each affected policy owner residing in this state of this change and of its implication on affected policies. This requirement shall not apply to policies for which the amount payable upon death under the basic policy as of the date when advice would otherwise be required does not exceed $5,000.

(5) If the insurer makes a material revision in the terms and conditions under which it will limit its right to change a nonguaranteed factor, it shall, no later than the first policy anniversary following the revision, advise each affected policy owner residing in this state.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.207 Failure to Comply

(1) Failure of an insurer to provide or deliver a buyer's guide or a policy summary as provided in ARM 6.6.206 shall constitute an omission which misrepresents the benefits, advantages, conditions, or terms of an insurance policy.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.208 Effective Date

(1) This regulation shall apply to all solicitations of life insurance which commence on or after December 15, 1978.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-201, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.209 Sample Buyer's Guide

(1) The following is a sample form:

(a) The face page of the Buyer's Guide shall read as follows:

Life Insurance Buyer's Guide

This guide can help you when you shop for life insurance. It discusses how to:

find a policy that meets your needs and fits your budget

decide how much insurance you need

make informed decisions when you buy a policy

Prepared by the National Association of Insurance Commissioners

The National Association of Insurance Commissioners is an association of state insurance regulatory officials. This association helps the various insurance departments to coordinate insurance laws for the benefit of all consumers.

This guide does not endorse any company or policy

Reprinted by

IMPORTANT THINGS TO CONSIDER

Review your own insurance needs and circumstances. Choose the kind of policy that has benefits that most closely fit your needs. Ask an agent or company to help you.
Be sure that you can handle premium payments. Can you afford the initial premium? If the premium increases later and you still need insurance, can you still afford it?
Don't sign an insurance application until you review it carefully to be sure all the answers are complete and accurate.
Don't buy life insurance unless you intend to stick with your plan. It may be very costly if you quit during the early years of the policy.
Don't drop one policy and buy another without a thorough study of the new policy and the one you have now. Replacing your insurance may be costly.
Read your policy carefully. Ask your agent or company about anything that is not clear to you.
Review your life insurance program with your agent or company every few years to keep up with changes in your income and your needs.

Buying Life Insurance

When you buy life insurance you want coverage that fits your needs.

First, decide how much you need--and for how long--and what you can afford to pay. Keep in mind the major reason you buy life insurance is to cover the financial effects of unexpected or untimely death. Life insurance can also be one of many ways you plan for the future.

Next, learn what kinds of policies will meet your needs and pick the one that best suits you.

Then, choose the combination of policy premium and benefits that emphasizes protection in case of early death, or benefits in case of long life, or a combination of both.

It makes good sense to ask a life insurance agent or company to help you. An agent can help you review your insurance needs and give you information about the available policies. If one kind of policy doesn't seem to fit your needs, ask about others.

This guide provides only basic information. You can get more facts from a life insurance agent or company or from your public library.

What About the Policy You Have Now?

If you are thinking about dropping a life insurance policy, here are some things you should consider:

If you decide to replace your policy, don't cancel your old policy until you have received the new one. You then have a minimum period to review your new policy and decide if it is what you wanted.

It may be costly to replace a policy. Much of what you paid in the early years of the policy you have now, paid for the company's cost of selling and issuing the policy. You may pay this type of cost again if you buy a new policy.

Ask your tax advisor if dropping your policy could affect your income taxes.

If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable.

You may have valuable rights and benefits in the policy you now have that are not in the new one.

If the policy you have now no longer meets your needs, you may not have to replace it. You might be able to change your policy or add to it to get the coverage or benefits you now want.

At least in the beginning, a policy may pay no benefits for some causes of death covered in the policy you have now.

In all cases, if you are thinking of buying a new policy, check with the agent or company that issued you the one you have now. When you bought your old policy, you may have seen an illustration of the benefits of your policy. Before replacing your policy, ask your agent or company for an updated illustration. Check to see how the policy has performed and what you might expect in the future, based on the amounts the company is paying now.

How Much Do You Need?

Here are some questions to ask yourself:

How much of the family income do I provide? If I were to die early, how would my survivors, especially my children, get by? Does anyone else depend on me financially, such as a parent, grandparent, brother, or sister?

Do I have children for whom I'd like to set aside money to finish their education in the event of my death?

How will my family pay final expenses and repay debts after my death?

Do I have family members or organizations to whom I would like to leave money?

Will there be estate taxes to pay after my death?

How will inflation affect future needs?

As you figure out what you have to meet these needs, count the life insurance you have now, including any group insurance where you work or veteran's insurance. Don't forget Social Security, and pension plan survivor's benefits. Add other assets you have: savings, investments, real estate, and personal property. Which assets would your family sell or cash in to pay expenses after your death?

What Is the Right Kind of Life Insurance?

All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. Your choice should be based on your needs and what you can afford.

There are two basic types of life insurance: term insurance and cash value insurance. Term insurance generally has lower premiums in the early years, but does not build up cash values that you can use in the future. You may combine cash value life insurance with term insurance for the period of your greatest need for life insurance to replace income.

Term Insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value.

You can renew most term insurance policies for one or more terms, even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase.

You may be able to trade many term insurance policies for a cash value policy during a conversion period even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.

Cash Value Life Insurance is a type of insurance where the premiums charged are higher at the beginning than they would be for the same amount of term insurance. The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy's cash value by taking a policy loan. If you don't pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value. You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums. You also can use the cash value to increase your income in retirement or to help pay for needs such as a child's tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy. Cash value life insurance may be one of several types; whole life, universal life, and variable life are all types of cash value insurance.

Whole Life Insurance covers you for as long as you live if your premiums are paid. You generally pay the same amount in premiums for as long as you live. When you first take out the policy, premiums can be several times higher than you would pay initially for the same amount of term insurance. But they are smaller than the premiums you eventually pay if you were to keep renewing a term policy until your later years.

Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period.

Universal Life Insurance is a kind of flexible policy that lets you vary your premium payments. You can also adjust the face amount of your coverage. Increases may require proof that you qualify for the new death benefit. The premiums you pay (less expense charges) go into a policy account that earns interest. Charges are deducted from the account. If your yearly premium payment plus the interest your account earns is less than the charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. To prevent that, you may need to start making premium payments, or increase your premium payments, or lower your death benefits. Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value.

Variable Life Insurance is a kind of insurance where the death benefits and cash values depend on the investment performance of one or more separate accounts, which may be invested in mutual funds or other investments allowed under the policy. Be sure to get the prospectus from the company when buying this kind of policy and study it carefully. You will have higher death benefits and cash value if the underlying investments do well. Your benefits and cash value will be lower or may disappear if the investments you chose didn't do as well as you expected. You may pay an extra premium for a guaranteed death benefit.

Life Insurance Illustrations

You may be thinking of buying a policy where cash values, death benefits, dividends, or premiums may vary based on events or situations the company does not guarantee (such as interest rates). If so, you may get an illustration from the agent or company that helps explain how the policy works. The illustration will show how the benefits that are not guaranteed will change as interest rates and other factors change. The illustration will show you what the company guarantees. It will also show you what could happen in the future. Remember that nobody knows what will happen in the future. You should be ready to adjust your financial plans if the cash value doesn't increase as quickly as shown in the illustration. You will be asked to sign a statement that says you understand that some of the numbers in the illustration are not guaranteed.

Finding a Good Value in Life Insurance

After you have decided which kind of life insurance is best for you, compare similar policies from different companies to find which one is likely to give you the best value for your money. A simple comparison of the premiums is not enough. There are other things to consider. For example:

Do premiums or benefits vary from year to year?

How much do the benefits build up in the policy?

What part of the premiums or benefits is not guaranteed?

What is the effect of interest on money paid and received at different times on the policy?

Remember that no one company offers the lowest cost at all ages for all kinds and amounts of insurance. You should also consider other factors.

How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level cash value build-up. A year-by-year display of values and benefits can be very helpful. (The agent or company will give you a policy summary or an illustration that will show benefits and premiums for selected years.)

Are there special policy features that particularly suit your needs?

How are nonguaranteed values calculated? For example, interest rates are important in determining policy returns. In some companies increases reflect the average interest earnings on all of the company's policies regardless of when issued. In others, the return for policies issued in a recent year, or a group of years, reflects the interest earnings on that group of policies; in this case, amounts paid are likely to change more rapidly when interest rates change.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-18-201, 33-20-150, 33-20-1501, MCA
History: NEW, 1978 MAR p. 875, Eff. 12/15/78; AMD, 2016 MAR p. 2329, Eff. 12/10/16.

Mont. Admin. R. 6.6.210 Funeral Prearrangements

(1) For a prearrangement that is funded or to be funded by a life insurance policy, the following information shall be adequately disclosed at the time an application is made or prior to accepting the applicant's initial premium or deposit:

(a) the fact that a life insurance policy is involved or being used to fund a prearrangement;

(b) the nature of the relationship among the soliciting agent or agents, the provider of the funeral or cemetery merchandise or services, the administrator and any other person;

(c) the relationship of the life insurance policy to the funding of the prearrangement and the nature and existence of any guarantees relating to the prearrangement;

(d) the impact on the prearrangement, including:

(i) any changes in the life insurance policy including, but not limited to, changes in the assignment, beneficiary designation, or use of the proceeds;

(ii) any penalties to be incurred by the policyholder as a result of failure to make premium payments; and

(iii) any penalties to be incurred or monies to be received as a result of cancellation or surrender of the life insurance policy.

(e) a list of the merchandise and services which are applied or contracted for in the prearrangement and all relevant information concerning the price of the funeral services, including an indication that the purchase price is either guaranteed at the time of purchase or to be determined at the time of need;

(f) all relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the life insurance policy and the amount actually needed to fund the prearrangement;

(g) any penalties or restrictions, including, but not limited to geographic restrictions or the inability of the provider to perform, on the delivery of merchandise, services, or the prearrangement guarantee; and

(h) the fact that a sales commission or other form of compensation is being paid and the identity of the individuals or entities to whom it is paid, if applicable.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-18-201, 33-20-150, 33-20-1501, MCA
History: NEW, 2016 MAR p. 2329, Eff. 12/10/16.

Subchapter 6.6.3 Replacement of Life Insurance

Mont. Admin. R. 6.6.301 Authority

This sub-chapter is adopted and promulgated by the commissioner of insurance pursuant to section 33-1-313, MCA, and implements section 33-18-204, MCA.

History

Authorizing statute(s): Sec. 33-1-313 MCA
Implementing statute(s): Sec. 33-18-204 MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78.

Mont. Admin. R. 6.6.302 Purpose

(1) The purpose of this subchapter is:

(a) to regulate the activities of insurers and producers with respect to the replacement of existing life insurance and annuities;

(b) to protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement, proposed replacement, or financed purchase transactions. It will:

(i) assure that purchasers receive information with which a decision can be made in his or her own best interests;

(ii) reduce the opportunity for misrepresentation and incomplete disclosures; and

(iii) establish penalties for failure to comply with the requirements of this subchapter.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.303 Definitions

(1) "Direct-response solicitation" means a solicitation through mailings, telephone, the internet or other mass communication media.

(2) "Existing insurer" means the insurance company whose policy or contract is or will be changed or affected in a manner described within the definition of "replacement".

(3) "Existing policy or contract" means an individual life insurance policy or annuity contract in force, including a policy under a binding or conditional receipt or a policy or a contract that is within an unconditional refund period.

(4) "Financed purchase" means the purchase of a new policy involving the actual or intended use of funds obtained by the withdrawal or surrender of, or by borrowing from values of an existing policy to pay all or part of any premium due on the new policy. For purposes of a regulatory review of an individual transaction only, if a withdrawal, surrender, or borrowing by an individual involves the policy values of an existing policy and is used to pay premiums on a new policy owned by the same policyholder and issued by the same company within four months before or 13 months after the effective date of the new policy, it will be deemed prima facie evidence of the policyholder's intent to finance the purchase of the new policy with existing policy values. This prima facie standard is not intended to increase or decrease the monitoring obligations contained in this subchapter.

(5) "Illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years as described in 33-20-604, MCA.

(6) "Policy summary," for the purposes of this subchapter:

(a) for policies or contracts other than universal life policies, means a written statement regarding a policy or contract which shall contain to the extent applicable, but need not be limited to, the following information:

(i) current death benefit;

(ii) annual contract premium;

(iii) current cash surrender value;

(iv) current dividend;

(v) application of current dividend; and

(vi) amount of outstanding loan.

(b) for universal life policies, means a written statement that shall contain at least the following information:

(i) the beginning and end date of the current report period;

(ii) the policy value at the end of the previous report period and at the end of the current report period;

(iii) the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders) ;

(iv) the current death benefit at the end of the current report period on each life covered by the policy;

(v) the net cash surrender value of the policy as of the end of the current report period; and

(vi) the amount of outstanding loans, if any, as of the end of the current report period.

(7) "Producer" shall be defined to include agents and producers.

(8) "Registered contract" means a variable annuity contract or variable life insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933.

(9) "Replacement" means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer if there is no producer, that by reason of such transaction, an existing policy or contract has been or is to be:

(a) lapsed, forfeited, surrendered, or partially surrendered, assigned to the replacing insurer or otherwise terminated;

(b) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

(c) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;

(d) reissued with any reduction in cash values; or

(e) used in a financed purchase.

(10) "Replacing insurer" means the insurance company that issues or proposes to issue a new policy or contract that replaces an existing policy or contract or is a financed purchase.

(11) "Sales material" means a sales illustration and any other written, printed or electronically presented information created, or completed or provided by the company or producer and used in the presentation to the policy or contract owner related to the policy or contract purchased.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.304 Exemptions

(1) Unless otherwise specifically included, this subchapter shall not apply to transactions involving:

(a) credit life insurance;

(b) group life insurance or group annuities where there is no direct solicitation of individuals by an insurance producer. Direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation shall be subject to the provisions of ARM 6.6.307;

(c) an application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised, or when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner;

(d) proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company;

(e) policies or contracts used to fund:

(i) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA) ;

(ii) a plan described by section 401(a) , 401(k) or 403(b) of the Internal Revenue Code, where the plan, for purposes of ERISA, is established or maintained by an employer;

(iii) a governmental or church plan defined in section 414, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under section 457 of the Internal Revenue Code; or

(iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor.

(f) notwithstanding (1)(e) , this subchapter shall apply to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and where the insurance company has been notified that plan participants may choose from among two or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this rule, direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan or arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee;

(g) existing life insurance that is a non-convertible term life insurance policy that will expire in five years or less and cannot be renewed;

(h) where new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured's employer or by an association for which the insured is a member; or

(i) immediate annuities that are purchased with proceeds from an existing contract. Immediate annuities purchased with proceeds from an existing policy are not exempted from the requirements of this subchapter; or

(j) structured settlements.

(2) Registered contracts shall be exempt from the requirements of ARM 6.6.306(1)(b) and 6.6.308(1)(b) with respect to the provision of illustrations or policy summaries; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular shall be required instead.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.305 Duties of Producers

(1) A producer who initiates an application shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts. If the answer is "no," the producer's duties with respect to replacement are complete.

(2) If the applicant answered "yes" to the question regarding existing coverage referred to in (1) , the producer shall present and read to the applicant, not later than at the time of taking the application, a notice regarding replacements in the form as described in Appendix A or other substantially similar form approved by the commissioner. However, no approval shall be required when amendments to the notice are limited to the omission of references not applicable to the product being sold or replaced. The notice shall be signed by both the applicant and the producer attesting that the notice has been read aloud by the producer or that the applicant did not wish the notice to be read aloud (in which case the producer need not have read the notice aloud) and left with the applicant.

(3) The notice shall list all life insurance policies or annuities proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and policy or contract number if available; and shall include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.

(4) In connection with a replacement transaction the producer shall leave with the applicant, at the time an application for a new policy or contract is completed, the original or a copy of all sales material. With respect to electronically presented sales material, it shall be provided to the policy or contract owner in printed form no later than at the time of policy or contract delivery.

(5) Except as provided in ARM 6.6.306(3) , in connection with a replacement transaction, the producer shall submit to the insurer to which an application for a policy or contract is presented, a copy of each document required by this rule, a statement identifying any preprinted or electronically presented company approved sales materials used, and copies of any individualized sales materials, including any illustrations related to the specific policy or contract purchased.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.306 Duties of Replacing Insurers That Use Producers

(1) Where a replacement is involved in the transaction, the replacing insurer shall:

(a) verify that the required forms are received and are in compliance with this subchapter;

(b) notify any other existing insurer that may be affected by the proposed replacement within five business days of receipt of a completed application indicating replacement or when the replacement is identified if not indicated on the application, and mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five business days of a request from an existing insurer;

(c) be able to produce copies of the notification regarding replacement required in ARM 6.6.305(2) , indexed by producer, for at least five years or until the next regular examination by the insurance department of a company's state of domicile, whichever is later; and

(d) provide to the policy or contract owner notice of the right to return the policy or contract within 30 days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations or imposed under such policy or contract. Such notice may be included in Appendix A or C.

(2) In transactions where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control, allow credit for the period of time that has elapsed under the replaced policy's or contract's incontestability and suicide period up to the face amount of the existing policy or contract. With regard to financed purchases the credit may be limited to the amount the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.

(3) If an insurer prohibits the use of sales material other than that approved by the company, as an alternative to the requirements of ARM 6.6.305(5) the insurer may:

(a) require with each application a statement signed by the producer that:

(i) represents that the producer used only company-approved sales material; and

(ii) states that copies of all sales material were left with the applicant in accordance with ARM 6.6.305(4) ; and

(b) within 10 days of the issuance of the policy or contract:

(i) notify the applicant by sending a letter or by verbal communication with the applicant by a person whose duties are separate from the marketing area of the insurer, that the producer has represented that copies of all sales material have been left with the applicant in accordance with ARM 6.6.305(4) ;

(ii) provide the applicant with a toll free number to contact company personnel involved in the compliance function if such is not the case; and

(iii) stress the importance of retaining copies of the sales material for future reference.

(c) be able to produce a copy of the letter or other verification in the policy file at the home or regional office for at least five years after the termination or expiration of the policy or contract.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.307 Duties of Insurers with Respect to Direct Response Solicitations

(1) In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue or change an existing policy or contract. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix B, or other substantially similar form approved by the commissioner.

(2) If the insurer has proposed the replacement or if the applicant indicates a replacement is intended and the insurer continues with the replacement, the insurer shall:

(a) provide to applicants or prospective applicants with the policy or contract a notice, as described in Appendix C, or other substantially similar form approved by the commissioner. In these instances the insurer may delete the references to the producer, including the producer's signature, and references not applicable to the product being sold or replaced, without having to obtain approval of the form from the commissioner. The insurer's obligation to obtain the applicant's signature shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the notice referred to in this rule. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed notice referred to in this rule; and

(b) comply with the requirements of ARM 6.6.306(1) (b) , if the applicant furnishes the names of the existing insurers, and the requirements of ARM 6.6.306(1) (c) , (1) (d) and (2) .

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.308 Duties of the Existing Insurer

(1) Where a replacement is involved in the transaction, the existing insurer shall:

(a) retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later;

(b) send a letter to the policy or contract owner of the right to receive information regarding the existing policy or contract values including, if available, an in force illustration or policy summary if an in force illustration cannot be produced within five business days of receipt of a notice that an existing policy or contract is being replaced. The information shall be provided within five business days of receipt of the request from the policy or contract owner;

(c) upon receipt of a request to borrow, surrender or withdraw any policy values, send a notice, advising the policy owner that the release of policy values may affect the guaranteed elements, non-guaranteed elements, face amount or surrender value of the policy from which the values are released. The notice shall be sent separate from the check if the check is sent to anyone other than the policy owner. In the case of consecutive automatic premium loans, the insurer is only required to send the notice at the time of the first loan.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.309 Violations and Penalties

(1) Any insurer, agent, representative, officer or employee of such insurer failing to comply with the requirements of this sub-chapter shall be subject to such penalties as may be appropriate under the insurance laws of Montana.

(2) Any failure to comply with this subchapter shall be considered a violation of 33-18-204, MCA, Twisting Prohibited.

(3) Examples of violations include:

(a) any deceptive or misleading information set forth in sales material;

(b) failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement;

(d) advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer; or

(e) advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company.

(4) Policy and contract owners have the right to replace existing life insurance policies or annuity contracts after indicating in or as part of the applications for new coverage that replacement is not their intention; however, patterns of such action by policy or contract owners of the same producer shall be deemed prima facie evidence of the producer's knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer's intent to violate this subchapter.

(5) Where it is determined that the requirements of this subchapter have not been met, the replacing insurer shall provide to the policy owner an in-force illustration if available or policy summary for the replacement policy or available disclosure document for the replacement contract and the notice regarding replacements in Appendix A or C.

History

Authorizing statute(s): Sec. 33-1-313, 33-1-317, 33-1-318, 33-17-1001, MCA
Implementing statute(s): Sec. 33-18-204, MCA
History: NEW, 1978 MAR p. 1302, Eff. 12/15/78; AMD, 2001 MAR p. 2221, Eff. 1/1/02.

Mont. Admin. R. 6.6.311 Duties of All Insurers That Use Producers

(1) Each insurer shall:

(a) maintain a system of supervision and control to insure compliance with the requirements of this subchapter that shall include at least the following:

(i) inform its producers of the requirements of this subchapter and incorporate the requirements of the subchapter into all relevant producer training manuals prepared by the insurer;

(ii) provide to each producer a written statement of the company's position with respect to the acceptability of replacements providing guidance to its producer as to the appropriateness of these transactions;

(iii) a system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with (1)(a)(ii);

(iv) procedures to confirm that the requirements of this subchapter have been met; and

(v) procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer. Compliance with this rule may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring.

(b) have the capacity to monitor each producer's life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the insurance department. The capacity to monitor shall include the ability to produce records for each producer's:

(i) life replacements, including financed purchases, as a percentage of the producer's total annual sales for life insurance;

(ii) number of lapses of policies by the producer as a percentage of the producer's total annual sales of life insurance;

(iii) annuity contract replacements as a percentage of the producer's total annual annuity contract sales;

(iv) number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company's monitoring system as required by (1)(a)(v); and

(v) replacements, indexed by replacing producer and existing insurer.

(c) require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts;

(d) require with each application for life insurance or an annuity that indicates an existing policy or contract a completed notice regarding replacements as contained in Appendix A;

(e) when the applicant has existing policies or contracts, each insurer shall be able to produce copies of any sales material as required by ARM 6.6.305(5), the basic illustration and any supplemental illustrations related to the specific policy or contract that is purchased, and the producer's and applicant’s signed statements with respect to financing and replacement for at least five years after the termination or expiration of the proposed policy or contract;

(f) ascertain that the sales material and illustrations used in the replacement meet the requirements of this subchapter and are complete and accurate for the proposed policy or contract;

(g) if an application does not meet the requirements of ARM 6.6.305(5), notify the producer and applicant and fulfill the outstanding requirements; and

(h) maintain records in paper, photographic, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-204, MCA
History: NEW, 2001 MAR p. 2221, Eff. 1/1/02; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.312 Severability

(1) If any rule or portion of a rule of this subchapter, or its applicability to any person or circumstances, is held invalid by a court, the remainder of this subchapter, or the applicability of its provision to other persons, shall not be affected.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-204, MCA
History: NEW, 2001 MAR p. 2221, Eff. 1/1/02; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.313 Sample Forms

(1) The State Auditor's Office adopts and incorporates by reference Appendix A, B, and C, which are set forth in the National Association of Insurance Commissioners' (NAIC) Life Insurance and Annuities Replacement Model Regulation, adopted in 2015. Copies of appendices A, B, and C are available for public inspection at the Office of the Montana State Auditor, 840 Helena Avenue, Helena, MT 59601. Copies of these appendices may be obtained by writing to the State Auditor's Office, Legal Department, 840 Helena Avenue, Helena, MT 59601. Persons obtaining a copy of these appendices must pay the cost of providing such copies.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-204, MCA
History: NEW, 2001 MAR p. 2221, Eff. 1/1/02; AMD, 2017 MAR p. 1888, Eff. 10/14/17; AMD, 2019 MAR p. 293, Eff. 3/16/19.

Subchapter 6.6.5 Medicare Supplements

Mont. Admin. R. 6.6.502A PURPOSE

6.6.502A PURPOSE

(1) The purpose of this subchapter is to:

(a) provide for the reasonable standardization of coverage and simplification of terms and benefits of medicare supplement policies;

(b) facilitate public understanding and comparison of such policies;

(c) eliminate provisions contained in such policies which may be misleading or confusing in connection with the purchase of such policies or with the settlement of claims; and

(d) provide for full disclosures in the sale of accident and sickness insurance coverages to persons eligible for medicare.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-22-902, MCA
History: NEW, 2004 MAR p. 313, Eff. 2/13/04.

Mont. Admin. R. 6.6.503 Applicability and Scope

(1) Except as otherwise specifically provided in ARM 6.6.507, 6.6.507C, 6.6.508, 6.6.509, 6.6.515 and 6.6.521, this subchapter shall apply to:

(a) all Medicare supplement policies delivered or issued for delivery in this state on or after February 1, 1982, the effective date of this subchapter; and

(b) all certificates which have been delivered or issued for delivery in this state and issued under group Medicare supplement policies.

(2) This subchapter does not apply to a policy or contract of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organizations, or combination, for employees or former employees, or a combination, or for members or former members, or a combination, of the labor organizations.

History

Authorizing statute(s): 33-1-313, 33-22-904, MCA
Implementing statute(s): 33-22-904, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.504 Definitions

For purposes of this subchapter, the terms defined in 33-22-903, MCA, will have the same meaning in this subchapter unless clearly designated otherwise. The following definitions are in addition to those in 33-22-903, MCA.

(1) "Bankruptcy" means when a Medicare advantage organization that is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in the state.

(2) "Continuous period of creditable coverage" means the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual had no breaks in coverage greater than 63 days. The 63-day period shall be counted as described in 33-22-141 and 33-22-142, MCA.

(3) "Creditable coverage":

(a) means, with respect to an individual, coverage of the individual provided under any of the following:

(i) a group health plan;

(ii) health insurance coverage;

(iii) Part A or Part B of Title XVIII of the Social Security Act (Medicare);

(iv) Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under section 1928;

(v) chapter 55 of Title 10 USC (CHAMPUS);

(vi) a medical care program of the Indian health service or of a tribal organization;

(vii) a state health benefits risk pool;

(viii) a health plan offered under chapter 89 of Title 5 USC (Federal Employees Health Benefits Program);

(ix) a public health plan as defined in federal regulation; and

(x) a health benefit plan under section 5(e) of the Peace Corps Act (22 USC 2504(e)).

(b) does not include:

(i) one or more, or any combination of, the following:

(A) coverage only for accident or disability income insurance, or any combination;

(B) coverage issued as a supplement to liability insurance;

(D) workers' compensation or similar insurance;

(E) automobile medical payment insurance;

(F) credit-only insurance;

(G) coverage for on-site medical clinics; and

(H) other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.

(ii) the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:

(A) limited scope dental or vision benefits;

(B) benefits for long-term care, nursing home care, home health care, community-based care, or any combination of; and

(iii) the following benefits if offered as independent, noncoordinated benefits:

(A) coverage only for a specified disease or illness; and

(B) hospital indemnity or other fixed indemnity insurance.

(iv) the following if it is offered as a separate policy, certificate, or contract of insurance:

(A) Medicare supplement health insurance as defined under section 1882(g)(1) of the Social Security Act;

(B) coverage supplemental to the coverage provided under chapter 55 of Title 10, United States Code; and

(4) "Employee welfare benefit plan" means a plan, fund, or program of employee benefits as defined in 29 USC section 1002 (Employee Retirement Income Security Act).

(5) "Insolvency" means when an issuer, licensed to transact the business of insurance in this state, has had a final order of liquidation entered against it with a finding of insolvency by a court of competent jurisdiction in the issuer's state of domicile.

(6) "MACRA" means the Medicare Access and CHIP Reauthorization Act of 2015.

(7) "Medicare advantage plan" means a plan of coverage for health benefits under Medicare Part C as defined in 42 USC 1395w-28(b)(1), and includes:

(a) coordinated care plans which provide health care services, including but not limited to health maintenance organization plans (with or without a point-of-service option), plans offered by provider-sponsored organizations, and preferred provider organization plans;

(b) medical savings account plans coupled with a contribution into a Medicare advantage plan medical savings account; and

(8) "Medicare supplement policy" has the meaning provided for in 33-22-903, MCA, except that "Medicare supplement policy" does not include Medicare advantage plans established under Medicare Part C, outpatient prescription drug plans established under Medicare Part D, or any health care prepayment plan (HCPP) that provides benefits pursuant to an agreement under section 1833(a)(1)(A) of the Social Security Act.

(9) ″MMA″ means the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

(10) "Pre-standardized Medicare supplement benefit plan," "pre-standardized benefit plan," or "pre-standardized plan" means a group or individual policy of Medicare supplement insurance issued prior to July 16, 1993.

(11) "Secretary" means the secretary of the United States Department of Health and Human Services.

(12) "1990 standardized Medicare supplement benefit plan," "1990 standardized benefit plan," or "1990 plan" means a group or individual policy of Medicare supplement insurance issued on or after July 16, 1993, and with an effective date for coverage prior to June 1, 2010, and includes Medicare supplement insurance policies and certificates renewed on or after that date which are not replaced by the issuer at the request of the insured.

(13) "2010 standardized Medicare supplement benefit plan," "2010 standardized benefit plan," or "2010 plan" means a group or individual policy of Medicare supplement insurance issued with an effective date for coverage on or after June 1, 2010.

History

Authorizing statute(s): 33-1-313, 33-22-904, MCA
Implementing statute(s): 33-22-902, 33-22-903, 33-22-923, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2018 MAR p. 969, Eff. 3/17/18.

Mont. Admin. R. 6.6.505 Policy Definitions and Terms

(1) No insurance policy or certificate may be advertised, solicited, or issued for delivery in this state as a medicare supplement policy or certificate unless the policy or certificate contains definitions or terms which conform to the requirements of this rule and 33-22-903, MCA.

(2) The following definitions are in addition to those in 33-22-903, MCA:

(a) "Accident," "accidental injury," or "accidental means" must be defined to employ "result" language and may not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.

(i) The definition may not be more restrictive than the following: "injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person that is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force."

(ii) The definition may provide that injuries may not include injuries for which benefits are provided or available under any workers' compensation, employer's liability or similar law, or motor vehicle no-fault plan, unless prohibited by law.

(b) "Benefit period" or "medicare benefit period" may not be defined more restrictively than as defined in the medicare program.

(c) "Convalescent nursing home," "extended care facility," or "skilled nursing facility" must not be described more restrictively than as defined in the medicare program.

(d) "Health care expenses" means, for purposes of ARM 6.6.508, expenses of health maintenance organizations associated with the delivery of health care services, which expenses are analogous to incurred losses of insurers.

(e) "Hospital" must be defined in relation to its status, facilities, and available services or to reflect its accreditation by the joint commission on accreditation of hospitals, but not more restrictively than as defined in the medicare program.

(f) "Medicare" shall be defined in the policy and certificate. Medicare may be substantially defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended."

(g) "Medicare eligible expenses" means expenses of the kinds covered by medicare parts A and B, to the extent recognized as reasonable by medicare.

(h) "Physician" must not be defined more restrictively than as defined in the medicare program.

(i) "Sickness" must not be defined more restrictively than the following: "Sickness means illness or disease of an insured person." The definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any workers' compensation, occupational disease, employer's liability, or similar law.

History

Authorizing statute(s): 33-1-313 and 33-22-904, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05.

Mont. Admin. R. 6.6.506 Prohibited Policy Provisions

(1) Except for permitted preexisting condition clauses as described in ARM 6.6.507(1)(a)(i) and 6.6.507D(1)(a)(i), no policy or certificate may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy if such policy or certificate contains limitations or exclusions on coverage that are more restrictive than those of Medicare.

(2) No Medicare supplement policy or certificate may use waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.

(3) No Medicare supplement policy or contract or certificate in force in the state of Montana shall contain benefits which duplicate benefits provided by Medicare.

(4) Subject to ARM 6.6.507(1)(a)(iv) and (v):

(a) a Medicare supplement policy or certificate with benefits for outpatient prescription drugs in existence prior to January 1, 2006, must be renewed for current policyholders or certificateholders who do not enroll in Part D at the option of the policyholder or certificateholder;

(b) a Medicare supplement policy or certificate with benefits for outpatient prescription drugs may not be issued after December 31, 2005; and

(c) after December 31, 2005, a Medicare supplement policy or certificate with benefits for outpatient prescription drugs may not be renewed after the policyholder or certificateholder enrolls in Medicare Part D unless:

(i) the policy or certificate is modified to eliminate outpatient drugs incurred after the effective date of the individual's coverage under a Part D plan; and

(ii) premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-902, 33-22-904, 33-22-905, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.507 Benefit Standards for Medicare Supplement Benefit Plan Policies or Certificates Issued or Delivered with an Effective Date for Coverage Prior to June 1, 2010

(a) the following standards are in addition to all other requirements of this subchapter and Title 33, chapter 22, part 9, MCA, Medicare Supplement Insurance Minimum Standards:

(i) a Medicare supplement policy or certificate shall not exclude or limit benefits for a loss incurred more than six months from the effective date of coverage because it involves a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage;

(ii) a Medicare supplement policy or certificate must not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents;

(iii) A Medicare supplement policy or certificate must provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible copayment, or coinsurance amounts. Premiums may be modified to correspond with such changes;

(iv) no Medicare supplement policy or certificate may provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured other than the nonpayment of premium;

(v) each Medicare supplement policy shall be guaranteed renewable and:

(A) the issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual; and

(B) the issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation;

(vi) if the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under (1)(a)(viii), the issuer must offer certificateholders an individual Medicare supplement policy which (at the option of the certificateholder):

(A) provides for continuation of the benefits contained in the group policy; or

(B) provides for such benefits as are required to meet the minimum standards as defined in 6.6.507D(4)];

(vii) if an individual is a certificateholder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:

(A) offer the certificateholder the conversion opportunity described in (1)(a)(vi);

(B) at the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy;

(viii) if a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the succeeding issuer shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy must not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced; and

(ix) if a Medicare supplement policy or certificate eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), the modified policy or certificate shall be deemed to satisfy the guaranteed renewal requirements of this rule.

(2) Termination of a Medicare supplement policy or certificate must be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss.

(3) A Medicare supplement policy or certificate must provide that benefits and premiums under the policy or certificate must be suspended at the request of the policyholder or certificateholder for the period (not to exceed 24 months) in which the policyholder or certificateholder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificateholder notifies the issuer of such policy or certificate within 90 days after the date the individual becomes entitled to such assistance. Upon receipt of timely notice, the issuer must either return to the policyholder or certificateholder that portion of the premium attributable to the period of Medicaid eligibility, or provide coverage to the end of the term for which premiums were paid, at the option of the insured, subject to adjustment for paid claims.

(a) If such suspension occurs and if the policyholder or certificateholder loses entitlement to such medical assistance, such policy or certificate must be automatically reinstituted effective as of the date of termination of such entitlement if the policyholder or certificateholder provides notice of loss of such entitlement within 90 days after the date of such loss and pays the premium attributable to the period.

(b) Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for any period that may be provided by federal regulation) at the request of the policyholder if the policyholder is entitled to benefits under 226(b) of the Social Security Act and is covered under a group health plan (as defined in 1862(b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificateholder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder provides notice of loss of coverage within 90 days after the date of loss;

(i) not provide for any limitation period with respect to treatment of preexisting conditions;

(ii) provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension. If the suspended Medicare supplement policy or certificate provided coverage for outpatient prescription drugs, reinstitution of the policy or certificate for Medicare Part D enrollees must be without coverage for outpatient prescription drugs and must otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and

(iii) provide for classification of premiums on terms at least as favorable to the policyholder or certificateholder as the premium classification terms that would have applied to the policyholder or certificateholder had the coverage not been suspended.

(4) If an issuer makes a written offer to the Medicare supplement policyholders or certificateholders of one or more of its plans, to exchange during a specified period from his or her pre-standardized plan or 1990 standardized plan to a 2010 standardized plan as described in ARM 6.6.507E, the offer and subsequent exchange shall comply with the following requirements:

(a) An issuer need not provide justification to the commissioner if the insured replaces a pre-standardized plan or a 1990 standardized policy or certificate with an issue age rate 2010 standardized policy or certificate at the insured's original issue age and duration. If an insured's policy or certificate to be replaced is priced on an issue age rate schedule at the time of such offer, the rate charged to the insured for the new exchanged policy shall recognize the policy reserve buildup, due to the pre-funding inherent in the use of an issue age rate basis, for the benefit of the insured. The method proposed to be used by an issuer must be filed with the commissioner for approval as part of the rate filing;

(b) The rating class of the new policy or certificate shall be the class closest to the insured's class of the replaced coverage;

(c) An issuer may not apply new preexisting condition limitations or a new incontestability period to the new policy for those benefits contained in the exchanged pre-standardized plan or 1990 standardized policy or certificate of the insured, but may apply preexisting condition limitations of no more than six months to any added benefits contained in the new 2010 standardized policy or certificate not contained in the exchanged policy; and

(d) The new policy or certificate shall be offered to all policyholders or certificateholders within a given plan, except where the offer or issue would be in violation of state or Federal law.

(5) Standards for basic ("core") benefits common to benefit Plans A through J include the following:

(a) every issuer shall make available a policy or certificate including only the following basic "core" package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare supplement insurance benefit plans in addition to the basic "core" package, but not in lieu thereof:

(i) coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;

(ii) coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;

(iii) upon exhaustion of the Medicare hospital inpatient coverage including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for the balance;

(iv) coverage under Medicare Parts A and B for the reasonable cost of the first three pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations;

(v) coverage for the coinsurance amount (or in the case of hospital outpatient department services under a prospective payment system, the co-payment amount) of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible.

(b) The following additional benefits must be included in Medicare supplement benefit Plans B through J only as provided by ARM 6.6.507A:

(i) coverage for all of the Medicare Part A inpatient hospital deductible amount per benefit period;

(ii) coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A;

(iii) coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement;

(iv) coverage for 80% of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge;

(v) coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge;

(vi) coverage for 50% of outpatient prescription drug charges, after a $250.00 calendar year deductible, to a maximum of $1,250.00 in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy or certificate until January 1, 2006;

(vii) coverage for 50% of outpatient prescription drug charges, after a $250.00 calendar year deductible to a maximum of $3,000.00 in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy or certificate until January 1, 2006;

(viii) coverage to the extent not covered by Medicare for 80% of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first 60 consecutive days of each trip outside the United States, subject to a calendar year deductible of $250.00, and a lifetime maximum benefit of $50,000.00. For purposes of this benefit, "emergency care" shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset; and

(ix) coverage for the following preventive health services not covered by Medicare:

(A) an annual clinical preventive medical history and physical examination that may include tests and services from (4)(b)(ix)(B) and patient education to address preventive health care measure;

(B) preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician;

(C) reimbursement shall be for the actual charges up to 100% of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of $120.00 annually under this benefit. This benefit must not include payment for any procedure covered by Medicare;

(x) coverage for services to provide short term, at-home assistance with activities of daily living for those recovering from an illness, injury or surgery.

(A) for purposes of this benefit, the following definitions apply:

(I) "activities of daily living" include, but are not limited to bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings;

(II) "care provider" means a duly qualified or licensed home health aide/homemaker, personal care aide or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses registry;

(III) "home" means any place used by the insured as a place of residence, provided that such place would qualify as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility shall not be considered the insured's place of residence; and

(IV) "at-home recovery visit" means the period of a visit required to provide at-home recovery care, without limit on the duration of the visit, except each consecutive four hours in a 24-hour period of services provided by a care provider is one visit;

(B) for the purposes of this benefit, the following coverage requirements apply:

(I) at-home recovery services provided must be primarily services which assist in activities of daily living.

(II) the insured's attending physician shall certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare.

(I) no more than the number and type of at-home recovery visits certified as necessary by the insured's attending physician. The total number of at-home recovery visits shall not exceed the number of Medicare approved home health care visits under a Medicare approved home care plan of treatment;

(II) the actual charges for each visit up to a maximum reimbursement of $40.00 per visit;

(III) $1,600.00 per calendar year;

(IV) seven visits in any one week;

(V) care furnished on a visiting basis in the insured's home;

(VI) services provided by a care provider as defined in this rule;

(VII) at-home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded; and

(VIII) at-home recovery visits received during the period the insured is receiving Medicare approved home care services or no more than eight weeks after the service date of the last Medicare approved home health care visit;

(D) coverage is excluded for:

(I) home care visits paid for by Medicare or other government programs; and

(II) care provided by family members, unpaid volunteers or providers who are not care providers.

(i) Standardized Medicare Supplement Benefit Plan K must consist of the following benefits:

(A) coverage of 100% of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;

(B) coverage of 100% of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;

(C) upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization paid at the applicable PPS rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for any balance;

(D) coverage for 50% of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in (4)(c)(i)(J);

(E) coverage for 50% of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in (4)(c)(i)(J);

(F) coverage for 50% of cost sharing for all Part A Medicare eligible expenses for hospice and respite care until the out-of-pocket limitation is met as described in (4)(c)(i)(J);

(G) coverage for 50%, under Medicare Part A or B, of the reasonable cost of the first three pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in (4)(c)(i)(J);

(H) except for coverage provided in (4)(c)(i)(I), coverage for 50% of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in (4)(c)(i)(J);

(I) coverage of 100% of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and

(J) coverage of 100% of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4,000.00 in 2006, indexed each year by the appropriate inflation adjustment specified by the secretary of the U.S. department of health and human services;

(ii) Standardized Medicare Supplement Benefit Plan L must consist of the following:

(A) the benefits described in (4)(c)(i)(A), (B), (C) and (I);

(B) the benefits described in (4)(c)(i)(D), (E), (F), (G) and (H), but substituting 75% for 50%; and

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-902, 33-22-904, 33-22-905, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2000 MAR p. 3518, Eff. 12/22/00; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09.

Mont. Admin. R. 6.6.507A STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 1990 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY ON OR AFTER JULY 1993, AND WITH AN EFFECTIVE DATE FOR COVERAGE PRIOR TO JUNE 1, 2010

6.6.507A STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 1990 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY ON OR AFTER JULY 1993, AND WITH AN EFFECTIVE DATE FOR COVERAGE PRIOR TO JUNE 1, 2010

(1) An issuer shall make available to each prospective policyholder and certificateholder a policy form or certificate form containing only the basic "core" benefits, as established in ARM 6.6.507.

(2) No groups, packages or combinations of Medicare supplement benefits other than those listed in this rule shall be offered for sale in this state, except as may be permitted in (7) and Medicare select policies or certificates.

(3) Benefit plans must be uniform in structure, language, designation and format to the standard benefit Plans A through L listed in this rule and conform to the definitions in 33-22-903, MCA, and ARM 6.6.505. Each benefit shall be structured in accordance with the format provided in ARM 6.6.507(4)(a), (b), and (c) and list the benefits in the order shown in this rule. For purposes of this section, "structure, language, and format" means style, arrangement and overall content of a benefit.

(4) An issuer may use, in addition to the benefit plan designations required in (3), other designations to the extent permitted by law.

(5) The following descriptions detail the contents of the standardized benefit Plans A through J:

(a) Standardized Medicare Supplement Benefit Plan A must be limited to the basic ("core") benefits common to all benefit plans, as established in ARM 6.6.507(5).

(b) Standardized Medicare Supplement Benefit Plan B must include only the core benefit as established in ARM 6.6.507(5), plus the Medicare Part A deductible as established in ARM 6.6.507(5)(b)(i).

(c) Standardized Medicare Supplement Benefit Plan C must include only the core benefit, as established in ARM 6.6.507(5), plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, and medically necessary emergency care in a foreign country as established in ARM 6.6.507(5)(b)(i), (ii), (iii), and (viii) , respectively.

(d) Standardized Medicare Supplement Benefit Plan D must include only the core benefit, as established in ARM 6.6.507(5), plus the Medicare Part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country, and the at-home recovery benefit as established in ARM 6.6.507(5)(b)(i), (ii), (viii), and (x), respectively.

(e) Standardized Medicare Supplement Benefit Plan E must include only the core benefit as established in ARM 6.6.507(5), plus the Medicare Part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country, and preventive medical care as defined in ARM 6.6.507(5)(b)(i), (ii), (viii), and (ix), respectively.

(f) Standardized Medicare Supplement Benefit Plan F must include only the core benefit as established in ARM 6.6.507(5), plus the Medicare Part A deductible, the skilled nursing facility care, the Part B deductible, 100% of the Medicare Part B excess charges and medically necessary emergency care in a foreign country as established in ARM 6.6.507(5)(b)(i), (ii), (iii), (v), and (viii), respectively.

(g) Standardized Medicare Supplement Benefit High Deductible Plan F shall include only 100% of covered expenses following the payment of the annual High Deductible Plan F deductible.

(i) The covered expenses are the core benefit as defined in ARM 6.6.507(5), plus the Medicare Part A deductible, skilled nursing facility care, the Medicare Part B deductible, 100% of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in ARM 6.6.507(5)(b)(i), (ii), (iii), (v), and (viii), respectively.

(ii) The annual High Deductible Plan F deductible must consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement Plan F policy, and must be in addition to any other specific benefit deductibles. The annual High Deductible Plan F deductible will be $1500.00 for 1998 and 1999, must be based on the calendar year, and will be adjusted annually thereafter by the secretary to reflect the change in the consumer price index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.00.

(h) Standardized Medicare Supplement Benefit Plan G must include only the core benefit as established in ARM 6.6.507(5) plus the Medicare Part A deductible, the skilled nursing facility care, 80% of the Medicare Part B excess charges, medically necessary emergency care in a foreign country, and the at-home recovery benefit as established in ARM 6.6.507(5)(b)(i), (ii), (iv), (viii), and (x), respectively.

(i) Standardized Medicare Supplement Benefit Plan H must include only the core benefit as established in ARM 6.6.507(5), plus the Medicare Part A deductible, the skilled nursing facility care, basic prescription drug benefit, and medically necessary emergency care in a foreign country as established in ARM 6.6.507(5)(b)(i), (ii), (vi), and (viii), respectively. However, the outpatient prescription drug benefit may not be included in a Medicare supplement policy or certificate sold after December 31, 2005.

(j) Standardized Medicare Supplement Benefit Plan I must include only the core benefit as established in ARM 6.6.507(5), plus the Medicare Part A deductible, the skilled nursing facility care, 100% of the Medicare Part B excess charges, basic prescription drug benefit, medically necessary emergency care in a foreign country, and at-home recovery benefit as established in ARM 6.6.507(5)(b)(i), (ii), (v), (vi), (viii), and (x), respectively. However, the outpatient prescription drug benefit may not be included in a Medicare supplement policy or certificate sold after December 31, 2005.

(k) Standardized Medicare supplement benefit plan J must include only the core benefit as established in ARM 6.6.507(5), plus the Medicare Part A deductible, the skilled nursing facility care, Medicare Part B deductible, 100% of the Medicare Part B excess charges, extended prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care, and at-home recovery benefit as established in ARM 6.6.507(5)(b)(i), (ii), (iii), (v), (vii), (viii), (ix), and (x), respectively. However, the outpatient prescription drug benefit shall not be included in a Medicare supplement policy or certificate sold after December 31, 2005.

(l) Standardized Medicare Supplement Benefit High Deductible Plan J shall consist of 100% of covered expenses following the payment of the annual High Deductible Plan J deductible.

(i) The covered expenses must be only the core benefit as defined in ARM 6.6.507(5), plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, 100% of the Medicare Part B excess charges, extended outpatient prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care benefit, and at-home recovery benefit as defined in ARM 6.6.507(5)(b)(i), (ii), (iii), (v), (vii), (viii), (ix), and (x), respectively. However, the outpatient prescription drug benefit may not be included in a Medicare supplement policy or certificate sold after December 31, 2005.

(ii) The annual High Deductible Plan J deductible must consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement Plan J policy, and must be in addition to any other specific benefit deductibles. The annual deductible will be $1500.00 for 1998 and 1999, must be based on a calendar year, and will be adjusted annually thereafter by the secretary to reflect the change in the consumer price index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.00.

(6) The following descriptions detail the contents of two Medicare supplement plans mandated by the MMA:

(a) standardized Medicare Supplement Benefit Plan K must consist of only those benefits described in ARM 6.6.507(5)(c)(i); and

(b) standardized Medicare Supplement Benefit Plan L must consist of only those benefits described in ARM 6.6.507(5)(c)(ii).

(7) An issuer may, with the prior approval of the commissioner, offer policies or certificates with new or innovative benefits in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits may include benefits that are appropriate to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. After December 31, 2005, the innovative benefit may not include an outpatient prescription drug benefit.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-2-905, MCA
Implementing statute(s): 33-22-902, 33-22-904, 33-22-905, MCA
History: NEW, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.507B OPEN ENROLLMENT

6.6.507B OPEN ENROLLMENT

(1) No issuer may deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant where an application for a policy or certificate is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B.

(2) Each Medicare supplement policy or certificate currently available from an issuer must be made available to all applicants who qualify under this rule without regard to age:

(a) If an applicant qualifies under ARM 6.6.507B(1) submits an application during either time period referenced in (1) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition; and

(b) If the applicant qualifies under ARM 6.6.507B(1) and submits an application during either time period referenced in (1) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The secretary shall specify the manner of the reduction under this rule.

(3) This rule must not be construed as preventing the exclusion of benefits under a policy, except as provided in (2)(a) and (2)(b), ARM 6.6.507C, and 6.6.522 during the first six months, based on a preexisting condition for which the policyholder or certificateholder received treatment or was otherwise diagnosed during the six months before it became effective.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-22-902, 33-22-904, MCA
History: NEW, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2013 MAR p. 1819, Eff. 10/18/13; AMD, 2015 MAR p. 1049, Eff. 7/31/15; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.507C GUARANTEED ISSUE FOR ELIGIBLE PERSONS

6.6.507C GUARANTEED ISSUE FOR ELIGIBLE PERSONS

(1) The following are general provisions relating to guaranteed issue:

(a) Eligible persons are those individuals described in (2) who enroll under the policy during the period specified in (3) and who submit evidence of the date of termination, disenrollment, or Medicare part D enrollment with the application for a Medicare supplement policy.

(b) with respect to eligible persons, an issuer shall not:

(i) deny or condition the issuance or effectiveness of a Medicare supplement policy described in (5) that is offered and is available for issuance to new enrollees by the issuer;

(ii) discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition; or

(iii) impose an exclusion of benefits based on a preexisting condition under such a Medicare supplement policy.

(c) if an eligible person who originally purchased an issue-age rated plan applies for another issue-age plan from any issuer on a guaranteed issue basis, then that issuer must rate the replacement policy or certificate using the age at which the original policy or certificate was rated.

(2) An eligible person is an individual described in any of the following paragraphs:

(a) The individual is enrolled under an employee welfare benefit plan that:

(i) provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide some or all such supplemental health benefits to the individual; or

(ii) is primary to Medicare and the plan terminates or the plan ceases to provide some or all health benefits to the individual because the individual leaves the plan;

(b) the individual is enrolled with a Medicare advantage organization under a Medicare advantage plan under Part C of Medicare, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-inclusive Care for the Elderly (PACE) provider under section 1894 of the Social Security Act, and there are circumstances similar to those described below that would permit discontinuance of the individual's enrollment with such provider if such individual were enrolled in a Medicare advantage plan:

(i) the organization's or plan's certification has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides;

(ii) the individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the secretary, but not including termination of the individual's enrollment on the basis described in section 1851(g)(3)(B) of the federal Social Security Act (where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under section 1856), or the plan is terminated for all individuals within a residence area;

(iii) the individual demonstrates, in accordance with guidelines established by the secretary, that:

(A) the organization offering the plan substantially violated a material provision of the organization's contract under this part in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards; or

(B) the organization, or agent or other entity on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual; or

(i) is enrolled with one of the following organizations:

(A) an eligible organization under a contract under section 1876 of the Social Security Act (Medicare cost);

(B) a similar organization operating under demonstration project authority, effective for periods before April 1, 1999;

(C) an organization under an agreement under section 1833(1)(A) of the Social Security Act (health care prepayment plan); or

(D) an organization under a Medicare select policy; and

(ii) the enrollment ceases under the same circumstance that would permit discontinuance of an individual's election of coverage under (2)(b).

(d) The individual is enrolled under a Medicare supplement policy and the enrollment ceases because:

(i) of the insolvency of the issuer or bankruptcy of the non-issuer organization;

(ii) of other involuntary termination of coverage or enrollment under the policy;

(iii) the issuer of the policy substantially violated a material provision of the policy; or

(iv) the issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual.

(e) The individual was enrolled under a Medicare supplement policy and terminates enrollment and:

(i) subsequently enrolls, for the first time, with any Medicare advantage organization under a Medicare advantage plan under Part C of Medicare, any eligible organization under a contract under section 1876 of the Social Security Act (Medicare risk or cost), any similar organization operating under demonstration project authority, any PACE provider under section 1894 of the Social Security Act, an organization under an agreement under section 1833(a)(1)(A) (health care prepayment plan), or a Medicare select policy; and

(ii) the subsequent enrollment under (2)(e) is terminated by the enrollee during any period within the first 12 months of such subsequent enrollment (during which the enrollee is permitted to terminate such subsequent enrollment under section 1851(e) of the Federal Social Security Act).

(f) the individual, upon first becoming eligible for benefits under Medicare part A at age 65, enrolls in a Medicare advantage plan under Part C of Medicare, or with a PACE provider under section 1894 of the Social Security Act, and disenrolls from the plan or program by not later than 12 months after the effective date of enrollment.

(g) the individual enrolls in a Medicare Part D plan during the initial enrollment period and, at the time of enrollment in part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare Part D along with the application for a policy described in (5)(e).

(h) the individual, upon first becoming eligible for benefits under Medicare Part A and B is enrolled in the Qualified Medicare Beneficiary Program as defined in section 6408(d)(2) of the Federal Omnibus Budget Reconciliation Act of 1989, Public Law 101-239, or full Medicaid (ARM 37.83.802), and no longer qualifies due to income or eligibility changes; or

(i) the individual becomes eligible for benefits under Medicare Part A and B by reason of disability.

(3) The guaranteed issue time period:

(a) for an individual described in (2)(a):

(i) begins on the later of:

(A) the date the individual receives a notice of termination or cessation of some or all supplemental health benefits (or, if a notice is not received, notice that a claim has been denied because of such a termination or cessation); or

(B) the date that the applicable coverage terminates or ceases;

(ii) ends 63 days after the applicable notice;

(b) for an individual described in (2)(b), (c), (e), (f), or (h), whose enrollment is terminated involuntarily, begins on the date that the individual receives a notice of termination and ends 63 days after the date the applicable coverage is terminated;

(i) begins on the earlier of:

(A) the date that the individual receives a notice of termination, a notice of the issuer's bankruptcy or insolvency, or other similar notice if any; or

(B) the date that the applicable coverage is terminated;

(ii) and ends on the date that is 63 days after the date the coverage is terminated;

(d) for an individual described in (2)(b), (d)(iii), (e), or (f) who disenrolls voluntarily, begins on the date that is 60 days before the effective date of the disenrollment and ends on the date that is 63 days after the effective date;

(e) for an individual described in (2)(g), begins on the date the individual receives notice pursuant to section 1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the 60-day period immediately preceding the initial Part D enrollment period and ends on the date that is 63 days after the effective date of the individual's coverage under Medicare Part D;

(f) for an individual described in (2) but not described in the preceding provisions of (3), begins on the effective date of disenrollment and ends on the day that is 63 days after the effective date; and

(g) for an individual described in (2)(i), begins on the date the individual is informed of the individual's eligibility for Medicare by reason of disability and end 63 days after that date.

(4) An individual is entitled to an extension of the guarantee issue time periods for Medicare supplement and Medicare select access if there is an interrupted trial period, as follows:

(a) if an individual described in (2)(e) (or deemed to be so described, pursuant to this subsection) whose enrollment with an organization or provider described in (2)(e)(i) is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, then the subsequent enrollment shall be deemed to be an initial enrollment described in (2)(e);

(b) if an individual described in (2)(f) (or deemed to be so described, pursuant to this subsection) whose enrollment with a plan or in a program described in (2)(f) is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls in another such plan or program, then the subsequent enrollment shall be deemed to be an initial enrollment described in (2)(f); and

(c) for purposes of (2)(e) and (f), no enrollment of an individual with an organization or provider described in (2)(e)(i), or with the plan or in a program described in (2)(f), may be deemed to be an initial enrollment under this subsection after the two-year period beginning on the date on which the individual first enrolled with such an organization, provider, plan or program.

(5) The following describe the type of Medicare supplement policy which must be issued to an eligible person:

(a) an eligible person defined in (2)(a), (b), (c), or (d) is entitled to the issuance of a Medicare supplement policy which has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K, or L offered by any issuer;

(b) subject to (5)(c), an eligible person defined in (2)(e) is entitled to the issuance of the same Medicare supplement policy in which the eligible person was most recently enrolled, if available from the issuer, or, if not so available, a policy described in (5)(a);

(c) after December 31, 2005, an individual who was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit and who elects to enroll in Part D, is entitled to the issuance of a Medicare supplement policy described as follows:

(i) the same policy from the same issuer but modified to remove outpatient prescription drug coverage; or

(ii) at the election of the policyholder, an A, B, C, F (including F with high deductible), K, or L policy that is offered by any issuer;

(d) an eligible person defined in (2)(f), (h), or (i) is entitled to the issuance of any Medicare supplement policy offered by any issuer;

(e) An eligible person defined in (2)(g) is entitled to the issuance of a Medicare supplement policy that has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K, or L, and that is offered and is available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage. However, if the eligible person wishes to enroll in an A, B, C, F (including high deductible F), K, or L and that issuer does not offer that plan, then the eligible person is entitled to have that plan issued by any issuer who makes it available for sale to new enrollees in Montana.

(6) The following establish standards for notification upon termination and disenrollment:

(a) at the time of an event described in (2) because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this rule, and of the obligations of issuers of Medicare supplement policies under (1). Such notice shall be communicated contemporaneously with the notification of termination.

(b) at the time of an event described in (2) because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis of the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this rule, and of the obligations of issuers of Medicare supplement policies under (1). Such notice shall be communicated within ten working days of the issuer receiving notification of disenrollment.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-22-902, 33-22-904, 33-22-905, MCA
History: NEW, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1910, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2013 MAR p. 1819, Eff. 10/18/13; AMD, 2015 MAR p. 1049, Eff. 7/31/15; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.507D BENEFIT STANDARDS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY WITH AN EFFECTIVE DATE FOR COVERAGE ON OR AFTER JUNE 1, 2010

6.6.507D BENEFIT STANDARDS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY WITH AN EFFECTIVE DATE FOR COVERAGE ON OR AFTER JUNE 1, 2010

(1) The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state with an effective date for coverage on or after June 1, 2010. No policy or certificate may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate with an effective date for coverage on or after June 1, 2010, unless it complies with these benefit standards. No issuer may offer any 1990 Standardized Medicare Supplement Benefit Plan for sale on or after June 1, 2010. Benefit standards applicable to Medicare supplement policies and certificates issued with an effective date for coverage before June 1, 2010, remain subject to the requirements of ARM 6.6.507 and other applicable rules and statutes contained in this subchapter and Title 33, chapter 22, part 9, MCA.

(a) The following standards are in addition to all other requirements of this subchapter and Title 33, chapter 22, part 9, MCA, Medicare Supplement Insurance Minimum Standards:

(i) a Medicare supplement policy or certificate must not exclude or limit benefits for a loss incurred more than six months from the effective date of coverage because it involves a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage;

(ii) a Medicare supplement policy or certificate must not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents;

(iii) a Medicare supplement policy or certificate must provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible copayment, or coinsurance amounts. Premiums may be modified to correspond with such changes;

(v) each Medicare supplement policy shall be guaranteed renewable and:

(A) the issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual; and

(B) the issuer shall not cancel or nonrenew the policy or certificate for any reason other than nonpayment of premium or material misrepresentation.

(A) provides for continuation of the benefits contained in the group policy; or

(B) provides for such benefits that meet the requirements of this subsection.

(vii) if an individual is a certificateholder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:

(A) offer the certificateholder the conversion opportunity described in (1)(a)(vi); or

(B) at the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy.

(viii) if a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy must not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

(a) if such suspension occurs and if the policyholder or certificateholder loses entitlement to such medical assistance, such policy or certificate must be automatically reinstituted effective as of the date of termination of such entitlement if the policyholder or certificateholder provides notice of loss of such entitlement within 90 days after the date of such loss and pays the premium attributable to the period, effective as of the date of the termination of entitlement;

(b) each Medicare supplement policy or certificate must provide that benefits and premiums under the policy must be suspended (for any period that may be provided by Federal regulation) at the request of the policyholder or certificateholder if the policyholder or certificateholder is entitled to benefits under 226(b) of the Social Security Act and is covered under a group health plan (as defined in 1862(b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificateholder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder or certificateholder provides notice of loss of coverage within 90 days after the date of loss of coverage;

(i) not provide for any limitation with respect to treatment of preexisting conditions;

(ii) provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension; and

(4) Standards for basic ("core") benefits common to benefit Plans A, B, C, D, F, F with High Deductible, G, M, and N include the following:

(i) coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;

(ii) coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;

(iii) upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for any balance;

(iv) coverage under Medicare Parts A and B for the reasonable cost of the first three pints of blood (or equivalent quantities of packed red blood cells, as defined under Federal regulations) unless replaced in accordance with Federal regulations;

(v) coverage for the coinsurance amount (or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount) of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible; and

(vi) coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses.

(b) The following additional benefits must be included in Medicare Supplement Benefit Plans B, C, D, F, and F with High Deductible, G, M, and N as provided by ARM 6.6.507E:

(i) coverage for 100% of the Medicare Part A inpatient hospital deductible amount per benefit period;

(ii) coverage for 50% of the Medicare Part A inpatient hospital deductible amount per benefit period;

(iii) coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A;

(iv) coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement;

(vi) coverage to the extent not covered by Medicare for 80% of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first 60 consecutive days of each trip outside the United States, subject to a calendar year deductible of $250, and a lifetime maximum benefit of $50,000. For purposes of this benefit, "emergency care" shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 2009 MAR p. 1107, Eff. 7/17/09; AMD, MAR p. 1819, Eff. 10/18/13

Mont. Admin. R. 6.6.507E STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED WITH AN EFFECTIVE DATE FOR COVERAGE ON OR AFTER JUNE 1, 2010

6.6.507E STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED WITH AN EFFECTIVE DATE FOR COVERAGE ON OR AFTER JUNE 1, 2010

(2) An issuer shall make available to each prospective policyholder and certificateholder a policy form or certificate form containing only the basic "core" benefits, as established in ARM 6.6.507D(4).

(3) If an issuer makes available any of the additional benefits described in ARM 6.6.507D(4)(b) or offers standardized benefits Plans K or L (as described in ARM 6.6.507E(8)(a) and (b) of this subchapter), then the issuer shall make available to each prospective policyholder and certificateholder, in addition to a policy form or certificate form with only the basic core benefits as described in (2), a policy form or certificate form containing either Standardized Benefit Plan C (as described in ARM 6.6.507E(7)(c) of this subchapter) or Standardized Benefit Plan F (as described in ARM 6.6.507E(7)(e) of this subchapter).

(4) No groups, packages, or combinations of Medicare supplement benefits other than those listed in this rule shall be offered for sale in this state, except as may be permitted in ARM 6.6.507E(11) and ARM 6.6.601-614 of these rules.

(5) Benefit plans must be uniform in structure, language, designation and format to the standard benefit plans listed in this rule and conform to the definitions in 33-22-903, MCA, and ARM 6.6.505. Each benefit shall be structured in accordance with the format provided in ARM 6.6.507D(4)(a) and (b); or in the case of Plans K or L, in ARM 6.6.507E(8)(a) and (b), and list the benefits in the order shown in this rule. For purposes of this rule, "structure, language, and format" means style, arrangement and overall content of a benefit.

(6) An issuer may use, in addition to the benefit plan designations required in (5), other designations to the extent permitted by law.

(7) The following descriptions detail the contents of the 2010 standardized benefit plans:

(a) Standardized Medicare Supplement Benefit Plan A must be limited to the basic ("core") benefits common to all benefit plans, as established in ARM 6.6.507D(4)(a);

(b) Standardized Medicare Supplement Benefit Plan B must include only the core benefit as established in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible as established in ARM 6.6.507D(4)(b)(i).

(c) Standardized Medicare Supplement Benefit Plan C must include only the core benefit, as established in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, 100% of the Medicare Part B deductible, and medically necessary emergency care in a foreign country as established in ARM 6.6.507D(4)(b)(i), (iii), (iv), and (vi), respectively.

(d) Standardized Medicare Supplement Benefit Plan D must include only the core benefit, as established in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country, as established in ARM 6.6.507D(4)(b)(i), (iii), and (vi), respectively.

(e) Standardized Medicare Supplement Benefit regular Plan F must include only the core benefit as established in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, 100% of the Medicare Part B deductible, 100% of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country, established in ARM 6.6.507D(4)(b)(i), (iii), (iv), (v), and (vi), respectively.

(f) Standardized Medicare Supplement Benefit High Deductible Plan F shall include only 100% of covered expenses following the payment of the annual High Deductible Plan F deductible.

(i) ″Covered expenses″ for this subsection are the core benefit as defined in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, 100% of the Medicare Part B deductible, 100% of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in ARM 6.6.507D(4)(b)(i), (iii), (iv), (v), and (vi), respectively.

(ii) The ″annual high deductible Plan F deductible″ must consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement regular Plan F policy, and must be in addition to any other specific benefit deductibles. The basis for the deductible will be $1500 and will be adjusted annually from 1999 by the Secretary to reflect the change in the consumer price index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.

(g) Standardized Medicare Supplement Benefit Plan G must include only the core benefit as established in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, 100% of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as established in ARM 6.6.507D(4)(b)(i), (iii), (v), and (vi), respectively. Effective January 1, 2020, the standardized benefit plans described in ARM 6.6.507F(2)(d) (Redesignated Plan G High Deductible) may be offered to any individual who was eligible for Medicare prior to January 1, 2020.

(8) The following descriptions detail the contents of two Medicare supplement plans authorized by the MMA:

(a) Standardized Medicare Supplement Benefit Plan K must consist of only the following benefits:

(i) coverage of 100% of the Part A hospital coinsurance amount for each day used from the 61st day through the 90th day in any Medicare benefit period;

(ii) coverage of 100% of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;

(iv) coverage for 50% of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in (x);

(v) coverage for 50% of the coinsurance amount for each day used for the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in (x);

(vi) coverage for 50% of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in (x);

(vii) coverage for 50%, under Medicare Part A or B of the reasonable cost of the first three pints of blood (or equivalent quantities of packed red blood cells, as defined under Federal regulations) unless replaced in accordance with Federal regulations until the out-of-pocket limitation is met as described in (x);

(viii) except for coverage provided in (ix) of this subsection, coverage for 50% of the cost sharing otherwise applicable under Medicare Part B after the policyholder or certificateholder pays the Part B deductible until the out-of-pocket limitation is met as described in (x);

(ix) coverage of 100% of the cost sharing for Medicare Part B preventative services after the policyholder pays the Part B deductible; and

(x) coverage of 100% of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4000 in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary.

(b) Standardized Medicare Supplement Benefit Plan L must consist of only the following benefits:

(i) the benefits described in (8)(a)(i), (ii), (iii), and (ix);

(ii) the benefit described in (8)(a)(iv), (v), (vi), (vii) and (viii), but substituting 75% for 50%; and

(iii) the benefit described in (8)(a)(x), but substituting $2000 for $4000.

(9) Standardized Medicare Supplement Plan M shall include only the basic (core) benefit as defined in ARM 6.6.507D(4)(a), plus 50% of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country, as defined in ARM 6.6.507D(4)(b)(ii), (iii), and (vi), respectively.

(10) Standardized Medicare Supplement Plan N shall include only the basic (core) benefit as defined in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country, as defined in ARM 6.6.507D(4)(b)(i), (iii), and (vi), respectively, with copayments in the following amounts:

(a) the lesser of $20 or the Medicare Part B coinsurance or copayment for each covered health care provider office visit (including visits to medical specialist); and

(b) the lesser of $50 or the Medicare Part B coinsurance or copayment for each covered emergency room visit, however, the copayment shall be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare Part A expense.

(11) An issuer may, with the prior approval of the commissioner, offer policies or certificates with new or innovative benefits in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits must include only benefits that are appropriate to Medicare supplement insurance, are new or innovative, are not otherwise available, are cost-effective, and are offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. New or innovative benefits must not include an outpatient prescription drug benefit. New or innovative benefits may not be used to change or reduce benefits, including a change of any cost-sharing provision, in any standardized plan.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2013 MAR p. 1819, Eff. 10/18/13; AMD, 2015 MAR p. 1049, Eff. 7/31/15; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.507F STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 2020 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY TO INDIVIDUALS NEWLY ELIGIBLE FOR MEDICARE ON OR AFTER JANUARY 1, 2020

6.6.507F STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 2020 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY TO INDIVIDUALS NEWLY ELIGIBLE FOR MEDICARE ON OR AFTER JANUARY 1, 2020

(1) The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) requires that the following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state to individuals newly eligible for Medicare on or after January 1, 2020. No policy or certificate that provides coverage of the Medicare part B deductible may be advertised, solicited, delivered, or issued for delivery in this state as a Medicare supplement policy or certificate to individuals newly eligible for Medicare on or after January 1, 2020. All policies must comply with the following benefit standards. Benefit plan standards applicable to Medicare supplement policies and certificates issued to individuals eligible for Medicare before January 1, 2020, remain subject to the requirements of the appropriate rules of this subchapter.

(2) The standards and requirements of ARM 6.6.507E shall apply to all Medicare supplement policies or certificates delivered or issued for delivery to individuals newly eligible for Medicare on or after January 1, 2020, with the following exceptions:

(a) Standardized Medicare supplement benefit Plan C is redesignated as Plan D and shall provide the benefits contained in ARM 6.6.507E(7)(c) but shall not provide coverage for 100% or any portion of the Medicare Part B deductible.

(b) Standardized Medicare supplement benefit Plan F is redesignated as Plan G and shall provide the benefits contained in ARM 6.6.507E(7)(e) but shall not provide coverage for 100% or any portion of the Medicare Part B deductible.

(c) Standardized Medicare supplement benefit Plans C, F, and F with High Deductible may not be offered to individuals newly eligible for Medicare on or after January 1, 2020.

(d) Standardized Medicare supplement benefit Plan F With High Deductible is redesignated as Plan G With High Deductible and shall provide the benefits contained in ARM 6.6.507E(7)(g) but shall not provide coverage for 100% or any portion of the Medicare Part B deductible. However, the Medicare Part B deductible paid by the beneficiary shall be considered an out-of-pocket expense in meeting the annual high deductible.

(e) The reference to Plans C or F contained in ARM 6.6.507E(3) is deemed a reference to Plans D or G for purposes of this rule.

(3) This rule applies to only individuals that are newly eligible for Medicare on or after January 1, 2020:

(a) by reason of attaining age 65 on or after January 1, 2020; or

(b) by reason of entitlement to benefits under part A pursuant to section 226(b) or 226A of the Social Security Act, or who is deemed to be eligible for benefits under section 226(a) of the Social Security Act on or after January 1, 2020.

(4) For purposes of ARM 6.6.507C, in the case of any individual newly eligible for Medicare on or after January 1, 2020, any reference to a Medicare supplement policy C or F (including F With High Deductible) shall be deemed to be a reference to Medicare supplement policy D or G (including G With High Deductible), respectively, that meet the requirements of this rule.

(5) In the case of a State described in Section 1882(p)(6) of the Social Security Act (″waivered″ alternative simplification states) MACRA prohibits the coverage of the Medicare Part B deductible for any Medicare supplement policy sold or issued to an individual that is newly eligible for Medicare on or after January 1, 2020.

(6) On or after January 1, 2020, the standardized benefit plans described in (2)(d) may be offered to any individual who was eligible for Medicare prior to January 1, 2020, in addition to the standardized plans described in ARM 6.6.507E(7).

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.508 Loss Ratio Standards and Refund or Credit of Premium

(1) A Medicare supplement policy form or certificate form must not be delivered or issued for delivery unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificateholders in the form of aggregate benefits (not including anticipated refunds or credits) provided under the policy form or certificate form:

(a) at least 75% of the aggregate amount of premiums earned in the case of group policies; or

(b) at least 65% of the aggregate amount of premiums earned in the case of individual policies.

(2) For purposes of (1), the loss ratio must be calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization must not include:

(a) home office and overhead costs;

(b) advertising costs;

(d) taxes;

(e) capital costs;

(f) administrative costs; or

(g) claims processing costs.

(3) All filings of rates and rating schedules must demonstrate that expected claims in relation to premiums comply with the requirements of this rule when combined with actual experience to date. Filings of rate revisions must also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards.

(4) The experience used to calculate an expected loss ratio must be the separate experience of any plan. However, if there is more than one Plan H, I, or J because of the requirements of the MMA, the experience of each plan issued before September 9, 2005, and of each H, I, or J Plan issued on or after September 9, 2005, must be combined for the purpose of determining the expected loss ratio. The experience must also be provided separately for each of these plans for the department's records.

(5) For policies issued prior to September 30, 1993, expected claims in relation to premiums shall meet:

(a) the originally filed anticipated loss ratio when combined with the actual experience since inception;

(b) the appropriate loss ratio requirement from (1)(a) and (b) when combined with actual experience beginning with June 21, 1996 to date; and

(c) the appropriate loss ratio requirement from (1)(a) and (b) over the entire future period for which the rates are computed to provide coverage.

(6) Annual reporting and refund or credit calculations must conform to the following requirements:

(a) an issuer shall collect and file with the commissioner by May 31 of each year the data contained in the reporting form contained in ARM 6.6.524 for each type in a standard Medicare supplement benefit plan;

(b) if, on the basis of the experience as reported, the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation (see ARM 6.6.524) must be done on a statewide basis for each type in a standard Medicare Supplement Benefit Plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded;

(c) for the purposes of this subsection, for policies or certificates issued prior to September 30, 1993, the issuer shall make the refund or credit calculation separately for all individual policies combined and all group policies combined for experience after February 13, 2004; and

(d) a refund or credit must be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the secretary, but in no event shall it be less than the average rate of interest for 13-week treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based.

(7) An issuer of Medicare supplement policies and certificates issued before or after the effective date of these rules in this state must file annually its rates, rating schedule, and supporting documentation including ratios of incurred losses to earned premiums by policy duration for approval by the commissioner in accordance with the filing requirements and procedures prescribed by the commissioner, demonstrating that it is in compliance with the foregoing. The supporting documentation must also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. Such demonstration must exclude active life reserves. An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three years.

(8) As soon as practicable, but prior to the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in the state must file with the commissioner, in accordance with the applicable filing procedures of this state:

(a) appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates; and

(b) any appropriate riders, endorsements, or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare. The riders, endorsements, or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or certificate.

(9) As required by (9), an issuer must make such premium adjustments necessary to produce an expected loss ratio under the policy or certificate to conform with minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for the Medicare supplement policies or certificates. No premium adjustment which would modify the loss ratio experience under the policy, other than the adjustments described in this rule, should be made with respect to a policy at any time other than upon its renewal date or anniversary date. Any premium adjustment filings must include all necessary supporting documents to justify the adjustment.

(10) If an issuer fails to make premium adjustments acceptable to the commissioner, the commissioner may order premium adjustments, refunds, or premium credits deemed necessary to achieve the loss ratio required by this rule.

(11) The commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued before or after the effective date of this rule if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. Any determination of compliance should be made without consideration of any refund or credit for the reporting period. Public notice of the hearing shall be furnished in a manner deemed appropriate by the commissioner.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-906, MCA
Implementing statute(s): 33-15-303, 33-22-902, 33-22-906, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96; AMD, 2000 MAR p. 3518, Eff. 12/22/00; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.508A FILING AND APPROVAL OF POLICIES AND CERTIFICATES AND PREMIUM RATES

6.6.508A FILING AND APPROVAL OF POLICIES AND CERTIFICATES AND PREMIUM RATES

(1) An issuer may not deliver, or issue for delivery, a policy or certificate to a resident of this state unless the policy form or certificate has been filed with and approved by the commissioner in accordance with filing requirements and procedures prescribed by the commissioner.

(a) An issuer's name must be as prominently displayed as the name of the association, tradename, or other sponsoring organization.

(b) The policy and certificate must be identified by the proper plan designation letter which must be included anywhere in the form number for the policy.

(2) An issuer must file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the MMA with the commissioner in the state in which the policy or certificate was issued.

(3) An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule, and supporting documentation, together with the outline of coverage, have been filed with and approved by the commissioner in accordance with the filing requirements and procedures adopted by the commissioner.

(4) Except as provided in (4)(a), an issuer shall not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan.

(a) An issuer may offer, with the approval of the commissioner, up to four additional policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases:

(i) the inclusion of new or innovative benefits;

(ii) the addition of either direct response or agent marketing methods;

(iii) the addition of either guaranteed issue or underwritten coverage; or

(iv) the offering of coverage to individuals eligible for Medicare by reason of disability.

(b) For the purposes of this rule, a "type" means an individual policy, a group policy, an individual Medicare select policy, or a group Medicare select policy.

(5) Except as provided in (5)(a), an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this rule that has been approved by the commissioner. A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous 12 months.

(a) An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the commissioner in writing its decision at least 30 days prior to discontinuing the availability of the form of the policy or certificate. After receipt of the notice by the commissioner, the issuer shall no longer offer for sale the policy form or certificate form in this state.

(b) An issuer that discontinues the availability of a policy form or certificate form pursuant to (5)(a) may not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of five years after the issuer provides notice to the commissioner of the discontinuance. The period of discontinuance may be reduced if the commissioner determines that a shorter period is appropriate.

(c) The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this subsection.

(d) Any change in the rating structure or methodology shall be considered a discontinuance under (5) unless the issuer complies with the following requirements:

(i) the issuer provides an actuarial memorandum, in a form and manner prescribed by the commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates; and

(ii) the issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The commissioner may approve a change to the differential which is in the public interest.

(6) The experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan must be combined for purposes of the refund or credit calculation prescribed in ARM 6.6.508, except that forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation.

(7) An issuer may not file a rate structure for its Medicare supplement policies and certificates after January 1, 2006, based upon a structure or methodology with any groupings of attained ages greater than one year for each year the rate increases. The rate change may be flat at the beginning and end of the rate structure, but otherwise the ratio between rates for successive ages must exhibit a smooth pattern as age increases. For example, the commissioner may allow a rate structure that has the same rate for policyholders younger than 68, a rate that smoothly increases some percentage each successive year through age 90, and then maintains the same rate for policyholders older than 90.

(8) An issuer has the option of offering Medicare supplement policies on an attained age basis, issue age basis, or a dual rating basis. Only one of those rating methodologies may be chosen per Medicare supplement benefit policy form, except as provided in (4)(a).

(a) Regardless of the rating methodology chosen, an issuer must provide adequate information to consumers so they may make informed decisions on their Medicare supplement purchases.

(b) If an issuer elects to offer dual rating, the issuer must:

(i) provide a choice between an issue age or attained age rating methodology to individual policyholders, for individual policies, or to group policyholders (not certificate holders) for group policies;

(ii) develop materials which disclose both rating methodologies, including how the methodologies differ in the near term and the long term;

(iii) provide the same commission for both methodologies;

(iv) allow consumers to switch from an attained age rating methodology to an issue age rating methodology; and

(v) prohibit consumers from switching from an issue age rating methodology to an attained age rating methodology.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-905, 33-22-906, MCA
Implementing statute(s): 33-22-904, 33-22-906, MCA
History: NEW, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1910, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.509 Required Disclosure Provisions

(1) Medicare supplement policies and certificates must include a renewal or continuation provision. The language or specifications of the provision must be consistent with the type of contract to be issued. The provision must be appropriately captioned, must appear on the first page of the policy, and must include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the policyholder's age.

(2) Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured or exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy must require a signed acceptance by the insured. After the date of policy or certificate issue, any rider or endorsement that increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing and signed by the insured, unless the increased benefits or coverage are required by the minimum standards for Medicare supplement policies, or if the increased benefits or coverage is required by law. If a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge must be set forth in the policy.

(3) Medicare supplement policies or certificates must not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import.

(4) If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions, the limitations must appear as a separate paragraph of the policy and be labeled as "Preexisting Condition Limitations".

(5) Medicare supplement policies and certificates must have notices prominently printed on the first page of the policy or certificate or attached thereto stating in substance that the policyholder or certificateholder shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination of the policy or certificate the insured person is not satisfied for any reason.

(6) Issuers of accident and sickness policies or certificates or subscriber contracts that provide hospital or medical expense coverage on an expense incurred or indemnity basis to persons eligible for Medicare must provide to such applicants a Medicare supplement "buyer's guide". This may be the pamphlet entitled "Guide to Health Insurance for People with Medicare," developed jointly by the national association of insurance commissioners and the center for Medicaid and Medicare services (CMS) of the U.S. Department of Health and Human Services, or any reproduction or official revision of that pamphlet in a type size no smaller than 12 point type. The "buyer’s guide" must conform to the language, format, type size, type proportional spacing, bold character, and line spaces as specified in Appendix C of the NAIC Model Regulation (see ARM 6.6.526).

(a) Delivery of the "buyer's guide" must be made whether or not such policies or certificates are advertised, solicited, or issued as Medicare supplement policies or certificates as defined in this rule. Except in the case of direct response issuers, delivery of the "buyer's guide" must be made to the applicant at the time of application and acknowledgment of receipt of the "buyer's guide" must be obtained by the issuer. Direct response issuers must deliver the "buyer's guide" to the applicant upon request but not later than at the time the policy is delivered.

(7) As soon as practicable, but no later than 30 days prior to the annual effective date of any Medicare benefit changes, an issuer shall notify its policyholders and certificateholders of modifications it has made to Medicare supplement insurance policies or certificates in a format acceptable to the commissioner. Such notice must:

(a) include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate; and

(b) inform each policyholder or certificateholder as to when any premium adjustment is to be made due to changes in Medicare;

(c) The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and concise terms so as to facilitate comprehension; and

(d) Such notices must not contain, or be accompanied by, any solicitation.

(8) Issuers shall comply with any notice requirements of the MMA.

(9) Issuers shall provide an outline of coverage to each applicant at the time application is presented to the prospective applicant and, except for direct response policies, shall obtain an acknowledgment of receipt of such outline from the applicant:

(a) If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate must accompany such policy or certificate when it is delivered and contain the following statement, in no less than 12 point bold type, immediately above the company name:

"NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued."

(b) The outline of coverage provided to applicants consists of a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage must be in the language and format prescribed below in no less than 12 point type. All plans must be shown on the cover page, and the plans that are offered by the issuer must be prominently identified. Premium information for plans that are offered must be shown on the cover page or immediately following the cover page and must be prominently displayed. The premium and mode shall be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant must be illustrated.

(10) The CSI adopts and incorporates by reference the National Association of Insurance Commissioners (NAIC) Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act (MDL-651), page 651-42 through page 651-84, which was last adopted in 2023. Specifically, those pages of the NAIC MDL-651 set forth benefit charts, disclosures to insureds, and outlines of coverage for 2010 or 2020 Medicare supplement plans, as applicable, that must be included in the outline of coverage provided to the consumer in the same order as set forth in NAIC MDL-651, except that asterisks can be represented numerically and asterisked text appearing at the top or beginning of a document can instead appear at the bottom or end of the document. Copies of the NAIC MDL-651 (2023) are available for public inspection online at http://www.naic.org/prod_serv_model_laws.htm and at the Office of the Commissioner of Securities and Insurance, Montana State Auditor, Legal Department, 840 Helena Avenue, Helena, Montana 59601. Persons obtaining a copy of these forms must pay the cost of providing such copies.

(11) Any accident and sickness insurance policy or certificate, other than a Medicare supplement policy; or a policy issued pursuant to a contract under section 1876 or section 1833 of the Federal Social Security Act (42 USC Sec. 1395, et seq.), disability income policy; basic, catastrophic, or major medical expense policy; single premium nonrenewable policy or other policy identified in ARM 6.6.503(2) issued for delivery in this state to persons eligible for Medicare by reason of age must be accompanied by a notice to the insureds under the policy that the policy is not a Medicare supplement policy or certificate. The notice must either be printed on or attached to the first page of the outline of coverage delivered to insureds under the policy, or if no outline of coverage is delivered, to the first page of the policy or certificate delivered to insureds. The notice must be in no less than 12 point type and must contain the following language: "THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT (POLICY OR CERTIFICATE). If you are eligible for Medicare, review the Medicare Supplement Buyers Guide available from the company."

(12) Applications provided to persons eligible for Medicare for the health insurance policies or certificates described in this rule shall disclose, using the applicable statement in Appendix C of the NAIC Model Regulation, which was incorporated by reference in ARM 6.6.519, the extent to which the policy duplicates Medicare. The disclosure statement shall be provided as a part of, or together with, the application for the policy or certificate.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-907, MCA
Implementing statute(s): 33-15-303, 33-22-902, 33-22-904, 33-22-907, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2000 MAR p. 3518, Eff. 12/22/00; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2009 MAR p. 1107, Eff. 7/17/09; AMD, 2013 MAR p. 1819, Eff. 10/18/13; AMD, 2018 MAR p. 572, Eff. 3/17/18; AMD, 2024 MAR p. 1188, Eff. 5/25/24.

Mont. Admin. R. 6.6.510 Requirements for Application Forms and Replacement Coverage

(1) Application forms must include the following questions designed to elicit information as to whether, as of the date of application, the applicant currently has Medicare supplement, Medicare advantage, Medicaid coverage, or another health policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and producer containing such questions and statements as the following may be used.

(STATEMENTS)

(1) You do not need more than one Medicare supplement policy.

(2) If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages.

(3) You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.

(4) If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy must be suspended if requested during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. Upon receipt of timely notice, the issuer must either return to the policyholder or certificateholder that portion of the premium attributable to the period of Medicaid eligibility or provide coverage to the end of the term for which premiums were paid, at the option of the insured, subject to adjustment for paid claims. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstated if requested within 90 days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare part D while your policy was suspended, the reinstated policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(5) If you are eligible for and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstated if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare part D while your policy was suspended, the reinstated policy will not have prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of suspension.

(6) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB).

(QUESTIONS)

If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS.

[Please mark Yes or No below with an ″X″]

To the best of your knowledge:

(1)

(a) Did you turn age 65 in the last 6 months?

YES _____ NO _____

(b) Did you enroll in Medicare Part B in the last 6 months?

YES _____ NO _____

(2) Are you covered for medical assistance through the state Medicaid program?

[NOTE TO APPLICANT: If you are participating in a ″spend-down″ program and have not met your ″share of cost,″ please answer NO to this question.]

YES _____ NO _____

If yes,

(a) Will Medicaid pay your premiums for this Medicare supplement policy?

YES _____ NO _____

(b) Do you receive any benefits from Medicaid other than payments toward your Medicare Part B premium?

YES _____ NO _____

(3)

(a) If you had coverage from any Medicare plan other than original Medicare within the past 63 days (for example, a Medicare advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave ″END″ blank.

Start / / End / /

(b) If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy?

YES _____ NO _____

(d) Did you drop a Medicare supplement policy to enroll in the Medicare plan?

YES _____ NO _____

(4)

(a) Do you have another Medicare supplement policy in force?

YES _____ NO _____

(b) If so, with what company, and what plan do you have [optional for direct mailers]?

YES _____ NO _____

(5) Have you had coverage under any other health insurance within the past 63 days? (For example, an employer, union, or individual plan.)

YES _____ NO _____

(a) If so, with what company and what kind of policy?

(b) What are your dates of coverage under the other policy?

Start / / End / /

(If you are still covered under the other policy, leave ″end″ blank.)

[End Statements and Questions Form]

(2) Producers shall list any other health insurance policies they have sold to the applicant, including:

(a) Policies sold which are still in force; and

(b) Policies sold in the past five years which are no longer in force.

(3) In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer upon delivery of the policy.

(4) Upon determining that a sale will involve replacement of medicare supplement coverage, and prior to the issuance or delivery of the medicare supplement policy or certificate, an issuer, other than a direct response insurer, or its producer must furnish the applicant a notice regarding replacement of medicare supplement coverage. One copy of the notice signed by the applicant and the producer, except where coverage is sold without a producer, must be provided to the applicant and an additional signed copy must be retained by the issuer for three years. A direct response issuer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of medicare supplement coverage.

(5) The notice required by (4) for an issuer must be in substantially the same form as below and be in no less than 12 point type:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF MEDICARE SUPPLEMENT INSURANCE

OR MEDICARE ADVANTAGE

(Insurance Company's Name and Address)

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to (your application) (information you have furnished), you intend to terminate existing Medicare or Medicare advantage supplement insurance and replace it with a policy to be issued by (Company Name). Your new policy will provide 30 days within which you may decide without cost whether you desire to keep the policy.

You should review this new coverage carefully. Compare it with all accident and sickness coverage you now have. Terminate your present policy only if, after due consideration, you find that purchase of this Medicare supplement or Medicare advantage coverage is a wise decision.

STATEMENT TO APPLICANT BY ISSUER, OR PRODUCER:

I have reviewed your current medical or health insurance coverage. To the best of my knowledge, this Medicare supplement policy will not duplicate your existing Medicare supplement or, if applicable, Medicare advantage coverage because you intend to terminate your existing Medicare supplement coverage or leave your Medicare advantage plan. The replacement policy is being purchased for the following reason(s) (check one):

Additional benefits.

No change in benefits, but lower premiums.

Fewer benefits and lower premiums.

My plan has outpatient prescription drug coverage and I am enrolling in part D.

Disenrollment from a Medicare advantage plan. Please explain reason for disenrollment. [optional only for direct mailers.]

Other. (please specify) ________________________________________________________________________________________________________________

Note: If the issuer of the Medicare supplement policy being applied for does not, or is otherwise prohibited from imposing pre-existing condition limitations, please skip to statement (2) below. Health conditions which you may presently have (pre-existing conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.
State law provides that your replacement policy or certificate may not contain new preexisting conditions, waiting periods, elimination periods or probationary periods. The insurer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.
If you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical/health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, review it carefully to be certain that all information has been properly recorded. [If the policy or certificate is guaranteed issue, this paragraph need not appear.]

Do not cancel your present policy until you have received your new policy and are sure that you want to keep it.

(Signature of Producer or Other Representative)*

[Typed Name and Address of Issuer or Producer]

The above ″Notice to Applicant″ was delivered to me on:

(Date)

(Applicant's Signature)

*Signature not required for direct response sales.

[END OF NOTICE FORM]

(6) Paragraphs 1. and 2. of the replacement notice, above (applicable to preexisting conditions) may be deleted by an issuer if the replacement does not involve application of a new preexisting condition limitation.

History

Authorizing statute(s): 33-1-313, 33-22-904, 33-22-907, MCA
Implementing statute(s): 33-15-303, 33-22-904, 33-22-907, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 1981 MAR p. 1474, Eff. 2/1/82; AMD, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 1/1/97; AMD, 1998 MAR p. 3269, Eff. 12/18/98; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1910, Eff. 9/9/05; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.515 Standards for Claims Payment

(1) An issuer shall comply with section 1882(c) (3) of the Social Security Act (as enacted by section 4081(b) (2) (C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA) , Pub. L. No. 100-203) by:

(a) Accepting a notice from a medicare carrier on dually assigned claims submitted by participating physicians and suppliers as a claim form otherwise required and making a payment determination on the basis of the information contained in that notice;

(b) Notifying the participating physician or supplier and the beneficiary of the payment determination;

(d) Furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number and a central mailing address to which notices from a medicare carrier may be sent;

(e) Paying user fees for claim notices that are transmitted electronically or otherwise. Any cost may not be passed on to the insured as a separate distinguishable charge and the charge may not be separated from the premium; and

(f) Providing to the secretary of health and human services, at least annually, a central mailing address to which all claims may be sent by medicare carriers.

(2) Compliance with the above requirements must be certified on the medicare supplement insurance experience reporting form.

History

Authorizing statute(s): 33-1-313 and 33-22-904, MCA
Implementing statute(s): 33-15-303 and 33-22-901 through 33-22-924, MCA
History: NEW, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 6/21/96.

Mont. Admin. R. 6.6.517 Permitted Compensation Arrangements

(1) An issuer or other entity may provide commission or other compensation to a producer for the sale of a Medicare supplement policy or certificate only if the first year commission or other first year compensation is no more than 200% of the commission or other compensation paid for selling or servicing the policy or certificate in the second year or period.

(2) The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for no fewer than five renewal years.

(3) No issuer or other entity shall provide compensation to its producers, and no producer shall receive, compensation greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates if an existing policy or certificate is replaced.

(4) For purposes of this rule, "compensation" includes pecuniary or non-pecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including but not limited to bonuses, gifts, prizes, awards and service and finders fees.

(5) As part of the annual filing under ARM 6.6.508(7), the entity providing Medicare supplement policies shall provide copies of commission schedules.

(a) An issuer must provide reasonable compensation, as provided under the plan of operation of the program, to a producer, if any, for the sale of a Medicare supplement insurance policy or certificate. For purposes of this rule, "reasonable compensation" shall be at least 3% of the premium paid for the policy or certificate.

(b) An issuer may not vary the commission paid on the sale or renewal of a Medicare supplement insurance policy or certificate due to any factor other than the first year or renewal status of the policy or certificate. For example, issuers may not vary the commission based on the plan marketed or the age, health status, location, or claims experience of the insured. Issuers may pay a different commission on a policy transferred to a different producer for servicing purposes following the initial sale, or on a policy sold over the internet, so long as there is no other variation in the commission for any other reason.

History

Authorizing statute(s): 33-1-313, 33-22-904, MCA
Implementing statute(s): 33-22-902, 33-22-904, 33-22-906, MCA
History: NEW, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487. Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 1/1/97; AMD, 2004 MAR p. 1017, Eff. 2/13/04; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.519 Standards for Marketing

(1) An issuer directly or through its producers shall:

(a) establish marketing procedures to assure that any comparison of policies by its producers will be fair and accurate;

(b) establish marketing procedures to assure excessive insurance is not sold or issued;

(c) establish marketing procedures which set forth a mechanism or formula for determining whether a replacement policy or certificate contains benefits greater than the benefits under the replaced policy;

(d) display prominently by type, stamp or other appropriate means, on the first page of the policy the following: "Notice to buyer: This policy may not cover all of your medical expenses;"

(e) inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of any such insurance;

(f) establish auditable procedures for verifying compliance with this rule; and

(g) provide to the enrollee an appropriate disclosure statement if the enrollee has accident and sickness insurance. These statements must be identical to the disclosure statements in ARM 6.6.526.

(2) In addition to the practices prohibited in Title 33, chapter 18, MCA, the following acts and practices are prohibited:

(a) knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer;

(b) employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance; and

(c) making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or issuer.

(3) The terms "medicare supplement," "medigap," "medicare wrap-around," "medicare select," and words of similar import must not be used unless the policy or certificate is issued in compliance with applicable administrative rules and statutes.

History

Authorizing statute(s): 33-1-313, 33-18-235, 33-22-904, MCA
Implementing statute(s): 33-15-303, 33-18-202, 33-18-204, 33-22-907, 33-22-908, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 1637, Eff. 1/1/97; AMD, 2004 MAR p. 313, Eff. 2/14/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.520 Appropriateness of Recommended Purchase and Excessive Insurance

(1) In recommending the purchase or replacement of any medicare supplement policy or certificate, an insurance producer shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

(2) Any sale of medicare supplement policy or certificate that will provide an individual more than one medicare supplement policy or certificate is prohibited.

(3) An issuer may not issue a medicare supplement policy or certificate to an individual enrolled in medicare part C unless the effective date of the coverage is after the termination date of the individual's part C coverage.

History

Authorizing statute(s): 33-1-313 and 33-22-904, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 2005 MAR p. 1672, Eff. 9/9/05.

Mont. Admin. R. 6.6.521 Reporting of Multiple Policies

(1) On or before March 1 of each year, every issuer shall report, on the form contained in ARM 6.6.525, information for every individual resident of this state for which the issuer has in force more than one Medicare supplement insurance policy or certificate. The following information must be reported:

(a) policy and certificate number; and

(b) date of issuance.

(2) The items set forth above must by grouped by individual policyholder.

History

Authorizing statute(s): 33-1-313, 33-22-904, MCA
Implementing statute(s): 33-15-303, 33-22-904, 33-22-907, MCA
History: NEW, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 1996 MAR p. 2156, Eff. 1/1/97; AMD, 2004 MAR p. 313, Eff. 2/13/04; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.522 Prohibition Against Preexisting Conditions, Waiting Periods, Elimination Periods, and Probationary Periods in Replacement Policies or Certificates

(1) If a medicare supplement policy or certificate replaces another medicare supplement policy or certificate, the replacing issuer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods and probationary periods in the new medicare supplement policy to the extent such time was spent under the original policy.

(2) If a medicare supplement policy or certificate replaces another medicare supplement policy or certificate which has been in effect for at least six months, the replacing policy must not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods.

History

Authorizing statute(s): 33-1-313 and 33-22-904, MCA
Implementing statute(s): 33-15-303, 33-22-902, 33-22-904, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 1990 MAR p. 1688, Eff. 9/1/90; AMD, 1993 MAR p. 1487, Eff. 7/16/93; AMD, 2004 MAR p. 313, Eff. 2/13/04.

Mont. Admin. R. 6.6.523 Separability

(1) If any provision of this subchapter or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the subchapter and the application of such provision to other persons or circumstances shall not be affected.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-22-902, MCA
History: NEW, 2004 MAR p. 313, Eff. 2/13/04.

Mont. Admin. R. 6.6.524 Appendix a - Medicare Supplement Refund Calculation Form

(1) This is the appendix referred to in ARM 6.6.508(2) and (3) .

MEDICARE SUPPLEMENT REFUND CALCULATION FORM

FOR CALENDAR YEAR ______

TYPE 1 _____________________________ SMSBP 2 _________________________

For the State of ______________________ Company Name ____________________

NAIC Group Code ____________________ NAIC Company Code ________________

Address ___________________________ Person Completing Exhibit ____________

Title _______________________________ Telephone Number __________________

Medicare Supplement Credibility Table

(1) Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

(2) "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for prestandardized plans.

(3) Includes Modal Loadings and Fees Charged

(4) Excludes Active Life Reserves

(5) This is to be used as "Issue Year Earned Premium" for Year 1 of next year's "Worksheet for Calculation of Benchmark Ratios"

If Ratio 3 is more than Benchmark Ratio (Ratio 1) , a refund or credit to premium is not required.

If Ratio 3 is less than the Benchmark Ratio, then proceed.

If the amount on line 13 is less than .005 times the annualized premium in force as of December 31 of the reporting year, then no refund is made. Otherwise, the amount on line 13 is to be refunded or credited, and a description of the refund or credit against premiums to be used must be attached to this form.

I certify that the above information and calculations are true and accurate to the best of my knowledge and belief.

Signature

Name - Please Type

Title - Please Type

Date

REPORTING FORM FOR THE CALCULATION OF BENCHMARK RATIO SINCE INCEPTION FOR GROUP POLICIES

FOR CALENDAR YEAR ____________

TYPE 1 ________________________________ SMSBP 2 _____________________________

For the State of _________________ Company Name _______________________

NAIC Group Code _____________________ NAIC Company Code___________________

Address _____________________________ Person Completing Exhibit___________

Title _______________________________ Telephone Number ___________________

Benchmark Ratio Since Inception (1 + n)/(k + m): ____________

1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

2 "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for pre-standardized plans

3 Year 1 is the current calendar year - 1. Year 2 is the current calendar year - 2 (etc). (Example: If the current year is 1991, then: Year 1 is 1990; Year 2 is 1989, etc.)

4 For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.

5 These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.

6 To include the earned premium for all years prior to as well as the 15th year prior to the current year.

REPORTING FORM FOR THE CALCULATION OF BENCHMARK RATIO SINCE INCEPTION FOR INDIVIDUAL POLICIES

FOR CALENDAR YEAR ____________

TYPE 1 ______________________________ SMSBP 2 _____________________________

For the State of ___________________ Company Name _______________________

NAIC Group Code ____________________ NAIC Company Code __________________

Address ____________________________ Person Completing Exhibit __________

Title ______________________________ Telephone Number ___________________

Benchmark Ratio Since Inception (1 + n)/(k + m): ____________

1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.

2 "SMSBP" = Standardized Medicare Supplement Benefit Plan - Use "P" for pre-standardized plans

3 Year 1 is the current calendar year - 1. Year 2 is the current calendar year - 2 (etc). (Example: If the current year is 1991, then: Year 1 is 1990; Year 2 is 1989, etc.)

4 For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.

6 To include the earned premium for all years prior to as well as the 15th year prior to the current year.

Line | | (a) Earned Premium 3 | (b) Incurred Claims 4

| Current Year's Experience | | | a. Total (all policy years) | | | b. Current year's issues 5 | | | c. Net (for reporting purposes - 1a-1b | |
| Past Year's Experience (all policy years) | |
| Total Experience (Net Current Year + Past Year) | |
| Refunds Last year (Excluding Interest) |
| Previous Since Inception (Excluding Interest) |
| Refunds Since Inception (Excluding Interest) |
| Benchmark Ratio Since Inception (see worksheet for Ratio 1) |
| Experienced Ratio Since Inception (Ratio 2) Total Actual Incurred Claims (line 3, col. b) Total Earned Premium (line 3, col. a) - Refunds Since Inception (line 6) |
| Life Years Exposed Since Inception If the Experienced Ratio is less than the Benchmark Ratio, and there are more than 500 life years exposure, then proceed to calculation of refund |
| Tolerance Permitted (obtained from credibility table) |

Life Years Exposed Since Inception Tolerance 10,000+ | 0.0% 5,000-9,999 | 5.0% 2,500-4,999 | 7.5% 1,000-2,499 | 10.0% 500-999 | 15.0% If less than 500, no credibility.

| Adjustment to Incurred Claims for Credibility Ratio 3 = Ratio 2 + Tolerance
| Adjusted Incurred Claims [Total Earned Premium (line 3, col. a) - Refunds Since Inception (line 6) ] x Ratio 3 (line 11)
| Refund = Total Earned Premiums (line 3, col. a) - Refunds Since Inception (line 6) -[Adjusted Incurred Claims (line 12) /Benchmark Ratio (Ratio 1) ]

(a) 3 | (b) 4 | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (o) 5 Year | Earned Premium | Factor | (b)x(c) | Cumulative Loss Ratio | (d)x(e) | Factor | (b)x(g) | Cumulative Loss Ratio | (h)x(i) | Policy Year Loss Ratio 1 | | 2.770 | | 0.507 | | 0.000 | | 0.000 | | 0.46 2 | | 4.175 | | 0.567 | | 0.000 | | 0.000 | | 0.63 3 | | 4.175 | | 0.567 | | 1.194 | | 0.759 | | 0.75 4 | | 4.175 | | 0.567 | | 2.245 | | 0.771 | | 0.77 5 | | 4.175 | | 0.567 | | 3.170 | | 0.782 | | 0.80 6 | | 4.175 | | 0.567 | | 3.998 | | 0.792 | | 0.82 7 | | 4.175 | | 0.567 | | 4.754 | | 0.802 | | 0.84 8 | | 4.175 | | 0.567 | | 5.445 | | 0.811 | | 0.87 9 | | 4.175 | | 0.567 | | 6.075 | | 0.818 | | 0.88 10 | | 4.175 | | 0.567 | | 6.650 | | 0.824 | | 0.88 11 | | 4.175 | | 0.567 | | 7.176 | | 0.828 | | 0.88 12 | | 4.175 | | 0.567 | | 7.655 | | 0.831 | | 0.88 13 | | 4.175 | | 0.567 | | 8.093 | | 0.834 | | 0.89 14 | | 4.175 | | 0.567 | | 8.493 | | 0.837 | | 0.89 15+ 6 | | 4.175 | | 0.567 | | 8.684 | | 0.838 | | 0.89 Total | | | (k): | | (l): | | (m): | | (n): |

(a) 3 | (b) 4 | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (o) 5 Year | Earned Premium | Factor | (b)x(c) | Cumulative Loss Ratio | (d)x(e) | Factor | (b)x(g) | Cumulative Loss Ratio | (h)x(i) | Policy Year Loss Ratio 1 | | 2.770 | | 0.442 | | 0.000 | | 0.000 | | 0.40 2 | | 4.175 | | 0.493 | | 0.000 | | 0.000 | | 0.55 3 | | 4.175 | | 0.493 | | 1.194 | | 0.659 | | 0.65 4 | | 4.175 | | 0.493 | | 2.245 | | 0.669 | | 0.67 5 | | 4.175 | | 0.493 | | 3.170 | | 0.678 | | 0.69 6 | | 4.175 | | 0.493 | | 3.998 | | 0.686 | | 0.71 7 | | 4.175 | | 0.493 | | 4.754 | | 0.695 | | 0.73 8 | | 4.175 | | 0.493 | | 5.445 | | 0.702 | | 0.75 9 | | 4.175 | | 0.493 | | 6.075 | | 0.708 | | 0.76 10 | | 4.175 | | 0.493 | | 6.650 | | 0.713 | | 0.76 11 | | 4.175 | | 0.493 | | 7.176 | | 0.717 | | 0.76 12 | | 4.175 | | 0.493 | | 7.655 | | 0.720 | | 0.77 13 | | 4.175 | | 0.493 | | 8.093 | | 0.723 | | 0.77 14 | | 4.175 | | 0.493 | | 8.493 | | 0.725 | | 0.77 15+ 6 | | 4.175 | | 0.493 | | 8.684 | | 0.725 | | 0.77 Total | | | (k): | | (l): | | (m): | | (n): |

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 2005 MAR p. 1672, Eff. 9/9/05.

Mont. Admin. R. 6.6.525 Appendix B - Form for Reporting Medicare Supplement Policies

(1) This is the appendix referred to in ARM 6.6.521.

FORM FOR REPORTING MEDICARE SUPPLEMENT POLICIES

Company Name: ____________________________

Address: ____________________________

Phone Number: ____________________________

Due March 1, annually

The purpose of this form is to report the following information on each resident of this state who has in force more than one Medicare supplement policy or certificate. The information is to be grouped by individual policyholder.

Policy and Date of

Certificate # Issuance

Signature

Name and Title (please type)

Date

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 2005 MAR p. 1672, Eff. 9/9/05.

Mont. Admin. R. 6.6.526 Appendix C Disclosure Statements

(1) This is the appendix referred to in ARM 6.6.509(6) .

Instructions for Use of the Disclosure Statements for Health Insurance Policies Sold to Medicare Beneficiaries that Duplicate Medicare

(1) Section 1882(d) of the federal Social Security Act (42 U.S.C. 1395ss) prohibits the sale of a health insurance policy (the term policy includes certificate) to Medicare beneficiaries that duplicates Medicare benefits unless it will pay benefits without regard to a beneficiary's other health coverage and it includes the prescribed disclosure statement on or together with the application for the policy.

(2) All types of health insurance policies that duplicate Medicare shall include one of the attached disclosure statements, according to the particular policy type involved, on the application or together with the application. The disclosure statement may not vary from the attached statements in terms of language or format (type size, type proportional spacing, bold character, line spacing, and usage of boxes around text) .

(3) State and federal law prohibits insurers from selling a Medicare supplement policy to a person that already has a Medicare supplement policy except as a replacement policy.

(4) Property/casualty and life insurance policies are not considered health insurance.

(5) Disability income policies are not considered to provide benefits that duplicate Medicare.

(6) Long-term care insurance policies that coordinate with Medicare and other health insurance are not considered to provide benefits that duplicate Medicare.

(7) The federal law does not preempt state laws that are more stringent than the federal requirements.

(8) The federal law does not preempt existing state form filing requirements.

(9) Section 1882 of the federal Social Security Act was amended in Subsection (d) (3) (A) to allow for alternative disclosure statements. The disclosure statements already in Appendix C remain. Carriers may use either disclosure statement with the requisite insurance product. However, carriers should use either the original disclosure statements or the alternative disclosure statements and not use both simultaneously.

(a) [Original disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]

This is not Medicare Supplement Insurance.

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses that result from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:

( hospital or medical expenses up to the maximum stated in the policy

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

( Check for coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(b) [Original disclosure statement for policies that provide benefits for specified limited services.]

This is not Medicare Supplement Insurance.

This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specific services listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:

( any of the services covered by the policy are also covered by Medicare

Medicare pays extensive benefits for medically necessary services regardless of the

reason you need them. These include:

( hospitalization

( physician services

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(c) [Original disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.]

This is not Medicare Supplement Insurance.

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses only when you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:

( hospital or medical expenses up to the maximum stated in the policy

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(d) [Original disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.]

This is not Medicare Supplement Insurance.

This insurance pays a fixed amount, regardless of your expenses, if you meet the policy conditions, for one of the specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits because Medicare generally pays for most of the expenses for the diagnosis and treatment of specific conditions or diagnoses named in the policy.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(e) [Original disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies.]

This is not Medicare Supplement Insurance.

This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:

( any of the services covered by the policy are also covered by Medicare

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( hospice

( other approved items and services

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(f) [Original disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis.]

This is not Medicare Supplement Insurance.

This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It also pays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:

( any expenses or services covered by the policy are also covered by Medicare; or

( it pays the fixed dollar amount stated in the policy and Medicare covers the same event

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice care

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(g) [Original disclosure statement for other health insurance policies not specifically identified in the preceding statements.]

This is not Medicare Supplement Insurance.

This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:

( the benefits stated in the policy and coverage for the same event is provided by Medicare

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(h) [Alternative disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]

Some health care service paid for by Medicare may also trigger the payment of benefits from this policy.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(i) [Alternative disclosure statement for policies that provide benefits for specified limited services.]

Some health care services paid for by Medicare may also trigger the payment of benefits under this policy.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(j) [Alternative disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.]

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy. Medicare generally pays for most or all of these expenses.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(k) [Alternative disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.]

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(l) [Alternative disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies.]

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(m) [Alternative disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis.]

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It also pays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your medicare deductibles or coinsurance and is not a substitute for Medicare supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

( hospitalization

( physician services

( hospice care

( [outpatient prescription drugs if you are enrolled in Medicare Part D]

( other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

( Check the coverage in all health insurance policies you already have.

( For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

( For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

(n) [Alternative disclosure statement for other health insurance policies not specifically identified in the preceding statements.]

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.

This insurance pays limited benefits if you meet the conditions listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

Medicare generally pays for most or all of these expenses.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These include:

• hospitalization

• physician services

• hospice care

• [outpatient prescription drugs if you are enrolled in Medicare Part D]

• other approved items and services

This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.

• Check the coverage in all health insurance policies you already have.

• For more information about Medicare and Medicare Supplement insurance, review the "Guide to Health Insurance for People with Medicare," available from the insurance company.

• For help in understanding your health insurance, contact your state insurance department or state [health] insurance [assistance] program [SHIP].

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE INSURANCE

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Before You Buy This Insurance

IMPORTANT NOTICE TO PERSONS ON MEDICARE THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Before You Buy This Insurance

History

Authorizing statute(s): 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2018 MAR p. 572, Eff. 3/17/18.

Mont. Admin. R. 6.6.527 Prohibition Against Use of Genetic Information and Requests for Genetic Testing

(1) This subsection applies to all policies with policy years beginning on or after May 21, 2009. An issuer of a Medicare supplement policy or certificate shall not:

(a) deny or condition the issuance or effectiveness of the policy or certificate (including the imposition of any exclusion of benefits under the policy based on a preexisting condition) on the basis of the genetic information with respect to such individual; and

(b) discriminate in the pricing of the policy or certificate (including the adjustment of premium rates) of an individual on the basis of the genetic information with respect to such individual.

(2) Nothing in (1) shall be construed to limit the ability of an issuer, to the extent otherwise permitted by law, from:

(a) denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant; or

(b) increasing the premium for any policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy (in such case, the manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members and to further increase the premium for the group).

(3) An issuer of a Medicare supplement policy or certificate shall not request or require an individual or a family member of such individual to undergo a genetic test.

(4) Section (3) shall not be construed to preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment (as defined for the purposes of applying the regulations promulgated under Part C of Title XI and section 264 of the Health Insurance Portability and Accountability Act of 1996, as may be revised from time to time) and consistent with (1).

(5) For purposes of carrying out (4), an issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose.

(6) Notwithstanding (3), an issuer of a Medicare supplement policy may request, but not require, that an individual or a family member of such individual undergo a genetic test if each of the following conditions is met:

(a) The request is made pursuant to research that complies with part 46 of Title 45, Code of Federal Regulations, or equivalent Federal regulations, and any applicable state or local law or regulations for the protection of human subjects in research.

(b) The issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of such child, to whom the request is made that:

(i) compliance with the request is voluntary; and

(ii) noncompliance will have no effect on enrollment status or premium or contribution amounts.

(c) No genetic information collected or acquired under this subsection shall be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rates, or the issuance, renewal, or replacement of a policy or certificate.

(d) The issuer notifies the Secretary in writing that the issuer is conducting activities pursuant to the exception provided for under this subsection, including a description of the activities conducted.

(e) The issuer complies with such other conditions as the Secretary may by regulation require for activities conducted under this subsection.

(7) An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information for underwriting purposes.

(8) An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information with respect to any individual prior to such individual's enrollment under the policy in connection with such enrollment.

(9) If an issuer of a Medicare supplement policy or certificate obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning any individual, such request, requirement, or purchase shall not be considered a violation of (8) if such request, requirement, or purchase is not in violation of (7).

(10) For the purposes of this section only:

(a) "Issuer of a Medicare supplement policy or certificate" includes third-party administrator, or other person acting for or on behalf of such issuer;

(b) "Family member" means, with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of such individual;

(c) "Genetic information" means, with respect to any individual, information about such individual's genetic tests, the genetic tests of family members of such individual, and the manifestation of a disease or disorder in family members of such individual. Such term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by such individual or any family member of such individual. Any reference to genetic information concerning an individual or family member of an individual who is a pregnant woman, includes genetic information of any fetus carried by such pregnant woman, or with respect to an individual or family member utilizing reproductive technology, includes genetic information of any embryo legally held by an individual or family member. The term "genetic information" does not include information about the sex or age of any individual;

(d) "Genetic services" means a genetic test, genetic counseling (including obtaining, interpreting, or assessing genetic information), or genetic education;

(e) "Genetic test" means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detect genotypes, mutations, or chromosomal changes. The term "genetic test" does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved;

(f) "Underwriting purposes" means:

(i) rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits under the policy;

(ii) the computation of premium or contribution amounts under the policy;

(iii) the application of any preexisting condition exclusion under the policy; and

(iv) other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.

History

Authorizing statute(s): 33-1-313, 33-22-904, MCA
Implementing statute(s): 33-22-904, 33-18-901, 33-18-902, 33-18-903, 33-18-904, MCA
History: NEW, 2009 MAR p. 1107, Eff. 7/17/09.

Subchapter 6.6.6 Medicare Select Policies

Mont. Admin. R. 6.6.601 Application and Scope

(1) This rule shall

(2) No policy or certificate may be advertised as a medicare select policy or certificate unless it meets the requirements of ARM 6.6.601 through 6.6.614.

apply to medicare select policies and certificates, as defined

in ARM 6.6.601 through 6.6.614.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.602 Definitions

For the purposes of ARM 6.6.601 through 6.6.614:

(1) "Complaint" means any dissatisfaction expressed by an individual concerning a medicare select issuer or its network providers.

(2) "Grievance" means dissatisfaction expressed in writing by an individual insured under a medicare select policy or certificate with the administration, claims practices, or provision of services concerning a medicare select issuer or its network providers.

(3) "Medicare select issuer" means an issuer offering, or seeking to offer, a medicare select policy or certificate.

(4) "Medicare select policy" or "medicare select certificate" mean respectively a medicare supplement policy or certificate that contains restricted network provisions.

(5) "Network provider" means a provider of health care, or a group of providers of health care, which has entered into a written agreement with the issuer to provide benefits insured under a medicare select policy.

(6) "Restricted network provision" means any provision which conditions the payment of benefits, in whole or in part, on the use of network providers.

(7) "Service area" means the geographic area approved by the commissioner within which an issuer is authorized to offer a medicare select policy.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.603 Authorization of the Commissioner

(1) The

commissioner may authorize an issuer to offer a medicare

select policy or certificate, pursuant to ARM 6.6.601 through

6.6.614 and section 4358 of the Omnibus Budget Reconciliation

Act (OBRA) of 1990, if the commissioner finds that the issuer

has satisfied all of the requirements of ARM 6.6.601 through

6.6.614 and at the discretion of the commissioner has met the requirements of 33-22-901 through 33-22-924 , MCA and ARM 6.6.501 through 6.6.522.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.604 Plan to Be Approved by Commissioner Before Being Issued

(1) A medicare select issuer shall not issue a medicare select policy or certificate in this state until its plan of operation has been approved by the commissioner.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.605 Plan to Be Filed and the Requirements

(1) A medicare select issuer shall file a proposed plan of operation with the commissioner in a format prescribed by the commissioner. The plan of operation shall contain at least the following information:

(a) evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration that:

(i) such services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation and after-hour care. The hours of operation and availability of after-hour care shall reflect usual practice in the local area. Geographic availability shall reflect the usual travel times within the community;

(ii) the number of network providers in the service area is sufficient, with respect to current and expected policyholders, either:

(A) to deliver adequately all services that are subject to a restricted network provision; or

(B) to make appropriate referrals;

(iii) there are written agreements with network providers describing specific responsibilities;

(iv) emergency care is available 24 hours per day and 7 days per week;

(v) in the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting such providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a medicare select policy or certificate. (1) (a) (v) shall not apply to supplemental charges or coinsurance amounts as stated in the medicare select policy or certificate;

(b) a statement or map providing a clear description of the service area;

(d) a description of the quality assurance program, including:

(i) the formal organizational structure;

(ii) the written criteria for selection, retention and removal of network providers; and

(iii) the procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action when warranted;

(e) a list and description, by specialty, of the network providers;

(f) copies of the written information proposed to be used by the issuer to comply with (1) ; and

(g) any other information requested by the commissioner.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.606 Plan Changes to Be Filed and Approved

(1) A medicare select issuer shall file for approval with the commissioner any proposed changes to the plan of operation, except for changes to the list of network providers, prior to implementing such changes.

(2) An updated list of network providers shall be filed with the commissioner at least quarterly.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.607 Medicare Select Full Coverage

(1) A medicare select policy or certificate must not restrict payment for covered services provided by non-network providers if:

(a) the services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury or a condition; and

(b) it is not reasonable to obtain such services through a network provider.

(2) A medicare select policy or certificate must provide payment for full coverage under the policy for covered services that are not available through network providers.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-902, 33-22-903, 33-22-904, 33-22-921, 33-22-922, 33-22-923 and 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96; AMD, 2004 MAR p. 313, Eff. 2/13/04.

Mont. Admin. R. 6.6.608 Disclosure Requirements

(1) A medicare select issuer shall make full and fair disclosure in writing of the provisions, restrictions, and limitations of the medicare select policy or certificate to each applicant. This disclosure shall include at least the following:

(a) an outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the medicare select policy or certificate with:

(i) other medicare supplement policies or certificates offered by the issuer; and

(ii) other medicare select policies or certificates;

(b) a description (including address, telephone number and hours of operation) of the network providers, including primary care physicians, specialty physicians, hospitals and other providers;

(c) a description of the restricted network provisions, including payments for coinsurance and deductibles, when providers other than network providers are utilized. Except to the extent specified in the policy or certificate, expenses incurred when using out-of-network providers do not count toward the out-of-pocket annual limit contained in plans K and L;

(d) a description of coverage for emergency and urgently needed care and other out-of-service area coverage;

(e) a description of limitations on referrals to restricted network providers and to other providers;

(f) a description of the policyholder's rights to purchase any other medicare supplement policy or certificate otherwise offered by the issuer; and

(g) a description of the medicare select issuer's quality assurance program and grievance procedure.

History

Authorizing statute(s): 33-22-904, 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96; AMD, 2005 MAR p. 1672, Eff. 9/9/05; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.609 Acknowledgment of Understanding by Applicant

(1) Prior to the sale of a medicare select policy or certificate, a medicare select issuer shall obtain from the applicant a signed and dated form stating that the applicant has received the information provided pursuant to ARM 6.6.608 and that the applicant understands the restrictions of the medicare select policy or certificate.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.610 Grievance and Complaint Procedure

(1) A medicare select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers. Such procedures shall be aimed at mutual agreement for settlement and may include arbitration procedures.

(2) The grievance procedure shall be described in the policies and certificates and in the outline of coverage.

(3) At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer.

(4) Grievances shall be considered in a timely manner and shall be transmitted to appropriate decision-makers who have authority to fully investigate the issue and take corrective action.

(5) If a grievance is found to be valid, corrective action shall be taken promptly.

(6) All concerned parties shall be notified about the results of a grievance.

(7) The issuer shall report no later than each March 31 to the commissioner regarding its grievance procedure. The report shall be in a format prescribed by the commissioner and shall contain the number of grievances filed in the past year and a summary of the subject, nature and resolution of such grievances.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.611 Availability to Purchase Any Product

(1) At the time of initial purchase, a medicare select issuer shall make available to each applicant for a medicare select policy or certificate the opportunity to purchase any medicare supplement policy or certificate otherwise offered by the issuer.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Mont. Admin. R. 6.6.612 Insured May Purchase a Comparable or Lesser Benefit Policy or Certificate Without a Restricted Network Provision

(1) At the request of an individual insured under a medicare select policy or certificate, a medicare select issuer shall make available to the individual insured the opportunity to purchase a medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make such policies or certificates available without requiring evidence of insurability after the medicare select policy or certificate has been in force for six months.

(2) For the purpose of this rule, a medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the medicare select policy or certificate being replaced. For the purpose of (2) , a significant benefit means coverage for the medicare part A deductible, coverage for at-home recovery services, or coverage for part B excess charges.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96; AMD, 2005 MAR p. 1672, Eff. 9/9/05.

Mont. Admin. R. 6.6.613 Provision for Continued Coverage

(1) Medicare select policies and certificates shall provide for continuation of coverage in the event the United States department of health and human services determines that medicare select policies and certificates issued pursuant to ARM 6.6.601 through 6.6.614 should be discontinued due to either the failure of the medicare select program to be reauthorized under law or its substantial amendment.

(2) Each medicare select issuer shall make available to each individual insured under a medicare select policy or certificate the opportunity to purchase any medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make such policies and certificates available without requiring evidence or insurability.

(3) For the purpose of this rule, a medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the medicare select policy or certificate being replaced. For the purpose of (3) , a significant benefit means coverage for the medicare part A deductible, coverage for at-home recovery services, or coverage for part B excess charges.

(4) In the event of the discontinuance of the medicare select insurance program by an entity, (including but not limited to the federal government, an insurer, an insurance company, health maintenance organization or health service corporation) the insured will have the option to continue medicare supplement insurance. The insured may select from any of the medicare supplement insurance plans then currently available with no restrictions or limitations.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-15-303, 33-22-901, 33-22-902, 33-22-903, 33-22-904, 33-22-905, 33-22-906, 33-22-907, 33-22-908, 33-22-909, 33-22-910, 33-22-911, 33-22-921, 33-22-922, 33-22-923, and 33-22-924, MCA
History: NEW, 1996 MAR p. 1645, Eff. 4/5/96; AMD, 2005 MAR p. 1672, Eff. 9/9/05.

Mont. Admin. R. 6.6.614 Issuer Shall Comply with Reasonable Requests for Data

(1) A medicare select issuer shall comply with reasonable requests for data made by state or federal agencies, including the United States department of health and human services, for the purpose of evaluating the medicare select program.

History

Authorizing statute(s): 33-22-904 and 33-22-905, MCA
Implementing statute(s): 33-22-901 through 33-22-924, MCA
History: NEW, 1996 MAR p. 907, Eff. 4/5/96.

Subchapter 6.6.7 Life Insurance Illustrations

Mont. Admin. R. 6.6.701 Purpose

(1) The purpose of this subchapter is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The rules provide illustration formats, prescribe standards to be followed when illustrations are used, and specify the disclosures that are required in connection with illustrations. The goals of these rules are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

History

Authorizing statute(s): Sec. 33 -1-313 and 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.702 Authority

(1) This subchapter is issued based upon the authority granted the commissioner under 33-20-150, MCA.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.703 Applicability and Scope

(1) This subchapter applies to all group and individual life insurance policies and certificates except:

(a) variable life insurance;

(b) individual and group annuity contracts;

(d) life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

History

Authorizing statute(s): Sec. 33 -20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.704 Definitions

For the purposes of this subchapter:

(1) " Actuarial Standards Board" means the board established by the American academy of actuaries to develop and promulgate standards of actuarial practice.

(2) " Contract premium" means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

(3) "Currently payable scale" means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days.

(4) "Disciplined current scale " means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the actuarial standards board may be relied upon if the standards:

(a) are consistent with all provisions of this subchapter;

(b) limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(c) do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(d) do not permit assumed expenses to be less than minimum assumed expenses.

(5) "Generic name" means a short title descriptive of the policy being illustrated such as "whole life," "term life" or " flexible premium adjustable life."

(6) "Guaranteed elements" means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.

(7) "Illustrated scale" means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

(a) the disciplined current scale; or

(b) the currently payable scale.

(8) "Illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined below:

(a) "basic illustration" means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements;

(b) "supplemental illustration" means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this subchapter, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration;

(c) " in force illustration " means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

(9) " Illustration actuary " means an actuary meeting the requirements of ARM 6.6.715 who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.

(10) "Lapse-supported illustration" means an illustration of a policy form failing the test of self-supporting as defined in this subchapter, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100% policy persistency thereafter.

(11) " Minimum assumed expenses" means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:

(a) fully allocated expenses;

(b) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the commissioner;

(c) marginal expenses which may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.

(12) "Non-guaranteed elements" means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.

(13) " Non-term group life" means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

(a) every plan of coverage was selected by the employer or other group representative;

(b) some portion of the premium is paid by the group or through payroll deduction; and

(14) "Policy owner" means the owner named in the policy or the certificate holder in the case of a group policy.

(15) "Premium outlay" means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.

(16) " Self-supporting illustration" means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner) , the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election.

(17) "Terminal dividends " means dividends paid when a policy terminates.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.705 Policies to Be Illustrated

(1) Each insurer marketing policies to which this subchapter is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on January 1, 2002, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this subchapter, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner.

(2) If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited.

(3) If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this subchapter is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.

(4) Potential enrollees of non-term group life subject to this subchapter shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this subchapter, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.706 General Rules and Prohibitions

(1) An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this subchapter, be clearly labeled "life insurance illustration" and contain the following basic information:

(a) name of insurer;

(b) name and business address of producer or insurer's authorized representative, if any;

(c) name, age, and sex (if sex is used in underwriting) of proposed insured, except where a composite illustration is permitted under this subchapter;

(d) underwriting or rating classification upon which the illustration is based;

(e) generic name of policy, the company product name, if different, and form number;

(f) initial death benefit; and

(g) dividend option election or application of non-guaranteed elements, if applicable.

(2) When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not:

(a) represent the policy as anything other than a life insurance policy;

(b) use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(d) use an illustration that does not comply with the requirements of this subchapter;

(e) use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

(f) provide an applicant with an incomplete illustration;

(g) represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;

(h) use the term "vanish" or "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay a portion of future premiums;

(i) except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported;" or

(j) use an illustration that is not "self-supporting."

(3) If an interest rate used to determine the illustrated non-guaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale.

