USA Statutes : oregon
Title : TITLE 56 INSURANCE
Chapter : Chapter 737 Rates and Rating Organizations
(1) As used in this chapter,
unless the context requires otherwise, “rating organization” means:

(a) Every person, other than an insurer, whether located within or
outside this state who has as the person’s object or purpose the making
of rates, rating plans or rating systems; or

(b) Two or more insurers which act in concert for the purpose of
making rates, rating plans or rating systems.

(2) Subsection (1) of this section does not include, apply to or
affect two or more insurers operating within the specific authorizations
contained in ORS 737.275, 737.312, 737.365, 737.390 and 737.526. [1969
c.690 §14] As used in this chapter,
unless the context requires otherwise, “advisory organization” means
every group, association or other organization of insurers, whether
located within or outside this state, which assists authorized insurers
which make their own filings or licensed rating organizations in rate
making, by the collection and furnishing of loss or expense statistics or
by the submission of recommendations, but which does not make filings
under this chapter. [1969 c.690 §15]


As used in this chapter,
unless the context requires otherwise:

(1) “Member” means:

(a) An insurer that participates in or is entitled to participate
in the management of a rating, advisory or other organization; or

(b) For purposes of workers’ compensation insurance, an insurer
that is affiliated or associated with a rating, advisory or other
organization by agreement with the organization for the purpose of
obtaining the rates and rating manuals or the services offered by the
organization.

(2) “Subscriber” means an insurer that is furnished at its request:

(a) With rates and rating manuals by a rating organization of which
it is not a member; or

(b) With advisory services by an advisory organization of which it
is not a member. [1969 c.690 §16; 1999 c.235 §6]

(1) The purpose of this chapter
is to promote the public welfare by regulating insurance rates to the end
that they shall not be excessive, inadequate or unfairly discriminatory
and to authorize cooperation between insurers in rate making and other
related matters.

(2) It is the express intent of this chapter to permit and
encourage competition between insurers on a sound financial basis. [1969
c.690 §1]


This chapter applies to all forms
of insurance on risks or operations in this state, except:

(1) Reinsurance, other than joint reinsurance to the extent stated
in ORS 737.390;

(2) Insurance against loss of, or damage to, aircraft, including
accessories and equipment, or against liability arising out of ownership,
maintenance or use of aircraft;

(3) Wet marine and transportation insurance;

(4) Life insurance;

(5) Health insurance; or

(6) Surplus lines insurance. [1969 c.690 §2; 2005 c.185 §10] (1) If the
Director of the Department of Consumer and Business Services has reason
to believe that a rate, rating plan or rating system filed or used by an
insurer or filed by a rating or advisory organization on behalf of an
insurer does not comply with the requirements and standards of this
chapter, the director may issue an order directing the insurer or the
rating or advisory organization to discontinue or desist from the
noncompliance. An order issued under this subsection is subject to the
provisions of ORS 731.252.

(2) If the director holds a hearing on an order issued pursuant to
subsection (1) of this section, the insurer or rating or advisory
organization filing or using the rate, rating plan or rating system shall
pay to the director the just and legitimate costs of the hearing,
including actual necessary expenses.

(3) If the director finds after a hearing under ORS 737.340 that
any rate, rating plan or rating system violates the provisions of this
chapter, the director may issue an order specifying the violation and
stating when, within a reasonable period of time, the further use of such
rate, rating plan or rating system by an insurer or rating or advisory
organization shall be prohibited.

(4) If the director finds after a hearing under ORS 737.215 or
737.340 that an insurer or rating or advisory organization is in
violation of any provision of this chapter other than the provisions
dealing with rates, rating plans or rating systems, the director may
issue an order specifying the violation and requiring compliance within a
reasonable time.

(5) If the director finds after a hearing under ORS 737.215 that
the violation of any of the provisions of this chapter applicable to it
by any insurer or rating organization that has been the subject of a
hearing was willful, the director may suspend or revoke the certificate
of authority of such insurer or the license of such rating organization.

(6) If the director finds after a hearing that any rating
organization has willfully engaged in any fraudulent or dishonest act or
practices, the director may suspend or revoke the license of such
organization. [1969 c.690 §10; 1987 c.774 §143]RATES AND RATE MAKING(1) Every insurer shall
file with the Director of the Department of Consumer and Business
Services copies of the rates, rating plans and rating systems used by it.
Except as provided in ORS 737.207, 737.209 and 737.320 (2), each filing
shall become effective immediately on the date specified therein but not
earlier than the date such filing is received by the director. This
subsection does not apply to inland marine risks which by general custom
of the business are not written according to manual rates or rating plans.

