COMPLYING WITH MONTANA LAW AND COMPANY APPOINTMENTS

August 2001 -- Producers may not hold themselves out in any way as a representative of a company for which they are not appointed under Montana Law. This does not necessarily mean a producer can’t assist the consumer in finding coverage and servicing their client. The Independent Insurance Agents’ Association of Montana (IIAM) is writing this article and asking the Montana Insurance Department to review and approve the content before printing.

Montana insurance law, 33-17-236, MCA is as follows:

33-17-236. Appointments of insurance producers by insurers. (1) An insurance producer may not claim to be a representative of or an authorized or appointed insurance producer of or use another term implying a contractual relationship with a particular insurer unless the insurance producer is an appointed insurance producer of that insurer pursuant to this section. This does not prevent an insurance producer from obtaining and presenting a quotation from an insurer with whom the producer is not appointed. If the insurer consents, the insurer may bind coverage on a risk in accordance with 33-15-411 prior to the execution of an agency contract and policy issuance.
     (2) The insurer shall, not later than 15 days from the date on which the agency contract is executed with a licensed insurance producer, file with the insurance department a written notice of appointment on a form prescribed by the insurance department. The notice may be electronically filed pursuant to rules adopted by the commissioner.
     (3) Upon receipt of the notice of appointment, the insurance department shall verify that the licensed insurance producer is eligible for appointment. If the licensed insurance producer is determined to be ineligible for appointment, the insurance department shall notify the insurer of the determination.
     (4) An appointment is effective on the earlier of the date of the executed agency contract or the date on which the insurer files the notice of appointment with the insurance department, unless the appointment is disapproved by the insurance department. A disapproved appointment is void on the date the department provides notification to the insurer.
     (5) The appointment is perpetual until canceled by the insurer.

However, Montana insurance law allows sharing of commission under:

33-17-1103. Accepting and paying commissions, fees, or consideration -- restriction. (1) An insurer or insurance producer may not pay, directly or indirectly, a commission, service fee, brokerage fee, or other valuable consideration to a person for services as an insurance producer unless the person performing the service holds a valid license with regard to the kind or kinds of insurance for which the service was rendered at the time the service was performed. A person not properly licensed in accordance with this chapter at the time the person performs the service as an insurance producer may not accept a commission, service fee, brokerage fee, or other valuable consideration for the service. This section does not prevent payment or receipt of renewal or other deferred commissions to or by a person entitled to receive the payment under this section.

(2) An insurance producer may not directly or indirectly share the insurance producer's commissions or other compensation received or to be received by the insurance producer on account of a transaction under the insurance producer's license with any person not also licensed under this chapter as to the same kind or kinds of insurance involved in the transactions. This provision does not affect payment of the regular salaries due to employees of the licensee, the distribution in regular course of business of compensation and profits among members or stockholders if the licensee is a partnership or corporation, or use of funds for family or personal purposes.

(3) Surplus lines producers may share commissions with a property and casualty insurance producer pursuant to 33-2-306.

The IIAM has met with the Montana Insurance department in an effort to clarify when and how a producer may place business and serve their customers. At no time should a producer hold themselves out as a representative of a company for which they are not licensed.

The following conditions must apply for a producer to be in compliance with Montana insurance law:

1. Have an appointment with the carrier that is issuing the policy.

2. Have the business placed with a licensed producer, (this could also include a wholesaler that producers know as a general agent), that is appointed with the carrier and clearly inform the consumer that you are not a contractual representative of the carrier writing the policy or policies. You may share commissions as outlined in insurance law reprinted here. We also recommend that the file be clearly documented that you have informed the insured that you are not a contractual representative of the insurer.

3. An agent not appointed should not sign any application or policy of a carrier that they are not appointed with. Care should be taken that the appointed producer of record signs the necessary document.

If you have any questions in regard to compliance with the Montana insurance laws, please call the Montana Insurance Department at (406) 444-2040 or in state at 1-800-332-6148.