History

Authorizing statute(s): 33-20-150, MCA
Implementing statute(s): 33-18-202, 33-20-150, 49-2-309, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02; AMD, 2022 MAR p. 1794, Eff. 9/24/22.

Mont. Admin. R. 6.6.707 Standards for Basic Illustrations - Format

(1) A basic illustration shall conform with the following requirements:

(a) the illustration shall be labeled with the date on which it was prepared;

(b) each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled " page 4 of 7 pages");

(d) if the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force;

(e) the assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay;

(f) guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed;

(g) if the illustration shows any non-guaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements shall be clearly labeled non-guaranteed;

(h) the guaranteed elements, if any, shall be shown before corresponding non-guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements");

(i) the account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender;

(j) the value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable;

(k) illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form;

(l) any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:

(i) the benefits and values are not guaranteed;

(ii) the assumptions on which they are based are subject to change by the insurer; and

(iii) actual results may be more or less favorable.

(m) if the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up;

(n) if the applicant plans to use dividends or policy values, guaranteed or non-guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.

History

Authorizing statute(s): 33-20-150, MCA
Implementing statute(s): 33-18-202, 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02; AMD, 2022 MAR p. 1794, Eff. 9/24/22.

Mont. Admin. R. 6.6.708 Standards for Basic Illustrations - Narrative Summary

(1) A basic illustration shall include the following:

(a) a brief description of the policy being illustrated, including a statement that it is a life insurance policy;

(b) a brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code;

(c) a brief description of any policy features, riders or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;

(d) identification and a brief definition of column headings and key terms used in the illustration; and

(e) a statement containing in substance the following:

(i) "this illustration assumes that the currently illustrated non-guaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown. "

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.709 Standards for Basic Illustrations - Numeric Summary

(1) Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium.

(2) This summary shall be shown for at least policy years five, 10 and 20 and at age 70, if applicable, on the three bases shown below. For multiple life policies the summary shall show policy years five, 10, 20 and 30:

(a) policy guarantees;

(b) insurer's illustrated scale;

(i) dividends at 50% of the dividends contained in the illustrated scale used;

(ii) non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and

(iii) all non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

(3) In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three bases.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.710 Standards for Basic Illustrations - Statements

(1) Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this rule.

(2) A statement to be signed and dated by the applicant or policy owner reading as follows: "I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed. "

(3) A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: "I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration. "

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.711 Standards for Basic Illustrations - Tabular Detail

(1) A basic illustration shall include the following for at least each policy year from one to 10 and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the twentieth year, for any year in which the premium outlay and contract premium, if applicable, is to change:

(a) the premium outlay and mode the applicant plans to pay and the contract premium, as applicable;

(b) the corresponding guaranteed death benefit, as provided in the policy; and

(2) For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium.

(3) Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any non-guaranteed elements are shown they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non-guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.712 Standards for Supplemental Illustrations

(1) A supplemental illustration may be provided so long as:

(a) it is appended to, accompanied by, or preceded by a basic illustration that complies with this subchapter;

(b) the non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;

(d) for a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration.

(2) The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information.

History

Authorizing statute(s): 33-20-150, MCA
Implementing statute(s): 33-18-202, 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.713 Delivery of Illustrations and Record Retention

(1) If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this subchapter, shall be submitted to the insurer at the time of policy application. A copy also shall be provided to the applicant.

(2) If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this subchapter, shall be labeled "revised illustration" and shall be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

(3) If no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application.

(4) If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner:

(a) if the basic illustration or revised illustration is sent to the applicant or policy owner by mail from the insurer, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer's obligation under this subsection shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page;

(b) a copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until five years after the policy is no longer in force. A copy need not be retained if no policy is issued.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.714 Annual Report; Notice to Policy Owners

(1) In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain at least the following information:

(a) for universal life policies, the report shall include the following:

(i) the beginning and end date of the current report period;

(ii) the policy value at the end of the previous report period and at the end of the current report period;

(iii) the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders) ;

(iv) the current death benefit at the end of the current report period on each life covered by the policy;

(v) the net cash surrender value of the policy as of the end of the current report period;

(vi) the amount of outstanding loans, if any, as of the end of the current report period; and

(b) for fixed premium policies, if, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report; or

(c) for flexible premium policies, if, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report;

(d) for all other policies, where applicable:

(i) current death benefit;

(ii) annual contract premium;

(iii) current cash surrender value;

(iv) current dividend;

(v) application of current dividend; and

(vi) amount of outstanding loan;

(e) insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to non-guaranteed policy elements by the insurer.

(2) If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer's phone number], writing to [insurer's name] at [insurer's address] or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department." The insurer may vary the sequential order of the methods for obtaining an in force illustration.

(3) Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration shall comply with the requirements of ARM 6.6.706(1) and (2) , 6.6.707 and 6.6.711. No signature or other acknowledgment of receipt of this illustration shall be required.

(4) If an adverse change in non-guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.715 Annual Certifications

(1) The board of directors of each insurer shall appoint one or more illustration actuaries.

(2) The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC model regulation on life insurance illustrations promulgated by the Actuarial Standards Board and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this subchapter.

(3) The illustration actuary shall:

(a) be a member in good standing of the American Academy of Actuaries;

(b) be familiar with the standard of practice regarding life insurance policy illustrations;

(i) violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary;

(ii) been found guilty of fraudulent or dishonest practices;

(iii) demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or

(iv) resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards.

(d) not fail to notify the commissioner of any action taken by a commissioner of another state similar to that under (3) above;

(e) disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If non-guaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies, this must be disclosed in the annual certification. If non-guaranteed elements illustrated for both new and in force policies are not consistent with the non-guaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and

(f) disclose in the annual certification the method used to allocate overhead expenses for all illustrations:

(i) fully allocated expenses;

(ii) marginal expenses; or

(iii) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the NAIC or by the commissioner.

(4) The illustration actuary shall file a certification with the board and with the commissioner:

(a) annually for all policy forms for which illustrations are used; and

(b) before a new policy form is illustrated.

(5) If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly.

(6) If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify.

(7) A responsible officer of the insurer, other than the illustration actuary, shall certify annually:

(a) that the illustration formats meet the requirements of this subchapter and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and

(b) that the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in (3) (f) .

(8) The annual certifications shall be provided to the commissioner each year by a date determined by the insurer.

(9) If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.716 Penalties

(1) In addition to any other penalties provided by the laws of this state, an insurer or producer that violates a requirement of this subchapter shall be guilty of a violation of 33-18-202, MCA.

History

Authorizing statute(s): Sec. 33-18-202 and 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.717 Severability

(1) If any provision of this subchapter or its application to any person or circumstance is for any reason held to be invalid by any court of law, the remainder of the subchapter and its application to other persons or circumstances shall not be affected.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Mont. Admin. R. 6.6.718 Effective Date

(1) This subchapter shall become effective January 1, 2002, and shall apply to policies sold on or after the effective date.

History

Authorizing statute(s): Sec. 33-20-150, MCA
Implementing statute(s): Sec. 33-18-202 and 33-20-150, MCA
History: NEW, 2001 MAR p. 2234, Eff. 1/1/02.

Subchapter 6.6.8 Annuities

Mont. Admin. R. 6.6.801 Purpose

(1) The purpose of this subchapter is to provide standards for the disclosure of certain minimum information about annuity contracts to protect consumers and foster consumer education. These rules specify the minimum information which must be disclosed and the method for disclosing it in connection with the sale of annuity contracts. The goals of these rules are to ensure that purchasers of annuity contracts understand certain basic features of annuity contracts.

History

Authorizing statute(s): Sec. 33-1-313 and 33-20-308, MCA
Implementing statute(s): Sec. 33-20-308, MCA
History: NEW, 1998 MAR p. 2012, Eff. 12/31/98; AMD, 1999 MAR p. 508, Eff. 7/1/99.

Mont. Admin. R. 6.6.802 Authority

(1) These rules are issued based upon the authority granted the commissioner under 33-20-150 , and 33-20-308 , Montana Code Annotated, (MCA).

History

Authorizing statute(s): Sec. 33-1-313, 33-20-150 and 33-20-308, MCA
Implementing statute(s): Sec. 33-20-308, MCA
History: NEW, 1998 MAR p. 2012, Eff. 12/31/98; AMD, 2001 MAR p. 2239, Eff. 11/9/01.

Mont. Admin. R. 6.6.803 Applicability and Scope

(1) This subchapter applies to all annuity contracts and certificates except:

(a) registered or nonregistered variable annuities or other registered contracts;

(b) immediate and deferred annuities that contain no nonguaranteed elements;

(i) an employee pension plan which is covered by the Employee Retirement Income Security Act (ERISA);

(ii) a plan described by section 401(a), 401(k), 403(b) of the Internal Revenue Code (IRC), where the plan, for purposes of ERISA, is established or maintained by an employer;

(iii) a governmental or church plan defined in section 414, IRC, or a deferred compensation plan of a state or local government or tax exempt organization under section 457, IRC; or

(iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor.

(d) Notwithstanding (c), this rule shall apply to annuities used to fund a plan or arrangement that is funded solely by contributions an employee elects to make whether on a pretax or after-tax basis, and where the insurance company has been notified that plan participants may choose from among two or more fixed annuity providers and there is a direct solicitation of an individual employee by a producer for the purchase of an annuity contract. As used in this rule, direct solicitation shall not include any meeting held by a producer solely for the purpose of educating or enrolling employees in the plan or arrangement;

(e) structured settlement annuities;

(f) charitable gift annuities; and

(g) funding agreements.

History

Authorizing statute(s): 33-1-313, 33-20-308, MCA
Implementing statute(s): 33-20-308, MCA
History: NEW, 1998 MAR p. 2012, Eff. 12/31/98; AMD, 1999 MAR p. 508, Eff. 7/1/99; AMD, 2022 MAR p. 1793, Eff. 9/24/22.

Mont. Admin. R. 6.6.804 Definitions

For the purposes of this subchapter:

(1) "Charitable gift annuity" means a transfer of cash or other property by a donor to a charitable organization in return for an annuity payable over one or two lives, under which the actuarial value of the annuity is less than the value of the cash or other property transferred and the difference in value constitutes a charitable deduction for federal tax purposes, but does not include a charitable remainder trust or a charitable lead trust or other similar arrangement where the charitable organization does not issue an annuity and incur a financial obligation to guarantee annuity payments.

(2) "Contract owner" means the owner named in the annuity contract or certificate holder in the case of a group annuity contract.

(3) "Determinable elements" means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable elements only, or from both determinable and guaranteed elements.

(4) "Funding agreement" means an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies.

(5) "Generic name" means a short title descriptive of the annuity contract being applied for or illustrated such as "single premium deferred annuity".

(6) "Guaranteed elements" means the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these, that are guaranteed and determined at issue. An element is considered guaranteed if all of the underlying elements that go into its calculation are guaranteed.

(7) "Nonguaranteed elements" means the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

(8) "Structured settlement annuity" means a "qualified funding asset" as defined in section 130(d) of the Internal Revenue Code or an annuity that would be a qualified funding asset under section 130(d) but for the fact that it is not owned by an assignee under a qualified assignment.

History

Authorizing statute(s): Sec. 33-1-313 and 33-20-308, MCA
Implementing statute(s): Sec. 33-20-308, MCA
History: NEW, 1998 MAR p. 2012, Eff. 12/31/98; AMD, 1999 MAR p. 508, Eff. 7/1/99.

Mont. Admin. R. 6.6.805 Standards for the Disclosure Document

(1) Where the application for an annuity contract is taken in a face-to-face meeting, the applicant shall at or before the time of application be given both the disclosure document described in (2) and the Buyer's Guide contained in Appendix A.

(a) Where the application for an annuity contract is taken by means other than in a face-to-face meeting, the applicant shall be sent both the disclosure document and the Buyer's Guide no later than five business days after the completed application is received by the insurer.

(i) With respect to an application received as a result of a direct solicitation through the mail:

(A) Providing a Buyer's Guide in a mailing inviting prospective applicants to apply for an annuity contract shall be deemed to satisfy the requirement that the Buyer's Guide be provided no later than five business days after receipt of the application.

(B) Providing a disclosure document in a mailing inviting a prospective applicant to apply for an annuity contract shall be deemed to satisfy the requirement that the disclosure document be provided no later than five business days after receipt of the application.

(ii) With respect to an application received via the internet:

(A) Taking reasonable steps to make the Buyer's Guide available for viewing and printing on the insurer's web site shall be deemed to satisfy the requirement that the Buyer's Guide be provided no later than five business days of receipt of the application.

(B) Taking reasonable steps to make the disclosure document available for viewing and printing on the insurer's web site shall be deemed to satisfy the requirement that the disclosure document be provided no later than five business days after receipt of the application.

(iii) A solicitation for an annuity contract provided in other than a face-to-face meeting shall include a statement that the proposed applicant may contact the insurance department of the state for a free annuity Buyer's Guide. In lieu of the foregoing statement, an insurer may include a statement that the prospective applicant may contact the insurer for a free annuity Buyer's Guide.

(b) Where the Buyer's Guide and disclosure document are not provided at or before the time of application, a free look period of no less than 15 days shall be provided for the applicant to return the annuity contract without penalty. This free look shall run concurrently with any other free look provided under state law or regulation.

(2) The State Auditor's Office hereby adopts and incorporates by reference the appendix titled "Buyer's Guide" including the section title "Equity-indexed Annuities," which is contained in the National Association of Insurance Commissioners' Annuity Disclosure Model Regulation, adopted April 1999. Copies of this appendix are available for public inspection at the office of the Commissioner of Insurance, 840 Helena Avenue, Helena, MT 59601. A copy of this appendix may be obtained by writing to the State Auditor's Office, Legal Department, 840 Helena Avenue, Helena, Montana 59601.

(3) At a minimum, the following information shall be included in the disclosure document required to be provided under this rule:

(a) the generic name of the contract, the company product name, if different, and form number, and the fact that it is an annuity;

(b) the insurer's name and address;

(c) a description of the contract and its benefits, emphasizing its long-term nature, including examples where appropriate:

(i) the guaranteed, nonguaranteed and determinable elements of the contract, and their limitations, if any, and an explanation of how they operate;

(ii) an explanation of the initial crediting rate, specifying any bonus or introductory portion, the duration of the rate and the fact that rates may change from time to time and are not guaranteed;

(iii) periodic income options both on a guaranteed and nonguaranteed basis;

(iv) any value reductions caused by withdrawals from or surrender of the contract;

(v) how values in the contract can be accessed;

(vi) the death benefit, if available and how it will be calculated;

(vii) a summary of the federal tax status of the contract and any penalties applicable on withdrawal of values from the contract; and

(viii) impact of any rider, such as long term care rider.

(d) specific dollar amount or percentage charges and fees shall be listed with an explanation of how they apply; and

(e) information about the current guaranteed rate for new policies that contains a clear notice that the rate is subject to change.

(4) Insurers shall define terms used in the disclosure statement in language that facilitates the understanding by a typical person within the segment of the public to which the disclosure statement is directed.

History

Authorizing statute(s): Sec. 33-1-313, 33-20-150 and 33-20-308, MCA
Implementing statute(s): Sec. 33-20-308, MCA
History: NEW, 1998 MAR p. 2012, Eff. 12/31/98; AMD, 1999 MAR p. 508, Eff. 7/1/99; AMD, 2001 MAR p. 2239, Eff. 11/9/01.

Mont. Admin. R. 6.6.806 Annual Notice to Contract Owners

(1) For annuities in the payout period with changes in nonguaranteed elements and for the accumulation period of a deferred annuity, the insurer shall provide each contract owner with a report, at least annually, on the status of the contract that contains at least the following information:

(a) the beginning and end date of the current report period;

(b) the accumulation and cash surrender value, if any, at the end of the previous report period and at the end of the current report period;

(c) the total amounts, if any, that have been credited, charged to the contract value or paid during the current report period; and

(d) the amount of outstanding loans, if any, as of the end of the current report period.

History

Authorizing statute(s): Sec. 33-1-313 and 33-20-308, MCA
Implementing statute(s): Sec. 33-20-308, MCA
History: NEW, 1998 MAR p. 2012, Eff. 12/31/98; AMD, 1999 MAR p. 508, Eff. 7/1/99.

Mont. Admin. R. 6.6.807 Penalties

(1) In addition to any other penalties provided by the laws of this state, an insurer or producer that violates a requirement of this subchapter shall be guilty of a violation of 33-1-317 , MCA.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1993 MAR p. 2764, Eff. 11/25/93; AMD, 1996 MAR p. 2157, Eff. 6/21/96.

Mont. Admin. R. 6.6.810 Purpose

(1) The purpose of these rules is to provide:

(a) model forms for mandatory disclosures to consumers prior to the recommendation or sale of an annuity and for documenting certain events at the time of a recommendation or sale of an annuity; and

(b) the process for approving, and certifying compliance with, training courses necessary to educate insurance producers prior to engaging in the recommendation or sale of an annuity.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-20-805, 33-20-807, MCA
History: NEW, 2021 MAR p. 1206, Eff. 10/1/21.

Mont. Admin. R. 6.6.811 Model Forms

(1) For purposes of the model forms to be provided by the insurance department under 33-20-805(4), MCA, the commissioner adopts and incorporates by reference Appendices A through C of the National Association of Insurance Commissioners (NAIC) Model Regulation No. 275, Suitability In Annuity Transactions, published Spring 2020, which set forth a model form for an insurance agent or producer's disclosure prior to the recommendation or sale of an annuity, a model form for use when a consumer refuses to provide certain information, and a model form for use when a consumer decides to purchase an annuity that is not based on a producer's recommendation. A copy of Appendices A through C of NAIC Model Act No. 275 may be obtained from the Commissioner of Securities and Insurance, Office of the Montana State Auditor, at 840 Helena Ave., Helena, MT 59601.

(2) As used in Appendix A, "cash compensation" has the same meaning set forth in the definition found at 33-20-804, MCA.

(3) As used in Appendix B, "consumer profile information" has the same meaning set forth in the definition found at 33-20-804, MCA.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-20-805, MCA
History: NEW, 2021 MAR p. 1206, Eff. 10/1/21.

Mont. Admin. R. 6.6.812 Guidelines for Approval of Training

(1) The commissioner will approve training on the subject of the suitability of annuities using the process for review and approval of continuing education courses set forth at 33-17-1201 et seq., MCA.

(2) A training course intended to fulfill the requirements of 33-20-807, MCA, must be submitted for review to and recommendation by the Continuing Education Course Advisory Council established at 33-17-1204(2), MCA. Except as stated in (3), for purposes of this rule, the commissioner adopts and incorporates by reference ARM 6.6.4201 through 4213 (as in effect on October 1, 2021), which sets forth the rules for Continuing Education Program for Insurance Producers and Consultants. A copy of the rules may be obtained from the Commissioner of Securities and Insurance, Office of the Montana State Auditor, at 840 Helena Ave., Helena, MT 59601.

(3) The commissioner's adoption and incorporation by reference of the rules identified in (2) is done with the following exceptions and additions specific to the training requirements of 33-20-807, MCA:

(a) The definition of "Biennial cycle" found at ARM 6.6.4202(3) does not apply to this rule.

(b) In addition to the rules for course submissions found at ARM 6.6.4203, the submission must demonstrate the following:

(i) In the case of any submission for a one-time, four-credit course:

(A) that the course contains information on at least the following topics:

(I) the types of annuities and various classifications of annuities;

(II) identification of the parties to an annuity;

(III) how product-specific annuity contract features affect consumers;

(IV) the application of income taxation of qualified and nonqualified annuities;

(V) the primary uses of annuities; and

(VI) appropriate standard of conduct, sales practices, replacement, and disclosure requirements.

(B) that the course does not include any information on marketing, sales techniques, or the specific aspects of a particular insurer's products.

(ii) In the case of any submission for a one-time, one-credit course:

(A) that the course contains information on at least appropriate sales practices and replacement and disclosure requirements; and

(B) that the course does not include any information on marketing, sales techniques, or the specific aspects of a particular insurer's products.

(i) The requirements for nonresident licensees found at ARM 6.6.4208(1) do not apply unless the home state or designated home state in which the nonresident licensee is licensed has adopted a law substantially similar to the Montana Suitability in Annuity Transactions Act found at 33-20-801 et seq., MCA.

(ii) In addition to the requirements for nonresident licensees found at ARM 6.6.4208(2), the licensee shall submit to this state proof of course completion demonstrating compliance with 33-20-807, MCA.

(d) In addition to the conditions for nonresident sponsoring organizations found at ARM 6.6.4213, reciprocity may only be afforded for courses intended to fulfill the requirements of 33-20-807, MCA, if the resident state has adopted a law substantially similar to the Montana Suitability in Annuity Transactions Act found at 33-20-801 et seq., MCA.

(e) The rule concerning extensions found at ARM 6.6.4214 is not adopted.

History

Authorizing statute(s): 33-1-313, 33-20-807, MCA
Implementing statute(s): 33-20-807, MCA
History: NEW, 2021 MAR p. 1206, Eff. 10/1/21.

Mont. Admin. R. 6.6.813 Standards for Insurer Verification

(1) An insurer's obligation to verify that a producer has completed the training requirements of 33-20-807, MCA, can be accomplished by either:

(a) obtaining certificate(s) of completion of a commissioner-approved training course; or

(b) obtaining reports from a database system that either reflects on the face of the report information establishing that the training includes at least the requirements set forth in ARM 6.6.812, as applicable, or can be queried to provide that information if requested by the commissioner.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-20-807, MCA
History: NEW, 2021 MAR p. 1206, Eff. 10/1/21.

Mont. Admin. R. 6.6.814 Alternative Satisfaction of Training Requirements

(1) A producer may submit a written request to the commissioner to evaluate a training course or courses with components substantially similar to those required, and prohibited, by 33-20-807(2), MCA.

(2) The written request must:

(a) be made within 12 months of the producer attending the course or courses to be considered;

(b) be accompanied by a time-stamped syllabus or similar material that:

(i) shows the content of the course or courses; and

(ii) establishes the minimum length of training under 33-20-807(2)(b), (f)(i), or (f)(ii), MCA, as applicable;

(c) include a narrative description, annotated syllabus, or similar cross-reference showing where each of the topics required by ARM 6.6.812(3)(b), as applicable to the producer, were addressed in the course or courses; and

(d) contain a sworn statement that the course or courses did not include any information on marketing, sales techniques, or the specific aspects of a particular insurer's products.

(3) The commissioner will approve or deny the request within 60 days.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-20-807, MCA
History: NEW, 2021 MAR p. 1206, Eff. 10/1/21.

Subchapter 6.6.9 Military Sales Practices

Mont. Admin. R. 6.6.901 Purpose

(1) The purpose of this rule is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive, or unfair.

(2) Nothing herein may be construed to create or imply a private cause of action for a violation of this rule.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.902 Scope

(1) This rule shall apply only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.903 Authority

(1) This rule is issued under the authority of 2007 Montana Laws, chapter 333 (to be codified as 33-18-103 , MCA, 2007).

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.904 Exemptions

(1) This rule shall not apply to solicitations or sales involving:

(a) credit insurance;

(b) group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;

(c) an application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates;

(d) individual stand-alone health policies, including disability income policies;

(e) contracts offered by Servicemembers' Group Life Insurance (SGLI) or Veterans' Group Life Insurance (VGLI), as authorized by 38 U.S.C. Section 1965 et seq.;

(f) life insurance contracts offered through or by a nonprofit military association, qualifying under section 501(c)(23) of the Internal Revenue Code (IRC), and which are not underwritten by an insurer; or

(g) contracts used to fund:

(i) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(ii) a plan described by sections 401(a), 401(k), 403(b), 408(k), or 408(p) of the IRC, as amended, if established or maintained by an employer;

(iii) a government or church plan defined in section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under section 457 of the IRC;

(iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(v) settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(vi) prearranged funeral contracts.

(2) Nothing herein shall be construed to abrogate the ability of nonprofit organizations (and/or other organizations) to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07 "Personal Commercial Solicitation on DoD Installations" or successor directive.

(3) For purposes of this rule, general advertisements, direct mail and internet marketing shall not constitute "solicitation." Telephone marketing shall not constitute "solicitation" provided the caller explicitly and conspicuously discloses that the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Provided however, nothing in this rule shall be construed to exempt an insurer or insurance producer from this regulation in any in-person, face-to-face meeting established as a result of the "solicitation" exemptions identified in this rule.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.905 Definitions

For the purposes of ARM 6.6.901 through 6.6.909:

(1) "Active duty" means full-time duty in the active military service of the United States and includes members of the reserve component (National Guard and Reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.

(2) "Department of Defense (DoD) personnel" means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.

(3) "Door to door" means a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment.

(4) "General advertisement" means an advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of insurance, or the promotion of the insurer or the insurance producer.

(5) "Insurer" means an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

(6) "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit, or negotiate life insurance, including annuities.

(7) "Known" or "knowingly" means, depending on its use herein, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:

(a) is a service member; or

(b) is a service member with a pay grade of E-4 or below.

(8) "Life insurance" means insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income and unless otherwise specifically excluded, includes individually issued annuities.

(9) "Military installation" means any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.

(10) "MyPay" is a Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.

(11) "Service member" means any active duty officer (commissioned and warrant) or enlisted member of the United States Armed Forces.

(12) "Side fund" means a fund or reserve that is part of or otherwise attached to a life insurance policy (excluding individually issued annuities) by rider, endorsement, or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include:

(a) accumulated value or cash value or secondary guarantees provided by a universal life policy;

(b) cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; and

(i) contains only premiums paid in advance which accumulate at interest;

(ii) imposes no penalty for withdrawal;

(iii) does not permit funding beyond future required premiums;

(iv) is not marketed or intended as an investment; and

(v) does not carry a commission, either paid or calculated.

(13) "Specific appointment" means a prearranged appointment agreed upon by both parties and definite as to place and time.

(14) "United States Armed Forces" means all components of the Army, Navy, Air Force, Marine Corps, and Coast Guard.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.906 Practices Declared False, Misleading, Deceptive, or Unfair on a Military Installation

(1) The following acts or practices when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance are declared to be false, misleading, deceptive, or unfair:

(a) knowingly soliciting the purchase of any life insurance product "door to door" or without first establishing a specific appointment for each meeting with the prospective purchaser;

(b) soliciting service members in a group or "mass" audience or in a "captive" audience where attendance is not voluntary;

(d) making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation;

(e) soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander's designee;

(f) posting unauthorized bulletins, notices, or advertisements;

(g) failing to present DD Form 2885, "Personal Commercial Solicitation Evaluation," to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885; or

(h) knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer's files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives, or rules of the DoD or any branch of the Armed Forces.

(2) The following acts or practices when committed on a military installation by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements and are declared to be false, misleading, deceptive, or unfair:

(a) using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members; or

(b) using an insurance producer to participate in any United States Armed Forces sponsored education or orientation program.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.907 Practices Declared False, Misleading, Deceptive, or Unfair Regardless of Location

(1) The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements and are declared to be false, misleading, deceptive, or unfair:

(a) submitting, processing, or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member's pay to a third party for the purchase of life insurance. The foregoing includes, but is not limited to, using or assisting in using a service member's "MyPay" account or other similar internet or electronic medium for such purposes. This rule does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form; or

(b) knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this rule, a formal banking relationship is established when the depository institution:

(i) provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. section 4301 et seq., and the regulations promulgated thereunder; and

(ii) permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums.

(c) employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member's Leave and Earnings Statement or equivalent or successor form as "savings" or "checking" and where the service member has no formal banking relationship as defined in (1)(b);

(d) entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship;

(e) using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel;

(f) offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting, or facilitating the solicitation or sale of life insurance to another service member;

(g) knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance is solicited; and

(h) advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or state of legal residence for the sole purpose of increasing disposable income to purchase life insurance.

(2) The following acts or practices by an insurer or insurance producer lead to confusion regarding source, sponsorship, approval, or affiliation and are declared to be false, misleading, deceptive, or unfair:

(a) making any representation, or using any device, title, descriptive name, or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer, or product offered is affiliated, connected, or associated with, endorsed, sponsored, sanctioned, or recommended by the U.S. Government, the United States Armed Forces, or any state or federal agency or government entity. Examples of prohibited insurance producer titles include, but are not limited to, "Battalion Insurance Counselor," "Unit Insurance Advisor," "Servicemen's Group Life Insurance Conversion Consultant," or "Veteran's Benefits Counselor."

(i) Nothing herein shall be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning. Such designations include, but are not limited to, Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In Financial Services (MSFS), or Masters of Science Financial Planning (MS); or

(b) soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer, or insurance product is affiliated, connected, or associated with, endorsed, sponsored, sanctioned, or recommended by the U.S. Government, or the United States Armed Forces.

(3) The following acts or practices by an insurer or insurance producer lead to confusion regarding premiums, costs, or investment returns and are declared to be false, misleading, deceptive, or unfair:

(a) using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid; and

(b) excluding individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product "costs nothing" or is "free."

(4) The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive, or unfair:

(a) making any representation regarding the availability, suitability, amount, cost, exclusions, or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading, or deceptive;

(b) making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading, or deceptive; or

(c) suggesting, recommending, or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement shall take effect upon or after the service member's separation from the United States Armed Forces.

(5) The following acts or practices by an insurer and or insurance producer regarding disclosure are declared to be false, misleading, deceptive, or unfair:

(a) deploying, using or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance;

(b) failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser;

(c) excluding individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance;

(d) failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by section 10 of the "Military Personnel Financial Services Protection Act," Pub. L. No. 109-290, p.16; and

(e) excluding individually issued annuities, when the sale is conducted in-person face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:

(i) an explanation of any free look period with instructions on how to cancel if a policy is issued; and

(ii) either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of 33-20-604 , MCA (2005) and ARM 6.6.303 shall be deemed sufficient to meet this requirement for a written disclosure.

(6) The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive, or unfair:

(a) excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable; and

(b) offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant's insurable needs for life insurance:

(i) "insurable needs" are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant's estate and/or survivors or dependents; and

(ii) "other military survivor benefits" include, but are not limited to: the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents' Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and Social Security Survivor Benefits.

(c) excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

(i) unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

(ii) unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule will be provided for at least each policy year from one to ten and for every fifth policy year thereafter ending at age 100, policy maturity, or final expiration; and

(iii) which by default diverts or transfers funds accumulated in the side fund to pay, reduce, or offset any premiums due.

(d) excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with standard nonforfeiture law for life insurance; and

(e) selling any life insurance product to an individual known to be a service member that excludes coverage if the insured's death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, e.g., double indemnity, which may be excluded.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.908 Severability

(1) If any provision of these rules or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of these rules which can be given effect without the invalid provisions or application. To this end all provisions of these rules are declared to be severable.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Mont. Admin. R. 6.6.909 Effective Date

(1) ARM 6.6.901 through 6.6.909 shall become effective January 1, 2008, and shall apply to acts or practices committed on or after the effective date.

History

Authorizing statute(s): 33-1-313, 33-18-103, MCA
Implementing statute(s): 33-18-103, MCA
History: NEW, 2007 MAR p. 1180, Eff. 1/1/08.

Subchapter 6.6.10 Funeral Insurance

Mont. Admin. R. 6.6.1001 Purpose

(1) The purpose of these rules is to establish specific rules to regulate funeral insurance, including but not limited to the licensing of producers, form review, financial reporting, and consumer protection.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-17-201, 33-17-211, 33-17-212, 33-17-213, 33-17-214, 33-17-219, 33-17-220, 33-17-231, 33-17-236, 33-17-401, 33-17-405, 33-17-406, 33-17-407, 33-17-409, 33-17-411, 33-17-1001, 33-17-1002, 33-17-1003, 33-17-1004, 33-17-1005, 33-17-1101, 33-17-1102, 33-17-1103, 33-17-1203, 33-17-1205, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1002 Scope

(1) These rules shall apply to:

(a) all life insurance policy forms delivered or issued for delivery, marketed, or designated as intended for use in this state as funeral insurance;

(b) any solicitation, negotiation, or sale of funeral insurance occurring within this state;

(d) the licensing of specialized funeral insurance producers.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-17-201, 33-17-211, 33-17-212, 33-17-213, 33-17-214, 33-17-219, 33-17-220, 33-17-231, 33-17-236, 33-17-401, 33-17-405, 33-17-406, 33-17-407, 33-17-409, 33-17-411, 33-17-1001, 33-17-1002, 33-17-1003, 33-17-1004, 33-17-1005, 33-17-1101, 33-17-1102, 33-17-1103, 33-17-1203, 33-17-1205, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1003 Applicability of Other Rules

(1) Funeral insurance is defined in 33-20-1501, MCA, as a type of life insurance, and all rules pertaining to life insurance shall apply to funeral insurance unless funeral insurance is specifically exempted. In the event of any inconsistency between these rules and other rules pertaining to life insurance, these rules shall govern.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-17-201, 33-17-211, 33-17-212, 33-17-213, 33-17-214, 33-17-219, 33-17-220, 33-17-231, 33-17-236, 33-17-401, 33-17-405, 33-17-406, 33-17-407, 33-17-409, 33-17-411, 33-17-1001, 33-17-1002, 33-17-1003, 33-17-1004, 33-17-1005, 33-17-1101, 33-17-1102, 33-17-1103, 33-17-1203, 33-17-1205, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1004 Definitions

For the purposes of ARM 6.6.1001, 6.6.1002, 6.6.1003, 6.6.1004, 6.6.1006, 6.6.1008, 6.6.1010, 6.6.1012, 6.6.1014, 6.6.1016, 6.6.1018, and 6.6.1020, the following definitions apply:

(1) "Excess beneficiary" means the person designated in the funeral insurance policy or certificate to receive any amount of the funeral insurance proceeds that exceed the cost of the funeral goods and services provided to the insured. Payment to the excess beneficiary may be subject to recovery by Medicaid pursuant to 33-20-1501, MCA.

(2) "Funeral goods and services" means personal property sold, or provided, and services provided in connection with a funeral or at the final disposition of human remains.

(3) "Funeral insurance" is a type of life insurance as defined in 33-20-1501, MCA. Funeral insurance may be purchased by making a one time payment of premium or by paying premium in installments. Funeral insurance may be issued on a group or individual basis. Annuity contracts and viatical settlement agreements are not funeral insurance and may not be marketed or designated as intended for use as funeral insurance.

(4) "Funeral insurance policy forms" means every policy, certificate, enrollment form, application form, printed rider, endorsement form, disclosure form, policy summary, or other document which purports to grant funeral insurance or effect a transaction of funeral insurance.

(5) "Funeral insurance proceeds" means the amount payable as stated in the funeral insurance policy forms upon the death of the insured. Funeral insurance proceeds are also known as the death benefit.

(6) "Insurable interest" has the same meaning as in 33-15-201, MCA.

(7) "One-time payment of premium" means a single premium payment is made and the funeral insurance is fully paid up with no further premium payments required.

(8) "Person" means an individual or a business entity including a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

(9) "Preneed funeral arrangement" means an arrangement made with a person licensed under Title 37, chapter 19, parts 3 and 4, MCA, by the intended recipient of the funeral goods and services on that individual's own behalf, or by an authorized individual on behalf of the intended recipient, prior to the death of the individual. Preneed funeral arrangements are governed by Title 37, chapter 19, MCA, and the rules promulgated to implement that chapter.

(10) "Primary beneficiary" means the person designated in the funeral insurance to receive the funeral insurance proceeds intended by the applicant or insured, if not one in the same, to fund a preneed funeral arrangement or to pay for funeral goods and services for the insured. The primary beneficiary may, but need not, be a person licensed under Title 37, chapter 19, parts 3 and 4, MCA. Payment to the primary beneficiary may be subject to recovery by Medicaid pursuant to 33-20-1501, MCA.

(11) "Specialized funeral insurance producer" means a person who holds a current specialized funeral insurance producer license.

(12) "Specialized funeral insurance producer license" means a life insurance producer license that is issued only to persons also licensed under Title 37, chapter 19, parts 3 and 4, MCA.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-17-201, 33-17-211, 33-17-212, 33-17-213, 33-17-214, 33-17-219, 33-17-220, 33-17-231, 33-17-236, 33-17-401, 33-17-405, 33-17-406, 33-17-407, 33-17-409, 33-17-411, 33-17-1001, 33-17-1002, 33-17-1003, 33-17-1004, 33-17-1005, 33-17-1101, 33-17-1102, 33-17-1103, 33-17-1203, 33-17-1205, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1006 Licensing of Specialized Funeral Insurance Producers

(1) No person shall solicit, negotiate, or sell funeral insurance unless that person is properly licensed and appointed as a life insurance producer or as a specialized funeral insurance producer.

(2) Any person applying for a specialized funeral insurance producer license shall apply in a form approved by the commissioner. The commissioner may require a supplement to a standardized license application, or a separate license application for persons also licensed under Title 37, chapter 19, parts 3 and 4, MCA.

(3) Any person who wishes to obtain a specialized funeral insurance producer license shall disclose to the commissioner whether the person is currently licensed as funeral director, undertaker, mortician, or mortuary under Title 37, chapter 19, parts 3 and 4, MCA. Additionally, applicants shall disclose whether they have ever had such an application denied, or whether a disciplinary action has ever been taken against such a license, and the outcome of the disciplinary proceeding.

(4) Any nonresident applicant who holds a funeral director, undertaker, mortician, mortuary, or similar license, by whatever name called, in another jurisdiction must first become licensed as a funeral director, undertaker, mortician, or mortuary under Title 37, chapter 19, parts 3 and 4, MCA, before the commissioner will consider an application for a specialized funeral insurance producer license.

(5) If the Board of Funeral Service, provided for in 2-15-1743, MCA, suspends, revokes, or terminates the license of a funeral director, undertaker, mortician, or mortuary, the specialized funeral insurance producer license and any appointments will automatically terminate. The funeral director, undertaker, mortician, or mortuary must notify the commissioner within ten days after a suspension, revocation, or license termination by the Board of Funeral Service.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-17-201, 33-17-211, 33-17-212, 33-17-213, 33-17-214, 33-17-219, 33-17-220, 33-17-231, 33-17-236, 33-17-401, 33-17-405, 33-17-406, 33-17-407, 33-17-409, 33-17-411, 33-17-1001, 33-17-1002, 33-17-1003, 33-17-1004, 33-17-1005, 33-17-1101, 33-17-1102, 33-17-1103, 33-17-1203, 33-17-1205, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.1008 Reporting by Issuer

(1) The commissioner may require a funeral insurance issuer to file a supplement to the annual statement. The supplement will be in a form approved by the commissioner.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-2-701, 33-2-705, 33-20-1501, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1010 Funeral Insurance Policy Forms

(1) In addition to the filing and approval requirements in statute and rule for life insurance policy forms, funeral insurance issuers must file the following with the commissioner for review and prior approval:

(a) solicitation materials; and

(b) disclosure forms.

(2) In addition to complying with the rules governing life insurance, funeral insurance policy forms must clearly and conspicuously:

(a) be identified as funeral insurance;

(b) list any and all exclusions or other conditions under which the funeral insurance will not pay the death benefit; and

History

Authorizing statute(s): 33-1-313, 33-1-501, 33-20-1503, MCA
Implementing statute(s): 33-1-501, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1012 Beneficiary Designation

(1) Funeral insurance policy forms must clearly and conspicuously:

(a) allow the insured, or applicant, if the applicant has an insurable interest in the life of the insured, to designate a primary beneficiary and an excess beneficiary;

(b) state that funeral insurance proceeds may be subject to recovery by Medicaid pursuant to 33-20-1501, MCA; and

(c) subject to (1)(b), provide that if the primary beneficiary is a funeral director, mortician, mortuary, or undertaker:

(i) any funeral insurance proceeds that exceed the cost of funeral goods and services provided will be paid in accordance with the term of the funeral insurance, such as an excess beneficiary designation or provision regarding a failed beneficiary designation; and

(ii) under no circumstance may any funeral insurance proceeds be paid to the primary beneficiary that exceed the cost of funeral goods and services provided.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-1-501, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1014 Right to Return Policy

(1) Each funeral insurance policy and certificate delivered or issued for delivery in this state must clearly and conspicuously provide to the insured the right to return the policy or certificate to the funeral insurance issuer within 30 days of delivery of the policy or certificate and to receive an unconditional full refund of all premium and other consideration paid on it.

(2) The funeral insurance issuer must refund the premium and other consideration paid within 30 days of receiving the refund request.

(3) A funeral insurance policy or certificate returned pursuant to this rule is void from the beginning.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-1-501, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1016 Unintentional Lapse

(1) Each issuer offering funeral insurance with premium payable in installments shall, as a protection against unintentional lapse, comply with the following:

(a) No funeral insurance policy or certificate shall be issued until the issuer has received from the applicant either a written designation of at least one individual who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium, or a written waiver dated and signed by the applicant electing not to designate an additional individual to receive notice. The applicant has the right to designate at least one individual who is to receive the notice of termination in addition to the insured. Designation shall not constitute acceptance of any liability by the third party for any goods or services provided to the insured. The form used for the written designation must clearly and conspicuously provide space for listing at least one individual. The designation shall include each individual's full name and home address. In the case of an applicant who elects not to designate an additional individual, the waiver shall state:

(i) "Protection against unintended lapse. I understand that I have the right to designate at least one individual other than myself to receive notice of lapse, or termination of this funeral insurance policy or certificate for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I do not elect to designate an individual to receive this notice."

(b) No funeral insurance policy or certificate shall lapse or be terminated for nonpayment of premium unless the issuer, at least 30 days before the effective date of the lapse or termination, has given notice to those individuals designated pursuant to (1) at the address provided for purposes of receiving notice of lapse or termination.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-1-501, 33-20-1501, 33-20-1502, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1018 Required Disclosures

(1) In addition to any disclosures required for life insurance by statute or rule, the funeral insurance issuer shall develop clear and conspicuous written disclosures regarding the following information:

(a) the information contained in 33-20-1501(3), MCA;

(b) whether the cumulative premium paid may exceed the face amount of the funeral insurance policy or certificate and, if so, the length of time until the cumulative premium paid exceeds the face amount of the policy or certificate;

(c) the nature of the relationship among the soliciting producer, the provider of the funeral goods and services, and any other person identified in a preneed funeral arrangement who will or may profit from the transaction;

(d) whether a sales commission, or other form of compensation, is being paid in connection with the sale of the funeral insurance and the identity of the persons to whom it will be paid;

(e) that the funeral insurance issuer, insurance producer, or specialized funeral insurance producer may not require that the applicant, or insured, designate a specific beneficiary, including, but not limited to a funeral director, mortician, mortuary, or undertaker;

(f) the relationship of the funeral insurance to the funding of the preneed funeral arrangement and the nature and existence of any guarantees in relation to the preneed funeral arrangement;

(g) an itemized list of the funeral goods and services which are applied or contracted for in the preneed funeral arrangement and all relevant information concerning the price of the same and whether the price is guaranteed or to be determined at the time of need;

(h) the impact on the preneed funeral arrangement of:

(i) changes in the funeral insurance policy, including, but not limited to, changes in the assignment, beneficiary designation, or use of the proceeds;

(ii) penalties to be incurred by the policyholder as a result of failure to make premium payments; and

(iii) penalties to be incurred or monies to be received as a result of cancellation or surrender of the funeral insurance.

(i) an explanation of any entitlements or obligations which arise if there is a difference between the funeral insurance proceeds and the amount actually needed to fund the preneed funeral arrangement;

(j) any penalties or restrictions, regarding either geographic restrictions, or the inability of the provider of the funeral goods and services identified in the preneed funeral arrangement to perform, on the delivery of funeral goods and services, or the guaranteed elements in the preneed funeral arrangement;

(k) if known, whether the provider of funeral goods and services making or entering a preneed funeral arrangement will accept assignments of funeral insurance and preneed funeral arrangements sold by any other properly licensed person;

(l) that after the death of an individual who at any time received Medicaid benefits, a funeral director, mortician, mortuary, undertaker, or other person, including but not limited to the decedent's spouse, heir, devisee, or personal representative, who is the beneficiary of funeral insurance in excess of $5,000 in value designated to pay for the disposition of the Medicaid recipient's remains and for related expenses shall, after paying for the disposition and related expenses, pay all remaining funds to the Department of Public Health and Human Services within 30 days following the receipt of the funeral insurance death benefit. The funds must be paid to the Department of Public Health and Human Services regardless of any provision in a written contract, insurance policy, or other agreement entered into on or after January 1, 2008, directing a different disposition of the funds. Funds paid to the department under these rules are not considered to be property of the deceased Medicaid recipient's estate, and the provisions of 53-6-167, MCA, do not apply to recovery of the funds by the department;

(m) that the funeral goods and services may also be purchased prior to death by making payment directly to a provider of funeral goods and services, licensed under Title 37, chapter 19, MCA, who would hold the funds in trust for the benefit of the purchaser under Title 37, chapter 19, MCA;

(n) that a discount from the price of funeral goods and services will not be offered, or provided, as an inducement to purchase or assign funeral insurance; and

(o) that cancellation of a preneed funeral arrangement will not cancel, or otherwise invalidate the funeral insurance policy.

(2) If any of the disclosures in (1) cannot be determined until the time of application, the life insurance producer or specialized funeral insurance producer shall complete the disclosure information specific to that funeral insurance transaction.

(3) The funeral insurance issuer will provide the disclosures in (1) to the applicant at the time application is made and prior to accepting any premium. Receipt of these disclosures must be acknowledged in writing by the applicant.

(4) The disclosures and a copy of the written acknowledgment must also be provided when the funeral insurance policy or certificate is delivered.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-20-1501, 33-20-1502, 33-20-1503, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Mont. Admin. R. 6.6.1020 Prohibitions

(1) The sale of funeral insurance may not be conditioned on:

(a) the applicant or insured agreeing to assign the funeral insurance proceeds to a funeral director, mortician, mortuary, or undertaker; or

(b) the applicant or insured making or entering a preneed funeral arrangement.

(2) Prohibited inducements under 33-18-208, MCA, include, but are not limited to, discounts from the price of funeral goods and services.

History

Authorizing statute(s): 33-1-313, 33-20-1503, MCA
Implementing statute(s): 33-18-208, 33-20-1501, 33-20-1502, 33-20-1503, MCA
History: NEW, 2008 MAR p. 118, Eff. 2/1/08.

Subchapter 6.6.11 Credit Life and Disability Insurance

Mont. Admin. R. 6.6.1101 Credit Life Insurance -- Acceptable Rates

(1) Except as may otherwise be provided in this subchapter, the following rates for credit life insurance may be considered "prima facie acceptable rates" for purposes of 33-21-205, MCA. Rates which are filed by any company for the indicated coverage will be considered acceptable without substantiating data if they do not exceed these premium rates:

(a) If premiums are payable on a monthly outstanding balance basis the rate is $.80 per month per $1,000 of outstanding insured debt on single life and $1.40 per month per $1,000 of outstanding insured debt on joint life.

(b) If the premium is charged on a single premium basis, the rate must be computed according to the following formula or according to a forumla approved by the commissioner which produces a rate which is substantially the same as the rate produced by the following formula:

S p = Single premium rate per $100 of initial credit life insurance coverage.

O p = $.80, the prima facie credit life insurance premium rate for monthly outstanding balance coverage from (1).

I t = The scheduled amount of insurance for month t.

I i = Initial amount of insurance. For a net insurance policy, I i equals the initial principal balance of the loan.

dis = .0036, representing an annual discount rate of 4% for the interest plus .4% for mortality.

n = The number of months in the term of the insurance.

(2) An insurer may at any time charge a rate which is less than the basic maximum rate set forth above.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1993 MAR p. 2764, Eff. 11/25/93; AMD, 1996 MAR p. 2157, Eff. 6/21/96.

Mont. Admin. R. 6.6.1102 Limitation on Presumption of Reasonableness

(1) The rates provided by ARM 6.6.1101 are presumed to produce reasonable benefits in relation to premium only if:

(a) The credit life insurance contract contains no exclusion other than for suicide committed within two years of the effective date of the insurance; and

(b) The contract contains no age restrictions more severe than those making ineligible for coverage debtors older than the applicable age limit, which must not be less than attained age 65 years if such limit applies to the age when the insurance attaches, or not less than attained age 66 if such limit applies to the age on the scheduled maturity date of the debt.

(i) If the insurer used ages 70 and 71, or higher ages, instead of ages 65 or 66, the prima facie rates in-ARM 6.6.1101(1) may be increased by 5%.

(ii) If the insurer imposes no age limit, the prima facie rates may be increased by 10%.

(2) If a debtor exceeds the eligibility age, has correctly stated his age in writing, or otherwise, and a certificate or policy is issued to him in error, the insurer has the right within 60 days from the date of the loan or extension of credit to terminate coverage and refund any premiums paid. Failure on the part of the insurer to act in a timely manner will subject it to the full risk regardless of the age.

(a) If the debtor dies within the 60 day period before the insurer terminates coverage, the insurer will be liable for the amount of the debtor's insurance at death.

(3) If the policy is issued beyond the age limits established in the policy due to misstatement of age of the debtor, an equitable adjustment of premiums or of benefits must be made as provided by the policy.

(4) The contract may require submission of evidence of insurability.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1996 MAR p. 1646, Eff. 6/21/96.

Mont. Admin. R. 6.6.1103 Credit Disability Insurance--Acceptable Rates

(1) Except as may otherwise be provided in this sub-chapter, the rates provided in this rule for credit disability insurance may be considered as "prima facie acceptable rates" for the purposes of 33-21-205, MCA. Rates which are filed by any company for the indicated coverage will be considered acceptable without substantiating data if they do not exceed these premium rates.

(2) If premiums are paid in one sum for the entire duration of the indebtedness, the following rates for $100 of initial indebtedness repayable in the indicated number of installments are applicable.

(3) If premiums are paid on the basis of a premium rate per month per $1,000 of outstanding insured gross debt, this premium rate must be computed according to the following formula or according to a formula approved by the commissioner which produces a rate actuarially consistent with the applicable single premium rate in (2):

SP n = Single premium rate per $100 of initial insured debt repayable in n equal monthly installments as shown in (2).

OP n = Monthly outstanding balance premium rate per $1,000.

n = The number of months in the term of the insurance.

dis = .0033, representing an annual discount rate of 4% for interest.

(4) The premium rate for joint credit disability coverage shall not exceed 1.8 times the permitted single credit disability rate.

(5) Premiums for credit disability insurance which are payable on a basis not specified in this rule or which cover benefits on a basis not specified in this rule must be actuarially consistent with the rates specified in this rule.

(6) An insurer may at any time charge a rate which is less than the basic maximum rate set forth above in this section.

Number of months in which indebtedness | Nonretroactive Elimination Period | Retroactive Benefits Waiting Period is repayable | 7-day | 14-day | 30-day | 7-day | 14-day | 30-day 6 or less | $1.55 | $1.03 | $0.41 | $2.16 | $1.85 | $1.34 7 | 1.61 | 1.09 | 0.47 | 2.22 | 1.91 | 1.40 8 | 1.67 | 1.15 | 0.53 | 2.28 | 1.97 | 1.46 9 | 1.73 | 1.21 | 0.59 | 2.34 | 2.03 | 1.52 10 | 1.79 | 1.27 | 0.65 | 2.40 | 2.09 | 1.58 11 | 1.85 | 1.33 | 0.71 | 2.46 | 2.15 | 1.64 12 | 1.91 | 1.39 | 0.77 | 2.52 | 2.21 | 1.70 13 | 1.96 | 1.45 | 0.83 | 2.58 | 2.27 | 1.76 14 | 2.01 | 1.51 | 0.89 | 2.64 | 2.33 | 1.82 15 | 2.06 | 1.57 | 0.95 | 2.70 | 2.39 | 1.88 16 | 2.11 | 1.63 | 1.01 | 2.76 | 2.45 | 1.94 17 | 2.16 | 1.69 | 1.07 | 2.82 | 2.51 | 2.00 18 | 2.21 | 1.75 | 1.13 | 2.88 | 2.58 | 2.06 19 | 2.27 | 1.81 | 1.19 | 2.94 | 2.64 | 2.11 20 | 2.32 | 1.87 | 1.25 | 3.00 | 2.70 | 2.16 21 | 2.37 | 1.93 | 1.31 | 3.06 | 2.76 | 2.21 22 | 2.42 | 1.99 | 1.37 | 3.12 | 2.82 | 2.27 23 | 2.47 | 2.05 | 1.43 | 3.18 | 2.88 | 2.32 24 | 2.52 | 2.11 | 1.49 | 3.24 | 2.94 | 2.37 25 | 2.58 | 2.17 | 1.55 | 3.30 | 2.99 | 2.42 26 | 2.63 | 2.23 | 1.61 | 3.36 | 3.04 | 2.47 27 | 2.68 | 2.29 | 1.67 | 3.42 | 3.09 | 2.52 28 | 2.73 | 2.35 | 1.73 | 3.48 | 3.14 | 2.58 29 | 2.78 | 2.41 | 1.79 | 3.54 | 3.19 | 2.63 30 | 2.83 | 2.47 | 1.85 | 3.61 | 3.24 | 2.68 31 | 2.88 | 2.53 | 1.91 | 3.66 | 3.30 | 2.73 32 | 2.94 | 2.59 | 1.96 | 3.71 | 3.35 | 2.78 33 | 2.99 | 2.65 | 2.01 | 3.76 | 3.40 | 2.83 34 | 3.04 | 2.71 | 2.06 | 3.81 | 3.45 | 2.88

Number of months in which indebtedness | Nonretroactive Elimination Period | Retroactive Benefits Waiting Period is repayable | 7-day | 14-day | 30-day | 7-day | 14-day | 30-day 35 | $3.09 | $2.77 | $2.11 | $3.86 | $3.50 | $2.94 36 | 3.14 | 2.83 | 2.16 | 3.91 | 3.55 | 2.99 37 | 3.19 | 2.88 | 2.21 | 3.96 | 3.61 | 3.04 38 | 3.24 | 2.94 | 2.27 | 4.00 | 3.66 | 3.09 39 | 3.30 | 2.99 | 2.32 | 4.04 | 3.71 | 3.14 40 | 3.35 | 3.04 | 2.37 | 4.09 | 3.76 | 3.19 41 | 3.40 | 3.09 | 2.42 | 4.13 | 3.81 | 3.24 42 | 3.45 | 3.14 | 2.47 | 4.17 | 3.86 | 3.30 43 | 3.49 | 3.18 | 2.51 | 4.21 | 3.91 | 3.35 44 | 3.54 | 3.23 | 2.56 | 4.26 | 3.95 | 3.40 45 | 3.58 | 3.27 | 2.60 | 4.30 | 3.99 | 3.45 46 | 3.62 | 3.31 | 2.64 | 4.34 | 4.03 | 3.50 47 | 3.67 | 3.36 | 2.69 | 4.39 | 4.08 | 3.55 48 | 3.71 | 3.40 | 2.73 | 4.43 | 4.12 | 3.61 49 | 3.75 | 3.44 | 2.77 | 4.46 | 4.16 | 3.65 50 | 3.79 | 3.48 | 2.82 | 4.50 | 4.21 | 3.69 51 | 3.84 | 3.53 | 2.86 | 4.53 | 4.25 | 3.73 52 | 3.88 | 3.57 | 2.90 | 4.57 | 4.29 | 3.78 53 | 3.92 | 3.61 | 2.94 | 4.60 | 4.33 | 3.82 54 | 3.97 | 3.66 | 2.99 | 4.64 | 4.38 | 3.86 55 | 4.00 | 3.69 | 3.02 | 4.67 | 4.41 | 3.91 56 | 4.04 | 3.73 | 3.06 | 4.70 | 4.45 | 3.95 57 | 4.07 | 3.76 | 3.09 | 4.74 | 4.48 | 3.99 58 | 4.11 | 3.79 | 3.12 | 4.77 | 4.51 | 4.03 59 | 4.15 | 3.83 | 3.16 | 4.81 | 4.55 | 4.08 60 | 4.18 | 3.86 | 3.19 | 4.84 | 4.58 | 4.12 61 | 4.22 | 3.90 | 3.23 | 4.88 | 4.62 | 4.15 62 | 4.26 | 3.93 | 3.26 | 4.91 | 4.65 | 4.19 63 | 4.31 | 3.97 | 3.30 | 4.94 | 4.69 | 4.22 64 | 4.35 | 4.00 | 3.33 | 4.98 | 4.72 | 4.26 65 | 4.39 | 4.03 | 3.36 | 5.01 | 4.76 | 4.29 66 | 4.43 | 4.07 | 3.40 | 5.05 | 4.79 | 4.33 67 | 4.45 | 4.09 | 3.43 | 5.08 | 4.82 | 4.35 68 | 4.48 | 4.12 | 3.47 | 5.12 | 4.86 | 4.38 69 | 4.51 | 4.15 | 3.50 | 5.15 | 4.89 | 4.40 70 | 4.53 | 4.17 | 3.54 | 5.18 | 4.93 | 4.43 71 | 4.56 | 4.20 | 3.57 | 5.22 | 4.96 | 4.45

Number of months in which indebtedness | Nonretroactive Elimination Period | Retroactive Benefits Waiting Period is repayable | 7-day | 14-day | 30-day | 7-day | 14-day | 30-day 72 | $4.58 | $4.22 | $3.61 | $5.25 | $5.00 | $4.48 73 | 4.61 | 4.25 | 3.63 | 5.28 | 5.02 | 4.51 74 | 4.64 | 4.27 | 3.66 | 5.30 | 5.05 | 4.53 75 | 4.66 | 4.30 | 3.68 | 5.33 | 5.07 | 4.56 76 | 4.69 | 4.33 | 3.71 | 5.36 | 5.10 | 4.58 77 | 4.71 | 4.35 | 3.73 | 5.38 | 5.12 | 4.61 78 | 4.74 | 4.38 | 3.76 | 5.41 | 5.15 | 4.64 79 | 4.76 | 4.40 | 3.79 | 5.43 | 5.18 | 4.66 80 | 4.79 | 4.43 | 3.81 | 5.46 | 5.20 | 4.69 81 | 4.82 | 4.45 | 3.84 | 5.48 | 5.23 | 4.71 82 | 4.84 | 4.48 | 3.86 | 5.51 | 5.25 | 4.74 83 | 4.87 | 4.51 | 3.89 | 5.54 | 5.28 | 4.76 84 | 4.89 | 4.53 | 3.91 | 5.56 | 5.30 | 4.79 85 | 4.92 | 4.56 | 3.94 | 5.59 | 5.33 | 4.82 86 | 4.94 | 4.58 | 3.97 | 5.61 | 5.36 | 4.84 87 | 4.97 | 4.61 | 3.99 | 5.64 | 5.38 | 4.87 88 | 5.00 | 4.64 | 4.02 | 5.67 | 5.41 | 4.89 89 | 5.02 | 4.66 | 4.04 | 5.69 | 5.43 | 4.92 90 | 5.05 | 4.69 | 4.07 | 5.72 | 5.46 | 4.94 91 | 5.06 | 4.71 | 4.09 | 5.73 | 5.48 | 4.97 92 | 5.08 | 4.74 | 4.10 | 5.75 | 5.49 | 5.00 93 | 5.10 | 4.76 | 4.12 | 5.77 | 5.51 | 5.02 94 | 5.12 | 4.79 | 4.14 | 5.79 | 5.53 | 5.05 95 | 5.13 | 4.82 | 4.15 | 5.80 | 5.54 | 5.07 96 | 5.15 | 4.84 | 4.17 | 5.82 | 5.56 | 5.10 97 | 5.17 | 4.86 | 4.19 | 5.84 | 5.58 | 5.12 98 | 5.18 | 4.88 | 4.21 | 5.85 | 5.60 | 5.13 99 | 5.20 | 4.89 | 4.22 | 5.87 | 5.61 | 5.15 100 | 5.22 | 4.91 | 4.24 | 5.89 | 5.63 | 5.17 101 | 5.24 | 4.93 | 4.26 | 5.91 | 5.65 | 5.18 102 | 5.25 | 4.94 | 4.27 | 5.92 | 5.67 | 5.20 103 | 5.27 | 4.96 | 4.29 | 5.94 | 5.68 | 5.22 104 | 5.29 | 4.98 | 4.31 | 5.96 | 5.70 | 5.24 105 | 5.30 | 5.00 | 4.33 | 5.97 | 5.72 | 5.25 106 | 5.32 | 5.01 | 4.34 | 5.99 | 5.73 | 5.27 107 | 5.34 | 5.03 | 4.36 | 6.01 | 5.75 | 5.29 108 | 5.36 | 5.05 | 4.38 | 6.03 | 5.77 | 5.30

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1993 MAR p. 2764, Eff. 11/25/93; AMD, 1996 MAR p. 1646, Eff. 6/21/96.

Mont. Admin. R. 6.6.1104 Limitation of Presumption of Reasonableness

(1) The rates provided by ARM 6.6.1103 are presumed to produce reasonable benefits in relation to premiums only if:

(a) The coverage contains no exclusions for pre-existing conditions except for those conditions which manifested themselves to the insured debtor by requiring medical diagnosis or treatment within 6 months prior to the application for insurance and which caused loss within the 6 months following the effective date of coverage. However, a disability commencing after the expiration of the first 6 months following the effective date of coverage and resulting from such conditions shall be covered.

(i) The policy shall provide that in event the indebtedness covered by the policy results from the refinancing in whole or part of a prior debt with the same creditor, any period of exclusion for pre-existing conditions shall be reduced by any period that creditor-debtor disability coverage was in force in connection with the prior indebtedness, provided however, that if the resulting period of exclusion for pre-existing conditions is less than the period that would normally be applicable and if as a result a claim for which disability benefits would not otherwise be allowed is payable, the benefits for such claim need not be greater than those which would have been paid under the prior policy if it had not terminated.

(b) Coverage is provided or offered to all debtors not older than the applicable age limit, which shall not be less than attained age 65 years if such limit applies to the age when the insurance attaches, or not less than attained age 66 years if such limit applies to the age on the scheduled maturity date of the debt.

(i) If the insurer uses ages 70 and 71, or higher ages, instead of ages 65 and 66, the prima facie rates in ARM 6.6.1103(2) may be increased by 5%.

(ii) If the insurer imposes no age limit, the prima facie rates may be increased by 10%.

(d) The contract may require the debtor be gainfully employed (or unemployed solely because of seasonal lay-off) at the time the insurance becomes effective and meets other standards as provided in these rules.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1996 MAR p. 1131, Eff. 3/22/96; AMD, 1996 MAR p. 1646, Eff. 6/21/96.

Mont. Admin. R. 6.6.1105 Allowable Exclusions and Restrictions

(1) Any contract to which the rates provided by ARM 6.6.1103 apply may contain provisions excluding or restricting coverage in the event of intentional and self-inflicted injury, foreign travel or residence, flight in non-scheduled aircraft, or war or military service.

(2) If more restricted coverage is to be provided, there must be an appropriate reduction in the foregoing premium standards.

(3) Except in unusual cases, such insurance should not be sold to military persons.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1999 MAR p. 2246, Eff. 10/8/99.

Mont. Admin. R. 6.6.1106 Filing--Insurer's Statement

(1) Any filing made pursuant to this sub-chapter shall clearly indicate whether the insurer believes that the rates in the filing are within the acceptable rates established by this sub-chapter or are higher than those established rates.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/78; AMD, 1978 MAR p. 887, Eff. 10/15/78.

Mont. Admin. R. 6.6.1107 Requests for Higher Rates--Approval by Commissioner

(1) Requests for rates higher than those established in this sub-chapter for a debtor or a creditor or a class or classes of debtors or creditors will be approved on a satisfactory showing by the insurer that, because of the nature of the risk, the mortality or morbidity experience which may reasonably be anticipated will be significantly higher than the average anticipated experience upon which the applicable rate standard was based.

(2) In judging requests for higher rates, the commissioner of insurance will consider;

(a) Available mortality and morbidity data pertaining to the debtors of a creditor or a class or classes of debtors of a creditor;

(b) Previous experience, if any, for an actuarially credible period of the creditor's debtors, including the experience of any subsidiary or affiliate of the creditor;

(d) A reasonable rate of expense.

(3) Age data and prior experience of the creditor's pro-gram should always be submitted.

(4) Commissions or other payments or allowances to creditors, agents, or general agents will not be considered a justification for higher rates.

History

Authorizing statute(s): Sec. 33-21-111, MCA
Implementing statute(s): Sec. 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78.

Mont. Admin. R. 6.6.1108 Refunds

(1) Section 33-21-206, MCA, requires that the formula to be used in computing refunds be filed with the commissioner of insurance.

(2) Any refund formula which is at least as favorable to the insured debtor as the "sum of the digits" formula (also called the "rule of 78ths") for single premium plans, or pro rata for other plans, is acceptable to the commissioner.

(3) A refund or credit need not be made if the amount thereof is less than $1.00.

(4) If credit life insurance on a debtor terminates prior to expiration of the period for which a charge for such insurance has been made to the debtor, by reason of early discharge of indebtedness by cash or refinancing, or by payment of a lump sum disability insurance claim, or otherwise, except by payment of a death claim under the credit life insurance policy, a refund of such charge for insurance shall be made to the debtor or credited to his account. If credit accident and health insurance on a debtor terminates prior to expiration of the period for which a charge for such insurance has been made to the debtor, for any reason whatsoever except for payment of a lump sum disability insurance benefit, a refund of such charge for insurance shall be made to the debtor, or to his beneficiary or estate, as appropriate. In any refinancing or consolidation of an indebtedness, no policy provision covering the new indebtedness shall operate to deny benefits which would have been payable had the refinancing or consolidation not taken place.

History

Authorizing statute(s): Sec. 33-21-111, MCA
Implementing statute(s): Sec. 33-21-206, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78.

Mont. Admin. R. 6.6.1109 Creditor--Remittance of Premiums to Insurer

(1) If the creditor adds identifiable insurance charges or premiums for credit insurance to the total amount of the indebtedness and makes any direct or indirect finance, carrying, credit or service charge whatever to the debtor in connection with such insurance charge, the creditor is deemed to have loaned the premium or insurance charge to the debtor and the premium or insurance charge is deemed collected for the insurer as soon as it is added to the indebtedness, in which event, the creditor must remit and the insurer shall collect on a single premium basis only. A creditor may remit and an insurer may collect premiums for credit life insurance on a monthly balance basis. The charge for the premium shall be shown separately from the balance of the loan and any payment received by the creditor shall first be applied to pay the credit life insurance premium. Only in the event no payment is made or the payment made is insufficient to satisfy the premium charge, may the creditor add the unpaid premium to the loan and remit it to the insurers. If the premium charged by the insurer for group credit life insurance is on the basis of the outstanding balances of indebtedness at risk at each premium due date, the amount charged to the debtor for such insurance shall not exceed the substantial mathematical equivalent of the premiums to be charged for that insurance by the insurer, as computed at the time the charge to the debtor is determined. Schedules of such permissible charges shall be provided to the creditor with instructions on the manner and method such schedules must be used to effect compliance with the law.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-206, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78.

Mont. Admin. R. 6.6.1110 Determination of Reasonableness of Benefits in Relation to Premium Charged

(1) Benefits provided by credit insurance policies must be reasonable in relation to the premium charged. This requirement is satisfied if the premium rate charged develops or may be reasonably expected to develop a loss ratio of not less than the minimum loss ratio required by this rule.

(a) The minimum loss ratio is defined as follows:

(i) Credit disability insurance - 55%;

(ii) Credit life insurance - 38.5%.

(b) The rates established in this subchapter and rates filed and approved pursuant to ARM 6.6.1107 will be presumed to satisfy the loss ratio standards set forth in this rule.

(2) Creditor, agent and general agent compensation must not be more than a combined total of 37.5% of the net written prima facie premium. This compensation must be apportioned not more than 7.5% to the producing general agent.

(a) For the purpose of (2), prima facie premium means premium using the premium rates set out in ARM 6.6.1101 and 6.6.1103.

(3) If an insurer's loss ratio is less than the standards set forth in this rule, this will be considered prima facie evidence that the insurer intends to write credit business at a loss ratio not in compliance with these rules. The insurer will then be required to:

(a) Reduce the premium rates as needed to produce an anticipated loss ratio which satisfies the standards in this rule, and file these rates with the commissioner; or

(b) Provide to the commissioner an actuarial justification to demonstrate why the premium rates currently filed should not be reduced.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1996 MAR p. 1646, Eff. 6/21/96; AMD, 2000 MAR p. 453, Eff. 2/11/00.

Mont. Admin. R. 6.6.1111 Compliance -- Forms, Contracts and Rates

(1) Forms, contracts and rates used in this state shall comply with the applicable provisions of this subchapter.

History

Authorizing statute(s): 33-21-111, MCA
Implementing statute(s): 33-21-205 and 33-21-206, MCA
History: NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78.

Subchapter 6.6.13 Proxies, Consents, and Authorizations Of Domestic Stock Insurers

Mont. Admin. R. 6.6.1301 Applicability

(1) This sub-chapter applies to all domestic stock insurers having 100 or more stockholders.

(2) This sub-chapter does not apply to an insurer if 95% or more of its stock is owned or controlled by a parent or an affiliated insurer and the remaining shares are held by less than 500 stockholders.

(3) This sub-chapter does not apply to a domestic stock insurer which files with the United States Securities and Exchange Commission forms of proxies, consents, and authorizations complying with the requirements of the Securities and Exchange Act of 1934, the Securities and Exchange Act Amendments of 1964, and Regulation X-14 of the Securities and Exchange Commission adopted under the Securities and Exchange Act.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1302 Definitions

As used in this sub-chapter, unless the context indicates otherwise:

(1) "Solicit" and "solicitation" include:

(a) Any request for a proxy, whether or not accompanied by or included in a form of proxy; or

(b) Any request to execute, not execute, or revoke a proxy; or

(c) The furnishing of a proxy or other communication to stockholders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy.

(2) "Solicit" and "solicitation" do not include:

(a) Any solicitation by a person in respect to stock of which he is the beneficial owner;

(b) Action, by a broker or other person, in respect to stock carried in his name or in the name of his nominee;

(i) Forwarding to the beneficial owner of that stock soliciting material received from the company;

(ii) Impartially instructing such beneficial owner to forward a proxy to any person to whom the beneficial owner desires to give a proxy; or

(iii) Impartially requesting instructions from the beneficial owner with respect to the authority to be conferred by the proxy and stating that a proxy will be given if the instructions are received by a certain date;

(c) The furnishing of a form of proxy to a stockholder upon his unsolicited request, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1303 Disclosure of Equivalent Information

(1) Unless proxies, consents, or authorizations, in respect to stock of a domestic insurer subject to this sub-chapter, are solicited by or on behalf of the management of the insurer from the holders of record of the stock of the insurer, in accordance with the provisions of this sub-chapter and prior to any annual or other meeting, the insurer shall, in accordance with this sub-chapter, file with the Commissioner of Insurance and transmit to all stockholders of record information substantially equivalent to the information which would be required to be transmitted if a solicitation were made.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1304 Information to Be Furnished to Stockholders

(1) A solicitation subject to this sub-chapter may not be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in ARM 6.6.1305 through ARM 6.6.1319.

(2) If the solicitation is made on behalf of the management of the insurer and relates to an annual meeting of stockholders at which directors are to be elected, each proxy statement, furnished pursuant to subsection (1) of this rule, shall be accompanied or preceded by an annual report (in preliminary of final form) to the stockholders containing those financial statements for the last fiscal year referred to in Schedule SIS of the insurer's annual statement under the heading "Financial Reporting to Stockholders". Subject to the preceding requirements with respect to financial statements, the annual report, stockholders may be in any form considered suitable by the management

(3) Two copies of each report sent to the stockholders pursuant to this rule shall be mailed to the commissioner of insurance not later than the date of which the report is first sent or given to stockholders or the date on which preliminary copies of solicitation material are filed pursuant to ARM 6.6.1323(1) , whichever date is later.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1305 Proxy Statements--Revocability

Each proxy statement shall state whether the person giving the proxy may revoke it. If the right of revocation before the proxy is exercised is limited or is subject to compliance with any formal procedure, the proxy statement shall describe the limitation or procedure.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1306 Proxy Statements--Dissenters' Rights of Appraisal

(1) Each proxy statement shall outline briefly the rights of appraisal or similar rights of dissenting stockholders with respect to any matter to be acted upon and shall indicate any statutory procedure required to be followed by those stockholders in order to perfect their rights.

(2) Where those rights may be exercised only within a limited time after the date of the adoption of a proposal, the filing of a charter amendment, or other similar act, the proxy statement shall state whether the person solicited will be notified of that date.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1307 Proxy Statements--Indentity of Solicitors and Cost of Solicitation

(1) If a solicitation of a proxy is

(2) If the solicitation is made otherwise than by the management of the insurer, the solicitation or proxy statement shall state the names and addresses of the persons by whom and on whose behalf it is made and the names and addresses of the persons paying, directly or indirectly, the cost of the soli-citation.

(3) If the solicitation is to be made by specially engaged employees or paid solicitors, the solicitation or proxy statement shall state the material features of any contract or arrangement for the solicitation and shall identify the parties and the actual or anticipated cost of the solicitation.

made by the management of the insurer, the solicitation or proxy statement shall so state. It shall further state the name of any director of the insurer who has informed the management in writing that he intends to oppose any intended action by the management and shall indicate the intended action which is opposed.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1308 Proxy Statements--Disclosure of Interests

(1) Each proxy statement shall describe briefly any substantial interest, direct or indirect, by stockholdings or otherwise, of any director, nominee for election for director, officer and, if the solicitation is made otherwise than on behalf of management, each person on whose behalf the solicitation is made, in any matter to be acted upon other than elections to office.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1309 Proxy Statements--Stocks and Stockholders Entitled to Vote

(1) Each proxy statement shall state, as to each class of voting stock of the insurer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled.

(2) The proxy statement shall state the date as of which the record list of stockholders entitled to vote at the meeting will be determined. if the right to vote is not limited to stockholders of record on that date, the proxy statement shall indicate the conditions under which other stockholders may be entitled to vote.

(3) If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights, the proxy statement shall state that they have those rights and shall state briefly the conditions precedent to their exercise.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1310 Proxy Statements--Election of Directors

If action is to be taken with respect to the election of directors, the proxy statement shall furnish the following information in tabular form, to the extent practicable, with respect to each person nominated for election as a director and to each person whose term of office as a director will continue after the meeting:

(1) The name of the person, the date when his term of office or the term of office for which he is a nominee will expire, a statement of all other positions and offices with the insurer presently held by him, and a statement of which persons are nominees for election as directors at the meeting;

(2) A statement of the person's principal occupation or employment and the name and principal business of any corporation or other organization in which that employment is carried on, and a statement containing similar information as to all of his principal occupations or employers during the last 5 years, unless he is now a director and was elected to his present term of office by a vote of stockholders at a meeting for which proxies were solicited pursuant to this sub-chapter;

(3) If he is or has been a director of the insurer, a statement of the period or periods during which he served; and

(4) A statement, as of the most recent practicable date, of the approximate amount of each class of stock of the insurer or any of its parents, subsidiaries, or affiliates other than directors' qualifying shares, beneficially owned directly or indirectly by him, or, if he is not the beneficial owner of any of those stocks, a statement to that effect.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1311 Proxy Statements--Schedule Sis Information

(1) The proxy statement shall furnish the information reported or required in item 1 of Schedule SIS, of the insurer's annual statement filed pursuant to Section 33-2-701 , MCA, under the heading "Information Regarding Management and Directors" if action is to be taken with respect to:

(a) The election of directors;

(b) Any remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the insurer will participate;

(c) Any pension or retirement plan in which any director, nominee for director, or officer of the insurer will participate; or

(d) The granting or extension to any such person of any options, warrants, or rights to purchase any stocks, other than warrants or rights issued to stockholders, as such, on a prorata basis.

(2) If the solicitation is made on behalf of persons other than the management, information shall be furnished only as to Item lA of the heading of Schedule SIS specified in sub-section (1) of this rule.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1312 Proxy Statements--Bonus, Profit-Sharing, and Other Remuneration Plans

If action is to be taken with respect to any bonus, profit-sharing, or other remuneration plan of the insurer, the proxy statement shall furnish the following information:

(1) A brief description of the material features of the plan, each class of persons who will participate in the plan, the approximate number of persons in each class, and the basis of participation;

(2) The amounts which would have been distributable under the plan during the last calendar year to each director, nomi-nee for director, and officer of the insurer, to directors and officers as a group, and to all other employees as a group, if the plan had been in effect;

(3) If the plan to be acted upon may be amended, other than by a vote of stockholders, in a manner which would mater-ially increase the cost of the plan to the insurer or materially alter the allocation of the benefits as between the groups specified in subsection (2) of this rule, the nature of those amendments.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1313 Proxy Statements--Pension and Retirement Plans

If action is to be taken with respect to any pension or retirement plan of the insurer, the proxy statement shall furnish the following information:

(1) A brief description of the material features of the plan, each class of persons who will participate in the plan, the approximate number of persons in each class, and the basis of participation;

(2) The approximate total amount necessary to fund the plan with respect to past services, the period over which that total amount is to be paid, and the estimated annual payments necessary to pay the total amount over that period, the estimated annual payment to be made, with respect to current ser-vices, and the amount of the annual payments to be made for the benefit of each director, nominee for director, and officer of the insurer, directors and officers as a group, and employees as a group;

(3) If the plan to be acted upon may be amended, other than by a vote of stockholders,, in a manner which would materially increase the cost of the plan to the insurer or to materially alter the allegation, of the benefits as between the groups specified in subsection (2) of this rule, the nature of such amendments.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1314 Proxy Statements--Options, Warrants, or Rights

If action is to be taken with respect to the granting or extension of any options, warrants, or rights (all referred to in this rule as "warrants") to purchase stock of the insurer or any subsidiary or affiliate, other than warrants issued to all stock holders on a pro-rata basis, the proxy statement shall furnish the following information:

(1) The title and amount of stock called for or to be called for, the prices, expiration dates and other material conditions upon which the warrants may be exercised, the consideration received or to be received by the insurer, subsidiary or affiliate for the granting or extension of the warrants, and the market value of the stock called for or to be called for by the warrants, as of the latest practicable date;

(2) If known, a separate statement of the amount of stock called for or to be called for by warrants received or to be received by each director, nominee for director, and officer of the insurer, and each other person who will be entitled to acquire 5% or more of the stock called for or to be called for by such warrants, naming each of them;

(3) If known, a statement of the total amount of stock called for or to be called for by the warrants, received or to be received by all directors and officers of the company as a group and all employees, without naming them.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1315 Proxy Statements--Authorization or Issuance of Stock

(1) If action is to be taken with respect to the author- ization or issuance of any stock of the insurer, the proxy statement shall furnish the title, amount and description of the stock to be authorized or issued.

(2) If the shares of stock to be authorized or issued are other than additional shares or common stock of a class out-standing, the proxy statement shall furnish a brief summary, if applicable, of dividend, voting, liquidation, pre-emptive, and conversion rights, redemption and sinking fund provisions, interest rate, and date of maturity.

(3) If the shares of stock to be authorized or issued are other than additional shares of common stock of a class out-standing, the commissioner may require financial statements comparable to those contained in the annual report.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1316 Proxy Statements--Mergers, Consolidations, Acquisitions, and Similar Matters

(1) If action is to be

(a) The rights of appraisal or similar rights of dissen-

ters with respect to any matters to be acted upon, and any procedure required to be followed by dissenting stockholders in order to perfect those rights;

(b) The material features of the plan or agreement;

(d) If available, the high and low sales prices for each

quarterly period within two years;

(e) The percentage of outstanding shares which must approve the transaction before it is consummated.

(2) For each company involved in a merger, consolidation,

or acquisition, the following financial statements shall be

furnished:

(a) A comparative balance sheet as of the close of the

last two fiscal years;

(b) A comparative statement of operating income and ex-

penses for each of the last two fiscal years and, as a continuation of each statement, a statement of earnings per share after related taxes and cash dividends paid per share;

taken with respect to a merger, consolidation, acquisition, or

similar matter, the proxy statement shall furnish in brief outline the following information:

expense statement for the last fiscal year, giving effect to

the necessary adjustments with respect to the resulting company.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1317 Proxy Statements--Restatement of Assets and Accounts

If action is to be taken with respect to the restate-

ment of any asset, capital, or surplus of the insurer, the proxy statement shall furnish the following information:

(1) The nature of the restatement and the date as of which it is to be effective;

(2) A brief outline of the reasons for the restatement and for the selection of the particular effective date;

(3) The name and amount of each account affected by the restatement and the effect of the restatement on each affected account.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1318 Proxy Statements--Amendment of Charter, by-Laws, or Other Documents

(1) If action is to be taken with respect to any amendment of the insurer's charter, by-laws, or other documents as to which information is not required by the pre-ceding rules in this sub-chapter, the proxy statement shall state briefly the reasons for and general effect of the amendment and the vote needed for its approval.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1319 Proxy Statements--Submission When Stockholder Vote Not Required

(1) If action is to be taken with respect to any matter which is not required to be submitted to a vote of stockholders, the proxy statement shall state the nature of the matter, the reason for submitting it to a vote of stockholders, and any action intended by the management in the event of a negative vote on the matter by the stockholders.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1320 Contents and Form of Proxies and Proxy Statements

(1) The form of proxy shall:

(a) Indicate in bold-face type whether or not the proxy is solicited on behalf of the management;

(b) Provide a specifically designated blank space for dating the proxy; and

(c) Identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the management or by stockholders.

(2) No reference need be made to proposals as to which discretionary authority is conferred pursuant to ARM 6.6.1321.

(3) Means shall be provided in the proxy for the person solicited to specify by ballot a choice between approval or disapproval of each matter or group of related matters referred to, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not so specified if the form of proxy states in boldface type how the shares or authorization represented by the proxy are voted in each case.

(4) The proxy statement or form of proxy shall provide, subject to reasonable and specified conditions, that the proxy will be voted and that where the person solicited specifies, by means of ballot provided pursuant to subsection (3) of this rule, a choice with respect to any matter to be acted upon, the vote will be in accordance with the specifications so made.

(5) The information included in the proxy statement shall be clearly presented and the statements made shall be divided into groups according to subject matter, with appropriate headings. All printed proxy statements shall be legible.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1321 Proxies--Discretionary Authority

(1) A proxy may confer discretionary authority with respect to other matters which may come before the meeting, provided the persons on whose behalf the solicitation is made are not aware a reasonable time prior to the time the solicitation is made that any other matters are to be presented for action at the meeting and provided further that a specific statement to that effect is made in the proxy statement or in the form of proxy.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1322 Proxies--Prohibited Authority

(1) No proxy may confer authority to vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement, or to vote at any annual meeting other than the next annual meeting (or any adjournment thereof) to be held after the date on which the proxy statement and form of proxy are first sent or given to stockholders.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1323 Materials Subject to Filing Requirements

(1) Two preliminary copies of the proxy statement and form of proxy and any other soliciting material to be furnished concurrently to stockholders shall be filed with the commissioner of insurance at least 10 days prior to the date copies of the material are first sent or given to stockholders. The commissioner may, upon showing of good cause, allow materials to be sent to stockholders within a shorter period of time following filing.

(2) Two copies of the proxy statement, form of proxy and all other solicitating material, in the form the material is actually furnished to stockholders, shall be filed with the commissioner not later than the date the material is first sent or given to the stockholders.

(3) Where a proxy statement, form of proxy or other material filed pursuant to this sub-chapter or sub-chapter 14 is amended or revised, two of the copies shall be marked to clearly show any changes.

(4) Copies of replies to inquiries from stockholders requesting further information, and copies of communications which do no more than request that forms of proxy previously solicited be signed and returned, need not be filed pursuant to this rule.

(5) Copies of soliciting material in the form of speeches, press releases, and radio or television scripts need not be filed with the commissioner prior to use or publication. However, this type of material shall be filed with or mailed for filing to the commissioner as required by this rule not later than the date the material is used or published. The provisions of this rule apply, however, to any reprints or reproductions of such material.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1324 Prohibited Actions and Solicitations

(1) No domestic stock insurer subject to this sub-chapter, and no director, officer, or employee of such an insurer, and no other person, may solicit or permit the use of his name to solicit, by mail or otherwise, any proxy, consent, or authorization in respect of any stock of that insurer contrary to the provisions of this sub-chapter.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1325 Prohibited Statements

(1) No solicitation subject to this sub-chapter may be made by means of a proxy statement, form of proxy, notice of meeting, or other communication, written or oral, containing any statement which:

(1) Is, at the time and in the light of the circumstances under which it is made, false or misleading with respect to any material fact;

(2) Fails to state any material fact necessary in order to make the statements therein not false or misleading; or

(3) Fails to state any material fact necessary to correct any statement, made in an earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter, which has become false or misleading.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1326 Undated or Postdated Proxies Prohibited

(1) No person making a solicitation subject to this sub-chapter may solicit any undated or postdated proxy or any proxy which pro-vides that it shall be considered dated as of any date after it is signed by the stockholder.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Subchapter 6.6.14 Proxies, Consents, and Authorizations-- Special Provisions Applicable to Election Contests

Mont. Admin. R. 6.6.1401 Applicability

(1) This sub-chapter applies to any solicitation made by a person or group for the purpose of opposing any solicitation which is subject to sub-chapter 13 of this chapter and which was made by any other person or group with respect to the election or removal of directors at any annual or special meeting of stockholders.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1402 Definitions

As used in this sub-chapter, unless the context indicates otherwise:

(1) "Solicit" and "solicitation" include:

(a) Any request for a proxy, whether or not accompanied by or included in a form of proxy; or

(b) Any request to execute, not execute, or revoke a proxy; or

(c) The furnishing of a proxy or other communication to stockholders under circumstances reasonably calculated to re-sult in the procurement, withholding, or revocation of a proxy.

(2) "Solicit" and "solicitation" do not include:

(a) Any solicitation by a person in respect to stock of which he is the beneficial owner;

(b) Action, by a broker or other person in respect to stock carried in his name or in the name of his nominee;

(i) Forwarding to the beneficial owner of that stock soliciting material received from the company;

(ii) Impartially instructing such beneficial owner to forward a proxy to any person to whom the beneficial owner desires to give a proxy; or

(c) The furnishing of a form of proxy to a stockholder upon his unsolicited request, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.

(3) "Participant" and "participant in a solicitation" include:

(a) The insurer;

(b) Any director of the insurer, any nominee for whose election as a director proxies are solicited;

(c) Any other person, acting alone or with one or more other persons, committees or groups, in organizing, directing, or financing the solicitaion.

(4) "Participant" and "participant in a solicitation" do not include:

(a) A bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of stock and who is not otherwise a participant;

(b) Any person or organization retained or employed by a participant to solicit stockholders or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties;

(c) Any person employed in the capacity of attorney, accountant, or of advertising, public relations, or financial adviser, and whose activities are limited to the performance of his duties in the course of that employment;

(d) Any person regularly employed as an officer or employee of the insurer or any of its subsidiaries or affiliates who is not otherwise a participant; or

(e) Any officer or director of, or any person regularly employed by, any other participant, if that officer, director, or employee is not otherwise a participant.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, 5/5/75.

Mont. Admin. R. 6.6.1403 Materials Subject to Filing Requirements

(1) A solicitation subject to this sub-chapter may not be made by any person other than the management of an insurer unless at least 5 business days prior to the solicitation, or within a shorter period which the commissioner of insurance may author- ize upon a showing of good cause, there has been filed with the commissioner, by or on behalf of each participant in the solicitation, a statement in duplicate containing the information required by this sub-chapter and accompanied by a copy of any material to be distributed to stockholders in furtherance of the solicitation. Where preliminary copies of any materials are filed, distribution to stockholders must be deferred until the commissioner's comments have been received and complied with.

(2) Within 5 business days after a solicitation subject to this sub-chapter is made by the management of an insurer, or within a longer period which the commissioner may authorize upon a showing of good cause, there shall be filed with the commissioner, by or on behalf of each participant in the solicitation other than the insurer, and by or on behalf of each management nominee for director, a statement in duplicate containing the information required by this sub-chapter.

(3) If any solicitation on behalf of management or any other person has been made, or if proxy material is ready for distribution, prior to a solicitation subject to this sub-chapter in opposition thereto, a statement in duplicate con-taining the information required by this sub-chapter shall be filed with the commissioner, by or on behalf of each participant in the prior solicitation other than the insurer, as soon as reasonably practicable after the commencement of the solicitation in opposition thereto.

(4) If, subsequent to the filing of the statements re-

quired by subsections (1) , (2) , and (3) of this rule, additional persons become participants in a solicitation subject to this rule, there shall be filed with the commissioner by or on behalf of each of those persons a statement in duplicate, containing the information required by this sub-chapter, within 3 business days after each person becomes a participant or a longer period which the commissioner may authorize upon a showing of good cause.

(5) If any material change occurs in the facts reported

in any statement filed by or on behalf of any participant, an

appropriate amendment to that statement shall be filed promptly with the commissioner.

(6) Each statement and amendment filed pursuant to this

rule becomes part of the public files of the commissioner.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1404 Solicitations Prior to Furnishing Required Written Proxy Statement

Notwithstanding the provisions of

ARM 6.6.1304(1) , a solicitation subject to this sub-chapter may be made prior to furnishing stockholders a written proxy statement containing the information specified in sub-chapter 13 with respect to the solicitation, provided that:

(1) The statements required by ARM 6.6.1403 are filed by

or on behalf of each participant in the solicitation;

(2) No form or proxy is furnished to stockholders prior

to the time the written proxy statement required by ARM 6.6.1304 (1) is furnished to such persons. However, this requirement does not apply where a proxy statement meeting the requirements of sub-chapter 13 has been furnished to stockholders;

(3) At least the information required by ARM 6.6.1403(2)

to be filed by each participant, or any appropriate summary is

included in each communication sent or given to stockholders in connection with the solicitation;

(4) A written proxy statement containing the information

specified in sub-chapter 13 with respect to a solicitation is

sent or given stockholders at the earliest practicable date.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1405 Filing Requirements for Solicitations Prior to Proxy Statements

(1) Two copies of any soliciting material

(2) Copies of soliciting material in the form of speeches, press releases, and radio or televisions scripts need not be filed with the commissioner prior to use or publication. However, two copies of this type of material, in the form it is used or published, shall be filed with or mailed for filing to the commissioner not later than the date the material is used or published. However, subsection (1) of this rule applies to any reprints or reproductions of the material.

proposed to be sent or given to stockholders prior to the fur-

nishing of the written proxy statement required by ARM 6.6.1304 (1) shall be filed with the commissioner of insurance in preliminary form at least 5 business days prior to the date

definitive copies of such material are first sent or given to

such persons, or within a shorter period which the commissioner may authorize upon a showing of good cause.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1406 Annual Report Commenting on Solicitation--Filing Requirements

(1) Two copies of any portion of the annual report to stockholders referred to in ARM 6.6.1304(2) and (3) , which comments upon or refers to any solicitation subject to this sub-chapter or to any participant in the solicitation, other than the solicitation by the management, shall be filed with the commissioner of insurance as proxy material subject to this sub-chapter and sub-chapter 13.

(2) The copies shall be filed in preliminary form at least 5 business days prior to the date copies of the report are first sent or given to stockholders.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1407 Statements Filed in Election Contests--Identity of Insurer and Solicitor of Proxies

(1) Each statement filed by or on behalf of a participant other than an insurer, in a proxy solicitation in an election contest, shall state the name and address of the insurer.

(2) Each statement filed by or on behalf of a participant other than an insurer, in a proxy solicitation in an election contest, shall state:

(a) The solicitor's name and business address;

(b) The solicitor's present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is carried on;

(d) Information as to all material occupations, positions, offices or employments of the solicitor during the last ten years, giving starting and ending dates of each and the name, principal business and address of any business corporation or other business organization in which each occupation, position, office, or employment was carried on;

(e) Whether the solicitor is or has been a participant in any other proxy contest involving this company or other companies within the past ten years, and, if so, the names of the principals, the subject matter, and the solicitor's relationship to the parties and the outcome;

(f) Whether, during the past ten years, the solicitor has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, the pertinent dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this item need not be included in the proxy statement or other proxy soliciting material.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1408 Statements Filed in Election Contests--Solicitor's Stock Interests

Each statement filed by or on behalf of a participant other than an insurer, in a proxy solicitation in an election contest, shall state:

(1) The amount of each class of stock of the insurer which the solicitor owns beneficially, directly or indirectly;

(2) The amount of each class of stock of the insurer which the solicitor owns of record but not beneficially;

(3) With respect to the stock subject to subsections (1) and (2) of this rule, the amounts acquired within the past 2 years, the dates of acquisition, and the amounts acquired on each date;

(4) If any part of the purchase price or market value of any of the stated stock is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding the stock, the amount of the indebtedness as of the latest practicable date, and, if the funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker, or dealer, the nature of the transaction and the names of the parties;

(5) Whether the solicitor is a party to any contracts, arrangements, or understandings with any person with respect to any stock of the insurer, including but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies, and, if so, the names of the persons with whom such contracts, arrangements, or understandings exist and the details thereof;

(6) The amount of stock of the insurer owned beneficially, directly or indirectly, by each of the solicitor's associates and the name and address of each associate;

(7) The amount of each class of stock of any parent, subsidiary or affiliate of the insurer which the solicitor owns beneficially, directly or indirectly.

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Mont. Admin. R. 6.6.1409 Statements Filed in Election Contests--Additional Requirements and Signature

(1) Each statement filed by or on behalf of a participant other than an insurer, in a proxy solicitation in an election contest, shall state:

(a) The time and circumstances under which the solicitor became a participant in the solicitation and the nature and extent of the solicitor's activities or proposed activities as a participant;

(b) Where practicable, a brief statement of the approximate amount of any material interest, direct or indirect, of the solicitor and of each of his associates in any material transactions since the beginning of the company's last fiscal year, or in any material proposed transaction, to which the company or any of its subsidiaries or affiliates was or is to be a party;

(c) Whether the solicitor or any of his associates have any arrangement or understanding with any person with respect to any future employment by the insurer or its subsidiaries or affiliates, or with respect to any future transactions to which the insurer or any of its subsidiaries or affiliates will be or may be a party, and, if so, a description of the arrangement or understanding and the names of the parties to it.

(2) Each statement filed by or on behalf of a participant other than an insurer, in a proxy solicitation in an election contest, shall be dated and signed in the following manner:

I certify that the statement filed by or on behalf of a participant other than an insurer, in a proxy solicitation in an election contest, shall be dated and signed in the following manner: ,

I certify that the statements made in this statement are true, complete, and correct, to the best of my knowledge and belief.

(Date) (Signature of participant or

authorized representative)

History

Authorizing statute(s): Sec. 33-3-447 MCA
Implementing statute(s): Sec. 33-3-447 MCA
History: EMERG, NEW, Eff. 5/5/75.

Subchapter 6.6.15 Crop Hail Insurance

Mont. Admin. R. 6.6.1501 Crop Hail Insurance Rates

(1) All crop hail insurance rates, used by an insurer authorized to transact crop hail or multiple peril insurance, shall be based on the latest available cumulative crop hail insurance statistics for this state.

History

Authorizing statute(s): Sec. 33-16-202 MCA
Implementing statute(s): Sec. 33-16-201 MCA
History: EMERG, NEW, Eff. 6/2/75.

Mont. Admin. R. 6.6.1502 Crop Hail Insurance Rate Filings

(1) Any crop hail insurer proposing to use rates or advisory final average loss costs other than those filed by the national crop insurance services shall first file the proposed rates or advisory final average loss costs with the commissioner of insurance for his approval.

(2) Proposed rates subject to subsection (1) of this rule shall be filed on or before March 15 of each year.

History

Authorizing statute(s): Sec. 33-16-202 MCA
Implementing statute(s): Sec. 33-16-201 MCA
History: EMERG, NEW, Eff. 6/2/75; AMD, 1988 MAR p. 1665, Eff. 7/29/88; AMD, 1992 MAR p. 130, Eff. 1/31/92.

Mont. Admin. R. 6.6.1503 Crop Hail Insurance Rate Deviation Filings

(1) A crop hail insurer proposing to use rates or advisory final average loss costs, based upon the rates or advisory final average loss costs filed by the national crop insurance services but which deviate from those rates or advisory final average loss costs in any aspect, shall first file the proposed rates or advisory final average loss costs with the commissioner of insurance for his approval.

(2) An insurer shall include with rates filed pursuant to subsection (1) of this rule, cumulative crop hail statistics indicating the insurer's expense loading substantiating the proposed rate deviation.

(3) Proposed rates subject to subsection (1) of this rule shall be filed on or before March 15 of each year.

History

Authorizing statute(s): Sec. 33-16-202 MCA
Implementing statute(s): Sec. 33-16-201 MCA
History: EMERG, NEW, Eff. 6/2/75; AMD, 1988 MAR p. 1665, Eff. 7/29/88; AMD, 1992 MAR p. 130, Eff. 1/31/92.

Mont. Admin. R. 6.6.1504 Crop Hail Insurance Rate Modifications or Changes--Multiple Peril Coverage

(1) A filing or submission, pertaining to multiple peril coverage for which rate changes or modifications are proposed, will be accepted only if notice of the proposed changes or modifications is provided to the commissioner of insurance not less than 30 days before the closing date established by the national crop insurance services for spring and fall sown crops.

History

Authorizing statute(s): Sec. 33-16-202 MCA
Implementing statute(s): Sec. 33-16-201 MCA
History: EMERG, NEW, Eff. 6/22/75; AMD, 1992 MAR p. 130, Eff. 1/31/92.

Mont. Admin. R. 6.6.1505 Crop Hail Insurers--Experience Reporting

(1) Each insurer writing crop hail insurance in Montana shall annually report its crop hail experience to the national crop insurance services.

History

Authorizing statute(s): Sec. 33-16-202, MCA
Implementing statute(s): Sec. 33-16-201, MCA
History: EMERG, NEW, Eff. 6/22/75; AMD, 1992 MAR p. 130, Eff. 1/31/92.

Mont. Admin. R. 6.6.1506 Premium Deferral and Cash Discounts

(1) Discounts based on the time or date of premium payment shall be permitted. Cash discounts based on full payment of premium will be permitted, with a maximum discount not to exceed 6% of the premium. The premium payment must be paid in full by the insured and accompany the application. The discount percentage amount must be shown on the declarations page of the policy. Insurers must include supporting data with filings that justify the discount.

(2) If full premium is not paid to the insurer at the time of policy inception, and if any interest charges to the insured are associated with the deferral of premium payment, a written premium finance agreement must be incorporated into the policy by explicit reference on the policy declarations page.

(3) Any plan an insurer intends to offer for the deferral of premiums or cash discounts must be included in the insurer's filing.

History

Authorizing statute(s): Sec. 33-16-202, MCA
Implementing statute(s): Sec. 33-16-201, MCA
History: NEW, 1992 MAR p. 130, Eff. 1/31/92; AMD, 1996 MAR p. 413, Eff. 2/9/96.

Mont. Admin. R. 6.6.1507 Effective Date of Crop Insurance Policies

(1) No crop insurance policy issued in Montana shall be effective prior to 12:01 a.m. of the day following the day that the application is bound by the producer or insurer.

History

Authorizing statute(s): Sec. 33-16-202, MCA
Implementing statute(s): Sec. 33-16-201, MCA
History: NEW, 1992 MAR p. 130, Eff. 1/31/92.

Mont. Admin. R. 6.6.1508 Insurer Groups and Managing General Agents

(1) Differing crop hail insurance rates or rating plans for affiliated insurance companies within a group or for different companies under the control of the same managing general agency shall not be permitted.

(2) No exposure to loss under any crop insurance policy shall be retained by any entity other than the insurer and its reinsurer. No managing general agency shall assume any exposure to loss under any crop insurance policy.

History

Authorizing statute(s): Sec. 33-16-202, MCA
Implementing statute(s): Sec. 33-16-201, MCA
History: NEW, 1992 MAR p. 130, Eff. 1/31/92.

Subchapter 6.6.16 Public Adjusters

Mont. Admin. R. 6.6.1601 Purpose

(1) The purpose of this subchapter is to provide for the protection of consumers by examination, licensure, bonding, and regulation of public adjusters.

History

Authorizing statute(s): 33-1-313, 33-17-102, MCA
Implementing statute(s): 33-17-102, 33-17-301, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Mont. Admin. R. 6.6.1605 Separate Licenses

(1) Separate licenses are required for independent adjusters and public adjusters. No person may be concurrently licensed both as an independent adjuster and a public adjuster.

History

Authorizing statute(s): 33-1-313, 33-17-102, MCA
Implementing statute(s): 33-17-102, 33-17-303, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Mont. Admin. R. 6.6.1607 Scope of Examination

(1) Each examination of a licensee as a public adjuster shall be as the commissioner may prescribe and shall be of sufficient scope reasonably to test the applicant's knowledge relative to a kind of insurance which may be dealt with under the license applied for and the duties and responsibilities of, and laws of this state applicable to such a licensee.

History

Authorizing statute(s): 33-1-313, 33-17-102, MCA
Implementing statute(s): 33-17-102, 33-17-301, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Mont. Admin. R. 6.6.1608 Examinations--Form--Time

(1) The examination shall be given at such times and places within this state as the commissioner deems necessary.

(2) The commissioner may require a waiting period of reasonable duration before giving a new examination to an applicant who has failed to pass a previous similar examination.

History

Authorizing statute(s): 33-1-313, 33-17-102, MCA
Implementing statute(s): 33-17-102, 33-17-301, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Mont. Admin. R. 6.6.1610 The Commissioner Shall Collect in Advance the Fees for a Public Adjuster's License

(1) The commissioner shall collect in advance the fees for an adjuster's license listed in 33-2-708, MCA.

History

Authorizing statute(s): 33-1-313, 33-17-301, MCA
Implementing statute(s): 33-2-708, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2003 MAR p. 2849, Eff. 1/1/04; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Mont. Admin. R. 6.6.1611 Public Adjuster's Bond

(1) Prior to the issuance of a license as a public adjuster, the applicant shall file with the commissioner a surety bond in favor of the people of Montana in the amount of $5,000, executed by a surety company authorized to do business in the state. The total aggregate liability on the bond may be limited to the payment of $5,000. The bond shall be conditioned on the accounting of the adjuster to any insured whose claim the adjuster is handling for moneys or any other settlement in connection with the claim.

(2) Any bond shall remain in force concurrently with the license, or until the surety is released from liability by the commissioner, or until canceled by the surety. Without prejudice to any liability accrued prior to the cancellation, the surety may cancel a bond upon 30 days written notice filed with the commissioner.

History

Authorizing statute(s): 33-1-313, 33-17-102, MCA
Implementing statute(s): 33-17-102, 33-17-302, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Mont. Admin. R. 6.6.1613 Powers Conferred by the Public Adjuster's License

(1) Public adjusters shall adjust first party physical damage claims only.

History

Authorizing statute(s): 33-1-313, 33-17-102, MCA
Implementing statute(s): 33-17-102, MCA
History: NEW, 1983 MAR p. 1530, Eff. 10/28/83; AMD, 2018 MAR p. 1022, Eff. 5/26/18.

Subchapter 6.6.17 Unfair Trade Practices

Mont. Admin. R. 6.6.1701 General Business Practice or General Course of Business Practice

(1) General business practice or general course of business practice shall be taken to mean multiple unfair claim settlement practice violations by the same company in different cases.

(2) This rule applies under Chapter 300, Laws of 1983 and 33-18-201 , MCA.

History

Authorizing statute(s): 33-1-313 and 33-18-235, MCA
Implementing statute(s): 33-18-201 and 33-18-231, et seq. , MCA
History: NEW, 1983 MAR p. 1533, Eff. 10/28/83.

Subchapter 6.6.18 Standard Valuation and Standard Nonforfeiture

Mont. Admin. R. 6.6.1801 Purpose

(1) The purpose of these rules is to permit individual life insurance policies to provide the same cash surrender values and paid-up nonforfeiture benefits for both men and women. No change in minimum valuation standards is implied by this rule.

History

Authorizing statute(s): 33-1-313 and 33-20-208(8) (f), MCA
Implementing statute(s): 33-20-208(8), MCA
History: NEW, 1983 MAR p. 1814, Eff. 12/16/83.

Mont. Admin. R. 6.6.1802 Definitions

For purposes of these rules, the following definitions apply:

(1) "1980 CSO Table, with or without 10-year select mortality factors" means that mortality table, consisting of separate rates or mortality for male and female lives, developed by the society of actuaries committee to recommend new mortality table for valuation of standard individual ordinary life insurance, incorporated in the 1980 NAIC amendments to the Model Standard Valuation Law and Standard Nonforfeiture Law for Life Insurance, and referred to in those models as the commissioner's 1980 Standard Ordinary Mortality Table, with or without 10-year select mortality factors.

(2) "1980 CSO Table (M) , with or without 10-year select mortality factors" means that mortality table consisting of the rates of mortality for male lives from the 1980 CSO Table, with or without 10-year select mortality factors.

(3) "1980 CSO Table (F) , with or without 10-year select mortality factors" means that mortality table consisting of the rates of mortality for female lives from the 1980 CSO Table, with or without 10-year select mortality factors.

(4) "1980 CET Table" means that mortality table consisting of separate rates of mortality for male and female lives, developed by the society of actuaries committee to recommend new mortality tables for valuation of standard individual ordinary life insurance, incorporated in the 1980 NAIC amendments to the Model Standard Valuation Law and Standard Nonforfeiture Law for Life Insurance, and referred to in those models as the commissioners 1980 Extended Term Insurance Table.

(5) "1980 CET Table (M) " means that mortality table consisting of the rates of mortality for male lives from the 1980 CET Table.

(6) "1980 CET Table (F) " means that mortality table consisting of the rates of mortality for female lives from the 1980 CET Table.

History

Authorizing statute(s): 33-1-313 and 33-20-208(8) (f), MCA
Implementing statute(s): 33-20-208(8), MCA
History: NEW, 1983 MAR p. 1814, Eff. 12/16/83.

Mont. Admin. R. 6.6.1803 Adoption of Tables Alternate to the 1980 Cso and 1980 Cet for Nonforfeiture Purposes Under an Employer Sponsored Retirement Benefit Program

For any policy of insurance on the life of either a male or female insured delivered or issued for delivery in this state after October 1, 1983 that complies with 33-20-208 , MCA and for all policies issued on or after January 1, 1989, the following may be substituted for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits:

(1) A mortality table which is a blend of the 1980 CSO Table (M) and 1980 CSO Table (F) with or without 10-year select mortality factors may at the option of the company be substituted for the 1980 CSO Table, with or without the 10-year select mortality factors, and

(2) The mortality table (M) , with or without 10-year select mortality factors, may at the option of the company be substituted for the 1980 CSO Table, with or without 10-year select mortality factors, and

(3) A mortality table which is of the same blend as used in (1) but applied to form a blend of the 1980 CET Table (M) and the 1980 CET Table (F)

(4) The 1980 CET Table (M) may at the option of the company be substituted for the 1980 CET Table.

History

Authorizing statute(s): 33-2-313 and 33-20-208(8) (f), MCA
Implementing statute(s): 33-20-208(8), MCA
History: NEW, 1983 MAR p. 1814, Eff. 12/16/83.

Mont. Admin. R. 6.6.1805 Separability

(1) If any provision of this rule or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision to other persons or circumstances shall not be affected thereby.

History

Authorizing statute(s): 33-1-313 and 33-20-208(8) (f), MCA
Implementing statute(s): 33-20-208(8), MCA
History: NEW, 1983 MAR p. 1814, Eff. 12/16/83.

Subchapter 6.6.21 Discrimination in Insurance

Mont. Admin. R. 6.6.2101 Definitions

(1) The term "insurer" as used in this subchapter means any financial institution, or person, as those terms are defined in 49-2-101, 33-1-201, and 33-1-202, MCA, that issues, transacts, sells, or otherwise provides any type of insurance policy, plan, certificate, membership contract, or coverage.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-1-502, 49-2-309, MCA
History: NEW, 1986 MAR p. 194, Eff. 2/14/86; AMD, 2009 MAR p. 83, Eff. 1/30/09.

Mont. Admin. R. 6.6.2102 Rates and Premiums; Property and Casualty Insurance

(1) Factors which an insurer may take into account to determine rates or premiums for motor vehicle liability and property coverage include, but are not limited to:

(a) the age of the driver;

(b) the sex of the driver;

(d) the length of driving experience;

(e) the number of years licensed to operate a motor vehicle;

(f) a determination of which driver, among several insured individuals, is the primary driver of a covered vehicle, based upon the proportionate use of each vehicle insured under the policy by individual drivers insured or to be insured under the policy;

(g) average number of miles driven over a period of time;

(h) type of use, such as business, farm, or pleasure use;

(i) vehicle characteristics, features, and options such as engine displacement, ability of vehicle and its equipment to protect passengers from injury, vehicle make and model, and design characteristics related to damageability of the vehicle;

(j) commuting mileage over a period of time;

(k) the number of cars insured or number of licensed operators in the household;

(l) the amount of insurance;

(m) the anticipated cost of vehicle repairs or replacement, which may be measured by age, price, cost, or value of the insured automobile, and other related factors;

(n) geographic location;

(o) the accident record of the insured, including accidents for which the insured, although not cited, was substantially at fault; and

(p) the driving record of the insured, including citations.

History

Authorizing statute(s): 33-1-313, MCA
*Implementing statute(s): *
History: 33-1-502, 49-2-309, MCA; NEW, 1986 MAR p. 194, Eff. 2/14/86; AMD, 2009 MAR p. 83, Eff. 1/30/09; AMD, 2022 MAR p. 43, Eff. 1/15/22.

Mont. Admin. R. 6.6.2104 Jurisdiction and Applicability Date

(1) Section 49-2-309, MCA, and this subchapter are applicable to all insurance policies, plans, and coverages subject to the laws of Montana and issued or entered into on or after October 1, 1985.

(2) Any term, payment, or benefit of an insurance policy, plan, or coverage in effect prior to October 1, 1985, may be exercised in accordance with the terms of that policy, plan, or coverage. Options to increase or decrease coverage, annual rate adjustments, and settlement options in life insurance policies are examples of terms which if included in a policy, plan, or coverage in effect prior to October 1, 1985, may be exercised without regard to 49-2-309, MCA, or these rules.

(3) Section 49-2-309, MCA, and these rules, are applicable to any agreement whereby an insurer and an insured agree to an extension or continuation of a pre-October 1, 1985, insurance policy plan or coverage when no consideration was given in the pre-October 1, 1985, contract for the right to extend or continue upon the same terms. The fact that the contract formed by extension or continuation is identical to the pre-October 1, 1985, contract is not material if no consideration for the right to extend or continue the pre-October 1, 1985, terms was given.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-1-502, 49-2-309, MCA
History: NEW, 1986 MAR p. 194, Eff. 2/14/86; AMD, 2009 MAR p. 83, Eff. 1/30/09.

Mont. Admin. R. 6.6.2106 Unfair Discrimination on the Basis of Blindness

(1) Refusing to insure, or refusing to continue to insure, or limiting the amount, extent, or kind of coverage available to an individual, or charging an individual a different rate for the same coverage solely because of blindness or partial blindness, is an act or practice that constitutes unfair discrimination between individuals of the same class, except where the refusal, limitation, or rate differential is based on sound actuarial principles, or is related to actual or reasonably anticipated experience.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-206, 33-18-210, 33-30-306, MCA
History: NEW, 1978 MAR p. 1614, Eff. 2/1/79; TRANS and AMD, from ARM 6.6.1201, 2009 MAR p. 83, Eff. 1/30/09.

Subchapter 6.6.22 Title Insurance

Mont. Admin. R. 6.6.2201 Liens, Encumbrances, and Standards of Insurability

(1)

(a) The provisions of subsections (2) and(3) of ARM 6.6.2201 do not apply to defects in title. Defects in title arise when a document or proceeding upon which title depends fails to accomplish its stated purpose. Defects of title include, but are not limited to, a break in the chain of title, a defective probate proceeding, an improperly acknowledged deed, or an error in a legal description.

(b) The provisions of subsections (2) and (3) of ARM 6.6.2201 apply to other interests against the property. "Other interests against the property" means those interests created by documents the purpose of which is to encumber title. "Other interests against the property" include recorded liens or encumbrances.

(2) "[I]ssuing an owner's title insurance policy or commitment to insure" includes issuing a title insurance policy or commitment to insure to the person who is or will be the owner or tenant in possession of the property to which title is insured, but does not include issuing a title insurance policy or commitment to insure to a lender or other party whose insured interest concerns the validity, enforceability, or priority of a lien securing a financial obligation.

(3) The requirements that a title insurer show all outstanding enforceable recorded liens or other interests against the property title to be insured under an owner's title insurance policy and make a determination of insurability as to possible liens and encumbrances shall not be construed as prohibiting a title insurer from issuing a policy without taking exception to a specific recorded, inchoate, or death tax item when sound underwriting standards and practices allow insurance against the item. Specifically, an insurer may issue a policy without taking exception to a specific recorded, inchoate, or death tax item in the following situations:

(a) where a lien securing an obligation, though not released of record, to the satisfaction of the insurer has been discharged, and the insurer or its agent has documentary evidence in its file that the obligation has been paid in an amount which the holder of such obligation has accepted in full satisfaction of such obligation;

(b) where funds are in escrow to pay said item, and a recordable release in form for filing or recording is

available for recording in the ordinary course of business;

(d) where inchoate liens arise from improvements to the described property and have priority over an interest being insured, and a sufficient indemnity made by a person or persons other than the named insured, the makers of the obligation secured by the insured mortgage, or a guarantor thereof, has been delivered to and accepted by the insurer, or where collected or cleared funds have been deposited with the insurer or its agent to assure ultimate payment and release of such liens; provided, an exception as to such inchoate liens shall be shown on the policy with a provision insuring against the enforcement thereof;

(e) where the insurer has previously issued a policy without taking exception to the specific item and is called upon to issue an additional policy where it is already obligated to the insured under such prior policy and where the new policy will not increase the insurer's liability or exposure; provided, an exception as to such item shall be shown on the policy with a provision insuring against the enforcement thereof;

(f) or with reference to federal estate taxes and state inheritance taxes which have not been paid, where the insurer has examined a balance sheet of the estate and determined that more than adequate funds are on hand to pay such taxes, and the insurer has taken an indemnity from a responsible person protecting itself against such unpaid taxes, or where sufficient moneys or other securities to pay such taxes have been placed in escrow-pending the payment thereof or pending receipt of waiver of lien from the taxing authority.

(4) For purposes of ARM 6.6.2201(3) (d) , "sufficient indemnity" means a direct obligation to pay such liens in an amount judged adequate by the insurer and executed by a financial institution regulated by the state or federal government or executed by a responsible person except where the provisions of 71-3-516, MCA are applicable.

(5) ARM 6.6.2201(3) (d) shall apply to recorded liens being contested if the indemnity is 150% of the claim, is executed by a financial institution regulated by the state or federal government, or is in an amount judged to be adequate by the insurer.

(6) For purposes of ARM 6.6.2201(4) , "responsible person" is any person, or persons if they are jointly and severally liable, whose currently verified balance sheet upon examination is determined by the insurer to be sufficient for the purpose of the indemnity given. Verified copies of all statements shall be retained by the insurer or its agent.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): 33-25-214, MCA
History: NEW, 1986 MAR p. 783, Eff. 5/16/86.

Mont. Admin. R. 6.6.2202 Escrow, Closing, or Settlement Services

(1) Escrow, closing, or settlement services are those activities undertaken by a title insurer or title agent acting in a fiduciary capacity with regard to a particular transaction or transactions, including the receipt and disbursement of money and the proration of insurance and taxes. Activities coincidental to the issuance of a title insurance policy such as accepting instruments for recording and filing and handling funds to pay recording and filing fees and property taxes are not considered escrow, closing, or settlement services.

(2) An escrow agent shall not accept funds or papers in escrow without first receiving dated, written instructions adequate to administer the escrow account and without receiving collected or cleared funds and documents to carry out the terms of the escrow instructions.

(3) An escrow agent shall use documents or other property deposited in escrow only in accordance with the written instructions of the principals to the escrow transaction or, if not so directed, in accordance with sound escrow practice or order of a court of competent jurisdiction.

(4) An escrow agent shall act without partiality to any of the parties to the escrow. An escrow agent may not close a transaction where he has, directly or indirectly, a monetary interest in the subject property either as buyer or seller.

(5) If an escrow agent has a business interest in the escrow transaction other than as escrow agent, the relationship or interest must be disclosed in the written escrow instructions. After noting such interest, an additional statement shall appear as follows:

"We call this interest to your attention for disclosure purposes. This interest will not, in our opinion, prevent us from being a fair and impartial escrow agent in this transaction, but you are, nevertheless, free to request that the transaction be closed by some other escrow agent."

(6) Upon completion of an escrow transaction, the escrow agent shall deliver to each principal a verified written, signed closing statement of the principal's account. The statement shall show all receipts and disbursements of escrow funds for that account as well as charges and credits to that account. Service charges made by the escrow agent and all disbursements by the agent in connection with the transaction shall be clearly designated. Payments outside of escrow, if shown in the statement, shall be set forth separately from payments under the escrow. A copy of the closing statement shall be retained by the escrow agent in the appropriate escrow file. The statement shall be dated and signed, a copy delivered to each interested real estate broker, and an additional copy furnished to an appropriate principal upon his request.

(7) An escrow agent shall not authorize or allow a bank to remove funds from the agent's trust account or escrow account for payment of bank service charges, overdraft charges, printed check charges, collection charges, bank fees, or service charges of any kind. Such charges shall be paid from the escrow agent's own funds. If bank procedures require, however, the deduction of such charges, the escrow agent must re-deposit to the account non-trust funds equal to the amount of the deduction within one business day of receipt of notification of the deduction.

(8) No escrow funds shall be placed in an interest bearing account unless:

(a) the escrow agent has received express written instructions to do so from the principal; and

(b) all earnings accruing to such account are credited to that account exclusively for the use and benefit of the principal or such other persons as the principal has designated in the written escrow instructions.

(9)

(a) An escrow agent shall establish and maintain on a current basis the following books of account pertaining to its escrow business:

(i) an escrow ledger containing a separate, numbered sheet to record the accounting on each escrow agreement, and

(ii) an escrow liability control account.

(b) All escrow account disbursements shall be posted from checks or vouchers to the agent's cash journal. When receipts or disbursements are posted as a total to the cash journal or to the control account, the adding machine tape or other means of tracing the individual transactions in an audit shall be preserved and filed in a logical sequence.

(c) The escrow liability control account shall be in balance with the escrow ledger at all times. The balance of the escrow liability control account shall equal the balance of the trust account or escrow account in the bank and shall be reconciled at least once each month with the balance of such bank account.

(10)

(a) A check against a particular escrow account shall not be drawn, executed, or dated unless the escrow account contains a sufficient credit balance consisting of collected or cleared funds at the time of drawing and executing the check and at the date of the check.

(b) Transfer of funds between escrow account may not be accomplished by ledger entries alone, but must be accomplished by writing checks and receipts which are charged and credited to the respective escrow account. The reason and appropriate authorization for the transfer must be included in the escrow files. However, transfers between one collection escrow account and another collection escrow account may be made on each of the escrow ledger accounts affected.

(c) An escrow agent shall not withdraw payment or transfer money from any escrow account in excess of the credit balance of the account at the time of the withdrawal payment or transfer.

(d) Escrow fees from a closing escrow account shall not be withdrawn from the account until it is ready for closing in accordance with the escrow instructions, and must be withdrawn no later than the day on which other final disbursements are made from the escrow account.

(e) When the collection service has been performed, escrow fees from a collection escrow account shall be withdrawn from the account or posted to a separate fee ledger. If escrow fees are posted in a separate fee ledger, the fees must be withdrawn at least once each month.

(f) No funds other than those received as part of an escrow transaction shall be deposited in the bank trust account or escrow account, or otherwise commingled with escrow funds.

(g) All money deposited in a trust account or escrow account shall be withdrawn, paid out, or transferred to other account only in accordance with the written instructions of the principals to the escrow transaction or the order of a court of competent jurisdiction.

(h) All receipts and disbursements of money shall be posted in the escrow ledger as of the date of the transaction, without regard to the date of posting.

(11) If any disbursement made out of an escrow account results in a discount, refund, credit, or other benefit directly or indirectly to an escrow agent or its officers or employees, such benefit shall be credited to the principal for whose account the payment is made.

(12)

(a) Records of the escrow agent shall be based upon a method which provides accounting control and traceability and an audit trail of the receipts and shall include:

(i) copies of all prenumbered receipts forms used, with all numbers accounted for;

(ii) all cancelled checks, with all numbered check forms accounted for; and

(iii) all prenumbered voucher or prenumbered check stubs used, with all numbers accounted for.

(b) These records shall be made and kept by the escrow agent to account for funds received in and disbursed from escrow.

(c) No funds shall be received in escrow or paid out of escrow without issuing a receipt or check, respectively, to evidence the transaction. On closing escrows, the receipt shall be issued as soon as practicable after the money is received. On collection escrows, the receipt may be issued to show receipts over a period of time not exceeding one year.

(d) The receipt and check forms shall be prenumbered consecutively. All voided forms shall be preserved in the records in numerical sequence, and all lost or missing forms shall be accounted for with an explanation of why the form is missing.

(13) The offices, places of business, books, records, accounts, safes, files, and papers of an escrow agent shall be maintained so as to be freely accessible and available for audit, inspection, or examination by the commissioner at all reasonable times.

(14) An escrow agent shall preserve for at least six years all records required by this rule and all bank statements of its trust accounts and escrow accounts.

(15) The commissioner may request, once within a three-year period, an audit by an independent public accountant of an escrow agent's escrow accounts. If the commissioner requests an audit of an escrow agent's escrow accounts, and the independent public accountant conducting the audit discovers discrepancies in the audited account, the commissioner may require annual audits of the escrow account until the commissioner believes the problems have been resolved. The scope of the audit shall be limited to a sample check of closed escrow transactions, a verification of open escrows, and a determination as to whether the escrow agent's records are maintained in a manner to permit such audit. The audit report shall contain a balance sheet of the close of the audit period; a statement of receipts and disbursements of escrow funds showing reconciliation between the beginning and ending balances; a list of all bank accounts of the escrow agent containing escrow funds showing the name, address, and account number; a list of any closing escrow accounts which have been open for more than one year at the end of the audit period showing the name, number, and amount of such escrow liability; an explanation of the method used to verify the escrow account liabilities together with the number of escrows; the number of confirmations requested; the number of discrepancies and approximate percentage of escrow accounts checked; and a statement that the escrow agent has compiled with the regulations of the commissioner as to escrow accounts listing any exceptions as disclosed by such sampling and said statements and lists.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-25-201, MCA
History: NEW, 1986 MAR p. 783, Eff. 5/16/86; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.2203 Rebates and Inducements

(1) "Rebate" means the payment or return of any charge or any portion thereof of the amount constituting the total rate for title insurance or services constituting the business of title insurance or the rates on file with the commissioner to any person.

(2) "Inducements" entail the following activities or practices:

(a) furnishing title information in written form without charge or at a charge less than the applicable rate filing. However, cancellation of a title commitment due to the failure of any party to complete the transaction at a charge determined by an underwriter's filed rate schedule shall not be considered an inducement;

(b) furnishing information packets, listing kits or hybrid forms of title information;

(c) paying or offering to pay any charges which constitute an obligation of any producer of title business for the cancellation of an existing title insurance order with a competing company;

(d) furnishing escrow, closing, or settlement services for a charge (independent of the rate charged for involved title insurance) less than the reasonable cost of so providing;

(e) deferring any payment for insurance or services, including title commitments or preliminary reports, otherwise due or payable for more than 60 days;

(f) furnishing or offering to furnish services not reasonably related to bona fide insurance or escrow, closing, or settlement transactions, including, but not limited to:

(i) computer services;

(ii) nonrelated delivery services;

(iii) mailing services;

(iv) accounting assistance; or

(v) the referral of legal matters to an attorney with whom the title company has a referral arrangement, unless disclosure is made of that fact and the customer has been advised that the attorney is an agent of the title company and does not represent the individual;

(g) renting or offering to rent as either landlord or tenant at a rental favorable to any producer of title business, title insurer, title insurance producer, or any employee or agent of any of the aforementioned, as compared with terms otherwise generally available;

(h) providing or paying for, as an inducement, the sale of title insurance or escrow services of any of the following non-exclusive items:

(i) credit extensions;

(ii) prizes;

(iii) vacations;

(iv) travel expenses;

(v) membership or registration fees; or

(vi) lodging; and

(i) depositing funds, whether interest bearing or not, with a credit or lending institution based on an understanding that title insurance business will be referred to a particular agent or insurer.

(3) A title insurer or title insurance producer may furnish a single copy of a "property profile" relating to the ownership and status of title to real property.

(a) A property profile may include only the following six items:

(i) the last vesting deed of record;

(ii) deeds of trust or mortgages which have not been reconveyed or released;

(iii) a plat map reproduction and/or a map showing the location of the property with or without driving directions;

(iv) a copy of restrictive covenants filed with the plat map;

(v) real estate tax information; and

(vi) property characteristics such as number of rooms, square footage and year built.

(b) A property profile may include no more than the six above-described items of information and shall not include market value information, demographics, or additions, addenda, or attachments which may be construed as conclusions reached by the title insurer or title insurance producer regarding matters of marketable ownership or encumbrances. A generic cover letter with the printed standard letterhead of the title insurer or title insurance producer must be attached to the property profile. The cover letter may include a brief statement identifying by name only, which of the six permitted items of information are attached thereto. The cover letter may also contain a disclaimer as to conclusions of marketable ownership or encumbrances. The content of the cover letter or property profile is strictly limited to the foregoing and shall specifically not include any advertising or marketing for the benefit of the recipient.

(c) Market value information, demographics, or other additions, addenda, or attachments may be provided, but only upon receipt of a charge commensurate with the actual cost of the work performed and the material furnished.

(4) A title insurance agent, who is also a licensed attorney rendering any legal services in the transaction insured, must render a separate legal billing therefor. The escrow fees shall not include such legal services.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-18-210, 33-25-202, and 33-25-401, MCA
History: NEW, 1986 MAR p. 783, Eff. 5/16/86; AMD, 2003 MAR p. 2752, Eff. 12/12/03.

Subchapter 6.6.24 Group Coordination of Benefits

Mont. Admin. R. 6.6.2401 Purpose

(1) The purpose of these rules is to:

(a) adopt the Coordination of Benefits Model Regulation, as promulgated by the National Association of Insurance Commissioners (NAIC);

(b) establish a uniform order of benefit determination under which plans pay claims;

(c) establish uniformity in the permissive use of overinsurance provisions and to avoid claim delays and misunderstandings that could otherwise result from the use of inconsistent or incompatible provisions among plans;

(d) reduce duplication of benefits by permitting a reduction of the benefits to be paid by plans that, pursuant to rules established by this subchapter, do not have to pay their benefits first; and

(e) provide greater efficiency in the processing of claims when a person is covered under more than one plan.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 1987 MAR p. 1766, Eff. 10/16/87; AMD, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2402 Applicability and Scope

(1) These rules apply to each contract providing health care benefits issued or delivered in Montana after the effective date of these rules, January 1, 2011.

(2) A contract providing health care benefits issued or delivered in Montana before the effective date of these rules must be brought into compliance with these rules by the later of:

(a) the next anniversary date, renewal date, or plan year of the contract; or

(b) the expiration of any applicable collectively bargained contract pursuant to which it was written.