(2) An insurer may satisfy its obligation to make such filings by
becoming a member of or a subscriber to a licensed rating organization
which makes such filings, and by authorizing the director to accept such
filings on its behalf. Such insurer may so adopt the filings of a rating
organization on part of the classes of risks insured by it and may make
its own filings as to other classes which shall be uniform throughout the
insurer’s territorial classification. This subsection does not apply to
workers’ compensation insurance filings except to the extent that the
rating organization filings of rating plans or systems under ORS 737.320
are complete and usable by an insurer without the addition of allowances
for expenses, taxes or profit.

(3) A filing shall be open to public inspection immediately upon
submission to the director. [1969 c.690 §4; 1981 c.535 §16; 1987 c.774
§50](1) As used in this section, a market may be a line, subline
or classification of commercial liability insurance.

(2) Filings of commercial liability insurance rates for markets
specified by the Director of the Department of Consumer and Business
Services shall be submitted by an insurer or rating organization to the
director for review prior to the effective date if the average annual
rate level increase or decrease for each market exceeds 15 percent.
Factors to be considered by the director in specifying a market to be
subject to this section may include:

(a) The nature and extent of competition;

(b) The size and significance of the coverage provided;

(c) Reinsurance availability;

(d) The volume of cancellations and nonrenewals; and

(e) Changing conditions in the economic, judicial and social
environment.

(3) Except as otherwise provided in ORS 737.209, the effective date
of a commercial liability insurance filing required by subsection (2) of
this section to be submitted to the director for review shall be the date
specified therein but not earlier than the 30th day after the filing is
received by the director. After review of the filing, the director may
authorize an earlier effective date, if appropriate. The 30-day waiting
period may be extended to 60 days if the director gives written notice
within such waiting period to the insurer or rating organization which
made the filing that the extended period is needed for consideration of
the filing. A filing subject to subsection (2) of this section that has
not been approved or disapproved within the waiting period, or any
extension thereof, shall be deemed approved.

(4) Supporting actuarial data shall accompany every filing of
commercial liability insurance rates. The data shall be in sufficient
detail to justify the rate level change and shall demonstrate compliance
with ORS 737.310 governing the making of rates. [1987 c.774 §48]
(1) The Director of the Department of Consumer and Business Services may
hold a hearing on a filing made pursuant to ORS 737.207 if the director
determines that such a hearing would aid the director in determining
whether to approve or disapprove the filing. A hearing under this section
may be held at a place designated by the director and upon not less than
10 days’ written notice to the insurer or rating organization that made
the filing and to any other person the director decides should be
notified. A filing that is the subject of a hearing under this section
becomes effective, if approved, as provided in subsection (4) of this
section.

(2) A hearing held pursuant to subsection (1) of this section must
be conducted by an administrative law judge assigned from the Office of
Administrative Hearings established under ORS 183.605. The administrative
law judge shall report findings, conclusions and recommendations to the
director within 30 days of the close of the hearing. The insurer or
rating organization proposing the rate filing shall have the burden of
proving that the rate proposal is justified and shall pay to the director
the fair and reasonable costs of the hearing, including actual necessary
expenses.

(3) Within 10 days of receiving a report from the administrative
law judge, the director shall issue an order approving or disapproving
the filing.

(4) An order issued under subsection (3) of this section may be
reviewed as provided in ORS 183.480 to 183.540 for review of contested
cases. A filing approved by the director under this section shall be
effective 10 days after the order issued under subsection (3) of this
section and shall remain effective during any review of the order. [1987
c.774 §48a; 1999 c.849 §§175,176; 2003 c.75 §62] If the
Director of the Department of Consumer and Business Services has reason
to believe that noncompliance by an insurer with the requirements and
standards of this chapter to be willful, or if within the period
prescribed by the director in the notice required by ORS 737.336, the
insurer, rating or advisory organization does not make such changes as
may be necessary to correct the noncompliance specified by the director
or establish to the satisfaction of the director that such specified
noncompliance does not exist, then the director may hold a hearing in
connection therewith, provided that within a reasonable period of time
which shall be not less than 10 days before the date of such hearing, the
director shall mail written notice to the insurer, rating or advisory
organization involved specifying the matters to be considered at such
hearing. [1969 c.690 §8](1) Each insurer, rating
organization or advisory organization shall maintain reasonable records,
of the type and kind reasonably adapted to its method of operation, of
its experience or the experience of its members and of the data,
statistics or information collected or used by it in connection with the
rates, rating plans, rating systems, underwriting rules, policy or bond
forms, surveys or inspections made or used by it. An insurer providing
workers’ compensation insurance shall maintain reasonable records showing
investment income earned by the insurer, insurer profit on workers’
compensation insurance, accumulated reserves for vocational
rehabilitation services and accumulated reserves for claim costs related
to orders or awards made pursuant to ORS 656.278.

