1The Montana 63rd Legislative Session adjourned sine die Wednesday, April 24, 2013, having used 87 of the permitted 90 legislative days for its regular biennial session. More than 2,200 bills were requested in the session. Over 1,200 bills were introduced, with less than half becoming law. The session produced mixed results on insurance measures. Medicaid expansion and the implementation of PPACA was the primary legislative insurance focus. In the end, the legislature rejected most proposals, leaving considerable uncertainty where State law might regulate in those arenas. Nevertheless, lawmakers enacted certain important pieces of insurance legislation that will enhance uniform regulation in Montana and further facilitate product approval and availability for Montana consumers.2
SB 28 - Authorize Montana Joining Interstate Insurance Product Regulation Compact [Ch. 3603, Eff. Oct. 1, 2013].
Enactment of the Interstate Compact is the culmination of Montana's initial rejection and then long consideration of the Compact's compatibility with provisions of law under Montana's young constitution.4 The chief impediment was belief that membership within the Compact would force noncompliance with the State's requirement of unisex rating for all insurance and annuity products. Continued development of Compact protocols that address unique state requirements opened the door for adoption in Montana.
Reflecting historical reticence, Montana will participate in the Compact on a limited number of lines of insurance, adding others as the State integrates the protocols into its regulation. Initially the State will opt out of all existing and prospective uniform standards involving long-term care products and all existing uniform standards involving individual disability income products as permitted by Compact Art. VII, sec. (4), "in order to preserve the state's statutory and constitutional requirements governing these insurance products."5 The enabling legislation further specifically provides: "As a participant in the Interstate Insurance Product Regulation Compact, the commissioner may opt out of any uniform standard that provides a materially lower level of protection for or materially diminishes the rights of Montana policyholders or policy applicants under Montana law."6
Despite the opt out provisos, insurance representatives nevertheless regard the Compact's enactment as an important step toward uniform product regulation and speed to market.
SB 34 - Adopting the NCOIL Model Unclaimed Life Insurance Benefits Act [Ch. 119, Eff. Jan. 1, 2014].
The Model Unclaimed Life Insurance Benefits Act requires life insurers to cross check the Social Security Administration death master file (or other similarly comprehensive database) twice annually to identify and payout unclaimed life insurance benefits before escheat to the State. The amendment correcting the Model definitions adopted at the 2013 summer NCOIL meeting was included in Montana's enactment.
The Model has been enacted in nine states and is pending in two others. Insurer support of the Model as currently promulgated is not uniform; Montana's delayed effective date is intended to allow consideration of operational impediments for industry and necessary rulemaking to clarify administration.
SB 158 - Adopting the Certificates of Insurance Model Act [Ch. 303, Eff. Jul. 1, 2013; applies to certificates of insurance that are prepared, issued, requested, or required on property, operations, or risks located in this State on or after Oct. 1, 2013].
In general, the Act bans changes to certificate forms and clarifies that certificates are not insurance policies and do not provide coverage different from or in addition to policy provisions. The enactment will not significantly change current regulation as the Montana Insurance Department's advisory bulletin (Aug. 2010)7 establishes similar parameters for certificates of insurance.
SB 264 - Model Portable Electronics Insurance Act [Ch. 406, Eff. Aug. 1, 2013].
The Model Portable Electronics Insurance Act is an initiative of Asurion, LLC, to create a uniform regulatory scheme for an insurance product tailored to the nature of the portable electronic device. The covered property is a single portable electronics device,8 and coverage results in the delivery of a replacement device by mail.9 There is little or no calculation as to the value of the device or extent of loss. To the extent there is such a calculation, it is performed by an automated claims adjudication system. The coverage is typically sold with the purchase of a device and historically has been offered through an enroller's exception in state laws. Many states' iterations of the MPEIA, including Montana's, provide for certain adjuster requirements and exemptions also carefully tailored to the complement the specific features of the product.
The MPEIA is currently enacted in 43 states. Asurion's goal is to achieve enactment in all 50 in 2013.
HB 415 - Model Guaranteed Asset Protection Waiver Act [Ch. 313, Eff. Apr. 26, 2013; applies to guaranteed asset protection waivers issued on or after Oct. 1, 2013].
The Model GAP Waiver Act is an initiative to the Guaranteed Asset Protection Alliance. The purpose of the Act is to provide a framework within which guaranteed asset protection waivers are defined and may be offered within a state as a financial product distinct in feature and regulation from insurance products.
