USA Statutes : oregon
Title : TITLE 56 INSURANCE
Chapter : Chapter 731 Administration and General Provisions
The Insurance Code shall regulate
the business of insurance and every person engaged therein in accordance
with the intent of Congress as expressed in the Act of March 9, 1945, as
amended (Public Law 15, 79th Congress, 15 U.S.C. 1011 to 1014) which
states in part that no Act of Congress shall be construed to invalidate,
impair or supersede any law enacted by any state for the purpose of
regulating the business of insurance, or which imposes a fee or tax upon
such business, unless such Act specifically relates to the business of
insurance. [1967 c.359 §3] The Insurance Code shall be
liberally construed and shall be administered and enforced by the
Director of the Department of Consumer and Business Services to give
effect to the policy stated in ORS 731.008. [1967 c.359 §4]


No person shall
transact insurance in this state or relative to a domestic risk without
complying with the applicable provisions of the Insurance Code. [1967
c.359 §5] The
Insurance Code applies to:

(1) A fraternal benefit society complying with ORS chapter 748,
only as provided in such chapter.

(2) A health care service contractor complying with ORS 750.005 to
750.095, only as provided in such sections.

(3) A legal expense organization complying with ORS 750.505 to
750.715, only as provided in such sections.

(4) A multiple employer welfare arrangement complying with ORS
750.301 to 750.341, only as provided in such sections. [1967 c.359 §6;
1971 c.425 §1; 1973 c.97 §2; 1975 c.769 §2; 1989 c.331 §23; 1993 c.265
§2; 1993 c.615 §26; 2005 c.31 §6](1) The State Accident Insurance
Fund Corporation is subject as a domestic insurer to ORS 731.248,
731.252, 731.256, 731.258, 731.260, 731.296 to 731.316, 731.488, 731.574,
731.592, 731.594, 731.730, 731.731, 731.735, 731.737, 731.988, 731.992,
733.010 to 733.060, 733.140 to 733.170, 733.210, 737.205, 737.215,
737.225, 737.235 to 737.340, 737.505 and 737.560, ORS chapters 742, 743
and 744 and ORS 746.015, 746.075, 746.110, 746.145 to 746.155, 746.230
and 746.240. However:

(a) The requirements of the Director of the Department of Consumer
and Business Services under ORS 733.010 to 733.060, 733.140 to 733.170
and 733.210 govern in the case of a conflict between those requirements
and the requirements of any accounting system prescribed by the Oregon
Department of Administrative Services.

(b) The filing requirements of ORS 737.205 to 737.340, 737.505 and
737.560 are in lieu of any similar filing requirements prescribed by any
other law of this state.

(c) The requirements of ORS chapter 743 are applicable only with
respect to excess workers’ compensation insurance furnished by the
corporation.

(d) The provisions of ORS chapter 744 apply only with respect to
the regulation of insurance producers.

(e) For each year that the Secretary of State conducts an audit of
the State Accident Insurance Fund Corporation under ORS 297.210, the
director may accept the audit and a copy of the Secretary of State’s
audit report in lieu of the requirements of ORS 731.488 if the director
determines that the purposes of ORS 731.488 are adequately served by the
Secretary of State’s audit and report. The Secretary of State shall file
a copy of its audit report of the State Accident Insurance Fund
Corporation with the director.

(2) The provisions of subsection (1) of this section govern in the
case of a conflict between those provisions and the provisions of ORS
chapter 656 that apply only to the State Accident Insurance Fund
Corporation. [1971 c.385 §2; 1977 c.405 §5; 1979 c.815 §7; 1979 c.829 §7;
1987 c.884 §4; 1989 c.701 §69; 1991 c.340 §1; 1991 c.401 §31; 1993 c.447
§116; 1995 c.79 §356; 1999 c.633 §5; 2003 c.364 §63; 2003 c.689 §1]The Insurance Code does not apply to any of the following to the
extent of the subject matter of the exemption:

(1) A bail bondsman, other than a corporate surety and its agents.

(2) A fraternal benefit society that has maintained lodges in this
state and other states for 50 years prior to January 1, 1961, and for
which a certificate of authority was not required on that date.

(3) A religious organization providing insurance benefits only to
its employees, which organization is in existence and exempt from
taxation under section 501(c)(3) of the federal Internal Revenue Code on
September 13, 1975.

(4) Public bodies, as defined in ORS 30.260, that either
individually or jointly establish a self-insurance program for tort
liability in accordance with ORS 30.282.

(5) Public bodies, as defined in ORS 30.260, that either
individually or jointly establish a self-insurance program for property
damage in accordance with ORS 30.282.

(6) Cities, counties, school districts, community college
districts, community college service districts or districts, as defined
in ORS 198.010 and 198.180, that either individually or jointly insure
for health insurance coverage, excluding disability insurance, their
employees or retired employees, or their dependents, or students engaged
in school activities, or combination of employees and dependents, with or
without employee or student contributions, if all of the following
conditions are met:

(a) The individual or jointly self-insured program meets the
following minimum requirements:

(A) In the case of a school district, community college district or
community college service district, the number of covered employees and
retired employees aggregates at least 1,000 individuals;

(B) In the case of an individual public body program other than a
school district, community college district or community college service
district, the number of covered employees and retired employees
aggregates at least 500 individuals; and

(C) In the case of a joint program of two or more public bodies,
the number of covered employees and retired employees aggregates at least
1,000 individuals, or the annual contributions to the program aggregate
at least $500,000;

(b) The individual or jointly self-insured health insurance program
includes all coverages and benefits required of group health insurance
policies under ORS chapter 743;

(c) The individual or jointly self-insured program must have
program documents that define program benefits and administration;

(d) Enrollees must be provided copies of summary plan descriptions
including:

(A) Written general information about services provided, access to
services, charges and scheduling applicable to each enrollee’s coverage;

(B) The program’s grievance and appeal process; and

(C) Other group health plan enrollee rights, disclosure or written
procedure requirements established under ORS chapter 743;

(e) The financial administration of an individual or jointly
self-insured program must include the following requirements:

(A) Program contributions and reserves must be held in separate
accounts and used for the exclusive benefit of the program;

(B) The program must maintain adequate reserves. Reserves may be
invested in accordance with the provisions of ORS chapter 293. Reserve
adequacy must be calculated annually with proper actuarial calculations
including the following:

(i) Known claims, paid and outstanding;

(ii) A history of incurred but not reported claims;

(iii) Claims handling expenses;

(iv) Unearned contributions; and

(v) A claims trend factor; and

(C) The program must maintain adequate reinsurance against the risk
of economic loss in accordance with the provisions of ORS 742.065 unless
the program has received written approval for an alternative arrangement
for protection against economic loss from the Director of the Department
of Consumer and Business Services;

(f) The individual or jointly self-insured program must have
sufficient personnel to service the employee benefit program or must
contract with a third party administrator licensed under ORS chapter 744
as a third party administrator to provide such services;

(g) The individual or jointly self-insured program shall be subject
to assessment in accordance with ORS 735.614 and former enrollees shall
be eligible for portability coverage in accordance with ORS 735.616;

(h) The public body, or the program administrator in the case of a
joint insurance program of two or more public bodies, files with the
Director of the Department of Consumer and Business Services copies of
all documents creating and governing the program, all forms used to
communicate the coverage to beneficiaries, the schedule of payments
established to support the program and, annually, a financial report
showing the total incurred cost of the program for the preceding year. A
copy of the annual audit required by ORS 297.425 may be used to satisfy
the financial report filing requirement; and

(i) Each public body in a joint insurance program is liable only to
its own employees and no others for benefits under the program in the
event, and to the extent, that no further funds, including funds from
insurance policies obtained by the pool, are available in the joint
insurance pool.

(7) All ambulance services.

(8) A person providing either or both of the services described in
this subsection in connection with motor vehicles. The exemption under
this subsection does not apply to an authorized insurer providing such
services under an insurance policy. This subsection applies to the
following services:

(a) Towing service.

(b) Emergency road service, which means adjustment, repair or
replacement of the equipment, tires or mechanical parts of a motor
vehicle in order to permit the motor vehicle to be operated under its own
power.

(9)(a) A person described in this subsection who, in an agreement
to lease or to finance the purchase of a motor vehicle, agrees to waive
for no additional charge the amount specified in paragraph (b) of this
subsection upon total loss of the motor vehicle because of physical
damage, theft or other occurrence, as specified in the agreement. The
exemption established in this subsection applies to the following persons:

(A) The seller of the motor vehicle, if the sale is made pursuant
to a motor vehicle retail installment contract.

(B) The lessor of the motor vehicle.

(C) The lender who finances the purchase of the motor vehicle.

(D) The assignee of a person described in this paragraph.

(b) The amount waived pursuant to the agreement shall be the
difference, or portion thereof, between the amount received by the
seller, lessor, lender or assignee, as applicable, which represents the
actual cash value of the motor vehicle at the date of loss, and the
amount owed under the agreement. [1967 c.359 §8; 1975 c.314 §1; 1977
c.428 §4; 1981 c.891 §1; 1985 c.811 §1; 1987 c.97 §1; 1987 c.288 §1; 1991
c.958 §2; 1993 c.265 §4; 1995 c.79 §357; 1995 c.582 §1; 1995 c.629 §1;
1997 c.795 §3; 1999 c.502 §4; 2003 c.342 §1; 2005 c.175 §1](1) As used in this section:

(a) “Charitable gift annuity” has the meaning given that term in
section 501(m)(5) of the Internal Revenue Code, as amended and in effect
on January 1, 2006.

(b) “Charitable organization” means an organization to which
contributions may be made that are charitable contributions under section
170(c) of the Internal Revenue Code, as amended and in effect on January
1, 2006.

(2) The Insurance Code does not apply to a charitable organization
that issues charitable gift annuities if, on the date that the charitable
organization issues the charitable gift annuity, the charitable
organization:

(a) Has a minimum of $300,000 in net assets as shown by an annual
audited financial statement prepared by an independent certified public
accountant and kept on file by the charitable organization;

(b) Except as provided in subsection (3) of this section, has been
in continuous operation for at least five years or is a successor to or
an affiliate of a charitable organization that has been in continuous
operation for at least five years; and

(c) Maintains a separate and distinct trust fund as a reserve fund
adequate to meet the future payments under all outstanding annuity
agreements. The amount in the reserve fund must be an amount no less than
an amount computed on the basis of the transfers to which it relates in
accordance with the standard of valuation based on current mortality
tables and interest rate recommended by a national organization organized
for the purpose of providing educational and other services to American
charities regarding gift annuities and other forms of planned gifts. The
reserve fund may include one or more single premium annuities that pay
the entire amount of one or more charitable gift annuities issued by the
charitable organization if each single premium annuity is issued by an
authorized insurer that is also authorized to transact insurance in the
state in which the charitable organization has its principal office and
in the state in which the single premium annuity is issued.

(3) The Insurance Code does not apply to an educational institution
or nonprofit corporation that issued a charitable gift annuity before
January 1, 2006, under a certificate of authority issued under ORS
731.704 (repealed in 2005).

(4) When a charitable organization that is subject to subsection
(2) of this section enters into an agreement for a charitable gift
annuity, the charitable organization shall disclose in writing to the
donor that the charitable gift annuity is not issued by an insurance
company, is not subject to regulation by the State of Oregon and is not
protected by an insurance guaranty association.

(5) A charitable organization that is not subject to subsection (2)
of this section must hold a certificate of authority to issue charitable
Note: 731.038 was added to and made a part of the Insurance Code by
legislative action but was not added to ORS chapter 731 or any series
therein. See Preface to Oregon Revised Statutes for further explanation.ORS 731.038
(2)(a) and (b) does not apply to an educational institution or nonprofit
corporation that holds a certificate of authority issued under ORS
731.704 (repealed in 2005) on the day before January 1, 2006. An
educational institution or nonprofit corporation subject to this section
shall keep on file an annual audited financial statement prepared by an
Note: 731.039 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 731 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1) An exempt insurer who holds a
certificate of exemption issued by the Director of the Department of
Consumer and Business Services before January 1, 2003, may continue
transacting insurance.

(2) In order to continue a certificate of exemption, an exempt
insurer to whom subsection (1) of this section applies must file its
annual statement and pay the fees established by the director by March 1
of each year.

(3) An exempt insurer shall be subject to ORS 731.296 to 731.316,
731.414, 731.418, 731.574, 731.988, 731.992, 733.010 to 733.115, 733.140
to 733.210, 743.703, 746.075 and 746.110. [Formerly 736.020; 1979 c.870
§1; 1981 c.752 §15; 1989 c.413 §2; 2003 c.802 §174; 2005 c.22 §485] Any policy whose
form has been filed with and approved by the Director of the Department
of Consumer and Business Services shall be exempt from the application of
ORS 59.005 to 59.451, 59.660 to 59.830, 59.991 and 59.995, and the
marketing of such policy shall be likewise exempt. [1967 c.359 §10]DEFINITIONS GENERALLY Except where the context
otherwise requires, the definitions given in the Insurance Code govern
its construction. [1967 c.359 §11]” “Action” means any action, suit or legal
proceeding. [1967 c.359 §12] (1) An “authorized”
insurer is one authorized by a subsisting certificate of authority to
transact insurance in this state.

(2) An “unauthorized” insurer is one not so authorized. [1967 c.359
§14]” (1) “Certificate”
means a written statement evidencing the coverage of a person insured
under a group insurance policy.

(2) “Certificate holder” means an employee or member of a group
insured under a group insurance policy. [1981 c.752 §11]” (1) A “certificate
of authority” is one issued by the Director of the Department of Consumer
and Business Services pursuant to the Insurance Code evidencing the
authority of an insurer to transact insurance in this state.

(2) A “license” is authority granted by the director pursuant to
the Insurance Code for the licensee to engage in a business or operation
of insurance in this state other than as an insurer, and the certificate
by which such authority is evidenced. [1967 c.359 §15]” (1) “Commercial liability
insurance” means insurance for a business, professional, nonprofit or
governmental entity against legal, contractual or assumed liability for
death, injury or disability of any human, or for damage to property,
arising out of acts or omissions in the course of the conduct of the
entity.

(2) “Commercial liability insurance” does not include the following
lines of insurance or classes of business:

(a) Marine and transportation insurance;

(b) Wet marine and transportation insurance;

(c) FAIR plans and automobile assigned risk insurance;

(d) Workers’ compensation and employers’ liability insurance;

(e) Nuclear liability insurance;

(f) Fidelity and surety insurance;

(g) Hazardous waste and environmental impairment insurance;

(h) Aviation insurance; or

(i) Commercial automobile insurance.

(3) As used in this section, “commercial automobile” means a four
wheel passenger or station wagon type of vehicle used as a public or
private conveyance, including a motor vehicle of the utility, pickup,
sedan delivery or panel truck type used for wholesale or retail delivery,
and a farm truck. [1987 c.774 §32]Note: 731.074 was added to and made a part of the Insurance Code
but was not added to ORS chapter 731 or any series therein by legislative
action. See Preface to Oregon Revised Statutes for further explanation.” (1) “Department” means the
Department of Consumer and Business Services.

(2) “Director” means the Director of the Department of Consumer and
Business Services. [1967 c.359 §16; 1987 c.373 §76; 1993 c.744 §28] (1) “Domestic
insurer” means an insurer formed under the laws of this state.

(2) “Foreign insurer” means an insurer formed under the laws of a
state other than this state.

(3) “Alien insurer” means an insurer formed under the laws of any
country other than the United States of America or a state thereof. [1967
c.359 §17]” “Domestic risk” means a subject of
insurance resident, located or to be performed in this state. [1967 c.359
§18]” The “domicile” of an insurer means:

(1) As to insurers formed under the laws of Canada or any province
thereof, the province in which the insurer’s head office is located.

(2) As to other alien insurers, as provided in ORS 731.096.

(3) As to all other insurers, the state under the laws of which the
insurer was formed or, if the insurer has been redomesticated to another
state, the state to which it has been redomesticated. [1967 c.359 §19;
1995 c.639 §13]” (1) The domicile of an alien
insurer, other than insurers formed under the laws of Canada or a
province thereof, shall be that state designated by the insurer in
writing filed with the Director of the Department of Consumer and
Business Services at time of admission to this state or before January 1,
1962, whichever date is the later, and may be any one of the following
states:

(a) The state in which the insurer was first authorized to transact
insurance;

(b) The state in which is located the insurer’s principal place of
business in the United States; or

(c) The state in which is held the largest deposit of assets of the
insurer in trust for the protection of its policyholders and creditors in
the United States.

(2) If the insurer makes no such designation its domicile shall be
deemed to be that state in which is located its principal place of
business in the United States. [Formerly 736.240]” (1) “Insurance” means a contract whereby one
undertakes to indemnify another or pay or allow a specified or
ascertainable amount or benefit upon determinable risk contingencies.

(2) “Insurance” so defined includes annuities.

(3) “Insurance” so defined includes a contract under which one
other than a manufacturer, builder, seller or lessor of the subject
property undertakes to perform or provide, for a fixed term and
consideration, repair or replacement service or indemnification therefor
for the operational or structural failure of specified real or personal
property or property components.

Insurance does not include contracts with a telecommunications utility as
defined in ORS 759.005, for repair, replacement or maintenance of
customer-owned inside wiring. [1967 c.359 §21; 1981 c.247 §1; 1985 c.633
§5; 1987 c.447 §111]” “Insurance producer” means a person
required to be licensed under the laws of this state to sell, solicit or
negotiate insurance. For purposes of this definition:

(1) “Negotiate” means to confer directly with or to offer advice
directly to a purchaser or prospective purchaser of a particular policy
of insurance concerning any of the substantive benefits, terms or
conditions of the policy, if the person engaged in that act:

(a) Sells insurance; or

(b) Obtains insurance from insurers for purchasers.

(2) “Sell” means to exchange a policy of insurance by any means,
for money or its equivalent, on behalf of an insurer.

(3) “Solicit” means to attempt to sell a policy of insurance or to
ask or urge a person to apply for a particular kind of insurance from a
particular insurer. [Formerly 731.062]” “Insurer” includes every person engaged in the
business of entering into policies of insurance. [1967 c.359 §22] “Judgment” includes a final order. [1967 c.359
§23; 2003 c.576 §553]” “Person” means an individual or a business
entity. For the purpose of this definition, “business entity” means a
corporation, association, partnership, limited liability company, limited
liability partnership or other legal entity. [1967 c.359 §24; 1983 c.327
§12; 2001 c.191 §21]” “Policy” means the written contract or written
agreement for or effecting insurance, by whatever name called, and
includes all clauses, riders, indorsements and papers which are a part
thereof and annuities. [1967 c.359 §25]” “Reinsurance” means a contract under which
an originating insurer, called the “ceding” insurer, procures insurance
for itself in another insurer, called the “assuming” insurer or the
“reinsurer,” with respect to part or all of an insurance risk of the
originating insurer. [1967 c.359 §26]” “Required capitalization” means
the minimum combined paid-up capital and surplus required by the
Insurance Code of a stock insurer, or the minimum surplus so required of
an insurer without capital stock. [1967 c.359 §27]” When used in context signifying a jurisdiction
other than the State of Oregon, “state” means any state, district,
territory, commonwealth or possession of the United States of America.
[1967 c.359 §28; 2001 c.191 §22] (1) “Stock
insurer” means an incorporated insurer whose capital is divided into
shares and owned by its stockholders.

(2) “Mutual insurer” means an incorporated insurer without capital
stock and the governing body of which is elected by its policyholders.
This definition does not exclude as a “mutual insurer” a foreign insurer
found by the Director of the Department of Consumer and Business Services
to be organized on the mutual plan under the laws of its domicile, but
having temporary share capital or providing for election of the insurer’s
governing body on a reasonable basis by policyholders and others.

(3) “Reciprocal insurer” means an unincorporated aggregation of
persons known as “subscribers,” operating individually and collectively
through an attorney in fact common to all such persons, interexchanging
among themselves reciprocal agreements of indemnity. [1967 c.359 §29]” “Surplus lines insurance” means
any insurance in this state of risks resident, located or to be performed
in this state, permitted to be placed through a surplus lines licensee
with a nonadmitted insurer eligible to accept such insurance, other than
reinsurance, wet marine and transportation insurance, independently
procured insurance and life and health insurance and annuities. [1987
c.774 §113; 1991 c.810 §24]Note: 731.144 was added to and made a part of ORS chapter 731 but
was not added to any smaller series therein by legislative action. See
Preface to Oregon Revised Statutes for further explanation.” (1) “Transact insurance” means one or
more of the following acts effected by mail or otherwise:

(a) Making or proposing to make an insurance contract.

(b) Taking or receiving any application for insurance.

(c) Receiving or collecting any premium, commission, membership
fee, assessment, due or other consideration for any insurance or any part
thereof.

(d) Issuing or delivering policies of insurance.

(e) Directly or indirectly acting as an insurance producer for, or
otherwise representing or aiding on behalf of another, any person in the
solicitation, negotiation, procurement or effectuation of insurance or
renewals thereof, the dissemination of information as to coverage or
rates, the forwarding of applications, the delivering of policies, the
inspection of risks, the fixing of rates, the investigation or adjustment
of claims or losses, the transaction of matters subsequent to
effectuation of the policy and arising out of it, or in any other manner
representing or assisting a person with respect to insurance.

(f) Advertising locally or circularizing therein without regard for
the source of such circularization, whenever such advertising or
circularization is for the purpose of solicitation of insurance business.

(g) Doing any other kind of business specifically recognized as
constituting the doing of an insurance business within the meaning of the
Insurance Code.

(h) Doing or proposing to do any insurance business in substance
equivalent to any of paragraphs (a) to (g) of this subsection in a manner
designed to evade the provisions of the Insurance Code.

(2) Subsection (1) of this section does not include, apply to or
affect the following:

(a) Making investments within a state by an insurer not admitted or
authorized to do business within such state.

(b) Except as provided in ORS 743.015, doing or proposing to do any
insurance business arising out of a policy of group life insurance or
group health insurance, or both, or a policy of blanket health insurance,
if the master policy was validly issued to cover a group organized
primarily for purposes other than the procurement of insurance and was
delivered in and pursuant to the laws of another state in which:

(A) The insurer was authorized to do an insurance business;

(B) The policyholder is domiciled or otherwise has a bona fide
situs; and

(C) With respect to a policy of blanket health insurance, the
policy was approved by the director of such state.

(c) Investigating, settling, or litigating claims under policies
lawfully written within a state, or liquidating assets and liabilities,
all resulting from the insurer’s former authorized operations within such
state.

(d) Transactions within a state under a policy subsequent to its
issuance if the policy was lawfully solicited, written and delivered
outside the state and did not cover a subject of insurance resident,
located or to be performed in the state when issued.

(e) The continuation and servicing of life or health insurance
policies remaining in force on residents of a state if the insurer has
withdrawn from such state and is not transacting new insurance therein.

(3) If mail is used, an act shall be deemed to take place at the
point where the matter transmitted by mail is delivered and takes effect.
[1967 c.359 §30; 1971 c.231 §10; 1989 c.784 §4; 2003 c.364 §64]CLASSES OF INSURANCE DEFINED
It is intended that certain insurance coverages may come within the
definitions of two or more classes of insurance as defined in the
Insurance Code, and the inclusion of such coverage within one definition
shall not exclude it as to any other class of insurance within the
definition of which such coverage is likewise reasonably includable.
[1967 c.359 §32]” (1) “Annuity” or “annuity policy” means any
agreement to make periodic payments, whether fixed or variable in amount,
where the making of all or some of such payments, or the amount of any
such payment, is dependent upon the continuance of human life, except
payments made pursuant to the settlement provisions of a life insurance
policy, and includes additional benefits operating to safeguard the
policy from lapse or to provide a special surrender value or special
benefit or annuity in the event of total and permanent disability of the
annuitant.