(2) The maintenance of such records in the office of a licensed
rating organization of which an insurer is a member or subscriber will be
sufficient compliance with this section for any insurer maintaining
membership or subscribership in such organization, to the extent that the
insurer uses the rates, rating plans, rating systems or underwriting
rules of such organization.

(3) Such records shall be available to the Director of the
Department of Consumer and Business Services for examination and
inspection at any time in order to determine whether the filings made
pursuant to ORS 737.205 comply with this chapter.

(4) Each insurer shall maintain statistics under statistical plans
compatible with the rating plans used by the insurer. An insurer may
report its statistics through a recognized agency or advisory
organization, except that workers’ compensation insurance statistics
shall be reported to the workers’ compensation rating organization of
which the insurer is a member. The director shall prescribe by rule the
statistical plan for workers’ compensation insurance.

(5)(a) The director shall designate one workers’ compensation
statistical agency from the licensed rating organizations as the agent to
which all licensed workers’ compensation rating organizations shall
report workers’ compensation insurance statistics. The director shall
adopt rules to ensure a competitive process in the designation of the one
workers’ compensation statistical agency.

(b) The designated workers’ compensation statistical agency shall
assist the director in gathering workers’ compensation insurance
statistics and making compilations of those statistics and shall make the
compilations available to insurers and other licensed workers’
compensation rating organizations, subject to rules adopted by the
director.

(c) If the director licenses only one workers’ compensation rating
organization under ORS 737.355 (2), that rating organization shall be the
designated statistical agent under this subsection.

(6) The ownership of the financial and statistical data submitted
to a workers’ compensation statistical agency is vested in the submitting
member insurer. The financial and statistical data shall be confidential
and may not be disclosed, provided that the ownership rights of an
insurer shall not limit access by the director for the purposes of
performing the regulatory duties of the Department of Consumer and
Business Services. [1969 c.690 §11; 1981 c.535 §17; 1983 c.360 §2; 1987
c.884 §54; 1999 c.235 §2] The data collected
and maintained by each insurer, rating organization or advisory
organization pursuant to ORS 737.225 shall be in sufficient detail to
demonstrate the statistical significance of differences or correlations
relevant to the rating plan definitions and rate differentials. [1979
c.870 §6] (1) The
Director of the Department of Consumer and Business Services may make or
cause to be made an examination of every insurer transacting any class of
insurance to which the provisions of this chapter are applicable to
ascertain whether such insurer and every rate and rating system used by
it for every such class of insurance complies with the requirements and
standards of this chapter.

(2) The officers, managers, agents and employees of any insurer,
under examination, may be examined at any time under oath and shall
exhibit all books, records, accounts, documents or agreements governing
its method of operation, together with all data, statistics and
information of every kind and character collected or considered by such
insurer in the conduct of the operations to which such examination
relates.

(3) The reasonable cost of any examination authorized by this
section shall be paid by the organization or insurer to be examined
including actual necessary transportation and traveling expenses.

