USA Statutes : oregon
Title : TITLE 56 INSURANCE
Chapter : Chapter 735 Alternative Insurance
As used in ORS
735.005 to 735.145, unless the context requires otherwise:
(1) “Association” means the Oregon FAIR Plan Association created by
ORS 735.045.
(2) “Board” means the board of directors of the association.
(3) “Essential property insurance” means insurance against direct
loss to property as defined and limited in standard fire policies and
extended coverage indorsements thereon, as approved by the Director of
the Department of Consumer and Business Services, and insurance against
the perils of vandalism and malicious mischief. “Essential property
insurance” does not include automobile insurance or insurance on such
types of manufacturing risks as may be excluded by the director.
(4) “Inspection bureau” means the person or persons designated by
the association with the approval of the director to make inspections as
required under ORS 731.418, 733.010 and 735.005 to 735.145 and to perform
such other duties as may be authorized by the association.
(5) “Service insurer” means any insurer designated as such by the
board.
(6) “Member insurer” means an insurer authorized to transact
insurance in this state that writes any kind of essential property
insurance.
(7) “Net direct written premiums” means direct gross premiums
written in this state on insurance policies to which ORS 735.005 to
735.145 apply, less return premiums thereon and dividends paid or
credited to policyholders on such direct business. “Net direct written
premiums” does not include premiums on contracts between insurers or
reinsurers.
(8) “Plan” means the plan of operation of the association
established pursuant to ORS 735.085. [1971 c.321 §5; 1979 c.818 §2]The purpose of ORS 735.005 to 735.145 is:
(1) To assure stability in the property insurance market for
certain property located in this state.
(2) To assure the availability of essential property insurance to
the owners of insurable property.
(3) To encourage maximum use, in obtaining essential property
insurance, of the normal insurance market provided by authorized insurers.
(4) To provide for the equitable distribution among authorized
insurers of the responsibility for insuring certain insurable property
for which essential property insurance cannot be obtained through the
normal insurance market by the establishment of the Oregon FAIR Plan
Association. [1971 c.321 §2]ORS 735.005 to 735.145 shall be liberally
construed to effect the purpose provided in ORS 735.015. [1971 c.321 §3]ORS 735.005 to 735.145 apply only to essential
property insurance on domestic risks. [1971 c.321 §4]There is hereby created the Oregon FAIR Plan
Association. Each insurer that is a member insurer shall become and
remain a member of the association as a condition of its authority to
transact insurance in this state. The association shall perform its
functions in accordance with a plan of operation established pursuant to
ORS 735.085, and shall exercise its powers through its board of
directors. [1971 c.321 §6](1) The board of directors of the Oregon
FAIR Plan Association shall consist of five members selected by the
member insurers, subject to the approval of the Director of the
Department of Consumer and Business Services, and four persons selected
by the Governor, one of whom shall be an insurance producer holding an
appointment as an Oregon insurance producer of a member insurer. Of the
other three persons appointed by the Governor, one shall be a resident of
a county of over 400,000 population and none shall have been an employee
or insurance producer of a member insurer. The term of each member shall
be as specified in the plan, but in no event for longer than four years.
A vacancy on the board shall be filled for the remainder of the unexpired
term in the same manner as for the initial selection.
(2) In making or approving selections to the board, the Director of
the Department of Consumer and Business Services shall consider among
other things whether member insurers are fairly represented.
(3) A member of the board shall receive no compensation for
services as a member. However, a member shall be reimbursed from the
assets of the association for actual and necessary travel and other
expenses incurred by the member in the performance of duties.
(4) A majority of the members of the board constitutes a quorum for
the transaction of business. [1971 c.321 §7; 1979 c.818 §2a; 2003 c.364
§88] (1) The Oregon
FAIR Plan Association shall:
(a) Have authority on behalf of its members to arrange for the
issuance of property insurance policies by service insurers and to
reinsure any of those policies in whole or in part and to cede such
reinsurance, subject to the plan.
(b) Assess member insurers the amounts necessary to pay the
expenses incurred by the association in meeting its obligations and
exercising its duties and powers under ORS 735.005 to 735.145.
(2) Except as provided in subsection (3)(a) and (b) of this
section, the assessment of each member insurer for a particular calendar
year shall be in the proportion that the net direct written premiums of
the member insurer for the second preceding calendar year bears to the
net direct written premiums of all member insurers for the second
preceding calendar year. Each member insurer shall be notified of an
assessment not later than the 30th day before the day it is due. If the
funds of the association do not provide in any one year an amount
sufficient to pay the expenses of the association, the funds available
shall be prorated among the expenses and the unpaid portion shall be paid
as soon thereafter as funds become available. If an assessment would
cause a member insurer’s financial statement to reflect an amount of
surplus less than the minimum amount required for a certificate of
authority by any jurisdiction in which the member insured is authorized
to transact insurance, the association may, in whole or in part, exempt
the member insurer from payment of the assessment or defer payments.
(3)(a) The maximum assessment of a member insurer for any calendar
year shall be two percent of the insurer’s net direct written premiums
for the second preceding calendar year.
(b) The minimum assessment of a member insurer for any calendar
year shall be $50.
(4) Reimburse inspection bureaus, service insurers and employees of
the association for expenses incurred in the inspection or insuring of
property on behalf of the association, and pay all other expenses the
association incurs in carrying out the provisions of ORS 735.005 to
735.145.
(5) Undertake a continuing public education program in cooperation
with member insurers and insurance producers to assure that the plan
receives adequate attention.
(6) Undertake a continuing education program to advise the public
of the steps which may be taken to make property more insurable against
crime, personal liability and the perils named in ORS 735.005 (3). [1971
c.321 §8; 1979 c.818 §3; 2003 c.364 §89] The Oregon FAIR Plan
Association may:
(1) With the approval of the Director of the Department of Consumer
and Business Services, employ or retain such persons and designate such
inspection bureaus and service insurers as are necessary to handle
applications, inspect and insure property and perform the other duties of
the association.
(2) Borrow funds as necessary to carry out ORS 735.005 to 735.145
in such manner as may be specified in the plan.
(3) Sue or be sued.
(4) Negotiate and become a party to such contracts as are necessary
to carry out ORS 735.005 to 735.145.
(5) At the end of any calendar year, refund to member insurers, in
proportion to each insurer’s payments to the association, the amount by
which the board of directors finds that the funds of the association
exceed its current liabilities plus the liabilities estimated for the
coming year.
(6) Perform such other acts as are necessary or proper to carry out
ORS 735.005 to 735.145. [1971 c.321 §9](1) The Oregon FAIR Plan Association shall
submit to the Director of the Department of Consumer and Business
Services, not later than September 7, 1971, a plan of operation, and may
thereafter submit such amendments thereto as will provide for the
reasonable and equitable exercise of the duties and powers of the
association. The plan of operation, and any amendments thereto, shall
become effective upon approval in writing by the director.
(2) If the association fails to submit a plan that receives the
approval of the director as provided in subsection (1) of this section,
or if the association after such approval fails to maintain a plan
satisfactory to the director, the director shall by rule prescribe a plan
of operation that meets the standards provided in subsection (1) of this
section. A plan prescribed by the director shall remain in effect until
the director by rule provides otherwise.
(3) No member insurer shall fail to comply with the currently
effective plan. [1971 c.321 §10] The plan shall:
(1) Establish procedures for the submission and processing of
applications for insurance and the payment of claims for losses.
(2) Establish procedures for record keeping, payment of other
expenses and administration of all other financial affairs of the Oregon
FAIR Plan Association.
(3) Establish times and places for meetings of the board.
(4) Establish procedures for selection of members of the board and
for approval of such selections by the Director of the Department of
Consumer and Business Services.
(5) Establish a procedure for appeal to the director of final
actions or decisions of the association.
(6) Establish such other procedures as may be necessary or proper
to carry out the duties and powers of the association.
(7) Provide that the association shall file periodically with the
director statements of the insurance provided through the association and
estimates of anticipated claims against the association. [1971 c.321 §11;
1979 c.818 §4]The Oregon FAIR Plan Association is subject to regulation by
the Director of the Department of Consumer and Business Services in the
same manner as an insurer, to the extent determined by the director to be
necessary to carry out the purpose of ORS 735.005 to 735.145. Not later
than March 30 of each year the board shall submit to the director, in a
form approved by the director, a financial report for the preceding
calendar year. [1971 c.321 §12] Except for
taxes levied on real or personal property, the Oregon FAIR Plan
Association shall be exempt from the payment of all fees and taxes levied
by this state or by any city, county, district or other political
subdivision of this state. [1971 c.321 §13] No
person shall have a cause of action against the Oregon FAIR Plan
Association or its employees or servicing facilities, any member of the
board, or the Director of the Department of Consumer and Business
Services or the employees of the director for any action taken by them in
carrying out ORS 735.005 to 735.145. [1971 c.321 §16]MARKET ASSISTANCE PLANS; JOINT UNDERWRITING ASSOCIATIONS (1) The Legislative Assembly
finds that:
(a) Some businesses and service providers in Oregon have
experienced major problems in both the availability and affordability of
commercial liability insurance. Premiums for such insurance policies have
recently grown as much as 500 percent and the availability of such
insurance in Oregon markets has greatly diminished.
(b) These businesses and service providers are essential to achieve
goals such as increased workforce productivity, family self-sufficiency
and the maintenance and improvement of the health of the citizens of
Oregon. The lack of adequate commercial liability insurance threatens
these businesses and services.
(2) The Legislative Assembly therefore declares it is the purpose
of ORS 735.200 to 735.260 to remedy the problem of unavailable commercial
liability insurance for these businesses and service providers by
authorizing the Director of the Department of Consumer and Business
Services to assist in the establishment of a market assistance plan for
providing commercial liability insurance for these businesses and service
providers, or, if necessary, by requiring all insurers authorized to
write commercial liability insurance in Oregon to be members of one or
more joint underwriting associations created to provide commercial
liability insurance for these businesses and service providers. [1987
c.774 §73] As used in ORS
735.200 to 735.260:
(1) “Joint underwriting association” means a mechanism requiring
casualty insurers doing business in Oregon to provide commercial
liability insurance to certain businesses and service providers on either
an assigned risk basis or through a joint underwriting pool underwritten
to standards adopted under the Insurance Code.
(2) “Market assistance plan” means a mechanism through which
admitted casualty insurers in this state provide commercial liability
insurance for classes of risks designated by the Director of the
Department of Consumer and Business Services. [1987 c.774 §74] (1) After a
public hearing, the Director of the Department of Consumer and Business
Services may by rule require insurers authorized to write and writing
commercial liability insurance in this state to form a market assistance
plan to assist businesses and service providers unable to purchase
specified classes of commercial liability insurance in adequate amounts
from either the admitted or nonadmitted market.
(2) The market assistance plan shall operate under a plan of
operations prepared by admitted insurers, eligible surplus line insurers
and insurance producers, and approved by the director. [1987 c.774 §75;
2003 c.364 §90](1) The Director of the Department of Consumer and
Business Services may mandate the formation of a joint underwriting
association under ORS 735.220 if after directing the formation of a
market assistance plan and allowing it a reasonable time to alleviate
insurance availability problems, the director finds that:
(a) There exist in Oregon certain businesses or service providers
for which no commercial liability insurance is available; and
(b) There is a need in Oregon for the goods or services provided by
these businesses or service providers and the lack of available
commercial liability insurance will cause a substantial number of the
entities to cease operations within the state.
(2) Notwithstanding subsection (1) of this section, if the lack of
availability of insurance is due to legitimate insurance underwriting
considerations, including past claims experience, licensing noncompliance
or inadequate risk management, formation of a joint underwriting
association shall not be appropriate.
(3) The director may make the findings required under subsection
(1) of this section only after conducting a public hearing according to
the applicable provisions of ORS chapter 183. The director must specify
the specific classes of business or lines of insurance determined to be
unavailable.
(4) At least once each year, the director shall hold a public
hearing to determine if the classes of business or lines of insurance
offered by the joint underwriting association are still unavailable in
the voluntary insurance market. If any class or line is found to be
available, the joint underwriting association shall cease to underwrite
such class of business or line of insurance. [1987 c.774 §76] After
finding under ORS 735.215 that there is a need in Oregon for a joint
underwriting association, the Director of the Department of Consumer and
Business Services may form and put into operation a temporary, nonprofit,
nonexclusive joint underwriting association constituting a legal entity
separate and distinct from its members for commercial liability insurance
subject to the conditions and limitations contained in the Insurance
Code. All funds and reserves of the association shall be separately held
and invested. [1987 c.774 §77] The joint
underwriting association established under ORS 735.220 shall be comprised
of all insurers authorized to write and who are writing commercial
liability insurance within this state on a direct basis, including the
commercial liability portions of multiperil policies. Every such insurer
shall remain a member of the association as a condition of its authority
to continue to transact insurance in this state. [1987 c.774 §78] The board of directors of the joint
underwriting association shall engage the services of an independent
actuarial firm to develop and recommend actuarially sound rates, rating
plans, rating rules and classifications. The Director of the Department
of Consumer and Business Services shall approve rates filed by the joint
underwriting association in accordance with ORS 737.310. All rates
approved for the joint underwriting association shall be actuarially
sound and calculated to be self-supporting. [1987 c.774 §79] The joint underwriting association
formed under ORS 735.220 shall be under the administrative control of a
seven person board of directors appointed by the Governor. Two directors
shall represent insurance carriers participating in the association; one
director shall represent insurance producers; three directors shall
represent the affected classes of insureds; and one director shall be a
public member with no ties to the insurance industry. The board shall
elect one of its members as chairperson. [1987 c.774 §80; 2003 c.364 §91] The joint underwriting association shall
file an annual statement prepared by an independent certified public
accountant containing a financial statement, a summary of its
transactions and operations for the prior year and other information as
prescribed by the Director of the Department of Consumer and Business
Services by rule. [1987 c.774 §81] (1) Upon a
determination of the board of directors that the joint underwriting
association will be unable to pay its outstanding lawful obligations as
they mature, the board shall certify the existence of this condition to
the Director of the Department of Consumer and Business Services. A
schedule for policyholder surcharges shall be submitted by the board at
the time of certification.
(2) The surcharge schedule shall become final 30 days after
certification unless the director finds, after a public hearing, that the
surcharge amounts are unreasonable or unjustifiable. Such surcharges may
be adjusted to take into consideration the past and prospective loss and
expense experience in different geographical areas within the state. Such
surcharges shall be in addition to and not in lieu of the premiums
charged for the coverages provided.
(3) Moneys collected in accordance with subsection (2) of this
section shall be held in a fund separate from other joint underwriting
association funds. Such funds shall be invested in accordance with
applicable law governing publicly held trust funds. The association shall
file an annual financial statement covering such funds.
(4) Surcharge funds shall be subject to the control of the board of
directors and may be used to satisfy the legal obligations of the joint
underwriting association.