(3) For the transition period between the adoption of these rules and the timeframe for which plans are to be in compliance pursuant to (1), a plan that is subject to the prior coordination of benefits (COB) requirements shall not be considered a noncomplying plan by a plan subject to the new COB requirements; and, if there is a conflict between the prior COB requirements under the prior rules and the new COB requirements under the amended rules, the prior COB requirements shall apply.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 1987 MAR p. 1766, Eff. 10/16/87; AMD, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2403 Definitions

As used in these rules, these words and terms have the following meanings, unless the context clearly indicates otherwise:

(1) "Allowable expense," except as set forth in (a) through (g), or where a statute requires a different definition, means any health care expense, including coinsurance or copayments, and without reduction for any applicable deductible, that is covered in full or in part by any of the plans covering the person:

(a) If a plan is advised by a covered person that all plans covering the person are high-deductible health plans and the person intends to contribute to a health savings account established in accordance with Section 223 of the Internal Revenue Code of 1986, the primary high-deductible health plan's deductible is not an allowable expense, except for any health care expense incurred that may not be subject to the deductible as described in Section 223(c)(2)(C) of the Internal Revenue Code of 1986;

(b) an expense or a portion of an expense that is not covered by any of the plans is not an allowable expense;

(c) any expense that a provider by law or in accordance with a contractual agreement is prohibited from charging a covered person is not an allowable expense; and

(d) the following are examples of expenses that are not allowable expenses:

(i) If a person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room is not an allowable expense, unless one of the plans provides coverage for private hospital room expenses;

(ii) if a person is covered by two or more plans that compute their benefit payments on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology, any amount charged by the provider in excess of the highest reimbursement amount for a specified benefit is not an allowable expense;

(iii) if a person is covered by two or more plans that provide benefits or services on the basis of negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense; and

(iv) if a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology and another plan that provides its benefits or services on the basis of negotiated fees, the primary plan's payment arrangement shall be the allowable expense for all plans. However, if the provider has contracted with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan's payment arrangement and if the provider's contract permits, that negotiated fee or payment shall be the allowable expense used by the secondary plan to determine its benefits.

(e) The definition of "allowable expense" may exclude certain types of coverage or benefits such as dental care, vision care, prescription drug, or hearing aids. A plan that limits the application of COB to certain coverages or benefits may limit the definition of allowable expense in its contract to expenses that are similar to the expenses that it provides. When COB is restricted to specific coverages or benefits in a contract, the definition of allowable expense shall include similar expenses to which COB applies;

(f) when a plan provides benefits in the form of services, the reasonable cash value of each service will be considered an allowable expense and a benefit paid; and

(g) the amount of the reduction may be excluded from allowable expense when a covered person's benefits are reduced under a primary plan:

(i) because the covered person does not comply with the plan provisions concerning second surgical opinions or precertification of admissions or services; or

(ii) because the covered person has a lower benefit because the covered

person did not use a preferred provider.

(2) "Birthday" refers only to month and day in a calendar year and does not include the year in which the individual is born.

(3) "Claim" means a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of:

(a) services (including supplies);

(b) payment for all or a portion of the expenses incurred;

(d) an indemnification.

(4) "Closed panel plan" means a plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by the plan, and that excludes benefits for services provided by other providers, except in cases of emergency or referral by a panel member.

(5) "Consolidated Omnibus Budget Reconciliation Act of 1985" or "COBRA" means coverage provided under a right of continuation pursuant to federal law.

(6) "Coordination of benefits" or "COB" means a provision establishing an order in which plans pay their claims, and permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses.

(7) "Custodial parent" means:

(a) the parent awarded custody of a child by a court decree; or

(b) in the absence of a court decree, the parent with whom the child resides more than one-half of the calendar year without regard to any temporary visitation.

(8) "Group-type contract" means a contract that is not available to the general public and is obtained and maintained only because of membership in or a connection with a particular organization or group, including blanket coverage.

(a) "Group-type contract" does not include an individually underwritten and issued guaranteed renewable policy even if the policy is purchased through payroll deduction at a premium savings to the insured since the insured would have the right to maintain or renew the policy independently of continued employment with the employer.

(9) "High-deductible health plan" has the meaning given the term under Section 223 of the Internal Revenue Code of 1986, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

(10) "Hospital indemnity benefits" means benefits not related to expenses incurred, but the term does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim.

(11) "Plan" means a form of coverage with which coordination is allowed. Separate parts of a plan for members of a group that are provided through alternative contracts that are intended to be part of a coordinated package of benefits are considered one plan and there is no COB among the separate parts of the plan:

(a) If a plan coordinates benefits, its contract shall state the types of coverage that will be considered in applying the COB provision of that contract.

Whether the contract uses the term "plan" or some other term such as "program," the contractual definition may be no broader than the definition of "plan" in this subsection. The definition of "plan" in the model COB provision in Appendix A in ARM 6.6.2410 is an example;

(b) the term includes:

(i) group and nongroup health insurance contracts and subscriber contracts;

(ii) uninsured arrangements of group or group-type coverage;

(iii) group and nongroup coverage through closed panel plans;

(iv) group-type contracts;

(v) the medical care components of long-term care contracts, such as skilled nursing care;

(vi) first party medical payment coverage in automobile insurance; and

(vii) Medicare or other governmental benefits, as permitted by law, except

as provided in (11)(c). That part of the definition of plan may be limited to the hospital, medical, and surgical benefits of the governmental program.

(i) excepted benefits pursuant to 33-22-140(8)(a), (b), (c), (d), (e), (f), (g), (h), (j), and (k), MCA;

(ii) school accident-type coverages that cover students for accidents only,

including athletic injuries, either on a twenty-four-hour basis or on a "to and from school" basis;

(iii) benefits provided in long-term care insurance policies for nonmedical services, for example: personal care, adult day care, homemaker services, assistance with activities of daily living, respite care and custodial care, or for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services; or

(iv) a governmental plan, which, by law, provides benefits that are in excess of those of any private insurance plan or other nongovernmental plan.

(d) these policies, contracts, or certificates may be delivered, or issued for delivery in this state only if the outline of coverage is completed and delivered as required by this part, and the policy or certificate is clearly labeled as a limited benefit policy or certificate.

(12) "Policyholder" means the primary insured named in a nongroup insurance policy.

(13) "Primary plan" means a plan whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if:

(a) the plan either has no order of benefit determination rules, or its rules differ from those permitted by this subchapter; or

(b) all plans that cover the person use the order of benefit determination rules required by this subchapter, and under those rules the plan determines its benefits first.

(14) "Secondary plan" means a plan that is not a primary plan.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 1987 MAR p. 1766, Eff. 10/16/87; AMD, 2010 MAR p. 2958, Eff. 12/24/10; AMD, 2013 MAR p. 669, Eff. 4/26/13; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.2404 Use of Model Cob Contract Provision

(1) Appendix A in ARM 6.6.2410 contains a model COB provision for use in group contracts. The use of this model COB provision is subject to the provisions of (2), (3), and (4), and to the provisions of ARM 6.6.2405.

(2) Appendix B in ARM 6.6.2411 is a plain language description of the COB process that explains to the covered person how health plans will implement coordination of benefits. It is not intended to replace or change the provisions that are set forth in the contract. Its purpose is to explain the process by which the two or more plans will pay for or provide benefits.

(3) The COB provision contained in Appendix A in ARM 6.6.2410, and the plain language explanation in Appendix B in ARM 6.6.2411, do not have to use the specific words and format shown in Appendix A or Appendix B. Changes may be made to fit the language and style of the rest of the contract or to reflect differences among plans that provide services, pay benefits for expenses incurred, and indemnify. No substantive changes are permitted.

(4) A COB provision may not be used that permits a plan to reduce its benefits on the basis that:

(a) another plan exists and the covered person did not enroll in that plan;

(b) a person is or could have been covered under another plan; or

(c) a person has elected an option under another plan providing a lower level of benefits than another option which could have been elected.

(5) No plan may contain a provision that its benefits are "always excess" or "always secondary" except in accordance with the rules permitted by this regulation.

(6) Under the terms of a closed panel plan, benefits are not payable if the covered person does not use the services of a closed panel provider. In most instances, COB does not occur if a covered person is enrolled in two or more closed panel plans and obtains services from a provider in one of the closed panel plans because the other closed panel plan (the one whose providers were not used) has no liability. However, COB may occur during the plan year when the covered person receives emergency services that would have been covered by both plans. Then the secondary plan shall use the provision of ARM 6.6.2406 of these rules to determine the amount it should pay for the benefit.

(7) No plan may use a COB provision, or any other provision that allows it to reduce its benefits with respect to any other coverage its insured may have that does not meet the definition of plan under ARM 6.6.2403(11).

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 1987 MAR p. 1766, Eff. 10/16/87; AMD, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2405 Rules for Coordination of Benefits

(1) When a person is covered by two or more plans, the rules for determining the order of benefit payments are as follows:

(a) The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist;

(b) If the primary plan is a closed panel plan and the secondary plan is not a closed panel plan, the secondary plan shall pay or provide benefits as if it were the primary plan when a covered person uses a nonpanel provider, except for emergency services or authorized referrals that are paid or provided by the primary plan;

(c) When multiple contracts providing coordinated coverage are treated as a single plan under this subchapter, this rule applies only to the plan as a whole, and coordination among the component contracts is governed by the terms of the contracts. If more than one carrier pays or provides benefits under the plan, the carrier designated as primary within the plan shall be responsible for the plan's compliance with this subchapter; and

(d) If a person is covered by more than one secondary plan, the order of benefit determination rules of this subchapter decide the order in which secondary plans benefits are determined in relation to each other. Each secondary plan shall take into consideration the benefits of the primary plan or plans and the benefits of any other plan, which under the rules of this subchapter, has its benefits determined before those of that secondary plan.

(2) Except as provided in (a), a plan that does not contain order of benefit determination provisions that are consistent with this subchapter is always the primary plan unless the provisions of both plans, regardless of the provisions of this subsection, state that the complying plan is primary:

(a) Coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance-type coverages that are written in connection with a closed panel plan to provide out-of-network benefits.

(3) A plan may take into consideration the benefits paid or provided by another plan only when, under the rules of this subchapter, it is secondary to that other plan.

(4) Each plan determines its order of benefits by using the first of the following rules that applies:

(a) regarding a nondependent or dependent:

(i) subject to (4)(a)(ii), the plan that covers the person other than as a dependent, for example as an employee, member, subscriber, policyholder, or retiree, is the primary plan and the plan that covers the person as a dependent is the secondary plan.

(ii) if the person is a Medicare beneficiary; and if as a result of the provisions of Title XVIII of the Social Security Act and implementing regulations, Medicare is:

(A) secondary to the plan covering the person as a dependent;

(B) primary to the plan covering the person as other than a dependent (e.g. a retired employee); then

(C) the order of benefits is reversed so that the plan covering the person as an employee, member, subscriber, policyholder, or retiree is the secondary plan and the other plan covering the person as a dependent is the primary plan.

(b) regarding a dependent child covered under more than one plan:

(i) unless there is a court decree stating otherwise, plans covering a dependent child under one plan shall determine the order of benefits as follows:

(A) for a dependent child whose parents are married or are living together, whether or not they have ever been married:

(I) the plan of the parent whose birthday falls earlier in the calendar year is the primary plan; or

(II) if both parents have the same birthday, the plan that has covered the parent longest is the primary plan.

(B) for a dependent child whose parents are divorced or separated or are not living together, whether or not they have ever been married:

(I) if a court decree states that one of the parents is responsible for the dependent child's health care expenses or health care coverage, and the plan of that parent has actual knowledge of those terms, that plan is primary. If the parent with responsibility has no health care coverage for the dependent child's health care expenses, but that parent's spouse does, that parent's spouse's plan is the primary plan. This item shall not apply with respect to any plan year during which benefits are paid or provided before the entity has actual knowledge of the court decree provision;

(II) if a court decree states that both parents are responsible for the dependent child's health care expenses or health care coverage, the provisions of (4)(a) shall determine the order of benefits;

(III) if a court decree states that the parents have joint custody without specifying that one parent has responsibility for the health care expenses or health care coverage of the dependent child, the provisions of (4)(a) shall determine the order of benefits.

(ii) if there is no court decree allocating responsibility for the child's health care expenses or health care coverage, the order of benefits for the child are as follows:

(A) the plan covering the custodial parent;

(B) the plan covering the custodial parent's spouse;

(D) the plan covering the noncustodial parent's spouse.

(iii) for a dependent child covered under more than one plan of individuals who are not the parents of the child, the order of benefits shall be determined, as applicable, under (4)(b)(i)(A) or (B), as if those individuals were parents of the child.

(i) the plan that covers a person as an active employee, that is, an employee who is neither laid off nor retired or as a dependent of an active employee is the primary plan. The plan covering that same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee is the secondary plan;

(ii) if the other plan does not have this rule, and as a result, the plans do not agree on the order of benefits, this rule is ignored; and

(iii) this rule does not apply if (4)(a) can determine the order of benefits.

(d) regarding COBRA or state continuation coverage:

(i) if a person whose coverage is provided pursuant to COBRA or under a right of continuation pursuant to state or other federal law is covered under another plan, the plan covering the person as an employee, member, subscriber, or retiree, or covering the person as a dependent of an employee, member, subscriber, or retiree is the primary plan and the plan covering that same person pursuant to COBRA or under a right of continuation pursuant to state or other federal law is the secondary plan;

(ii) if the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored; and

(iii) this rule does not apply if subsection (4)(a) can determine the order of benefits.

(e) regarding longer or shorter lengths of coverage:

(i) if the preceding rules do not determine the order of benefits, the plan that covered the person for the longer period of time is the primary plan and the plan that covered the person for the shorter period of time is the secondary plan;

(ii) to determine the length of time a person has been covered under a plan, two successive plans shall be treated as one if the covered person was eligible under the second plan within 24 hours after coverage under the first plan ended;

(iii) the start of a new plan does not include:

(A) a change in the amount or scope of a plan's benefits;

(B) a change in the entity that pays, provides, or administers the plan's benefits; or

(iv) The person's length of time covered under a plan is measured from the person's first date of coverage under that plan. If that date is not readily available for a group plan, the date the person first became a member of the group shall be used as the date from which to determine the length of time the person's coverage under the present plan has been in force.

(f) if none of the preceding rules determines the order of benefits, the allowable expenses shall be shared equally between the plans.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 1987 MAR p. 1766, Eff. 10/16/87; AMD, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2406 Procedure to Be Followed by Secondary Plan to Calculate Benefits and Pay a Claim

(1) In determining the amount to be paid by the secondary plan on a claim, should the plan wish to coordinate benefits, the secondary plan shall calculate the benefits it would have paid on the claim in the absence of other health care coverage, and apply that calculated amount to any allowable expense under its plan that is unpaid by the primary plan. The secondary plan may reduce its payment by the amount so that, when combined with the amount paid by the primary plan, the total benefits paid or provided by all plans for the claim do not exceed 100 percent of the total allowable expense for that claim. In addition, the secondary plan shall credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2407 Notice to Covered Persons

(1) A plan shall, in its explanation of benefits provided to covered persons, include the following language: "If you are covered by more than one health benefit plan, you should file all your claims with each plan."

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2408 Miscellaneous Provisions

(1) A secondary plan that provides benefits in the form of services may recover the reasonable cash value of the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan that provides benefits in the form of services.

(2) A plan with order of benefit determination rules that comply with this subchapter (complying plan) may coordinate its benefits with a plan that is "excess" or "always secondary," or that uses order of benefit determination rules that are inconsistent with those contained in this subchapter (noncomplying plan) on the following basis:

(a) If the complying plan is the primary plan, it shall pay or provide its benefits first;

(b) If the complying plan is the secondary plan, it shall pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the complying plan were the secondary plan. In such a situation, the payment shall be the limit of the complying plan's liability; and

(c) If the noncomplying plan does not provide the information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan must assume that the benefits of the noncomplying plan are identical to its own, and shall pay its benefits accordingly. If, within two years of payment, the complying plan receives information as to the actual benefits of the noncomplying plan, it shall adjust payments accordingly.

(3) If the noncomplying plan reduces its benefits so that the covered person receives less in benefits than the covered person would have received had the complying plan paid or provided its benefits as the secondary plan and the noncomplying plan paid or provided its benefits as the primary plan, and governing state law allows the right of subrogation set forth in (4) and (5), then the complying plan shall advance to the covered person, or on behalf of the covered person, an amount equal to the difference.

(4) In no event shall the complying plan advance more than the complying plan would have paid had it been the primary plan less any amount it previously paid for the same expense or service. In consideration of the advance, the complying plan shall be subrogated to all rights of the covered person against the noncomplying plan. The advance by the complying plan shall also be without prejudice to any claim it may have against a noncomplying plan in the absence of subrogation.

(5) COB differs from subrogation. Provisions for one may be included in health care benefits contracts without compelling the inclusion or exclusion of the other.

(6) If the plans cannot agree on the order of benefits within 30 calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been the primary plan.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2410 Appendix "a" Model Cob Contract Provisions

(1) The model COB contract provisions are set forth in this rule and referred to as "Appendix A:"

(a) APPENDIX A. MODEL COB CONTRACT PROVISIONS

COORDINATION OF THIS CONTRACT'S BENEFITS WITH OTHER BENEFITS

The Coordination of Benefits (COB) provision applies when a person has health care coverage under more than one Plan. Plan is defined below.

The order of benefit determination rules govern the order in which each Plan will pay a claim for benefits. The Plan that pays first is called the Primary plan. The Primary plan must pay benefits in accordance with its policy terms without regard to the possibility that another Plan may cover some expenses. The Plan that pays after the Primary plan is the Secondary plan. The Secondary plan may reduce the benefits it pays so that payments from all Plans does not exceed 100% of the total allowable expense.

DEFINITIONS

A. A Plan is any of the following that provides benefits or services for medical or dental care or treatment. If separate contracts are used to provide coordinated coverage for members of a group, the separate contracts are considered parts of the same plan and there is no COB among those separate contracts.

(1) Plan includes: group and nongroup health insurance contracts, health maintenance organization (HMO) contracts, closed panel plans or other forms of group or group type coverage (whether insured or uninsured); medical care components of long-term care contracts, such as skilled nursing care; and Medicare or any other federal governmental plan, as permitted by law.

(2) Plan does not include: hospital indemnity coverage or other fixed indemnity coverage; accident only coverage; specified disease or specified accident coverage; limited benefit health coverage, if determined by the commissioner to be "excepted benefits" as defined in 33-22-140, MCA; school accident type coverage; benefits for non-medical components of long-term care policies; Medicare supplement policies; Medicaid policies; or coverage under other federal governmental plans, unless permitted by law.

Each contract for coverage under (1) or (2) is a separate Plan. If a Plan has two parts and COB rules apply only to one of the two, each of the parts is treated as a separate Plan.

B. This plan means, in a COB provision, the part of the contract providing the health care benefits to which the COB provision applies and which may be reduced because of the benefits of other plans. Any other part of the contract providing health care benefits is separate from this plan. A contract may apply one COB provision to certain benefits, such as dental benefits, coordinating only with similar benefits, and may apply another COB provision to coordinate other benefits.

C. The order of benefit determination rules determine whether This plan is a Primary plan or Secondary plan when the person has health care coverage under more than one Plan.

When This plan is primary, it determines payment for its benefits first before those of any other Plan without considering any other Plan's benefits. When This plan is secondary, it determines its benefits after those of another Plan and may reduce the benefits it pays so that all Plan benefits do not exceed 100% of the total Allowable expense.

D. Allowable expense is a health care expense, including deductibles, coinsurance and copayments, that is covered at least in part by any Plan covering the person. When a Plan provides benefits in the form of services, the reasonable cash value of each service will be considered an Allowable expense and a benefit paid. An expense that is not covered by any Plan covering the person is not an Allowable expense. In addition, any expense that a provider by law or in accordance with a contractual agreement is prohibited from charging a covered person is not an Allowable expense.

The following are examples of expenses that are not Allowable expenses:

(1) The difference between the cost of a semi-private hospital room and a private hospital room is not an Allowable expense, unless one of the Plans provides coverage for private hospital room expenses.

(2) If a person is covered by two or more Plans that compute their benefit payments on the basis of usual and customary fees or relative value schedule reimbursement methodology or other similar reimbursement methodology, any amount in excess of the highest reimbursement amount for a specific benefit is not an Allowable expense.

(3) If a person is covered by two or more Plans that provide benefits or services on the basis of negotiated fees, an amount in excess of the highest of the negotiated fees is not an Allowable expense.

(4) If a person is covered by one Plan that calculates its benefits or services on the basis of usual and customary fees or relative value schedule reimbursement methodology or other similar reimbursement methodology and another Plan that provides its benefits or services on the basis of negotiated fees, the Primary plan's payment arrangement shall be the Allowable expense for all Plans. However, if the provider has contracted with the Secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the Primary plan's payment arrangement and if the provider's contract permits, the negotiated fee or payment shall be the Allowable expense used by the Secondary plan to determine its benefits.

(5) The amount of any benefit reduction by the Primary plan because a covered person has failed to comply with the Plan provisions is not an Allowable expense. Examples of these types of plan provisions include second surgical opinions, precertification of admissions, and preferred provider arrangements.

E. Closed panel plan is a Plan that provides health care benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by the Plan, and that excludes coverage for services provided by other providers, except in cases of emergency or referral by a panel member.

F. Custodial parent is the parent awarded custody by a court decree or, in the absence of a court decree, is the parent with whom the child resides more than one half of the calendar year excluding any temporary visitation.

ORDER OF BENEFIT DETERMINATION RULES

When a person is covered by two or more Plans, the rules for determining the order of benefit payments are as follows:

A. The Primary plan pays or provides its benefits according to its terms of coverage and without regard to the benefits of under any other Plan.

B. (1) Except as provided in Paragraph (2), a Plan that does not contain a coordination of benefits provision that is consistent with this regulation is always primary unless the provisions of both Plans state that the complying plan is primary.

(2) Coverage that is obtained by virtue of membership in a group that is designed to supplement a part of a basic package of benefits and provides that this supplementary coverage shall be excess to any other parts of the Plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverages that are written in connection with a Closed panel plan to provide out-of-network benefits.

C. A Plan may consider the benefits paid or provided by another Plan in calculating payment of its benefits only when it is secondary to that other Plan.

D. Each Plan determines its order of benefits using the first of the following rules that apply:

(1) Non-Dependent or Dependent. The Plan that covers the person other than as a dependent, for example as an employee, member, policyholder, subscriber or retiree is the Primary plan and the Plan that covers the person as a dependent is the Secondary plan. However, if the person is a Medicare beneficiary and, as a result of federal law, Medicare is secondary to the Plan covering the person as a dependent; and primary to the Plan covering the person as other than a dependent (e.g. a retired employee); then the order of benefits between the two Plans is reversed so that the Plan covering the person as an employee, member, policyholder, subscriber or retiree is the Secondary plan and the other Plan is the Primary plan.

(2) Dependent Child Covered Under More Than One Plan. Unless there is a court decree stating otherwise, when a dependent child is covered by more than one Plan the order of benefits is determined as follows:

(a) For a dependent child whose parents are married or are living together, whether or not they have ever been married:

• The Plan of the parent whose birthday falls earlier in the calendar year is the Primary plan; or

• If both parents have the same birthday, the Plan that has covered the parent the longest is the Primary plan.

(b) For a dependent child whose parents are divorced or separated or not living together, whether or not they have ever been married:

(i) If a court decree states that one of the parents is responsible for the dependent child's health care expenses or health care coverage and the Plan of that parent has actual knowledge of those terms, that Plan is primary. This rule applies to plan years commencing after the Plan is given notice of the court decree;

(ii) If a court decree states that both parents are responsible for the dependent child's health care expenses or health care coverage, the provisions of (a) above shall determine the order of benefits;

(iii) If a court decree states that the parents have joint custody without specifying that one parent has responsibility for the health care expenses or health care coverage of the dependent child, the provisions of (a) above shall determine the order of benefits; or

(iv) If there is no court decree allocating responsibility for the dependent child's health care expenses or health care coverage, the order of benefits for the child are as follows:

• The Plan covering the Custodial parent ;

• The Plan covering the spouse of the Custodial parent ;

• The Plan covering the non-custodial parent ; and then

• The Plan covering the spouse of the non-custodial parent .

(c) For a dependent child covered under more than one Plan of individuals who are the parents of the child, the provisions of (a) or (b) above shall determine the order of benefits as if those individuals were the parents of the child.

(3) Active Employee or Retired or Laid-off Employee. The Plan that covers a person as an active employee, that is, an employee who is neither laid off nor retired, is the Primary plan . The Plan covering that same person as a retired or laid-off employee is the Secondary plan . The same would hold true if a person is a dependent of an active employee and that same person is a dependent of a retired or laid-off employee. If the other Plan does not have this rule, and as a result, the Plans do not agree on the order of benefits, this rule is ignored. This rule does not apply if the rule labeled D(1) can determine the order of benefits.

(4) COBRA or State Continuation Coverage. If a person whose coverage is provided pursuant to COBRA or under a right of continuation provided by state or other federal law is covered under another Plan , the Plan covering the person as an employee, member, subscriber or retiree or covering the person as a dependent of an employee, member, subscriber or retiree is the Primary plan and the COBRA or state or other federal continuation coverage is the Secondary plan . If the other Plan does not have this rule, and as a result, the Plans do not agree on the order of benefits, this rule is ignored. This rule does not apply if the rule labeled D(1) can determine the order of benefits.

(5) Longer or Shorter Length of Coverage. The Plan that covered the person as an employee, member, policyholder, subscriber or retiree longer is the Primary plan and the Plan that covered the person the shorter period of time is the Secondary plan .

(6) If the preceding rules do not determine the order of benefits, the Allowable expenses shall be shared equally between the Plans meeting the definition of Plan . In addition, This plan will not pay more than it would have paid had it been the Primary plan .

EFFECT ON THE BENEFITS OF THIS PLAN

A. When This plan is secondary, it may reduce its benefits so that the total benefits paid or provided by all Plans during a plan year are not more than the total Allowable expenses . In determining the amount to be paid for any claim, the Secondary plan will calculate the benefits it would have paid in the absence of other health care coverage and apply that calculated amount to any Allowable expense under its Plan that is unpaid by the Primary plan . The Secondary plan may then reduce its payment by the amount so that, when combined with the amount paid by the Primary plan , the total benefits paid or provided by all Plans for the claim do not exceed the total Allowable expense for that claim. In addition, the Secondary plan shall credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.

B. If a covered person is enrolled in two or more Closed panel plans and if, for any reason, including the provision of service by a non-panel provider, benefits are not payable by one Closed panel plan , COB shall not apply between that Plan and other Closed panel plans .

RIGHT TO RECEIVE AND RELEASE NEEDED INFORMATION

Certain facts about health care coverage and services are needed to apply these COB rules and to determine benefits payable under This plan and other Plans . [Organization responsible for COB administration] may get the facts it needs from or give them to other organizations or persons for the purpose of applying these rules and determining benefits payable under This plan and other Plans covering the person claiming benefits. [Organization responsible for COB administration] need not tell, or get the consent of, any person to do this. Each person claiming benefits under This plan must give [Organization responsible for COB administration] any facts it needs to apply those rules and determine benefits payable.

FACILITY OF PAYMENT

A payment made under another Plan may include an amount that should have been paid under This plan . If it does, [Organization responsible for COB administration] may pay that amount to the organization that made that payment. That amount will then be treated as though it were a benefit paid under This plan . [Organization responsible for COB administration] will not have to pay that amount again. The term "payment made" includes providing benefits in the form of services, in which case "payment made" means the reasonable cash value of the benefits provided in the form of services.

RIGHT OF RECOVERY

If the amount of the payments made by [Organization responsible for COB administration] is more than it should have paid under this COB provision, it may recover the excess from one or more of the persons it has paid or for whom it has paid; or any other person or organization that may be responsible for the benefits or services provided for the covered person. The "amount of the payments made" includes the reasonable cash value of any benefits provided in the form of services.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 2010 MAR p. 2958, Eff. 12/24/10.

Mont. Admin. R. 6.6.2411 Appendix "b" Model Cob Consumer Explanatory Booklet

(1) The provisions of the model COB consumer explanatory booklet are set forth in this rule and referred to as "Appendix B:"

(a) APPENDIX B. CONSUMER EXPLANATORY BOOKLET

COORDINATION OF BENEFITS

Double Coverage

It is common for family members to be covered by more than one health care plan. This happens, for example, when a husband and wife both work and choose to have family coverage through both employers.

When you are covered by more than one health plan, state law permits your insurers to follow a procedure called "coordination of benefits" to determine how much each should pay when you have a claim. The goal is to make sure that the combined payments of all plans do not add up to more than your covered health care expenses.

Coordination of benefits (COB) is complicated, and covers a wide variety of circumstances. This is only an outline of some of the most common ones. If your situation is not described, read your evidence of coverage or contact your state insurance department.

Primary or Secondary?

You will be asked to identify all the plans that cover members of your family. We need this information to determine whether we are the "primary" or "secondary" benefit payer. The primary plan always pays first when you have a claim.

Any plan that does not contain your state's COB rules will always be primary.

When This Plan is Primary

If you or a family member are covered under another plan in addition to this one, we will be primary when:

Your Own Expenses

• The claim is for your own health care expenses, unless you are covered by Medicare and both you and your spouse are retired.

Your Spouse's Expenses

• The claim is for your spouse, who is covered by Medicare, and you are not both retired.

Your Child's Expenses

• The claim is for the health care expenses of your child who is covered by this plan; and

• You are married and your birthday is earlier in the year than your spouse's or you are living with another individual, regardless of whether or not you have ever been married to that individual, and your birthday is earlier than that other individual's birthday. This is known as the "birthday rule;" or

• You are separated or divorced and you have informed us of a court decree that makes you responsible for the child's health care expenses; YOU MUST INFORM US WHEN A COURT DECRESS MAKES YOU RESPONSIBLE FOR THE CHILD'S HEALTH CARE EXPENSE; or

• There is no court decree, but you have custody of the child.

Other Situations

We will be primary when any other provisions of state or federal law require us to be.

How We Pay Claims When We Are Primary

When we are the primary plan, we will pay the benefits in accordance with the terms of your contract, just as if you had no other health care coverage under any other plan.

How We Pay Claims When We Are Secondary

We will be secondary whenever the rules do not require us to be primary.

When we are the secondary plan, we do not pay until after the primary plan has paid its benefits. We will then pay part or all of the allowable expenses left unpaid, as explained below. An "allowable expense" is a health care expense covered by one of the plans, including copayments, coinsurance and deductibles.

• If there is a difference between the amount the plans allow, we will base our payment on the higher amount. However, if the primary plan has a contract with the provider, our combined payments will not be more than the amount called for in our contract or the amount called for in the contract of the primary plan, whichever is higher. Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) usually have contracts with their providers.

• We will determine our payment by subtracting the amount the primary plan paid from the amount we would have paid if we had been primary. We may reduce our payment by any amount so that, when combined with the amount paid by the primary plan, the total benefits paid do not exceed the total allowable expense for your claim. We will credit any amount we would have paid in the absence of your other health care coverage toward our own plan deductible.

• If the primary plan covers similar kinds of health care expenses, but allows expenses that we do not cover, we may pay for those expenses.

• We will not pay an amount the primary plan did not cover because you did not follow its rules and procedures. For example, if your plan has reduced its benefit because you did not obtain pre-certification, as required by that plan, we will not pay the amount of the reduction, because it is not an allowable expense.

Questions About Coordination of Benefits?

Contact Your State Insurance Department

At 406-444-2040 or 1-800-332-6148

IMPORTANT NOTICE This is a summary of only a few of the provisions of your health plan to help you understand coordination of benefits, which can be very complicated. This is not a complete description of all of the coordination rules and procedures and does not change or replace the language contained in your insurance contract, which determines your benefits .

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
History: NEW, 2010 MAR p. 2958, Eff. 12/24/10.

Subchapter 6.6.25 Health Maintenance Organizations

Mont. Admin. R. 6.6.2501 Purpose

(1) The purpose of these rules is to implement the Montana Health Maintenance Organization Act to assure the availability, accessibility, and continuity of services provided by health maintenance organizations and to provide reasonable standards for terms and provisions contained in health maintenance organization contracts and evidences of coverage.

History

Authorizing statute(s): 33-31-103, MCA
Implementing statute(s): 33-31-101 through 33-31-405, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87.

Mont. Admin. R. 6.6.2502 Applicability and Scope

(1) These rules apply 60 days after effective date to all health maintenance organizations that are required to obtain a certificate of authority in this state. If these rules conflict with other rules adopted by the commissioner, these rules control as to health maintenance organizations.

(2) A new contract or evidence of coverage may not be delivered or issued for delivery in this state 60 days after the effective date of these rules unless it complies with these rules.

(3) A contract or evidence of coverage may not be reissued, renewed, amended, or extended in this state on or after the effective date of these rules unless it complies with these rules. A contract or evidence of coverage approved before the effective date of these rules is considered to be reissued, renewed, amended, or extended on the date the health maintenance organization changes the terms of the contract or evidence of coverage or adjusts the premiums charged. A contract or evidence of coverage must comply with these rules when it is amended or within 12 months after the effective date of these rules, whichever is earlier.

History

Authorizing statute(s): 33-31-103, MCA
Implementing statute(s): 33-31-101 through 33-31-405, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87.

Mont. Admin. R. 6.6.2503 Definitions

As used in this subchapter, the Montana Health Maintenance Organization Act, and for the purpose of any terms used in the contract and evidence of coverage:

(1) "Contract holder" means a person or entity consisting of employees or eligible persons that has entered into a group contract with a health maintenance organization for the provision of specified health care services to its eligible employees or eligible persons.

(2) "Copayment" means the amount an enrollee must pay to receive a specific service that is not fully prepaid.

(3) "Emergency care services" means the same as "emergency services," and incorporating "emergency medical condition," as defined in 33-36-103, MCA.

(4) "Group contract" means a contract for health care services that by its terms limits eligibility to members of a specified group.

(5) "Hospital" means hospital as defined in 50-5-101, MCA.

(6) "Individual contract" means a contract for health care services issued to and covering an individual or a family.

(7) "Out-of-area services" means the health care services that a health maintenance organization covers when its enrollees are outside of the service area.

(8) "Physician" means physician as defined in 50-2-101, MCA.

(9) "Primary care physician" means a physician who supervises, coordinates, and provides initial and basic care to enrollees; initiates their referral for specialist care; and maintains continuity of patient care.

(10) "Service area" means the geographical area approved by the commissioner within which the health maintenance organization provides or arranges for health care services that are available and accessible to enrollees.

(11) "Subscriber" means the individual whose employment or other status, except for family dependency, is the basis for eligibility for enrollment in the health maintenance organization.

(12) "Supplemental health care services" means health care services other than basic health care services.

History

Authorizing statute(s): 33-31-103, MCA
Implementing statute(s): 33-31-101 through 33-31-405, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 1998 MAR p. 1698, Eff. 6/26/98; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2504 Filing Exemption for Health Maintenance Operated by Insurer or Health Service Corporation as a Plan

(1) A health maintenance organization operated as a plan (defined in 33-31-102, MCA) need not file with the commissioner, as part of its application for a certificate of authority, the financial statement required by 33-31-201, MCA, if the same financial statement has been filed with the commissioner already.

History

Authorizing statute(s): 33-31-103, 33-31-201, MCA
Implementing statute(s): 33-31-201, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 1998 MAR p. 1698, Eff. 6/26/98; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2505 Multidisciplinary Advisory Boards

(1) The membership of a health maintenance organization advisory board must include providers or other individual representatives from at least three different health-related fields.

History

Authorizing statute(s): 33-31-103, MCA and SB 353, statement of intent, p. 2, lines 15-18
Implementing statute(s): 33-31-222, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2506 Requirements for Contracts and Evidences of Coverage

(1) Each subscriber is entitled to a contract or evidence of coverage as approved by the commissioner. The contract or evidence of coverage must be delivered or issued for delivery to a subscriber within a reasonable time after enrollment, but not more than 15 days from the later of the effective date of coverage or the date on which the health maintenance organization is notified of enrollment.

(2) A health maintenance organization contract and evidence of coverage must contain:

(a) the name, address, and telephone number of the health maintenance organization and the location of and the manner in which information is available as to how services may be obtained;

(b) a statement that the contract, all applications, and any amendments thereto constitute the entire agreement between the parties. No portion of the charter, bylaws, or other document of the health maintenance organization may be part of the contract and evidence of coverage unless set forth in full in the contract and evidence of coverage or attached thereto.

(c) the time and date or occurrence upon which coverage takes effect, including any applicable waiting or affiliation periods, or describe how the time and date or occurrence upon with coverage takes effect is determined. The contract and evidence of coverage must contain the time and date or occurrence upon which coverage will terminate.

(d) eligibility requirements indicating the conditions that must be met to enroll as a subscriber or eligible dependent; the limiting age for subscribers and eligible dependents, including the effects of medicare eligibility; and a clear statement regarding coverage of newborn children. However, a health maintenance organization contract and evidence of coverage may not contain any provision excluding or limiting coverage for a newborn child. Medically diagnosed congenital defects and birth abnormalities must be treated the same as any other illness or injury for which coverage is provided.

(e) a specific description of benefits and services available within the service area and out of the service area;

(f) a specific description of benefits available for emergency care services 24 hours a day, seven days a week, including disclosure of any restrictions on emergency care services.

(g) a description of any copayments, limitations, or exclusions on the services, kind of services, benefits, or kind of benefits to be provided, such as any lawful copayments, limitations, or exclusions due to preexisting conditions, waiting or affiliation periods, or an enrollee's refusal of treatment;

(h) the conditions upon which the health maintenance organization or the subscriber may cancel coverage;

(i) the conditions for, and any restrictions upon, the subscriber's right to renewal and right to reinstatement;

(j) a grace period of not less than 10 days for the payment of any premium except the first, during which coverage remains in effect if payment is made during the grace period. During the grace period, the health maintenance organization remains liable for providing the services and benefits contracted for, the contract holder remains liable for paying the premium for the time coverage was in effect during the grace period, and the subscriber remains liable for any copayments owed.

(k) procedures for filing claims that include:

(i) required notice to the health maintenance organization;

(ii) if any claim forms are required, how, when, and where to obtain and submit them;

(iii) requirements for filing proper proofs of loss;

(iv) time limit of payment of claims;

(v) notice of requirements for resolving disputed claims including arbitration; and

(vi) a statement of restrictions, if any, on assignment of sums payable to the enrollee by the health maintenance organization.

(l) in compliance with Title 33, chapter 32, MCA and ARM 6.6.2509(4), a description of the health maintenance organization’s method for resolving enrollee complaints, incorporating procedures to be followed by the enrollee if a dispute arises under the contract; and

(m) a provision that a subscriber may return the contract within 10 days of receiving it and receive a refund of the premium paid if the person is not satisfied with the contract for any reason. If the contract or evidence of coverage is returned to the health maintenance organization or to the agent through whom it was purchased, it is considered void from the beginning.

(3) In addition to the requirements under (2), a group contract and evidence of coverage must contain:

(a) a provision that an enrollee who is an inpatient in a hospital or a skilled nursing facility on the date of discontinuance of the group contract shall be covered in accordance with the terms of the group contract until discharged from the hospital or skilled nursing facility, and that the enrollee may be charged the appropriate premium for coverage that was in effect prior to discontinuance of the group contract.

(4) The contract and evidence of coverage may contain a provision for coordination of benefits consistent with the coordination of benefit rules applicable to other insurers in the jurisdiction. The provisions or rules for coordination of benefits established by a health maintenance organization may not relieve a health maintenance organization of its duty to provide or arrange for a covered health care service to any enrollee because the enrollee is entitled to coverage under any other contract, policy, or plan, including coverage provided under government programs. The health maintenance organization shall provide covered health care services first and then, at its option, seek coordination of benefits.

(5) The contract and evidence of coverage may not contain any provision concerning subrogation for injuries caused by third parties unless the wording has been approved by the commissioner.

(6) A contract and evidence of coverage that contains a provision not in conformity with the Montana Health Maintenance Organization Act is not invalid but must be construed and applied as if it were in full compliance with these rules and the Montana Health Maintenance Organization Act.

(7) A contract or evidence of coverage delivered or issued for delivery to any person by a health maintenance organization required to obtain a certificate of authority in this state may not contain any definitions that extend, modify, or conflict with those definitions contained in the Montana Health Maintenance Organization Act or ARM 6.6.2503. A contract or evidence of coverage may include definitions of additional terms, so long as those additional definitions do not extend, modify, or conflict with the definitions contained in the Montana Health Maintenance Organization Act or ARM 6.6.2503. In addition, all definitions used in the contract and evidence of coverage must be in alphabetical order.

History

Authorizing statute(s): 33-31-103, MCA
Implementing statute(s): 33-31-301, 33-31-303, 33-31-307, 33-31-312, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 1998 MAR p. 1698, Eff. 6/26/98; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2507 Prohibited Practices

(1) A health maintenance organization may not include in its contract and evidence of coverage a provision setting forth exclusions or limitations of services for preexisting conditions at the time of enrollment, except as permitted under 33-22-246, 33-22-514, or 33-22-1811, MCA.

(2) In addition to the requirements of (1), a health maintenance organization may not exclude or limit services for a preexisting condition when the enrollee transfers coverage from one individual contract to another or when the enrollee converts coverage under his conversion option, except to the extent of a preexisting condition limitation or exclusion remaining unexpired under the prior contract.

(3) A health maintenance organization may not unfairly discriminate against any enrollee or applicant for enrollment on the basis of the age, sex, race, color, creed, national origin, ancestry, religion, marital status, or lawful occupation of an enrollee, because of the frequency of utilization of services of an enrollee, or for any reason prohibited by 33-22-526, MCA.

(4) Representing as a group contract a contract that refuses, within the eligibility period, to enroll an individual member of a group on the basis of the health status or health care needs of the individual enrollee or member is deceptive and misleading and violative of 33-18-203, MCA.

History

Authorizing statute(s): 33-31-103, MCA
Implementing statute(s): 33-18-203, 33-31-111, 33-31-301, 33-31-312, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 1998 MAR p. 1698, Eff. 6/26/98; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2508 Services

(1) A health maintenance organization shall establish and maintain adequate arrangements to provide the health services contracted for by its subscribers including:

(a) reasonable proximity to the business or personal residences of the enrollees so as not to result in unreasonable barriers to accessibility;

(b) reasonable hours of operation and after-hours services;

(d) sufficient providers and personnel, including health professionals, administrators and support staff, to assure that all services contracted for will be accessible to enrollees on an appropriate basis without delays detrimental to the health of enrollees.

(2) A health maintenance organization shall make available to each enrollee a primary care physician and provide accessibility to medically necessary specialists through staffing, contracting, or referral. A health maintenance organization shall provide for continuity of care for enrollees referred to specialists.

(3) A health maintenance organization shall have written procedures governing the availability of frequently utilized services contracted for by subscribers, including at least the following:

(a) well-patient examinations and immunizations;

(b) emergency telephone consultation on a 24 hours per day, seven days per week basis;

(d) treatment of minor illnesses; and

(e) treatment of chronic illnesses.

(4) A health maintenance organization shall provide or arrange for the provision of emergency care and basic health care services, including the following:

(a) emergency care services, as defined in ARM 6.6.2503;

(b) inpatient hospital care, meaning medically necessary hospital care services including, but not limited to, room and board; general nursing care; special diets when medically necessary; use of operating room and related facilities; use of intensive care units and services; x-ray, laboratory, and other diagnostic tests; drugs, medications, biologicals, anesthesia, and oxygen services; special nursing when medically necessary; physical therapy, radiation therapy, and inhalation therapy; psychotherapy; administration of whole blood and blood the plasma; and short-term rehabilitation services;

(c) inpatient provider care, meaning medically necessary health care services performed, prescribed, or supervised by providers or other health professionals including diagnostic, therapeutic, medical, surgical, preventive, referral, and consultative health care services.

(d) outpatient medical services, meaning preventive and medically necessary health care services provided in a physician’s office, providers office, a non-hospital-based health care facility, or a hospital. Outpatient medical services include but are not limited to diagnostic services; treatment services; laboratory services; x-ray services; referral services; and physical therapy, radiation therapy, psychotherapy, and inhalation therapy. Outpatient services also include preventive health services which include at least a broad range of voluntary family planning services, services for infertility, well-child care from birth, periodic health evaluations for adults, screening to determine the need for vision and hearing correction, and pediatric and adult immunizations in accordance with accepted medical practice.

(5) Out-of-area services are subject to the same copayment requirements set forth in ARM 6.6.2509.

(6) When an enrollee is traveling or temporarily residing out of a health maintenance organization’s service area, the health maintenance organization must provide benefits for reimbursement for emergency care services, without regard to whether the health care provider furnishing the emergency care services is a participating network provider with respect to the emergency care services.

(7) In addition to the basic health care services required to be provided in (4), a health maintenance organization may offer to its enrollee any supplemental health care services it chooses to provide. Limitations as to time and cost may vary from those applicable to basic health care services.

History

Authorizing statute(s): 33-31-103 MCA
Implementing statute(s): 33-31-202, 33-31-301, MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2509 Other Requirements

(1) A health maintenance organization shall provide its subscribers with a list of the names and locations of all of its providers no later than the time of enrollment or the time the contract and evidence of coverage are issued and upon request thereafter.

(a) If a provider is no longer affiliated with a health maintenance organization, the health maintenance organization shall provide notice of such change to its affected subscribers in a timely manner.

(b) Subject to the approval of the commissioner, a health maintenance organization may provide its subscribers with a list of providers or provider groups for a segment of the service area. However, a health maintenance organization must make a list of all providers available to subscribers upon request.

(c) Any list of providers must contain a notice regarding the availability of the listed primary care physicians. The notice must be in not less than 12-point type and be placed in a prominent place on the list of providers. The notice must contain the following or similar language: "Enrolling in [name of health maintenance organization] does not guarantee services by a particular provider on this list. If you wish to be sure of receiving care from specific providers listed, you should contact those providers to be sure that they are accepting additional patients for [name of health maintenance organization]."

(2) A health maintenance organization shall provide its subscribers with a description of its service area no later than the time of enrollment or the time the contract and evidence of coverage is issued and upon request thereafter. If the description of the service area is changed, the health maintenance organization shall provide at such time a new description of the service area to its subscribers.

(3) A health maintenance organization may require copayments of enrollees as a condition for the receipt of specific health care services. Copayments for basic health care services must be shown in the contract and evidence of coverage. Copayments and deductibles are the only charges that a health maintenance organization may assess to subscribers for basic and supplemental health care services.

(4) Health maintenance organizations, unless operated by an insurer or a health service corporation as a plan, are required to file annual audited financial reports, as set forth in ARM 6.6.3501 through 6.6.3521.

History

Authorizing statute(s): 33-31-103 MCA
Implementing statute(s): 33-31-202, 33-21-211, 33-31-301 MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87; AMD, 2018 MAR p. 1102, Eff. 6/9/18.

Mont. Admin. R. 6.6.2510 Penalties

(1) A violation of these rules is punishable as provided for in 33-31-402 and 33-31-405, MCA, and any other applicable law of this state.

History

Authorizing statute(s): Sec. 33-31-103 MCA
Implementing statute(s): Sec. 33-31-101 through 33-31-405 MCA
History: NEW, 1987 MAR p. 1770, Eff. 10/16/87.

Subchapter 6.6.26 Independent Liability Funds

Mont. Admin. R. 6.6.2601 Purpose and Applicability

(1) The purpose of these rules is to protect members of the public who deal with business entities that have elected to insure their third-party liabilities or any portion thereof through the use of independent liability funds as authorized by the Independent Liability Fund Act by:

(a) regulating the registration and annual reporting of data pertinent to the inviolability and health of independent liability funds;

(b) regulating the responsible administration of independent liability funds;

(c) providing for the coordination of efforts between the department of revenue and the commissioner to assure the inviolability and health of independent liability funds;

(d) providing mechanisms for the sanctioning of independent liability funds that do not comply with the Independent Liability Fund Act or these rules or that are not inviolable, healthy, or secure.

(2) ARM 6.6.2601 through 6.6.2606 apply to independent liability funds, as defined in the Independent Liability Fund Act, except to the extent they conflict with statutory requirements. Statutory requirements prevail over conflicting rules.

(3) These rules are not exclusive. The commissioner may also consider other provisions of the Montana Insurance Code that apply to the circumstances or situations addressed herein. The rights provided by these rules are in addition to and do not prejudice any other rights granted to third party liability claimants under statutes, common law, or other Administrative Rules of Montana.

History

Authorizing statute(s): Sec. 33-27-104, MCA
Implementing statute(s): Title 33, Ch. 27, MCA
History: NEW, 1987 MAR p. 2372, Eff. 12/25/87.

Mont. Admin. R. 6.6.2602 Definitions

As used in this subchapter and Title 33, chapter 27, MCA, the following definitions apply unless the context requires otherwise:

(1) "Health" means the extent to which:

(a) assets in an independent liability fund are accurately valued; and

(b) the investments and assets constituting an independent liability fund meet the criteria established by 33-2-501 and 33-2-502, MCA

(2) "Inviolability" means that the business entity establishing the independent liability fund has provided security, third-party oversight, or both, in accordance with these rules so as to satisfy the commissioner that the investments and assets that comprise the independent liability fund cannot be misappropriated or dissipated.

(3) "Security" means measures taken to provide a reasonable expectation that an independent liability fund will remain inviolable over the time period it is to remain available to pay the costs of third-party liability claims.

(4) "Viability" means the extent to which the investments and assets constituting an independent liability fund will retain their value or increase in value over the time period they are to remain available to pay the costs of any third-party liability claim.

History

Authorizing statute(s): 33-27-104, MCA
Implementing statute(s): Title 33, ch. 27, MCA
History: NEW, 1987 MAR p. 2372, Eff. 12/25/87; AMD, 2018 MAR p. 825, Eff. 4/28/18.

Mont. Admin. R. 6.6.2603 Registration of Independent Liability Funds

(1) On or before February 1 of each year, or within one calendar month of the end of the business entity's fiscal year, the business entity shall provide the commissioner with the following information on a form prescribed by the commissioner:

(a) name of the business entity;

(b) if a corporation, the state where it is incorporated;

(d) the name of its staff member responsible for handling independent liability fund questions;

(e) the name, address, and telephone number of its third-party administrator;

(f) if it has no third-party administrator, the name, address, and telephone number of its in-house administrator;

(g) the name, address, and telephone number of the surety insurer for the in-house administrator;

(h) a copy of the bond issued on the in-house administrator;

(i) all relevant information regarding the investments and assets that make up the bond of the independent liability fund, including the type of contribution, the amount, the date of its acquisition, the actual physical location of the asset or investment, its acquisitions of independent liability fund assets or investments during the year, its disposals of independent liability fund assets or investments during the year, and any other documentation that the commissioner considers necessary or relevant.

(2) The commissioner shall report failure to comply with the above registration requirement to the department of revenue. The department of revenue may disallow a business entity's deduction for an independent liability fund if the business entity fails to comply with the registration requirement or these rules.

History

Authorizing statute(s): Sec. 33-27-104, MCA
Implementing statute(s): Title 33, Ch. 27, MCA
History: NEW, 1987 MAR p. 2372, Eff. 12/25/87.

Mont. Admin. R. 6.6.2604 Administration of Independent Liability Funds

A business entity may use one of the two following methods to administer its independent liability fund:

(1) A third party having no close connection with the business entity may administer the fund, provided that the third party is either a trust company registered in the state of Montana to conduct such business or a person or entity bonded by an authorized surety insurer for the full amount, including principal and interest, of the funds contained in the independent liability fund.

(2) An in-house officer or employee of the business entity may administer the fund if the officer or employee is bonded by an authorized surety insurer for the full amount including principal and interest, of the funds contained in the independent liability fund. If an in-house officer or employee administers the independent liability fund:

(a) that officer or employee must have exclusive control of the assets or investments contained in the independent liability fund;

(b) the business entity shall file a copy of the bond insuring the officer or employee with the commissioner; and

(c) the surety insurer issuing the bond shall notify the commissioner in writing 30 days before the effective date of a cancellation of the bond.

(3) Both in-house and third-party administrators shall cooperate fully with the commissioner in providing proof of the security or bond covering the investments, assets, and interest contained in the independent liability funds.

(4) An asset or investment contained in the independent liability fund may not be used or removed from the fund without prior notification to the commissioner with full explanation of the need for the transfer and a clear statement of the financial reasoning behind the transfer.

(5) A business entity using an independent liability fund shall obtain adequate insurance coverage for each insurable asset contained in the independent liability fund.

History

Authorizing statute(s): Sec. 33-27-104, MCA
Implementing statute(s): Title 33, Ch. 27, MCA
History: NEW, 1987 MAR p. 2372, Eff. 12/25/87.

Mont. Admin. R. 6.6.2605 Oversight of Independent Liability Fund

(1) The commissioner shall at all times be allowed access to any records of a business entity that bear upon the health, inviolability, authenticity, viability, and security of that entity's independent liability fund.

(2) A business entity using an independent liability fund shall be required to execute any documents necessary to give the commissioner access to records of a third-party relating to that entity's independent liability fund assets and investments.

(3) A business entity using an independent liability fund

shall bear the costs of any review, investigation, or

examination of its independent liability fund conducted by the

commissioner or her authorized agents.

History

Authorizing statute(s): Sec. 33-27-104, MCA
Implementing statute(s): Title 33, Ch. 27, MCA
History: NEW, 1987 MAR p. 2372, Eff. 12/25/87.

Subchapter 6.6.27 Periodic Payment of Premium Taxes

Mont. Admin. R. 6.6.2701 Purpose

(1) The purpose of these rules is to implement 33-2-705 (7) , MCA, allowing the commissioner to adopt

rules to establish a quarterly schedule for payment of the premium tax during the year in which the tax liability is accrued.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2702 Applicability and Scope

(1) These rules apply to all insurers required to pay premium tax pursuant to 33-2-705 (2) , MCA. If these rules conflict with, or are found by a court of competent jurisdiction to be in conflict with, 33-2-705 , MCA, the statute will control the collection of the premium tax.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2703 Effective Date

(1) Beginning April 15, 1988, and thereafter, every insurer shall remit to the commissioner its premium tax in accordance with these rules.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2704 Methods of Calculation

(1) Every insurer shall pay its quarterly premium tax obligation as follows:

(a) pay an amount equal to 100% of its prior calendar year premium tax in four equal payments, or

(b) pay an amount equal to 90% of its current year premium tax obligation, as calculated pursuant to 33-2-705 (2) MCA, in four equal payments.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2705 Payment Dates

(1) The payment dates of the equal quarterly premium tax payments are as follows: first payment due April 15; second payment due June 15; third payment due September 15; and fourth payment due December 15.

(2) An insurer, subject to the provisions of these rules, who by virtue of the pattern of its sale of insurance, receives more than 75% of its premium within the final calendar quarter of a year, may request from the commissioner permission to pay its tax obligation for the current year under these rules in one full payment on December 15 of the year in which the obligation accrues.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2706 Adjustments

(1) Over the course of the calendar

year, the insurer shall make the periodic payments in the amounts specified by ARM 6.6.2704. Any adjustments in the amounts paid must be made in conjunction with the filing of the report and payment of tax on March 1 of each year. Any credit must be carried forward and used to offset future periodic payments.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2707 Cessation of Business

(1) If an insurer notifies the commissioner in writing that it is no longer writing new or renewing existing insurance policies of any type in the state, the commissioner may waive the periodic payment requirements established in these rules.

History

Authorizing statute(s): 33-2-705, MCA
Implementing statute(s): 33-2-705, MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87; AMD, 2022 MAR p. 1793, Eff. 9/24/22.

Mont. Admin. R. 6.6.2708 Application for Refund

(1) If an insurer, on a form approved by the commissioner and under oath, notifies the commissioner that it is entitled to a refund, the commissioner may authorize a refund. An insurer is not entitled to receive interest on the refund.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Mont. Admin. R. 6.6.2709 Penalty

(1) Any insurer who is late in making or does not pay the quarterly premium tax as set forth in these rules is subject to the penalties in 33-2-705 (5) and (6) , MCA.

History

Authorizing statute(s): Sec. 33-2-705(7) MCA
Implementing statute(s): 33-2-705(7) MCA
History: NEW, 1987 MAR p. 2373, Eff. 12/25/87.

Subchapter 6.6.28 Surplus Lines Insurance Transactions

Mont. Admin. R. 6.6.2801 Purpose and Scope

(1) In accordance with 33-2-301 et seq., MCA, the commissioner declares that the purpose of these rules is to implement Title 33, chapter 2, part 3, MCA. ARM 6.6.2801 through 6.6.2810 implement 33-2-301, et seq., MCA, the surplus lines insurance law.

History

Authorizing statute(s): 33-1-313, 33-2-316, MCA
Implementing statute(s): 33-2-301, 33-2-302, 33-2-303, 33-2-304, 33-2-305, 33-2-306, 33-2-307, 33-2-308, 33-2-309, 33-2-310, 33-2-311, 33-2-312, 33-2-313, 33-2-314, 33-2-315, 33-2-316, 33-2-317, 33-2-321, 33-2-326, MCA, Chap. 350, sections 3, 4, 16, 17, L. of 2011
History: NEW, 1990 MAR p. 218, Eff. 1/26/90; AMD, 2009 MAR p. 2145, Eff. 10/30/09; AMD, 2011 MAR p. 2624, Eff. 12/9/11.

Mont. Admin. R. 6.6.2803 Filing of Submissions, Examination of Submissions and Records Retained

(1) Every Montana-licensed surplus lines insurance producer and insured who independently procured insurance shall submit to the department all information required to be filed by 33-2-301, et seq., MCA, and these rules.

(2) Surplus lines submissions to the department shall be made in a manner and form approved by the commissioner. There are standardized submission forms available from the department. Submissions may be made by:

(a) sending paper submissions to the department; or

(b) electronically filing submissions via the surplus lines business portal via the department's web site.

(3) All surplus lines submissions must be made to the department within 60 calendar days of the effective date of the policy.

(4) All surplus lines submissions must be complete. Incomplete submissions will not be accepted by the department, and will be returned for correction and resubmission within the foregoing 60 calendar day deadline from the effective date of the policy. If the 60 calendar day deadline has passed when the incomplete submission is returned, the surplus lines insurance producer or insured who independently procured insurance shall resubmit the corrected submission form within ten calendar days from the date the department rejected the incomplete submission.

(5) For electronically filed submissions, the producing insurance producer shall keep a true and correct copy of the completed and signed affirmation section of the paper submission form regarding the diligent search and the information provided to the insured under 33-2-310, MCA. The producing insurance producer shall provide a true and correct copy of the affirmation section of the submission form to the surplus lines insurance producer. These records shall be retained by the producing insurance producer and the surplus lines insurance producer for five years after the issuance of the surplus lines insurance policy to which they relate, and shall be subject to inspection by the department in accord with 33-2-310, MCA.

(6) If coverage is procured through a surplus lines insurance producer, that surplus lines insurance producer shall stamp or notate the first page of each insurance contract, cover note, declarations page, or certificate of insurance procured and delivered as surplus lines insurance with the following completed statement:

NOTICE: This coverage is issued by an unauthorized insurer that is an eligible surplus lines insurer. If this insurer becomes insolvent, there is no coverage by the Montana Insurance Guaranty Association under the Montana Insurance Guaranty Association Act.

_________________________________________ Printed Name of Surplus Lines Insurance Producer Montana License Number

_________________________________________ Signature of Surplus Lines Insurance Producer

(7) Surplus lines insurance producers shall retain records of, and supporting documentation for, all inspection fees charged to insureds under 33-2-306, MCA, and any assessment, membership, or similar fee or charge to insureds to obtain surplus lines insurance if such assessment, membership, or similar fee or charge was payable separately by the insured in consideration of the policy.

(8) Producing insurance producers and surplus lines insurance producers may create and retain electronic records to meet the records retention requirements in 33-2-310, MCA, and these rules, provided that the electronic records are:

(a) archival in nature, such as a scanned copy, so as to preclude the alteration of the record after it is initially stored in the electronic medium; and

(b) capable of duplication to a paper copy that is as legible as the original.

History

Authorizing statute(s): 33-1-313, 33-2-316, MCA
Implementing statute(s): 33-2-301, 33-2-302, 33-2-303, 33-2-305, 33-2-306, 33-2-307, 33-2-308, 33-2-310, 33-2-311, 33-2-312, 33-2-313, 33-2-316, 33-2-321, 33-2-326, MCA, Chap. 350, sections 3, 4, 16, 17, L. of 2011
History: NEW, 1990 MAR p. 218, Eff. 1/26/90; AMD, 2009 MAR p. 2005, Eff. 10/30/09; AMD, 2011 MAR p. 2624, Eff. 12/9/11.

Mont. Admin. R. 6.6.2804 Collection of Stamping Fee

(1) Pursuant to 33-2-321, MCA, the commissioner has determined that CSI will not collect a stamping fee on the base premium, including any monied endorsement, payable for each surplus lines insurance policy transacted in the state.

History

Authorizing statute(s): 33-1-313, 33-2-316, MCA
Implementing statute(s): 33-2-321, MCA
History: NEW, 1990 MAR p. 218, Eff. 1/26/90; AMD, 2009 MAR p. 2005, Eff. 10/30/09; AMD, 2011 MAR p. 2624, Eff. 12/9/11; AMD, 2022 MAR p. 1796, Eff. 9/24/22.

Mont. Admin. R. 6.6.2808 Eligible Surplus Lines Insurers List

(1) At least semiannually, the department shall make available a complete current list of eligible surplus lines insurers approved by the commissioner.

History

Authorizing statute(s): 33-1-313, 33-2-316, MCA
Implementing statute(s): 33-2-301, 33-2-302, 33-2-303, 33-2-305, 33-2-306, 33-2-307, 33-2-308, 33-2-310, 33-2-311, 33-2-312, 33-2-313, 33-2-316, 33-2-321, 33-2-326, MCA, Chap. 350, sections 3, 4, 16, 17, L. of 2011
History: NEW, 1990 MAR p. 218, Eff. 1/26/90; AMD, 2009 MAR p. 2005, Eff. 10/30/09; AMD, 2011 MAR p. 2624, Eff. 12/9/11.

Mont. Admin. R. 6.6.2810 Annual Reporting Period - Tax and Fee Statement

(1) The reporting period for surplus lines insurance premium taxes and stamping fees shall be the calendar year.

(2) The department shall produce for each surplus lines insurance producer, and insured who independently procured insurance, in a form approved by the commissioner, an annual tax and fee statement complying with the requirements of 33-2-310, MCA.

(3) By March 1 of each year, the department shall distribute such annual tax and fee statements for the preceding calendar year to surplus lines insurance producers and insureds who independently procured insurance for their review and submission to the commissioner.

(4) By April 1 of each year, surplus lines insurance producers and insureds who independently procured insurance shall file with the commissioner the annual tax and fee statement for the preceding calendar year and pay the taxes and fees.

(5) Insureds who independently procured insurance may pay the associated taxes and fees to the department when filing the surplus lines submission with the department.

(6) Nothing in this section or in the annual tax and fee statement prepared by the department shall relieve a surplus lines insurance producer or an insured who independently procured insurance from the duties and obligations imposed by 33-2-310, 33-2-311, 33-2-312, and 33-2-321, MCA.

History

Authorizing statute(s): 33-1-313, 33-2-316, MCA
Implementing statute(s): 33-2-301, 33-2-302, 33-2-303, 33-2-305, 33-2-306, 33-2-307, 33-2-308, 33-2-310, 33-2-311, 33-2-312, 33-2-313, 33-2-315, 33-2-316, 33-2-321, MCA, Chap. 350, sections 3, 4, 16, 17, L. of 2011
History: NEW, 2009 MAR p. 2005, Eff. 10/30/09; AMD, 2011 MAR p. 2624, Eff. 12/9/11.

Subchapter 6.6.30 Loss Cost Advisory Rate Filings

Mont. Admin. R. 6.6.3001 Purpose and Scope

(1) The purpose of these rules is to set forth procedures for the development and filing of prospective loss cost and supplementary rating information filings of property and casualty rating organizations. These filings can be made in place of full advisory rates. Member or subscriber insurers may refer to and incorporate in whole or in part filings made by advisory/rating organizations.

(2) These rules apply to the kinds and lines of insurance to which Title 33, chapter 16, MCA, applies, as indicated in 33-16-103, MCA, and to insurers and rating organizations making filings under 33-16-203, MCA, except they do not apply to workers' compensation insurance.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-16-201, 33-16-202, 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.3002 Authority

(1) These rules are issued pursuant to the authority vested in the commissioner by 33-1-313 and 33-16-202 , MCA.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): 33-16-201 through 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90.

Mont. Admin. R. 6.6.3003 Definitions

(1) "Expenses" means the portion of a rate attributable to costs of loss adjustment, acquisition, field supervision, collection expenses, general expenses, taxes, licenses, and fees.

(2) "Prospective loss costs" means the portion of a rate that does not include provisions for expenses (other than loss adjustment expenses at the discretion of the rating organization) or profit, and which is based on historical aggregate losses and loss adjustment expenses adjusted through development to their ultimate value and projected through trending to a future point in time.

(3) "Rate" means the cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost with an adjustment to account for the treatment of expenses, profit and variations in loss experience, prior to any application of individual risk variations based on loss or expense considerations. The term does not include minimum premiums.

(4) "Rating organization" is an organization licensed pursuant to 33-16-403 , MCA.

(5) "Supplementary rating information" means any classification system, territory code or description, manual or plan of rates, classification, rating schedule, minimum premium, policy fee, rating rule, rate-related underwriting rule, experience rating plan, statistical plan and any other similar information needed to determine the applicable rate in effect or to be in effect.

(6) "Supporting information" means:

(a) the experience and judgment of the insurer and the experience or data of other insurers or rating organizations relied upon by the insurer;

(b) the interpretation of any statistical data relied upon by the insurer;

(d) other similar information required by the commissioner to be filed.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): 33-16-201 through 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90.

Mont. Admin. R. 6.6.3004 Rating Organization Reference Filings of Advisory Prospective Loss Costs

(1) Rating organizations may develop and may make reference filings containing advisory prospective loss costs. Such filings shall contain the statistical data and supporting information for any calculations or assumptions underlying those prospective loss costs. The reference filings shall be filed and be effective in the same manner as rates filed pursuant to 33-16-203 , MCA.

(2) An insurer may satisfy its obligation to make rate filings by:

(a) becoming a participating insurer of a licensed rating organization which makes reference filings of advisory prospective loss costs;

(b) filing with the commissioner the information required in ARM 6.6.3005; and

(3) The insurer's rates will include the prospective loss costs filed by the rating organization which have been filed pursuant to subsection (1) , the insurer's loss cost adjustments filed in accordance with ARM 6.6.3005 which are in effect for that insurer, and the insurer's expense component.

(4) An insurer's filing of loss cost adjustments becomes

effective in the same manner as rates filed under 33-16-203 , MCA.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): 33-16-201 through 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90.

Mont. Admin. R. 6.6.3005 Required Filing Documents

(1) All filings by insurers which refer to a reference filing of prospective loss costs made by a rating organization shall include, in the order listed, the following documents:

(a) reference filing adoption form as specified by the commissioner; and

(b) a summary of supporting information.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): 33-16-201 through 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90.

Mont. Admin. R. 6.6.3006 Rating Organization Filings of Advisory Supplementary Rating Information

(1) Rating organizations may develop and make filings of supplementary rating information. These filings shall be made in accordance with 33-16-203 , MCA.

(2) An insurer may satisfy its obligation to make filings of supplementary rate information by becoming a participating insurer of a licensed rating organization and by authorizing the commissioner to accept filings by that organization on behalf of the insurer. The insurer's supplementary rating information shall be that filed by the rating organization, subject to any modifications filed by the insurer.

History

Authorizing statute(s): Sec. 33-1-313, MCA
Implementing statute(s): 33-16-201 through 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90.

Mont. Admin. R. 6.6.3007 Existing Rates and Deviations Remain in Effect Until Disapproved, Replaced, or Modified

(1) Nothing in this subchapter requires rating organizations or their participating insurers to immediately refile rates in effect. Any participating insurer of a rating organization may continue to use all rates and deviations in effect until such rates are disapproved or until the insurer makes its own filing to change its rates, either by making an independent filing or by filing a reference filing adoption form adopting the rating organization's prospective loss costs, or the insurer's modification of them.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-16-201, 33-16-202, 33-16-203, MCA
History: NEW, 1990 MAR p. 2171, Eff. 12/14/90; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Subchapter 6.6.31 Long-Term Care

Mont. Admin. R. 6.6.3101 Purpose, Scope, and Authority

(1) In accordance with 33-22-1101, et seq., MCA, the Commissioner of Insurance declares that the purpose of these rules is to implement Title 33, chapter 22, part 11, MCA, to promote the public interest, to promote the availability of long-term care insurance, as defined in ARM 6.6.3102(7), to protect the public from unfair or deceptive sales or enrollment practices, to facilitate public understanding and comparison of long-term care insurance coverages, and to facilitate flexibility and innovation in the development of long-term care insurance.

(2) Except as otherwise specifically provided, these rules apply to:

(a) all long-term care insurance policies or certificates including qualified long-term care contracts and life insurance policies that accelerate benefits for long-term care delivered or issued for delivery in this state on or after January 1, 1991, by issuers, fraternal benefit societies, nonprofit health, hospital, medical service corporations, prepaid health plans, health maintenance organizations, and all similar organizations; and

(b) policies having indemnity benefits that are triggered by activities of daily living and sold as disability income insurance, if:

(i) the benefits of the disability income policy are dependent upon or vary in amount based on the receipt of long-term care services;

(ii) the disability income policy is advertised, marketed, or offered as insurance for long-term care services; or

(iii) benefits under the policy may commence after the policyholder has reached social security's normal retirement age unless benefits are designed to replace lost income or pay for specific expenses other than long-term care services.

(3) Notwithstanding (2), certain provisions of these rules apply only to qualified long-term care insurance contracts, as noted.

(4) Group policies or certificates issued for delivery outside this state to Montana residents are subject to these rules and Title 33 of the Montana Code Annotated.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3102 Definitions

For purposes of these rules, in addition to the definitions in 33-22-1107, MCA, the following definitions apply:

(1) "Benefit trigger," for the purposes of independent review, means a contractual provision in the insured's policy of long-term care insurance conditioning the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. For purposes of a tax-qualified long-term care insurance contract, as defined in Section 770B of the Internal Revenue Code of 1986, as amended, "benefit trigger" shall include a determination by a licensed health care practitioner that an insured is a chronically ill individual.

(2) "Commissioner" means the Montana State Auditor and Ex Officio Commissioner of Insurance.

(3) "Exceptional increase" means a premium rate increase filed by an insurer as exceptional; and

(a) for which the commissioner determines the need for a rate increase to be justified:

(i) due to a change in laws or rules applicable to long-term care coverage in this state; or

(ii) due to increased and unexpected utilization that affects the majority of insurers of similar products.

(b) except as provided in ARM 6.6.3124, exceptional increases are subject to the same requirements as other premium rate increases;

(c) the commissioner may request a review of the basis for the exceptional increase by an independent actuary or a professional actuarial body;

(d) the commissioner, in determining whether there is a necessary basis for an exceptional increase, shall also determine any potential offsets to higher claims costs.

(4) "Incidental" means that the value of the long-term care benefits provided is less than 10% of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue.

(5) "Independent review organization" has the same meaning as in 33-32-402, MCA.

(6) "Insurer" or "issuer" means an insurance company, health service corporation, health maintenance organization, or other entity providing long-term care insurance or benefits in Montana.

(7) "Licensed health care professional" means an individual qualified by education and experience in an appropriate field to determine, by record review, an insured's actual functional or cognitive impairment.

(8) "Qualified actuary" means a member in good standing of the American Academy of Actuaries.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3103 Policy Definitions

(1) No long-term care insurance policy or certificate delivered or issued for delivery in Montana may use the terms set forth below, unless the terms are defined in the policy or certificate as follows in this rule.

(2) "Activities of daily living" as defined in 33-22-1107(1), MCA.

(3) "Acute condition" means that the individual is medically unstable. Such an individual requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status.

(4) "Adult day care" means a program for six or more individuals, of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly or other disabled adults who can benefit from care in a group setting outside the home.

(5) "Bathing" means washing oneself by sponge bath, or in a tub or shower, including the task of getting into or out of the tub or shower.

(6) "Cognitive impairment" means a deficiency in a person's short or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

(7) "Continence" means the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).

(8) "Dressing" means putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.

(9) "Eating" means feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.

(10) "Hands-on assistance" means physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activity of daily living.

(11) "Home health care services" means medical and nonmedical services, provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living, and respite care services.

(12) "Irreversible dementia" means deterioration or loss of intellectual faculties, reasoning power, memory, and will due to organic brain disease characterized by confusion, disorientation, apathy and stupor of varying degrees which is not capable of being reversed and from which recovery is impossible.

(13) "Medicare" shall be defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title 1, Part 1 of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof" or words of similar import.

(14) "Mental or nervous disorder" shall not be defined to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder.

(15) "Personal care" means the provision of hands-on services to assist an individual with activities of daily living.

(16) "Skilled nursing care," "personal care," "home care," "specialized care," "assisted living care," and other services shall be defined in relation to the level of skill required, the nature of the care, and the setting in which care must be delivered.

(17) "Toileting" means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.

(18) "Transferring" means moving into or out of a bed, chair or wheelchair.

(19) All providers of services, including but not limited to "skilled nursing facility," "extended care facility," "convalescent nursing home," "personal care facility," "specialized care providers," "assisted living facility," and "home care agency" shall be defined in relation to the services and facilities required to be available and the licensure, certification, registration, or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified, or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification, or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified, or registered, or when the state licenses, certifies, or registers the provider of services under another name.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3104 Policy Practices and Provisions

(1) The terms "guaranteed renewable" and "noncancellable" shall not be used in any individual long-term care insurance policy or certificate without further explanatory language in accordance with the disclosure requirements of ARM 6.6.3105.

(2) No such policy or certificate issued to an individual shall contain renewal provisions less favorable to the insured than "guaranteed renewable." The commissioner of insurance may authorize nonrenewal on a statewide basis, on terms and conditions deemed necessary by the commissioner of insurance, to best protect the interests of the insureds, if the issuer demonstrates:

(a) that renewal will jeopardize the issuer's solvency; or

(b) that the actual paid claims and expenses have substantially exceeded the premium and investment income associated with the policies; and

(d) the projected loss experience of the policies cannot be significantly improved or mitigated through reasonable rate adjustments or other reasonable methods; and

(e) the issuer has made repeated and good faith attempts to stabilize loss experience of the policies, including the timely filing for rate adjustments.

(3) The term "guaranteed renewable" means the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the issuer has no unilateral right to make any change in any provision of the policy, certificate, or rider while the insurance is in force, and cannot decline to renew, except that rates may be revised by the issuer on a class basis.

(4) The term "noncancellable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the issuer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.

(5) The term "level premium" may only be used when the insurer does not have the right to change the premium.

(6) In addition to the other requirements of this rule, a qualified long-term care insurance contract shall be guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended.

(7) A policy or certificate may not be delivered or issued for delivery in this state as long-term care insurance if the policy or certificate limits or excludes coverage by type of illness, treatment, medical condition, or accident, except it may include exclusions or limits for:

(a) preexisting conditions or diseases;

(b) mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer's disease or irreversible dementia;

(d) illness, treatment or medical condition arising out of:

(i) war or act of war, whether declared or undeclared;

(ii) participation in a felony, riot or insurrection;

(iii) service in the armed forces or units auxiliary thereto;

(iv) sane or insane suicide, attempted suicide or intentionally self-inflicted injury; or

(v) aviation, provided this exclusion applies only to nonfare-paying passengers.

(e) treatment provided in a government facility, unless coverage is otherwise required by law;

(f) services for which benefits are available under Medicare or a governmental program other than Medicaid, or under a state or federal worker's compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law;

(g) services provided by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance;

(h) expenses for services or items available or paid under another long-term care insurance or health insurance policy;

(i) in the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount;

(j) this rule is not intended to prohibit exclusions and limitations by type of provider; however:

(i) no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued, under the following conditions:

(A) when the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification, or registration; or

(B) when the state other than the state of policy issue issues licenses, certifies, or registers the provider under another name.

(ii) for purposes of this paragraph, "state of policy issue" means the state in which the individual policy or certificate was originally issued.

(k) this rule is not intended to prohibit exclusions or limitations by territorial limitations.

(8) Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization if such institutionalization began while the long-term care insurance was in force and continues without interruption after termination. Such extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy or certificate.

(9) Group long-term care insurance policies or certificates issued in Montana on or after January 1, 1991, shall provide covered individuals with a basis for continuation or conversion of coverage.

(a) For the purposes of this rule, "a basis for continuation of coverage" means a policy provision which maintains coverage under the existing group policy or certificate when such coverage would otherwise terminate and which is subject only to the continued timely payment of premium when due. Group policies or certificates which restrict provision of benefits and services to, or contain incentives to use certain health care providers or facilities may provide continuation benefits which are substantially equivalent to the benefits of the existing group policy or certificate. The Commissioner of Insurance may make a determination as to the substantial equivalency of benefits, and in doing so, may take into consideration the differences between managed care and nonmanaged care plans, including, but not limited to, health care provider system arrangements, service availability, benefit levels and administrative complexity.

(b) For the purposes of this rule, "a basis for conversion of coverage" means a policy provision that an individual whose coverage under the group policy or certificate would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy or certificate in its entirety or with respect to an insured class, and who has been continuously insured under the group policy or certificate and any group policy or certificate which it replaced, for at least three months immediately prior to termination, shall be entitled to the issuance of a converted policy or certificate by the issuer under whose group policy or certificate the individual is covered, without evidence of insurability.

(c) For the purposes of this rule, "converted policy" means a policy or certificate of long-term care insurance providing benefits identical to or benefits determined by the Commissioner of Insurance to be substantially equivalent to or in excess of those provided under the group policy or certificate from which conversion is made. Where the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain health care providers or facilities, the Commissioner of Insurance, in making a determination as to the substantial equivalency of benefits, may take into consideration the differences between managed care and nonmanaged care plans, including, but not limited to, health care provider system arrangements, service availability, benefit levels, and administrative complexity.

(d) Written application for the converted policy or certificate shall be made and the first premium due, if any, shall be paid as directed by the issuer not later than 31 days after termination of coverage under the group policy or certificate. The converted policy or certificate shall be issued effective on the day following the termination of coverage under the group policy or certificate, and shall be renewable annually.

(e) Unless the group policy or certificate from which conversion is made replaced previous group coverage, the premium for the converted policy or certificate shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy or certificate from which conversion is made replaced previous group coverage, the premium for the converted policy or certificate shall be calculated on the basis of the insured's age at inception of coverage under the group policy or certificate replaced.

(f) Continuation of coverage or issuance of a converted policy or certificate shall be mandatory except where:

(i) termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due; or

(ii) the terminating coverage is replaced not later than 31 days after termination, by group coverage effective on the day following the termination of coverage:

(A) providing benefits identical to or benefits determined by the Commissioner of Insurance to be substantially equivalent to or in excess of those provided by terminating coverage; and

(B) the premium for which is calculated in a manner consistent with the requirements of (9)(e).

(g) Notwithstanding any other provision of this rule, a converted policy or certificate issued to an individual who at the time of conversion is covered by another long-term care insurance policy or certificate which provides benefits on the basis of incurred expenses, may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy or certificate, would result in payment of more than 100% of incurred expenses. The provision shall only be included in the converted policy or certificate if the converted policy or certificate also provides for a premium decrease or refund which reflects the reduction in benefits payable.

(h) The converted policy or certificate may provide that the benefits payable under the converted policy or certificate, together with the benefits payable under the group policy or certificate from which conversion is made, may not exceed those that would have been payable had the individual's coverage under the group policy or certificate remained in force and effect.

(i) Notwithstanding any other provision of these rules, any insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person shall be entitled to continuation of coverage under the group policy or certificate upon termination of the qualifying relationship by death or dissolution of marriage.

(j) For the purposes of these rules, a "managed-care plan" is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management, or use of specific health care provider networks.

(10) If a group long-term care policy or certificate is replaced by another group long-term care policy or certificate issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy or certificate:

(a) shall not result in an exclusion for preexisting conditions that would have been covered under the group policy or certificate being replaced; and

(b) shall not vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services.

(11) The premium charged to an insured shall not increase due to either:

(a) the increasing age of the insured at ages beyond 65; or

(b) the duration the insured has been covered under the policy.

(12) The purchase of additional coverage shall not be considered a premium rate increase, but for purposes of the calculation required under ARM 6.6.3128, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium. A reduction in benefits shall not be considered a premium change, but for purposes of the calculation required under ARM 6.6.3128, the initial annual premium shall be based on the reduced benefits.

(13) In the case of a group defined in 33-22-1107(5)(a), MCA, any requirement that a signature of an insured be obtained by an agent or issuer shall be deemed satisfied if:

(a) The consent is obtained by telephonic or electronic enrollment by the group policyholder or issuer. A verification of enrollment information shall be provided to the enrollee;

(b) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention and prompt retrieval of records; and

(c) The telephonic or electronic enrollment providing necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information and "privileged information," as defined by 33-19-104(24), MCA, is maintained.

(d) The issuer shall make available, upon request of the commissioner, records that will demonstrate the issuer's ability to confirm enrollment and coverage amounts.

(14) For a policy or certificate that has been in force for less than six months an issuer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is material to the acceptance for coverage.

(a) For a policy or certificate that has been in force for at least six months but less than two years an issuer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term insurance claim upon a showing of misrepresentation that is both material to the acceptance for coverage and which pertains to the condition for which benefits are sought.

(b) After a policy or certificate has been in force for two years it is not contestable upon the grounds of misrepresentation alone; such policy or certificate may be contested only upon a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health.

(c) No long-term care insurance policy or certificate may be field issued based on medical or health status. For purposes of this rule, "field issued" means a policy or certificate issued by a producer or a third-party administrator pursuant to the underwriting authority granted to the producer or third-party administrator by an issuer.

(d) If an issuer has paid benefits under the long-term care insurance policy or certificate, the benefit payments may not be recovered by the issuer in the event that the policy or certificate is rescinded.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3104A UNINTENTIONAL LAPSE

6.6.3104A UNINTENTIONAL LAPSE

(1) Each issuer offering long-term care insurance shall, as a protection against unintentional lapse, comply with the following:

(a) No individual long-term care policy or certificate shall be issued until the issuer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium, or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation shall not constitute acceptance of any liability on the third party for services provided to the insured. The form used for the written designation must provide space clearly designated for listing at least one person. The designation shall include each person's full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver shall state: "Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy or certificate for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice." The issuer shall notify the insured of the right to change this written designation, no less often than once every two years.

(b) When the policyholder or certificateholder pays the premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in (1)(a) need not be met until 60 days after the policyholder or certificateholder is no longer on such a payment plan. The application or enrollment form for such policies or certificates shall clearly indicate the payment plan selected by the applicant.

(c) No individual long-term care policy or certificate shall lapse or be terminated for nonpayment of premium unless the issuer, at least 30 days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to (1)(a) at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall only be effective if it is mailed via:

(i) certified mail, or the issuer obtains a certificate of mailing by the United States Postal Service;

(ii) a commercial delivery service, and the issuer obtains at the time of mailing a written receipt from the service showing the date of mailing, the number of items mailed, and the name and address of the insured and those persons designated pursuant to (1)(a) to whom the notice was mailed; or

(iii) first-class United States mail, and the issuer obtains at the time of mailing a written receipt from the United States Postal Service showing the date of mailing, the number of items mailed, and the name and address of the insured and those persons designated pursuant to (1)(a) to whom the notice was mailed.

(d) There is a presumption that notice is delivered five days after the date of mailing, as evidenced in the written receipt obtained by the insurer pursuant to (1)(c). The insurer shall retain any and all evidence of mailing the notice, including the list of recipients, as applicable, and a copy of the notice, for at least three years following the date of notice. Notice may not be given until 30 days after a premium is due and unpaid.

(2) In addition to the requirement in (1), a long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage, in the event of lapse if the issuer is provided proof that the policyholder or certificateholder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy or certificate expired. This option shall be available to the insured if requested within five months after termination and shall allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1113, MCA
History: NEW, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2015 MAR p. 1046, Eff. 1/30/16.

Mont. Admin. R. 6.6.3105 Required Disclosure Provisions

(1) Individual long-term care insurance policies and certificates shall contain a renewability provision.

(a) The provision shall be appropriately captioned, shall appear on the first page of the policy or certificate, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy or certificate is issued and for which it may be renewed. This provision shall not apply to policies which do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder; and

(b) A long-term care insurance policy, other than one where the insurer does not have the right to change the premium, shall include a statement that the premium rates may change.

(2) Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured under an individual long-term care insurance policy or certificate, all riders or endorsements added to an individual long-term care insurance policy or certificate after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy or certificate shall require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the policy, certificate, rider or endorsement.

(3) A long-term care insurance policy or certificate which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import shall include a definition of such terms in the policy or certificate and an explanation of such terms in its accompanying outline of coverage.

(4) If a long-term care insurance policy of certificate contains any limitations with respect to preexisting conditions, such limitations shall appear as a separate paragraph of the policy or certificate and shall be labeled as "preexisting condition limitations."

(5) A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in 33-22-1115(1), MCA, shall set forth a description of such limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label such paragraph "limitations or conditions on eligibility for benefits."

(6) With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This provision does not apply to qualified long-term care insurance contracts.

(7) Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and shall be described in the policy or certificate in a separate paragraph and shall be labeled "Eligibility for the Payment of Benefits." Any additional benefit triggers shall also be explained in this separate paragraph. If these triggers differ for different benefits, explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.

(8) A qualified long-term care insurance contract shall include a disclosure statement in the policy and/or certificate and in the outline of coverage that the policy is intended to be a qualified long-term care insurance contract under 7702B(b) of the Internal Revenue Code of 1986, as amended.

(9) A nonqualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in ARM 6.6.3114(6) that the policy is not intended to be a qualified long-term care insurance contract.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3106 Prohibition Against Post-Claims Underwriting

(1) All applications for long-term care insurance policies or certificates except those which are guaranteed issue shall contain clear and unambiguous questions designed to ascertain the health condition of the applicant.

(2) If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed. If the medications listed in such application were known by the issuer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate shall not be rescinded for that condition.

(3) Except for policies or certificates which are guaranteed issue, the following language shall be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate: Caution: If your answers on this application are incorrect or untrue, [company] may have the right to deny benefits or rescind your [policy] [certificate], pursuant to ARM 6.6.3104(13).

(4) The following language, or language substantially similar to the following, shall be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery:

Caution: The issuance of this long-term care insurance

[policy][certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your [policy] [certificate]. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]

(5) Prior to issuance of a long-term care policy or certificate to an applicant age 80 or older, the issuer shall obtain one of the following:

(a) a report of a physical examination;

(b) an assessment of functional capacity;

(d) copies of medical records.

(6) A copy of the completed application or enrollment form whichever is applicable, shall be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application.

(7) Every issuer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and shall annually furnish this information to the Commissioner of Insurance in the format prescribed by the National Association of Insurance Commissioners in ARM 6.6.3120, LTC Form A.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3107 Minimum Standards for Home Health Care Benefits in Long-Term Care Insurance Policies

(1) A long-term care insurance policy or certificate may not, if it provides benefits for home health care services, limit or exclude benefits:

(a) by requiring that the insured or claimant would need skilled care in a skilled nursing facility if home health care services were not provided;

(b) by requiring that the insured or claimant first or simultaneously receive nursing or therapeutic services in a home, community or institutional setting before home health care services are covered;

(d) by requiring that a nurse or therapist provide services covered by the policy or certificate that can be provided by a home health aide, or other licensed or certified home care worker acting within the scope of his or her licensure of certification;

(e) by excluding coverage for personal care services provided by a home health aide;

(f) by requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service;

(g) by requiring that the insured or claimant have an acute condition before home health care services are covered;

(h) by limiting benefits to services provided by Medicare-certified agencies or providers.

(i) by excluding coverage for adult day care services.

(2) A long-term care insurance policy or certificate, if it provides for home health or community care services, shall provide total home health or community care coverage that is a dollar amount equivalent to at least one-half of one year's coverage available for nursing home benefits under the policy or certificate, at the time covered home health or community care services are being received. This requirement shall not apply to policies or certificates issued to residents of continuing care retirement communities.

(3) Home Health Care coverage may be applied to the nonhome health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3108 Requirement to Offer Inflation Protection

(1) No issuer may offer a long-term insurance policy or certificate unless the issuer also offers to the policyholder, in addition to any other inflation protection, the option to purchase a policy or certificate that provides for benefit levels to increase with benefit maximums or reasonable durations which are meaningful to account for reasonably anticipated increases in the costs of long-term care services covered by the policy or certificate. Issuers must offer to each policyholder, at the time of purchase, the option to purchase a policy or certificate with an inflation protection feature no less favorable than one of the following:

(a) increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than 5%;

(b) guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least 5% for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or

(c) covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit.

(2) Where the policy or certificate is issued to a group, the required offer in (1) above shall be made to the group policyholder; except, if the policy or certificate is issued to a group defined in 33-22-1107(5)(d), MCA, other than to a continuing care retirement community, the offering shall be made to each proposed certificateholder.

(3) The offer in (1) above shall not be required of life insurance policies or riders containing accelerated long-term care benefits.

(4) Issuers shall include the following information in or with the outline of coverage:

(a) a graphic comparison of the benefit levels of a policy or certificate that increases benefits over the policy period with a policy or certificate that does not increase benefits. The graphic comparison shall show benefit levels over at least a 20-year period; and

(b) any expected premium increases or additional premiums to pay for automatic or optional benefit increases. If premium increases or additional premiums will be based on the attained age of the applicant at the time of the increase, the issuer shall also disclose the magnitude of the potential premiums the applicant would need to pay at ages 75 and 85 for benefit increases.

(5) Inflation protection benefit increases under a policy or certificate which contains these benefits shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy or certificate.

(6) An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium which the issuer expects to remain constant. The offer shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

(7) Inflation protection as provided in (1)(a) shall be included in a long-term care insurance policy or certificate unless an issuer obtains a rejection of inflation protection signed by the policyholder as required in this rule. The rejection shall be considered a part of the application and shall state:

(a) I reviewed the outline of the coverage and the graphs that compare the benefits and premiums of this policy or certificate with and without inflation protection. Specifically, I reviewed Plans__________, and I reject inflation protection.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91, AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3109 Requirements for Application Forms and Replacement Coverage

(1) Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care insurance policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and producer, except where the coverage is sold without a producer, containing the following questions shall be used:

(2) Producers shall list any other health insurance policies they have sold to the applicant, including:

(a) policies sold that are still in force; and

(b) policies sold in the past five years that are no longer in force.

(3) Upon determining that a sale will involve replacement, an issuer, other than an issuer using direct response solicitation methods, or its producer, shall furnish the applicant, prior to issuance or delivery of the individual long-term care insurance policy or certificate, a notice regarding replacement of accident and sickness or long-term care coverage. One copy of the notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the issuer. The required notice shall be provided in the following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT OF INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance Company's Name and Address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term insurance and replace it with an individual long-term care insurance policy to be issued by [company name] Insurance Company. Your new policy provides 30 days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.

STATEMENT TO APPLICANT BY PRODUCER [OR OTHER REPRESENTATIVE]:

(Use additional sheets, as necessary.)

I have reviewed your current medical or health insurance coverage. I believe the replacement of insurance involved in this transaction materially improves your position. My conclusion has taken into account the following considerations, which I call to your attention:

Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.
If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present issuer or its producer regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.

(Signature of Producer or Other Representative)

[Typed Name and Address of Producer]

The above "Notice to Applicant" was delivered to me on:

(Date)

(Applicant's Signature)

(4) Issuers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy or certificate. The required notice shall be provided in the following manner:

Do you have another long-term care insurance policy or certificate in force (including health care service contract, health maintenance organization contract)?
Did you have another long-term care insurance policy or certificate in force during the last 12 months?

a. If so, with which company?

b. If that policy or certificate lapsed, when did it lapse?

Are you covered by Medicaid?
Do you intend to replace any of your medical or health insurance coverage with this policy [certificate]?

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance Company's Name and Address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term insurance and replace it with an individual long-term care insurance policy or certificate to be issued by [company name] Insurance Company. Your new policy or certificate provides 30 days within which you may decide, without cost, whether you desire to keep the policy or certificate. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy or certificate.

You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy or certificate only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.

Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy or certificate. This could result in denial or delay in payment of benefits under the new policy or certificate, whereas a similar claim might have been payable under your present policy or certificate.
Montana law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. Your insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

3. If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present issuer or its producer regarding the proposed replacement of your present policy or certificate. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

[To be included only if the application is attached to the policy.] If, after due consideration, you still wish to terminate your present policy or certificate and replace it with new coverage, read the copy of the application attached to your new policy or certificate and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write [company name and address] within 30 days if any information is not correct and complete, or if any past medical history has been left out of the application.
Where replacement is intended, the replacing issuer shall notify, in writing, the existing issuer of the proposed replacement. The existing policy or certificate shall be identified by the issuer, name of the insured and policy number or address including zip code. Notice shall be made within five working days from the date the application is received by the issuer or the date the policy or certificate is issued, whichever is sooner.
Life insurance policies that accelerate benefits for long-term care shall comply with this rule if the policy or certificate being replaced is a long-term care insurance policy. If the policy or certificate being replaced is a life insurance policy, the issuer shall comply with the replacement requirements of ARM 6.6.301 through 6.6.310. If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy or certificate, the replacing issuer shall comply with both the long-term care and the life insurance replacement requirements.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3109A REPORTING REQUIREMENTS

6.6.3109A REPORTING REQUIREMENTS

(1) Every issuer shall maintain records for each producer of that producer's amount of replacement sales as a percentage of the producer's total annual sales and the amount of lapses of long-term care insurance policies sold by the producer as a percentage of the producer's total annual sales.

(2) Every issuer shall report annually by June 30, on LTC Form G in ARM 6.6.3120(1)(g), the 10% of its producers with the greatest percentages of lapses and replacements as measured by (1).

(3) Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports are for the purpose of reviewing more closely producer activities regarding the sale of long-term care insurance.

(4) Every issuer shall report annually by June 30, on LTC Form E in ARM 6.6.3120(1)(e), the number of lapsed policies as a percentage of its total annual sales and as a percentage of its total number of policies in force as of the end of the preceding calendar year.

(5) Every issuer shall report annually by June 30 the number of replacement policies sold as a percentage of its total annual sales and as a percentage of its total number of policies in force as of the preceding calendar year.

(6) Every issuer shall report annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied, other than claims denied for failure to meet the waiting period or because of an applicable preexisting condition.

(7) For purposes of this rule:

(a) "policy" means only long-term care insurance;

(b) subject to (7)(c) "claim" means a request for payment of benefits under an in-force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

(c) "denied" means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition; and

(d) "report" means on a statewide basis.

(8) Reports required under this rule shall be filed with the commissioner on the applicable forms contained in ARM 6.6.3120.

(9) The following annual submission requirements apply subsequent to initial rate filings for individual long-term care insurance policies issued in this state on or after January 1, 2009:

(a) An actuarial certification based on calendar year data, submitted annually no later than May 1st of each year, and prepared, dated, and signed by a member of the American Academy of Actuaries who provides the information. The actuarial certification shall provide at least the following information:

(i) for the rate schedules currently marketed, a description of the review performed and a statement of the sufficiency of the current premium rate schedule including:

(A) that the premium rate schedule continues to be sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated; or

(B) if the statement in (A) cannot be made, a statement that margins for moderately adverse experience may no longer be sufficient. In this situation, the insurer shall provide to the commissioner, within 60 days of the date the actuarial certification is submitted to the commissioner, a plan of action, including a time frame, for the re-establishment of adequate margins for moderately adverse experience so that the ultimate premium rate schedule would be reasonably expected to be sustainable over the future life of the form with no future premium increases anticipated. Failure to submit a plan of action to the commissioner within 60 days or to comply with the time frame stated in the plan of action constitutes grounds for the commissioner to withdraw or modify approval of the form for future sales;

(ii) for the rate schedules that are no longer marketed, a description of the review performed and a statement:

(A) that the premium rate schedule continues to be sufficient to cover anticipated costs under best estimate assumptions; or

(B) that the premium rate schedule may no longer be sufficient. In this situation, the insurer shall provide to the commissioner, within 60 days of the date the actuarial certification is submitted to the commissioner, a plan of action, including a time frame, for the re-establishment of adequate margins for moderately adverse experience.

(b) An actuarial memorandum submitted at least once every three years with the certification required in (a), and dated and signed by a member of the American Academy of Actuaries who prepares the information. The actuarial memorandum shall provide at least the following information:

(i) a detailed explanation of the data sources and review performed by the actuary prior to making the statement required by (a);

(ii) a complete description of experience assumptions and their relationship to the initial pricing assumptions;

(iii) a description of the credibility of the experience data; and

(iv) an explanation of the analysis and testing performed in determining the current presence of margins.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1113, MCA
History: NEW, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/1/20.

Mont. Admin. R. 6.6.3109B LICENSING

6.6.3109B LICENSING

(1) A producer may not market, sell, solicit, negotiate, or otherwise act as an insurance producer with respect to long-term care insurance in this state except as authorized by Title 33, chapter 17, part 2, MCA. The producer must also meet the training requirements set forth in 33-22-1128, MCA.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-17-201, MCA
History: NEW, 1998 MAR p. 3271, Eff. 12/1/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3110 Discretionary Powers of Commissioner of Insurance

(1) The Commissioner of Insurance may upon written request and after administrative hearing, issue an order to modify or suspend a specific provision or provisions of these rules with respect to a specific long-term care insurance policy or certificate upon a written finding that:

(a) the modification or suspension would be in the best interest of the insureds; and

(b) the purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and

(i) the modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; or

(ii) the policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or

(iii) the modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3111 Reserve Standards

(1) When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves for such benefits shall be determined in accordance with 33-2-523, MCA. Claim reserves must also be established in the case when such policy or rider is in claim status.

(2) Reserves for policies and riders subject to this rule should be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

(3) In the development and calculation of reserves for policies and riders subject to this rule, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to the following:

(a) definition of insured events;

(b) covered long-term care facilities;

(d) definition of facilities;

(e) existence or absence of barriers to eligibility;

(f) premium waiver provision;

(g) renewability;

(h) ability to raise premiums;

(i) marketing method;

(j) underwriting procedures;

(k) claims adjustment procedures;

(l) waiting period;

(m) maximum benefit;

(n) availability of eligible facilities;

(o) margins in claim costs;

(p) optional nature of benefit;

(q) delay in eligibility for benefit;

(r) inflation protection provisions; and

(s) guaranteed insurability option.

(4) Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

(5) When long-term care benefits are provided other than as in (1) above, reserves shall be determined as acceptable to the commissioner of insurance.

History

Authorizing statute(s): 33-1-313, 33-22-1121,MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3112 Loss Ratio

(1) Benefits under individual long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least 60%, calculated in a manner which provides for adequate reserving of the long-term insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:

(a) statistical credibility of incurred claims experience and earned premiums;

(b) the period for which rates are computed to provide coverage;

(d) concentration of experience within early policy duration;

(e) expected claim fluctuation;

(f) experience refunds, adjustments or dividends;

(g) renewability features;

(h) all appropriate expense factors;

(i) interest;

(j) experimental nature of the coverage;

(k) policy reserves;

(l) mix of business by risk classification; and

(m) product features such as long elimination periods, high deductibles and high maximum limits.

(2) This rule shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy or certificate that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy or certificate complies with all of the following provisions:

(a) the interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy or certificate;

(b) the portion of the policy or certificate that provides life insurance benefits meets the nonforfeiture requirements of 33-20-201, et seq., MCA;

(d) any policy illustration that meets the applicable requirements of ARM 6.6.701 through 6.6.718; and

(e) an actuarial memorandum is filed with and reviewed by the Insurance Department of the State Auditor's Office that includes:

(i) a description of the basis on which the long-term care rates were determined;

(ii) a description of the basis for the reserves;

(iii) a summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

(iv) a description and a table of each actuarial assumption used. For expenses, an issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(v) a description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(vi) the estimated average annual premium per policy or certificate and the average issue age;

(vii) a statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy or certificate, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(viii) a description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy or certificate, both for active lives and those in long-term care claim status.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3113 Filing Requirement

(1) Prior to an issuer offering long-term care insurance to a resident of Montana pursuant to 33-22-1120, MCA, the issuer shall file with the Commissioner of Insurance the policy or certificate for approval by this state.

(2) The policy or certificate and all related forms must prominently display the specific kind and type(s) of long-term care benefits insured.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3113A FILING REQUIREMENTS FOR ADVERTISING

6.6.3113A FILING REQUIREMENTS FOR ADVERTISING

(1) Every issuer, health service corporation or health maintenance organization or other entity providing long-term care insurance or benefits in Montana shall provide a copy of any long-term care insurance advertisement intended for use in this state whether through written, radio or television medium to the commissioner of insurance for review or approval by the commissioner. In addition, all advertisements shall be retained by the issuer, health service corporation, health maintenance organization or other entity for at least three years from the date the advertisement was first used.

(2) The commissioner may exempt from these requirements any advertising form or material when, in the commissioner's opinion, this requirement may not be reasonably applied.

(3) All advertising and marketing materials must prominently display the specific kind and type(s) of long-term care benefits insured.

History

Authorizing statute(s): 33-1-3113 and 33-22-1121, MCA
Implementing statute(s): 33-22-1103, MCA
History: NEW, 1998 MAR p. 3271, Eff. 12/18/98.

Mont. Admin. R. 6.6.3114 Standard Format Outline of Coverage

(1) This rule implements, interprets and makes specific the provisions of 33-22-1111, MCA, in prescribing a standard format and the content of an outline of coverage.

(2) The outline of coverage shall be a free-standing document, using no smaller than 10 point type.

(3) The outline of coverage shall contain no material of an advertising nature.

(4) Text which is capitalized or underscored in the standard format outline of coverage may be emphasized by other means which provide prominence equivalent to such capitalization or underscoring.

(5) Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated.

(6) Format for outline of coverage:

[COMPANY NAME]

[ADDRESS-CITY & STATE]

[TELEPHONE NUMBER]

LONG-TERM CARE INSURANCE

OUTLINE OF COVERAGE

[Policy Number of Group Master Policy and Certificate Number]

[Except for policies or certificates which are guaranteed issue, the following caution statement, or language substantially similar, must appear as follows in the outline of coverage.] Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application][enrollment form] [is enclosed][was retained by you when you applied]. If your answers are incorrect or untrue, the company may have the right to deny benefits, or rescind your policy or certificate. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]

This policy is [an individual policy of insurance] ([a group policy] which was issued in the [indicate jurisdiction in which group policy was issued]).
PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy or certificate contains governing contractual provisions. This means that the policy or certificate or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY!
FEDERAL TAX CONSEQUENCES.

This [POLICY][CERTIFICATE] is intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.

This [POLICY][CERTIFICATE] is not intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended. Benefits received under the [POLICY][CERTIFICATE] may be taxable as income.

TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE CONTINUED IN FORCE OR DISCONTINUED.

(a) [For long-term care health insurance policies or certificates, describe one of the following policy renewability provisions:]

(1) [Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy [certificate], to continue this policy [certificate] as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy [certificate] on its own, except that, in the future, IT MAY INCREASE THE PREMIUM YOU PAY.

(2) [Policies and certificates that are noncancelable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS NONCANCELABLE. This means that you have the right, subject to the terms of your policy or certificate, to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy or certificate contains an inflation protection feature where you choose to increase your benefits, [Company Name] may increase your premium at that time for those additional benefits.

(b) [For group coverage, specifically describe continuation conversion provisions applicable to the certificate and group policy.]

TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS.

[In bold type larger than the maximum type required to be used for the other provisions of the outline of coverage, state whether or not the company has a right to change the premium, and if a right exists, describe clearly and concisely each circumstance under which the premium may change.]

TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.

(a) [Provide a brief description of the right to return--"free look" provision of the policy or certificate.]

(b) [include a statement that the policy or certificate either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include description of them.]

THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Medicare Supplement buyer's guide available from the insurance company.

(a) [For producers] Neither [insert company name] nor its producers represent Medicare, the federal government or any state government.

(b) [For direct response] [insert company name] is not representing Medicare, the federal government or any state government.

LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community or in the home. This policy or certificate provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy [limitations] [waiting periods] and [coinsurance] requirements. [Modify this paragraph if the policy is not an indemnity policy.]
BENEFITS PROVIDED BY THIS POLICY/CERTIFICATE.

(a) [Covered services, related deductible(s), waiting periods, elimination periods and benefit maximums.]

(b) Institutional benefits, by skill level.]

(d) [Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and must be defined and described as part of the outline of coverage.] [Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified.]

LIMITATIONS AND EXCLUSIONS

[Describe:

(a) Preexisting conditions;

(b) Non-eligible facilities/provider;

(d) Exclusions/exceptions;

(e) Limitations.]

[This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in (6) above.]

THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted. [As applicable, indicate the following:

(a) That the benefit level will not increase over time;

(b) Any automatic benefit adjustment provisions;

(c) Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;

(d) If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations;

(e) And finally, describe whether there will be any additional premium charge imposed, and how that is to be calculated.]

ALZHEIMER'S DISEASE, IRREVERSIBLE DEMENTIA, AND OTHER ORGANIC BRAIN DISORDERS.

[State that the policy or certificate provides coverage for insured clinically diagnosed as having Alzheimer's disease, irreversible dementia, or related degenerative and dementing illnesses. Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.]

PREMIUM.

[(a) State the total annual premium for the policy or certificate;

(b) If the premium varies with an applicant's choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option.]

ADDITIONAL FEATURES.

(a) Indicate if medical underwriting is used;

(b) Describe other important features.]

CONTACT THE MONTANA STATE AUDITOR'S OFFICE, COMMISSIONER OF SECURITIES AND INSURANCE, IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/1/20.

Mont. Admin. R. 6.6.3115 Requirement to Deliver Shopper's Guide

(1) A long-term care insurance shopper's guide in the format developed by the National Association of Insurance Commissioners, or a guide developed or approved by the Commissioner of Insurance, shall be provided to all prospective applicants of a long-term care insurance policy or certificate.

(a) In the case of producer solicitations, a producer must deliver the shopper's guide prior to the presentation of an application or enrollment form.

(b) In the case of direct response solicitations, the shopper's guide must be presented in conjunction with any application or enrollment form.

(2) Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the above-referenced guide, but shall furnish the policy summary required under 33-22-1111, MCA.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1991 MAR p. 119, Eff. 2/1/91; AMD, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3117 Standards for Marketing

(1) Every issuer, health service corporation, health maintenance organization or other entity marketing long-term care insurance coverage in this state, directly or through its producers, shall:

(a) establish marketing procedures and producer training requirements to assure that:

(i) any marketing activities, including comparison of policies, by its producers

or other producers, will be fair and accurate; and

(ii) excessive insurance is not sold or issued;

(b) display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy or certificate the following:

"Notice to buyer: This policy or certificate may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations."

(d) inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required;

(e) establish auditable procedures for verifying compliance with this rule;

(f) the issuer must at solicitation, provide written notice to the prospective policyholder and certificateholder that a senior insurance counseling program is available and the name, address, and telephone number of the program;

(g) for long-term care health insurance policies and certificates, use the terms "noncancelable" or "level premium" only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the issuer has no right to unilaterally make any change in any provision of the insurance or in the premium rate; and

(h) provide an explanation of contingent benefit upon lapse provided for in ARM 6.6.3119.

(2) In addition to the practices prohibited in Title 33, chapter 18, Montana Code Annotated, the following acts and practices are prohibited:

(a) twisting or knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or issuers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert any insurance policy or certificate or to take out a policy of insurance or certificate with another issuer;

(b) high pressure tactics such as employing any method of marketing having the effect of, or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance;

(c) cold lead advertising such as making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company; and

(d) misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

(3) With respect to the obligations set forth in this rule:

(a) the primary responsibility of an association, as defined in 33-22-1107, MCA, when endorsing long-term care insurance shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by such associations to ensure that members of such associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.

(b) the issuer shall file with the insurance department the following material:

(i) the policy and certificate;

(ii) a corresponding outline of coverage; and

(iii) all advertisements requested by the insurance department.

(i) the specific nature and amount of the compensation arrangements (including all fees, commissions, administrative fees and other forms of financial support) that the association receives from endorsement of the policy or certificate to its members; and

(ii) a brief description of the process under which such policies and the issuer issuing such policies were selected.

(d) if the association and the issuer have interlocking directorates or trustee arrangements, the association shall disclose such fact to its members.

(e) The board of directors of associations endorsing long-term care insurance policies or certificates shall review and approve such insurance policies as well as the compensation arrangements made with the issuer.

(f) the association shall also:

(i) at the time of the association's decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the issuer to conduct an examination of the policies, including its benefits, features, and rates and update such examination thereafter in the event of material change;

(ii) actively monitor the marketing efforts of the issuer and its producers;

(iii) review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding such policies or certificates; and

(iv) (3)(f)(i) through (3)(f)(iii) do not apply to qualified long-term care insurance contracts.

(g) No group long-term care insurance policy or certificate may be issued to an association unless the issuer files with the state insurance department the information required in this rule.

(h) The issuer shall not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the issuer certifies annually that the association has complied with the requirements set forth in this rule.

(i) Failure to comply with the filing and certification requirements of this rule constitutes an unfair trade practice in violation of Title 33, chapter 18, Montana Code Annotated.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1995 MAR p. 2242, Eff. 1/1/96; TRANS & AMD, from ARM 6.6.5601, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3118 Suitability Standards

(1) Every issuer, health service corporation, health maintenance organization or other entity marketing long-term care insurance (the "issuer") shall:

(a) develop and use appropriate suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

(b) train its producers in the use of its suitability standards; and

(c) maintain a copy of its suitability standards and make them available for inspection upon request by the commissioner.

(2) To determine whether the applicant meets the standards developed by the issuer, the producer and issuer shall develop procedures that take the following into consideration:

(a) the ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

(b) the applicants' goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

(c) the values, benefits and costs of the applicant's existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.

(3) To determine whether the applicant meets the standards required by (2), the issuer, and where a producer is involved, the producer shall make reasonable efforts to obtain the information set out in (2). The efforts shall include presentation to the applicant, at or prior to application, the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the issuer shall contain, at a minimum, the information in the format contained in ARM 6.6.3120(1)(b) in not less than 12 point type. The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the issuer's personal worksheet shall be filed with the commissioner.

(a) A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses; and

(b) The sale or dissemination outside the company or agency by the issuer or producer of information obtained through the personal worksheet in ARM 6.6.3120(1)(b), LTC Form B is prohibited.

(4) The issuer shall use the suitability standards it has developed pursuant to this rule in determining whether issuing long-term care insurance coverage to an applicant is appropriate.

(5) Producers shall use the suitability standards developed by the issuer in marketing long-term care insurance.

(6) At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form shall be in the format contained in ARM 6.6.3120(1)(c), LTC Form C in not less than 12 point type.

(7) If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a letter similar to ARM 6.6.3120(1)(d), LTC Form D. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file.

(8) The issuer shall report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

(9) This rule shall not apply to life insurance policies or certificates that accelerate benefits for long-term care.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1996 MAR p. 143, Eff. 1/1/96; TRANS & AMD from ARM 6.6.5602, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/1/20.

Mont. Admin. R. 6.6.3119 Nonforfeiture Benefit Requirement

(1) An insurance company offering a long-term care insurance policy or certificate shall offer to each prospective purchaser the choice between a policy that includes nonforfeiture benefits to the defaulting or surrendering policyholder or certificate holder and one that does not include nonforfeiture benefits.

(2) To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of 33-22-1116, MCA:

(a) A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in (5); and

(b) The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the outline of coverage or other materials given to the prospective policyholder.

(3) If the offer of the long-term care insurance policy or certificate that includes nonforfeiture benefits is rejected, the issuer shall provide the contingent benefit upon lapse described in this rule. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit upon lapse in (4)(c) still applies.

(4) After rejection of the offer of the long-term care insurance policy or certificate, for individual and group policies without nonforfeiture benefits issued after December 18, 1998, the issuer shall provide a contingent benefit upon lapse.

(a) In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificateholder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.

(b) The contingent benefit upon lapse shall be triggered every time an issuer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

(c) A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time an issuer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, the policy lapses within 120 days of the due date of the premium so increased, and the ratio in (4)(e)(ii), is 40% or more. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

This provision shall be in addition to the contingent benefit provided by (4)(b), and where both are triggered, the benefit provided shall be at the option of the insured.

(d) on or before the effective date of a substantial premium increase as defined in (4)(b) above, the issuer shall:

(i) offer to reduce policy benefits provided by the current coverage consistent with the requirements of ARM 6.6.3129 so that required premium payments are not increased;

(ii) offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of (5). This option may be elected at any time during the 120-day period referenced in (4)(b); and

(iii) notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in (4)(b) shall be deemed to be the election of the offer to convert in (4)(c)(ii), unless the automatic option in (4)(e)(iii) applies.

(e) On or before the effective date of a substantial premium increase as defined in (4)(c), the issuer shall:

(i) offer to reduce policy benefits provided by the current coverage consistent with the requirements of ARM 6.6.3129 so that required premium payments are not increased;

(ii) offer to convert the coverage to a paid-up status where the amount payable for each benefit is 90% of the amount payable, in effect immediately prior to lapse, times the ratio of the number of completed months of paid premiums, divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in (4)(c); and

(iii) notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in (4)(c) shall be deemed to be the election of the offer to convert in (4)(e)(ii), if the ratio is 40% or more.

(5) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with (4)(b), but not (4)(c), are described in (5)(a) through (e):

(a) For purposes of this rule, attained age rating is defined as a schedule of premiums starting from the issue date which increases with increasing age at least 1% per year prior to age 50, and at least 3% per year beyond age 50.

(b) For purposes of this rule, the nonforfeiture benefit shall be a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in (5)(c).

(c) The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The issuer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than 30 times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of (6).

(d) The nonforfeiture benefit shall begin:

(i) not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first three years as well as thereafter;

(ii) except that for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:

(A) the end of the tenth year following the policy or certificate issue date; or

(B) the end of the second year following the date the policy or certificate is no longer subject to attained age rating.

(e) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.

(6) All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid-up status will not exceed the maximum benefits which would have been payable if the policy or certificate had remained in premium paying status.

(7) There shall be no difference in the minimum nonforfeiture benefits as required under this rule for group and individual policies.

(8) The requirements set forth in this rule shall become effective 12 months after adoption of this provision and shall apply as follows:

(a) Except as provided in (8)(b), the provisions of this rule apply to any long-term care policy or certificate issued in this state on or after the December 18, 1998; and

(b) For certificates issued on or after December 18, 1998, under a group long-term care insurance policy or certificate as defined in 33-22-1107, MCA, which policy or certificate was in force at the time this rule became effective, the provisions of this rule shall not apply.

(c) The last sentence in (3) and (4)(c) and (4)(e) shall apply to any long-term insurance policy issued in Montana after six months after its adoption, except new certificates on a group policy as defined in 33-22-1107(5), MCA, one year after adoption.

(9) Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of ARM 6.6.3112 or ARM 6.6.3124, whichever is applicable, treating the policy or certificate as a whole.

(10) To determine whether contingent nonforfeiture upon lapse provisions are triggered under (4)(b) or (4)(c), a replacing issuer that purchased or otherwise assumed a block or blocks of long-term care insurance policies or certificates from another issuer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy or certificate was first purchased from the original issuer.

(11) A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:

(a) the nonforfeiture provisions shall be appropriately captioned;

(b) the nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the commissioner for the same contract form; and

(i) reduced paid-up insurance;

(ii) extended term insurance;

(iii) shortened benefit period; and

(iv) other similar offerings approved by the commissioner.

(12) This rule does not apply to life insurance policies, certificates or riders containing accelerated long-term care benefits.

Issue Age | Substantial Percent Over Initial Premium 29 and under | 200% 30-34 | 190% 35-39 | 170% 40-44 | 150% 45-49 | 130% 50-54 | 110% 55-59 | 90% 60 | 70% 61 | 66% 62 | 62% 63 | 58% 64 | 54% 65 | 50% 66 | 48% 67 | 46% 68 | 44% 69 | 42% 70 | 40% 71 | 38% 72 | 36% 73 | 34% 74 | 32% 75 | 30% 76 | 28% 77 | 26% 78 | 24% 79 | 22% 80 | 20% 81 | 19% 82 | 18% 83 | 17% 84 | 16% 85 | 15% 86 | 14% 87 | 13% 88 | 12% 89 | 11% 90 and over | 10%

Issue Age | Percent Increase Over Initial Premium Under 65 | 50% 65-80 | 30% Over 80 | 10%

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1995 MAR p. 2242, Eff. 1/1/96; TRANS & AMD, from ARM 6.6.5603, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3120 Adoption of Forms

(1) The following forms are adopted and made a part of these rules for all purposes, and the same must be used as herein directed in giving notice.

(a) LTC Form A Rescission Reporting Form

LTC Form A

RESCISSION REPORTING FORM FOR

LONG-TERM CARE POLICIES

FOR THE STATE OF MONTANA

FOR THE REPORTING YEAR 20[ ]

Due: March 1 annually

Instructions:

The purpose of this form is to report all rescissions of long-term care insurance policies. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.

Detailed reason for rescission: _________________________________________

Signature

Name and Title (please type)

Date

(b) LTC Form B Long-Term Care Insurance

Personal Worksheet

LTC FORM B

Long-Term Care Insurance

Personal Worksheet

This worksheet will help you understand some important information about this type of insurance. Montana law requires companies issuing this [policy][certificate][rider] to give you some important facts about premiums and premium increases and to ask you some important questions to help you and the company decide if you should buy this [policy][certificate][rider]. Long-term care insurance can be expensive and it may not be right for everyone.

Premium Information

Policy Form Numbers

The premium for the coverage you are considering will be $[] per [insert payment interval] or a total of [$[] per year][a one-time single premium of $[__]].

The premium quoted in this worksheet is not guaranteed and may change during the underwriting process and in the future while this [policy][certificate][rider] is in force.

Type of Policy & The Company's Right to Increase Premiums on the Coverage You Choose:

[Noncancellable – The company cannot increase your premiums on this [policy][certificate][rider]].

[Guaranteed renewable – The company can increase your premiums on this [policy][certificate][rider] in the future if it increases the premiums for all [policies][certificates][riders] like yours in Montana.]

[Paid-up – This [policy][certificate][rider] will be paid-up after you have paid all of the premiums specified in your [policy][certificate][rider]].

Premium Increase History

[Name of company] has sold long-term care insurance since [year] and has sold this [policy][certificate][rider] since [year]. [The company has never raised its premiums for any long-term care [policy][certificate][rider] it has sold in this state or any other state.] [The company has not increased its premiums for this [policy][certificate][rider] or similar [policies][certificates][riders] in this state or any other state in the last 10 years.] [The company has increased its premiums on this [policy][certificate][rider] or similar [policies][certificates][riders] in the last 10 years. Following is a summary of the increases.]

[Over the past 10 years, the company has increased premiums on this [policy][certificate][rider] or similar [policies][certificates][riders] by __%. A summary of the premium increases in the last 10 years is attached to this worksheet.]

Questions Related to Your Income

You do not have to answer the following questions. They are intended to make sure you have thought about how you'll pay premiums and the cost of care your insurance does not cover. If you do not want to answer these questions, you should understand that the company might refuse to insure you.

What resources will you use to pay your premium?

□ Current income from employment □ Current income from investments □ Other current income □ Savings □ Sell investments □ Sell other assets □ Money from my family

□ Other: ________________

Could you afford to keep this [policy][certificate][rider] if your spouse or partner dies first?

□ Yes □ No □ Had not thought about it □ Do not know □ Does not apply

[What would you do if the premiums went up, for example, by 50%?

□ Pay the higher premium □ Call the company/producer □ Reduce benefits □ Drop the [policy][certificate][rider] □ Do not know]

What is your household annual income from all sources? (check one) â˜ Under $10,000 â˜ $10,000-20,000

â˜ $20,000-30,000 â˜ $30,000-50,000 â˜ Over $50,000

Do you expect your income to change over the next 10 years? (check one)

â˜ No change â˜ Yes, expect increase â˜ Yes, expect decrease

If you plan to pay premiums from your income, have you thought about how a change in your income would affect your ability to continue to pay the premium?

□ Yes □ No □ Do not know

Will you buy inflation protection: (check one) â˜ Yes â˜ No

Inflation may increase the cost of long-term care in the future.

If you do not buy inflation protection, how will you pay for the difference between future costs and your daily benefit amount?

□ From my Income□ From my Savings □ From my investments □ Sell other assets □ Money from my family □ Other: _______________

The national average annual cost of care in [insert year] was [insert $ amount], but this figure varies across the country. In ten years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.

What [elimination period][waiting period][cash deductible] are you considering? [Number of days ________ in [elimination period][waiting period]

Approximate cost of care for this period: $_______.

($xxx per day times the number of days in [elimination period][waiting period], where "xxx" represents the most recent estimate of the national daily average cost of long-term care)]

[Cash deductible $_____]

How are you planning to pay for your care during the [elimination period][waiting period][deductible period]? (check all that apply)

□ From my Income □ From my savings/investments □ My family will pay

Questions Related to Your Savings and Investments

Not counting your home, about how much are all of your assets (your savings and investments) worth?

(check one)

â˜ Under $20,000 â˜ $20,000-$30,000 â˜ $30,000-$50,000 â˜ Over $50,000

How do you expect your assets to change over the next 10 years? (check one)

â˜ Stay about the same â˜ Increase â˜ Decrease

If you are buying this [policy][certificate][rider] to protect your assets and your assets are less than $50,000, experts suggest you think about other ways to pay for your long-term care.

Disclosure Statement

Signed: _____________________________ _____________________

(Applicant) (Date)

[ â˜ I explained to the applicant the importance of completing this information.]

Signed: _____________________________ ___________________

(Applicant) (Date)

Producer's Printed Name: ____________________________________________]

In order for us to process your application, please return this signed statement to [name of company], along with your application.]

[My producer has advised me that this [policy][certificate][rider] does not seem to be suitable for me. However, I still want the company to consider my application.]

Signed: ___________________________ _____________________________

(Applicant) (Date)

Someone from the company may contact you to discuss your answers and the suitability of this [policy][certificate][rider] for you.

LTC FORM C

Things You Should Know Before You Buy

Long-Term Care Insurance

(d) LTC Form D Long-Term Care Insurance Suitability Letter

LTC FORM D

Long-Term Care Insurance Suitability Letter

Dear [Applicant]:

Your recent application for long-term care insurance included a "personal worksheet," which asked questions about your finances and your reasons for buying long-term care insurance. For your protection, state law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage.

[Your answers indicate that long-term care insurance may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet "Shopper's Guide to Long-Term Care Insurance" and the page titled "Things You Should Know Before Buying Long-Term Care Insurance." Your state insurance department also has information about long-term care insurance and may be able to refer you to a counselor, free of charge, who can help you decide whether to buy this policy.]

[You chose not to provide any financial information for us to review.]

We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.

If we do not hear from you within the next 60 days, we will close your file and not issue you a policy. You should understand that you will not have any coverage until we hear back from you, approve your application and issue you a policy.

Please check one box and return in the enclosed envelope.

â˜ Yes , [although my worksheet indicates that long-term care insurance may not be a suitable purchase.] I wish to purchase this coverage. Please resume review of my application.

â˜ No , I have decided not to buy a policy at this time.

APPLICANT'S SIGNATURE DATE_____________

Please return to [issuer] at [address] by [date]

(e) LTC Form E Claims Denial Reporting Form

LTC FORM E

Claims Denial Reporting Form

Long-Term Care Insurance

For the State of Montana

For the Reporting Year of __________

Company Name : ___________________________ Due: June 30 annually

Company Address: _________________________

Company NAIC: ___________________________ Number:

Contact Person: _________________________ Phone Number: ___________

Line of Business: Individual Group

Instructions:

The purpose of this form is to report all long-term care claim denials under in-force long-term care insurance policies. Indicate the manner of reporting by checking one of the boxes below:

□ Per Claimant – counts each individual who makes one or a series of claim requests.

□ Per Transaction – counts each claim payment request.

"Denied" means a claim that is not paid for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition.

Inforce Data

Claim & Denial Data

The nationwide data may be viewed as a more representative and credible indicator where the data for claims reported and denied for your state are small in number.
Example—home health care claim filed under a nursing home only policy.
Example—a facility that does not meet the minimum level of care requirements or the licensing requirements as outlined in the policy.
Examples—a benefit trigger not met, certification by a licensed health care practitioner not provided, no plan of care.

(f) LTC Form F Potential Premium Increase Reporting Form

LTC Form F

Instructions:

Insurers shall provide all of the following information to the applicant regarding premium, premium adjustments, potential premium increases, and policyholder options in the event of a premium increase except as noted below. This form does not need to be provided in the event the policy does not reserve the right to increase rates.

As used in this form:

"Policy" shall mean policy, certificate, or rider, as applicable.

"Premium" shall include premium schedules, as applicable.

Companies may substitute whichever term is appropriate to reflect the long-term care insurance for which the applicant is applying.

Long-Term Care Insurance

Potential Premium Increase Disclosure Form

This policy is guaranteed renewable. Companies can increase the premiums for guaranteed renewable policies in the future. The company cannot increase your premiums because you are older or your health declines. It can increase premiums based on the experience of all individuals with a policy like yours.

What Is Your Premium?

The producer has quoted you a premium of $[__] for this policy. This is not a final premium. The premium might change during the underwriting process or if you choose different benefits. The premium you will be required to pay for your policy will be [shown on the schedule page of][attached to] your policy.

How Will I Know If My Premium Is Changing?

The company will send you a notice. The notice will include the new premium and when you will start paying it. It also will give you ways you could avoid paying a higher premium. One likely choice will be to keep your insurance policy, but with fewer or lower benefits than you bought. Another choice may be to stop paying premiums and have a "paid-up" policy with fewer or lower benefits than the policy you bought. You may have other choices.

Contingent Nonforfeiture

If the premium rate for your policy goes up in the future and you didn't buy a nonforfeiture option, you may be eligible for contingent nonforfeiture. Here's how to tell if you are eligible:

You will keep some long-term care insurance coverage, if:

â—

Your premium after the increase exceeds your original premium by the percentage shown (or more) in the following table; and

â— You lapse (do not pay more premiums) within 120 days of the increase.

The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal the total amount of premiums you've paid since your policy was first issued. If you have already received benefits under the policy, so that the remaining maximum benefit amount is less than the total amount of premiums you've paid, the amount of coverage will be that remaining amount.

Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain at the levels attained at the time of the lapse and will not increase thereafter.

Should you choose this Contingent Nonforfeiture option, your policy, with this reduced maximum benefit amount, will be considered "paid-up" with no further premiums due.

Example:

â—

You bought the policy at age 65 and paid the $1,000 annual premium for 10 years, so you have paid a total of $10,000 in premium.

â—

In the eleventh year, you receive a rate increase of 50%, or $500 for a new annual premium of $1,500, and you decide to lapse the policy (not pay any more premiums.)

â—

Your "paid-up" policy benefits are $10,000 (provided you have at least $10,000 of benefits remaining under your policy.)

Contingent Nonforfeiture

Cumulative Premium Increase over Initial Premium

That Qualifies for Contingent Nonforfeiture

(Percentage increase is cumulative from date of original issue. It does NOT represent a one-time increase.)

[The following contingent nonforfeiture disclosure need only be included for those limited pay policies to which ARM 6.6.3119(4)(c) and (e) of the regulation are applicable].

In addition to the contingent nonforfeiture benefits described above, the following reduced "paid-up" contingent nonforfeiture benefit is an option in all policies that have a fixed or limited premium payment period, even if you selected a nonforfeiture benefit when you bought your policy. If both the reduced "paid-up" benefit AND the contingent benefit described above are triggered by the same rate increase, you can choose either of the two benefits.

You are eligible for the reduced "paid-up" contingent nonforfeiture benefit when all three conditions shown below are met:

The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below:

Triggers for a Substantial Premium Increase

You stop paying your premiums within 120 days of when the premium increase took effect; and
The ratio of the number of months you already paid premiums is 40% or more than the number of months you originally agreed to pay.

If you exercise this option your coverage will be converted to reduced "paid-up" status. That means there will be no additional premiums required. Your benefits will change in the following ways:

a. The total lifetime amount of benefits your reduced paid up policy will provide can be determined by multiplying 90% of the lifetime benefit amount at the time the policy becomes paid up by the ratio of the number of months you already paid premiums to the number of months you agreed to pay them.

b. The daily benefit amounts you purchased will also be adjusted by the same ratio.