(4) Notwithstanding any other provision of law, all reimbursable
expenses collected by the director under subsection (3) of this section
shall be deposited in the fund created by ORS 705.145 for the payment of
expenses incurred in conducting the examinations authorized by this
section. The moneys deposited shall be continuously appropriated for such
purpose. [1969 c.690 §12; 1987 c.373 §83] In the
event any insurer shall in collusion with any other insurer conspire to
fix, set or adhere to insurance rates except as expressly sanctioned by
the Insurance Code, such insurer shall be liable to any person damaged
thereby for an amount equal to three times the amount of such damage
together with the damaged party’s attorney fees. [1969 c.690 §13] Subject to
and in compliance with the provisions of this chapter authorizing
insurers to be members or subscribers of rating or advisory organizations
or to engage in joint underwriting or joint reinsurance, two or more
insurers may act in concert with each other and with others with respect
to any matters pertaining to the making of rates or rating systems, the
preparation or making of insurance policy or bond forms, underwriting
rules, surveys, inspections and investigations, the furnishing of loss or
expense statistics or other information and data or carrying on of
research. [1969 c.690 §17](1) Members and subscribers of
rating or advisory organizations may use the rates, rating systems,
underwriting rules or policy or bond forms of such organizations, either
consistently or intermittently, but, except as provided in ORS 737.275,
737.312, 737.365, 737.390, 737.526 and subsection (2) of this section,
shall not agree with each other or rating organizations or others to
adhere thereto. The fact that two or more authorized insurers, whether or
not members or subscribers of a rating or advisory organization, use,
either consistently or intermittently, the rates or rating systems made
or adopted by a rating organization, or the underwriting rules or policy
or bond forms prepared by a rating or advisory organization, shall not be
sufficient in itself to support a finding that an agreement to so adhere
exists, and may be used only for the purpose of supplementing or
explaining any competent evidence of the existence of any such agreement.

(2) Each insurer transacting workers’ compensation insurance shall
adhere to the policy forms filed by the licensed workers’ compensation
rating organization of which the insurer is a member and approved by the
Director of the Department of Consumer and Business Services. [1969 c.690
§19; 1971 c.385 §4; 1977 c.333 §1; 1981 c.535 §18; 1999 c.235 §3](1) When a worker
leasing company required to be licensed by ORS 656.850 provides workers
to work for a client and also provides the workers’ compensation coverage
for those workers, the insurance premium for the client’s exposure shall
be based on the client’s own experience rating, in the same manner as
required for employers insuring directly employed workers.

(2) An insurer that provides workers’ compensation to a worker
leasing company shall maintain and report to the licensed workers’
compensation rating organization of which the insurer is a member
separate statistical experience for each client of the worker leasing
company according to the uniform statistical plan prescribed by the
Director of the Department of Consumer and Business Services according to
ORS 737.225 (4).

(3) To reimburse expenses incurred by the insurer in segregating
client experience, the insurer shall be permitted to charge the worker
leasing company a reasonable fee as determined by the director.

(4) The worker leasing company shall earn a separate experience
rating for any administrative personnel the company employs. [1993 c.628
§5; 1999 c.235 §4]With respect
to any matters pertaining to the making of rates or rating systems, the
preparation or making of insurance policy or bond forms, underwriting
rules, surveys, inspections and investigations, the furnishing of loss or
expense statistics or other information and data, or carrying on of
research, two or more admitted insurers having a common ownership or
operating in this state under common management or control are hereby
authorized to act in concert between or among themselves the same as if
they constituted a single insurer, and to the extent that such matters
relate to co-surety bonds, two or more admitted insurers executing such
bonds are hereby authorized to act in concert between or among themselves
the same as if they constituted a single insurer. [1969 c.690 §21] The
following standards shall apply to the making and use of rates:

(1) Rates shall not be excessive, inadequate or unfairly
discriminatory.

(2) As to all classes of insurance, other than workers’
compensation and title insurance:

(a) No rate shall be held to be excessive unless:

(A) Such rate is unreasonably high for the insurance provided; and

(B) A reasonable degree of competition does not exist in the area
with respect to the classification to which such rate is applicable.

(b) No rate shall be held inadequate unless such rate is
unreasonably low for the insurance provided and:

(A) Use or continued use of such rate endangers the solvency of the
insurer; or

(B) The use of such rate by the insurer has, or if continued will
have, the effect of destroying competition or creating a monopoly.

(3) Rates for each classification of coverage shall be based on the
claims experience of insurers within Oregon on that classification of
coverage unless that experience provides an insufficient base for
actuarially sound rates.

(4) Due consideration shall be given to past and prospective loss
experience within this state, to the hazards of conflagration and
catastrophe, to a reasonable margin for profit and to contingencies, to
dividends, savings or unabsorbed premium deposits allowed or returned by
insurers to their policyholders, members or subscribers, to past and
prospective expenses specially applicable to this state, and to all other
relevant factors, including judgment factors deemed relevant, within this
state.

(5) In addition to subsection (4) of this section, rates for home
protection insurance may include provision for unreimbursed costs of risk
inspection and for loss costs under policies which are terminated without
premium because the related home sale is not made.

