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SENATE BILL NO. 68
INTRODUCED BY D. MAHLUM
BY REQUEST OF THE STATE COMPENSATION INSURANCE FUND
AN ACT REVISING CERTAIN STATUTES RELATING TO THE STATE COMPENSATION INSURANCE FUND; PROVIDING AN EXEMPTION FROM THE MONTANA PROCUREMENT ACT FOR INSURANCE-RELATED SERVICES; CLARIFYING CURRENT LAW RELATING TO PAYMENT OF DIVIDENDS BY THE STATE COMPENSATION INSURANCE FUND; REQUIRING USE OF NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS' RISK-BASED CAPITAL REQUIREMENTS IN SETTING RATES; ELIMINATING AN ADDITIONAL PRICING LEVEL WITH A HIGHER RATE FOR EMPLOYERS WHO DO NOT SATISFACTORILY IMPLEMENT SAFETY PROGRAMS; ELIMINATING THE STATE FUND'S AUTHORITY TO ASSESS AN ADDITIONAL 20 PERCENT SURCHARGE ON PREMIUMS PAYABLE TO THE STATE FUND BY HIGH-LOSS EMPLOYERS; AMENDING SECTIONS 18-4-132, 39-71-2315, 39-71-2323, 39-71-2330, AND 39-71-2341, MCA; AND PROVIDING EFFECTIVE DATES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 18-4-132, MCA, is amended to read:
"18-4-132. Application. (1) This chapter applies to expenditure of public funds irrespective of their source, including federal assistance money, by this state acting through a governmental body, as defined in 18-4-123, under any contract. This chapter does not apply to either grants or contracts between the state and its political subdivisions or other governments, except as provided in part 4. This chapter also applies to the disposal of state supplies. This chapter or rules adopted pursuant to this chapter do not prevent any governmental body or political subdivision from complying with the terms and conditions of any grant, gift, bequest, or cooperative agreement.
(2) This chapter does not apply to construction contracts.
(3) This chapter does not apply to expenditures of or the authorized sale or disposal of equipment purchased with money raised by student activity fees designated for use by the student associations of the university system.
(4) This chapter does not apply to contracts entered into by the Montana state lottery that have an aggregate value of less than $250,000.
(5) This chapter does not apply to contracts entered into by the state compensation insurance fund to procure insurance-related services.
(5)(6) This chapter does not apply to employment of:
(a) a registered professional engineer, surveyor, real estate appraiser, or registered architect;
(b) a physician, dentist, pharmacist, or other medical, dental, or health care provider;
(c) an expert witness hired for use in litigation, a hearings officer hired in rulemaking and contested case proceedings under the Montana Administrative Procedure Act, or an attorney as specified by executive order of the governor;
(d) consulting actuaries;
(e) a private consultant employed by the student associations of the university system with money raised from student activity fees designated for use by those student associations;
(f) a private consultant employed by the Montana state lottery;
(g) a private investigator licensed by any jurisdiction; or
(h) a claims adjuster."
Section 2. Section 39-71-2315, MCA, is amended to read:
"39-71-2315. Management of state fund -- powers and duties of the board -- business plan required. (1) The management and control of the state fund is vested solely in the board.
(2) The board is vested with full power, authority, and jurisdiction over the state fund. The board may perform all acts necessary or convenient in the exercise of any power, authority, or jurisdiction over the state fund, either in the administration of the state fund or in connection with the insurance business to be carried on under the provisions of this part, as fully and completely as the governing body of a private mutual insurance carrier, in order to fulfill the objectives and intent of this part. Bonds may not be issued by the board, the state fund, or the executive director.
(3) The board shall adopt a business plan no later than June 30 for the next fiscal year. At a minimum, the plan must include:
(a) specific goals for the fiscal year for financial performance. The standard for measurement of financial performances must include an evaluation of premium to surplus.
(b) specific goals for the fiscal year for operating performance. Goals must include but not be limited to specific performance standards for staff in the area of senior management, underwriting, and claims administration. Goals must, in general, maximize efficiency, economy, and equity as allowed by law.