(2) “Annuity” does not include a charitable remainder annuity trust
or a charitable remainder unitrust as defined in section 664(d) of the
Internal Revenue Code. [1967 c.359 §33; 1993 c.377 §1]” “Variable
life insurance” and “variable annuity” mean those forms of life insurance
or annuity benefits, respectively, which vary according to the investment
experience of a separate account or accounts maintained by the insurer
with respect to policies providing such benefits. For convenience,
reference to “variable life insurance” in the Insurance Code includes
variable life insurance and variable annuities as defined in this
section, except if the inclusion of variable annuities obviously is
inapplicable or if the context requires, or the Insurance Code provides,
otherwise. [1973 c.435 §2]” “Casualty insurance” means:

(1) Insurance against legal, contractual or assumed liability for
death, injury or disability of any human, or for damage to property; and
provision for medical, hospital, surgical and disability benefits to
injured persons including insurance against the risk of economic loss
assumed under a less than fully insured employee health benefit plan and
funeral and death benefits to dependents, beneficiaries or personal
representatives of persons killed, irrespective of legal liability of the
insured, when issued as coverage for personal injury protection benefits
under a motor vehicle liability policy or as an incidental coverage with
or supplemental to liability insurance;

(2) Motor vehicle physical damage, burglary and theft, glass,
boiler and machinery, credit and livestock insurance;

(3) Insurance of the obligations accepted by, imposed upon or
assumed by employers under law for death, disablement or occupational
diseases of employees, including issuing guaranty contracts in connection
therewith;

(4) Insurance which undertakes to perform or provide repair or
replacement service or indemnification therefor for the operational or
structural failure of specified real or personal property or property
components; and

(5) Insurance against any other kind of loss, damage or liability
properly a subject of insurance and not within any other class of
insurance otherwise defined, if such insurance is not disapproved by the
Director of the Department of Consumer and Business Services as being
contrary to law or public policy. [1967 c.359 §34; 1981 c.247 §2; 1993
c.649 §5]” “Health insurance” means insurance of
humans against bodily injury, disablement or death by accident or
accidental means, or the expense thereof, or against disablement or
expense resulting from sickness or childbirth, or against expense
incurred in prevention of sickness, in dental care or optometrical
service, and every insurance appertaining thereto, including insurance
against the risk of economic loss assumed under a less than fully insured
employee health benefit plan. “Health insurance” does not include
workers’ compensation coverages. [1967 c.359 §35; 1993 c.649 §6]”
(1)(a) “Home protection insurance” means that part of casualty insurance
that includes only insurance which undertakes to perform or provide
repair or replacement service or indemnification therefor for the
operational or structural failure of the insured home, components of the
home or personal property relating to the home or its components, and
does not include protection against consequential damage from the
operational or structural failure.

(b)(A) “Home protection insurance” does not include a home service
agreement.

(B) As used in this paragraph, “home service agreement” means a
contract or agreement for a specific limited duration to:

(i) Service, repair or replace in an existing home the mechanical
or appliance system or the components that break down due to normal wear
and tear or inherent defects; or

(ii) Provide incidental service, repair or replacement to cover
leaks and failures in roofing systems.

(c) As used in this subsection, “home” means a single living unit
or multiple living units, including manufactured dwellings, used
primarily as residences.

(2) “Home protection insurer” means an insurer under policies of
home protection insurance, other than an insurer transacting other forms
of casualty insurance or any form of reinsurance. [1981 c.247 §4; 2003
c.283 §1]” “Industrial life insurance”
means that form of life insurance written under policies of face amount
of $2,500 or less, under which premiums are payable monthly or more often
and the policy specifies it is an industrial life insurance policy. [1967
c.359 §36] (1) “Life insurance”
means insurance on human lives and every insurance appertaining thereto
and includes the granting of endowment benefits, additional benefits in
event of death or dismemberment by accident or accidental means,
additional benefits in event of the insured’s or premium payer’s
disability and optional modes of settlement of proceeds of life insurance
including annuity benefits payable under such a settlement provision.
“Life insurance” does not include workers’ compensation coverages.

(2) For convenience, reference to “life insurance” in the Insurance
Code includes life insurance as defined in subsection (1) of this section
and annuities as defined in ORS 731.154, except if the inclusion of
annuities obviously is inapplicable or if the context requires, or the
Insurance Code provides, otherwise. [1967 c.359 §37]” “Marine and
transportation insurance” includes:

(1) Insurance against any and all kinds of loss of or damage to:

(a) Vessels, craft, aircraft, cars, automobiles and vehicles of
every kind, as well as all goods, freights, cargoes, merchandise,
effects, disbursements, profits, moneys, bullion, precious stones,
securities, choses in action, evidences of debt, valuable papers,
bottomry and respondentia interests and all other kinds of property and
interests therein, in respect to, appertaining to or in connection with
any and all risks or perils of navigation, transit or transportation,
including war risks, on or under any seas or other waters, on land or in
the air, or while being assembled, packed, crated, baled, compressed or
similarly prepared for shipment or while awaiting the same or during any
delays, storage, transshipment, or reshipment incident thereto, including
marine builders’ risks, and all personal property floater risks including
bailees’ customers risks;

(b) Person or to property in connection with or appertaining to a
marine, inland marine, transit or transportation insurance, including
liability for loss of or damage to either, arising out of or in
connection with the construction, repair, operation, maintenance or use
of the subject matter of such insurance (but not including life insurance
or surety bonds nor insurance against loss by reason of bodily injury to
the person arising out of the ownership, maintenance or use of
automobiles);

(c) Precious stones, jewels, jewelry, gold, silver and other
precious metals, whether used in business or trade or otherwise and
whether the same is in course of transportation or otherwise; and

(d) Bridges, tunnels and other instrumentalities of transportation
and communication (excluding buildings, their furniture and furnishings,
fixed contents and supplies held in storage) unless fire, tornado,
sprinkler leakage, hail, explosion, earthquake, riot and civil commotion,
or any of them, are the only hazards to be covered; piers, wharves,
docks, and slips, excluding the risks of fire, tornado, sprinkler
leakage, hail, explosion, earthquake, riot and civil commotion or any of
them; other aids to navigation and transportation, including dry docks
and marine railways, against all risks.

(2) Marine protection and indemnity insurance meaning insurance
against, or against legal liability of the insured for, loss, damage or
expense arising out of, or incident to, the ownership, operation,
chartering, maintenance, use, repair or construction of any vessel, craft
or instrumentality in use in ocean or inland waterways, including
liability of the insured for personal injury, illness or death or for
loss of or damage to the property of another person. [Formerly 745.005]” “Mortgage insurance” means insurance
against financial loss by reason of:

(1) Nonpayment of principal, interest and other sums agreed to be
paid under the terms of an obligation secured by a mortgage, deed of
trust or other instrument constituting a lien or charge on real or
personal property; or

(2) Nonpayment of rent and other sums agreed to be paid under the
terms of a written lease for the possession, use or occupancy of real
property, such insurance also being referred to in the Insurance Code as
“lease insurance.” [1967 c.359 §39; 1969 c.692 §1]” “Property insurance” means insurance
on real or personal property of every kind and of every interest therein,
whether on land, water or in the air, against loss or damage from any and
all hazard or cause, and against consequential loss from such loss or
damage, other than noncontractual legal liability for loss or damage.
“Property insurance” does not include title insurance. [1967 c.359 §40]” “Surety insurance” means insurance
guaranteeing the fidelity of persons holding places of trust, the
performance of duties, contracts, bonds and undertakings, including the
signing thereof as surety, and insuring the performance of obligations of
employers under workers’ compensation laws by surety bond. [1967 c.359
§41]” “Title insurance” means insurance of
owners of property or others having an interest therein or liens or
encumbrances thereon, against loss by encumbrance, defective titles,
invalidity or adverse claim to title. [1967 c.359 §42]” “Wet marine and
transportation insurance” is that part of marine and transportation
insurance that includes only:

(1) Insurance upon vessels, crafts, hulls and of interests therein
or with relation thereto;

(2) Insurance of marine builder’s risks, marine war risks and
contracts referred to in ORS 731.174 (2) or any replacement thereof;

(3) Insurance of freights and disbursements pertaining to a subject
of insurance coming within this section;

(4) Insurance of personal property and interests therein, in course
of exportation from or importation into any country, and in course of
transportation coastwise or on inland waters, including transportation by
land, water, or air from point of origin to final destination, in respect
to, appertaining to or in connection with, any and all risks or perils of
navigation, transit or transportation, and while being prepared for and
while awaiting shipment, and during any delays, storage, transshipment or
reshipment incident thereto;

(5) Insurance on operations of railroads engaged in transportation
in interstate commerce and their property used in such operations; and

(6) Insurance of aircraft operated in scheduled interstate flight,
or cargo of such aircraft, or against this liability other than workers’
compensation and employers’ liability arising out of the ownership,
maintenance or use of such aircraft. [1967 c.359 §43; 1987 c.774 §114]INSURANCE ADMINISTRATION The Director of the
Department of Consumer and Business Services shall have the power to:

(1) Contract for and procure, on a fee or part-time basis, or both,
such actuarial, technical or other professional services as may be
required for the discharge of duties.

(2) Obtain such other services as the director considers necessary
or desirable, including participation in organizations of state insurance
supervisory officials and appointment of advisory committees. A member of
an advisory committee so appointed shall receive no compensation for
services as a member, but, subject to any other applicable law regulating
travel and other expenses of state officers, shall receive actual and
necessary travel and other expenses incurred in the performance of
official duties.

(3) Establish within the Department of Consumer and Business
Services a workers’ compensation rating bureau to provide rating
information that is based upon and relevant to activities conducted in
this state, to enable the director to carry out the provisions of ORS
chapter 737. In lieu of creating a rating bureau within the department,
the director may contract with any rating organization in other states if
the director finds that such a contract would provide the information
required by this section. [Formerly 736.503; 1987 c.373 §77; 1987 c.884
§50; 2003 c.14 §445] (1) No officer or
employee of the Department of Consumer and Business Services delegated
responsibilities in the enforcement of the Insurance Code shall:

(a) Be a director, officer, or employee of or be financially
interested in any person regulated by the department or office of the
department that is delegated responsibility in the enforcement of the
Insurance Code, except as a policyholder or claimant under an insurance
policy or by reason of rights vested in commissions, fees, or retirement
benefits related to services performed prior to affiliation with the
department; or

(b) Be engaged in any other business or occupation interfering with
or inconsistent with the duties of the office or employment.

(2) No person shall directly or indirectly give or pay, or offer to
give or pay, to the Director of the Department of Consumer and Business
Services, or any officer or employee of the department, and the director
or such officer or employee shall not directly or indirectly solicit,
receive or accept any fee, compensation, loan, gift or other thing of
value in addition to the compensation and expense allowance provided by
law, for:

(a) Any service rendered or to be rendered as such director,
officer or employee, or in connection therewith;

(b) Services rendered or to be rendered in relation to legislation;

(c) Extra services rendered or to be rendered; or

(d) Any cause whatsoever related to any person regulated by the
department or office of the department that is delegated responsibility
in the enforcement of the Insurance Code.

(3) This section does not permit any conduct, affiliation or
interest that is otherwise prohibited by public policy. [1967 c.359 §50;
1987 c.373 §78] (1) For the purpose of an investigation or
proceeding under the Insurance Code, the Director of the Department of
Consumer and Business Services may administer oaths and affirmations,
subpoena witnesses, compel their attendance, take evidence and require
the production of books, papers, correspondence, memoranda, agreements or
other documents or records which the director considers relevant or
material to the inquiry. Each witness who appears before the director
under a subpoena shall receive the fees and mileage provided for
witnesses in ORS 44.415 (2).

(2) If a person fails to comply with a subpoena so issued or a
party or witness refuses to testify on any matters, the judge of the
circuit court for any county, on the application of the director, shall
compel obedience by proceedings for contempt as in the case of
disobedience of the requirements of a subpoena issued from such court or
a refusal to testify therein. [1967 c.359 §51; 1989 c.980 §22] (1) The Director of the
Department of Consumer and Business Services shall enforce the provisions
of the Insurance Code for the public good, and shall execute the duties
imposed by the code.

(2) The director has the powers and authority expressly conferred
by or reasonably implied from the provisions of the Insurance Code.

(3) The director may conduct such examinations and investigations
of insurance matters, in addition to examinations and investigations
expressly authorized, as the director considers proper to determine
whether any person has violated any provision of the Insurance Code or to
secure information useful in the lawful administration of any such
provision. The cost of such additional examinations and investigations
shall be borne by the state.

(4) The director has such additional powers and duties as may be
provided by other laws of this state. [1967 c.359 §52] (1) The Director of the Department of
Consumer and Business Services shall hold a hearing upon written demand
for a hearing by a person aggrieved by any act, threatened act or failure
of the director to act. The demand must state the grounds therefor.

(2) To the extent applicable and not inconsistent with subsection
(1) of this section, the provisions of ORS chapter 183 shall govern the
hearing procedure and any judicial review thereof. [1967 c.359 §53; 1991
c.401 §1] In accordance with the applicable provisions of ORS
chapter 183, the Director of the Department of Consumer and Business
Services may make reasonable rules necessary for or as an aid to the
effectuation of the Insurance Code. No such rule shall extend, modify or
conflict with the Insurance Code or the reasonable implications thereof.
[1967 c.359 §54] (1) Orders of the Director of the Department of
Consumer and Business Services shall be effective only when in writing
and signed by the director or by the authority of the director. Orders
shall be filed in the Department of Consumer and Business Services.

(2) Every such order shall state:

(a) Its effective date;

(b) Its intent or purpose;

(c) The grounds on which based; and

(d) The provisions of the Insurance Code pursuant to which action
is taken or proposed to be taken.

(3) Except as may be provided in the Insurance Code respecting
particular procedures, an order or notice may be given by delivery to the
person to be ordered or notified or by mailing it by certified or
registered mail, return receipt requested, postage prepaid, addressed to
the person at the residence or principal place of business of the person
as last of record in the department. Notice so mailed shall be deemed to
have been given when deposited in a letter depository of a United States
post office. [1967 c.359 §55] (1) Whenever the Director of the
Department of Consumer and Business Services has reason to believe that
any person has been engaged or is engaging or is about to engage in any
violation of the Insurance Code, the director may issue an order,
directed to such person, to discontinue or desist from such violation or
threatened violation. The copy of the order forwarded to the person
involved shall set forth a statement of the specific charges and the fact
that the person may request a hearing within 20 days of the date of
mailing. Where a hearing is requested, the director shall set a date for
the hearing to be held within 30 days after receipt of the request, and
shall give the person involved written notice of the hearing date at
least seven days prior thereto. The person requesting the hearing must
establish to the satisfaction of the director that such order should not
be complied with. The order shall become final 20 days after the date of
mailing unless within such 20-day period the person to whom it is
directed files with the director a written request for a hearing. To the
extent applicable and not inconsistent with the foregoing, the provisions
of ORS chapter 183 shall govern the hearing procedure and any judicial
review thereof. Where the hearing has been requested, the director’s
order shall become final at such time as the right to further hearing or
review has expired or been exhausted.

(2) No order of the director under this section or order of a court
to enforce the same shall in any way relieve or absolve any person
affected by such order from any liability under any other laws of this
state.

(3) The powers vested in the director pursuant to this section are
supplementary and not in lieu of any other powers to suspend or revoke
certificates of authority or licenses or to enforce any penalties, fines
or forfeitures, authorized by law with respect to any violation for which
an order of discontinuance has been issued. [Formerly 736.835] (1) The Director of the Department
of Consumer and Business Services may institute such actions or other
lawful proceedings as the director may deem necessary for the enforcement
of any provision of the Insurance Code or any order or action made or
taken by the director in pursuance of law.

(2) If the director has reason to believe that any person has
violated any provision of the Insurance Code or other law applicable to
insurance operations, for which criminal prosecution is provided and in
the opinion of the director would be in order, the director shall give
the information relative thereto to the Attorney General or district
attorney having jurisdiction of any such violation. The Attorney General
or district attorney promptly shall institute such action or proceedings
against such person as the information requires or justifies. [1967 c.359
§57](1) The Attorney
General upon request of the Director of the Department of Consumer and
Business Services may proceed in the courts of this state or any
reciprocal state to enforce an order or decision in any court proceeding
or in any administrative proceeding before the director.

(2) As used in this section:

(a) “Reciprocal state” means any state the laws of which contain
procedures substantially similar to those specified in this section for
the enforcement of decrees or orders in equity issued by courts located
in other states, against any insurer incorporated or authorized to do
business in such state.

(b) “Foreign decree” means any decree or order in equity of a court
located in a reciprocal state, including a court of the United States
located therein, against any insurer incorporated or authorized to do
business in this state.

(c) “Qualified party” means a state regulatory agency acting in its
capacity to enforce the insurance laws of its state.

(3) The Director of the Department of Consumer and Business
Services of this state shall determine which states qualify as reciprocal
states and shall maintain at all times an up-to-date list of such states.

(4) A copy of any foreign decree authenticated in accordance with
the statutes of this state may be filed in the office of the clerk of any
circuit court of this state. The clerk, upon verifying with the director
that the decree or order qualifies as a foreign decree shall treat the
foreign decree in the same manner as a judgment of a circuit court of
this state. A foreign decree so filed has the same effect and shall be
deemed as a judgment of a circuit court of this state, and is subject to
the same procedures, defenses and proceedings for reopening, vacating, or
staying as a judgment of a circuit court of this state and may be
enforced or satisfied in like manner.

(5)(a) At the time of the filing of the foreign decree, the
Attorney General shall make and file with the clerk of the court an
affidavit setting forth the name and last-known post-office address of
the defendant.

(b) Promptly upon the filing of the foreign decree and the
affidavit, the clerk shall mail notice of the filing of the foreign
decree to the defendant at the address given and to the director of this
state and shall make a note of the mailing in the register of the court.
In addition, the Attorney General may mail a notice of the filing of the
foreign decree to the defendant and to the director of this state and may
file proof of mailing with the clerk. Lack of mailing notice of filing by
the clerk shall not affect the enforcement proceedings if proof of
mailing by the Attorney General has been filed.

(c) No execution or other process for enforcement of a foreign
decree filed under subsection (4) of this section shall issue until 30
days after the date the decree is filed.

(6)(a) If the defendant shows the circuit court that an appeal from
the foreign decree is pending or will be taken, or that a stay of
execution has been granted, the court shall stay enforcement of the
foreign decree until the appeal is concluded, the time for appeal
expires, or the stay of execution expires or is vacated, upon proof that
the defendant has furnished the security for the satisfaction of the
decree required by the state in which it was rendered.

(b) If the defendant shows the circuit court any ground upon which
enforcement of a judgment of any circuit court of this state would be
stayed, the court shall stay enforcement of the foreign decree for an
appropriate period, upon requiring the same security for satisfaction of
the decree which is required in this state for a judgment. [1969 c.336
§5; 2003 c.576 §219] No person shall file or cause
to be filed with the Director of the Department of Consumer and Business
Services any article, certificate, report, statement, application or any
other information required or permitted to be so filed under the
Insurance Code and known to such person to be false or misleading in any
material respect. [Formerly 736.650](1) A complaint made to the Director of the
Department of Consumer and Business Services against any person regulated
by the Insurance Code, and the record thereof, shall be confidential and
may not be disclosed except as provided in ORS 705.137. No such
complaint, or the record thereof, shall be used in any action, suit or
proceeding except to the extent considered necessary by the director in
the prosecution of apparent violations of the Insurance Code or other law.

(2) Data gathered pursuant to an investigation by the director of a
complaint shall be confidential, may not be disclosed except as provided
in ORS 705.137 and may not be used in any action, suit or proceeding
except to the extent considered necessary by the director in the
investigation or prosecution of apparent violations of the Insurance Code
or other law.

(3) Notwithstanding subsections (1) and (2) of this section, the
director shall establish by rule a method for publishing an annual
statistical report containing the insurer’s name and the number,
percentage, type and disposition of complaints received by the Department
of Consumer and Business Services against each insurer transacting
insurance within this state. [1967 c.359 §59; 1971 c.231 §11; 1987 c.481
§1; 1987 c.774 §149; 2001 c.377 §4]
(1) Photographs or microphotographs in the form of film or prints of
documents and records made by the Director of the Department of Consumer
and Business Services for the files of the director shall have the same
force and effect as the originals thereof, and duly certified or
authenticated reproductions of such photographs or microphotographs shall
be as admissible in evidence as are the originals.

(2) Upon request of any person and payment of the applicable fee,
the director shall furnish a certified copy of any record in the office
of the director which is then subject to public inspection.

(3) Copies of original records or documents in the office of the
director certified by the director shall have the same force and effect
and be received in evidence in all courts equally and in like manner as
if they were originals. [1967 c.359 §60]
(1) The Director of the Department of Consumer and Business Services
shall prepare annually, as soon after March 1 as is consistent with full
and accurate preparation, a report of the official transactions of the
director under the Insurance Code. The report shall include:

(a) In condensed form statements made to the director by every
insurer authorized to do business in this state.

(b) A statement of all insurers authorized to do business in this
state as of the date of the report.

(c) A list of insurers whose business in this state was terminated
and the reason for the termination. If the termination was a result of
liquidation or delinquency proceedings brought against the insurer in
this or any other state, the report shall include the amount of the
insurer’s assets and liabilities so far as those amounts are known to the
director.

(d) A statement of the operating expenses of the Department of
Consumer and Business Services under the Insurance Code, including
salaries, transportation, communication, printing, office supplies, fixed
charges and miscellaneous expenses.

(e) A detailed statement of the moneys, fees and taxes received by
the department under the Insurance Code and from what source.

(f) Any other pertinent information and matters as the director
considers to be in the public interest.

(2) The director shall give notice of the publication of the report
to:

(a) The office of the Speaker of the House of Representatives;

(b) The office of the President of the Senate; and

(c) The chair or cochairs of the Joint Legislative Committee on
Ways and Means if the Legislative Assembly is in session or of the
Emergency Board if during the interim. [Formerly 736.520; 1987 c.373 §79;
2005 c.185 §8] The Director
of the Department of Consumer and Business Services shall continuously
review the Insurance Code and may, from time to time, make
recommendations for changes therein. [1967 c.359 §62] The Director of the Department of
Consumer and Business Services shall publish:

(1) Pamphlet or booklet copies of the insurance laws of this state;

(2) The director’s annual report;

(3) Such copies of results of investigations or examinations of
insurers for public distribution as the director considers to be in the
public interest;

(4) Such compilations as the director considers advisable from time
to time of the general orders of the director then in force; and

(5) Such other material as the director may compile and consider
relevant and suitable for the effective administration of the Insurance
Code. [1967 c.359 §63] The Director of the
Department of Consumer and Business Services may sell, at a price
reasonably calculated to cover the costs of preparation, any of the
copies, compilations or materials described in ORS 731.280. [1971 c.231
§2; 1982 s.s.1 c.17 §3] Copies of the insurance
laws in pamphlet form may be sold by the Director of the Department of
Consumer and Business Services at a reasonable price. The director may
distribute free of charge one copy of such pamphlet to each of the
following:

(1) Authorized insurers and licensed rating organizations;

(2) Insurance departments of other states; and

(3) Public agencies. However, the director may distribute such
quantities to public agencies as the director determines. [1967 c.359
§64; 2003 c.364 §65]The Department of Consumer and Business Services
shall record each complaint the department receives, including the
subsequent disposition of the complaint. The record of a complaint shall
be maintained for a period of not less than seven years. The records of
complaints shall be indexed whenever applicable both by the name of the
insurer and by the name of the insurance producer involved. The Director
of the Department of Consumer and Business Services shall consider such
complaints before issuing or continuing any certificate of authority or
license of an insurer or insurance producer named in such complaints.
[Formerly 736.580; 2003 c.364 §66; 2003 c.802 §168](1) Except as provided in subsections (2) and (3) of this
section, all fees, charges and other moneys received by the Department of
Consumer and Business Services or the Director of the Department of
Consumer and Business Services under the Insurance Code shall be
deposited in the fund created by ORS 705.145 and are continuously
appropriated to the department for the payment of the expenses of the
department in carrying out the Insurance Code.