(6) In the case of fire insurance rates, consideration may be given
to the experience of the fire insurance business during the most recent
five-year period for which such experience is available.

(7) The systems of expense provisions included in the rates for use
by any insurer or group of insurers may differ from those of other
insurers or groups of insurers to reflect the requirements of the
operating methods of any such insurer or group of insurers with respect
to any class of insurance, or with respect to any subdivision or
combination thereof for which subdivision or combination separate
expenses are applicable.

(8) Risks may be grouped by classifications for the establishment
of rates and minimum premiums. Classification rates for casualty, surety
or inland marine risks may be modified to produce rates for individual
risks in accordance with rating plans which establish standards for
measuring variations in hazards or expense provisions or both. Such
standards may measure any differences among risks that can be
demonstrated to have a probable effect upon losses or expenses.

(9) Due consideration shall be given, in the making and use of
rates for all insurance, to investment income earned by the insurer, to
insurer profits and to accumulated reserves for vocational rehabilitation
services and for claim costs related to orders or awards made pursuant to
ORS 656.278.

(10) The Director of the Department of Consumer and Business
Services, by rule, shall prescribe the conditions under which a division
of payroll between different manual classifications is permitted for
purposes of computing workers’ compensation premiums.

(11)(a) The director shall not approve any workers’ compensation
rating system that does not include a plan for rewarding employers,
however small, that have good loss experience or programs likely to
improve accident prevention. However, this paragraph is not intended to
require that all employers be experience rated.

(b) The director shall not approve any workers’ compensation rating
system that does not allow the insurer to include potential third party
recovery as one of the variables in the claims reserving process.

(12) At the time an insurer issues a workers’ compensation
insurance policy to an insured for the first time, the insurer shall give
written notice to the insured of the rating classifications to which the
insured’s employees are to be assigned and shall provide an adequate
description of work activities in each classification. In the event an
insurer recommences coverage following its termination, the notice
required under this subsection must be given only if the gap in coverage
exceeds six months.

(13) If an insurer determines the workers’ compensation insurance
policy of an insured needs reclassification, the insurer:

(a) May bill an additional premium for the revised classification
after the insurer has provided the insured at least 60 days’ written
notice of the reclassification.

(b) Shall bill retroactively to policy inception or date of change
in insured’s operations for any reclassification that results in a net
reduction of premium.

(c) May, notwithstanding paragraph (a) of this subsection,
retroactively bill an insured for reclassification during the policy year
without prior notice of reclassification if the insurer shows by a
preponderance of the evidence that:

(A) The insured knew that the employees were misclassified, or the
insured was adequately informed by the insurer of the proper
classification for the insured’s employees;

(B) The insured provided improper or inaccurate information
concerning its operations; or

(C) The insured’s operations changed after the date information on
the employees was obtained from the insured.

(14) In consultation with system participants, the director shall
analyze the rating classification system to investigate changes that
simplify the system and reduce costs for employers and insurers while
preserving rate equity and minimizing the potential for abuse. The
director shall give particular emphasis to the method of allocating
payroll to rating classifications and to alternatives to methods that
require verifiable payroll records. Upon completion of this analysis, the
director shall implement appropriate changes to the system.

(15) The director shall adopt rules to carry out the provisions of
this section and may by rule specify procedures relating to rating and
ratemaking by workers’ compensation insurers.

(16) A rate increase based solely upon an insured’s attaining or
exceeding 65 years of age shall be presumed to be unfairly discriminatory
unless the increase is clearly based on sound actuarial principles or is
related to actual or reasonably anticipated experience. [Amended by 1967
c.359 §307; 1969 c.690 §3; 1981 c.247 §15; 1981 c.535 §19; 1981 c.874
§19; 1983 c.360 §1; 1987 c.676 §1; 1987 c.774 §146; 1987 c.884 §52; 1991
c.768 §1; 1997 c.766 §1; 1997 c.768 §1]Agreements may be made among insurers with respect to the
equitable apportionment among them of insurance which may be afforded
applicants who are in good faith entitled to such insurance but who are
unable to procure such insurance through ordinary methods. Such insurers
may agree among themselves on the use of reasonable rate modifications
for such insurance, such agreements and rate modifications to be subject
to the approval of the Director of the Department of Consumer and
Business Services. [Formerly 737.180]Notwithstanding ORS 737.600, but subject to all other rate
filing requirements of this chapter, an insurer may combine for rating
purposes the experience of a group of employers covered for workers’
compensation insurance by the insurer, subject to applicable rules
adopted by the Director of the Department of Consumer and Business
Services, if:

(1) All the employers in the group are members of an organization.

