33-2-323. Authorization for agreements with other state regarding multistate risks. (1) Following negotiated rulemaking under Title 2, chapter 5, the commissioner may enter into a cooperative or reciprocal agreement with other states, individually or collectively, for the purposes of collecting, allocating, and disbursing premium taxes and fees attributable to multistate risks. The allocation methodology of any agreement must be based upon readily available data, with simplicity and uniformity for the surplus lines insurance producer as a material consideration. Any agreement regarding multistate risks may require that a single, blended tax rate be used.

Terms Used In Montana Code 33-2-323

  • Contract: A legal written agreement that becomes binding when signed.
  • Home state: means , with respect to an insured:

    (i)the state in which the insured maintains its principal place of business or, in the case of an individual, the individual's principal residence;

    (ii)if 100% of the insured risk is located outside the state referred to in subsection (3)(k)(i), the state with the greatest allocated percentage of the insured's taxable premium for that surplus lines insurance contract;

    (iii)if more than one insured from an affiliated group are named insureds on a single surplus lines insurance contract, the home state as determined under subsection (3)(k)(i) or (3)(k)(ii) for the member of the affiliated group that has the largest percentage of premium attributed to it under the surplus lines insurance contract; or

    (iv)if a group policyholder pays 100% of the premium from its own funds, the home state of the group policyholder as determined under subsection (3)(k)(i) or, if a group policyholder does not pay 100% of the premiums from its own funds, the home state of the group member as determined under subsection (3)(k)(i). See Montana Code 33-2-301

  • Process: means a writ or summons issued in the course of judicial proceedings. See Montana Code 1-1-202
  • Single-state risk: means a risk covered by an unauthorized insurer with exposures in only one state. See Montana Code 33-2-301
  • State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa. See Montana Code 33-2-301
  • Surplus lines insurance: means any property, casualty, or inland marine insurance permitted in a state to be placed directly or through a surplus lines insurance producer with an unauthorized insurer eligible to accept the insurance. See Montana Code 33-2-301

(2)An agreement entered into under this section must provide for:

(a)uniform eligibility standards for unauthorized insurers;

(b)uniform methods for reporting surplus lines insurance transactions and sharing information between the parties to the agreement based upon readily available data;

(c)uniform methods for allocating and reporting surplus lines insurance risk classifications based upon readily available data;

(d)uniform procedures for the collection, allocation, and distribution of taxes and fees attributable to the multistate risks;

(e)uniform disclosures to policyholders regarding the reporting and collection of premium taxes on multistate risks;

(f)an allocation methodology and resulting collection of premium tax revenue, less costs of administration and collection, that generate premium tax revenue not less than the premium tax revenue collected under 33-2-311;

(g)minimizing the data collection and reporting burden on insureds and surplus lines insurance producers;

(h)a withdrawal process that minimizes instability among the participating states and the surplus lines and insurance industries;

(i)regulatory provisions that provide certainty regarding compliance to all persons having an interest in surplus lines insurance transactions, including but not limited to insureds, regulators, surplus lines insurance producers, other insurance producers, and surplus lines insurers; and

(j)continued collection of premium taxes under 33-2-311 until the collection infrastructure under the agreement is fully operational and the provisions of the agreement are fully implemented.

(3)If the commissioner has entered into an agreement under subsection (1) for multistate risks and the agreement provides that each participating state develop a single, blended tax rate for multistate risks:

(a)the provisions of 50-3-109 are not applicable to the collection of premium taxes;

(b)the single, blended tax rate must be 3.3% on premiums and must be computed in the manner provided in 33-2-705(1) as to premiums of authorized insurers, except that amounts collected from the insured specifically for applicable state and federal taxes and in excess of the premium otherwise required are not considered to be part of the premium for the purposes of the computation; and

(c)the 3.3% tax collected must be distributed as follows:

(i)2.75% must be considered premium taxes as provided in 33-2-705 and paid to the state general fund; and

(ii)0.55% must be considered fire premium taxes as provided in 50-3-109 and paid to the state general fund.

(4)If a single-state risk is involved and Montana is the home state of the insured, the surplus lines transaction must be submitted to the commissioner and the commissioner shall collect the tax at the same rate and in the same manner as provided in 33-2-705.

(5)If the commissioner has entered into a cooperative or reciprocal agreement under subsection (1), the commissioner may contract with the designated clearinghouse to process multistate risks and allocate and distribute taxes and fees collected.

(6)As used in this section, “readily available data” means Montana-specific data, if any, used to rate a surplus lines insurance policy.

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