What happened: Montana’s top court ruled Victory Insurance violated the insurance code by ignoring four directives to disclose an $8 million-plus federal lawsuit in its annual statement.
Who’s involved: Victory Insurance Company, Montana Commissioner of Securities and Insurance, Clear Spring Property and Casualty Company.
What’s at stake: A $25,000 maximum fine - tossed because the regulator never explained why it chose that amount.
Why it matters: Insurers cannot ignore a commissioner’s directive to supplement annual financial filings, but regulators must justify the penalties they impose.
Where it stands: Affirmed on the violation, reversed on the fine and sent back for the agency to explain its reasoning.
Four times, Montana’s insurance regulator told Victory Insurance Company to disclose an $8 million lawsuit in its annual financial statement. Four times, Victory said no.
On November 10, 2026, the Montana Supreme Court ruled that defiance violated the state’s insurance code. But the court also tossed the regulator’s $25,000 maximum fine - because the Commissioner never explained why the highest penalty was the right one.
The case starts with a deal. In 2019, Clear Spring Property and Casualty Company purchased Victory’s book of workers’ compensation policies. Victory, a Montana-based workers’ comp insurer, stayed on as Clear Spring’s managing general agent, authorized to keep $800,000 a quarter from premiums as payment.
That arrangement fell apart. In March 2021, Clear Spring sued Victory in federal court in Illinois, chasing more than $8 million.
Victory filed its 2021 annual statement in early 2022 without a word about the lawsuit. According to the court, the statement noted Victory faced potential litigation in the normal course of business - but nothing about a specific suit involving millions.
The regulator’s chief financial examiner wrote on March 17, 2022, asking Victory to amend the statement. A follow-up letter made clear this was a “direction,” not a request. Victory said it would not comply. Two more letters followed. According to the court, Victory took the position that insurers were not required to follow directions from the Commissioner’s staff.
The federal lawsuit settled confidentially on April 21, 2022 - which complicated things. Later directives asked Victory to disclose both the lawsuit and the settlement. Everyone eventually agreed the settlement fell outside the 2021 reporting period. The lawsuit itself did not.
The Montana Supreme Court upheld the finding that the Commissioner’s power to require annual statements be “supplemented for additional information” covered the directive. Victory could not pick and choose which parts of a partly overreaching order to follow - ignoring the valid directive alongside the invalid one was still a code violation.
The fine landed differently. The Commissioner imposed the $25,000 maximum - the highest amount the statute allows - without saying why. The court pointed to a separate Victory Insurance case earlier in 2026, where the agency had laid out specific findings, including that Victory had actively impeded the investigation and misrepresented facts to the hearing examiner, before imposing the same maximum.
This time? Nothing beyond a bare statement that Victory broke the code. That was not enough. The court sent the fine back for the agency to explain its reasoning before imposing any penalty.
Regulators can demand supplemental disclosures and insurers who ignore those directives face real consequences - but the same principles that empower regulators require them to show their work on penalties.
The Montana Supreme Court affirmed that Victory Insurance violated the Montana Insurance Code. No determination has been made on the fine amount, which has been sent back to the agency for further proceedings.