(5) No part of the profit or loss of the joint underwriting
association shall inure to the benefit of any member insurer or be an
obligation of any member insurer. [1987 c.774 §82] There shall be no liability or
cause of action against any member insurer, self-insurer, or its agents
or employees, the joint underwriting association or its agents or
employees, members of the board of directors, the Department of Consumer
and Business Services or its representatives for any action taken by or
statement made by them in performance of their powers and duties under
ORS 735.210 to 735.260. [1987 c.774 §83] The state is
not liable to pay any debts or obligations of any association formed
under ORS 735.220 and no person may assert any claim against the state or
any of its agencies for any act or omission of the association. [1987
c.774 §84] The Director of the Department of Consumer and
Business Services may adopt all rules necessary to insure the efficient,
equitable operation of the market assistance plan or the joint
underwriting association, including but not limited to rules requiring or
limiting certain policy provisions. [1987 c.774 §85]If a market assistance plan is formed under ORS 735.210, or a
joint underwriting association is formed under ORS 735.220, the Director
of the Department of Consumer and Business Services shall by rule
establish such liquor liability insurance risk and rate classifications
as may be necessary to facilitate the availability and affordability of
this commercial insurance product. Risk and rate classifications shall be
established for all facets of the liquor industry including those who
sell at wholesale or retail and the State of Oregon, as allowed by law.
Risk classifications and rating plans shall be developed upon
considerations including, but not limited to, the following factors:
(1) Past loss experience and prospective loss experience of
different license types.
(2) Past loss experience and prospective loss experience in
different geographic areas.
(3) Prior claims experience of the individual licensee.
(4) Prior compliance with public safety and alcoholic beverage
laws, rules and ordinances pertaining to the sale and service of
alcoholic beverages.
(5) Evidence of responsible management policies including, but not
limited to, procedures and actions which:
(a) Encourage persons not to become intoxicated if they consume
alcoholic beverages on the licensee’s premises;
(b) Promote availability of nonalcoholic beverages and food;
(c) Promote safe transportation alternatives to driving while
intoxicated;
(d) Prohibit employees and agents of the licensee from consuming
alcoholic beverages while acting in their capacity as employee or agent;
(e) Establish promotions and marketing efforts which publicize
responsible business practices to the licensee’s customers and community;
(f) Implement comprehensive training procedures; and
(g) Maintain an adequate, trained number of employees and agents
for the type and size of licensee’s business. [1987 c.774 §88]LIABILITY RISK RETENTION LAW The purpose of ORS
735.300 to 735.365 is to regulate the formation and operation of risk
retention groups and purchasing groups in this state formed pursuant to
the provisions of the federal Liability Risk Retention Act of 1986 (P.L.
99-563). [1987 c.774 §98; 1989 c.700 §10] As used in ORS
735.300 to 735.365:
(1) “Director” means the Director of the Department of Consumer and
Business Services of this state or the commissioner, director or
superintendent of insurance in any other state.
(2) “Completed operations liability” means liability arising out of
the installation, maintenance or repair of any product at a site that is
not owned or controlled by any person who performs that work or by any
person who hires an independent contractor to perform that work. The term
also includes liability for activities that are completed or abandoned
before the date of the occurrence giving rise to the liability.
(3) “Domicile,” for purposes of determining the state in which a
purchasing group is domiciled, means:
(a) For a corporation, the state in which the purchasing group is
incorporated; and
(b) For an unincorporated entity, the state of its principal place
of business.
(4) “Hazardous financial condition” means that a risk retention
group, based on its present or reasonably anticipated financial
conditions, although not yet financially impaired or insolvent, is
unlikely to be able:
(a) To meet obligations to policyholders with respect to known
claims and reasonably anticipated claims; or
(b) To pay other obligations in the normal course of business.
(5) “Insurance” means primary insurance, excess insurance,
reinsurance, surplus lines insurance and any other arrangement for
shifting and distributing risk that is determined to be insurance under
the laws of this state.
(6) “Liability”:
(a) Means legal liability for damages, including costs of defense,
legal costs and fees and other claims expenses, because of injuries to
other persons, damage to their property or other damage or loss to such
other persons resulting from or arising out of:
(A) Any business that is for-profit or not-for-profit, or any
trade, product, premises, operations or services, including professional
services; or
(B) Any activity of any state or local government, or any agency or
political subdivision thereof.
(b) Does not include personal risk liability and an employer’s
liability with respect to its employees other than legal liability under
the Federal Employers’ Liability Act (45 U.S.C. 51 et seq.).
(7) “Personal risk liability” means liability for damages because
of injury to any person, damage to property or other loss or damage
resulting from any personal, familial or household responsibilities or
activities, rather than from responsibilities or activities referred to
in subsection (6) of this section.
(8) “Plan of operation or a feasibility study” means an analysis
that presents the expected activities and results of a risk retention
group, and includes at a minimum:
(a) The coverages, deductibles, coverage limits, rates and rating
classification systems for each line of insurance the group intends to
offer;
(b) Historical and expected loss experience of the proposed members
and national experience of similar exposures to the extent that this
experience is reasonably available;
(c) Pro forma financial statements and projections;
(d) Appropriate opinions by a qualified independent casualty
actuary, including a determination of minimum premium or participation
levels required to commence operations and prevent a hazardous financial
condition;
(e) Identification of management, underwriting procedures,
managerial oversight methods and investment policies; and
(f) Other matters that the director requires for liability
insurance companies authorized by the insurance laws of the state in
which the risk retention group is chartered.
(9) “Product liability” means liability for damages because of any
personal injury, death, emotional harm, consequential economic damage or
property damage, including damages resulting from the loss of use of
property, arising out the manufacture, design, importation, distribution,
packaging, labeling, lease or sale of a product. The term does not
include the liability of any person for those damages if the product
involved was in the possession of such a person when the incident giving
rise to the claim occurred.
(10) “Purchasing group” means any group that:
(a) Has as one of its purposes the purchase of liability insurance
on a group basis;
(b) Purchases such insurance only for its group members and only to
cover their similar or related liability exposure, as described in
paragraph (c) of this subsection;
(c) Is composed of members whose business or activities are similar
or related with respect to the liability to which members are exposed by
virtue of any related, similar or common business, trade, product,
services, premises or operations; and
(d) Is domiciled in any state.
(11) “Risk retention group” means any corporation or other limited
liability association formed under the laws of any state:
(a) Whose primary activity consists of assuming and spreading all,
or any portion of, the liability exposure of its group members;
(b) That is organized for the primary purpose of conducting the
activity described in paragraph (a) of this subsection;
(c) That:
(A) Is chartered and licensed as a liability insurance company and
authorized to engage in the business of insurance under the laws of any
state; or
(B) Before January 1, 1985, was chartered or licensed and
authorized to engage in the business of insurance under the laws of
Bermuda or the Cayman Islands and, before that date, had certified to the
insurance commissioner of at least one state that it satisfied the
capitalization requirements of that state. However, any such group shall
be considered to be a risk retention group only if it has been engaged in
business continuously since that date and only for the purpose of
continuing to provide insurance to cover product liability or completed
operations liability, as such terms were defined in the federal Product
Liability Risk Retention Act of 1981, as amended by the Risk Retention
Amendments of 1986, before the date of the enactment of the federal
Liability Risk Retention Act of 1986 (P.L. 99-563);
(d) That does not exclude any person from membership in the group
solely to provide for members of such a group a competitive advantage
over such a person;
(e) That:
(A) Has as its members only persons who have an ownership interest
in the group and has as its owners only persons who are members that are
provided insurance by the risk retention group; or
(B) Has as its sole member and sole owner an organization that is
owned by persons who are provided insurance by the risk retention group;
(f) Whose members are engaged in businesses or activities similar
or related with respect to the liability to which such members are
exposed by virtue of any related, similar or common business, trade,
product, services, premises or operations;
(g) Whose activities do not include the provision of insurance
other than:
(A) Liability insurance for assuming and spreading all or any
portion of the liability of its group members; and
(B) Reinsurance with respect to the liability of any other risk
retention group, or any members of such other group, that is engaged in
businesses or activities so that such group or member meets the
requirement described in paragraph (f) of this subsection for membership
in the risk retention group that provides such reinsurance; and
(h) The name of which includes “Risk Retention Group.”
(12) “State” means any state of the United States or the District
of Columbia. [1987 c.774 §99; 1993 c.744 §29](1) A risk retention group seeking to be organized in this
state:
(a) Must be organized as a liability insurer in this state and
authorized by a subsisting certificate of authority issued by the
director to transact liability insurance in this state, as provided in
ORS chapter 732; and
(b) Except as otherwise provided in ORS 735.300 to 735.365, must
comply with all laws, rules and other requirements applicable to such
insurers authorized to transact insurance in this state and with ORS
735.315 to the extent the requirements under ORS 735.315 are not a
limitation on other laws, rules or requirements of this state.
(2) Before a risk retention group may offer insurance in any state,
the risk retention group shall submit for approval to the director of
this state a plan of operation or a feasibility study and revisions of
such plan or study if the group intends to offer any additional lines of
liability insurance.
(3) Immediately upon receipt of an application for organization,
the director shall provide summary information concerning the filing to
the National Association of Insurance Commissioners, including the name
of the risk retention group, the identity of the initial members of the
group, the identity of those individuals who organized the group or who
will provide administrative services or otherwise influence or control
the activities of the group, the amount and nature of initial
capitalization, the coverages to be afforded and the states in which the
group intends to operate. Providing notification to the National
Association of Insurance Commissioners is in addition to and shall not be
sufficient to satisfy the requirements of ORS 735.300 to 735.365. [1987
c.774 §100]Risk retention groups chartered in states
other than this state and seeking to do business as a risk retention
group in this state must observe and abide by the laws of this state as
follows:
(1) Before transacting insurance in this state, a risk retention
group shall submit to the director:
(a) A statement identifying the state or states in which the risk
retention group is chartered and licensed as a liability insurance
company, its date of chartering, its principal place of business and such
information, including information on its membership, as the director may
require to verify that the risk retention group is qualified under ORS
735.305 (11);
(b) A copy of its plan of operation or a feasibility study and
revisions of such plan or study submitted to its state of domicile. The
requirement of the submission of a plan of operation or a feasibility
study shall not apply with respect to any line or classification of
liability insurance that:
(A) Was defined in the federal Product Liability Risk Retention Act
of 1981, as amended by the Risk Retention Amendments of 1986, before
October 27, 1986; and
(B) Was offered before October 27, 1986, by any risk retention
group that had been chartered and operating for not less than three years
before October 27, 1986; and
(c) A statement of registration that designates the director as its
agent for the purpose of receiving service of legal documents or process.
(2) A risk retention group doing business in this state shall
submit to the director:
(a) A copy of the group’s financial statement submitted to its
state of domicile, which shall be certified by an independent public
accountant and contain a statement of opinion on loss and loss adjustment
expense reserves made by a member of the American Academy of Actuaries or
a qualified loss reserve specialist, under criteria established by the
National Association of Insurance Commissioners;
(b) A copy of each examination of the risk retention group as
certified by the director or public official conducting the examination;
(c) Upon request by the director, a copy of any audit performed
with respect to the risk retention group; and
(d) Such information as may be required to verify its continuing
qualification as a risk retention group under ORS 735.305 (11).
(3) A risk retention group is subject to taxation in this state as
follows:
(a) All premiums paid for coverage within this state to risk
retention groups shall be subject to taxation at the rate applicable to
foreign admitted insurers and the taxes owing shall be subject to the
same interest, fines and penalties for nonpayment as those applicable to
foreign admitted insurers.
(b) To the extent insurance producers are used, they shall report
and pay the taxes for the premiums for the risks that they have placed
with or on behalf of a risk retention group not organized in this state.
(c) To the extent insurance producers are not used or fail to pay
the tax, each risk retention group shall pay the tax for risks insured
within the state. Further, each risk retention group shall report all
premiums paid to it for risks insured within the state.
(4) A risk retention group and its agents and representatives shall
comply with ORS 746.230 and 746.240. If the director seeks an injunction
regarding such conduct, the injunction must be obtained from a court of
competent jurisdiction.
(5) A risk retention group must submit to an examination by the
director to determine its financial condition if the director of the
jurisdiction in which the group is chartered has not initiated an
examination or does not initiate an examination within 60 days after a
request by the director of this state. Any such examination shall be
coordinated to avoid unjustified repetition. Examinations may be
conducted in accordance with the examiner handbook of the National
Association of Insurance Commissioners.
(6) A policy issued by a risk retention group shall contain in 10
point type on the front page and the declaration page, the following
notice:
___________________________________________________________________________
___
Notice
This policy is issued by your risk retention group. Your risk
retention group may not be subject to all of the insurance laws and rules
of your state. State insurance insolvency guaranty funds are not
available for your risk retention group.
___________________________________________________________________________
___
(7) The following acts by a risk retention group are prohibited:
(a) The solicitation or sale of insurance by a risk retention group
to any person who is not eligible for membership in such group; and
(b) The solicitation or sale of insurance by, or operation of, a
risk retention group that is in a hazardous financial condition or is
financially impaired.
(8) No risk retention group shall be allowed to do business in this
state if an insurer is directly or indirectly a member or owner of the
risk retention group, other than in the case of a risk retention group
all of whose members are insurers.
(9) No risk retention group may offer insurance policy coverage
prohibited by the Insurance Code.
(10) A risk retention group not organized in this state and doing
business in this state must comply with a lawful order issued in a
voluntary dissolution proceeding or in a delinquency proceeding commenced
by the insurance commissioner of any state if there has been a finding of
financial impairment after an examination under subsection (5) of this
section. [1987 c.774 §101; 2003 c.364 §92](1) No risk retention group shall be permitted
to join or contribute financially to any insurance insolvency guaranty
fund, or similar mechanism, in this state. No risk retention group, or
its insureds, shall receive any benefit from any such fund for claims
arising out of the operations of the risk retention group.
(2) A risk retention group shall participate in this state’s joint
underwriting associations and mandatory liability pools as provided by
the Insurance Code. [1987 c.774 §102] Any
purchasing group meeting the criteria established under the provisions of
the federal Liability Risk Retention Act of 1986 (P.L. 99-563), shall be
exempt from any law of this state relating to the creation of groups for
the purchase of insurance or the prohibition of group purchasing, or any
law that would discriminate against a purchasing group or its members. In
addition, an insurer shall be exempt from any law of this state that
prohibits providing or offering to provide advantages to a purchasing
group or its members based on their loss and expense experience not
afforded to other persons with respect to rates, policy forms, coverages
or other matters. A purchasing group shall be subject to all other
applicable laws of this state. [1987 c.774 §103](1) A purchasing group that intends to do
business in this state shall furnish notice to the director, which shall:
(a) Identify the state in which the group is domiciled;
(b) Specify the lines and classifications of liability insurance
that the purchasing group intends to purchase;
(c) Identify the insurer from which the group intends to purchase
its insurance and the domicile of the insurer;
(d) Identify the principal place of business of the group; and
(e) Provide such other information as may be required by the
director to verify that the purchasing group is qualified under ORS
735.305 (10).