(2) All taxes, fines and penalties paid pursuant to the Insurance
Code shall be paid to the director and after deductions of refunds shall
be paid by the director to the State Treasurer, at the end of every
calendar month or more often in the director’s discretion, for deposit in
the General Fund to become available for general governmental expenses.

(3) All premium taxes received by the director pursuant to ORS
731.820 shall be paid by the director to the State Treasurer for deposit
in the State Fire Marshal Fund. [Formerly 736.525; 1981 c.652 §3; 1982
s.s.1 c.17 §1; 1987 c.373 §80; 1991 c.67 §193] The Director of the Department of
Consumer and Business Services may address any proper inquiries to any
insurer, licensee or its officers in relation to its activities or
condition or any other matter connected with its transactions. Any such
person so addressed shall promptly and truthfully reply to such inquiries
using the form of communication requested by the director. The reply
shall be verified by an officer of such person, if the director so
requires. A reply is subject to the provisions of ORS 731.260. [Formerly
736.542; 1975 c.298 §1] (1) The Director of
the Department of Consumer and Business Services shall examine every
authorized insurer, including an audit of the financial affairs of such
insurer, as often as the director determines an examination to be
necessary but at least once each five years. An examination shall be
conducted for the purpose of determining the financial condition of the
insurer, its ability to fulfill its obligations and its manner of
fulfillment, the nature of its operations and its compliance with the
Insurance Code. The director may also make such an examination of any
surplus lines insurance producer or any person holding the capital stock
of an authorized insurer or surplus lines insurance producer for the
purpose of controlling the management thereof as a voting trustee or
otherwise, or both.

(2) Instead of conducting an examination of an authorized foreign
or alien insurer, the director may accept an examination report on the
insurer that is prepared by the insurance department for the state of
domicile or state of entry of the insurer if:

(a) At the time of the examination the insurance department of the
state was accredited under the Financial Regulation Standards and
Accreditation Program or successor program of the National Association of
Insurance Commissioners; or

(b) The examination was performed under the supervision of an
accredited insurance department or with the participation of one or more
examiners who are employed by such an accredited insurance department and
who, after a review of the examination work papers and report, state
under oath that the examination was performed in a manner consistent with
the standards and procedures required by their insurance department.

(3) Examination of an alien insurer shall be limited to its
insurance transactions, assets, trust deposits and affairs in the United
States except as otherwise required by the director. [Formerly 736.545;
1979 c.870 §2; 1981 c.874 §18; 1990 c.2 §46; 1993 c.447 §1; 2003 c.364
§67](1)
When the Director of the Department of Consumer and Business Services
determines that an examination should be conducted, the director shall
appoint one or more examiners to perform the examination and instruct
them as to the scope of the examination. In conducting the examination,
each examiner shall consider the guidelines and procedures in the
examiner handbook, or its successor publication, adopted by the National
Association of Insurance Commissioners. The director may prescribe the
examiner handbook or its successor publication and employ other
guidelines and procedures that the director determines to be appropriate.

(2) When making an examination, the director may retain appraisers,
independent actuaries, independent certified public accountants or other
professionals and specialists as needed. The cost of retaining such
professionals and specialists shall be borne by the person that is the
subject of the examination.

(3) At any time during the course of an examination, the director
may take other action pursuant to the Insurance Code.

(4) Facts determined and conclusions made pursuant to an
examination shall be presumptive evidence of the relevant facts and
conclusions in any judicial or administrative action. [1993 c.447 §2] The
Director of the Department of Consumer and Business Services, whenever
the director deems it advisable in the interest of policyholders or for
the public good, shall investigate into the affairs of any person engaged
in, proposing to engage in or claiming or advertising to engage in:

(1) Transacting insurance in this state;

(2) Organizing or receiving subscriptions for or disposing of the
stock of or in any manner taking part in the formation or business of an
insurer; or

(3) Holding capital stock of one or more insurers for the purpose
of controlling the management thereof as voting trustee or otherwise.
[1967 c.359 §69](1) Upon an examination or investigation the
Director of the Department of Consumer and Business Services may examine
under oath all persons who may have material information regarding the
property or business of the person being examined or investigated.

(2) Every person being examined or investigated shall produce all
books, records, accounts, papers, documents and computer and other
recordings in its possession or control relating to the matter under
examination or investigation, including, in the case of an examination,
the property, assets, business and affairs of the person.

(3) With regard to an examination, the officers, directors and
agents of the person being examined shall provide timely, convenient and
free access at all reasonable hours at the offices of the person being
examined to all books, records, accounts, papers, documents and computer
and other recordings. The officers, directors, employees and agents of
the person must facilitate the examination. [Formerly 736.555; 1993 c.447
§3](1) Not later than the 60th day after completion of an
examination, the examiner in charge of the examination shall submit to
the Director of the Department of Consumer and Business Services a full
and true report of the examination, verified by the oath of the examiner.
The report shall comprise only facts appearing upon the books, papers,
records, accounts, documents or computer and other recordings of the
person, its agents or other persons being examined or facts ascertained
from testimony of individuals concerning the affairs of such person,
together with such conclusions and recommendations as reasonably may be
warranted from such facts.

(2) The director shall make a copy of the report submitted under
subsection (1) of this section available to the person who is the subject
of the examination and shall give the person an opportunity to review and
comment on the report. The director may request additional information or
meet with the person for the purpose of resolving questions or obtaining
additional information, and may direct the examiner to consider the
additional information for inclusion in the report.

(3) Before the director files the examination report as a final
examination report or makes the report or any matters relating thereto
public, the person being examined shall have an opportunity for a
hearing. A copy of the report must be mailed by certified mail to the
person being examined. The person may request a hearing not later than
the 30th day after the date on which the report was mailed. This
subsection does not limit the authority of the director to disclose a
preliminary or final examination report as otherwise provided in this
section.

(4) The director shall consider comments presented at a hearing
requested under subsection (3) of this section and may direct the
examiner to consider the comments or direct that the comments be included
in documentation relating to the report, although not as part of the
report itself. The director may file the report as a final examination
report at any time after consideration of the comments or at any time
after the period for requesting a hearing has passed if a hearing is not
requested.

(5) A report filed as a final examination report is subject to
public inspection. The director, after filing any report, if the director
considers it for the interest of the public to do so, may publish any
report or the result of any examination as contained therein in one or
more newspapers of the state without expense to the person examined.

(6) All work papers, recorded information, documents and copies
thereof that are produced or obtained by or disclosed to the director or
any other person in the course of an examination or in the course of
analysis by the director of the financial condition or market conduct of
an insurer are confidential and are exempt from public inspection as
provided in ORS 705.137. If the director, in the director’s sole
discretion, determines that disclosure is necessary to protect the public
interest, the director may make available work papers, recorded
information, documents and copies thereof produced by, obtained by or
disclosed to the director or any other person in the course of the
examination.

(7) The director may disclose the content of an examination report
that has not yet otherwise been disclosed or may disclose any of the
materials described in subsection (6) of this section as provided in ORS
705.137. [Formerly 736.560; 1993 c.447 §4; 1999 c.364 §1; 2001 c.377 §5] (1) No cause of
action may arise and no liability may be imposed against the Director of
the Department of Consumer and Business Services, an authorized
representative of the director or any examiner appointed by the director
for any statements made or conduct performed in good faith pursuant to an
examination or investigation.

(2) No cause of action may arise and no liability may be imposed
against any person for communicating or delivering information or data to
the director or an authorized representative of the director or examiner
pursuant to an examination or investigation if the communication or
delivery was performed in good faith and without fraudulent intent or an
intent to deceive.

(3) This section does not abrogate or modify in any way any common
law or statutory privilege or immunity otherwise enjoyed by any person to
which subsection (1) or (2) of this section applies.

(4) The court may award reasonable attorney fees to the prevailing
party in a cause of action arising out of activities of the director or
an examiner in carrying out an examination or investigation. [1993 c.447
§5; 1995 c.618 §127] Any person examined
under ORS 731.300 shall pay to the Director of the Department of Consumer
and Business Services the just and legitimate costs of the examination as
determined by the director, including actual necessary transportation and
traveling expenses. [Formerly 736.565; 1969 c.336 §6](1) Any act set forth in ORS 731.146 by an
unauthorized insurer is equivalent to and shall constitute an irrevocable
appointment by such insurer, binding upon the insurer, the executor of
the insurer or administrator, or successor in interest if a corporation,
of the Secretary of State or the successor in office, to be the true and
lawful attorney of such insurer. All lawful process in any action in any
court by the Director of the Department of Consumer and Business Services
or by the state and any notice, order, pleading or process in any
proceeding before the director which arises out of transacting insurance
in this state by such insurer may be served upon the Secretary of State
or the successor in office. Transacting insurance in this state by an
unauthorized insurer shall be signification of its agreement that lawful
process in a court action and any notice, order, pleading, or process in
an administrative proceeding before the director so served shall be of
the same legal force and validity as personal service of process in this
state upon such insurer.

(2) Service of process in such action shall be made by delivering
to and leaving with the Secretary of State, or one of the assistants, two
copies of the document served and by payment to the Secretary of State of
the fee prescribed by law. Service upon the Secretary of State shall be
service upon the principal.

(3) The Secretary of State shall forward by certified mail one of
the copies of such process or such notice, order, pleading, or process in
proceedings before the director to the defendant in such court proceeding
or to whom the notice, order, pleading, or process in such administrative
proceeding is addressed or directed at its last-known principal place of
business and shall keep a record of all process so served on the
defendant. Such record shall show the day and hour of service. Service is
sufficient, provided:

(a) Notice of service and a copy of the court process or the
notice, order, pleading, or process in the administrative proceeding are
sent within 10 days thereafter by certified mail by the plaintiff or the
plaintiff’s attorney in the court proceeding or by the director in the
administrative proceeding to the defendant at the last-known principal
place of business of the defendant.

(b) The defendant’s receipt or receipts issued by the post office
with which the letter is certified or registered, showing the name of the
sender of the letter and the name and address of the person or insurer to
whom the letter is addressed, and an affidavit of the plaintiff or the
plaintiff’s attorney in court proceeding or of the director in
administrative proceeding, showing compliance therewith are filed with
the clerk of the court in which such action is pending or with the
director in administrative proceedings, on or before the date the
defendant in the court or administrative proceeding is required to appear
or respond thereto, or within such further time as the court or director
may allow.

(4) No plaintiff shall be entitled to a judgment or a determination
by default in any court or administrative proceeding in which court
process or notice, order, pleading, or process in proceedings before the
director is served under this section until the expiration of 45 days
after the date of filing of the affidavit of compliance.

(5) Nothing in this section shall limit or affect the right to
serve any process, notice, order, or demand upon any person or insurer in
any other manner now or hereafter permitted by law. [1969 c.336 §3](1) Before an unauthorized insurer files or causes to be
filed any pleading in any court action or any notice, order, pleading, or
process in an administrative proceeding before the Director of the
Department of Consumer and Business Services instituted against such
person or insurer, by services made as provided in ORS 731.324, such
insurer shall deposit with the clerk of the court in which such action is
pending, or with the director in administrative proceedings before the
director, cash or securities. The insurer may also file with such clerk
or director a bond with good and sufficient sureties, to be approved by
the clerk or director, or an irrevocable letter of credit issued by an
insured institution, as defined in ORS 706.008, in an amount to be fixed
by the court or director sufficient to secure the payment of any final
judgment which may be rendered in such action or administrative
proceeding.

(2) The director, in any administrative proceeding in which service
is made as provided in ORS 731.324, may order such postponement as may be
necessary to afford the defendant reasonable opportunity to comply with
the provisions of subsection (1) of this section and to defend such
action.

(3) Nothing in subsection (1) of this section shall be construed to
prevent an unauthorized insurer from filing a motion to quash a writ or
to set aside service thereof made in the manner provided in ORS 731.324.
[1969 c.336 §4; 1991 c.331 §126; 1997 c.631 §545]AUTHORIZATION OF INSURERS AND GENERAL REQUIREMENTS No person shall act as
an insurer and no insurer shall directly or indirectly transact insurance
in this state except as authorized by a subsisting certificate of
authority issued to the insurer by the Director of the Department of
Consumer and Business Services. [1967 c.359 §73] When the
Director of the Department of Consumer and Business Services believes,
from evidence satisfactory to the director, that any insurer is violating
or about to violate the provisions of ORS 731.354, the director may cause
a complaint to be filed in the Circuit Court of Marion County to enjoin
and restrain such insurer from continuing such violation. The court shall
have jurisdiction of the proceeding and shall have the power to make and
enter an order or judgment awarding such preliminary or final injunctive
relief as in its judgment is proper. [1969 c.336 §2] Upon
application a domestic insurer shall be granted a certificate of
authority to transact any class of insurance permitted by the Insurance
Code and provided for in its articles of incorporation upon its
compliance with all the laws of this state and the rules of the
Department of Consumer and Business Services relating to such insurers.
[Formerly 736.085] (1) A
foreign or alien insurer may be authorized to transact insurance in this
state when it has complied with the following requirements:

(a) It shall file with the Director of the Department of Consumer
and Business Services a certified copy of its charter, articles of
incorporation or deed of settlement and a statement of its financial
condition and business in all states in such form and detail as the
director may require, signed and sworn to by at least two of its
executive officers or the United States manager.

(b) It shall satisfy the director that it is fully and legally
organized under the laws of its state or government to do the business it
proposes to transact.

(c) It shall satisfy the director that it is possessed of and will
maintain at all times its required capitalization.

(d) It shall make such deposits with the Department of Consumer and
Business Services as are required by the provisions of the Insurance Code.

(2) Upon compliance with the requirements of this section and all
other requirements imposed on such insurer by the Insurance Code, the
director shall issue to it a certificate of authority. [Formerly 736.205;
1999 c.196 §1] (1)
An authorized foreign insurer may become a domestic insurer:

(a) By complying with all of the requirements of law relating to
the organization and authorization of a domestic insurer of the same type;

(b) By filing articles of incorporation that are amended to comply
with all of the requirements of law relating to the organization and
authorization of a domestic insurer of the same type; and

(c) By designating its principal place of business at a place in
this state.

(2) If the Director of the Department of Consumer and Business
Services determines that an authorized foreign insurer has complied with
the requirements of subsection (1) of this section, the insurer is
entitled to a certificate of authority to transact insurance in this
state and shall be subject as a domestic insurer to the authority and
jurisdiction of this state. [1995 c.639 §9; 1997 c.771 §24] A
domestic insurer, upon the approval of the Director of the Department of
Consumer and Business Services, may transfer its domicile to any other
state in which it is admitted to transact the business of insurance. Upon
such a transfer the insurer ceases to be a domestic insurer and may be
authorized in this state if qualified as a foreign insurer. The director
shall approve such a proposed transfer unless the director determines
that the transfer is not in the interest of the policyholders of this
state. [1995 c.639 §10](1) The certificate
of authority, insurance producer appointments and licenses, rates and
other items allowed by the Director of the Department of Consumer and
Business Services pursuant to the discretion of the director that are in
existence at the time an authorized insurer transfers its domicile to
this or any other state as provided in ORS 731.363 or 731.367 or by
merger, consolidation or any other lawful method shall continue in full
force and effect upon the transfer if the insurer remains authorized to
transact insurance in this state.

(2) All outstanding policies of a transferring insurer shall remain
in full force and effect and need not be indorsed as to the new name of
the insurer or its new location unless so ordered by the director. A
transferring insurer shall file new policy forms with the director on or
before the effective date of the transfer but may use existing policy
forms with appropriate indorsements if allowed by the director, according
to any conditions established by the director.

(3) Each transferring insurer shall notify the director of the
details of the proposed transfer and shall file promptly any resulting
amendments to corporate or other organizational documents filed or
required to be filed with the director.

(4) This section applies to a domestic insurer that transfers its
domicile to another state and to an authorized foreign insurer that
transfers its domicile either to this state or to another state. [1995
c.639 §11; 1997 c.771 §25; 2003 c.364 §68]An unincorporated authorized foreign insurer transfers its
domicile to this state when the Director of the Department of Consumer
and Business Services determines that it has complied with all of the
requirements of law relating to the organization and authorization of a
domestic insurer of the same type as provided in ORS 731.363. No merger,
consolidation or other method shall be required to effect a transfer of
the domicile of the unincorporated insurer to this state and no vote or
approval of the policyholders, members or subscribers of the
unincorporated insurer shall be required. Any agreement of indemnity,
appointment or governance or any similar agreement shall continue in full
force after the transfer if the unincorporated insurer remains an
authorized insurer. The laws of this state, however, shall govern all
such agreements regardless of any other law to the contrary, and such
agreements shall be considered to be modified to reflect that this state
is the principal place of business and domicile of the unincorporated
insurer. [1995 c.639 §12] (1) A
reciprocal insurer, through its attorney, shall file with the Director of
the Department of Consumer and Business Services a declaration, verified
by the oath of such attorney, setting forth:

(a) The name or title of the reciprocal insurer.

(b) The location of the principal office of the reciprocal insurer.

(c) The class or classes of insurance to be effected or exchanged.

(d) A copy of the form of power of attorney or instrument under
which such insurance is to be effected or exchanged.

(e) A copy of the policy under or by which such contracts of
insurance are effected or exchanged among the subscribers.

(f) That applications have been made for insurance in the amounts
required by subsection (2) of this section, and that such applications
will be concurrently effective when the reciprocal insurer is authorized
to commence business by the director.

(g) If a foreign or alien reciprocal insurer, that there has been
deposited and shall be maintained at all times with the State Treasurer
or other proper official of the state in which the insurer is domiciled
$50,000 in cash or securities, as a general deposit for the benefit of
subscribers wherever located. Where the laws of the home state do not
provide for the acceptance of such a deposit, the deposit may be made
with a bank or trust company in escrow subject to the control of the
insurance commissioner of the home state, and such deposit shall be
released only upon the written order of such insurance commissioner. A
certification from the insurance director or other proper state official
of the state in which the reciprocal insurer is domiciled shall be
attached to the application for the certificate of authority.

(2) The reciprocal insurer must have bona fide applications for
insurance aggregating not less than $3 million upon at least 200 risks,
except in the case of wet marine hull insurance written by a domestic
reciprocal insurer for persons whose earned income, in whole or in part,
is derived from taking and selling food resources living in an ocean, bay
or river, the applications must cover at least 25 hulls and the insurance
must aggregate at least $125,000.

(3) The applicant shall furnish any other relevant information
required by the director, except no reciprocal insurer shall be required
to furnish or file the names or addresses of its policyholders or
subscribers. [Formerly 731.366](1) The application for a certificate of authority shall be
accompanied by a sworn statement of a reciprocal insurer showing the
financial condition of the insurer as of December 31 immediately
preceding. The Director of the Department of Consumer and Business
Services may require a supplemental statement to be furnished as of a
later date.

(2) Concurrently with the filing of the declaration provided for by
the terms of ORS 731.369, the attorney shall file with the director an
instrument in writing executed for the subscribers conditioned that upon
the issuance of certificate of authority, action may be brought in the
county in which the property insured thereunder is situated or where the
injured person resides, and service of process may be had as provided in
ORS 731.434 in all actions in this state arising out of policies issued
by the reciprocal insurer, which service shall be valid and binding upon
all subscribers exchanging at any time reciprocal or interinsurance
contracts through such attorney. Actions may be brought against or
defended in the name of the reciprocal insurer adopted by the
subscribers. [Formerly 749.050] Except
where inconsistent with other provisions of the Insurance Code, a
reciprocal insurer in its own name, as in the case of an individual, may
purchase, receive, own, hold, lease, mortgage, pledge or encumber by deed
of trust or otherwise, manage and sell real estate for the purposes and
objects of the insurer including, but not limited to, investment for the
production of income or for its accommodation in the convenient
transaction of its business. Any contract, including but not limited to a
deed, lease, mortgage, deed of trust, purchase or sale agreement or any
other contract to be executed in the name of the insurer, may be executed
by the attorney in fact designated by the insurer’s subscribers. [1991
c.401 §35]Note: 731.371 was added to and made a part of the Insurance Code by
legislative action but was not added to ORS chapter 731 or any series
therein. See Preface to Oregon Revised Statutes for further explanation. A
certificate of authority is not required of an insurer with respect to
the following:

(1) Transactions pursuant to surplus lines coverages lawfully
written under the Insurance Code.

(2) Reinsurance, when transacted by an insurer duly authorized by
its state of domicile to transact the class of insurance involved. [1967
c.359 §78]No foreign or alien insurer
that has complied with the requirements of the Insurance Code shall be
subject to any other provisions of the laws of this state relating to
admission or licensing of foreign or alien corporations. [Formerly
736.220](1) Subject
to subsection (2) of this section, any foreign or alien insurer, without
being authorized to transact business in this state, may take, acquire,
hold and enforce notes secured by real estate mortgages or trust deeds
and make commitments to purchase such notes. A foreign or alien insurer
may foreclose the mortgages and trust deeds in the courts of this state,
acquire the mortgaged property, hold, own and operate the property for a
period not exceeding five years and dispose of the property. The
activities authorized under this subsection by such a foreign or alien
insurer shall not constitute transacting business in this state for the
purposes of ORS chapter 60.

(2) Before a foreign or alien insurer engages in any of the
activities described in subsection (1) of this section, the foreign or
alien insurer shall first file with the Department of Consumer and
Business Services a statement signed by its president, secretary,
treasurer or general manager that it constitutes the Director of the
Department of Consumer and Business Services its attorney for service of
process, and shall pay an initial filing fee of $200 and an annual
license fee of $200. The statement shall include the address of the
principal place of business of the foreign or alien insurer.

(3) The director, upon receiving service of process as authorized
by subsection (2) of this section, immediately shall forward by
registered mail or by certified mail with return receipt all documents
served upon the director to the principal place of business of the
foreign or alien insurer.

