Senate Bill No. 39

Introduced By nelson

By Request of the State Auditor



A Bill for an Act entitled: An Act applying management and exclusive agency contract restrictions to farm mutual insurers; defining "farm mutual insurer"; requiring licensure of farm mutual managing general agents and regulation of farm mutual managing general agent contracts; limiting the retention of crop-hail risk by a farm mutual insurer; and amending sections 33-4-101, 33-4-102, and 33-4-502, MCA.



Be it enacted by the Legislature of the State of Montana:



Section 1.  Section 33-4-101, MCA, is amended to read:

"33-4-101.   Scope of chapter -- provisions applicable. (1) The chapter applies to:

(a)  all domestic mutual hail, fire, and other casualty insurers of farm property and stock and rural buildings formed and immediately prior to January 1, 1961, lawfully transacting insurance under sections 40-1501 through 40-1517 of the Revised Codes of Montana, 1947;

(b)  all domestic mutual rural insurers formed and immediately prior to January 1, 1961, lawfully transacting insurance under sections 40-1601 through 40-1625 of the Revised Codes of Montana, 1947;

(c)  all insurers formed under this chapter.

(2)  All insurers qualifying under subsection (1) may be referred to as "farm mutual insurers".

(3)  The insurance laws of this state do not apply to or govern, either directly or indirectly, domestic farm mutual insurers except as contained or referred to in this chapter.

(4)(3)  The following chapters and sections of this title apply to farm mutual insurers to the extent applicable and not inconsistent with the express provisions of this chapter and the reasonable implications of the express provisions: parts 1, 2, 3, 4, and 7 of chapter 1, parts 1 through 4 and 7; 33-2-112; 33-2-501; 33-2-502; 33-2-532 through 33-2-535; 33-2-708; chapter 2, part parts 13 and 16; 33-2-1212; 33-3-218; 33-3-308; 33-3-309; 33-3-401; 33-3-402; 33-3-431; 33-3-436; and chapter 18."



Section 2.  Section 33-4-102, MCA, is amended to read:

"33-4-102.   Definitions. (1) A "county" "county mutual insurer" is an a farm mutual insurer authorized to insure only property and liability risks located in the county wherein is located in which its principal office is located and in the counties in this state with boundaries contiguous with such the principal office county.

(2)  A "farm mutual insurer" is an insurer that meets the qualifications of 33-4-101(1).

(3) A "state" "state mutual insurer" is an a farm mutual insurer authorized to insure property and liability risks throughout the state.

(3)(4)  "Surplus" is the extent to which the value of an insurer's assets exceeds its liabilities."



Section 3.  Section 33-4-502, MCA, is amended to read:

"33-4-502.   Limit of risk -- retention of liability. (1) Except as provided in subsection (3), the maximum amount of insurance which that an insurer shall retain on a single risk, after deduction of applicable reinsurance, may not exceed 10% of the admitted assets of the insurer or $50,000, whichever is the larger amount.

(2)  For the purposes of this section, a "single risk" as to insurance against fire and hazards other than windstorm, earthquake, or other catastrophic perils includes all properties insured by the same insurer which that are reasonably susceptible to loss or damage from the same fire or the same occurrence of such other another hazard insured against.

(3)  A farm mutual insurer:

(a)  that insures any portion of a liability risk shall maintain a surplus of at least $50,000;

(b)  that retains any portion of a liability risk shall obtain reinsurance on that liability insurance with an insurer authorized to do business in this state, and the farm mutual insurer's maximum aggregate liability for incurred losses on liability coverage retained for any calendar year or contract year may not exceed the smaller of $200,000 or 20% of the farm mutual insurer's surplus as of December 31 of the preceding year; and

(c)  may not retain liability risk or risk resulting from insuring growing crops against loss or damage from hail or other hazards greater than the proportional share of each limit of liability in the following schedule:

Surplus as of the Proportional Share of Each

Preceding December 31: Limit of Liability Retained:

$1,000,000 or greater 15%

$800,000 to $999,999 12%

$600,000 to $799,999  9%

$400,000 to $599,999  6%

$200,000 to $399,999  3%

Under $200,000  0"

-END-