(2) The purchasing group shall register with the director and
designate the director as its agent solely for the purpose of receiving
service of legal documents or process, except that such requirements
shall not apply in the case of a purchasing group that meets the
following qualifications:
(a) That:
(A) Was domiciled before April 1, 1986, in any state; and
(B) Is domiciled on and after October 27, 1986, in any state;
(b) That:
(A) Before October 27, 1986, purchased insurance from an insurance
carrier licensed in any state; and
(B) On and after October 27, 1986, purchased insurance from an
insurance carrier licensed in any state;
(c) That was a purchasing group under the requirements of the
federal Product Liability Risk Retention Act of 1981, as amended by the
Risk Retention Amendments of 1986, before October 27, 1986; and
(d) That does not purchase insurance that was not authorized for
purposes of an exemption under the federal Product Liability Risk
Retention Act of 1981, as in effect before October 27, 1986. [1987 c.774
§104] A purchasing
group may not purchase insurance from a risk retention group that is not
chartered in a state or from an insurer not admitted in the state in
which the purchasing group is located, unless the purchase is effected
through a licensed insurance producer acting pursuant to the surplus
lines laws and regulations of that state. [1987 c.774 §105; 2003 c.364
§93]The director is authorized to make use of any of the powers
established under the Insurance Code to enforce the laws of this state so
long as those powers are not specifically preempted by the federal
Product Liability Risk Retention Act of 1981, as amended by the Risk
Retention Amendments of 1986. This includes, but is not limited to, the
director’s administrative authority to investigate, issue subpoenas,
conduct depositions and hearings, issue orders and impose penalties. With
regard to any investigation, administrative proceedings or litigation,
the director may rely on the procedural law and rules of the state. The
injunctive authority of the director in regard to risk retention groups
is restricted by the requirement that any injunction be issued by a court
of competent jurisdiction. [1987 c.774 §106] A risk
retention group that violates any provision of ORS 735.300 to 735.365 is
subject to criminal and civil penalties applicable to insurers generally,
and to suspension or revocation of its certificate of authority to
transact insurance. [1987 c.774 §107] Any person acting or offering to
act as an insurance producer for a risk retention group or purchasing
group that solicits members, sells insurance coverage, purchases coverage
for its members located within this state or otherwise does business in
this state shall, before commencing any such activity, obtain a license
as an insurance producer from the director under ORS chapter 744. [1987
c.774 §108; 1989 c.701 §71; 2003 c.364 §94] An order issued by any
district court of the United States enjoining a risk retention group from
soliciting or selling insurance or operating in any state or in all
states or in any territory or possession of the United States, upon a
finding that such a group is in a hazardous financial condition shall be
enforceable in the courts of this state. [1987 c.774 §109] The director may adopt rules that the director
determines are necessary for carrying out ORS 735.300 to 735.365. [1987
c.774 §110; 1989 c.700 §11]ORS 735.300 to 735.365 shall be known and may
be cited as the Oregon Liability Risk Retention Law. [1987 c.774 §98a]SURPLUS LINES LAW
(1) Protecting persons seeking insurance in this state;
(2) Permitting surplus lines insurance to be placed with reputable
and financially sound nonadmitted insurers and exported from this state
pursuant to ORS 735.400 to 735.495;
(3) Establishing a system of regulation which will permit orderly
access to surplus lines insurance in this state and encourage admitted
insurers to provide new and innovative types of insurance available to
consumers in this state; and
(4) Protecting revenues of this state. [1987 c.774 §117] As used in ORS
735.400 to 735.495:
(1) “Admitted insurer” means an insurer authorized to do an
insurance business in this state.
(2) “Capital” means funds paid in for stock or other evidence of
ownership.
(3) “Eligible surplus lines insurer” means a nonadmitted insurer
with which a surplus lines licensee may place surplus lines insurance.
(4) “Export” means to place surplus lines insurance with a
nonadmitted insurer.
(5) “Kind of insurance” means one of the types of insurance
required to be reported in the annual statement which must be filed with
the Director of the Department of Consumer and Business Services by
authorized insurers.
(6) “Nonadmitted insurer” means an insurer not authorized to do an
insurance business in this state. This definition shall include insurance
exchanges as authorized under the laws of various states.
(7) “Producing insurance producer” means the individual insurance
producer dealing directly with the party seeking insurance.
(8) “Surplus” means funds over and above liabilities and capital of
the insurer for the protection of policyholders.
(9) “Surplus lines licensee” means an insurance producer licensed
under ORS chapter 744 to place insurance on risks resident, located or to
be performed in this state with nonadmitted insurers eligible to accept
such insurance. [1987 c.774 §118; 1991 c.810 §25; 2001 c.191 §44a; 2003
c.364 §38](1) Insurance may be procured through a surplus lines
licensee from a nonadmitted insurer if:
(a) The insurer is an eligible surplus lines insurer;
(b) A diligent search has first been made among the insurers who
are authorized to transact and are actually writing the particular kind
and class of insurance in this state, and it is determined that the full
amount or kind of insurance cannot be obtained from those insurers; and
(c) All other requirements of ORS 735.400 to 735.495 are met.
(2) Subsection (1) of this section does not apply to a placement of
surplus lines insurance outside this state by a nonresident surplus lines
licensee or by a nonresident surplus lines insurance producer who is not
licensed to transact surplus lines insurance in this state when the
insurance covers a risk with exposures both in this state and outside
this state, if both of the following conditions are met:
(a) If the nonresident surplus lines licensee or insurance producer
is licensed in the state as an insurance producer to transact surplus
lines policies in the state in which the insurance is placed and is in
good standing in that state; and
(b) If the surplus lines policy complies with all of the
requirements for placement of nonadmitted insurance in the state in which
the insurance is placed.
(3) The Director of the Department of Consumer and Business
Services by rule may establish requirements applicable to the placement
of surplus lines insurance outside this state by a nonresident surplus
lines licensee or by a nonresident surplus lines insurance producer who
is not licensed in this state, when the insurance covers a risk with
exposures both in this state and outside this state. The rules may
include such matters as the procurement of surplus lines insurance,
eligibility of the insurer, the conditions under which surplus lines
insurance may be obtained, the necessary evidence of insurance, filing
requirements and other matters necessary for regulation of surplus lines
insurance transactions that affect risk exposures in this state. The
rules may not interfere with or hinder implementation of the federal
Gramm-Leach-Bliley Act (P.L. 106-102) with respect to licensing
reciprocity among the states. [1987 c.774 §119; 2001 c.191 §44b](1) A surplus lines licensee may not place any coverage with a
nonadmitted insurer unless at the time of placement the nonadmitted
insurer has done all of the following:
(a) Established satisfactory evidence of good repute and financial
integrity.
(b) Qualified under one of the following subparagraphs:
(A) Has capital and surplus or its equivalent under the laws of its
domiciliary jurisdiction that equals either the minimum capital and
surplus requirements under the laws of this state or $5 million, except
that the requirements of this paragraph may be satisfied by an insurer
possessing less than $5 million capital and surplus upon an affirmative
finding of acceptability by the Director of the Department of Consumer
and Business Services. The finding shall be based upon such factors as
quality of management, capital and surplus of any parent company, company
underwriting profit and investment income trends and company record and
reputation within the industry. In no event shall the director make an
affirmative finding of acceptability when the surplus lines insurer’s
capital and surplus is less than $3 million.
(B) Except as otherwise provided in subparagraph (C) of this
paragraph, in the case of an alien insurer, maintains in the United
States an irrevocable trust fund in either a national bank or a member of
the Federal Reserve System, in an amount not less than $1.5 million for
the protection of all its policyholders in the United States and such
trust fund consists of cash, securities, irrevocable letters of credit,
or of investments of substantially the same character and quality as
those which are eligible investments for the capital and statutory
reserves of admitted insurers authorized to write like kinds of insurance
in this state. Such trust fund, which shall be included in any
calculation of capital and surplus or its equivalent, shall have an
expiration date which at no time shall be less than five years.
(C) In the case of a group of insurers that includes incorporated
and individual unincorporated underwriters, maintains a trust fund of not
less than $50 million as security to the full amount thereof for all
policyholders and creditors in the United States of each member of the
group, and such trust shall likewise comply with the terms and conditions
established in subparagraph (B) of this paragraph for alien insurers,
except that 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 solvency regulation and control by the
group’s domiciliary regulators as are the unincorporated members.
(D) In the case of an insurance exchange created by the laws of
individual states, maintains capital and surplus, or the substantial
equivalent thereof, of not less than $15 million in the aggregate. For
insurance exchanges that maintain funds for the protection of all
insurance exchange policyholders, each individual syndicate shall
maintain minimum capital and surplus, or the substantial equivalent
thereof, of not less than $1.5 million. In the event the insurance
exchange does not maintain funds for the protection of all insurance
exchange policyholders, each individual syndicate shall meet the minimum
capital and surplus requirements of subparagraph (A) of this paragraph.
(E) Is on the most current list of alien insurers approved by the
National Association of Insurance Commissioners and meets additional
requirements regarding the use of the list established by rule of the
director.
(c) Unless qualified under paragraph (b)(E) of this subsection,
provided to the director no more than six months after the close of the
period reported upon a certified copy of its current annual statement
that is:
(A) Filed with and approved by the regulatory authority in the
domicile of the nonadmitted insurer;
(B) Certified by an accounting or auditing firm licensed in the
jurisdiction of the insurer’s domicile; or
(C) In the case of an insurance exchange, an aggregate combined
statement of all underwriting syndicates operating during the period
reported.
(2) When a nonresident surplus lines licensee or nonresident
surplus lines insurance producer who is not licensed to transact surplus
lines insurance in this state places surplus lines insurance outside this
state that covers a risk with exposures both in this state and outside
this state, the licensee or insurance producer is not subject to the
requirements of subsection (1) of this section if the nonadmitted insurer
with which the coverage is placed:
(a) Meets the requirements for nonadmitted placement of insurance
in the state in which the insurance is placed; or
(b) Is an authorized or admitted insurer in the state in which the
insurance is placed. [1987 c.774 §120; 1995 c.99 §2; 2001 c.191 §44c;
2005 c.185 §11] (1)
The Director of the Department of Consumer and Business Services may
declare a surplus lines insurer described in ORS 735.415 (1) ineligible
if the director has reason to believe that the surplus lines insurer:
(a) Is in unsound financial condition;
(b) Is no longer eligible under ORS 735.415;
(c) Has willfully violated the laws of this state; or
(d) Does not make reasonably prompt payment of just losses and
claims in this state or elsewhere.
(2) The director shall promptly mail notice of all such
declarations to each surplus lines licensee. [1987 c.774 §121; 2001 c.191
§44d](1) Within 90 days after the placing of any surplus lines
insurance in this state, each surplus lines licensee shall file with the
Director of the Department of Consumer and Business Services:
(a) A statement signed by the licensee regarding the insurance,
which shall be kept confidential as provided in ORS 705.137, including
the following:
(A) The name and address of the insured;
(B) The identity of the insurer or insurers;
(C) A description of the subject and location of the risk;
(D) The amount of premium charged for the insurance; and
(E) Such other pertinent information as the director may reasonably
require.
(b) A statement on a standardized form furnished by the director,
as to the diligent efforts by the producing insurance producer to place
the coverage with admitted insurers and the results thereof. The
statement shall be signed by the producing insurance producer and shall
affirm that the insured was expressly advised prior to placement of the
insurance that:
(A) The surplus lines insurer with whom the insurance was to be
placed is not licensed in this state and is not subject to its
supervision; and
(B) In the event of the insolvency of the surplus lines insurer,
losses will not be paid by the state insurance guaranty fund.
(2) The director may direct that filings required under subsection
(1) of this section be made to the Surplus Line Association of Oregon.
The director may also require that such filings be made electronically
but may exempt a licensee from the requirement for good cause shown.
(3) A nonresident surplus lines licensee or nonresident producing
insurance producer not licensed to transact surplus lines insurance in
this state who places a surplus lines policy on a risk with exposures
located both in this state and outside this state shall satisfy filing
requirements established by the director by rule. The director shall
ensure that the rules facilitate interstate regulation of surplus lines
insurance transactions.
(4) Facsimile signatures and electronic signatures subject to ORS
84.001 to 84.061 are acceptable and have the same force as original
signatures. [1987 c.774 §122; 1993 c.182 §1; 2001 c.377 §§13,13a; 2003
c.364 §39; 2005 c.185 §12] (1) The Surplus Line
Association of Oregon shall be the advisory organization of surplus lines
licensees to:
(a) Facilitate and encourage compliance by resident and nonresident
surplus lines licensees with the laws of this state and the rules of the
Director of the Department of Consumer and Business Services relative to
surplus lines insurance;
(b) Provide means for the examination, which shall remain
confidential as provided in ORS 705.137, of all surplus lines coverage
written by resident and nonresident surplus lines licensees to determine
whether the coverages comply with the Oregon Surplus Lines Law;
(c) Communicate with organizations of admitted insurers with
respect to the proper use of the surplus lines market;
(d) Receive and disseminate to resident and nonresident surplus
lines licensees information relative to surplus lines coverages; and
(e) Receive and collect on behalf of the state and remit to the
state premium receipts tax for surplus lines insurance.
(2) The Surplus Line Association of Oregon shall file with the
director:
(a) A copy of its constitution, articles of agreement or
association or certificate of incorporation;
(b) A copy of its bylaws and rules governing its activities;
(c) A current list of members;
(d) The name and address of a resident of this state upon whom
notices or orders of the director or processes issued at the direction of
the director may be served;
(e) An agreement that the director may examine the Surplus Line
Association of Oregon in accordance with the provisions of this section;
and
(f) A schedule of fees and charges.
(3) The director may make or cause to be made an examination of the
surplus lines advisory organization. The reasonable cost of any such
examination shall be paid by the surplus lines advisory organization upon
presentation to it by the director of a detailed account of each cost.
The officers, managers, agents and employees of the surplus lines
advisory organization may be examined at any time, under oath, and shall
exhibit all books, records, accounts, documents or agreements governing
its method of operation. The director shall furnish two copies of the
examination report to the surplus lines advisory organization examined
and shall notify such organization that it may, within 20 days thereof,
request a hearing on the report or on any facts or recommendations
therein. If the director finds the surplus lines advisory organization or
any member thereof to be in violation of ORS 735.400 to 735.495, the
director may issue an order requiring the discontinuance of such
violation.