(4) A foreign or alien insurer that indirectly engages in the
activities described in subsection (1) of this section because of its
beneficial interest in a pool of notes secured by real estate mortgages
or trust deeds need not comply with subsection (2) of this section. [1987
c.94 §118; 1991 c.249 §70]Engaging in the
activities authorized by ORS 731.380 by a foreign or alien insurer shall
not subject the foreign or alien insurer to any tax, license fee or
charge, except as provided in ORS 731.380, for the privilege of doing
business within the State of Oregon or to any tax measured by net or
gross income. However, if the foreign or alien insurer acquires any
property given as security for such a mortgage or trust deed, all income
accruing to the foreign or alien insurer solely from the ownership, sale
or other disposal of such property is subject to taxation in the same
manner and on the same basis as income of corporations doing business in
this state. [1987 c.94 §119] To
qualify for and hold authority to transact insurance in this state an
insurer must be an incorporated insurer, or a reciprocal insurer or an
incorporated fraternal benefit society. [1967 c.359 §80](1) The Director of the
Department of Consumer and Business Services shall establish standards by
rule for determining whether the continued operation of an authorized
insurer may be hazardous to the policyholders or to the insurance-buying
public generally, for the purpose of carrying out ORS chapter 734 and
other provisions of the Insurance Code that authorize the director to
take action against such an insurer. If the director makes such a
determination, the director may order the insurer to take one or more of
the following actions:

(a) Reduce the total amount of present and potential liability for
policy benefits by reinsurance.

(b) Reduce, suspend or limit the volume of business being accepted
or renewed.

(c) Reduce general insurance and commission expenses by methods
specified by the director.

(d) Increase the capital and surplus of the insurer.

(e) Suspend or limit the declaration and payment of dividends by
the insurer to its stockholders or to its policyholders.

(f) Limit or withdraw from certain investments or discontinue
certain investment practices to the extent the director determines such
action to be necessary.

(2) The director may exercise authority under subsection (1) of
this section in addition to or instead of any other authority that the
director may exercise under the Insurance Code.

(3) The director may issue an order under this section with or
without a hearing. An insurer subject to an order issued without a
hearing may file a written request for a hearing to review the order.
Such a request shall not stay the effect of the order. The hearing shall
be held within 30 days after the filing of the request. The director
shall complete the review within 30 days after the record for the hearing
is closed, and shall discontinue the action taken under subsection (1) of
this section if the director determines that none of the conditions
giving rise to the action exists. [1993 c.447 §14] The Director of the Department of
Consumer and Business Services shall not grant or continue authority to
transact insurance in this state for any insurer:

(1) The management of which is found by the director to be
untrustworthy or so lacking in insurance experience as to make the
proposed operation or the continued operation hazardous to the
insurance-buying public; or

(2) That the director has good reason to believe is affiliated
directly or indirectly through ownership, control, reinsurance
transactions or other insurance or business relations, with any person
whose business operations are or have been marked to the detriment of
policyholders, stockholders, investors, creditors or the public, by
manipulation or dissipation of assets, manipulation of accounts or
reinsurance, or by similar injurious actions. [1967 c.359 §81; 1993 c.447
§15] No certificate of
authority may be issued to any state, province or foreign government nor
to any instrumentality, political subdivision or agency thereof.
[Formerly 736.080] An insurer
that otherwise qualifies therefor may be authorized to transact any one
class or combination of classes of insurance, except:

(1) A reciprocal insurer shall not transact life insurance or title
insurance.

(2) A title insurer shall be a stock insurer, and shall not
transact any other class of insurance.

(3) A mortgage insurer shall be a stock insurer, and shall not
transact any other class of insurance. [1967 c.359 §83; 1969 c.692 §2]No domestic, foreign or alien insurer shall deliver or issue for delivery
in this state variable life insurance or variable annuity policies unless
the insurer is authorized to transact life insurance in this state and
the Director of the Department of Consumer and Business Services is
satisfied that its condition and method of operation in connection with
the issuance of such policies will not render its operation hazardous to
its policyholders or the public in this state. In making the
determination the director shall consider, among other things:

(1) The history and financial condition of the insurer;

(2) The character, responsibility and fitness of the officers and
directors of the insurer; and

(3) The laws and rules under which the insurer is authorized by its
domicile to issue such policies. [1973 c.435 §4] The Director of the
Department of Consumer and Business Services at any time may amend an
insurer’s certificate of authority to accord with lawful changes in the
insurer’s charter or insuring powers. [1967 c.359 §84] (1) The
Director of the Department of Consumer and Business Services shall issue
to an insurer a certificate of authority if upon completion of the
application for a certificate of authority by the insurer the director
finds, from the application and such other investigation and information
the director may acquire, that the insurer is fully qualified and
entitled thereto under the Insurance Code.

(2) The director shall take all necessary action and shall either
issue or refuse to issue a certificate of authority within a reasonable
time after the completion of the application for such authority.

(3) The certificate of authority, if issued, shall specify the
class or classes of insurance the insurer is authorized to transact in
this state. The director may issue authority limited to particular
subclasses of insurance or types of insurance coverages within the scope
of a class of insurance. [1967 c.359 §85] (1)
An insurer’s subsisting certificate of authority is evidence of its
authority to transact in this state the class or classes of insurance
specified therein, either as direct insurer or as reinsurer or as both.

(2) Although issued to the insurer the certificate of authority is
at all times the property of this state. Upon any suspension, revocation
or termination thereof the insurer promptly shall deliver the certificate
of authority to the Director of the Department of Consumer and Business
Services. [1967 c.359 §86](1) A certificate of authority shall continue in force as long
as the insurer is entitled thereto under the Insurance Code and until
suspended or revoked by the Director of the Department of Consumer and
Business Services, or terminated at the request of the insurer; subject,
however, to continuance of the certificate by the insurer each year by:

(a) Payment prior to April 1 of the continuation fee established by
the director;

(b) Due filing by the insurer of its annual statement for the
calendar year preceding;

(c) Due filing by the insurer of each annual statement supplement;
and

(d) Payment by the insurer of premium taxes with respect to the
preceding calendar year as required by ORS 731.808 to 731.828.

(2) A certificate of authority that is not continued by the insurer
under subsection (1) of this section expires on the 60th day after the
date on which the payment or filing is due.

(3) The director promptly shall notify the insurer of impending
expiration of its certificate of authority.

(4) The director, in the discretion of the director, upon the
insurer’s request made not later than the 90th day after expiration, may
reinstate a certificate of authority which the insurer has permitted to
expire, after the insurer has cured all its failures which resulted in
the expiration and has paid the fee for reinstatement established by the
director. Otherwise the insurer shall be granted another certificate of
authority only after filing application therefor and meeting all other
requirements as for an original certificate of authority in this state.
[1967 c.359 §87; 1989 c.413 §3; 1995 c.639 §1](1) The Director of the Department of Consumer and
Business Services shall refuse to continue, or shall suspend or revoke,
an insurer’s certificate of authority if:

(a) As a foreign insurer, it no longer meets the requirements for
the authority; or as a domestic insurer, it has failed to cure an
impairment of required capitalization within the time allowed therefor by
the director under ORS 732.230;

(b) The insurer knowingly exceeds its charter powers or powers
granted under its certificate of authority; or

(c) As a foreign or alien insurer, its certificate of authority to
transact insurance is suspended or revoked by its domicile.

(2) Except in cases of impairment of required capitalization or
suspension or revocation by another domicile as referred to in subsection
(1)(c) of this section, the director shall refuse, suspend or revoke the
certificate of authority only after a hearing granted to the insurer,
unless the insurer waives such hearing in writing. [1967 c.359 §88](1) The Director of the Department of Consumer and Business
Services may refuse to continue or may suspend or revoke an insurer’s
certificate of authority if the director finds after a hearing that:

(a) The insurer has violated or failed to comply with any lawful
order of the director, or any provision of the Insurance Code other than
those for which suspension or revocation is mandatory.

(b) The insurer is in unsound condition, or in such condition or
using such methods and practices in the conduct of its business, as to
render its further transaction of insurance in this state hazardous or
injurious to its policyholders or to the public.

(c) The insurer has failed, after written request by the director,
to remove or discharge an officer or director who has been convicted in
any jurisdiction of an offense which, if committed in this state,
constitutes a misdemeanor involving moral turpitude or a felony, or is
punishable by death or imprisonment under the laws of the United States,
in any of which cases the record of the conviction shall be conclusive
evidence.

(d) The insurer is affiliated with and under the same general
management, interlocking directorate or ownership as another insurer that
transacts direct insurance in this state without having a certificate of
authority therefor, except as permitted under the Insurance Code.

(e) The insurer or an affiliate or holding company of the insurer
refuses to be examined or any director, officer, employee or
representative of the insurer, affiliate or holding company refuses to
submit to examination relative to the affairs of the insurer, or to
produce its accounts, records, and files for examination when required by
the director or an examiner of the Department of Consumer and Business
Services, or refuse to perform any legal obligation relative to the
examination.

(f) The insurer has failed to pay any final judgment rendered
against it in this state upon any policy, bond, recognizance or
undertaking issued or guaranteed by it, within 30 days after the judgment
became final, or within 30 days after time for taking an appeal has
expired, or within 30 days after dismissal of an appeal before final
determination, whichever date is the later.

(g) The insurer fails to comply with ORS 742.534 (1).

(h) The insurer has failed to comply with ORS 476.270 (1), (2) or
(3) or 654.097 (1).

(2) Without advance notice or a hearing thereon, the director may
suspend immediately the certificate of authority of any insurer as to
which proceedings for receivership, conservatorship, rehabilitation, or
other delinquency proceedings, have been commenced in any state by the
public insurance supervisory official of such state. [1967 c.359 §89;
1971 c.321 §17; 1971 c.523 §10; 1975 c.585 §4; 1981 c.701 §3; 1993 c.447
§7](1) All suspensions or revocations of, or
refusals to continue, an insurer’s certificate of authority shall be by
order of the Director of the Department of Consumer and Business Services
order.

(2) Upon suspending, revoking or refusing to continue the insurer’s
certificate of authority, the director forthwith shall give notice
thereof to the insurer’s insurance producers in this state of record in
the Department of Consumer and Business Services, and likewise shall
suspend or revoke the authority of such insurance producers to represent
the insurer. The director also shall give notice to the insurance
supervisory authority in jurisdictions in which the insurer is
authorized, if a domestic insurer, or in its domicile if a foreign or
alien insurer.

(3) In the discretion of the director, the director may publish
notice of such suspension, revocation or refusal in one or more
newspapers of general circulation in this state. [1967 c.359 §90; 2003
c.364 §69](1) In an order suspending the
certificate of authority of an insurer, the Director of the Department of
Consumer and Business Services may provide that the suspension expires at
the end of a specified period or when the director determines that the
cause or causes of the suspension have terminated. During the suspension
the director may rescind or shorten the suspension by further order.

(2) During the suspension period the insurer shall not solicit or
write any new business in this state, but shall file its annual statement
and pay fees, licenses and taxes as required under the Insurance Code,
and may service its business already in force in this state, as if the
certificate of authority had continued in full force.

(3) Upon expiration of a specific suspension period, if within such
period the certificate of authority has not terminated, the insurer’s
certificate of authority automatically shall reinstate unless the
director finds that the cause or causes of the suspension have not
terminated, or that the insurer is otherwise not in compliance with the
requirements of the Insurance Code, and of which the director shall give
the insurer notice not less than 30 days in advance of the expiration of
the suspension period.

(4) When the director determines that a suspension should expire
because the cause or causes have terminated, the director shall reinstate
the certificate of authority of the insurer unless the certificate of
authority has expired within the suspension period.

(5) Upon reinstatement of the insurer’s certificate of authority,
the authority of its insurance producers in this state to represent the
insurer shall likewise reinstate. The director promptly shall notify the
insurer and its insurance producers in this state of record in the
Department of Consumer and Business Services, of such reinstatement. If
pursuant to ORS 731.422 the director has published notice of suspension,
in like manner the director shall publish notice of the reinstatement.
[1967 c.359 §91; 1989 c.700 §1; 2003 c.364 §70](1) A person who is prohibited by 18 U.S.C. 1033 from
engaging or participating in the business of insurance because of a
conviction of a felony involving dishonesty or a breach of trust or
conviction of a crime under 18 U.S.C. 1033 may apply to the Director of
the Department of Consumer and Business Services for a written consent to
engage or participate in the business of insurance.

(2) The director shall establish by rule a procedure and standards
by which the director may issue a written consent to engage or
participate in the business of insurance to a person convicted of a crime
described in subsection (1) of this section.

(3) The director shall not issue a license under the Insurance Code
to an applicant who has been convicted of a crime referred to in
subsection (1) of this section unless the director also issues a written
consent.

(4) If a person issued a license under the Insurance Code has been
convicted of a crime referred to in subsection (1) of this section or is
subsequently the subject of such a conviction, the director shall revoke,
suspend or refuse to renew the license. The person may apply to the
director for a written consent as provided in subsection (1) of this
section. [2001 c.191 §59]Note: 731.428 was added to and made a part of ORS chapter 731 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation. (1) No insurer shall be formed or
authorized to transact insurance in this state which has or will have, or
which uses or will use as an assumed business name, a name or principal
identifying name factor:

(a) That is the same as or deceptively similar to:

(A) Any other insurer so formed or authorized;

(B) Any name reserved or registered as authorized by this section;

(C) Any name on file with the Secretary of State pursuant to ORS
chapter 60, 65 or 648; or

(D) The name of any insurer that was authorized to transact
insurance in this state within the preceding 10 years if insurance
policies issued by such other insurer still are outstanding in this
state. With the consent of the insurer issuing such policies, the
Director of the Department of Consumer and Business Services may waive
this provision if the director finds that the waiver will not be
detrimental to the public; or

(b) That is deceptive or misleading as to the type of organization
of the insurer or that does not indicate the insurer is transacting
insurance.

(2) Any insurer doing business in this state may file and register
with the director in writing, in its articles of incorporation or
otherwise, an assumed name that it will use in transacting insurance in
this state. Such name may not be a name prohibited by subsection (1) of
this section.

(3) Any person may reserve a name for use as a corporate name or an
assumed business name in transacting insurance in this state by filing in
writing with the director a reservation of such name. Such name may not
be a name prohibited by subsection (1) of this section. Such reservation
shall expire six months after the date of filing unless:

(a) If filed by an insurer, it is using such name as an authorized
insurer; or

(b) If filed by a noninsurer, it has filed with the director a
formal application for a permit to form an insurer in this state. If a
valid reservation is on file, the director may accept the filing of a
same or deceptively similar name by another person which filing shall
become effective, in the order of filing, at the expiration of the
six-month provision unless the original reservation does not expire
pursuant to this subsection.

(4) When an insurer is merged as provided in the Insurance Code,
the surviving insurer may retain the use of the name for a period of five
years after the effective date of merger. If such name is retained, use
of the same or deceptively similar name by other insurers shall be
prohibited as specified under this section during the five-year period.
[1967 c.359 §92; 1987 c.414 §161a; 1987 c.846 §2; 1993 c.447 §104] (1) The provisions, procedures
and requirements of ORS chapter 60 relating to a registered office,
registered agent and to service of process, notice and demand shall
govern all insurers transacting insurance in this state, whether
authorized or unauthorized, except that the Director of the Department of
Consumer and Business Services shall be substituted for the Secretary of
State as the person with whom all filings shall be made and upon whom, in
the circumstances specified by statute, such service may be effected.

(2) This section shall not apply to insurers for whom a certificate
of authority is not required under ORS 731.374. [1967 c.359 §93; 1987
c.846 §3; 1995 c.79 §358](1) A title insurer, in order
to receive and maintain a certificate of authority, shall own and
maintain at all times a title plant covering a period of at least the
immediately preceding 50 years except years before 1960 and consisting of
a general index, adequate maps and currently posted tract or geographic
indexes for all the lands in the county in which title insurance policies
or other title services are to be issued or provided. Either directly or
through its insurance producer, a title insurer also shall own and
maintain for each additional county in which it shall be authorized to
transact a title insurance business a comparable title plant or obtain
from a person having a comparable title plant for such additional county
or counties title insurance showing the status of the title.

(2) The means by which tract or geographic indexes may be currently
posted for purposes of subsection (1) of this section include but are not
limited to maintenance of the information on ledger sheets, separate
cards or sheets of film, whether bound in books or contained in envelopes
or storage files, or maintenance of the information on punch cards,
computer tape, disc or similar machine compatible form. All title
services by a title insurer must be provided in this state. The
information upon which the title services are based must be maintained
and must be capable of reproduction in this state at all times.

(3) Every title insurance transaction by a title insurer or
insurance producer involving the status of title of an Oregon title risk
shall be based on one or more title plants which:

(a) Cover the location of the risk;

(b) Meet the requirements of this section; and

(c) Are owned and maintained by one or more title insurers or
insurance producers as provided in subsections (4), (5) and (6) of this
section.

(4) For any county with a population of 500,000 or more, or any
county with a population of 200,000 or more that is contiguous to a
county with a population of 500,000 or more, ownership and maintenance of
a title plant shall be as provided in this subsection:

(a) The title plant referred to in subsection (1) of this section
may be owned and maintained on an exclusive basis or on a joint basis as
provided in paragraph (b) of this subsection.

(b) A title plant is owned and maintained on a joint basis under
this subsection if two or more persons own and maintain a portion of the
title plant as joint venturers, partners, shareholders or participants in
another form of joint, several or common property ownership recognized
under the laws of this state. If ownership of a title plant is held by
fewer than four title insurers or insurance producers, each share of
ownership shall be at least 25 percent. If ownership of a title plant is
held by four or more insurers or insurance producers, all shares shall be
equal.

(5) A title insurer authorized to transact title insurance in this
state and every insurance producer of such an authorized title insurer
shall own and maintain a title plant.

(6) In any county not described in subsection (4) of this section,
a title insurer or its insurance producers transacting title insurance
business shall solely own a title plant for that county in conformance
with subsections (1) and (2) of this section and shall maintain a title
plant for that county on an exclusive basis or a joint basis in
conformance with subsections (1) and (2) of this section. A title plant
for a county is maintained on a joint basis under this subsection if a
title insurer or insurance producer obtains current posting information
for its tract or geographic indexes from one or more other title insurers
or insurance producers or from a provider that is wholly owned in equal
shares by the title insurers or insurance producers utilizing the
provider’s services. [Formerly 748.084; 1983 c.322 §1; 1999 c.183 §1;
2003 c.364 §71]A title plant that conforms on December 31, 1999, with ORS
731.438 (1) and (2) (1997 Edition) satisfies the requirements of ORS
731.438 (1) as amended by section 1, chapter 183, Oregon Laws 1999, if it
also contains after that date a general index, adequate maps and
currently posted tract or geographic indexes for all lands in the county.
[1999 c.183 §3]An insurer may not transact a life insurance
business upon a mutual assessment plan within this state. [Formerly
739.105; 2005 c.185 §1] An insurer may accept, from a holder
of a life insurance policy, deposits in addition to current premium
payments to provide a fund for payment of future premiums or to make
possible the future acquisition of additional insurance, annuities or
other benefits, whether the interest to be paid on such deposits be fixed
or variable. Such deposits, or any portion thereof, not used for the
purposes described in this section shall be refunded to the policyholder
or, upon the death of the policyholder, to designated beneficiaries.
[1967 c.359 §96]Except as authorized by the federal Gramm-Leach-Bliley Act
(P.L. 106-102), an insurer may not engage in any business except the
making of insurance or a kind of business related to the insurance
business. However, a foreign or alien insurer may engage, outside this
state, in any business permitted by its articles of incorporation and the
laws of the state of its domicile; and a title insurer also may engage in
business as an escrow agent; provided, however, that a title insurer
engaging in business as an escrow agent shall be subject to the
provisions of ORS 696.505 to 696.590 in respect to its escrow activities.
[1967 c.359 §97; 1971 c.398 §5; 1977 c.351 §13; 2001 c.377 §57]No domestic insurer, or any of the representatives
thereof, shall transact insurance in any jurisdiction in which such
insurer is not authorized in accordance with the laws of such
jurisdiction. [Formerly 736.645] (1)
Individuals, partnerships and corporations of this state, hereby
designated as subscribers, may exchange reciprocal or interinsurance
contracts with each other, or with individuals, partnerships and
corporations of other states and countries, providing indemnity among
themselves from any loss which may be insured against under the Insurance
Code, except life insurance and title insurance. Such contracts may be
executed by an attorney, agent or other representative, hereby designated
as attorney, duly authorized and acting for such subscribers. The
attorney may be an individual, firm or corporation organized under the
laws of this state or any other state or territory and having a principal
office at the place designated by the subscribers in the power of
attorney.

(2) Any corporation now or hereafter organized under the laws of
the state, in addition to the rights, powers and franchises specified in
its articles of incorporation, may exchange insurance contracts of the
kind and character described in subsection (1) of this section. The right
to exchange such contracts is declared to be incidental to the purpose
for which such corporations are organized and as much granted as the
rights and powers expressly conferred. [Formerly 749.010] A reciprocal
insurer having a surplus of not less than $500,000 may issue
nonassessable policies. [1967 c.359 §100] (1) The rights
and power of the attorney of a reciprocal insurer shall be as provided in
the power of attorney given it by the subscribers.

(2) The power of attorney must set forth:

(a) The powers of the attorney.

(b) That the attorney may accept service of process on behalf of
the insurer.

(c) The services to be performed by the attorney in general.

(d) The maximum amount to be deducted from advance premiums or
deposits to be paid to the attorney.

(e) Except as to nonassessable policies, a provision for a
contingent several liability of each subscriber in a specified amount not
less than one nor more than 10 times the premium or premium deposit
stated in the policy.

(3) The power of attorney may:

(a) Provide for the right of substitution of the attorney and
revocation of the power of attorney and rights thereunder;

(b) Impose such restrictions upon the exercise of the power as are
agreed upon by the subscribers;

(c) Provide for the exercise of any right reserved to the
subscribers directly or through their advisory committee; and

(d) Contain other lawful provisions.

(4) The terms of any power of attorney or agreement collateral
thereto shall be reasonable and equitable, and no such power or agreement
or any amendment thereof, shall be used or be effective in this state
until approved by the Director of the Department of Consumer and Business
Services. [1967 c.359 §101; 1997 c.249 §217] (1) Any instrument
required to be verified by the oath of the attorney for a reciprocal
insurer may, in case of an incorporated attorney, be verified by the oath
of the president, vice president, secretary or other executive officer of
such corporation.

(2) The certificate of authority of a reciprocal insurer shall be
issued to its attorney in the name of the insurer.

(3) The Director of the Department of Consumer and Business
Services may refuse, suspend or revoke the certificate of authority, in
addition to other grounds therefor, for failure of a reciprocal insurer’s
attorney to comply with any provision of the Insurance Code.

(4) The attorney for an authorized foreign or alien reciprocal
insurer shall not, by virtue of discharge of its duties as such attorney
with respect to the insurer’s transactions in this state, be thereby
deemed to be doing business in this state within the meaning of any laws
of this state applying to foreign persons. [Formerly 749.140](1) Every insurer authorized to issue
workers’ compensation coverage to subject employers as required by ORS
chapter 656 shall maintain a place of business in this state where the
insurer shall:

(a) Process, and keep complete records of, claims for compensation
made to the insurer under ORS chapter 656.

(b) Make available upon request complete records, including all
records submitted electronically, of all guaranty contracts issued as
required by ORS chapter 656.

(c) Keep records identifying the specific persons covered by an
employer electing coverage pursuant to ORS 656.039.

(2) Claims records must be retained in, and may be removed from,
this state or disposed of, in accordance with the rules of the Director
of the Department of Consumer and Business Services. The records must be
available to the Department of Consumer and Business Services for
examination and audit at all reasonable times upon notice by the
department to the insurer.

(3) In lieu of establishing a place of business in this state for
the purpose required by this section, an insurer may keep such records in
this state at places of business operated by service companies, if:

(a) Each service company is incorporated in or authorized to do
business in this state;

(b) The agreement entered into between the insurer and the service
company grants each service company a power of attorney to act for the
insurer in workers’ compensation coverage and claims proceedings under
ORS chapter 656; and

(c) The agreement entered into between the insurer and each service
company is approved by the director.