(2) The employers in the group constitute at least 50 percent of
the employers in the organization, unless the number of covered workers
in the group exceeds 500, in which case the employers in the group must
constitute at least 25 percent of the employers in the organization.

(3) The grouping of employers is likely to substantially improve
accident prevention, claims handling for the employers and reduce
expenses. [1983 c.706 §6; 1990 c.1 §4](1) A workers’ compensation insurer shall maintain a premium audit
program to aid in achieving equitable premium charges to Oregon employers
and for the collection of credible statewide data for ratemaking.

(2) The Director of the Department of Consumer and Business
Services shall prescribe by rule a premium audit program system for
workers’ compensation insurance.

(3) The premium audit system shall include provisions for:

(a) Employer education of the audit reporting function of the
rating system;

(b) A continuing test audit program providing for auditing of all
insurers;

(c) A continuous monitoring of the audit program system pursuant to
ORS 737.235;

(d) An appeal process pursuant to ORS 737.505 for employers to
question the results of a premium audit. This process must include
written notification to the employer that is included in the final
premium audit billing that informs the employer of appeal rights to the
director under ORS 737.505, of the requirement that a written request to
initiate an appeal must be received by the director not later than the
60th day after the employer receives the final premium audit billing and
of any other information the director may request by rule; and

(e) Civil penalties pursuant to ORS 731.988 for violations of
prescribed standards of the premium audit system.

(4) Notwithstanding ORS 737.505, the provisions of this section
apply to all premium audit disputes between employers and insurers in
existence on July 20, 1987, regardless of the policy year involved or the
date of the final audit billing. [1987 c.884 §8; 1999 c.1020 §5](1)
The Director of the Department of Consumer and Business Services shall
review title insurance filings, and each workers’ compensation insurance
filing, as soon as reasonably possible after they have been made in order
to determine whether they meet the requirements of this chapter.

(2) The effective date of each title and workers’ compensation
insurance filing shall be the date specified therein but not earlier than
the 30th day after the date the filing is received by the director or
from the date of receipt of the information furnished in support of a
filing or specific portions of such filing if such supporting information
is required by the director. The waiting period may be extended by the
director for not more than 30 days if the director gives written notice
within such waiting period to the insurer or rating organization which
made the filing that the director needs such additional time for the
consideration of such filing or specific portions of such filing. Upon
written application by such insurer or rating organization, the director
may authorize a filing or specific portions of such filing, which the
director has reviewed, to become effective before the expiration of the
waiting period. A filing or portions of a filing shall be deemed to meet
the requirements of this chapter unless disapproved by the director
within the waiting period or any extension thereof.

(3) Filings of workers’ compensation rates, rating plans and rating
systems by a workers’ compensation rating organization shall be limited
to provisions for claim payment approved or established by the director,
and shall not include allowances for or recognition of expenses, taxes or
profit. A workers’ compensation rating organization shall make such
filings with the director, which filings shall be subject to this
section. The organization shall also file the workers’ compensation
policy forms to be used by its members. The filing shall include a report
of investment income.

(4) Filings of workers’ compensation rates by an insurer shall
specify allowances for expenses, taxes and profits.

(5) The director shall investigate and evaluate all workers’
compensation filings to determine whether the filings meet the
requirements of this chapter. The director shall employ such experts and
other personnel as may be reasonably necessary to make such investigation
and evaluation, the cost of which shall be paid out of the fund created
under ORS 705.145.

(6) Notwithstanding the provisions of ORS 737.205 (1), the director
may require any person to comply with the requirements of subsection (2)
of this section if the director has good cause to believe that a
reasonable degree of competition does not exist in the area with respect
to the classification to which such rate is applicable.

(7) The director may require insurers to use, as that portion of a
rate filing that constitutes the amount for claim payment, rates
prescribed by the director based upon rating information determined
pursuant to ORS 731.216 (3). [Amended by 1967 c.359 §310; 1969 c.690 §5;
1973 c.353 §1; 1981 c.535 §20; 1981 c.874 §20; 1985 c.706 §5; 1987 c.373
§83a; 1987 c.884 §51; 1989 c.171 §83; 1989 c.700 §12]Notwithstanding any other provision of this chapter:

(1) The Director of the Department of Consumer and Business
Services shall not approve any workers’ compensation rate filing for an
assigned risk pool that provides for any surcharge. As used in this
subsection, a “surcharge” does not include a modification pursuant to an
experience rating plan approved by the director.