(4) The Surplus Line Association of Oregon may charge resident and
nonresident surplus lines licensees and nonresident producing insurance
producers a fee for reviewing surplus lines policies and for collecting,
on behalf of the state, taxes imposed under ORS 735.470. The association
shall adopt bylaws implementing this subsection. [1987 c.774 §123; 2001
c.377 §14; 2005 c.185 §13](1) Upon placing surplus
lines insurance, the surplus lines licensee shall promptly deliver to the
insured or the producing insurance producer the policy, or if such policy
is not then available, a certificate as described in subsection (4) of
this section, cover note or binder. The certificate, as described in
subsection (4) of this section, cover note or binder shall be executed by
the surplus lines licensee and shall show the description and location of
the subject of the insurance, coverages including any material
limitations other than those in standard forms, a general description of
the coverages of the insurance, the premium and rate charged and taxes to
be collected from the insured, and the name and address of the insured
and surplus lines insurer or insurers and proportion of the entire risk
assumed by each, and the name of the surplus lines licensee and the
licensee’s license number.
(2) No surplus lines licensee shall issue or deliver any insurance
policy or certificate of insurance or represent that insurance will be or
has been written by any eligible surplus lines insurer, unless the
licensee has authority from the insurer to cause the risk to be insured,
or has received information from the insurer in the regular course of
business that such insurance has been granted.
(3) If, after delivery of an insurance policy or certificate of
insurance, there is any change in the identity of the insurers, or the
proportion of the risk assumed by any insurer, or any other material
change in coverage as stated in the surplus lines licensee’s original
insurance policy, or in any other material as to the insurance coverage,
the surplus lines licensee shall promptly issue and deliver to the
insured or the original producing insurance producer an appropriate
substitute for, or indorsement of the original document, accurately
showing the current status of the coverage and the insurers responsible
thereunder.
(4) As soon as reasonably possible after the placement of any such
insurance the surplus lines licensee shall deliver a copy of the policy
or, if not available, a certificate of insurance to the insured or
producing insurance producer to replace an insurance policy or
certificate of insurance theretofore issued. Each certificate or policy
of insurance shall contain or have attached thereto a complete record of
all policy insuring agreements, conditions, exclusions, clauses,
indorsements or any other material facts that would regularly be included
in the policy.
(5) Any surplus lines licensee who fails to comply with the
requirements of this section shall be subject to the penalties provided.
(6) Each insurance policy or certificate of insurance negotiated,
placed or procured under the provisions of ORS 735.400 to 735.495 by the
surplus lines licensee shall bear the name of the licensee and the
following legend in bold type: “This insurance was procured and developed
under the Oregon surplus lines laws. It is NOT covered by the provisions
of ORS 734.510 to 734.710 relating to the Oregon Insurance Guaranty
Association. If the insurer issuing this insurance becomes insolvent, the
Oregon Insurance Guaranty Association has no obligation to pay claims
under this insurance.”
(7) The Director of the Department of Consumer and Business
Services by rule may establish requirements relating to insurance
policies and certificates of insurance and other applicable requirements
governing placement of insurance by a nonresident surplus lines licensee
outside this state that covers a risk with exposures located both in this
state and outside this state. [1987 c.774 §124; 2001 c.191 §45a; 2003
c.364 §40] Insurance contracts procured under
ORS 735.400 to 735.495 shall be valid and enforceable as to all parties.
[1987 c.774 §125] A
payment of premium to a surplus lines licensee acting for a person other
than the surplus lines licensee in negotiating, continuing or renewing
any policy of insurance under ORS 735.400 to 735.495 shall be deemed to
be payment to the insurer, whatever conditions or stipulations may be
inserted in the policy or contract notwithstanding. [1987 c.774 §126](1) A person shall not procure any contract of surplus lines
insurance with any nonadmitted insurer unless the person is licensed
under ORS chapter 744 to transact surplus lines insurance. A person may
obtain a license to transact surplus lines insurance only if the person
is licensed as an insurance producer under ORS chapter 744 to transact
property and casualty insurance.
(2) The prohibition in subsection (1) of this section does not
apply to a nonresident surplus lines licensee or to a nonresident surplus
lines insurance producer who is not a licensee in this state if:
(a) The insurance contract covers a risk with exposures both in
this state and outside this state;
(b) Procurement of the insurance contract described in paragraph
(a) of this subsection did not occur in this state; and
(c) The licensee or insurance producer is licensed to transact
surplus lines insurance in the state in which the insurance contract
described in paragraph (a) of this subsection was procured. [1987 c.774
§127; 1989 c.288 §1; 1991 c.810 §26; 1995 c.639 §14; 2001 c.191 §46; 2003
c.364 §41] (1) A surplus lines licensee
may originate surplus lines insurance or accept such insurance from any
other insurance producer duly licensed as to the kinds of insurance
involved, and the surplus lines licensee may compensate the insurance
producer therefor.
(2) A surplus lines licensee may charge a producing insurance
producer a fee or a combination of a fee and a commission when
transacting surplus lines for the producing insurance producer if the
surplus lines licensee has a written agreement with the producing
insurance producer prior to the binding or issuance of a surplus lines
insurance policy. When a surplus lines licensee transacts surplus lines
insurance directly for a prospective insured, the surplus lines licensee
may charge the prospective insured a fee or a combination of a fee and a
commission if the surplus lines licensee has a written agreement with the
prospective insured prior to the binding or issuance of a surplus lines
insurance policy.
(3) A producing insurance producer may charge a fee to a
prospective insured when the producing insurance producer pays a fee or a
combination of a fee and a commission to a surplus lines licensee under
subsection (2) of this section if the producing insurance producer has a
written agreement with the prospective insured prior to the binding or
issuance of the surplus lines insurance policy. The fee may not exceed
the amount of compensation paid by the producing insurance producer to
the surplus lines licensee.
(4) For the purpose of determining the charge under subsection (2)
of this section, the producing insurance producer and the surplus lines
licensee may agree to any allocation of the fee that the producing
insurance producer charges the prospective insured under this section.
(5) The fee or the fee and commission charged by a surplus lines
licensee under subsection (2) of this section must be commensurate with
the services provided by the surplus lines licensee. The Director of the
Department of Consumer and Business Services may establish by rule
minimum conditions for written agreements entered into under this
section. An insurer or insurance producer who enters into a written
agreement as provided in this section is not in violation of ORS 746.035
or 746.045. [1987 c.774 §128; 2003 c.364 §42] (1) Each surplus lines
licensee shall keep a full and true record of each surplus lines
insurance contract placed by or through the licensee on each risk
resident in this state as required by ORS 744.068, including a copy of
the policy, certificate, cover note or other evidence of insurance
showing any of the following items that are applicable:
(a) Amount of the insurance and perils insured;
(b) Brief description of the property insured and its location;
(c) Gross premium charged;
(d) Any return premium paid;
(e) Rate of premium charged upon the several items of property;
(f) Effective date of the contract and the terms thereof;
(g) Name and address of the insured;
(h) Name and address of the insurer;
(i) Amount of tax and other sums to be collected from the insured;
and
(j) Identity of the producing insurance producer, any confirming
correspondence from the insurer or its representative and the application.
(2) The record of each contract shall be kept open at all
reasonable times to examination by the Director of the Department of
Consumer and Business Services without notice for a period not less than
five years following termination of the contract. [1987 c.774 §129; 2001
c.191 §47; 2003 c.364 §43] (1) On or before the end of each
month, each surplus lines licensee shall file with the Director of the
Department of Consumer and Business Services, as prescribed by the
director, a verified report of all surplus lines insurance transacted on
risks resident in this state during the preceding 90 days. The report
need not show transacted surplus lines insurance that was reported in an
earlier report. The report shall show:
(a) Aggregate gross premiums written;
(b) Aggregate return premiums; and
(c) Amount of aggregate tax.
(2) The director may direct that reports required under subsection
(1) of this section be made to the Surplus Lines Association of Oregon
and that the Surplus Lines Association of Oregon file a combined report
thereof with the director. The director may also require that reports
required under subsection (1) of this section be made electronically but
may exempt a licensee from the requirement for good cause shown.
(3) For the purpose of collecting taxes on insurance covering the
Oregon portion of risks when the insurance is placed outside this state
and covers a risk with exposures located both in this state and outside
this state, the director may establish by rule requirements for filing
reports on surplus lines insurance transacted outside this state on risks
with exposures located both in this state and outside this state. [1987
c.774 §130; 2001 c.191 §48] (1) The
surplus lines licensee shall pay the Director of the Department of
Consumer and Business Services an amount equal to the tax which would
have been imposed under ORS 731.816 (1993 Edition) if that section were
in effect and operative, and the tax which is imposed by ORS 731.820, on
authorized insurers for the premiums shown in the report required by ORS
735.465. The tax shall be collected by the surplus lines licensee as
specified by the director, in addition to the full amount of the gross
premium charged by the insurer for the insurance. The tax on any portion
of the premium unearned at termination of insurance having been credited
by the state to the licensee shall be returned to the policyholder
directly by the surplus lines licensee or through the producing insurance
producer, if any. The surplus lines licensee is prohibited from absorbing
such tax and from rebating for any reason, any part of such tax.
(2) The surplus lines tax is due quarterly on the 45th day
following the calendar quarter in which the premium is collected. The tax
shall be paid to and reported on forms prescribed by the director or upon
the director’s order paid to and reported on forms prescribed by the
surplus lines association.
(3) Notwithstanding subsection (2) of this section, if a surplus
lines license is terminated or nonrenewed for any reason, the taxes
described in this section are due on the 30th day after the termination
or nonrenewal.
(4) In applying ORS 731.816 (1993 Edition) for purposes of this
section, the rate shall be two percent rather than two and one-quarter
percent.
(5) The director by rule shall establish procedures for payment of
taxes on the Oregon portion of risks covered by surplus lines insurance
policies transacted outside this state that cover risks with exposures
both in this state and outside this state. [1987 c.774 §131; 1989 c.288
§2; 1995 c.786 §10; 2001 c.191 §48a; 2003 c.364 §44] If the tax collectible by a
surplus lines licensee under ORS 735.400 to 735.495 is not paid within
the time prescribed, the same shall be recoverable in a suit brought by
the Director of the Department of Consumer and Business Services against
the surplus lines licensee. [1987 c.774 §132; 1989 c.288 §3; 2001 c.191
§48b]The Director of the Department of Consumer and Business Services
may suspend, revoke or refuse to renew the license of a surplus lines
licensee after notice and hearing as provided under the applicable
provision of this state’s laws upon any one or more of the following
grounds:
(1) Removal of the surplus lines licensee’s office from this state,
if the licensee is a resident insurance producer;
(2) Removal of the surplus lines licensee’s office accounts and
records from the principal place of business of the licensee under ORS
744.068 during the period during which such accounts and records are
required to be maintained under ORS 735.460;
(3) Closing of the surplus lines licensee’s office for a period of
more than 30 business days, unless permission is granted by the director;
(4) Failure to make and file required reports;
(5) Failure to transmit required tax on surplus lines premiums;
(6) Violation of any provision of ORS 735.400 to 735.495; or
(7) For any cause for which an insurance license could be denied,
revoked, suspended or renewal refused under ORS 744.074. [1987 c.774
§133; 1989 c.288 §4; 2001 c.191 §49; 2003 c.364 §45] (1) A surplus lines
insurer may be sued upon any cause of action arising in this state under
any surplus lines insurance contract made by it or evidence of insurance
issued or delivered by the surplus lines licensee pursuant to the
procedure provided in ORS 735.490. Any surplus lines policy issued by the
surplus lines licensee shall contain a provision stating the substance of
this section and designating the person to whom process shall be
delivered.
(2) Each surplus lines insurer assuming surplus lines insurance
shall be considered thereby to have subjected itself to ORS 735.400 to
735.495.
(3) The remedies provided in this section are in addition to any
other methods provided by law for service of process upon insurers.
(4) A surplus lines insurance contract covering risks with
exposures both in this state and outside this state that is placed
outside this state by a nonresident surplus lines licensee, and the
surplus lines insurer of the contract, are not subject to the provisions
of subsection (2) of this section or ORS 735.490:
(a) If the nonresident surplus lines licensee is currently licensed
as an insurance producer authorized to transact surplus lines insurance
contracts in the state in which the surplus lines insurance contract is
placed and is in good standing in that state; and
(b) If the surplus lines insurance contract complies with all of
the requirements for placement of nonadmitted insurance in the state in
which the surplus lines insurance contract is placed.
(5) When a nonresident surplus lines insurance producer who is not
a surplus lines licensee in this state transacts outside this state a
surplus lines insurance contract covering risks with exposures both in
this state and outside this state, the producer and the surplus lines
insurer of the contract are subject to this section and to ORS 735.490 or
to rules adopted by the director in lieu thereof unless:
(a) The producer is currently licensed to transact surplus lines
policies in the state in which the surplus lines insurance contract is
placed and is in good standing in that state; and
(b) The surplus lines insurance contract complies with all of the
requirements for placement of nonadmitted insurance in the state in which
the surplus lines insurance contract is placed. [1987 c.774 §134; 1989
c.288 §5; 2001 c.191 §49a](1) An insurer transacting insurance under the
provisions of ORS 735.400 to 735.495 may be sued upon any cause of
action, arising under any policy of insurance so issued and delivered by
it, in the courts for the county where the insurance producer who
registered or delivered the policy resides or transacts business, by the
service of summons and complaint made upon the insurance producer for the
insurer.
(2) Any insurance producer served with summons and complaint in any
such cause shall forthwith mail the summons and complaint, or a true and
complete copy thereof, by registered or certified mail with proper
postage affixed and properly addressed, to the insurer being sued.
(3) The insurer shall have 40 days from the date of the service of
the summons and complaint upon the insurance producer in which to plead,
answer or defend any such cause.
(4) Upon service of summons and complaint upon the insurance
producer for the insurer, the court in which the action is begun shall be
deemed to have duly acquired personal jurisdiction of the defendant
insurer so served.
(5) An insurer and policyholder may agree to waive the provisions
of subsections (1) to (4) of this section governing service and venue
with respect to a surplus lines insurance contract for commercial
property and casualty risk if the waiver is specifically referred to in
the contract or in an indorsement attached to the contract. [1987 c.774
§137; 2001 c.191 §49b; 2003 c.364 §46]ORS 731.324, 731.328, 731.512 and 731.624 do not apply to
surplus lines insurers. [2005 c.185 §17](1) ORS 735.400 to 735.495 shall
be known and may be cited as “The Oregon Surplus Lines Law.”
(2) If any provisions of ORS 735.400 to 735.495, or the application
of such provision to any person or circumstance, is held invalid, the
remainder of ORS 735.400 to 735.495 and the application of such provision
to persons or circumstances other than those as to which it is held
invalid, shall not be affected. [1987 c.774 §§116,136]MEDICAL INSURANCE POOL The intent of the Legislative Assembly
in enacting ORS 735.600 to 735.650 is to provide access to medical
insurance coverage to all residents of this state who are denied adequate
medical insurance, while at the same time avoiding undue financial impact
on the state and on private insurers. [1987 c.838 §2] As used in ORS
735.600 to 735.650:
(1) “Benefits plan” means the coverages to be offered by the pool
to eligible persons pursuant to ORS 735.600 to 735.650.