If you purchased lifetime benefits, only the daily benefit amounts you purchased will be adjusted by the applicable ratio.

Example:

▪ You bought the policy at age 65 with an annual premium payable for 10 years.

▪ In the sixth year, you receive a rate increase of 35% and you decide to stop paying premiums.

▪ Because you already paid 50% of your total premium payments and that is more than the 40% ratio, your "paid-up" policy benefits are .45 (.90 times .50) times the total benefit amount that was in effect when you stopped paying your premiums. If you purchased inflation protection, it will not continue to apply to the benefits in the reduced "paid-up" policy.

(g) LTC Form G Replacement and Lapse Reporting Form

LTC Form G

Long-Term Care Insurance

Replacement and Lapse Reporting Form

For the State of Montana For the Reporting Year of __________

Company Name: ______________ Due: June 30 annually

Company Address: ___________________ Company NAIC # _______

Company NAIC Number: ____________________

Contact Person: ____________________________

Phone Number: ()_____________________

Instructions

The purpose of this form is to report, on a statewide basis, information regarding long-term care insurance policy replacements and lapses. Specifically, every insurer shall maintain records for each agent on that agent's amount of long-term care insurance replacement sales as a percent of the agent's total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent's total annual sales. The tables below should be used to report the 10% of the insurer's agents with the greatest percentages of replacements and lapses.

Listing of the 10% of Agents with the Greatest Percentage of Replacements

Listing of the 10% of Agents with the Great Percentage of Lapses

Company Totals:

Percentage of Replacement Policies Sold to Total Sales _____%

Percentage of Replacement Policies Sold to Policies in Force (as of the end of the preceding

calendar year) ____%

Percentage of Lapsed Policies to Total Annual Sales _____%

Percentage of Lapsed Policies to Policies in Force (as of the end of the preceding

calendar year) _____%

(h) LTC Form H Guidelines for Long-Term Care Independent Review Entities

LTC FORM H

Guidelines for Long-Term Care Independent Review Entities

In order for an organization to qualify as an independent review organization for long-term care insurance benefit trigger decisions, it shall comply with all of the following:

a. The independent review organization shall ensure that all health care professionals on its staff and with whom it contracts to provide benefit trigger determination reviews hold a current unrestricted license or certification to practice a health care profession in the United States.

b. The independent review organization shall ensure that any health care professional on its staff and with whom it contracts to provide benefit trigger determination reviews who is a physician holds a current certification by a recognized American medical specialty board in a specialty appropriate for determining an insured's functional or cognitive impairment.

c. The independent review organization shall ensure that any health care professional on its staff and with whom it contracts to provide benefit trigger determination reviews who is not a physician holds the current certification in the specialty in which that person is licensed, by a recognized American specialty board in a specialty appropriate for determining an insured's functional or cognitive impairment.

d. The independent review organization shall ensure that all health care professionals on its staff and with whom it contracts to provide benefit trigger determination reviews have no history of disciplinary actions or sanctions including, but not limited to, the loss of staff privileges or any participation restriction taken or pending by any hospital or state or federal government regulatory agency.

e. The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals it utilizes for benefit trigger determination reviews receives compensation of any type that is dependent on the outcome of the review.

f. The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed healthcare professionals it utilizes for benefit trigger determination reviews are in any manner related to, employed by, or affiliated with the insurer, insured, or with a person who previously provided medical care or long-term care services to the insured.

g. The independent review organization shall provide a description of the qualifications of the reviewers retained to conduct independent review of long-term care insurance benefit trigger decisions, including the reviewer's current and past employment history, practice affiliations, and a description of past experience with decisions relating to long-term care, functional capacity, dependency in activities of daily living, or in assessing cognitive impairment. Specifically, with regard to reviews of tax qualified long-term care insurance contracts, it must demonstrate the ability to assess the severity of cognitive impairment requiring substantial supervision to protect the individual from harm, or with assessing deficits in the ability to perform without substantial assistance from another person at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity.

h. The independent review organization shall provide a description of the procedures employed to ensure that reviewers conducting independent reviews are appropriately licensed, registered, or certified; trained in the principles, procedures, and standards of the independent review organization; and knowledgeable about the functional or cognitive impairments associated with the diagnosis and disease staging processes, including expected duration of such impairment, which is the subject of the independent review.

i. The independent review organization shall provide the number of reviewers retained by the independent review organization and a description of the areas of expertise available from such reviewers and the types of cases such reviewers are qualified to review (e.g., assessment of cognitive impairment or inability to perform activities of daily living due to a loss of functional capacity).

j. The independent review organization shall provide a description of the policies and procedures employed to protect confidentiality of protected health information, in accordance with federal and state law.

k. The independent review organization shall provide a description of its quality assurance program.

l. The independent review organization shall provide the names of all corporations and organizations owned or controlled by the independent review organization or which own or control the organization, and the nature and extent of any ownership or control. The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals utilized are not a subsidiary of, or owned or controlled by, an insurer or by a trade association of insurers of which the insured is a member.

m. The independent review organization shall provide the names and resumes of all directors, officers, and executives of the independent review organization.

Company Name: | ________________________________________________ Address: | ________________________________________________ Phone Number: | ________________________________________________

â˜ The answers to the questions above describe my financial situation. Or â˜ I choose not to complete this information. (Check one.) â˜ I acknowledge that the carrier and/or its producer (below) has reviewed this form with me including the premium, premium rate increase history and potential for premium increases in the future. [For direct mail situations, use the following: I acknowledge that I have reviewed this form including the premium, premium rate increase history and potential for premium increases in the future.] I understand the information contained in this worksheet. (This box must be checked.)

Long-Term ▪ | | A long-term care insurance policy may pay most of the costs for your care in a nursing home. Many policies also pay for care at home or other community settings. Since policies can vary in coverage, you should read this policy and make sure you understand what it covers before you buy it. ________▪ | | [You should not buy this insurance policy unless you can afford to pay the premiums every year.] [Remember that the company can increase premiums in the future.]

________▪ | | The personal worksheet includes questions designed to help you and the company determine whether this policy is suitable for your needs. Medicare ▪ | | Medicare does not pay for most long-term care. Medicaid ▪ | | Medicaid will generally pay for long-term care if you have very little income and few assets. You probably should not buy this policy if you are now eligible for Medicaid. ________▪ | | Many people become eligible for Medicaid after they have used up their own financial resources by paying for long-term care services. ________▪ | | When Medicaid pays your spouse's nursing home bills, you are allowed to keep your house and furniture, a living allowance, and some of your joint assets. ________▪ | | Your choice of long-term care services may be limited if you are receiving Medicaid. To learn more about Medicaid, contact your local or state Medicaid agency. Shopper's ▪ Guide | | Make sure the insurance company or agent gives you a copy of a book called the National Association of Insurance Commissioners' "Shopper's Guide to Long-Term Care Insurance." Read it carefully. If you have decided to apply for long-term care insurance, you have the right to return the policy within 30 days and get back any premium you have paid if you are dissatisfied for any reason or choose not to purchase the policy.

Counseling ▪ | | Free counseling and additional information about long-term care insurance are available through your state's insurance counseling program. Contact your state insurance department or department on aging for more information about the senior health insurance counseling program in your state. Facilities ▪ | | Some long-term care insurance contracts provide for benefit payments in certain facilities only if they are licensed or certified, such as in assisted living centers. However, not all states regulate these facilities in the same way. Also, many people move into a different state from where they purchased their long-term care insurance policy. Read the policy carefully to determine what types of facilities qualify for benefit payments, and to determine that payment for a covered service will be made if you move to a state that has a different licensing scheme for facilities than the one in which you purchased the policy.

| State Data | Nationwide Data 1 Total Number of Inforce Policies [Certificates] as of December 31st | |

| | State Data | Nationwide Data 1 1 | Total Number of Long-Term Care Claims Reported | | 2 | Total Number of Long-Term Care Claims Denied/Not Paid | | 3 | Number of Claims Not Paid due to Preexisting Condition Exclusion | | 4 | Number of Claims Not Paid due to Waiting (Elimination) Period Not Met | | 5 | Net Number of Long-Term Care Claims Denied for Reporting Purposes (Line 2 Minus Line 3 Minus Line 4) | | 6 | Percentage of Long-Term Care Claims Denied of Those Reported (Line 5 Divided by Line 1) | | 7 | Number of Long-Term Care Claims Denied due to: | | 8 | ▪ Long-Term Care Services 2 | | 9 | ▪ Provider/Facility Not Qualified under the Policy 3 | | 10 | ▪ Benefit Eligibility Criteria Not Met 4 | | 11 | ▪ Other | |

Important Notice: Your long-term care insurance company may increase the premium for your policy every year. You have certain rights and it is important that you understand them before you buy a long-term care insurance policy. Please read this information and be sure you understand it before you buy a policy.

Issue Age | Percent Increase Over Initial Premium 29 and under | 200% 30-34 | 190% 35-39 | 170% 40-44 | 150% 45-49 | 130% 50-54 | 110% 55-59 | 90% 60 | 70% 61 | 66% 62 | 62% 63 | 58% 64 | 54% 65 | 50% 66 | 48% 67 | 46% 68 | 44% 69 | 42% 70 | 40% 71 | 38% 72 | 36% 73 | 34% 74 | 32% 75 | 30% 76 | 28% 77 | 26% 78 | 24% 79 | 22% 80 | 20% 81 | 19% 82 | 18% 83 | 17% 84 | 16% 85 | 15% 86 | 14% 87 | 13% 88 | 12% 89 | 11% 90 and over | 10%

Agent's Name | Number of Policies Sold by This Agent | Number of Policies Replaced by This Agent | Number of Replacements as % of Number Sold by this Agent

Agent's Name | Number of Policies Sold by This Agent | Number of Policies Lapsed by This Agent | Number of Lapses as % of Number Sold by This Agent

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 1995 MAR p. 2242, Eff. 1/1/96; TRANS & AMD, from ARM 6.6.5604, 1998 MAR p. 3271, Eff. 12/18/98; AMD, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/1/20.

Mont. Admin. R. 6.6.3121 Required Disclosure of Rating Practices to Consumers

(1) This rule shall apply as follows:

(a) except as provided in (2), this provision applies to any long-term care policy issued in Montana on or after January 1, 2009; and

(b) for certificates issued on or after the effective date of this amended rule under a group long-term care insurance policy as defined in 33-22-1107(5), MCA, which policy was in force at the time this amended rule became effective, the provisions of this rule shall apply on the policy anniversary following January 1, 2009.

(2) Other than policies for which no applicable premium rate or rate schedule increases can be made, issuers shall provide all of the information listed in this rule to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such case, an issuer shall provide all of the information listed in this rule to the applicant no later than at the time of delivery of the policy:

(a) a statement that the policy may be subject to rate increases in the future;

(b) an explanation of potential future premium rate revisions, and the policyholder's or certificateholder's option in the event of a premium rate revision;

(c) the premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase; and

(d) a general explanation for applying premium rate or rate schedule adjustments that shall include:

(i) a description of when premium rate or rate schedule adjustments will be effective, e.g., next anniversary date, next billing date, etc.; and

(ii) the right to a revised premium rate or rate schedule as provided in (2)(c) if the premium rate or rate schedule is changed.

(e) information regarding each premium rate increase on this policy form or similar policy forms over the past ten years for this state or any other state that, at a minimum, identifies:

(i) the policy forms for which the premium rates have been increased;

(ii) the calendar years when the form was available for purchase; and

(iii) the amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.

(f) the issuer may, in a fair manner, provide additional explanatory information related to the rate increases;

(g) an issuer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated issuers or the long-term care policies acquired from other nonaffiliated issuers when those increases occurred prior to the acquisition;

(h) if an acquiring issuer files for a rate increase on a long-term care policy form acquired from nonaffiliated issuers or a block of policy forms acquired from nonaffiliated issuers on or before the later of the effective date of this rule or the end of a 24 month period following the acquisition of the block or policies, the acquiring issuer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with (2)(e); and

(i) if the acquiring issuer in (2)(h) files for a subsequent rate increase, even within the 24 month period, on the same policy form acquired from nonaffiliated issuers or block of policy forms acquired from nonaffiliated insurers referenced in (2)(h), the acquiring issuer shall make all disclosures required by (2)(e), including disclosure of the earlier rate increase referenced in (2)(h).

(3) An applicant shall sign an acknowledgment at the time of application, unless the method of application does not allow for signature at that time, that the issuer made the disclosure required under (2)(a) and (e). If due to the method of application the applicant cannot sign an acknowledgment at the time of application, the applicant shall sign no later than at the time of delivery of the policy.

(4) An issuer shall use the forms in ARM 6.6.3120(1)(b) and (f) to comply with the requirements of (2) and (3).

(5) An issuer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least 45 days prior to the implementation of the premium rate schedule increase by the issuer. The notice shall include the information required by (2), when the rate increase is implemented.

(6) A premium increase notice required by (5) shall include:

(a) an offer to reduce policy benefits provided by the current coverage consistent with the requirements of ARM 6.6.3129;

(b) a disclosure stating that all options available to the policyholder may not be of equal value; and

(c) in the case of a partnership policy, a disclosure that some benefit reduction options may result in a loss in partnership status that may reduce policyholder protections.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 2008 MAR p. 615, Eff. 1/1/09; AMD, 2019 MAR p. 126, Eff. 1/1/20.

Mont. Admin. R. 6.6.3122 Initial Filing Requirements

(1) This rule applies to any long-term care policy issued in this state on or after January 1, 2009.

(2) An insurer shall provide the information listed in this rule to the commissioner 30 days prior to making a long-term care insurance form available for sale:

(a) a copy of the disclosure documents required in ARM 6.6.3121; and

(b) an actuarial certification consisting of at least the following:

(i) a statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;

(ii) a statement that the policy design and coverage provided have been reviewed and taken into consideration;

(iii) a statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

(iv) a complete description of the basis for contract reserves that are anticipated to be held under the form, to include:

(A) sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;

(B) a statement that the assumptions used for reserves contain reasonable margins for adverse experience;

(C) a statement that the net valuation premium for renewal years does not increase, except for attained-age rating where permitted; and

(D) a statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur:

(I) an aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;

(II) if the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under (3), based on a standard age distribution.

(v) a statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; and

(vi) a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.

(3) The commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration shall include:

(a) either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both; and

(b) in the event the commissioner asks for additional information under this provision, the period in (2), does not include the period during which the insurer is preparing the requested information.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3123 Recouping Past Losses

(1) In reviewing loss ratio and premium rate schedule increases, the commissioner will ensure that any issuer does not recoup past losses.

(2) For premium rate increases, to ensure that issuers do not recoup past losses, premium deficiencies prior to a requested rate increase should not be included in the premium rate increase calculation. This is determined by comparing the originally filed lifetime loss ratio with the corrected lifetime loss ratio.

(a) The corrected lifetime loss ratio is found by recalculating the original premiums given the actual historical experience of that block of business combined with the company's revised projected assumptions.

(b) The originally filed lifetime loss ratio is found by:

(i) for blocks of business issued in Montana prior to January 1, 2009, following ARM 6.6.3112; or

(ii) for blocks of business issued in Montana on or after January 1, 2009, following ARM 6.6.3124.

(3) In order to review for past losses, insurers shall provide the following information in an actuarial memorandum accompanying any premium rate increase request:

(a) lifetime projections of earned premiums and incurred claims with the original pricing assumptions, including the originally filed discount rates;

(b) lifetime projections of earned premiums and incurred claims with actual experience;

(c) lifetime projections of earned premiums and incurred claims as required by (b), but with future premiums restated to reflect previously approved premium increases in Montana;

(d) lifetime projections of earned premiums and incurred claims as required by (c), but including persistency assumptions in the projected experience;

(e) lifetime projections of earned premiums and incurred claims as required by (d), but with revised claim assumptions (the lifetime loss ratio should reflect the expected lifetime loss ratio using best estimate assumptions besides the original discount rates);

(f) lifetime projections of earned premiums and incurred claims as required by (e), but including results both with and without the requested premium rate increase; and

(g) lifetime projections of earned premiums and incurred claims as required by (f), but including results with all past premium rate increases in Montana assumed to be implemented at policy issue.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-18-206, 33-18-1003, 33-22-1102, 33-22-1121, MCA
History: NEW, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3124 Premium Rate Schedule Increases

(1) Except as provided in (2), this rule applies to any long-term care policy issued in this state on or after January 1, 2009.

(2) For policies issued on or after the effective date of this amended rule under a group long-term care insurance policy as defined in 33-22-1107(5), MCA, which policy was in force at the time this amended rule became effective, the provisions of this rule shall apply on the policy anniversary following January 1, 2009.

(3) An issuer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the commissioner at least 30 days prior to the notice to policyholders and shall include:

(a) information required by ARM 6.6.3121;

(b) certification by a qualified actuary that:

(i) if the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated; and

(ii) the premium rate filing is in compliance with the provisions of this rule.

(i) lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;

(A) annual values for the five years preceding and the three years following the valuation date shall be provided separately;

(B) the projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

(D) for exceptional increases the projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase;

(I) in the event the commissioner determines, as provided in ARM 6.6.3102(4)(d) that offsets may exist, the issuer shall use appropriate net projected experience;

(ii) disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

(iii) disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;

(iv) a statement that policy design, underwriting, and claims adjudication practices have been taken into consideration;

(v) in the event that it is necessary to maintain consistent premium rates for new business premium rate schedules, except for differences attributable to benefits, unless sufficient justification is provided to the commissioner; and

(vi) sufficient information for review of the premium rate schedule increase by the commissioner.

(4) All premium rate schedule increases shall be determined in accordance with the following requirements:

(a) exceptional increases shall provide that 70% of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

(b) premium rate schedule increases shall be calculated so that the sum of the accumulated value of incurred claims without the inclusion of active life reserves, and the present value of future projected incurred claims without the inclusion of active life reserves will not be less than the sum of the following:

(i) the accumulated value of the initial earned premium times 58%;

(ii) 85% of the accumulated value of prior premium rate schedule increases on an earned basis;

(iii) the present value of future projected initial earned premiums times 58%; and

(iv) 85% of the present value of future projected premiums not in (4)(b)(iii) on an earned basis.

(c) in the event that a policy form has both exceptional and other increases, the values in (4)(b)(ii) and (4)(b)(iv), will also include 70% for exceptional rate increase amounts; and

(d) all present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in 33-2-514, MCA. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

(5) For each rate increase that is implemented, the issuer shall file for review by the commissioner updated projections, as defined in (3)(c)(i), annually for the next three years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than three years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in (12), the projections required by this rule shall be provided to the policyholder in lieu of filing with the commissioner.

(6) If any premium rate in the revised premium rate schedule is greater than 200% of the comparable rate in the initial premium schedule, lifetime projections, as defined in (3)(c)(i), shall be filed for review by the commissioner every five years following the end of the required period in (5). For group insurance policies that meet the conditions in (12), the projections required by (6) shall be provided to the policyholder in lieu of filing with the commissioner.

(7) If the commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in (4), the commissioner may require the insurer to implement any of the following:

(a) premium rate schedule adjustments; or

(b) other measures to reduce the difference between the projected and actual experience.

(i) In determining whether the actual experience adequately matches the projected experience, consideration should be given to (3)(c)(v), if applicable.

(8) If the majority of the policies to which the increase is applicable are eligible for the contingent benefit upon lapse, the issuer shall file:

(a) a plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the commissioner may impose the condition in (9); and

(b) the original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to (4), had the greater of the original anticipated lifetime loss ratio or 58% been used in the calculations described in (4)(b)(i) and (iii).

(9) For a rate increase filing that meets the criteria in (9)(b)(i), (ii), and (iii), the commissioner shall review, for all policies included in the filing:

(a) the projected lapse rates and past lapse rates during the twelve months following each increase to determine if significant adverse lapsation has occurred or is anticipated.

(b) the following criteria triggers a lapsation review:

(i) the rate increase is not the first rate increase requested for the specific policy form or forms;

(ii) the rate increase is not an exceptional increase; and

(iii) the majority of the policies to which an increase is applicable are eligible for the contingent benefit upon lapse.

(c) in the event significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the issuer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner may require the issuer to offer, without underwriting to all in force insureds subject to the rate increase, the option to replace existing coverage with one or more reasonably comparable products being offered by the issuer or its affiliates.

(i) The offer shall:

(A) be subject to the approval of the commissioner;

(B) be based on actuarially sound principles, but not be based on attained age; and

(C) provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

(d) the issuer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

(i) the maximum rate increase determined based on the combined experience; and

(ii) the maximum rate increase determined based only on the experience of the insureds originally issued the form plus 10%.

(10) If the commissioner determines that the issuer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the commissioner may, in addition to the provisions of (9), prohibit the issuer from either of the following:

(a) filing or marketing comparable coverage for a period of up to five years; or

(b) offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

(11) Sections (1) through (10) shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in ARM 6.6.3102(6), if the policy complies with all of the following provisions:

(b) the portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:

(i) 30-20-201 et seq., MCA; and

(ii) 30-20-501 et seq., MCA.

(d) the portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:

(i) policy illustrations as required by ARM 6.6.701 et seq.; and

(ii) disclosure requirements in ARM 6.6.805.

(e) an actuarial memorandum is filed with the insurance department that includes:

(i) a description of the basis on which the long-term care rates were determined;

(ii) a description of the basis for the reserves;

(iii) a summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

(iv) a description and a table of each actuarial assumption used. For expenses, an issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(v) a description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(vi) the estimated average annual premium per policy and the average issue age;

(vii) a statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(viii) a description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.

(12) ARM 6.6.3124(7) and (9) do not apply to group insurance policies defined in 33-22-1107(5), MCA, where:

(a) the policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or

(b) the policyholder, and not the certificateholder, pays a material portion of the premium that shall not be less than 20% of the total premium for the group in the calendar year prior to the year a rate increase is filed.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3125 Premium Rate Increase -- Asset Yield Rates

(1) An issuer may not use asset investment yield rate changes to justify any premium rate schedule increase for a long-term care insurance policy. This does not prohibit the commissioner from considering an issuer's potential insolvency when making rate determinations pursuant to ARM 6.6.3124.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1121, MCA
History: NEW, 2015 MAR p. 1046, Eff. 7/31/15.

Mont. Admin. R. 6.6.3126 Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies

(1) If a long-term care insurance policy replaces another long-term care policy, the replacing issuer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3128 Availability of New Services or Providers

(1) An issuer shall notify policyholders of the availability of a new long-term policy series that provides coverage for new long-term care services or providers, material in nature, and not previously available through the issuer to the general public. The notice shall be provided within twelve months of the date the new policy series is made available for sale in Montana.

(2) Notwithstanding (1), notification is not required for any policy issued prior to the effective date of this rule or to any policy issued prior to the effective date of this rule or to any policyholder or certificateholder who is currently eligible for benefits within an elimination period or on a claim, or who previously had been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

(3) The issuer shall make the new coverage available in one of the following ways:

(a) by adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;

(b) by exchanging the existing policy for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy. The premium credits shall be based on premiums paid or reserves held for the prior policy;

(c) by exchanging the existing policy for a new policy in which consideration for past insured status shall be recognized by setting the premium for the new policy at the issue age of the policy being exchanged. The cost for the new policy may recognize the difference in reserves between the new policy and the original policy; or

(d) by an alternative program developed by the issuer that meets the intent of this rule if the program is filed with and approved by the commissioner.

(4) An issuer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this section, "limited distribution channel" means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a new proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers, material in nature, is made available to that limited distribution channel.

(5) Policies issued pursuant to this rule shall be considered exchanges and not replacements. These exchanges shall not be subject to ARM 6.6.3109 and 6.6.3118, and the reporting requirements of ARM 6.6.3109A(1) through (5).

(6) Where the policy is offered through an employer, labor organization, professional, trade, or occupational association, the required notification in (1) shall be made to the offering entity. However, if the policy is issued to a group defined in 33-22-1107, MCA, the notification shall be made to each certificateholder.

(7) Nothing in this rule prohibits an issuer from offering any policy, rider, or coverage change to any policyholder or certificateholder. However, upon request, any policyholder may apply for currently available coverage that includes the new services or providers. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

(8) This rule does not apply to life insurance policies or riders containing accelerated long-term care benefits.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 2008 MAR p. 615, Eff. 10/1/08.

Mont. Admin. R. 6.6.3129 Right to Reduce Coverage and Lower Premiums

(1) Every long-term care insurance policy shall include a provision that allows the policyholder or certificateholder to reduce coverage and lower the policy premium in at least one of the following ways:

(a) reducing the maximum benefit; or

(b) reducing the daily, weekly, or monthly benefit amount.

(2) In addition to (1), the issuer may also offer other reduction options that are consistent with the policy design or the carrier's administrative processes.

(3) In the event the reduction in coverage involves the reduction or elimination of the inflation protection provision, the issuer shall allow the policyholder to continue the benefit amount in effect at the time of the reduction.

(4) The provision required by (1) shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.

(5) The age to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force and shall be consistent with the approved rate table.

(6) The issuer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable.

(7) If a policy is about to lapse, the issuer shall provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by ARM 6.6.3104A(1)(c).

(8) This rule does not apply to life insurance policies or riders containing accelerated long-term care benefits.

(9) This rule applies to any long-term care policy issued in Montana on or after January 1, 2009.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA
History: NEW, 2008 MAR p. 615, Eff. 10/1/08; AMD, 2019 MAR p. 126, Eff. 1/26/19.

Mont. Admin. R. 6.6.3130 Appealing an Insurer's Determination That the Benefit Trigger Is Not Met

(1) For purposes of this rule, "authorized representative" means a person authorized to act as the covered person's personal representative within the meaning of 45 CFR 164.502(g) promulgated by the Secretary under the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act and means the following:

(a) a person to whom a covered person has given express written consent to represent the covered person in an external review;

(b) a person authorized by law to provide substituted consent for a covered person; or

(c) a family member of the covered person or the covered person's treating health care professional only when the covered person is unable to provide consent.

(2) If an insurer determines that the benefit trigger of a long-term care insurance policy has not been met, it shall provide a clear, written notice to the insured and the insured's authorized representative, if applicable, of all of the following:

(a) the reason that the insurer determined that the insured's benefit trigger has not been met;

(b) the insured's right to internal appeal in accordance with (3), and the right to submit new or additional information relating to the benefit trigger denial with the appeal request; and

(c) the insured's right, after exhaustion of the insurer's internal appeal process, to have the benefit trigger determination reviewed under the independent review process in accordance with (4).

(3) The insured or the insured's authorized representative may appeal the insurer's adverse benefit trigger determination by sending a written request to the insurer, along with any additional supporting information, within 120 calendar days after the insured and the insured's authorized representative, if applicable, receives the insurer's benefit determination notice. The internal appeal shall be considered by an individual or group of individuals designated by the insurer, provided that the individual or individuals making the internal appeal decision may not be the same individual or individuals who made the initial benefit determination. The internal appeal shall be completed and written notice of the internal appeal decision shall be sent to the insured and the insured's authorized representative, if applicable, within 30 calendar days of the insurer's receipt of all necessary information upon which a final determination can be made.

(a) If the insurer's original determination is upheld upon internal appeal, the notice of the internal appeal decision shall describe any additional internal appeal rights offered by the insurer. Nothing in this rule shall require the insurer to offer any internal appeal rights other than those described in this rule.

(b) If the insurer's original determination is upheld after the internal appeal process has been exhausted, and new or additional information has not been provided to the insurer, the insurer shall provide a written description of the insured's right to request an independent review of the benefit determination as described in (4) to the insured and the insured's authorized representative, if applicable.

(c) As part of the written description of the insured's right to request an independent review, an insurer shall include the following, or substantially equivalent, language: "We have determined that the benefit eligibility criteria ("benefit trigger") of your [policy][certificate] has not been met. You may have the right to an independent review of our decision conducted by long-term care professionals who are not associated with us. Please send a written request for independent review to us at [address]. You must inform us, in writing, of your election to have this decision reviewed within 120 days of receipt of this letter. Listed below are the names and contact information of the independent review organizations approved or certified by your state insurance commissioner's office to conduct long-term care insurance benefit eligibility reviews. If you wish to request an independent review, please choose one of the listed organizations and include its name with your request for independent review. If you elect independent review, but do not choose an independent review organization with your request, we will choose one of the independent review organizations for you and refer the request for independent review to it."

(d) If the insurer does not believe the benefit trigger decision is eligible for independent review, the insurer shall inform the insured and the insured's authorized representative, if applicable, in writing and include in the notice that reasons for its determination of independent review ineligibility.

(e) The appeal process described in this section is not deemed to be a "new service or provider" as referenced in ARM 6.6.3128 and therefore does not trigger the notice requirements of that rule.

(4) The insured or the insured's authorized representative may request an independent review of the insurer's benefit trigger determination after the internal appeal process outlined in (3) has been exhausted. A written request for independent review may be made by the insured or the insured's authorized representative to the insurer within 120 calendar days after the insurer's written notice of the final internal appeal decision is received by the insured or the insured's authorized representative, if applicable.

(a) The cost of the independent review shall be borne by the insurer.

(b) Within five business days of receiving a written request for independent review, the insurer shall refer the request to the independent review organization that the insured or the insured's authorized representative has chosen from the list of certified or approved organizations the insurer has provided to the insured. If the insured or the insured's authorized representative does not choose an approved independent review organization to perform the review, the insurer shall choose an independent review organization approved or certified by the commissioner. The insurer shall vary the selection of authorized independent review organizations on a rotating basis.

(c) The insurer shall refer the request for independent review of a benefit trigger determination to an independent review organization, subject to the following:

(i) the independent review organization shall be on a list of certified or approved independent review organizations that satisfy the requirements of a qualified long-term care insurance independent review organization contained in this rule;

(ii) the independent review organization shall not have any conflicts of interest with the insured, the insured's authorized representative, if applicable, or the insurer; and

(iii) such review shall be limited to the information or documentation provided to and considered by the insurer in making its determination, including any information or documentation considered as part of the internal appeal process.

(d) The insured or the insured's authorized representative may submit at any time new or additional information not previously provided to the insurer but pertinent to the benefit trigger denial. If the insured or the insured's authorized representative has new or additional information not previously provided to the insurer, whether submitted to the insurer or the independent review organization, such information shall first be considered in the internal review process, as set forth in (3).

(i) If new information is received by the independent review organization from the insured or the insured's authorized representative, the independent review organization shall provide copies of any documentation or information provided to the insurer for its review.

(ii) While this information is being reviewed by the insurer, the independent review organization shall suspend its review and the time period for review is suspended until the insurer completes its review.

(iii) The insurer shall complete its review of the information and provide written notice of the analysis and results of the review to the insured, the insured's authorized representative, if applicable, and the independent review organization within five business days of the insurer's receipt of such new or additional information.

(iv) If the insurer maintains its denial after such review, the independent review organization shall continue its review, and render its decision within the time period specified in (4)(g). If the insurer overturns its decision following its review, the independent review request shall be considered withdrawn.

(e) The insurer shall acknowledge in writing to the insured and the insured's authorized representative, if applicable, that the request for independent review has been received, accepted, and forwarded to an independent review organization for review. Such notice will include the name and address of the independent review organization.

(f) Within five business days of receipt of the request for independent review, the assigned independent review organization shall notify the insured, the insured's authorized representative, if applicable, and the insurer, that it has accepted the independent review request and identify the type of licensed health care professional assigned to the review. The assigned independent review organization shall include in the notice a statement that the insured or the insured's authorized representative may submit in writing to the independent review organization, within seven days following the date of receipt of the notice, additional information and supporting documentation that the independent review organization should consider when conducting its review.

(g) The independent review organization shall review all of the information received, and provide the insured, the insured's authorized representative, if applicable, and the insurer written notice of its decision within 30 calendar days from receipt of the referral referenced in (4)(c). If the independent review organization overturns the insurer's decision, it shall:

(i) establish the precise date within a specific period of time under review that the benefit trigger was deemed to have been met;

(ii) specify the specific period of time under review for which the insurer declined eligibility, but during which the independent review organization deemed the benefit trigger to have been met; and

(iii) for tax-qualified long-term care insurance contracts, provide a certification (made only by a licensed health care practitioner as defined in section 7702B(c)(4) of the Internal Revenue Code) that the insured is a chronically ill individual.

(h) The decision of the independent review organization with respect to whether the insured met the benefit trigger will be final and binding on the insurer.

(5) The independent review organization's determination shall be used solely to establish liability for benefit trigger decisions, and is intended to be admissible in any proceeding only to the extent it establishes the eligibility of benefits payable.

(6) Nothing in this rule shall restrict the insured's right to submit a new request for a benefit trigger determination after the independent review decision, should the independent review organization uphold the insurer's decision.

(7) Nothing contained in this rule limits the insurer's ability to assert any rights it may have under the policy related to:

(a) an insured's misrepresentation;

(b) changes in the insured's benefit eligibility; or

(8) The requirements of this rule apply to a benefit trigger request made on or after January 1, 2020, under a long-term care insurance policy.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-18-201, 33-22-1102, 33-22-1121, 33-22-1124, 33-22-1125, MCA
History: NEW, 2019 MAR p. 126, Eff. 1/1/20.

Mont. Admin. R. 6.6.3131 Long-Term Care Independent Review Organizations

(1) The commissioner shall certify or approve a qualified long-term care insurance independent review organization, provided the organization demonstrates to the satisfaction of the commissioner that it is unbiased and that:

(a) the organization will have on staff, or contract with, a qualified and licensed health care professional in an appropriate field for determining an insured's functional or cognitive impairment (e.g., physical therapy, occupational therapy, neurology, physical medicine and rehabilitation) to conduct the review;

(b) neither the organization, nor any of its licensed health care professionals, may be related to or affiliated with, in any manner, an entity that previously provided medical care to the insured;

(c) the organization will utilize a licensed health care professional who is not an employee of the insurer or related in any manner to the insured;

(d) neither the organization, nor its licensed health care professionals who conduct the reviews, may receive compensation of any type that is dependent on the outcome of the review;

(e) the organization will be approved or certified by the commissioner before conducting such reviews;

(f) the organization provides a description of the fees to be charged by it for independent reviews of a long-term care insurance benefit trigger decision;

(g) the organization's fees shall be reasonable and customary for the type of long-term care insurance benefit trigger decision under review;

(h) the organization provides the name of the medical director or health care professional responsible for the supervision and oversight of the independent review procedure; and

(i) the organization will have on staff or contract with a licensed health care practitioner, as defined by Section 7702B(c)(4) of the Internal Revenue Code, who is qualified to certify that an individual is chronically ill for purposes of a qualified long-term care insurance contract.

(2) Each certified independent review organization shall:

(a) maintain written documentation, in an easily accessible and retrievable format for the year in which it received information plus two calendar years, establishing the date it received a request for independent review, the date each review was conducted, the resolution, the date such resolution was communicated to the insurer and the insured, and the name and professional status of the reviewer who conducted the review;

(b) be able to document measures taken to appropriately safeguard the confidentiality of its records and prevent unauthorized use and disclosures in accordance with applicable federal and state law;

(c) report annually to the commissioner, by June 1 (or other annual date set by the commissioner), in the aggregate and for each long-term care insurer all of the following:

(i) the total number of requests received for independent review of long-term care benefit trigger decisions;

(ii) the total number of reviews conducted and the resolution of such reviews (i.e., the number of reviews which upheld or overturned the long-term care insurer's determination that the benefit trigger was not met);

(iii) the number of reviews withdrawn prior to review; and

(iv) the percentage of reviews conducted within the prescribed timeframe set forth in ARM 6.6.3130;

(d) report immediately to the commissioner any change in its status which would cause it to cease meeting any of the qualifications required of an independent review organization performing independent reviews of long-term care benefit trigger decisions.

(3) The insurance department shall utilize the criteria set forth in ARM 6.6.3120(1)(h), in certifying or approving entities to review long-term care insurance benefit trigger decisions.

(4) The commissioner shall maintain and periodically update a list of approved independent review organizations.

History

Authorizing statute(s): 33-1-313, 33-22-1121, MCA
Implementing statute(s): 33-18-201, 33-22-1102, 33-22-1121, 33-22-1124, 33-22-1125, MCA
History: NEW, 2019 MAR p. 126, Eff. 7/1/19.

Subchapter 6.6.33 Prohibiting Unfair Discrimination for Previously Uninsured Personal Automobile Insurance Applicants

Mont. Admin. R. 6.6.3301 Purpose and Application

(1) The purpose of these rules is to prevent unfair discrimination in personal automobile insurance based solely on an applicant's lack of prior insurance at the time of application for insurance with any insurer. These rules prohibit unfair discrimination in underwriting such applicants by insurers, both in determining eligibility for insurance and in the pricing of such insurance.

(2) These rules apply to all coverages, including applicable deductible options and policy limit's, in an automobile insurance policy issued to individuals or families. This includes any policy commonly known as an automobile policy, private passenger automobile policy, or any similar policy by whatever name, but does not include policies known as commercial automobile policies.

(3) These rules will support greater compliance with the Unfair Trade Practices Act, 33-15-101 , et seq., MCA.

History

Authorizing statute(s): Sec. 33-1-313 and 33-18-102, MCA
Implementing statute(s): Sec. 33-18-210, MCA
History: NEW, 1993 MAR p. 674, Eff. 4/30/93.

Mont. Admin. R. 6.6.3302 Definitions

(1) "Prior insurance" means an automobile insurance policy in force with any insurer, or an authorized self-insurance plan in effect, at the time of or at any time within the three-year period prior to application for coverage with any insurer.

(2) "Insurer" means an individual insurance company or a group of affiliated insurance companies.

History

Authorizing statute(s): Sec. 33-1-313 and 33-18-102, MCA
Implementing statute(s): 33-18-210, MCA
History: NEW, 1993 MAR p. 674, Eff. 4/30/93.

Mont. Admin. R. 6.6.3303 Discrimination in Determining Eligibility for Insurance Prohibited

(1) Except as provided in (1) (a) , (1) (b) , and (3) below, an insurer shall not reject an applicant for insurance solely on the basis that the applicant cannot or does not demonstrate the existence of prior insurance. This section does not prohibit an insurer from rejecting an applicant with no prior insurance under the following circumstances:

(a) The insurer can demonstrate through driving records or other objective means that the applicant has at any time in the immediately prior three years been operating a motor vehicle in violation of any state's compulsory auto insurance laws.

(b) If on the application for coverage the applicant represents that prior insurance existed, but fails to provide evidence to the insurer, or fails to assist the insurer in securing evidence that said prior insurance actually existed.

(2) If an insurer has filed with the Montana insurance department multiple pricing programs designed to reflect the risk quality of individual applicants (a "preferred" program for "better than average" risks, a "standard" program and a "sub-standard" program for "worse than average" risks, for example) , the insurer shall not deem an applicant to be a "sub-standard" risk (and thus ineligible for the "standard" program) in the absence of supportive evidence in the driving records of the applicant, or other underwriting criteria that are applied to all applicants for coverage.

(3) Nothing in these rules is intended to require that an applicant with no prior insurance be eligible for an insurer's "preferred" program for "better than average" risks. The insurer may require that such eligibility be "earned" by the policyholder through satisfactory driving records under an insurance policy.

History

Authorizing statute(s): Sec. 33-1-313 and 33-18-102, MCA
Implementing statute(s): Sec. 33-18-210, MCA
History: NEW, 1993 MAR p. 674, Eff. 4/30/93; AMD, 1993 MAR p. 2764, Eff 11/25/93.

Mont. Admin. R. 6.6.3304 Discrimination in Pricing Prohibited

(1) Except as provided in paragraphs (2) and (3) below, once program eligibility has been established, the existence or non-existence of prior insurance for a policyholder shall not be considered in determining the premium for a policy. The premium charged by an insurer for a policyholder with no prior insurance shall be the same as if the policyholder had prior insurance and was insured in the same program.

(2) An insurer may impose a surcharge in accordance with its filed pricing structure on an insured who has received a citation within the immediately prior three years for driving in violation of any state's mandatory insurance law.

(3) An insurer-may impose a surcharge, not to exceed the surcharge permitted in paragraph (2) above, on an insured who in the immediately prior three years has driven in violation of any state's mandatory insurance law but did not receive a citation for such. The surcharge must be in accordance with the insurer's filed pricing structure, and the insurer must maintain in the insured's file evidence sufficient to demonstrate that the insured operated a motor vehicle in violation of a state's mandatory auto insurance law.

History

Authorizing statute(s): Sec. 33-1-313 and 33-18-102, MCA
Implementing statute(s): Sec. 33-18-210, MCA
History: NEW, 1993 MAR p. 674, Eff. 4/30/93.

Subchapter 6.6.34 Companies Considered to Be in Hazardous Financial Condition

Mont. Admin. R. 6.6.3401 Standards for Evaluating Financial Condition of Regulated Companies

(1) The following standards, either singly or a combination of two or more, may be considered by the commissioner to determine whether the continued operation of any insurer transacting an insurance business in this state might be deemed to be hazardous to its policyholders, creditors, or the general public:

(a) adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports or summaries;

(b) the National Association of Insurance Commissioners (NAIC) Insurance Regulatory Information System and its other financial analysis solvency tools and reports;

(c) whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts;

(d) the ability of an assuming reinsurer to perform, and whether the insurer's reinsurance program provides sufficient protection for the company's remaining surplus after taking into account the insurer's cash flow and the classes of business written, as well as the financial condition of the assuming reinsurer;

(e) whether the insurer's operating loss in the last 12-month period or any shorter period of time, including but not limited to net capital gain or loss, change in nonadmitted assets, and cash dividends paid to shareholders, is greater than 50% of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

(f) whether the insurer's operating loss in the last 12-month period, or any shorter period of time, excluding net capital gains, is greater than 20% of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

(g) whether a reinsurer, obligor, or any entity within the insurer's insurance holding company system is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations, and which in the opinion of the commissioner may affect the solvency of the insurer;

(h) contingent liabilities, pledges, or guaranties which either individually or collectively involve a total amount which in the opinion of the commissioner may affect the solvency of the insurer;

(i) whether any "controlling person" of an insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer;

(j) the age and collectability of receivables;

(k) whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation deemed necessary to serve the insurer in such position;

(l) whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry;

(m) whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the commissioner;

(n) whether management of an insurer either has filed any false or misleading sworn financial statement, or has released false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of a material amount in the books of the insurer;

(o) whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;

(p) whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems;

(q) whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles, and standards of practice;

(r) whether management persistently engages in material under-reserving that results in adverse development;

(s) whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature; and

(t) any other finding determined by the commissioner to be hazardous to the insurer's policyholders, creditors, or general public.

History

Authorizing statute(s): 33-1-313, 33-2-1517, 33-28-206, MCA
Implementing statute(s): 33-1-401, 33-2-1321, 33-2-1517, 33-28-108, 33-28-109, 33-28-207, 33-30-102, 33-30-105, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2011 MAR p. 1128, Eff. 6/24/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.3402 Scope of Commissioner's Discretion

(1) For the purposes of making a determination of an insurer's financial condition under this subchapter, the commissioner may:

(a) disregard any credit or amount receivable resulting from transactions with a reinsurer which is insolvent, impaired, or otherwise subject to a delinquency proceeding;

(b) make appropriate adjustments, including disallowance, to asset values attributable to investments in, or transactions with, parents, subsidiaries, or affiliates consistent with the NAIC Accounting Practices and Procedures Manual, state laws and regulations;

(c) refuse to recognize the stated value of accounts receivable, if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; or

(d) increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included, if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next 12-month period.

History

Authorizing statute(s): 33-1-313, 33-2-1517, 33-28-206, MCA
Implementing statute(s): 33-1-401, 33-2-1321, 33-2-1517, 33-28-108, 33-28-109, 33-28-207, 33-30-102, 33-20-105, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2011 MAR p. 1128, Eff. 6/24/11.

Mont. Admin. R. 6.6.3403 Possible Administrative Sanctions Against Companies in Hazardous Condition

(1) If the commissioner determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to its policyholders, creditors, or the general public, then the commissioner may, upon such a determination, issue an order requiring the insurer to:

(a) reduce the total amount of present and potential liability for policy benefits by reinsurance;

(b) reduce, suspend, or limit the volume of business being accepted or renewed;

(d) increase the insurer's capital and surplus;

(e) suspend or limit the declaration and payment of dividend by an insurer to its stockholders or to its policyholders;

(f) file reports in a form acceptable to the commissioner concerning the market value of an insurer's assets;

(g) limit or withdraw from certain investments or discontinue certain investment practices to the extent the commissioner deems necessary;

(h) document the adequacy of premium rates in relation to the risks insured;

(i) file, in addition to regular annual statements, interim financial reports on the form adopted by the NAIC or in such format as promulgated by the commissioner;

(j) correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the commissioner;

(k) provide a business plan to the commissioner in order to continue to transact business in the state; and

(l) notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments, adjust rates for any non-life insurance product written by the insurer that the commissioner considers necessary to improve the financial condition of the insurer.

(2) If the insurer is a foreign insurer the commissioner's order may be limited to the extent provided by statute.

History

Authorizing statute(s): 33-1-313, 33-2-1321, 33-2-1517, 33-28-206, MCA
Implementing statute(s): 33-1-401, 33-2-1321, 33-2-1323, 33-2-1517, 33-28-108, 33-28-109, 33-28-207, 33-30-102, 33-30-105, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2011 MAR p. 1128, Eff. 6/24/11.

Mont. Admin. R. 6.6.3404 Administrative Remedies Available to Insurers

(1) Any health service corporation subject to an order under ARM 6.6.3403 may request a hearing pursuant to 33-1-701, MCA.

(2) Any other insurer, including a captive insurance company and a captive risk retention group, subject to an order under ARM 6.6.3403 may request a hearing or appeal from the order pursuant to 33-2-1321, MCA.

(3) The notice of hearing shall be served upon the respondent pursuant to the Montana Administrative Procedure Act. The notice of hearing shall state the time and place of hearing, and the conduct, condition, or ground upon which the commissioner based the order. Unless mutually agreed between the commissioner and the respondent, the hearing shall occur not less that 10 days nor more than 30 days after notice is served, and shall be either in Lewis & Clark County, or in some other place convenient to the parties to be designated by the commissioner. The commissioner shall hold all hearings under this rule privately, unless the respondent requests a public hearing, in which case the hearing shall be public.

History

Authorizing statute(s): 33-1-313, 33-2-1321, 33-2-1517, 33-28-206, MCA
Implementing statute(s): 33-1-401, 33-2-1321, 33-2-1323, 33-2-1517, 33-28-108, 33-28-109, 33-28-207, 33-30-102, 33-30-105, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2011 MAR p. 1128, Eff. 6/24/11.

Mont. Admin. R. 6.6.3405 Judicial Review

(1) Any order or decision of the commissioner shall be subject to judicial review in accordance with 33-1-711, 33-2-1323, MCA, and Montana Administrative Procedure Act by any party to the proceedings whose interests are substantially affected.

History

Authorizing statute(s): 33-1-313, 33-2-1517, 33-28-206, MCA
Implementing statute(s): 33-1-401, 33-2-1321, 33-2-1517, 33-28-108, 33-28-109, 33-28-207, 33-30-102, 33-30-105, MCA
History: NEW, 2011 MAR p. 1128, Eff. 6/24/11.

Subchapter 6.6.35 Annual Audited Reports and Establishing Accounting Practices and Procedures to Be Used in Annual Statements

Mont. Admin. R. 6.6.3501 Definitions

For the purposes of this subchapter, the following terms shall have the following meanings:

(1) "Accountant" and "independent certified public accountant" mean an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants (AICPA), and in all states in which they are licensed to practice; for Canadian and British companies, it means a Canadian-chartered or British-chartered accountant.

(2) An "affiliate" of, or person "affiliated" with a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

(3) "Audit committee" means a committee (or equivalent body) established by the board of directors of an entity for the purpose of overseeing the accounting and financial reporting processes of an insurer, or group of insurers, the internal audit function of an insurer or group of insurers (if applicable), and external audits of financial statements of the insurer, or group of insurers. The audit committee of any entity that controls a group of insurers may be deemed to be the audit committee for one or more of these controlled insurers solely for the purposes of this regulation at the election of the controlling person. Refer to ARM 6.6.3515(6) for exercising this election. If an audit committee is not designated by the insurer, the insurer's entire board of directors shall constitute the audit committee.

(4) "Audited financial report" means and includes those items specified in ARM 6.6.3504.

(5) "Indemnification" means an agreement of indemnity, or a release from liability, where the intent or effect is to shift, or limit, in any manner the potential liability of the person, or firm, for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing of other misrepresentations made by the insurer, or its representatives.

(6) "Independent board member" has the same meaning as described in ARM 6.6.3515(4).

(7) "Insurer" means an insurer as defined in 33-1-201 and 33-2-1501, MCA, or an authorized insurer as defined in 33-1-201, MCA.

(8) "Group of insurers" means those licensed insurers included in the reporting requirements of 33-2-1101, MCA, et seq., or a subset of such insurers as identified by management for the purpose of assessing the effectiveness of internal controls over financial reporting.

(9) "Internal audit function" means a person or persons that provide independent, objective, and reasonable assurance designed to add value and improve an organization's operations and accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

(10) "Internal control over financial reporting" means a process effected by an entity's board of directors, management ,and other personnel designed to provide reasonable assurance regarding the reliability of the financial statements, i.e., those items specified in ARM 6.6.3504(2)(b) through 6.6.3504(3), and includes those policies and procedures that:

(a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;

(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements, i.e., those items specified in ARM 6.6.3504(2)(b) through 6.6.3504(3), and that receipts and expenditures are being made only in accordance with authorizations of management, and directors; and

(c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements, i.e., those items specified in ARM 6.6.3504(2)(b) through 6.6.3504(3).

(11) "SEC" means the United States Securities and Exchange Commission.

(12) "Section 404" means Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC's rules and regulations promulgated thereunder.

(13) "Section 404 Report" means management's report on "internal control over financial reporting" as defined by the SEC, and the related attestation report of the independent certified public accountant as described in ARM 6.6.3501.

(14) "SOX compliant entity" means an entity that either is required to be compliant with, or voluntarily is compliant with, all of the following provisions of the Sarbanes-Oxley Act of 2002:

(a) the preapproval requirements of Section 201 (Section 10A(i) of the Securities Exchange Act of 1934);

(b) the audit committee independence requirements of Section 301 (Section 10A(m)(3) of the Securities Exchange Act of 1934); and

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2010 MAR p. 315, Eff. 2/12/10; AMD, 2017 MAR p. 1888, Eff. 10/14/17; AMD, 2019 MAR p. 1740, Eff. 10/5/19.

Mont. Admin. R. 6.6.3502 Purpose and Scope

(1) The purpose of this rule is to improve the surveillance of the financial condition of insurers by the department of insurance

(a) an annual audit of financial statements reporting the financial position, and the results of operations of insurers by independent certified public accountants;

(b) communication of internal control related matters noted in an audit; and

(2) Except as specifically provided herein, every insurer shall be subject to these rules. Insurers having direct premiums written in this state of less than $1,000,000 in any calendar year and less than 1,000 policyholders or certificateholders of directly written policies nationwide at the end of such calendar year shall be exempt from these rules for such year (unless the commissioner makes a specific finding that compliance is necessary for the commissioner to carry out statutory responsibilities). Insurers having assumed premiums pursuant to contracts and/or treaties of reinsurance of $1,000,000 or more will not be exempt.

(3) Foreign or alien insurers filing the audited financial report in another state, pursuant to that state's requirement for filing of audited financial reports which has been found by the commissioner to be substantially similar to the requirements herein, are exempt from ARM 6.6.3503 through 6.6.3512 if:

(a) a copy of the audited financial report, communication of internal control related matters noted in an audit, and the accountant's letter of qualifications which are filed with such other state are filed with the commissioner in accordance with the filing dates specified in ARM 6.6.3503, 6.6.3510, and 6.6.3511, respectively (Canadian insurers may submit accountants' reports as filed with the Office of the Superintendent to Financial Institutions, Canada).

(b) a copy of any notification of adverse financial condition report filed with such other state is filed with the commissioner within the time specified in ARM 6.6.3509.

(4) Foreign or alien insurers required to file Management's Report of Internal Control over Financial Reporting in another state are exempt from filing the report in this state provided the other state has substantially similar reporting requirements, and the report is filed with the commissioner of the other state within the time specified.

(5) This rule does not prohibit, preclude, or in any way limit the commissioner from ordering and/or conducting and/or performing examinations of insurers under the rules, regulations, practices, and procedures of the department.

of the state of Montana by requiring:

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3503 General Requirements Related to Filing and Extensions for Filing of Annual Audited Financial Reports and Audit Committee Appointment

(1) All insurers shall have an annual audit by an independent certified public accountant and shall file an audited financial report with the commissioner on or before June 1 for the year ended December 31 immediately preceding. Upon 90 days advance notice, for good cause, the commissioner may require an insurer to file an audited financial report earlier than June 1.

(2) Extensions of the June 1 filing date may be granted by the commissioner for 30-day periods upon showing by the insurer and its independent certified public accountant of good cause for an extension. Request for extension must by submitted in writing not less than ten days prior to the due date and must be in sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension.

(3) If an extension is granted in accordance with the provisions in ARM 6.6.3503(2), a similar extension of 30 days is granted to the filing of management's report of internal control over financial reporting.

(4) Every insurer required to file an annual audited financial report pursuant to this subchapter shall designate a group of individuals as constituting its audit committee, as defined in ARM 6.6.3501. The audit committee of an entity that controls an insurer may be deemed to be the insurer's audit committee for purposes of this subchapter at the election of the controlling person.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA NEW, 1993 MAR p. 2408, Eff. 10/15/93
History: AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3504 Contents of Annual Audited Financial Report

(1) The annual audited financial report shall report the financial position of the insurer as of the end of the most recent calendar year and the results of its operations, cash flows and changes in capital and surplus for the year then ended, all in conformity with statutory accounting practices prescribed, or otherwise permitted, by the department of insurance of the state of domicile.

(2) The annual audited financial report shall include the following:

(a) report of independent certified public accountant;

(b) balance sheet reporting admitted assets, liabilities, capital, and surplus;

(d) statement of cash flow;

(e) statement of changes in capital and surplus; and

(f) notes to financial statements;

(i) These notes shall be those required by the appropriate 2018 NAIC Annual Statement Instructions and the March 2018 NAIC Accounting Practices and Procedures Manual, which are adopted and incorporated by reference, and may be obtained from the NAIC at http://www.naic.org/prod_serv_alpha_listing.htm . The notes shall include reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to 33-2-701, 33-4-313, 33-7-118, 33-30-107, 33-31-211, MCA, with a written description of the nature of these differences.

(3) The financial statements included in the audited financial report shall be prepared in a form, and using language and groupings substantially the same as the relevant sections of the annual statement of the insurer filed with the commissioner, and the financial statement must be comparative, presenting the amounts as of December 31 of the current year and the amounts as of the immediately preceding December 31. In the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2004 MAR p. 73, Eff. 1/16/04; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2010 MAR p. 315, Eff. 2/12/10; AMD, 2011 MAR p. 1129, Eff. 6/24/11; AMD, 2015 MAR p. 925, Eff. 7/17/15; AMD, 2018 MAR p. 1418, Eff. 7/21/18.

Mont. Admin. R. 6.6.3505 Designation of Independent Certified Public Accountant

(1) Each insurer required by these rules to file an annual audited financial report must, within 60 days after becoming subject to such requirement, register with the commissioner in writing the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit required by these rules. Insurers not retaining an independent certified public accountant on the effective date of this rule shall register the name and address of their retained independent certified public accountant not less than six months before the date when the first audited financial report is to be filed.

(2) The insurer shall obtain a letter from the accountant, and file a copy with the commissioner, stating that the accountant is aware of the provisions of the insurance code, and the administrative rules of the insurance department of the insurer's state of domicile that relate to accounting and financial matters, and affirming that he will express his opinion on the financial statements in terms of their conformity with the statutory accounting practices prescribed or otherwise permitted by that department, specifying such exceptions as he may believe appropriate.

(3) If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall within five business days notify the department of this event. The insurer shall also furnish the commissioner with a separate letter within ten business days of the above notification, stating whether in the 24 months preceding such event there were any disagreements with the former accountant on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure; which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him to make reference to the subject matter of the disagreement in connection with his opinion. The disagreements required to be reported in response to this rule include both those resolved to the former accountant's satisfaction and those not resolved to the former accountant's satisfaction. Disagreements contemplated by this rule are those that occur at the decision-making level, that is between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also in writing request such former accountant to furnish a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which he does not agree; and the insurer shall furnish such responsive letter from the former accountant to the commissioner, together with its own.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 1995 MAR p. 455, Eff. 3/31/95; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3506 Qualifications of Independent Certified Public Accountant

(1) The commissioner shall not recognize any person or firm as a qualified independent certified public accountant if the person, or firm:

(a) is not in good standing with the AICPA and in all states in which the accountant is licensed to practice, or, for a Canadian or British company, that is not a chartered accountant; or

(b) has either directly or indirectly entered into an agreement of indemnity or release from liability (collectively referred to as "indemnification") with respect to the audit of the insurer.

(2) Except as otherwise provided herein, an independent certified public accountant shall be recognized as qualified as long as he or she conforms to the standards of his or her profession, as contained in the code of professional ethics of the AICPA and rules and regulations and code of ethics and rules of professional conduct of the Montana Board of Public Accountants or its counterparts in sister states.

(3) A qualified independent certified public accountant may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration. However, in the event of a delinquency proceeding commenced against the insurer under the Insurers Supervision, Rehabilitation and Liquidation Act at 33-2-1301, et seq., MCA, the mediation or arbitration provisions shall operate at the option of the statutory successor.

(4) Following the effective date of these rules, no partner or other member of a firm responsible for rendering a report may act in that capacity for more than five consecutive years. Following any period of service such person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of five consecutive years. This does not preclude other partners or members of any accounting firm from succeeding to the responsibility for rendering reports. An insurer may make application to the commissioner for relief from the above rotation requirement on the basis of unusual circumstances. This application shall be made at least 30 days before the end of the calendar year. The commissioner may consider the following factors in determining whether relief should be granted:

(a) number of partners, expertise of the partners, or the number of insurance clients in the currently registered firm;

(b) premium volume of the insurer; and

(5) The insurer shall file, with its annual statement filing, the approval for relief from (4) with the states that it is licensed in, or doing business in and with the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

(6) The commissioner shall neither recognize as a qualified independent certified public accountant, nor accept any annual audited financial report prepared in whole or in part, by any natural person who:

(a) has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961-1968, or any dishonest conduct or practices under federal or state law;

(b) has been found to have violated the insurance laws of this state with respect to any previous reports submitted under this rule; or

(c) has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this rule.

(7) The commissioner may hold a hearing pursuant to 33-1-701, MCA, to determine whether an independent certified public accountant is qualified and, after considering the evidence and arguments presented, may decide whether the accountant is qualified to express his opinion on the financial statements in the annual audited financial report filed pursuant to these rules, and may require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of these rules.

(8) In general, the principles of independence with respect to services provided by the qualified independent certified public accountant are largely predicated on three basic principles, violations of which would impair the accountant's independence. The principles are that the accountant cannot function in the role of management, cannot audit his or her own work, and cannot serve in an advocacy role for the insurer.

(9) The commissioner shall not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole, or in part, by an accountant who provides to an insurer, contemporaneously with the audit, the following nonaudit services:

(a) bookkeeping, or other services, related to the accounting records, or financial statements of the insurer;

(b) financial information systems design, and implementation;

(d) actuarially-oriented advisory services involving the determination of amounts recorded in the financial statements. The accountant may assist an insurer in understanding the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement only if it is reasonable to conclude that the services provided will not be subject to audit procedures during an audit of the insurer's financial statements. An accountant's actuary may also issue an actuarial opinion or certification ("opinion") on an insurer's reserves if the following conditions have been met:

(i) neither the accountant nor the accountant's actuary has performed any management functions, or made any management decisions;

(ii) the insurer has competent personnel (or engages a third party actuary) to estimate the reserves for which management takes responsibility; and

(iii) the accountant's actuary tests the reasonableness of the reserves after the insurer's management has determined the amount of the reserves.

(e) internal audit outsourcing services;

(f) management functions, or human resources;

(g) broker or dealer, investment adviser, or investment banking services;

(h) legal services, or expert services unrelated to the audit; or

(i) any other services that the commissioner determines, by regulation, are impermissible.

(10) Insurers having direct written and assumed premiums of less than $100,000,000 in any calendar year may request an exemption from (9). The insurer shall file with the commissioner a written statement discussing the reasons why the insurer should be exempt from these provisions. If the commissioner finds, upon review of this statement, that compliance with this regulation would constitute a financial or organizational hardship upon the insurer, an exemption may be granted.

(11) A qualified independent certified public accountant who performs the audit may engage in other nonaudit services, including tax services, that are not described in (9) or that do not conflict with (8), only if the activity is approved in advance by the audit committee, in accordance with (12).

(12) All auditing services and nonaudit services provided to an insurer by the

qualified independent certified public accountant of the insurer shall be preapproved by the audit committee. The preapproval requirement is waived with respect to nonaudit services if the insurer is a SOX compliant entity, or a direct or indirect wholly-owned subsidiary of a SOX compliant entity; or

(a) the aggregate amount of all such nonaudit services provided to the insurer constitutes not more than five percent of the total amount of fees paid by the insurer to its qualified independent certified public accountant during the fiscal year in which the nonaudit services are provided;

(b) the services were not recognized by the insurer at the time of the engagement to be nonaudit services; and

(c) the services are promptly brought to the attention of the audit committee and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are the members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee.

(13) The audit committee may delegate to one or more designated members of the audit committee the authority to grant the preapprovals required by (12). The decisions of any member to whom this authority is delegated shall be presented to the full audit committee at each of its scheduled meetings.

(14) The commissioner shall not recognize an independent certified public

accountant as qualified for a particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for that insurer, was employed by the independent certified public accountant, and participated in the audit of that insurer during the one year period preceding the date that the most current statutory opinion is due. Section (14) shall only apply to partners and senior managers involved in the audit.

(15) An insurer may make application to the commissioner for relief from (14) on the basis of unusual circumstances. The insurer shall file, with its annual statement filing, the approval for relief from (14) with the states that it is licensed in, doing business in, and with the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-1-701, 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3507 Consolidated or Combined Audits

(1) An insurer may make written application to the commissioner for authority to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements, if the insurer is part of a group of insurance companies which utilizes a pooling, or 100% reinsurance, agreement that affects the solvency and integrity of the insurer's reserves and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report, as follows:

(a) amounts shown on the consolidated or combined audited financial report shall be shown on the worksheet;

(b) amounts for each insurer subject to this section shall be stated separately;

(d) explanations of consolidating and eliminating entries shall be included; and

(e) a reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statements of the insurers.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3508 Scope of Audit and Report of Independent Certified Public Accountant

(1) Financial statements furnished pursuant to ARM 6.6.3504 shall be examined by an independent certified public accountant. The audit of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards. In accordance with AU Section 319 of the Professional Standards of the AICPA, Consideration of Internal Control in a Financial Statement Audit, the independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent required by AU 319, for those insurers required to file a Management's Report of Internal Control over Financial Reporting pursuant ARM 6.6.3517, the independent certified public accountant should consider (as that term is defined in Statement on Auditing Standards (SAS) No. 102, Defining Professional Requirements in Statements on Auditing Standards or its replacement) the most recently available report in planning and performing the audit of the statutory financial statements. Consideration should also be given to such other procedures illustrated in the Financial Condition Examiner's Handbook promulgated by the NAIC, as the independent certified public accountant deems necessary.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3509 Notification of Adverse Financial Condition

(1) The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report, in writing, within five business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner, as of the balance sheet date currently under audit, or that the insurer does not meet the minimum capital and surplus requirement of 33-2-109, 33-2-110, 33-4-401, 33-5-401, 33-30-201, and 33-31-216(9), MCA, as of that date. An insurer who has received a report pursuant to this rule shall forward a copy of the report to the commissioner within five business days of receipt of such report, and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the commissioner. If the independent certified public accountant fails to receive such evidence within the required five-business-day period, the independent certified public accountant shall furnish to the commissioner a copy of its report within the next five business days.

(2) An independent certified public accountant shall not be liable in any manner to any person for any statement made in connection with (1) if such statement is made in good faith in compliance with (1).

(3) If the accountant, subsequent to the date of the audited financial report filed pursuant to this rule, becomes aware of facts which might have affected the report, it has the obligation to take such action as prescribed in Volume 1, Section AU 561 of the Professional Standards of the AICPA.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 1995 MAR p. 455, Eff. 3/31/95; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3510 Communication of Internal Controls Related Matters Noted in an Audit

(1) In addition to the annual audited financial report, each insurer shall furnish the commissioner with a written communication as to any unremediated material weaknesses in its internal controls over financial reporting noted during the audit. Such communication shall be prepared by the accountant within 60 days after the filing of the annual audited financial report, and shall contain a description of any unremediated material weakness (as the term material weakness is defined by Statement on Auditing Standard 60, communication of internal control related matters noted in an audit, or its replacement) as of December 31 immediately preceding (so as to coincide with the audited financial report discussed in ARM 6.6.3503(1)) in the insurer's internal control over financial reporting noted by the accountant during the course of their audit of the financial statements. If no unremediated material weaknesses were noted, the communication should so state.

(2) The insurer shall provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communication.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3511 Accountant's Letter of Qualifications

(1) The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating:

(a) that the accountant is independent with respect to the insurer and conforms to the standards of his or her profession as contained in the code of professional ethics and pronouncements of the AICPA and the rules of professional conduct of the Montana board of public accountants or its applicable counterpart in a sister state;

(b) the background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement, and whether each is an independent certified public accountant. Nothing within these rules shall be construed as prohibiting the accountant from utilizing such staff as he or she deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards;

(c) that the accountant understands the annual audited financial report and his or her opinion thereon will be filed in compliance with these rules and that the commissioner will be relying on this information in the monitoring and regulation of the financial position of insurers;

(d) that the accountant consents to the requirements of ARM 6.6.3512 and that the accountant consents and agrees to make available for review by the commissioner, his designee or his appointed agent, the workpapers, as defined in ARM 6.6.3512;

(e) a representation that the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the AICPA; and

(f) a representation that the accountant is in compliance with the requirements of ARM 6.6.3506 of these rules.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 1995 MAR p. 455, Eff. 3/31/95; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3512 Definition, Availability, and Maintenance of Independent Certified Public Accountants' Workpapers

(1) Workpapers are the records kept by the independent certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to his/her audit of the financial statements of an insurer. Workpapers, accordingly, may include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of his / her audit of the financial statements of an insurer and which support his/her opinion thereof.

(2) Every insurer required to file an audited financial report pursuant to these rules shall require the accountant to make available for review by department examiners, all workpapers prepared in the conduct of his/her and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the department, or at any other reasonable place designated by the commissioner. The insurer shall require that the accountant retain the audit workpapers and communications until the department has filed a report on examination covering the period of the audit, but no longer than seven years from the date of the audit report.

(3) In the conduct of the aforementioned periodic review by the department examiners, photocopies of pertinent audit workpapers may be made and retained by the department. Such reviews by the department examiners shall be considered investigations and all working papers and communications obtained during the course of such investigations shall be afforded the same confidentiality as other examination workpapers generated by the department.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3515 Requirements for Audit Committees

(1) This rule shall not apply to foreign or alien insurers licensed in this state, an insurer that is a SOX compliant entity, or an insurer that is a direct or indirect wholly-owned subsidiary of a SOX compliant entity.

(2) The audit committee shall be directly responsible for the appointment, compensation, and oversight of the work of any accountant (including resolution of disagreements between management and the accountant regarding financial reporting) for the purpose of preparing or issuing the audited financial report or related work pursuant to this subchapter. Each accountant shall report directly to the audit committee.

(3) The audit committee of an insurer or group of insurers shall be responsible for overseeing the insurer's internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by ARM 6.6.3518.

(4) Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to ARM 6.6.3501(3), and ARM 6.6.3515(7).

(5) In order to be considered independent for purposes of this rule, a member of the audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory, or other compensatory fee from the entity or be an affiliated person of the entity, or any subsidiary thereof. However, if law requires board participation by otherwise nonindependent members, that law shall prevail, and such members may participate in the audit committee and be designated as independent for audit committee purposes, unless they are an officer, or employee of the insurer, or one of its affiliates.

(6) If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the state, may remain an audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity, or one year from the occurrence of the event that caused the member to be no longer independent.

(7) To exercise the election of the controlling person to designate the audit committee for purposes of this subchapter, the ultimate controlling person shall provide written notice to the commissioners of the affected insurers. Notification shall be made timely prior to the issuance of the statutory audit report and shall include a description of the basis for the election. The election can be changed through notice to the commissioner by the insurer, which shall include a description of the basis for the change. The election shall remain in effect for perpetuity, until rescinded.

(8) The audit committee shall require the accountant that performs for an insurer any audit required by this subchapter to timely report to the audit committee in accordance with the requirements of SAS 61, Communication with Audit Committees, or its replacement, including:

(a) all significant accounting policies and material permitted practices;

(b) all material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and

(c) other material written communications between the accountant and the management of the insurer, such as any management letter, or schedule of unadjusted differences.

(9) If an insurer is a member of an insurance holding company system, the reports required by (8) may be provided to the audit committee on an aggregate basis for insurers in the holding company system, provided that any substantial differences among insurers in the system are identified to the audit committee.

(10) The proportion of independent audit committee members shall meet or exceed the following criteria:

Note A: The commissioner has authority afforded by state law to require the entity's board to enact improvements to the independence of the audit committee membership if the insurer is in a RBC action level event, meets one or more of the standards of an insurer deemed to be in hazardous financial condition, or otherwise exhibits qualities of a troubled insurer.

Note B: All insurers with less than $500,000,000 in prior year direct written and assumed premiums are encouraged to structure their audit committees with at least a supermajority of independent audit committee members.

Note C: Prior calendar year direct written and assumed premiums shall be the combined total of direct premiums and assumed premiums from nonaffiliates for the reporting entities.

(11) An insurer with direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000 may make application to the commissioner for a waiver from the ARM 6.6.3515 requirements based upon hardship. The insurer shall file, with its annual statement filing, the approval for relief from ARM 6.6.3515 with the states that it is licensed in, doing business in, and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

Prior Calendar Year Direct Written and Assumed Premiums. See Note C. $0 - $300,000,000 | Over $300,000,000 - $500,000,000 | Over $500,000,000 No minimum requirements. See also Note A and B. | Majority (50% or more) of members shall be independent. See also Note A and B. | Supermajority of members (75% or more) shall be independent. See also Note A.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 2010 MAR p. 315, Eff. 2/12/10; AMD, 2017 MAR p. 1888, Eff. 10/14/17; AMD, 2019 MAR p. 1740, Eff. 10/5/19.

Mont. Admin. R. 6.6.3516 Conduct of Insurer in Connection with the Preparation of Required Reports and Documents

(1) No director or officer of an insurer shall, directly or indirectly:

(a) make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review, or communication required under this subchapter; or

(b) omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review, or communication required under this subchapter.

(2) No officer, or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence any accountant engaged in the performance of an audit pursuant to this subchapter if that person knew, or should have known, that the action, if successful, could result in rendering the insurer's financial statements materially misleading.

(3) For purposes of (2), actions that, "if successful, could result in rendering the insurer's financial statements materially misleading" include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead, or fraudulently influence an accountant:

(a) to issue, or reissue a report on an insurer's financial statements that is not warranted in the circumstances (due to material violations of statutory accounting principles prescribed by the commissioner, generally accepted auditing standards, or other professional or regulatory standards);

(b) not to perform audit, review, or other procedures required by generally accepted auditing standards, or other professional standards;

(d) not to communicate matters to an insurer's audit committee.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3517 Management's Report of Internal Control Over Financial Reporting

(1) Every insurer required to file an audited financial report pursuant to this subchapter that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000 or more shall prepare a report of the insurer's or group of insurers' internal control over financial reporting, as these terms are defined in ARM 6.6.3501. The report shall be filed with the commissioner along with the communication of internal control related matters noted in an audit described under ARM 6.6.3510. Management's report of internal control over financial reporting shall be as of December 31 immediately preceding.

(2) Notwithstanding the premium threshold in (1), the commissioner may require an insurer to file management's report of internal control over financial reporting if the insurer is in any RBC level event, or meets any one or more of the standards of an insurer deemed to be in hazardous financial condition pursuant to ARM 6.6.3401 and 6.6.3402.

(3) An insurer or a group of insurers that is directly subject to Section 404; part of a holding company system whose parent is directly subject to Section 404; not directly subject to Section 404, but is a SOX compliant entity; or a member of a holding company system whose parent that is not directly subject to Section 404, but is a SOX compliant entity, may file its, or its parent's Section 404 Report and an addendum in satisfaction of this rule requirement provided that those internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in ARM 6.6.3504(2)(b) through 6.6.3504(3)) were included in the scope of the Section 404 Report. The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in ARM 6.6.3504(2)(b) through 6.6.3504(3) of this subsection) excluded from the Section 404 Report. If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements, and those internal controls were not included in the scope of the Section 404 Report, the insurer or group of insurers may file:

(a) a ARM 6.6.3517 report; or

(b) the Section 404 Report and ARM 6.6.3517 report for those internal controls that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements not covered by the Section 404 Report.

(4) Management's report of internal control over financial reporting shall include:

(a) a statement that management is responsible for establishing and maintaining adequate internal control over financial reporting;

(b) a statement that management has established internal control over

financial reporting and an assertion, to the best of management's knowledge and belief, after diligent inquiry, as to whether its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles;

management evaluated the effectiveness of its internal control over financial reporting;

(d) a statement that briefly describes the scope of work that is included, and

whether any internal controls were excluded;

(e) disclosure of any unremediated material weaknesses in the internal control over financial reporting identified by management as of December 31 immediately preceding. Management is not permitted to conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weaknesses in its internal control over financial reporting;

(f) a statement regarding the inherent limitations of internal control systems; and

(g) signatures of the chief executive officer and the chief financial officer (or equivalent position/title).

(5) Management shall document and make available upon financial condition

examination the basis upon which its assertions, required in (4), are made. Management may base its assertions, in part, upon its review, monitoring, and testing of internal controls undertaken in the normal course of its activities. Management shall have discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost effective manner and, as such, may include assembly of, or reference to, existing documentation. Management's report on internal control over financial reporting, required by (1), and any documentation provided in support thereof during the course of a financial condition examination, shall be kept confidential by the state insurance department.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 2010 MAR p. 315, Eff. 2/12/10.

Mont. Admin. R. 6.6.3518 Internal Audit Function Requirements

(1) An insurer is exempt from the requirements of this rule if:

(a) the insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and

(b) if the insurer is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000.

(2) An insurer or group of insurers exempt from the requirements of this rule is encouraged, but not required, to conduct a review of the insurer business type, sources of capital, and other risk factors to determine whether an internal audit function is warranted. The potential benefits of an internal audit function should be assessed and compared against the estimated costs.

(3) The insurer or group of insurers shall establish an Internal audit function providing independent, objective, and reasonable assurance to the audit committee and insurer management regarding the insurer's governance, risk management, and internal controls. This assurance shall be provided by performing general and specific audits, reviews and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.

(4) In order to ensure that internal auditors remain objective, the internal audit function must be organizationally independent. Specifically, the internal audit function will not defer ultimate judgment on audit matters to others, and shall appoint an individual to head the Internal audit function who will have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships.

(5) The head of the internal audit function shall report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact the internal audit function's independence or effectiveness, material findings from completed audits and the appropriateness of corrective actions implemented by management as a result of audit findings.

(6) If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in this rule at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 2019 MAR p. 1740, Eff. 10/5/19.

Mont. Admin. R. 6.6.3520 Exemptions and Effective Dates

(1) Upon written application of any insurer, the commissioner may grant an exemption from compliance with any and all provisions of these rules if the commissioner finds, upon review of the application, that compliance would constitute a financial or organizational hardship upon the insurer. An exemption may be granted at any time and from time to time for a specified period or periods. Within ten days from a denial of an insurer's written request for an exemption, such insurer may make a written request for a hearing on its application for an exemption. Such hearing shall be held in accordance with 33-2-701, MCA.

(2) Domestic insurers retaining certified public accountants on the effective date of this rule who qualify as independent shall comply with these rules for the year ending December 31, 2009, and each year thereafter unless the commissioner permits otherwise.

(3) Domestic insurers not retaining certified public accountants on the effective date of these rules who qualify as independent may meet the following schedule for compliance, unless the commissioner permits otherwise.

(a) as of December 31, 2009, file with the commissioner an audited financial report.

(b) for the year ending December 31, 2010, and each year thereafter, such insurers shall file with the commissioner all reports and communications required by these rules.

(4) Foreign insurers shall comply with these rules for the year ending December 31, 2009, and each year thereafter, unless the commissioner permits otherwise.

(5) The requirements of ARM 6.6.3506(4) shall be in effect for audits of the year beginning January 1, 2010, and thereafter.

(6) The requirements of ARM 6.6.3515 are to be in effect January 1, 2010. An insurer, or group of insurers, that is not required to have independent audit committee members, or only a majority of independent audit committee members (as opposed to a supermajority), because the total written and assumed premium is

below the threshold, and subsequently becomes subject to one of the independence

requirements due to changes in premium shall have one year following the

year the threshold is exceeded (but not earlier than January 1, 2010) to comply with the independence requirements. Likewise, an insurer that becomes subject to one of the independence requirements as a result of a business combination shall have one calendar year following the date.

(7) The requirements of ARM 6.6.3517 and ARM 6.6.3510 are effective beginning with the reporting period ending December 31, 2010, and each year thereafter. An insurer, or group of insurers, that is not required to file a report because the total written premium is below the threshold, and subsequently becomes subject to the reporting requirements, shall have two years following the year the threshold is exceeded (but not earlier than December 31, 2010) to file a report. Likewise, an insurer acquired in a business combination shall have two calendar years following the date of acquisition or combination to comply with the reporting requirements.

(8) If an insurer or group of insurers that is exempt from ARM 6.6.3518 requirements no longer qualifies for that exemption, it shall have one year after the year the threshold is exceeded to comply with the requirements of ARM 6.6.3518.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-1-701, 33-2-1517, 33-4-313, 33-5-413, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; TRANS and AMD, from ARM 6.6.3513, 2010 MAR p. 315, Eff. 2/12/10; AMD, 2017 MAR p. 1888, Eff. 10/14/17; AMD, 2019 MAR p. 1740, Eff. 10/5/19.

Mont. Admin. R. 6.6.3521 Canadian and British Companies

(1) In the case of Canadian and British insurers, the annual audited financial report must be defined as the annual statement of total business on the form filed by such companies with their supervision authority, duly audited by an independent chartered accountant.

(2) For such insurers, the letter required in ARM 6.6.3505 must state that the accountant is aware of the requirements relating to the annual audited financial report filed with the commissioner pursuant to ARM 6.6.3503, and must affirm that the opinion expressed is in conformity with such requirements.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; TRANS and AMD, to ARM 6.6.3521, 2010 MAR 315, Eff. 2/12/10.

Subchapter 6.6.36 Life and Health Reinsurance Agreements

Mont. Admin. R. 6.6.3601 Scope of Rules

(1) These rules apply to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers which are not subject to a substantially similar regulation in their domiciliary state. These rules also apply to licensed property and casualty insurers with respect to their accident and health business. These rules do not apply to assumption reinsurance, yearly renewable term reinsurance or certain nonproportional reinsurance such as stop-loss or catastrophe reinsurance.

History

Authorizing statute(s): Sec. 33-1-313 and 33-2-1517, MCA
Implementing statute(s): Sec. 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93.

Mont. Admin. R. 6.6.3602 Accounting Requirements

(1) No insurer subject to these rules may, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the department if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist:

(a) Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period, are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall (using assumptions equal to the applicable statutory reserve basis on the business reinsured) . Renewal expenses include commissions, premium taxes, and direct expenses including, but not limited to, billing, valuation, claims, and maintenance expected by the company at the time the business is reinsured;

(b) The ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, shall not be considered to be such a deprivation of surplus or assets;

(c) The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement, except that neither offsetting experience refunds against current and prior years, losses under the agreement nor payment by the ceding insurer of an amount equal to the current and prior years, losses under the agreement upon voluntary termination of in-force reinsurance by the ceding insurer shall be considered such a reimbursement to the insurer for negative experience. Voluntary termination does not include situationswhere termination occurs because of unreasonable provisions which allow the reinsurer to reduce its risk under the agreement;

(d) The ceding insurer must, at specific points in time scheduled in the agreement, terminate, or automatically recapture all or part of the reinsurance ceded;

(e) The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the reinsured policies;

(f) The agreement does not involve transfer of all of the significant risk inherent in the business being reinsured.

(i) Significant risks include, but are not limited to, the following:

(A) Morbidity.

(B) Mortality.

(C) The risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy (lapse risk) .

(D) The risk that invested assets supporting the reinsured business will decrease in value, the main hazards being that assets will default or that there will be a decrease in earning power (credit quality risk) . This risk excludes market value declines due to changes in interest rate.

(E) The risk that interest rates will fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less than expected (reinvestment risk) .

(F) The risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal (disintermediation risk) .

(ii) Risk categories for types of insurance covered by these rules are summarized in the following chart: (+ denotes significant risk; 0 denotes insignificant risk.)

*LTC = Long Term Care Insurance

LTD = Long Term Disability Insurance

(g) The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding company does not [other than for the classes of business excepted in (i) below] either transfer the underlying assets to the reinsurer or legally segregate such assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the commissioner which legally segregates, by contract or contract provision, the underlying assets.

(i) Notwithstanding the requirements of (1) (g) , the assets supporting the reserves for the following classes of business and any classes of business which do not have a significant credit quality, reinvestment or disintermediation risk may be held by the ceding company without segregation of such assets:

(A) Health Insurance--LTC/LTD;

(B) Traditional Non-Par Permanent;

(D) Adjustable Premium Permanent;

(E) Indeterminate Premium Permanent;

(F) Universal Life Fixed Premium (exclusive of dumped-in premiums) .

(ii) Any formula for determining reserve interest rate adjustment must be one which reflects the ceding company's investment earnings and incorporates all realized and unrealized gains and losses reflected in the statement.

(h) Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within 90 days of the settlement date.

(i) The ceding insurer is required to make representations or warranties not reasonably related to the business being reinsured.

(j) The ceding insurer is required to make representations or warranties about future performance of the business being reinsured.

(k) The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.

(2) Notwithstanding subsection (1) , an insurer subject to this rule may, with the prior approval of the commissioner, take such reserve credit or establish such asset as the commissioner may deem consistent with the Montana insurance code and rules of the department, including actuarial interpretations or standards adopted by the department.

(3) Agreements entered into after the effective date of these rules which involve the reinsurance of business issued prior to the effective date of the agreements, along with any subsequent amendments thereto, shall be filed by the ceding company with the commissioner within 30 days from the date of execution. Each filing shall include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion with respect to valuation of reserves shall consider these rules and applicable actuarial standards of practice when determining the proper credit in financial statements filed with the department. The actuary shall maintain adequate documentation and be prepared to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that his or her work conforms to these rules.

(a) Any increase in surplus net of federal income tax resulting from arrangements described in this subsection shall be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the capital and surplus account of the annual statement) and recognition of the surplus increase as income shall be reflected on a net of tax basis on the line captioned "reserve adjustments on reinsurance ceded" of the annual statement, as earnings emerge from the business reinsured.

LINES OF INSURANCE | A | B | C | D | E | F Health Insurance--other than LTC/LTD* | + | 0 | + | 0 | 0 | 0 Health Insurance--LTC/LTD* | + | 0 | + | + | + | 0 Immediate Annuities | 0 | + | 0 | + | + | 0 Single Premium Deferred Annuities | 0 | 0 | + | + | + | + Flexible Premium Deferred Annuities | 0 | 0 | + | + | + | + Guaranteed Interest Contracts | 0 | 0 | 0 | + | + | + Other Annuity Deposit Business | 0 | 0 | + | + | + | + Single Premium Whole Life | 0 | + | + | + | + | + Traditional Non-Par Permanent | 0 | + | + | + | + | + Traditional Non-Par Term | 0 | + | + | 0 | 0 | 0 Traditional Par Permanent | 0 | + | + | + | + | + Traditional Par Term | 0 | + | + | 0 | 0 | 0 Adjustable Premium Permanent | 0 | + | + | + | + | + Indeterminate Premium Permanent | 0 | + | + | + | + | + Universal Life Flexible Premium | 0 | + | + | + | + | + Universal Life Fixed Premium | 0 | + | + | + | + | + Universal Life Fixed Premium | 0 | + | + | + | + | +

History

Authorizing statute(s): Sec. 33-1-313 and 33-2-1517, MCA
Implementing statute(s): Sec. 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93.

Mont. Admin. R. 6.6.3603 Written Agreement

(1) No reinsurance agreement or amendment to any agreement may be used to reduce any liability or to establish any asset in any financial statement filed with the department, unless the agreement, amendment or a binding letter of intent has been duly executed by both parties no later than the "as of date" of the financial statement.

(2) In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement must be executed within a reasonable period of time, not exceeding 90 days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded.

(3) The reinsurance agreement must contain provisions to the effect that:

(a) The agreement constitutes the entire agreement between the parties with respect to the business being reinsured there under and that there are no understandings between the parties other than as expressed in the agreement; and

(b) Any change or modification to the agreement is null and void unless made by amendment to the agreement and signed by both parties.

History

Authorizing statute(s): Sec. 33-1-313 and 33-2-1517, MCA
Implementing statute(s): Sec. 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93.

Mont. Admin. R. 6.6.3604 Existing Agreements

(1) Insurers subject to these rules must reduce to zero by December 31, 1995, any reserve credits or assets established with respect to reinsurance agreements entered into prior to the effective date of these rules which, under the provisions of these rules would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements must have been in compliance with laws or regulations in existence immediately preceding the effective date of these rules.

History

Authorizing statute(s): Sec. 33-1-313 and 33-2-1517, MCA
Implementing statute(s): Sec. 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93.

Subchapter 6.6.37 Reporting by Holding Company Systems

Mont. Admin. R. 6.6.3701 Definitions

For the purposes of this subchapter, the following terms shall have the following meanings:

(1) "Executive officer" means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title.

(2) "Foreign insurer" shall include an alien insurer, except where clearly noted otherwise.

(3) "Ultimate controlling person" means that person which is not controlled by any other person.

(4) Unless the context otherwise requires, other terms found in these rules are used as defined in 33-1-201, 33-1-202, and 33-1-1101, MCA. Other nomenclature or terminology is according to the Montana insurance code, or industry usage if not defined by the code.

History

Authorizing statute(s): Sec. 33-1-313 and 33-2-1517, MCA
Implementing statute(s): Sec. 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93.

Mont. Admin. R. 6.6.3702 Forms--General Requirements

(1) Forms A, B, C, D, and F are intended to be guides in the preparation of the statements required by 33-2-1104, 33-2-1111, and 33-2-1113, MCA. They are not intended to be blank forms which are to be filled in. The statements filed must contain the numbers and captions of all items, but the text of the items may be omitted, provided the answers are prepared to indicate the scope of the items. All instructions appearing in the forms must be omitted from the statements. Unless expressly provided otherwise, if any item is inapplicable, or the answer to any item is in the negative, an appropriate statement to that effect shall be made.

(2) One complete copy of each statement including attached exhibits and other documents must be filed with the commissioner by personal delivery or mail addressed to the Commissioner of Securities and Insurance, Montana State Auditor, 840 Helena Avenue, Helena, MT 59601. An insurer must file a copy of Form C within 30 days of written request from a state insurance regulator in any state the insurer is authorized to do business. At least one of the copies must be manually signed in the manner prescribed on the form. Unsigned copies must be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority must be filed with the statement.

(3) Statements should be prepared on 8 1/2" x 11" (or 8 1/2" x 14") paper and bound at the top left-hand corner. Exhibits and financial statements, unless specifically prepared for the filing, may be submitted in their original size. All copies of all statements, financial statements, and exhibits must be easily readable and suitable for photocopying. Debits in credit categories and credits in debit categories must be so designated and distinguishable on photocopies. Statements must be in the English language and monetary values must be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it must be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally must be converted into United States currency.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1111, 33-2-1113, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14; AMD, 2016 MAR p. 824, Eff. 5/7/16.

Mont. Admin. R. 6.6.3703 Forms--Incorporation by Reference, Summaries, and Omissions

(1) Information required by any item of Forms A, B, D, or F may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Forms A, B, D, or F, provided the document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the commissioner which were filed within three years need not be attached as exhibits. References to information contained in exhibits or in documents already on file must clearly identify the material and must specifically indicate that such material is to be incorporated by reference in answer to the item. Matter must not be incorporated by reference in any case where such incorporation would render the statement incomplete, unclear, or confusing.

(2) Where an item requires a summary or outline of the provisions of any document, only a brief statement must be made as to the pertinent provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the commissioner which was filed within three years and may be qualified in its entirety by such reference. In any case where two or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties, the dates of execution, or other details, a copy of only one of such documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such documents differ from the documents, a copy of which is filed.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1111, 33-2-1113, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14; AMD, 2016 MAR p. 824, Eff. 5/7/16.

Mont. Admin. R. 6.6.3704 Forms--Information Unknown or Unavailable and Extension of Time to Furnish

(1) If it is impractical to furnish any required information, document, or report at the time it is required to be filed, a separate document may be filed with the commissioner:

(a) identifying the information, document, or report in question;

(b) stating why filing at the time required is impractical; and

(2) Unless the commissioner notifies the person that the request for extension is denied within 30 days after receipt of the request, the request will be deemed granted.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1111, 33-2-1113, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3705 Forms--Additional Information and Exhibits

(1) In addition to the information required to be included in Forms A, B, C, D, and F, any additional material information necessary to make the information contained in the forms not misleading must be added. Additional exhibits not required by the statement may be filed. The additional exhibits must indicate the subject matters they reference. Changes to Forms A, B, C, D, or F must include on the top of the cover page the phrase: "Change No. (insert number) to Form (A, B, C, D, or F)" and must indicate the date of the change rather than the date of the original filing.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1111, 33-2-1113, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14; AMD, 2016 MAR p. 824, Eff. 5/7/16.

Mont. Admin. R. 6.6.3706 Filing of Form A, Regarding Acquisition or Control

(1) A person required to file a statement pursuant to 33-2-1104, MCA, shall furnish the required information on Form A, which is made a part of these rules.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3707 Amendments to Form a

(1) The applicant shall promptly advise the commissioner of any changes in the information furnished on Form A arising subsequent to the date upon which the information was furnished, but prior to the commissioner's disposition of the application.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1103, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3708 Reporting Acquisition of Domestic Insurers

(1) If the person being acquired is deemed to be a "domestic insurer" solely because of the provisions of 33-2-1104, MCA, the name of the domestic insurer on the cover page must be indicated as follows:

(a) "ABC Insurance Company, a subsidiary of XYZ Holding Company."

(2) Where a domestic is being acquired, references to "the insurer" contained in Form A must refer to both the domestic subsidiary insurer and the person being acquired.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3709 Filing of Form B--Annual Registration of Insurers

(1) An insurer required to file an annual registration statement pursuant to 33-2-1111(2), MCA, shall furnish the required information on Form B, which is made a part of these rules.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1111, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3710 Amendments to Form B

(1) An amendment to Form B shall be filed within 15 days after the end of any month in which there is a material change to the information provided in the annual registration statement.

(2) Amendments must be filed in the Form B format with only those items which are being amended reported. Each amendment must include at the top of the cover page "Amendment No. (insert number) to Form B for (insert year)," and shall indicate the date of the change and not the date of the original filings.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1111, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3711 Summary of Changes to Registration--Statement Filing

(1) An insurer required to file an annual registration statement pursuant to 33-2-1111(2), MCA, is also required to furnish information required on Form C, which is made a part of these rules.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1111, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3712 Alternative and Consolidated Registrations

(1) Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under 33-2-1111, MCA. A registration statement may include information not required by 33-2-1111, MCA, regarding any insurer in the insurance holding company system even if such insurer is not authorized to do business in this state. In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required in its state of domicile, provided:

(a) the statement or report contains substantially similar information required to be furnished on Form B; and

(b) the filing insurer is the principal insurance company in the insurance holding company system.

(2) The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

(3) With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under (1).

(4) Any insurer may take advantage of the provisions of 33-2-1111(8) and (9), MCA, without obtaining the prior approval of the commissioner. The commissioner, however, may require individual filings if (s)he deems such filings necessary in the interest of clarity, ease of administration, or the public benefit.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1111, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3713 Disclaimers and Termination of Registration

(1) A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the "subject") must contain the following information:

(a) the number of authorized, issued, and outstanding voting securities of the subject;

(b) with respect to the person whose control is denied, and all affiliates of such person, the number and percentage of shares of the subject's voting securities which are held of record, or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly;

(c) all material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person; and

(d) a statement explaining why the person should not be considered to control the subject.

(2) A request for termination of registration shall be deemed granted unless the commissioner, within 30 days after (s)he receives the request, notifies the registrant otherwise.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1111, 33-2-1112, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3714 Filing of Form D--Transactions Subject to Prior Notice

(1) An insurer required to give notice of a proposed transaction pursuant to 33-2-1113, MCA, shall furnish the required information on Form D, which is made a part of these rules.

(2) Agreements for cost sharing services and management services must at a minimum, and as applicable:

(a) identify the person providing services, and the nature of such services;

(b) set forth the methods to allocate costs;

(c) require timely settlement, not less frequently than on a quarterly basis, and in compliance with the requirements in the Accounting Practices and Procedures Manual;

(d) prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

(e) state that the insurer will maintain oversight for functions provided to the insurer by the affiliate, and that the insurer will monitor services annually for quality assurance;

(f) define books and records of the insurer to include all books and records

developed or maintained under or related to the agreement;

(g) specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;

(h) state that all funds and invested assets of the insurer are the exclusive

property of the insurer, held for the benefit of the insurer, and are subject to

the control of the insurer;

(i) include standards for termination of the agreement with and without cause;

(j) include provisions for indemnification of the insurer in the event of gross

negligence, or willful misconduct on the part of the affiliate providing the

services;

(k) specify that, if the insurer is placed in receivership or seized by the

commissioner under the Insurers Supervision, Rehabilitation, and Liquidation Act:

(i) all of the rights of the insurer under the agreement extend to the

receiver or commissioner; and

(ii) all books and records will immediately be made available to the receiver or commissioner, and shall be turned over to the receiver or commissioner immediately upon the receiver or the commissioner's request.

(l) specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to the Insurers Supervision, Rehabilitation, and Liquidation Act; and

(m) specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the commissioner under the Insurers Supervision, Rehabilitation, and Liquidation Act, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1113, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3715 Extraordinary Dividends and Other Distributions

(1) Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders must include the following:

(a) the amount of the proposed dividend;

(b) the date established for payment of the dividend;

(c) a statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value, together with an explanation of the basis for valuation;

(d) a copy of the calculations determining that the proposed dividend is extraordinary. The work paper must include the following information:

(i) the amounts, dates, and forms of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurer's own securities) paid within the period of 12 consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the preceding year;

(ii) surplus as regards policyholders (total capital and surplus) as of the 31st day of December next preceding;

(iii) if the insurer is a life insurer, the net gain from operations for the 12-month period ending the 31st day of December next preceding;

(iv) if the insurer is not a life insurer, the net income less realized capital gains for the 12-month period ending the 31st day of December next preceding and the two preceding 12-months periods; and

(v) if the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer's own securities in the preceding two calendar years.

(e) a balance sheet and statement of income for the period intervening from the last annual statement filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and

(f) a brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurers financial needs.

(2) Subject to 33-2-1114, MCA, each registered insurer shall report to the commissioner all dividends and other distributions to shareholders within 15 business days following the declaration thereof, including the same information required by (1)(d)(i) through (v).

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1114, 33-2-1516, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.3716 Adequacy of Surplus

(1) The factors set forth in 33-2-1113(6), MCA, are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer's surplus, no single factor will necessarily be controlling. The commissioner will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the commissioner will consider the extent to which each of these factors varies from company to company, and in determining the quality and liquidity of investments in subsidiaries, the commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1113, 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 2014 MAR p. 501, Eff. 3/14/14.

Mont. Admin. R. 6.6.3717 Forms

(1) The following forms apply to this subchapter.

(a) FORM A

STATEMENT REGARDING THE

ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER

Name of Domestic Insurer

Name of Acquiring Person (Applicant)

Filed with the Office of the Montana State Auditor, Commissioner of Securities and Insurance

(State of domicile of insurer being acquired)

Dated: ___________, 20

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning this Statement Should be Addressed:

ITEM 1. INSURER AND METHOD OF ACQUISITION

State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT

(a) State the name and address of the applicant seeking to acquire control over the insurer;

(b) If the applicant is not an individual, state the nature of its business operations for the past five years, or for such lesser period as such person and any predecessors thereof shall have been in existence. Briefly describe the business intended to be done by the applicant and the applicant's subsidiaries; and

(c) Furnish a chart or listing clearly presenting the identities of the inter-relationships among the applicant and all affiliates of the applicant. Indicate in such chart or listing the percentage of voting securities of each such person which is owned or controlled by the applicant or by any other such person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, and set forth the title of the court, nature of proceedings, and the date when commenced.

ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT

On the biographical affidavit, include a third party background check, and state the following with respect to:

(1) The applicant if (s)he is an individual, or

(2) All persons who are directors, executive officers or owners of 10% or more of the voting securities of the applicant if the applicant is not an individual.

(a) Name and business address;

(b) Present principal business activity, occupation, or employment including position and office held and the name, principal business, and address of any corporation or other organization in which such employment is carried on;

(c) Material occupations, positions, offices, or employment during the last five years, giving the starting and ending dates of each and the name, principal business, and address of any business corporation or other organization in which each such occupation, position, office or employment was carried on; if any such occupation, position, office, or employment required licensing by or registration with any federal, state, or municipal governmental agency, indicate such fact, the current status of such licensing or registration, and an explanation of any surrender, revocation, suspension, or disciplinary proceedings in connection therewith; and

(d) Whether or not a person has ever been convicted in a criminal proceeding (excluding minor traffic violations) during the last ten years and, if so, give the date, nature of conviction, name and location of court, and penalty imposed or other disposition of the case.

ITEM 4. NATURE, SOURCE, AND AMOUNT OF CONSIDERATION

(a) Describe the nature, source, and amount of funds or other considerations used or to be used in effecting the merger or other acquisition of control. If any part of the same is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship, if any, between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes, and security arrangements relating thereto;

(b) Explain the criteria used in determining the nature and amount of such consideration; and

(c) If the source of the consideration is a loan made in the lender's ordinary course of business, and if the applicant wishes the identity of the lender to remain confidential, (s)he must specifically request that the identity be kept confidential.

ITEM 5. FUTURE PLANS OF INSURER

Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate the insurer, to sell its assets to or merge it with any person or persons, or to make any other material change in its business operations, or corporate structure, or management.

ITEM 6. VOTING SECURITIES TO BE ACQUIRED

State the number of shares of the insurer's voting securities which the applicant, its affiliates, and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement, or acquisition, and a statement as to the method by which the fairness of the proposal was arrived at.

ITEM 7. OWNERSHIP OF VOTING SECURITIES

State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates, or any person listed in Item 3.

ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDING WITH RESPECT TO VOTING SECURITIES OF THE INSURER

Give a full description of any contracts, arrangements, or understandings with respect to any voting security of the insurer in which the applicant, its affiliates, or any person listed in Item 3 is involved including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. Such description shall identify the persons with whom such contracts, arrangements, or understandings have been entered into.

ITEM 9. RECENT PURCHASES OF VOTING SECURITIES

Describe any purchases of any voting securities of the insurer by the applicant, its affiliates, or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement. Include in such description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefore. State whether any such shares so purchased are hypothecated.

ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE

Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates, or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates, or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement.

ITEM 11. AGREEMENT WITH BROKER-DEALERS

Describe the terms of any agreement, contract, or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender, and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard thereto.

ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements, exhibits, and three year financial projections of the insurer(s) must be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached;

(b) The financial statements must include the annual financial statements of the persons identified in Item 2(c) for the preceding five fiscal years (or for such lesser period as the applicant and its affiliates, and any predecessors thereof shall have been in existence), and similar information covering the period from the end of such person's last fiscal year, if the information is available. Such statements may be prepared on either an individual basis, or, unless the commissioner otherwise requires, on a consolidated basis, if such consolidated statements are prepared in the usual course of business.

The annual financial statements of the applicant must be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles, or with requirements of insurance, or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of such person filed with the insurance department of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the state; and

(c) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer and (if distributed) of additional soliciting material relating thereto, any proposed employment, consultation, advisory, or management contracts concerning the insurer, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years, and any additional documents or papers required by Form A or ARM 6.6.3702 and 6.6.3704.

ITEM 13. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of 33-1-1111, MCA, ______________ has caused this application to be duly signed on its behalf in the city of _____________ and state of ______________ on the _____ day of _________, 20.

(SEAL) _________________________

Name of Applicant

BY _____________________________

(Name) (Title)

Attest:

(Signature of Officer)

(Title)

CERTIFICATION

The undersigned certifies that (s)he has duly executed the attached application dated ________, 20, for and on behalf of _______________________; (Name of Applicant); that (s)he is the ____________________ (Title of Officer) of such company and that (s)he is authorized to execute and file the instrument. Deponent further says that (s)he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information, and belief.

(Signature) _______________________

(Type or print name beneath) _______________________

(b) FORM B

INSURANCE HOLDING COMPANY SYSTEM ANNUAL REGISTRATION STATEMENT

Filed with the Office of the Montana State Auditor,

Commissioner of Securities and Insurance

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

Date: ________, 20

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning this Statement Should be Addressed:

ITEM 1. IDENTITY AND CONTROL OF REGISTRANT

Furnish the exact name of each insurer registering or being registered (hereinafter called "the Registrant"), the home office address and principal executive offices of each; the date on which each registrant became part of the insurance holding company system; and the method(s) by which control of each registrant was acquired and is maintained.

ITEM 2. ORGANIZATIONAL CHART

Furnish a chart or listing presenting the identities of, and interrelationships among, all affiliated persons within the insurance holding company system. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in such chart or listing, indicate the type of organization (e.g., corporation, trust, partnership), and the state or other jurisdiction of domicile.

ITEM 3. THE ULTIMATE CONTROLLING PERSON

As to the ultimate controlling person in the insurance holding company system furnish the following information:

(a) Name;

(b) Home office address;

(d) The organizational structure of the person, i.e., corporation, partnership, individual, trust, etc;

(e) The principal business of the person;

(f) The name and address of any person who holds or owns 10% or more of any class of voting security, the class of such security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned; and

(g) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings, and the date when commenced.

ITEM 4. BIOGRAPHICAL INFORMATION

If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, furnish the following information for the directors and executive officers of the ultimate controlling person; the individual's name and address, his or her principal occupation and all offices and positions held during the past five years, and any convictions of crimes other than minor traffic violations during the past ten years. If the ultimate controlling person is an individual, furnish the individual's name and address, the individual's principal occupation, and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations during the past ten years.

ITEM 5. TRANSACTIONS AND AGREEMENTS

Briefly describe the following agreements in force and transactions currently outstanding, or which have occurred during the last calendar year between the registrant and its affiliates:

(a) Loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the registrant or of the registrant by its affiliates;

(b) Purchases, sales, or exchanges of assets;

(d) Guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the registrant's assets to liability, other than insurance contracts entered into in the ordinary course of the registrant's business;

(e) All management agreements, service contracts, and all cost-sharing arrangements;

(f) Reinsurance agreements;

(g) Dividends and other distributions to shareholders;

(h) Consolidated tax allocation agreements; and

(i) Any pledge of the registrant's stock and/or of the stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.

No information need be disclosed if such information is not material for purposes of 33-2-1111, 33-2-1112, and 33-2-1113, MCA.

Sales, purchases, exchanges, loans, or extensions of credit, investments or guarantees involving one-half of 1% or less of the registrant's admitted assets as of the 31st day of December of the preceding year are not deemed material.

The description must be in a manner as to permit the proper evaluation thereof by the commissioner, and must include at least the following: the nature and purpose of the transaction, the nature and amounts of any payments or transfers of assets between the parties, the identity of all parties to the transaction, and relationship of the affiliated parties to the registrant.

ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS

A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person is or was the subject; give the names of the parties and the court or agency in which such litigation or proceeding is or was pending:

(a) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party; and

(b) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company including, but not necessarily limited to, bankruptcy, receivership, or other corporate reorganizations.

ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits must be listed under this item and attached to this statement as an appendix.

(b) If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, the financial statements must include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year.

If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information must be filed for any subsequent period to the extent such information is available. The financial statements may be prepared either on an individual basis, or unless the commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

Unless the commissioner otherwise permits, the annual financial statements must be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles, or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the insurer's annual statement filed with the insurance department of the insurer's domiciliary state, and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.

Any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review shall be conducted in accordance with standards for review of personal financial statements published in the Personal Financial Statements Guide by the American Institute of Certified Public Accountants. Personal financial statements shall be accompanied by the independent public accountants Standard Review Report stating that the accountant is not aware of any material modifications that should be made to the financial statements in order for the statements to be in conformity with generally accepted accounting principles.

(c) Exhibits must include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by Form B or ARM 6.6.3702 and 6.6.3704.

ITEM 9. FORM C REQUIRED

A Form C, Summary of Changes to Registration Statement, must be prepared and filed with this Form B.

ITEM 10. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of 33-2-1111, MCA, the registrant has caused this annual registration statement to be duly signed on its behalf in the city of _______________ and state of ___________ on the day of ________, 20.

(SEAL) _______________________

Name of Applicant

BY_______________________

(Name) (Title)

Attest:

(Signature of Officer)

(Title)

CERTIFICATION

The undersigned certifies that (s)he has duly executed the attached annual registration statement dated _____________, 20 , for and on behalf of ____________________ (Name of Applicant); that (s)he is the _________________ (Title of Officer) of the company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information, and belief.

(Signature) ______________________

(Type or print name beneath) ______________________

SUMMARY OF CHANGES TO REGISTRATION STATEMENT

Filed with the Office of the Montana State Auditor,

Commissioner of Securities and Insurance

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

Date: __________, 20

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:

Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. The description must be in a manner as to permit the proper evaluation thereof by the commissioner, and must include specific references to Item numbers in the annual registration statement and to the terms contained therein.

Changes occurring under Item 2 of Form B insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where such changes are ones which result in ownership or holdings of 10% or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

Changes occurring under Item 4 of Form B need only be included where an individual is, for the first time, made a director or executive officer of the ultimate controlling person; a director or executive officer terminates his or her responsibilities with the ultimate controlling person; or in the event an individual is named president of the ultimate controlling person.

If a transaction disclosed on the prior year's annual registration statement has been changed, the nature of such change must be included. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.

The insurer must furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

Pursuant to the requirements of 33-2-1111, MCA, the registrant has caused this summary of registration statement to be duly signed on its behalf in the city of _____________ and state of ________________ on the_______ day of __________, 20.

(SEAL) _________________________

Name of Registrant

By _________________________

(Name) (Title)

Attest:

(Signature of Officer)

(Title)

CERTIFICATION

The undersigned certifies that (s)he has duly executed the attached summary of registration statement dated ________________, 20, for and on behalf of ______________________ (Name of Applicant); that (s)he is the ______________ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information, and belief.

(Signature) ________________________

(Type or print name beneath) ________________________

(d) FORM D

PRIOR NOTICE OF A TRANSACTION

Filed with the Office of the Montana State Auditor,

Commissioner of Securities and Insurance

Name of Registrant

On Behalf of Following Insurance Companies

Name Address

Date: ____________, 20

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should be Addressed:

ITEM 1. IDENTITY OF PARTIES TO TRANSACTION

Furnish the following information for each of the parties to the transaction:

(a) Name;

(b) Home office address;

(d) The organizational structure; i.e., corporation, partnership, individual, trust, etc.

(e) A description of the nature of the parties' business operations;

(f) Relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties; and

(g) Where the transaction is with a non-affiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.

ITEM 2. DESCRIPTION OF THE TRANSACTION

Furnish the following information for each transaction for which notice is being given:

(a) A statement as to whether notice is being given under 33-2-1113(2), MCA;

(b) A statement of the nature of the transaction;

(d) The proposed effective date of the transaction.

ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES OR INVESTMENTS

Furnish a brief description of the amount and source of funds, securities, property, or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, a description of the terms of any securities being received, if any, and a description of any other agreements relating to the transaction such as contracts or agreements for services, consulting agreements, and the like. If the transaction involves other than cash, furnish a description of the consideration, its cost and fair market value, together with an explanation of the basis for evaluation.

If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under such loan, extension of credit or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of, or deferral of interest.

If the transaction involves an investment, guarantee, or other arrangement, state the time period during which the investment, guarantee, or other arrangement will remain in effect, together with any provisions for extensions or renewals of the investments, guarantees, or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

Notice is not required if the maximum amount which can at any time be outstanding, or for which the insurer can be legally obligated under the loan, extension of credit, or guarantee is less than, (a) in the case of non-life insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders or, (b) in the case of life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December of the preceding year.

ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NON-AFFILIATE

If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit. Additionally, specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of, or make investments in any affiliate. Describe the amount and source of funds, securities, property, or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, include a description of its cost and fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

Notice is not required if the loan or extension of credit is one which equals less than, in the case of non-life insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus as regards policyholders or, with respect to life insurers, 3% of the insurer's admitted assets, each as of the 31st day of December of the preceding year.

ITEM 5. REINSURANCE

If the transaction is a reinsurance agreement or modification to a reinsurance agreement, as described by 33-2-1113(2)(a)(iii), MCA, furnish a description of the known and/or estimated amount of liability to be ceded and/or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and non-affiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer's surplus.

Notice is not required for reinsurance agreements or modifications if the reinsurance premium or a change in the insurer's liabilities in connection with the reinsurance agreement or modification is less than 5% of the insurer's surplus as regards policyholders, as of the 31st day of December of the preceding year.

ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS, AND COST-SHARING AGREEMENTS

For management and service agreements, furnish:

(a) A brief description of the managerial responsibilities, or services to be performed; and

(b) A brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

For cost-sharing arrangements, furnish:

(a) A brief description of the purpose of the agreement;

(b) A description of the period of time during which the agreement is to be in effect;

(d) A brief description of the accounting basis to be used in calculating each party's costs under the agreement.

(e) A brief statement as to the effect of the transaction upon the insurer's policyholder surplus.

(f) A statement regarding the cost allocation methods that specifies whether proposed charges are based on "cost of market." If market-based, rationale for using market instead of cost, including justification for the company's determination that amounts are fair and reasonable; and

(g) A statement regarding compliance with the NAIC Accounting Practices and Procedure Manual regarding expense allocation.

ITEM 7. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of 33-2-1113, MCA, _____________ has caused this notice to be duly signed on its behalf in the city of _____________ and state of ______________ on the ______ day of __________, 20.

(SEAL) ___________________________

Name of Applicant

By: ___________________________

(Name) (Title)

Attest:

(Signature of Officer)

(Title)

CERTIFICATION

The undersigned certifies that (s)he has duly executed the attached notice dated ___________, 20, for and on behalf of _____________________; (Name of Applicant); that (s)he is the ________________________ (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information, and belief.

(Signature) _____________________

(Type or print name beneath) _____________________

(e) FORM F

ENTERPRISE RISK REPORT

Filed with the Office of the Montana State Auditor,

Commissioner of Securities and Insurance

Name of Registrant/Applicant

On Behalf of/Related to Following Insurance Companies

Name Address

Date: ________, 20

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:

ITEM 1. ENTERPRISE RISK

The Registrant/Applicant, to the best of its knowledge and belief, shall provide information regarding the following areas that could produce enterprise risk as defined in 33-2-1101(3), MCA, provided such information is not disclosed in the Insurance Holding Company System Annual Registration Statement filed on behalf of itself or another insurer for which it is the ultimate controlling person:

Any material developments regarding strategy, internal audit findings, compliance or risk management affecting the insurance holding company system;

Acquisition or disposal of insurance entities and reallocating of existing financial or insurance entities within the insurance holding company system;

Any changes of shareholders of the insurance holding company system exceeding ten percent (10%) or more of voting securities;

Developments in various investigations, regulatory activities or litigation that may have a significant bearing or impact on the insurance holding company system;

Business plan of the insurance holding company system and summarized strategies for next 12 months;

Identification of material concerns of the insurance holding company system raised by supervisory college, if any, in last year;

Identification of insurance holding company system capital resources and material distribution patterns;

Identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in the credit ratings and individual insurer financial strength ratings assessment of the insurance holding company system (including both the rating score and outlook);

Information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should such guarantees be called upon; and

Identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, could adversely affect the insurance holding company system.

The Registrant/Applicant may attach the appropriate form most recently filed with the U.S. Securities and Exchange Commission, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the form provides responsive information. If the Registrant/Applicant is not domiciled in the U.S., it may attach its most recent public audited financial statement filed in its country of domicile, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the financial statement provides responsive information.

ITEM 2: OBLIGATION TO REPORT.

If the Registrant/Applicant has not disclosed any information pursuant to Item

1, the Registrant/Applicant shall include a statement affirming that to the best of its knowledge and belief, it has not identified enterprise risk subject to disclosure pursuant to Item 1.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1104, 33-2-1111, 33-2-1113, 33-2-1517, MCA
History: NEW, 2014 MAR p. 501, Eff. 3/14/14; AMD, 2016 MAR p. 824, Eff. 5/7/16.

Mont. Admin. R. 6.6.3718 Enterprise Risk Report

(1) The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to 33-2-1111(7), MCA, shall furnish the required information on Form F, found in ARM 6.6.3717.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1111, MCA
History: NEW, 2016 MAR p. 824, Eff. 5/7/16.

Mont. Admin. R. 6.6.3719 Group Capital Calculation

(1) The lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination that the insurance holding company system meets all of the following criteria:

(a) Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium), but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000;

(b) Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

(c) Has no banking, depository, or other financial entity that is subject to an identified regulatory capital framework within its holding company structure;

(d) The holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital; and

(e) The non-insurers within the holding company system do not pose a material financial risk to the insurer's ability to honor policyholder obligations.

(2) Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to accept in lieu of the group capital calculation a limited group capital filing if:

(a) The insurance holding company system has annual direct written and unaffiliated assumed premium (including international direct and assumed premium), but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000; and

(b) All of the following additional criteria are met:

(i) Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

(ii) Does not include a banking, depository, or other financial entity that is subject to an identified regulatory capital framework; and

(iii) The holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state commissioner and the non-insurers within the holding company system do not pose a material financial risk to the ability of the insurers to honor policyholder obligations.

(3) For an insurance holding company that has previously met an exemption with respect to the group capital calculation pursuant to (1) or (2) of this rule, the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC Group Capital Calculation Instructions, if any of the following criteria are met:

(a) Any insurer within the insurance holding company system is in a Risk-Based Capital action level event as set forth in 33-2-1904, MCA, or a similar standard for a non-U.S. insurer; or

(b) Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in ARM 6.6.3401 and 6.6.3402; or

(c) Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.

(4) A non-U.S. jurisdiction is considered to "recognize and accept" the group capital calculation if it satisfies the following criteria:

(a) With respect to 33-2-1111, MCA:

(i) The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or

(ii) Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard. This will serve as the documentation otherwise required in (4)(a)(i).

(b) The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC. The commissioner shall determine, in consultation with the NAIC Committee Process, if the requirements of the information sharing agreements are in force.

(5) A list of non-U.S. jurisdictions that "recognize and accept" the group capital calculation will be published through the NAIC Committee Process:

(a) A list of jurisdictions that "recognize and accept" the group capital calculation pursuant to 33-2-1111, MCA, is published through the NAIC Committee Process to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction is exempted from filing under 33-2-1111(7)(b)(iv), MCA. To assist with a determination under 33-2-1111(7)(b)(v), MCA, the list will also identify whether a jurisdiction that is exempted under either 33-2-1111(7)(b)(iii) or (iv), MCA, requires a group capital filing for any U.S. based insurance group's operations in that non-U.S. jurisdiction.

(b) For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of (4)(a)(ii) will serve as support for recommendation to be published as a jurisdiction that "recognizes and accepts" the group capital calculation through the NAIC Committee Process.

(c) If the lead state commissioner makes a determination pursuant to 33-2-1111(7)(b)(iv), MCA, that differs from the NAIC List, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states.

(d) Upon determination by the lead state commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to "recognize and accept" the group capital calculation, the lead state commissioner may provide a recommendation to the NAIC that the non-U.S. jurisdiction be removed from the list of jurisdictions that "recognize and accept" the group capital calculation.

History

Authorizing statute(s): 33-1-313, 33-2-1117, MCA
Implementing statute(s): 33-2-1111, MCA
History: NEW, 2022 MAR p. 1189, Eff. 9/1/22.

Subchapter 6.6.38 Credit for Reinsurance

Mont. Admin. R. 6.6.3810 Methods of Allowing Credit for Reinsurance

(1) These rules implement the statutory provisions allowing for credit for reinsurance. Credit for reinsurance is allowed only where a method set out in statute has been followed, including the following methods:

(a) assuming insurer is licensed in Montana, as provided in 33-2-1216(2), MCA;

(b) assuming insurer is accredited in Montana, as provided in 33-2-1216(3), MCA;

(c) assuming insurer is domiciled, and licensed in, or entered through another state with standards regarding credit for reinsurance substantially similar to those of this state, as provided in 33-2-1216(4), MCA;

(d) assuming insurer maintains a trust fund, as provided in 33-2-1216(5), MCA;

(e) assuming insurer is certified by the commissioner, as provided in 33-2-1216(5)(e), MCA; or

(f) assuming insurer does not meet the requirements of 33-2-1216, MCA, but the commissioner approves reduction from liability in the amount of funds held by, or on behalf of, the ceding insurer pursuant to 33-2-1217, MCA.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1201, 33-2-1202, 33-2-1203, 33-2-1204, 33-2-1205, 33-2-1206, 33-2-1207, 33-2-1208, 33-2-1209, 33-2-1210, 33-2-1211, 33-2-1212, 33-2-1213, 33-2-1214, 33-2-1215, 33-2-1216, 33-2-1217, 33-2-1218, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3811 Definitions

For the purposes of this subchapter, the following definitions apply:

(1) "Beneficiary" includes any successor by operation of law of the named beneficiary, including without limitation any liquidator, rehabilitator, receiver, or conservator.

(2) "Grantor" means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer.

(3) "Reinsurance agreement" or "reinsurance contract" means an agreement or contract between the assuming insurer and any other party for purposes of Title 33, chapter 2, part 12, MCA, and these rules. The original insured (ceding insurer) has no interest in a contract of reinsurance.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3812 Reinsurance Transactions Affected

(1) All new and renewal reinsurance transactions entered into after October 1, 1993, shall conform to the requirements of 33-2-1201, 33-2-1202, 33-2-1203, 33-2-1204, 33-2-1205, 33-2-1206, 33-2-1207, 33-2-1208, 33-2-1209, 33-2-1210, 33-2-1211, 33-2-1212, 33-2-1213, 33-2-1214, 33-2-1215, 33-2-1216, 33-2-1217, 33-2-1218, MCA, and these rules if credit is to be given to the ceding insurer for such reinsurance.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1218, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3813 Requirements for Reinsurance Contracts or Agreements

(1) Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for reinsurance pursuant to 33-2-1216, or 33-2-1217, MCA, and these rules unless the reinsurance contract or agreement includes:

(a) a clause which requires that the reinsurance is payable directly to the liquidator or successor by the assuming insurer without consideration of the insolvency of the ceding insurer;

(b) a provision whereby the assuming insurer has submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States, and has agreed to comply with all requirements necessary to give such court or panel jurisdiction, has designated an agent upon whom service of process may be effected, and has agreed to abide by the final decision of such court or panel; and

(c) a proper reinsurance intermediary clause, if applicable, which stipulates that the credit risk for the intermediary is carried by the assuming insurer.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16; AMD, 2017 MAR p. 2432, Eff. 1/1/18.

Mont. Admin. R. 6.6.3814 Forms

(1) The following forms (and related instructions) are found on the web site of the Commissioner of Securities and Insurance, Office of the State Auditor:

(a) Form AR-1;

(b) Form CR-1;

(d) Form CR-F; and

(e) Form CR-S.

History

Authorizing statute(s): 33-1-313, 33-2-1216, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16; AMD, 2022 MAR p. 798, Eff. 5/28/22.

Mont. Admin. R. 6.6.3815 Credit for Unencumbered Funds

(1) A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the United States subject to withdrawal solely by the ceding insurer and under its exclusive control.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2017 MAR p. 2432, Eff. 1/1/18.

Mont. Admin. R. 6.6.3821 Assuming Insurer That Maintains a Trust Fund - Period for Payment of Trust Funds Subject to Claims

(1) Contested claims under 33-2-1216(5)(c), MCA, shall be valid and enforceable out of funds in trust to the extent remaining unsatisfied 30 days after entry of the final order of any court of competent jurisdiction in the United States.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3822 Assuming Insurer That Maintains a Trust Fund - Definition of Liabilities

(1) For the purposes of 33-2-1216(5)(b), MCA, the term "liabilities" means the assuming insurer's gross liabilities attributable to reinsurance ceded by United States domiciled insurers, excluding liabilities that are otherwise secured by acceptable means.

(2) For business ceded by domestic insurers authorized to write accident and health or disability, and property and casualty insurance, the term "liabilities" shall include:

(a) losses and allocated loss expenses paid by the ceding insurer, recoverable from the assuming insurer;

(b) reserves for losses reported and outstanding;

(d) reserves for allocated loss expenses; and

(e) unearned premiums.

(3) For business ceded by domestic insurers authorized to write life, health or disability, and annuity insurance, the term "liabilities" shall include:

(a) aggregate reserves for life policies and contracts net of policy loans and net due and deferred premiums;

(b) aggregate reserves for accident and health or disability policies;

(d) liabilities for policy and contract claims.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3823 Assuming Insurer That Maintains a Trust Fund - Insufficient Trust Funds or Trust Fund Grantor Declared Insolvent or Placed Into Receivership, Rehabilitation, Liquidation, or Similar Proceedings

(1) If the trust fund is inadequate because it contains an amount less than required by 33-2-1216, MCA, or by ARM 6.6.3810 through 6.6.3869, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled or other designated receiver all of the assets of the trust fund.

(2) Once so transferred, the trust fund assets shall be distributed by the commissioner described above pursuant to claims filed and valued by the commissioner with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled. Assets of the trust fund unclaimed or disallowed by the commissioner shall be distributed in accordance with the trust agreement.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3824 Assuming Insurer That Maintains a Trust Fund - Valuation of Trust Assets

(1) Assets deposited in trusts established pursuant to 33-2-1216(5), MCA, shall be valued according to their current fair market value and shall consist only of:

(a) cash in U.S. dollars;

(b) certificates of deposit issued by a U.S. financial institution; and

(2) No more than 20% of the total of the investments in the trust may be foreign investments, and no more than 10% of the total of the investments in the trust may be securities denominated in foreign currencies. For purposes of applying the preceding sentence, a depository receipt denominated in U.S. dollars and representing rights conferred by a foreign security shall be classified as a foreign investment denominated in a foreign currency.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3825 Assuming Insurer That Maintains a Trust Fund - Restriction on Percentage of Trust Investment Shared by Grantor or Beneficiary

(1) For purposes of 33-2-1216(5), MCA, there can be no more than five percent of the total investments of the trust that involve investments in, or issued by, an entity controlling, controlled by, or under common control of either the grantor or beneficiary of the trust.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3826 Assuming Insurer That Maintains a Trust Fund - Allowable Government Obligations

(1) For purposes of 33-2-1216(5), MCA, government obligations are allowable if they are not in default as to principal or interest, are valid and legally authorized, and are issued, assumed, or guaranteed by:

(a) the United States or by any agency or instrumentality of the United States;

(b) a state of the United States;

(d) an agency or instrumentality of a governmental unit allowed in this rule, if the obligations shall be payable, as to both principal and interest, from taxes or adequate specifically ordered revenues provided for making these payments; or

(e) the government of any other country that is a member of the Organization for Economic Cooperation and Development and whose government obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3827 Assuming Insurer That Maintains a Trust Fund - Allowable Nongovernment Obligations

(1) For purposes of 33-2-1216(5), MCA, nongovernment obligations are allowable if they are:

(a) issued in the United States;

(b) dollar-denominated and issued in a non-United States market by a solvent United State institution (other than an insurance company); or

(2) The obligations shall not be in default as to principal or interest.

(3) The obligations shall be:

(a) rated A or higher (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the NAIC, or if not so rated, are similar in structure and other material respects to other obligations of the same institution that are so rated;

(b) insured by at least one authorized insurer (other than the investing insurer or a parent, subsidiary, or affiliate of the investing insurer) licensed to insure obligations in this state and, after considering the insurance, are rated AAA (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the NAIC; or

(4) Preferred or guaranteed shares issued or guaranteed by a solvent United States institution are permissible investments if all of the institution's obligations are eligible as investments under (3)(a) and (c), but shall not exceed two percent of the assets of the trust.

(5) Obligations issued, assumed, or guaranteed by a solvent non-United States institution chartered in a country that is a member of the Organization for Economic Cooperation and Development or obligations of United States corporations issued in a non-United States currency shall be rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3828 Assuming Insurer That Maintains a Trust Fund - Additional Restrictions on Government Obligations and Nongovernment Obligations

(1) The following apply to allowable government and nongovernment obligations used to fulfill the requirements of 33-2-1216, MCA, trust fund investments:

(a) An investment in or loan upon the obligations of an institution other than an institution that issues mortgage-related securities shall not exceed five percent of the assets of the trust;

(b) An investment in any one mortgage-related security shall not exceed five percent of the assets of the trust; and

(2) As used in this rule, "mortgage-related security" means an obligation that is rated AA or higher (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the NAIC and that either:

(a) represents ownership of one or more promissory notes or certificates of interest or participation in the notes (including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of the notes, certificates, or participation of amounts payable under, the notes, certificates or participation), that:

(i) are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in 42 U.S.C.A. Section 5402(6), whether the manufactured home is considered real or personal property under the laws of the state in which it is located; and

(ii) were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution that is supervised and examined by a federal or state housing authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to 12 U.S.C.A. Sections 1709 and 1715-b, or, where the notes involve a lien on the manufactured home, by an institution or by a financial institution approved for insurance by the Secretary of Housing and Urban Development pursuant to 12 U.S.C.A. Section 1703.

(b) is secured by one or more promissory notes or certificates of deposit or participations in the notes (with or without recourse to the insurer of the notes) and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, or notes meeting the requirements of this part of this rule.

(3) As used in this rule, when used in connection with a manufactured home, "promissory note" shall also include a loan, advance, or credit sale as evidenced by a retail installment sales contract or other instrument.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3829 Assuming Insurer That Maintains a Trust Fund - Allowable Equity Interests

(1) Investments in common shares or partnership interests of a solvent U.S. institution are permissible for purposes of 33-2-1216(5), MCA, if the equity interests of the institution (except an insurance company) are registered on a national securities exchange as provided in the Securities Exchange Act of 1934, 15 U.S.C. sections 78a to 78kk or otherwise registered pursuant to that Act, and if otherwise registered, price quotations for them are furnished through a nationwide automated quotations system approved by the Financial Industry Regulatory Authority, or successor organization. A trust shall not invest in equity interests under this paragraph an amount exceeding one percent of the assets of the trust even though the equity interests are not so registered and are not issued by an insurance company.

(2) Investments in common shares of a solvent institution organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development are permissible for purposes of 33-2-1216(5), MCA, if:

(a) all its obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC; and

(b) the equity interests of the institution are registered on a securities exchange regulated by the government of a country that is a member of the Organization for Economic Cooperation and Development.

