39-71-2215. Security deposit to ensure payment of liability of plan No. 2 insurer. - Montana Statutes

     39-71-2215. Security deposit to ensure payment of liability of plan No. 2 insurer. (1) Except as provided in subsection (7), a plan No. 2 insurer issuing or renewing a policy on or after January 1, 2008, shall post a security deposit with the department as provided by this section. The purpose of the security deposit is to provide a ready source of funds to pay claims arising under this chapter if the plan No. 2 insurer:
     (a) becomes insolvent;
     (b) is placed in receivership;
     (c) declares bankruptcy;
     (d) seeks protection from its creditors; or
     (e) is otherwise unwilling or unable to pay its liabilities arising under this chapter.
     (2) The amount of the security deposit, which is subject to the discretion of the department, must be in an amount from $25,000 to $250,000. The security deposit must be posted in the form of:
     (a) a certificate of deposit;
     (b) a United States treasury note; or
     (c) an irrevocable letter of credit.
     (3) If a plan No. 2 insurer fails to discharge any determined liability within the time set by the department, the department may convert the security deposit to cash and use the proceeds to pay the liability. Upon the conversion, the plan No. 2 insurer shall immediately furnish additional security to the department in an amount determined by the department to provide reasonable assurance that all current and future liabilities incurred by the plan No. 2 insurer as a result of the coverage provided under this chapter can be fully paid.
     (4) (a) The security deposit required by this section is the property of the department and is held in trust by the department for the payment of the liabilities of the plan No. 2 insurer incurred under this chapter.
     (b) Any earnings made by the security deposit accrue to the security deposit.
     (c) Upon proof of final payment of all liabilities incurred under this chapter, the unexpended portion of the security deposit must be discharged and any proceeds remaining are payable to the plan No. 2 insurer.
     (5) In the event of the insolvency of a plan No. 2 insurer, the department may, in its discretion, release part or all of the security deposit to the Montana insurance guaranty association, provided for in 33-10-103, for payment of the plan No. 2 insurer's Montana workers' compensation claims if:
     (a) the plan No. 2 insurer has been determined to be insolvent by a court of competent jurisdiction or is the debtor in a bankruptcy proceeding;
     (b) the plan No. 2 insurer is unable to pay its workers' compensation claims; and
     (c) the plan No. 2 insurer's Montana workers' compensation liabilities have become the responsibility of the Montana insurance guaranty association.
     (6) The department is authorized to share information and coordinate its actions with the Montana insurance commissioner and other appropriate regulatory agencies with respect to actions taken pursuant to this section.
     (7) A captive reciprocal insurer specified in 39-71-2201 is not subject to this section.

     History: En. Sec. 15, Ch. 117, L. 2007.