(2) “Board” means the Oregon Medical Insurance Pool Board.
(3) “Insured” means any individual resident of this state who is
eligible to receive benefits from any insurer.
(4) “Insurer” means:
(a) Any insurer as defined in ORS 731.106 or fraternal benefit
society as defined in ORS 748.106 required to have a certificate of
authority to transact health insurance business in this state, and any
health care service contractor as defined in ORS 750.005, issuing medical
insurance in this state on or after September 27, 1987.
(b) Any reinsurer reinsuring medical insurance in this state on or
after September 27, 1987.
(c) To the extent consistent with federal law, any self-insurance
arrangement covered by the Employee Retirement Income Security Act of
1974, as amended, that provides health care benefits in this state on or
after September 27, 1987.
(d) All self-insurance arrangements not covered by the Employee
Retirement Income Security Act of 1974, as amended, that provides health
care benefits in this state on or after September 27, 1987.
(5) “Medical insurance” means any health insurance benefits payable
on the basis of hospital, surgical or medical expenses incurred and any
health care service contractor subscriber contract. Medical insurance
does not include accident only, disability income, hospital confinement
indemnity, dental or credit insurance, coverage issued as a supplement to
liability insurance, coverage issued as a supplement to Medicare,
insurance arising out of a workers’ compensation or similar law,
automobile medical-payment insurance or insurance under which benefits
are payable with or without regard to fault and which is statutorily
required to be contained in any liability insurance policy or equivalent
self-insurance.
(6) “Medicare” means coverage under Part A, Part B and Part D of
Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq., as
amended.
(7) “Plan of operation” means the plan of operation of the pool,
including articles, bylaws and operating rules, adopted by the board
pursuant to ORS 735.600 to 735.650.
(8) “Pool” means the Oregon Medical Insurance Pool as created by
ORS 735.610.
(9) “Reinsurer” means any insurer as defined in ORS 731.106 from
whom any person providing medical insurance to Oregon insureds procures
insurance for itself in the insurer, with respect to all or part of the
medical insurance risk of the person.
(10) “Self-insurance arrangement” means any plan, program, contract
or any other arrangement under which one or more employers, unions or
other organizations provide health care services or benefits to their
employees or members in this state, either directly or indirectly through
a trust or third party administrator, unless the health care services or
benefits are provided by an insurance policy issued by an insurer other
than a self-insurance arrangement. [1987 c.838 §3; 1989 c.838 §6; 2003
c.33 §4; 2005 c.634 §4](1) There is created in the Department of Consumer and Business
Services the Oregon Medical Insurance Pool Board. The board shall
establish the Oregon Medical Insurance Pool and otherwise carry out the
responsibilities of the board under ORS 735.600 to 735.650.
(2) The board shall consist of nine individuals, eight of whom
shall be appointed by the Director of the Department of Consumer and
Business Services. The Director of the Department of Consumer and
Business Services or the director’s designee shall be a member of the
board. The chair of the board shall be elected from among the members of
the board. The board shall at all times, to the extent possible, include
at least one representative of a domestic insurance company licensed to
transact health insurance, one representative of a domestic
not-for-profit health care service contractor, one representative of a
health maintenance organization, one representative of reinsurers and two
members of the general public who are not associated with the medical
profession, a hospital or an insurer.
(3) The director may fill any vacancy on the board by appointment.
(4) The board shall have the general powers and authority granted
under the laws of this state to insurance companies with a certificate of
authority to transact health insurance and the specific authority to:
(a) Enter into such contracts as are necessary or proper to carry
out the provisions and purposes of ORS 735.600 to 735.650 including the
authority to enter into contracts with similar pools of other states for
the joint performance of common administrative functions, or with persons
or other organizations for the performance of administrative functions;
(b) Recover any assessments for, on behalf of, or against insurers;
(c) Take such legal action as is necessary to avoid the payment of
improper claims against the pool or the coverage provided by or through
the pool;
(d) Establish appropriate rates, rate schedules, rate adjustments,
expense allowances, insurance producers’ referral fees, claim reserves or
formulas and perform any other actuarial function appropriate to the
operation of the pool. Rates may not be unreasonable in relation to the
coverage provided, the risk experience and expenses of providing the
coverage. Rates and rate schedules may be adjusted for appropriate risk
factors such as age and area variation in claim costs and shall take into
consideration appropriate risk factors in accordance with established
actuarial and underwriting practices;
(e) Issue policies of insurance in accordance with the requirements
of ORS 735.600 to 735.650;
(f) Appoint from among insurers appropriate actuarial and other
committees as necessary to provide technical assistance in the operation
of the pool, policy and other contract design, and any other function
within the authority of the board;
(g) Seek advances to effect the purposes of the pool; and
(h) Establish rules, conditions and procedures for reinsuring risks
under ORS 735.600 to 735.650.
(5) Each member of the board is entitled to compensation and
expenses as provided in ORS 292.495.
(6) The Director of the Department of Consumer and Business
Services shall adopt rules, as provided under ORS chapter 183,
implementing policies recommended by the board for the purpose of
carrying out ORS 735.600 to 735.650.
(7) In consultation with the board, the director shall employ such
staff and consultants as may be necessary for the purpose of carrying out
responsibilities under ORS 735.600 to 735.650. [1987 c.838 §4; 1989 c.838
§7; 1993 c.744 §190; 1995 c.79 §361; 2001 c.356 §1; 2003 c.364 §95] (1)
There is established in the State Treasury, the Oregon Medical Insurance
Pool Account, which shall consist of:
(a) Moneys appropriated to the account by the Legislative Assembly
to obtain the coverage described in ORS 735.625.
(b) Interest earnings from the investment of moneys in the account.
(c) Assessments and other revenues collected or received by the
Oregon Medical Insurance Pool Board.
(2) All moneys in the Oregon Medical Insurance Pool Account are
continuously appropriated to the Oregon Medical Insurance Pool Board to
carry out the provisions of ORS 735.600 to 735.650.
(3) The Oregon Medical Insurance Pool Board shall transfer to the
Consumer and Business Services Fund created by ORS 705.145 an amount
equal to the operating budget authorized by the Legislative Assembly or
as that budget may be modified by the Emergency Board or the Oregon
Department of Administrative Services, for operation of the Oregon
Medical Insurance Pool Board. [1989 c.838 §§2,3; 1993 c.744 §191] (1) If the Oregon Medical
Insurance Pool Board determines at any time that funds in the Oregon
Medical Insurance Pool Account are or will become insufficient for
payment of expenses of the pool in a timely manner, the board shall
determine the amount of funds needed and shall impose and collect
assessments against insurers, as provided in this section, in the amount
of the funds determined to be needed.
(2) Each insurer’s assessment shall be determined by multiplying
the total amount to be assessed by a fraction, the numerator of which
equals the number of Oregon insureds and certificate holders insured or
reinsured by each insurer, and the denominator of which equals the total
of all Oregon insureds and certificate holders insured or reinsured by
all insurers, all determined as of March 31 each year.
(3) The board shall ensure that each insured and certificate holder
is counted only once with respect to any assessment. For that purpose,
the board shall require each insurer that obtains reinsurance for its
insureds and certificate holders to include in its count of insureds and
certificate holders all insureds and certificate holders whose coverage
is reinsured in whole or part. The board shall allow an insurer who is a
reinsurer to exclude from its number of insureds those that have been
counted by the primary insurer or the primary reinsurer for the purpose
of determining its assessment under this subsection.
(4) Each insurer shall pay its assessment as required by the board.
(5) If assessments exceed the amounts actually needed, the excess
shall be held and invested and, with the earnings and interest, used by
the board to offset future net losses or to reduce pool premiums. For
purposes of this subsection, “future net losses” includes reserves for
claims incurred but not reported.
(6) Each insurer’s proportion of participation in the pool shall be
determined by the board based on annual statements and other reports
deemed necessary by the board and filed by the insurer with the board.
The board may use any reasonable method of estimating the number of
insureds and certificate holders of an insurer if the specific number is
unknown. With respect to insurers that are reinsurers, the board may use
any reasonable method of estimating the number of persons insured by each
reinsurer.
(7) The board may abate or defer, in whole or in part, the
assessment of an insurer if, in the opinion of the board, payment of the
assessment would endanger the ability of the insurer to fulfill the
insurer’s contractual obligations. In the event an assessment against an
insurer is abated or deferred in whole or in part, the amount by which
the assessment is abated or deferred may be assessed against the other
insurers in a manner consistent with the basis for assessments set forth
in this section. The insurer receiving the abatement or deferment shall
remain liable to the board for the deficiency for four years.
(8) The board shall abate or defer assessments authorized by this
section if a court orders that assessments cannot be made applicable to
reinsurers. However, if a court orders that assessments cannot be made
applicable to reinsurers, the board may continue to assess insurers to
the end of the biennium in which the determination is made.
(9) Subject to the approval of the Director of the Department of
Consumer and Business Services, the board may develop a program for
adjusting the assessment of an insurer in the individual health benefits
market based on that insurer’s contribution to reducing the enrollment in
the Oregon Medical Insurance Pool. When developing the program, the board
may consider, but is not limited to, the following factors:
(a) The insurer’s level of participation;
(b) Level of health benefit plan coverage offered; and
(c) Assumption of risk in the individual health benefits market.
[1989 c.838 §4; 1991 c.333 §1; 1995 c.603 §28; 2005 c.304 §1; 2005 c.635
§1] (1) Except as
provided in subsection (3) of this section, a person who is a resident of
this state, as defined by the Oregon Medical Insurance Pool Board, is
eligible for medical pool coverage if:
(a) An insurer, or an insurance company with a certificate of
authority in any other state, has made within a time frame established by
the board an adverse underwriting decision, as defined in ORS 746.600
(1)(a)(A), (B), (D), (E) or (F), on individual medical insurance for
health reasons while the person was a resident;
(b) The person has a history of any medical or health conditions on
the list adopted by the board under subsection (2) of this section;
(c) The person is a spouse or dependent of a person described in
paragraph (a) or (b) of this subsection; or
(d) The person is eligible for the credit for health insurance
costs under section 35 of the federal Internal Revenue Code, as amended
and in effect on December 31, 2004.
(2) The board may adopt a list of medical or health conditions for
which a person is eligible for pool coverage without applying for
individual medical insurance pursuant to this section.
(3) A person is not eligible for coverage under ORS 735.600 to
735.650 if:
(a) Except as provided in ORS 735.625 (3)(c), the person is
eligible to receive health services as defined in ORS 414.705 that meet
or exceed those adopted by the board or is eligible for Medicare;
(b) The person has terminated coverage in the pool within the last
12 months and the termination was for:
(A) A reason other than becoming eligible to receive health
services as defined in ORS 414.705; or
(B) A reason that does not meet exception criteria established by
the board;
(c) The person has exceeded the maximum lifetime benefit
established by the board;
(d) The person is an inmate of or a patient in a public institution
named in ORS 179.321;
(e) The person has, on the date of issue of coverage by the board,
coverage under health insurance or a self-insurance arrangement that is
substantially equivalent to coverage under ORS 735.625; or
(f) The person has the premiums paid or reimbursed by a public
entity or a health care provider for the sole purpose of reducing the
financial loss or obligation of the payer.
(4) A person applying for coverage shall establish initial
eligibility by providing evidence that the board requires.
(5)(a) Notwithstanding ORS 735.625 (4)(c) and subsection (3)(a) of
this section, if a person becomes eligible for Medicare after being
enrolled in the pool for a period of time as determined by the board by
rule, that person may continue coverage within the pool as secondary
coverage to Medicare.
(b) The board may adopt rules concerning the terms and conditions
for the coverage provided under paragraph (a) of this subsection.
(6) The board may adopt rules to establish additional eligibility
requirements for a person described in subsection (1)(d) of this section.
[1987 c.838 §5; 1989 c.838 §11; 1993 c.130 §1; 1993 c.212 §1; 1999 c.754
§1; 2005 c.305 §1; 2005 c.634 §1; 2005 c.635 §§2,3]Note: The amendments to 735.615 by section 3, chapter 305, Oregon
Laws 2005, become operative January 2, 2008. See section 4, chapter 305,
Oregon Laws 2005. The text that is operative on and after January 2,
2008, is set forth for the user’s convenience.
735.615. (1) Except as provided in subsection (3) of this section,
a person who is a resident of this state, as defined by the Oregon
Medical Insurance Pool Board, is eligible for medical pool coverage if:
(a) An insurer, or an insurance company with a certificate of
authority in any other state, has made within a time frame established by
the board an adverse underwriting decision, as defined in ORS 746.600
(1)(a)(A), (B) or (D), on individual medical insurance for health reasons
while the person was a resident;
(b) The person has a history of any medical or health conditions on
the list adopted by the board under subsection (2) of this section;
(c) The person is a spouse or dependent of a person described in
paragraph (a) or (b) of this subsection; or
(d) The person is eligible for the credit for health insurance
costs under section 35 of the federal Internal Revenue Code, as amended
and in effect on December 31, 2004.
(2) The board may adopt a list of medical or health conditions for
which a person is eligible for pool coverage without applying for
individual medical insurance pursuant to this section.
(3) A person is not eligible for coverage under ORS 735.600 to
735.650 if:
(a) Except as provided in ORS 735.625 (3)(c), the person is
eligible to receive health services as defined in ORS 414.705 that meet
or exceed those adopted by the board or is eligible for Medicare;
(b) The person has terminated coverage in the pool within the last
12 months and the termination was for:
(A) A reason other than becoming eligible to receive health
services as defined in ORS 414.705; or
(B) A reason that does not meet exception criteria established by
the board;
(c) The person has exceeded the maximum lifetime benefit
established by the board;
(d) The person is an inmate of or a patient in a public institution
named in ORS 179.321;
(e) The person has, on the date of issue of coverage by the board,
coverage under health insurance or a self-insurance arrangement that is
substantially equivalent to coverage under ORS 735.625; or
(f) The person has the premiums paid or reimbursed by a public
entity or a health care provider for the sole purpose of reducing the
financial loss or obligation of the payer.
(4) A person applying for coverage shall establish initial
eligibility by providing evidence that the board requires.
(5)(a) Notwithstanding ORS 735.625 (4)(c) and subsection (3)(a) of
this section, if a person becomes eligible for Medicare after being
enrolled in the pool for a period of time as determined by the board by
rule, that person may continue coverage within the pool as secondary
coverage to Medicare.
(b) The board may adopt rules concerning the terms and conditions
for the coverage provided under paragraph (a) of this subsection.