(3) An investment in, or loan upon, any one institution's outstanding equity interests shall not exceed one percent of the assets of the trust. The cost of an investment in equity interests made pursuant to this paragraph, when added to the aggregate cost of other investments in equity interests, then held pursuant to this paragraph, shall not exceed ten percent of the assets in the trust.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3830 Assuming Insurer That Maintains a Trust Fund - Allowable Obligations Issued, Assumed, or Guaranteed by Multinational Development Bank

(1) For purposes of 33-2-1216(5), MCA, obligations issued, assumed, or guaranteed by a multinational development bank, provided the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC are allowable.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3831 Assuming Insurer That Maintains a Trust Fund - Allowable Investment Companies

(1) For purposes of 33-2-1216(5), MCA, securities of an investment company registered pursuant to the Investment Company Act of 1940, 15 U.S.C. section 80a, are permissible investments if the investment company:

(a) invests at least 90% of its assets in the types of securities that qualify as an investment under ARM 6.6.3826 through 6.6.3828, or invests in securities that are determined by the commissioner to be substantively similar to the types of securities set out in ARM 6.6.3826 through 6.6.3828; or

(b) invests at least 90% of its assets in the types of equity interests that qualify as an investment under ARM 6.6.3829.

(2) Investments made by a trust in investment companies under this rule shall not exceed the following limitations:

(a) an investment shall not exceed 10% of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall not exceed 25% of the assets in the trust; and

(b) investments shall not exceed five percent of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to this rule.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3832 Assuming Insurer That Maintains a Trust Fund - Letters of Credit

(1) In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or some other binding agreement (as duly approved by the commissioner), to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.

(2) The term of the letter of credit must be at least one year. The letter of credit must require notice of the expiration or nonrenewal date to the trustee no less than 30 days prior to the expiration or nonrenewal date.

(3) The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence and/or willful misconduct, for which the trustee is liable. Such liability must be stated in the trust agreement.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3833 Assuming Insurer That Maintains a Trust Fund - Application of Specific Security

(1) A specific security provided to a ceding insurer by an assuming insurer pursuant to 33-2-1216(6), MCA shall be applied, until exhausted, to the payment of liabilities of the assuming insurer to the ceding insurer holding the specific security prior to, and as a condition precedent for, presentation of a claim by the ceding insurer for payment by a trustee of a trust established by the assuming insurer pursuant 33-2-1216(5), MCA and applicable rules.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2017 MAR p. 2432, Eff. 1/1/18.

Mont. Admin. R. 6.6.3841 Certification of Assuming Insurers - Eligibility for Certification

(1) To be eligible for certification by the department, the assuming insurer shall be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant to the following:

(a) United States jurisdictions that meet the requirements for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions;

(b) A list of qualified jurisdictions shall be published through the NAIC Committee Process. The commissioner shall consider this list in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification with respect to the criteria in this rule; and

(c) In order to determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the reinsurance supervisory system of the non-United States jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and the extent of reciprocal recognition afforded by the non-United States jurisdiction to assuming insurers licensed and domiciled in the United States. The commissioner shall determine the appropriate approach for evaluating the qualifications of such jurisdictions, and create and publish a list of jurisdictions whose assuming insurers may be approved by the commissioner as eligible for certification. A qualified jurisdiction must agree to share information and cooperate with the commissioner with respect to all assuming insurers domiciled within that jurisdiction. Additional factors to be considered in determining whether to recognize a qualified jurisdiction, in the discretion of the commissioner, include but are not limited to the following:

(i) the framework under which the assuming insurer is regulated;

(ii) the structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;

(iii) the substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;

(iv) the form and substance of financial reports required to be filed or made publicly available by assuming insurers in the domiciliary jurisdiction and the accounting principles used;

(v) the domiciliary regulator's willingness to cooperate with United States regulators in general and the commissioner in particular;

(vi) the history of performance by assuming insurers in the domiciliary jurisdiction;

(vii) any documented evidence of substantial problems with the enforcement of final United States judgments in the domiciliary jurisdiction. A jurisdiction will not be considered to be a qualified jurisdiction if the commissioner has determined that it does not adequately and promptly enforce final United States judgments or arbitration awards;

(viii) any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or successor organization; and

(ix) any other matters deemed relevant by the commissioner.

(d) If, upon conducting an evaluation under this rule with respect to the reinsurance supervisory system of any non-United States assuming insurer, the commissioner determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the commissioner shall publish notice and evidence of such recognition in an appropriate manner. The commissioner may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.

(2) To be eligible for certification, the assuming insurer must maintain capital and surplus, or its equivalent, of no less than $250,000,000 calculated in accordance with ARM 6.6.3850. This requirement may also be satisfied by an association including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000, and a central fund containing a balance of at least $250,000,000.

(3) The assuming insurer must maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information. These financial strength ratings will be one factor used by the commissioner in determining the rating that is assigned to the assuming insurer. Acceptable rating agencies include the following:

(a) Standard & Poor's;

(b) Moody's Investors Service;

(d) A.M. Best Company; or

(e) any other nationally recognized statistical rating organization.

(4) The assuming insurer must comply with any other requirements reasonably imposed by the commissioner.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3842 Certification of Assuming Insurers - Initial Certification Procedure

(1) The assuming insurer must submit an Application for Credit for Reinsurance and a properly executed Form CR-1. The forms and directions are found on the web site maintained by the commissioner.

(2) The commissioner shall post notice on the department web site promptly upon receipt of any application for credit for reinsurance involving certification pursuant to 33-2-1216(5)(e), MCA. The web site must include instructions on how members of the public may respond to the application. The commissioner may not take final action on the application until at least 30 days after posting the notice required by this paragraph.

(3) Upon the initial certification, the assuming insurer shall submit audited financial statements for the last three years filed with the assuming insurer's supervisor.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3843 Certification of Assuming Insurers - Filing Requirements

(1) The assuming insurer must fulfill filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis.

(2) All information submitted by assuming insurers which are not otherwise public information subject to disclosure shall be exempted from disclosure under 33-2-406, MCA, and shall be withheld from public disclosure.

(3) The assuming insurer must provide to the commissioner the following:

(a) notification within 10 days of any regulatory actions taken against the assuming insurer, any change in the provisions of its domiciliary license or any change in rating by an approved rating agency, including a statement describing such changes and the reasons therefore;

(b) annually, Form CR-F or CR-S, as applicable. The forms are found on the web site maintained by the commissioner;

(c) upon the initial certification, audited financial statements for the last two years filed with the certified reinsurer's supervisor, thereafter, annually, reports of an independent auditor on the financial statements of the assuming insurer, the most recent audited financial statements, regulatory filings, and actuarial opinions (as filed with the assuming insurer's supervisor, with a translation into English);

(d) at least annually, an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from United States domestic ceding insurers;

(e) a certification from the assuming insurer's domestic regulator that the assuming insurer is in good standing and maintains capital in excess of the jurisdiction's highest regulatory action level; and

(f) any other information that the commissioner may require.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16; AMD, 2022 MAR p. 1190, Eff. 7/9/22.

Mont. Admin. R. 6.6.3844 Certification of Assuming Insurers - Recognition of Certification Issued by an Naic-Accredited Jurisdiction

(1) An assuming insurer that has submitted a properly executed Form CR-1 and such additional information as the commissioner requires, may request that the commissioner consider the assuming insurer's certification in an NAIC-accredited jurisdiction.

(2) In the event that the commissioner certifies the assuming insurer based on the certification in an NAIC-accredited jurisdiction (hereinafter the other jurisdiction), the following apply:

(a) the certified reinsurer shall notify the commissioner of any change in its certification status or rating in the other jurisdiction within 10 days after receiving notice of the change;

(b) any change in the certified reinsurer's certification status in the other jurisdiction shall apply automatically in this state as of the date it takes effect in the other jurisdiction;

(c) the commissioner may withdraw recognition of the other jurisdiction's certification at any time, with written notice to the certified reinsurer; and

(d) unless the commissioner suspends or revokes the certified reinsurer's certification in accordance with ARM 6.6.3846(1) and (2), the certified reinsurer's certification shall remain in good standing in this state for a period of three months, which shall be extended if additional time is necessary to consider the assuming insurer's application for certification in this state.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3845 Certification of Assuming Insurers - Notice of Certification

(1) The commissioner shall issue written notice to an assuming insurer that has made application and been approved as a certified reinsurer. The written notice shall include the rating assigned the certified reinsurer pursuant to this rule. The commissioner shall publish a list of all certified reinsurers and their ratings.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3846 Certified Assuming Insurers - Change in Certification

(1) The commissioner has the authority to suspend, revoke, or otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements as stated in 33-2-1216, MCA, and these rules, or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the commissioner to reconsider the certified reinsurer's ability or willingness to meet its contractual obligations.

(2) Upon revocation of the certification of a certified reinsurer by the commissioner, the assuming insurer shall be required to post security to continue to take credit for reinsurance. The commissioner may allow additional credit equal to the ceding insurer's pro rata share of trust funds meeting the standards of 33-2-1216, 33-2-1217, MCA, and these rules, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration. Notwithstanding the change of a certified reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of three months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the commissioner to be at high risk of uncollectibility.

(3) When an assuming insured has been certified by the commissioner pursuant to 33-2-1216(5)(e), MCA, (based on certification in a qualified jurisdiction and NAIC certification) and the certification in the NAIC-accredited jurisdiction (hereinafter the other jurisdiction) changes, the provisions of ARM 6.6.3850 apply.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3847 Certification of Assuming Insurers - Mandatory Funding Clause in Reinsurance Contracts or Agreements

(1) Insurance contracts entered into or renewed under the commissioner's authority to certify an assuming reinsurer shall include a proper funding clause, which requires the certified reinsurer to provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3848 Certified Reinsurers - Effective Date of Credit

(1) The credit allowed to a certified reinsurer pursuant to 33-2-1216, MCA, and this rule shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Reinsurance contracts entered into prior to the effective date of the certification of the assuming insurer can be applied prospectively to the effective date of the certification of the assuming insurer only with respect to losses incurred and reserves reported from and after the effective date of an amendment to the prior contract or the effective date of a new contract.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3849 Certified Reinsurers - Security Rating for Credit

(1) The credit allowed to a certified assuming insurer pursuant to 33-2-1216, MCA, shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the commissioner. The security shall be in a form consistent with 33-2-1216, MCA, and this rule. The minimum amount of security required in order for full credit to be allowed shall correspond with the following requirements:

(a) Ratings Security Required

Secure – 1 0%

Secure – 2 10%

Secure – 3 20%

Secure – 4 50%

Secure – 5 75%

Vulnerable – 6 100%

(b) the commissioner may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to United States ceding insurers, provided that the commissioner shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level if the commissioner finds that:

(i) more than 15% of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more which are not in dispute and which exceed $100,000 for each cedent; or

(ii) the aggregate amount of reinsurance recoverables on paid losses which are not in dispute that are overdue by 90 days or more exceeds $50,000,000.

(c) the commissioner has the authority to revise and change the security rating of a certified reinsurer at any time pursuant to this rule. If the rating is upgraded by the commissioner, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the commissioner shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the commissioner, the commissioner shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer;

(d) the certified reinsurer shall post 100% of the security for the benefit of the ceding insurer or its estate upon the entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer; and

(e) to facilitate the prompt payment of claims, a certified reinsurer shall not be required to post security for catastrophe recoverables recognized by the commissioner for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the commissioner. The one-year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. The deferral period applies only to the following lines of business, as reported on the NAIC annual financial statement related specifically to the catastrophic occurrence:

(i) Line 1: Fire;

(ii) Line 2: Allied Lines;

(iii) Line 3: Farmowners multiple peril;

(iv) Line 4: Homeowners multiple peril;

(v) Line 5: Commercial multiple peril;

(vi) Line 9: Inland Marine;

(vii) Line 12: Earthquake; and

(viii) Line 21: Auto physical damage.

(2) In the event that the commissioner certifies the assuming insurer based on the certification in an NAIC-accredited jurisdiction (hereinafter the other jurisdiction), the following apply:

(a) the certified assuming insurer shall notify the commissioner of any change in its rating in the other jurisdiction within 10 days after receiving notice of the change; and

(b) the commissioner may withdraw recognition of, change, or revoke the rating of the certified assuming insurer at any time and assign a new rating pursuant to this rule.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3850 Certified Assuming Insurers - Legal Entity Security Rating

(1) Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include, but are not limited to, the following:

(a) the certified reinsurer's financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The commissioner shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification:

(b) the business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;

(c) for certified reinsurers domiciled in the United States, a review of the most recent applicable NAIC Annual Statement Blank, either Schedule F (for property/casualty reinsurers) or Schedule S (for life and health or disability reinsurers);

(d) for certified reinsurers not domiciled in the United States, a review annually of Form CR-F (for property/casualty reinsurers) or Form CR-S (for life and health or disability reinsurers). The forms are found on the web site maintained by the commissioner;

(e) the reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;

(f) regulatory actions against the certified reinsurer;

(g) reports of an independent auditor on the financial statements of the assuming insurer, audited financial statement, regulatory filings, and actuarial opinions (as filed with the assuming insurer's supervisor);

(h) for certified reinsurers not domiciled in the United States, audited financial statements, regulatory filings, and actuarial opinion (as filed with the non-United States jurisdiction supervisor, with a translation into English). Upon the initial application for certification, the commissioner will consider audited financial statements for the last two years filed with its non-United States jurisdiction supervisor;

(i) the liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding;

(j) a certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, which involves United States ceding insurers. The commissioner shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and

(k) any other information deemed relevant by the commissioner.

(2) The commissioner has the authority to revise and change the legal rating of a certified assuming insurer at any time pursuant to this rule.

Ratings | Best | S&P | Moody's | Fitch Secure – 1 | A++ | AAA | Aaa | AAA Secure – 2 | A+ | AA+, AA, AA- | Aa1, Aa2, Aa3 | AA+, AA, AA- Secure – 3 | A | A+, A | A1, A2 | A+, A Secure – 4 | A- | A- | A3 | A- Secure – 5 | B++, B+ | BBB+, BBB, BBB- | Baa1, Baa2, Baa3 | BBB+, BBB, BBB- Vulnerable – 6 | B, B-, C++, C+, C, C-, D, E, F | BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, R | Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C | BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16; AMD, 2022 MAR p. 1190, Eff. 7/9/22.

Mont. Admin. R. 6.6.3851 Credit for Reinsurance – Reciprocal Jurisdictions

(1) Pursuant to 33-2-1216, MCA, the commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a reciprocal jurisdiction, and which meets the other requirements of this subchapter.

(2) A "Reciprocal jurisdiction" is a jurisdiction, as designated by the commissioner pursuant to (4), that meets one of the following:

(a) a non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of (2), a "covered agreement" is an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;

(b) a U.S. jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or

(c) a qualified jurisdiction, as determined by the commissioner pursuant to 33-2-1216, MCA, which is not otherwise described in (2)(a) or (b) and which the commissioner determines meets all of the following additional requirements:

(i) provides that an insurer which has its head office or is domiciled in such qualified jurisdiction shall receive credit for reinsurance ceded to a U.S.-domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by insurers domiciled in such qualified jurisdiction;

(ii) does not require a U.S.-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer subject to regulation by the non-U.S. jurisdiction or as a condition to allow the ceding insurer to recognize credit for such reinsurance;

(iii) recognizes the U.S. state regulatory approach to group supervision and group capital, by providing written confirmation by a competent regulatory authority, in such qualified jurisdiction, that insurers and insurance groups that are domiciled or maintain their headquarters in this state or another jurisdiction accredited by the NAIC shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the commissioner or the commissioner of the domiciliary state and will not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and

(iv) provides written confirmation by a competent regulatory authority in such qualified jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such qualified jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC.

(3) Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in this state to an assuming insurer meeting each of the conditions set forth below.

(a) The assuming insurer must be licensed to transact reinsurance by, and have its head office or be domiciled in, a reciprocal jurisdiction.

(b) The assuming insurer must have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, and confirmed as set forth in (3)(g) according to the methodology of its domiciliary jurisdiction, in the following amounts:

(i) no less than $250,000,000; or

(ii) if the assuming insurer is an association, including incorporated and individual unincorporated underwriters:

(A) minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250,000,000; and

(B) a central fund containing a balance of the equivalent of at least $250,000,000.

(c) The assuming insurer must have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:

(i) if the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction as defined in (2)(a), the ratio specified in the applicable covered agreement;

(ii) if the assuming insurer is domiciled in a reciprocal jurisdiction as defined in (2)(b), a risk-based capital (RBC) ratio of 300% of the authorized control level, calculated in accordance with the formula developed by the NAIC; or

(iii) if the assuming insurer is domiciled in a reciprocal jurisdiction as defined in (2)(c), after consultation with the reciprocal jurisdiction and considering any recommendations published through the NAIC Committee Process, such solvency or capital ratio as the commissioner determines to be an effective measure of solvency.

(d) The assuming insurer must agree to and provide adequate assurance, in the form of a properly executed Form RJ-1, of its agreement to the following:

(i) The assuming insurer must agree to provide prompt written notice and explanation to the commissioner if it falls below the minimum requirements set forth in (3)(b) or (c), or if any regulatory action is taken against it for serious noncompliance with applicable law.

(ii) The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the commissioner as agent for service of process.

(A) The commissioner may also require that such consent be provided and included in each reinsurance agreement under the commissioner's jurisdiction.

(B) Nothing in this provision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.

(iii) The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained.

(iv) Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable.

(v) The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement, which involves this state's ceding insurers, and agrees to notify the ceding insurer and the commissioner and to provide 100% security to the ceding insurer consistent with the terms of the scheme, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of 33-2-1216 and 33-2-1217, MCA, and ARM 6.6.3815, 6.6.3863, or 6.6.3868. For purposes of this subchapter, the term "solvent scheme of arrangement" means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer's home jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer's home jurisdiction.

(vi) The assuming insurer must agree in writing to meet the applicable information filing requirements as set forth in (3)(e).

(e) The assuming insurer or its legal successor must provide, if requested by the commissioner, on behalf of itself and any legal predecessors, the following documentation to the commissioner:

(i) for the two years preceding entry into the reinsurance agreement and on an annual basis thereafter, the assuming insurer's annual audited financial statements, in accordance with the applicable law of the jurisdiction of its head office or domiciliary jurisdiction, as applicable, including the external audit report;

(ii) for the two years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer's supervisor;

(iii) prior to entry into the reinsurance agreement and not more than semi-annually thereafter, an updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States; and

(iv) prior to entry into the reinsurance agreement and not more than semi-annually thereafter, information regarding the assuming insurer's assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in (3)(f).

(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met:

(i) more than 15% of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the commissioner;

(ii) more than 15% of the assuming insurer's ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or

(iii) the aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as otherwise specified in a covered agreement.

(g) The assuming insurer's supervisory authority must confirm to the commissioner on an annual basis that the assuming insurer complies with the requirements set forth in (3)(b) and (c).

(h) Nothing in (3) precludes an assuming insurer from providing the commissioner with information on a voluntary basis.

(4) The commissioner shall timely create and publish a list of reciprocal jurisdictions.

(a) A list of reciprocal jurisdictions is published through the NAIC Committee Process. The commissioner's list shall include any reciprocal jurisdiction as defined under (2)(a) and (b), and shall consider any other reciprocal jurisdiction included on the NAIC list. The commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions as provided by applicable law, regulation, or in accordance with criteria published through the NAIC Committee Process.

(b) The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets one or more of the requirements of a reciprocal jurisdiction, as provided by applicable law, regulation, or in accordance with a process published through the NAIC Committee Process, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under (2)(a) and (b). Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to 33-2-1216 and 33-2-1217, MCA.

(5) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this rule and to which cessions shall be granted credit in accordance with this rule.

(a) If an NAIC accredited jurisdiction has determined that the conditions set forth in (3) have been met, the commissioner has the discretion to defer to that jurisdiction's determination, and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with (5). The commissioner may accept financial documentation filed with another NAIC accredited jurisdiction or with the NAIC in satisfaction of the requirements of (3).

(b) When requesting that the commissioner defer to another NAIC accredited jurisdiction's determination, an assuming insurer must submit a properly executed Form RJ-1 and additional information as the commissioner may require. A state that has received such a request will notify other states through the NAIC Committee Process and provide relevant information with respect to the determination of eligibility.

(6) If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this rule, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this rule.

(a) While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with 33-2-1217, MCA.

(b) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of 33-2-1217, MCA.

(7) Before denying statement credit or imposing a requirement to post security with respect to (6) or adopting any similar requirement that will have substantially the same regulatory impact as security, the commissioner:

(a) shall communicate with the ceding insurer, the assuming insurer, and the assuming insurer's supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in (3);

(b) shall provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection;

(c) if, after the expiration of 90 days or less, as set out in (7)(b), determines that no or insufficient action was taken by the assuming insurer, the commissioner may impose any of the requirements as set out in (7); and

(d) shall provide a written explanation to the assuming insurer of any of the requirements set out in (7).

(8) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding liabilities.

History

Authorizing statute(s): 33-2-1216, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 798, Eff. 5/28/22.

Mont. Admin. R. 6.6.3860 Assuming Insurer - Definition of Obligations

(1) "Obligations," as used in ARM 6.6.3861 through 6.6.3869, means:

(a) reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;

(b) reserves for reinsured losses reported and outstanding;

(d) reserves for allocated reinsured loss expenses and unearned premiums.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3861 Assuming Insurer - Valuation of Assets

(1) Either the reinsurance agreement or the trust agreement relevant to 33-2-1217, MCA, must stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States bank and payable in United States dollars, and investments permitted by Title 33, MCA, or any combination thereof, provided investments in or issued by an entity controlling, controlled by, or under common control with either the grantor or the beneficiary of the trust shall not exceed five percent of total investments. The agreement may further specify the types of investments to be deposited. If the reinsurance agreement covers life, annuities, or accident and health or disability risks, then the provisions required by this paragraph must be included in the reinsurance agreement.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3862 Assuming Insurer - Financial Reporting

(1) A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with the department in compliance with the provisions of this rule when established on or before the date of filing of the financial statement of the ceding insurer. Further, the reduction for the existence of an acceptable trust account must be equal to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but such reduction shall be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3863 Assuming Insurer - Trust Agreement Conditions - Mandatory

(1) The trust agreement required by 33-2-1217(2), MCA, shall be entered into between the beneficiary, the grantor, and a trustee which shall be a qualified United States financial institution as defined in 33-2-1217, MCA, and include all of the following conditions:

(a) the trust agreement shall create a trust account into which assets shall be deposited;

(b) all assets in the trust account shall be held by the trustee at the trustee's office in the United States;

(i) the beneficiary shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;

(ii) no other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets; and

(iii) it is not subject to any conditions or qualifications outside the trust agreement; and it shall not contain references to any other agreements to documents except as provided for under (j).

(d) the trust agreement shall be established for the sole benefit of the beneficiary;

(e) the trust agreement shall require the trustee to:

(i) receive assets and hold all assets in a safe place;

(ii) determine that all assets are in such form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate any such assets, without consent or signature from the grantor or any other person or entity;

(iii) furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;

(iv) notify the grantor and the beneficiary within 10 days of any deposits to or withdrawals from the trust account;

(v) upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and

(vi) allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of, but with notice to, the beneficiary, upon call or maturity of any trust asset, withdraw such asset upon condition that the proceeds are paid into the trust account.

(f) the trust agreement shall provide that at least 30 days, but not more than 45 days, prior to termination of the trust account, written notification of termination must be delivered by the trustee to the beneficiary;

(g) the trust agreement shall be made subject to and governed by the laws of the state in which the trust is established;

(h) the trust agreement shall prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee;

(i) the trust agreement shall provide that the trustee shall be liable for its own negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence and/or willful misconduct; and

(j) either the reinsurance agreement or the trust agreement must stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in U.S. dollars, certificates of deposit issued by a U.S. bank and payable in U.S. dollars, and investments permitted by the Insurance Code or any combination of the above, provided investments in or issued by an entity controlling, controlled by, or under common control with either the grantor or the beneficiary of the trust shall not exceed five percent of total investments. The agreement may further specify the types of investments to be deposited. If the reinsurance agreement covers life, annuities, or accident and health or disability risks, then the provisions required by this paragraph must be included in the reinsurance agreement.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3864 Assuming Insurer - Risks Other Than Life, Annuities, Accident and Health or Disability - Trust Agreement Provisions - Permissive

(1) When a trust agreement is established in conjunction with a reinsurance agreement pursuant to 33-2-1217, MCA, covering risks other than life, annuities, and accident and health or disability, the trust agreement may, notwithstanding any other conditions in this regulation, provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes:

(a) to pay or reimburse the ceding insurer for the assuming insurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;

(b) to make payment to the assuming insurer of any amounts held in the trust account that exceed 102% of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or

(c) when the ceding insurer has received notification of termination of the trust account and when the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account in the name of the ceding insurer in any qualified United States financial institution as defined in 33-2-1217, MCA, apart from its general assets, in trust for such uses and purposes specified in (a) and (b) as may remain executory after such withdrawal and for any period after the termination date.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3865 Assuming Insurer - Risks Associated with Life, Annuities, Accident and Health or Disability - Trust Agreement Provisions - Permissive

(1) When a trust agreement is established in conjunction with a reinsurance agreement pursuant to 33-2-1217, MCA, covering risks associated with life, annuities, and accident and health or disability, notwithstanding any other conditions in this regulation, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:

(a) to pay or reimburse the ceding insurer for:

(i) the assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and

(ii) the assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement;

(b) to pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or

(c) where the ceding insurer has received notification of termination of the trust and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified U.S. financial institution apart from its general assets, in trust for the uses and purposes specified in (a) and (b) as may remain executory after withdrawal and for any period after the termination date.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3866 Assuming Insurer - Trust Agreement Provisions - Permissive

(1) The trust agreement pursuant to 33-2-1217, MCA, may include any or all of the following conditions:

(a) the trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than 90 days after receipt by the beneficiary and grantor of the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than 90 days after receipt by the trustee and the beneficiary of the notice, provided that no such resignation or removal shall be effective until a successor trustee has been duly appointed and approved by the beneficiary and the grantor and all assets in the trust have been duly transferred to the new trustee;

(b) the grantor may have the full and unqualified right to vote any shares of stock in the trust account and to receive from payments of any dividends or interest upon any shares of stock or obligations included in the trust account. Any such interest or dividends must be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor's name;

(c) the trustee may be given authority to invest, and accept substitutions of, any funds in the account, provided that no investment or substitution may be made without prior approval of the beneficiary, unless the trust agreement specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions that the trustee determines are at least equal in current market value to the assets withdrawn and that are consistent with the restrictions of this rule;

(d) the trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets are to be transferred. Such transfer may be conditioned upon the trustee receiving, prior to or simultaneously, other specified assets; and

(e) the trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary must, with written approval by the beneficiary, be delivered over to the grantor.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3867 Reinsurance Agreement Provisions Relating to 1217 Trust Agreements - Permissive

(1) Reinsurance agreements entered into in conjunction with trust agreements pursuant to 33-2-1217, MCA, may include the following:

(a) a requirement that the assuming insurer enter into a trust agreement and establish a trust account for the benefit of the ceding insurer, and specifying what the agreement is to cover;

(b) a requirement that the assuming insurer, prior to depositing assets with the trustee, execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the assuming insurer or any other entity;

(c) a requirement that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and

(d) a requirement that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance agreement, and must be utilized and applied by the ceding insurer or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver, or conservator of such company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:

(i) to reimburse the ceding insurer for the assuming insurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement because of cancellations of such policies;

(ii) to reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer pursuant to the provisions of the policies reinsured under the reinsurance agreement;

(iii) to pay or reimburse the ceding insurer any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; and

(iv) to pay the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.

(2) The reinsurance agreement may provide for amounts due, reasonable interest, and awards by an arbitration panel or court of competent jurisdiction.

(3) The reinsurance agreement may also contain provisions that give the assuming insurer the right to seek approval from the ceding insurer to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, provided:

(a) the assuming insurer shall, at the time of withdrawal, replace the withdrawn assets with other qualified assets having a market value equal to the market value of the assets withdrawn, so as to maintain at all times the deposit in the required amount; or

(b) after withdrawal and transfer, the market value of the trust account is no less than 102% of the required amount. The ceding insurer shall not unreasonably or arbitrarily withhold its approval.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3868 Terms and Conditions of Letters of Credit

(1) Applicable standards of acceptability for issuers of letters of credit under 33-2-1217, MCA, include the following:

(a) the letter of credit must contain an issue date and date of expiration and must stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented;

(b) the letter of credit must indicate that it is not subject to any condition or qualifications outside of the letter of credit; and

(2) The heading of the letter of credit may include a boxed section which contains the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section must be clearly marked to indicate that such information is for internal identification purposes only.

(3) The letter of credit must contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.

(4) The term of the letter of credit must be at least one year. The letter of credit must require notice of the expiration or nonrenewal date to the trustee no less than 30 days prior to the expiration or nonrenewal date.

(5) The letter of credit must state whether it is subject to and governed by the laws of this state or the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 400), and whether all drafts drawn thereunder must be presentable at an office in the United States of a qualified United States financial institution.

(6) If the letter of credit is made subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (publication 400), then the letter of credit must specifically address and make provision for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in Article 19 of Publication 400 occur.

(7) The letter of credit must be issued or confirmed by a qualified United States financial institution authorized to issue letters of credit, pursuant to 33-2-1217, MCA.

(8) If the letter of credit is issued by a qualified United States financial institution authorized to issue letters of credit, other than a qualified United States financial institution as described in (7), then the following additional requirements must be met:

(a) the issuing qualified U.S. financial institution shall formally designate the confirming qualified U.S. financial institution as its agent for the receipt and payment of the drafts; and

(b) the letter of credit must require notice of the expiration or nonrenewal date to the trustee no less than 30 days prior to the expiration or nonrenewal date.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Mont. Admin. R. 6.6.3869 Reinsurance Agreement Provisions Relating to 1217 Letters of Credit

(1) The reinsurance agreement entered into in conjunction with trust agreements pursuant to 33-2-1217, MCA, may include the following:

(a) a requirement that the assuming insurer provide letters of credit to the ceding insurer and specify what they are to cover; and

(b) a requirement that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer may be drawn upon at any time, notwithstanding any other provisions in the reinsurance agreement, and must be utilized and applied by the ceding insurer or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver, or conservator of such company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:

(ii) to reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurers;

(iii) to pay or reimburse the ceding insurer any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; and

(iv) when the letter of credit will expire without renewal or be reduced or replaced by a letter of credit for a reduced amount and where the assuming insurer's entire obligations under the reinsurance agreement remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of the liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer and exceed the amount of any reduced or replacement letter of credit, and deposit those amounts in a separate account in the name of the ceding insurer in a qualified U.S. financial institution apart from its general assets, in trust for such uses and purposes specified in this rule as may remain after withdrawal and for any period after the termination date.

(2) The reinsurance agreement may provide for amounts due, reasonable interest, and awards by an arbitration panel or court of competent jurisdiction.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1217, MCA
History: NEW, 2016 MAR p. 2186, Eff. 11/26/16.

Subchapter 6.6.40 Insurer Investments

Mont. Admin. R. 6.6.4001 Valuation of Securities Other Than Those Specifically Referred to in Statutes

(1) Securities and assets must be valued in accordance with valuation standards of the NAIC published in its 1999 Accounting Practices and Procedures manual and its December 31, 1999 Valuation of Securities manual.

(2) The department hereby adopts and incorporates herein by reference the standards adopted by the NAIC for valuation of securities and other investments appearing in its 1999 Accounting Practices and Procedures manual and its December 31, 1999 Valuation of Securities manual. These are nationally-recognized models for such standards. Copies of the manuals are available for inspection at the office of the Commissioner of Insurance, 840 Helena Ave., Helena, Montana 59601. Copies of the Accounting Practices and Procedures manual and the Valuation of Securities manual may be obtained by writing to the National Association of Insurance Commissioners, 120 West 12th Street, Suite 1100, Kansas City, MO 64105-1925. Persons obtaining copies of such manuals may be required to pay the NAIC's costs of providing such copies.

History

Authorizing statute(s): Sec. 33-1-313, 33-2-533, and 33-2-1517, MCA
Implementing statute(s): Sec. 33-2-533 and 33-2-1517, MCA
History: NEW, 1993 MAR p. 2408, Eff. 10/15/93; AMD, 1995 MAR p. 445, Eff. 3/31/95; AMD, 1996 MAR p. 268, Eff. 1/26/96; AMD, 1997 MAR p. 688, Eff. 4/22/97; AMD, 1998 MAR p. 528, Eff. 2/27/98; AMD, 1999 MAR p. 639, Eff. 4/9/99; AMD, 2000 MAR p. 3519, Eff. 12/22/00.

Mont. Admin. R. 6.6.4002 Definitions of Money Market Funds

(1) For the purposes of implementing 33-4-403 , MCA, the commissioner defines "money market funds" as those investments which comply with the standards of the United States securities and exchange commission adopted in 17 C.F.R. 270.2a-7, as it appears in the April 1, 1997, edition of the Code of Federal Regulations.

(2) The commissioner hereby adopts and incorporates herein by reference 17 C.F.R. 270.2a-7, as it appears in the April 1, 1997, edition of the Code of Federal Regulations. A copy of the complete regulation is available for inspection at the office of the Commissioner of Insurance, Room 270, Sam W. Mitchell Building, Helena, Montana. Copies of the regulation may also be obtained by writing to United States Securities and Exchange Commission Regional Office, 3040 Jackson Federal Building, 915 Second Avenue, Seattle, Washington 98174. Persons obtaining such copies may be required to pay the costs of providing such copies.

History

Authorizing statute(s): Sec. 33-1-313 and 33-4-403, MCA
Implementing statute(s): Sec. 33-2-806, 33-4-403, and 33-4-404, MCA
History: NEW, 1993 MAR p. 2764, Eff. 11/25/93; AMD, 1997 MAR p. 1988, Eff. 11/4/97.

Mont. Admin. R. 6.6.4020 Purpose

(1) The purpose of these rules is to establish standards for the prudent use of derivative instruments by insurers in accordance with Title 33, chapter 12, MCA, regarding insurer investments.

History

Authorizing statute(s): 33-1-313, 33-12-111, MCA
Implementing statute(s): 33-12-210, 33-12-310, MCA
History: NEW, 2011 MAR p.1303, Eff. 7/15/11.

Mont. Admin. R. 6.6.4021 Definitions

(1) The words and phrases used in these rules have the same meaning as in 33-12-102, MCA, unless a different meaning is required by the context of the particular rule.

History

Authorizing statute(s): 33-1-313, 33-12-111, MCA
Implementing statute(s): 33-12-210, 33-12-310, MCA
History: NEW, 2011 MAR p.1303, Eff. 7/15/11.

Mont. Admin. R. 6.6.4022 Guidelines and Internal Control Procedures

(1) Before engaging in a derivative transaction, an insurer shall establish written guidelines, approved by the commissioner, that shall be used for effecting and maintaining derivative transactions. The guidelines shall:

(a) specify the insurer's objectives for engaging in derivative transactions, derivative strategies, and all applicable risk constraints, including credit risk limits;

(b) establish counterparty exposure limits and credit equity standards;

(c) identify permissible derivative transactions and the relationship of those transactions to insurer operations; for example, a precise identification of the risks being hedged by a derivative transaction; and

(d) require compliance with internal control procedures.

(2) An insurer shall have a written methodology for determining whether a derivative instrument used for hedging has been effective.

(3) An insurer shall have written policies and procedures describing the credit risk management process and a credit risk management system for over-the-counter derivative transactions that measures credit risk exposure using the counterparty exposure amount.

(4) An insurer's board of directors shall, in accordance with 33-12-104, MCA:

(a) approve the written guidelines, methodology, polices and procedures, and systems required by this rule;

(b) determine whether the insurer has adequate professional personnel, technical expertise, and systems to implement investment practices involving derivatives;

(c) review whether derivatives transactions have been made in accordance with the approved guidelines, and consistent with the stated objectives; and

(d) take action to correct any deficiencies in internal controls relative to derivative transactions.

History

Authorizing statute(s): 33-1-313, 33-12-111, MCA
Implementing statute(s): 33-12-210, 33-12-310, MCA
History: NEW, 2011 MAR p.1303, Eff. 7/15/11.

Mont. Admin. R. 6.6.4023 Commissioner Approval

(1) Written documentation explaining the insurer's internal guidelines and controls governing derivative transactions shall be submitted for approval to the commissioner. The commissioner shall have the authority to disapprove the guidelines and controls proposed by the insurer if the insurer cannot demonstrate the proposed internal guidelines and controls would be adequate to manage the risks associated with the derivative transactions the insurer intends to engage in.

History

Authorizing statute(s): 33-1-313, 33-12-111, MCA
Implementing statute(s): 33-12-210, 33-12-310, MCA
History: NEW, 2011 MAR p.1303, Eff. 7/15/11.

Mont. Admin. R. 6.6.4025 Insurer Documentation Requirements

(1) An insurer shall maintain documents and records relating to each derivative transaction, including:

(a) the purpose of the transaction;

(b) the assets or liabilities to which the transaction relates;

(d) for over-the-counter derivative instrument transactions, the name of the counterparty and the market value; and

(e) for exchange traded derivative instruments, the name of the exchange and the name of the firm that handled the trade and the market value.

History

Authorizing statute(s): 33-1-313, 33-12-111, MCA
Implementing statute(s): 33-12-210, 33-12-310, MCA
History: NEW, 2011 MAR p.1303, Eff. 7/15/11.

Mont. Admin. R. 6.6.4027 Trading Requirements

(1) Each derivative instrument shall be:

(a) traded on a qualified exchange;

(b) entered into with, or guaranteed by, a business entity;

(d) entered into with a qualified foreign exchange.

History

Authorizing statute(s): 33-1-313, 33-12-111, MCA
Implementing statute(s): 33-12-210, 33-12-310, MCA
History: NEW, 2011 MAR p.1303, Eff. 7/15/11.

Subchapter 6.6.41 Fee Schedules

Mont. Admin. R. 6.6.4102 Continuing Education Fees

(1) Accredited educational institutions are exempt from fee requirements for courses provided for academic credit.

History

Authorizing statute(s): Sec. 33-1-313, 33-2-708, and 33-17-1206, MCA
Implementing statute(s): Sec. 33-2-708, 33-17-1204, 33-17-1205, and 33-17-1207, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 1995 MAR p. 2793, Eff. 12/22/95; AMD, 2000 MAR p. 183, Eff. 1/1/00.

Subchapter 6.6.42 Continuing Education and Pre-Licensing Courses

Mont. Admin. R. 6.6.4201 Scope of Rules

(1) These rules apply to continuing education programs for insurance producers, adjusters, consultants, and surety bail bond insurance licensees, and include course content, qualifications of instructors, instructional format, courses and materials, review and approval procedures, application forms, and fees.

(2) These rules also apply to pre-licensing training courses for bail bond insurance, including the requirements specified in 33-17-1602, MCA.

History

Authorizing statute(s): 33-1-313, 33-17-1206, 33-26-108MCA
Implementing statute(s): 33-17-1203, 33-17-1204, 33-17-1602, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 2008 MAR p. 1455, Eff. 7/18/08; AMD, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Mont. Admin. R. 6.6.4202 Definitions

For the purposes of this subchapter, the following terms have the following meanings:

(1) "Accredited university or college" means an institution of higher learning that is certified by its appropriate accrediting agency to meet that agency's prescribed standards.

(2) "Biennial cycle" means the 24-month period in which required continuing education must be completed. An initial cycle may be longer than 24 months.

(3) "Classroom setting" means a course format in which a body of students meets to study the same course materials under the direction of the same approved instructor.

(4) "Course" means any course, seminar or program of instruction for presentation as part of the continuing education requirements for licensees. The term also includes the training course specified in 33-17-1602, MCA, that an applicant for a surety bail bond insurance license must complete before being issued a license.

(5) "Credit hours" means the value assigned to a course by the commissioner, upon review and approval of course materials and content outline.

(6) "Instructor" means an individual who meets the requirements set forth in ARM 6.6.4204, is identified by a sponsoring organization in a course submission, participates in course presentations, activities and discussions, and who may monitor the attendance and conduct of course participants or administer examinations.

(7) "Licensee" means an individual required to be licensed under Title 33, chapter 17, parts 2, 3, 4, 5, or 16, MCA.

(8) "SBS" means the electronics system owned by the NAIC and enhanced in partnership with state insurance departments that provides a comprehensive, web-based application for use by state regulators.

(9) "Self study" means those independent study methods taught outside the classroom setting through approved text, audiotape materials, videotape materials or another method of information exchange.

(10) "Significant change" means a change in two or more of the following course elements:

(a) course goals or objectives;

(b) major course topic(s);

(d) syllabus or course outline;

(e) teaching method, or

(f) examination method.

(11) "Sponsoring organization" means any group(s) or organization(s) and their agent(s) that submit courses for department review and offer or provide approved courses for continuing education credit to allow licensees to meet the requirements of 33-17-1203 and 33-17-1204, MCA, and are responsible for those course offerings, or any individual Montana insurance producer, adjuster, or consultant who submits a course pursuant to ARM 6.6.4203(14) for department review to allow that licensee to meet the requirements of 33-17-1203 and 33-17-1204, MCA. For purposes of surety bail bond insurance, the applicable requirements also include the requirements stated in 33-17-1601 and 33-17-1602, MCA.

History

Authorizing statute(s): 33-1-313, 33-17-1206, 33-26-108, MCA
Implementing statute(s): 33-17-1203, 33-17-1204, 33-17-1601, 33-17-1602, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 1995 MAR p. 2793, Eff. 12/22/95; AMD, 1996 MAR p. 1661, Eff. 6/21/96; AMD, 2001 MAR p. 2457, Eff. 10/26/01; AMD, 2008 MAR p. 1455, Eff. 7/18/08; AMD, 2014 MAR p. 580, Eff. 3/28/14; AMD, 2023 MAR p. 1397, Eff. 10/21/23; AMD, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Mont. Admin. R. 6.6.4203 Course Submissions

(1) Except as provided in (14) and ARM 6.6.4213, the following standards, by which acceptability of submitted courses should be evaluated, must all be certified by the sponsoring organization:

(a) the practical and academic experience of each faculty member is sufficient to teach the subject assigned;

(b) the course enhances the ability of a licensee to provide insurance services to the public effectively;

(2) Submissions for approval of courses must include at least the following information:

(a) the name of the sponsoring organization;

(b) the title of the course;

(d) course length;

(e) a syllabus or course outline;

(f) a summary of each course outline element;

(g) method of instruction, such as classroom, self- study, videotape, audiotape, teleconference, and online webinars, etc.;

(h) method of administering examinations, if any;

(i) method of attendance verification;

(j) instructors, if any;

(k) a designated contact person; and

(l) a written explanation of examination security measures and examination administration methods.

(3) A sponsoring organization must submit each course for review and receive approval of the course prior to making that course available for enrollment by licensees. If the commissioner determines that the course content is incomplete or inadequate, the provider will be notified and required to supplement or modify the course before receiving approval.

(4) Accredited university or college courses will be allowed 15 continuing education credits for each semester credit and 10 continuing education credits for each quarter credit.

(5) Charges for courses must be clearly disclosed to students before enrollment.

(a) If a course is canceled for any reason, all charges are refundable in full.

(b) In all instances, the charges must be refunded within 45 days of cancellation.

(c) In the event that a continuing education provider postpones a course for any reason, the provider must give the students a choice of attending a course at a later date or having their charges refunded in full. The provider must refund the charges within 45 days of the postponement unless the student notifies the provider that the student has chosen to attend a later course.

(d) A sponsoring organization may have a refund policy addressing a student's cancellation or failure to complete a course, as long as that policy is made clear to potential students.

(6) A sponsoring organization shall submit course completion attendance through SBS for each course participant within 30 days of the course completion. A sponsoring organization's compliance with this rule satisfies the annual reporting requirements of 33-17-1205(4), MCA.

(7) Sponsoring organizations who add qualified course instructors after a course is approved must submit the names of those instructors to the commissioner prior to the course offering.

(8) Except as provided in (15), course approval is for a period of two years following the course approval date. A course without significant changes may be renewed in a form approved by the commissioner.

(9) Sponsoring organizations must resubmit courses for new review and certification whenever significant changes in course content are made.

(10) The commissioner will only award credits for courses whose subject matter will increase the technical knowledge of insurance principles, coverages, laws or regulations. Technical knowledge includes subject areas described in 33-17-1204, MCA. For purposes of surety bail bond insurance, the subject areas must also include the subjects described in 33-17-1601 and 33-17-1602, MCA.

(11) If any credits are awarded for sales or marketing, those credits will be separately noted on the course approval document. Credits for sales or marketing may only be awarded in states that are permitted by law or regulation to accept credit for those topics. The commissioner shall award one credit for each 50 minutes of contact instruction. The commissioner will award credit hours for a self-study course based on the hours required to complete that course.

(12) The minimum number of credits that the commissioner may award is one credit.

(13) No course may be advertised as having been approved for credit by the commissioner until the sponsoring organization receives written approval from the commissioner.

(14) An individual Montana insurance producer, adjuster, consultant, or surety bail bond insurance licensee subject to the continuing education requirements of 33-17-1203, MCA, may submit a course for review and approval after personally completing the course.

(a) A self-submitted course need not comply with (1)(a), (2)(k), (5)(a), (5)(b), (5)(c), (5)(d), (6), or (7).

(b) The request to approve the course must be submitted no more than 45 days after the date the person completed the course.

(15) Any credit hours assigned to a course submitted as described in (14), are available only to the producer, adjuster, consultant, or surety bail bond insurance licensee who made the course submission for that offering.

History

Authorizing statute(s): 33-1-313, 33-17-1206, 33-26-108, MCA
Implementing statute(s): 33-17-1204, 33-17-1601, 33-17-1602, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 1996 MAR p. 1661, Eff. 6/21/96; AMD, 2001 MAR p. 2134, Eff. 10/26/01; AMD, 2008 MAR p. 1455, Eff. 7/18/08; AMD, 2014 MAR p. 580, Eff. 3/28/14; AMD, 2023 MAR p. 1397, Eff. 10/21/23; AMD, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Mont. Admin. R. 6.6.4204 Qualifications for Instructors

(1) Unless exempted by ARM 6.6.4213, instructors must meet the following qualifications for the commissioner to approve the course:

(a) hold a high school diploma or equivalent certificate; and

(b) have experience in at least one of the following:

(i) have three or more years of managerial, supervisory, technical, or teaching experience in the insurance lines the individual plans to teach;

(ii) have appropriate national designations; or

(iii) have been approved on an exception basis by the commissioner.

(2) No person will be qualified as an instructor who:

(a) has had an insurance producer, adjuster, consultant, or surety bail bond insurance license suspended or revoked in Montana or any other state;

(b) has any outstanding fines for insurance-related disciplinary offenses imposed by the commissioner or by any regulatory authority in any other state;

(c) has been found to have violated or not complied with a provision of Title 33, MCA, during a contested case proceeding within the preceding two years; or

(d) has been found to have violated a rule, subpoena, or order of the commissioner or by any regulatory authority in any other state, during a contested case proceeding within the preceding two years.

(3) An instructor may be disqualified, if that person:

(a) has been convicted of a felony;

(b) has intentionally falsified documents filed with the commissioner;

(c) has intentionally misrepresented course approval, credit hour assignment, curriculum, or content of a course to students or prospective students;

(d) has solicited students as clients or recruited students as candidates for appointment by insurers or agencies during the instructional portion of a course offering; or

(e) has been found to have violated other applicable statutes or administrative rules.

(4) Licensees teaching or lecturing approved courses will be credited with two times the number of approved credit hours of courses they instruct.

History

Authorizing statute(s): 33-1-313, 33-17-1206, 33-26-108, MCA
Implementing statute(s): 33-17-1203, 33-17-1204, 33-17-1602, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 1996 MAR p. 1661, Eff. 6/21/96; AMD, 2001 MAR p. 2134, Eff. 10/26/01; AMD, 2008 MAR p. 1455, Eff. 7/18/08; AMD, 2023 MAR p. 1397, Eff. 10/21/23; AMD, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Mont. Admin. R. 6.6.4205 Examinations

(1) Except as provided in (5) below, all courses must include an examination which requires a passing score to qualify for a certificate of completion.

(2) For each approved course, the sponsoring organization shall maintain a pool of tests sufficient to maintain the integrity of the testing process.

(3) The sponsoring organization shall administer, monitor, grade, and record the results of the test.

(4) The sponsoring organization shall retain completed tests for a period of not less than 12 months, and the tests must not be returned to any licensee.

(5) Courses taught by an approved instructor in a classroom setting are exempted from the examination requirement.

History

Authorizing statute(s): 33-1-313, 33-17-1206, MCA
Implementing statute(s): 33-17-1204, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 2001 MAR p. 2134, Eff. 10/26/01; AMD, 2008 MAR p. 1455, Eff. 7/18/08.

Mont. Admin. R. 6.6.4206 Limit on Credit for Courses Repeated and Timing of Earning Credits

(1) A licensee may not earn credit for any courses repeated as either student or instructor within the same biennial cycle.

(2) A licensee may earn credit as soon as the licensee is licensed.

History

Authorizing statute(s): 33-1-313, 33-17-1206, MCA
Implementing statute(s): 33-17-1203, 33-17-1204, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 2008 MAR p. 1455, Eff. 7/18/08; AMD, 2014 MAR p. 580, Eff. 3/28/14.

Mont. Admin. R. 6.6.4208 Nonresident Requirements

(1) A nonresident licensee may satisfy the continuing education requirements of this state by submitting proof of course completion that demonstrates compliance with the Continuing Legal Education (CLE) requirements of the home state or designated home state in which the nonresident licensee is licensed.

(2) If the home state or designated home state in which the nonresident licensee is licensed does not require continuing education, the licensee shall submit to this state proof of course completion that demonstrates compliance with the basic requirements of 33-17-1203, MCA.

History

Authorizing statute(s): 33-1-313, 33-17-1206, MCA
Implementing statute(s): 33-17-1203, 33-17-1204, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 2014 MAR p. 580, Eff. 3/28/14.

Mont. Admin. R. 6.6.4209 Course Audit

(1) The commissioner or members of the commissioner's staff may audit courses approved for continuing education or pre-licensing training on a no-fee basis and as a regular part of course review, with or without notice to the course provider.

(2) A sponsoring organization shall provide records at the commissioner's request.

History

Authorizing statute(s): 33-1-313, 33-17-1206, 33-26-108, MCA
Implementing statute(s): 33-17-1203, 33-17-1204, 33-17-1205, 33-17-1602, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 2001 MAR p. 2134, Eff. 10/26/01; AMD, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Mont. Admin. R. 6.6.4210 Sanctions Against Courses and Sponsoring Organization Suspension

(1) Approval of a program may be revoked or placed under probationary approval if the commissioner determines that:

(a) the program teaching method or program content no longer meet the standards of these rules or have been significantly changed without approval of the commissioner; or

(b) the sponsoring organization certifies that an individual has completed a program in accordance with the standards established for certification or completion of the program, when in fact the individual has not done so; or

(c) the sponsoring organization did not certify licensees who satisfactorily completed the program in accordance with the sponsoring organization's standards for certification or completion; or

(d) the instructor or sponsoring organization no longer meets the standards of these rules, has had a license revoked or placed under probationary approval, or lacks education or experience in the subject matter of the proposed courses.

(2) Reinstatement of a revoked or probationary approval may be made upon proof satisfactory that the conditions responsible for the revocation or probationary approval have been corrected and the provider is not otherwise disqualified.

(3) The commissioner reserves authority to issue a cease and desist order under 33-1-318, MCA.

History

Authorizing statute(s): 33-1-313 and 33-17-1206, MCA
Implementing statute(s): 33-17-1204 and 33-17-1205, MCA
History: NEW, 1993 MAR p. 3004, Eff. 12/24/93; AMD, 1996 MAR p. 1661, Eff. 6/21/96; AMD, 2001 MAR p. 2457, Eff. 10/26/01.

Mont. Admin. R. 6.6.4211 Requests for Reconsideration of Credit Hour Assignment

(1) A sponsoring organization may request reconsideration of the credit hours assigned to a course. Such requests must:

(a) be in writing;

(b) include any additional supporting documentation on which the request is based to include documentation to show how many blocks of 50 minute instruction are in the course of instruction; and

(c) be submitted to the commissioner within 20 business days of notification to the sponsoring organization of assignment of credit hours to the course.

(2) The commissioner shall evaluate any submitted requests for reconsideration, the original course submission, and any additional materials provided to support the request for reconsideration within 60 days of the submission.

(3) After evaluating the request for reconsideration, the commissioner will increase, decrease, or maintain the credit hours assigned to the course. The commissioner shall only assign one credit per 50 minutes of instruction.

(4) The commissioner will assign credit hours to the course.

(5) Increased credit hours assigned to a course by the commissioner will be granted to licensees who complete the course after the submission date of the request for reconsideration of credit hour assignment.

(6) After the commissioner decreases the credit hours assigned for a course, the commissioner shall notify the sponsoring organization.

History

Authorizing statute(s): 33-1-313, 33-17-1206, MCA
Implementing statute(s): 33-17-1204, MCA
History: NEW, 1996 MAR p. 1661, Eff. 6/21/96; AMD, 2001 MAR p. 2134, Eff. 10/26/01; AMD, 2014 MAR p. 580, Eff. 3/28/14; AMD, 2023 MAR p. 1397, Eff. 10/21/23.

Mont. Admin. R. 6.6.4212 Requests for Reconsideration of Course Disapproval

(1) A sponsoring organization may request reconsideration of the credit hours assigned to a course. Such requests must:

(a) be in writing;

(b) include any additional supporting documentation on which the request is based; and

(c) be submitted to the commissioner within 20 business days of notification to the sponsoring organization of assignment of credit hours to the course.

(2) Credit hours assigned a course approved by the commissioner must be granted to licensees who complete the course after the submission date of the request for reconsideration of course disapproval.

History

Authorizing statute(s): 33-1-313, 33-17-1206, MCA
Implementing statute(s): 33-17-1204, MCA
History: NEW, 1996 MAR p. 1661, Eff. 6/21/96; AMD, 2001 MAR p. 2457, Eff. 10/26/01; AMD, 2014 MAR p. 580, Eff. 3/28/14; AMD, 2023 MAR p. 1397, Eff. 10/21/23.

Mont. Admin. R. 6.6.4213 Conditions of Nonresident Sponsoring Organizations

(1) A nonresident sponsoring organization doing business in this state through any agreement conveying reciprocity to such an entity is subject to the following conditions:

(a) the commissioner may not require the sponsoring organization to file courses for substantive review that have been awarded credit by the resident state. However, the sponsoring organization shall file a course outline with the commissioner. The sponsoring organization shall also file the instructors' names;

(b) the commissioner may disapprove instructors or sponsoring organizations who have been the subject of disciplinary proceedings or who have otherwise failed to comply with a state's laws and rules;

(c) the commissioner agrees to notify other states when a sponsoring organization has been the subject of a formal administrative action or other disciplinary action;

(d) the commissioner shall accept the NAIC standard continuing education form or a substantially similar form provided by a nonresident sponsoring organization;

(e) the commissioner shall award a course the same number of credits and will accept all course topics as approved by the sponsoring organization's resident state;

(f) a sponsoring organization shall pay the commissioner a $75 fee for each course submitted as required by 33-17-1204, MCA;

(g) the commissioner is not required to accept any topic, provider or instructor that is not eligible for approval under this state's laws and regulations.

History

Authorizing statute(s): 33-1-313, 33-17-1206, MCA
Implementing statute(s): 33-17-1204, MCA
History: NEW, 2001 MAR p. 2134, Eff. 10/26/01; AMD, 2014 MAR p. 580, Eff. 3/28/14.

Mont. Admin. R. 6.6.4214 Extensions of Time for Course Completion

(1) A request for an extension of time for required credit hour completion must be in writing and must include a narrative description of the reasons for the request and any available documentation to support the request. An applicant for a surety bail bond insurance license may not request an extension to complete the basic course of training specified in 33-17-1602, MCA.

(2) The licensee's licenses and appointments will remain in effect during an extension period granted by the commissioner unless the licensee terminates his or her license during that period.

History

Authorizing statute(s): 33-1-313, 33-17-1206, 33-26-108, MCA
Implementing statute(s): 2-4-631, 33-17-1205, 33-17-1602, MCA
History: NEW, 2014 MAR p. 580, Eff. 3/28/14; AMD, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Subchapter 6.6.45 NAIC Valuation Manual

Mont. Admin. R. 6.6.4501 Adoption by Reference of the Naic Valuation Manual

(1) The Commissioner of Securities and Insurance, Office of the State Auditor, adopts and incorporates by reference the Valuation Manual first adopted by the National Association of Insurance Commissioners (NAIC) on December 2, 2012, including subsequent amendments to the Valuation Manual through August 29, 2016, which sets forth and specifies a principle-based method for the valuation of insurance policies and contracts and the establishment of reserves. A copy of the Valuation Manual, as adopted by the NAIC on August 29, 2016, may be obtained from the NAIC web site at the following link:

http://www.naic.org/documents/committees_a_latf_related_valuation_manual_noapf_160829.pdf .

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-402, 33-2-403, 33-2-404, 33-2-405, MCA
History: NEW, 2016 MAR p. 1846, Eff. 10/15/16.

Subchapter 6.6.46 Montana Life and Health Insurance Guaranty Association Act and Notice Concerning Coverage Limitations and Exclusions

Mont. Admin. R. 6.6.4601 Adoption of Notice

(1) The commissioner adopts the form and content of the summary notice and disclosure document regarding the protection provided by the Montana Life and Health Insurance Guaranty Association as set out in Appendix A in 6.6.4603.

(2) The summary notice and disclosure document set out in Appendix A are substantially similar to the National Association of Insurance Commissioners' Notice of Protection Provided by [State] Life and Health Insurance Guaranty Association, Guideline #1525, adopted April, 2010.

History

Authorizing statute(s): 33-1-313, 33-10-210, MCA
Implementing statute(s): 33-10-210, MCA
History: NEW, 1995 MAR p. 456, Eff. 3/31/95; AMD, 2011 MAR p. 1367, Eff. 7/29/11.

Mont. Admin. R. 6.6.4602 Delivery of Notice

(1) The notice adopted in this subchapter shall be delivered where appropriate to the policy, certificate, or contract holder.

History

Authorizing statute(s): 33-1-313, 33-10-210, MCA
Implementing statute(s): 33-10-210, MCA
History: NEW, 1995 MAR p. 456, Eff. 3/31/95; AMD, 2011 MAR p. 1367, Eff. 7/29/11.

Mont. Admin. R. 6.6.4603 Appendix "a" - Form and Content of Notice

(1) The form and content of the summary notice and disclosure document adopted in ARM 6.6.4601, and referred to as "Appendix A" are as follows:

NOTICE OF PROTECTION PROVIDED BY MONTANA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION

This notice provides a brief summary of the Montana Life and Health Insurance Guaranty Association (Association) and the protection it provides for policyholders.

The Association was established under Montana law to provide protection in the unlikely event that a life, annuity or health insurance issuer becomes financially unable to meet its obligations and is placed into liquidation. If this should happen, the Association will typically arrange to continue coverage and pay claims, in accordance with Montana law, with funding from assessments paid by other insurance companies.

In the event a company is placed into liquidation, benefits provided by the Association are payable according to the insurance policy or certificate, and subject to the following maximum limits:

• Life Insurance

$300,000 in death benefits, but limited to $100,000 in cash surrender and net cash withdrawal values.

• Health Insurance

$500,000 in health insurance benefits
$300,000 in disability income insurance benefits
$300,000 in long-term care insurance benefits
$100,000 in other types of health insurance benefits

• Annuities

$250,000 present value, including net cash surrender and net cash withdrawal values

The maximum amount of protection is $300,000 in benefits with respect to any one life regardless of the number of policies or contracts, except with respect to the $500,000 maximum in health insurance benefits but not including disability, long term care or other types of health insurance benefits.

Note: Other restrictions to coverage apply. Certain policies and contracts may not be covered or fully covered. For example, coverage does not extend to any portion(s) of a policy or contract that the insurer does not guarantee, such as certain investment additions to the account value of a variable life insurance policy or a variable annuity contract. There are also various residency requirements and other limitations under Montana law.

To learn more about the above protections, as well as protections relating to group contracts or retirement plans, please visit the Association's web site at www.mtlifega.org or contact:

IF YOUR INSURANCE COMPANY IS IN GOOD STANDING AND NOT IN LIQUIDATION, PLEASE DIRECT QUESTIONS ABOUT YOUR POLICY TO YOUR INSURANCE COMPANY!

Insurance companies and agents are not allowed by Montana law to use the existence of the Association or its coverage to encourage you to purchase any form of insurance. When selecting an insurance company, you should not rely on Association coverage.

If there is any inconsistency between this notice and Montana law, then Montana law will control.

Montana Life and Health Insurance Guaranty Association PO Box 8247 Missoula, MT 59807 877-678-1048 or administrator@mtlifega.org | Office of the Montana State Auditor Commissioner of Securities and Insurance 840 Helena Ave. Helena, MT 59601 406-444-2040

History

Authorizing statute(s): 33-1-313, 33-10-210, MCA
Implementing statute(s): 33-10-210, MCA
History: NEW, 2011 MAR p. 1367, Eff. 7/29/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17; AMD, 2019 MAR p. 1741, Eff. 1/1/20.

Subchapter 6.6.47 Group Disability Income Opt Out

Mont. Admin. R. 6.6.4701 Definitions

(1) "Commission" means the interstate insurance product regulation commission established under 33-39-101, MCA.

(2) "Opt out" means action taken to decline to adopt or participate in a promulgated uniform standard adopted by the commission under 33-39-101, MCA.

(3) "Uniform standard" means a standard adopted by the commission for a product line under 33-39-101, MCA.

History

Authorizing statute(s): 33-39-101, 33-39-103, MCA
Implementing statute(s): 33-39-101, 33-39-103, MCA
History: NEW, 2016 MAR p. 2057, Eff. 11/11/16.

Mont. Admin. R. 6.6.4702 Purpose

(1) The purpose of these rules is to formally opt out of certain uniform standards pursuant to the procedure in 33-39-103, MCA.

History

Authorizing statute(s): 33-39-101, 33-39-103, MCA
Implementing statute(s): 33-39-101, 33-39-103, MCA
History: NEW, 2016 MAR p. 2057, Eff. 11/11/16.

Mont. Admin. R. 6.6.4703 Group Disability Income Uniform Standards Opt Out

(1) The insurance commissioner finds and concludes, based upon the preponderance of the evidence and given the conditions in Montana, that the group disability income standards do not provide reasonable protections to the citizens of Montana, and in fact would materially lower the level of protection for and materially diminish the rights of Montana policyholders, with regard to the following:

(a) the subrogation and claim off-set rights of the insurer; and

(b) the enforcement of the law of the policyholder's or group contract holder's resident state, as opposed to the state of the certificate holder.

(2) The insurance commissioner has balanced, has considered, and finds that the conditions in Montana and needs of the citizens of Montana outweigh the following factors:

(a) the intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for group disability income uniform standards; and

(b) the presumption that group disability income standards adopted by the commission provide reasonable protection to consumers of the group disability income product.

(3) The state of Montana opts out of the group disability income uniform standards.

History

Authorizing statute(s): 33-39-101, 33-39-103, MCA
Implementing statute(s): 33-39-101, 33-39-103, MCA
History: NEW, 2016 MAR p. 2057, Eff. 11/11/16.

Subchapter 6.6.48 Fire Tax

Mont. Admin. R. 6.6.4801 Definitions

The following definitions apply to this subchapter:

(1) "Fire premium" means the portion of property insurance premium an insurer reasonably attributes to insurance against fire, in relation to all other risks covered by the property insurance policy at issue.

(2) "Presumptively reasonable allocation" means the minimum percentage of fire premium the CSI determines to be reasonable pursuant to 33-2-705(3), MCA, without further justification from the insurer.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-705, MCA
History: NEW, 2015 MAR p. 1043, Eff. 8/1/15.

Mont. Admin. R. 6.6.4802 Fire Premium Allocation Procedure

(1) Insurers paying fire premium tax required by 50-3-109(1), MCA, shall provide to the CSI the calculation of fire premium separately for each line of business identified in 50-3-109(2), MCA.

(2) For each line of business identified in 50-3-109(2), MCA, the following apply to an insurer's reporting obligation under (1):

(a) If the percentage of fire premium reported is at or above the presumptively reasonable allocation, the insurer need not provide any other documentation to justify that fire premium;

(b) If the percentage of fire premium reported is below the presumptively reasonable allocation, the insurer shall provide the basis for the calculation of fire premium along with any supporting documentation to the CSI. If the CSI accepts the insurer's calculation of fire premium, and in subsequent years the percentage of fire premium remains the same, the insurer is not required to provide such justification to the CSI; or

(c) Unless the presumptively reasonable allocation for a line of business is 0% as provided in ARM 6.6.4803(1), if the fire premium reported is zero, the insurer shall provide the policy terms which show that risk of fire is excluded from the policy. If the CSI accepts the insurer's calculation of fire premium, and in subsequent years the calculation and policy terms remain the same, the insurer is not required to provide such policy terms to the CSI.

(3) If a rider, schedule, or addition to a policy:

(a) exclusively includes risk of fire, then all premium collected under such rider, schedule, or addition must be included in the fire line of business at 100% fire premium; or

(b) includes risk of fire as well as other risks, then all premium collected under such rider, schedule, or addition must be included in the line of business of the policy.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-705, MCA
History: NEW, 2015 MAR p. 1043, Eff. 8/1/15; AMD, 2023 MAR p. 871, Eff. 8/26/23.

Mont. Admin. R. 6.6.4803 Presumptively Reasonable Allocations

(1) For purposes of 33-2-705(3) and 50-3-109(2), MCA, the presumptively reasonable allocations for the following lines of business are as follows:

(a) for fire, 100%;

(b) for allied lines, 30%;

(d) for homeowners multi-peril, 40%;

(e) for commercial multi-peril (nonliability), 50%;

(f) for commercial multi-peril (liability), 0%;

(g) for ocean marine, 12%;

(h) for inland marine, 15%;

(i) for other private passenger auto liability, 0%;

(j) for other commercial auto liability, 0%;

(k) for private passenger auto physical damage, 9%;

(l) for commercial auto physical damage, 9%;

(m) for aircraft, 15%;

(n) for burglary and theft, 0%; and

(o) for boiler and machinery, 0%.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-705, MCA
History: NEW, 2015 MAR p. 1043, Eff. 8/1/15; AMD, 2023 MAR p. 871, Eff. 8/26/23.

Subchapter 6.6.50 Small Employer Health Insurance Rules

Mont. Admin. R. 6.6.5001 Definitions

For the purposes of this sub-chapter, the following terms have the following definitions:

(1) "Act" means the Montana Small Employer Health Insurance Availability Act.

(2) "Adjusted gross income" means gross income minus deductions recognized by the Internal Revenue Code.

(3) "Associate member of an employee organization" means any individual who participates in an employee benefit plan, as defined in 29 U.S.C. 1002(1) , that is a multiemployer plan, as defined in 29 U.S.C. 1002(37A) , other than the following:

(a) An individual (or the eligible dependent of such individual) who is employed by a participating employer within a bargaining unit covered by at least one of the collective bargaining agreements under or pursuant to which the employee benefit plan is established or maintained; or

(b) An individual who is a present or former employee (or an eligible dependent of such employee) of the sponsoring employee organization, of an employer who is, or was a party to at least one of the collective bargaining agreements under or pursuant to which the employee benefit plan is established or maintained, or of the employee benefit plan, or of a related plan.

(4) "Coinsurance" means the percentage of eligible charges which the insurer must pay, after the deductible is met.

(5) "Copayment" means a fixed dollar amount or percentage of eligible charges which the insured must pay for each service after a deductible, if any, is met.

(6) "Deductible" means the dollar amount of eligible charges which the insured must pay in an annual benefit period before any benefits are payable by the insurer.

(7) "Eligible dependent" means any dependent defined in 33-22-1803(12) , MCA, including a common law spouse, or any child who qualifies as a dependent under the Internal Revenue Code.

(8) "Eligible employee" means any employee defined in 33-22-1803(13) , MCA. All employees who work an average of 30 hours a week or more shall be considered an eligible employee unless, at the sole discretion of the employer, the insurance contract has specified in an endorsement a different hourly requirement of between 20 and 40 hours a week as contemplated in ARM 6.6.5058(3) . An eligible employee does not include an employee who works on a part-time or temporary basis.

(a) "Temporary employee" means an employee who is designated as temporary by an employer for a definite period of time, not to exceed twelve months, and who has no

guarantees of becoming a permanent employee. A temporary employee may not be an eligible employee. At the employer's discretion, a seasonal employee may be an eligible employee provided they are not designated as temporary and that they work the requisite number of hours per week.

(b) Officers must be subject to the same eligibility criteria as other employees including working the required number of hours per week.

(9) "Lifetime maximum benefit" means maximum total benefits paid by the insurer throughout the life of the policy.

(10) "Maximum annual out-of-pocket" means the total amount of eligible charges paid by the insured as copayments and deductible in an annual benefit period.

(11) "Risk characteristic" means the health status, claims experience, duration of coverage, or any similar characteristic related to the health status or experience of a small employer group or of any member of a small employer group.

(12) "Renewal date" means the first day of a group health plan year, or the first day of a shorter period if a plan is issued for a period shorter than one year.

(13) "Risk load" means the percentage above the applicable base premium rate that is charged by a small employer carrier to a small employer to reflect the risk characteristics of the small employer group.

(14) "This subchapter" means ARM Title 6, chapter 6, subchapter 50.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1803, and 33-22-1813, MCA
History: NEW, 1994 MAR p. 1990, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5004 Applicability, Scope, and Transition

(1) Except as provided elsewhere in this rule, this subchapter applies to any health benefit plan, whether provided on a group or individual basis, which:

(a) Meets one or more of the conditions set forth in 33-22-1804 , MCA; and

(b) Provides coverage to one or more employees of a small employer located in this state, without regard to whether the policy or certificate was issued in this state.

(2) A carrier that provides individual health insurance policies to one or more of the employees-of a small employer is subject to the act and this subchapter with respect to such policies, if the small employer contributes to the payment or reimbursement of premiums for the policies. The carrier is not considered a small employer carrier if premiums are paid entirely by contributions from employees. A payroll deduction or list-billed premium arrangement is allowable only if premiums are paid entirely by contributions from employees.

(3) The act and this subchapter do not apply to any health benefit plan provided to a small employer or to the employees of a small employer if the plan constitutes both a multiple employer welfare arrangement as defined by section 29 USCS 1002(40) (A) and an employee welfare benefit plan under section 29 USCS 1002(1) . For applicability of the act and this subchapter to health benefit plans provided through associations, see ARM 6.6.5060.

(4) An individual health insurance policy is not subject to the provisions of these rules solely because the policyholder elects a deduction under section 162(1) of the Internal Revenue Code, entitled "special rules for health insurance costs of self-employed individuals."

(5) An employer qualifies as a small employer if it meets the definition of "small employer" in 33-22-1803 , MCA, and employs at least 2 but not more than 50 eligible employees regardless of whether each eligible employee intends to enroll in the employer's health benefit plan. The number of eligible employees includes every employee who meets the hourly requirement set by the employer as defined in 33-22-1803 , MCA, and ARM 6.6.5001(8) . A small employer group must meet a carrier's participation requirement for issuance of a policy.

(6) If the small employer is issued a health benefit plan, the act and this subchapter continue to apply to the health benefit plan in the case that the small employer subsequently employs less than 2 or more than 50 eligible employees until the next renewal date. A carrier providing coverage to such an employer shall notify the employer 60 days prior to the plan renewal date, or, if the carrier becomes aware of such an employer less than 60 days before the plan renewal date, immediately, that the protections provided under the act and this subchapter cease to apply to the employer upon the plan renewal date.

(7) Subject to (9) , if a health benefit plan is issued to an employer that is not a small employer as defined in the act, but subsequently the employer becomes a small employer, the act and this subchapter do not apply to the existing health benefit plan until the next renewal date. The carrier providing a health benefit plan to such an employer must not become a small employer carrier under these rules solely because the carrier continues to provide coverage under the existing health benefit plan to the employer until the renewal date.

(8) A carrier providing coverage to an employer described in (7) shall, within 60 days of becoming aware that the employer has 2 to 50 eligible employees, but not later than the next renewal date, notify the employer of the options and protections available to the employer under the act, including the employer's option to purchase a small employer health benefit plan from any small employer carrier.

(9) A carrier providing coverage to an employer described in (7) may continue to provide coverage to the small employer without becoming a small employer carrier, according to the provisions of 33-22-1811 (1) (c) , MCA, but only if the carrier does not actively market coverage to any small employers. If the carrier does actively market to any small employer, then the carrier is deemed a small employer carrier subject to all the provisions of the act and this subchapter, including guaranteed issue requirements as set forth in ARM 6.6.5079A. Carriers providing continuing coverage under this subsection must comply with (8) .

(10) If a small employer has employees in more than one state, the act and this subchapter apply to any health benefit plans issued to the small employer if:

(a) The majority of eligible employees of such small employer are employed in this state or,

(b) If no state contains a majority of the eligible employees of the small employer, the primary business location of the small employer is in this state.

(c) In determining whether the laws of this state or another state apply to a health benefit plan issued to a small employer described in (7) , the provisions of (7) apply as of the date the health benefit plan was issued to the small employer for the period that the health benefit plan remains in effect.

(d) If a health benefit plan is subject to this subchapter, this subchapter applies to all individuals covered under the health benefit plan, whether they reside in this state or in another state.

(11) A carrier that is not operating as a small employer carrier in this state is not subject to the provisions of this subchapter solely because it issued a health benefit plan in another state to a small employer that subsequently moves to this state, until the plan renewal date. However, such a carrier shall, within 60 days of becoming aware that the employer has moved to this state, notify the employer of the options and protections available to the employer under the act, including the employer's option to purchase a small employer health benefit plan from any small employer carrier authorized to do business in this state.

(12) Carriers offering individual and group health benefit plans in this state are responsible for determining whether the plans are subject to the requirements of the act and this subchapter. Carriers shall elicit the following information from applicants for such plans at the time of application:

(a) Whether any portion of the premium will be paid by or on behalf of a small employer, either directly or through wage adjustments or other means of reimbursement; and

(b) Whether the prospective policyholder, certificate holder, or any proposed insured individual intends to treat the health benefit plan as part of a plan or program for the purposes of sections 106, 125 or 162 of the Internal Revenue Code, and, if so, whether any part of the plan or program is funded by an applicant's small employer.

(13) If a small employer carrier fails to comply with (12) , the small employer carrier shall be deemed to be on notice of any information that could reasonably have been attained if the small employer carrier had complied with that section.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1804, 33-22-1808, 33-22-1811, and 33-22-1812, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5008 Covered Services of Policies Under Standard Plan

(1) Coverage for all usual, customary, and reasonable charges related to medically necessary services rendered, as defined by the small employer carrier includes as follows:

(a) The benefits provided shall be coordinated pursuant to ARM 6.6.2401 through 6.6.2405.

(b) Coverage for all statutory mandated benefits, including, but not limited to those mandated by 33-22-132 , MCA, (mammography examinations) ; 33-22-512 , MCA, 33-30-1014 , MCA (well child care) ; 33-22-703 , MCA (mental illness, and chemical dependency) ; 33-22-114 , MCA, (services of physician's assistants - certified) ; 33-22-125 , MCA, (independent chiropractic examination and review) ; 33-22-130 , MCA, (treatment of adopted children) ; 33-22-131 , MCA, (phenylketonuria treatment) ; 33-22-301 , MCA, 33-22-504 , MCA, and 33-30-1001 , MCA, (newborns) ; 33-22-304 , MCA, 33-22-506 , MCA, and 33-30-1004 , MCA, (continuation of coverage for the handicapped) ; 33-22-305 through 33-22-311 , MCA (the Individual Family Disability Insurance Continuation of Coverage Act) ; 33-22-503 , MCA (regarding continuation of benefits to dependents) ; 33-22-507 , MCA (regarding continuing group coverage after reduction of work schedule) ; 33-22-508 , MCA (regarding conversion on termination of eligibility) ; 33-22-509 , MCA (regarding imposition of pre-existing conditions to a converted policy covered by a group contract) ; and 33-22-510 , MCA (insured family-conversion entitlement) .

(2) Small employer carriers may offer a standard plan above the minimum coverage and benefit levels.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1812, and 33-22-1828, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 2020, Eff. 6/26/98.

Mont. Admin. R. 6.6.5024 Hmo Cost Sharing Schedule and Exception to Standard Plan Provisions

(1) Standard plans offered by HMOs must comply with ARM 6.6.5008. HMO plans may require that all services provided in ARM 6.6.5008 must be rendered or referred by a primary care provider.

(2) Standard plans offered by HMOs must offer a comparable level of benefits to a standard plan contemplated in 33-22-1828 , MCA and ARM 6.6.5008 as determined by the benefit value.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1812, and 33-22-1828, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5032 Criteria of Policies Offered Under Basic Plan

(1) Any health benefit plan offered to a small employer group that has a benefit value, as calculated in ARM 6.6.5036, of less than the benefit value of the insurer's standard plan will qualify as a basic health benefit plan contemplated by 33-22-1827 , MCA.

(2) Any HMO plan offered by a small employer carrier that offers fewer benefits than the carrier's standard HMO plan is subject to the commissioner's final determination, as contemplated by 33-22-1827 , MCA.

(3) All basic health benefit plans and basic HMO plans contemplated by 33-22-1827 , MCA, may exclude coverage for services of any category of licensed practitioners and any type of health care service otherwise required by law or rule, except as specified in 33-22-1827 and 33-22-1903 , MCA. Basic health benefit plans must comply with 49-2-309 , MCA.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1812, and 33-22-1827, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5036 Calculation of Benefit Values

(1) For the purposes of determining whether a health benefit plan is a basic health benefit plan under ARM 6.6.5032, a benefit value method may be developed and used by the small employer carrier as contemplated in 33-22-1803 (6) , MCA. The carrier has the option to use the following computations, together with the values listed, to determine a benefit value for major medical health insurance plans. This calculation may not be used for HMO health benefit plans. The values in Table I in (1) (d) of this rule may not be used for any health benefit plans with only partial medical coverage, such as hospital-only expense plans or hospital and surgical expense plans. The calculation and its result are subject to review and approval by the commissioner.

(a) An optional formula for calculating the benefit value is as follows:

BENEFIT VALUE = DEDUCTIBLE VALUE + COINSURANCE VALUE +

LIFETIME MAXIMUM VALUE

where

DEDUCTIBLE VALUE = DEDUCTIBLE CLAIMS COST x Y x

UTILIZATION (Y) / 0.8

and

COINSURANCE VALUE = COINSURANCE-STOPLOSS-PLUS-DEDUCTIBLE

CLAIMS COST x ([Z x UTILIZATION(Z) ] -

[Y x UTILIZATION(Y) ]} / 0.8.

(b) The variables for the formula are defined as follows:

(i) COINSURANCE STOPLOSS refers to the maximum amount of annual claims to which the coinsurance is applied. For the standard plan, the COINSURANCE STOPLOSS is $5,000.

(ii) DEDUCTIBLE CLAIMS COST is the expected claims cost for a plan with a particular deductible.

(iii) COINSURANCE-STOPLOSS-PLUS-DEDUCTIBLE CLAIMS COST is the expected claim cost for a plan with a "deductible" equal to the amount of the COINSURANCE STOPLOSS plus the DEDUCTIBLE.

(iv) LIFETIME MAXIMUM VALUE is the dollar adjustment to the expected claims cost for a particular lifetime maximum amount.

(v) UTILIZATION(Y) and UTILIZATION(Z) each refer to a factor to apply to the expected claims cost to adjust for expected utilization of a plan with a coinsurance level Y or Z.

(vi) Y is the coinsurance percent applied to claims, up to the amount of the coinsurance stoploss annually.

(vii) Z is the coinsurance percent applied to claims

above the coinsurance stoploss (usually 100%) .

may be used:

(i) Determine the deductible claims cost.

(Table I) ____

(ii) Determine the value of Y, as a decimal.

(coinsurance percentage) ____

(iii) Determine the value of utilization(Y) .

(Table II) ____

(iv) Determine Y x utilization(Y) .

(line [ii] x line [iii]) ____

(v) Determine the deductible value.

(line [i] x line [iv] /0.8) ____

(vi) Determine the coinsurance-stoploss-plus-

deductible. (Coinsurance stoploss amount

deductible amount.) ____

(vii) Determine the coinsurance-stoploss-plus-

deductible claims cost. (Interpolate the claims

costs in Table I corresponding to the

deductibles immediately bounding the

coinsurance-stoploss-plus deductible.) ____

(viii) Determine the value of Z, as a decimal.

(usually, but not always, 1.0) ____

(ix) Determine the value of utilization(Z) .

(Table II) ____

(x) Determine Z x utilization(Z) .

(line [viii] x line [ix]) ____

(xi) Determine the coinsurance value.

(line [vii] x(line [x] - line [iv]/0.8) ____

(xii) Determine the lifetime-maximum

value. (Table III) ____

(xiii) Determine the benefit value.

(line [v] + line [xi] + line [xii]) ____

(d) The following tables, or other tables with actuarially sound values, may be used in calculating benefit values under this rule:

Table I - Claim Costs by Deductible Amount *

Table II - Utilization Rate by Coinsurance *

Table - III - Lifetime-Maximum Values by

Lifetime Maximum Amount

Values were constructed by the Montana Insurance Department, using the 1994 Tillinghast Group Medical Insurance Rate Manual as a reference.

(2) Filing of standard and basic health benefit plans for approval by the commissioner must include a description of the small employer carrier's benefit value method, an actuarial certification that the formula's expected claims costs, utilization rates and values used are based on commonly accepted actuarial assumptions, and the calculation of the benefit values of the standard and basic plans being filed.

Deductible Amount | Claims Cost | Deductible Amount | Claims Cost | Deductible Amount | Claims Cost $ 0 | $124.83 | $ 750 | $ 89.29 | $ 10,000 | $ 24.92 100 | 119.43 | 1,000 | 79.77 | 15,000 | 20.56 150 | 116.82 | 1,500 | 68.70 | 20,000 | 17.38 200 | 114.23 | 2,000 | 60.42 | 25,000 | 15.11 250 | 111.65 | 2,500 | 53.69 | 50,000 | 9.36 300 | 109.08 | 5,000 | 35.21 | 100,000 | 5.38 500 | 98.81 | 7,500 | 30.07 | 150,000 | 2.87

Coinsurance | Utilization Rate | Coinsurance | Utilization Rate 100% | 1.14 | 70% | 0.93 95% | 1.10 | 65% | 0.91 90% | 1.07 | 60% | 0.89 85% | 1.03 | 55% | 0.87 80% | 1. | 50% or less | 0.86 75% | 0.97 | |

Lifetime Maximum Amount | Lifetime Maximum Value $5,000,000 or more | $ 0.23 2,000,000 | 0.17 1,000,000 | 0.00 750,000 | -0.28 500,000 | -0.55 250,000 | -1.78 100,000 | -7.67 50,000 | -13.34 25,000 | -21.54

History

Authorizing statute(s): Sec. 33-1-313, 33-22-1812 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1809, 33-22-1811, and 33-22-1812, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1996 MAR p. 141, Eff. 10/13/95; AMD, 1998 MAR p. 2020, Eff. 6/26/98.

Mont. Admin. R. 6.6.5050 Status of Carriers as Small Employer Carriers - Permission to Reenter - Annual Reporting Requirements

(1) In order to enter the small employer market, health insurance carriers must:

(a) Have prior approval by the commissioner of at least one basic and one standard health benefit plan for issuance in the small employer market; and

(b) Notify the commissioner of:

(i) All the carrier's health benefit plans intended for use in the small employer market, and the date of approval of all forms used in connection with those plans; and

(ii) The carrier's intent to comply with all provisions of the Small Employer Health Insurance Availability Act, including guaranteed issue requirements for all health benefit plans actively marketed by the carrier.

(2) Each new carrier applying for a certificate of authority to sell disability insurance in this state shall include with its application a statement whether it intends to operate as a small employer carrier in this state.

(3) If a small employer carrier opts to discontinue offering a particular type or all group health insurance coverage in the small group market, the provisions of 33-22-524 and 33-22-1810, MCA, apply.

(4) A carrier that has been prohibited from writing coverage for small employers in this state pursuant to 33-22-1810(1)(g) , MCA, may not resume offering health benefit plans to small employers in this state until the carrier has received permission from the commissioner to reenter the small employer market as a small employer carrier.

History

Authorizing statute(s): 33-1-313, 33-22-143, 33-22-1822, MCA
Implementing statute(s): 33-22-1802, 33-22-1810, 33-22-1811, 33-22-1812, 33-22-1814, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98; AMD, 2023 MAR p. 876, Eff. 1/1/24.

Mont. Admin. R. 6.6.5058 Requirement to Insure Entire Groups

(1) A carrier providing health insurance coverage to a small employer shall offer coverage to all eligible employees and their dependents and shall issue coverage to all eligible employees and their dependents who make timely application and who do not waive coverage under (6) . Except as provided in (2) , such small employer carriers shall provide the same health benefit plan to each such eligible employee and dependent.

(2) Small employer carriers may offer the employees of a small employer the option of choosing among any health plans which have been chosen by the employer. The choice among benefit plans may not be limited, restricted, or conditioned based upon the risk characteristics of the employees or their dependents or upon any factors set forth in 33-22-526 , MCA.

(3) A small employer has the sole discretion, within the parameters of 33-22-1803 (13) , MCA and ARM 6.6.5001(8) , to define the hourly workweek eligibility criteria as a normal workweek between 20 and 40 hours, provided the criteria is applied uniformly among all employees. If the employer has chosen to define the hourly eligibility as other than 30 hours a week, the employer must sign a contract endorsement stating the following:

(a) the specific hourly employee eligibility requirement with a normal workweek between 20 and 40 hours;

(b) that all employees have been, and new employees will be, informed of the eligibility requirement;

(c) that the hourly eligibility requirement was not established for the purposes of excluding an employee or dependent of an employee because of the individual's health status, claims experience, risk characteristics, or any factor set forth in 33-22-526 , MCA; and

(d) that the eligibility requirement applies uniformly among all employees.

(4) Part-time and temporary employees may be offered coverage in a small employer group health plan at the discretion of the employer, provided all part-time and temporary employees are treated uniformly and eligibility for coverage is not related to risk characteristics or factors listed in 33-22-526 , MCA. Such employees are not to be counted for purposes of determining the number of "eligible employees" pursuant to 33-22-1803 (24) , MCA.

(5) Small employer carriers shall require each small employer that applies for coverage, as part of the application process, to provide a complete list of eligible employees and eligible dependents. The list must include a statement showing how much the employer is contributing to each employee's premiums.

(6) Small employer carriers shall secure waivers with respect to each eligible employee and each eligible dependent who declines an offer of coverage under a health benefit plan provided to a small employer. Such waivers must be signed by the eligible employees on behalf of such employee or the dependent of such employee and must certify that the individual who declined coverage was informed of the availability of coverage under the health benefit plan. The waiver form may request but must not require that the reason for declining coverage be stated on the form, and must include a written warning of the penalties imposed on late enrollees. Waivers must be maintained by the small employer carrier for a period of 6 years.

(7) Small employer carriers may not issue coverage to any small employer if the carrier is unable to obtain the list required under (5) , and the waivers required under (6) .

(8) Small employer carriers may not offer coverage to any small employer if the carrier, or a producer for such carrier, has reason to believe that the small employer or producer has induced or pressured an eligible employee, or dependent of an eligible employee, to decline coverage due to the individual's health status, claims experience or risk characteristics. Small employer carriers may not offer coverage to any small employer if the carrier, or a producer for such carrier, has reason to believe that the small employer has chosen to define an eligible employee in such a way as to specifically exclude from coverage an employee or dependent of anemployee because of the individual's health status, claims experience or risk characteristics.

(9) Prior to submitting an application for coverage with the carrier on behalf of a small employer, each involved producer shall notify his or her small employer carrier of any circumstances that would indicate that the small employer has induced or pressured an eligible employee or eligible dependent, to decline coverage due to the individual's health status, claims experience or risk characteristics. Prior to submitting an application for coverage with the carrier on behalf of a small employer, each involved producer shall notify his or her small employer carrier of any circumstances that would indicate that the small employer has defined an eligible employee in such a way as to specifically exclude from coverage an employee or a dependent of an employee because of the individual's health status, claims experience or risk characteristic.

History

Authorizing statute(s): Sec. 33-1-313, 33-22-143, and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-526, 33-22-1802, 33-22-1803, 33-22-1811, and 33-22-1812, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1996 MAR p. 141, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5060 Coverage Through Associations

(1) A bona fide association must:

(a) Meet all the requirements listed in 33-22-1803 (8) , MCA; for purposes of meeting the requirement of being actively in existence for at least 5 years, activities for that duration must include legitimate trade or association business; and

(b) Make health insurance coverage offered through the association available to all members of the association. Bona fide associations may create membership categories that will not be offered association health insurance coverage, provided that such membership categories must not be based on health status or insurability or designed in any way to circumvent Montana health insurance law.

(2) A "non-bona fide association" means an association which meets the requirements listed in 33-22-1803 (8) , MCA, except:

(a) The association must have been actively in existence for at least 2 years; and

(b) The association is not required to make health insurance coverage available to all members of the association, except to small employer members.

(3) A health insurance carrier that provides a group health plan to a non-bona fide association must comply with the Small Employer Health Insurance Availability Act with respect to the small employer members of the association. For purposes of the guaranteed issue requirement for small employers in a non-bona fide association, a health insurance carrier must actively market all the carrier's small employer health benefit plans to small employers within a non-bona fide association, and actively market any plan provided to a non-bona fide association's small employers to other small employers not in the association. Small employers may be rated together with other members of a non-bona fide association provided that the rates for the whole group meet the requirements of 33-22-1809 , MCA.

(4) Members leaving a bona fide or non-bona fide association are considered to be voluntarily leaving a group, in which case a health insurance carrier insuring the group is not required to guarantee renewal of such members' coverage, unless the policy for the coverage provides for guaranteed renewal.

(5) A health insurance carrier may not issue a group health plan to an association if the association does not meet the requirements of either a bona fide or non-bona fide association.

(6) Bona fide associations and non-bona fide associations may impose a waiting period of up to 12 months before members can enroll in health insurance provided through the association. This initial waiting period may not be counted

as a break in creditable coverage.

(7) Bona fide associations and non-bona fide associations may impose a waiting period before members that cancel their membership in an association, or in an association's health insurance coverage, may reenroll in the association's health insurance coverage.

History

Authorizing statute(s): Sec. 33-1-313, 33-1-501 and 33-22-1822, MCA
Implementing statute(s): 33-22-501, 33-22-1802, and 33-22-1803, MCA
History: NEW, 1994 MAR p. 2926, Eff. 11/11/94; AMD, 1995 MAR p. 2127, Eff. 10/13/95; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5078 Fair Marketing Standards

(1) Small employer carriers shall actively market each of their basic and standard health benefit plans to small employers in this state, and shall comply with the guaranteed availability of coverage and disclosure requirements set forth in ARM 6.6.5079A and ARM 6.6.5079B. Examples of active marketing include, but are not limited to, promotional materials for agents and consumers, marketing classes for agents, direct mail to small business, and paid media advertising. Small employer carriers may not suspend the marketing or issuance of the basic and standard health benefit plans except for good cause and with the prior approval of the commissioner. A small employer carrier suspending the marketing and issuance of any small employer plan shall notify the commissioner of such suspension by the suspension date.

(2) In marketing basic and standard health benefit plans to small employers, small employer carriers shall use at least the same sources and methods of distribution that they use to market other health benefit plans to small employers. Producers authorized by small employer carriers to market health benefit plans to small employers in the state shall also be authorized to market the basic and standard health benefit plans.

(3) Small employer carriers shall provide price quotes to small employers, either directly or through authorized producers, within 15 working days of receiving a request for a quote. Price quotes must include such information as is necessary to understand the quotes. If a small employer carrier needs additional information to provide price quotes, it must request such information from the employer within 5 working days of receiving the request for the price quotes.

(4) Small employer carriers may not apply more stringent or detailed requirements related to the application process for the basic and standard health benefit plans than are applied for other health benefit plans offered by the carrier.

(5) Small employer carriers may not require, as a condition to the offer or sale of a health benefit plan to small employers, that the small employer purchase or qualify for any other insurance product or service.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822, MCA
Implementing statute(s): 33-22-1802, 33-22-1809, 33-22-1812, and 33-22-1813, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079 Opportunities for Individuals to Enroll in Small Group Plans

(1) Upon the inception of a small group health plan all eligible employees and their dependents, and thereafter all new eligible employees and their dependents, must be offered an opportunity to enroll in the plan. Any waiting period prior to enrollment may not exceed twelve months. If a small employer carrier issues more than one health benefit plan to a small employer group pursuant to ARM 6.6.5058(2) , all eligible employees must be offered the same choice of health benefit plans as the other members of the group.

(2) Except as provided in (3) , eligible employees who do not enroll during an initial enrollment opportunity as described in (1) , provided that the opportunity lasted at least 30 days, may be considered late enrollees. A carrier may not impose a preexisting condition exclusion of more than 18 months from the date of a late enrollee's application. Although 33-22-1811(3) (c) , MCA, allows a carrier to impose an 18 month period of exclusion from coverage or an 18 month preexisting condition exclusion for late enrollees, the federal Health Insurance Portability and Accountability Act of 1996 does not allow both and only authorizes a maximum 18 month preexisting condition exclusion. Therefore, late enrollees may only be subject to the 18 month preexisting condition exclusion from the date of application and a carrier must not impose unreasonable delays in issuing coverage from the date of such application.

(3) Eligible individuals who meet the requirements set forth in 33-22-140(17) (a) , (b) or (c) which provides exceptions to late enrollee status, or who qualify for a special enrollment period under 33-22-523, MCA, are not considered late enrollees. Individuals qualifying for special enrollment must be given an opportunity to enroll according to the terms of 33-22-523, MCA. Eligible individuals who are not late enrollees under the terms of 33-22-140(17) (a) , (b) or (c) , MCA, must be given opportunities to enroll as set forth in (1) , and the enrollment period must extend at least 30 days.

(4) On or before the time an employee is offered an initial opportunity to enroll in a group health plan, the plan is required to provide the employee with a description, as set forth in ARM 6.6.50791(3) of the plan's special enrollment rules. Additionally, the plan shall provide at the same time a description of opportunities to enroll under 33-22-140(17) (a) , (b) or (c) , MCA, and as a late enrollee.

History

Authorizing statute(s): Sec. 33-22-143 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-140, 33-22-523, 33-22-526, and 33-22-1811, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079A GUARANTEED AVAILABILITY OF COVERAGE IN THE SMALL GROUP MARKET - GUARANTEED ISSUE REQUIREMENTS - EXCEPTIONS

6.6.5079A GUARANTEED AVAILABILITY OF COVERAGE IN THE SMALL GROUP MARKET - GUARANTEED ISSUE REQUIREMENTS - EXCEPTIONS

(1) Except for coverage offered only through a bona fide association, and subject to (2) , (3) , and (4) , each small group carrier that offers health insurance coverage in the small group market must offer, to any small employer in the state, all products that are approved for sale in the small group market and that the issuer is actively marketing, and must accept any small employer that applies for any of those products.

(2) A small employer carrier is not required to issue coverage to a small group employer that does not meet the minimum participation and contribution requirements of the carrier, as permitted by 33-22-1811(3) (d) , MCA. If a carrier refuses to issue any plan to a small employer on the basis that the small employer does not meet participation or contribution requirements, the carrier may not issue any other plan to the small group employer.

(3) A small employer carrier is not required to issue coverage in circumstances set forth in 33-22-1811(4) , MCA. In the event that a small employer carrier denies coverage to a small employer under that section and is prevented from offering coverage for 180 days, the responsibilities of the small employer carrier to renew existing coverage pursuant to 33-22-524 and 33-22-1810, MCA, continue.

(4) A small employer carrier may not issue coverage to a small employer under circumstances described in 33-22-1811(3) (e) (iv) , MCA.

(5) For purposes of this rule, "product" refers to a health benefit plan, and includes all contract provisions included in the contract language for a health benefit plan issued to a small group employer.

History

Authorizing statute(s): Sec. 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1811, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079B DISCLOSURE OF INFORMATION

6.6.5079B DISCLOSURE OF INFORMATION

(1) In connection with the offering of any health insurance coverage to a small employer, a small employer carrier is required to:

(a) Make a reasonable disclosure to the employer, as part of its solicitation and sales materials, of the availability of the information described in (2) of this rule for all plans marketed by the carrier; and

(b) Upon request of the employer, provide that information to the employer.

(2) Information that must be provided under (1) (b) of this rule is:

(a) Information required in 33-22-1809(4) , MCA;

(b) A description of benefits in summary form;

(c) The rate or rating schedule that applies to the plan. If the plan has options with respect to the length or existence of preexisting condition waiting periods or affiliation periods, information regarding rates under those options must be provided;

(d) The minimum employer contribution and group participation rules that apply; and

(e) In the case of a network plan, a map or listing of counties served and a list of providers in the network.

History

Authorizing statute(s): Sec. 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1809(4), and 33-22-1811, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079C PREEXISTING CONDITIONS - PERMISSIBLE RESTRICTIONS IN SMALL GROUPS

6.6.5079C PREEXISTING CONDITIONS - PERMISSIBLE RESTRICTIONS IN SMALL GROUPS

(1) Eligible employees and their dependents making timely application must be accepted for coverage in a small employer's group health plan without any restrictions or limitations on coverage related to risk characteristics of the eligible individuals, except as provided in 33-22-1811(3) , MCA, and this rule.

(2) A preexisting condition exclusion must relate to a condition based on presence of a condition for which medical advice, diagnosis, care or treatment was recommended or received by the participant or beneficiary within the 6-month period ending on the enrollment date as defined in 33-22-140, MCA. Medical advice, diagnosis, care, or treatment may be taken into account only if it is recommended by, or received from, an individual licensed or similarly authorized to provide such services under state law and operating within the scope of practice authorized by state law. A negative diagnosis does not constitute medical advice, diagnosis, care, or treatment for purposes of determining whether there is a preexisting condition.

(3) A preexisting exclusion period may not extend more than the following periods of time:

(a) For an employee or dependent obtaining coverage within the initial period of eligibility, twelve months from the coverage effective date;

(b) For an employee or dependent obtaining coverage through a special enrollment period as set forth in 33-22-523, MCA, or an employee or dependent qualifying for a later enrollment period pursuant to 33-22-140(17) , MCA, twelve months from the coverage effective date;

(c) For an employee or dependent obtaining coverage as a late enrollee as defined in 33-22-140(17) , MCA, eighteen months from the enrollment date.

(4) Exclusionary riders are not permitted.

(5) A small group plan must not impose a preexisting exclusion more restrictive than those allowed in 33-22-514, MCA.

(6) The following may not be excluded as a preexisting condition:

(a) Genetic information in the absence of diagnosis of the condition related to the genetic information;

(b) Pregnancy;

(d) Newborns as set forth in 33-22-504, MCA.

(7) A health benefit plan must waive any time period permitted for a preexisting exclusion under this rule by applicable periods of creditable coverage as set forth in 33-22-1811(3) (b) and 33-22-141, MCA.

(8) Small group carriers are required to give prior notice of the imposition of a preexisting exclusion period as set forth in ARM 6.6.5079H(6) .

History

Authorizing statute(s): Sec. 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-1811, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079D SMALL EMPLOYER HEALTH INSURANCE SUBJECT TO GENERAL HEALTH INSURANCE AND GROUP RULES

6.6.5079D SMALL EMPLOYER HEALTH INSURANCE SUBJECT TO GENERAL HEALTH INSURANCE AND GROUP RULES

(1) Unless otherwise specified in Title 33, chapter 22, part 18, MCA, or this subchapter, small employer carriers and small employer health plans are subject to applicable statutes in Title 33, chapter 22, MCA. Those sections include, but are not limited to, provision regarding:

(a) Definitions in 33-22-140, MCA;

(b) Crediting previous coverage and issuing certificates of creditable coverage in 33-22-141 and 33-22-142, MCA;

(d) Guaranteed renewability in the group market at 33-22-524, MCA; and

(e) Prohibiting discrimination in the group market at 33-22-526, MCA.

History

Authorizing statute(s): Sec. 33-22-143 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-140, 33-22-141, 33-22-142, 33-22-523, 33-22-524, 33-22-526, and 33-22-1802, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079E TRANSITION IN LARGE AND SMALL GROUP HEALTH PLANS TO CHANGES UNDER HEALTH INSURANCE PORTABILITY ACCOUNTABILITY ACT (HIPAA) IN MONTANA LAW

6.6.5079E TRANSITION IN LARGE AND SMALL GROUP HEALTH PLANS TO CHANGES UNDER HEALTH INSURANCE PORTABILITY ACCOUNTABILITY ACT (HIPAA) IN MONTANA LAW

(1) Group health insurance plans and health insurance coverage offered in connection with group health plans for group health plan and health insurance coverage contracts issued or renewed after June 30, 1997, are subject to the following sections of the Montana Codes Annotated (MCA) regarding:

(a) Representations in applications at 33-15-402, MCA;

(b) Prohibiting against preexisting condition exclusions for adopted children at 33-22-130, MCA;

(d) Creditable coverage at 33-22-141, MCA;

(e) Issuing certificates of coverage at 33-22-142, MCA;

(f) Preexisting condition exclusions in the group market at 33-22-514, MCA;

(g) Special enrollment periods at 33-22-523, MCA;

(h) Guaranteed renewability requirements at 33-22-524, MCA;

(i) Guaranteed renewability in multiple employer welfare arrangements at 33-22-525, MCA;

(j) Discrimination in group health insurance at 33-22-526, MCA;

(k) Prohibitions against preexisting condition exclusions for newborns at 33-22-504(1) , MCA;

(l) Definitions under the Small Employer Health Insurance Availability Act at 33-22-1803, MCA;

(m) The applicability, and scope of the Small Employer Health Insurance Availability Act at 33-22-1804(1) (d) and (3) , MCA;

(n) Guaranteed issue of all small group plans at 33-22-1811(1) , MCA. These requirements are further defined in ARM 6.6.5079A;

(o) Rules for preexisting condition exclusions in small group plans at 33-22-1811(3) (a) (i) and (b) , MCA;

(p) Regarding the requirements for small employer carriers to offer or provide coverage under certain circumstances at 33-22-1811(4) , MCA;

(q) Prohibiting preexisting condition exclusions in plans issued by health service corporations at 33-30-1001, MCA;

(r) The definition of an "affiliation period" for health maintenance organizations at 33-31-102(1) , MCA;

(s) Health maintenance organizations being subject to 33-22-141, 33-22-142, 33-22-514, 33-22-523, 33-22-524 and 33-22-526, MCA, at 33-31-111(6) , MCA; and

(t) Affiliations periods in health maintenance organizations at 33-31-307, MCA.

(2) When a group health plan is first issued or renewed after June 30, 1997, it must provide an open enrollment period for the purpose of providing an opportunity to enroll in the plan to those persons who previously may have been excluded from coverage, or discouraged from participating, for reasons now prohibited under any statute listed in (1) . The period shall commence at the time the plan is issued or renewed and last not less than 30 days after eligible employees and their dependents are notified of the enrollment opportunity as set forth in (3) .

(3) Small employer carriers must provide written notice prior to the opportunity to enroll set forth in (2) to each small employer insured under a health benefit plan offered by such carrier. The notice must clearly describe the enrollment rights required by this rule to all eligible employees and dependents not currently covered under the plan. Small employer carriers are not required to send this notice to each eligible employee or dependent, but must obtain written proof from the employer that each eligible individual has been notified.

(4) A group health plan renewing after June 30, 1997 must remove any remaining preexisting exclusion periods for any covered individual to the extent that those preexisting conditions conflict with 33-22-130, 33-22-504, 33-22-514 or 33-22-1811(3) , MCA, as applicable. Additionally, any preexisitng exclusion periods permitted under 33-22-514 or 33-22-1811(3) , MCA, must be reduced by any creditable coverage periods, assuming the application of creditable coverage held by an individual as of the individual's enrollment date, regardless of whether the enrollment date occurred before or after a plan's renewal date.

(5) A small employer carrier that has not previously complied with the guaranteed issue requirements set forth in ARM 6.6.5079A must comply with those provisions with respect to any small' employers for whom the carrier is providing health insurance coverage as of July 1, 1997 by following the disclosure requirements set forth in ARM 6.6.5079B with respect to those small employers.

(6) In order to continue operating as a small employer carrier, each health insurance carrier that was approved as a small employer carrier prior to June 26, 1998, must make a submission in accord with ARM 6.6.5050(1) (b) by October 1, 1998.

History

Authorizing statute(s): Sec. 33-1-313, 33-22-143, and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-141, 33-22-514, 33-22-526, and 33-22-1811, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079F CREDITABLE COVERAGE AND METHODS OF COUNTING

6.6.5079F CREDITABLE COVERAGE AND METHODS OF COUNTING

(1) Periods of creditable coverage must be counted for individuals previously covered under any health coverage set forth in 33-22-140(4) (a) , MCA, and for coverage under the association plan or the association portability plan as set forth in Title 33, chapter 22, part 15, MCA.

(2) For purposes of reducing any preexisting condition exclusion period, as provided under 33-22-514 and 33-22-1811, MCA, a group health plan, and a health insurance issuer offering group health coverage, must determine the amount of an individual's creditable coverage by using the standard method described in (3) , except that the plan, or issuer, may use the alternative method under (4) with respect to any or all of the categories of benefits described under (4) (b) .

(3) Under the standard method, a group health plan, and a health insurance issuer offering group health insurance coverage, shall determine the amount of creditable coverage without regard to the specific benefits included in the coverage.

(a) Subject to (4) (d) , for purposes of reducing the preexisting condition exclusion period, a group health plan, and a health insurance issuer offering group health insurance coverage, shall determine the amount of creditable coverage by counting all the days that the individual has under one or more types of creditable coverage. Accordingly, if on a particular day, an individual has creditable coverage from more than one source, all the creditable coverage on that day is counted as one day. Further, any days in a waiting period for a plan or policy are not creditable coverage under the plan or policy.

(i) Days of creditable coverage that occur before a significant break in coverage are not required to be counted.

(ii) A significant break in coverage means a period of 63 consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage.

(iii) Notwithstanding any other provisions of (3) , for purposes of reducing a preexisting condition exclusion period using the standard method, but not for purposes of issuing a certificate under ARM 6.6.5079G, a group health plan, and a health insurance issuer offering group health insurance coverage, may determine the amount of creditable coverage in any other manner that is at least as favorable to the individual as the method set forth in (3) , subject to the requirements of other applicable law.

(4) Under the alternative method, a group health plan, or a health insurance issuer offering group health insurance coverage, shall determine the amount of creditable coverage based on coverage within any category of benefits described in (4) (b) and not based on coverage for any other benefits. The plan or issuer may use the alternative method for any or all of the categories. The plan may apply a different preexisting condition exclusion period with respect to each category, and may apply a different preexisting condition exclusion period for benefits that are not within any category. The creditable coverage determined for a category of benefits applies only for purposes of reducing the preexisting condition exclusion period with respect to that category. An individual's creditable coverage for benefits that are not within any category for which the alternative method is being used is determined under the standard method of (3) .

(a) A plan or issuer using the alternative method is required to apply it uniformly to all participants and beneficiaries under the plan or policy. The use of the alternative method must be set forth in the plan.

(b) The alternative method for counting creditable coverage may be used for coverage for any of the following categories of benefits:

(i) Mental health;

(ii) Substance abuse treatment;

(iii) Prescription drugs;

(iv) Dental care;

(v) Vision care;

(i) State prominently that the plan is using the alternative method of counting creditable coverage in disclosure statements concerning the plan, and state this to each enrollee at the time of enrollment under the plan; and

(ii) Include in these statements a description of the effect of using the alternative method, including an identification of the categories used.

(d) With respect to health insurance coverage offered by an issuer in the small or large group market, if the insurance coverage uses the alternative method, the issuer shall state prominently in any disclosure statement concerning the coverage, and to each employer at the time of the offer or sale of the coverage, that the issuer is using the alternative method, and include in such statements a description of the effect of using the alternative method. This applies separately to each type of coverage offered by the health insurance issuer.

(e) Statements under (4) (c) and (d) must be in writing.

(f) Under the alternative method, the group health plan or issuer must count creditable coverage within a category if any level of benefits is provided within the category. Coverage under a reimbursement account or arrangement, such as a flexible spending arrangement (as defined in section 106(c) (2) of the Internal Revenue Code) , does not constitute coverage within any category. In counting an individual's creditable coverage under the alternative method, the group health plan, or issuer, shall first determine the amount of the individual's creditable coverage that may be counted under (3) , up to a total of 365 days of the most recent creditable coverage (546 days for a late enrollee in the case of an individual in a small group plan) . The period over which this creditable coverage is determined is referred to as the "determination period". Then, for the category specified under the alternative method, the plan or issuer must count within the category all days of coverage that occurred during the determination period (whether or not a significant break in coverage for that category occurs) , and must reduce the individual's preexisting condition exclusion period for that category by that number of days. The plan or issuer may determine the amount of creditable coverage in any other reasonable manner, uniformly applied, that is at least as favorable to the individual.

History

Authorizing statute(s): Sec. 33-22-143 and 33-22-1822, MCA
Implementing statute(s): Sec. 33-22-141, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079G CERTIFICATION OF CREDITABLE COVERAGE - GROUPS AND INDIVIDUALS

6.6.5079G CERTIFICATION OF CREDITABLE COVERAGE - GROUPS AND INDIVIDUALS

(1) A group health plan, and each health insurance issuer offering group health insurance coverage under a group health plan, is required to issue certificates of creditable coverage in accordance with 33-22-142, MCA, and this rule. A health insurance issuer offering health insurance coverage in the individual market is required to issue certificates of creditable coverage in accordance with this rule, notwithstanding references in this rule to "group health plan" and "plan".

(2) Certificates required under 33-22-142(1) (a) and (b) , MCA, must be mailed or hand-delivered to the individual within a reasonable time. Certificates provided under 33-22-142(1) (c) , MCA, must be mailed or hand-delivered within 7 days of the receipt of the request by the plan or the health insurance issuer or a designee of either.

(3) No automatic written certificate of creditable coverage is required to be provided to an individual if:

(a) An individual is entitled to receive a certificate;

(b) The individual requests that the certificate be sent to another plan or issuer instead of to the individual; and

(c) The plan or issuer that would otherwise receive the certificate agrees to accept the information through means other than a written certificate (for example, by telephone or electronic mail) .

(4) The certification must contain:

(a) The date the certificate is issued;

(b) The name of the group health plan that provided the coverage described in the certificate;

(c) The name of the participant or dependent with respect to whom the certificate applies, and any other information necessary for the plan providing the coverage specified in the certificate to identify the individual, such as the individual's identification number under the plan and the name of the participant if the certificate is for, or includes, a dependent;

(d) The name, address, and telephone number of the plan administrator or issuer required to provide the certificate, and the telephone number to call for further information regarding the certificate; and

(e) Either:

(i) A statement that an individual has at least 18 months (for this purpose, 546 days is deemed to be 18 months) of creditable coverage, disregarding days of creditable coverage before a significant break in coverage; or

(ii) The date any waiting period (and affiliation period, if applicable) began and the date creditable coverage began;

(iii) The date creditable coverage ended, unless the certificate indicates that creditable coverage is continuing as of the date of the certificate; and

(iv) Information required under 33-22-142, MCA.

(5) If an individual requests a certificate under 33-22-142(1) (c) , MCA, a certificate must be provided for each period of continuous coverage ending within the 24-month period ending on the date of the request, or continuing on the date of the request. A separate certificate may be provided for each such period of continuous coverage.

(6) A certificate may provide information with respect to both a participant and the participant's dependents if the information is identical for each individual or, if the information is not identical, certificates may be provided on one form if the form provides all the required information for each individual and separately states the information that is not identical.

(7) The certificate must be provided to each covered individual or to an entity requesting the certificate on behalf of an individual. The certificate may be provided by first-class mail. If the certificate or certificates are provided to the

participant and the participant's spouse at the participant's

last known address, then the requirement is satisfied with

respect to all individuals residing at that address. If a

dependent's last known address is different than the

participant's last known address, a separate certificate must be provided to the dependent at the dependent's last known address. If separate certificates are being provided by mail to individuals who reside at the same address, separate mailings of each certificate are not required.

(8) A plan or issuer must establish a procedure for individuals to request and receive certificates under 33-22-

142(1) (c) , MCA.

(9) If an automatic certificate is required to be provided, and the individual entitled to receive the certificate designates another individual or entity to receive the certificate, the plan or issuer responsible for providing the certificate is permitted to provide the certificate to the designated party. If a certificate is required to be provided upon request and the individual entitled to receive the certificate designates another individual or entity to receive the certificate, the plan or issuer responsible for providing the certificate is required to provide the certificate to the designated party.

(10) A plan or issuer is required to use reasonable efforts to determine any information needed for a certificate relating to the dependent coverage. In any case in which an automatic certificate is required to be furnished, no individual certificate is required to be furnished until the plan or issuer knows, or making reasonable efforts should know, of the dependent's cessation of coverage under the plan.

(11) Issuers of group and individual health insurance are required to provide certificates of any creditable coverage they provide in the group or individual health insurance market, even if the coverage is provided in connection with an entity or program that is not itself required to provide a certificate because it is not subject to the group market provisions of the Health Insurance Portability and Accessability Act, PL 104-191 and Title 33, chapter 22, MCA. However, a certificate is not required to be provided with respect to short-term limited duration insurance that is not provided in connection with a group health plan.

(12) If the accuracy of a certificate is contested or a certificate is unavailable when needed by an individual, the individual has the right to demonstrate creditable coverage (and waiting or affiliation periods) through the presentation of documents or other means. For example, the individual may make such a demonstration when:

(a) An entity has failed to provide a certificate within a reasonable or required time period;

(b) The individual has creditable coverage but an entity may not be required to provide a certificate of the coverage;

(d) The individual has an urgent medical condition that necessitates a determination before the individual can deliver a certificate to the plan; or

(e) The individual lost a certificate that the individual had previously received and is unable to obtain another certificate.

(13) In case of an individual attempting to demonstrate creditable coverage under (12) , a plan or issuer is required to take into account all information that it obtains or that is presented on behalf of an individual to make a determination, based on the relevant facts and circumstances, whether an individual has creditable coverage and is entitled to offset all or a portion of any preexisting condition exclusion period. A plan or issuer shall treat the individual as having furnished a certificate if the individual attests to the period of creditable coverage, the individual also presents relevant corroborating evidence of some creditable coverage during the period, and the individual cooperates with the plan's or issuer's efforts to verify the individual's coverage. For this purpose, cooperation includes providing, upon the plan's or issuer's request, a written authorization for the plan or issuer to request a certificate on behalf of the individual, and cooperating in efforts to determine the validity of the corroborating evidence and the dates of creditable coverage. while a plan or issuer may refuse to credit coverage where the individual fails to cooperate with the plan's or issuer's efforts to verify coverage, the plan or issuer may not consider an individual's inability to obtain a certificate to be evidence of the absence of creditable coverage.

(14) In the absence of a certificate, documents which may establish creditable coverage under (12) , including categories of creditable coverage and waiting or affiliation periods, include explanations of benefit claims (EOB) or other correspondence from a plan or issuer indicating coverage, pay stubs showing a payroll deduction for health coverage, a health insurance identification card, a certificate of coverage under a group health policy, records from medical care providers indicating health coverage, third party statements verifying periods of coverage, and any other relevant documents that evidence periods of health coverage. The information may also be established through means other than documentation, such as by a telephone call from the plan or provider to a third party verifying creditable coverage.

(15) If, in the course of providing evidence, including a certificate, of creditable coverage, an individual is required to demonstrate dependent status, the group health plan or issuer must treat the individual as having furnished a certificate showing the dependent status if the individual attests to such dependency and the period of such status and the individual cooperates with the plan's or issuer's efforts to verify the dependent status.

(16) In the event that a group health plan or health insurance issuer offering group health insurance coverage receives a certification of creditable coverage, information regarding categories of coverage, or through the alternative method set forth in (12) , the entity must, within a reasonable time period following receipt of the information, make a determination regarding the individual's period of creditable coverage and notify the individual in writing of the determination. Whether a determination and notification regarding an individual's creditable coverage is made within a reasonable time period is determined based on the relevant facts and circumstances. Relevant facts and circumstances include whether a plan's application of a preexisting condition exclusion would prevent an individual from having access to urgent medical services.

(17) A plan or issuer seeking to impose a preexisting condition exclusion is required to disclose to the individual, in writing, its determination of any preexisting condition exclusion period that applies to the individual, and the basis for such determination, including the source and substance of any information on which the plan or issuer relied. In addition, the plan or issuer is required to provide the individual with a written explanation of any appeal procedures established by the plan or issuer, and with a reasonable opportunity to submit additional evidence of creditable coverage. However, nothing in this rule prevents a plan or issuer from modifying an initial determination of creditable coverage if it determines that the individual did not have the claimed creditable coverage, provided that:

(a) A notice of the reconsideration is provided to the individual; and

(b) Until the final determination is made, the plan or issuer, for purposes of approving access to medical services (such as a pre-surgery authorization) , acts in a manner consistent with the initial determination.

(18) If an individual's coverage under an issuer's policy ceases before the individual's coverage under the plan ceases, the issuer is required to provide sufficient information to the plan, or to another party designated by the plan, to enable a certificate to be provided by the plan (or other party) , after cessation of the individual's coverage under the plan, that reflects the period of coverage under the policy. The provision of that information to the plan will satisfy the issuer's obligation to provide certification under 33-22-142(1) (a) and (b) , MCA. In addition, an issuer providing that information is required to cooperate with the plan in responding to any request relating to the alternative method of counting creditable coverage, and to any request made by an individual pursuant to 33-22-142(1) (c) , MCA.

(19) This section of this rule applies to establishing creditable coverage for dependents only through June 30, 1998. A group health plan or health insurance issuer that cannot provide the names of dependents, or related coverage information, for purposes of providing a certificate of coverage for a dependent may satisfy the requirements to do so by providing the name of the participant covered by the group health plan or health insurance issuer and specifying that the type of coverage described in the certificate is for dependent coverage, such as family coverage or employee-plus-spouse coverage. For purposes of certificates provided on the request of, or on behalf of, an individual under 33-22-142(1) (c) , MCA, a plan or issuer must make reasonable efforts to obtain and provide the names of any dependent covered by the certificate where such information is requested to be provided. If it does not include the name of any dependent of an individual covered by the certificate, the individual may, if necessary, use the procedures described in (12) for submitting documentation to establish that the creditable coverage in the certificate applies to the dependent.

History

Authorizing statute(s): Sec. 33-22-142(3) (v) and 33-22-143, MCA
Implementing statute(s): Sec. 33-22-142, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079H PREEXISTING CONDITIONS - PERMISSIBLE RESTRICTIONS IN GROUP PLANS OTHER THAN SMALL EMPLOYER PLANS

6.6.5079H PREEXISTING CONDITIONS - PERMISSIBLE RESTRICTIONS IN GROUP PLANS OTHER THAN SMALL EMPLOYER PLANS

(1) A group health plan or a health insurance issuer offering group health insurance coverage may not exclude coverage for a preexisting condition except as set forth in 33-22-514, MCA, and this rule.

(2) For purposes of a preexisting condition exclusion, medical advice, diagnosis, care, or treatment may be taken into account only if it is recommended by, or received from, an individual licensed or similarly authorized to provide such services under state law and operating within the scope of practice authorized by state law. A negative diagnosis does not constitute medical advice, diagnosis, care, or treatment for purposes of determining whether there is a preexisting condition.

(3) A preexisting condition exclusionary period may not exceed more than 12 months after the enrollment date, including exclusionary periods for late enrollees.

(4) Exclusionary riders are not permitted.

(5) The following may not be excluded as a preexisting condition:

(a) Genetic information in the absence of diagnosis of the condition related to the genetic information;

(b) Pregnancy;

(d) Newborns as set forth in 33-22-504, MCA.

(6) A group health plan, and health insurance issuer offering group health insurance under the plan, may not impose a preexisting condition exclusion with respect to a participant or dependent of the participant before notifying the participant, in writing, of the existence and terms of any preexisting condition exclusion under the plan and of the rights of individuals to demonstrate creditable coverage (and any applicable waiting periods) . The description of the rights of individuals to demonstrate creditable coverage includes a description of the right of the individual to request a certificate from a prior plan or issuer, if necessary, and a statement that the current plan or issuer will assist in obtaining a certificate from any prior plan or issuer, if necessary.

History

Authorizing statute(s): Sec. 33-22-143, MCA
Implementing statute(s): Sec. 33-22-514, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079I SPECIAL ENROLLMENT PERIODS

6.6.5079I SPECIAL ENROLLMENT PERIODS

(1) If an employee or dependent makes a timely request for enrollment under 33-22-523(1) , MCA, enrollment must be effective not later than the first regular billing date used by the carrier during the month following receipt of the completed request for enrollment.

(2) Special enrollment opportunities must be provided for the following individuals under 33-22-523(2) , MCA:

(a) An employee, if the individual is an employee who is eligible, but not enrolled in the plan, and the individual would be a participant but for a prior election by the individual not to enroll in the plan during a previous enrollment period, and a person becomes a dependent of the individual through marriage, birth, or adoption or placement for adoption;

(b) A spouse of an employee, if the individual becomes the spouse of a participant, or if the individual is a spouse of the participant and a child becomes a dependent of the participant through birth, adoption, or placement for adoption;

(c) An employee who is eligible, but not enrolled, in the plan, and a spouse of such employee, if the employee would be a participant but for a prior election by the employee not to enroll in the plan during a previous enrollment period, and either:

(i) The employee and the individual become married; or

(ii) The employee and individual are married and a child becomes a dependent of the employee through birth, adoption or placement for adoption;

(d) An individual who becomes a dependent of a participant through marriage, birth, or adoption or placement for adoption; and

(e) An employee who is eligible, but not enrolled, in the plan, and an individual who is a dependent of the employee, if the employee would be a participant but for a prior election by the employee not to enroll in the plan during a previous enrollment period, and the dependent becomes a dependent of the employee through marriage, birth, or adoption or placement for adoption.

(3) On or before the time an employee is offered the opportunity to enroll in a group health plan, the plan is required to provide the employee with a description of the plan's special enrollment rules under 33-22-523, MCA, and this rule. For this purpose, the plan may use the following model description of the special enrollment rules:

(a) "If you are declining enrollment for yourself or your dependents (including your spouse) because of other health insurance coverage, you may in the future be able to enroll yourself or your dependents in this plan, provided that you request enrollment within 30 days after your other coverage ends. In addition, if you have a new dependent as a result of marriage, birth, adoption or placement for adoption, you may be able to enroll yourself and your dependents, provided that you request enrollment within 30 days after the marriage, birth, adoption, or placement for adoption."

(4) A special enrollment date for an individual means any date on which the individual has a right to have enrollment in a group health plan become effective under 33-22-523, MCA.

History

Authorizing statute(s): Sec. 33-22-143, MCA
Implementing statute(s): Sec. 33-22-523, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079J OPPORTUNITIES FOR INDIVIDUALS TO ENROLL IN GROUP PLANS OTHER THAN SMALL EMPLOYER PLANS

6.6.5079J OPPORTUNITIES FOR INDIVIDUALS TO ENROLL IN GROUP PLANS OTHER THAN SMALL EMPLOYER PLANS

(1) Upon issuance of a group health plan all employees and their dependents who are eligible for enrollment under the criteria set by the plan, and thereafter all new eligible employees and their dependents, must be offered an opportunity to enroll in the plan. Any waiting period prior to enrollment may not exceed 12 months.

(2) Except as provided in (3) , eligible employees who do not enroll during an initial enrollment opportunity as described in (1) , provided that the opportunity lasted at least 30 days, may be considered late enrollees. A health insurance carrier or group health plan must afford late enrollees an opportunity to enroll at least annually.

(3) Eligible individuals who meet the requirements set forth in 33-22-140(17) (a) , (b) or (c) , MCA, which provides exceptions to late enrollee status, or who qualify for a special enrollment period under 33-22-523, MCA, are not considered late enrollees. Opportunities to enroll individuals qualifying for special enrollment must be given according to the terms of 33-22-523, MCA. Eligible individuals who meet the criteria set forth in 33-22-140(17) (a) , (b) or (c) , MCA, must be given opportunities to enroll as set forth in that section.

(4) On or before the time an employee is offered an initial opportunity to enroll in a group health plan, the plan is required to provide the employee with a description, as set forth in ARM 6.6.5079I(3) of the plan's special enrollment rules. Additionally, the plan shall provide at the same time a description of opportunities to enroll under 33-22-140(17) (a) , (b) or (c) , MCA, and as a late enrollee.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-143, MCA
Implementing statute(s): Sec. 33-22-140, 33-22-523, and 33-22-526, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079K TRANSITION IN INDIVIDUAL MARKET TO CHANGES UNDER HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) UNDER MONTANA LAW

6.6.5079K TRANSITION IN INDIVIDUAL MARKET TO CHANGES UNDER HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) UNDER MONTANA LAW

(1) An individual health insurance policy issued or renewed after June 30, 1997 must remove any remaining preexisting exclusion periods for any covered individual to the extent that those preexisting exclusions conflict with 33-22-246, MCA,

History

Authorizing statute(s): Sec. 33-22-143, MCA
Implementing statute(s): Sec. 33-22-246, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079L PREEXISTING CONDITIONS IN THE INDIVIDUAL, MARKET - DISCLOSURE

6.6.5079L PREEXISTING CONDITIONS IN THE INDIVIDUAL, MARKET - DISCLOSURE

(1) A health insurer offering individual health insurance coverage may not limit coverage for a preexisting condition except as set forth in 33-22-246, MCA, and this rule. Additionally, the following provisions prohibit or limit preexisting condition exclusions for:

(a) Newborns ( 33-22-301, MCA) ;

(b) Adopted children ( 33-22-130, MCA) ; and

(2) For purposes of a preexisting condition exclusion, medical advice, diagnosis, care or treatment may be taken into account only if it is recommended by, or received from, an individual licensed or similarly authorized to provide such services under state law and operating within the scope of practice authorized by state law. A negative diagnosis does not constitute medical advice, diagnosis, care, or treatment for purposes of determining whether there is a preexisting condition.

(3) A health insurance carrier may not impose a preexisting condition exclusion on a covered individual before notifying the individual, in writing, of the existence and terms of any preexisting condition exclusion and of the individual's right to demonstrate any qualifying previous coverage as provided for in 33-22-242, MCA.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-143, MCA
Implementing statute(s): Sec. 33-18-206(4), 33-22-130, 33-22-246, and 33-22-301, MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5079M CERTIFICATION OF CREDITABLE COVERAGE ISSUED BY INSURERS IN THE INDIVIDUAL MARKET

6.6.5079M CERTIFICATION OF CREDITABLE COVERAGE ISSUED BY INSURERS IN THE INDIVIDUAL MARKET

(1) Insurers providing health insurance coverage in the individual market must issue certificates of creditable coverage as set forth in 33-22-142(6) , MCA and ARM 6.6.5079G.

History

Authorizing statute(s): Sec. 33-22-143, MCA
Implementing statute(s): Sec. 33-22-142(6), MCA
History: NEW, 1998 MAR p. 1698, Eff. 6/26/98.

Mont. Admin. R. 6.6.5082 Establishment of Classes of Business

(1) Every small employer carrier that establishes more than one class of business pursuant to 33-22-1808 , MCA, shall maintain on file for inspection by the commissioner the following information with respect to each class of business so established:

(a) A description of each criterion employed by the carrier, or any of its agents, for determining membership in the class of business;

(b) A statement describing the justification for establishing the class as a separate class of business and documentation that the establishment of the class of business is intended to reflect substantial differences in expected claims experience or administrative costs related to the reasons set forth in 33-22-1808 , MCA; and

(c) A statement disclosing which, if any, health benefit plans are currently available for purchase in the class and any significant limitations related to the purchase of such plans.