(4) Notwithstanding subsection (3) of this section, an insurer may
not:

(a) Enter into a service agreement contract with one of its
insureds unless the insured has service contracts with other insurers; or

(b) Have more than eight locations at any one time where claims are
processed or records are maintained. [1975 c.585 §2; 1981 c.874 §8; 1987
c.373 §80a; 1989 c.630 §1; 1991 c.67 §194; 2003 c.170 §10]An insurer shall not issue guaranty contracts pursuant to ORS
chapter 656 unless it furnishes occupational safety and health loss
control consultative services to its insured employers consistent with
the requirements of ORS 654.097. [1975 c.585 §3; 1981 c.874 §9; 1987
c.373 §80b; 1987 c.884 §61](1) Except as provided in subsection (5)
of this section, an insurance company selling commercial liability
insurance and authorized to do business in Oregon may not withdraw from,
fail to renew or cancel any line of insurance or class of business
without supplying appropriate written justification to the Director of
the Department of Consumer and Business Services.

(2) Justification for withdrawal, failure to renew or cancellation
may include, but need not be limited to:

(a) Insufficient premium income;

(b) Loss experience or expectation of future loss in the particular
line of insurance or class of business;

(c) Necessity for uncompetitive or uneconomic rate increases;

(d) Increased hazard in the risks assumed or material change in the
line of insurance or class of business that could not have been
reasonably contemplated by the insurance company at the time the company
began selling the line of insurance or class of business in Oregon; or

(e) Change in the availability or costs of reinsurance.

(3) The director shall issue an order approving or disapproving the
withdrawal from, failure to renew or cancellation of a line of insurance
or class of business.

(4) An order issued under this section shall include a provision
requiring the insurer to notify affected insureds at least 60 days before
the effective date of any withdrawal, failure to renew or cancellation
approved by the director.

(5) This section does not apply to a surplus lines insurer. [1987
c.774 §34](1) No insurer or insurance producer selling a
policy of group life insurance or group health insurance subject to the
exemption in ORS 731.146 (2)(b) is authorized to sell membership in a
group for the purpose of qualifying an applicant who is an individual for
the insurance.

(2) No insurer or insurance producer selling membership in a group
is authorized to offer a policy of group life insurance or group health
insurance subject to the exemption in ORS 731.146 (2)(b) for the purpose
of selling membership in the group. [1989 c.784 §2; 2003 c.364 §72](1) An insurer may limit the drug outlets
or pharmacists from which a person covered under a health insurance
policy issued by the insurer is authorized by the insurer to obtain
services only if the insurer first provides an opportunity to drug
outlets and pharmacists to offer to participate as a provider of services
as provided in this section. An insurer to which this section applies
must provide notice of the opportunity by mailing a notice to the
professional organization representing drug outlets and pharmacists in
the service area of the insurer. The notice must be given at least 10
days before the deadline for receiving offers. The notice shall state the
following:

(a) The date after which offers will not be considered.

(b) The services to be provided under the policy.

(c) That each offer must contain a statement that the drug outlet
or pharmacist is in compliance with the requirements of the State Board
of Pharmacy.

(d) The name and address of the person or office designated for
receipt of the offers.

(2) The services to which this section applies are the services
normally provided by drug outlets and pharmacists, including but not
limited to prescription drugs.

(3) A professional organization that has received notice pursuant
to subsection (1) of this section shall take reasonable steps to relay
the notice to each drug outlet registered with the State Board of
Pharmacy that is in the relevant service area.

(4) The following apply to an offer submitted by a drug outlet or
pharmacist in response to a notice given under subsection (1) of this
section:

(a) The offer must be in writing.

(b) The offer must be submitted to the person or office designated
in the notice.

(c) The drug outlet or pharmacist must agree to provide services
specified by the insurer.

(5) An insurer to which this section applies may select any drug
outlet or pharmacist of its choice on whatever basis the insurer alone
determines to be appropriate. Nothing in this section prohibits an
insurer from contracting with one or more drug outlets or pharmacists
exclusively for services to be provided to its insureds. [1993 c.391 §2](1) The exemption in ORS 731.146 (2)(b)
does not apply to an insurer that offers coverage under a group health
insurance policy or a group life insurance policy in this state unless
the Director of the Department of Consumer and Business Services
determines that the exemption applies.

(2) The insurer shall submit evidence to the director that the
exemption applies. When a master policy is delivered or issued for
delivery outside this state to trustees of a fund for two or more
employers, for one or more labor unions, for one or more employers and
one or more labor unions or for an association, the insurer shall also
submit evidence showing compliance with:

(a) ORS 743.526, for a policy of group health insurance; or

(b) ORS 743.354, for a policy of group life insurance.

(3) The director shall review the evidence submitted and may
request additional evidence as needed.

(4) An insurer shall submit to the director any changes in the
evidence submitted under subsection (2) of this section.

(5) The director may order an insurer to cease offering a policy or
coverage under a policy if the director determines that the exemption
under ORS 731.146 (2)(b) is no longer satisfied.

(6) Coverage under a master group life or health insurance policy
delivered or issued for delivery outside this state that does not qualify
for the exemption in ORS 731.146 (2)(b) may be offered in this state if
the director determines that the state in which the policy was delivered
or issued for delivery has requirements that are substantially similar to
those established under ORS 743.360 or 743.522 (2) and that the policy
satisfies those requirements.

(7) This section does not apply to any master policy issued to a
multistate employer or labor union.

(8) The director may adopt rules to carry out this section. [1989
c.784 §3; 2001 c.943 §1; 2005 c.22 §486] (1) Each insurer shall have
an annual audit conducted by an independent certified public accountant
and shall file an audited financial report annually with the Director of
the Department of Consumer and Business Services. The annual audited
financial report shall disclose:

(a) The financial position of the insurer as of the end of the most
recent calendar year; and

(b) The results of the insurer’s operations, cash flows and changes
in capital and surplus for the year then ended.

(2) The director shall adopt rules with respect to the following
matters as needed for carrying out the requirements of this section:

(a) Required contents and format of the audited financial report.

(b) Requirements for filing the report.

(c) Requirements applicable to qualifications and designation of
certified public accountants for purposes of audits under this section.
The requirements may include limitations on length of service for
certified public accountants and may permit recognition of accountants
comparably qualified under the laws of another country.

(d) Requirements applicable to evaluation of the accounting
procedures of an insurer and its system of internal control by a
certified public accountant.

(e) Standards governing the scope and preparation of the audit.

(f) Requirements and procedures relating to the reporting of the
adverse financial condition of an insurer by a certified public
accountant.

(g) Requirements and procedures relating to the reporting of
significant deficiencies for internal controls of an insurer.

(h) Exemptions.

(i) Any other matter that the director determines to be needed for
preparation of or inclusion in the financial report. [1991 c.401 §15]LIMIT OF RISK; REINSURANCE (1) No insurer shall retain any risk on any
one subject of insurance, whether a domestic risk or not, in an amount
exceeding 10 percent of its surplus to policyholders, or in the case of
title insurance, more than 50 percent of such surplus, except that an
insurance company, including a reciprocal insurance company, comprised
solely of 1,000 or more licensed Oregon physicians organized for the
purpose of insuring for professional liability may consider aggregate
insurance as surplus to policyholders for purposes of this section and
shall not be allowed to retain the risk on any one subject of insurance
in excess of two and one-half percent of such aggregate insurance.

(2) For purposes of this section, aggregate insurance is insurance
which provides coverage in the event that the total fund of an insurance
company, including a reciprocal insurance company, which is available to
pay claims for occurrences of any one year, is exhausted. Aggregate
insurance shall be in an amount equal to at least five times the annual
premium collected by the insurance company.

(3) A “subject of insurance” for the purposes of this section:

(a) As to insurance against fire and hazards other than windstorm,
earthquake and other catastrophic hazards, includes all properties
insured by the same insurer that customarily are considered by
underwriters to be subject to loss or damage from the same fire or the
same occurrence of any other hazard insured against;

(b) As to group life and health insurance, refers individually to
each person benefited under the group policy as a separate subject; and

(c) As to mortgage insurance, includes all obligations secured by
real property in a single tract, or in multiple tracts not separated by
at least one-half mile.

(4) Reinsurance ceded as authorized by ORS 731.508 shall be
deducted in determining risk retained. As to surety risks, deduction also
shall be made of the amount assumed by any established incorporated
cosurety and the value of any security deposited, pledged, or held
subject to the surety’s consent and for the surety’s protection.

(5) As to alien insurers, this section relates only to risks and
surplus to policyholders of the insurer’s United States branch.

(6) As used in this section, “surplus to policyholders,” in
addition to the insurer’s capital and surplus, includes any voluntary
reserves that are not required pursuant to law, includes the contingency
reserve held for mortgage insurance as required by ORS 733.100, and shall
be determined from the last sworn statement of the insurer on file with
the Director of the Department of Consumer and Business Services, or by
the last report of examination of the insurer, whichever is the more
recent at time of assumption of risk.

(7) This section does not apply to wet marine and transportation
insurance or to any policy or type of coverage as to which the maximum
possible loss to the insurer is not readily ascertainable on issuance of
the policy. [1967 c.359 §103; 1969 c.692 §3; 1975 c.796 §12] (1) An insurer may accept reinsurance
only of such risks, and retain risk thereon within such limits, as it is
otherwise authorized to insure.

(2) Except as provided in ORS 731.512, 732.517 to 732.546 or
742.150 to 742.162, an insurer may reinsure risks with an insurer
authorized to transact such insurance in this state, or in any other
solvent insurer approved or accepted by the Director of the Department of
Consumer and Business Services for the purpose of such reinsurance. The
director shall not approve or accept any such reinsurance by a ceding
domestic insurer in an unauthorized insurer which the director finds for
good cause would be contrary to the interests of the policyholders or
stockholders of such domestic insurer.

(3) Credit shall not be allowed, as an asset or as a deduction from
liability, to any ceding insurer for reinsurance unless the reinsurance
contract provides, in substance, that in the event of the insolvency of
the ceding insurer, the reinsurance shall be payable under a contract or
contracts reinsured by the assuming insurer on the basis of reported
claims allowed by the court hearing the liquidation proceeding, without
diminution because of the insolvency of the ceding insurer. Such payments
shall be made directly to the ceding insurer or to its domiciliary
liquidator except:

(a) When the contract or other written agreement specifically
provides another payee of the reinsurance in the event of the insolvency
of the ceding insurer; or

(b) When the assuming insurer, with the consent of the direct
insured or insureds, has assumed the policy obligations of the ceding
insurer as direct obligations of the assuming insurer to the payees under
such policies and in substitution for the obligations of the ceding
insurer to such payees.

(4) For the purposes of subsection (3) of this section, the
reinsurance agreement may provide that the domiciliary liquidator of an
insolvent ceding insurer shall, within a reasonable time after the claim
is filed in the liquidation proceeding, give written notice to the
assuming insurer of the pendency of a claim against the ceding insurer on
the contract reinsured. During the pendency of the claim, an assuming
insurer may investigate the claim and interpose, at its own expense, in
the proceeding in which the claim is to be adjudicated any defenses that
the assuming insurer determines to be available to the ceding insurer or
its liquidator. The expense may be filed as a claim against the insolvent
ceding insurer to the extent of a proportionate share of the benefit that
may accrue to the ceding insurer solely as a result of the defense
undertaken by the assuming insurer. When two or more assuming insurers
are involved in the same claim and a majority in interest elect to
interpose one or more defenses to the claim, the expense shall be
apportioned in accordance with the terms of the reinsurance agreement as
though the expense had been incurred by the ceding insurer.

(5) The director may disallow credit that would otherwise be
allowed if the director determines that allowing credit would be contrary
to accurate financial reporting or proper financial management, or may be
hazardous to policyholders of the insurer or the insurance-buying public
generally. The director may make such a determination only according to
standards established by the director by rule. This subsection applies
only to insurers who transact life insurance or health insurance, or both.

(6) Upon request of the director, a ceding insurer promptly shall
inform the director in writing of the cancellation or any other material
change of any of its reinsurance treaties or arrangements.

(7) This section does not apply to wet marine and transportation
insurance. [1967 c.359 §104; 1993 c.447 §68; 1995 c.30 §9; 1995 c.638 §1;
2001 c.318 §14](1) The purpose of ORS 731.509, 731.510, 731.511, 731.512
and 731.516 is to protect the interests of insureds, claimants, ceding
insurers, assuming insurers and the public generally. The Legislative
Assembly declares that its intent is to ensure adequate regulation of
insurers and reinsurers and adequate protection for those to whom they
owe obligations. In furtherance of that state interest, the Legislative
Assembly mandates that upon the insolvency of an alien insurer or
reinsurer that provides security to fund its United States obligations in
accordance with ORS 731.509, 731.510, 731.511, 731.512 and 731.516, the
assets representing the security shall be maintained in the United States
and claims shall be filed with and valued by the state insurance
commissioner with regulatory oversight, and the assets shall be
distributed in accordance with the insurance laws of the state in which
the trust is domiciled that are applicable to the liquidation of domestic
United States insurers. The Legislative Assembly declares that the laws
contained in ORS 731.509, 731.510, 731.511, 731.512 and 731.516 are
fundamental to the business of insurance in accordance with 15 U.S.C.
1011 and 1012.

(2) The Director of the Department of Consumer and Business
Services shall not allow credit for reinsurance to a domestic ceding
insurer as either an asset or a reduction from liability on account of
reinsurance ceded unless credit is allowed as provided under ORS 731.508
and unless the reinsurer meets the requirements of:

(a) Subsection (3) of this section;

(b) Subsection (4) of this section;

(c) Subsections (5) and (8) of this section;

(d) Subsections (6) and (8) of this section; or

(e) Subsection (7) of this section.

(3) Credit shall be allowed when the reinsurance is ceded to an
authorized assuming insurer that accepts reinsurance of risks, and
retains risk thereon within such limits, as the assuming insurer is
otherwise authorized to insure in this state as provided in ORS 731.508.

(4) Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that is accredited as a reinsurer in this state as
provided in ORS 731.511. The director shall not allow credit to a
domestic ceding insurer if the accreditation of the assuming insurer has
been revoked by the director after notice and opportunity for hearing.

(5) Credit shall be allowed when the reinsurance is ceded to a
foreign assuming insurer or a United States branch of an alien assuming
insurer meeting all of the following requirements:

(a) The foreign assuming insurer must be domiciled in a state
employing standards regarding credit for reinsurance that equal or exceed
the standards applicable under this section. The United States branch of
an alien assuming insurer must be entered through a state employing such
standards.

(b) The foreign assuming insurer or United States branch of an
alien assuming insurer must maintain a combined capital and surplus in an
amount not less than $20,000,000. The requirement of this paragraph does
not apply to reinsurance ceded and assumed pursuant to pooling
arrangements among insurers in the same holding company system.

(c) The foreign assuming insurer or United States branch of an
alien assuming insurer must submit to the authority of the director to
examine its books and records.

(6) Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that maintains a trust fund meeting the requirements of
this subsection and additionally complies with other requirements of this
subsection. The trust fund must be maintained in a qualified United
States financial institution, as defined in ORS 731.510 (1), for the
payment of the valid claims of its United States policyholders and ceding
insurers and their assigns and successors in interest. The assuming
insurer must report annually to the director information substantially
the same as that required to be reported on the annual statement form by
ORS 731.574 by authorized insurers, in order to enable the director to
determine the sufficiency of the trust fund. The following requirements
apply to such a trust fund:

(a) In the case of a single assuming insurer, the trust fund must
consist of funds in trust in an amount not less than the assuming
insurer’s liabilities attributable to reinsurance ceded by United States
ceding insurers. In addition, the assuming insurer must maintain a
trusteed surplus of not less than $20,000,000.

(b) In the case of a group including incorporated and individual
unincorporated underwriters:

(A) For reinsurance ceded under reinsurance agreements with an
inception, amendment or renewal date on or after August 1, 1995, the
trust shall consist of a trusteed account in an amount not less than the
group’s several liabilities attributable to business ceded by United
States domiciled ceding insurers to any member of the group.

(B) For reinsurance ceded under reinsurance agreements with an
inception date on or before July 31, 1995, and not amended or renewed
after that date, notwithstanding the other provisions of ORS 731.509,
731.510, 731.511, 731.512 and 731.516, the trust shall consist of a
trusteed account in an amount not less than the group’s several insurance
and reinsurance liabilities attributable to business written in the
United States.

(C) In addition to the trusts described in subparagraphs (A) and
(B) of this paragraph, the group shall maintain in trust a trusteed
surplus of which $100,000,000 shall be held jointly for the benefit of
the United States domiciled ceding insurers of any member of the group
for all years of account.

(D) The incorporated members of the group shall not be engaged in
any business other than underwriting as a member of the group and shall
be subject to the same level of regulation and solvency control by the
group’s domiciliary regulator as are the unincorporated members.

(E) Within 90 days after the group’s financial statements are due
to be filed with the group’s domiciliary regulator, the group shall
provide to the director an annual certification by the group’s
domiciliary regulator of the solvency of each underwriter member or, if
certification is unavailable, financial statements of each underwriter
member of the group prepared by independent certified public accountants.

(c) In the case of a group of incorporated insurers described in
this paragraph, the trust must be in an amount equal to the group’s
several liabilities attributable to business ceded by United States
ceding insurers to any member of the group pursuant to reinsurance
contracts issued in the name of the group. This paragraph applies to a
group of incorporated insurers under common administration that complies
with the annual reporting requirements contained in this subsection and
that has continuously transacted an insurance business outside the United
States for at least three years immediately prior to making application
for accreditation. Such a group must have an aggregate policyholders’
surplus of $10,000,000,000 and must submit to the authority of this state
to examine its books and records and bear the expense of the examination.
The group shall also maintain a joint trusteed surplus of which
$100,000,000 must be held jointly for the benefit of United States ceding
insurers of any member of the group as additional security for any such
liabilities. Each member of the group shall make available to the
director an annual certification of the member’s solvency by the member’s
domiciliary regulator and its independent certified public accountant.

(d) The form of the trust and any amendment to the trust shall have
been approved by the insurance commissioner of the state in which the
trust is domiciled or by the insurance commissioner of another state who,
pursuant to the terms of the trust instrument, has accepted principal
regulatory oversight of the trust.

(e) The form of the trust and any trust amendments also shall be
filed with the insurance commissioner of every state in which the ceding
insurer beneficiaries of the trust are domiciled. The trust instrument
must provide that contested claims shall be valid and enforceable upon
the final order of any court of competent jurisdiction in the United
States. The trust must vest legal title to its assets in its trustees for
the benefit of the assuming insurer’s United States ceding insurers and
their assigns and successors in interest. The trust and the assuming
insurer are subject to examination as determined by the director. The
trust must remain in effect for as long as the assuming insurer has
outstanding obligations due under the reinsurance agreements subject to
the trust.

(f) Not later than March 1 of each year, the trustees of each trust
shall report to the director in writing the balance of the trust and
listing the trust’s investments at the preceding year end, and shall
certify the date of termination of the trust, if so planned, or certify
that the trust will not expire prior to the following December 31.

(7) Credit shall be allowed when the reinsurance is ceded to an
assuming insurer not meeting the requirements of subsection (3), (4), (5)
or (6) of this section, but only as to the insurance of risks located in
jurisdictions in which the reinsurance is required by applicable law or
regulation of that jurisdiction.

(8) If the assuming insurer is not authorized to transact insurance
in this state or accredited as a reinsurer in this state, the director
shall not allow the credit permitted by subsections (5) and (6) of this
section unless the assuming insurer agrees in the reinsurance agreement
to the provisions stated in this subsection. This subsection is not
intended to conflict with or override the obligation of the parties to a
reinsurance agreement to arbitrate their disputes, if such an obligation
is created in the agreement. The assuming insurer must agree in the
reinsurance agreement:

(a) That in the event of the failure of the assuming insurer to
perform its obligations under the terms of the reinsurance agreement, the
assuming insurer, at the request of the ceding insurer, shall submit to
the jurisdiction of any court of competent jurisdiction in any state of
the United States, will comply with all requirements necessary to give
the court jurisdiction and will abide by the final decision of the court
or of any appellate court in the event of an appeal; and

(b) To designate the director or a designated attorney as its true
and lawful attorney upon whom any lawful process in any action, suit or
proceeding instituted by or on behalf of the ceding company may be served.

(9) If the assuming insurer does not meet the requirements of
subsection (3), (4) or (5) of this section, the credit permitted by
subsection (6) of this section shall not be allowed unless the assuming
insurer agrees in the trust agreements to the following conditions:

(a) Notwithstanding any other provisions in the trust instrument,
if the trust fund is inadequate because it contains an amount less than
the applicable amount required by subsection (6)(a), (b) or (c) of this
section, or if the grantor of the trust has been declared insolvent or
placed into receivership, rehabilitation, liquidation or similar
proceedings under the laws of the grantor’s state or country of domicile,
the trustee shall comply with an order of the insurance commissioner with
regulatory oversight over the trust or with an order of a court of
competent jurisdiction directing the trustee to transfer to the insurance
commissioner with regulatory oversight all the assets of the trust fund.

(b) The assets shall be distributed by and claims shall be filed
with and valued by the insurance commissioner with regulatory oversight
in accordance with the laws of the state in which the trust is domiciled
that are applicable to the liquidation of domestic insurance companies.

(c) If the insurance commissioner with regulatory oversight
determines that the assets of the trust fund or any part thereof are not
necessary to satisfy the claims of the United States ceding insurers of
the grantor of the trust, the assets or part thereof shall be returned by
the insurance commissioner according to the laws of that state and
according to the terms of the trust agreement not inconsistent with the
laws of that state.

(d) The grantor shall waive any right otherwise available to it
under United States law that is inconsistent with this subsection. [1993
c.447 §65; 1995 c.99 §1; 2001 c.318 §15](1) Subject to the provisions of ORS 731.508 relating to
allowance of credit for reinsurance, the Director of the Department of
Consumer and Business Services shall allow a reduction from liability for
the reinsurance ceded by a domestic insurer to a reinsurer not meeting
the requirements of ORS 731.509 in an amount not exceeding the
liabilities carried by the ceding insurer, as provided in this section.
The reduction shall be in the amount of funds held by or on behalf of the
ceding insurer, including funds held in trust for the ceding insurer,
under a reinsurance contract with the reinsurer as security for the
payment of obligations thereunder, if the security:

(a) Is held in the United States subject to withdrawal solely by
and under the exclusive control of the ceding insurer; or

(b) In the case of a trust, is held in a qualified United States
financial institution. For purposes of this paragraph, a qualified United
States financial institution is an institution that:

(A) Is organized, or, in the case of a United States branch or
agency office of a foreign banking organization, is licensed, under the
laws of the United States or any state thereof and has been granted
authority to operate with fiduciary powers; and

(B) Is regulated, supervised and examined by federal or state
authorities having regulatory authority over banks and trust companies.

(2) The security for purposes of subsection (1) of this section may
be in any of the following forms:

(a) Cash.

(b) Securities listed by the Securities Valuation Office of the
National Association of Insurance Commissioners and qualifying as allowed
assets.