(6) The board may adopt rules to establish additional eligibility
requirements for a person described in subsection (1)(d) of this section. (1) In
addition to individuals otherwise qualified under ORS 735.615, the
following individuals qualify for portability health insurance coverage
under the Oregon Medical Insurance Pool if an application for coverage is
made not later than the 63rd day after the date of first eligibility, as
provided in subsection (2) of this section, and the individual is an
Oregon resident at the time of such application:
(a) An individual who has left coverage that was continuously in
effect for a period of 180 days or more under one or more group health
benefit plans, if:
(A) The terminated coverage was in a plan issued or established in
a state other than Oregon; and
(B) The individual was an Oregon resident for at least 180
consecutive days immediately prior to the termination of coverage;
(b) An eligible individual, as defined in ORS 743.760, who has left
coverage under a group health benefit plan or a portability health
benefit plan and whose carrier cannot offer a portability plan under ORS
743.760 (6) because of:
(A) A change in residence of the eligible individual within Oregon;
(B) A change in the geographic area served by the group carrier; or
(C) The carrier’s withdrawal from the group market in Oregon in
accordance with ORS 743.737 and 743.754;
(c) An individual who has left coverage that was continuously in
effect for a period of 180 days or more under one or more Oregon group
health benefit plans and the terminated coverage was provided by:
(A) An employee welfare benefit plan that is exempt from state
regulation under the federal Employee Retirement Income Security Act of
1974, as amended;
(B) A multiple employer welfare arrangement subject to ORS 750.301
to 750.341; or
(C) A public body of this state in accordance with ORS 731.036; and
(d) On or after January 1, 1998, an individual who meets the
eligibility requirements of 42 U.S.C. 300gg-41, as amended and in effect
on January 1, 1998, and does not otherwise qualify to obtain portability
coverage from an Oregon group carrier in accordance with ORS 743.760.
(2) Eligibility for coverage pursuant to subsection (1) of this
section is subject to the following provisions:
(a) An eligible individual does not include:
(A) An individual who remains eligible for the individual’s prior
group coverage or would remain eligible for prior group coverage in a
plan under the federal Employee Retirement Income Security Act of 1974,
as amended, were it not for action by the plan sponsor relating to the
actual or expected health condition of the individual;
(B) An individual who is covered under another health benefit plan
at the time that portability coverage would commence;
(C) An individual who is eligible to enroll in another health
benefit plan offered by the employer, other than as a late enrollee, at
the time that portability coverage would commence; or
(D) An individual who is eligible for the federal Medicare program.
(b) If an eligible individual has left group coverage issued by an
insurance company, a health care service contractor or a health
maintenance organization, the date of first eligibility is the day
following the termination date of the group coverage, including any
period of continuation coverage that was elected by the individual under
federal law or under ORS 743.600 or 743.610.
(c) If an eligible individual has left group coverage issued by an
entity other than an insurance company, a health care service contractor
or a health maintenance organization, the date of first eligibility is
the day following the termination date of the group coverage, including
the full extent of continuation coverage available to the individual
under federal law and ORS 743.600 and 743.610.
(d) If an individual is eligible for coverage pursuant to
subsection (1)(b) of this section, the date of first eligibility is the
day following the loss of the group or portability coverage.
(3) Coverage under the Oregon Medical Insurance Pool pursuant to
subsection (1) of this section shall be offered according to the
following provisions:
(a) Coverage is subject to ORS 743.760 (2) and (8);
(b) Coverage may not be subject to a preexisting conditions
provision, exclusion period, waiting period, residency period or other
similar limitation on coverage; and
(c) The individual shall be required to pay a premium rate not more
than the applicable portability risk rate determined by the Oregon
Medical Insurance Pool Board pursuant to ORS 735.625. [Formerly 743.763;
1999 c.987 §1; 2001 c.356 §2] (1)
Except as provided in subsection (4) of this section, the Oregon Medical
Insurance Pool Board shall select an insurer or insurers through a
competitive bidding process to administer the insurance program or
components of the insurance program. The board shall evaluate bids
submitted based on criteria established by the board that include but are
not limited to:
(a) The insurer’s proven ability to handle individual medical
insurance.
(b) The efficiency of the insurer’s claim paying procedures.
(c) An estimate of total charges for administering the plan.
(d) The insurer’s ability to administer the pool in a
cost-effective manner.
(2)(a) The administering insurer shall serve for a period of three
years subject to removal for cause.
(b) At least one year prior to the expiration of each three-year
period of service by an administering insurer, the board shall invite all
insurers, including the current administering insurer, to submit bids to
serve as the administering insurer for the succeeding three-year period.
Selection of the administering insurer for the succeeding period shall be
made at least six months prior to the end of the current three-year
period.
(3) The administering insurer shall be responsible for one or more
of the following:
(a) Performing eligibility and administrative claims payment
functions relating to the pool.
(b) Establishing a premium billing procedure for collection of
premiums from insured persons on a periodic basis as determined by the
board.
(c) Performing all necessary functions to assure timely payment of
benefits to covered persons under the pool including:
(A) Making available information relating to the proper manner of
submitting a claim for benefits and distributing forms upon which
submission shall be made.
(B) Evaluating the eligibility of each claim for payment.
(d) Submitting regular reports to the board regarding the operation
of the pool. The frequency, content and form of the report shall be as
determined by the board.
(e) Following the close of each calendar year, determining net
written and earned premiums, the expense of administration and the paid
and incurred losses for the year and reporting this information to the
board on a form prescribed by the board.
(f) Being paid as provided in the plan of operation for its
expenses incurred in the performance of its services.
(4) The board may contract with third party administrators or other
vendors to provide services described in subsection (5) of this section
that are in addition to or that replace services provided by the
administering insurer.
(5) A third party administrator or vendor may provide services that
include but are not limited to:
(a) Any or all of the services provided by an administering insurer.
(b) Disease case management.
(c) Direct provider or provider network contracts.
(d) Pharmacy benefit management. [1987 c.838 §6; 1989 c.838 §12;
2005 c.635 §4] (1) Except as provided in subsection
(3)(c) of this section, the Oregon Medical Insurance Pool Board shall
offer major medical expense coverage to every eligible person.
(2) The coverage to be issued by the board, its schedule of
benefits, exclusions and other limitations, shall be established through
rules adopted by the board, taking into consideration the advice and
recommendations of the pool members. In the absence of such rules, the
pool shall adopt by rule the minimum benefits prescribed by section 6
(Alternative 1) of the Model Health Insurance Pooling Mechanism Act of
the National Association of Insurance Commissioners (1984).
(3)(a) In establishing portability coverage under the pool, the
board shall consider the levels of medical insurance provided in this
state and medical economic factors identified by the board. The board may
adopt rules to establish benefit levels, deductibles, coinsurance
factors, exclusions and limitations that the board determines are
equivalent to the portability health benefit plans established under ORS
743.760.
(b) In establishing medical insurance coverage under the pool, the
board shall consider the levels of medical insurance provided in this
state and medical economic factors identified by the board. The board may
adopt rules to establish benefit levels, deductibles, coinsurance
factors, exclusions and limitations that the board determines are
equivalent to those found in the commercial group or employer-based
medical insurance market.
(c) The board may provide a separate Medicare supplement policy for
individuals under the age of 65 who are receiving Medicare disability
benefits. The board shall adopt rules to establish benefits, deductibles,
coinsurance, exclusions and limitations, premiums and eligibility
requirements for the Medicare supplement policy.
(d) In establishing medical insurance coverage for persons eligible
for coverage under ORS 735.615 (1)(d), the board shall consider the
levels of medical insurance provided in this state and medical economic
factors identified by the board. The board may adopt rules to establish
benefit levels, deductibles, coinsurance factors, exclusions and
limitations to create benefit plans that qualify the person for the
credit for health insurance costs under section 35 of the federal
Internal Revenue Code, as amended and in effect on December 31, 2004.
(4)(a) Premiums charged for coverages issued by the board may not
be unreasonable in relation to the benefits provided, the risk experience
and the reasonable expenses of providing the coverage.
(b) Separate schedules of premium rates based on age and
geographical location may apply for individual risks.
(c) The board shall determine the applicable medical and
portability risk rates either by calculating the average rate charged by
insurers offering coverages in the state comparable to the pool coverage
or by using reasonable actuarial techniques. The risk rates shall reflect
anticipated experience and expenses for such coverage. Rates for pool
coverage may not be more than 125 percent of rates established as
applicable for medically eligible individuals or for persons eligible for
pool coverage under ORS 735.615 (1)(d), or 100 percent of rates
established as applicable for portability eligible individuals.
(d) The board shall annually determine adjusted benefits and
premiums. The adjustments shall be in keeping with the purposes of ORS
735.600 to 735.650, subject to a limitation of keeping pool losses under
one percent of the total of all medical insurance premiums, subscriber
contract charges and 110 percent of all benefits paid by member
self-insurance arrangements. The board may determine the total number of
persons that may be enrolled for coverage at any time and may permit and
prohibit enrollment in order to maintain the number authorized. Nothing
in this paragraph authorizes the board to prohibit enrollment for any
reason other than to control the number of persons in the pool.
(5)(a) The board may apply:
(A) A waiting period of not more than 90 days during which the
person has no available coverage; or
(B) Except as provided in paragraph (c) of this subsection, a
preexisting conditions provision of not more than six months from the
effective date of coverage under the pool.
(b) In determining whether a preexisting conditions provision
applies to an eligible enrollee, except as provided in this subsection,
the board shall credit the time the eligible enrollee was covered under a
previous health benefit plan if the previous health benefit plan was
continuous to a date not more than 63 days prior to the effective date of
the new coverage under the Oregon Medical Insurance Pool, exclusive of
any applicable waiting period. The Oregon Medical Insurance Pool Board
need not credit the time for previous coverage to which the insured or
dependent is otherwise entitled under this subsection with respect to
benefits and services covered in the pool coverage that were not covered
in the previous coverage.
(c) The board may adopt rules applying a preexisting conditions
provision to a person who is eligible for coverage under ORS 735.615
(1)(d).
(d) For purposes of this subsection, a “preexisting conditions
provision” means a provision that excludes coverage for services, charges
or expenses incurred during a specified period not to exceed six months
following the insured’s effective date of coverage, for a condition for
which medical advice, diagnosis, care or treatment was recommended or
received during the six-month period immediately preceding the insured’s
effective date of coverage.
(6)(a) Benefits otherwise payable under pool coverage shall be
reduced by all amounts paid or payable through any other health
insurance, or self-insurance arrangement, and by all hospital and medical
expense benefits paid or payable under any workers’ compensation
coverage, automobile medical payment or liability insurance whether
provided on the basis of fault or nonfault, and by any hospital or
medical benefits paid or payable under or provided pursuant to any state
or federal law or program except the Medicaid portion of the Oregon
Health Plan offering a level of health services described in ORS 414.707.
(b) The board shall have a cause of action against an eligible
person for the recovery of the amount of benefits paid which are not for
covered expenses. Benefits due from the pool may be reduced or refused as
a setoff against any amount recoverable under this paragraph.
(7) Except as provided in ORS 735.616, no mandated benefit statutes
apply to pool coverage under ORS 735.600 to 735.650.
(8) Pool coverage may be furnished through a health care service
contractor or such alternative delivery system as will contain costs
while maintaining quality of care. [1987 c.838 §8; 1989 c.838 §13; 1993
c.130 §2; 1995 c.603 §27; 1999 c.987 §2; 2001 c.356 §3; 2003 c.684 §5;
2005 c.634 §2; 2005 c.635 §5a] Neither participation in the pool
as members, the establishment of rates, forms or procedures, nor any
other action taken in the performance of the powers and duties under ORS
735.600 to 735.650 shall be the basis of any legal action, criminal or
civil liability or penalty against the Oregon Medical Insurance Pool
Board, any members, the Director of the Department of Consumer and
Business Services or any of their agents or employees. [1987 c.838 §9;
1989 c.838 §14] The pool established pursuant to
ORS 735.600 to 735.650 shall be exempt from any and all taxes assessed by
the State of Oregon. [1987 c.838 §10; 1989 c.838 §15] After
two years of operation of the pool, and every two years thereafter, the
Oregon Medical Insurance Pool Board shall conduct a study of the pool and
adjust the plan of operation and benefits plan to reflect the findings of
the study. The board may also recommend amendments to ORS 735.600 to
735.650 and other statutes as necessary to the Legislative Assembly to
address the claims loss experience of the pool. [1987 c.838 §12; 1989
c.838 §16] Every insurer shall include a
notice of the existence of the Oregon Medical Insurance Pool in any
adverse underwriting decision on individual medical insurance for reasons
of the health of the applicant, as described in ORS 735.615 (1)(a). [1987
c.838 §13; 1989 c.838 §17; 1993 c.130 §3; 2005 c.22 §489; 2005 c.634 §3] (1) The
following provisions of the Insurance Code shall apply to the pool to the
extent applicable and not inconsistent with the express provisions of ORS
735.600 to 735.650: ORS 731.004 to 731.022, 731.052 to 731.146, 731.162,
731.216 to 731.328, 742.023, 742.028, 742.046, 742.051, 742.056, 743.024,
743.027, 743.028, 743.041, 743.050, 743.100 to 743.106, 743.402, 743.707,
743.721, 743.801, 743.803, 743.804, 743.806, 743.807, 743.808, 743.811,
743.814, 743.817, 743.819, 743.821, 743.823, 743.827, 743.829, 743.834,
743.837, 743.839, 743.845, 746.005 to 746.370, 746.600, 746.605, 746.607,
746.608, 746.610, 746.615, 746.625, 746.635, 746.650, 746.655, 746.660,
746.668, 746.670, 746.675, 746.680 and 746.690.
(2) For the purposes of this section only, the pool shall be deemed
an insurer, pool coverage shall be deemed individual health insurance and
pool coverage contracts shall be deemed policies. [1987 c.838 §14; 1989
c.701 §72; 1989 c.838 §18; 1999 c.987 §3; 2001 c.356 §4; 2003 c.87 §20]OFFICE OF PRIVATE HEALTH PARTNERSHIPS(Generally) As used in ORS
735.700 to 735.714, unless the context requires otherwise:
(1) “Carrier” means an insurance company or health care service
contractor holding a valid certificate of authority from the Director of
the Department of Consumer and Business Services, or two or more
companies or contractors acting together pursuant to a joint venture,
partnership or other joint means of operation.
(2) “Eligible employee” means an employee of an employer who is
employed by the employer for an average of at least 17.5 hours per week
who elects to participate in one of the group benefit plans provided
through action of the Office of Private Health Partnerships, and sole
proprietors, business partners, and limited partners. The term does not
include individuals:
(a) Engaged as independent contractors.
(b) Whose periods of employment are on an intermittent or irregular
basis.
(c) Who have been employed by the employer for a period of time
established by the employer or for fewer than 90 days, whichever is less.