(2) A carrier may not directly or indirectly use group size as a criterion for establishing eligibility for a health benefit plan or for a class of business.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822 MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1808, and 33-22-1812 MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94.

Mont. Admin. R. 6.6.5086 Transition for Assumptions of Business from Another Carrier

(1) No small employer carrier may transfer or assume the entire insurance obligation and/or risk of a health benefit plan covering a small employer in this state unless:

(a) The transfer has been approved by the commissioner of the state of domicile of the assuming carrier;

(b) The transfer has been approved by the commissioner of the state of domicile of the ceding carrier;

(d) The transfer otherwise meets the requirements of this rule.

(2) Any carrier domiciled in this state that proposes to assume or cede the entire insurance obligation and/or risk of one or more small employer health benefit plans from another carrier shall file a request for approval of the transfer with the commissioner at least 60 days prior to the date of the proposed assumption. The commissioner may approve the transfer if the commissioner finds that the transaction is in the best interests of the individuals insured under the health benefit plans to be transferred and is consistent with the purposes of the act and these rules. The commissioner shall not approve the transfer until at least 30 days after the date of the filing, unless the commissioner finds that the ceding carrier is in hazardous financial condition, in which case the commissioner may approve the transfer as soon as the commissioner deems reasonable after the filing.

(3) The filing required under (2) must:

(a) Describe the class of business (including any eligibility requirements) of the ceding carrier from which the health benefit plans will be ceded;

(b) State whether the assuming carrier will maintain the assumed health benefit plans as a separate class of business pursuant to (8) or will incorporate them into an existing class of business pursuant to (9) . If the assumed health benefit plans will be incorporated into an existing class of business, the filing must describe the class of business of the assuming carrier into which the health benefit plans will be incorporated;

(d) Describe the potential effect, if any, of the assumption on the benefits provided by the health benefit plans to be assumed;

(e) Describe the potential effect, if any, of the assumption on the premiums for the health benefit plans to be assumed; and

(f) Describe any other potential material effects of the assumption on the coverage provided to the small employers covered by the health benefit plans to be assumed.

(4) A small employer carrier required to file a request under (2) shall include an informational filing, or other such filing as may be required, with the commissioner of each state in which there are small employer health benefit plans that would be included in the transfer. The informational filing to each state may be made concurrently with the filing made under (2) and include at least the information specified in (3) for the small employer health benefit plans in that state.

(5) No small employer carrier may transfer or assume the entire insurance obligation and/or risk of a health benefit plan covering a small employer in this state unless it complies with the following provisions:

(a) The carrier shall provide notice to the commissioner at least 60 days prior to the date of the proposed assumption. The notice must contain the information specified in (3) for the health benefit plans covering small employers in this state.

(b) If the assumption of a class of business would result in the assuming small employer carrier being out of compliance with the limitations related to premium rates contained in 33-22-1809 , MCA, the assuming carrier shall apply to the commissioner pursuant to 33-22-1809 (3) , MCA, for a suspension of the application of 33-22-1809 (1) , MCA.

(c) No assuming carrier seeking suspension of the application of 33-22-1809 (1) , MCA, may complete the assumption of health benefit plans covering small employers in this state unless the commissioner grants the suspension requested pursuant to (5) (b) .

(d) Unless a different period is approved by the commissioner, a suspension of the application of 33-22-1809 (1) , MCA, must, with respect to an assumed class of business, be for no more than 15 months and, with respect to each individual small employer, must last only until the anniversary date of such employer's coverage, provided that the period with respect to an individual small employer may be extended beyond its first anniversary date for a period of up to 12 months if the anniversary date occurs within 3 months of the date of assumption of the class of business.

(6) Except as provided in (2) , no small employer carrier may cede or assume the entire insurance obligation and/or risk for a small employer health benefit plan unless the transfer includes the ceding to the assuming carrier of the entire class of business which includes such health benefit plan.

(7) A small employer carrier may cede less than an entire class of business to an assuming carrier if:

(a) One or more small employers in the class has exercised their right under contract or state law to reject, either directly or by implication, the ceding of their health benefit plans to another carrier. In that instance, the transfer must include each health benefit plan in the class of business except those health benefit plans for which a small employer has rejected the proposed cession; or

(b) After a written request from the transferring carrier, the commissioner determines that the transfer of less than the entire class of business is in the best interests of the small employers insured in that class of business.

(8) Except as provided in (9) , a small employer carrier that assumes one or more health benefit plans from another carrier shall maintain such health benefit plans as a separate class of business.

(9) Subject to the prior approval of the commissioner, a small employer carrier that assumes one or more health benefit plans from another carrier may exceed the limitation contained in 33-22-1808 (2) , MCA, due solely to such assumption for a period of no more than 15 months after the date of the assumption, provided that the carrier complies with the following provisions:

(a) Upon assumption of the health benefit plans, such health benefit plans must be maintained as separate classes of business. During the 15-month period following the assumption, each of the assumed small employer health benefit plans must be transferred by the assuming small employer carrier into a single class of business operated by the assuming small employer carrier. The assuming small employer carrier shall select the class of business into which the assumed health benefit plans will be transferred in a manner such that the transfer results in the least possible change to the benefits and rating method of the assumed health benefit plans;

(b) The transfers authorized in (9) (a) must occur, with respect to each small employer on the anniversary date of the small employer's coverage, provided that the period with respect to an individual small employer may be extended beyond its first anniversary date for a period of up to 12 months if the anniversary date occurs within 3 months of the date of the assumption of the class of business;

(c) A small employer carrier making a transfer pursuant to (9) (a) may alter the benefits of the assumed health benefit plans to conform to the benefits currently offered by the carrier in the class of business into which the health benefit plans have been transferred;

(d) The premium rate for an assumed small employer health benefit plan must not be modified by the assuming small employer carrier until the health benefit plan is transferred pursuant to (9) (a) . Upon transfer, the assuming small employer carrier shall calculate a new premium rate for the health benefit plan from the rate manual established for the class of business into which the health benefit plan is transferred. In making such calculation, the risk load applied to the health benefit plan must be no higher than the risk load applicable to such health benefit plan prior to the assumption.

(10) During the 15-month period provided in (9) (a) , the transfer of small employer health benefit plans from the assumed class of business in accordance herewith may not be treated as a violation of 33-22-1809 (2) , MCA.

(11) Assuming carriers may not apply eligibility requirements, including minimum participation and contribution requirements, with respect to an assumed health benefit plan, or with respect to any health benefit plan subsequently offered to a small employer covered by such an assumed health benefit plan, that are more stringent than the requirements applicable to such health benefit plan prior to the assumption.

(12) The commissioner may approve a longer period of transition upon application by a small employer carrier. The application must be made within 60 days after the date of assumption of the class of business and must clearly state the justification for a longer transition period.

(13) Nothing in this rule is intended to:

(a) Reduce or diminish any legal or contractual obligation or requirement, including any obligation provided in Title 33, chapter 2, part 12, MCA, of the ceding or assuming carrier related to the transaction;

(b) Authorize a carrier that is not admitted to transact the business of insurance in this state to offer or insure health benefit plans in this state; or

(c) Reduce or diminish the protections related to an assumption reinsurance transaction provided in Title 33, chapter 2, part 12, MCA, or otherwise provided by law.

History

Authorizing statute(s): Sec. 33-1-313 and 33-22-1822 MCA
Implementing statute(s): Sec. 33-22-1802, 33-22-1808, 33-22-1809, and 33-22-1812 MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94.

Mont. Admin. R. 6.6.5090 Rate Manual and Rate Restriction Guidelines

(1) Each small employer carrier shall develop a separate rate manual for each class of business, which must be the basis for all premium rates and new business premium rates charged to small employers by the small employer carrier. To the extent that a portion of the premium rates charged by a small employer carrier is based on the carrier's discretion, the manual must specify the criteria and factors considered by the carrier in exercising such discretion.

(2) The rate manual developed pursuant to (1) must specify the case characteristics and rate factors to be applied by the small employer carrier in establishing premium rates for each class of business.

(3) The small employer carrier shall use the same case characteristics in establishing premium rates for each health benefit plan in a class of business and shall apply them in the same manner in establishing premium rates for each such health benefit plan. Case characteristics must be applied without regard to the risk characteristics of a small employer.

(4) The rate manual developed pursuant to (1) must clearly illustrate the relationship among the base premium rates charged for each health benefit plan in the class of business. If the new business premium rate is different than the base premium rate for a health benefit plan, the rate manual must illustrate and justify the difference.

(5) Differences among base premium rates for health benefit plans must be based solely on the reasonable and objective differences in the design and benefits of the health benefit plans and may not be based in any way on the actual or expected health status or claims experience of the small employer groups that choose, or are expected to choose, a particular health benefit plan. The small employer carrier shall apply case characteristics and rate factors within each class of business in a manner that assures that premium differences among health benefit plans for identical small employer groups vary only due to reasonable and objective differences in the design and benefits of the health benefit plans, and not due to the actual or expected health status or claims experience of the small employer groups that choose, or are expected to choose, a particular health benefit plan.

(6) The rate manual developed pursuant to (1) must provide for premium rates to be developed in a two-step process. In the first step, a base premium rate must be developed for the small employer group, without regard to any risk characteristics of the group. In the second step, the resulting base premium rate may be adjusted by a risk load, subject to the provisions of 33-22-1809 , MCA, to reflect the risk characteristic of the group.

(7) Premiums charged to small employers for health benefit plans must not include separate application fees, underwriting fees, or any other separate fees or charges.

(8) Small employer carriers shall allocate administrative expenses to basic and standard health benefit plans on no less favorable a basis than expenses are allocated to other health benefit plans in the class of business. The rate manual developed pursuant to (1) must describe the method of allocating administrative expenses to the health benefit plans in the class of business for which the manual was developed.

(9) Each rate manual developed pursuant to (1) must be maintained by the carrier for a period of 6 years. Updates and changes to the manual must be maintained with the manual.

(10) If group size is used as a case characteristic by a small employer carrier, the highest rate factor associated with a group size classification must not exceed the lowest rate factor associated with such a classification by more than 35%.

(11) The restrictions related to changes in premium rates in 33-22-1809 (1) , MCA, apply as follows:

(a) Small employer carriers revise their rate manuals each rating period to reflect changes in base premium rates and changes in new business premium rates.

(b) If, for any health benefit plan with respect to any rating period, the percentage change in the new business premium rate is less than, or the same as, the percentage change in the base premium rate, the change in the new business premium rate must be deemed to be a change in the base premium rate under 33-22-1809 (1) , MCA.

(c) If, for any health benefit plan with respect to any rating period, the percentage change in the new business premium rate exceeds the percentage change in the base premium rate, the health benefit plan must be considered a health benefit plan into which the small employer carrier is no longer enrolling new small employers for the purposes of 33-22-1809 (1) , MCA.

(d) If, for any rating period, the change in the new business premium rate for a health benefit plan differs from the change in the new business premium rate for any other health benefit plan in the same class of business by more than 20%, the carrier shall file a statement with the commissioner which contains a complete explanation of how the respective changes in new business premium rates were established and the reason for the difference. The filing must be made within 30 days of the beginning of the rating period.

(e) Small employer carriers shall keep on file for a period of at least 6 years, all calculations used to determine all changes in base premium rates and new business premium rates for each health benefit plan for each rating period.

(12) A representative of a Taft-Hartley trust, including a carrier upon the written request of such a trust, may file a written request with commissioner for a waiver of the application of the provisions of 33-22-1809 (1) , MCA, with respect to such trust.

(a) Such a request must identify the provisions for which the trust is seeking the waiver and must describe, with respect to each provision, the extent to which application of such provision would:

(i) Adversely affect the participants and beneficiaries of the trust; and

(ii) Require modifications to one or more of the collective bargaining agreements under, or pursuant to, which the trust was or is established or maintained.

(b) A waiver granted hereunder may not apply to an individual who participates in the trust because the individual is an associate member of an employee organization or the beneficiary of such an individual.

History

Authorizing statute(s): 33-1-313 and 33-22-1822, MCA
Implementing statute(s): 33-22-1802, 33-22-1809 and 33-22-1812, MCA
History: NEW, 1994 MAR p. 1528, Eff. 6/10/94; AMD, 1998 MAR p. 1698, Eff. 6/26/98; AMD, 1998 MAR p. 3276, Eff. 12/18/98.

Subchapter 6.6.53 Annuity Mortality Tables - Determining Reserve Liabilities

Mont. Admin. R. 6.6.5301 Purpose

(1) The purpose of these rules is to recognize the following mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts:

(a) the 1983 Table "a";

(b) the 2012 IAR Mortality Table; and

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5302 Definitions

(1) "1983 Table 'a'" means the individual annuity mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners.

(2) "1994 GAR Table" means the group annuity mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force and shown on pages 866-867 of Volume XLVII of the Transactions of the Society of Actuaries (1995).

(3) "2012 IAM Period Table" means the individual annuity mortality period table containing loaded mortality rates for the calendar year 2012. This table contains rates, q x 2012 , developed by the Society of Actuaries Committee on Life Insurance Research and referenced in Appendices A and B.

(4) "2012 IAR Mortality Table" means the generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, q x 2012+n , derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in ARM 6.6.5304.

(5) "Generational mortality table" means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a period table and a projection scale containing rates of mortality improvement.

(6) "Period table" means a table of mortality rates applicable to a given calendar year.

(7) "Projection Scale G2" is a table of annual rates, G2 x , of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research and referenced in Appendices C and D.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5303 Individual Annuity and Pure Endowment Contracts

(1) Except as provided in (2), the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2017.

(2) The 1983 Table "a" without projection shall be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 2017, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(a) settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;

(b) settlements involving similar actions such as workers' compensation claims; or

(c) settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5304 Application of the 2012 Iar Mortality Table

(1) In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

(a) q x 2012+n = q x 2012 (1-G2 x ) n ;

(b) the resulting q x 2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000;

(i) for a male age 30, q x 2012 = 0.741, q x 2013 = 0.741 * (1-0.010) ^{1 = 0.73359, which is rounded to 0.734. q x 2014 = 0.741 * (1-0.010)} 1 = 0.7262541, which is rounded to 0.726.

(ii) a method leading to incorrect rounding would be to calculate q x 2014 as q x 2013 * (1-0.010), or 0.734 * 0.99 = 0.727.

(d) It is incorrect to use the already rounded q x 2013 to calculate q x 2014 .

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5306 Group Annuity and Pure Endowment Contracts

(1) The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 2017, under a group annuity or pure endowment contract.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5307 Application of the 1994 Gar Table

(1) In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

(a) q x 1994+n = q x 1994 (1-AA x ) n where the q x 1994 and AA x are specified in the 1994 GAR Table.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5308 Incorporation by Reference of the 1983 Table "a," the 2012 Iar Mortality Table, and the 1994 Gar Table

(1) The Commissioner of Securities and Insurance, Office of the State Auditor, adopts and incorporates by reference the 1983 Table "a" adopted by the National Association of Insurance Commissioners (NAIC) in June 1982; the 1994 GAR Table was developed by the Society of Actuaries Group Valuation Task Force and published in 1995; and the 2012 IAR Mortality Table was adopted by the NAIC in December 2012. These tables set forth and specify rating data necessary for calculation of insurers' reserve requirements associated with applicable products. Copies of these tables are available for public inspection in the Rates and Forms Bureau of the Office of the Commissioner of Securities and Insurance, Montana State Auditor, Legal Department, 840 Helena Avenue, Helena, Montana 59601. Persons obtaining a copy of these forms must pay the cost of providing such copies.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Mont. Admin. R. 6.6.5309 Effective Date

(1) The effective date of ARM 6.6.5301 through 6.6.5309 is January 1, 2017.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-410, MCA
History: NEW, 2016 MAR p. 2328, Eff. 1/1/17.

Subchapter 6.6.55 Implementation of Standardized Health Claim Forms

Mont. Admin. R. 6.6.5501 Purpose of Rules

(1) The purpose and intent of this subchapter is to standardize the forms used in the billing and reimbursement of health care, reduce the number of forms utilized, increase efficiency in the reimbursement of health care through standardization, and encourage the use of and prescribe a timetable for implementation of electronic data interchange of health care expenses and reimbursement.

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): Sec. 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95.

Mont. Admin. R. 6.6.5503 Definitions

For the purposes of this sub-chapter, the following terms have the following meanings:

(1) "ASC X12N standard format" means the standards for electronic data interchange within the health care industry developed by the accredited standards committee X12N insurance subcommittee of the American national standards institute.

(2) "CDT-1 codes" means the current dental terminology prescribed by the American dental association.

(3) "CPT-4 codes" means the Physicians' Current Procedural Terminology, Fourth Edition published by the American medical association.

(4) "HCFA" means the health care financing administration of the U.S. department of health and human services.

(5) "HCFA Form 1450 (UB-92) " means the health insurance claim form maintained by HCFA for use by institutional care practitioners.

(6) "HCFA Form 1500" means the health insurance claim form maintained by HCFA for use by health care practitioners.

(7) "HCPCS" means HCFA's common procedure coding system, a coding system which describes products, supplies, procedures and health professional services and includes, the American medical association's (AMA's) Physicians' Current Procedural Terminology, Fourth Edition (CPT-4) codes, alpha-numeric codes, and related modifiers. This includes:

(a) "HCPCS level 1 codes" which are the AMA's CPT-4 codes and modifiers for professional services and procedures;

(b) "HCPCS level 2 codes" which are national alpha-numeric codes and modifiers for health care products and supplies, as well as some codes and modifiers for professional services not included in the AMA's CPT-4; and

(c) "HCPCS level 3 codes" which are local alpha-numeric codes and modifiers for items and services not included in HCPCS level 1 or HCPCS level 2.

(8) "Health care practitioner" means a person licensed or certified to provide health care services.

(9) "ICD-9-CM codes" means the diagnosis and procedure codes in the International Classification Of Diseases, Ninth Revision, clinical modifications published by the U.S. department of health and human services.

(10) "Institutional care practitioner" means a facility or institution that is licensed to provide health care services.

(11) "Issuer" means an insurance company, fraternal benefit society, health care service corporation, or health maintenance organization. This includes third party administrators and any other entity reimbursing the costs of health care expenses at the direction of an issuer. The term "issuer" does not include any insurer or self-insurer providing coverage pursuant to the Workers' Compensation and Occupational Disease Act. This definition does not include recipients of medicaid.

(12) "Administrator" means a person who collects charges or premiums from residents of this state in connection with life, disability, property, or casualty insurance or annuities or who adjusts or settles claims on such coverage as defined in 33-17-102 (3) , MCA.

(13) "J512 Form" means the uniform dental claim form approved by the American dental association for use by dentists.

(14) "Revenue codes" means the codes established for use by institutional care practitioners by the national uniform billing committee.

(15) The updated versions of the above-referenced codes will be in use within 90 days of adoption of this rule.

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95.

Mont. Admin. R. 6.6.5505 Applicability and Scope

(1) Except as otherwise specifically provided, the requirements of this subchapter apply to issuers, health care practitioners, and institutional care practitioners.

(2) Nothing in this subchapter shall prevent an issuer from requesting additional information that is not contained on the forms required under this subchapter to determine eligibility of the claim for payment if required under the terms of the policy or certificate issued to the claimant. This subchapter does not apply to workers' compensation and occupational diseases insurance services provided pursuant to the Workers' Compensation and Occupational Disease Act. This rule does not apply to medical assistance-medicaid as referenced in 53-6-101 through 53-6-402 , MCA. Nothing in this rule prohibits such insurers and medical providers from complying with this subchapter, however, to the extent that such compliance is consistent with workers' compensation or medicaid laws and rules.

(3) Nothing in this subchapter shall prohibit an issuer, health care practitioner or institutional care practitioner from using alternative forms or procedures for filing claims as are specified in a written contract between the health care practitioner or institutional care practitioner and issuer.

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95

Mont. Admin. R. 6.6.5507 Requirements for Use of Hcfa Form 1500

(1) Health care practitioners, other than dentists, shall use the HCFA Form 1500 and instructions provided by HCFA for use of the HCFA Form 1500 when filing claims with issuers for professional services. Health care practitioners that bill patients directly shall provide a properly completed HCFA Form 1500 in addition to any other explanatory information used to bill the patient when requested by the patient. Institutional care practitioners may use HCFA Form 1500 when billing service for employees or as part of outpatient services.

(2) Issuers may only require health care practitioners to use the following coding system for the initial filing of claims for health care services:

(a) HCPCS codes; and

(b) ICD-9-CM codes.

(3) Issuers may only require health care practitioners to use other explanations with a code or to furnish additional information with the initial submission of an HCFA Form 1500 under the following circumstances:

(a) when the procedure codes used describe a treatment or service that is not otherwise classified; or

(b) when the procedure code is followed by the CPT-4 modifier 22, 52, or 99. Health care practitioners may use item 19 of the HCFA Form 1500 to explain multiple modifiers, unless item 19 is used for other purposes in accordance with the instructions for this form.

(4) Health care practitioners may use item 19 of the HCFA Form 1500 to indicate the form is an amended version of a form previously submitted to the issuer by inserting the word "amended" in the space provided.

(5) Health care practitioners billing for services based on the amount of time involved shall define on item 19 the time interval in item 24 G of the HCFA Form 1500, if the time interval is not already defined the HCPCS code. If not defined by either HCPCS or in item 19, units will be assumed to be days of treatment.

(6) Health care practitioners shall provide the unique physician identification number, if assigned by HCFA, in box 17a and either the federal tax identification number or social security number to complete item 25 of the HCFA Form' 1500, as required by the HCFA instructions.

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95.

Mont. Admin. R. 6.6.5509 Requirements for Use of Hcfa Form 1450 (ub-92)

(1) Institutional care practitioners shall use the HCFA Form 1450 (UB-92) and instructions provided by HCFA for use of the HCFA Form 1450 (UB-92) when filing claims with issuers for health care services. Institutional care providers that bill patients directly shall provide a properly completed HCFA Form 1450 in addition to any other explanation information used to bill the patient when requested by the patient.

(2) Issuers may only require institutional care practitioners to use the following coding system for the initial filing of claims for health care services:

(a) ICD-9-CM codes;

(b) revenue codes;

(d) the information outlined in ARM 6.6.5507, if the charges include direct service furnished by a health care practitioner, and the direct service is not covered by the instructions for the HCFA Form 1450 (UB-92) .

(3) Hospitals may use the HCFA Form 1500 to supplement a HCFA Form 1450 (UB-92) if necessary in billing patients or their representatives or filing claims with issuers for outpatient services.

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95.

Mont. Admin. R. 6.6.5511 Requirements for Use of J512 Form

(1) Dentists shall use the J512 form and instructions provided by the American dental association CDT-1 for use of the J512 form for filing claims with issuers for professional services. Dentists that bill patients directly shall provide a properly completed J512 form in addition to any other form used to bill the patient when requested by the patient.

(2) Issuers may not require a dentist to use any code other than the CDT-1 codes for the initial filing of claims for dental care services, unless the use of supplemental codes are defined and permitted in a written contract between the issuer and dentist.

(3) Hospitals may use the HCFA Form 1500 to supplement a HCFA Form 1450 (UB-92) if necessary in billing patients or their representatives of filing claims with issuers for outpatient services.

History

*Authorizing statute(s): *
Implementing statute(s): 50-4-501, MCA
History: IMP, 50-4-305 and 50-4-501, MCA; NEW, 1995 MAR p. 923, Eff. 5/26/95.

Mont. Admin. R. 6.6.5513 General Provisions

(1) Health care practitioners and institutional care practitioners shall file claims in a manner consistent with the requirements of this subchapter. Claims filed in paper form shall be printed on 8.5" x 11" paper.

(2) Issuers shall accept forms submitted in compliance with this subchapter for the processing of claims.

(3) Health care practitioners, institutional care practitioners, and issuers shall:

(a) use and accept the most current editions of the HCFA Form 1500, HCFA Form 1450, or J512 form and most current instructions for these forms in the billing of patients or their representatives and filing claims with issuers; and

(b) modify their billing and claim reimbursement practices to encompass the coding changes for all billing and claim filing by the effective date of the changes set forth by the developers of the forms, codes, and procedures required under this subchapter. The updated versions of the above-referenced forms will be in use within 90 days of adoption of these rules.

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95.

Mont. Admin. R. 6.6.5515 Mandatory Electronic Format

(1) Issuers that receive claims or send payments by electronic means shall, within one year after May 26, 1995 or the date on which the health care financing administration requires it of medicare intermediaries and carriers, whichever is earlier, accept the ASC X12N standard format or the national uniform billing data element specifications as developed by the national uniform billing committee for the health care claims submission transaction set (837) and send the ASC X12N health care payment transaction set (835) .

History

Authorizing statute(s): Sec. 50-4-501, MCA
Implementing statute(s): 50-4-305 and 50-4-501, MCA
History: NEW, 1995 MAR p. 923, Eff. 5/26/95.

Subchapter 6.6.57 The Supervision, Rehabilitation and Liquidation of Self-Funded Multiple Employer Welfare Arrangements

Mont. Admin. R. 6.6.5701 Supervision, Rehabilitation, and Liquidation

(1) The commissioner has the authority to impose sanctions on any self-funded multiple employer welfare arrangement (MEWA) for failure to maintain sufficient reserves as required by 33-35-209, MCA. The commissioner may impose and take any action or sanction as is authorized pursuant to the provisions of Title 33, chapter 2, part 13, MCA, which are adopted by reference and excepting therefrom 33-2-1303(1) and (10), MCA; 33-2-1335, MCA; 33-2-1342(6)(b) and (6)(c), MCA; 33-2-1344, MCA; 33-2-1349, MCA; and 33-2-1379 through 33-2-1390, MCA.

History

Authorizing statute(s): 33-35-209, MCA
Implementing statute(s): 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95; AMD, 2022 MAR p. 1793, Eff. 9/24/22.

Mont. Admin. R. 6.6.5702 Authority Is Limited to Insolvency

(1) The commissioner's authority to supervise, rehabilitate and liquidate any self-funded multiple employer welfare arrangement applies only to those instances where they fail to maintain the level of reserves as are required by 33-35-209 , MCA.

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Mont. Admin. R. 6.6.5703 Inapplicability of the Life and Health Guaranty Provisions

(1) The provisions of Title 33, chapter 10, part 2, MCA, do not apply to a MEWA nor do any of the provisions of Title 33, chapter 2, part 13, MCA, such as 33-2-1303 (10) and 33-2-1371 (3) , MCA as they relate to the life and health guaranty Association.

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Mont. Admin. R. 6.6.5704 Application of These Rules Are to Be Consistent with Erisa

(1) These rules are to be interpreted so as to be consistent with the provisions of the Employee Retirement Income Security Act(ERISA) and to the extent that they conflict with ERISA they shall not apply.

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Mont. Admin. R. 6.6.5705 Definitions

(1) "Delinquency proceeding" as it appears in the statutory provisions means any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating or reorganizing, or conserving such insurer due to the insolvency of the insurer.

(2) "Insurer" as it appears in the statutory provision shall be deemed to refer to a self-funded multiple employer welfare arrangement as defined in 33-35-103 (4) , MCA.

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Mont. Admin. R. 6.6.5706 Commissioner's Summary Orders and Supervision Proceedings

(1) 33-2-1321 (1) , MCA, shall be deleted and in its place shall be inserted: "Whenever the commissioner has established than an insurer is insolvent, he may make and serve upon the insurer and any other person involved such orders as are reasonably necessary to correct such failure."

(2) Subsections (2) and (6) of 33-2-1321 , MCA, are not adopted.

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Mont. Admin. R. 6.6.5707 Termination of Policy Coverage

(1) 33-2-1343 , MCA, shall be deleted and in its place shall be inserted: "All policies issued by an insurer in effect at the time of issuance of an order of liquidation shall terminate upon issuance of the order of liquidation."

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Mont. Admin. R. 6.6.5708 Priority of Distribution

(1) The introductory language in 33-2-1360 (1) , MCA, shall be deleted and in its place the following language shall be inserted: "As soon as practicable but not more than 180 days from the date of an order of liquidation of an insurer which provides for assessment of its member employers, the liquidator shall make a report to the court setting forth." 33-2-1360 (1) (a) through (d) , MCA, are adopted as written in the statute.

History

Authorizing statute(s): Sec. 33-35-209, MCA
Implementing statute(s): Sec. 33-35-209, MCA
History: NEW, 1995 MAR p. 2468, Eff. 10/13/95.

Subchapter 6.6.59 Network Adequacy

Mont. Admin. R. 6.6.5901 Applicability and Identification of Different Levels of Adequacy

(1) A health care insurer who issues disability benefits and meets the requirements of 33-22-1706(4)(c), MCA, is deemed to have an adequate network, for that category of health care providers, provided that the insurer submits the information and follows the requirements set forth in this chapter.

(2) The commissioner may also determine a network to be adequate pursuant to 33-22-1706(4)(a), MCA, and ARM 6.6.5902(1) and (3).

(3) If the commissioner determines an insurer's network to be "not adequate," the cost sharing may be adjusted to no greater than a 25% payment differential.

(a) The commissioner shall determine whether the payment difference between in- and out-of-network is 25% or less, based on the utilization of actuarial data developed by actuarial experts, such as the information found in the Tillinghast Manual.

(b) Even if the commissioner determines that the insurer utilizes an acceptable payment differential under (3), that insurer shall submit the information and follow the requirements set forth in this chapter.

(4) If the commissioner determines that the network is so inadequate that representing it to the public as a network constitutes a misrepresentation under 33-1-502, MCA, the insurer may not issue a network plan under this chapter.

(5) ARM 6.6.5902(4)(b) through (f), ARM 6.6.5903(2)(b), ARM 6.6.5905(1)(b), and ARM 6.6.5906(4)(b) do not apply to dental and vision insurers.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Mont. Admin. R. 6.6.5902 Network Adequacy

(1) The commissioner may determine that an insurer has an adequate network, even if the network does not meet all of the percentages for various types of providers or facilities specified in 33-22-1706(4)(c), MCA.

(2) As used in 33-22-1706(4)(c), MCA, and this chapter, the terms "physician" and "provider" include a specialty health care provider that delivers necessary medical services.

(3) For the purposes of determining network adequacy when the total percentage of any type of provider or facility is less than the minimum adequacy percentage set forth in 33-22-1706(4)(c), MCA, the commissioner shall review the insurer's network to determine if it is sufficient in numbers and types of providers and facilities to assure that all covered health plan services to covered persons are accessible without unreasonable delay, within a reasonable proximity, and with sufficient provider choice, based on the availability of those types of providers and facilities.

(4) All insurers' networks must ensure that each covered person shall have adequate choice of each type of provider and facility, including but not limited to the following types:

(a) physicians;

(b) mental health and chemical dependency treatment providers;

(d) hospitals;

(e) surgi-centers; and

(f) residential treatment centers.

(5) Sufficiency and adequacy of choice for each type of provider or facility must be demonstrated to the commissioner by reasonable criteria. "Reasonable criteria" may include provider to covered person ratios by specialty, primary care provider to covered person ratios, geographic accessibility, waiting times for appointments with participating providers, and the volume of specialty services available to serve the needs of covered persons requiring specialty care.

(6) If the insurer has an absence or insufficient number or type of participating providers or facilities qualified to provide necessary specialty care for a particular covered health care service within a reasonable proximity, regardless of whether adequacy was determined by a threshold percentage or other criteria listed in (3), the insurer shall ensure that the covered person obtains the covered service from a qualified provider or facility within reasonable proximity of the covered person at no greater level of cost-sharing to the covered person than if the service were obtained from an in-network provider or facility. The requirements of this section apply only if:

(a) the care the covered person is seeking is medically necessary; and

(b) the insurer:

(i) does not have a participating provider with the training and certification required to provide the necessary health care services, including access to specialty pediatric services, within a reasonable proximity; or

(ii) cannot provide reasonable access to a participating provider with the necessary expertise without unreasonable delay.

(7) The commissioner shall determine what constitutes reasonable proximity and appropriate access according to the availability of providers with the necessary expertise in that area.

(8) When providing access to a nonparticipating provider or facility pursuant to (6), an insurer is not responsible for amounts that the nonparticipating provider may charge to the patient for a service that is above the reasonable "allowable charge," as determined under 33-15-308, MCA.

(9) An insurer shall establish and maintain adequate arrangements to ensure reasonable proximity of network providers and facilities to the business or personal residence of covered persons.

(a) An insurer shall include providers and facilities in networks in a manner that limits the amount of travel required to obtain covered benefits, based on the relative availability of providers and the geographic barriers existing in that particular area; and

(b) Relative availability includes the willingness of providers or facilities in the service area to contract with the insurer under reasonable terms and conditions.

(10) An insurer shall monitor, on an ongoing basis, the ability and capacity of its network providers and facilities to furnish health plan services to covered persons.

(11) A contract between a preferred provider and an insurer must require a preferred provider who is compensated by the insurer on a discounted fee basis to accept the rate that is negotiated with the insurer as payment in full under that contract, and the participating provider may not bill the patient for charges above that amount for medically necessary covered services.

(12) This rule does not prohibit an insurer from using restricted networks, as long as that insurer otherwise meets the network adequacy requirements set forth in these rules. This rule does not prohibit an insurer from placing reasonable requirements on providers with whom it contracts.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Mont. Admin. R. 6.6.5903 Filing Provider Lists

(1) An insurer shall file on the date specified in filing instructions from the commissioner, an electronic report of all participating providers in that insurer's network on a form and in a manner prescribed by the commissioner. If the insurer maintains health plans with different network access, the insurer must file a separate report for each network.

(2) An insurer shall file an updated report if:

(a) provider numbers decrease by five percent or more;

(b) a hospital, surgi-center, or other inpatient facility, with more than five beds, terminates its provider contract with that insurer; or

(3) The commissioner may conduct an audit of an insurer's provider network.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Mont. Admin. R. 6.6.5905 Choice of Primary Care Physician

(1) If an insurer requires a covered person to choose a primary care provider and ties claims payment to that choice or requires a primary care provider referral before seeking specialty provider services, that insurer shall provide the covered person with access to the following:

(a) a list of participating primary care providers who are accepting new patients and who are located within a reasonable proximity of the home or business of the covered person. Covered persons must be permitted to change primary care providers at any time with the change becoming effective no later than 30 days following the covered person's request for the change; and

(b) a process whereby a covered person with a complex or serious medical or psychiatric condition may receive a standing referral to a participating specialist for an extended period of time. The standing referral must be consistent with the covered person's medical needs and the plan's benefits. A referral does not preclude the insurer from performing medical necessity reviews.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Mont. Admin. R. 6.6.5906 Required Disclosures Regarding Network Adequacy

(1) Each insurer shall have a preferred provider directory on its web site and available in hard copy, if requested. The provider directory must be searchable by specialty, including primary provider designation, county and city or town. The directory must include facilities and must be updated monthly to reflect whether or not the provider is accepting new patients, if that information is available, and any additions or subtractions to the provider list. There must be a separate and clearly designated directory for each health plan type, if more than one network is offered by that insurer. In addition, each insurer shall provide access to a directory of out-of-state participating providers that includes location, provider type, and specialty.

(2) An insurer shall also include the following information displayed in a prominent manner in the outline of coverage:

(a) a description of the process required in ARM 6.6.5902 regarding how patients are provided access to and compensated for medically necessary care if there are no participating providers with the necessary expertise within a reasonable proximity who are able to provide the health care service without unreasonable delay; and

(b) a statement advising that out-of-network emergency room services to treat an emergency medical condition are reimbursed as if obtained in-network, if an in-network emergency room cannot be reasonably reached. That disclosure must include the definition of emergency medical condition provided in applicable federal law.

(3) A provider or insurer shall provide a 60-day notice to the other party prior to terminating a provider contract.

(a) An insurer shall ensure that covered persons are notified at least 30 days before a provider contract termination is effective, or as soon as possible after the insurer learns of the termination, by a notice delivered electronically or by mail to, at a minimum:

(i) all covered persons who are identified as having obtained services from the provider within the last two years; and

(ii) in the case of a facility, all covered persons who live in the city or town that the facility serves.

(b) An insurer shall also use the following notification methods:

(i) a prompt correction of the provider directory; and

(ii) a request to the provider, asking that a notice be posted in the provider office or facility that notifies patients of the termination.

(4) The notice in (3)(a) must disclose any applicable continuity of coverage provisions by referring to the section of the policy or certificate that contains those provisions. The notice must include a list of available preferred providers in the same geographic area who are the same provider type.

(5) This rule is effective for policies issued or renewed on or after January 1, 2016.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Mont. Admin. R. 6.6.5907 Geographic Services Areas

(1) An insurer may offer health plans with a limited geographic area to individuals who live or work in that area, as long as the insurer meets the network adequacy requirements set forth in these rules and provides the commissioner with the following information:

(a) a description of the geographic area; and

(b) the rationale for limiting the sales of that product to that area.

(2) All insurers who are licensed as a health service corporation and all insurers who are qualified health plan issuers in the federally facilitated exchange must offer a health plan in all parts of the state.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Mont. Admin. R. 6.6.5908 Continuity of Care

(1) When an insured's provider is dropped for any reason from the network, an insurer shall establish reasonable procedures to transition the insured to a preferred provider in a manner that ensures continuity of care.

(2) If the insured requests it and the treating provider agrees that the insured is in an active course of treatment, the treating provider may:

(a) request that the insured be permitted to continue treatment under the provider's care;

(b) agree to accept the same reimbursement from the insurer for that patient as provided for under that insurer's provider contract; and

(c) agree not to seek payment from the insured of any amount for which the insured would not be responsible if the provider were still a preferred provider.

(3) As used in this rule, "active course of treatment" means a condition which a provider reasonably believes could cause harm to an insured if care by the treating provider is suddenly discontinued, such as pregnancy or an ongoing course of treatment for an episode of cancer or other condition for which discontinuing care by the current treating physician may worsen the condition and interfere with anticipated outcomes.

(a) In a case involving an active course of treatment, an insurer must ensure continuity of care until the later of the following:

(i) the ongoing course of treatment is completed; or

(ii) through the postpartum period for a covered person in her second or third trimester of pregnancy.

(b) Except in the case of pregnancy, the continuity of care period may not last longer than 90 days, or the next renewal date for that policy, whichever is longer, without insurer consent; and

(4) An insurer shall agree to extend its obligation to reimburse the treating provider for ongoing treatment at the in-network rate if:

(a) the insurer agrees that the insured is in an "active course of treatment" as identified by the treating physician; and

(b) the provider contract termination was not "for cause."

(5) If the insurer does not agree to extend ongoing treatment at the in-network rate, the insured may appeal that decision under the appeal rights outlined in the insurance contract. An expedited appeal process must be available.

(6) This rule is effective for policies issued or renewed on or after January 1, 2016.

History

Authorizing statute(s): 33-22-1707, MCA
Implementing statute(s): 33-22-1706, MCA
History: NEW, 2015 MAR p. 565, Eff. 5/15/15.

Subchapter 6.6.60 Bail Bonds

Mont. Admin. R. 6.6.6001 Definitions

For the purposes of this subchapter, the following terms have the following meanings:

(1) "Bail bond agency" means a surety bail insurance producer agency which may be a corporation, limited liability company, partnership, limited partnership, limited liability partnership, sole proprietorship, or other legal entity which is owned by, employs, or contracts with one or more individual surety bail insurance producers.

(2) "Commercial bail bond surety insurer" means a surety insurer who sells, solicits, or negotiates commercial bail bonds.

(3) "Indemnitor" is a person who, by agreement with a surety bail insurance producer, accepts liability for loss of the surety bail insurance producer in the event that a principal fails to perform according to the standards agreed upon between the principal and the surety bail insurance producer.

(4) "Premium" means the cost of a surety insurance bond, issued pursuant to 33-26-101, et seq., MCA, and contained in the contract with the principal.

(5) "Principal" is a defendant or a witness who has been admitted to bail and who is obligated to appear in court as required upon penalty of forfeiting bail under a commercial bail bond.

(6) "Surety bail insurance producer" or "producer" means an insurance producer who sells, solicits, or negotiates commercial bail bonds, pursuant to 33-26-101, et seq. and 46-9-401, MCA.

History

Authorizing statute(s): 33-1-313, 33-26-108, MCA
Implementing statute(s): 33-26-108, MCA
History: NEW, 2021 MAR p. 410, Eff. 4/17/21.

Mont. Admin. R. 6.6.6002 Bond Instruments

(1) A surety bail insurance producer may not sign or countersign bail bonds in blank. A surety bail insurance producer may not give power of attorney to, or otherwise authorize, anyone to countersign the surety bail insurance producer's signature to bonds.

(2) Bail bond applications shall be signed by the principal and the surety bail insurance producer, and an executed copy shall be given to the principal.

(3) Surety bail insurance producers shall maintain copies of all bail bonds issued for not less than three years.

History

Authorizing statute(s): 33-1-313, 33-26-108, MCA
Implementing statute(s): 33-17-201, 33-26-108, MCA
History: NEW, 2021 MAR p. 410, Eff. 4/17/21.

Mont. Admin. R. 6.6.6003 Collateral, Trust Accounts, Records of Arrest and Surrender, List of Forfeitures, Costs, Notice of Incarceration

(1) Any collateral security required by a surety bail insurance producer must be commercially reasonable in relation to the amount of the bond. The value of any collateral security received by a surety bail insurance producer must not exceed two-and-one-half times (250%) the amount of the bond unless no other collateral is available. Any collateral must be acquired and secured by a signed security agreement and in accordance with Montana law.

(2) A surety bail insurance producer who accepts collateral shall give the principal the security agreement and a written receipt for the collateral. The receipt must give a detailed description of the collateral received.

(3) Collateral security must be held and maintained in trust. When collateral security is received in the form of cash, check, or other negotiable instrument, and unless cash collateral is deposited with and held in trust by the commercial bail bond surety insurer, the surety bail insurance producer shall deposit the cash or instrument, within five banking days after receipt, in a trust account in a bank insured by the Federal Deposit Insurance Corporation. The trust account may not contain operating or personal funds.

(4) When personal property is received as collateral, the surety bail insurance producer must comply with the Montana Uniform Commercial Code-Secured Transactions, 30-9A-101, et seq, MCA.

(5) Each surety bail insurance producer shall keep records identifying all collateral received, the source of funds placed into all trust accounts, security agreements, and the terms of all commercial bail bond transactions. The records are open to inspection without notice by the commissioner.

(6) If the court exonerates a bail bond, the surety bail insurance producer shall return all collateral or other security to the person entitled to it within five business days after receipt of written notification of exoneration. All collateral or security must be returned in the condition it was received, and at the location it was received, at the principal's address, or the parties may mutually agree to another location.

(7) Each surety bail insurance producer shall maintain and retain for three years, and update on a continual basis:

(a) a list of forfeitures, which must include the names of the principal and indemnitor, the case name and number, the date of the forfeiture; and

(b) a list of arrests and surrenders, which must include the names of the principal and indemnitor, the case name and number, and the date of the failure of the principal to appear.

(8) A surety bail insurance producer may bill the principal for actual and reasonable costs, listed in this rule, which the surety bail insurance producer incurs in securing the appearance or arrest of a principal. A surety bail insurance producer shall keep receipts for actual costs for a period of three years. The costs which a surety bail insurance producer may recover from the principal, in addition to the premium or bail amount, are limited to the actual and reasonable direct expenses, including but not limited to gasoline, and food and lodging, incurred in searching for, arresting, and transporting (to a detention facility) the principal.

(9) If collateral is liquidated it must be done according to commercially reasonable standards and lawful procedures, and the balance, if any, must be returned to the principal or indemnitor as appropriate within ten business days of liquidation. For purposes of this rule, "balance" means the amount obtained by lawful liquidation of the collateral, minus the amount of premium or bail and costs allowed pursuant to (8), which are due to the surety bail insurance producer. Prior to initiating any liquidation process, the principal must be given 30 days' written notice from the surety bail insurance producer, and an opportunity to pay all costs and fees in lieu of liquidation. The surety bail insurance producer cannot send this notice or initiate any liquidation process until 90 days after a court issues an order of forfeiture pursuant to 46-9-503(2), MCA.

(10) If the surety bail insurance producer fails to return the collateral or violates any provision of these rules or other Montana laws in the liquidation or the failure to return the collateral, the surety bail insurance producer shall be subject to a maximum penalty of three times the value of the collateral, or $1000, whichever is greater.

History

Authorizing statute(s): 33-1-313, 33-26-108, MCA
Implementing statute(s): 33-17-1001, 33-17-1102, 33-26-108, MCA
History: NEW, 2021 MAR p. 410, Eff. 4/17/21.

Mont. Admin. R. 6.6.6004 Prohibited Practices

(1) A surety bail insurance producer may not:

(a) pay a fee or rebate, or give or promise anything of value, directly or indirectly to any public official, employee, or agent, who has power to arrest or hold in custody, in order to secure a settlement, compromise, remission, or reduction of the amount of any bail bond, or the forfeiture thereof;

(b) pay a fee or rebate, or give, or promise anything of value to the principal or anyone on his or her behalf;

(c) participate in the capacity of an attorney at a trial or hearing of a person on whose bond the surety bail insurance producer is a surety;

(d) advise or assist the principal for the purpose of forfeiting bond;

(e) fail to report, preserve without use, retain separately, or return after payment in full collateral taken as security on any bail bond to the party entitled to the collateral;

(f) fail to return collateral within five business days of receiving written notice of exoneration;

(g) gain access to a prospective principal in a prisoner confinement facility for the purpose of solicitation by misrepresenting to facility officials that the prospective principal or someone on the prospective principal's behalf had so requested; or

(h) sell, solicit, or negotiate surety bail insurance while employed as an investigator with the Office of the Public Defender.

History

Authorizing statute(s): 33-1-313, 33-26-108, MCA
Implementing statute(s): 33-17-1001, 33-17-1103, 33-18-210, 33-18-212, 33-26-108, 46-9-401, 46-9-402, 46-9-502, 46-9-503, 46-9-505, 46-9-510, 46-9-511, 46-9-512, MCA
History: NEW, 2021 MAR p. 410, Eff. 4/17/21.

Mont. Admin. R. 6.6.6005 Portion of Bond Premium Payments Deferred

(1) If an agreement between the principal and surety bail insurance producer calls for some portion of the bond premium payments to be deferred or paid after the principal is released from custody, the surety bail insurance producer shall keep the agreement on file and provide a copy to the principal and indemnitor, if applicable. The agreement must contain the following information:

(a) the amount of the premium payment deferred, or not yet paid, at the time the principal is released from custody;

(b) the method and schedule of payment to be made by the principal or indemnitor to the surety bail insurance producer, including the dates of payment and amount to be paid on each date; and

(2) For the agreement to be enforceable, interest and finance charges on any unpaid premium must comply with 31-1-107, MCA.

History

Authorizing statute(s): 33-26-108, MCA
Implementing statute(s): 31-1-107, 33-18-213, 33-26-108, 46-9-403, MCA
History: NEW, 2021 MAR p. 410, Eff. 4/17/21.

Mont. Admin. R. 6.6.6006 Bail Bond Documents

(1) The following requirements apply to documentation a surety bail insurance producer uses in connection with transacting business:

(a) an indemnity agreement must:

(i) be in writing;

(ii) be signed by the principal;

(iii) be signed by the indemnitor, if any;

(iv) be signed by the surety bail insurance producer;

(v) set forth the amount of bail, the name of the principal, the amount and type of collateral held by the surety bail insurance producer, and the conditions under which the collateral is to be returned, in compliance with these rules;

(vi) state that the principal and the indemnitor have received copies of signed and dated disclosure forms referred to in (1)(e);

(vii) if the principal or indemnitor is illiterate or does not read English, state that the surety bail insurance producer or a third party has read or translated the agreement for the principal or indemnitor; and,

(viii) conform to all requirements of, and use the forms designated by the surety company.

(b) if used in the bail bond transaction, a promissory note must be:

(i) in writing;

(ii) signed by the surety bail insurance producer;

(iii) signed by the principal or indemnitor; and

(iv) in an amount not in excess of the premium due from the principal.

(i) be dated;

(ii) be in writing;

(iii) be signed by the surety bail insurance producer;

(iv) be signed by the principal or indemnitor;

(v) be prenumbered;

(vi) contain a full description of the collateral, including the condition of the collateral at the time it is taken into custody;

(vii) set forth the amount of bail, the name of the principal, the court case number, the court where the bond is executed, the amount of premium, the amount and type of collateral held by the surety bail insurance producer, and the conditions under which the collateral is to be returned; and

(viii) include a provision stating that the acquisition, liquidation, and disposition of all collateral must comply with these rules, and provisions of Montana law governing the liquidation of collateral.

(d) a prenumbered, signed receipt for payments made pursuant to a promissory note must be given to the person tendering payment for each payment received. The payment receipt must contain the date, the principal's name, a description of the consideration and amount of money received, the purpose for which it was received, the amount of the bail bond, and the name of the person tendering payment; and

(e) a surety bail insurance producer shall provide an advance written disclosure of any and all charges, in addition to the premium, that the principal or indemnitor may incur including, but not limited to, costs and interest, to the extent allowed by these rules. The disclosure must be:

(i) in writing;

(ii) dated;

(iii) signed by the surety bail insurance producer; and

(iv) signed by the principal or indemnitor.

(2) All bail bond documentation must be consistent and comply with the producer's agreement with the surety company, the surety company's policies and procedures, and these rules. In the event of a conflict, these rules supersede any agreements, policies, or procedures.

(3) In all bail bond documents, any interest or finance charges must comply with 31-1-107, MCA.

(4) Bail bond documents and agreements must comply with Montana law, including but not limited to 33-15-301 through 33-15-303, MCA. The agreement (surety insurance policy) between the bail bond company and the policyholder must contain the entire contract between the parties, and provisions must be plainly expressed in the policy.

(5) A surety bail insurance producer licensed to sell, solicit, or negotiate commercial bail bonds pursuant to Title 33, chapter 17, MCA, who effects an arrest or surrender pursuant to 46-9-510(1), MCA, shall notify CSI in writing of the arrest or surrender within seven business days.

(a) The written notice of the arrest or surrender shall provide the following information:

(i) full name of the principal/defendant who was arrested or surrendered;

(ii) criminal court case number and county for which the principal's/defendant's bail bond was posted;

(iii) dollar amount of the principal's/defendant's bail bond;

(iv) address or precise location, date, and time of arrest, and any persons who assisted in an arrest, if an arrest was effected;

(v) name, license number, and contact information of the producer who effected the arrest or surrender;

(vi) description of probable cause for the arrest, if an arrest was effected;

(vii) surrender location, date, and time (if known);

(viii) local sheriff's office or police department that the producer notified of the intent to apprehend the principal/defendant, including the date and time of the notice, if an arrest was effected;

(ix) local sheriff's office or police department that the producer notified after the arrest of the principal/defendant, including the date and time of the notice, if an arrest was effected;

(x) an explanation if the notice of intent to apprehend the principal/defendant was not provided, or was provided more than 6 hours before the arrest, or if the notice of arrest was not provided immediately after the arrest, if an arrest was effected;

(xi) producer signature, contact information, and license number of the producer completing the form.

(b) The form for providing the foregoing notice, a Surety Bail Bond Insurance Producer Arrest and Surrender Report, is available on the website of CSI.

(c) As used in this rule, the "producer . . . who effects an arrest or surrender" refers to any producer who physically arrests or surrenders a principal/defendant or any producer who requests, orders, or otherwise causes the arrest or surrender of a principal/defendant. A "surrender" includes any action, process, or procedure by which a producer requests bail be exonerated pursuant to 46-9-510(2), MCA.

History

Authorizing statute(s): 33-26-108, MCA
Implementing statute(s): 33-26-108, 46-9-510, MCA
History: NEW, 2021 MAR p. 410, Eff. 4/17/21; AMD, 2023 MAR p. 872, Eff. 1/1/24.

Mont. Admin. R. 6.6.6007 Supervision for Temporary Surety Bail Bond Insurance Licensees

(1) When an applicant applies for a temporary surety bail bond insurance license pursuant to 33-17-1602, MCA, the applicant must identify an individual who is a fully licensed surety bail bond agent who will serve as the temporary licensee’s supervisor. The applicant must submit a sworn affidavit from the supervisor, using the form designated by the commissioner, that includes the following certifications:

(a) The supervisor has read and agrees to comply with the requirements of this rule and applicable laws.

(b) The supervisor agrees to supervise the temporary licensee.

(c) The supervisor agrees to assume responsibility for the actions of the temporary licensee while the individual is serving as a bail bond agent.

(d) The supervisor meets the qualifications listed in 33-17-1602(5)(a)(i) through (iii), MCA.

(e) If a temporary licensee’s employment or the supervision ends, the supervisor must immediately send a written notification, via U.S. mail or email, to Producer Licensing at the office of the commissioner and to each surety company or any bonds executed by the temporary licensee.

(2) To ensure adequate supervision of temporary licensees, a licensed surety bail bond agent may only serve as the supervisor for up to two temporary licensees at once.

(3) “To operate under supervision” of a licensed surety bail bond agent, as the term is used in 33-17-1602(5)(a), MCA, means a person with a temporary surety bail bond insurance license must be in the direct physical presence of the supervisor when attempting to effect the arrest or surrender of a person pursuant to Title 46, chapter 9, MCA, or when entering a private residence. When a person with a temporary surety bail bond insurance license is performing other work that requires a license, such as issuing bonds, the person must be working under the direct control and guidance of the supervisor and be able to immediately contact the supervisor.

(4) Upon receipt of notification of termination of a temporary licensee’s supervision arrangement, the temporary license is suspended until the temporary licensee enters into a new supervision arrangement that is compliant with (1). Within one week of suspension, the supervising agent must send written notice, via U.S. mail or email, to Producer Licensing at the office of the commissioner, the surety company, the person released on bail, any co-signers on the bond, and the relevant clerk of court. If no supervising agent is available to provide the required notice, the surety company must send the same written notice within five business days. The notice must identify the producer who will serve as the point of contact for each existing bond and confirm that each bond remains in full force and effect.

History

Authorizing statute(s): 33-1-313, 33-26-108, MCA
Implementing statute(s): 33-17-1601, 33-17-1602, MCA
History: NEW, 2026 MAR, Notice No. 2026-112, Eff. 8/8/26.

Subchapter 6.6.65 Actuarial Opinions

Mont. Admin. R. 6.6.6501 Purpose

(1) The purpose of these rules is to prescribe:

(a) guidelines and standards for statements of actuarial opinion which are to be submitted in accordance with 33-2-407(5) and (6) and 33-7-118(2), MCA, and for memoranda in support thereof;

(b) rules applicable to the appointment of an appointed actuary; and

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
History: NEW, 1996 MAR p. 1371, Eff. 5/24/96; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6502 Authority

(1) These rules are issued pursuant to the authority vested in the Commissioner of Insurance of the state of Montana under 33-2-407, MCA. These rules will take effect for annual statements for the year 2009.

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
History: NEW, 1996 MAR p. 1371, Eff. 5/24/96; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6503 Scope

(1) These rules shall apply to all life insurance companies and fraternal benefit societies doing business in this state and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities or disability insurance business in this state.

(2) This rule shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the commissioner's judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.

(3) These rules shall be applicable to all annual statements filed with the office of the commissioner after the effective date of these rules. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with ARM 6.6.6508, and a memorandum in support thereof in accordance with ARM 6.6.6509, shall be required each year.

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
History: NEW, 1996 MAR p. 1371, Eff. 5/24/96; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6504 Definitions

(1) "Actuarial opinion" means the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy test in accordance with ARM 6.6.6508 and with applicable Actuarial Standards of Practice.

(2) "Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and promulgate Actuarial Standards of Practice.

(3) "Annual statement" means that statement required by 33-2-701 and 33-7-118, MCA, of the insurance law to be filed by the company with the office of the commissioner annually.

(4) "Appointed actuary" means any individual who is appointed or retained in accordance with the requirements set forth in ARM 6.6.6505(3) to provide the actuarial opinion and supporting memorandum as required by 33-2-407(5) and (6), and 33-7-118(2), MCA.

(5) "Asset adequacy analysis" means an analysis that meets the standards and other requirements referred to in ARM 6.6.6505(4).

(6) "Commissioner" means the insurance commissioner of this state.

(7) "Company" means a life insurance company, fraternal benefit society or reinsurer subject to the provisions of this rule.

(8) "Qualified actuary" means any individual who meets the requirements set forth in ARM 6.6.6505(2).

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA: IMP, 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
Implementing statute(s): 1996 MAR p. 1371, Eff. 5/24/96
History: AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6505 General Requirements

(1) As to the submission of Statement of Actuarial Opinion, the following requirements apply:

(a) there is to be included on or attached to page one of the annual statement for each year beginning with the year in which this regulation becomes effective the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with ARM 6.6.6508; and

(b) upon written request by the company, the commissioner may grant an extension of the date for submission of the statement of actuarial opinion.

(2) A "qualified actuary" is an individual who:

(a) is a member in good standing of the American Academy of Actuaries;

(b) is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements;

(d) has not been found by the commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing to have:

(i) violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as a qualified actuary;

(ii) been found guilty of fraudulent or dishonest practices;

(iii) demonstrated his or her incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary;

(iv) submitted to the commissioner during the past five years, pursuant to these rules, an actuarial opinion or memorandum that the commissioner rejected because it did not meet the provisions of these rules including standards set by the Actuarial Standards Board; or

(v) resigned or been removed as an actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standard; and

(e) has not failed to notify the commissioner of any action taken by any commissioner of any other state similar to that under ARM 6.6.6505(2)(d).

(3) An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the statement of actuarial opinion required by these rules, either directly by or by the authority of the board of directors through an executive officer of the company other than the qualified actuary. The company shall give the commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in such notice that the person meets the requirements set forth in ARM 6.6.6505(2). Once notice is furnished, no further notice is required with respect to this person, provided that the company shall give the commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in ARM 6.6.6505(2). If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement.

(4) The asset adequacy analysis required by these rules:

(a) shall conform to the Actuarial Standards of Practice as promulgated from time to time by the Actuarial Standards Board and on any additional standards under these rules, which standards are to form the basis of the statement of actuarial opinion in accordance with these rules; and

(b) shall be based on methods of analysis as are deemed appropriate for such purposes by the Actuarial Standards board.

(5) Liabilities to be covered by the actuarial opinion are as follows:

(a) Under authority of 33-2-407(5) and (6), and 33-7-118(2), MCA, the statement of actuarial opinion shall apply to all in force business on the statement date, whether directly issued or assumed, regardless of when or where issued, e.g., reserves of Exhibits 8, 9, and 10, and claim liabilities in Exhibit 11, Part 1 and equivalent items in the separate account statement or statements.

(b) If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in 33-2-411, 33-2-412, and 33-2-417, MCA, the company shall establish such additional reserve.

(c) Additional reserves established under (5)(b) and deemed not necessary in subsequent years may be released. Any amounts released must be disclosed in the actuarial opinion for the applicable year. The release of such reserves would not be deemed an adoption of a lower standard of valuation.

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
History: NEW, 1996 MAR p. 1371, Eff. 5/24/96; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6508 Statement of Actuarial Opinion Based on an Asset Adequacy Analysis

(1) The statement of actuarial opinion submitted in accordance with this rule shall consist of:

(a) a paragraph identifying the appointed actuary and his or her qualifications (see (2)(a));

(b) a scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items which have been analyzed for asset adequacy and the method of analysis, (see (2)(b)) and identifying the reserves and related actuarial items covered by the opinion which have not been so analyzed;

(c) a reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, (e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios (see (2)(c)), supported by a statement of each such expert in the form prescribed by (5); and

(d) an opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities (see (2)(f)).

(e) one or more additional paragraphs will be needed in individual company cases as follows:

(i) if the appointed actuary considers it necessary to state a qualification of his or her opinion;

(ii) if the appointed actuary must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion;

(iii) if the appointed actuary must disclose whether additional reserves as of the prior opinion date are released as of this opinion date, and the extent of the release; or

(iv) if the appointed actuary chooses to add a paragraph briefly describing the assumptions which form the basis for the actuarial opinion.

(2) The following paragraphs are to be included in the statement of actuarial opinion in accordance with this rule. Language is that which in typical circumstances should be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language which clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this rule.

(a) The opening paragraph should generally indicate the appointed actuary's relationship to the company and his or her qualifications to sign the opinion.

(i) For a company actuary, the opening paragraph of the actuarial opinion should include a statement such as: "I, [name], am [title] of [insurance company name] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and disability insurance companies."

(ii) For a consulting actuary, the opening paragraph should contain a sentence such as: "I, [name], a member of the American Academy of Actuaries, am associated with the firm of [name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and disability insurance companies."

(b) the scope paragraph should include a statement such as the following: "I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of December 31, [year]. Tabulated below are those reserves and related actuarial items which have been subjected to asset adequacy analysis."

Notes:

a. The additional actuarial reserves are the reserves established under ARM 6.6.6505(5)(b).

b. The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy analysis referred to in ARM 6.6.6505(4), by means of symbols which should be defined in footnotes to the table.

c. Allocated amount of Asset Valuation Reserve (AVR)

(c) If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph should include a statement such as the following: "I have relied on [name], [title] for [e.g., "anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios" or "certain critical aspects of the analysis performed in conjunction with forming my opinion"], as certified in the attached statement. I have reviewed the information relied upon for reasonableness." A statement of reliance on other experts should be accompanied by a statement by each of the experts in the form prescribed by ARM 6.6.6508(5).

(d) If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph should include a statement such as: "My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company's current annual statement."

(e) If the appointed actuary has not examined the underlying records, but has relied upon data (e.g., listings and summaries of policies in force and/or asset records) prepared by the company, the reliance paragraph should include a sentence such as: "In forming my opinion on [specify types of reserves], I relied upon data prepared by [name and title of company officer certifying in-force records or other data] as certified in the attached statements. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company's current annual statement. In other respects my examination included such review of the actuarial assumptions and actuarial methods used and tests of the actuarial calculations as I considered necessary. " The section must be accompanied by a statement by each person relied upon in the form prescribed by ARM 6.6.6508(5).

(f) The opinion paragraph should include a statement such as:

"In my opinion the reserves and related actuarial values concerning the statement items identified above:

(i) are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;

(ii) are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions;

(iii) meet the requirements of the insurance law and regulation of the state of [state of domicile] and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed;

(iv) are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below); and

(v) include provision for all actuarial reserves and related statement items which ought to be established.

The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on the assets, and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the company.

The actuarial methods, considerations and analyses used in forming my opinion conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis of this statement of opinion.

This opinion is updated annually as required by statute. To the best of my knowledge, there have been no material changes from the applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion, or

The following material change(s) which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion: (Describe the change or changes.)

Note: Choose one of the above two paragraphs, whichever is applicable.

The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis.

Signature of Appointed Actuary

Address of Appointed Actuary

Telephone Number of Appointed Actuary

Date

(3) The adoption for new issues or new claims or other new liabilities of an actuarial assumption that differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of ARM 6.6.6508.

(4) If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason(s) for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph.

(5) If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion should so indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance. In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness, or reasonableness, as applicable, of the items. This certification shall include the signature, title, company, address, and telephone number of the person rendering the certification, as well as the date on which it is signed.

(6) Under 33-2-407, MCA, the commissioner has broad authority to accept the valuation of a foreign insurer when that valuation meets the requirements applicable to a company domiciled in this state in the aggregate. As an alternative to the requirements of (2)(f)(iii), the commissioner may make one or more of the following additional approaches available to the opining actuary:

(a) a statement that the reserves "meet the requirements of the insurance laws and regulations of the state of [state of domicile] and the formal written standards and conditions of this state for filing an opinion based on the law of the [state of domicile]." If the commissioner chooses to allow this alternative, a formal written list of standards and conditions shall be made available. If a company chooses to use this alternative, the standards and conditions in effect on July 1 of a calendar year shall apply to statements for that calendar year, and they shall remain in effect until they are revised or revoked. If no list is available, this alternative is not available.

(b) a statement that the reserves "meet the requirements of the insurance laws and regulations of the state of [state of domicile] and I have verified that the company's request to file an opinion based on the law of [state of domicile] has been approved and that any conditions required by the commissioner for approval of that request have been met." If the commissioner chooses to allow this alternative, a formal written statement of such allowance shall be issued no later than March 31 of the year it is first effective. It shall remain valid until rescinded or modified by the commissioner. The rescission or modifications shall be issued no later than March 31 of the year they are first effective. Subsequent to that statement being issued, if a company chooses to use this alternative, the company shall file a request to do so, along with justification for its use, no later than April 30 of the year of the opinion to be filed. The request shall be deemed approved on October 1 of that year if the commissioner has not denied the request by that date.

(c) a statement that the reserves "meet the requirements of the insurance laws and regulations of the state of [state of domicile] and I have submitted the required comparison as specified by this state."

(i) If the commissioner chooses to allow this alternative, a formal written list of products (to be added to the table in (6)(c)(ii)) for which the required comparison shall be provided will be published. If a company chooses to use this alternative, the list in effect on July 1 of a calendar year shall apply to statements for that calendar year, and it shall remain in effect until it is revised and revoked. If no list is available, this alternative is not available.

(ii) If a company desires to use this alternative, the appointed actuary shall provide a comparison of the gross nationwide reserves held to the gross nationwide reserves that would be held under NAIC codification standards. Gross nationwide reserves are the total reserves calculated for the total company in force business directly sold and assumed, indifferent to the state in which the risk resides, without reduction for reinsurance ceded. The information provided shall be at least:

(iii) The information listed shall include all products identified by either the state of filing or any other states subscribing to this alternative.

(iv) If there is no codification standard for the type of product or risk in force or if the codification standard does not directly address the type of product or risk in force, the appointed actuary shall provide detailed disclosure of the specific method and assumptions used in determining the reserves held.

(v) The comparison provided by the company is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

(d) Notwithstanding the above, the commissioner may reject an opinion based on the laws and regulations of the state of domicile and require an opinion based on the laws of Montana. If a company is unable to provide the opinion within 60 days of the request or such other period of time as determined by the commissioner after consultation with the company, the commissioner may contract an independent actuary at the company's expense to prepare and file the opinion.

IMR (General Account, Page___Line _ ) | (Separate Accounts, Page ___ Line ___) |

AVR (Page Line ) | c. Net Deferred and Uncollected Premium |

(1) Product Type | (2) Death Benefit or Account Value | (3) Reserves Held | (4) Codification Reserves | (5) Codification Standard

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
History: NEW, 1996 MAR p. 1371, Eff. 5/24/96; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6509 Description of Actuarial Memorandum Including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary

(1) In accordance with 33-2-407(5) and (6), and 33-7-118(2), MCA, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of his or her opinion regarding the reserves under an ARM 6.6.6508 opinion. The memorandum shall be made available for examination by the commissioner upon his or her request but shall be returned to the company after such examination and shall not be considered a record of the insurance department or subject to automatic filing with the commissioner.

(a) In preparing the memorandum, the appointed actuary may rely on, and include as a part of his or her own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of ARM 6.6.6505(2), with respect to the areas covered in such memoranda, and so state in their memoranda.

(b) If the commissioner requests a memorandum and no such memorandum exists or if the commissioner finds that the analysis described in the memorandum fails to meet the standards of the actuarial standards board or the standards and requirements of these rules, the commissioner may designate a qualified actuary to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expense of the independent review shall be paid by the company but shall be directed and controlled by the commissioner.

(c) The reviewing actuary shall have the same status as an examiner for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary shall be retained by the commissioner; provided, however, that any information provided by the company to the reviewing actuary and included in the work papers shall be considered as material provided by the company to the commissioner and shall be kept confidential to the same extent as is prescribed by law with respect to other material provided by the company to the commissioner pursuant to the statute governing these rules. The reviewing actuary shall not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to these rules for any one of the current year or the preceding three years.

(d) In accordance with 33-2-407(5), MCA, the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in (3)(a) through (3)(f). The regulatory asset adequacy issues summary will be submitted no later than March 15 of the year following the year for which a statement of actuarial opinion based on asset adequacy is required. The regulatory asset adequacy issues summary is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

(2) When an actuarial opinion under ARM 6.6.6508 is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in ARM 6.6.6505(4) and any additional standards under these rules. The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions. It shall specify:

(a) for reserves:

(i) product descriptions including market description, underwriting and other aspects of a risk profile and the specific risks the appointed actuary deems significant;

(ii) source of liability in force;

(iii) reserve method and basis;

(iv) investment reserves;

(v) reinsurance arrangements;

(vi) identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis;

(vii) documentation of assumptions to test reserves for the following:

(A) lapse rates (both base and excess);

(B) interest crediting rate strategy;

(D) policyholder dividend strategy;

(E) competitor or market interest rate;

(F) annuitization rates;

(G) commissions and expenses; and

(H) morbidity.

(b) for assets:

(i) portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets;

(ii) investment and disinvestment assumptions;

(iii) source of asset data;

(iv) asset valuation bases; and

(v) documentation of assumptions made for the following:

(A) default costs;

(B) bond call function;

(D) determining market value for assets sold due to disinvestment strategy; and

(E) determining yield on assets acquired through the investment strategy.

(i) methodology;

(ii) rationale for inclusion/exclusion of different blocks of business and how pertinent risks were analyzed;

(iii) rationale for degree of rigor in analyzing different blocks of business (include in the rationale the level of "materiality" that was used in determining how rigorously to analyze different blocks of business);

(iv) criteria for determining asset adequacy (include in the criteria the precise basis for determining if assets are adequate to cover reserves under "moderately adverse conditions" or other conditions as specified in relevant Actuarial Standards of Practice); and

(v) whether the impact of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis.

(d) summary of material changes in methods, procedures, or assumptions from the prior year's asset adequacy analysis;

(e) summary of results; and

(f) conclusion(s).

(3) The regulatory asset adequacy issues summary shall include:

(a) descriptions of the scenarios tested (including whether those scenarios are stochastic or deterministic) and the sensitivity testing done relative to those scenarios. If negative ending surplus results under certain tests in the aggregate, the actuary should describe those tests and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. Ending surplus values shall be determined by either extending the projection period until the in-force and associated assets and liabilities at the end of the projection period are immaterial or by adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force;

(b) the extent to which the appointed actuary uses assumptions in the asset adequacy analysis that are materially different than the assumptions used in the previous asset adequacy analysis;

(c) the amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the prior opinion but were not subject to analysis for the current opinion;

(d) comments on any interim results that may be of significant concern to the appointed actuary, for example, the impact of the insufficiency of assets to support:

(i) the payment of benefits and expenses; or

(ii) the establishment of statutory reserves during one or more interim periods;

(e) the methods used by the actuary to recognize the impact of reinsurance on the company's cash flows, including both assets and liabilities, under each of the scenarios tested; and

(f) whether the actuary has been satisfied that all options, whether explicit or embedded, in any asset or liability (including but not limited to those affecting cash flows embedded in fixed income securities) and equity-like features in any investments have been appropriately considered in the asset adequacy analysis.

(4) The regulatory asset adequacy issues summary shall contain the name of the company for which the regulatory asset adequacy issues summary is being supplied and shall be signed and dated by the appointed actuary rendering the actuarial opinion.

(5) The memorandum shall include a statement: "Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate standards of practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum."

(6) An appropriate allocation of assets in the amount of the interest maintenance reserve (IMR), whether positive or negative, shall be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve (AVR); these AVR assets may not be applied for any other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support. The amount of the assets used for the AVR shall be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets shall be disclosed in the memorandum.

(7) The appointed actuary shall retain on file, for at least seven years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions, and the results obtained.

History

Authorizing statute(s): 33-1-313, 33-2-407, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, 33-7-118, 33-7-411, MCA
History: NEW, 1996 MAR p. 1371, Eff. 5/24/96; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2623, Eff. 12/9/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Subchapter 6.6.66 Fidelity Bond

Mont. Admin. R. 6.6.6601 Fidelity Bond

(1) The amount of fidelity bond coverage required by 33-3-307, MCA, for officers of a domestic insurer must be calculated as follows:

(a) The sum of the calculations in (i) and (ii) equals the amount of the insurer's exposure index:

(i) 5% of the insurer's admitted assets, as reported in the insurer's most recent annual statement; plus

(ii) 10% of the insurer's gross income. Gross income equals the total of direct and assumed premiums written plus investment income collected, as reported in the insurer's most recent annual statement.

(b) The amount of the exposure index, as calculated in (1) (a) , determines the acceptable range of the amount of the required fidelity bond, according to the following table:

Exposure Index | Amount of Bond $1,000 | - | $25,000 | $15,000 | - | $25,000 25,000 | - | 125,000 | 25,000 | - | 50,000 125,000 | - | 250,000 | 50,000 | - | 75,000 250,000 | - | 500,000 | 75,000 | - | 100,000 500,000 | - | 750,000 | 100,000 | - | 125,000 750,000 | - | 1,000,000 | 125,000 | - | 150,000 1,000,000 | - | 1,375,000 | 150,000 | - | 175,000 1,375,000 | - | 1,750,000 | 175,000 | - | 200,000 1,750,000 | - | 2,125,000 | 200,000 | - | 225,000 2,125,000 | - | 2,500,000 | 225,000 | - | 250,000 2,500,000 | - | 3,325,000 | 250,000 | - | 300,000 3,325,000 | - | 4,175,000 | 300,000 | - | 350,000 4,175,000 | - | 5,000,000 | 350,000 | - | 400,000 5,000,000 | - | 6,075,000 | 400,000 | - | 450,000 6,075,000 | - | 7,150,000 | 450,000 | - | 500,000 7,150,000 | - | 9,275,000 | 500,000 | - | 600,000 9,275,000 | - | 11,425,000 | 600,000 | - | 700,000 11,425,000 | - | 15,000,000 | 700,000 | - | 800,000 15,000,000 | - | 20,000,000 | 800,000 | - | 900,000 20,000,000 | - | 25,000,000 | 900,000 | - | 1,000,000 25,000,000 | - | 50,000,000 | 1,000,000 | - | 1,250,000 50,000,000 | - | 87,500,000 | 1,250,000 | - | 1,500,000 87,500,000 | - | 125,000,000 | 1,500,000 | - | 1,750,000 125,000,000 | - | 187,500,000 | 1,750,000 | - | 2,000,000 187,500,000 | - | 250,000,000 | 2,000,000 | - | 2,250,000 250,000,000 | - | 333,325,000 | 2,250,000 | - | 2,500,000 333,325,000 | - | 500,000,000 | 2,500,000 | - | 3,000,000 500,000,000 | - | 750,000,000 | 3,000,000 | - | 3,500,000 750,000,000 | - | 1,000,000,000 | 3,500,000 | - | 4,000,000 1,000,000,000 | - | 1,250,000,000 | 4,000,000 | - | 4,500,000 1,250,000,000 | - | 1,500,000,000 | 4,500,000 | - | 5,000,000

History

Authorizing statute(s): Sec. 33-3-307, MCA
Implementing statute(s): Sec. 33-3-307, MCA
History: NEW, 1997 MAR p. 2180, Eff. 12/2/97.

Subchapter 6.6.67 Valuation of Life Insurance Policies

Mont. Admin. R. 6.6.6701 Purpose

(1) The purpose of ARM 6.6.6701 through 6.6.6713 is to provide:

(a) tables of select mortality factors and rules for their use;

(b) rules concerning a minimum standard for the valuation of plans with nonlevel premiums or benefits; and

(2) The method for calculating basic reserves defined in ARM 6.6.6701 through 6.6.6713 will constitute the commissioners' reserve valuation method for policies to which they are applicable.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-3-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2018 MAR p. 826, Eff. 4/28/18; AMD, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6703 Applicability

(1) ARM 6.6.6701, 6.6.6703, 6.6.6705, 6.6.6707, 6.6.6709, 6.6.6711, and 6.6.6713 shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after January 1, 2000, subject to the following exceptions:

(a) these rules shall not apply to any individual life insurance policy issued on or after January 1, 2000, if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before January 1, 2000, that guarantees the premium rates of the new policy. These rules also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.

(b) these rules shall not apply to any universal life policy that meets all the following requirements:

(i) secondary guarantee period, if any, is 5 years or less;

(ii) specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in ARM 6.6.6705(6) and the applicable valuation interest rate; and

(iii) the initial surrender charge is not less than 100% of the first year annualized specified premium for the secondary guarantee period.

(c) these rules shall not apply to any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

(d) these rules shall not apply to any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

(e) these rules shall not apply to a group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

(2) ARM 6.6.6701, 6.6.6703, 6.6.6705, 6.6.6707, 6.6.6709, 6.6.6711, and 6.6.6713 shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after January 1, 2000, subject to the following conditions:

(a) calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, shall be in accordance with the provisions of ARM 6.6.6709.

(b) calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of ARM 6.6.6711.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2018 MAR p. 826, Eff. 4/28/18.

Mont. Admin. R. 6.6.6705 Definitions

For purposes of ARM 6.6.6701 through 6.6.6713:

(1) "Basic reserves" means reserves calculated in accordance with 33-2-411, MCA.

(2) "Contract segmentation method" means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in (6) of this rule, (or any other valuation mortality table adopted by the National Association of Insurance Commissioners (NAIC) after January 1, 2000, and promulgated by rule by the commissioner for this purpose) and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in ARM 6.6.6707(2).

GP x+k+t G t = __________ GP x+k+t-1

where:

x = original issue age;

k = the number of years from the date of issue to the

beginning of the segment;

t = 1, 2, ...; t is reset to 1 at the beginning of each

segment;

GP x+k+t-1 = Guaranteed gross premium per thousand of face

amount for year t of the segment, ignoring policy

fees only if level for the premium paying period of

the policy.

q x+k+t

R t = __________ However, R t may be increased or q x+k+t-1 decreased by one percent in any policy year, at the insurer's option, but R t shall not be less than one;

where:

x, k and t are as defined above, and

q x+k+t-1 = valuation mortality rate for deficiency reserves in policy year k+t but using the mortality of ARM 6.6.6707(2)(b) if ARM 6.6.6707(3) is elected for deficiency reserves.

However, if GP x+k+t is greater than 0 and GP x+k+t-1 is equal to 0, G t shall

be deemed to be 1000. If GP x+k+t and GP x+k+t-1 are both equal to 0, G t

shall be deemed to be 0.

(3) "Deficiency reserves" means the excess, if greater than 0, of minimum reserves calculated in accordance with 33-2-412, MCA, over basic reserves.

(4) "Guaranteed gross premiums" means the premiums under a policy of life insurance that are guaranteed and determined at issue.

(5) "Maximum valuation interest rates" means the interest rates defined in 33-2-413, MCA, that are to be used in determining the minimum standard for the valuation of life insurance policies.

(6) "1980 CSO valuation tables" means the Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without 10-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law, and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983.

(7) "Scheduled gross premium" means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in ARM 6.6.6711(3), if any, or else the minimum premium described in ARM 6.6.6711(4).

(8) "Segmented reserves" means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:

(a) the present value of the death benefits within the segment; plus

(b) the present value of any unusual guaranteed cash value (ARM 6.6.6709(4)) occurring at the end of the segment; less

(d) for the first segment only, the excess of (8)(a) over (8)(b), as follows:

(i) a net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the 19-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy;

(ii) a net 1-year term premium for the benefits provided for in the first policy year;

(e) the length of each segment is determined by the "contract segmentation method," as defined in this rule;

(f) the interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy;

(g) for both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.

(9) "Tabular cost of insurance" means the net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.

(10) "10-year select factors" means the select factors adopted with the 1980 amendments to the NAIC Standard Valuation Law.

(11) "Unitary reserves" means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:

(a) guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and

(b) modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of (11)(b)(i) over (11)(b)(ii), as follows:

(i) a net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the 19-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy;

(ii) a net one year term premium for the benefits provided for in the first policy year;

(c) the interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.

(12) "Universal life insurance policy" means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2012 MAR p. 304, Eff. 2/10/12; AMD, 2018 MAR p. 826, Eff. 4/28/18; AMD, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6707 General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves

(1) At the election of the insurer for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after January 1, 2000, and promulgated by rule by the commissioner for this purpose). If select mortality factors are elected, they may be:

(a) the 10-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;

(b) the select mortality factors in ARM 6.6.6713.

(2) Deficiency reserves, if any, are calculated for each policy as the excess, if greater than 0, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the insurer for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors. If select mortality factors are elected, they may be:

(a) the 10-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;

(b) the select mortality factors in ARM 6.6.6713;

(i) X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;

(ii) X is such that, when using the valuation interest rate used for basic reserves, (2)(c)(ii)(A) is greater than or equal to (2)(c)(ii)(B) as follows:

(A) the actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X;

(B) the actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;

(iii) X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first 5 years after the valuation date;

(iv) the appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of (2)(c);

(v) the appointed actuary may decrease X at any valuation date as long as X continues to meet all the requirements of (2)(c); and

(vi) the appointed actuary shall specifically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums;

(vii) if X is less than 100% at any duration for any policy, the following requirements shall be met:

(A) the appointed actuary shall annually prepare an actuarial opinion and memorandum for the insurer in conformance with the requirements of ARM 6.6.6505;

(B) the appointed actuary shall disclose, in the regulatory asset adequacy issues summary as required in ARM 6.6.6509, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods; and

(C) the appointed actuary shall annually opine for all policies subject to ARM 6.6.6701 through 6.6.6713 as to whether the mortality rates resulting from the application of X meet the requirements of (2)(c). This opinion shall be supported by an actuarial report, subject to appropriate actuarial standards of practice promulgated by the actuarial standards board of the American academy of actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience;

(d) any other table of select mortality factors adopted by the NAIC after January 1, 2000, and promulgated by rule by the commissioner for the purpose of calculating deficiency reserves.

(3) This rule applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. However, if the first segment is less than 10 years, the appropriate 10-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.

(4) In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.

(5) Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following:

(a) reserves calculated ignoring the guarantee;

(b) reserves assuming the guarantee was made at issue; and

(6) The commissioner may require that the insurer document the extent of the adequacy of reserves for specified blocks, including but not limited to policies issued prior to January 1, 2000. This documentation may include a demonstration of the extent to which aggregation with other nonspecified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of ARM 6.6.6505.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2012 MAR p. 304, Eff. 2/10/12; AMD, 2018 MAR p. 826, Eff. 4/28/18; AMD, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6709 Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (other Than Universal Life Policies)

(1) Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in (1)(a) or (b) below may be made:

(a) treat the unitary reserve, if greater than 0, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than 0, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment; or

(b) treat the guaranteed cash surrender value, if greater than 0, applicable at the end of each segment as a pure endowment and subtract the guaranteed cash surrender value, if greater than 0, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

(2) The deficiency reserve at any duration shall be calculated:

(a) on a unitary basis if the corresponding basic reserve determined by (1) is unitary;

(b) on a segmented basis if the corresponding basic reserve determined by (1) is segmented; or

(c) on the segmented basis if the corresponding basic reserve determined by (1) is equal to both the segmented reserve and the unitary reserve;

(d) this rule shall apply to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality specified in ARM 6.6.6707(2) and rate of interest;

(e) deficiency reserves, if any, shall be calculated for each policy as the excess if greater than 0, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in ARM 6.6.6707(2);

(f) for deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.

(3) Minimum value. Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid-terminal reserves are used. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if select mortality factors are used, they shall be the 10-year select factors incorporated into the 1980 amendments of the NAIC Standard Valuation Law. In no case may total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination) be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, upon termination of the policy.

(4) Unusual pattern of guaranteed cash surrender values:

(a) for any policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.

(b) the reserves actually held subsequent to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where:

(i) n is the number of years from the date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:

(A) the date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or

(B) the mandatory expiration date of the policy; and

(ii) the net premium for a given year during the n year period is equal to the product of the net to gross ratio and the respective gross premium; and

(iii) the net to gross ratio is equal to (4)(b)(iii)(A) divided by (4)(b)(iii)(B) as follows:

(A) the present value, at the beginning of the n year period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period;

(B) the present value, at the beginning of the n year period, of the scheduled gross premiums payable during the n year period.

(c) for purposes of this rule, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of:

(i) 110% of the scheduled gross premium for that year;

(ii) 110% of one year's accrued interest on the sum of the prior year's guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and

(iii) 5% of the first policy year surrender charge, if any.

(5) Optional exemption for yearly renewable term (YRT) reinsurance. At the option of the company, the following approach for reserves on YRT reinsurance may be used:

(a) calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year;

(b) basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in (3);

(i) For each policy year, calculate the excess, if greater than 0, of the valuation net premium over the respective maximum guaranteed gross premium.

(ii) Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with (5)(c)(i) above.

(6) For purposes of this rule, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without 10-year select mortality factors, or any other table adopted after January 1, 2000, by the NAIC and promulgated by rule by the commissioner for this purpose.

(7) A reinsurance agreement shall be considered YRT reinsurance for purposes of this rule if only the mortality risk is reinsured.

(8) If the assuming insurer chooses this optional exemption, the ceding insurer's reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

(9) At the option of the insurer, the following approach for reserves for attained-age-based yearly renewable term (YRT), life insurance policies may be used:

(a) calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year;

(b) basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in (3);

(i) For each policy year, calculate the excess, if greater than 0, of the valuation net premium over the respective maximum guaranteed gross premium.

(ii) Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with (9)(c)(i) above.

(10) For purposes of this rule, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without 10-year select mortality factors, or any other table adopted after January 1, 2000, by the NAIC and promulgated by rule by the commissioner for this purpose.

(11) A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this rule if:

(a) the premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and

(b) the premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same risk class, plan of insurance and attained age.

(12) For policies that become attained-age-based YRT policies after an initial period of coverage, the approach of this rule may be used after the initial period if:

(a) the initial period is constant for all insureds of the same risk class and plan of insurance; or

(b) the initial period runs to a common attained age for all insureds of the same risk class and plan of insurance; and

(13) If this election is made, this approach shall be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after January 1, 2000.

(14) Exemption from unitary reserves for certain n year renewable term life insurance polices. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:

(a) the policy consists of a series of n year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than 10 years and less than twice the size of the earlier n year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

(b) the guaranteed gross premiums in all n year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the 10-year select mortality factors; and

(15) Exemption from unitary reserves for certain juvenile policies: Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:

(a) the insured is age 24 or younger;

(b) until the insured reaches the end of the juvenile period, which shall occur at or before age 25, the gross premiums and death benefits are level, and there are no cash surrender values; and

(c) after the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2012 MAR p. 304, Eff. 2/10/12; AMD, 2018 MAR p. 826, Eff. 4/28/18.

Mont. Admin. R. 6.6.6711 Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy

(1) Policies with a secondary guarantee include:

(a) a policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;

(b) a policy in which the minimum premium at any duration is less than the corresponding 1-year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without 10-year select mortality factors; or

(2) A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in (7) and (8) below shall be recalculated from issue to reflect these changes.

(3) Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.

(4) For purposes of this rule, the minimum premium for any policy year is the premium that, when paid into a policy with a 0 account value at the beginning of the policy year, produces a 0 account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate, which are all guaranteed at issue.

(5) The 1-year valuation premium means the net 1-year premium based upon the original schedule of benefits for a given policy year. The 1-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in ARM 6.6.6707(2)(b) and (c) may not be used to calculate the 1-year valuation premiums.

(6) The 1-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.

(7) Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in ARM 6.6.6705(2).

(8) Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in ARM 6.6.6709(2) with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.

(9) The minimum reserves during the secondary guarantee period are the greater of:

(a) the basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or

(b) the minimum reserves required by other rules or regulations governing universal life plans.

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2012 MAR p. 304, Eff. 2/10/12; AMD, 2018 MAR p. 826, Eff. 4/28/18.

Mont. Admin. R. 6.6.6713 Select Mortality Factors

(1) This rule contains tables of select mortality factors that are the bases to which the respective percentage of ARM 6.6.6707(1)(b), (2)(b) and (2)(c) are applied.

(2) The six tables of select mortality factors contained herein include:

(a) male, aggregate;

(b) male, nonsmoker;

(d) female, aggregate;

(e) female, nonsmoker; and

(f) female, smoker.

(3) These tables apply to both age last birthday and age nearest birthday mortality tables.

(4) For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are 80% of the appropriate male table in this rule, plus 20% of the appropriate female table in this rule.

(5) The tables listed in (2)(a) through (f) are as follows:

(a) | Male, Aggregate Issue | Duration Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 0-15 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 16 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 17 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 18 | 96 | 98 | 98 | 99 | 99 | 100 | 100 | 90 | 92 | 92 | 92 | 92 | 93 | 93 | 96 | 97 | 98 | 98 | 99 | 100 19 | 83 | 84 | 84 | 87 | 87 | 87 | 79 | 79 | 79 | 81 | 81 | 82 | 82 | 82 | 85 | 88 | 91 | 94 | 97 | 100 20 | 69 | 71 | 71 | 74 | 74 | 69 | 69 | 67 | 69 | 70 | 71 | 71 | 71 | 71 | 74 | 79 | 84 | 90 | 95 | 100 21 | 66 | 68 | 69 | 71 | 66 | 66 | 67 | 66 | 67 | 70 | 70 | 70 | 70 | 71 | 71 | 77 | 83 | 88 | 94 | 100 22 | 65 | 66 | 66 | 63 | 63 | 64 | 64 | 64 | 65 | 68 | 68 | 68 | 68 | 69 | 71 | 77 | 83 | 88 | 94 | 100 23 | 62 | 63 | 59 | 60 | 62 | 62 | 63 | 63 | 64 | 65 | 65 | 67 | 67 | 69 | 70 | 76 | 82 | 88 | 94 | 100 24 | 60 | 56 | 56 | 59 | 59 | 60 | 61 | 61 | 61 | 64 | 64 | 64 | 66 | 67 | 70 | 76 | 82 | 88 | 94 | 100 25 | 52 | 53 | 55 | 56 | 58 | 58 | 60 | 60 | 60 | 63 | 62 | 63 | 64 | 67 | 69 | 75 | 81 | 88 | 94 | 100 26 | 51 | 52 | 55 | 56 | 58 | 58 | 57 | 61 | 61 | 62 | 63 | 64 | 66 | 69 | 66 | 73 | 80 | 86 | 93 | 100 27 | 51 | 52 | 55 | 57 | 58 | 60 | 61 | 61 | 60 | 63 | 63 | 64 | 67 | 66 | 67 | 74 | 80 | 87 | 93 | 100 28 | 49 | 51 | 56 | 58 | 60 | 60 | 61 | 62 | 62 | 63 | 64 | 66 | 65 | 66 | 68 | 74 | 81 | 87 | 94 | 100 29 | 49 | 51 | 56 | 58 | 60 | 61 | 62 | 62 | 62 | 64 | 64 | 62 | 66 | 67 | 70 | 76 | 82 | 88 | 94 | 100 30 | 49 | 50 | 56 | 58 | 60 | 60 | 62 | 63 | 63 | 64 | 62 | 63 | 67 | 68 | 71 | 77 | 83 | 88 | 94 | 100 31 | 47 | 50 | 56 | 58 | 60 | 62 | 63 | 64 | 64 | 62 | 63 | 66 | 68 | 70 | 72 | 78 | 83 | 89 | 94 | 100 32 | 46 | 49 | 56 | 59 | 60 | 62 | 63 | 66 | 62 | 63 | 66 | 67 | 70 | 72 | 73 | 78 | 84 | 89 | 95 | 100 33 | 43 | 49 | 56 | 59 | 62 | 63 | 64 | 62 | 65 | 66 | 67 | 70 | 72 | 73 | 75 | 80 | 85 | 90 | 95 | 100 34 | 42 | 47 | 56 | 60 | 62 | 63 | 61 | 63 | 66 | 67 | 70 | 71 | 73 | 75 | 76 | 81 | 86 | 90 | 95 | 100 35 | 40 | 47 | 56 | 60 | 63 | 61 | 62 | 65 | 67 | 68 | 71 | 73 | 74 | 76 | 76 | 81 | 86 | 90 | 95 | 100 36 | 38 | 42 | 56 | 60 | 59 | 61 | 63 | 65 | 67 | 68 | 70 | 72 | 74 | 76 | 77 | 82 | 86 | 91 | 95 | 100 37 | 38 | 45 | 56 | 57 | 61 | 62 | 63 | 65 | 67 | 68 | 70 | 72 | 74 | 76 | 76 | 81 | 86 | 90 | 95 | 100 38 | 37 | 44 | 53 | 58 | 61 | 62 | 65 | 66 | 67 | 69 | 69 | 73 | 75 | 76 | 77 | 82 | 86 | 91 | 95 | 100 39 | 37 | 41 | 53 | 58 | 62 | 63 | 65 | 65 | 66 | 68 | 69 | 72 | 74 | 76 | 76 | 81 | 86 | 90 | 95 | 100 40 | 34 | 40 | 53 | 58 | 62 | 63 | 65 | 65 | 66 | 68 | 68 | 71 | 75 | 76 | 77 | 82 | 86 | 91 | 95 | 100

Male, Aggregate Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 41 | 34 | 41 | 53 | 58 | 62 | 63 | 65 | 64 | 64 | 66 | 68 | 70 | 74 | 76 | 77 | 82 | 86 | 91 | 95 | 100 42 | 34 | 43 | 53 | 58 | 61 | 62 | 63 | 63 | 63 | 64 | 66 | 69 | 72 | 75 | 77 | 82 | 86 | 91 | 95 | 100 43 | 34 | 43 | 54 | 59 | 60 | 61 | 63 | 62 | 62 | 64 | 66 | 67 | 72 | 74 | 77 | 82 | 86 | 91 | 95 | 100 44 | 34 | 44 | 54 | 58 | 59 | 60 | 61 | 60 | 61 | 62 | 64 | 67 | 71 | 74 | 77 | 82 | 86 | 91 | 95 | 100 45 | 34 | 45 | 53 | 58 | 59 | 60 | 60 | 60 | 59 | 60 | 63 | 66 | 71 | 74 | 77 | 82 | 86 | 91 | 95 | 100 46 | 31 | 43 | 52 | 56 | 57 | 58 | 59 | 59 | 59 | 60 | 63 | 67 | 71 | 74 | 75 | 80 | 85 | 90 | 95 | 100 47 | 32 | 42 | 50 | 53 | 55 | 56 | 57 | 58 | 59 | 60 | 65 | 68 | 71 | 74 | 75 | 80 | 85 | 90 | 95 | 100 48 | 32 | 41 | 47 | 52 | 54 | 56 | 57 | 57 | 57 | 61 | 65 | 68 | 72 | 73 | 74 | 79 | 84 | 90 | 95 | 100 49 | 30 | 40 | 46 | 49 | 52 | 54 | 55 | 56 | 57 | 61 | 66 | 69 | 72 | 73 | 74 | 79 | 84 | 90 | 95 | 100 50 | 30 | 38 | 44 | 47 | 51 | 53 | 54 | 56 | 57 | 61 | 66 | 71 | 72 | 73 | 75 | 80 | 85 | 90 | 95 | 100 51 | 28 | 37 | 42 | 46 | 49 | 53 | 54 | 56 | 57 | 61 | 66 | 71 | 72 | 73 | 75 | 80 | 85 | 90 | 95 | 100 52 | 28 | 35 | 41 | 45 | 49 | 51 | 54 | 56 | 57 | 61 | 66 | 71 | 72 | 74 | 75 | 80 | 85 | 90 | 100 | 100 53 | 27 | 35 | 39 | 44 | 48 | 51 | 53 | 55 | 57 | 61 | 67 | 71 | 74 | 75 | 76 | 81 | 86 | 100 | 100 | 100 54 | 27 | 33 | 38 | 44 | 48 | 50 | 53 | 55 | 57 | 61 | 67 | 72 | 74 | 75 | 76 | 81 | 100 | 100 | 100 | 100 55 | 25 | 32 | 37 | 43 | 47 | 50 | 53 | 55 | 57 | 61 | 68 | 72 | 74 | 75 | 78 | 100 | 100 | 100 | 100 | 100 56 | 25 | 32 | 37 | 43 | 47 | 49 | 51 | 54 | 56 | 61 | 67 | 70 | 73 | 74 | 100 | 100 | 100 | 100 | 100 | 100 57 | 24 | 31 | 38 | 43 | 47 | 49 | 51 | 54 | 56 | 59 | 66 | 69 | 72 | 100 | 100 | 100 | 100 | 100 | 100 | 100 58 | 24 | 31 | 38 | 43 | 48 | 48 | 50 | 53 | 56 | 59 | 64 | 67 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 59 | 23 | 30 | 39 | 43 | 48 | 48 | 51 | 53 | 55 | 58 | 63 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 60 | 23 | 30 | 39 | 43 | 48 | 47 | 50 | 52 | 53 | 57 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 61 | 23 | 30 | 39 | 43 | 49 | 49 | 50 | 52 | 53 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 62 | 23 | 30 | 39 | 44 | 49 | 49 | 51 | 52 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 63 | 22 | 30 | 39 | 45 | 50 | 50 | 52 | 75 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 64 | 22 | 30 | 39 | 45 | 50 | 51 | 75 | 75 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 65 | 22 | 30 | 39 | 45 | 50 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Male, Aggregate Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 66 | 22 | 30 | 39 | 45 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 67 | 22 | 30 | 39 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 68 | 23 | 32 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 69 | 23 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 70 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 71 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 72 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 73 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 74 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 75 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 76 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 77 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 78 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 79 | 48 | 52 | 55 | 60 | 60 | 65 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 80 | 48 | 52 | 55 | 60 | 60 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 81 | 48 | 52 | 55 | 60 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 82 | 48 | 52 | 55 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 83 | 48 | 52 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 84 | 48 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 85+ | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

(b) Male, Nonsmoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 0-15 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 16 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 17 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 18 | 93 | 95 | 96 | 98 | 99 | 100 | 100 | 90 | 92 | 92 | 92 | 92 | 95 | 95 | 96 | 97 | 98 | 98 | 99 | 100 19 | 80 | 81 | 83 | 86 | 87 | 87 | 79 | 79 | 79 | 81 | 81 | 82 | 83 | 83 | 86 | 89 | 92 | 94 | 97 | 100 20 | 65 | 68 | 69 | 72 | 74 | 69 | 69 | 67 | 69 | 70 | 71 | 71 | 72 | 72 | 75 | 80 | 85 | 90 | 95 | 100 21 | 63 | 66 | 68 | 71 | 66 | 66 | 67 | 66 | 67 | 70 | 70 | 70 | 71 | 71 | 73 | 78 | 84 | 89 | 95 | 100 22 | 62 | 65 | 66 | 62 | 63 | 64 | 64 | 64 | 67 | 68 | 68 | 68 | 70 | 70 | 73 | 78 | 84 | 89 | 95 | 100 23 | 60 | 62 | 58 | 60 | 62 | 62 | 63 | 63 | 64 | 67 | 68 | 68 | 67 | 69 | 71 | 77 | 83 | 88 | 94 | 100 24 | 59 | 55 | 56 | 58 | 59 | 60 | 61 | 61 | 63 | 65 | 67 | 66 | 66 | 69 | 71 | 77 | 83 | 88 | 94 | 100 25 | 52 | 53 | 55 | 56 | 58 | 58 | 60 | 60 | 61 | 64 | 64 | 64 | 64 | 67 | 70 | 76 | 82 | 88 | 94 | 100 26 | 51 | 53 | 55 | 56 | 58 | 60 | 61 | 61 | 61 | 63 | 64 | 64 | 66 | 69 | 67 | 74 | 80 | 87 | 93 | 100 27 | 51 | 52 | 55 | 58 | 60 | 60 | 61 | 61 | 62 | 63 | 64 | 66 | 67 | 66 | 67 | 74 | 80 | 87 | 93 | 100 28 | 49 | 52 | 57 | 58 | 60 | 61 | 63 | 62 | 62 | 64 | 66 | 66 | 63 | 66 | 68 | 74 | 81 | 87 | 94 | 100 29 | 49 | 51 | 57 | 60 | 61 | 61 | 62 | 62 | 63 | 64 | 66 | 63 | 65 | 67 | 68 | 74 | 81 | 87 | 94 | 100 30 | 49 | 51 | 57 | 60 | 61 | 62 | 63 | 63 | 63 | 64 | 62 | 63 | 66 | 68 | 70 | 76 | 82 | 88 | 94 | 100 31 | 47 | 50 | 57 | 60 | 60 | 62 | 63 | 64 | 64 | 62 | 63 | 65 | 67 | 70 | 71 | 77 | 83 | 88 | 94 | 100 32 | 46 | 50 | 57 | 60 | 62 | 63 | 64 | 64 | 62 | 63 | 65 | 66 | 68 | 71 | 72 | 78 | 83 | 89 | 94 | 100 33 | 45 | 49 | 56 | 60 | 62 | 63 | 64 | 62 | 63 | 65 | 66 | 68 | 71 | 73 | 74 | 79 | 84 | 90 | 95 | 100 34 | 43 | 48 | 56 | 62 | 63 | 64 | 62 | 62 | 65 | 66 | 67 | 70 | 72 | 74 | 74 | 79 | 84 | 90 | 95 | 100 35 | 41 | 47 | 56 | 62 | 63 | 61 | 62 | 63 | 66 | 67 | 68 | 70 | 72 | 74 | 75 | 80 | 85 | 90 | 95 | 100 36 | 40 | 47 | 56 | 62 | 59 | 61 | 62 | 63 | 66 | 67 | 68 | 70 | 72 | 74 | 75 | 80 | 85 | 90 | 95 | 100 37 | 38 | 45 | 56 | 58 | 59 | 61 | 62 | 63 | 66 | 67 | 67 | 69 | 71 | 73 | 74 | 79 | 84 | 90 | 95 | 100 38 | 38 | 45 | 53 | 58 | 61 | 62 | 63 | 65 | 65 | 67 | 68 | 70 | 72 | 74 | 73 | 78 | 84 | 89 | 95 | 100 39 | 37 | 41 | 53 | 58 | 61 | 62 | 63 | 64 | 65 | 67 | 68 | 70 | 71 | 73 | 73 | 78 | 84 | 89 | 95 | 100 40 | 34 | 41 | 53 | 58 | 61 | 62 | 63 | 64 | 64 | 66 | 67 | 69 | 71 | 73 | 72 | 78 | 83 | 89 | 94 | 100

Male, Nonsmoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 41 | 34 | 41 | 53 | 58 | 61 | 61 | 62 | 62 | 63 | 65 | 65 | 67 | 69 | 71 | 71 | 77 | 83 | 88 | 94 | 100 42 | 34 | 43 | 53 | 58 | 60 | 61 | 62 | 61 | 61 | 63 | 64 | 66 | 67 | 69 | 71 | 77 | 83 | 88 | 94 | 100 43 | 32 | 43 | 53 | 58 | 60 | 61 | 60 | 60 | 60 | 60 | 62 | 64 | 66 | 68 | 69 | 75 | 81 | 88 | 94 | 100 44 | 32 | 44 | 52 | 57 | 59 | 60 | 60 | 59 | 59 | 58 | 60 | 62 | 65 | 67 | 69 | 75 | 81 | 88 | 94 | 100 45 | 32 | 44 | 52 | 57 | 59 | 60 | 59 | 57 | 57 | 57 | 59 | 61 | 63 | 66 | 68 | 74 | 81 | 87 | 94 | 100 46 | 32 | 42 | 50 | 54 | 56 | 57 | 57 | 56 | 55 | 56 | 59 | 61 | 63 | 65 | 67 | 74 | 80 | 87 | 93 | 100 47 | 30 | 40 | 48 | 52 | 54 | 55 | 55 | 54 | 54 | 55 | 59 | 61 | 62 | 63 | 66 | 73 | 80 | 86 | 93 | 100 48 | 30 | 40 | 46 | 49 | 51 | 52 | 53 | 53 | 54 | 55 | 57 | 61 | 62 | 63 | 63 | 70 | 78 | 85 | 93 | 100 49 | 29 | 39 | 43 | 48 | 50 | 51 | 50 | 51 | 53 | 54 | 57 | 61 | 61 | 62 | 62 | 70 | 77 | 85 | 92 | 100 50 | 29 | 37 | 42 | 45 | 47 | 48 | 49 | 50 | 51 | 54 | 57 | 61 | 61 | 61 | 61 | 69 | 77 | 84 | 92 | 100 51 | 27 | 35 | 40 | 43 | 45 | 47 | 48 | 50 | 51 | 53 | 57 | 60 | 61 | 61 | 62 | 70 | 77 | 85 | 92 | 100 52 | 27 | 34 | 39 | 42 | 44 | 45 | 48 | 49 | 50 | 53 | 56 | 60 | 60 | 62 | 62 | 70 | 77 | 85 | 100 | 100 53 | 25 | 31 | 37 | 41 | 44 | 45 | 47 | 49 | 50 | 51 | 56 | 59 | 61 | 61 | 62 | 70 | 77 | 100 | 100 | 100 54 | 25 | 30 | 36 | 39 | 43 | 44 | 47 | 48 | 49 | 51 | 55 | 59 | 59 | 61 | 62 | 70 | 100 | 100 | 100 | 100 55 | 24 | 29 | 35 | 38 | 42 | 43 | 45 | 48 | 49 | 50 | 56 | 58 | 59 | 61 | 62 | 100 | 100 | 100 | 100 | 100 56 | 23 | 29 | 35 | 38 | 42 | 42 | 44 | 47 | 48 | 50 | 55 | 57 | 58 | 59 | 100 | 100 | 100 | 100 | 100 | 100 57 | 23 | 28 | 35 | 38 | 42 | 42 | 43 | 45 | 47 | 49 | 53 | 55 | 56 | 100 | 100 | 100 | 100 | 100 | 100 | 100 58 | 22 | 28 | 33 | 37 | 41 | 41 | 43 | 45 | 45 | 47 | 51 | 53 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 59 | 22 | 26 | 33 | 37 | 41 | 41 | 42 | 44 | 44 | 46 | 50 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 60 | 20 | 26 | 33 | 37 | 41 | 40 | 41 | 42 | 42 | 45 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 61 | 20 | 26 | 33 | 37 | 41 | 40 | 41 | 42 | 42 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 62 | 19 | 25 | 32 | 38 | 40 | 40 | 41 | 42 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 63 | 19 | 25 | 33 | 36 | 40 | 40 | 41 | 75 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 64 | 18 | 24 | 32 | 36 | 39 | 40 | 75 | 75 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 65 | 18 | 24 | 32 | 36 | 39 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 66 | 18 | 24 | 32 | 36 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 67 | 18 | 24 | 32 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 68 | 18 | 24 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

69 | 18 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 70 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Male, Nonsmoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 71 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 72 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 73 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 74 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 75 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 76 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 77 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 78 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 79 | 48 | 52 | 55 | 60 | 60 | 65 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 80 | 48 | 52 | 55 | 60 | 60 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 81 | 48 | 52 | 55 | 60 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 82 | 48 | 52 | 55 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 83 | 48 | 52 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 84 | 48 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 85+ | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 0-15 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 16 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 17 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 18 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 19 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 20 | 98 | 100 | 100 | 100 | 100 | 100 | 100 | 99 | 99 | 99 | 100 | 99 | 99 | 99 | 100 | 100 | 100 | 100 | 100 | 100 21 | 95 | 98 | 99 | 100 | 95 | 96 | 96 | 95 | 96 | 97 | 97 | 96 | 96 | 96 | 96 | 97 | 98 | 98 | 99 | 100 22 | 92 | 95 | 96 | 90 | 90 | 93 | 93 | 92 | 93 | 95 | 95 | 93 | 93 | 92 | 93 | 94 | 96 | 97 | 99 | 100 23 | 90 | 92 | 85 | 88 | 88 | 89 | 89 | 89 | 90 | 90 | 90 | 90 | 89 | 90 | 92 | 94 | 95 | 97 | 98 | 100 24 | 87 | 81 | 82 | 85 | 84 | 86 | 88 | 86 | 86 | 88 | 88 | 86 | 86 | 88 | 89 | 91 | 93 | 96 | 98 | 100 25 | 77 | 78 | 79 | 82 | 81 | 83 | 83 | 82 | 83 | 85 | 84 | 84 | 84 | 85 | 86 | 89 | 92 | 94 | 97 | 100 26 | 75 | 77 | 79 | 82 | 82 | 83 | 83 | 82 | 83 | 84 | 84 | 84 | 84 | 85 | 81 | 85 | 89 | 92 | 96 | 100 27 | 73 | 75 | 78 | 82 | 82 | 83 | 83 | 82 | 82 | 82 | 82 | 84 | 84 | 80 | 81 | 85 | 89 | 92 | 96 | 100 28 | 71 | 73 | 79 | 82 | 81 | 82 | 83 | 81 | 81 | 82 | 82 | 82 | 80 | 80 | 81 | 85 | 89 | 92 | 96 | 100 29 | 69 | 72 | 78 | 81 | 81 | 82 | 82 | 81 | 81 | 81 | 81 | 77 | 80 | 80 | 81 | 85 | 89 | 92 | 96 | 100 30 | 68 | 71 | 78 | 81 | 81 | 81 | 82 | 81 | 81 | 81 | 76 | 77 | 80 | 80 | 81 | 85 | 89 | 92 | 96 | 100 31 | 65 | 70 | 77 | 81 | 79 | 81 | 82 | 81 | 81 | 76 | 77 | 79 | 81 | 81 | 83 | 86 | 90 | 93 | 97 | 100 32 | 63 | 67 | 77 | 78 | 79 | 81 | 81 | 81 | 76 | 77 | 77 | 80 | 83 | 83 | 85 | 88 | 91 | 94 | 97 | 100 33 | 60 | 65 | 74 | 78 | 79 | 79 | 81 | 76 | 77 | 77 | 79 | 80 | 83 | 85 | 85 | 88 | 91 | 94 | 97 | 100 34 | 57 | 62 | 74 | 77 | 79 | 79 | 75 | 76 | 77 | 79 | 79 | 81 | 83 | 85 | 87 | 90 | 92 | 95 | 97 | 100 35 | 53 | 60 | 73 | 77 | 79 | 75 | 75 | 76 | 77 | 79 | 80 | 82 | 84 | 86 | 88 | 90 | 93 | 95 | 98 | 100 36 | 52 | 59 | 71 | 75 | 74 | 75 | 75 | 76 | 77 | 79 | 79 | 81 | 83 | 85 | 87 | 90 | 92 | 95 | 97 | 100 37 | 49 | 58 | 70 | 71 | 74 | 74 | 75 | 76 | 77 | 78 | 79 | 81 | 84 | 86 | 86 | 89 | 92 | 94 | 97 | 100 38 | 48 | 55 | 66 | 70 | 72 | 74 | 74 | 75 | 76 | 78 | 79 | 81 | 83 | 85 | 87 | 90 | 92 | 95 | 97 | 100 39 | 45 | 50 | 65 | 70 | 72 | 72 | 74 | 74 | 75 | 77 | 79 | 81 | 84 | 86 | 86 | 89 | 92 | 94 | 97 | 100 40 | 41 | 49 | 63 | 68 | 71 | 72 | 73 | 74 | 74 | 76 | 78 | 80 | 83 | 85 | 86 | 89 | 92 | 94 | 97 | 100

Male, Smoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 41 | 40 | 49 | 63 | 68 | 71 | 72 | 72 | 72 | 73 | 75 | 76 | 78 | 81 | 84 | 85 | 88 | 91 | 94 | 97 | 100 42 | 40 | 49 | 62 | 68 | 70 | 71 | 71 | 71 | 71 | 73 | 75 | 76 | 81 | 83 | 85 | 88 | 91 | 94 | 97 | 100 43 | 39 | 50 | 62 | 67 | 69 | 69 | 70 | 70 | 70 | 71 | 73 | 76 | 79 | 83 | 85 | 88 | 91 | 94 | 97 | 100 44 | 39 | 50 | 60 | 66 | 68 | 69 | 68 | 69 | 69 | 69 | 71 | 74 | 79 | 81 | 85 | 88 | 91 | 94 | 97 | 100 45 | 37 | 50 | 60 | 66 | 68 | 68 | 68 | 67 | 67 | 67 | 69 | 73 | 78 | 81 | 85 | 88 | 91 | 94 | 97 | 100 46 | 37 | 48 | 58 | 63 | 65 | 67 | 66 | 66 | 66 | 67 | 71 | 74 | 78 | 81 | 84 | 87 | 90 | 94 | 97 | 100 47 | 36 | 47 | 55 | 61 | 63 | 64 | 64 | 64 | 65 | 67 | 71 | 75 | 79 | 81 | 84 | 87 | 90 | 94 | 97 | 100 48 | 35 | 46 | 53 | 58 | 60 | 62 | 63 | 63 | 65 | 67 | 72 | 75 | 79 | 81 | 83 | 86 | 90 | 93 | 97 | 100 49 | 34 | 45 | 51 | 56 | 58 | 59 | 61 | 62 | 63 | 67 | 72 | 77 | 80 | 81 | 83 | 86 | 90 | 93 | 97 | 100 50 | 34 | 43 | 49 | 53 | 55 | 57 | 60 | 61 | 63 | 67 | 73 | 78 | 80 | 81 | 81 | 85 | 89 | 92 | 96 | 100 51 | 32 | 42 | 47 | 52 | 55 | 57 | 60 | 61 | 63 | 67 | 73 | 78 | 80 | 83 | 84 | 87 | 90 | 94 | 97 | 100 52 | 32 | 40 | 46 | 50 | 54 | 56 | 60 | 61 | 63 | 67 | 73 | 78 | 81 | 84 | 85 | 88 | 91 | 94 | 100 | 100 53 | 30 | 37 | 44 | 49 | 54 | 56 | 59 | 61 | 65 | 67 | 74 | 79 | 83 | 85 | 87 | 90 | 92 | 100 | 100 | 100 54 | 30 | 36 | 43 | 48 | 53 | 55 | 59 | 61 | 65 | 67 | 74 | 80 | 84 | 85 | 89 | 91 | 100 | 100 | 100 | 100 55 | 29 | 35 | 42 | 47 | 53 | 55 | 59 | 61 | 65 | 67 | 75 | 80 | 84 | 86 | 90 | 100 | 100 | 100 | 100 | 100 56 | 28 | 35 | 42 | 47 | 53 | 55 | 57 | 60 | 63 | 68 | 74 | 79 | 83 | 85 | 100 | 100 | 100 | 100 | 100 | 100 57 | 28 | 35 | 42 | 47 | 53 | 54 | 57 | 60 | 64 | 67 | 74 | 78 | 81 | 100 | 100 | 100 | 100 | 100 | 100 | 100 58 | 26 | 33 | 43 | 48 | 54 | 54 | 56 | 59 | 63 | 67 | 73 | 78 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 59 | 26 | 33 | 43 | 48 | 54 | 53 | 57 | 59 | 63 | 66 | 73 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 60 | 25 | 33 | 43 | 48 | 54 | 53 | 56 | 58 | 62 | 66 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 61 | 25 | 33 | 43 | 49 | 55 | 55 | 57 | 59 | 63 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 62 | 25 | 33 | 43 | 50 | 56 | 56 | 58 | 61 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 63 | 24 | 33 | 45 | 51 | 56 | 56 | 59 | 75 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 64 | 24 | 34 | 45 | 51 | 57 | 57 | 75 | 75 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 65 | 24 | 34 | 45 | 52 | 57 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 66 | 24 | 35 | 45 | 53 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 67 | 25 | 35 | 45 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 68 | 25 | 36 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 69 | 27 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 70 | 48 | 52 | 55 | 60 | 60 | 65 | 70 | 70 | 70 | 70 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Male, Smoker Issue Duration

(d) Female, Aggregate Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 0-15 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 16 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 17 | 99 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 93 | 95 | 96 | 97 | 97 | 100 | 100 | 100 | 100 | 100 | 100 | 100 18 | 83 | 83 | 84 | 84 | 84 | 84 | 86 | 78 | 78 | 79 | 82 | 84 | 85 | 88 | 88 | 90 | 93 | 95 | 98 | 100 19 | 65 | 66 | 68 | 68 | 68 | 68 | 63 | 63 | 64 | 66 | 69 | 71 | 72 | 74 | 75 | 80 | 85 | 90 | 95 | 100 20 | 48 | 50 | 51 | 51 | 51 | 47 | 48 | 48 | 49 | 51 | 56 | 57 | 58 | 61 | 63 | 70 | 78 | 85 | 93 | 100 21 | 47 | 48 | 50 | 51 | 47 | 47 | 48 | 49 | 51 | 53 | 57 | 60 | 61 | 64 | 64 | 71 | 78 | 86 | 93 | 100 22 | 44 | 47 | 48 | 45 | 47 | 47 | 48 | 49 | 53 | 54 | 60 | 61 | 63 | 64 | 66 | 73 | 80 | 86 | 93 | 100 23 | 42 | 45 | 44 | 45 | 47 | 47 | 49 | 51 | 53 | 54 | 61 | 64 | 64 | 67 | 69 | 75 | 81 | 88 | 94 | 100 24 | 39 | 40 | 42 | 44 | 47 | 47 | 50 | 51 | 54 | 56 | 64 | 64 | 66 | 69 | 70 | 76 | 82 | 88 | 94 | 100 25 | 34 | 38 | 41 | 44 | 47 | 47 | 50 | 53 | 56 | 57 | 64 | 67 | 69 | 71 | 73 | 78 | 84 | 89 | 95 | 100 26 | 34 | 38 | 41 | 45 | 49 | 49 | 51 | 56 | 58 | 59 | 66 | 69 | 70 | 73 | 70 | 76 | 82 | 88 | 94 | 100 27 | 34 | 38 | 41 | 47 | 50 | 51 | 54 | 57 | 59 | 60 | 69 | 70 | 73 | 70 | 71 | 77 | 83 | 88 | 94 | 100 28 | 34 | 37 | 43 | 47 | 53 | 53 | 56 | 59 | 62 | 63 | 70 | 73 | 70 | 72 | 74 | 79 | 84 | 90 | 95 | 100 29 | 34 | 38 | 43 | 49 | 54 | 56 | 58 | 60 | 63 | 64 | 73 | 70 | 72 | 74 | 75 | 80 | 85 | 90 | 95 | 100 30 | 35 | 38 | 43 | 50 | 56 | 56 | 59 | 63 | 66 | 67 | 70 | 71 | 74 | 75 | 76 | 81 | 86 | 90 | 95 | 100 31 | 35 | 38 | 43 | 51 | 56 | 58 | 60 | 64 | 67 | 65 | 71 | 72 | 74 | 75 | 76 | 81 | 86 | 90 | 95 | 100 32 | 35 | 39 | 45 | 51 | 56 | 59 | 63 | 66 | 65 | 66 | 72 | 72 | 75 | 76 | 76 | 81 | 86 | 90 | 95 | 100 33 | 36 | 39 | 44 | 52 | 58 | 62 | 64 | 65 | 66 | 67 | 72 | 74 | 75 | 76 | 76 | 81 | 86 | 90 | 95 | 100 34 | 36 | 40 | 45 | 52 | 58 | 63 | 63 | 66 | 67 | 68 | 74 | 74 | 76 | 76 | 76 | 81 | 86 | 90 | 95 | 100 35 | 36 | 40 | 45 | 53 | 59 | 61 | 65 | 67 | 68 | 70 | 75 | 74 | 75 | 76 | 75 | 80 | 85 | 90 | 95 | 100 36 | 36 | 40 | 45 | 53 | 55 | 62 | 65 | 67 | 68 | 70 | 74 | 74 | 74 | 75 | 75 | 80 | 85 | 90 | 95 | 100 37 | 36 | 41 | 47 | 52 | 57 | 62 | 65 | 67 | 68 | 69 | 72 | 72 | 73 | 75 | 74 | 79 | 84 | 90 | 95 | 100 38 | 34 | 41 | 44 | 52 | 57 | 63 | 66 | 68 | 69 | 70 | 72 | 71 | 72 | 74 | 75 | 80 | 85 | 90 | 95 | 100 39 | 34 | 40 | 45 | 53 | 58 | 63 | 66 | 68 | 69 | 69 | 70 | 70 | 70 | 73 | 74 | 79 | 84 | 90 | 95 | 100 40 | 32 | 40 | 45 | 53 | 58 | 65 | 65 | 67 | 68 | 69 | 70 | 69 | 70 | 73 | 73 | 78 | 84 | 89 | 95 | 100

Female, Aggregate Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 41 | 32 | 40 | 45 | 53 | 57 | 63 | 64 | 67 | 68 | 68 | 69 | 69 | 69 | 73 | 74 | 79 | 84 | 90 | 95 | 100 42 | 32 | 40 | 45 | 52 | 56 | 61 | 63 | 65 | 66 | 68 | 69 | 68 | 70 | 74 | 75 | 80 | 85 | 90 | 95 | 100 43 | 31 | 39 | 45 | 51 | 55 | 59 | 61 | 65 | 65 | 66 | 68 | 69 | 69 | 74 | 77 | 82 | 86 | 91 | 95 | 100 44 | 31 | 39 | 45 | 50 | 54 | 58 | 61 | 63 | 64 | 66 | 67 | 68 | 71 | 75 | 78 | 82 | 87 | 91 | 96 | 100 45 | 31 | 38 | 44 | 49 | 53 | 56 | 59 | 62 | 63 | 65 | 67 | 68 | 71 | 77 | 79 | 83 | 87 | 92 | 96 | 100 46 | 29 | 37 | 43 | 48 | 51 | 54 | 59 | 62 | 63 | 65 | 67 | 69 | 71 | 77 | 78 | 82 | 87 | 91 | 96 | 100 47 | 28 | 35 | 41 | 46 | 49 | 54 | 57 | 61 | 62 | 66 | 68 | 69 | 71 | 77 | 77 | 82 | 86 | 91 | 95 | 100 48 | 28 | 35 | 41 | 44 | 49 | 52 | 57 | 61 | 63 | 66 | 68 | 71 | 72 | 75 | 77 | 82 | 86 | 91 | 95 | 100 49 | 26 | 34 | 39 | 43 | 47 | 52 | 55 | 61 | 63 | 67 | 69 | 71 | 72 | 75 | 75 | 80 | 85 | 90 | 95 | 100 50 | 25 | 32 | 38 | 41 | 46 | 50 | 55 | 61 | 63 | 67 | 69 | 72 | 72 | 75 | 74 | 79 | 84 | 90 | 95 | 100 51 | 25 | 32 | 38 | 41 | 45 | 50 | 55 | 61 | 63 | 66 | 68 | 69 | 71 | 74 | 74 | 79 | 84 | 90 | 95 | 100 52 | 23 | 30 | 36 | 41 | 45 | 51 | 56 | 61 | 62 | 65 | 66 | 68 | 68 | 73 | 73 | 78 | 84 | 89 | 100 | 100 53 | 23 | 30 | 36 | 41 | 47 | 51 | 56 | 61 | 62 | 63 | 65 | 66 | 68 | 72 | 72 | 78 | 83 | 100 | 100 | 100 54 | 22 | 29 | 35 | 41 | 47 | 53 | 57 | 61 | 61 | 62 | 62 | 66 | 66 | 69 | 70 | 76 | 100 | 100 | 100 | 100 55 | 22 | 29 | 35 | 41 | 47 | 53 | 57 | 61 | 61 | 61 | 62 | 63 | 64 | 68 | 69 | 100 | 100 | 100 | 100 | 100 56 | 22 | 29 | 35 | 41 | 45 | 51 | 56 | 59 | 60 | 61 | 62 | 63 | 64 | 67 | 100 | 100 | 100 | 100 | 100 | 100 57 | 22 | 29 | 35 | 41 | 45 | 50 | 54 | 56 | 58 | 59 | 61 | 62 | 63 | 100 | 100 | 100 | 100 | 100 | 100 | 100 58 | 22 | 30 | 36 | 41 | 44 | 49 | 53 | 56 | 57 | 57 | 61 | 62 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 59 | 22 | 30 | 36 | 41 | 44 | 48 | 51 | 53 | 55 | 56 | 59 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 60 | 22 | 30 | 36 | 41 | 43 | 47 | 50 | 51 | 53 | 55 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 61 | 22 | 29 | 35 | 39 | 42 | 46 | 49 | 50 | 52 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 62 | 20 | 28 | 33 | 39 | 41 | 45 | 47 | 49 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 63 | 20 | 28 | 33 | 38 | 41 | 44 | 46 | 80 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 64 | 19 | 27 | 32 | 36 | 40 | 42 | 80 | 80 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 65 | 19 | 25 | 30 | 35 | 39 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 66 | 19 | 25 | 30 | 35 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 67 | 19 | 25 | 30 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 68 | 19 | 25 | 68 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

69 | 19 | 64 | 68 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 70 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Female, Aggregate Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 71 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 72 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 73 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 74 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 75 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 76 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 77 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 78 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 79 | 60 | 60 | 64 | 68 | 68 | 72 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 80 | 60 | 60 | 64 | 68 | 68 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 81 | 60 | 60 | 64 | 68 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 82 | 60 | 60 | 64 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 83 | 60 | 60 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 84 | 60 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 85+ | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

(e) Female, Nonsmoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 0-15 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 16 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 17 | 96 | 98 | 98 | 98 | 98 | 99 | 99 | 99 | 92 | 92 | 93 | 95 | 95 | 97 | 99 | 99 | 99 | 100 | 100 | 100 18 | 78 | 80 | 80 | 80 | 80 | 81 | 81 | 74 | 75 | 75 | 78 | 79 | 82 | 83 | 85 | 88 | 91 | 94 | 97 | 100 19 | 60 | 62 | 63 | 63 | 63 | 65 | 59 | 59 | 60 | 60 | 64 | 67 | 67 | 70 | 72 | 78 | 83 | 89 | 94 | 100 20 | 42 | 44 | 45 | 45 | 45 | 42 | 42 | 42 | 45 | 45 | 50 | 51 | 53 | 56 | 58 | 66 | 75 | 83 | 92 | 100 21 | 41 | 42 | 44 | 45 | 41 | 42 | 42 | 44 | 47 | 47 | 51 | 53 | 54 | 57 | 59 | 67 | 75 | 84 | 92 | 100 22 | 39 | 41 | 44 | 41 | 41 | 42 | 44 | 45 | 49 | 49 | 54 | 56 | 57 | 58 | 60 | 68 | 76 | 84 | 92 | 100 23 | 38 | 41 | 38 | 40 | 41 | 42 | 44 | 46 | 49 | 50 | 56 | 57 | 58 | 60 | 62 | 70 | 77 | 85 | 92 | 100 24 | 36 | 36 | 38 | 40 | 41 | 42 | 46 | 47 | 50 | 51 | 58 | 59 | 60 | 62 | 63 | 70 | 78 | 85 | 93 | 100 25 | 32 | 34 | 37 | 40 | 41 | 43 | 46 | 49 | 51 | 53 | 59 | 60 | 62 | 63 | 64 | 71 | 78 | 86 | 93 | 100 26 | 32 | 34 | 37 | 41 | 43 | 45 | 47 | 50 | 53 | 53 | 60 | 62 | 63 | 64 | 62 | 70 | 77 | 85 | 92 | 100 27 | 32 | 34 | 38 | 43 | 46 | 47 | 49 | 51 | 53 | 55 | 62 | 63 | 64 | 62 | 62 | 70 | 77 | 85 | 92 | 100 28 | 30 | 34 | 39 | 43 | 47 | 49 | 51 | 53 | 56 | 58 | 63 | 63 | 61 | 62 | 63 | 70 | 78 | 85 | 93 | 100 29 | 30 | 35 | 40 | 45 | 50 | 51 | 52 | 55 | 58 | 59 | 64 | 61 | 62 | 63 | 63 | 70 | 78 | 85 | 93 | 100 30 | 31 | 35 | 40 | 46 | 51 | 52 | 53 | 56 | 59 | 60 | 62 | 62 | 63 | 65 | 65 | 72 | 79 | 86 | 93 | 100 31 | 31 | 35 | 40 | 46 | 51 | 53 | 55 | 58 | 60 | 58 | 62 | 62 | 63 | 65 | 65 | 72 | 79 | 86 | 93 | 100 32 | 32 | 35 | 40 | 45 | 51 | 53 | 56 | 59 | 57 | 58 | 62 | 63 | 63 | 65 | 64 | 71 | 78 | 86 | 93 | 100 33 | 32 | 36 | 41 | 47 | 52 | 55 | 58 | 55 | 58 | 59 | 63 | 63 | 65 | 65 | 65 | 72 | 79 | 86 | 93 | 100 34 | 33 | 36 | 41 | 47 | 52 | 55 | 55 | 57 | 58 | 59 | 63 | 65 | 64 | 65 | 64 | 71 | 78 | 86 | 93 | 100 35 | 33 | 36 | 41 | 47 | 52 | 53 | 57 | 58 | 59 | 61 | 63 | 64 | 64 | 64 | 64 | 71 | 78 | 86 | 93 | 100 36 | 33 | 36 | 41 | 47 | 49 | 53 | 57 | 58 | 59 | 61 | 63 | 64 | 63 | 64 | 63 | 70 | 78 | 85 | 93 | 100 37 | 32 | 36 | 41 | 44 | 49 | 53 | 57 | 58 | 59 | 60 | 62 | 62 | 61 | 62 | 63 | 70 | 78 | 85 | 93 | 100 38 | 32 | 37 | 39 | 45 | 50 | 54 | 57 | 58 | 60 | 60 | 61 | 61 | 61 | 62 | 61 | 69 | 77 | 84 | 92 | 100 39 | 30 | 35 | 39 | 45 | 50 | 54 | 57 | 58 | 60 | 59 | 60 | 60 | 59 | 60 | 61 | 69 | 77 | 84 | 92 | 100 40 | 28 | 35 | 39 | 45 | 50 | 54 | 56 | 57 | 59 | 59 | 60 | 59 | 59 | 59 | 60 | 68 | 76 | 84 | 92 | 100

Female, Nonsmoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 41 | 28 | 35 | 39 | 45 | 49 | 52 | 55 | 55 | 58 | 57 | 58 | 59 | 58 | 59 | 60 | 68 | 76 | 84 | 92 | 100 42 | 27 | 35 | 39 | 44 | 49 | 52 | 54 | 55 | 56 | 57 | 57 | 57 | 58 | 60 | 61 | 69 | 77 | 84 | 92 | 100 43 | 27 | 34 | 39 | 44 | 47 | 50 | 53 | 53 | 55 | 55 | 56 | 57 | 56 | 60 | 61 | 69 | 77 | 84 | 92 | 100 44 | 26 | 34 | 38 | 42 | 47 | 50 | 52 | 53 | 54 | 55 | 55 | 55 | 56 | 61 | 62 | 70 | 77 | 85 | 92 | 100 45 | 26 | 33 | 38 | 42 | 45 | 48 | 51 | 51 | 52 | 53 | 54 | 55 | 56 | 61 | 62 | 70 | 77 | 85 | 92 | 100 46 | 24 | 32 | 37 | 40 | 43 | 47 | 49 | 51 | 52 | 53 | 54 | 55 | 56 | 60 | 61 | 69 | 77 | 84 | 92 | 100 47 | 24 | 30 | 35 | 39 | 42 | 45 | 47 | 49 | 51 | 53 | 54 | 55 | 56 | 59 | 60 | 68 | 76 | 84 | 92 | 100 48 | 23 | 30 | 35 | 37 | 40 | 44 | 47 | 49 | 50 | 53 | 54 | 55 | 55 | 59 | 57 | 66 | 74 | 83 | 91 | 100 49 | 23 | 29 | 33 | 35 | 39 | 42 | 45 | 48 | 50 | 53 | 54 | 55 | 55 | 57 | 56 | 65 | 74 | 82 | 91 | 100 50 | 21 | 27 | 32 | 34 | 37 | 41 | 44 | 48 | 50 | 53 | 54 | 55 | 55 | 56 | 55 | 64 | 73 | 82 | 91 | 100 51 | 21 | 26 | 30 | 34 | 37 | 41 | 44 | 48 | 49 | 51 | 53 | 53 | 54 | 55 | 55 | 64 | 73 | 82 | 91 | 100 52 | 20 | 25 | 30 | 33 | 37 | 41 | 44 | 47 | 48 | 50 | 50 | 51 | 51 | 55 | 53 | 62 | 72 | 81 | 100 | 100 53 | 19 | 24 | 29 | 32 | 37 | 41 | 43 | 47 | 48 | 48 | 49 | 49 | 51 | 52 | 52 | 62 | 71 | 100 | 100 | 100 54 | 18 | 24 | 29 | 32 | 37 | 41 | 43 | 45 | 47 | 47 | 47 | 49 | 49 | 51 | 51 | 61 | 100 | 100 | 100 | 100 55 | 18 | 23 | 28 | 32 | 37 | 41 | 43 | 45 | 45 | 45 | 46 | 46 | 47 | 50 | 50 | 100 | 100 | 100 | 100 | 100 56 | 18 | 23 | 28 | 32 | 36 | 39 | 42 | 44 | 44 | 45 | 46 | 46 | 46 | 49 | 100 | 100 | 100 | 100 | 100 | 100 57 | 18 | 23 | 28 | 31 | 35 | 38 | 41 | 42 | 44 | 44 | 45 | 45 | 46 | 100 | 100 | 100 | 100 | 100 | 100 | 100 58 | 17 | 23 | 26 | 31 | 35 | 36 | 38 | 41 | 41 | 42 | 45 | 45 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 59 | 17 | 23 | 26 | 30 | 33 | 35 | 38 | 39 | 40 | 41 | 44 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 60 | 17 | 23 | 26 | 30 | 32 | 34 | 36 | 38 | 39 | 40 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 61 | 17 | 22 | 25 | 29 | 32 | 33 | 35 | 36 | 38 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 62 | 16 | 22 | 25 | 28 | 30 | 32 | 34 | 35 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 63 | 16 | 20 | 24 | 28 | 30 | 32 | 34 | 80 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 64 | 14 | 21 | 24 | 27 | 29 | 30 | 80 | 80 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 65 | 15 | 19 | 23 | 25 | 28 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 66 | 15 | 19 | 23 | 25 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 67 | 15 | 19 | 22 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 68 | 13 | 18 | 68 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 69 | 13 | 64 | 68 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 70 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Female, Nonsmoker Issue Duration

(f) Female, Smoker Issue Duration Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 0-15 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 16 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 17 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 18 | 99 | 100 | 100 | 100 | 100 | 100 | 100 | 95 | 96 | 97 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 19 | 87 | 89 | 92 | 92 | 92 | 92 | 84 | 84 | 86 | 86 | 92 | 93 | 95 | 96 | 99 | 99 | 99 | 100 | 100 | 100 20 | 74 | 77 | 80 | 80 | 80 | 73 | 73 | 73 | 75 | 77 | 83 | 83 | 86 | 88 | 90 | 92 | 94 | 96 | 98 | 100 21 | 71 | 74 | 78 | 78 | 71 | 71 | 73 | 74 | 77 | 79 | 85 | 86 | 88 | 89 | 90 | 92 | 94 | 96 | 98 | 100 22 | 68 | 71 | 75 | 70 | 71 | 71 | 73 | 74 | 78 | 79 | 88 | 90 | 89 | 89 | 92 | 94 | 95 | 97 | 98 | 100 23 | 65 | 69 | 67 | 70 | 70 | 70 | 73 | 77 | 79 | 81 | 89 | 90 | 90 | 92 | 92 | 94 | 95 | 97 | 98 | 100 24 | 62 | 60 | 64 | 69 | 70 | 70 | 74 | 77 | 79 | 81 | 92 | 90 | 92 | 93 | 93 | 94 | 96 | 97 | 99 | 100 25 | 53 | 58 | 63 | 67 | 69 | 70 | 74 | 78 | 81 | 82 | 92 | 93 | 93 | 95 | 95 | 96 | 97 | 98 | 99 | 100 26 | 53 | 58 | 63 | 69 | 71 | 72 | 75 | 79 | 82 | 82 | 93 | 93 | 95 | 96 | 90 | 92 | 94 | 96 | 98 | 100 27 | 52 | 56 | 63 | 70 | 74 | 74 | 78 | 81 | 82 | 84 | 93 | 95 | 95 | 90 | 90 | 92 | 94 | 96 | 98 | 100 28 | 52 | 56 | 64 | 71 | 75 | 77 | 79 | 82 | 85 | 86 | 95 | 95 | 90 | 92 | 92 | 94 | 95 | 97 | 98 | 100 29 | 51 | 56 | 64 | 71 | 78 | 78 | 81 | 84 | 86 | 88 | 95 | 90 | 90 | 92 | 92 | 94 | 95 | 97 | 98 | 100 30 | 51 | 56 | 64 | 72 | 79 | 79 | 82 | 85 | 88 | 89 | 90 | 90 | 92 | 93 | 93 | 94 | 96 | 97 | 99 | 100 31 | 51 | 56 | 64 | 72 | 78 | 81 | 84 | 84 | 88 | 84 | 90 | 90 | 92 | 93 | 93 | 94 | 96 | 97 | 99 | 100 32 | 51 | 56 | 64 | 71 | 78 | 81 | 85 | 86 | 84 | 85 | 90 | 90 | 92 | 94 | 93 | 94 | 96 | 97 | 99 | 100 33 | 51 | 57 | 62 | 71 | 78 | 82 | 85 | 83 | 84 | 85 | 90 | 92 | 93 | 93 | 93 | 94 | 96 | 97 | 99 | 100 34 | 51 | 56 | 62 | 71 | 78 | 82 | 81 | 83 | 85 | 86 | 90 | 92 | 92 | 94 | 93 | 94 | 96 | 97 | 99 | 100 35 | 51 | 56 | 62 | 71 | 78 | 79 | 83 | 84 | 85 | 86 | 90 | 91 | 91 | 93 | 93 | 94 | 96 | 97 | 99 | 100 36 | 49 | 56 | 62 | 71 | 74 | 79 | 83 | 84 | 85 | 86 | 90 | 90 | 91 | 93 | 92 | 94 | 95 | 97 | 98 | 100 37 | 48 | 55 | 62 | 67 | 74 | 79 | 83 | 84 | 85 | 86 | 89 | 90 | 89 | 92 | 91 | 93 | 95 | 96 | 98 | 100 38 | 47 | 55 | 57 | 66 | 72 | 77 | 81 | 84 | 86 | 86 | 87 | 88 | 88 | 90 | 91 | 93 | 95 | 96 | 98 | 100 39 | 45 | 50 | 57 | 66 | 72 | 77 | 81 | 83 | 85 | 86 | 86 | 87 | 86 | 89 | 90 | 92 | 94 | 96 | 98 | 100 40 | 41 | 50 | 57 | 66 | 72 | 77 | 81 | 83 | 84 | 85 | 86 | 86 | 86 | 89 | 89 | 91 | 93 | 96 | 98 | 100

Female, Smoker Issue Duration

Age | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20+ 41 | 40 | 50 | 57 | 65 | 71 | 76 | 79 | 81 | 83 | 84 | 85 | 86 | 85 | 89 | 90 | 92 | 94 | 96 | 98 | 100 42 | 40 | 49 | 57 | 65 | 69 | 74 | 77 | 80 | 82 | 83 | 84 | 85 | 86 | 90 | 92 | 94 | 95 | 97 | 98 | 100 43 | 39 | 49 | 55 | 63 | 69 | 73 | 76 | 78 | 80 | 82 | 83 | 84 | 85 | 92 | 93 | 94 | 96 | 97 | 99 | 100 44 | 39 | 48 | 55 | 62 | 67 | 71 | 75 | 78 | 80 | 80 | 82 | 84 | 86 | 93 | 96 | 97 | 98 | 98 | 99 | 100 45 | 37 | 47 | 55 | 61 | 65 | 70 | 73 | 76 | 78 | 80 | 81 | 84 | 86 | 94 | 97 | 98 | 98 | 99 | 99 | 100 46 | 36 | 46 | 53 | 59 | 63 | 68 | 71 | 75 | 77 | 79 | 83 | 85 | 86 | 93 | 96 | 97 | 98 | 98 | 99 | 100 47 | 34 | 44 | 51 | 57 | 62 | 66 | 70 | 75 | 77 | 80 | 83 | 85 | 86 | 93 | 94 | 95 | 96 | 98 | 99 | 100 48 | 34 | 44 | 50 | 54 | 60 | 64 | 69 | 74 | 77 | 80 | 84 | 86 | 87 | 92 | 92 | 94 | 95 | 97 | 98 | 100 49 | 33 | 42 | 48 | 53 | 58 | 63 | 68 | 74 | 77 | 81 | 84 | 86 | 87 | 92 | 91 | 93 | 95 | 96 | 98 | 100 50 | 31 | 41 | 46 | 51 | 57 | 61 | 67 | 74 | 77 | 81 | 85 | 87 | 87 | 91 | 90 | 92 | 94 | 96 | 98 | 100 51 | 30 | 39 | 45 | 51 | 56 | 61 | 67 | 74 | 75 | 80 | 83 | 85 | 85 | 90 | 90 | 92 | 94 | 96 | 98 | 100 52 | 29 | 38 | 45 | 50 | 56 | 62 | 68 | 74 | 75 | 79 | 81 | 83 | 84 | 90 | 90 | 92 | 94 | 96 | 100 | 100 53 | 28 | 37 | 43 | 49 | 57 | 62 | 68 | 73 | 74 | 77 | 79 | 81 | 83 | 89 | 89 | 91 | 93 | 100 | 100 | 100 54 | 28 | 36 | 43 | 49 | 57 | 63 | 69 | 73 | 74 | 75 | 78 | 80 | 81 | 87 | 89 | 91 | 100 | 100 | 100 | 100 55 | 26 | 35 | 42 | 49 | 57 | 63 | 69 | 73 | 73 | 74 | 76 | 78 | 79 | 86 | 87 | 100 | 100 | 100 | 100 | 100 56 | 26 | 35 | 42 | 49 | 56 | 62 | 67 | 71 | 72 | 74 | 76 | 78 | 79 | 85 | 100 | 100 | 100 | 100 | 100 | 100 57 | 26 | 35 | 42 | 49 | 55 | 61 | 66 | 69 | 72 | 73 | 76 | 78 | 79 | 100 | 100 | 100 | 100 | 100 | 100 | 100 58 | 28 | 36 | 43 | 49 | 55 | 59 | 63 | 68 | 69 | 72 | 76 | 78 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 59 | 28 | 36 | 43 | 49 | 54 | 57 | 63 | 67 | 68 | 70 | 76 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 60 | 28 | 36 | 43 | 49 | 53 | 57 | 61 | 64 | 67 | 69 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 61 | 26 | 35 | 42 | 48 | 52 | 56 | 59 | 63 | 66 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 62 | 26 | 33 | 41 | 47 | 51 | 55 | 58 | 62 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 63 | 25 | 33 | 41 | 46 | 51 | 55 | 57 | 80 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 64 | 25 | 33 | 40 | 45 | 50 | 53 | 80 | 80 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 65 | 24 | 32 | 39 | 44 | 49 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 66 | 24 | 32 | 39 | 44 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 67 | 24 | 32 | 39 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 68 | 24 | 32 | 68 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 69 | 24 | 64 | 68 | 72 | 72 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 70 | 60 | 60 | 64 | 68 | 68 | 72 | 75 | 75 | 80 | 80 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100

Female, Smoker Issue Duration

History

Authorizing statute(s): 33-1-313, 33-2-418, MCA
Implementing statute(s): 33-2-407, 33-2-408, 33-2-409, 33-2-410, 33-2-411, 33-2-412, 33-2-413, 33-2-414, 33-2-415, 33-2-416, 33-2-417, MCA
History: NEW, 1999 MAR p. 2839, Eff. 1/1/00; AMD, 2012 MAR p. 304, Eff. 2/10/12; AMD, 2018 MAR p. 826, Eff. 4/28/18.