(2) The director shall adopt rules providing for approval of
workers’ compensation rating plans that include provisions allowing for
reasonable retroactive application of experience rating modification
factors. Nothing in this subsection affects retrospective rating plans.

(3) If the director disapproves a workers’ compensation rate or
rating plan and the insurer or rating organization requests a hearing
before the director, the burden of proof is upon the insurer or rating
organization to prove that the filing meets the requirements of this
chapter.

(4) If the director holds a hearing on an order disapproving a
workers’ compensation rate, rating plan or rating system, the insurer or
rating or advisory organization filing or using the rate, rating plan or
rating system shall pay to the director the just and legitimate costs of
the hearing, including actual necessary expenses. [1987 c.884 §49](1) Under such rules and regulations as
the Director of the Department of Consumer and Business Services adopts,
the director, by written order, may suspend or modify the requirement of
filing as to any class of insurance, or subdivision or combination
thereof, or as to classes of risks, for which the rates cannot
practicably be filed before they are used. Such orders, rules and
regulations shall be made known to insurers and rating organizations
affected thereby. The director may make such examination as the director
deems advisable to ascertain whether any rates affected by such order
meet the standards set forth in ORS 737.310.

(2) Upon the written application of the insured, stating the
reasons therefor, filed with the director and approved by the director, a
rate in excess of that provided by a filing otherwise applicable may be
used on any specific risk. [Amended by 1967 c.359 §311] (1)
No insurer shall make or issue a policy except in accordance with the
filings which are in effect for the insurer as provided in this chapter.

(2) This section does not apply to policies for inland marine risks
as to which filings are not required. [Amended by 1967 c.359 §312; 1969
c.690 §6](1) If within the waiting period or the extension thereof, if
any, as provided in ORS 737.320 (2), the Director of the Department of
Consumer and Business Services finds that a filing does not meet the
requirements of this chapter, the director shall send to the insurer or
rating organization which made such filing written notice of disapproval
of such filing, specifying therein in what respects the director finds
such filing fails to meet the requirements and stating that such filing
shall not become effective.

(2) If the director has reason to believe that an insurer or rating
or advisory organization is not complying with the requirements and
standards of this chapter other than the requirements and standards
dealing with rates, rating plans or rating systems, unless the director
has reason to believe such noncompliance is willful, the director shall
give notice in writing to such insurer or rating or advisory organization
stating in what manner such noncompliance is alleged to exist and
specifying a reasonable time, not less than 10 days after the date of
mailing, in which such noncompliance may be corrected. [1967 c.359 §313;
1969 c.690 §7; 1987 c.774 §144](1) Any person aggrieved with respect to
any filing that is in effect, other than the insurer or rating
organization that made the filing, may make written application to the
Director of the Department of Consumer and Business Services for a
hearing on the filing. The application shall specify the grounds to be
relied upon by the applicant.

(2) If the director finds that the application is made in good
faith, that the applicant would be so aggrieved if the grounds are
established, and that such grounds otherwise justify holding such a
hearing, the director shall do one of the following:

(a) Issue an order under ORS 737.045 (1). The director shall not
act under this paragraph if the filing concerns a rate, rating plan or
rating system subject to ORS 737.320 (1).

(b) Hold a hearing, within 30 days after receipt of such
application, at a place designated by the director and upon not less than
10 days’ written notice to the applicant and to the insurer or rating
organization that made the filing. [Amended by 1967 c.359 §314; 1969
c.690 §9; 1987 c.774 §145] Conduct of the hearing,
issuance of orders pursuant thereto and judicial review of orders shall
be as provided in ORS chapter 183. [1971 c.734 §181]RATING ORGANIZATIONS No rating
organization shall conduct its operations in this state without first
filing with the Director of the Department of Consumer and Business
Services a written application for a license as a rating organization for
such classes of insurance, or subdivision or class of risk or a part or
combination thereof as are specified in its application and shall file
therewith:

(1) A copy of its constitution, its articles of agreement or
association or its certificate of incorporation, and of its bylaws, rules
and regulations governing the conduct of its business.

(2) A list of its members and subscribers.

(3) The name and address of a resident of this state upon whom
notices or orders of the director or process affecting such rating
organization may be served.