(c) Clean, irrevocable, unconditional letters of credit, issued or
confirmed by a qualified United States financial institution, effective
not later than December 31 of the year for which filing is being made,
and in the possession of, or in trust for, the ceding company on or
before the filing date of its annual statement. Letters of credit issued
or confirmed by an institution meeting applicable standards of issuer
acceptability as of the dates of their issuance or confirmation shall
continue to be acceptable as security, notwithstanding the subsequent
failure of the issuing or confirming institution to meet applicable
standards of issuer acceptability, until their expiration, extension,
renewal, modification or amendment, whichever occurs first. For purposes
of this paragraph, a qualified United States financial institution is an
institution that:

(A) Is organized or, in the case of a United States office of a
foreign banking organization, is licensed, under the laws of the United
States or any state thereof;

(B) Is regulated, supervised and examined by United States federal
or state authorities having regulatory authority over banks and trust
companies; and

(C) Has been determined by the director to meet such standards of
financial condition and standing as are considered necessary and
appropriate to regulate the quality of financial institutions whose
letters of credit will be acceptable to the director. For the purpose of
making a determination under this subparagraph, the director shall
consider and may accept determinations made by the Securities Valuation
Office of the National Association of Insurance Commissioners as to
whether a financial institution meets its standards of financial
conditions and standing.

(d) Any other form of security acceptable to the director. [1993
c.447 §66; 2001 c.318 §16](1) For purposes of allowing credit to a ceding
domestic insurer under ORS 731.509 when the reinsurance is ceded to an
assuming insurer that is accredited as a reinsurer in this state, an
insurer may be accredited as a reinsurer in this state if the insurer:

(a) Files and maintains with the Director of the Department of
Consumer and Business Services evidence of its submission to the
jurisdiction of this state;

(b) Submits to the authority of the director to examine its books
and records;

(c) Is authorized or licensed to transact insurance or reinsurance
in at least one state or, in the case of a United States branch of an
alien assuming insurer, is entered through and authorized or licensed to
transact insurance or reinsurance in at least one state;

(d) Files annually with the director a copy of its annual statement
filed with the insurance department of its state of domicile and a copy
of its most recent audited financial statement; and

(e) Satisfies either of the following requirements:

(A) Maintains combined capital and surplus in an amount that is not
less than $20,000,000. An application for accreditation by an insurer who
maintains the amount of combined capital and surplus specified in this
subparagraph is considered to be approved if the application is not
disapproved on or before the 90th day after the application is complete
and is filed with the director.

(B) Maintains combined capital and surplus in an amount less than
$20,000,000. An insurer applying for accreditation who maintains the
amount of combined capital and surplus specified in this subparagraph is
not accredited until the application for accreditation is approved by the
director.

(2) An insurer that is accredited as a reinsurer in this state may
accept reinsurance only of those risks and retain the risk thereon within
such limits as the accredited reinsurer is otherwise authorized to insure
directly in a state in which the accredited reinsurer is authorized or
licensed to transact insurance.

(3) The director may revoke the accreditation of an assuming
insurer if the director determines that the assuming insurer has failed
to continue to meet any of the requirements of subsection (1) of this
section. [1993 c.447 §67] (1) No insurer shall
withdraw from this state until its direct liability to its policyholders
and obligees under all its insurance policies then in force in this state
has been assumed by another authorized insurer under an agreement
approved by the Director of the Department of Consumer and Business
Services. In the case of a life insurer, its liability pursuant to
policies issued in this state in settlement of proceeds under its
policies shall likewise be so assumed.

(2) The director may waive this requirement if the director finds
upon examination that a withdrawing insurer then is fully solvent and
that the protection to be given its policyholders in this state will not
be impaired by the waiver.

(3) The assuming insurer within a reasonable time shall replace the
assumed insurance policies with its own, or by indorsement thereon
acknowledge its liability thereunder.

(4) This section is in addition to the requirements of ORS 732.517
to 732.546 and 742.150 to 742.162. [1967 c.359 §105; 1995 c.30 §10] A mortgage insurer shall not
have outstanding at any time mortgage insurance policies covering amounts
of insured obligations and amounts of insured future lease payments
aggregating more than 25 times the insurer’s “surplus to policyholders”
as defined in ORS 731.504 (6). [1969 c.692 §5; 1977 c.600 §1]CAPITAL AND SURPLUS (1) Except as provided in
subsections (2) to (6) of this section and ORS 731.562 and 731.566, to
qualify for authority to transact insurance in this state an insurer
shall possess and thereafter maintain capital or surplus, or any
combination thereof, of not less than $2.5 million.

(2) An insurer transacting any workers’ compensation insurance
business shall possess and thereafter maintain capital or surplus, or any
combination thereof, of not less than $5 million.

(3) An insurer transacting mortgage insurance shall possess and
thereafter maintain capital or surplus, or any combination thereof, of
not less than $4 million.

(4) A home protection insurer shall possess and thereafter maintain
capital or surplus, or any combination thereof, of not less than 10
percent of the aggregate of premiums charged on its policies currently in
force, but the required amount shall not be less than $250,000 or more
than $1 million.

(5) A domestic insurer applying for its original certificate of
authority in this state shall possess, when first so authorized,
additional capital or surplus, or any combination thereof, of not less
than $500,000. However, the additional amount in the case of a home
protection insurer shall be not less than $10,000.

(6) For the protection of the public, the Director of the
Department of Consumer and Business Services may require an insurer to
possess and maintain capital or surplus, or any combination thereof, in
excess of the amount otherwise required under this section, ORS 731.562
or 731.566, owing to the type, volume and nature of insurance business
transacted by the insurer, if the director determines that the greater
amount is necessary for maintaining the insurer’s solvency according to
standards established by rule. In developing such standards, the director
shall consider model standards adopted by the National Association of
Insurance Commissioners. For the purpose of determining the
reasonableness and adequacy of an insurer’s capital and surplus, the
director must consider at least the following factors, as applicable:

(a) The size of the insurer, as measured by its assets, capital and
surplus, reserves, premium writings, insurance in force and other
appropriate criteria.

(b) The extent to which the business of the insurer is diversified
among the several lines of insurance.

(c) The number and size of risks insured in each line of business.

(d) The extent of the geographical dispersion of the insured risks
of the insurer.

(e) The nature and extent of the reinsurance program of the insurer.

(f) The quality, diversification and liquidity of the investment
portfolio of the insurer.

(g) The recent past and projected future trend in the size of the
investment portfolio of the insurer.

(h) The combined capital and surplus maintained by other comparable
insurers.

(i) The adequacy of the reserves of the insurer.

(j) The quality and liquidity of investments in affiliates. The
director may treat any such investment as a disallowed asset for purposes
of determining the adequacy of combined capital and surplus whenever in
the judgment of the director the investment so warrants.

(k) The quality of the earnings of the insurer and the extent to
which the reported earnings include extraordinary items. [1967 c.359
§106; 1969 c.335 §1; 1969 c.692 §6; 1981 c.247 §5; 1987 c.483 §1; 1993
c.447 §9; 2001 c.318 §1] To qualify
for authority to transact title insurance in this state, an insurer shall
possess and thereafter maintain capital or surplus, or any combination
thereof, of not less than $2.5 million. [Formerly 748.010; 1987 c.483 §2;
2001 c.318 §2] To qualify for
authority to transact insurance in this state, a reciprocal insurer shall
possess and thereafter maintain a surplus of not less than $2.5 million,
and any reciprocal insurer that exchanges policies of insurance covering
workers’ compensation insurance shall possess and thereafter maintain a
surplus of not less than $5 million. [1967 c.359 §109; 1975 c.274 §1;
1977 c.651 §2; 1987 c.483 §3; 1993 c.709 §3; 2001 c.318 §3]Note: Section 5, chapter 318, Oregon Laws 2001, provides:

Sec. 5. (1) To qualify for authority to transact insurance in this
state on and after January 1, 2002, an insurer that is not authorized to
transact insurance in this state on the day before January 1, 2002, must
possess and thereafter maintain the applicable capital and surplus
required by ORS 731.554, 731.562 and 731.566, as amended by sections 1 to
3, chapter 318, Oregon Laws 2001.

(2) To qualify for authority to transact health care services in
this state on and after January 1, 2002, a health care service contractor
that is not authorized to transact health care services in this state on
the day before January 1, 2002, must possess and thereafter maintain the
applicable capital and surplus required by ORS 750.045, as amended by
section 6, chapter 318, Oregon Laws 2001.

(3) An insurer that is authorized to transact insurance in this
state on the day before January 1, 2002, and that possesses on that date
the applicable capital and surplus required under ORS 731.554, 731.562
and 731.566, as amended by sections 1 to 3, chapter 318, Oregon Laws
2001, must thereafter maintain that capital and surplus.

(4) A health care service contractor that is authorized to transact
health care services in this state on the day before January 1, 2002, and
that possesses on that date the applicable capital and surplus required
under ORS 750.045, as amended by section 6, chapter 318, Oregon Laws
2001, must thereafter maintain that capital and surplus.

(5) Notwithstanding the effective date of chapter 318, Oregon Laws
2001 [January 1, 2002], an insurer that is authorized to transact
insurance in this state on the day before January 1, 2002, and that does
not possess on January 1, 2002, the applicable capital and surplus
required under ORS 731.554 (1) and (2), 731.562 and 731.566, as amended
by sections 1 to 3, chapter 318, Oregon Laws 2001, must possess and
maintain at least the amounts of capital and surplus as follows:

(a) For insurers other than insurers transacting workers’
compensation insurance:

(A) $1,300,000, not later than December 31, 2002.

(B) $1,600,000, not later than December 31, 2003.

(C) $1,900,000, not later than December 31, 2004.

(D) $2,200,000, not later than December 31, 2005.

(E) $2,500,000, not later than December 31, 2006.

(b) For insurers transacting workers’ compensation insurance:

(A) $3,400,000, not later than December 31, 2002.

(B) $3,800,000, not later than December 31, 2003.

(C) $4,200,000, not later than December 31, 2004.

(D) $4,600,000, not later than December 31, 2005.

(E) $5,000,000, not later than December 31, 2006.

(6) Notwithstanding the effective date of chapter 318, Oregon Laws
2001, a health care service contractor that is authorized to transact
health care services in this state on the day before January 1, 2002, and
that does not possess on January 1, 2002, the applicable capital and
surplus required under ORS 750.045, as amended by section 6, chapter 318,
Oregon Laws 2001, must possess and maintain at least the amounts of
capital and surplus as follows:

(a) As of each date specified in this paragraph, a health care
service contractor other than one to which ORS 750.045 (3) applies shall
possess and maintain capital or surplus, or any combination thereof, of
not less than the minimum amount specified in connection with the date or
an amount equal to 50 percent of the average claims as defined in ORS
750.005 for the preceding 12-month period, whichever is greater. The
required amount of capital and surplus for each date, however, shall not
be more than the maximum amount specified in connection with that date.
The dates and minimum and maximum required amounts of capital and surplus
are as follows:

(A) As of December 31, 2002, not less than $650,000 and not more
than $1,300,000.

(B) As of December 31, 2003, not less than $800,000 and not more
than $1,600,000.

(C) As of December 31, 2004, not less than $950,000 and not more
than $1,900,000.

(D) As of December 31, 2005, not less than $1,100,000 and not more
than $2,200,000.

(E) As of December 31, 2006, not less than $2,500,000.

(b) As of each date specified in this paragraph, a health care
service contractor to which ORS 750.045 (3) applies shall possess and
maintain capital or surplus, or any combination thereof, of not less than
the minimum amount specified in connection with the date or an amount
equal to 50 percent of the average claims as defined in ORS 750.005 for
the preceding 12-month period, whichever is greater. The required amount
of capital and surplus for each date, however, shall not be more than the
maximum amount specified in connection with that date. The dates and
minimum and maximum required amounts of capital and surplus are as
follows:

(A) As of December 31, 2002, not less than $300,000 and not more
than $600,000.

(B) As of December 31, 2003, not less than $350,000 and not more
than $700,000.

(C) As of December 31, 2004, not less than $400,000 and not more
than $800,000.

(D) As of December 31, 2005, not less than $450,000 and not more
than $900,000.

(E) As of December 31, 2006, not less than $1 million.

(7) An insurer authorized to transact insurance in this state on
the day before January 1, 2002, shall not be granted authority to
transact any other or additional class of insurance until the insurer
complies with the applicable provisions of ORS 731.554, 731.562 or
731.566, as amended by sections 1 to 3, chapter 318, Oregon Laws 2001.

(8) An insurer or health care service contractor authorized to
transact insurance or health care services in this state on the day
before January 1, 2002, that reapplies for a certificate of authority
after having a certificate of authority revoked for any cause shall not
be granted authority to transact any insurance or health care services
until the insurer or health care service contractor complies with the
applicable provisions of ORS 731.554, 731.562, 731.566 or 750.045, as
amended by sections 1 to 3 and 6, chapter 318, Oregon Laws 2001.

(9) If an insurer to which subsection (5) of this section applies
or a health care service contractor to which subsection (6) of this
section applies does not possess and maintain the minimum amount of
capital and surplus required by ORS 731.554 (1) and (2), 731.562, 731.566
and 750.045, as amended by sections 1 to 3 and 6, chapter 318, Oregon
Laws 2001, on or before December 31, 2006, the insurer or health care
service contractor may apply to the Director of the Department of
Consumer and Business Services for an extension of time within which to
attain the amount. The application must state the reasons for the failure
to attain the required minimum amount, the date by which the amount is
expected to be attained and the means and likelihood of attaining the
amount by that date. The director may grant the extension if the director
determines that the extension is reasonable and appropriate in the
circumstances, taking into account factors that include but are not
limited to the following:

(a) Whether the insurer or health care service contractor has made
reasonable progress toward attaining the required minimum amount during
the time periods specified in this section; and

(b) Whether the insurer or health care service contractor is likely
to attain the required minimum amount by the date proposed by the insurer
or health care service contractor. [2001 c.318 §5; 2003 c.33 §3] No
advancement made by the subscribers or the attorney of a reciprocal
insurer shall be withdrawn or refunded except out of the surplus of the
insurer in excess of its required capitalization, and then only upon the
written consent of the Director of the Department of Consumer and
Business Services. [1967 c.359 §110] (1) Except as provided in
subsection (4) of this section, every authorized insurer shall file with
the Director of the Department of Consumer and Business Services, on or
before March 1 of each year, a financial statement for the year ending
December 31 immediately preceding. This statement shall be on a form
prescribed by the director. The statement shall contain such detailed
exhibit of the condition and transactions of the insurer, in such form
and otherwise, as the director prescribes. The director shall consider
and may prescribe the annual statement blank or other form established by
the National Association of Insurance Commissioners, including
instructions prepared by the National Association of Insurance
Commissioners for completing the blank or other form. If the director
prescribes the blank or other form established by the National
Association of Insurance Commissioners, including the instructions, an
insurer submitting the annual statement blank or form established by the
National Association of Insurance Commissioners must complete the blank
or form according to the instructions. The director may require the
filing of information in addition to the information required in the
annual statement. The director may also require additional filings as the
director determines necessary.

(2) The financial statement filed by an insurer under subsection
(1) of this section shall be verified by the oaths of the president and
secretary of the insurer or, in their absence, by two other principal
officers. The statement of an alien company shall embrace only its
condition and transactions in the United States, unless the director
requires otherwise, and shall be verified by the oath of its resident
manager or principal representatives in the United States. Facsimile
signatures are acceptable and shall have the same force as original
signatures.

(3) The director may grant an extension of time for filing the
annual statement.

(4) A home protection insurer may adopt a fiscal year other than
the calendar year for its financial statements filed with the director
under subsection (1) of this section by declaring the fiscal year in its
application for a certificate of authority. An adopted fiscal year may
not be changed without the consent of the insurance supervisory official
of the insurer’s domicile. The financial statement of a home protection
insurer on other than the calendar year basis shall be filed with the
director on or before the first day of the third month which follows the
end of the fiscal year.

(5) An insurer, subject to requirements set forth in rules made by
the director, may publish financial statements, or information based on
financial statements, prepared on a basis that is in accordance with
requirements of a competent authority and differs from the basis of the
statements required to be filed with the director.

(6) It is the intention of the Legislative Assembly that the
director consider and follow the accounting, reporting and other
standards, practices and procedures established by the National
Association of Insurance Commissioners in order to:

(a) Strengthen and improve regulation of insurer solvency by the
Department of Consumer and Business Services;

(b) Promote uniform and consistent regulation of insurance by this
state and the other states;

(c) Reduce regulatory costs owing to unnecessary differences in the
laws of the various states; and

(d) Obtain and maintain accreditation of this state’s insurance
regulatory program by the National Association of Insurance
Commissioners. [Formerly 736.120; 1975 c.231 §1; 1981 c.247 §6; 1993
c.447 §12]REPORTS OF CRIMINAL CONDUCT As used in
ORS 731.592 and 731.594, “insurer” includes, but is not limited to:

(1) An insurer, as defined in ORS 731.106.

(2) A health care service contractor, as defined in ORS 750.005,
including, but not limited to, a health maintenance organization.

(3) A multiple employer welfare arrangement, as defined in ORS
750.301.

(4) A legal entity that is self-insured and provides insurance
services to its employees.

(5) A guaranty contract insurer, as defined in ORS 656.005.

(6) An employer authorized under ORS chapter 656 to self-insure its
workers’ compensation risk.

(7) A fraternal benefit society, as described in ORS 748.106.

(8) An insurance producer, as defined in ORS 731.104. [1999 c.633
§2; 2003 c.364 §73]Note: 731.590 to 731.594 were added to and made a part of the
Insurance Code by legislative action but were not added to ORS chapter
731 or any series therein. See Preface to Oregon Revised Statutes for
further explanation. (1)
Notwithstanding ORS 746.665, an insurer shall cooperate with any law
enforcement agency or other state or federal agency that is investigating
or prosecuting suspected criminal conduct involving insurance. The
insurer shall provide any information requested by the agency unless the
information is subject to a legal privilege that would prohibit
disclosure.

(2) If an insurer has reason to believe that criminal conduct
involving insurance has been, is being or is about to be committed, the
insurer shall notify the appropriate agency of that fact. The insurer is
not required to notify the agency if the information or any part of the
information upon which the belief is based is protected from disclosure
by legal privilege.

(3) An insurer providing information under this section may request
information relating to the investigation that is in the possession or
control of the agency. The agency may not provide an insurer with
information that is privileged or confidential. Otherwise, the agency
shall disclose requested information unless disclosure would jeopardize
an ongoing investigation or prosecution. The agency may require that the
insurer not disclose the information to any other person.

(4) A person who has reason to believe criminal conduct involving
insurance has been, is being or is about to be committed, or who
collects, reviews or analyzes information concerning suspected criminal
conduct involving insurance, may furnish any unprivileged information in
the person’s possession concerning the suspected criminal conduct to an
insurer who requests the information for the purpose of detecting,
prosecuting or preventing criminal conduct involving insurance.

(5) If an insurer or agency does not provide information as
required by this section and the suspected criminal conduct results in a
conviction, the insurer or agency is not eligible for any compensation to
which the insurer or agency might otherwise be entitled from any award
under ORS 137.106. [1999 c.633 §3]Note: See note under 731.590. Unless it is shown that the
person, including an insurer, acted with actual malice, a person who
discloses or provides information under ORS 731.592 has immunity from any
civil liability that might otherwise be incurred or imposed with respect
to the disclosure or provision of the information. A person has the same
immunity with respect to participating in any judicial proceeding
resulting from the disclosure or provision of information. [1999 c.633 §4]Note: See note under 731.590.DEPOSITS The following deposits
of insurers shall be accepted and held by the Department of Consumer and
Business Services for the purposes for which such deposits are made and
are subject to the applicable provisions of the Insurance Code:

(1) Deposits required or permitted under the Insurance Code.

(2) Deposits of domestic insurers made pursuant to the laws of
other jurisdictions. [1967 c.359 §112; 1999 c.196 §2] (1) Except as provided in subsection
(2) of this section, deposits made in this state under ORS 731.624 shall
be held for the faithful performance by the insurer of all insurance
obligations, including claims for unearned premiums, with respect to
domestic risks pertaining to the particular class of insurance for which
the deposit was made. However, there shall be excluded from each such
obligation the same amount as is excluded in determining the obligation
of the Oregon Insurance Guaranty Association under ORS 734.510 to 734.710.

(2) If at any time a deposit made under ORS 731.624 by a particular
insurer is insufficient to perform the insurance obligations upon the
faithful performance of which the deposit was conditioned, then any other
deposit made under ORS 731.624 by that insurer shall be so used to the
extent that such other deposit is not used to perform the insurance
obligations upon the faithful performance of which such other deposit was
conditioned.

(3) Deposits made by insurers and reinsurers in this state under
ORS 731.628 shall be held for the payment of compensation benefits to
workers employed by insured employers other than those insured with the
State Accident Insurance Fund Corporation to whom the insurer has issued
a guaranty contract under ORS chapter 656. Deposits made by insurers and
reinsurers under ORS 731.628 also shall be held to reimburse the
Department of Consumer and Business Services, subject to approval by the
Director of the Department of Consumer and Business Services, for costs
incurred by the department in processing workers’ compensation claims of
insurers which have been placed in liquidation, receivership,
rehabilitation or other such status for the orderly conservation or
distribution of assets, pursuant to the laws of this state or any other
state.

(4) A deposit made in this state by a domestic insurer transacting
insurance in another jurisdiction, and as required by the laws of such
jurisdiction, shall be held for the purpose or purposes required by such
laws.

(5) Deposits of foreign and alien insurers required pursuant to ORS
731.854 shall be held for such purposes as are required by such law, and
as specified by the director’s order by which the deposit is required.

(6) Deposits of domestic reciprocal insurers required pursuant to
ORS 731.632 shall be held for the benefit of subscribers wherever
located. [1967 c.359 §113; 1971 c.231 §12; 1977 c.793 §6; 1981 c.854 §57;
1987 c.236 §1; 1989 c.700 §2] While the insurer
remains unimpaired and is in compliance with the Insurance Code it may:

(1) Demand, receive, sue for and recover the income from the assets
deposited;

(2) Exchange and substitute for the deposited assets, or any part
thereof, other eligible assets of equivalent or greater value; and

(3) At any reasonable time inspect such deposit. [1967 c.359 §114] (1) For the purpose of
determining the sufficiency of its deposit in this state the assets of
the insurer on deposit shall be valued at current market value.

(2) If assets deposited by an insurer are subject to material
fluctuations in market value, the Director of the Department of Consumer
and Business Services, in the discretion of the director, may require the
insurer to deposit and maintain on deposit additional assets in such
amount as reasonably is necessary to assure that the deposit at all times
will have a market value of not less than the amount specified under or
pursuant to the law by which the deposit is required.

(3) If for any reason the current market value of such assets falls
below the amount of deposit required of the insurer, the insurer shall
promptly deposit other or additional assets eligible for deposit in an
amount sufficient to cure the deficiency. The insurer has 30 days in
which to cure the deficiency after notice thereof from the director.
[1967 c.359 §115] (1) The insurer shall
assign in trust to the Director of the Department of Consumer and
Business Services and successors in office all securities being deposited
through the director under the Insurance Code that are not negotiable by
delivery; or, in lieu of such assignment, the insurer may give the
director an irrevocable power of attorney authorizing the director to
transfer the securities or any part thereof for any purpose within the
scope of the Insurance Code.

(2) Upon release to the insurer, or other person entitled thereto,
of any such security the director shall reassign the security to such
insurer or person; or, in the case of power of attorney given pursuant to
subsection (1) of this section, the director shall deliver the power of
attorney, together with the securities covered thereby, to the insurer or
person entitled thereto. [1967 c.359 §116; 1979 c.870 §3; 1987 c.158 §154] Every
insurer, before transacting insurance in this state, shall make the
following deposits with the Department of Consumer and Business Services:

(1) Foreign or alien insurers transacting surety insurance in this
state, $250,000.