Mont. Admin. R. 6.6.6720 Purpose and Intent

(1) The purpose and intent of ARM 6.6.6720 through 6.6.6727 is to establish uniform, national standards governing reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums, guaranteed nonlevel benefits and universal life insurance policies with secondary guarantees; and to ensure that, with respect to each such financing arrangement, funds consisting of primary security and other security, as defined in ARM 6.6.6723, are held by or on behalf of ceding insurers in the forms and amounts required herein.

(2) In general, reinsurance ceded for reserve financing purposes has one or more of the following characteristics:

(a) some or all of the assets used to secure the reinsurance treaty or to capitalize the reinsurer:

(i) are issued by the ceding insurer or its affiliates; or

(ii) are not unconditionally available to satisfy the general account obligations of the ceding insurer; or

(iii) create a reimbursement, indemnification, or other similar obligation on the part of the ceding insurer or any of its affiliates (other than a payment obligation under a derivative contract acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty).

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6721 Applicability

(1) ARM 6.6.6720 through 6.6.6727 pertain to all covered policies, in force as of and after September 1, 2022.

(2) ARM 6.6.6720 through 6.6.6727 shall apply to reinsurance treaties that cede liabilities pertaining to covered policies, as that term is defined in ARM 6.6.6723, issued by any life insurance company domiciled in this state. ARM 6.6.6720 through 6.6.6727 and ARM Title 6, chapter, 6, subchapter 38 shall apply to such reinsurance treaties, provided that in the event of a direct conflict between ARM 6.6.6720 through 6.6.6727 and ARM Title 6, chapter, 6, subchapter 38, ARM 6.6.6720 through 6.6.6727 shall apply, but only to the extent of the conflict.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6722 Exemptions

(1) ARM 6.6.6720 through 6.6.6727 do not apply to the situations described below:

(a) reinsurance of:

(i) Policies that satisfy the criteria for exemption set forth in ARM 6.6.6709(5) and (6) and (11) through (13) or ARM 6.6.6709(14), and which are issued before the later of:

(A) September 1, 2022; and

(B) The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies' statutory reserves, but in no event later than January 1, 2020;

(ii) Portions of policies that satisfy the criteria for exemption set forth in ARM 6.6.6709(7) through (10) and which are issued before the later of:

(A) September 1, 2022; and

(B) The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies' statutory reserves, but in no event later than January 1, 2020;

(iii) Any universal life policy that meets all of the following requirements:

(A) Secondary guarantee period, if any, is five years or less;

(B) Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the commissioners standard ordinary (CSO) valuation tables and valuation interest rate applicable to the issue year of the policy; and

(C) The initial surrender charge is not less than 100% of the first year annualized specified premium for the secondary guarantee period;

(iv) Credit life insurance;

(v) Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; or

(vi) Any group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

(b) Reinsurance ceded to an assuming insurer that meets the applicable requirements of 33-2-1216(5), MCA; or

(c) Reinsurance ceded to an assuming insurer that meets the applicable requirements of 33-2-1216(2), (3), or (4), MCA, and that, in addition:

(i) Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual, without any departures from NAIC statutory accounting practices and procedures pertaining to the admissibility or valuation of assets or liabilities that increase the assuming insurer's reported surplus and are material enough that they need to be disclosed in the financial statement of the assuming insurer pursuant to Statement of Statutory Accounting Principles No. 1 (SSAP 1); and

(ii) Is not in a company action level event, regulatory action level event, authorized control level event, or mandatory control level event as those terms are defined in Title 33, chapter 2, part 19, MCA, when its RBC is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation; or

(d) Reinsurance ceded to an assuming insurer that meets the applicable requirements of 33-2-1216(2), (3), or (4), MCA, and that, in addition:

(i) Is not an affiliate, as that term is defined in 33-2-1101, MCA, of:

(A) The insurer ceding the business to the assuming insurer; or

(B) Any insurer that directly or indirectly ceded the business to that ceding insurer;

(ii) Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual;

(iii) Is both:

(A) Licensed or accredited in at least 10 states (including its state of domicile); and

(B) Not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensing regime; and

(iv) Is not, or would not be, below 500% of the authorized control level RBC as that term is defined in Title 33, chapter 2, part 19, MCA, when its risk-based capital (RBC) is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation, and without recognition of any departures from NAIC statutory accounting practices and procedures pertaining to the admission or valuation of assets or liabilities that increase the assuming insurer's reported surplus; or

(e) Reinsurance ceded to an assuming insurer that satisfies one of the following requirements:

(i) meets the conditions set forth in 33-2-1216(7), MCA; or

(ii) is certified in this state as a reinsurer pursuant to 33-2-1216(6), MCA; or

(iii) maintains at least $250 million in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, excluding the impact of any permitted or prescribed practices and:

(A) is licensed in at least 26 states; or

(B) is licensed in at least 10 states, and licensed or accredited in a total of at least 35 states; or

(f) Reinsurance not otherwise exempt under (a) through (e) of this rule if the commissioner, after consulting with the NAIC Financial Analysis Working Group (FAWG) or other group of regulators designated by the NAIC, as applicable, determines under all the facts and circumstances that all of the following apply:

(i) The risks are clearly outside of the intent and purpose of ARM 6.6.6720 through 6.6.6727 (as described in ARM 6.6.6720(2));

(ii) The risks are included within the scope of ARM 6.6.6720 through 6.6.6727 only as a technicality; and

(iii) The application of ARM 6.6.6720 through 6.6.6727 to those risks is not necessary to provide appropriate protection to policyholders. The commissioner shall publicly disclose any decision made pursuant to this provision to exempt a reinsurance treaty from ARM 6.6.6720 through 6.6.6727, as well as the general basis therefor (including a summary description of the treaty).

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6723 Definitions

For purposes of ARM 6.6.6720 through 6.6.6727:

(1) "Actuarial method" means the methodology used to determine the required level of primary security, as described in ARM 6.6.6725.

(2) "Covered policies" means, subject to the exemptions described in ARM 6.6.6722, those policies, other than grandfathered policies, of the following types:

(a) Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or,

(b) Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

(3) "Grandfathered policies" means policies of the types described in (2) that were:

(a) issued prior to January 1, 2015; and

(b) ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in ARM 6.6.6722 had that rule then been in effect.

(4) "Non-Covered policies" means any policy that does not meet the definition of covered policies, including grandfathered policies.

(5) "Required level of primary security" means the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.

(6) "Primary security" means the following forms of security:

(a) cash;

(b) securities listed by the securities valuation office meeting the requirements of 33-2-1217(2)(b), MCA, but excluding any synthetic letter of credit, contingent note, credit-linked note, or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(i) commercial loans in good standing of CM3 quality and higher;

(ii) policy loans; and

(iii) derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

(7) "Other security" means any security acceptable to the commissioner other than security meeting the definition of primary security.

(8) "Valuation manual" means the valuation manual adopted by the NAIC as described in 33-2-402 and 33-2-403, MCA, and in ARM 6.6.4501 that are effective for the financial statement date on which credit for reinsurance is claimed.

(9) "VM-20 means "Requirements for Principle-Based Reserves for Life Products," including all relevant definitions, from the Valuation Manual.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6724 The Actuarial Method

(1) The actuarial method to establish the required level of primary security for each reinsurance treaty subject to ARM 6.6.6720 through 6.6.6727 shall be VM-20, applied on a treaty-by-treaty basis, including all relevant definitions, from the Valuation Manual as then in effect, applied as follows:

(a) For covered policies described in ARM 6.6.6723(2)(a), the actuarial method is the greater of the deterministic reserve or the net premium reserve (NPR) regardless of whether the criteria for exemption testing can be met. However, if the covered policies do not meet the requirements of the stochastic reserve exclusion test in the Valuation Manual, then the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the NPR. In addition, if such covered policies are reinsured in a reinsurance treaty that also contains covered policies described in ARM 6.6.6723(2)(b), the ceding insurer may elect to instead use (1)(b) below as the actuarial method for the entire reinsurance agreement. Whether (1)(a) or (1)(b) are used, the actuarial method must comply with any requirements or restrictions that the Valuation Manual imposes when aggregating these policy types for purposes of principle-based reserve calculations.

(b) For covered policies described in ARM 6.6.6723(2)(b), the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the NPR regardless of whether the criteria for exemption testing can be met.

(c) Except as provided in (a), the actuarial method is to be applied on a gross basis to all risks with respect to the covered policies as originally issued or assumed by the ceding insurer.

(d) If the reinsurance treaty cedes less than 100% of the risk with respect to the covered policies then the required level of primary security may be reduced as follows:

(i) If a reinsurance treaty cedes only a quota share of some or all of the risks pertaining to the covered policies, the required level of primary security, as well as any adjustment under (iii) below, may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;

(ii) If the reinsurance treaty in a non-exempt arrangement cedes only the risks pertaining to a secondary guarantee, the required level of primary security may be reduced by an amount determined by applying the actuarial method on a gross basis to all risks, other than risks related to the secondary guarantee, pertaining to the covered policies, except that for covered policies for which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the required level of primary security may be reduced by the statutory reserve retained by the ceding insurer on those covered policies, where the retained reserve of those covered policies should be reflective of any reduction pursuant to the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;

(iii) If a portion of the covered policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the required level of primary security may be reduced by the amount resulting by applying the actuarial method including the reinsurance section of VM-20 to the portion of the covered policy risks ceded in the exempt arrangement, except that for covered policies issued prior to January 1, 2017, this adjustment is not to exceed [c x / (2 * number of reinsurance premiums per year)] where c x is calculated using the same mortality table used in calculating the net premium reserve ; and

(iv) For any other treaty ceding a portion of risk to a different reinsurer, including but not limited to stop loss, excess of loss, and other non-proportional reinsurance treaties, there will be no reduction in the required level of primary security.

(e) It is possible for any combination of (d)(i), (ii), (iii), and (iv) above to apply. Such adjustments to the required level of primary security will be done in the sequence that accurately reflects the portion of the risk ceded via the treaty. The ceding insurer should document the rationale and steps taken to accomplish the adjustments to the required level of primary security due to the cession of less than 100% of the risk.

(f) The adjustments for other reinsurance will be made only with respect to reinsurance treaties entered into directly by the ceding insurer. The ceding insurer will make no adjustment as a result of a retrocession treaty entered into by the assuming insurers.

(g) If a reinsurance treaty subject to ARM 6.6.6720 through 6.6.6727 cedes risk on both covered and non-covered policies, credit for the ceded reserves shall be determined as follows:

(i) The actuarial method shall be used to determine the required level of primary security for the covered policies, and ARM 6.6.6725 shall be used to determine the reinsurance credit for the covered policy reserves; and

(ii) Credit for the non-covered policy reserves shall be granted only to the extent that security, in addition to the security held to satisfy the requirements of (i) above, is held by or on behalf of the ceding insurer in accordance with 33-2-1216 and 33-2-1217, MCA. Any primary security used to meet the requirements of this subsection may not be used to satisfy the required level of primary security for the covered policies.

(h) In no event will the required level of primary security resulting from application of the actuarial method exceed the amount of statutory reserves ceded.

(i) If the ceding insurer cedes risks with respect to covered policies, including any riders, in more than one reinsurance treaty subject to ARM 6.6.6720 through 6.6.6727, in no event will the aggregate required level of primary security for those reinsurance treaties be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those treaties were ceded in a single treaty subject to ARM 6.6.6720 through 6.6.6727.

(2) For the purposes of both calculating the required level of primary security pursuant to the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following shall apply:

(a) For assets, including any such assets held in trust, that would be admitted under the NAIC Accounting Practices and Procedures Manual if they were held by the ceding insurer, the valuations are to be determined according to statutory accounting procedures as if such assets were held in the ceding insurer's general account and without taking into consideration the effect of any prescribed or permitted practices; and

(b) For all other assets, the valuations are to be those that were assigned to the assets for the purpose of determining the amount of reserve credit taken. The tables of asset spreads and asset default costs shall be incorporated into the actuarial method in the manner specified in VM-20.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6725 Requirements Applicable to Covered Policies to Obtain Credit for Reinsurance; Opportunity for Remediation

(1) Subject to the exemptions described in ARM 6.6.6722 and the provisions of (2) below, credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to covered policies pursuant to 33-2-1216 or 33-2-1217, MCA, if, and only if, in addition to all other requirements imposed by law or regulation, the following requirements are met on a treaty-by-treaty basis:

(a) The ceding insurer's statutory policy reserves with respect to the covered policies are established in full and in accordance with the applicable requirements of Title 33, chapter 2, part 4, MCA, and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to ARM 6.6.6720 through 6.6.6727 does not exceed the proportionate share of those reserves ceded under the contract; and

(b) The ceding insurer determines the required level of primary security with respect to each reinsurance treaty subject to ARM 6.6.6720 through 6.6.6727 and provides support for its calculation as determined to be acceptable to the commissioner; and

(c) Funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of 33-2-1217, MCA, on a funds-withheld, trust, or modified coinsurance basis; and

(d) Funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held pursuant to (1)(c) above, are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of 33-2-1217, MCA; and

(e) Any trust used to satisfy the requirements of this rule shall comply with all of the conditions and qualifications of trusts set forth in ARM Title 6, chapter 6, subchapter 38, except that:

(i) Funds consisting of primary security or other security held in trust, shall for the purposes identified in ARM 6.6.6724(2), be valued according to the valuation rules set forth in ARM 6.6.6724(2), as applicable; and

(ii) There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of (1)(c) above; and

(iii) The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security within the trust (when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner required by (1)(c)) below 102% of the level required by (1)(c) at the time of the withdrawal or substitution; and

(iv) The determination of reserve credit under ARM 6.6.3862 shall be determined according to the valuation rules set forth in ARM 6.6.6724(2), as applicable; and

(f) The reinsurance treaty has been approved by the commissioner.

(2) Requirements at inception date and on an ongoing basis, and remediation, are as follows:

(a) The requirements of (1) must be satisfied as of the date that risks under covered policies are ceded (if such date is on or after September 1, 2022) and on an ongoing basis thereafter. Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under (1)(c) or (1)(d) with respect to any reinsurance treaty under which covered policies have been ceded, and in the event that a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.

(b) Prior to the due date of each quarterly or annual statement, each life insurance company that has ceded reinsurance within the scope of ARM 6.6.6721 shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which covered policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of (1)(c) and (1)(d) were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held pursuant to (1)(c), unless either:

(i) The requirements of (1)(c) and (1)(d) were fully satisfied as of the valuation date as to such reinsurance treaty; or

(ii) Any deficiency has been eliminated before the due date of the quarterly or annual statement to which the valuation date relates through the addition of primary security and/or other security, as the case may be, in such amount and in such form as would have caused the requirements of (1)(c) and (1)(d) to be fully satisfied as of the valuation date.

(c) Nothing in (2)(b) above shall be construed to allow a ceding company to maintain any deficiency under (1)(c) and (1)(d) for any period of time longer than is reasonably necessary to eliminate it.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6726 Prohibition Against Avoidance

(1) No insurer that has covered policies as to which ARM 6.6.6720 through 6.6.6727 apply (as set forth in ARM 6.6.6721) shall take any action or series of actions, or enter into any transaction or arrangement or series of transactions or arrangements if the purpose of such action, transaction, or arrangement or series thereof is to avoid the requirements of ARM 6.6.6720 through 6.6.6727, or to circumvent their purpose and intent, as set forth in ARM 6.6.6720.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Mont. Admin. R. 6.6.6727 Severability

(1) If any provision of ARM 6.6.6720 through 6.6.6727 is held invalid, the remainder shall not be affected.

History

Authorizing statute(s): 33-1-313, 33-2-1517, MCA
Implementing statute(s): 33-2-1216, 33-2-1217, MCA
History: NEW, 2022 MAR p. 1691, Eff. 9/1/22.

Subchapter 6.6.68 Formation and Regulation of Captive Insurance Companies

Mont. Admin. R. 6.6.6801 Purpose

(1) The purpose of these rules is to set forth the financial and reporting requirements which the commissioner deems necessary for the regulation of captive insurance companies, as authorized by 33-28-206 , MCA.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-102, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6802 Definitions

For purposes of these rules:

(1) "Company" means captive insurance company or companies, unless otherwise specified.

(2) "Commissioner" means the Commissioner of Securities and Insurance, Montana State Auditor.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-101, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2011 MAR p. 2516, Eff. 11/26/11.

Mont. Admin. R. 6.6.6803 Organizational Examination

(1) In addition to processing the application, the commissioner may perform an organizational investigation or examination before an applicant is licensed as a captive insurance company. This investigation or examination may consist of a general survey of the applicant's corporate records, including but not limited to:

(a) its charter, bylaws and minute books;

(b) verification of capital and surplus;

(d) determination of assets and liabilities; and

(e) a review of such other factors, as the commissioner deems necessary.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-102, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6804 Additional Security

(1) If the commissioner deems that the financial condition of the company warrants additional security, the commissioner may require the company to deposit through the State Auditor's Office in the manner described in 33-2-604, MCA, cash or securities approved by the commissioner or, alternatively, to furnish the commissioner a clean irrevocable letter of credit issued by a bank chartered by the state of Montana or by a member of the bank of the federal reserve system and approved by the commissioner.

(2) The company may receive interest or dividends from the deposit, or exchange the deposits for other of equal value with the prior approval of the commissioner.

(3) If the company discontinues business, the commissioner shall return the deposit only after the commissioner is satisfied that all obligations of the company have been discharged.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-104, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2011 MAR p. 2516, Eff. 11/26/11.

Mont. Admin. R. 6.6.6805 Permitted Reinsurance

(1) A captive insurance company authorized to do business in this state may take credit for reserves on risks ceded to a reinsurer subject to the following conditions:

(a) no credit is allowed for reinsurance if the reinsurance contract does not result in the complete transfer of the risk or liability to the reinsurer;

(b) no credit shall be allowed, as an asset or deduction from liability, to any ceding insurer for reinsurance unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding insurer under the contract reinsured without diminution because of the insolvency of the ceding insurer;

(c) reinsurance must be effected through a written agreement of reinsurance setting forth the terms, provisions and conditions governing the reinsurance; and

(d) the commissioner may require that complete copies of all reinsurance treaties and contracts be filed and/or approved by him.

(2) Credit for reinsurance of captive risk retention groups shall be permitted if reinsurer complies with 33-2-1216, MCA.

(3) If a captive risk retention group does not qualify for reinsurance under (2), credit for reinsurance may still be permitted if the reinsurer:

(a) maintains an A- or higher A.M. Best rating, or other comparable rating from a nationally recognized statistical rating organization;

(b) maintains a minimum surplus as regards policyholders in an amount acceptable to the commissioner based upon a review of the reinsurer's most recent audited financial statements; and

(4) If a captive risk retention group does not qualify for reinsurance under (2) or (3), credit for reinsurance may still be permitted if the reinsurer satisfies all of the following requirements and any other requirements deemed necessary by the commissioner:

(a) the risk retention group licensed as a captive insurer shall file the reinsurer's audited financial statements. The commissioner shall analyze these statements for appropriateness of the reserve credit, and the initial and continued financial condition of the reinsurer. The statements shall be filed:

(i) annually;

(ii) at the request of the commissioner; or

(iii) if the risk retention group thinks it appropriate, more often.

(b) the reinsurer shall demonstrate to the satisfaction of the commissioner that it maintains a ratio of net written premium, wherever written, to surplus as regards policyholders of not more than 3 to 1;

(c) the affiliated reinsurer shall not write third-party business without obtaining prior written approval from the commissioner;

(d) the reinsurer shall not use cell arrangements without obtaining approval from the commissioner;

(e) the reinsurer shall be licensed and domiciled in a jurisdiction acceptable to the commissioner; and

(f) the reinsurer shall submit to the examination authority of the commissioner.

(5) Risk retention groups shall not receive statement credit if:

(a) all policies are ceded through 100% reinsurance arrangements; or

(b) the commissioner requires a maximum ceded reinsurance percentage of less than 100% and the risk retention group exceeds the approved percentage. The portion within the approved amount may still qualify for state credit if the reinsurer is eligible under (2), (3), or (4).

(6) The commissioner shall require:

(a) a reinsurer not domiciled in the U.S. to include language in the reinsurance agreement that states that in the event of the reinsurer's failure to perform its obligations under the terms of its reinsurance agreement, it shall submit to the jurisdiction of any court of competent jurisdiction in the U.S.; or

(b) for credit for reinsurance and solvency regulatory purposes, the commissioner may require any of the following collateral:

(i) an approved funds-held agreement;

(ii) letter of credit; or

(iii) trust or other acceptable collateral based on paid losses, unearned premium, and LAE reserves.

(7) Upon application, the commissioner may waive the reinsurance requirements of (4)(b) in circumstances where the risk retention group licensed as a captive insurer or reinsurer can demonstrate to the satisfaction of the commissioner that the reinsurer:

(a) is sufficiently capitalized based upon an annual review of the reinsurer's most recent audited financial statements;

(b) the reinsurer is licensed and domiciled in a jurisdiction satisfactory to the commissioner; and

(c) the proposed reinsurance agreement adequately protects the risk retention group licensed as a captive insurer and its policyholders. Any such waiver should be included in the plan of operation, or any subsequent revision or amendment of the plan, pursuant to Section 3902(d)(1) of the Federal Liability Risk Retention Act of 1986, and the plan must be submitted by the risk retention group licensed as a captive insurer to the commissioner of its state of domicile and each state in which the risk retention group licensed as a captive insurer intends to do business, or is currently registered. Any such waiver of (4) requirement constitutes a change in the risk retention group's plan of operation in each of those states.

(8) Upon application, the commissioner may waive either of the reinsurance requirements in (6) in circumstances where the risk retention group licensed as a captive insurer or reinsurer can demonstrate to the satisfaction of the commissioner that:

(a) the reinsurer is sufficiently capitalized based upon an annual review of the reinsurer's most recent audited financial statements;

(b) the reinsurer is licensed and domiciled in a jurisdiction satisfactory to the commissioner, and

(c) the proposed reinsurance agreement adequately protects the risk retention group licensed as a captive insurer and its policyholders. Any such waiver should be disclosed in Note 1 of the risk retention group's annual statutory financial statement.

(9) Each approved risk retention group licensed as a captive insurer shall assess its reinsurance program and within 60 days of the effective date of these guidelines, submit a written report to the commissioner indicating whether such risk retention group licensed as a captive is in compliance with these guidelines. All risk retention groups licensed as captive insurers that fail to submit the report in a timely manner may be examined, at the risk retention group's expense, to determine compliance with these guidelines.

(10) These guidelines are effective December 9, 2011, and apply to risk retention groups licensed as captive insurers. Risk retention groups licensed as captive insurers who require additional time to comply with these guidelines shall be permitted to take credit for reinsurance for risks ceded to reinsurers not in compliance with these guidelines for a period not to exceed 12 months from the effective date of these guidelines upon satisfactory demonstration to the commissioner that such delay of implementation will not cause a hazardous financial condition or potential harm to its member policyholders.

History

Authorizing statute(s): 33-2-121, 33-28-102, 33-28-206, MCA
Implementing statute(s): 33-28-203, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2011 MAR p. 2516, Eff. 11/26/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6806 Insurance Managers and Intermediaries

(1) No person shall, within the state of Montana, act as a manager, broker, agent, salesperson, or reinsurance intermediary for a company without the authorization of the commissioner. Application for such authorization must be in a form prescribed by the commissioner.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-102, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2011 MAR p. 2516, Eff. 11/26/11.

Mont. Admin. R. 6.6.6807 Changes in Directors - Restrictions on Fees and Gifts

(1) Each company must report to the commissioner within 30 days after any change in its executive officers or directors, including in its report a statement of the business and professional affiliations of any new executive officer or director.

(2) No director, officer, or employee of a company may, except on behalf of the company, accept, or be the beneficiary of, any fee, brokerage, gift, or other emolument because of any investment, loan, deposit, purchase, sale, payment or exchange made by or for the company, but such person may receive reasonable compensation for necessary services rendered to the company in his or her usual private, professional or business capacity.

(3) Any profit or gain received by or on behalf of any person in violation of this rule shall inure to and be recoverable by the company.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-102, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6808 Conflict of Interest

(1) Each company must prepare and adopt a conflict of interest statement for officers, directors and key employees. This statement must disclose that the individual does not have outside commitments, personal or otherwise, that would inhibit the individual's duty to further the interests of the company.

(2) The conflict of interest statement need not preclude an individual from being a director or officer of more than one insurance company.

(3) The disclosure statements must be filed annually with the company's board of directors.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-102, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6809 Acquisition of Control of or Merger with a Domestic Company

(1) No person, other than the issuer shall make a tender offer of or a request or invitation for tenders of, or enter into any agreement to exchange securities for, seek to acquire, or acquire in the open market or otherwise, any voting security of a domestic company if, after the consummation thereof, such person would, directly or indirectly (or by conversion or by exercise of any right to acquire) be in control of the company.

(2) No person shall enter into an agreement to merge with or otherwise to acquire control of a domestic company without the prior written approval of the commissioner.

(3) In considering an application for acquisition of control or merger with a domestic company, the commissioner shall consider all of the facts and circumstances surrounding the application as well as the criteria for establishing a company in these rules and Title 33, chapter 28, MCA.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-105, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6811 Annual Audit

(1) Each company must have an annual audit by an independent certified public accountant, authorized by the commissioner, and must file the audited financial report with the commissioner within 180 days of the company's fiscal year end.

(2) The annual audit report is considered part of the company's annual report of financial condition, except with respect to the date by which it must be filed with the commissioner.

(3) The annual audit must contain the following information:

(a) opinion of the independent certified public accountant;

(b) report of evaluation of internal controls;

(d) financial statements; and

(e) certification of loss reserves and loss expense reserves by an actuary approved by the commissioner.

(4) The annual audit report may be waived by the commissioner for any captive insurance company other than a captive risk retention group, under one or more of the following circumstances:

(a) the company has minimal or no written premium in the audit year;

(b) the company has minimal or no earned premium in the audit year;

(d) the company has filed a plan of dissolution with the commissioner.

(5) A risk retention group licensed as a captive insurer shall utilize the Model Audit Rule as defined in ARM 6.6.3501 - 6.6.3521. A risk retention group licensed as a captive insurer shall only be exempt from the Model Audit Rule for such year if:

(a) the nationwide total of direct written plus assumed premiums is less than $1,000,000 in any calendar year;

(b) there are less than 1,000 policyholders or certificateholders of directly written policies nationwide at the end of such calendar year; and

(c) the commissioner has not made a specific finding that the insurer's compliance with the Model Audit Rule is necessary for the commissioner to carry out statutory responsibilities.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2005 MAR p. 2448, Eff. 12/9/05; AMD, 2008 MAR p. 2622, Eff. 12/25/08; AMD, 2011 MAR p. 2516, Eff. 11/26/11.

Mont. Admin. R. 6.6.6812 The Opinion of the Certified Public Accountant

(1) Financial statements of the company furnished pursuant to these rules must be examined by a certified public accountant in accordance with generally accepted auditing standards.

(2) The opinion of the certified public accountant must cover all years presented.

(3) The opinion must be addressed to the company on the stationery of the accountant showing the address of issuance, must bear the original manual signatures and must be dated.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6813 Report of Evaluation of Internal Controls

(1) Each company shall file with the commissioner a report that includes an evaluation, in accordance with generally accepted auditing standards, of the internal controls of the company relating to the methods and procedures used in the securing of assets and the reliability of the financial records. The evaluation must include, but is not limited to, those controls governing the system of authorization and approval and separation of duties.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6814 Accountant's Letter

(1) The accountant who prepares the annual opinion for the company, must furnish the company, for inclusion in the filing of the audited annual report, a letter stating:

(a) that the accountant is independent with respect to the company and conforms to the standard of the profession as contained in the Code of Professional Ethics and pronouncements of the American institute of certified public accountants and pronouncements of the financial account standards board;

(b) the general background and experience of the staff engaged in the audit including the experience in auditing captives or other insurance companies;

(c) that the accountant understands that the audited annual report and the accountant's opinion will be filed with the commissioner;

(d) that the accountant consents and agrees to make available for review by the commissioner the working papers as described in ARM 6.6.6819; and

(e) that the accountant is properly licensed by the appropriate state licensing authority and is a member in good standing in the American institute of certified public accountants.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6815 Financial Statements

(1) The financial statements which must be filed annually with the commissioner must include the following:

(a) balance sheet;

(b) statement of gain or loss from operations;

(d) statement of changes in capital paid up, gross paid in and contributed surplus and unassigned funds (surplus); and

(e) notes to the financial statements.

(2) The notes to the financial statement shall be those required by generally accepted accounting principles, and shall include:

(a) a reconciliation of differences, if any, between the audited financial report and the statement or form filed with the commissioner; and

(b) a summary of ownership and relationship of the company and all affiliated corporations or companies insured by the captive.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2005 MAR p. 2448, Eff. 12/9/05; AMD, 2011 MAR p. 2516, Eff. 11/26/11.

Mont. Admin. R. 6.6.6816 Certification of Loss Reserves and Loss Expense Reserves

(1) The annual audit report must include an opinion of the adequacy of the company's loss reserves and loss expense reserves. The individual who certifies the adequacy of the reserves must be approved by the commissioner and shall be a fellow of the casualty actuarial society, a member in good standing of the American academy of actuaries, or an individual who has demonstrated competence in loss reserve evaluation to the commissioner.

(2) The certification must be in a form which the commissioner deems appropriate.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6817 Designation of Independent Certified Public Accountant

(1) Each company, within 90 days after receiving its license, shall report to the commissioner in writing, the name and address of the independent certified public accountant retained to conduct the annual audit as required by these rules.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6818 Notification of Adverse Financial Condition

(1) A company must require the certified public accountant to immediately notify in writing an officer and all members of the board of directors of the company of any determination by the independent certified public accountant that the company has materially misstated its financial condition in its report to the commissioner as required by 33-28-107 , MCA.

(2) The company must furnish the notice to the commissioner within five days of the receipt of the notice from the accountant.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6819 Availability and Maintenance of Working Papers of the Independent Certified Public Accountant

(1) Each company shall require the independent certified public accountant to make available for review by the commissioner the working papers prepared in the conduct of the audit of the company.

(2) The company shall require that the accountant retain the audit working papers for a period of not less than five years after the period covered by the report.

(3) The commissioner's review of the working papers is considered an investigation during the course of which the papers shall remain confidential. The company shall require the independent certified public accountant to provide photocopies of any of the working papers which the commissioner requests. The photocopies may be retained by the commissioner.

(4) The term "working paper" as used in this rule includes, but is not limited to, schedules, analyses, reconciliations, abstracts, memoranda, narratives, flow charts, copies of company records or other documents prepared or obtained by the accountant and employees of the accountant in the conduct of the examination of the company.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-107, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02.

Mont. Admin. R. 6.6.6820 Revocation of the Company's License

(1) The commissioner may revoke the license of a company in accordance with 33-28-109, MCA, including, but not limited to, the following reasons:

(a) if the company has not commenced business in accordance with its plan of operation within two years of being licensed;

(b) if the company ceases to do business in or from within the state of Montana;

(d) for any other reason as described in 33-28-109, MCA.

(2) Prior to revoking the license pursuant to (1)(a) or (b) of this rule, the commissioner shall give the company notice in writing of the grounds for revocation of the license, and shall afford the company an opportunity to object in writing within 30 days after receipt of the notice. The commissioner shall take into consideration the company's written objections and, if the license is revoked, serve the order of revocation upon the company.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-109, MCA
History: NEW, 2002 MAR p. 171, Eff. 2/1/02; AMD, 2011 MAR p. 2516, Eff. 11/26/11; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.6821 Limit of Risk -- Captive Risk Retention Groups

(1) A captive risk retention group shall not retain any risk on any one occurrence in an amount exceeding 10% of its surplus as regards policyholders.

(2) The maximum retained risk on any one occurrence pursuant to (1) may be increased by the commissioner after considering all relevant aspects of a captive risk retention group's business plan and/or operational history including, but not limited to, the following:

(a) the financial strength of the captive risk retention group;

(b) the ability of the risk retention group to raise capital;

(d) rating and pricing methodologies; and

(e) loss prevention and risk management programs.

(3) Increases in the maximum retained risk granted by the commissioner pursuant to (2) shall be by policy, or by program, and shall not apply to a captive risk retention group's other policies or programs without specific approval of the commissioner.

(4) The commissioner may revoke an increase in the maximum retained risk granted to a captive risk retention group pursuant to (2) when the commissioner becomes aware of any adverse change to one or more of the factors used in granting the increase, or when the commissioner becomes aware of any other information meriting a reduction in the maximum retained risk.

(5) Any captive risk retention group licensed and operating prior to the effective date of this rule that has a maximum retained risk higher than the limit in (1) is considered to have been approved for an increase in the maximum retained risk pursuant to (2). The commissioner's authority to revoke an increase in the maximum retained risk pursuant to (4) is applicable to captive risk retention groups.

History

Authorizing statute(s): 33-28-206, MCA
Implementing statute(s): 33-28-207, MCA
History: NEW, 2006 MAR p. 321, Eff. 12/9/05; AMD, 2011 MAR p. 2516, Eff. 11/26/11.

Subchapter 6.6.69 Insurance Information and Privacy Protection

Mont. Admin. R. 6.6.6901 Purpose

(1) The purpose of ARM 6.6.6901 through 6.6.6904 is to provide rules that interpret statutes and define terms within the Insurance Information and Privacy Protection Act, Title 33, chapter 19, MCA. The goals of these rules are to ensure that the purpose and scope of the Privacy Protection Act, as described in 33-19-102 and 33-19-103 , MCA, are fully implemented.

History

Authorizing statute(s): Sec. 33-1-313 and 33-19-106, MCA
Implementing statute(s): Sec. 33-19-102 and 33-19-103, MCA
History: NEW, 2002 MAR p. 3390, Eff. 12/13/02.

Mont. Admin. R. 6.6.6902 Notice Exceptions for Certificate Holders

(1) "Personally identifiable information" sufficient to trigger a notice to certificate holders as described in 33-19-202 (2) (a) , MCA, does not include names, addresses, birth dates and identification numbers, used in any combination as personal identifiers obtained for the sole purpose of verifying eligibility for insurance coverage, provided that the insurance institution does not use that information for any purpose other than verifying benefits, does not collect further information, or disclose any personal information about that individual outside the provisions of 33-19-306 (7) , MCA, and does not use this information for any marketing purpose.

(2) A notice to individual certificate holders is required if further information is collected, or personal information is used for purposes other than for eligibility determination, or disclosed for any other purpose, including disclosures to affiliates.

History

Authorizing statute(s): Sec. 33-1-313 and 33-19-106, MCA
Implementing statute(s): Sec. 33-19-102 and 33-19-103, MCA
History: NEW, 2002 MAR p. 3390, Eff. 12/13/02.

Mont. Admin. R. 6.6.6903 Notice Requirements

(1) A licensee is not subject to the notice requirements set forth in 33-19-202 , MCA, if the licensee is an employee, agent or other representative of an insurance institution and:

(a) the insurance institution otherwise complies with, and provides the notices required by the provisions of this rule and 33-19-202 , MCA, including notice to applicants; and

(b) the licensee does not collect or disclose personal information except as provided for in the insurance institution's privacy notice and except as required by his employment or contractual relationship with the insurance institution.

(2) A licensee may not collect or disclose personal information beyond what is required by the licensee's relationship with the insurance institution unless the licensee provides another privacy notice to the individual that is specific to the licensee.

History

Authorizing statute(s): Sec. 33-1-313 and 33-19-106, MCA
Implementing statute(s): Sec. 33-19-102 and 33-19-103, MCA
History: NEW, 2002 MAR p. 3390, Eff. 12/13/02.

Mont. Admin. R. 6.6.6904 Deidentification for Group Policyholder Audits

(1) For purposes of 33-19-306 (14) , MCA, medical record information provided to a group policyholder is deemed to be "edited to prevent the identification of the applicant, policyholder, or certificate holder" if the following identifiers of the individual are removed:

(a) name;

(b) address;

(c) all elements of dates (except year) for dates directly related to the individual, including birth date, discharge date, and date of death;

(d) telephone numbers;

(e) fax numbers;

(f) electronic mail addresses;

(g) social security number;

(h) medical record numbers;

(i) health plan beneficiary numbers;

(j) account numbers;

(k) certificate/license numbers;

(l) vehicle identifiers and serial numbers, including license plate numbers;

(m) device identifiers and serial numbers;

(n) web universal resource locators (URLs) ;

(o) internet protocol (IP) address numbers;

(p) biometric identifiers, including finger and voice prints; and

(q) full face photographic images and any comparable images.

(2) Disclosure by the licensee of personal information that the group policyholder already has in its possession is not a disclosure under 33-19-306 (14) , MCA, unless the personal information is associated with or otherwise attached to medical record information or personal financial information.

(3) The fact of death does not require deidentification if that information is publicly available, unless it is associated with or otherwise attached to other medical record information or personal financial information.

History

Authorizing statute(s): Sec. 33-1-313 and 33-19-106, MCA
Implementing statute(s): Sec. 33-19-102 and 33-19-103, MCA
History: NEW, 2002 MAR p. 3390, Eff. 12/13/02.

Subchapter 6.6.70 Insurance Standards for Safeguarding Personal Information

Mont. Admin. R. 6.6.7001 Purpose

(1) The purpose of these rules is to establish standards for developing and implementing administrative, technical and physical safeguards to protect the security, confidentiality and integrity of an individual's personal information requiring protection pursuant to the provisions of the Montana Insurance Information and Privacy Protection Act, Title 33, chapter 19, MCA (2001) (Privacy Act) , as required by the Gramm-Leach-Bliley Act (GLBA) , codified at 15 USC 6801, 6805(b) and 6807.

(2) Section 501(a) of GLBA provides that it is the policy of the congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those "customers' nonpublic personal information." Section 501(b) of GLBA requires the state insurance regulatory authorities to establish appropriate standards relating to administrative, technical and physical safeguards:

(a) to ensure the security and confidentiality of "customer" records and information;

(b) to protect against any anticipated threats or hazards to the security or integrity of such records; and

(c) to protect against unauthorized access to or use of records or information that could result in substantial harm or inconvenience to a "customer."

(3) Section 505(b) (2) of GLBA calls on state insurance regulatory authorities to implement the standards prescribed under Section 501(b) by regulation (or rule) with respect to persons engaged in providing insurance.

(4) Section 507 of GLBA provides, among other things, that a state regulation may afford persons greater privacy protections than those provided by subtitle A of Title V of GLBA. The safeguards established pursuant to these rules shall apply to all personal information of individuals requiring protection pursuant to the provisions of the Privacy Act.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7002 Definitions

For purposes of this subchapter, the following definitions apply:

(1) "Individual" is defined in 33-19-104 , MCA. Any reference to the term "customer" in this subchapter means "individual."

(2) "Information systems" means the electronic or physical methods used to access, collect, store, use, transmit, protect or dispose of personal information.

(3) "Licensee" means a licensee as that term is defined in 33-19-104 , MCA.

(4) "Personal information" is defined in 33-19-104 , MCA. Any reference to the term "nonpublic customer information" in this subchapter means, for the purpose of these rules, "personal information."

(5) "Service provider" means a person that maintains, processes or otherwise is permitted access to personal information through its provision of services directly to the licensee.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-104, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7003 Exemption Based on Federal Standards for Privacy and Security of Individually Identifiable Health Information

(1) The obligations imposed under this subchapter do not apply to a licensee that is a covered entity under the provisions of federal regulations that are part of the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) , 45 CFR, parts 160 and 164, standards for privacy of individually identifiable health information as to any use or disclosure of personal information that is covered under the HIPAA privacy regulations and the HIPAA security rule.

(2) If a licensee considers itself exempt from this subchapter for the reason provided in (1) , the licensee shall give written notice to the commissioner of that exemption and a brief statement describing why it is a HIPAA-covered entity.

(3) A licensee may claim an exemption only as to those lines of business that are subject to HIPAA privacy and security regulations. All other lines of business are subject to this subchapter.

(4) A third-party administrator that is a party to a valid business associate agreement required by HIPAA privacy regulations is exempt from the provisions of this subchapter, but only as to the scope of that particular agreement. Any activities of the third-party administrator that fall outside of the scope of that agreement are subject to the provisions of this subchapter.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-105, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7007 Information Security Program

(1) Each licensee shall implement a comprehensive written information security program that includes administrative, technical and physical safeguards for the protection of personal information. The administrative, technical and physical safeguards included in the information security program shall be appropriate to the size and complexity of the licensee and the nature and scope of its activities.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7008 Objective of Information Security Program

(1) A licensee's information security program shall be designed to:

(a) ensure the security and confidentiality of personal information;

(b) protect against any anticipated threats or hazards to the security or integrity of the information; and

(c) protect against unauthorized access to or use of the information that could result in substantial harm or inconvenience to any individual or a violation of the Privacy Act.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7009 Examples of Methods of Development and Implementation

(1) The actions and procedures described in ARM 6.6.7010 through 6.6.7013 are examples of methods of implementation of the requirements of ARM 6.6.7007 and 6.6.7008. These examples are non-exclusive illustrations of actions and procedures that licensees may follow to implement ARM 6.6.7007 and 6.6.7008.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7010 Assess Risk

(1) The licensee:

(a) identifies reasonable foreseeable internal or external threats that could result in unauthorized disclosure, misuse, alteration or destruction of an individual's personal information or a licensee's information systems;

(b) assesses the likelihood and potential damage of these threats, taking into consideration the sensitivity of the personal information involved; and

(c) assesses the sufficiency of policies, procedures, information systems and other safeguards in place to control risks.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7011 Manage and Control Risk

(1) The licensee:

(a) designs its information security program to control the identified risks, commensurate with the sensitivity of the information, as well as the complexity and scope of the licensee's activities;

(b) trains staff, as appropriate, to implement the licensee's information security program; and

(c) regularly tests or otherwise monitors the key controls, systems and procedures of the information security program. The frequency and nature of these tests are determined by the licensee's risk assessment.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7012 Oversee Service Provider Arrangements

(1) The licensee:

(a) exercises appropriate due diligence in selecting its service providers; and

(b) requires its service providers to implement appropriate measures designed to meet the objectives of this rule, and where indicated by the licensee's risk assessment, takes appropriate steps to confirm that its service providers have satisfied these obligations.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7013 Adjust the Program

(1) The licensee monitors, evaluates and adjusts, as appropriate, the information security program in light of any relevant changes in technology, the sensitivity of an individual's personal information, internal or external threats to information, and the licensee's own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements and changes to information systems.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102 and 33-19-306, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7018 Determined Violation

(1) A violation of these rules will result in a civil penalty as described in 33-19-405 , MCA.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-405, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Mont. Admin. R. 6.6.7019 Implementation Date

(1) Each licensee shall establish and implement an information security program, including appropriate policies and systems pursuant to these rules by

October 1, 2005.

History

Authorizing statute(s): 33-19-106, MCA
Implementing statute(s): 33-19-102, 33-19-104, 33-19-105, 33-19-306, and 33-19-405, MCA
History: NEW, 2005 MAR p. 426, Eff. 4/1/05.

Subchapter 6.6.71 Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities

Mont. Admin. R. 6.6.7101 Authority

(1) This subchapter's rules are promulgated by the Commissioner of Insurance pursuant to 33-2-409, MCA, and ARM 6.6.6707.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-409, MCA
History: NEW, 2008 MAR p. 136, Eff. 2/1/08; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.7102 Purpose

(1) The purpose of this subchapter's rules is to recognize, permit, and prescribe the use of mortality tables that reflect differences in mortality between preferred and standard lives in determining minimum reserve liabilities in accordance with 33-2-409, MCA, and ARM 6.6.6707.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-409, MCA
History: NEW, 2008 MAR p. 136, Eff. 2/1/08; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.7103 Definitions

For the purposes of ARM 6.6.7101, 6.6.7102, 6.6.7103, 6.6.7105, 6.6.7107, and 6.6.7109:

(1) "2001 CSO Mortality Table" means the mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table, developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the "Proceedings of the NAIC (2nd Quarter 2002)," and supplemented by the 2001 CSO Preferred Class Structure Mortality Table defined in (2). Unless the context indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of that table, the select and ultimate form of that table, both the smoker and nonsmoker mortality tables, and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables in the 2001 CSO Mortality Table include the following:

(a) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table;

(b) "2001 CSO Mortality Table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table;

(c) "composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers; and

(d) "smoker and nonsmoker mortality tables" means mortality tables with separate rates of mortality for smokers and nonsmokers.

(2) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables with separate rates of mortality for Super Preferred Nonsmokers, Preferred Nonsmokers, Residual Standard Nonsmokers, Preferred Smokers, and Residual Standard Smoker splits of the 2001 CSO Nonsmoker and Smoker tables as adopted by the NAIC at the September 2006 national meeting and published in the "NAIC Proceedings (3rd quarter 2006)." Unless the context indicates otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes both the ultimate form of that table, and the select and ultimate form of that table. It includes both the smoker and nonsmoker mortality tables. It includes both the male and female mortality tables, and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table.

(3) "Statistical agent" means an entity with proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for, and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-523, MCA
History: NEW, 2008 MAR p. 136, Eff. 2/1/08.

Mont. Admin. R. 6.6.7105 2001 Cso Preferred Class Structure Table

(1) At the election of the company, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this rule, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard for policies issued on or after April 1, 2008. No such election shall be made until the company demonstrates at least 20% of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this rule, will be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of the NAIC model regulation, "Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation."

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-523, MCA
History: NEW, 2008 MAR p. 136, Eff. 2/1/08.

Mont. Admin. R. 6.6.7107 Conditions

(1) For each plan of insurance with separate rates for preferred and standard nonsmoker lives, an insurer may use the Super Preferred Nonsmoker, Preferred Nonsmoker, and Residual Standard Nonsmoker tables to substitute for the nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the Residual Standard Nonsmoker Table, the appointed actuary shall certify that:

(a) the present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class; and

(b) the present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.

(2) For each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the Preferred Smoker and Residual Standard Smoker tables to substitute for the smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the Preferred Smoker Table, the appointed actuary shall certify that:

(a) the present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class; and

(3) Unless exempted by the commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Table shall annually file with the commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the commissioner, statistical reports showing mortality and such other information as the commissioner may deem necessary or expedient for the administration of the provisions of this rule. The form of the reports shall be established by the commissioner, or the commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC and acceptable to the commissioner.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-523, MCA
History: NEW, 2008 MAR p. 136, Eff. 2/1/08.

Mont. Admin. R. 6.6.7109 Separability

(1) For the rules in this subchapter, if a part of a rule is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of a rule is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-2-523, MCA
History: NEW, 2008 MAR p. 136, Eff. 2/1/08.

Subchapter 6.6.79 Pharmacy Benefit Managers

Mont. Admin. R. 6.6.7901 Network Adequacy Definitions

(1) The following definitions apply to this subchapter:

(a) "Mail-order pharmacy" means a pharmacy that provides pharmacist services and primarily dispenses and delivers covered drugs via common carrier.

(b) "Pharmacy network" means a group of pharmacies contracted with a pharmacy benefit manager (PBM) to provide pharmacist services at negotiated prices to an enrollee or an injured worker of a workers' compensation insurance carrier.

(c) "Preferred pharmacy network" means a subset, group, or tier of pharmacies that is designated as preferred within a pharmacy network that agrees to charge an enrollee or an injured worker of a workers' compensation insurance carrier a lower copayment, coinsurance, or deductible for pharmacist services or to accept a lower reimbursement rate than other pharmacies in the pharmacy network.

(d) "Retail pharmacy" means any pharmacy that provides pharmacist services to the walk-in general public from which an enrollee or an injured worker of a workers' compensation insurance carrier could purchase a covered drug without being required to receive medical services from a provider or institution affiliated with that pharmacy.

History

Authorizing statute(s): 33-1-313, 33-2-2409, 33-2-2412, MCA
Implementing statute(s): 33-2-2402, 33-2-2403, 33-2-2409, MCA
History: NEW, 2021 MAR p. 1899, Eff. 1/1/22.

Mont. Admin. R. 6.6.7902 Network Adequacy

(1) A PBM must establish and maintain a pharmacy network that is sufficient in numbers to ensure all pharmacist services are accessible without unreasonable delay, within a reasonable proximity to the business or personal residence of an enrollee or an injured worker of a workers' compensation insurance carrier, and with sufficient choice based on the availability of retail pharmacies.

(2) Each pharmacy network offered by a PBM will be considered a separate pharmacy network.

(3) The commissioner may consider reasonable criteria or standards to determine the sufficiency and adequacy of a pharmacy network, including:

(a) whether the pharmacy network includes at least 80% of retail pharmacies;

(b) the criteria the PBM used to build a pharmacy network, including the criteria used to select pharmacies for participation in the pharmacy network;

(c) the criteria the PBM used to build any preferred pharmacy network, including the criteria used to place pharmacies in subsets, groups, or tiers;

(d) the criteria the PBM used to select pharmacies to dispense specialty drugs in the pharmacy network;

(e) the access standards and other information provided in the PBM's application and reports; and

(f) the willingness of retail pharmacies in the applicable geographic service area to contract with the PBM based upon the same or similar terms and conditions applicable to pharmacies of the same type participating in the pharmacy network. The commissioner may require the PBM to submit credible evidence documenting a retail pharmacy's refusal to contract based upon the same or similar terms and conditions applicable to pharmacies of the same type participating in the pharmacy network.

(4) A PBM may decline to select a pharmacy to be in a pharmacy network if the pharmacy fails to meet legitimate and reasonable selection criteria of the PBM.

(5) A PBM may not use mail-order pharmacies to meet network adequacy requirements for a pharmacy network.

(6) A PBM may not require an enrollee or an injured worker of a workers' compensation insurance carrier to use any pharmacy, including a mail-order pharmacy, in which the PBM has an ownership interest, either directly or indirectly through an affiliate, holding company, or subsidiary, for prescriptions, refills, or specialty drugs regardless of day supply.

(7) A PBM may use a restricted pharmacy network as long as the PBM otherwise meets the network adequacy requirements set forth in these rules.

(8) A PBM must monitor, on an ongoing basis, the ability and capacity of the pharmacy network to furnish pharmacist services to an enrollee or an injured worker of a workers' compensation insurance carrier.

History

Authorizing statute(s): 33-1-313, 33-2-2409, 33-2-2412, MCA
Implementing statute(s): 33-2-2402, 33-2-2403, 33-2-2409, MCA
History: NEW, 2021 MAR p. 1899, Eff. 1/1/22.

Mont. Admin. R. 6.6.7903 Network Adequacy Reporting

(1) A PBM must submit the following reports and information for each pharmacy network as part of its license or license renewal application to demonstrate to the commissioner a sufficient and adequate pharmacy network:

(a) a report in a form and in a manner prescribed by the commissioner that designates the number and location of all retail pharmacies, mail-order pharmacies, and specialty pharmacies, if any, in each pharmacy network;

(b) a network accessibility report that includes:

(i) the access standard or standards the PBM establishes to determine network adequacy based on the number of miles between an enrollee or an injured worker of a workers' compensation insurance carrier and nearest retail pharmacy in the pharmacy network;

(ii) the number of enrollees or injured workers of a workers' compensation insurance carrier with access to a retail pharmacy in the pharmacy network using the access standard established by the PBM;

(iii) the average number of miles between the enrollees and injured workers of a workers' compensation insurance carrier identified in (ii) and the nearest retail pharmacy in the pharmacy network;

(iv) the number of enrollees and injured workers of a workers' compensation insurance carrier without access to a retail pharmacy in the pharmacy network using the access standard established by the PBM;

(v) the average number of miles between the enrollees and injured workers of a workers' compensation insurance carrier identified in (iv) and the nearest retail pharmacy in the pharmacy network; and

(vi) the ratios of retail pharmacies in the pharmacy network to an enrollee or an injured worker of a workers' compensation insurance carrier; and

(c) the PBM's process for monitoring and ensuring on an ongoing basis a sufficient and adequate pharmacy network to meet the pharmacist services needs of enrollees and injured workers of a workers' compensation insurance carrier.

(2) A PBM must file and update the report required in (1)(a) with the commissioner if the number of pharmacies in the pharmacy network decreases by more than 5% during the year.

History

Authorizing statute(s): 33-1-313, 33-2-2409, 33-2-2412, MCA
Implementing statute(s): 33-2-2402, 33-2-2403, 33-2-2409, MCA
History: NEW, 2021 MAR p. 1899, Eff. 1/1/22.

Mont. Admin. R. 6.6.7904 Network Adequacy Directories

(1) A PBM must post electronically a current, accurate, and searchable directory of pharmacies for each pharmacy network.

(a) In making the directory available electronically, the PBM must ensure that the general public is able to view all pharmacies included in each pharmacy network through a clearly identifiable link or tab, without creating an account or entering a policy or contract number.

(b) A PBM must clearly identify in its electronic directories the pharmacies that are in each pharmacy network.

(c) A PBM must include in its electronic directory a customer service email address and telephone number or electronic link that enrollees, injured workers of a workers' compensation insurance carrier, or the general public may use to notify the PBM of inaccurate directory information.

History

Authorizing statute(s): 33-1-313, 33-2-2409, 33-2-2412, MCA
Implementing statute(s): 33-2-2402, 33-2-2403, 33-2-2409, MCA
History: NEW, 2021 MAR p. 1899, Eff. 1/1/22.

Mont. Admin. R. 6.6.7905 Batch Appeal Process

(1) A pharmacy benefit manager's appeals procedure described in 33-22-173, MCA, must allow for the submission of appeals received from a pharmacy or a pharmacy services administrative organization as part of a batch or group of appeals.

History

Authorizing statute(s): 33-1-313, MCA
Implementing statute(s): 33-22-173, MCA
History: NEW, 2024 MAR p. 1866, Eff. 9/1/24.

Subchapter 6.6.80 Classification Review Committee

Mont. Admin. R. 6.6.8001 Agency Organization

(1) History. The classification review committee is created by statute. The district court held in Cause No. BDV-91-1585, state of Montana, first judicial district, entitled State Compensation Mutual Insurance Fund v. R/E. Developers, Inc. , decided August 14, 1992, that the classification review committee is a state agency defined by 2-4-102, MCA. As a state agency, the classification review committee is required to promulgate procedural rules pursuant to the Montana Administrative Procedure Act. In 1993, the legislature amended 33-16-1012, MCA, to give the committee express rulemaking authority.

(2) Nature of committee. The classification review committee is a state agency as defined by 2-4-102, MCA. Documents and other information concerning the classification review committee's actions are made available for public review at the office of the commissioner of insurance. The classification review committee consists of five members, of whom four are appointed by the commissioner of insurance and one is appointed by the executive director of the state fund, as provided in 33-16-1011 , MCA. The classification review committee is staffed as determined necessary by the National Council on Compensation Insurance or each other workers' compensation rating organization as the classification review committee may designate.

(3) Inquiries and submissions. Unless otherwise provided in these rules or by special notice, all inquiries and submissions to the classification review committee should be made to the Montana Classification Review Committee in care of the National Council on Compensation Insurance, 901 Peninsula Corporate Circle, Boca Raton, FL 33487-1362; Telephone: 561-893-3820; Email: DisputeResolution@ncci.com ; Fax: 561-893-5043.

History

Authorizing statute(s): 33-16-1012, MCA
Implementing statute(s): 2-4-201, 33-16-1011, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 1995 MAR p. 2138, Eff. 10/13/95; AMD, 2023 MAR p. 1085, Eff. 9/23/23.

Subchapter 6.6.81 Procedural Rule

Mont. Admin. R. 6.6.8101 Adoption of Model Rules

(1) The classification review committee adopts and incorporates by reference the following of the attorney general's Model Procedural Rules:

(a) 1.3.102;

(b) 1.3.203 through 1.3.211;

(d) 1.3.218; and

(e) 1.3.222 through 1.3.233.

(2) The attorney general's Model Procedural Rules are adopted on a selective basis because certain of the rules are not consistent with the requirement contained in 33-16-1012 , MCA, which provides that a hearing conducted before the committee must be an informal proceeding as provided in 2-4-604 , MCA.

(3) A copy of the model rules adopted by the classification review committee may be obtained from the committee.

History

Authorizing statute(s): Sec. 33-16-1012, MCA
Implementing statute(s): Sec. 2-4-201, 2-4-202, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 1995 MAR p. 2682, Eff. 10/13/95.

Subchapter 6.6.82 Contested Case Procedures Used by the Classification Review Committee

Mont. Admin. R. 6.6.8201 Definitions

The following definitions apply to this subchapter, unless context or the particular rule requires otherwise:

(1) "Classification" means a category of risk based on the nature of the work performed.

(2) "Classification decision" means the classification assigned by the insurer.

(3) "Classification determination" means the determination made by the committee of the appropriate classification.

(4) "Committee" means the classification review committee created under 33-16-1011, MCA.

(5) "Insurer" means an authorized insurer writing workers' compensation coverage in this state, including the state compensation insurance fund. For purposes of these rules, "insurer" does not include employers electing to be bound by compensation plan No. 1 of the Montana Workers' Compensation Act.

History

Authorizing statute(s): Sec. 33-16-1012, MCA
Implementing statute(s): 33-16-1011, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 1995 MAR p. 2138, Eff. 10/13/95.

Mont. Admin. R. 6.6.8202 Administrative Appeal of Classification Decision

(1) An employer may appeal a classification decision by filing a notice of administrative appeal. The notice of administrative appeal must contain a short statement of the reasons for the appeal and a statement of the general nature of the relief sought. An employer must request an in-person hearing simultaneously with the filing of the notice of administrative appeal. If a request for an in-person hearing is not made when the notice of administrative appeal is filed, the committee may hold a hearing pursuant to ARM 6.6.8206 in lieu of an in-person hearing.

(2) The notice of administrative appeal must be filed with the classification review committee.

(3) The initial hearing conducted by the committee must be informal and non-binding upon the parties and must be conducted pursuant to the rules of procedure set forth in ARM 6.6.8203.

(4) A party who is aggrieved by the informal and non-binding decision of the committee, or by the refusal of a party to be bound by the advisory decision as provided in ARM 6.6.8202A may initiate an informal contested case proceeding pursuant to 2-4-604, MCA, before the committee pursuant to the rules of procedure set forth in ARM 6.6.8203 - 6.6.8206.

History

Authorizing statute(s): 33-16-1012, MCA
Implementing statute(s): 2-4-201, 33-16-1011, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 1995 MAR p. 2138, Eff. 10/13/95; AMD, 2023 MAR p. 1085, Eff. 9/23/23.

Mont. Admin. R. 6.6.8202A INFORMAL ADVISORY HEARING PROCEDURE

6.6.8202A INFORMAL ADVISORY HEARING PROCEDURE

(1) The initial hearing conducted by the committee concerning objections filed by an employer or insurer in relation to classifications assigned to an employer shall be conducted informally, and in such manner as to ascertain the substantial rights of the parties. All issues relevant to an appeal shall be considered. The employer and the insurer, and such witness or witnesses as either may call, may present such evidence as may be pertinent, subject to examination by any member of the committee.

(2) The parties may stipulate the facts involved orally or in writing. Contesting parties shall provide to the committee secretary, c/o NCCI, relevant information to be exchanged not less than 15 days prior to the date of the hearing to allow sufficient time to review background material prior to the hearing.

(3) During the informal hearing the committee may receive and consider evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs but may not receive or consider evidence which is irrelevant, immaterial or unduly repetitious. Hearsay evidence may be received and considered to supplement or explain other evidence.

(4) Telephonic hearings may be conducted during the course of informal proceedings.

(5) The committee may in its discretion adjourn any hearing for a reasonable period of time, in order to secure all the evidence that is necessary and to be fair to the parties.

(6) The committee shall issue a written advisory decision within 30 days of the conclusion of the hearing which shall not be binding on the parties. The committee shall send a written copy of its advisory decision by first class mail, postage pre-paid to each party. Each party to the informal hearing shall notify the committee and each other party in writing of the notifying party's intent to be bound or not bound by the committee's advisory decision and the notice must be made within 30 days of the date the committee mails the written copy of its advisory decision to the parties.

(7) The party who is aggrieved by the advisory decision of the committee or by the refusal of a party to be bound by the committee's advisory decision rendered after a hearing conducted pursuant to this rule may within 30 days after the expiration of the 30 day notice deadline specified in (6) herein initiate an informal contested case proceeding pursuant to 2-4-604, MCA, before the committee and the committee shall hear the matter in a de novo administrative proceeding as provided in Title 2, chapter 4, part 6, MCA. This informal contested case proceeding shall be conducted pursuant to the provisions of ARM 6.6.8204 - 6.6.8206. If the party who is aggrieved by the advisory decision of the committee or by the refusal of a party to be bound by the committee's advisory decision does not initiate such informal contested case proceeding within the 30 day deadline, such advisory decision shall be binding upon the parties

(8) If either the employer or the insurer shall fail to appear at the committee hearing and no good cause for a continuance is shown, the committee shall render its decision on the basis of the best evidence available to it; provided, however, a hearing before the committee may be continued for good cause upon application to the committee orally or in writing before the hearing is concluded, and may be continued or reopened by the committee on application or on its own motion. Any party who fails to appear in person or by authorized representative at the hearing before the committee may within 10 days after the scheduled date of the hearing file an application for reopening, and such application for reopening shall be granted if good cause is shown for failing to appear. An application for reopening must be in writing; it must state the reason or reasons believed to constitute good cause for failing to appear at the hearing; and it must be delivered or mailed within such 10-day period to the committee. If an application for reopening is not allowed, a copy of such decision shall be given or mailed to each party to the hearing, and in the reopening proceedings the allowance of the application may be contested. Where it appears that the application for reopening or any other request or application may not have been filed within the period of time prescribed for filing, the applicant shall be notified and be given the opportunity to show that such appeal application or request was timely. If it is found that such application or request was not filed within the applicable time limit, it may be dismissed on such grounds. If it is found that such application or request was timely the matter shall be decided on the merits and an advisory ruling issued as provided by these rules. Copies of the decision under this provision shall be given or mailed to the policyholder and the insurer together with a clear statement of right of appeal or judicial review as may be appropriate.

History

Authorizing statute(s): Sec. 33-16-1012, MCA
Implementing statute(s): Sec. 2-4-201, 33-16-1011, 33-16-1012, MCA
History: NEW, 1995 MAR p. 2682, Eff. 10/13/95.

Mont. Admin. R. 6.6.8203 Informal Contested Case Proceeding

(1) This rule sets forth procedural steps that shall be followed in informal contested case hearings for administrative appeals involving classification determinations.

(2) Classification determination hearings must be informal proceedings held pursuant to 2-4-604, MCA. Classification determination hearings are conducted in such a manner as to ascertain the substantial rights of the parties. All issues relevant to the classification determination are considered and passed upon. Any party and any witness may, under oath or affirmation, present pertinent evidence subject to examination by the committee and to cross-examination by the opposing party.

(3) With the consent of the committee, the parties may stipulate in writing the facts of the case. A hearing may nevertheless be held if the committee finds such a stipulation inadequate for determination in the administrative appeal.

(4) If any party fails to appear at the hearing, and good cause justifying continuance is not shown, the committee may decide the issues and make a determination on the best evidence available. The hearing may be postponed for good cause upon application to the committee orally or in writing before the hearing is concluded.

(5) The committee may continue any hearing for a reasonable period of time, in order to secure all the evidence that is necessary and to be fair to the parties.

(6) The committee may in its discretion or at the request of any party appoint a hearings examiner to decide all pre-hearing matters and to conduct the hearing. After the hearings examiner is appointed the examiner shall take evidence and prepare proposed findings of fact and conclusions of law which the committee may accept or reject or modify in whole or in part based upon the evidence produced during the informal contested case proceeding.

History

Authorizing statute(s): Sec. 33-16-1012, MCA
Implementing statute(s): Sec. 2-4-603, 2-4-604, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 1995 MAR p. 2138, Eff. 10/13/95.

Mont. Admin. R. 6.6.8204 Notice of Hearing

(1) A hearing must be scheduled at a regular or special meeting of the committee.

(2) Written notice of a hearing must be mailed to the parties at least 20 days before the hearing or conference.

(3) A hearing notice must comply with 2-4-601, MCA, except that the hearing notice shall not contain a statement

that a formal proceeding may be waived pursuant to 2-4-603, MCA. The hearing notice shall contain a statement that the hearing must be an informal proceeding as provided in 2-4-604, MCA.

History

Authorizing statute(s): Sec. 33-16-1012, MCA
Implementing statute(s): Sec. 2-4-201, 2-4-601, 2-4-604, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93.

Mont. Admin. R. 6.6.8205 Pre-Hearing Exchange of Information

(1) At least 10 days before a hearing, each party must mail or deliver the following information or documents to the committee and to all other parties:

(a) accurate copies of all documentary evidence;

(b) the names, addresses and telephone numbers of all proposed witnesses; and

(2) The employer shall mark and identify each document constituting the employer's documentary evidence with a number, beginning with the number "1". The insurer shall mark and identify each document of the insurer's documentary evidence with a letter, beginning with the letter "A".

(3) Telephone numbers may be updated by either party at any time prior to hearing.

(4) The committee may prescribe a form to be used in providing the information required by this rule.

(5) The committee intends this rule and the subpoena power contained in ARM 1.3.225 of the attorney general's Model Procedural Rules to comply with the requirement of 2-4-602, MCA, that every agency adopt practice rules which provide a means of discovery.

History

Authorizing statute(s): Sec. 33-16-1012, MCA
Implementing statute(s): Sec. 2-4-201, 2-4-602, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93.

Mont. Admin. R. 6.6.8206 Audio, Video, or Other Telecommunications Technology Hearings

(1) A hearing may be held by audio, video, or other telecommunications technology or media if a request for an in-person hearing is not filed with the notice of administrative appeal.

History

Authorizing statute(s): 33-16-1012, MCA
Implementing statute(s): 2-3-202, 2-4-201, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 2023 MAR p. 1085, Eff. 9/23/23.

Subchapter 6.6.83 Classification Establishment

Mont. Admin. R. 6.6.8301 Establishment of Classification for Compensation Plan No. 2 and Plan No. 3

(1) The committee adopts and incorporates by reference the NCCI Basic Manual for Workers Compensation and Employers Liability Insurance, as supplemented, including classifications established or revised in accordance with (2) below and 33-16-1023(3), MCA, which establish classifications with respect to employers electing to be bound by compensation plan No. 2 and plan No. 3 as provided in Title 39, chapter 71, part 22 and part 23, MCA. A copy of the Basic Manual for Workers Compensation and Employers Liability Insurance is available for public inspection at the Office of the Commissioner of Insurance, 840 Helena Ave., Helena, MT 59601. Copies of the Basic Manual for Workers Compensation and Employers Liability Insurance may be obtained by writing to the Montana Classification Review Committee in care of the National Council on Compensation Insurance, Inc., c/o Regulatory Assurance Department, 901 Peninsula Corporate Circle, Boca Raton FL 33487-1362. Persons obtaining a copy of the Basic Manual for Workers Compensation and Employers Liability Insurance must pay the committee's cost of providing such copies.

(2) The committee may amend the definition of a rate classification, establish a new rate classification, or delete an existing rate classification pursuant to the rulemaking procedures as provided in Title 2, chapter 4, part 3, MCA and the applicable Attorney General's Model Procedural Rules adopted by the committee.

History

Authorizing statute(s): 33-16-1012, MCA
Implementing statute(s): 2-4-103, 33-1-115, 33-16-1012, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/95; AMD, 1994 MAR p. 1669, Eff. 7/1/94; AMD, 1995 MAR p. 351, Eff. 3/17/95; AMD, 1995 MAR p. 1035, Eff. 6/16/95; AMD, 1995 MAR p. 2138, Eff. 10/13/95; AMD, 1996 MAR p. 547, Eff. 2/3/96; AMD, 1996 MAR p. 1372, Eff. 5/24/96; AMD, 1996 MAR p. 1827, Eff. 7/4/96; AMD, 1997 MAR p. 1357, Eff. 8/5/97; AMD, 1997 MAR p. 2059, Eff. 11/18/97; AMD, 1998 MAR p. 1407, Eff. 5/29/98; AMD, 1999 MAR p. 509, Eff. 3/26/99; AMD, 1999 MAR p. 2841, Eff. 2/17/99; AMD, 2001 MAR p. 842, Eff. 7/1/01; AMD, 2001 MAR p. 1175, Eff. 7/6/01; AMD, 2004 MAR p. 2909, Eff. 12/3/04; AMD, 2008 MAR p. 1135, Eff. 6/13/08; AMD, 2017 MAR p. 2182, Eff. 11/25/17; AMD, 2018 MAR p. 2208, Eff. 11/3/18; AMD, 2020 MAR p. 41, Eff. 7/1/20; AMD, 2020 MAR p. 1734, Eff. 10/1/20; AMD, 2021 MAR p. 919, Eff. 11/1/21; AMD, 2023 MAR p. 1085, Eff. 9/23/23.

Subchapter 6.6.84 Public Participation

Mont. Admin. R. 6.6.8401 Public Participation Guidelines

(1) A continuing committee program for public participation shall be observed for each function of the committee. The exact mechanisms for public participation may vary in relation to the resources available, public response, or the nature of the issues involved.

(2) The committee shall provide continuing policy, program, and technical information at the earliest practical time and at a place reasonably accessible to interested or affected persons or organizations so that they can make informed and constructive contributions to committee decision making. News releases and other publications may be used for this purpose as well as informational discussions and meetings with interested groups. Efforts shall be made to summarize complex and technical materials for public and media use.

(3) The committee shall have a procedure for dissemination of information to interested persons and organizations. Requests for information shall be promptly handled.

(4) The committee shall have a procedure for early consultation and exchange of views with interested or affected persons and organizations on significant activity prior to decision making.

(5) The committee shall maintain a current list of interested persons and organizations, including any who have requested inclusion on such list, for the distribution of information. The committee shall, in addition, notify any interested persons of any public hearing or other decision making proceedings prior to decision making and wherever practical shall supplement this notification with informal notice to all interested persons or organizations having requested such notice in advance. The committee shall make available for public inspection committee meeting agendas and agenda materials at the office of the commissioner of insurance at least five days prior to a committee meeting.

(6) Committee files, other than personnel files and those files required by law or requirements of individual privacy to remain confidential, are open to public inspection. These files are located at the office of the National Council on Compensation Insurance, Inc. (NCCI), c/o Regulatory Assurance Department, 901 Peninsula Corporate Circle, Boca Raton, FL 33487-1362. Documents and information on the Classification Review Committee actions are available at the Office of the Commissioner of Insurance, 840 Helena Avenue, Helena, MT 59601, or on www.csi.mt.gov . Copies of specific documents are available from the NCCI or the Office of the Commissioner of Insurance either free or for a reasonable copying charge.

(7) When the committee determines that a proposed decision or action is of significant interest to the public, one person shall be designated as contact person with the public on the proposed decision or action.

(8) The listing of specific measures in this section shall not preclude additional techniques for obtaining, encouraging or assisting public participation.

History

Authorizing statute(s): 33-16-1012, MCA
Implementing statute(s): 2-3-103, MCA
History: TEMP, NEW, 1993 MAR p. 2225, Eff. 10/1/93; AMD, 2017 MAR p. 2182, Eff. 11/25/17.

Subchapter 6.6.85 Viatical Settlement Agreements

Mont. Admin. R. 6.6.8501 Definitions

In addition to the definitions in 33-20-1302 , MCA, the following definitions apply to this subchapter:

(1) "Advertising" means any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the internet or similar communications media, disseminated, circulated or placed before the public, directly or indirectly, for the purpose of creating an interest in or inducing a person to purchase or sell a life insurance policy or an interest in a life insurance policy pursuant to a viatical settlements contract or a viatical settlement purchase agreement.

(2) "Attending physician" means the insured's physician, as defined in 33-20-1312 (3) , MCA.

(3) "Chronically ill" means:

(a) being unable to perform at least two activities of daily living (i.e., eating, toileting, transferring, bathing, dressing or continence) ;

(b) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or

(c) having a level of disability similar to that described in (3) (a) as determined by the secretary of health and human services as of the date the viatical settlement contract was signed.

(4) "Insured" means the person covered under the policy being considered for viatication.

(5) "Life expectancy" means the mean of the number of months the individual insured under the life insurance policy to be viaticated can reasonably be expected to live based on accepted actuarial and medical criteria experience.

(6) "Net death benefit" means the amount of the life insurance policy or certificate to be viaticated less any outstanding debts or lien then owing to the insurer providing coverage under the subject life insurance policy.

(7) "Patient identifying information" means:

(a) an insured's address, telephone number, facsimile number, electronic mail address;

(b) an insured's photograph or likeness;

(c) an insured's employer, employment status, social security number, unless the social security number is used by the insurer as a means of identifying the subject policy; or

(d) any other information that is likely to lead to the identification of the insured.

(8) "Terminally ill" means having an illness that the attending physician reasonably expects to result in death in 24 months or less.

History

Authorizing statute(s): 33-1-313, 33-20-1315, MCA
Implementing statute(s): 33-20-1302, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00; AMD, 2005 MAR p. 71, Eff. 1/14/05; AMD, 2005 MAR p. 2650, Eff. 12/23/05.

Mont. Admin. R. 6.6.8502 License Requirements

(1) To obtain a license as a viatical settlement provider, a person shall apply to the department by filling out an application for a license as a viatical settlement provider in a format prescribed by the commissioner and by supplying requested information. The application form must be accompanied by:

(a) a registration fee in the amount of $1900;

(b) a copy of an executed bond as surety; or

(2) Except as provided in (3) , to obtain an initial license as a viatical settlement broker, a person must:

(a) apply to the department by filling out an application for a license as a viatical settlement broker in a format prescribed by the commissioner and by supplying requested information;

(b) pay a fee pursuant to 33-2-708 , MCA;

(c) submit a copy of an executed bond as surety pursuant to (4) or submit a copy of an errors and omissions policy in an amount commensurate with a broker's exposure;

(d) complete 24 credit hours of department-approved education in the subjects of life insurance, viaticals, and ethics; and

(e) pass the viatical settlement broker's examination designated by the department.

(3) A resident or nonresident insurance producer who is licensed as an insurance producer with a life insurance line of authority in this state or in the insurance producer's home state and who has been licensed for at least one year shall be considered to meet the licensing requirements of a viatical settlement broker and must be permitted to operate as a viatical settlement broker, provided that such producer must:

(a) provide written notice pursuant to 33-20-1303 (2) (b) (i) , MCA, to the department that the insurance producer is acting as a viatical settlement broker, specifically identifying the date on which the insurance producer began acting as a viatical settlement broker;

(b) pay a fee pursuant to 33-2-708 (1) (b) (viii) , MCA; and

(c) acknowledge in writing that the insurance producer will operate as a viatical settlement broker in accordance with Title 33, chapter 20, part 13, MCA, and the rules promulgated thereunder.

(4) When required under (1) or (2) , a viatical settlement provider or a viatical settlement broker shall acquire and maintain a surety bond for violations of the insurance code. The bond must be in the amount of $50,000 payable to the State of Montana. An applicant shall file a copy of the executed bond with the commissioner at the time of application.

(5) Except as provided in (6) , a viatical settlement broker's license is subject to renewal by the licensee on or before the first anniversary of its issuance and on or before the expiration of a 24 month period for every biennium thereafter. A person renewing a viatical settlement broker's license under this rule must:

(a) pay a renewal fee pursuant to 33-2-708 (1) (b) (vi) , MCA;

(b) comply with the reporting requirements under Title 33, chapter 20, part 13, MCA, and the rules promulgated thereunder;

(d) file, in a format approved by the commissioner, certification as to the approved courses, lectures, seminars, and instructional programs successfully completed by that person pursuant to 33-20-1303 (5) , MCA, during the preceding biennium.

(6) A viatical settlement broker's license obtained under (3) is subject to renewal at the time the licensee's resident or nonresident life insurance producer's license is renewed. A person renewing a viatical settlement broker's license under this rule must:

(a) indicate the person's intent to continue acting as a viatical settlement broker on the person's life insurance producer license renewal form;

(b) comply with the reporting requirements under Title 33, chapter 20, part 13, MCA, and the rules promulgated thereunder;

(7) If a licensee fails to meet the applicable renewal requirements under (5) or (6) , the person's viatical settlement broker's license will lapse. To reinstate a lapsed viatical settlement broker's license, a person must satisfy the applicable renewal requirements under (5) or (6) and pay the lapsed license reinstatement fee prescribed in 33-2-708 (1) (b) (vi) , MCA.

(8) The commissioner may ask and an applicant shall provide for such additional information as is necessary to determine whether an applicant complies with the requirements of 33-20-1301 , MCA.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1303 and 33-20-1315, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00; AMD, 2005 MAR p. 2650, Eff. 12/23/05.

Mont. Admin. R. 6.6.8503 Annual Fee and Reporting Forms

(1) On or before March 1 of each year, viatical settlement providers shall submit to the department an annual fee in the amount of $1900.

(2) Forms for annual reporting required in 33-20-1309 , MCA, are available at the commissioner's office.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-2-708, 33-20-1309, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00.

Mont. Admin. R. 6.6.8504 Forms and Materials Filings, Approvals and Revisions

(1) A viatical settlement provider shall file and have approved by the commissioner application forms, contracts and other forms as required by 33-1-501 and 33-20-1308, MCA.

(2) A viatical settlement provider or broker shall file with the commissioner information brochures, advertising, and other solicitation materials that a provider or broker uses to market viatical settlements to viators or prospective viators in this state before using such materials.

(3) If a viator, prior to effectuating a viatical settlement, requests any changes to a contract form previously approved by the commissioner, the provider shall file a letter with the commissioner requesting a deviation from the standard contract form. The letter must provide:

(a) the name of a viatical settlement provider;

(b) that the viator requested substantive revision;

(d) the deviations from a standard viatical settlement contract; and

(e) that the payment was reasonable under ARM 6.6.8507.

(4) The provider may not execute a revised viatical settlement contract with a viator until the commissioner has reviewed the revisions and approved the form pursuant to 33-1-501, MCA.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-1-501, 33-20-1308, 33-20-1311, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.8505 Disclosure

(1) A disclosure document containing the disclosures required in 33-20-1311, MCA, and this rule, shall be provided when an application for a viatical settlement contract is taken.

(2) The disclosure document must contain the following language:

(a) "All medical, financial, or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about a viator and insured, including the viator and insured's identity or the identity of family members is confidential."

(3) The medical, financial, or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about a viator and insured may not be disclosed in any form to any person, unless disclosure:

(a) is necessary to effect the viatical settlement between the viator and the viatical settlement provider; and

(b) the viator and insured have provided prior written consent to the disclosure.

(4) The disclosure shall include advising the viator and insured that the information may be provided to financing entities including individual and institutional purchasers.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1311, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00; AMD, 2005 MAR p. 71, Eff. 1/14/05; AMD, 2017 MAR p. 1888, Eff. 10/14/17.

Mont. Admin. R. 6.6.8507 Standards for Evaluation of Reasonable Payments

(1) In order to assure that viators receive a reasonable return for viaticating an insurance policy, the following shall be minimum discounts when the insured is terminally ill:

(2) If the insured is not terminally ill or chronically ill, the viator must receive at least the greater of the cash surrender value or accelerated death benefit of the policy.

(3) If the insured is chronically ill but not terminally ill, the viator must receive at least 30% of the net death benefit.

(4) Except where the cash surrender value or accelerated death benefit is paid, the percentage may be reduced by 5% for viaticating a policy for which the insurer of the policy has an A.M. Best rating that is at or below a marginal rating.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1315, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00; AMD, 2005 MAR p. 71, Eff. 1/14/05; AMD, 2005 MAR p. 2650, Eff. 12/23/05.

Mont. Admin. R. 6.6.8508 General Rules

(1) With respect to policies containing a provision for double or additional indemnity for accidental death, the additional payment must remain payable to the beneficiary last named by a viator prior to entering into a viatical settlement contract, or to such other beneficiary, other than a viatical settlement provider, as a viator may thereafter designate, or in the absence of a beneficiary, to the estate of a viator.

(2) Payment of the proceeds of a viatical settlement pursuant to 33-20-1314 , MCA, must be by means of wire transfer to an account designated by the viator in a notarized writing signed by the viator or by certified check or cashier's check.

(3) Payment of the proceeds to the viator pursuant to a viatical settlement shall be made in a lump sum except where the viatical settlement provider has purchased an annuity or similar financial instrument issued by a licensed insurance company or bank, or an affiliate of either. Retention of a portion of the proceeds by the viatical settlement provider or escrow agent is not permissible.

(4) A viatical settlement provider or viatical settlement broker shall not discriminate, as provided in 33-20-1313 , MCA, in the making or solicitation of viatical settlements, or discriminate between viators with dependents and without.

(5) A viatical settlement provider or broker may not condition the consideration of an application on exclusive dealing between a viator and a viatical settlement provider or broker.

(6) A viatical settlement provider may provide personal information about a policyholder or certificate holder to a financing entity, but must comply with Title 33, part 19, MCA.

(7) If a viator rescinds a viatical settlement contract, the viator must repay to the viatical settlement provider or financing entity all paid settlement proceeds.

(8) A viatical settlement provider or viatical settlement broker shall not pay or offer to pay any finder's fee, commission or other compensation to any insured's physician, or to an attorney, accountant or other person providing medical, legal or financial planning services to the viator, or to any other person acting as an agent of the viator, other than a viatical settlement broker with respect to the viatical settlement.

(9) A viatical settlement provider shall not knowingly solicit purchasers who have treated or have been asked to treat the illness of the insured whose coverage would be the subject of the investment.

(10) The following standards apply to advertising of viatical settlements:

(a) advertising related to a viatical settlement must be truthful and not misleading by fact or implication;

(b) if the advertiser emphasizes the speed with which the viatication will occur, the advertising must disclose the average time frame from completed application to the date of offer and from acceptance of the offer to receipt of the funds by the viator; and

(c) if the advertising emphasizes the dollar amounts available to viators, the advertising must disclose the average purchase price as a percent of face value obtained by viators contracting with the advertiser during the past six months.

(11) If a viatical settlement provider enters into a viatical settlement that allows the viator to retain an interest in the policy, the viatical settlement contract shall contain the following provisions:

(a) the viatical settlement provider will effect the transfer of the amount of the death benefit only to the extent or portion of the amount viaticated. Benefits in excess of the amount viaticated shall be paid directly to the viator's beneficiary by the insurance company;

(b) the premiums to be paid by the viatical settlement provider and the viator will be apportioned, unless the viatical settlement contract specifies that all premiums shall be paid by the viatical settlement provider. The contract may also require that the viator reimburse the viatical settlement provider for the premiums attributable to the retained interest; and

(i) advise the insured, in writing, that the insurance company has confirmed the viator's interest in the policy; or

(ii) send a copy of the instrument sent from the insurance company to the viatical settlement provider that acknowledges the viator's interest in the policy.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1313 and 33-20-1314, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00; AMD, 2005 MAR p. 71, Eff. 1/14/05.

Mont. Admin. R. 6.6.8509 Regulation as a Security

(1) A viatical settlement broker or a viatical settlement provider may not solicit, enter into, or negotiate viatical settlement contracts unless a broker or provider, through the exercise of due diligence, ensures that:

(a) the method of funding the financial obligations of a viatical settlement provider does not involve, directly or indirectly, an offer and sale of a "security", as defined in 30-10-103 (22) , MCA; or

(b) if the method of funding the financial obligations of a viatical settlement provider does involve, directly or indirectly, an offer and sale of a "security", as defined in 30-10-103 (22) , MCA, a related offer and sale of a security is in compliance with the Securities Act of Montana, 30-10-101 , et seq., MCA.

(2) A viatical settlement provider shall provide a letter verifying that it is in compliance with (1) (a) and (1) (b) with the application and the yearly report to the commissioner.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1303, MCA
History: NEW, 2000 MAR p. 3155, Eff. 11/10/00.

Mont. Admin. R. 6.6.8510 Reporting Requirement

(1) On or before March 1 of each calendar year, each viatical settlement provider licensed in this state shall submit the following related to the licensee's activities for the previous calendar year:

(a) a report of the viatical settlement transactions in all states and territories, which shall be submitted on Form VSP 001;

(b) a report of the viatical settlement transactions related to Montana viators, which shall be submitted on Form VSP 002;

(d) a certification of the information contained in the reports, which shall be submitted on Form VSPB 001 and shall be filed with the reports.

(2) On or before June 1 of each calendar year, each viatical settlement provider licensed in this state shall submit an annual audited financial statement, if such statements are regularly prepared by or for the viatical settlement provider in the ordinary course of business, or such other financial statements as the commissioner shall require which may include but are not limited to:

(a) a balance sheet reporting assets, liabilities, capital, and surplus;

(b) a statement of operations of the viatical settlement provider for the preceding calendar year;

(d) a statement of cash flows.

(3) On or before March 1 of each calendar year, each licensed viatical settlement broker shall submit the following related to the licensee's activities for the previous calendar year:

(a) a report of the viatical settlement transactions in all states and territories, which shall be submitted on Form VSB 001;

(b) a report of the viatical settlement transactions related to Montana viators, which shall be submitted on Form VSB 002; and

(c) a certification of the information contained in the reports, which shall be submitted on Form VSPB 001 and shall be filed with the reports.

(4) The following materials promulgated by the national association of insurance commissioners are available from the department at 840 Helena Ave., Helena, Montana 59601, and are incorporated by reference:

(a) Form VSP 001, "Viatical Settlement Provider Report-All States and Territories" (March 2004) ;

(b) Form VSP 002, "Viatical Settlement Provider Report-Montana Insureds Only" (March 2004) ;

(d) Form VSB 001, "Viatical Settlement Broker Report-All States and Territories" (March 2004) ;

(e) Form VSB 002, "Viatical Settlement Broker Report-Montana Insureds Only" (March 2004) ; and

(f) Form VSPB 001, "Viatical Settlement Provider/Broker Certification Form" (March 2004) .

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1309, MCA
History: NEW, 2005 MAR p. 71, Eff. 1/14/05.

Mont. Admin. R. 6.6.8511 Prohibited Practices

(1) A viatical settlement provider or viatical settlement broker shall not provide patient identifying information to any person, unless the insured provides written consent to the release of the information at or before the time the viator enters into a viatical settlement contract pursuant to ARM 6.6.8505(3) .

(2) A viatical settlement provider or viatical settlement broker shall obtain from a person that is provided with patient identifying information a signed affirmation that the person or entity will not further divulge the information without procuring the express, written consent of the insured for the disclosure. Notwithstanding the foregoing, if a viatical settlement provider or viatical settlement broker is served with a subpoena and, therefore, is compelled to produce records containing patient identifying information, it shall notify the viator and the insured in writing at the insured's last known address within five business days after receiving notice of the subpoena.

(3) A viatical settlement provider shall not act also as a viatical settlement broker, whether entitled to collect a fee directly or indirectly, in the same viatical settlement.

(4) A viatical settlement broker shall not, without the written agreement of the viator obtained prior to performing any services in connection with a viatical settlement, seek or obtain any compensation from the viator.

(5) A viatical settlement provider shall not use a longer life expectancy than is realistic in order to reduce the payout to which the viator is entitled.

History

Authorizing statute(s): 33-20-1315, MCA
Implementing statute(s): 33-20-1313, MCA
History: NEW, 2005 MAR p. 71, Eff. 1/14/05.

Mont. Admin. R. 6.6.8512 Insurance Company Practices

(1) Life insurance companies authorized to do business in this state shall respond to a request for verification of coverage from a viatical settlement provider or a viatical settlement broker within 30 calendar days of the date a request is received, subject to the following conditions:

(a) a current authorization consistent with applicable law, signed by the policyowner or certificateholder, accompanies the request; and

(b) in the case of an individual policy or group coverage where details with respect to the certificate holder's coverage are maintained by the insurer, submission of a form prescribed by the commissioner, which has been completed by the viatical settlement provider or the viatical settlement broker in accordance with the instructions on the form.

(2) Nothing in this rule shall prohibit a life insurance company and a viatical settlement provider or a viatical settlement broker from using another verification of coverage form that has been mutually agreed upon in writing in advance of submission of the request.

(3) A life insurance company may not charge a fee for responding to a request for information from a viatical settlement provider or viatical settlement broker in compliance with this rule in excess of any usual and customary charges to policyowners, contractholders, certificateholders or insureds for similar services.

(4) The life insurance company may send an acknowledgment of receipt of the request for verification of coverage to the policyowner or certificateholder and, where the policyowner or certificate owner is other than the insured, to the insured. The acknowledgment may contain a general description of any accelerated death benefit that is available under a provision of or rider to the life insurance contract.

History

Authorizing statute(s): 33-19-306 and 33-20-1315, MCA
Implementing statute(s): 33-19-306, MCA
History: NEW, 2005 MAR p. 71, Eff. 1/14/05.

Subchapter 6.6.86 Air Ambulance Arbitration

Mont. Admin. R. 6.6.8601 Purpose and Scope

(1) These rules are intended to establish an expedient and economical process for resolving billing disputes between insurers or health plans and air ambulance services. The independent reviewer shall conduct all aspects of the dispute resolution process in a manner that furthers these objectives while providing for accurate determination of fair market price.

(2) The rules in this subchapter apply to disputes between:

(a) health insurance issuers, as defined in 33-22-140, MCA, government health plans authorized in Title 2, chapter 18, part 7, MCA, or health plans established by the Montana university system authorized by Title 20, chapter 25, part 13, MCA; and

(b) out-of-network air ambulance services, which are not owned or controlled by a Montana hospital system.

(3) the rules in this subchapter do not apply to any disputes:

(a) with self-funded health plans, unless they are expressly identified in (2); or

(b) with air ambulance services owned or controlled by a Montana hospital system.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8602 Mapa Inapplicable

(1) A dispute resolution process subject to this subchapter:

(a) is not a contested case as defined in 2-4-102, MCA;

(b) is not a proceeding before the commissioner; and

(2) The independent dispute resolution process is exhausted upon issuance of the independent reviewer's final decision. A final decision:

(a) is not appealable;

(b) does not limit or create any private rights or remedies for either party;

and

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8603 Confidentiality

(1) The parties and independent reviewer shall maintain the confidentiality of all information protected under applicable law, including protected health information under the Health Insurance Portability and Accountability Act of 1996, trade secret information protected by Title 30, chapter 14, part 4, MCA, or personal information protected under Title 33, chapter 19, MCA.

(2) The parties are entitled to discovery of any documents or information relevant to the determination of fair market value. However, the parties shall limit disclosure of protected information, including to the independent reviewer, to the minimum necessary to effectuate the dispute resolution process.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, 33-19-106, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, 33-19-306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8604 Notice of Dispute – Content

(1) After determining that an insurer or health plan and an air ambulance service cannot resolve a billing dispute, either party may communicate in writing to the other party its intent to submit the dispute to this arbitration process. Within 30 days of that communication, the parties shall file a notice of dispute with the commissioner. The notice shall be mailed to: Office of the Montana State Auditor, c/o Chief Legal Counsel, 840 Helena Avenue, Helena, MT 59601.

(2) The notice must specify:

(a) the parties to the dispute;

(b) the date(s) of service;

(d) the amount in controversy after insurer or health plan payment;

(e) whether the parties have agreed upon an independent reviewer, and if so, his or her contact information; and

(f) the contact information of each party's representative for purposes of the dispute.

(3) If multiple billing disputes between the parties are ripe for dispute resolution when the notice of dispute is filed, whether or not involving transport of the same individual, the parties shall identify all such disputes in the notice. The disputes must be consolidated and the assigned independent reviewer shall hear all identified disputes.

(4) Parties shall make reasonable efforts to jointly file the notice of dispute with the commissioner. If one party is uncooperative, a party may file the notice of dispute without the participation of the uncooperative party. In such a case, the filing party must document in the notice the efforts made to coordinate with the other party and must serve a copy of the notice on the uncooperative party by mail to the registered agent, or if the entity does not have a registered agent in Montana, to the last known business address of the uncooperative party.

(5) The parties shall notify each other of the acceptable form of service before or at the time the notice of dispute is filed. If a party does not specify a form of service, service shall be effectuated by mail to the entity's registered agent, or if the entity does not have a registered agent in Montana, to the last known business address of the entity.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8605 Independent Reviewer Selection–substitution

(1) If the parties to a dispute agree upon an independent reviewer, the independent reviewer is presumed to be qualified without further verification by the commissioner.

(2) If a party believes an assigned independent reviewer has a conflict of interest, the party may request assignment of a different independent reviewer. Upon receipt of the request, the commissioner shall randomly appoint a replacement independent reviewer.

(3) Each party may request assignment of a different independent reviewer under (2) only once per dispute.

(4) A request under (2) must be made either within 10 calendar days after the commissioner notifies the parties of assignment of the independent reviewer or replacement independent reviewer, or within 10 calendar days of discovering new facts demonstrating that the reviewer has a conflict of interest.

(5) In addition to the one request for a replacement independent review allowed by (3), a party may make a request to the commissioner to assign a different independent reviewer if a conflict of interest exists. If the commissioner has good cause to believe reassignment of the independent reviewer is necessary, the commissioner may grant the request. Any request for reassignment must follow the timing requirements in (4).

(6) An independent reviewer may recuse himself or herself if an actual conflict of interest exists.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-719, 2-18-720, 20-25-1319, 20-25-1320, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8606 Preliminary Conference

(1) Unless otherwise ordered by the independent reviewer or agreed to by the parties, within 30 days of appointment the independent reviewer shall hold a telephonic preliminary conference.

(2) During the preliminary conference, the parties and independent reviewer shall address any issues precedent to the hearing, including as applicable:

(a) establishing a scheduling order;

(b) whether the parties intend to call experts, and if so, whether the parties will exchange expert reports;

(d) whether the hearing will be conducted telephonically, in person, or by written submissions;

(e) any dispositive issues, including any assertion that the dispute is not properly subject to the dispute resolution process;

(f) coordinating document exchanges; and

(g) any mechanisms to streamline the dispute resolution process, such as the use of pre-filed testimony.

(3) The preliminary conference and any other communications or proceedings may only be conducted with the participation of all parties. Parties may not participate in any ex parte communications on the subject of the arbitration with an appointed independent reviewer.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8607 Discovery

(1) Within 14 days after the preliminary conference, the parties shall exchange all documents upon which they intend to rely at hearing, a list of all witnesses they intend to call, and a summary of the expected testimony from each identified witness. The parties shall promptly supplement the disclosures as additional documents or witnesses become known.

(2) Each party is limited to one deposition except as agreed otherwise, or as ordered by the independent reviewer.

(3) A party may request additional documentation from the other party that it reasonably believes to be relevant and material to any factor in 33-2-2305(6), MCA. If a party refuses to comply, the requesting party may petition the independent reviewer, who shall require production if the request is for documentation reasonably believed to meet the standards of relevance and materiality, and would not be overly burdensome for the refusing party to produce.

(4) Parties may not propound discovery in the form of requests for admission or interrogatories.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8608 Evidence and Procedure

(1) The Montana Rules of Evidence and Montana Rules of Civil Procedure do not apply to the independent dispute resolution process.

(2) The parties may offer such evidence as is relevant and material to the dispute.

(3) The independent reviewer shall determine the admissibility of evidence. The independent reviewer may exclude evidence that is cumulative or irrelevant, or if the evidence cannot be sufficiently authenticated.

(4) The independent reviewer may render any necessary procedural determinations not set forth by statute or this subchapter.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8609 Preparation for Hearing

(1) No less than 14 days prior to the adjudicatory hearing, the parties shall jointly submit a stipulation identifying all facts not in dispute, including as applicable:

(a) distance and method of transportation;

(b) actual rates of air ambulance billing and insurer or health plan reimbursement;

(d) services provided during transport that were billed to the insured; and

(e) each party's calculation of the fair market price for the services provided.

(2) No less than 10 days prior to the adjudicatory hearing, each party shall submit a prehearing brief setting forth its determination of the fair market price for the services provided, and summarizing the basis for that determination. A prehearing brief may not exceed 10 double-spaced pages, inclusive of any attachments.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8610 Hearing

(1) Unless otherwise requested by either party, all hearings during the independent dispute resolution process should be held telephonically.

(2) Each party shall present evidence, which may include witness testimony in support of its fair market price determination. Witnesses shall be subject to examination by the adverse party and independent reviewer. Evidence may only be presented if it was provided to all parties at least 21 days prior to the hearing.

(3) The parties may consent to waive a telephonic or in-person hearing and proceed by filing opening and rebuttal briefs, with supporting affidavits and evidence, under terms established by the independent reviewer.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8611 Non-Compliance with Order

(1) An independent reviewer may order sanctions as necessary to address a party's willful or repeated non-compliance with its obligations under statute, these rules, or an order of the independent reviewer.

(2) Sanctions may include:

(a) disallowing testimony or admission of evidence;

(b) drawing adverse inferences;

(c) a determination that the other party′s calculation accurately reflects the fair market price of the services provided;

(d) if requested by the party not subject to the sanction, dismissal of the arbitration proceeding; and

(e) any other sanction appropriate for regulation of the proceedings not otherwise disallowed by law.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Mont. Admin. R. 6.6.8612 Final Determination

(1) An independent reviewer shall issue a written final determination of the fair market price of the services provided no later than 60 days following the hearing.

(2) The final determination must provide a reasoned basis for the fair market price with supporting factual findings and legal conclusions.

(3) The final determination must be held confidential by all parties and the independent reviewer. However, upon the request of the commissioner any party or independent reviewer shall provide information necessary to review the efficiency, effectiveness, or outcomes of this process.

History

Authorizing statute(s): 2-18-720, 20-25-1320, 33-2-2306, MCA
Implementing statute(s): 2-18-718, 2-18-719, 2-18-720, 20-25-1318, 20-25-1319, 20-25-1320, 33-2-2304, 33-2-2305, 33-2-2306, MCA
History: NEW, 2017 MAR p. 1877, Eff. 10/14/17.

Subchapter 6.6.87 Corporate Governance Annual Disclosure

Mont. Admin. R. 6.6.8701 Purpose

(1) The purpose of these rules is to set forth the procedures for filing and the required contents of the CGAD necessary to carry out the provisions of the Corporate Governance Disclosure Act, 33-2-2101 through 33-2-2109, MCA.

History

Authorizing statute(s): 33-2-2105, MCA
Implementing statute(s): 33-2-2101, 33-2-2102, 33-2-2103, 33-2-2104, 33-2-2105, 33-2-2106, 33-2-2107, 33-2-2108, 33-2-2109, MCA
History: NEW, 2017 MAR p. 2183, Eff. 1/1/18.

Mont. Admin. R. 6.6.8702 Definitions

The following definitions apply to this subchapter:

(1) "CGAD" means the corporate governance annual disclosure required under Title 33, chapter 2, part 21, MCA.

(2) "Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in 33-2-1101, MCA.

(3) "Senior management" means any corporate officer responsible for reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators. "Senior management" includes the chief executive officer, chief financial officer, chief operations officer, chief procurement officer, chief legal officer, chief information officer, chief technology officer, chief revenue officer, chief visionary officer, or any other "C" level executive.

History

Authorizing statute(s): 33-2-2105, MCA
Implementing statute(s): 33-2-2101, 33-2-2102, 33-2-2103, 33-2-2104, 33-2-2105, 33-2-2106, 33-2-2107, 33-2-2108, 33-2-2109, MCA
History: NEW, 2017 MAR p. 2183, Eff. 1/1/18.

Mont. Admin. R. 6.6.8703 Filing Procedures

(1) An insurer, or the insurance group of which the insurer is a member, required to file a CGAD by Title 33, chapter 2, part 21, MCA, shall, no later than June 1 of each calendar year, submit to the commissioner a CGAD that contains the information described in ARM 6.6.8704 for the prior calendar year.

(2) The CGAD must include a signature of the insurer's or insurance group's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that:

(a) the insurer or insurance group has implemented the corporate governance practices; and

(b) a copy of the CGAD has been provided to the insurer's or insurance group's board of directors or the appropriate committee of the board of directors.

(3) The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by this subchapter and is permitted to customize the CGAD to provide the most relevant information necessary to permit the commissioner to gain an understanding of the corporate governance structure, policies, and practices utilized by the insurer or insurance group.

(4) For purposes of completing the CGAD, the insurer or insurance group may choose to provide information on governance activities that occur at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance.

(a) The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which:

(i) the insurer's or insurance group's risk appetite is determined;

(ii) the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised; or

(iii) legal liability for failure of general corporate governance duties would be placed.

(b) If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in the level of reporting.

(5) As outlined in 33-2-2104, MCA, if the CGAD is completed at the insurance group level, and if the lead state has substantially adopted the requirements contained in the Corporate Governance Disclosure Act, then it must be filed with the lead state of the group as determined by the procedures outlined in the financial analysis handbook adopted in ARM 6.6.8705. A copy of the CGAD must also be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer upon request.

(6) An insurer or insurance group may comply with this section by referencing other existing documents, including the ORSA Summary Report, Holding Company Form B or F Filings, Securities and Exchange Commission (SEC) Proxy Statements, or foreign regulatory reporting requirements, if the documents provide information that is comparable to the information described in ARM 6.6.8704. The insurer or insurance group shall clearly reference the location of the relevant information within the CGAD and attach the referenced document if it is not already filed or available to the regulator.

(7) Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating any changes made since the filing. If no changes were made, the insurer or insurance group should state that in the filing.

History

Authorizing statute(s): 33-2-2105, MCA
Implementing statute(s): 33-2-2101, 33-2-2102, 33-2-2103, 33-2-2104, 33-2-2105, 33-2-2106, 33-2-2107, 33-2-2108, 33-2-2109, MCA
History: NEW, 2017 MAR p. 2183, Eff. 1/1/18.

Mont. Admin. R. 6.6.8704 Contents of Corporate Governance Annual Disclosure

(1) The insurer or insurance group shall be as descriptive as possible in completing the CGAD, and shall include any relevant attachments or example documents that are used in the governance process.

(2) The CGAD shall describe the insurer's or insurance group's corporate governance framework and structure. Its description shall include consideration of:

(a) the board of directors, including the rationale for the current board size and structure, the committees ultimately responsible for overseeing the insurer or insurance group, and the levels at which that oversight occurs, such as the ultimate control, intermediate holding company, or legal entity level; and

(b) the duties of the board and each of its significant committees and how they are governed, such as bylaws, charters, or informal mandates, as well as how the board's leadership is structured, including a discussion of the roles of chief executive officer and chairman of the board within the organization.

(3) The insurer or insurance group shall describe the policies and practices of the most senior governing entity and its significant committees, including a discussion of:

(a) how the qualifications, expertise, and experience of each board member meets the needs of the insurer or insurance group;

(b) how an appropriate amount of independence is maintained on the board and its significant committees;

(c) the number of meetings held by the board and its significant committees over the past year, and information on director attendance;

(d) how the insurer or insurance group identifies, nominates, and elects members to the board and its committees. The discussion should include:

(i) whether a nomination committee is in place to identify and select individuals for consideration;

(ii) whether term limits are placed on directors;

(iii) how the election and reelection processes function; and

(iv) whether a board diversity policy is in place and if so, how it functions.

(e) The processes in place for the board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance. The discussion should disclose any board or committee training programs.

(4) The insurer or insurance group shall describe the policies and practices for directing senior management, including a description of:

(a) any processes or practices, including suitability standards, to determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, including:

(i) identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and

(ii) any changes in an officer's or key person's suitability as outlined by the insurer's or insurance group's standards and procedures to monitor and evaluate such changes.

(b) the insurer's or insurance group's code of business conduct and ethics, including consideration of:

(i) compliance with laws, rules, and regulations; and

(ii) proactive reporting of any illegal or unethical behavior.

(c) the insurer's or insurance group's processes for performance evaluation, compensation, and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the commissioner to understand how the organization ensures that compensation programs do not encourage or reward excessive risk taking. Elements to be discussed may include:

(i) the board's role in overseeing management compensation programs and practices;

(ii) the various elements of compensation awarded in the insurer's or insurance group's compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

(iii) how compensation programs are related to both company and individual performance over time;

(iv) whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

(v) any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and

(vi) any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees; and

(vii) the insurer's or insurance group's plans for chief executive officer and senior management succession.

(5) The insurer or insurance group shall describe the processes by which the board, its committees, and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer's business activities, including a discussion of:

(a) how oversight and management responsibilities are delegated between the board, its committees, and senior management;

(b) how the board is kept informed of the insurer's strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks; and

(c) how reporting responsibilities are organized for each critical risk area. The description must allow the commissioner to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the board. This description may include, for example, the following critical risk areas of the insurer:

(i) risk management processes. An ORSA Summary Report filer may refer to its ORSA Summary Report pursuant to 33-2-1130 through 33-2-1138, MCA;

(ii) actuarial function;

(iii) investment decision-making processes;

(iv) reinsurance decision-making processes;

(v) business strategy and finance decision-making processes;

(vi) compliance function;

(vii) financial reporting and internal auditing; and

(viii) market conduct decision-making processes.

History

Authorizing statute(s): 33-2-2105, MCA
Implementing statute(s): 33-2-2101, 33-2-2102, 33-2-2103, 33-2-2104, 33-2-2105, 33-2-2106, 33-2-2107, 33-2-2108, 33-2-2109, MCA
History: NEW, 2017 MAR p. 2183, Eff. 1/1/18.

Mont. Admin. R. 6.6.8705 Adoption of Naic Financial Analysis Handbook

(1) For purposes of review of holding company systems and corporate governance disclosures, the commissioner adopts the financial analysis handbook, volumes one and two, most recently published on January 2, 2017 by the National Association of Insurance Commissioners. Copies of both volumes of the financial analysis handbook are available at: www.naic.org/prod_serv_publications.htm .

History

Authorizing statute(s): 33-2-2105, 33-2-1117, MCA
Implementing statute(s): 33-2-1111, 33-2-2101, 33-2-2104, MCA
History: NEW, 2017 MAR p. 2183, Eff. 1/1/18.

Subchapter 6.6.88 Network Adequacy for Managed Care Plans

Mont. Admin. R. 6.6.8801 Definitions

The following definitions, in addition to those contained in 33-36-103 , MCA, apply to this chapter:

(1) "Access plan" means a document filed by a health carrier with the commissioner that complies with the standards set forth in ARM 6.6.8805 through 6.6.8807 and 33-36-201 , MCA.

(2) "Advanced practice registered nurse" means a nurse midwife, a nurse anesthetist, a nurse practitioner, or a clinical nurse specialist.

(3) "Geographic service area" means a geographic area of Montana in which a health carrier has a network that has been deemed adequate by the commissioner.

(4) "Mid-level provider" means a physician assistant-certified or an advanced practice registered nurse.

(5) "Non-urgent care with symptoms" means care required for an illness, injury, or condition with symptoms that do not require care within 24 hours to prevent a serious risk of harm but do require care that is neither routine nor preventive in nature.

(6) "Primary care provider (PCP)" means a physician, mid-level provider, federally qualified health center or rural health clinic as defined in ARM 37.86.4401, migrant health center, or other community-based provider that is designated by a health carrier to supervise, coordinate, or provide initial or continuing care to an enrollee, and if required by the health carrier, initiate a referral for specialty care services rendered to the enrollee.

(7) "Specialty provider" or "specialist" means a physician or other provider whose area of specialization is an area other than general medicine, family medicine, general internal medicine, or general pediatrics. A provider whose area of specialization is obstetrics and/or gynecology may be either a PCP or a specialist within the meaning of this rule.

(8) "Urgent care" means those health care services that are not emergency services but that are necessary to treat a condition or illness that could reasonably be expected to present a serious risk of harm if not treated within 24 hours.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-103, 33-36-105, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.201, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8805 Access Plan Filing and Review Guidelines

(1) When a health carrier submits a proposed access plan to the commissioner for review and approval, the commissioner will either approve, disapprove, or request additional information on the proposed plan within 60 calendar days. The commissioner has a total of 60 calendar days to review and issue a decision concerning any proposed access plan, not including any 30 calendar day response period that may be granted a health carrier proposing the plan. The commissioner may grant up to two 30 day response periods during the review of each access plan.

(2) During the commissioner's review of its proposed access plan, a health carrier must respond to the commissioner's request for information within 30 calendar days after the date of the request. If the response remains incomplete, the commissioner may grant the health carrier a second 30 calendar day period within which to submit a complete response. If, after two requests by the commissioner for information, the health carrier fails to provide information that the commissioner deems sufficient to satisfy its requests, the access plan will be disapproved and the health carrier will be required to submit a new proposed access plan prior to enrolling initial or additional enrollees.

(3) The total number of days allowed for the review of a given proposed access plan may not exceed 120 calendar days, including both time spent by the commissioner in review of the proposed plan and any time granted to a health carrier to respond to the commissioner's requests for additional information.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.205, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8806 Access Plan Updates

(1) Health carriers shall be responsible for monitoring the status of their networks and must submit an updated access plan to the commissioner within 30 calendar days after a material change in the status of their network. For the purposes of this rule, a material change is a change in the composition of a health carrier's provider network or a change in the size or demographic characteristics of the population enrolled with the health carrier that renders the health carrier's network non-compliant with one or more of the network adequacy standards set forth in ARM 6.6.8815 , 6.6.8819 , and 6.6.8827 . If the revised access plan is not submitted within 30 calendar days after the material change in network status occurs, the health carrier must cease enrolling new recipients in the affected geographic service area until the revised access plan is approved by the commissioner. Review of the revised access plan is subject to the procedures and consequences outlined in ARM 6.6.8805 .

(2) In addition to the requirement in (1):

(a) the health carrier must submit an updated access plan to the commissioner pursuant to 33-36-201(4), MCA; and

(b) health carriers must file an updated access plan with the commissioner if the number of providers in the overall provider network or in any specialty provider network decreases by more than 5% during the year in any single geographic service area or in the overall network. The carrier must file the plan within 30 days of the date the carrier learns of the decrease.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.206, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8807 Access Plan Specifications

(1) In addition to meeting the requirements of 33-36-201 (6) , MCA, an access plan for each health carrier offered in Montana must describe or contain the following:

(a) a list of participating providers which describes the type of provider, their specialty or credentials, and also their names, business addresses, zip codes, and phone numbers. The list must indicate which providers are accepting new patients;

(b) the health carrier's policy for making referrals within and outside of the network including, at a minimum, the health carrier's method for complying with each of the standards set forth in ARM 6.6.8828 , 6.6.8829 and 6.6.8835 ;

(c) the health carrier's process for monitoring on a periodic basis the need for and satisfaction with health care services of the enrolled population and ensuring on an ongoing basis, the sufficiency of the network to meet those needs and, at a minimum, the health carrier's methods for complying with each of the standards set forth in ARM 6.6.8840 ;

(d) the health carrier's policy to address the needs of enrollees with limited English proficiency and/or illiteracy, those with diverse cultural and ethnic backgrounds, and those with physical and mental disabilities, in order to ensure that these characteristics do not pose barriers to gaining access to services. The policy shall, at a minimum, describe the health carrier's methods for complying with each of the standards set forth in ARM 6.6.8836 ; and

(e) a copy of the health benefit plan's booklet or policy or certificate of coverage, a summary of benefits for each policy (if available) , the list of network providers for each policy, and any other important information about the health carrier's services and features which must be provided by the health carrier to either potential enrollees or covered enrollees. This information must be presented in language that is comprehensible to the average layperson. The information to be provided includes, but is not limited to:

(i) a listing of participating providers, as described in (1)(a);

(ii) a summary description of the health carrier's standards for provider credentials and methodology for reviewing provider credentials on an ongoing basis required by ARM 6.6.8816 ;

(iii) the procedures in place for selecting and changing providers;

(iv) the health carrier's policy regarding enrollee responsibility for co-insurance, copayments, and deductibles;

(v) a detailed description of the health carrier's procedures along with authorization for specialty care that comply with ARM 6.6.8828 , a schedule of the fees, including co-insurance, copayments, and deductibles, for which an enrollee will be responsible;

(vi) policies pertaining to approval of and access to emergency services that meet the requirements of ARM 6.6.8814 ;

(vii) telephone numbers and procedures for contacting an authorized representative of the health carrier who can facilitate review of post-evaluation or post-stabilization services required immediately after receipt of emergency services;

(viii) a description of the health carrier's grievance procedures, including specific instructions and guidelines for filing and appealing grievances;

(ix) a policy regarding use of and payment for in-network services; and

(x) a policy regarding use of and payment for out-of-network services;

(f) the health carrier's method of providing and paying for emergency screening and services 24 hours a day, 7 days a week, in accordance with ARM 6.6.8814 ;

(g) a process for enabling enrollees to change primary care professionals that meets the standards of ARM 6.6.8835 ;

(h) a process for transfer of enrollees to other providers must include a provision for transitional care as described in ARM 6.6.8829 ;

(i) the process used to address and correct instances where a health carrier has an insufficient number or type of participating providers accessible to enrollees to provide a covered benefit. This process must comply with the requirements of ARM 6.6.8819 and 6.6.8820 ; and

(j) the health carrier's procedures for complying with geographic accessibility requirements as outlined in ARM 6.6.8819 and 6.6.8820 .

