Administrative Rules of Montana › Department 2 - ADMINISTRATION › Chapter 2.55 - STATE COMPENSATION INSURANCE FUND › Subchapter 2.55.5 - Individual Loss Sensitive Dividend Distribution Plan › Rule 2.55.502 - INDIVIDUAL LOSS SENSITIVE DIVIDEND DISTRIBUTION PLAN

Current through Register Vol. 13, July 5, 2024
(1) Upon declaration of a dividend by the
				State Fund board of directors (board) as of the end of any fiscal year, but in
				no event prior to July 1, 1998, the following factors and procedures shall be
				utilized to determine the entitlement of a State Fund policyholder to an
				individual loss sensitive dividend. The dividend shall be declared as an amount
				not to exceed the approved dividend amount, to aid distribution of the declared
				dividend among policyholders through the table of dividend factors.
(2) Distribution of dividends to individual
				policyholders shall be based on a table of dividend factors as approved by the
				board, subject to the certification by the State Fund independent consulting
				actuary pursuant to (4). The table of dividend factors shall be constructed
				with one axis based on increments of policyholder premium size in the dividend
				year and the other axis based on increments of policyholder loss ratios from
				the dividend year.
(3) Dividend
				factors shall be based on an actuarial determination of policyholders'
				proportionate contribution to the operating results of the State Fund during
				the dividend year. The proportionate contribution of the policyholder shall be
				determined by taking into consideration factors such as, but not limited to,
				the following: incurred losses, loss development, credibility of incurred loss
				ratios, provision for excess losses, loss adjustment expenses, other expenses
				including differences in expense levels by premium segment, rate adequacy by
				premium segment, actuarially determined insurance charges, and future
				investment income on premiums paid.
(4) The independent actuary shall certify
				that the approved table of dividend factors, to include the increments of
				policyholder premium size and loss ratios, is consistent with (3) and generally
				accepted actuarial principles.
(5)
				To be eligible for a dividend a policyholder must have six continuous months of
				coverage with the State Fund in the policy period that is new or renewed within
				the dividend year.
(6) Individual
				retrospectively rated and optional deductible policies shall not be eligible
				for a dividend declared by the board under this rule. This section applies to
				policies with policy effective dates after December 31, 2006.
(7) The board may set a minimum amount below
				which a dividend shall not be payable to an individual policyholder.
(8) A dividend will be issued as a warrant to
				a policyholder, unless (8)(a) through (8)(c) exist. The dividend will be
				applied to the account, unless an exception is made by the board of directors
				for a warrant to be issued, if the following situations exist:
(a) a current policy has a past-due premium
				or other debt pending;
(b) a
				canceled policy with an existing obligation owed the State Fund, including a
				past-due premium or an outstanding payroll report; or
(c) a current policy when the dividend amount
				is above the minimum amount established pursuant to (7) but below an amount as
				established by the board.