(3) “Family member” means an eligible employee’s spouse, any
unmarried child or stepchild within age limits and other conditions
imposed by the office with regard to unmarried children or stepchildren,
or any other dependents eligible under the terms of the health benefit
plan selected by the employee’s employer.
(4) “Health benefit plan” means a contract for group medical,
surgical, hospital or any other remedial care recognized by state law and
related services and supplies.
(5) “Premium” means the monthly or other periodic charge for a
health benefit plan.
(6) “Small employer” means a person, firm, corporation, partnership
or association actively engaged in business that, on at least 50 percent
of its working days during the preceding year, employed no more than 50
eligible employees and no fewer than two eligible employees, the majority
of whom are employed within this state, and in which a bona fide
partnership or employer-employee relationship exists. “Small employer”
includes corporations that are eligible to file a consolidated tax return
pursuant to ORS 317.715. [Formerly 653.705; 2003 c.742 §§1,6; 2005 c.238
§§1,2; 2005 c.262 §§1,2; 2005 c.727 §§1,2; 2005 c.744 §§14,15]Note: 735.700 to 735.714 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 735 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation. (1) The Office of
Private Health Partnerships is established.
(2) The office shall carry out the duties described under ORS
414.831, 735.700 to 735.714 and 735.720 to 735.740. [2005 c.744 §2]Note: 735.701 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 735 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. To increase access to health insurance
and health care, the Office of Private Health Partnerships shall provide:
(1) Information about health benefit plans and the premiums charged
for those plans to self-employed individuals and small employers in
Oregon;
(2) Direct assistance to health insurance producers and health
insurance consumers regarding health benefit plans;
(3) A central source for information about resources for health
care and health insurance; and
(4) Health benefit plans for small employers. [Formerly 653.715;
2003 c.364 §96; 2003 c.742 §2; 2005 c.744 §16]Note: The amendments to 735.702 by section 7, chapter 742, Oregon
Laws 2003, become operative January 2, 2008. See section 9, chapter 742,
Oregon Laws 2003, as amended by section 18, chapter 727, Oregon Laws
2005. The text that is operative on and after January 2, 2008, including
amendments by section 17, chapter 744, Oregon Laws 2005, is set forth for
the user’s convenience.
735.702. To increase access to health insurance and health care,
the Office of Private Health Partnerships shall provide:
(1) Information about health benefit plans and the premiums charged
for those plans to self-employed individuals and small employers in
Oregon;
(2) Direct assistance to health insurance producers and health
insurance consumers regarding health benefit plans;
(3) A central source for information about resources for health
care and health insurance; and
(4) Health benefit plans for small employers that have not provided
a group health benefit plan for eligible employees for a period of at
least one year.Note: See note under 735.700. (1) The Office of Private Health
Partnerships is under the supervision and control of an administrator,
who is responsible for the performance of the duties, functions and
powers of the office.
(2) The Governor shall appoint the Administrator of the Office of
Private Health Partnerships, who holds office at the pleasure of the
Governor.
(3) The administrator shall be paid a salary as provided by law or,
if not so provided, as prescribed by the Governor.
(4) For purposes of administration, subject to the approval of the
Governor, the administrator may organize and reorganize the office as the
administrator considers necessary to properly conduct the work of the
office. [2005 c.744 §3]Note: 735.703 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 735 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. (1)
The Administrator of the Office of Private Health Partnerships shall, by
written order filed with the Secretary of State, appoint a deputy
director. The deputy director serves at the pleasure of the
administrator, has authority to act for the administrator in the absence
of the administrator and is subject to the control of the administrator
at all times.
(2) Subject to any applicable provisions of ORS chapter 240, the
administrator shall appoint all subordinate officers and employees of the
Office of Private Health Partnerships, prescribe their duties and fix
their compensation. [2005 c.744 §4]Note: 735.705 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 735 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. The Office
of Private Health Partnerships Account is established separate and
distinct from the General Fund. All moneys received by the Office of
Private Health Partnerships, other than appropriations from the General
Fund and except for moneys in the account established by ORS 735.736,
shall be deposited into the account and are continuously appropriated to
the office to carry out the duties, functions and powers of the office.
[2001 c.716 §16; 2005 c.744 §18]Note: See note under 735.700. In accordance with applicable provisions of ORS
chapter 183, the Administrator of the Office of Private Health
Partnerships may adopt rules necessary for the administration of the laws
that the Office of Private Health Partnerships is charged with
administering. [2005 c.744 §5]Note: 735.707 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 735 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. (1) To aid and advise
the Administrator of the Office of Private Health Partnerships in the
performance of the functions of the Office of Private Health
Partnerships, the administrator may establish advisory committees that
the administrator considers necessary. These committees may be continuing
or temporary. The administrator shall determine the representation,
membership, terms and organization of the committees and shall appoint
their members. The administrator is an ex officio member of each
committee.
(2) Members appointed to the committees shall represent business,
labor, employers, insurance carriers or producers and consumers.
(3) Members of the committees are not entitled to compensation, but
at the discretion of the administrator may be reimbursed from funds
available to the office for actual and necessary travel and other
expenses incurred in the performance of their official duties in the
manner and amount provided in ORS 292.495. [2005 c.744 §10]Note: 735.709 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 735 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. (1) In carrying out its
duties under ORS 735.700 to 735.714 and 735.720 to 735.740, the Office of
Private Health Partnerships may:
(a) Enter into contracts for administration of ORS 735.700 to
735.714 and 735.720 to 735.740, including collection of premiums and
paying carriers.
(b) Retain consultants and employ staff.
(c) Enter into contracts with carriers or health care providers for
health benefit plans.
(d) Set premium rates for eligible employees and small employers.
(e) Perform other duties to provide low-cost health benefit plans
of types likely to be purchased by small employers.
(f) Establish contributions to be paid by small employers toward
the premiums incurred on behalf of covered eligible employees.
(g) Establish procedures by rule for the publication or release of
aggregate data relating to:
(A) Applicants for enrollment and persons enrolled in the Family
Health Insurance Assistance Program;
(B) Health benefit plans for small employers offered by the office;
and
(C) Other programs operated by the office.
(2) Notwithstanding any other health benefit plan contracted for
and offered by the office, the office shall contract for a health benefit
plan or plans best designed to meet the needs and provide for the welfare
of eligible employees and small employers.
(3) The office may approve more than one carrier for each type of
plan contracted for and offered, but the number of carriers shall be held
to a number consistent with adequate service to eligible employees and
family members.
(4) Where appropriate for a contracted and offered health benefit
plan, the office shall provide options under which an eligible employee
may arrange coverage for family members of the employee.
(5) In developing any health benefit plan, the office may provide
an option of additional coverage for eligible employees and family
members at an additional cost or premium.
(6) Transfer of enrollment from one health benefit plan to another
shall be open to all eligible employees and family members under rules
adopted by the office.
(7) If the office requests less health care service or benefit than
is otherwise required by state law, a carrier is not required to offer
such service or benefit.
(8) The office may contract for and offer health benefit plans for
small employers that provide a sufficient level of benefits to be
eligible for a subsidy under ORS 735.724 as well as health benefit plans
for small employers that are not eligible for a subsidy under ORS 735.724.
(9) The office may employ whatever means are reasonably necessary
to carry out the purposes of ORS 735.700 to 735.714 and 735.720 to
735.740. Such authority includes but is not limited to authority to seek
clarification, amendment, modification, suspension or termination of any
agreement or contract that in the office’s judgment requires such action.
[Formerly 653.745; 2003 c.742 §3; 2005 c.238 §3; 2005 c.262 §3; 2005
c.727 §3; 2005 c.744 §19]Note: The amendments to 735.710 by section 8, chapter 742, Oregon
Laws 2003, become operative January 2, 2008. See section 9, chapter 742,
Oregon Laws 2003, as amended by section 18, chapter 727, Oregon Laws
2005. The text that is operative on and after January 2, 2008, including
amendments by section 4, chapter 238, Oregon Laws 2005, section 4,
chapter 262, Oregon Laws 2005, section 4, chapter 727, Oregon Laws 2005,
and section 20, chapter 744, Oregon Laws 2005, is set forth for the
user’s convenience.
735.710. (1) In carrying out its duties under ORS 735.700 to
735.714 and 735.720 to 735.740, the Office of Private Health Partnerships
shall:
(a) Enter into contracts for administration of ORS 735.700 to
735.714 and 735.720 to 735.740, including collection of premiums and
paying carriers.
(b) Retain consultants and employ staff.
(c) Enter into contracts with carriers or health care providers for
health benefit plans, including contracts where final payment may be
reduced if usage is below a level fixed in the contract.
(d) Set premium rates for eligible employees and small employers.
(e) Perform other duties to provide low-cost health benefit plans
of types likely to be purchased by small employers.
(f) Establish contributions to be paid by small employers toward
the premiums incurred on behalf of covered eligible employees.
(g) Establish procedures by rule for the publication or release of
aggregate data relating to:
(A) Applicants for enrollment and persons enrolled in the Family
Health Insurance Assistance Program;
(B) Health benefit plans for small employers offered by the office;
and
(C) Other programs operated by the office.
(2) Notwithstanding any other health benefit plan contracted for
and offered by the office, the office shall contract for a health benefit
plan or plans best designed to meet the needs and provide for the welfare
of eligible employees and small employers.
(3) The office may approve more than one carrier for each type of
plan contracted for and offered, but the number of carriers shall be held
to a number consistent with adequate service to eligible employees and
family members.
(4) Where appropriate for a contracted and offered health benefit
plan, the office shall provide options under which an eligible employee
may arrange coverage for family members of the employee.
(5) In developing any health benefit plan, the office may provide
an option of additional coverage for eligible employees and family
members at an additional cost or premium.
(6) Transfer of enrollment from one health benefit plan to another
shall be open to all eligible employees and family members under rules
adopted by the office.
(7) If the office requests less health care service or benefit than
is otherwise required by state law, a carrier is not required to offer
such service or benefit.
(8) Health benefit plans for small employers contracted for and
offered by the office must provide a sufficient level of benefits to be
eligible for a subsidy under ORS 735.724.
(9) The office may employ whatever means are reasonably necessary
to carry out the purposes of ORS 735.700 to 735.714 and 735.720 to
735.740. Such authority includes but is not limited to authority to seek
clarification, amendment, modification, suspension or termination of any
agreement or contract that in the office’s judgment requires such action.Note: See note under 735.700.Note: Section 5, chapter 742, Oregon Laws 2003, provides:
Sec. 5. (1) The Office of Private Health Partnerships shall submit
to the Director of the Department of Consumer and Business Services any
information requested by the director for the purpose of assessing the
impact of the amendments to ORS 735.700, 735.702 and 735.710 by sections
1, 2 and 3, chapter 742, Oregon Laws 2003.
(2) The office shall report the results of the assessment conducted
under subsection (1) of this section to the Seventy-fourth Legislative
Assembly. The report shall include, but not be limited to:
(a) The demographics of small employers obtaining health benefit
plans from the office;
(b) The carriers with whom the office has contracts to offer health
benefit plans for small employers; and
(c) The premiums charged for health benefit plans for small
employers. [2003 c.742 §5; 2005 c.744 §39](1) The Office of Private Health Partnerships shall encourage
increased health insurance coverage among small employers:
(a) By providing information, benefit comparisons, premium
comparisons and technical assistance on obtaining employee benefits and
on incentives including, but not limited to, information on the pretax
health benefit options allowed under section 125 of the United States
Internal Revenue Code; and
(b) By using other means necessary to market health benefit plan
coverage to small employers.
(2) The office shall provide information about other resources for
accessing health care and shall assist consumers in accessing those
resources. [Formerly 653.747; 2005 c.744 §21]Note: 735.712 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 735 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. The
Office of Private Health Partnerships may renew health benefit plans for
small employers offered by the office on or after September 2, 2003, that
are not eligible for a subsidy under ORS 735.724. [2003 c.742 §12; 2005
c.744 §22]Note: See note under 735.700.Note: Section 2b, chapter 742, Oregon Laws 2003, provides:
Sec. 2b. Health benefit plans for small employers offered by the
Office of Private Health Partnerships under ORS 735.710 (8) that are not
eligible for a subsidy under ORS 735.724 may be offered only to small
employers that did not provide a health benefit plan for eligible
employees on July 1, 2003, and to small employers that begin business
operations on or after September 2, 2003. [2003 c.742 §2b; 2005 c.744 §40]Note: Sections 10, 11, 12, 13 and 16, chapter 727, Oregon Laws
2005, provide:
Sec. 10. Sections 11 and 12 of this 2005 Act are added to and made
a part of ORS 735.700 to 735.714. [2005 c.727 §10]
Sec. 11. (1) A small employer may obtain a health benefit plan
offered by the Office of Private Health Partnerships only if the small
employer pays a contribution established under ORS 735.710 (1)(f) toward
the premium incurred on behalf of a covered eligible employee.
(2) Notwithstanding section 2b, chapter 742, Oregon Laws 2003, the
Office of Private Health Partnerships may offer a health benefit plan to
a small employer that contributed to a health benefit plan solely for the
benefit of the employer or the employer’s dependents. [2005 c.727 §11;
2005 c.744 §24b]
Sec. 12. (1) The Office of Private Health Partnerships shall impose
and collect assessments against carriers who have entered into contracts
under ORS 735.710 (1)(c) to offer health benefit plans for small
employers. The office shall apply the same assessment rate against all
participating carriers.
(2) A carrier’s assessment shall be an amount established by rule
that is:
(a) Not greater than one percent of the earned premiums a carrier
receives from selling health benefit plans to small employers under ORS
735.710 (1)(c); or
(b) A flat rate per small employer health benefit plan sold by a
carrier to small employers under ORS 735.710 (1)(c).
(3) A carrier shall pay its assessment as required by the office.
(4) The office shall adopt rules to implement this section. [2005
c.727 §12; 2005 c.744 §24c]
Sec. 13. Section 12 of this 2005 Act becomes operative on March 1,
2006. [2005 c.727 §13]
Sec. 16. Sections 11 and 12 of this 2005 Act are repealed on
(Family Health Insurance Assistance Program) For purposes of ORS
735.720 to 735.740:
(1) “Carrier” has the meaning given that term in ORS 735.700.
(2) “Eligible individual” means an individual who:
(a) Is a resident of the State of Oregon;
(b) Is not eligible for Medicare;
(c) Either has been without health benefit plan coverage for a
period of time established by the Office of Private Health Partnerships,
or meets exception criteria established by the office;
(d) Except as otherwise provided by the office, has family income
less than 200 percent of the federal poverty level;
(e) Has investments and savings less than the limit established by
the office; and
(f) Meets other eligibility criteria established by the office.