(2) Foreign or alien insurers transacting title insurance in this
state, $100,000.

(3) Foreign or alien insurers transacting home protection insurance
in this state, $100,000.

(4) Foreign or alien insurers transacting mortgage guaranty
insurance in this state, $500,000. [1967 c.359 §117; 1981 c.247 §7; 1987
c.483 §4; 1999 c.196 §3] (1) In
addition to any other requirement therefor under the Insurance Code, each
insurer other than the State Accident Insurance Fund Corporation that
issues guaranty contracts to employers under ORS chapter 656 shall
deposit with the Department of Consumer and Business Services an amount
that is the greater of the following amounts:

(a) $100,000.

(b) An amount equal to the sum described in this paragraph less
credits for approved reinsurance that the insurer may take under
subsection (2) of this section. The sum under this paragraph is the sum
of the following, computed as of December 31 next preceding in respect to
guaranty contracts written subject to ORS chapter 656:

(A) The aggregate of the present values at four percent interest of
the determined and estimated future loss and loss-expense payments upon
claims incurred more than three years next preceding the date of
computation.

(B) The aggregate of the amounts computed under this subparagraph
for each of the three years next preceding the date of computation. The
amount for each year shall be 65 percent of the earned premiums for the
year less all loss and loss-expense payments made upon claims incurred in
the corresponding year, except that the amount for any year shall not be
less than the present value at four percent interest of the determined
and estimated future loss and loss-expense payments upon claims incurred
in that year.

(2) Before an insurer may take a credit for reinsurance under
subsection (1)(b) of this section, the reinsurer must deposit with the
department an amount equal to the credit to be taken.

(3) An insurer may be allowed the credit referred to in subsection
(1)(b) of this section only when the reinsurer has deposited with the
department an amount equal to the credit. [1967 c.359 §118; 1971 c.231
§13; 1979 c.870 §4; 1981 c.854 §58; 1987 c.483 §5; 1989 c.700 §3; 1999
c.196 §4]Every domestic reciprocal insurer shall deposit with the
Department of Consumer and Business Services $50,000, except such an
insurer which exchanges policies of insurance covering only wet marine
hull insurance for persons whose earned income, in whole or in part, is
derived from taking and selling food resources living in an ocean, bay or
river. [1967 c.359 §119; 1977 c.651 §3; 1993 c.709 §5; 1999 c.196 §5] (1)
Except as provided in subsection (3) of this section, every alien
insurer, before transacting insurance in this state as an authorized
insurer, shall deposit with the Department of Consumer and Business
Services the sum of the following amounts:

(a) The amount of its outstanding liabilities arising out of its
insurance transactions in the United States; and

(b) Its required capitalization.

(2) ORS 731.640 (1)(d) does not apply with respect to such deposit.

(3) In lieu of such deposit, the insurer may furnish evidence
satisfactory to the Director of the Department of Consumer and Business
Services that it maintains in the United States, by way of trust deposits
with public depositories or with trust institutions acceptable to the
director, assets at least equal to the deposit otherwise required by this
section. [1967 c.359 §120; 1999 c.196 §6] (1) Deposits which are required
or permitted under the Insurance Code shall consist only of the following:

(a) Cash.

(b) Amply secured obligations of the United States, a state or a
political subdivision thereof.

(c) Certificates of deposit or other investments described in ORS
733.650 (4). The Director of the Department of Consumer and Business
Services may promulgate rules to limit such investments.

(d) A surety bond, approved by the director, executed by an
authorized surety insurer that is not under common ownership, management
or control with the person making the deposit. This paragraph does not
apply to deposits made by surety insurers or to workers’ compensation
deposits made under ORS 731.628.

(e) Amply secured obligations of a corporation rated by the
National Association of Insurance Commissioners as Class 1. This
paragraph applies only to that portion of the total deposit that exceeds
$50 million. The director may adopt rules to require periodic review of
the secured obligations of a corporation allowed under this paragraph.

(2) Deposits of domestic insurers made pursuant to the laws of
other jurisdictions shall consist of cash or securities as required or
permitted by the laws of such jurisdictions. [1967 c.359 §121; 1973 c.450
§1; 1981 c.854 §61; 1999 c.196 §6a; 2003 c.123 §1] The Director of the
Department of Consumer and Business Services, in performing duties under
ORS 731.604 to 731.652 and after consultation with the State Treasurer,
may enter into contracts with banks qualified to act as trust companies
and as depositories of state funds to hold and service securities
deposited by insurers with the Department of Consumer and Business
Services. The insurers whose securities are held and serviced by the
banks shall pay for the cost of such contracts. [1969 c.143 §2; 1999
c.196 §7; 2001 c.104 §288] (1) Except as
otherwise provided in the Insurance Code, no judgment creditor or other
claimant of an insurer shall have the right to levy upon any of the
assets or securities of the insurer held on deposit in this state.

(2) As to deposits made in this state pursuant to ORS 731.854, levy
thereupon shall be permitted only if expressly so provided in the order
of the Director of the Department of Consumer and Business Services under
which the deposit is required. [1967 c.359 §122] (1) Every deposit made in
this state by an insurer pursuant to the Insurance Code shall be so held
as long as there is outstanding any liability of the insurer as to which
the deposit was required, except as follows:

(a) If the deposit was required under ORS 731.854, the deposit
shall be held for so long as the basis of such retaliation exists.

(b) If the deposit was required of a reinsurer under ORS 731.628,
the deposit shall be held as long as there is outstanding any liability
of the reinsurer with respect to which the deposit was made.

(2) No surety insurer shall be permitted to withdraw its deposit
for a period of three years after discontinuing business within this
state.

(3) The Director of the Department of Consumer and Business
Services shall release a deposit:

(a) To the insurer upon extinguishment by reinsurance or otherwise
of all liability of the insurer for the security of which the deposit is
held. If extinguishment is by reinsurance, the assuming insurer shall be
one authorized to transact such insurance in this state.

(b) To the insurer, while unimpaired, to the extent such deposit is
in excess of the amount required.

(c) To the surviving corporation or to such person as it may
designate for the purpose, upon effectuation of a merger of the
depositing insurer, if the surviving insurer is authorized to transact
insurance in this state.

(4) The director shall release a deposit by an insurer upon order
of a court of competent jurisdiction, to the receiver, conservator,
rehabilitator, or liquidator of the insurer, or to any other properly
designated official or officials who succeed to the management and
control of the insurer’s assets pursuant to delinquency proceedings
brought against the insurer. The director shall release a deposit by a
reinsurer under ORS 731.628 upon order of a court of competent
jurisdiction, to the receiver, conservator, rehabilitator, or liquidator
of the ceding insurer, or to any other properly designated official or
officials who succeed to the management and control of the insurer’s
assets pursuant to delinquency proceedings brought against the ceding
insurer. [1967 c.359 §123; 1989 c.700 §4; 1993 c.447 §106; 1999 c.196 §8](1) Before releasing any deposit or portion thereof to
the insurer, as provided in ORS 731.648, the Director of the Department
of Consumer and Business Services shall require the insurer to file with
the director a written statement in such form and with such verification
as the director deems advisable setting forth the facts upon which it
bases its entitlement to such release.

(2) If release of the deposit is claimed by the insurer upon the
ground that all its liabilities, as to which the deposit was held, have
been assumed by another insurer authorized to transact insurance in this
state, the insurer shall file with the director a copy of the contract or
agreement of such reinsurance duly attested under the oath of an officer
of each of the insurers that are parties thereto.

(3) If release of the deposit is claimed by a domestic insurer upon
the ground that all its liabilities, as to which the deposit was held,
have been terminated other than by reinsurance, the director shall make
an examination of the affairs of the insurer for determination of the
actuality of such termination.

(4) Upon being satisfied by such statement and reinsurance
contract, or examination of the insurer if required under subsection (3)
of this section, or by such other examination of the affairs of the
insurer as the director deems advisable to make, that the insurer is
entitled to the release of its deposit or portion thereof as provided in
ORS 731.648, the director shall release the deposit or excess portion
thereof to the insurer or its authorized representative.

(5) If the director willfully fails faithfully to keep, deposit,
account for or surrender any such assets or securities deposited through
the director in the manner as authorized or required under the Insurance
Code, the director shall be liable therefor upon the director’s official
bond, and suit may be brought upon the bond by any person injured by such
failure. The director shall not, however, have any liability as to any
assets or securities of an insurer released by the director in good faith
pursuant to the authority vested in the director under the Insurance
Code. [1967 c.359 §124; 1999 c.196 §9]EXCHANGE OF INFORMATION BY REGULATORS(1) Every authorized insurer shall file with the National
Association of Insurance Commissioners, on or before March 1 of each
year, a copy of its annual statement blank, along with additional filings
required by the Director of the Department of Consumer and Business
Services for the preceding year. The information filed with the National
Association of Insurance Commissioners must be in the same format and
scope as that required by the director and must include the signed jurat
page and the actuarial certification. Each amendment and each addendum to
the annual statement filing subsequently filed with the director must
also be filed with the National Association of Insurance Commissioners.

(2) A foreign insurer that is domiciled in a state having a law
substantially similar to the provisions of subsection (1) of this section
is considered to be in compliance with this section.

(3) An insurer making a filing under subsection (1) of this section
must pay the National Association of Insurance Commissioners the fee
established by the National Association of Insurance Commissioners for
filing, reviewing or processing the information. [1993 c.447 §100]Except in the case of
malfeasance in office or willful or wanton neglect of duty or authority,
there shall be no liability on the part of, and no cause of action of any
nature shall arise against, any of the following persons by virtue of
their collection, review, analysis or dissemination of the data and
information collected from the filings required by ORS 731.730:

(1) Members of the National Association of Insurance Commissioners
and the delegates and authorized committees, subcommittees and task
forces of the National Association of Insurance Commissioners.

(2) Employees of the National Association of Insurance
Commissioners.

(3) The Director of the Department of Consumer and Business
Services or any representative of the director.

(4) The insurance regulatory official of another state or any
representative of such an official. [1993 c.447 §101] All financial analysis
ratios and examination synopses concerning insurers that are submitted to
the Director of the Department of Consumer and Business Services by the
Insurance Regulatory Information System of the National Association of
Insurance Commissioners are confidential as provided in ORS 705.137.
[1993 c.447 §102; 2001 c.377 §6](1) A person or other entity described in this subsection acting
without malice, fraudulent intent or bad faith is not subject to civil
liability, and no cause of action of any nature may exist against such a
person or entity, when the person is performing authorized functions,
including publication or dissemination of information, regarding any
activity described in subsection (3) of this section. This subsection
applies to the following persons and entities:

(a) Law enforcement officials and their agents and employees.

(b) The National Association of Insurance Commissioners, the
Department of Consumer and Business Services, a federal or state
governmental agency established to detect and prevent activities
described in subsection (3) of this section and any other organization
established for the same purpose, and agents, employees or designees of
any such person or entity.

(2) A person acting without malice, fraudulent intent or bad faith
is not subject to liability by virtue of filing reports or furnishing
information regarding any activity described in subsection (3) of this
section with or to any person or other entity described in subsection (1)
of this section.

(3) The activities referred to in subsections (1) and (2) of this
section include but are not limited to the following, whether any
activity is suspected or anticipated or has occurred:

(a) Acts or omissions by a person who presents a statement
described in this paragraph to or by an insurer or an insurance producer,
causes such a statement to be presented to or by an insurer or an
insurance producer, or prepares such a statement with knowledge or belief
that it will be presented to or by an insurer or an insurance producer.
This paragraph applies to any statement that the person knows to contain
false information as part of, in support of or concerning any fact
relating to the following, or conceals relevant information relating to
the following:

(A) An application for the issuance of insurance.

(B) The rating of insurance.

(C) A claim for payment or benefit pursuant to any insurance.

(D) Premiums paid on insurance.

(E) Payments made in accordance with the terms of insurance
coverage.

(F) An application for a certificate of authority.

(G) The financial condition of an insurer.

(H) The acquisition of any insurer.

(b) Solicitation or an attempt to solicit new or renewal insurance
by or for an insolvent insurer or other person subject to regulation
under the Insurance Code.

(c) Removal or an attempt to remove assets or any record of assets,
transactions and affairs from the home office or other place of business
of the insurer or other person subject to regulation under the Insurance
Code, or from the place of safekeeping of such a person, or who conceals
or attempts to conceal the assets or record from the Director of the
Department of Consumer and Business Services.

(d) Diversion, an attempt to divert or a conspiracy to divert funds
of an insurer or other person subject to regulation under the Insurance
Code, or of any other person, in connection with:

(A) The transaction of insurance.

(B) The conduct of business activities by an insurer or other
person subject to regulation under the Insurance Code.

(C) The formation, acquisition or dissolution of an insurer or
other person subject to regulation under the Insurance Code.

(4) This section does not abrogate or modify in any way any common
law or statutory privilege or immunity otherwise enjoyed by a person or
entity made immune from liability under this section.

(5) The court may award reasonable attorney fees to the prevailing
party in any tort action against a person who claims immunity under the
provisions of this section. [1993 c.447 §103; 1995 c.618 §128; 2003 c.364
§74]CONFIDENTIALITY OF REPORTS(1) A report filed with the Director of
the Department of Consumer and Business Services according to
requirements established by rule for disclosure of material acquisitions
or dispositions of assets and disclosure of material nonrenewals,
cancellations and revisions of ceded reinsurance agreements shall be
confidential as provided in ORS 705.137.

(2) The director may direct the insurer to furnish copies of a
report described in subsection (1) of this section to the National
Association of Insurance Commissioners.

(3) The director may disclose or use a report as considered
necessary by the director in the administration of the Insurance Code or
other law.

(4) Information contained in documents described in subsections (1)
to (3) of this section that is also contained in financial statements of
insurers filed under ORS 731.574 or in final examination reports filed
under ORS 731.312 is not confidential under this section. [1995 c.638 §3;
2001 c.377 §7](1) A report
filed with the Director of the Department of Consumer and Business
Services according to requirements established by rule for the purpose of
determining the amount of capital or surplus, or any combination thereof,
that should be possessed and maintained by an insurer under ORS 731.554
or by a health care service contractor under ORS 750.045, or under the
laws of another state establishing similar requirements, shall be
confidential and shall not be disclosed except as provided in ORS 705.137.

(2) A financial plan of action stating corrective actions to be
taken by an insurer or health care service contractor in response to a
determination of inadequate capital or surplus, or any combination
thereof, that is filed by the insurer or health care service contractor
with the director according to requirements established by rule shall be
confidential and shall not be disclosed except as provided in ORS 705.137.

(3) The results or report of any examination or analysis of an
insurer or health care service contractor performed by the director in
connection with a financial plan described in subsection (2) of this
section and any corrective order issued by the director pursuant to such
an examination or analysis shall be confidential and shall not be
disclosed except as provided in ORS 705.137.

(4) Information contained in documents described in subsections (1)
to (3) of this section that is also contained in financial statements of
insurers or health care service contractors filed under ORS 731.574 or in
final examination reports filed under ORS 731.312 is not confidential
under this section. [1995 c.638 §4; 2001 c.318 §19; 2001 c.377 §8](1) The Director of the Department of Consumer and Business
Services may use the following only for the purpose of monitoring the
solvency of insurers and health care service contractors and the need for
possible corrective action with respect to insurers and health care
service contractors:

(a) Reports and financial plans of action that are made
confidential under ORS 731.752; and

(b) Instructions adopted and amended by the National Association of
Insurance Commissioners for use by insurers and health care service
contractors in preparing reports and financial plans of action referred
to in paragraph (a) of this subsection.

(2) The director may not use reports, financial plans of action and
instructions referred to in subsection (1) of this section for
ratemaking, for reviewing rate filings or in a rate proceeding related
thereto, or to calculate or derive any elements of an appropriate premium
level or rate of return for any line of insurance that an insurer, a
health care service contractor or an affiliate is authorized to transact.
Such reports and financial plans of action also shall not be introduced
as evidence in a rate proceeding.

(3) This section does not restrict the authority of the director to
use information included in reports, financial plans or instructions
referred to in subsection (1) of this section that is available from
other sources. [1995 c.638 §5; 2001 c.318 §20]INSURANCE COMPLIANCE AUDIT REPORTS As used in ORS
731.760 to 731.770:

(1) “Insurance compliance audit” means a voluntary internal
evaluation, review, assessment, audit or investigation that is undertaken
to identify or prevent noncompliance with, or promote compliance with,
laws, regulations, orders or industry or professional standards, and that
is conducted by or on behalf of an insurer regulated under the Insurance
Code.

(2) “Insurance compliance self-evaluative audit document” means a
document prepared as a result of or in connection with an insurance
compliance audit. “Insurance compliance self-evaluative audit document”
includes, but is not limited to:

(a) A written response to the findings of an insurance compliance
audit.

(b) Field notes and records of observations, findings, opinions,
suggestions, conclusions, drafts, memoranda, drawings, photographs,
exhibits, computer-generated or electronically recorded information,
phone records, maps, charts, graphs and surveys, provided this supporting
information is collected or developed solely for the purpose of an
insurance compliance audit.

(c) An insurance compliance audit report prepared by an auditor,
who may be an employee of the insurer or an independent contractor, which
may include the scope of the audit, the information gained in the audit
and conclusions and recommendations, with exhibits and appendices.

(d) Memoranda and documents analyzing portions or all of the
insurance compliance audit report and discussing potential implementation
issues.

(e) An implementation plan that addresses correcting past
noncompliance, improving current compliance and preventing future
noncompliance.

(f) Analytic data generated in the course of conducting the
insurance compliance audit, not including any analytic data that exists
independently of the audit or existed before the audit was conducted.
[2001 c.329 §2] (1) Except as provided in ORS
731.760 to 731.770, an insurance compliance self-evaluative audit
document is privileged information and is not discoverable, or admissible
as evidence, in any civil, criminal or administrative proceeding.

(2) Except as provided in ORS 731.760 to 731.770, any person who
performs or directs the performance of an insurance compliance audit, any
officer, employee or agent of an insurer who is involved with an
insurance compliance audit and any consultant who is hired for the
purpose of performing an insurance compliance audit may not be examined
in any civil, criminal or administrative proceeding about the insurance
compliance audit or any insurance compliance self-evaluative audit
document. [2001 c.329 §3](1) ORS 731.761 does not limit the
authority of the Director of the Department of Consumer and Business
Services to acquire any insurance compliance self-evaluative audit
document or to examine any person in connection with the document. If the
director determines that the actions of an insurer are egregious, the
director may introduce and use the document in any administrative
proceeding or civil action under the Insurance Code. The director may
require that an insurer submit an insurance compliance self-evaluative
audit document for the purpose of an examination or investigation
conducted under this chapter. An insurer may also voluntarily submit an
insurance compliance self-evaluative audit document to the director.

(2) Any insurance compliance self-evaluative audit document
submitted to the director under this section and in the possession of the
director remains the property of the insurer and is not subject to
disclosure or production under ORS 192.410 to 192.505.

(3)(a) The director shall consider the corrective action taken by
an insurer to eliminate problems identified in the insurance compliance
self-evaluative audit document as a mitigating factor when determining a
civil penalty or other action against the insurer.

(b) The director may, in the director’s sole discretion, decline to
impose a civil penalty or take other action against an insurer based on
information obtained from an insurance compliance self-evaluative audit
document if the insurer has taken reasonable corrective action to
eliminate the problems identified in the document.

(4) Disclosure of an insurance compliance self-evaluative audit
document to a governmental agency, whether voluntarily or pursuant to
compulsion of law, does not constitute a waiver of the privilege set
forth in ORS 731.761 for any other purpose.

(5) The director may not be compelled to produce an insurance
compliance self-evaluative audit document. [2001 c.329 §4] (1) The
privilege set forth in ORS 731.761 does not apply to the extent that the
privilege is expressly waived by the insurer that prepared or caused to
be prepared the insurance compliance self-evaluative audit document.

(2) The privilege set forth in ORS 731.761 does not apply in any
civil, criminal or administrative proceeding commenced by the Attorney
General relating to Medicaid fraud, without regard to whether the
proceeding is brought on behalf of the state, a state agency or a federal
agency. An insurer may request an in camera review of any document or
other evidence to be released or used under this subsection and may
request that appropriate protective orders be entered governing release
and use of the material.

(3) In any civil proceeding a court of record may, after an in
camera review, require disclosure of material for which the privilege set
forth in ORS 731.761 is asserted if the court determines that the
material is not subject to the privilege, or that the privilege is
asserted for a fraudulent purpose, including but not limited to an
assertion of the privilege for an insurance compliance audit that was
conducted for the purpose of concealing a violation of any federal, state
or local law or rule. Nothing in this subsection shall be construed to
limit the authority of the Director of the Department of Consumer and
Business Services to acquire, examine and use insurance compliance
self-evaluative audit documents under ORS 731.762.

(4) In a criminal proceeding, a court of record may, after an in
camera review, require disclosure of material for which the privilege set
forth in ORS 731.761 is asserted if the court determines that:

(a) The privilege is asserted for a fraudulent purpose, including
but not limited to an assertion of the privilege for an insurance
compliance audit that was conducted for the purpose of concealing a
violation of any federal, state or local law or rule;

(b) The material is not subject to the privilege; or

(c) The material contains evidence relevant to commission of a
criminal offense, and:

(A) A district attorney or the Attorney General has a compelling
need for the information;

(B) The information is not otherwise available; or

(C) The district attorney or Attorney General is unable to obtain
the substantial equivalent of the information by any other means without
incurring unreasonable cost and delay. [2001 c.329 §5](1) Within 30 days after a district attorney or the Attorney
General serves on an insurer a written request by certified mail for
disclosure of an insurance compliance self-evaluative audit document, the
insurer that prepared or caused the document to be prepared may file in
circuit court a petition requesting an in camera hearing on whether the
insurance compliance self-evaluative audit document or portions of the
document are privileged under ORS 731.761 or subject to disclosure.
Failure by the insurer to file a petition waives the privilege only with
respect to the specific request.

(2) A petition filed by an insurer under this section must contain
the following information:

(a) The date of the insurance compliance self-evaluative audit
document.

(b) The identity of the person that conducted the audit.

(c) The general nature of the activities covered by the insurance
compliance audit.

(d) An identification of the portions of the insurance compliance
self-evaluative audit document for which the privilege is being asserted.

(3) Within 45 days after the filing of a petition by an insurer
under this section, the court shall schedule an in camera hearing to
determine whether the insurance compliance self-evaluative audit document
or portions of the document are privileged under ORS 731.761.

(4) The court, after an in camera review pursuant to this section,
may require disclosure of material for which the privilege established by
ORS 731.761 is asserted if the court determines that any of the
conditions set forth in ORS 731.764 are met. Upon making such a
determination, the court may compel the disclosure of only those portions
of an insurance compliance self-evaluative audit document relevant to
issues in dispute in the underlying proceeding. Any disclosure that is
compelled by the court will not be considered to be a public document or
be deemed to be a waiver of the privilege for any other civil, criminal
or administrative proceeding. A party unsuccessfully opposing disclosure
may apply to the court for an appropriate order protecting the document
from further disclosure.

