6.6.2604    ADMINISTRATION OF INDEPENDENT LIABILITY FUNDS

A business entity may use one of the two following methods to administer its independent liability fund:

(1) A third party having no close connection with the business entity may administer the fund, provided that the third party is either a trust company registered in the state of Montana to conduct such business or a person or entity bonded by an authorized surety insurer for the full amount, including principal and interest, of the funds contained in the independent liability fund.

(2) An in-house officer or employee of the business entity may administer the fund if the officer or employee is bonded by an authorized surety insurer for the full amount including principal and interest, of the funds contained in the independent liability fund. If an in-house officer or employee administers the independent liability fund:

(a) that officer or employee must have exclusive control of the assets or investments contained in the independent liability fund;

(b) the business entity shall file a copy of the bond insuring the officer or employee with the commissioner; and

(c) the surety insurer issuing the bond shall notify the commissioner in writing 30 days before the effective date of a cancellation of the bond.

(3) Both in-house and third-party administrators shall cooperate fully with the commissioner in providing proof of the security or bond covering the investments, assets, and interest contained in the independent liability funds.

(4) An asset or investment contained in the independent liability fund may not be used or removed from the fund without prior notification to the commissioner with full explanation of the need for the transfer and a clear statement of the financial reasoning behind the transfer.

(5) A business entity using an independent liability fund shall obtain adequate insurance coverage for each insurable asset contained in the independent liability fund.

History: Sec. 33-27-104, MCA; IMP, Title 33, Ch. 27, MCA; NEW, 1987 MAR p. 2372, Eff. 12/25/87.