BEFORE THE STATE AUDITOR AND COMMISSIONER OF INSURANCE

OF THE STATE OF MONTANA

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TO: All Concerned Persons

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1. On July 5, 2007, the State Auditor and Commissioner of Insurance published MAR Notice No. 6-167 regarding the public hearing on the proposed adoption of the above-stated rules at page 902 of the 2007 Montana Administrative Register, issue number 13.

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2. On July 25, 2007, the State Auditor and Commissioner of Insurance held a public hearing to consider the proposed adoption of the above-stated rules. In addition, a written comment was received before the comment deadline.

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3. The State Auditor and Commissioner of Insurance has adopted New Rule I (ARM 6.6.901) PURPOSE, New Rule II (ARM 6.6.902) SCOPE, New Rule III (ARM 6.6.903) AUTHORITY, New Rule IV (ARM 6.6.904) EXEMPTIONS, New Rule V (ARM 6.6.905) DEFINITIONS, New Rule VI (ARM 6.6.906) PRACTICES DECLARED FALSE, MISLEADING, DECEPTIVE, OR UNFAIR ON A MILITARY INSTALLATION, New Rule VII (ARM 6.6.907) PRACTICES DECLARED FALSE, MISLEADING, DECEPTIVE, OR UNFAIR REGARDLESS OF LOCATION, and New Rule VIII (ARM 6.6.908) SEVERABILITY, exactly as proposed.

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4. The department has thoroughly considered the comment and testimony received. A summary of the comment and testimony received and the department's responses are as follows:

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COMMENT 1: Dave Adams of State Farm Insurance Companies commented that the effective date as presented in the proposal notice provides insurers with less than two months to come into compliance with the proposed rules. State Farm strongly recommended that the department give insurance companies at least six months to implement these rules, as provided in the NAIC Model. The January 1, 2008, effective date in the NAIC Model was the product of extensive discussions among the NAIC Executive Committee Military Sales Working Group, and reflects an important compromise with life insurers and producers. Implementation of these rules will require companies to establish a compliance plan, train their insurance producers, and perhaps make system changes. To ensure that all companies both large and small can adequately implement these rules, State Farm recommends an effective date of six months after adoption.

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RESPONSE 1: Based on Mr. Adams comment, the department adopts the NAIC Model proposed effective date of January 1, 2008, as more appropriate.

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COMMENT 2: Don Allen, representing National Association of Insurance and Financial Advisors (NAIFA-MT), also suggested that the effective date of these rules be changed to January 1, 2008.

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RESPONSE 2: The department agrees.

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5. After consideration of the comment and testimony received, the department has adopted the following New Rule IX (ARM 6.6.909) with the following change, stricken matter interlined, new matter underlined:

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NEW RULE IX (ARM 6.6.909) EFFECTIVE DATE (1) [New Rules I through IX] ARM 6.6.901 through 6.6.909 shall become effective September 27, 2007 January 1, 2008, and shall apply to acts or practices committed on or after the effective date.

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/s/ Christina L. Goe��������������������������������������������������������� /s/ Patrick M. Driscoll

Christina L. Goe�������������������������������������������������������������� Patrick M. Driscoll

Rule Reviewer����������������������������������������������������������������� Staff Attorney

������������������������������������������������������������������������������������������ State Auditor/Commissioner of Insurance

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Certified to the Secretary of State August 13, 2007

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