39-71-2206. Deposits by insurer with department to guarantee payment of liability. (1) (a) Before issuance of any policy by an insurer as herein authorized, the insurer shall deposit with the department book-entry securities of the United States or the state of Montana or of any school district, county, city, or town in the state of Montana or a corporate surety bond made out to and approved by the department in an amount not less than $25,000 or more than $200,000, as the department may determine.
     (b) If any insurer fails to discharge any liability after the amount thereof is determined by the department and within the time limited by the department, the department shall convert the bonds or any part thereof as is necessary into cash and from the proceeds liquidate the liability, and thereafter the insurer shall make an additional deposit to meet any deficiency caused thereby. It is intended to give the department the discretion in the matter of whether an insurer has failed to discharge any liability.
     (c) If any insurer fails to replace a canceling, terminating, or maturing security within the time limit established by the department, the department shall protect the security deposit by converting the canceling, terminating, or maturing security into cash and shall maintain the deposit until a replacement security acceptable to the department is deposited.
     (2) Within 30 days of the happening of an accident where death or the nature of the injury renders the amount of future payments certain or reasonably certain, the insurer shall make a deposit, as herein defined, with the department for the protection and guarantee of the payment of the liability in a sum as the department may direct. However, if the department considers the amount on deposit by the insurer under the provisions of subsection (1) sufficient to cover all liabilities of the insurer, then no further deposit may be required.
     (3) Any deposit made under the provisions of compensation plan No. 2 must be held in trust by the department as security for the payment of the liability for which the deposit was made. The deposit may be reduced from time to time with the permission of the department as the payment of the liability of the insurer may reduce the amount required to be on deposit. The deposit may be changed or renewed when desired by the depositor by withdrawing the same or any part thereof and substituting other deposits therefor. Upon proof of the final payment of the liability for which the deposit was made, any deposit remaining must be returned to the depositor. All earnings made by the deposit must first be applied upon any liability of the depositors, and if no such liability exists, then the earnings must upon demand be delivered to the depositor. The department and its bondsmen are liable for the value and safekeeping of the deposit and shall at any time, upon demand of a depositor, account for the same and the earnings thereof.
     (4) In the event of an insolvency of a plan No. 2 insurer, the department may, at its discretion, release part or all of the deposit held to the Montana insurance guaranty association for payment of the insurer's Montana workers' compensation claims if:
     (a) the insurer has been determined to be insolvent by a court of competent jurisdiction or bankruptcy proceedings have been instituted by or against it;
     (b) the insurer is unable to pay its workers' compensation claims; and
     (c) the insurer's Montana workers' compensation liabilities have become the responsibility of the Montana insurance guaranty association.

     History: (1)En. Sec. 35, Ch. 96, L. 1915; amd. Sec. 10, Ch. 100, L. 1919; re-en. Sec. 2981, R.C.M. 1921; amd. Sec. 11, Ch. 177, L. 1929; re-en. Sec. 2981, R.C.M. 1935; amd. Sec. 1, Ch. 141, L. 1971; amd. Sec. 58, Ch. 23, L. 1975; Sec. 92-1004, R.C.M. 1947; (2)En. Sec. 35, Ch. 96, L. 1915; amd. Sec. 11, Ch. 100, L. 1919; re-en. Sec. 2984, R.C.M. 1921; re-en. Sec. 2984, R.C.M. 1935; amd. Sec. 61, Ch. 23, L. 1975; Sec. 92-1007, R.C.M. 1947; (3)En. Sec. 35, Ch. 96, L. 1915; re-en. Sec. 2989, R.C.M. 1921; re-en. Sec. 2989, R.C.M. 1935; Sec. 92-1012, R.C.M. 1947; R.C.M. 1947, 92-1004(part), 92-1007, 92-1012; amd. Sec. 83, Ch. 397, L. 1979; amd. Sec. 1, Ch. 242, L. 1987; amd. Sec. 64, Ch. 613, L. 1989; amd. Sec. 14, Ch. 555, L. 1993.