24.29.709 SECURITY DEPOSITS FOR PLAN NUMBER TWO INSURERS -- REPORTS
(1) All insurers authorized by the Montana insurance commissioner's office to write workers' compensation must place a deposit with the department. The deposit amount is determined by calculating the sum of the medical and indemnity payments from the most recently closed calendar year and multiplying that total by 40 percent, subject to the minimums and maximums required by the department.
(a) Periodic review by the department of an insurer's future claims liabilities may result in an increase in deposit requirements pursuant to 39-71-2215, MCA.
(b) Upon proof from the insurer that its liabilities have been reduced, a reduction of the amount held on deposit by the department may be granted at the department's discretion. Requests for reduction in deposit may be submitted in writing to the department no more frequently than once every 12 months.
(c) The department may require 30 days advance written notice by the insurer of the insurer's intent to exchange one form of securities for another.
(d) Securities must remain on deposit until the department is satisfied all liabilities of the insurer arising under Title 39, chapter 71, MCA, have been met.
(2) A plan number two insurer may deposit one or more of the following securities to meet its obligation to make a security deposit as required by 39-71-2215, MCA:
(a) a United States Treasury note;
(b) a certificate of deposit; or
(c) an irrevocable letter of credit.
(3) The security deposit must be issued in the form prescribed by the department and must include a statement that the grantor of the security deposit is required to give the department 60 days advance notice of its intent to terminate future liability. The grantor of the security deposit is not relieved of the liability for claims arising under Title 39, chapter 71, MCA, prior to the effective date of the termination. Notice must be sent to the department via certified or registered mail.
(a) A security deposit in the form of a certificate of deposit must be issued by a financial institution located within the United States and must be fully insured by a federally chartered insurance corporation.
(b) A security deposit in the form of an irrevocable letter of credit must be issued by a financial institution located within the United States that is acceptable to the department, based on its financial ratings.
(4) The security deposit must name the department as obligee and must be held by the department.
(a) A safekeeping or custodial arrangement with a bank or trust company located in the city of Helena, Montana, may be authorized if:
(i) the department is satisfied such securities are held under the same conditions of security as if the securities had been deposited with the department; and
(ii) the department is satisfied the hours of business do not hinder department access to or ability to sell and/or collect on the securities.
(b) If the deposit of securities with the department will result in the need to handle the securities for exchange or remittance of coupons for collection of interest then the department, at its discretion, may require the securities be held in the safekeeping or custodial arrangement described above at the insurer's direct expense.
(5) The insurer is required to submit the following reports:
(a) a copy of the "Exhibit of Premium and Losses-Business in the State of Montana During the Year," from the insurer's annual statement of the preceding calendar year, as filed with the Montana insurance commissioner;
(b) a total summary of experience claim losses including, but not limited to, compensation and medical benefits and reserves for future liability as of May 1 of each year; and
(c) other reports and information as required by the department.
(6) The reports required by (5) must be filed with the department:
(a) upon the insurer's initial authorization by the Montana insurance commissioner's office to write workers' compensation insurance;
(b) by May 1 of each following year; and
(c) upon request of the department.
History: 39-71-203, MCA; IMP, 39-71-2215, MCA; NEW, 2012 MAR p. 1666, Eff. 8/24/12.