Advisory Memorandum Regarding Montana's Property and Casualty Insurance Policy Language Simplification Act

COMMISSIONER OF SECURITIES AND INSURANCE Troy Downing Commissioner Office of the Montana State Auditor # ADVISORY MEMORANDUM To: ALL PROPERTY AND CASUALTY INSURERS AND ALL OTHER INTERESTED PERSONS From: TROY DOWNING Commissioner of Securities and Insurance, Office of the Montana State Auditor Date: March 10, 2022 ### Advisory Memorandum Regarding Montana's Property and Casualty Insurance Policy Language Simplification Act This advisory memorandum is intended to provide guidance to the insurance industry with regard to how the Office of the Montana State Auditor, Commissioner of Securities and Insurance ("CSI") applies Montana's Property and Casualty Insurance Policy Language Simplification Act ("the Act") §§ 33-15-333 through 33-15-349, MCA, to commercial lines insurance policies. ### Background The Act requires that the policy text in all property and casualty policies must achieve a minimum score of 40 on the Flesch reading ease test (or an equivalent score on a comparable test). It has come to the CSI's attention that a minimum score of 40 is not warranted for commercial lines policies, given the undisputed complexity of commercial lines policies and the availability of risk managers/agents to explain such complexities to those who purchase commercial lines policies. 840 Helena Avenue, Helena, Montana 59601 (main fax) 406.444.3497 | (securities fax) 406.444.5558 (policyholder services fax) 406.444.1980 | (legal fax) 406.444.3499 (phone) 800.332.6148 or 406.444.2040 | (email) csi@mt.gov | (web) www.csimt.gov March 10, 2022 Page 2 The Act authorizes the Commissioner, at his discretion, to lower the minimum score when a lower score is warranted by the nature of a particular policy or type or class of policy. ## Application Accordingly, the Commissioner has exercised his discretion to determine that a minimum score of zero (0) on the Flesch reading ease test (or an equivalent score on a comparable test) is warranted for commercial lines policies. For questions about this advisory memorandum, please contact Deputy Insurance Commissioner Bob Biskupiak at 406-444-5438. This advisory memorandum is informational only and does not enlarge, reduce, or otherwise modify any requirements of the Montana Insurance Code or in any way limit the authority of the CSI under applicable law. The CSI encourages insurers to consult with independent legal counsel for further guidance on the application of the Montana Insurance Code to any particular circumstance. 840 Helena Avenue, Helena, Montana 59601 (main fax) 406.444.3497 | (securities fax) 406.444.5558 (policyholder services fax) 406.444.1980 | (legal fax) 406.444.3499 (phone) 800.332.6148 or 406.444.2040 | (email) csi@mt.gov | (web) www.csimt.gov