HOUSE BILL NO. 537
INTRODUCED BY P. SLITER
AN ACT ALLOWING A COUNTY MUTUAL INSURER TO CHANGE ITS STATUS TO THAT OF A STATE MUTUAL INSURER BY AMENDING ITS ARTICLES OF INCORPORATION; PROVIDING THAT A COUNTY MUTUAL INSURER THAT CHANGES ITS STATUS TO THAT OF A STATE MUTUAL INSURER IS SUBJECT TO THE REQUIREMENTS FOR STATE MUTUAL INSURERS PROVIDED IN TITLE 33, CHAPTER 4, MCA; INCREASING THE REQUIRED SURPLUS FUNDS; AMENDING SECTIONS 33-4-204, 33-4-206, 33-4-401, AND 33-4-501, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 33-4-204, MCA, is amended to read:
"33-4-204. Amendment of articles -- change from county mutual insurer to state mutual insurer. (1) A farm mutual insurer may, by a vote of two-thirds of its members present at any annual meeting or at any special meeting called for that purpose, amend its articles of incorporation to extend its corporate duration or any other particular within the scope of this chapter by causing amended articles to be filed in the same form and manner as required for original articles of incorporation.
(2) (a) A county mutual insurer may change its status to that of a state mutual insurer by amending its articles of incorporation pursuant to the requirements of this section.
(b) A county mutual insurer that changes its status to that of a state mutual insurer shall conform with all requirements for a state mutual insurer under this chapter upon its articles of amendment being certified by the commissioner, including the requirements of 33-4-206(2) and 33-4-401(1).
(3) The commissioner shall review the amended articles for compliance with this title. The amended articles of incorporation may be signed only by the president and secretary of the corporation and attested by the corporate seal. Notice of the proposed amendment must be contained in the notice of the annual or special meeting."
Section 2. Section 33-4-206, MCA, is amended to read:
"33-4-206. Initial qualifications. When applying for an original certificate of authority as an insurer newly organized
in this state, or for an amended certificate of authority in the case of a county mutual insurer that is changing its status to
that of a state mutual insurer pursuant to 33-4-204, the insurer must have surplus as required by 33-4-401, and be otherwise
qualified therefor under this code chapter, and:
(1) if a county mutual insurer, it must have received acceptable bona fide written applications from 25 separate persons
for substantial insurance of the kinds of insurance proposed to be transacted, aggregating at least $100,000. Such The
applicants must have given to the insurer the obligations referred to in 33-4-508 or paid the premium required therefor for
the insurance, subject to the insurer qualifying to transact the kinds of insurance so for which it has applied for.
(2) if a state mutual insurer, or a county mutual insurer that has changed its status to that of a state mutual insurer
pursuant to 33-4-204, it must have received acceptable bona fide written applications from 100 separate persons, each for
substantial insurance, aggregating at least $500,000 of the kinds of insurance proposed to be transacted. Such The
applicants must have given to the insurer the obligations referred to in 33-4-508 or paid the premium required therefor for
the insurance, subject to the insurer qualifying to transact the kinds of insurance so for which it has applied for.
(3) if to insure growing crops against loss or damage by hail, it must have received applications for such hail insurance
from not less than 100 persons resident residing in Montana and owning in the aggregate not less than 5,000 acres of grain.
Each such applicant must have given to the insurer the obligations referred to in 33-4-508 or paid the premium required
therefor for the insurance, subject to the insurer qualifying to transact hail insurance."
Section 3. Section 33-4-401, MCA, is amended to read:
"33-4-401. Surplus funds required. A domestic farm mutual insurer may hereafter be is authorized to transact
insurance if it is otherwise in compliance with the applicable provisions of this chapter, and if it has and thereafter
maintains surplus funds as follows:
(1) if a state mutual insurer, or a county mutual insurer that has changed its status to that of a state mutual insurer
pursuant to the provisions of 33-4-204, surplus of not less than $100,000 $200,000; or
(2) if a county mutual insurer, surplus of not less than $20,000 $50,000; or.
(3) if to insure growing crops against hail or other hazards, surplus in the amount of 150% of the amount otherwise
required under this section. This provision (3) shall not apply as to any domestic insurer first authorized as such prior to
January 1, 1956, which transacts business on the pro rata, nonassessable plan, under which plan a pro rata portion only of
insured losses is paid in event advance premiums collected are inadequate to pay all such losses in full."
Section 4. Section 33-4-501, MCA, is amended to read:
"33-4-501. Insuring powers in general. (1) In respect to property insurance as defined in 33-1-210, a farm mutual insurer shall insure against loss or damage by fire or other casualty only:
(a) rural dwellings and buildings, including the usual contents, farm livestock, machinery, vehicles, growing crops, and other forms of farm property owned by a member of the insurer or by the member's spouse;
(b) residential dwellings, appurtenant structures, and personal property owned by a member of the insurer or by the
member's spouse and located:
(i) outside the boundaries of an incorporated city or town; or
(ii) in an incorporated city or town with a population of less than 15,000;
(c) dwellings and related buildings designed for occupancy by not over two four families, together with the usual
contents, situated in an incorporated city or town with a population of 15,000 or more, but only if the property is owned by
a member of the insurer or by the member's spouse and the member has other insurance of rural property with the insurer;
(d) rural schoolhouses and buildings used in connection with the schoolhouse, rural community houses, rural churches, or other rural public buildings.
(2) A farm mutual insurer may insure against the liability risks provided in 33-1-206(1)(b):
(a) only to the extent of the limit of risks provided in 33-4-502(3); and only
(b) if contingent liability exists, provided that every policy bears on its face in boldface type contains a statement that
each member of the farm mutual insurer is subject to a contingent liability under 33-3-411.
(3) Except as provided in subsection (1)(d), an insurer may not insure any property not owned by a member or by the
member's spouse.
(4) An insurer may not insure any property situated within the limits of an incorporated city or town except as provided
in subsections (1)(b)(ii), (1)(c), and (5) and may not insure the property unless it has and maintains the surplus funds as
required under 33-4-401.
(5) An insurer may continue to insure property situated within the limits of an incorporated city or town with a
population of 15,000 or more if the insured obtained coverage when the incorporated city or town had a population of less
than 15,000."
Section 5. Effective date. [This act] is effective on passage and approval.
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