HOUSE BILL NO. 75
INTRODUCED BY J. DOOLING
BY REQUEST OF THE STATE AUDITOR
A BILL FOR AN ACT ENTITLED: "AN ACT CLARIFYING TERMS FOR MARKET CONDUCT EXAMINATIONS AND FINANCIAL EXAMINATIONS BY THE INSURANCE COMMISSIONER; CLARIFYING EXAMINATION PAYMENT TERMS; PROVIDING RULEMAKING AUTHORITY; AMENDING SECTIONS 33-1-401, 33-1-413, 33-18-1001, AND 33-30-105, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Market conduct examination of insurers -- rulemaking. (1) The commissioner shall carry out a market conduct examination by examining the affairs, transactions, accounts, records, and claims of each authorized insurer as often as the commissioner considers advisable.
(2) If a foreign or alien insurer licensed in this state is subject to the jurisdiction of another state or the federal government, the commissioner may accept a market conduct examination report prepared by the responsible jurisdiction if the examination was conducted using a methodology commonly accepted in the industry.
(3) In addition to the provisions of 33-1-402 and for the purposes of completing a market conduct examination of any company under this part, the commissioner may examine or investigate any person or the business of any person to the extent that the examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company.
(4) In addition to the provisions of 33-1-408 and 33-1-409, the commissioner may promulgate rules to establish categories, procedures, and costs for market conduct examinations. The commissioner may also adopt by reference the market conduct examination manuals published by the national association of insurance commissioners.
NEW SECTION. Section 2. Definition. Unless the context requires otherwise, a financial examination as provided for in 33-1-401 or a market conduct examination as provided for in [section 1] is included in the term "examine" or "examination" as used in Title 33.
"33-1-401. Examination Financial examination of insurers. (1) The commissioner shall examine the conduct a financial examination of the affairs, transactions, accounts, records, and assets of each authorized insurer as often as the commissioner considers advisable. The commissioner shall examine each authorized insurer not less frequently than every 5 years.
(2) The commissioner shall in like manner examine conduct a financial examination of each insurer applying for an initial certificate of authority to do business in this state.
(3) In lieu of making an conducting a financial examination under this part of any foreign or alien insurer licensed in this state, the commissioner may accept an a financial examination report on the company prepared by the insurance department for the company's state of domicile or port-of-entry state until January 1, 1994. After January 1, 1994, the reports may only be accepted if:
(a) the insurance department was at the time of the examination accredited under the national association of insurance commissioners' financial regulation standards and accreditation program; or
(b) the examination is performed under the supervision of an accredited state insurance department or with the participation of one or more examiners who are employed by such an accredited state insurance department and who, after a review of the examination workpapers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their the examiner's insurance department.
(4) For purposes the purpose of completing an a financial examination of any a company under this part, the commissioner may examine or investigate any person or the business of any person, insofar as to the extent that the examination or investigation is, in the sole discretion of the commissioner, necessary or material to the financial examination of the company."
"33-1-413. Examination expense -- lien. (1) Upon presentation of a detailed account of charges and expenses by the commissioner or pursuant to the commissioner's written authorization, each person examined, other than examinations pursuant to 33-1-402, shall pay the actual travel and reasonable expenses, a reasonable living expense allowance, including travel and a per diem if necessary, as compensation of examiners as necessarily incurred on account of the examination, all at reasonable rates as established or adopted by the commissioner. An account may be presented periodically during the course of the examination or at the termination of the examination as the commissioner considers proper. A person may not pay and an examiner may not accept any additional emolument on account of an examination.
(2) The commissioner shall pay to the state treasurer to the credit of the state special revenue fund all money received pursuant to subsection (1).
(3) If a person fails to pay the charges and expenses, as referred to in subsection (1), the charges and expenses must be paid out of the funds of the commissioner in the same manner as other disbursements of the funds. The amount paid is a first lien upon on all of the assets and property in this state of the person and may be recovered by suit by the attorney general on behalf of the state of Montana and restored to the appropriate fund."
"33-18-1001. Complaint handling -- record. (1) An insurer shall maintain a complete record of all of the complaints which it has received since the date of its the insurer's last examination under 33-1-401 or [section 1]. This record shall must indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of the complaints, and the time it took spent to process each complaint.
(2) For purposes of this section, "complaint" means any written communication primarily expressing a grievance."
"33-30-105. Examination of health service corporation. (1) If the commissioner believes a health service corporation is unable or potentially unable to fulfill its contractual obligations to its members, the commissioner may conduct an examination of that the health service corporation. The purpose of an examination under this section is
(2) In addition to the examination authorized in subsection (1), at least once every 4 years, the commissioner shall conduct an examination of each health service corporation to determine if the health service corporation is fulfilling its contractual obligations by the prompt satisfaction of claims at the highest monetary level consistent with reasonable dues or fees and that if the health service corporation's management exercises appropriate fiscal controls, operations, and personnel policies to ensure that efficient and economic administration restrains restrain overhead costs for the benefit of its members.
(3)(2) Each health service corporation examined and its officers, employees, and insurance producers shall produce and make available to the commissioner or the commissioner's examiners examiner the accounts, records, documents, files, information, assets, and matters in its possession or control relating to the subject of the examination.
(4)(3) The commissioner or the commissioner's examiner shall make a verified report of the examination.
(5)(4) The report must comprise only facts appearing from the books, papers, records, or documents of the corporation examined or ascertained from the testimony, under oath, of individuals concerning its affairs and conclusions and recommendations as warranted by those facts.
(6)(5) The commissioner shall furnish a copy of the proposed report to the corporation examined not less than 20 days prior to its filing in the commissioner's office. If the corporation requests a hearing, in writing, within the 20-day period, the commissioner shall grant a hearing with respect to the report and may not file the report until after the hearing and after modifications, if any, that the commissioner considers proper.
(7)(6) The health service corporation shall pay for each examination conducted pursuant to subsections subsection (1) and (2) in accordance with 33-1-413."
NEW SECTION. Section 7. Codification instruction. [Sections 1 and 2] are intended to be codified as an integral part of Title 33, chapter 1, part 4, and the provisions of Title 33, chapter 1, part 4, apply to [sections 1 and 2].
NEW SECTION. Section 8. Effective date. [This act] is effective on passage and approval.
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Prepared by Montana Legislative Services