(3)(a) “Family” means:
(A) A single individual;
(B) An adult and the adult’s spouse;
(C) An adult and the adult’s spouse, all unmarried, dependent
children under 23 years of age, including adopted children, children
placed for adoption and children under the legal guardianship of the
adult or the adult’s spouse, and all dependent children of a dependent
child; or
(D) An adult and the adult’s unmarried, dependent children under 23
years of age, including adopted children, children placed for adoption
and children under the legal guardianship of the adult, and all dependent
children of a dependent child.
(b) A family includes a dependent elderly relative or a dependent
adult disabled child who meets the criteria established by the office and
who lives in the home of the adult described in paragraph (a) of this
subsection.
(4)(a) “Health benefit plan” means a policy or certificate of group
or individual health insurance, as defined in ORS 731.162, providing
payment or reimbursement for hospital, medical and surgical expenses.
“Health benefit plan” includes a health care service contractor or health
maintenance organization subscriber contract, the Oregon Medical
Insurance Pool and any plan provided by a less than fully insured
multiple employer welfare arrangement or by another benefit arrangement
defined in the federal Employee Retirement Income Security Act of 1974,
as amended.
(b) “Health benefit plan” does not include coverage for accident
only, specific disease or condition only, credit, disability income,
coverage of Medicare services pursuant to contracts with the federal
government, Medicare supplement insurance, student accident and health
insurance, long term care insurance, hospital indemnity only, dental
only, vision only, coverage issued as a supplement to liability
insurance, insurance arising out of a workers’ compensation or similar
law, automobile medical payment insurance, insurance under which the
benefits are payable with or without regard to fault and that is legally
required to be contained in any liability insurance policy or equivalent
self-insurance or coverage obtained or provided in another state but not
available in Oregon.
(5) “Income” means gross income in cash or kind available to the
applicant or the applicant’s family. Income does not include earned
income of the applicant’s children or income earned by a spouse if there
is a legal separation.
(6) “Investment and savings” means cash, securities as defined in
ORS 59.015, negotiable instruments as defined in ORS 73.0104 and such
similar investments or savings as the office may establish that are
available to the applicant or the applicant’s family to contribute toward
meeting the needs of an applicant or eligible individual.
(7) “Medicaid” means medical assistance provided under 42 U.S.C.
section 1396a (section 1902 of the Social Security Act).
(8) “Resident” means an individual who meets the residency
requirements established by rule by the office.
(9) “Subsidy” means payment or reimbursement to an eligible
individual toward the purchase of a health benefit plan, and may include
a net billing arrangement with carriers or a prospective or retrospective
payment for health benefit plan premiums and eligible copayments or
deductible expenses directly related to the eligible individual.
(10) “Third-party administrator” means any insurance company or
other entity licensed under the Insurance Code to administer health
insurance benefit programs. [Formerly 653.800; 2003 c.684 §8; 2005 c.727
§§5,5a; 2005 c.744 §§23d,23e,23g]Note: 735.720 to 735.740 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 735 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation.(1) There is established the
Family Health Insurance Assistance Program in the Office of Private
Health Partnerships. The purpose of the program is to remove economic
barriers to health insurance coverage for residents of the State of
Oregon with family income less than 200 percent of the federal poverty
level, and investment and savings less than the limit established by the
office, while encouraging individual responsibility, promoting health
benefit plan coverage of children, building on the private sector health
benefit plan system and encouraging employer and employee participation
in employer sponsored health benefit plan coverage.
(2) The Office of Private Health Partnerships shall be responsible
for the implementation and operation of the Family Health Insurance
Assistance Program. The Administrator of the Office for Oregon Health
Policy and Research, in consultation with the Oregon Health Policy
Commission, shall make recommendations to the Office of Private Health
Partnerships regarding program policy, including but not limited to
eligibility requirements, assistance levels, benefit criteria and carrier
participation.
(3) The Office of Private Health Partnerships may contract with one
or more third-party administrators to administer one or more components
of the Family Health Insurance Assistance Program. Duties of a
third-party administrator may include but are not limited to:
(a) Eligibility determination;
(b) Data collection;
(c) Assistance payments;
(d) Financial tracking and reporting; and
(e) Such other services as the office may deem necessary for the
administration of the program.
(4) If the office decides to enter into a contract with a
third-party administrator pursuant to subsection (3) of this section, the
office shall engage in competitive bidding. The office shall evaluate
bids according to criteria established by the office, including but not
limited to:
(a) The bidder’s proven ability to administer a program of the size
of the Family Health Insurance Assistance Program;
(b) The efficiency of the bidder’s payment procedures;
(c) The estimate provided of the total charges necessary to
administer the program; and
(d) The bidder’s ability to operate the program in a cost-effective
manner. [Formerly 653.805; 2003 c.128 §1; 2003 c.683 §4; 2003 c.784 §12;
2005 c.238 §6; 2005 c.262 §6; 2005 c.727 §6; 2005 c.744 §24a]Note: See note under 735.720.(1) To enroll in the Family Health Insurance Assistance Program
established in ORS 735.720 to 735.740, an applicant shall submit a
written application to the Office of Private Health Partnerships or to
the third-party administrator contracted by the office to administer the
program pursuant to ORS 735.722 in the form and manner prescribed by the
office. Except as provided in ORS 735.728, if the applicant qualifies as
an eligible individual, the applicant shall either be enrolled in the
program or placed on a waiting list for enrollment.
(2) After an eligible individual has enrolled in the program, the
individual shall remain eligible for enrollment for the period of time
established by the office.
(3) After an eligible individual has enrolled in the program, the
office or third-party administrator shall issue subsidies in an amount
determined pursuant to ORS 735.726 to either the eligible individual or
to the carrier designated by the eligible individual, subject to the
following restrictions:
(a) Subsidies may not be issued to an eligible individual unless
all eligible children, if any, in the eligible individual’s family are
covered under a health benefit plan or Medicaid.
(b) Subsidies may not be used to subsidize premiums on a health
benefit plan whose premiums are wholly paid by the eligible individual’s
employer without contribution from the employee.
(c) Such other restrictions as the office may adopt.
(4) The office may issue subsidies to an eligible individual in
advance of a purchase of a health benefit plan.
(5) To remain eligible for a subsidy, an eligible individual must
enroll in a group health benefit plan if a plan is available to the
eligible individual through the individual’s employment and the employer
makes a monetary contribution toward the cost of the plan, unless the
office implements specific cost or benefit structure criteria that make
enrollment in an individual health insurance plan more advantageous for
the eligible individual.
(6) Notwithstanding ORS 735.720 (4)(b), if an eligible individual
is enrolled in a group health benefit plan available to the eligible
individual through the individual’s employment and the employer requires
enrollment in both a health benefit plan and a dental plan, the
individual is eligible for a subsidy for both the health benefit plan and
the dental plan. [Formerly 653.810; 2003 c.128 §2; 2003 c.683 §1; 2005
c.238 §7; 2005 c.262 §7; 2005 c.727 §7; 2005 c.744 §25]Note: See note under 735.720. (1) The Office of
Private Health Partnerships shall determine the level of assistance to be
granted under ORS 735.724 based on a sliding scale that considers:
(a) Family size;
(b) Family income;
(c) The number of members of a family who will receive health
benefit plan coverage subsidized through the Family Health Insurance
Assistance Program; and
(d) Such other factors as the office may establish.
(2) Notwithstanding the sliding scale established in subsection (1)
of this section, the office may establish different assistance levels for
otherwise similarly situated eligible individuals based on factors
including but not limited to whether the individual is enrolled in an
employer-sponsored group health benefit plan or an individual health
benefit plan. [Formerly 653.815; 2005 c.744 §26]Note: See note under 735.720.(1) Notwithstanding eligibility criteria and subsidy
amounts established pursuant to ORS 735.720 to 735.740, subsidies shall
be provided only to the extent the Legislative Assembly specifically
appropriates funds to provide such assistance.
(2) The Office of Private Health Partnerships shall prohibit or
limit enrollment in the Family Health Insurance Assistance Program to
ensure that program expenditures are within legislatively appropriated
amounts. Prohibitions or limitations allowed under this section may
include but are not limited to:
(a) Lowering the allowable income level necessary to qualify as an
eligible individual; and
(b) Establishing a waiting list of eligible individuals who shall
receive subsidies only when sufficient funds are available. [Formerly
653.820; 2005 c.744 §27]Note: See note under 735.720.The Office of Private Health Partnerships may, based on the
recommendation of the Administrator of the Office for Oregon Health
Policy and Research, establish minimum benefit requirements for
individual health benefit plans subject to subsidy pursuant to the Family
Health Insurance Assistance Program, including but not limited to the
type of services covered and the amount of cost-sharing to be allowed.
[Formerly 653.825; 2005 c.744 §28]Note: See note under 735.720. (1) The Family Health
Insurance Assistance Program shall provide coverage of age-appropriate
immunizations or other health care services when an eligible individual
is enrolled in a health benefit plan that does not provide coverage of
age-appropriate immunizations or other health care services required by
the state medical assistance program and the eligible individual is
receiving a subsidy described in ORS 414.839.
(2) The Office of Private Health Partnerships shall adopt rules
implementing subsection (1) of this section. [2003 c.683 §3; 2003 c.735
§12; 2005 c.744 §29]Note: See note under 735.720.(1) Except as otherwise provided in this section and
ORS 735.710, the Office of Private Health Partnerships may not disclose
information provided to the office as part of an application for
enrollment in the Family Health Insurance Assistance Program.
(2) The office may exchange information provided to the office with
other state and federal agencies for the purposes of verifying
eligibility for the program, improving provision of services and
identifying economic trends relevant to administration of the program.
(3) In accordance with applicable state and federal law, the office
may require applicants to provide their Social Security numbers and use
those numbers in the administration of the program. [Formerly 653.830;
2005 c.744 §30]Note: See note under 735.720.
The Office of Private Health Partnerships shall establish at least one
basic benchmark health benefit plan that qualifies for a subsidy
described by ORS 414.839. In establishing a basic benchmark plan, the
office shall consider employer-sponsored health benefit plans offered to
employees and dependents of employees in Oregon. [2003 c.684 §11; 2005
c.744 §31]Note: See note under 735.720. The Office of Private Health Partnerships, in
consultation with the Administrator of the Office for Oregon Health
Policy and Research and the Department of Human Services, shall adopt all
rules necessary for the implementation and operation of the Family Health
Insurance Assistance Program. [Formerly 653.835; 2005 c.744 §32]Note: See note under 735.720. There
is established in the State Treasury the Family Health Insurance
Assistance Program Account, which shall consist of moneys appropriated to
the account by the Legislative Assembly and interest earnings from the
investment of moneys in the account. All moneys in the Family Health
Insurance Assistance Program Account are continuously appropriated to the
Office of Private Health Partnerships to carry out the provisions of ORS
735.720 to 735.740. [Formerly 653.840; 2005 c.744 §33]Note: See note under 735.720. The Administrator of the
Office for Oregon Health Policy and Research shall report biennially to
the appropriate interim human resources committee and to the Legislative
Assembly on the effectiveness and efficiency of the Family Health
Insurance Assistance Program, including services and benefits covered
under the purchased health insurance plans, consumer satisfaction and
other program operational issues. [Formerly 653.845; 2005 c.238 §8; 2005
c.727 §8]Note: See note under 735.720.(1) The Office of Private Health Partnerships may impose
sanctions against an individual who violates any provision of ORS 735.720
to 735.740 or rules adopted thereto, including but not limited to
suspension or termination from the Family Health Insurance Assistance
Program and repayment of any subsidy amounts paid due to the omission or
misrepresentation of an applicant or enrolled individual. Sanctions
allowed under this subsection shall be imposed in the manner prescribed
in ORS chapter 183.
(2) In addition to the sanctions available pursuant to subsection
(1) of this section, the office may impose a civil penalty not to exceed
$1,000 against any individual who violates any provision of ORS 735.720
to 735.740 or rules adopted pursuant thereto. Civil penalties imposed
pursuant to this section shall be imposed pursuant to ORS 183.745.
[Formerly 653.850; 2003 c.684 §9; 2005 c.744 §34]Note: See note under 735.720. As used in ORS
735.750 to 735.756:
(1) “Benefits plan” has the meaning given that term in ORS 735.605.
(2) “Other costs” means costs incurred by the Oregon Medical
Insurance Pool that are not covered by the premiums received by the pool
for a subsidized member.
(3) “Premium” has the meaning given that term in ORS 735.700.
(4) “Subsidized member” means a medical assistance program client
who is enrolled in a benefits plan and who is receiving a subsidy from
the Family Health Insurance Assistance Program established in ORS 735.720
to 735.740.
(5) “Subsidy” has the meaning given that term in ORS 735.720. [2003
c.684 §1; 2005 c.744 §35]Note: 735.750 to 735.756 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 735 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation.
Notwithstanding ORS 735.615 (3)(a) and (f), a subsidized member is
eligible for coverage under ORS 735.600 to 735.650. [2003 c.684 §2]Note: See note under 735.750.
(1) In order to increase public subsidies for the purchase of health
insurance coverage provided by public programs or private insurance
described by ORS 414.839, the Office of Private Health Partnerships, the
Oregon Medical Insurance Pool Board and the Department of Human Services
shall work cooperatively to obtain federal matching dollars. The office,
the Oregon Medical Insurance Pool Board and the department shall develop
a system for payment or reimbursement of other costs and subsidies
provided to subsidized members.
(2) For each subsidized member, the Oregon Medical Insurance Pool
Board shall determine:
(a) The full cost of administering the benefits plan of the
subsidized member; and
(b) The amount of other costs.
(3) The Oregon Medical Insurance Pool Board shall bill the Family
Health Insurance Assistance Program for the total amount of the premium
received by the Oregon Medical Insurance Pool Board and for the amount of
other costs. The program shall forward the bill to the department.
(4) The department shall pay the program an amount equal to the
portion of the premium that is a subsidy and for other costs. The program
shall forward the payment to the Oregon Medical Insurance Pool Board.
[2003 c.684 §3; 2005 c.744 §36]Note: See note under 735.750. (1) Of payments made
to the Family Health Insurance Assistance Program by the Department of
Human Services under ORS 735.754 (4), the department shall determine:
(a) The portion of a subsidy of a subsidized member that is from
the General Fund; and
(b) The portion of other costs that is from the General Fund.
(2) The department shall bill the program for the amounts
determined under subsection (1) of this section. The program shall
forward the bill for the amount determined under subsection (1)(b) of
this section to the Oregon Medical Insurance Pool Board.
(3) The board shall:
(a) Determine the amount of funds needed for the payment of other
costs under subsection (1)(b) of this section; and
(b) Impose and collect assessments in that amount against insurers,
using the methodology described in ORS 735.614 (2), (6) and (9).
(4) The board shall pay the program for the amounts determined
under subsection (1)(b) of this section.
(5) The program shall forward to the department the amounts
determined under subsection (1) of this section.
(6) ORS 735.614 (3), (4), (5), (7) and (8) applies to assessments
collected under this section. [2003 c.684 §4]Note: See note under 735.750.
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