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.207, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8808 Access Criteria

(1) The commissioner will utilize the criteria set forth in this chapter and Title 33, chapter 36, MCA, to determine whether the network maintained by a health carrier offering a managed care plan in Montana is sufficient in numbers and type of providers.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.208, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8814 Mandatory Coverage

(1) The following must be reimbursed without regard to either prior authorization or the contractual relationship between the health carrier and the provider:

(a) emergency services as defined in 33-36-103 , MCA;

(b) covered services that do not meet the criteria for emergency services, but which were medically necessary and immediately required because an unforeseen illness, injury or condition occurred when the enrollee was outside the health carrier's geographic service area and could not reasonably access services through the health carrier's network of providers; and

(c) renal dialysis, if covered, that is provided while the enrollee is outside the health carrier's service area for no more than 30 calendar days per year.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, 33-36-205, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.214, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8815 Provider-Enrollee Ratio Requirements

(1) In order to be deemed adequate, a health carrier's network must include one mid-level PCP per 1,500 projected enrollees or one physician PCP per 2,500 projected enrollees.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.215, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8816 Verification of Provider Credentials

(1) Each health carrier shall establish and describe in its access plan the criteria utilized to review the credentials of the providers in its network. A health carrier must require a provider's credentials to be reviewed prior to the health carrier employing or entering into contractual relationship with a provider and a provider's credentials are to be reverified at least every 3 years thereafter.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.216, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8819 Geographic Access Criteria

(1) In order to be deemed adequate, a provider network must fulfill all access criteria of the rules in this chapter within the following geographic restrictions:

(a) to the extent that services are covered by the health carrier, the health carrier must have an adequate network of primary care providers; a hospital, critical access hospital, or medical assistance facility; and a pharmacy that is located within a 30 mile radius of each enrollee's residence or place of work, unless:

(i) the usual and customary travel pattern of the general population within the service area to reach health care providers is further, and if the fact that the usual and customary travel pattern exists is documented by the health carrier; or

(ii) the provider is available but does not meet the health carrier's reasonable credentialing requirements; and

(b) if no qualified provider for a service covered by the plan exists within a 30 mile radius of an enrollee's residence or place of work, the health carrier must document how covered services will be provided at no additional charge to enrollees through referrals to qualified providers outside the 30 mile radius.

(2) Enrollees may, at their discretion, select participating primary care providers located farther than 30 miles from their homes and/or places of business.

(3) When an eligible employee in a group health plan neither resides nor works within a 30 mile radius of the network established pursuant to (1) , the network may be deemed adequate subject to the following conditions:

(a) Insured employees living and working outside the 30 mile radius of the primary place of work of their employer, as well as their dependents, may not be penalized either in benefits or by being required to travel outside the 30 mile radius from their own place of work to receive routine treatment typically provided by a primary care provider.

(b) The health carrier may require employees to utilize a network primary care provider for referrals, including for referrals for routine treatment provided by a primary care provider. If such a requirement is imposed, access to the network primary care provider must be available to the insured by phone at no cost to the insured. A toll free number to the health carrier would satisfy this requirement.

(c) At the time of initial selection or the renewal of a managed care plan, the maximum number of eligible employees residing and working outside the 30 mile radius of the primary place of work may not exceed the following:

(i) for groups with two to five employees, one;

(ii) for groups with six to 15 employees, two;

(iii) for groups with 16 to 30 employees, three, and

(iv) for groups with 30 or more employees, 10% of the employees.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; AMD, 2005 MAR p. 1296, Eff. 7/15/05; TRANS, from 37.108.219, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8820 Exceptions to Geographic Access Criteria

(1) The commissioner may grant exceptions to the geographic accessibility standard in ARM 6.6.8819 if good cause to do so exists.

(2) Good cause includes but is not limited to the circumstance where the health carrier has documented a good faith effort to negotiate a contract with local providers but has failed to reach an agreement within 60 days after the offer of a written contract from the health carrier. A good faith effort means an honest effort with the intent to deal fairly with providers and includes offering terms and conditions at least as favorable as those offered to other entities providing the same or similar services.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.220, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8821 Service Areas

(1) A network's service area may encompass more than one geographic service area provided the network in all such areas meets the network adequacy criteria.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.221, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8827 Maximum Wait Times for Appointments

(1) An adequate network must meet the following criteria for all enrollees:

(a) emergency services must be available and accessible at all times;

(b) urgent care appointments must be available within 24 hours;

(d) appointments for immunizations must be available within 21 calendar days; and

(e) appointments for routine or preventive care must be available within 45 calendar days.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.227, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8828 Referral and Specialty Care Requirements

(1) Procedures for referrals must be clearly outlined in the access plan, in literature provided to all enrollees, and in literature or contracts provided to all participating providers.

(2) Women and adolescent females who do not designate a gynecological health care provider as their PCP must be allowed direct access (without prior authorization or referral from a PCP) to a participating provider whose area of specialization is gynecology for routine gynecological care no less frequently than one time per year.

(3) Pregnant females must be allowed direct access, without prior authorization or referral from a PCP, to a participating provider whose area of specialization is obstetrics.

(4) An enrollee must be allowed to designate a participating pediatrician, family practice physician, or, if the health carrier allows a mid-level provider to be a PCP, a mid-level provider specializing in primary care of children as the PCP for the enrollee's children and/or adolescents who are covered by the health carrier.

(5) The access plan must include a process to address and correct instances where a health carrier has an insufficient number or type of participating providers accessible to enrollees to provide a covered benefit. In these instances, the health carrier must ensure that covered services are provided at no greater cost to the enrollee than if the services were obtained from a participating provider.

(6) The access plan must include policies and procedures by which an enrollee with a condition that requires ongoing care from a specialist may obtain a standing referral to a participating specialty provider. For purposes of this rule, standing referral means a referral for ongoing care to be provided by a participating specialty care provider that authorizes a series of visits with the specialist for either a specific time period or a limited number of visits, and which is provided according to a treatment plan approved by the carrier and developed by the enrollee's PCP, the specialty provider, and the enrollee.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.228, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8829 Continuity of Care and Transitional Care

(1) A health carrier must allow the following new enrollees to continue to receive services from their previous providers for the time periods noted below, so long as those providers agree to abide by the payment rates, credentialing, referral process, quality-of-care standards and protocols, and reporting standards that apply to comparable participating providers:

(a) a new enrollee with a life-threatening, disabling or degenerative condition may obtain care from their previous provider for a period of 60 days, beginning the date of the enrollee's enrollment with the health carrier;

(b) a new enrollee who has received a diagnosis of terminal illness with life expectancy of less than 6 months, may continue to obtain care from their previous provider until death if it occurs prior to the end of the 6 month period, or, if it does not, for a period of 6 months from the date of the enrollee's enrollment with the health carrier, unless the period is extended after the enrollee's medical needs and the appropriateness of requiring a transition to a participating provider are reassessed. Such a reassessment must be conducted at or before the end of the 6 month period by the health carrier for such a terminally ill enrollee; and

(c) a new enrollee in the second or third trimester of pregnancy may obtain care from their previous provider through the completion of postpartum care.

(2) A health carrier must allow enrollees with the medical conditions described in (1) (a) through (1) (c) above to continue to receive services from their existing providers when their provider's contract is terminated by the carrier without cause or when the provider voluntarily terminates their contract with the carrier, so long as those providers agree to abide by the payment rates, credentialing, referral process, quality-of-care standards and protocols, and reporting standards which apply to comparable participating providers. The time periods during which such continued services are allowed are the same as those specified in (1) (a) through (1) (c) above, with the exception that, for the conditions described in (1) (a) and (1) (b) , the time period begins on the date the provider's contract is terminated, rather than the date of the enrollee's enrollment with the health carrier.

(3) A health carrier may not hold an enrollee covered by this rule responsible for any additional payments, copayments, co-insurance or deductibles beyond what would be required if the services were provided by a participating provider.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; AMD, 2000 MAR p. 2432, Eff. 9/8/00; TRANS, from 37.108.229, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8835 Selecting and Changing Providers

(1) Enrollees must be allowed to change primary care providers at least once per benefit year.

(2) The health carrier will monitor the frequency of enrollees' requests to change primary care providers and shall have in place a policy to address situations in which a provider has patient turnover rates that are significantly higher than the average rate within the health carrier's network.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.235, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8836 Removal of Barriers to Access

(1) The health carrier must have a policy in place to address the needs of enrollees with limited English proficiency and/or illiteracy, those with diverse cultural and ethnic backgrounds, and those with physical and mental disabilities, in order to insure that these characteristics do not pose barriers to gaining access to services. This policy shall, at a minimum, describe the health carrier's methods for providing the following:

(a) interpreter services to allow effective communication regarding treatment, medical history and health education;

(b) appropriate and sufficient personnel, physical resources and equipment to meet the basic health care needs of these enrollees; and

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.236, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8840 Monitoring the Network

(1) The health carrier must establish methods for periodically assessing the sufficiency of the network to meet the health care needs of covered persons as well as assessing their satisfaction with services. The following must be included in this assessment:

(a) changes in volume of specialty services needed;

(b) changes in number of primary care providers needed;

(d) enrollee satisfaction with billing and record keeping;

(e) provider satisfaction with billing and record keeping;

(f) enrollee satisfaction with educational materials available to them;

(g) enrollee satisfaction with 24-hour access to medical advice and services;

(h) enrollee satisfaction with the referral process; and

(i) provider satisfaction with the referral process.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.240, 2023 MAR p. 1401, Eff. 10/21/23.

Mont. Admin. R. 6.6.8841 Letters of Intent

(1) In order to demonstrate that its network is adequate, a health carrier may utilize letters of intent from individual providers with whom it does not yet have a contract, so long as the providers do not constitute more than 15% of the total network. If letters of intent from providers are utilized, within 6 months after the access plan is submitted to the commissioner the health carrier must submit to the commissioner verification that it has an adequate network.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-201, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.241, 2023 MAR p. 1401, Eff. 10/21/23; AMD, 2024 MAR p. 713, Eff. 4/13/24.

Mont. Admin. R. 6.6.8842 Responsibility for Contracted Services

(1) A health carrier offering a managed care plan that uses a contractual arrangement to provide services to covered persons remains responsible for meeting the requirements of this chapter, including documentation requirements.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, MCA
History: NEW, 1999 MAR p. 2052, Eff. 9/24/99; TRANS, from 37.108.242, 2023 MAR p. 1401, Eff. 10/21/23.

Subchapter 6.6.89 Quality Assurance for Managed Care Plans

Mont. Admin. R. 6.6.8901 Purpose

(1) The purpose of these rules is to implement the quality assurance provisions of the Montana Managed Care Plan Network Adequacy and Quality Assurance Act specified in Title 33, chapter 36, part 3, MCA. These rules establish mechanisms for the commissioner to evaluate quality assurance activities of health carriers providing managed care plans in Montana.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-102, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.501, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8902 Definitions

The following definitions, in addition to those contained in 33-36-103, MCA, apply to this subchapter:

(1) "HEDIS" means health plan employer data and information set, a standardized set of performance measures used by the national committee for quality assurance to assess and report on quality assurance activities of offered managed care plans.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.502, 2023 MAR p. 1403, Eff. 1/1/24.

Mont. Admin. R. 6.6.8905 Quality Assurance Structure and Accreditation

(1) The health carrier shall appoint, prior to commencing operation, a medical physician licensed to practice in the state of Montana to advise, oversee, and actively participate in the implementation and operation of the quality assurance program.

(2) The health carrier may delegate quality assurance activities. The health carrier shall retain responsibility for the performance of all delegated activities and shall develop and implement review and reporting requirements to ensure that the delegated entity performs all delegated quality assurance activities.

(3) A health carrier whose managed care quality assurance plan has been accredited by a nationally recognized accrediting organization shall initially provide a copy of the accreditation certificate or outcome report and the accrediting standards used by the accrediting organization to the commissioner.

(a) If the commissioner finds that the standards of the nationally recognized accrediting organization meet or exceed the commissioner's standards, the commissioner will approve the health carrier's quality assurance program.

(b) After approval by the commissioner, the accredited health carrier shall provide proof of its continued accreditation annually to the commissioner.

(c) All accredited health carriers, regardless of their offering of closed, combination, or open plans, must comply with ARM 6.6.8907, 6.6.8910, 6.6.8915, and 6.6.8916.

(d) The commissioner will maintain a list of its approved accrediting organizations whose standards have been determined by the commissioner to meet or exceed the commissioner's quality assurance standards.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-302, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.505, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8906 Written Description of Quality Assessment Plan

(1) The health carrier shall implement a written quality assessment plan that is evaluated annually and updated as necessary. The plan must be submitted to the commissioner by June 1 of each year. The plan must describe:

(a) the plan's mission, goals, and objectives;

(b) the plan's organizational structure and the job titles of the personnel responsible for quality assessment;

(i) specific diagnoses, conditions, or treatments targeted for review to improve health care services and health outcomes;

(ii) mechanisms to evaluate enrollees' health and health care services in relation to current medical research, knowledge, standards, and practices;

(iii) communication processes by which the findings generated by the quality assessment program are communicated to providers and consumers to improve the health of enrollees; and

(iv) mechanisms to evaluate the service performance of the health carrier and primary care physicians.

(2) The written quality assessment plan must be signed by the health carrier's corporate officer certifying that the plan meets the commissioner's requirements.

(3) The commissioner and each health carrier will meet annually to review and approve the written quality assessment plans and their outcomes.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-302, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.506, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8907 Components of Quality Assessment Activities

(1) Annually, the health carrier shall evaluate its quality assessment activities by using the following 2024 HEDIS measures:

(a) childhood immunization;

(b) breast cancer screening;

(d) comprehensive diabetes care; and

(e) HEDIS/Consumer Assessment of Health Plan Survey (CAHPS) for adults.

(2) The health carrier shall record organizational components that affect accessibility, availability, comprehensiveness, and continuity of care, including:

(a) referrals;

(b) case management;

(d) appointment scheduling and waiting periods for all types of health care services;

(e) second opinions, as applicable;

(f) prior authorizations, as applicable;

(g) provider reimbursement arrangements that contain financial incentives that may affect the care provided; and

(h) other systems, procedures, or administrative requirements used by the health carrier that affect the delivery of care.

(3) The health carrier may meet the requirements in (2) by submitting information to the commissioner regarding network adequacy as specified in ARM 6.6.8801, et seq., as long as the information is consistent with what is required in (2).

(4) The commissioner adopts and incorporates by reference the HEDIS 2024 measures for the categories listed in (1)(a) through (e). The HEDIS 2024 measures are developed by the National Committee for Quality Assurance and provide a standardized mechanism for measuring and comparing the quality of services offered by managed care health plans. Copies of the HEDIS 2024 measures are available from the National Committee for Quality Assurance, 1100 13th St. NW, Suite 1000, Washington, D.C. 20005 or at www.ncqa.org .

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-302, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; AMD, 2002 MAR p. 954, Eff. 3/29/02; AMD, 2003 MAR p. 1662, Eff. 8/1/03; AMD, 2004 MAR p. 1406, Eff. 6/18/04; AMD, 2005 MAR p. 1296, Eff. 7/15/05; AMD, 2006 MAR p. 1642, Eff. 6/23/06; AMD, 2007 MAR p. 303, Eff. 3/9/07; AMD, 2008 MAR p. 958, Eff. 5/9/08; AMD, 2009 MAR p. 1019, Eff. 6/26/09; AMD, 2010 MAR p. 437, Eff. 2/12/10; AMD, 2011 MAR p. 333, Eff. 3/11/11; AMD, 2012 MAR p. 1264, Eff. 6/22/12; AMD, 2013 MAR p. 336, Eff. 3/15/13; AMD, 2014 MAR p. 327, Eff. 2/14/14; AMD, 2017 MAR p. 610, Eff. 5/13/17; AMD, 2018 MAR p. 1167, Eff. 6/23/18; AMD, 2019 MAR p. 397, Eff. 4/13/19; AMD, 2020 MAR p. 331, Eff. 2/15/20; TRANS, from 37.108.507, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8910 Quality Improvement

(1) At the commissioner's request, the health carrier shall provide documentation on its quality improvement activities and an evaluation of the effectiveness of the previous year's quality improvement activities. Such documentation must include the health carrier's identification of quality assessment problems and opportunities for improving care through:

(a) ongoing monitoring of process, structure, and outcomes of patient care or clinical performance;

(b) evaluation of the data collected from ongoing monitoring activities to identify problems in patient care or clinical performance using criteria developed and applied by health care professionals;

(c) measurable objectives for each improvement action within the reporting year, including the degree of expected change in persons or situations;

(d) time frames for quality improvement action; and

(e) parties responsible for implementing quality improvement action.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-105, 33-36-303, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.510, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8911 Clinical Focused Study

(1) The health carrier shall conduct a focused study relevant to the quality of its services for enrollee care. The health carrier must document the clinical focused study and submit it to the commissioner at the commissioner's request.

(2) The health carrier shall select topics for the focused study that are justified based on any of the following considerations:

(a) areas of high volume;

(b) areas of high risk;

(d) areas that can be corrected or where prevention may have an impact;

(e) areas that have potential adverse health outcomes; and

(f) areas where enrollee complaints have occurred.

(3) The health carrier shall document the study methodology employed, including:

(a) the focused study question;

(b) the sample selection;

(d) evaluation criteria; and

(e) measurement techniques.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-303, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.511, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8915 Enrollee Complaint System

(1) The health carrier shall have an internal complaint system for enrollees. Such a system shall comply with the requirements of 33-31-303, MCA.

(2) The health carrier shall conduct ongoing evaluations of all enrollee complaints, including complaints about the health carrier's services filed with participating providers. Ongoing evaluations must be conducted in accordance with ARM 6.6.8910. The data on complaints must be reported and evaluated by the health carrier at least quarterly.

(3) Evaluation methods must permit the health carrier to track specific complaints, assess trends, and establish that corrective action is implemented and effective in improving the identified problem(s) .

(4) The health carrier shall document and monitor the effectiveness of its evaluation of the enrollee complaint system and communicate it to the involved providers, enrollees, and the commissioner upon request. The information is subject to the confidentiality requirements provided in 33-36-305, MCA.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-303, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.515, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Mont. Admin. R. 6.6.8916 Recording Consumer Satisfaction

(1) The health carrier shall record consumer components that identify enrollees' perceptions on the quality of the health carrier's services, including:

(a) enrollee satisfaction surveys; and

(b) enrollee complaints, including:

(i) the health carrier's resolution of the complaints through its internal procedures;

(ii) arbitration decisions; and

(iii) court decisions.

(2) The health carrier shall submit documentation of its handling of consumer satisfaction to the commissioner at the commissioner's request.

(3) The health carrier may meet the requirements in (1)(a) regarding enrollee satisfaction surveys by submitting to the commissioner the information required for network adequacy as specified in ARM 6.6.8801, et seq., as long as the information is consistent with what is required in (1)(a).

(4) The identities of enrollees involved in recording consumer satisfaction are subject to the confidentiality requirements provided in 33-36-305, MCA.

History

Authorizing statute(s): 33-36-105, MCA
Implementing statute(s): 33-36-303, MCA
History: NEW, 2001 MAR p. 1342, Eff. 7/20/01; TRANS, from 37.108.516, 2023 MAR p. 1403, Eff. 1/1/24; AMD, 2024 MAR p. 714, Eff. 4/13/24.

Subchapter 6.6.90 Regulatory Sandbox Waivers

Mont. Admin. R. 6.6.9001 Application Requirements

(1) An application for a waiver under 33-2-2501, MCA, must include the following information:

(a) the identity of the insurer applying for the waiver;

(b) the identity of the directors and executive officers of the insurer, any persons who are beneficial owners of 10% or more of the voting securities of the insurer, and any officers of the insurer;

(c) a description of the product or service to be offered if the waiver is granted, including how the product or service functions and the manner and terms on which it must be offered;

(d) a description of the potential benefits to consumers of the product or service;

(e) a description of the potential risks, including but not limited to financial risks, to consumers posed by the product or service or approval of the proposed waiver and how the applicant proposes to mitigate the risks;

(f) a statement that the insurer has a physical presence in the state and has a certificate of authority issued by the commissioner to write insurance in the state;

(g) a filing fee of $1,000 unless the submission is complex and lengthy, in which case the commissioner will provide an estimate of the fee that is commensurate with regulatory costs for consideration of the submission. The insurer may withdraw the submission after receiving the estimate;

(h) a specific explanation of how the waiver sought would meet each of the criteria set forth in 33-2-2501(1), MCA;

(i) certification that the waiver sought does not fall into any of the prohibited categories set forth in 33-2-2501(7), MCA; and

(j) a description of the insurer's plan for winding down the proposed program or activity pursuant to 33-2-2501(12), MCA.

(2) The application shall be submitted on a form designated by the commissioner and made available to applicants on the Montana State Auditor's website.

(3) At the time of submission, an applicant may request to protect confidential trade secrets contained in an application. The request must include an affidavit that clearly states the facts supporting the claim to trade secret protection with sufficient specificity to enable the reviewer to clearly understand the nature and basis of the claims to confidentiality, including an explanation of how the information meets the definition of "trade secret" under 30-14-402(4), MCA.

History

Authorizing statute(s): 33-2-2501, MCA
Implementing statute(s): 33-2-2501, MCA
History: NEW, 2023 MAR p. 1398, Eff. 10/21/23.

Mont. Admin. R. 6.6.9002 Waiver Monitoring

(1) At the time of granting a waiver, the commissioner shall provide an insurer granted a waiver under 33-2-2501, MCA, with a list of reporting requirements and dates for reporting as warranted by the facts and circumstances of the particular waiver.

History

Authorizing statute(s): 33-2-2501, MCA
Implementing statute(s): 33-2-2501, MCA
History: NEW, 2023 MAR p. 1398, Eff. 10/21/23.

Mont. Admin. R. 6.6.9003 Waiver Revocation

(1) The commissioner may revoke a waiver if the insurer who obtains the waiver fails to comply with any terms, conditions, or limitations established by the commissioner, the requirements of 33-2-2501, MCA, or if the waiver is causing harm to a consumer or causes material harm to the insurer's solvency.

(2) The commissioner shall give the insurer written notice of intent to revoke the waiver, and the insurer shall have ten days to respond to the notice.

(3) Following the insurer's response, if the commissioner is not satisfied that the condition warranting revocation is cured, the commissioner shall send final written notice revoking the waiver.

(4) If the reasons described in (1) of this rule pose a threat of harm in the absence of immediate action, the commissioner may immediately revoke the waiver pending the insurer's response.

History

Authorizing statute(s): 33-2-2501, MCA
Implementing statute(s): 33-2-2501, MCA
History: NEW, 2023 MAR p. 1398, Eff. 10/21/23.

Mont. Admin. R. 6.6.9004 Waiver Extension

(1) An extension request under 33-2-2501(3)(b), MCA, must be submitted to the commissioner within 45 days of the expiration of the waiver period. This request must include the length of the extension period requested and the specific reasons why the extension is necessary. These specific reasons must include an analysis of the effectiveness of the waiver in meeting the goals set forth in the initial waiver application.

History

Authorizing statute(s): 33-2-2501, MCA
Implementing statute(s): 33-2-2501, MCA
History: NEW, 2023 MAR p. 1398, Eff. 10/21/23.

Mont. Admin. R. 6.6.9005 Expedited Waiver Applications

(1) Where a product or service has been granted a waiver by the Commissioner, any applicant wishing to offer a substantially similar product or service may file an expedited application meeting the following requirements:

(a) An application must be submitted on the same form described in ARM 6.6.9001(2). The applicant must indicate that the application is an expedited application under this rule.

(b) An application must specifically identify the previously granted waiver and explain in detail how the product or service it anticipates offering is substantially similar to those offered under the previously-granted waiver.

History

Authorizing statute(s): 33-2-2501, MCA
Implementing statute(s): 33-2-2501, MCA
History: NEW, 2023 MAR p. 1398, Eff. 10/21/23.

Subchapter 6.6.91 Statewide School Health Insurance Trust

Mont. Admin. R. 6.6.9101 Definitions

The following definitions apply to this subchapter:

(1) “Claim reserves” means an actuarial estimate of the amount needed for unpaid claim liabilities. This amount shall be determined by a credentialed actuary selected by the trust.

(2) “Plan reserves,” “reserves,” or “reserve” means total assets minus total liabilities.

(3) “Trust” means the Bridged Health Alliance Trust, which the state auditor qualified on March 9, 2026, as the first district health insurance trust to meet the criteria set forth in 20-3-366, MCA.

History

Authorizing statute(s): 20-3-366, MCA
Implementing statute(s): 20-3-366, 20-3-370, MCA
History: NEW, 2026 MAR, Notice No. 2026-109, Eff. 7/25/26.

Mont. Admin. R. 6.6.9102 Annual Financial Reporting Requirement

(1) Beginning the year following the adoption of this rule, on or before September 1 of each year, the trust shall file with the state auditor an annual financial statement on the National Association of Insurance Commissioners’ (NAIC) health blank form, complete with all required schedules, covering the prior fiscal year. The trust shall also file the following integral components of an annual financial statement filing:

(a) A confidential risk-based capital calculation, using NAIC’s prescribed risk-based capital form.

(b) A statement of actuarial opinion from the trust’s credentialed actuary attesting to the adequacy of the trust’s unpaid claims liability and related reserves at year-end, using generally accepted actuarial principles and a 90% confidence level set forth in 20-3-370(3)(b), MCA, and so states in the opinion.

(c) The most recent calculation of minimum reserves calculated in ARM 6.6.9103. Filing of a confidential actuarial opinion summary and reserve report will meet this requirement.

(d) A list of the school districts participating in the trust during the prior year and, for each district, the number of employees contracted to participate in and obtain health insurance through the trust.

(e) A certification signed by the trust stating under oath that the other criteria set forth in 20-3-366, MCA, were satisfied during the prior year, that the criteria are satisfied as of the date of the certification, and that the trust is not aware of any material changes that will affect its ability to satisfy the criteria going forward.

(2) On or before December 1 of each year, the trust shall file with the state auditor audited financial statements certified by an independent certified public accountant. The trust may choose to use either generally accepted accounting principles (GAAP) or statutory accounting principles (SAP) to prepare its financial statements. Once a GAAP or SAP election has been made, any future change in the basis of accounting must be approved by the state auditor.

(3) On or before January 1 of each plan year beginning after the second full year of providing health benefits to the members of the trust, the trust shall provide the state auditor with a copy of the report provided to each participating district and employee group as specified in 20-3-367(2)(a), MCA.

(4) Beginning July 1, 2036, the trust shall, as part of its annual actuarial analysis, indicate any excess reserves existing in the trust and the total amount the trust has repaid to the state.

History

Authorizing statute(s): 20-3-366, MCA
Implementing statute(s): 20-3-366, 20-3-370, MCA
History: NEW, 2026 MAR, Notice No. 2026-109, Eff. 7/25/26.

Mont. Admin. R. 6.6.9103 Minimum Reserves

(1) The trust shall maintain reserves in an amount necessary to satisfy the minimum risk-based capital recommended by its actuary.

(2) The trust shall maintain claim reserves using a 90% confidence level and in accordance with the actuary’s actuarial memorandum prepared in accordance with actuarial standards of practice as required by NAIC annual statement instructions for health annual statement filings.

(3) The state auditor may require the trust to provide additional information reasonably necessary to evaluate claim reserve and plan reserve adequacy, and it may obtain an independent actuarial review of the minimum reserve level established by the trust. The cost of an independent actuarial review will be borne by the trust.

History

Authorizing statute(s): 20-3-366, MCA
Implementing statute(s): 20-3-366, MCA
History: NEW, 2026 MAR, Notice No. 2026-109, Eff. 7/25/26.

Mont. Admin. R. 6.6.9104 Other Reporting Requirements

(1) The trust must notify the state auditor in writing within 30 days after a school district signs a binding agreement to join the trust. The notification must include the relevant documents signed by the school district and the most recent employee census information for the school district.

(2) The trust must notify the state auditor in writing within 15 days after receiving notice from a school district stating that it intends to withdraw from the trust. The notification must include:

(a) the name of the school district and the number of employees contracted to participate in and obtain health insurance through the trust;

(b) all communications from the school district concerning withdrawing from the trust;

(d) the amount of reimbursement due to the trust under 20-3-367(3)(c), MCA.

(3) The trust must notify the state auditor in writing at least 120 days before the trust intends to hold a vote to voluntarily dissolve pursuant to 20-3-368(1), MCA.

History

Authorizing statute(s): 20-3-366, MCA
Implementing statute(s): 20-3-366, 20-3-367, 20-3-368, 20-3-370, MCA
History: NEW, 2026 MAR, Notice No. 2026-109, Eff. 7/25/26.

Chapter 6.10 Securities Department

Subchapter 6.10.1 Securities Regulation

Mont. Admin. R. 6.10.101 Applicability of Chapter

(1) This chapter applies to the securities and transactions involving securities, subject to the Securities Act of Montana, Title 30, chapter 10, parts 1 through 3, MCA; and to restitution assistance provided subject to the Securities Restitution Assistance Fund Act of Montana, Title 30, chapter 10, part 10, MCA.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1889, Eff. 8/12/88; AMD, 1999 MAR p. 56, Eff. 1/15/99; AMD, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.102 Definitions

As used in this subchapter, unless the context indicates otherwise:

(1) The definitions contained in 30-10-103, MCA, apply.

(2) "Affiliate" means a person who, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the person specified.

(3) "American depository receipt" is a negotiable certificate issued by a U.S. depository pursuant to an effective registration statement filed on form F-6 with the Securities and Exchange Commission, representing the securities of a non-U.S. company, which securities are held in a similar type of receipt or instrument issued with respect to a security, which receipt of instrument has been approved for sale by order of the commissioner.

(4) "Branch office" means an office, other than a main office but including a corporate subsidiary and any place of business of one or more registered salespersons of a registered broker-dealer, which is located in this state, owned or controlled by the broker-dealer, and engaged in the securities business in this state.

(5) "Issuer of an American depository receipt" is the non-U.S. company that issued the securities represented by the American depository receipt.

(6) "Promoter" means a person who, acting alone or in conjunction with one or more persons, directly or indirectly, takes the initiative in founding and organizing the business or enterprise of an issuer or an officer, directory or party owning, directly or indirectly, 5% or more of the outstanding shares of the corporation before or immediately following the public offering, or any affiliate of the aforesaid persons; and

(a) does not include an unaffiliated institutional purchaser who purchased its shares more than one year prior to the public offering.

(7) "Promotional or developmental stage" means a corporation which has no public market for its shares and has no significant earnings within the past five years (or shorter period of its existence).

(8) "Promotional security" means a security issued within three years before the date of registration in return for:

(a) a price less than 85% of the consideration for which such securities are proposed to be sold to the public; or

(i) services rendered, patents, copyrights, other intangibles, or real or personal property, the actual value of which has not been established to the satisfaction of the commissioner; or

(b) a security issued or to be issued to a promoter while a corporation is in a promotional or developmental stage.

(9) "Resident" is defined as a person who has physically resided in Montana at the person's primary home for 180 consecutive days and who meets the following criteria immediately before making application for any license:

(a) the person's principal or primary home is in Montana;

(b) the person files Montana state income tax returns as a resident (if required to file);

(d) if the person registers to vote, the person registers only in Montana.

(10) "Sales material" means an advertisement, display, pamphlet, brochure, form letter, article, or communication published in a newspaper, magazine, periodical, internet or electronic communication network, or a script, recording, radio or television announcement, broadcast, or commercial to be used or circulated in connection with the offer or sale of a security to a person in this state.

(11) "Significant earnings" exist if the corporation's earnings record over the last five years (or shorter period of its existence) demonstrates that for such period the corporation's net earnings per share is 30% of the public offering price per share (as adjusted for stock splits and stock dividends) or the corporation has earnings per share of 5% or more of the public offering price per share for each of any two consecutive years.

(12) "U.S. or foreign GAAP" are the generally accepted accounting principles of the United States or of the foreign country in which the issuer is domiciled.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-104, 30-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88; AMD, 1994 MAR p. 569, Eff. 3/18/94; AMD, 1996 MAR p. 1133, Eff. 4/26/96; AMD, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.106 New Venture Financing (is Hereby Repealed)

History

Authorizing statute(s): Sec. 30-10-107, MCA
Implementing statute(s): Sec. 33-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88.

Mont. Admin. R. 6.10.107 Filing of Registration Statements--When Complete (is Hereby Repealed)

History

Authorizing statute(s): Sec. 30-10-107, MCA
Implementing statute(s): Sec. 33-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88.

Mont. Admin. R. 6.10.133 Internet

(1) Pursuant to 30-10-105(15) , MCA, offers of securities made by, or on behalf of, issuers on or through the internet or similar proprietary or common carrier electronic system, shall be exempt from 30-10-201 through 30-10-207, MCA, if the following conditions are met:

(a) The offer indicates, directly or indirectly, that the securities are not being offered to residents of Montana;

(b) The offer is not specifically directed to any person in Montana by, or on behalf of, the issuer of the securities; and

(c) No sales of the issuers securities are made in Montana as a result of the offering until the securities being offered have been registered in accordance with 30-10-201 through 30-10-207, MCA, and a final prospectus or Form U-7 is delivered to Montana investors prior to such sales.

(2) Nothing in this rule precludes an issuer, or a person acting on behalf of an issuer, that offers securities on the internet or similar proprietary or common carrier electronic system, or effects sales to persons in Montana following such an offering, from relying on any other available exemption.

History

Authorizing statute(s): 30-10-105(15) and 30-10-107, MCA
Implementing statute(s): 30-10-105(15), MCA
History: NEW, 1996 MAR p. 1828, Eff. 7/4/96.

Mont. Admin. R. 6.10.150 Incorporation by Reference Consents to Service of Process Previously Filed

(1) For purposes of consents to service of process required to be filed pursuant to 30-10-201 and 30-10-211, MCA, or the rules promulgated thereunder, a broker-dealer, agent, federal covered adviser, investment adviser, investment adviser representative, or issuer may incorporate by reference any consent to service of process previously filed with the commissioner by such person or entity.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-202, 30-10-209 and 30-10-211, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99.

Subchapter 6.10.2 Offerings

Mont. Admin. R. 6.10.201 Sales Materials

(1) Except as provided in (3), (4), (5), and (6) of this rule, sales material to be used in connection with the offer or sale of securities to persons in this state must be filed with the commissioner at least ten days prior to being used in this state.

(2) The commissioner may by order disallow the use of sales material filed pursuant to this rule if the commissioner finds that such an order is necessary to protect the investor or a person engaged in securities transactions and is in the public interest. Unless the commissioner disallows the use of sales material filed pursuant to this rule within ten days from the date filed, the sales material may be disseminated.

(3) This rule does not apply to sales material that is used exclusively in connection with the offer or sale of securities that are registered in this state by notification or coordination pursuant to 30-10-203 or 30-10-204, MCA.

(4) This rule does not apply to sales material that is used exclusively by a broker-dealer registered pursuant to 30-10-201, MCA, if the sales material conforms to the provisions of section 2210 of the conduct rules of Financial Industry Regulatory Authority, Inc. (FINRA).

(5) This rule does not apply to sales material that is used exclusively in connection with the offer or sale of securities that are exempt from registration pursuant to 30-10-104 or 30-10-105, MCA, or the rules thereunder, unless the exemption statute or rule specifically provides that sales material must be filed.

(6) This rule does not apply to sales material that is used exclusively in connection with the offer or sale of a security that is a federal covered security.

(7) The commissioner may, upon written request and for good cause shown by a person wishing to use sales material, waive any of the requirements of this rule.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88; AMD, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.103, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.202 Promotional Securities--Escrow

(1) The commissioner may require that promotional securities be placed in escrow with a financial institution approved by the commissioner for a period of 2 years from the date that the registration becomes effective, or for such other period, or upon such terms and conditions as the commissioner may, in his discretion, require.

(2) An issuer may not sell or transfer an escrowed promotional security or an interest in one, except by will, intestate succession, or other similar methods, without first obtaining written consent from the commissioner. The owner of an escrowed promotional security may exercise voting rights that attach to that security.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-206, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88; TRANS, from ARM 6.10.104, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.203 Promotional Securities--Required Waivers

(1) Each promotional security must contain a provision waiving dividend rights and rights of participation, in the distribution of assets in the event of liquidation or dissolution, in favor of shareholders who paid cash or its equivalent for their securities that are not promotional securities.

(2) A waiver remains in effect only while the security is in escrow.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88; TRANS, from ARM 6.10.105, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.205 Notice of Termination of Offering--Change of Officers

(1) An issuer that has completed, discontinued, or terminated the sale of securities registered with the commissioner shall annually while registered and upon completion, discontinuance, or termination of the sale of registered securities notify the commissioner in writing and shall also submit a complete sales report that includes, for this state, the number of units and the aggregate dollar amount of sales.

(2) Until written notice has been provided as required by (1) of this rule, the commissioner shall be notified of each change in the officers, directors, trustees, partners, or other principal members of a registrant within 15 days of the change.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1998 MAR p. 1803, Eff. 8/12/88; TRANS, from ARM 6.10.108, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.206 Stock Subscription Agreement--No Default or Penalty Provision

(1) A stock purchase agreement or stock subscription agreement may not contain a default or penalty provision.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-105, 30-10-107, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88; TRANS, from ARM 6.10.110, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.207 Warrants and Options

(1) The commissioner will consider the granting of warrants or options, to persons other than purchasers of securities, as grounds for denial of an application for registration, with the exception of:

(a) options to management in the nature of restricted options for incentive purposes, if reasonable in number and method of exercise;

(b) options to employees or their nominees pursuant to stock purchase plans or profit sharing plans, if reasonable in number and method of exercise; and

(c) options or warrants issued to underwriters or other persons as compensation, in whole or in part, for the sale of securities if:

(i) the issuer does not have:

(A) a public market for its securities; or

(B) previously issued options or warrants to an underwriter in connection with more than one public offering of its securities;

(ii) the options or warrants are issued only to a managing underwriter and no options or warrants are issued in connection with a best efforts underwriting unless the entire issue is sold, except that options or warrants may be issued in connection with a minimum-maximum offering if the amount to be issued is prorated depending on the amount of the underwriting which is sold;

(iii) the options or warrants may not be exercised for a period of one year from the completion of the public offering;

(iv) the options or warrants are nontransferable except by will, by intestate succession, or by operation of law, except that the options or warrants may be transferred without payment thereto to:

(A) partners of the underwriter if the underwriter is a partnership;

(B) persons who are both officers and shareholders of the underwriter if the underwriter is a corporation; or

(v) the initial exercise price of the options or warrants is at least equal to the public offering price plus either:

(A) 7% each year they are outstanding, commencing one year after issuance, so that the exercise price throughout the second year is 107%, throughout the third year is 114%, throughout the fourth year is 121%, and throughout the fifth year is 128%; or

(B) 20% at any time after one year from the date of issuance;

(vi) the term of an option or warrant is not longer than five years; and

(vii) units of securities underlying the options or warrants acquired by an underwriter and related persons, whether acquired prior to, at the time of, or after the offering (but which is determined to be in connection with, or related to, the offering) are not, in the aggregate, more than 10% of the total number of shares that are outstanding at the conclusion of the offering. For purposes of this limitation, over-allotment units and units underlying options, warrants, or convertible securities that are a part of the proposed public offering are not to be counted as part of the aggregate number of shares being offered against which the 10% limitation is to be applied.

(2) The commissioner may, upon a showing of good cause, approve an application even though warrants or options have been granted that do not meet the conditions specified in (1). However, the burden of justifying issuance rests upon the applicant.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-207, MCA
History: EMERG, NEW, Eff. 7/5/75; AMD, 1988 MAR p. 1803, Eff. 8/12/88; AMD, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.111, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.208 Notice Filings for Offerings of Investment Company Securities

(1) A notice filing for a security that is a federal covered security under 18(b)(2) of the Securities Act of 1933 shall consist of the fees required under 30-10-209, MCA, a Form U-2, uniform consent to service of process, unless incorporated by reference by ARM 6.10.150, and either a copy of the issuer's federal registration statement as filed with the securities and exchange commissioner or an originally executed Form NF, uniform notice filing form.

(2) A notice filing under (1) is effective for one year following the date of the commissioner's receipt of the filing. A notice filing may be renewed by the filing with the commissioner, prior to the expiration date of the notice filing, payment of fees required under 30-10-209, MCA, together with either a current copy of the issuer's federal registration statement or an originally executed Form NF. A renewed notice filing shall be effective for one year commencing upon the expiration of the notice filing being renewed.

(3) A report detailing the amount of shares sold in this state shall be filed with the commissioner on Form NF within 60 days after the annual expiration of a notice filing.

(4) A notice filing may be amended to increase the amount of shares offered in this state by filing with the commissioner an amended Form NF together with any additional fees required by 30-10-209, MCA.

(5) Except as provided in (6), an investment company that has elected to file a Form NF in lieu of its federal registration statement is not required to file with the commissioner a copy of any document that is part of a federal registration statement filed with the securities and exchange commissioner or is part of an amendment to a federal registration statement.

(6) An investment company that has filed a Form NF shall file, upon written request of the commissioner and within the time period set forth in the request, a copy of any document identified in the request that is part of the federal registration statement filed with the securities and exchange commission or part of an amendment to a federal registration statement.

(7) Any filing or renewal required under ARM Title 6, chapter 10, subchapter 2 must be submitted to the commissioner through the Electronic Filing Depository (EFD), or other CSI-approved filing system, and must comply with the following:

(a) all filing or renewal fees shall likewise be submitted through the EFD or CSI-approved filing system;

(b) a person duly authorized by the issuer shall affix his or her electronic signature to the filing by typing his or her name in the appropriate fields and submitting the filing through the EFD, or other CSI-approved filing system, which shall constitute irrefutable evidence of legal signature by the individual whose name is typed on the filing; and

(c) any documents or fees required under (1) to be filed with the commissioner that are not permitted to be filed with, or cannot be accepted by, the EFD, or other CSI-approved filing system must be filed directly with the commissioner, and must be accompanied by a statement from the issuer providing the date the filing was attempted through the EFD, or other CSI-approved filing system.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-202, 30-10-211, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; TRANS, from ARM 6.10.147, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.209 NOTICE FILINGS FOR OFFERINGS OF FEDERAL COVERED SECURITIES UNDER 18(b)(3) OR (4) OF THE SECURITIES ACT OF 1933

(1) Except as provided in (3), a notice filing for a security that is a federal covered security under 18(b)(3) or (4) of the Securities Act of 1933 shall consist of:

(a) a letter explaining that the security is a federal covered security pursuant to 18(b)(3) or (4) of the Securities Act of 1933;

(b) a U-2 consent to service of process form; and

(2) A notice filing under (1) is effective for one year following the date of the commissioner's receipt of the filing. Prior to the expiration date of the notice filing, a notice filing may be renewed by filing a $200 fee with the commissioner. A renewed notice filing shall be effective for one year commencing upon the expiration of the notice filing being renewed.

(3) The notice filing requirements for an issuer offering a security that is a covered security under 18(b)(4)(D) of the Securities Act of 1933 are contained in ARM 6.10.210.

(4) Any filing or renewal required under ARM Title 6, chapter 10, subchapter 2 must be submitted to the commissioner through the Electronic Filing Depository (EFD), or other CSI-approved filing system, and must comply with the following:

(a) All filing or renewal fees shall likewise be submitted through the EFD or CSI-approved filing system;

(b) A person duly authorized by the issuer shall affix his or her electronic signature to the filing by typing his or her name in the appropriate fields and submitting the filing through the EFD, or other CSI-approved filing system, which shall constitute irrefutable evidence of legal signature by the individual whose name is typed on the filing; and

(c) Any documents or fees required under (1) to be filed with the commissioner that are not permitted to be filed with, or cannot be accepted by, the EFD, or other CSI-approved filing system must be filed directly with the commissioner, and must be accompanied by a statement from the issuer providing the date the filing was attempted through the EFD, or other CSI-approved filing system.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-201, MCA
History: NEW, 2003 MAR p. 2850, Eff. 12/25/03; TRANS, from ARM 6.10.148, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2015 MAR p. 1480, Eff. 9/25/15; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.210 Notice Filing Procedures for Rule 506 Offerings

(1) An issuer offering a security that is a covered security under 18(b)(4)(D) of the Securities Act of 1933 shall file a notice on Form D (17 CFR 239.500), and pay the fee required by 30-10-209(1)(a) and (1)(c), MCA, no later than 15 days after the first sale of the security in this state. An issuer shall file a renewal for each succeeding year that a security is offered in this state, and pay the fee required by 30-10-209(1)(b), MCA.

(2) For purposes of this rule, the SEC "Form D" is defined as the document, as adopted by the Securities and Exchange Commission and in effect on September 1, 1996, as may be amended by the SEC from time to time, entitled "Form D; notice of sale of securities pursuant to regulation D, section 4(6), and/or uniform limited offering exemption," including part E and the Appendix.

(3) Any Form D filing or renewal required under (1) must be submitted to the commissioner through the Electronic Filing Depository (EFD), or other CSI-approved filing system, and must comply with the following:

(a) All filing or renewal fees shall likewise be submitted through the EFD or other CSI-approved filing system;

(b) A person duly authorized by the issuer shall affix his or her electronic signature to the Form D filing by typing his or her name in the appropriate fields and submitting the filing through the EFD, or other CSI-approved filing system, which shall constitute irrefutable evidence of legal signature by the individual whose name is typed on the filing; and

(c) Any documents or fees required under (1) to be filed with the commissioner that are not permitted to be filed with, or cannot be accepted by, the EFD, or other CSI-approved filing system, must be filed directly with the commissioner, and must be accompanied by a statement from the issuer providing the date the filing was attempted through the EFD, or other CSI-approved filing system.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-202, 30-10-211, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.149, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2015 MAR p. 1480, Eff. 9/25/15; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.211 Notice Filing Rule for Regulation a-Tier 2 Offerings

(1) An issuer planning to offer and sell securities in this state in an offering exempt under Tier 2 of federal Regulation A shall submit the following at least 21 days prior to the initial sale in this state:

(a) a completed Regulation A-Tier 2 notice filing form or copies of all documents filed with the Securities and Exchange Commission;

(b) a consent to service of process on Form U-2 if not filing on the Regulation A-Tier 2 notice filing form; and

(2) The initial filing shall remain effective for twelve months from the date of filing.

(3) For each additional twelve-month period in which the same offering is continued, an issuer conducting a Tier 2 offering under federal Regulation A may renew its notice filing by filing the following on or before the expiration of the notice filing:

(a) the Regulation A-Tier 2 notice filing form marked "renewal" and/or cover letter or other document requesting renewal; and

(b) the renewal fee prescribed by 30-10-209(1)(b), MCA.

(4) An issuer may increase the amount of securities offered in this state by submitting a Regulation A-Tier 2 notice filing form marked "amendment" or other document describing the transaction and a fee calculated pursuant to 30-10-209(1)(a), MCA, to cover the increase in the amount of securities being offered prior to selling additional securities in this state.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-202, 30-10-211, MCA
History: NEW, 2020 MAR p. 1874, Eff. 10/24/20.

Subchapter 6.10.3 Exemptions

Mont. Admin. R. 6.10.301 Montana Limited Offering Exemption

(1) By the authority delegated to the commissioner in 30-10-105, MCA, an offer or sale of securities offered or sold in compliance with Securities Act of 1933, Regulation D, Rules 230.501 through 230.503 and 230.505 (17 CFR 230.501, 230.502, 230.503 and 230.505 (1998)), is exempt from the registration requirements of 30-10-202, MCA.

(2) Each person who offers or sells securities in this state to nonaccredited and/or accredited investors, as defined in Securities Act of 1933, Regulation D, Rule 230.501(a)(5) through 230.501(a)(7), shall be registered in accordance with 30-10-201, MCA.

(3) An exemption under this rule is not available for the securities of an issuer if any of the parties described in Securities Act of 1933, Regulation A, Rule 230.262:

(a) has filed a registration statement that is the subject of a currently effective registration stop order entered pursuant to a state's securities law within five years prior to the filing of the notice required under this exemption;

(b) has been convicted within five years prior to the filing if the notice required under this exemption of a felony or misdemeanor in connection with the offer, purchase, or sale of a security or a felony involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud;

(c) is currently subject to a state administrative enforcement order or judgment entered by that state's securities administrator within five years prior to the filing of the notice required under this exemption or is subject to a state's administrative enforcement order or judgment in which fraud or deceit, including but not limited to making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within five years prior to the filing of the notice required under this exemption;

(d) is subject to a state's administrative enforcement order or judgment that prohibits, denies, or revokes the use of an exemption from registration in connection with the offer, purchase, or sale of securities; or

(e) is currently subject to an order, judgment, or decree of a court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to an order, judgment, or decree of a court of competent jurisdiction, permanently restraining or enjoining the party from engaging in or continuing any conduct or practice in connection with the purchase or sale of a security or involving the making of a false filing with the state entered within five years prior to the filing of the notice required under this exemption.

(4) The prohibitions of (3)(a) through (3)(c) and (3)(e) do not apply if the person subject to the disqualification is licensed or registered to conduct securities-related business in the state in which the administrative order or judgment was entered against the person, or if the person subject to the disqualification is registered to conduct securities-related business by the Securities and Exchange Commission and the order or judgment was entered against the person by the Securities and Exchange Commission, or if the broker-dealer employing the person is registered in this state and the form BD as adopted by the North American Securities Administrators Association, Inc., and filed with this state discloses the order, conviction, judgment, or decree relating to the person. A person disqualified under this rule may not act in a capacity other than that for which the person is registered.

(5) A disqualification caused by this rule is automatically waived if the Securities and Exchange Commission, state securities administrator, or agency of the state which created the basis for disqualification determines, upon a showing of good cause, that it is not necessary to deny the exemption under the circumstances.

(6) The issuer shall file with the commissioner

(a) a notice on an original, manually signed form D (17 CFR 239.500) at least ten days prior to an offer or sale being made to a person in this state, annually until completion and upon completion of the offer or sale, and at all such other times and in the form required under Securities Act of 1933, Regulation D, Rule 230.503, to be filed with the Securities and Exchange Commission. The notice must contain an undertaking by the issuer to furnish to the commissioner, upon written request, the information furnished by the issuer to offerees, unless the commissioner, by order, requires that the information be filed at the time with the filing of the notice.

(b) a consent to service of process included with or in the initial notice;

(d) the name and address of each person who will offer or sell, in this state, a security under this rule.

(7) In all sales to nonaccredited investors in this state, the issuer and each person acting on its behalf shall have reasonable grounds to believe, and after making reasonable inquiry shall believe, that one of the following conditions is satisfied:

(a) the investment is suitable for the purchaser upon the basis of the facts, if any, disclosed by the purchaser as to the purchaser's other securities holdings, financial situation, and needs. For the purpose of this condition only, it may be presumed that, if the investment does not exceed 10% of the investor's net worth, it is suitable.

(b) the purchaser either alone or with the purchaser's representative has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

(8) A transaction that is exempt under this rule may not be combined with an offer and sale exempt under any other rule implementing or a section of the Securities Act of Montana. However, nothing in this limitation acts as an election. If the offer and sale fail to comply with all of the conditions for this exemption, the issuer may claim the availability of any other applicable exemption.

(9) The commissioner may, by order, increase the number of purchasers or waive any other conditions of this exemption.

(10) In the case of offerings of direct participation programs as defined in section 2810 of Financial Industry Regulatory Authority, Inc., (FINRA) conduct rules, each person who offers or sells securities in this state under this rule shall deliver a disclosure document containing the information required by Securities Act of 1933, Regulation D, Rule 230.502(b), to individuals covered by Securities Act of 1933, Regulation D, Rules 230.502(a)(5), 230.502(a)(6), and 230.502(a)(7).

(11) The commissioner may by order revoke, deny, or further condition the use of this exemption with respect to a particular offering when the commissioner finds that such an order is necessary to protect the investor or a person engaged in securities transactions and is in the public interest.

(12) An issuer using the Montana limited offering exemption shall file such other information as the commissioner may require.

History

Authorizing statute(s): 30-10-105, 30-10-107, MCA
Implementing statute(s): 30-10-104, 30-10-202, 30-10-211, MCA
History: NEW, 1984 MAR p. 19, Eff. 1/13/84; AMD, 1988 MAR p. 1803, Eff. 8/12/88; AMD, 1996 MAR p. 1133, Eff. 4/26/96; AMD, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.120, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.302 Foreign Savings and Loan Association Exemption

(1) By authority delegated to the commissioner in 30-10-105, MCA, a transaction in a security issued by and representing an interest in or a debt of or guaranteed by a savings and loan association or a building and loan or similar association, other than those described in 30-10-104(4) , MCA, is exempt from the registration requirements of 30-10-202, MCA, if:

(a) it is sold through a registered broker-dealer and registered salesperson;

(b) the issuer is a member of the federal deposit insurance corporation; or

(c) in the case of a certificate of deposit, the sums representing the certificate of deposit are fully insured by the federal deposit insurance corporation.

History

Authorizing statute(s): 30-10-105, 30-10-107, MCA
Implementing statute(s): 30-10-105, MCA
History: NEW, 1988 MAR p. 1803, Eff. 8/12/88; AMD, 1994 MAR p. 569, Eff. 3/18/94; TRANS from ARM 6.10.125, 2008 MAR . 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.303 Second Tier Limited Offering Exemption

(1) Pursuant to 30-10-105(8)(b), MCA, securities offered or sold in accordance with all the conditions set forth in this rule are exempt from the requirements of 30-10-201 through 30-10-207, MCA. This exemption may be cited as the "second tier limited offering exemption."

(2) An issuer using the second tier limited offering exemption shall file with the Commissioner of Securities:

(a) an original, manually signed copy of the second tier limited offering exemption form;

(b) a consent to service of process which is attached to and made part of the second tier limited offering exemption form; and

(3) Upon the entry of an order denying or revoking the approval of this exemption, the Commissioner of Securities shall promptly notify the issuer of the securities that an order has been entered and of the reasons therefore and that, if requested by the issuer within 15 days after the receipt of the Commissioner of Securities order, the matter will be promptly set down for hearing. If no hearing is requested within 15 days, and none is ordered by the Commissioner of Securities, the order will remain in effect until it is modified or vacated by the Commissioner of Securities. If a hearing is requested or ordered, the Commissioner of Securities, after notice of and opportunity for hearing, may affirm, modify, or vacate the order.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-105, MCA
History: NEW, 1992 MAR p. 1006, Eff. 5/15/92; TRANS and AMD, from ARM 6.10.130, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2022 MAR p. 1795, Eff. 9/24/22.

Mont. Admin. R. 6.10.305 Foreign Security Exemption

(1) Securities offered or sold in compliance with the following conditions are exempt from the registration requirements of 30-10-202 through 30-10-207, MCA:

(a) A nonissuer transaction, by or through a registered broker-dealer, in an outstanding security (including an American depository receipt representing such a security) of an issuer domiciled in a foreign country with which the United States is at the time of the transaction maintaining diplomatic relations, if the class of security has been outstanding in the hands of the public for not less than 90 days preceding the date of the transaction.

(i) This exemption is not available for sales of securities constituting an unsold allotment to, or subscription by, the broker-dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter.

(ii) This exemption is not available unless one of the following requirements is met:

(A) the most recent edition of Mergent's Manual or Standard & Poor's Corporation Records, or the periodic supplements to such publications, as well as all commonly recognized formats of the manuals including electronic dissemination over the internet, contains a description of the issuer's business or operations, the names of the issuer's officers and directors (or their corporate equivalents in the issuer's country of domicile), an externally audited balance sheet of the issuer as of a date within 18 months of the date of the transaction and audited profit and loss statements for each of the issuer's two fiscal years immediately preceding the date of such balance sheet (such statements to be prepared in accordance with U.S. or foreign GAAP); or

(B) the issuer of the security has a class of securities subject to the reporting requirements of section 13 of the Securities Exchange Act of 1934, 15 U.S.C. 78m or section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78m or section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(d) and is not delinquent in such reporting; or

(C) the security is exempted from the provisions of section 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. 78l(g) by section 12(g)(3) of that Act, 15 U.S.C. 78l(g)(3), and the issuer is in compliance with all of the conditions of 17 CFR 240.12g3-2(b)(1).

(iii) This exemption is not available unless all of the following requirements are met:

(A) the issuer, including any predecessors, has been in continuous operation for at least the preceding two years, is a going concern actually engaged in business and is not in an organizational or developmental stage, and is not in bankruptcy or receivership;

(B) the issuer has net tangible assets of at least U.S. $25,000,000 as of the date of its most recent externally audited financial statement prepared in accordance with U.S. or foreign GAAP. Such statement shall be dated as of a date within 18 months of the date of the transaction;

(C) the issuer had an average gross income of at least U.S. $5,000,000 over its most recent two consecutive years of operation according to audited profit and loss statements of the issuer prepared in accordance with U.S. or foreign GAAP for the issuer's two fiscal years immediately preceding the date of the financial statement referred to in (1)(a)(iii)(B);

(D) the issuer has a class of securities listed or traded on a stock exchange or automated quotation system organized under the laws of its country of domicile; and

(E) for the issuer's securities in the United States, there are at least two market makers who are registered broker-dealers under the Securities Exchange Act of 1934 and who have an excess net capital of a least U.S. $10,000,000.

(b) A nonissuer transaction by or through a registered broker-dealer in an outstanding security, other than a revenue obligation, which is issued or guaranteed by any foreign government with which the United States is, at the time of sale, maintaining diplomatic relations, or by a political subdivision of Canada or Mexico which has the power of taxation, if the securities, when offered for sale in this state, are acknowledged by the foreign government or political subdivision as valid obligations, and none of the securities of the foreign government or political subdivision are in default either as to principal or interest.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-104, 30-10-107, MCA
History: NEW, 1994 MAR p. 569, Eff. 3/18/94; AMD, 2000 MAR p. 824, Eff. 3/31/2000; TRANS and AMD from ARM 6.10.131, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.306 Transactional Exemptions for Cooperative Associations

(1) A cooperative association organized under another state's laws that are substantially the same as the provisions of Title 35, chapter 15, MCA, is entitled to a transactional exemption from the registration requirements of the Securities Act of Montana, provided that the association has furnished the commissioner with a general written description of the security to be offered or sold in Montana. For the purposes of 33-10-105, MCA, the commissioner has determined that the following states' laws authorizing the organization of the corresponding types of cooperative organizations are substantially the same as the provisions of Title 35, chapter 15, MCA:

(2) For the purposes of 30-10-105, MCA, a "general written description" must include:

(a) citation of the state law under which the cooperative is organized;

(b) the type of industry of business in which the cooperative is engaged;

(c) a general description of the offering, including type of security, price, restrictions, if any, on security ownership, and the number of shares to be issued;

(d) the purpose of the security offering; and

(e) a list of states in which the offering will be conducted.

History

Authorizing statute(s): 30-10-105, 30-10-107, MCA
Implementing statute(s): 30-10-105, MCA
History: NEW, 1997 MAR p. 1990, Eff. 11/4/97; TRANS, from 6.10.134, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.307 Filings Requirement for Transactional Exemption Pursuant to 30-10-105(15), Mca

(1) A request for a transactional exemption pursuant to 30-10-105(15), MCA, shall include:

(a) a letter of request explaining why an exemption would serve the purposes of 30-10-102, MCA;

(b) a U-2 consent to service of process form; and

(2) A transactional exemption granted pursuant to a request under (1) is effective for one year following the date of the commissioner's granting of the exemption request. Prior to the expiration date of the exemption, an exemption may be renewed by filing a $50 fee with the commissioner. A renewed exemption shall be effective for one year commencing upon the expiration of the exemption filing being renewed.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-105, 30-10-301, MCA
History: NEW, 2008 MAR p. 2046, Eff. 9/26/08; TRANS, from ARM 6.10.608, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.308 Merger and Acquisition Broker Exemption

(1) In this rule:

(a) "Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. There is a presumption of control for any person who:

(i) is a director, general partner, member, or manager of a limited liability company, or officer exercising executive responsibility (or has similar status or functions);

(ii) has the right to vote 20 percent or more of a class of voting securities or the power to sell or direct the sale of 20 percent or more of a class of voting securities; or

(iii) in the case of a partnership or limited liability company, has the right to receive upon dissolution, or has contributed, 20 percent or more of the capital.

(b) "Eligible privately held company" means a company meeting both of the following conditions:

(i) the company does not have any class of securities registered, or required to be registered, with the United States Securities and Exchange Commission under Section 12 of the Securities Exchange Act of 1934, 15 U.S.C. 781, or with respect to which the company files, or is required to file, periodic information, documents, and reports under subsection (d), 15 U.S.C. 78o(d); and

(ii) in the fiscal year ending immediately before the fiscal year in which the services of the merger and acquisition broker are initially engaged with respect to the securities transaction, the company meets either or both of the following conditions (determined in accordance with the historical financial accounting needs of the company):

(A) the earnings of the company before interest, taxes, depreciation, and amortization are less than $25,000,000; and

(B) the gross revenues of the company are less than $250,000,000.

(c) "Merger and Acquisition Broker" means any broker and any person associated with a broker engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless of whether that broker acts on behalf of a seller or buyer, through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities or assets of the eligible privately held company:

(i) if the broker reasonably believes that upon consummation of the transaction, any person acquiring securities or assets of the eligible privately held company, acting alone or in concert, will control and, directly or indirectly, will be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company; and

(ii) if any person is offered securities in exchange for securities or assets of the eligible privately held company, such person will, prior to becoming legally bound to consummate the transaction, receive or have reasonable access to the most recent fiscal year-end financial statements of the issuer of the securities as customarily prepared by its management in the normal course of operations and, if the financial statements of the issuer are audited, reviewed, or compiled, any related statement by the independent accountant; a balance sheet dated not more than 120 days before the date of the exchange offer; and information pertaining to the management, business, results of operations for the period covered by the foregoing financial statements, and any material loss contingencies of the issuer.

(d) "Public shell company" means a company that at the time of a transaction with an eligible privately held company:

(i) has any class of securities registered, or required to be registered, with the United States Securities and Exchange Commission under Section 12, 15 U.S.C. 78o(d); and

(ii) has no or nominal operations; and

(iii) has no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets.

(2) Except as provided in (3) and (4), a merger and acquisition broker shall be exempt from registration pursuant to 30-10-202, MCA, under this section.

(3) A merger and acquisition broker is not exempt from registration under this rule if such broker does any of the following:

(a) directly or indirectly, in connection with the transfer of ownership of an eligible privately held company, receives, holds, transmits, or has custody of the funds or securities to be exchanged by the parties to the transaction;

(b) engages on behalf of an issuer in a public offering of any class of securities that is registered, or is required to be registered, with the United States Securities and Exchange Commission under Section 12 of the Securities Exchange Act of 1934, 15 U.S.C. 78l or with respect to which the issuer files, or is required to file, periodic information, documents, and reports under the Securities Exchange Act of 1934 Section 15 subsection (d), 15 U.S.C. 78o(d); or

(4) A merger and acquisition broker is not exempt from registration under this rule if such broker is subject to:

(a) suspension or revocation of registration under Section 15(b)(4) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(b)(4);

(b) a statutory disqualification described in section 3(a)(39) of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(39);

(c) a disqualification under the rules adopted by the United States Securities and Exchange Commission under Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (15 U.S.C. 77d note); or

(d) a final order described in paragraph (4)(H) of Section 15(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(b)(4)(H).

(5) Nothing in this rule shall be construed to limit any other authority of the commissioner to exempt any person, or any class of persons, from any provision of ARM Title 6, chapter 10, or from any provision of any rule or regulation therein.

(6) On the date that is five years after the date of adoption of this rule, and every five years thereafter, each dollar amount in section (1)(b)(2) shall be adjusted by:

(a) dividing the annual value of the Employment Cost Index for Wages and Salaries, Private Industry Workers (or any successor index), as published by the Bureau of Labor Statistics, for the calendar year preceding the calendar year in which the adjustment is being made by the annual value of such index (or successor) for the calendar year ending December 31, 2012; and

(b) multiplying the dollar amount by the quotient obtained under (6)(a).

(7) Each dollar amount determined under (6) shall be rounded to the nearest multiple of $100,000.

History

Authorizing statute(s): 30-10-105, 30-10-107, MCA
Implementing statute(s): 30-10-105, MCA
History: NEW, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.309 Private Fund Investment Advisor Registration Exemption

(1) For purposes of this rule, the following definitions apply:

(a) "Beneficial owner" means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise enjoys the benefits of ownership even though the title to the private fund is in another name.

(b) "Private fund adviser" means an investment adviser who provides advice solely to one or more qualifying private fund(s).

(c) "Qualifying private fund" means an issuer that qualifies for the exclusion from the definition of an investment company under one or more of sections 3(c)(1), 3(c)(5), and 3(c)(7) of the Investment Company Act of 1940, as amended (15 U.S.C. 80a-3(c)(1), (5) and (7)).

(d) "Retail buyer fund" means a qualifying private fund that is not a venture capital fund and that qualifies for the exclusion from the definition of an investment company under one or both of sections 3(c)(1) and 3(c)(5) of the Investment Company Act of 1940, as amended (15 U.S.C. 80a-3(c)(1) and (5)).

(e) "Value of primary residence" means the fair market value of a person's primary residence, subtracted by the amount of debt secured by the property up to its fair market value.

(f) "Venture capital fund" means a private fund that meets the definition of a venture capital fund in SEC Rule 203(l)-1, 17 C.F.R. § 275.203(l)-1.

(2) Subject to the additional requirements of (3), a private fund adviser shall be exempt from the registration requirements of 30-10-201, MCA, applicable to investment advisors if the private fund adviser satisfies each of the following conditions:

(a) neither the private fund adviser nor any of its advisory affiliates are subject to a disqualifying event as described in 30-10-201(13), MCA, and/or Rule 506(d)(1) of SEC Regulation D, 17 C.F.R. § 230.506(d)(1);

(b) the private fund adviser makes available to the department upon written request:

(i) each report and amendment thereto that an exempt reporting adviser is required to file with the Securities and Exchange Commission pursuant to SEC Rule 204-4, 17 C.F.R. § 275.204-4; and

(ii) if the private fund adviser is not required to submit such filings to the Securities and Exchange Commission, the private fund adviser prepares the reports and amendments referenced in (2)(b)(i) on or before the date(s) such report(s) would be required to be filed pursuant to SEC Rule 204-4;

(c) the private fund adviser pays the fees specified in 30-10-209, MCA, for each calendar year in which it relies upon the exemption established by this rule. If the private fund adviser has paid an initial fee pursuant to this rule and it intends to rely on the exemption in a succeeding calendar year, it must pay the renewal fee specified by 30-10-209, MCA, before January 1 of the succeeding year.

(3) In order to qualify for the exemption described in (2), a private fund adviser who advises at least one retail buyer fund shall, except as otherwise provided in (9) below, in addition to satisfying each of the conditions specified in (2), comply with the following requirements:

(a) The private fund adviser shall advise only those retail buyer funds whose outstanding securities (other than short-term paper) are beneficially owned entirely by persons who:

(i) at the time the securities are purchased from the issuer, either:

(A) after deducting the value of the primary residence from the person's net worth, would each meet the definition of "accredited investor" in SEC Rule 501(a) of Regulation D, 17 C.F.R. § 230.501(a); or

(B) were employees, managers, directors, or officers of the private fund advisor; or

(ii) obtained the securities through a transfer not involving the sale of that security.

(b) The private fund adviser shall not enter into, perform, renew, or extend any investment advisory contract that provides for compensation to the investment adviser based on a share of the capital gains upon, or the capital appreciation of, the funds, or any portion of the funds of an investor in the private fund that is not a qualified client as defined in SEC Rule 205-3, 17 C.F.R. § 275.205-3.

(c) At the time of purchase, the private fund adviser shall disclose the following in writing to each beneficial owner of a retail buyer fund:

(i) all services, if any, to be provided to individual beneficial owners, and to the fund itself;

(ii) all duties, if any, the investment adviser owes to the beneficial owners, and to the fund itself; and

(iii) any other material information affecting the rights or responsibilities of the beneficial owners that the private fund advisor is required to disclose under other state or federal law.

(d) The private fund adviser shall obtain on an annual basis and at liquidation financial statements of each retail buyer fund audited by an independent certified public accountant (CPA). A copy of the audited financial statements shall be delivered to each beneficial owner of the fund within 180 days after the end of each fiscal year and within 180 days of liquidation, and shall be made available to CSI on written request.

(4) If a private fund adviser is registered with the Securities and Exchange Commission, the adviser is not eligible for this exemption and shall comply with the state notice filing requirements applicable to federal covered investment advisers in 30-10-201, MCA, and the fees found at 30-10-209, MCA.

(5) A person is exempt from the registration requirements of 30-10-201, MCA, applicable to investment advisor representatives if the person is employed by or associated with an investment adviser that is exempt from registration in this state pursuant to this rule and does not otherwise act as an investment adviser representative.

(6) Upon a written request from the department, an investment adviser relying on an exemption provided by this rule shall make available the records set forth in (2)(b) or (3)(d). Failure to comply with the request will result in the loss of the exemption provided by this rule.

(7) An investment adviser who becomes ineligible for the exemption provided by this rule must comply with all applicable laws and rules requiring registration or notice filing within 90 days after the date the investment adviser's eligibility for this exemption ceases.

(8) An investment advisor may request, pursuant to the process in 30-10-209(4), MCA, an exemption or exception to the requirements of (2)(a). The requirements of (2)(a) may be waived upon the commissioner's discretion after a determination is made that the waiver would be in the public interest.

(9) An investment adviser to a retail buyer fund that has one or more beneficial owners who do not satisfy the conditions set forth in (3)(a) is eligible for the exemption contained in (2) if the following conditions are satisfied:

(a) the subject fund existed prior to the effective date of this rule;

(b) as of the effective date of this rule, the subject fund ceases to accept beneficial owners other than those described in (3)(a);

(c) the investment adviser discloses in writing the information described in (3)(c) to all beneficial owners of the fund; and

(d) as of the effective date of this rule, the investment adviser delivers audited financial statements as required by (3)(d).

(10) Investment advisers to qualified private funds shall have 120 days from the effective date of this rule to establish compliance with this rule. CSI shall take no administrative action relating to registration failures during such grace period. However, the anti-fraud provisions of (11) remain in effect.

(11) Nothing in this rule shall be construed to provide an exemption from the operation of the anti-fraud provisions of 30-10-301, MCA.

History

Authorizing statute(s): 30-10-105, 30-10-107, MCA
Implementing statute(s): 30-10-105, 30-10-201, MCA
History: NEW, 2024 MAR p. 1999, Eff. 8/10/24.

Subchapter 6.10.4 Fraudulent and Unethical Practices

Mont. Admin. R. 6.10.401 Fraudulent and Unethical Practices Prohibited by Broker-Dealers and Salesmen

(1) For purposes of 30-10-201 and 30-10-301, MCA, fraudulent and unethical practices means, but is not limited to:

(a) engaging in a pattern of unreasonable and unjustifiable delays in either or both the:

(i) delivery of securities purchased by a customer;

(ii) payment upon request of free credit balances reflecting completed transactions of a customer;

(b) inducing trading in a customer's account which is excessive in size or frequency in view of the financial resources and character of the account;

(c) recommending to a customer the purchase, sale, or exchange of a security without grounds to believe that the transaction or recommendation is suitable for the customer based upon reasonable inquiry concerning the customer's investment objectives, financial situation and needs, and any other relevant information known by the broker-dealer;

(d) executing a transaction on behalf of a customer without authorization to do so;

(e) exercising any discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time or price for the execution of orders or to both time and price for the execution of orders;

(f) executing a transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account;

(g) failing to segregate a customer's fully paid securities or securities held in safekeeping;

(h) hypothecating a customer's securities without having a lien thereon unless the broker-dealer secures from the customer a properly executed written consent promptly after the initial transaction, except as permitted by rules of the Securities and Exchange Commission;

(i) entering into a transaction with or for a customer at a price not reasonably related to the current market price of the security or receiving an unreasonable commission or profit;

(j) failing to furnish to a customer purchasing securities in an offering, no later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and any additional documents, which together include all information set forth in the final prospectus;

(k) charging unreasonable and inequitable fees for services performed, including miscellaneous services such as collection of monies due for principal, dividends, or interest; exchange or transfer of securities; appraisals, safekeeping, or custody of securities; and other services related to its securities business;

(l) offering to buy from or sell to a person a security at a stated price unless the broker-dealer is prepared to purchase or sell, as the case may be, at the price and under the conditions stated at the time of the offer to buy or sell;

(m) representing that a security is being offered to a customer "at the market" or a price relevant to the market price unless the broker-dealer knows or has reasonable grounds to believe that a market for the security exists other than that made, created, or controlled by the broker-dealer, or by a person for whom he is acting or with whom he is associated in the distribution, or by a person controlled by, controlling, or under common control with the broker-dealer;

(n) effecting a transaction in, or inducing the purchase or sale of, a security by means of a manipulative, deceptive, or fraudulent device, practice, plan, program, design, or contrivance which may include but is not limited to:

(i) effecting a transaction in a security which involves no change in the beneficial ownership thereof;

(ii) entering an order for the purchase or sale of a security with the knowledge that an order of substantially the same size, at substantially the same time and substantially the same price, for the sale of the security, has been or will be entered by or for the same or different parties for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security. A broker-dealer may, however, enter a bono fide agency cross transaction for its customers.

(iii) effecting, alone or with one or more other person, a series of transactions in a security creating actual or apparent active trading in the security or raising or depressing the price of the security by others.

(o) guaranteeing a customer against loss in a securities account of the customer carried by the broker-dealer, or in a securities transaction effected by the broker-dealer with or for the customer;

(p) publishing or circulating, or causing to be published or circulated, a notice, circular, sales material, newspaper article, investment service, or communication of any kind which purports to:

(i) report a transaction as a purchase or sale of a security unless the broker-dealer believes that the transaction was a bona fide purchase or sale of the security; or

(ii) quote the bid price or asked price for a security, unless the broker-dealer believes that the quotation represents a bona fide bid for, or offer of, the security;

(q) using sales material or sales presentations in a deceptive or misleading fashion;

(r) failing to disclose that the broker-dealer is controlled by, controlling, affiliated with, or under common control with, the issuer of a security before entering into a contract with, or for, a customer. If the disclosure is not made in writing, it must be supplemented by giving, or sending a written disclosure at, or before, the completion of the transaction;

(s) failing to make a bona fide public offering of each security allotted to a broker-dealer for distribution, whether acquired as an underwriter, as a selling group member, or from a member participating in the distribution as an underwriter or selling group member;

(t) failing or refusing to furnish a customer, upon reasonable request, information to which he is entitled, or to respond to a formal written request or complaint; or

(u) engaging in other conduct such as forgery, embezzlement, nondisclosure, incomplete disclosure or misstatement of material facts, or manipulative or deceptive practices.

(2) For purposes of 30-10-201(13)(g), MCA, "unethical practices" by a salesman means, but is not limited to:

(a) engaging in the practice of lending or borrowing money or securities from a customer; or acting as a custodian for money, securities, or an executed stock power of a customer;

(b) effecting securities transactions not recorded on the regular books or records of the broker-dealer which the agent represents, unless the transactions are authorized in writing by the broker-dealer prior to execution of the transaction;

(c) establishing or maintaining an account containing fictitious information in order to execute transactions which would otherwise be prohibited;

(d) sharing directly or indirectly in profits or losses in the account of a customer without the written authorization of the customer and the broker-dealer which the agent represents;

(e) dividing or otherwise splitting the agent's commissions, profits, or other compensation from the purchase or sale of a security with a person not also registered as an agent for the same broker-dealer, or for a broker-dealer under direct or indirect common control;

(f) engaging in conduct specified in (1)(b), (1)(c), (1)(d), (1)(e), (1)(f), (1)(i), (1)(j), (1)(n), (1)(o), (1)(p), or (1)(q); or

(g) engaging in other conduct such as forgery, embezzlement, nondisclosure, incomplete disclosure or misstatement of material facts, or manipulative or deceptive practices.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 1989 MAR p. 221, Eff. 1/27/89; AMD, 1999 MAR p. 2245, Eff. 10/8/99; AMD, 2003 MAR p. 1078, Eff. 5/23/03; TRANS and AMD, from ARM 6.10.126, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.402 Fraudulent and Unethical Practices Prohibited by Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers

(1) A person who is a federal covered adviser, investment adviser, or an investment adviser representative is a fiduciary and has a duty to act for the benefit of its clients. The provisions of this rule apply to federal covered advisers to the extent that the conduct alleged is fraudulent, deceptive, or as otherwise permitted by the National Securities Markets Improvement Act of 1996 (PL 104-290). While the extent and nature of this duty varies according to the nature of the relationship between an investment adviser, investment adviser representative, or a federal covered adviser and its clients and the circumstances of each case, an investment adviser, investment adviser representative, or a federal covered adviser shall not engage in unethical business practices, or prohibited, fraudulent, deceptive, or manipulative conduct, including but not limited to the following:

(a) Recommending to a client, to whom investment supervisory, management or consulting services are provided, the purchase, sale, or exchange of a security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client's investment objectives, financial situation and needs, and any other information known by the investment adviser, investment adviser representative, or federal covered adviser;

(b) Exercising any discretionary power in placing an order for the purchase or sale of a security for a client without obtaining written discretionary authority from the client within ten business days after the date of the first transaction placed pursuant to oral discretionary authority, unless the discretionary power relates solely to the price at which, or the time when, an order involving a definite amount of a specified security shall be executed, or both;

(c) inducing trading in a client's account that is excessive in size or frequency in view of the financial resources, investment objectives, and character of the account if the investment adviser, investment adviser representative or federal covered adviser can directly or indirectly benefit from the number of securities transactions effected in a client's account;

(d) placing an order to purchase or sell a security for the account of a client without authority to do so;

(e) placing an order to purchase or sell a security for the account of a client upon instructions of a third party without first having obtained written third party trading authorization from the client;

(f) borrowing money or securities from a client unless the client is a broker-dealer, an affiliate of the investment adviser, investment adviser representative, or of a federal covered adviser, or a financial institution engaged in the business of loaning funds or securities;

(g) loaning money or securities to a client unless the investment adviser, investment adviser representative, or federal covered adviser is a financial institution engaged in the business of loaning funds, or the client is an affiliate of the investment adviser, investment adviser representative, or a federal covered adviser;

(h) misrepresenting to an advisory client, or prospective advisory client, the qualifications of the investment adviser, investment adviser representative, or federal covered adviser, or an employee or affiliate of the investment adviser, investment adviser representative, or federal covered adviser; misrepresenting the nature of the advisory services being offered or fees to be charged for the investment advisory service; or omitting to state a material fact necessary to make the statements made regarding qualifications, services, or fees, in light of the circumstances under which they are made, not misleading;

(i) providing a report or recommendation to a client prepared by someone other than the investment adviser, investment adviser representative, or federal covered adviser without disclosing that fact. This prohibition does not apply to a situation where the investment adviser, investment adviser representative, or federal covered adviser uses a published research report or statistical analysis to render advice or where an investment adviser, investment adviser representative, or federal covered adviser orders such a report in the normal course of providing service.

(j) charging a client an advisory fee that is unreasonable in light of the type of services to be provided, the experience and expertise of the investment adviser, investment adviser representative, or federal covered adviser, the sophistication and bargaining power of the client, and whether the investment adviser, investment adviser representative, or federal covered adviser has disclosed that a lower fee for comparable services may be available from other sources;

(k) failing to disclose to a client in writing before any advice is rendered a material conflict of interest relating to the investment adviser, investment adviser representative, or federal covered adviser or any of its employees or affiliated persons which could reasonably be expected to impair the rendering of unbiased and objective advice including but not limited to:

(i) compensation arrangements connected with advisory services to a client which are in addition to compensation from the client for the services; and

(ii) charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to the advice will be received by the investment adviser, investment adviser representative, or federal covered adviser or its employees or affiliates;

(iii) serving as an officer, or in a similar capacity, for any outside company or other entity;

(l) guaranteeing a client that a specific result will be achieved (gain or no loss) with advice which will be rendered;

(m) publishing, circulating, or distributing sales material which does not comply with 17 C.F.R. 275.206(4)-1;

(n) disclosing to a third party the identity, affairs, other financial information, or investment of a client or former client unless:

(i) required by law to do so; or

(ii) consented to by the client;

(o) taking action, directly or indirectly, with respect to those securities or funds in which a client has a beneficial interest, if the investment adviser, investment adviser representative, or federal covered adviser has custody or possession of the securities or funds when the investment adviser's, investment adviser representative's, or federal covered adviser's action is subject to, and does not comply with, the requirements of 17 C.F.R. 275.206(4)-2, or the investment adviser, investment adviser representative, or federal covered adviser is exempt from these requirements by virtue of 17 C.F.R. 275.206(4)-2(b);

(p) entering into, extending, or renewing an investment advisory contract, other than a contract for impersonal services, unless the contract is in writing and discloses, in substance, the services to be provided, the term of the contract, the advisory fee, the formula for computing the fee, the amount of or the manner of calculation of the prepaid fee to be returned in the event of contract termination or nonperformance, and whether the contract grants discretionary power to the investment adviser, investment adviser representative, or federal covered adviser or its representative, and that no assignment of such contract shall be made by the investment adviser, investment adviser representative, or federal covered adviser without the consent of the other party;

(q) failing to disclose to a client or prospective client each material fact with respect to:

(i) the financial condition of the investment adviser, investment adviser representative, or federal covered adviser that is reasonably likely to impair the ability of the investment adviser, investment adviser representative, or federal covered adviser to meet contractual commitments to a client, if the investment adviser, investment adviser representative, or federal covered adviser has express or implied discretionary authority or custody over the client's funds or securities or requires prepayment of advisory fees of more than $500 from the client, six months or more in advance; or

(ii) a legal or disciplinary action that is material to an evaluation of the investment adviser's, investment adviser representative's, or federal covered adviser's integrity or ability to meet contractual commitments to a client;

(r) failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information contrary to the provisions of section 204A of the Investment Advisers Act of 1940;

(s) entering into, extending, or renewing any advisory contract contrary to the provisions of section 205 of the Investment Advisers Act of 1940. This provision is adopted and incorporated, and applies to all advisers registered or required to be registered under the Securities Act of Montana, notwithstanding the fact that such investment adviser is not registered or required to be registered under section 203 of the Investment Advisers Act of 1940. Section 205 establishes standards for investment advisory contracts entered into by the adviser and may be obtained from the Commissioner of Securities, 840 Helena Avenue, Helena, MT 59601;

(t) to indicate, in an advisory contract, any condition, stipulation, or provisions binding any person to waive compliance with any provision of this act or of the Investment Advisers Act of 1940, or any other practice contrary to the provisions of section 215 of the Investment Advisers Act of 1940, which is adopted and incorporated notwithstanding the fact that such investment adviser is not registered or required to be registered under section 203 of the Investment Advisers Act of 1940. Section 215 of the Investment Advisers Act of 1940 establishes standards for the validity of advisory contracts, and may be obtained from the Commissioner of Securities, 840 Helena Avenue, Helena, MT 59601;

(u) engaging in any act, practice, or course of business which is fraudulent, deceptive, or manipulative, or contrary to the provisions of section 206(4) of the Investment Advisers Act of 1940, 15 U.S.C. 80b-6(4), which is adopted and incorporated by this reference, notwithstanding the fact that such investment adviser, investment adviser representative, or federal covered adviser is not registered or required to be registered under section 203 of the Investment Advisers Act of 1940, 15 U.S.C. 80b-3. Section 206(4) of the Investment Advisers Act of 1940, 15 U.S.C. 80b-6(4) establishes prohibited practices in the investment advisory business, and may be obtained from the CSI, 840 Helena Avenue, Helena, MT 59601;

(v) engaging in conduct or any act, indirectly through any other person, which would be unlawful for such person to do directly under the provisions of the Securities Act of Montana or any rule or regulation thereunder; and

(w) accessing a client's account by using the client's own unique identifying information, except where:

(i) the investment adviser, investment adviser representative, or federal covered adviser does not know, or have access to, the client's passwords;

(ii) there is an agreement between a data aggregation software company and the custodian(s)/online account platform which permits some form of "back-door" access; and

(iii) the data is in a read-only format;

(x) While acting as principal for its own advisory account, to knowingly sell any security to or purchase any security from a client, or while acting as broker-dealer for a person other than the client, to knowingly effect any sale or purchase of any security for the account of the client, without disclosing to the client in writing before the completion of the transaction the capacity in which the investment adviser, investment adviser representative, or federal covered adviser is acting and obtaining the consent of the client to the transaction.

(i) the prohibitions of this rule shall not apply to any transaction with a customer of a broker-dealer if the broker-dealer is not acting as an investment adviser, investment adviser representative, or federal covered adviser in relation to the transaction.

(ii) the prohibitions of this subsection shall not apply to any transaction with a customer of a broker-dealer if the broker-dealer acts as investment adviser, investment adviser representative, or federal covered adviser solely:

(A) by means of publicly distributed written materials or publicly made oral statements;

(B) by means of written materials or oral statements not purporting to meet the objectives or needs of specific individuals or accounts;

(C) through the issuance of statistical information containing no expressions of opinion as to the investment merits of a particular security; or

(D) by any combination of the foregoing services.

(iii) publicly distributed written materials or publicly made oral statements shall disclose that, if the purchaser of the advisory communications uses the investment adviser's, investment adviser representative's, or federal covered adviser's services in connection with the sale or purchase of a security which is a subject of the communication, the investment adviser, investment adviser representative, or federal covered adviser may act as principal for its own account or as agent for another person. Compliance by the investment adviser, investment adviser representative, or federal covered adviser with the foregoing disclosure requirement shall not relieve it of any other disclosure obligations under 15 U.S. C. § 206(3);

(iv) definitions for purposes of (x):

(A) "publicly distributed written materials" means written materials which are distributed to 35 or more persons who pay for those materials.

(B) "publicly made oral statements" means oral statements made simultaneously to 35 or more persons who pay for access to those statements.

(y) the prohibitions of this rule shall not apply to an investment adviser, investment adviser representative, or federal covered adviser effecting an agency cross transaction for an advisory client provided the following conditions are met:

(i) the advisory client executes a written consent prospectively authorizing the investment adviser, investment adviser representative, or federal covered adviser to effect agency cross transactions for such client;

(ii) before obtaining such written consent from the client, the investment adviser, investment adviser representative, or federal covered adviser makes full written disclosure to the client that, with respect to agency cross transactions, the investment adviser, investment adviser representative, or federal covered adviser will act as broker-dealer for, receive commissions from, and have a potentially conflicting division of loyalties and responsibilities regarding both parties to the transactions;

(iii) at or before the completion of each agency cross transaction, the investment adviser, investment adviser representative, or federal covered adviser or any other person relying on this rule sends the client a written confirmation. The written confirmation shall include:

(A) a statement of the nature of the transaction;

(B) the date the transaction took place;

(D) the source and amount of any other remuneration the investment adviser, investment adviser representative, or federal covered adviser received or will receive in connection with the transaction. In the case of a purchase, if the investment adviser, investment adviser representative, or federal covered adviser was not participating in a distribution, or, in the case of a sale, if the investment adviser, investment adviser representative, or federal covered adviser was not participating in a tender offer, the written confirmation may state whether the investment adviser, investment adviser representative, or federal covered adviser has been receiving or will receive any other remuneration and that the investment adviser, investment adviser representative, or federal covered adviser will furnish the source and amount of such remuneration to the client upon the client's written request;

(iv) at least annually, and with or as part of any written statement or summary of the account from the investment adviser, investment adviser representative, or federal covered adviser, the investment adviser, investment adviser representative, or federal covered adviser or any other person relying on this rule sends each client a written disclosure statement identifying:

(A) the total number of agency cross transactions during the period for the client since the date of the last such statement or summary; and

(B) the total amount of all commissions or other remuneration the investment adviser, investment adviser representative, or federal covered adviser received or will receive in connection with agency cross transactions for the client during the period.

(v) each written disclosure and confirmation required by this rule must include a conspicuous statement that the client may revoke the written consent required under (x)(i) of this rule at any time by providing written notice to the investment adviser, investment adviser representative, or federal covered adviser.

(vi) no agency cross transaction may be effected in which the same investment adviser, investment adviser representative, or federal covered adviser recommended the transaction to both any seller and any purchaser.

(vii) for purposes of this rule, "agency cross transaction for an advisory client" means a transaction in which a person acts as an investment adviser, investment adviser representative, or federal covered adviser in relation to a transaction in which the investment adviser, investment adviser representative, or federal covered adviser, or any person controlling, controlled by, or under common control with such investment adviser, investment adviser representative, or federal covered adviser, acts as a broker-dealer for both the advisory client and another person on the other side of the transaction. When acting in this capacity the person is required to be registered as a broker-dealer in this state unless excluded from the definition.

(viii) nothing in this rule shall be construed to relieve an investment adviser, investment adviser representative, or federal covered adviser from acting in the best interests of the client, including fulfilling their duty with respect to the best price and execution for the particular transaction for the client nor shall it relieve any investment adviser, investment adviser representative, or federal covered adviser of any other disclosure obligations imposed by the Act.

(z) making, in the solicitation of clients, any untrue statement of a material fact, or omitting to state a material fact necessary in order to make the statement made, in light of the circumstances under which they are made, not misleading.

(aa) failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information contrary to the provisions of Section 204A of the Investment Advisers Act of 1940.

(bb) taking any action, directly or indirectly, with respect to those securities or funds in which any client has a beneficial interest, where the investment adviser, investment adviser representative, or federal covered adviser has custody or possession of such securities or funds when the action of the investment adviser, investment adviser representative, or federal covered adviser, is subject to and does not comply with the requirements of ARM 6.10.508; and

(cc) engaging in other conduct such as nondisclosure, incomplete disclosure, or deceptive practices.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 1989 MAR p. 221, Eff. 1/27/89; AMD, 1998 MAR p. 2527, Eff. 12/18/98; AMD, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.127, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.403 Sanctions Against Fraudulent Foreign Securities and Their Dealers

(1) The commissioner may by order revoke or suspend any foreign security exemption with respect to any such security or the use of such exemption by any dealer if he finds that the further sale in this state of such security, or sales by a broker-dealer, would work, or tend to work, a fraud or deceit on purchasers or prospective purchasers.

History

Authorizing statute(s): 30-10-104, MCA
Implementing statute(s): 30-10-104, 30-10-107, MCA
History: NEW, 1994 MAR p. 569, Eff. 3/18/94; TRANS, from ARM 6.10.132, 2008 MAR p. 2046, Eff. 9/26/08.

Subchapter 6.10.5 Broker-Dealers and Investment Advisers

Mont. Admin. R. 6.10.501 Registration and Examination - Securities Salesperson, Investment Adviser Representatives, Broker-Dealers, and Investment Advisers

(1) To become registered in this state as a securities salesperson or an investment adviser representative, the individual applicant shall pass the Financial Industry Regulatory Authority, Inc. (FINRA) uniform securities agent state law exam or the uniform combined state law examination, or an examination designated by the commissioner. The applicant must also complete an application form described in (2). A salesperson applying to register with an issuer does not have to take an examination.

(2) Each application for registration in this state must be made on the most current revised uniform application form as adopted by the North American Securities Administrators Association (NASAA), unless the commissioner, by order, designates another form. Broker-dealers shall use FINRA form BD, investment adviser representatives shall use FINRA form ADV, and securities salespersons and investment adviser representatives shall use FINRA form U-4.

(3) Except as provided in (3)(a) and (b), all applications, amendments, reports, notices, related filings, and fees required to be filed with the commissioner shall be filed electronically with and transmitted to the FINRA's investment adviser registration depositor (IARD) for investment advisers and investment adviser representatives or to the FINRA's central registration depository (CRD) for broker-dealers and salespersons:

(a) except as provided in (3)(b), salespersons representing issuers, salespersons of non-FINRA firms and broker-dealers that are not members of the FINRA shall file all applications, amendments, reports, notices, related filings, and fees directly with the commissioner;

(b) in the commissioner's discretion, the commissioner may by order provide for a manner of filing an application to register or an application to terminate registration different from the procedures provided in this rule;

(c) notwithstanding (3) of this rule, the electronic filing of any particular document and the collection of related processing fees shall not be required until such time as IARD provides for receipt of such filings and fees. Any documents or fees required to be filed with the commissioner that are not permitted to be filed with or cannot be accepted by IARD shall be filed directly with the commissioner; and

(d) pursuant to 30-10-209, MCA, those in-state salespersons and investment adviser representatives that file applications on the Form U-4 must submit a Resident Affidavit form with a form W-9 within 30 days of acceptance of the Form U-4 to receive a refund of the difference between out-of-state registration and in-state registration fees.

(4) Any individual who has been registered as an agent in any state within two years from the date of filing an application for registration shall not be required to retake the examinations in (1) to be eligible for registration.

(5) Any individual who is not registered as an agent in any state for more than two years but less than five years, who has elected to participate in the FINRA Maintaining Qualifications Program (MQP) pursuant to FINRA Rule 1240(c), and whose appropriate FINRA qualifying examinations remain valid pursuant to effective participation in the MQP shall be deemed in compliance with the examination requirements of (1) as long as the individual elects to participate in the NASAA Examination Validity Extension Program (EVEP) within two years of agent registration termination.

(6) Any individual who has not been registered as an agent in any state for more than two years but less than five years, who has elected to participate in the FINRA MQP pursuant to FINRA Rule 1240(c), and whose appropriate FINRA qualifying examinations remain valid pursuant to effective participation in the FINRA MQP shall be deemed in compliance with the examination requirements of (1).

(7) Successful participation in the FINRA MQP shall not extend the Series 66/Uniform Combined State Law Examination for purposes of investment adviser representative registration.

(8) Each person registered pursuant to 30-10-201, MCA, wishing to terminate registration shall file an application to terminate registration. Each application to terminate registration must be made on the most current revised uniform termination form as adopted by NASAA, unless the commissioner, by order, designates another form. Broker-dealers shall use form BDW, investment advisers shall use form ADV-W, and securities salespersons and investment adviser representatives shall use form U-5.

(9) An individual who terminates their registration as an investment adviser representative may maintain the validity of their Series 65/Uniform Investment Adviser Law Examination (Series 65 Examination) or the investment adviser representative portion of the Series 66/Uniform Combined State Law Examination (Series 66 Examination), as applicable, without being employed by or associated with an investment adviser or federal covered investment adviser for a maximum of five years following the termination of the effectiveness of the investment adviser representative registration if the individual meets all of the following:

(a) the individual previously passed the examination for which they seek to maintain validity under this rule;

(b) the individual was registered as an investment adviser representative for at least one year immediately preceding the termination of the investment adviser representative registration;

(c) the individual was not subject to a statutory disqualification as defined in Section 3(a)(39) of the Exchange Act while registered as an investment adviser representative or at any period after termination of the registration;

(d) the person elects to participate in EVEP under (9) within two years from the effective date of the termination of the investment adviser representative registration;

(e) the individual does not have a deficiency under the investment adviser representative continuing education program at the time the investment adviser representative registration becomes ineffective;

(f) the person completes annually on or before December 31 of each calendar year in which the person participates in the IAR EVEP:

(i) six credits of IAR CE Ethics and Professional Responsibility Content offered by an Authorized Provider, including at least three hours covering the topic of ethics; and

(ii) six credits of IAR CE Products and Practice Content offered by an Authorized Provider;

(g) an individual who elects to participate in EVEP is required to complete credits required by (9)(f) for each calendar year that elapses after the individual's investment adviser representative registration became ineffective regardless of when the individual elects to participate in EVEP; and

(h) an individual who complies with the FINRA MQP under FINRA Rule 1240(c) shall be considered in compliance with (9)(f)(ii).

(10) Each change in the information included in an application for registration or termination must be set forth in an amendment to the application and filed with the commissioner within 30 days after the change occurs.

(11) Upon the written request of an applicant and for good cause shown, the commissioner may waive any of the requirements of this rule.

History

Authorizing statute(s): 30-10-107, 30-10-209, MCA
Implementing statute(s): 30-10-201, MCA
History: NEW, 1984 MAR p. 19, Eff. 1/13/84; AMD, 1988 MAR p. 1803, Eff. 8/12/88; AMD, 1989 MAR p. 220, Eff. 1/27/89; AMD, 1996 MAR p. 1133, Eff. 4/26/96; AMD, 2002 MAR p. 73, Eff. 1/18/02; TRANS and AMD, from ARM 6.10.121, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20; AMD, 2024 MAR p. 1999, Eff. 8/10/24.

Mont. Admin. R. 6.10.502 Canadian Broker-Dealers and Salespersons

(1) A Canadian broker-dealer that is resident in Canada, and has no office or other physical presence in the United States, and is not an office of, branch of, or a natural person associated with a broker-dealer otherwise registered in the United States may transact business in this state without registering as a broker-dealer pursuant to 30-10-201, MCA, under the following conditions:

(a) the business transacted by the Canadian broker-dealer must be limited to:

(i) transactions subject to the exemption provided by 30-10-105(7), MCA;

(ii) transactions with or for a Canadian person who is temporarily present in this state and with whom the Canadian broker-dealer had a bona fide customer relationship before the person entered this state; or

(iii) transactions with or for a Canadian person in a self-directed tax advantaged retirement plan in Canada of which that person is the holder or contributor; and

(b) the Canadian broker-dealer must:

(i) file the following with the securities administrator:

(A) a notice in the form of that person's current application for registration required by the jurisdiction in which that person's head office is located; and

(B) a consent to service of process pursuant to 30-10-208, MCA;

(ii) be a member of a self-regulatory organization or stock exchange in Canada; and

(iii) maintain provincial or territorial registration and membership in a Canadian self-regulatory organization or stock exchange in good standing;

(c) disclosure must be made to the customers in this state that the Canadian broker-dealer is not subject to the full regulatory requirements of the Securities Act of Montana; and

(d) the transaction must not be in violation of 30-10-301, MCA.

(2) A Canadian securities salesperson representing a Canadian broker-dealer transacting business in this state pursuant to (1) need not register pursuant to 30-10-201, MCA, provided that he or she is registered in good standing in the appropriate Canadian jurisdiction.

(3) Transactions by Canadian broker-dealers and their salespersons pursuant to (1) and (2) will be deemed not to involve the "offer" or "sale" of a security, as those terms are defined in 30-10-103, MCA, for purpose of compliance with 30-10-202, MCA, and the rules promulgated thereunder. Nothing in this rule shall affect the duty of the Canadian broker-dealer and its agents to comply with 30-10-301, MCA, and the rules promulgated thereunder.

History

Authorizing statute(s): 30-10-105, 30-10-107, MCA
Implementing statute(s): 30-10-201, MCA
History: NEW, 2000 MAR p. 3336, Eff. 12/8/00; TRANS and AMD, from ARM 6.10.135, 2011 MAR p. 746, Eff. 9/26/08.)

Mont. Admin. R. 6.10.503 Minimum Financial Requirements and Financial Reporting of Broker-Dealers

(1) Each broker-dealer registered or required to be registered under this act shall comply with SEC rule 15c3-1 (17 CFR 240.15c3-1 (1998)), 15c3-2 (17 CFR 240.15c3-2 (1998)), and 15c3-3 (17 CFR 240.15c-3 (1998)).

(2) Each broker-dealer registered or required to be registered under this act shall comply with SEC rule 17a-11 (17 CFR 240.17a-11 (1998)) and shall file with the commissioner upon request copies of notices and reports required under SEC rules 17a-5 (17 CFR 240.17a-5 (1998)), 17a-10(17 CFR 240.17a-10 (1998)), and 17a-11 (17 CFR 240.17a-11 (1998)).

(3) The commissioner adopts and incorporates by reference the rules cited in (1) and (2), which establish net capitalization requirements, customer free credit balance requirements, customer protection reserves, net capital decline reporting requirements, and capitalization reporting requirements. A copy of these rules may be obtained from the Office of the Montana State Auditor, 840 Helena Avenue, Helena, MT 59601.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-201, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.136, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.504 Broker-Dealer Books and Records

(1) Unless otherwise provided by order of the commissioner, each registered broker-dealer shall make, maintain, and preserve books and records in compliance with the United States Securities and Exchange Commission rules 17a-3 (17 CFR 240.17a-3 (1998)), 17a-4 (17 CFR 240.17a-4 (1998)), and 15c2-11 (17 CFR 240.15c2-11 (1998)) which are adopted and incorporated by this reference, and establish recordkeeping requirements related to the conduct of the business as a securities broker-dealer. Copies of these rules may be obtained from the Office of the Montana State Auditor, 840 Helena Avenue, Helena, MT 59601.

(2) To the extent that the Securities and Exchange Commission promulgates changes to the above-referenced rules, dealers in compliance with such rules as amended shall not be subject to enforcement action by the commissioner for violation of this rule to the extent that the violation results solely from the dealer's compliance with the amended rule.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, from ARM 6.10.138, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.506 Minimum Financial Requirements for Investment Advisers

(1) An investment adviser registered or required to be registered under the Act who has custody of client funds or securities shall maintain at all times a minimum net worth of $35,000, and every investment adviser registered or required to be registered under the Act who has discretionary authority over client funds or securities but does not have custody of client funds or securities shall maintain at all times a minimum net worth of $10,000.

(2) An investment adviser registered or required to be registered under the Act who has custody or discretion of client funds or securities, but does not meet the minimum net worth requirements in (1) shall be bonded in the amount of the net worth deficiency rounded up to the nearest $5,000. Any bond required by this section shall be:

(a) in the form determined by the commissioner;

(b) issued by a company qualified to do business in this state; and

(3) An investment adviser registered or required to be registered under the Act who accepts prepayment of more than $500 per client and six or more months in advance shall maintain at all times a positive net worth.

(4) Unless otherwise exempted, as a condition of the right to transact business in this state, every investment adviser registered or required to be registered under the Act shall by the close of business on the next business day notify the commissioner if such investment adviser's net worth is less than the minimum required. After transmitting such notice, each investment adviser shall file by the close of business on the next business day a report with the commissioner of its financial condition, including the following:

(a) a trial balance of all ledger accounts;

(b) a statement of all client funds or securities that are not segregated;

(d) a statement as to the number of client accounts.

(5) For purposes of this rule, the term "net worth" shall mean an excess of assets over liabilities, as determined by generally accepted accounting principles, but shall not include as assets:

(a) prepaid expenses (except as to items properly classified assets under generally accepted accounting principles) ;

(b) deferred charges;

(d) franchise rights;

(e) organizational expenses;

(f) patents;

(g) copyrights;

(h) marketing rights;

(i) unamortized debt discount and expense;

(j) all other assets of intangible nature;

(k) home furnishings;

(l) automobile(s) , and any other personal items not readily marketable in the case of an individual;

(m) advances or loans to stockholders and officers in the case of a corporation; and

(n) advances or loans to partners in the case of a partnership.

(6) For purposes of this rule, a person will be deemed to have custody if said person directly or indirectly holds client funds or securities, has any authority to obtain possession of them, or has the ability to appropriate them.

(7) For purposes of this rule, an investment adviser shall not be deemed to be exercising discretion when it places trade orders with a broker-dealer pursuant to a third party trading agreement if:

(a) the investment adviser has executed a separate investment adviser contract exclusively with its client which acknowledges that a third party trading agreement will be executed to allow the investment adviser to effect securities transactions for the client in the client's broker-dealer account; and

(b) the investment adviser contract specifically states that the client does not grant discretionary authority to the investment adviser and the investment adviser in fact does not exercise discretion with respect to the account; and

(c) a third party trading agreement is executed between the client and a broker-dealer which specifically limits the investment adviser's authority in the client's broker-dealer account to the placement of trade orders and deduction of investment adviser fees.

(8) The commissioner may require that a current appraisal be submitted in order to establish the worth of any asset.

(9) Every investment adviser that has its principal place of business in a state other than this state shall maintain only such minimum capital as required by the state in which the investment adviser maintains its principal place of business, provided the investment adviser is licensed in such state and is in compliance with such state's minimum capital requirement.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-201, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; TRANS, from ARM 6.10.140, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.507 Bonding Requirements for Certain Investment Advisers

(1) Any bond required by this rule shall be issued by a company qualified to do business in this state in the form determined by the commissioner and shall be subject to the claims of all clients of such investment adviser regardless of the client's state of residence.

(a) every investment adviser registered or required to be registered under the Act having custody of or discretionary authority over client funds or securities shall be bonded in an amount determined by the commissioner based upon the number of clients and the total assets under management of the investment adviser;

(b) every investment adviser registered or required to be registered under the Act who has custody or discretion of client funds or securities who does not meet the minimum net worth standard in ARM 6.10.506(1) shall be bonded in the amount of the net worth deficiency rounded up to the nearest $5,000.

(2) An investment adviser that has its principal place of business in a state other than this state shall be exempt from the requirements of (1) , provided that the investment adviser is registered as an investment adviser in the state where it has its principal place of business and is in compliance with such state's requirements relating to bonding.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-201, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; AMD, 2003 MAR p. 2850, Eff. 12/25/03; TRANS, from ARM 6.10.141, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.508 Custody of Client Funds or Securities by Investment Advisers

(1) It shall be unlawful for any investment adviser to take, or have custody of, any securities or funds of any client unless:

(a) the investment adviser notifies the commissioner in writing that the investment adviser has, or may have, custody. Such notification may be given on Form ADV;

(b) the securities of each client are segregated, marked to identify the particular client having the beneficial interest therein, and held in safekeeping in some place reasonably free from risk of destruction or other loss:

(i) all client funds are deposited in one or more bank accounts containing only clients' funds;

(ii) such account or accounts are maintained in the name of the investment adviser as agent or trustee for such clients; and

(iii) the investment adviser maintains a separate record for each such account showing the name and address of the bank where the account is maintained, the dates and amounts of deposits in and withdrawals from the account, and the exact amount of each client's beneficial interest in the account;

(c) immediately after accepting custody or possession of funds or securities from any client, the investment adviser notifies the client in writing of the place where, and the manner in which, the funds and securities will be maintained and subsequently, if and when there is a change in the place where, or the manner in which, the funds or securities are maintained, the investment adviser gives written notice thereof to the client;

(d) at least once every three months, the investment adviser sends each client an itemized statement showing the funds and securities in the investment adviser's custody at the end of such period, and all debits, credits, and transactions in the client's account during such period; and

(e) at least once every calendar year, an independent certified public accountant or public accountant verifies all client funds and securities by actual examination at a time chosen by the accountant without prior notice to the investment adviser. A report stating that such accountant has made an examination of such funds and securities, and describing the nature and extent of the examination, shall be filed with the commissioner promptly after each such examination;

(f) for purposes of this rule, a person will be deemed to have custody if said person directly, or indirectly, holds client funds or securities, has any authority to obtain possession of them, or has the ability to appropriate them.

(2) This rule shall not apply to an investment adviser also registered as a broker-dealer under section 15 of the Securities Exchange Act of 1934 if the broker-dealer is:

(a) subject to and in compliance with SEC rule 15c3-1 (Net Capital Requirements for Brokers or Dealers), 17 CFR 240.15c3-1 under the Securities Exchange Act of 1934; or

(b) a member of an exchange whose members are exempt from SEC Rule 15c3-1, 17 CFR 240.15c3-1 under the provisions of paragraph (2)(b), and the broker-dealer is in compliance with all rules and settled practices of the exchange imposing requirements with respect to financial responsibility and the segregation of funds or securities carried for the account of customers.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-107, 30-10-201, MCA
History: NEW, 2003 MAR p. 2850, Eff. 12/25/03; TRANS and AMD, to ARM 6.10.508, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.510 Investment Adviser Books and Records

(1) Except as otherwise provided in (5), an investment adviser registered or required to be registered under the Securities Act of Montana must make and keep true, accurate, and current the following books, ledgers, and records:

(a) those books and records required to be maintained and preserved in compliance with Rule 204-2(a)(1)-(5), (7), (9), (10), (12), (13), (15), and (16) of the Investment Advisers Act of 1940 (17 CFR 275.204-2 (1998)), adopted and incorporated by reference, notwithstanding the fact that the investment adviser is not registered or required to be registered under the Investment Advisers Act of 1940. Rule 204-2 establishes books and records maintenance requirements pertaining to the conduct of business as an investment adviser. Copies of these rules may be obtained from the Commissioner of Securities, 840 Helena Avenue, Helena, MT 59601;

(b) all trial balances, financial statements prepared in accordance with generally accepted accounting principles, and internal audit working papers relating to the investment adviser's business as an investment adviser. For purposes of this rule, "financial statements" means balance sheets, income statements, cash flow statements and net worth computations as required by ARM 6.10.506;

(d) a file containing a copy of each record required by Rule 204-2(a)(11) of the Investment Advisers Act of 1940 (17 CFR 275.204-2(a)(11) (1998)), including any communication by electronic media that the investments adviser circulates or distributes directly or indirectly to two or more persons, other than persons connected with the investment adviser;

(e) a copy of each written statement and each amendment or revision given or sent to any client or prospective client of the investment adviser in accordance with the provisions of 30-10-201(12)(b), MCA, and a record of the dates that each written statement, and each amendment or revision was given or offered to be given to any client or prospective client who subsequently becomes a client;

(f) for each client that was obtained by the adviser by means of a solicitor to whom a cash fee was paid by the adviser, records required by Rule 206(4)-3 of the Investment Advisers Act of 1940 (17 CFR 275.206(4)-3 (1998)), which is adopted and incorporated by this reference, notwithstanding the fact that the investment adviser is not registered, or required to be registered, under the Investment Advisers Act of 1940;

(g) all records required by rule 204-2(a)(16) of the Investment Advisers Act of 1940 include, but are not limited to, electronic media that the investment adviser circulates or distributes, directly or indirectly, to two or more persons (other than persons connected with the investment adviser);

(h) a file containing a copy of all written communication received or sent regarding any litigation involving the investment adviser or any investment adviser representative or employee, and regarding any written customer or client complaint;

(i) written information about each investment advisory client that is the basis for making any recommendation or providing any investment advice to such client;

(j) written procedures to supervise the activities of employees and investment adviser representatives that are reasonably designed to achieve compliance with applicable securities laws and regulations; and

(k) a file containing a copy of each document (other than any notices of general dissemination) that was filed with, or received from, any state or federal agency or self regulatory organization, and that pertains to the registrant or its investment adviser representatives which file should contain, but is not limited to, all applications amendments, renewal filings, and correspondence.

(2) Every investment adviser subject to (1) shall preserve the following records in the manner prescribed:

(a) books and records required to be made under the provisions of (1)(a) shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in the principal office of the investment adviser; and

(b) books and records required to be made under (1)(b) through (1)(k) must be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in the principal office of the investment adviser or for the time period during which the investment adviser was registered, or required to be registered, in the state, if less.

(3) Not withstanding other record reservation requirements of this rule, the following records copies shall be required to be maintained at the business location of the investment adviser from which the customer or client is being provided or has been provided with investment advisory services:

(a) records required to be preserved under:

(i) sections (a)(3), (a)(7), (a)(9)-(10), (a)(15)-(16), (b) and (c) inclusive, of SEC Rule 204-2 of the Investment Advisers Act of 1940 (17 CFR 275.20402 (1998));

(ii) subsections (1)(c), (1)(e), (1)(i), and (1)(k).

(4) Every investment adviser registered or required to be registered shall establish, implement, update, and enforce written physical security and cybersecurity policies and procedures reasonably designed to ensure the confidentiality, integrity, and availability of physical and electronic records and information. The policies and procedures must be tailored to the investment adviser's business model, taking into account the size of the firm, type(s) of services provided, and the number of locations of the investment adviser.

(a) The physical security and cybersecurity policies and procedures must:

(i) protect against reasonably anticipated threats or hazards to the security or integrity of client records and information;

(ii) ensure that the investment adviser safeguards confidential client records and information; and

(iii) protect any records and information the release of which could result in harm or inconvenience to any client.

(b) The physical security and cybersecurity policies and procedures must cover at least five functions:

(i) the organizational understanding to manage information security risk to systems, assets, data, and capabilities;

(ii) implementation of the appropriate safeguards to ensure delivery of critical infrastructure services;

(iii) implementation of the appropriate activities to identify the occurrence of an information security event;

(iv) implementation of the appropriate activities to take action regarding a detected information security event; and

(v) implementation of the appropriate activities to maintain plans for resilience and to restore any capabilities or services that were impaired due to an information security event.

(c) The investment adviser must review, no less frequently than annually, and modify, as needed, these policies and procedures to ensure the adequacy of the security measures and the effectiveness of their implementation.

(5) The investment adviser must deliver upon the investment adviser's engagement by a client, and on an annual basis thereafter, a privacy policy to each client that is reasonably designed to aid in the client's understanding of how the investment adviser collects and shares, to the extent permitted by state and federal law, non-public personal information. The investment adviser must promptly update and deliver to each client an amended privacy policy if any of the information in the policy becomes inaccurate.

(6) Every investment adviser shall establish, implement, and maintain written procedures relating to a Business Continuity and Succession Plan. The plan shall be based upon the facts and circumstances of the investment adviser's business model including the size of the firm, type(s) of services provided, and the number of locations of the investment adviser. The plan shall provide for at least the following:

(a) The protection, backup, and recovery of books and records.

(b) Alternate means of communications with customers, key personnel, employees, vendors, service providers (including third-party custodians), and regulators, including, but not limited to, providing notice of a significant business interruption or the death or unavailability of key personnel or other disruptions or cessation of business activities.

(d) Assignment of duties to qualified responsible persons in the event of the death or unavailability of key personnel.

(e) Otherwise minimizing service disruptions and client harm that could result from a sudden significant business interruption.

(7) To the extent that the securities and exchange commission promulgates changes to the rules of the Investment Advisers Act of 1940 incorporated by reference into these rules, investment advisers in compliance with such rules as amended shall not be subject to enforcement action by the commissioner for violation of this rule to the extent that the violation results solely from the investment adviser's compliance with the amended rule.

(8) Every investment adviser that has its principal place of business in a state other than this state shall be exempt from the requirements of this rule, provided the investment adviser is licensed in such state and is in compliance with the state's record keeping requirements.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/5/99; TRANS and AMD, from ARM 6.10.143, 2008 MAR p. 2046, Eff. 9/26/08; AMD, 2020 MAR p. 1874, Eff. 10/24/20.

Mont. Admin. R. 6.10.511 Notice Filing Requirements for Federal Covered Advisers

(1) The notice filing for a federal covered adviser pursuant to 30-10-201, MCA, shall be filed with the commissioner, or with a central registration depository designated by the commissioner on an executed Form ADV (uniform application for investment adviser registration (17 CFR 279.1 (1998)) and shall include:

(a) the consent to service of process required by 30-10-208, MCA, unless incorporated by reference by ARM 6.10.150; and

(b) the fee required under 30-10-209, MCA.

(2) A federal covered adviser shall file with the commissioner a copy of each amendment to its Form ADV when such amendment is filed with the Securities and Exchange Commission.

(3) The renewal of the notice filing for a federal covered adviser pursuant to 30-10-209(2)(c), MCA, shall be filed upon the first page of an executed Form ADV (uniform application for investment adviser registration (17 CFR 279.1 (1998)), and shall contain the fee required under 30-10-209, MCA. Such filing shall be accompanied by amendments or documents filed with the Securities and Exchange Commission that have not previously been provided to the commissioner.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, MCA
History: NEW, 1999 MAR p. 56, Eff. 1/15/99; TRANS and AMD, to ARM 6.10.511, 2008 MAR p. 2046, Eff. 9/26/08.

Subchapter 6.10.6 Senior Specific Certifications and Designations

Mont. Admin. R. 6.10.601 Senior Specific Certifications and Designations Generally Unlawful

(1) The use of a senior specific certification or designation by any person in connection with the offer, sale, or purchase of securities, or the provision of advice as to the value of or the advisability of investing in, purchasing, or selling securities, either directly or indirectly or through publications or writings, or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person shall be a dishonest, fraudulent, and unethical practice in the securities business within the meaning of 30-10-201(13)(g) and 30-10-301, MCA. The prohibited use of such certifications or professional designation includes, but is not limited to, the following:

(a) use of a certification or professional designation by a person who has not actually earned or is otherwise ineligible to use such certification or designation;

(b) use of a nonexistent or self-conferred certification or professional designation;

(c) use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the person using the certification or professional designation does not have; and

(d) use of a certification or professional designation that was obtained from a designating or certifying organization that:

(i) is primarily engaged in the business of instruction in sales and/or marketing;

(ii) does not have reasonable standards or procedures for assuring the competency of its designees or certificants;

(iii) does not have reasonable standards or procedures for monitoring and disciplining its designees or certificants for improper or unethical conduct; or

(iv) does not have reasonable continuing education requirements for its designees or certificants in order to maintain the designation or certificate.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.602 Rebuttabe Presumption Regarding Certain Disqualifications

(1) There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of ARM 6.10.601I(1)(d), when the organization has been accredited by:

(a) The American National Standards Institute;

(b) The National Commission for Certifying Agencies; or

(c) an organization that is on the United States Department of Education's list entitled "Accrediting Agencies Recognized for Title IV Purposes" and the designation or credential issued therefrom does not primarily apply to sales and/or marketing.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.604 Factors Considered to Determine Unlawful Certifications or Designations

(1) In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing senior citizens or retirees, factors to be considered shall include:

(a) use of one or more words such as "senior," "retirement," "elder," or like words, combined with one or more words such as "certified," "registered," "chartered," "adviser," "specialist," "consultant," "planner," or like words, in the name of the certification or professional designation; and

(b) the manner in which those words are combined.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.605 Certifications or Designations Not Considered Unlawful

(1) For purposes of this rule, a senior certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title:

(a) indicates seniority or standing within the organization; or

(b) specifies an individual's area of specialization within the organization.

(2) For purposes of this rule, financial services regulatory agency includes, but is not limited to, an agency that regulates broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 2008 MAR p. 2046, Eff. 9/26/08.

Mont. Admin. R. 6.10.607 Rules Not Limiting Authority

(1) Nothing in these rules shall limit the commissioner's authority to enforce existing provisions of law.

History

Authorizing statute(s): 30-10-107, MCA
Implementing statute(s): 30-10-201, 30-10-301, MCA
History: NEW, 2008 MAR p. 2046, Eff. 9/26/08.

Subchapter 6.10.7 Securities Restitution Fund

Mont. Admin. R. 6.10.701 Securities Restitution Fund

(1) The purpose of these rules is to set forth:

(a) the procedures for allocating money from the Securities Restitution Fund to the victims of securities fraud in Montana;

(b) the procedures that victims shall use to apply for compensation from the fund;

(d) the method for calculating what percentage of money a victim shall be eligible for when the fund approaches zero.

History

Authorizing statute(s): 30-10-1008, MCA
Implementing statute(s): 30-10-1006, MCA
History: NEW, 2012 MAR p. 1140, Eff. 6/8/12.

Mont. Admin. R. 6.10.702 Definitions

For purposes of this subchapter:

(1) "Approaching zero" means the fund balance is under $1,000,000.

(2) "Claimant" means a claimant as defined under 30-10-1003(1), MCA.

(3) "Commissioner" means the Commissioner of Securities and Insurance, Montana State Auditor.

(4) "Committee" means the committee defined in ARM 6.10.705.

(5) "Department" means the department as defined in 30-10-1003(2), MCA.

(6) "Eligible persons" means persons eligible for restitution assistance under 30-10-1005, MCA.

(7) "Fund" means the fund as defined in 30-10-1003(4), MCA.

(8) "Investment scheme" means the underlying plan constituting the basis of a final order in a legal action initiated by the commissioner.

(9) "Loss ratio" means the ratio consisting of the victim's total investment loss over the victim's total net worth.

(10) "Total net loss" means a person's total loss in an investment scheme.

(11) "Total net worth" means the difference between the total value of a person's assets and a person's liabilities.

(12) "Victim" means a victim as defined under 30-10-1003(6), MCA.

History

Authorizing statute(s): 30-10-1008, MCA
Implementing statute(s): 30-10-1008, MCA
History: NEW, 2012 MAR p. 1140, Eff. 6/8/12.

Mont. Admin. R. 6.10.703 Method for Calculating Percentages as the Fund Approaches Zero

(1) When the fund is approaching zero, the committee shall utilize loss ratio to determine how much money a person is eligible to receive, except as specified in (4).

(2) The committee shall use the following percentages when making recommendations to the commissioner as the fund approaches zero:

(a) eligible persons whose loss ratio is less than 10% are eligible for up to $2,500. Eligible persons 60 years and older are eligible for up to $5,000;

(b) eligible persons whose loss ratio is between 10% and 25% are eligible for up to $7,500. Eligible persons 60 years and older are eligible for up to $15,000;

(c) eligible persons whose loss ratio is between 25% and 50% are eligible for up to $12,500. Eligible persons 60 years and older are eligible for up to $25,000;

(d) eligible persons whose loss ratio is between 50% and 75% are eligible for up to $17,500. Eligible persons 60 years and older are eligible for up to $35,000; and

(e) eligible persons whose loss ratio is greater than 75% are eligible for the full amount under 30-10-1006(3), MCA.

(3) A person's eligibility for restitution does not mean he or she shall receive the amount listed. The committee shall make recommendations which cannot exceed the amount listed. Payments shall be limited to funds available. Not all persons deemed eligible shall receive payment.

(4) The committee may waive the loss ratios in the interest of justice.

History

Authorizing statute(s): 30-10-1008, MCA
Implementing statute(s): 30-10-1008, MCA
History: NEW, 2012 MAR p. 1140, Eff. 6/8/12; AMD, 2016 MAR p. 721, Eff. 4/23/16.

Mont. Admin. R. 6.10.705 Composition of the Committee

(1) The committee shall be composed of three employees of the CSI. Those three persons shall be appointed by the Commissioner, at the Commissioner’s discretion.

History

Authorizing statute(s): 30-10-1008, MCA
Implementing statute(s): 30-10-1008, MCA
History: NEW, 2012 MAR p. 1140, Eff. 6/8/12; AMD, 2013 MAR p. 1824, Eff. 10/18/13

Mont. Admin. R. 6.10.706 Committee Procedures

(1) The committee shall meet quarterly to determine award recommendations.

(2) The committee shall review all completed applications received in the preceding quarter prior to making any recommendations.

(3) Within two weeks following the committee meeting, the attorney shall prepare a recommendation for the commissioner.

(4) Applications shall only be considered in two consecutive quarters. After the second quarter review, the application shall be deemed closed and eligible for review solely at the discretion of the committee.

(5) The commissioner may:

(a) adopt the recommendations in full;

(b) reject the recommendations in full; or

History

Authorizing statute(s): 30-10-1008, MCA
Implementing statute(s): 30-10-1008, MCA
History: NEW, 2012 MAR p. 1140, Eff. 6/8/12.

Mont. Admin. R. 6.10.707 Application Review Requirements

(1) Claimants shall submit a written application on a form prescribed by the commissioner.

(2) Only persons whose applications are complete and show they meet all of the eligibility requirements specified in 30-10-1005, MCA, and other relevant statutes shall have their applications reviewed by the committee.

(3) Incomplete applications shall be returned to the claimant. Any request by the department for additional information must be answered within 30 days for an application to be considered by the committee in the following quarter. Claimants failing to respond within 30 days shall not be considered in the following quarter, except for good cause shown.

(4) The committee shall not review more than one application per victim per investment scheme.

History

Authorizing statute(s): 30-10-1008, MCA
Implementing statute(s): 30-10-1006, MCA
History: NEW, 2012 MAR p. 1140, Eff. 6/8/12.

Chapter 6.12 Securities Department

Subchapter 6.12.12 Living Trusts

Mont. Admin. R. 6.12.1201 Applicability of Sub-Chapter

(1) This sub-chapter applies to living trusts and to transactions involving living trusts, subject to the Montana Living Trust Act, Title 30, chapter 10, part 9, MCA.

History

Authorizing statute(s): Sec. 30-10-905, MCA
Implementing statute(s): Sec. 30-10-901 through 30-10-915, MCA
History: NEW, 1997 MAR p. 1917, Eff. 10/21/97.

Mont. Admin. R. 6.12.1202 Definitions

As used in this sub-chapter, unless the context indicates otherwise:

(1) The definitions in 30-10-903, MCA, apply.

(2) "Living trust representative" means a person licensed to sell living trusts under 30-10-901 through 30-10-915, MCA.

History

Authorizing statute(s): Sec. 30-10-905, MCA
Implementing statute(s): Sec. 30-10-901 through 30-10-915, MCA
History: NEW, 1997 MAR p. 1917, Eff. 10/21/97.

Mont. Admin. R. 6.12.1203 Licensure

(1) Each application for a license to offer and sell living trusts in this state must be made on Form LT-1, available from the state auditor.

(2)

(a) A license granted under 30-10-904, MCA, to an investment advisor entitles an investment advisor representative affiliated with the investment advisor and registered in this state to act under that license pursuant to (b) .

(b) An investment advisor licensed under 30-10-904, MCA, shall provide the state auditor with the names of each investment advisor representative who will offer or sell living trusts in this state under that license by completing Schedule A to Form LT-1, and paying the fees required by 30-10-904, MCA.

(3) Each applicant shall notify the state auditor of any change in the information in the applicant's application within 30 days after the change occurs by filing an amended Form LT-1 or Schedule A.

(4) A license issued between October 1, 1997, and December 31, 1997, is effective until December 31, 1998, unless the license is suspended or revoked.

History

Authorizing statute(s): Sec. 30-10-905, MCA
Implementing statute(s): Sec. 30-10-904, MCA
History: NEW, 1997 MAR p. 1917, Eff. 10/21/97.

Mont. Admin. R. 6.12.1204 Living Trust Representative Books and Records

(1) Each living trust representative shall make and keep all books and records relating to the representative's offering and sales of living trusts, including, but not limited to, the following:

(a) each written agreement (or copy thereof) entered into by the living trust representative with a client;

(b) a complaint file containing each written customer or client complaint, the action taken by the living trust representative with respect to each complaint, and all documents related to the complaint;

(c) a litigation file documenting each criminal or civil action filed in a state or federal court against the living trust representative, and the disposition of any such action;

(d) a correspondence file containing all correspondence to and received from the public; and

(e) a file containing a copy of all letters of solicitation to clients with whom a living trust agreement is executed.

(2) Records made and kept pursuant to (1) shall be maintained and preserved for a period of at least 5 years.

(3) The state auditor may copy records made, kept, or preserved pursuant to (1) or require a living trust representative to copy those records and provide the copies to the state auditor.

(4) A living trust representative may make and keep records required to be made and kept by (1) on a computer, microform, or other electronic data storage system if the records can be immediately produced in document form.

History

Authorizing statute(s): Sec. 30-10-905, MCA
Implementing statute(s): Sec. 30-10-905, MCA
History: NEW, 1997 MAR p. 1917, Eff. 10/21/97.

Mont. Admin. R. 6.12.1205 Sales and Promotional Material

(1) Sales and promotional material used in connection with the offer or sale of living trusts by persons required to be licensed under 30-10-904, MCA, to persons in this state must be filed with the state auditor at least 10 days prior to use in this state.

(2) The state auditor may by order disallow the use of sales or promotional material filed pursuant to this rule if the state auditor finds that such an order is in the public interest or necessary to protect consumers in this state. Unless the state auditor disallows the use of material filed pursuant to this rule within 10 business days from the day it is filed, the material may be used.

History

Authorizing statute(s): Sec. 30-10-905, MCA
Implementing statute(s): Sec. 30-10-909 and 30-10-913, MCA
History: NEW, 1997 MAR p. 1917, Eff. 10/21/97.

Mont. Admin. R. 6.12.1206 Internet

(1) An offer of sale of living trusts made through the internet or similar proprietary or common carrier electronic system is exempt from 30-10-901 through 30-10-915, MCA, if the following conditions are met:

(a) the offer indicates that the offer is not being made to residents of Montana;

(b) the offer is not specifically directed to any person in Montana; and

(c) no sale of a living trust is made in Montana as a result of the offer until the person making the offer is licensed under 30-10-901 through 30-10-915, MCA.

History

Authorizing statute(s): Sec. 30-10-905, MCA
Implementing statute(s): Sec. 30-10-906, MCA
History: NEW, 1997 MAR p. 1917, Eff. 10/21/97.