As background, historically Montana has permitted GAP products only as an insurance product rather than a contractual financial product. Recognizing that the restriction to insurance was not consistent with current business practices, the 2011 legislature enacted legislation permitting banks, or bank subsidiaries or affiliates, and credit unions to offer debt cancellation and suspension programs as noninsurance contractual products in the State. HB 415 is tailored legislation that further authorizes the use of GAP waiver and other debt cancellation agreements as part of retail installment contracts offered by motor vehicle dealers and other retailers outside of the Montana Insurance Code. Enforcement will be administered under the consumer protection statutes within the jurisdiction of the Montana Attorney General.
Enactment of the GAP Waiver Act does not interfere with or preclude offering and issuance of GAP insurance, which will continue to be regulated under existing law in the Montana Insurance Code.
HB 87 - Requiring rates for health insurance coverage to be filed with the Commissioner of Insurance for review and providing standards for review and notice of deficiency [Ch. 334, Eff. Jul. 1, 2013; applies to rate filings affecting health insurance coverage in the individual or small group market issued on or after Jan. 1, 2014].
Montana has not required review of health insurance issuers' rates; HB 87 fills the regulatory void by providing for limited oversight in the individual and small group markets. Under HB 87, health insurers must submit to the Commissioner new rates or material changes to prior rate filings and justification for premium to be charged before the rates may be used. If the Commissioner determines that the submitted rates are "excessive, inadequate, unjustified, or unfairly discriminatory," the Commissioner must provide notice to the public. The legislation contains detailed criteria under which the Commissioner's determination must be made, and sets forth her rulemaking authority as well.10
If the Commissioner determines that the submitted rates are "excessive, inadequate, unjustified, or unfairly discriminatory," she must provide notice to the insurer. The insurer may then amend its filing or seek reconsideration. If after reconsideration or review of additional information the Commissioner maintains her initial determination, she must publish her determination on her agency's public website. The Commissioner has contracted with independent actuaries to begin the review process.
HB 232 - Adopting a higher standard of proof to impose liability on employer or fellow employee for intentional and deliberate acts outside the exclusive remedy of the Montana Workers' Compensation Act [Ch. 148, Eff. Jul. 1, 2013].
HB 232 amends 39-71-413, MCA, which allows recovery outside of the exclusive remedy11 under the Montana Workers' Compensation Act for workplace injuries resulting from the intentional and deliberate act of an employer or fellow employee. Section 39-71-413 has been fertile ground for eroding the exclusive remedy. The prior standard of proof for the alleged intentional and deliberate act of an employer or fellow employee in causing a workplace injury was preponderance of the evidence. Business advocates seeking to address case law by tightening the standard introduced the legislation proposing a "beyond reasonable doubt" standard as in criminal law. Sympathetic to business concerns, but unwilling to go to that extreme, the legislature ultimately came to consensus on a clear and convincing evidence standard.
1. Jacqueline Lenmark is Montana retained counsel for the American Insurance Association, the American Council of Life Insurers, and AFLAC.
2. For information more detailed than is included in the summary, go to: http://laws.leg.mt.gov/legprd/LAW0200W$.startup. From this site you may also view the text of the legislation discussed.
3. Chapter Number indicates that the bill was signed by the Governor or enacted without the Governor's signature and the Secretary of State has assigned a chapter number by which the bill will be referenced in the final Session Law 2013.
4. Adopted by the Constitutional Convention Mar. 22, 1972, and ratified by the People Jun. 6, 1972.
5. SB 28, Sec. 1, Art. XVII.
6. SB 28, Sec. 3 (1).
7. http://www.sao.mt.gov/news/bulletins/Certificate%20of%20Insurance.pdf.
8. "[E]lectronic devices that are portable in nature and their accessories." SB 264, Sec. 2 (4).
9. "Portable electronics insurance" means insurance providing coverage for the repair or replacement of portable electronics that may provide coverage for portable electronics against loss, theft, inoperability due to mechanical failure, malfunction, damage, or other similar causes of loss. Portable electronics insurance also includes any agreement in which a person or any legal entity, in exchange for consideration paid, agrees to provide for the future repair, replacement, or provision of portable electronics. The term does not include service contracts, insurance covering a seller's or a manufacturer's obligations under a warranty; or a homeowner's, renter's, private passenger automobile, commercial, or similar policy. SB 264, Sec. 2 (5).
10. HB 87, Secs. 2, 4.
11. Mont. Code Ann. § 39-71-411