(5) An insurer asserting the privilege established under ORS
731.761 has the burden of establishing that the privilege applies. If the
insurer establishes that the privilege applies, a party seeking
disclosure under ORS 731.764 has the burden of proving the elements set
forth in ORS 731.764. [2001 c.329 §6] The privilege established under ORS
731.761 does not apply to any of the following:

(1) Documents, communications, data, reports or other information
expressly required to be collected, developed, maintained or reported to
a regulatory agency under the Insurance Code or other state or federal
law;

(2) Information obtained by observation or monitoring by any
regulatory agency; or

(3) Information obtained from a source other than the insurance
compliance audit. [2001 c.329 §7]Nothing in ORS 731.760 to 731.770, or in the release of any
insurance compliance self-evaluative audit document under ORS 731.760 to
731.770, shall limit, waive or abrogate the scope or nature of any
statutory or common law privilege or other limitation on admissibility of
evidence including, but not limited to, the work product doctrine, the
lawyer-client privilege under ORS 40.225 or the subsequent remedial
measures exclusion provided by ORS 40.185. [2001 c.329 §8]ASSESSMENTS, FEES AND TAXES (1) Except as
otherwise provided in this section, each authorized insurer doing
business in this state shall pay assessments that the Director of the
Department of Consumer and Business Services determines necessary to
support the legislatively authorized budget of the Department of Consumer
and Business Services with respect to functions of the department under
the Insurance Code. The director shall determine the assessments
according to one or more percentage rates established by the director by
rule. The director shall specify in the rule when assessments shall be
made and payments shall be due. The premium-weighted average of the
percentage rates shall not exceed nine-hundredths of one percent of the
gross amount of premiums received by an insurer or its insurance
producers from and under its policies covering direct domestic risks,
after deducting the amount of return premiums paid and the amount of
dividend payments made to policyholders with respect to such policies. In
the case of reciprocal insurers, the amount of savings paid or credited
to the accounts of subscribers shall be deducted from the gross amount of
premiums. In establishing the percentage rate or rates, the director
shall use the most recent premium data approved by the director. In
establishing the amounts to be collected under this subsection, the
director shall take into consideration the expenses of the department for
administering the Insurance Code and the fees collected under subsection
(2) of this section. When the director establishes two or more percentage
rates:

(a) Each rate shall be based on such expenses of the department
ascribed by the director to the line of insurance for which the rate is
established.

(b) Each rate shall be applied to the gross amount of premium
received by an insurer or its insurance producers for the applicable line
of insurance as provided in this subsection.

(2) The director may collect fees for specific services provided by
the department under the Insurance Code according to a schedule of fees
established by the director by rule. The director may collect such fees
in advance. In establishing the schedule for fees, the director shall
take into consideration the cost of each service for which a fee is
imposed.

(3) Establishment and amendment of the schedule of fees under
subsection (2) of this section are subject to prior approval of the
Oregon Department of Administrative Services and a report to the
Emergency Board prior to adopting the fees and shall be within the budget
authorized by the Legislative Assembly as that budget may be modified by
the Emergency Board.

(4) The director may not collect an assessment under subsection (1)
of this section from any of the following persons:

(a) A fraternal benefit society complying with ORS chapter 748.

(b) Any person or class of persons designated by the director by
rule.

(5) The director may not collect an assessment under subsection (1)
of this section with respect to premiums received from any of the
following policies:

(a) Workers’ compensation insurance policies.

(b) Annuity policies, whether fixed or variable in nature.

(c) Wet marine and transportation insurance policies.

(d) Any category of policies designated by the director by rule.
[1967 c.359 §131; 1971 c.231 §14; 1971 c.425 §7; 1983 c.94 §1; 1985 c.697
§17; 1987 c.373 §81; 1989 c.331 §24; 1989 c.413 §1; 1991 c.371 §1; 1991
c.703 §40; 1991 c.958 §5; 1993 c.265 §5; 2003 c.364 §75; 2005 c.31 §7]As used in ORS 731.804,
731.812 and 731.820, “gross amount of premiums” means the consideration
paid by insureds to an insurer for policies of insurance, and includes
all premiums, assessments, dues and fees received or derived, or
obligations taken therefor, by whatever term known. [1967 c.359 §132;
1989 c.413 §5]
Every foreign or alien insurer, in its annual statement to the Director
of the Department of Consumer and Business Services, shall set forth the
gross amount of premiums received by it or its insurance producers,
return premiums paid, dividend payments made to policyholders, savings
paid or credited to the accounts of subscribers in the case of a
reciprocal insurer, and insurance benefit payments to policyholders, from
and under its policies covering direct domestic risks in the preceding
calendar year. [1967 c.359 §133; 2003 c.364 §76] (1)(a) For
the purpose of maintaining the office of State Fire Marshal and paying
the expenses incident thereto, every insurer transacting insurance
covering the peril of fire shall pay a tax to the Director of the
Department of Consumer and Business Services, on or before April 1 of
each year, equal to one percent of the gross amount of premiums received
by it or its insurance producers from such business, from and under its
policies covering direct domestic risks in the preceding calendar year
after deducting the amount of return premiums paid and the amount of
dividend payments made to policyholders or, in the case of a reciprocal
insurer, the amount of savings paid or credited to the accounts of
subscribers, with respect to such policies.

(b) For the purpose of paragraph (a) of this subsection the
following portions of the amounts required to be reported by line of
business in the annual financial statement required by ORS 731.574 shall
be considered premiums for insurance covering the peril of fire:

(A) Fire, 100 percent.

(B) Homeowners and farm owners multiple peril, 65 percent.

(C) Commercial multiple peril, 50 percent.

(D) Inland marine, 20 percent.

(E) Automobile physical damage, eight percent.

(F) Aircraft physical damage, eight percent.

(2) If an insurer ceases to do business or collect premiums on
direct domestic risks, it thereupon shall make a report to the director
of its premiums subject to taxation as provided in subsection (1) of this
section and collected or due as of the date when it ceased to do business
or collect premiums on direct domestic risks, and not theretofore
reported, and shall forthwith pay to the director the tax thereon.

(3) If the director, during the period in which the director under
ORS 731.836 may collect taxes owing under this section, finds the amount
of such taxes paid by an insurer to have been incorrect, the director
shall charge or credit the insurer with the difference between the
correct amount of tax and the amount actually paid. [1967 c.359 §135;
1967 c.453 §4; 1971 c.231 §15; 1975 c.275 §1; 1983 c.130 §1; 1989 c.700
§6; 2003 c.364 §77] (1) Every insurer with a tax
obligation under section 2, chapter 786, Oregon Laws 1995, ORS 731.820 or
ORS 731.854 and 731.859 shall make prepayment of the tax obligations
under section 2, chapter 786, Oregon Laws 1995, ORS 731.820, 731.854 and
731.859 for the current calendar year’s business, if the sum of the tax
obligations under section 2, chapter 786, Oregon Laws 1995, ORS 731.820,
731.854 and 731.859 for the preceding calendar year’s business is $400 or
more.

(2) The Director of the Department of Consumer and Business
Services shall credit the prepayment toward the appropriate tax
obligations of the insurer for the current calendar year under section 2,
chapter 786, Oregon Laws 1995, or ORS 731.820 or ORS 731.854 and 731.859.

(3) The amounts of the prepayments shall be percentages of the
insurer’s tax obligation based on the preceding calendar year’s business
adjusted, if necessary, to reflect the declining percentages set forth in
section 2 (3), chapter 786, Oregon Laws 1995, applicable for the current
year, and shall be paid to the director by the due dates and in the
following amounts:

(a) On or before June 15, 45 percent;

(b) On or before September 15, 25 percent; and

(c) On or before December 15, 25 percent.

(4) The effect of transferring policies of insurance from one
insurer to another insurer is to transfer the tax prepayment obligation
with respect to such policies.

(5) On or before June 1 of each year, the director shall notify
each insurer required to make prepayments in that year of the amount of
each prepayment, and shall provide remittance forms to be used by the
insurer. However, an insurer’s responsibility to make prepayments is not
affected by failure of the director to send, or the insurer to receive,
the notice or forms. [1980 c.10 §2; 1995 c.786 §5](1) Wet marine and transportation insurance
written by foreign or alien insurers within this state shall be taxed
only on that proportion of the total underwriting profit of such insurer
from such insurance written within the United States that the gross
premiums of the insurer from such insurance written within this state
bear to the gross premiums of such insurer from such insurance written
within the United States.

(2) The “underwriting profit,” for purposes of this section, is
arrived at by deducting from the net earned premiums on such insurance
policies written within the United States during the calendar year:

(a) The losses incurred, and

(b) Expenses incurred, including all taxes, state and federal, in
connection with such net earned premiums.

(3) The amount of “net earned premiums” on such insurance policies
written during the calendar year is the sum of paragraphs (a) and (b)
less paragraph (c) of this subsection.

(a) Gross premiums on such insurance policies written during the
calendar year, less any and all return premiums, any and all premiums on
policies not taken and any and all premiums paid for such reinsurance.

(b) Unearned premiums on such outstanding marine business at the
end of the preceding calendar year.

(c) Unearned premiums on such outstanding marine business at the
end of the current calendar year.

(4) “Losses incurred,” as used in this section, means gross losses
incurred during the calendar year under such policies written within the
United States, less reinsurance claims collected or collectible and
salvages or recoveries collectible from any source applicable to the such
losses.

(5) “Expenses incurred” includes:

(a) Specific expenses incurred on such earned wet marine and
transportation insurance premiums, consisting of all commissions, agency
expenses, taxes, licenses, fees, loss-adjustment expenses, and all other
expenses incurred directly and specifically in connection with such
premiums, less recoveries or reimbursements on account of or in
connection with such commissions or other expenses collected or
collectible because of reinsurance or from any other source.

(b) General expenses incurred on such earned premiums, consisting
of that proportion of general or overhead expenses, such as salaries of
officers and employees, printing and stationery, all taxes of this state
and of the United States, except as otherwise provided herein, and all
other expenses not chargeable specifically to a particular class of
insurance, which the net premiums of such insurance written bear to the
total net premiums written by such insurer from all classes of insurance
written by it during the current calendar year. However, in arriving at
the “underwriting profit” for purposes of taxation under this section
there shall not be deducted in respect to expenses incurred, as defined
and specified in paragraphs (a) and (b) of this subsection, amounts
which, in the aggregate, exceed 40 percent of the gross premiums on such
insurance policies. [Formerly 745.145]
(1) Each insurer transacting wet marine and transportation insurance in
this state shall file annually on or before June 15 with the Director of
the Department of Consumer and Business Services and in the form
prescribed by the director, a report of all the items pertaining to its
insurance business as enumerated and prescribed in ORS 731.824.

(2) Each insurer that has been writing such insurance in this state
for three years shall furnish the director a statement of all of the
items referred to in subsection (1) of this section, in the form
prescribed by the director, for each of the preceding three calendar
years. An insurer that has not been writing such insurance for three
years shall furnish to the director a statement of all such items for
each of the calendar years during which it has written such insurance.

(3) On or before June 15 of each year, if the insurer has
transacted such insurance for three years, the insurer shall:

(a) Ascertain the average annual underwriting profit, as provided
in ORS 731.824, derived by the insurer from such insurance business
written within the United States during the last preceding three calendar
years.

(b) Ascertain the proportion which the average annual premiums of
the insurer from such insurance written by it in this state during the
last preceding three calendar years bears to the average total of such
wet marine and transportation insurance premiums of the insurer during
the same three years.

(c) Pay five percent on this proportion of the average annual
underwriting profit of the insurer from such insurance to the director as
a tax upon such insurance written by it in this state during the current
calendar year.

(4) The insurer each year shall compute the tax, according to the
method described in this section, upon the average annual underwriting
profit of such insurer from such insurance during the preceding three
years, including the current calendar year. At the expiration of each
current calendar year, the profit or loss on such insurance business of
that year is to be added or deducted, and the profit or loss upon such
insurance business of the first calendar year of the preceding three-year
period is to be dropped so that the computation of underwriting profit
for purposes of taxation under this section will always be on a
three-year average.

(5) An insurer that has not been writing wet marine and
transportation insurance in this state for three years shall, until it
has transacted such business in this state for that number of years, be
taxed on the basis of its annual underwriting profit on such insurance
written within the United States for the current calendar year, subject,
however, to an adjustment in the tax as soon as the insurer, in
accordance with the provisions of this section, is enabled to compute the
tax on the three-year basis.

(6) In the case of mutual insurers the insurer shall not include in
the underwriting profit, when computing the tax prescribed by this
section, the amounts refunded by such insurers on account of premiums
previously paid by their policyholders.

(7) If the director, during the period in which the director under
ORS 731.836 may collect taxes owing under this section, finds the amount
of such taxes paid by an insurer to have been incorrect, the director
shall charge or credit the insurer with the difference between the
correct amount of tax and the amount actually paid.

(8) If an insurer ceases to transact wet marine and transportation
insurance in the state, it shall thereupon make report to the director of
the items pertaining to such insurance business, as enumerated and
described in this section, to the date of its ceasing to transact such
insurance and not theretofore reported, and forthwith pay to the director
the taxes computed according to this section and the annual authorization
fees thereon. [Formerly 745.150; 1969 c.158 §1; 1975 c.250 §1; 1989 c.700
§7] The
Director of the Department of Consumer and Business Services shall
commence an action for the recovery of taxes payable under ORS 731.820,
731.824, 731.828 and 731.859 not later than the later of the following:

(1) Five years after the date such taxes were payable to the
director under such sections; or

(2) Three years after the date on which the report of examination
by the domiciliary state of the insurer, disclosing that such taxes were
owing by the insurer under such sections, was filed with the director.
[1967 c.359 §139; 1969 c.158 §4; 1989 c.700 §8](1) The retaliatory tax imposed
upon a foreign or alien insurer under ORS 731.854 and 731.859, or the
corporate excise tax imposed upon a foreign or alien insurer under ORS
chapter 317, is in lieu of all other state taxes upon premiums, taxes
upon income, franchise or other taxes measured by income that might
otherwise be imposed upon the foreign or alien insurer except the fire
insurance premiums tax imposed under ORS 731.820 and the tax imposed upon
wet marine and transportation insurers under ORS 731.824 and 731.828.
However, all real and personal property, if any, of the insurer shall be
listed, assessed and taxed the same as real and personal property of like
character of noninsurers. Nothing in this subsection shall be construed
to preclude the imposition of the assessments imposed under ORS 656.612
upon a foreign or alien insurer.

(2) Subsection (1) of this section applies to a reciprocal insurer
and its attorney in its capacity as such.

(3) Subsection (1) of this section applies to foreign or alien
title insurers and to foreign or alien wet marine and transportation
insurers issuing policies and subject to taxes referred to in ORS 731.824
and 731.828.

(4) The State of Oregon hereby preempts the field of regulating or
of imposing excise, privilege, franchise, income, license, permit,
registration, and similar taxes, licenses and fees upon insurers and
their insurance producers and other representatives as such, and:

(a) No county, city, district, or other political subdivision or
agency in this state shall so regulate, or shall levy upon insurers, or
upon their insurance producers and representatives as such, any such tax,
license or fee; except that whenever a county, city, district or other
political subdivision levies or imposes generally on a nondiscriminatory
basis throughout the jurisdiction of the taxing authority a payroll,
excise or income tax, as otherwise provided by law, such tax may be
levied or imposed upon domestic insurers; and

(b) No county, city, district, political subdivision or agency in
this state shall require of any insurer, insurance producer or
representative, duly authorized or licensed as such under the Insurance
Code, any additional authorization, license, or permit of any kind for
conducting therein transactions otherwise lawful under the authority or
license granted under this code. [1967 c.359 §140; 1969 c.600 §12; 1973
c.515 §1; 1973 c.583 §2; 1995 c.786 §6; 2003 c.364 §78]If, on account of the provisions of section 2, chapter 786,
Oregon Laws 1995, and the amendments to ORS 731.840 by section 6, chapter
786, Oregon Laws 1995, the amendments to ORS 750.329 by section 11,
chapter 786, Oregon Laws 1995, the amendments to ORS 317.010 by section
12, chapter 786, Oregon Laws 1995, and the amendments to ORS 317.080 by
section 13, chapter 786, Oregon Laws 1995, any insurer authorized to
transact business in Oregon on January 1, 1997, is subject to the local
taxes, licenses and fees described in ORS 731.840 (4)(a) as of January 1,
1997, and was not so subject before January 1, 1997, the authority of the
local government to impose those taxes is preempted by the State of
Oregon and no county, city, district or other political subdivision or
agency in this state shall levy or impose upon such insurer, or upon its
insurance producers or representatives, any excise, privilege, franchise,
income, license, permit, registration or similar tax, license or fee.
[1995 c.786 §20; 2003 c.364 §79]Note: 731.841 was added to and made a part of ORS chapter 731 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation.(1) The Director of
the Department of Consumer and Business Services may grant, for good
cause shown, a request for an adjustment of the amount of the prepayment
due under ORS 731.822 or an extension of time for payment of taxes under
ORS 731.808 to 731.828 and 731.859. The extension shall be requested no
later than the due date and may not exceed 30 days or one month,
whichever is longer, except that an extension of time for payments under
ORS 731.822 may not exceed 10 days.

(2) Interest at the rate of two-thirds of one percent per month or
fraction of a month shall accrue on any such tax payment not made by the
due date (determined without regard to extensions).

(3) A penalty of 10 percent of the tax amount shall be imposed upon
any late payment of any such tax, except for a payment made within an
extension period as provided in subsection (1) of this section or when
the director believes extenuating circumstances justify waiver of the
penalty. [1975 c.230 §2; 1980 c.10 §4; 1995 c.786 §7] No personal
liability shall arise against any director, trustee, officer or agent of
any insurer on account of any taxes or fees paid pursuant to any statute,
law or ordinance, even though such statute, law or ordinance is
subsequently declared or held to be invalid. [1967 c.359 §141]RETALIATORY PROVISIONS (1) When by or pursuant to the laws of any
other state or foreign country any taxes, licenses and other fees, in the
aggregate, and any fines, penalties, deposit requirements or other
material obligations, prohibitions or restrictions are or would be
imposed upon insurers domiciled in this state, or upon the insurance
producers or representatives of such insurers, which are in excess of
such taxes, licenses and other fees, in the aggregate, or which are in
excess of the fines, penalties, deposit requirements or other
obligations, prohibitions, or restrictions directly imposed upon similar
insurers, or upon the insurance producers or representatives of such
insurers, of such other state or country under the statutes of this
state, so long as such laws of such other state or country continue in
force or are so applied, the same taxes, licenses and other fees, in the
aggregate, or fines, penalties or deposit requirements or other material
obligations, prohibitions, or restrictions of whatever kind shall be
imposed by the Director of the Department of Consumer and Business
Services upon the insurers, or upon the insurance producers or
representatives of such insurers, of such other state or country doing
business or seeking to do business in this state. Any tax, license or
other fee or other obligation imposed by any city, county, or other
political subdivision or agency of such other state or country on
insurers domiciled in this state or their insurance producers or
representatives shall be deemed to be imposed by such state or country
within the meaning of this subsection.

(2) Foreign reciprocal or interinsurance exchanges filing a
consolidated return for purposes of ORS chapter 317 shall prepare and
file a separate individual retaliatory tax calculation. The excise tax
for the consolidated group shall be allocated for retaliatory tax
purposes among the individual foreign insurers writing Oregon premiums.
The allocation, after excluding the domestic share as determined by the
Director of the Department of Consumer and Business Services by rule,
shall be in the proportion that the premiums written in Oregon by a
foreign insurer of the group bears to the total premiums written in
Oregon by all foreign insurers in the group writing premiums in Oregon.

(3) This section does not apply as to personal income taxes, nor as
to local ad valorem taxes on real or personal property nor as to special
purpose obligations or assessments heretofore imposed by another state in
connection with particular classes of insurance, other than property
insurance; except that deductions, from premium taxes or other taxes
otherwise payable, allowed on account of real estate or personal property
taxes paid shall be taken into consideration by the director in
determining the propriety and extent of retaliatory action under this
section.

(4) For the purpose of applying this section to an alien insurer,
its domicile shall be determined in accordance with ORS 731.092 and
731.096.

(5) For the purpose of applying this section to foreign and alien
insurers, the following specifically shall be treated as taxes imposed by
this state:

(a) The corporate excise tax imposed under ORS chapter 317.

(b) The assessments imposed under ORS 731.804 made to support the
legislatively authorized budget of the Department of Consumer and
Business Services with respect to the functions of the department under
the Insurance Code.

(c) The assessments paid by insurers on behalf of their insureds
under ORS 656.612. [Formerly 736.237; 1995 c.786 §7a; 2003 c.364 §80] (1) On or before
April 1 of each year, each foreign or alien insurer shall:

(a) Determine and report to the Director of the Department of
Consumer and Business Services whether the provisions of the laws of any
state or country require the imposition of the burdens specified by ORS
731.854;

(b) Compute the amount owing under ORS 731.854; and

(c) Pay to the director that amount.

(2) If the director, during the period in which the director under
ORS 731.836 may collect taxes owing under this section, finds the amount
of such taxes paid by an insurer to have been incorrect, the director
shall charge or credit the insurer with the difference between the
correct amount of tax and the amount actually paid. [1969 c.158 §3
(enacted in lieu of 731.858); 1989 c.700 §9]

PENALTIES (1) Any person who violates any provision
of the Insurance Code, any lawful rule or final order of the Director of
the Department of Consumer and Business Services or any judgment made by
any court upon application of the director, shall forfeit and pay to the
General Fund of the State Treasury a civil penalty in an amount
determined by the director of not more than $10,000 for each offense. In
the case of individual insurance producers, adjusters or insurance
consultants, the civil penalty shall be not more than $1,000 for each
offense. Each violation shall be deemed a separate offense.

(2) In addition to the civil penalty set forth in subsection (1) of
this section, any person who violates any provision of the Insurance
Code, any lawful rule or final order of the director or any judgment made
by any court upon application of the director, may be required to forfeit
and pay to the General Fund of the State Treasury a civil penalty in an
amount determined by the director but not to exceed the amount by which
such person profited in any transaction which violates any such
provision, rule, order or judgment.

(3) In addition to the civil penalties set forth in subsections (1)
and (2) of this section, any insurer that is required to make a report
under ORS 742.400 and that fails to do so within the specified time may
be required to pay to the General Fund of the State Treasury a civil
penalty in an amount determined by the director but not to exceed $10,000.

(4) A civil penalty imposed under this section may be recovered
either as provided in subsection (5) of this section or in an action
brought in the name of the State of Oregon in any court of appropriate
jurisdiction.

(5) Civil penalties under this section shall be imposed and
enforced in the manner provided by ORS 183.745.

(6) The provisions of this section are in addition to and not in
lieu of any other enforcement provisions contained in the Insurance Code.
[1967 c.359 §144; 1971 c.231 §16; 1987 c.774 §65; 1989 c.701 §70; 1991
c.401 §2; 1991 c.734 §120; 1993 c.265 §6; 1997 c.131 §5; 2003 c.364 §81;
2003 c.576 §220](1) Violation of ORS 731.260 is
punishable upon conviction, in the case of an individual, by imprisonment
in the county jail for not more than one year or by a fine not exceeding
$1,000; or, in the case of a corporation, by a fine not exceeding $10,000.

(2) Violation of any provision of the Insurance Code for which a
greater penalty is not otherwise provided by the Insurance Code or by
other applicable laws of this state, in addition to any applicable
prescribed denial, suspension or revocation of any certificate or license
or any civil forfeiture, shall be punishable upon conviction as for a
misdemeanor. [1967 c.359 §145; 1987 c.158 §154a]

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