Key Takeaways
- Montana has adopted the Unfair Insurance Practices Act under MCA 33-18
- Montana has adopted the Unfair Claims Settlement Practices Act
- Rebating and unfair discrimination are specifically prohibited
- The CSI has enforcement authority and can impose fines
- Insurers must handle claims fairly and promptly
Unfair Trade Practices
Montana has adopted comprehensive unfair trade practices regulations under Title 33, Chapter 18 of the Montana Code Annotated.
Unfair Insurance Practices Act (MCA 33-18-101 to 33-18-1006)
Montana prohibits various unfair or deceptive practices in the insurance industry.
Misrepresentation
Producers and insurers are prohibited from:
- Making false statements about policy terms or benefits
- Misrepresenting the financial condition of an insurer
- Using misleading policy illustrations
- Making false statements about competitors
- Misrepresenting the nature of the insurance transaction
False Advertising
Montana prohibits deceptive insurance advertising:
- Ads must be truthful and not misleading
- Must clearly identify as insurance advertisement
- Cannot use testimonials that are not genuine
- Cannot imply government endorsement
- Must include insurer's name
Rebating and Discrimination
Montana specifically addresses rebating and discrimination:
MCA 33-18-209: Exceptions to Discrimination and Rebates
Certain exceptions may apply to the discrimination and rebates provision.
MCA 33-18-210: Unfair Discrimination and Rebates Prohibited
For title, property, casualty, or surety insurance, unfair discrimination and rebates are prohibited.
MCA 33-18-217: Military Discount Exception
A military discount exception to the rebate and discount prohibition exists for property or casualty insurance.
What Is Prohibited
- Returning part of premium to insured
- Offering gifts or prizes of significant value
- Paying for referrals to individuals
- Sharing commission with non-licensed persons
Limited Exceptions
Montana allows:
- Dividends specified in policy
- Legitimate marketing items of nominal value
- Group premium discounts
- Military discounts for property/casualty
Unfair Claims Settlement Practices Act (MCA 33-18-201)
Montana has adopted the Unfair Claims Settlement Practices Act with specific requirements.
Prohibited Practices
Insurers cannot:
- Misrepresent policy provisions to claimants
- Fail to acknowledge claims promptly
- Fail to communicate claim decisions
- Deny claims without reasonable investigation
- Offer substantially less than reasonable value
- Delay payment to force settlement
Required Practices
Insurers must:
- Acknowledge claims with reasonable promptness
- Act reasonably promptly on communications
- Adopt reasonable standards for prompt investigation
- Attempt in good faith to settle claims where liability is clear
Commissioner's Rule-Making Authority
The Insurance Commissioner has specific rule-making authority to adopt rules under the Montana Administrative Procedures Act necessary to implement the Unfair Trade Practices Act.
Enforcement Actions
Historic Settlement Example
In February 2024, the Montana Commissioner of Securities and Insurance announced a $2 million settlement with State Farm regarding unfair claim settlement practices, with an additional suspended $2 million fine contingent on corrective action. The settlement arose from a two-year examination that revealed underpayment of claims.
Bad Faith Claims
Montana allows insureds to bring claims against insurers for:
- Breach of the implied covenant of good faith and fair dealing
- Violations of the Unfair Claims Settlement Practices Act
- Failure to exercise good faith in negotiations and settlement
Exam Tip: Montana has adopted the Unfair Claims Settlement Practices Act, which gives consumers additional protections when making claims.
Twisting and Churning
Twisting
Twisting is misrepresenting the terms of an existing policy to induce replacement:
- Falsely claiming existing policy is worthless
- Misrepresenting surrender values
- Hiding costs of replacement
- Exaggerating benefits of new policy
Churning
Churning is excessive replacement to generate commissions:
- Multiple replacements for same client
- Pattern of replacements in producer's book
- Ignoring client's best interests
- Creating new surrender charge periods
Penalties
| Violation | Potential Penalty |
|---|---|
| First offense | Warning, fine, or suspension |
| Repeat offense | License revocation |
| Consumer harm | Restitution required |
Unfair Discrimination
Montana prohibits unfair discrimination in insurance:
Prohibited Practices
| Practice | Prohibition |
|---|---|
| Race | Cannot discriminate based on race |
| Religion | Cannot discriminate based on religion |
| National Origin | Cannot discriminate based on national origin |
| Disability | Cannot discriminate based on disability (with limitations) |
What IS Permitted
Risk-based underwriting using:
- Age
- Health history
- Claims history
- Occupation
- Lifestyle factors (smoking, hazardous activities)
Consumer Complaint Process
Consumers can file complaints with the CSI:
- Consumer hotline: (800) 332-6148 or (406) 444-2040
- Email: CSI.marketconduct@mt.gov
- The CSI will investigate and may take enforcement action
Has Montana adopted the Unfair Claims Settlement Practices Act?
Which of the following is generally PERMITTED in Montana insurance sales?
What is the consumer hotline for the Montana Commissioner of Securities and Insurance?
What is twisting in Montana insurance law?