(4) The business plan must be available upon request to the general public for a fee not to exceed the actual cost of publication. However, performance goals relating to a specific employment position are confidential and not available to the public.
(5) No sooner than July 1 or later than October 31, the board shall convene a public meeting to review the performance of the state fund, using the business plan for comparison of all the established goals and targets. The board shall publish, by November 30 of each year, a report of the state fund's actual performance as compared to the business plan.
(6) The state fund board of directors shall establish in-house guidelines for procurement of insurance-related services and shall include guidelines for the solicitation of submissions of information regarding insurance-related services from more than one vendor. The board may include guidelines for the circumstances when business necessity or expedience may preclude the solicitation of submissions from more than one vendor. The board may also include in the guidelines the exemptions to the procurement process in 18-4-132."
Section 3. Section 39-71-2323, MCA, is amended to read:
"39-71-2323. Surplus in state fund -- payment of dividends. Subject to the provisions of 39-71-2316, if at the end of
any fiscal year there exists in the state fund account created by 39-71-2321 for claims for injuries resulting from accidents
that occur on or after July 1, 1990, an excess of assets over liabilities, including necessary reserves and
a reasonable an
appropriate surplus as determined by the board in accordance with 39-71-2330, and if the excess may be refunded safely,
then the state fund board, after consultation with the independent actuary engaged pursuant to 39-71-2330, may declare a
dividend. The rules of the state fund must prescribe the manner of payment to those employers who have paid premiums
into the state fund in excess of liabilities chargeable to them in the fund for that year. In determining the amount or
proportion of the balance to which the employer is entitled as dividends, the state fund shall give consideration to the prior
paid premiums and accident experience of each individual employer during the dividend year."
Section 4. Section 39-71-2330, MCA, is amended to read:
"39-71-2330. Rate setting -- surplus. (1) The board has the authority to establish the rates to be charged by the state
fund for insurance. The board shall engage the services of an independent actuary who is a member in good standing with
the American academy of actuaries to develop and recommend actuarially sound rates. Rates must be set at amounts
sufficient, when invested, to carry the estimated cost of all claims to maturity, to meet the reasonable expenses of
conducting the business of the state fund, and to amass and maintain
, by July 1, 2003, a surplus of 25% of the annual
premium an excess of surplus over the amount produced by the national association of insurance commissioners' risk-based
capital requirements for a casualty insurer.
(2) Because surplus is desirable in the insurance business, the board shall annually determine the level of surplus that must be maintained by the state fund pursuant to this section, but shall maintain a minimum surplus of 25% of annual earned premium. The state fund shall use the amount of the surplus above the risk-based capital requirements to secure the state fund against various risks inherent in or affecting the business of insurance and not accounted for or only partially measured by the risk-based capital requirements."
Section 5. Section 39-71-2341, MCA, is amended to read:
"39-71-2341. Variable pricing --
higher premium by state fund for noncompliance with safety program --
expenditure accounting. (1) The state fund shall : (a) implement variable pricing levels within individual rate classifications to reward an employer with a good safety
record and penalize an employer with a poor safety record. The timeliness of an employer's payroll reporting and premium
payments and other relevant factors may be considered in the placement of an employer within the variable pricing levels. (b) provide an additional pricing level with a higher rate within the classification for those employers who do not
satisfactorily implement a safety program subsequent to the provision of or attempt to provide onsite safety consultation
services. (2) The state fund may assess a surcharge of an additional 20% on premiums payable to the state fund by high-loss
employers. The criteria for identifying high-loss employers must be established by the state fund board of directors by rule. (3)(2) The state fund shall separately account for money expended under 2-15-1708, 33-15-318, Title 39, chapter 71,
part 15, 39-71-2311, and this section."
Section 6. Effective dates. (1) [Sections 1 and 2 and this section] are effective on passage and approval.
(2) [Sections 3 through 5] are effective July 1, 1999.
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