(4) A statement of its qualifications as a rating organization.
This statement shall be on forms prescribed and furnished by the director
and shall include:

(a) In the case of a fire insurance rating organization, a showing
as to its facilities for inspecting and surveying the various
municipalities and fire risks in this state and for inspecting and
surveying in this state the facilities for the preventing, confining and
extinguishing of fires and such other information as the director may
require; and

(b) In the case of a title insurance rating organization, a showing
that adequate representation, as determined by the director, is provided
for title insurance producers. [Amended by 1967 c.359 §318; 1969 c.690
§18; 1979 c.501 §2; 2003 c.364 §97](1) If the Director of the Department of Consumer and
Business Services finds that the applicant represents a credible
statistical base, is competent, trustworthy and otherwise qualified to
act as a rating organization and that its constitution, articles of
agreement or association or certificate of incorporation, and its bylaws,
rules and regulations governing the conduct of its business conform to
the requirements of law, the director shall issue a license specifying
the classes of insurance, or subdivision or class of risk or a part or
combination thereof for which the applicant is authorized to act as a
rating organization. Each application shall be granted or denied in whole
or in part by the director within 60 days of the date of its filing with
the director.

(2) The director need not issue a license to each workers’
compensation rating organization that meets the qualifications and
requirements of subsection (1) of this section. Instead, the director may
issue licenses to one or more qualifying workers’ compensation rating
organizations pursuant to a selection process established by rule. At the
end of the period for which one or more licenses are issued, the director
may do the following pursuant to the selection process established by
rule under this subsection:

(a) Renew a license or issue a license to another workers’
compensation rating organization; and

(b) Renew or issue licenses to more than one workers’ compensation
rating organization.

(3) A license issued pursuant to this section shall remain in
effect for three years unless suspended or revoked by the director. The
license fee shall be as established by the director. A license issued
pursuant to this section may be suspended or revoked by the director,
after a hearing upon notice, in the event the rating organization ceases
to meet the requirements of this section. If a license is issued to only
one workers’ compensation rating organization and the license is
suspended or revoked, the director may issue a license to another
workers’ compensation rating organization for the remainder of the period
for which the suspended or revoked license was issued.

(4) Each rating organization shall notify the director promptly of
every change regarding matters listed in ORS 737.350 (1), (2) and (3).

(5) As a condition of receiving and holding its license, a workers’
compensation rating organization must exchange data with other licensed
workers’ compensation rating organizations pursuant to rules adopted by
the director that may include establishing fees for the exchange of data.
[Amended by 1967 c.359 §319; 1971 c.385 §5; 1989 c.413 §9; 1999 c.235 §1](1) Subject to rules and
regulations which have been approved by the Director of the Department of
Consumer and Business Services as reasonable, each rating organization
shall permit any insurer, not a member, to be a subscriber to its rating
services for any class of insurance, subdivision or class of risk or a
part or combination thereof for which it is authorized to act as a rating
organization. Notice of proposed changes in such rules and regulations
shall be given to subscribers.

(2) Each rating organization shall furnish its rating services
without discrimination to its members and subscribers. Any rating
organization may subscribe to or purchase actuarial, technical or other
services, and such services shall be available to all members and
subscribers without discrimination.

(3) The reasonableness of any rule or regulation in its application
to subscribers, or the refusal of any rating organization to admit an
insurer as a subscriber, at the request of any subscriber or any such
insurer, shall be reviewed by the director at a hearing held at a place
designated by the director and upon at least 10 days’ written notice to
such rating organization and to such subscriber or insurer. If the
director finds that such rule or regulation is unreasonable in its
application to subscribers, the director shall order that such rule or
regulation shall not be applicable to subscribers. If the rating
organization fails to grant or reject an insurer’s application for
subscribership within 30 days after it was made, the insurer may request
a review by the director as if the application had been rejected. If the
director finds that the insurer has been refused admittance to the rating
organization as a subscriber without justification, the director shall
order the rating organization to admit the insurer as a subscriber. If
the director finds that the action of the rating organization was
justified, the director shall make an order affirming its action.

(4) No rating organization shall adopt any rule, the effect of
which would be to prohibit or regulate the payment of dividends, savings
or unabsorbed premium deposits allowed or returned by insurers to their
policyholders, members or subscribers. [Amended by 1967 c.359 §320](1) Cooperation among rating organizations or among rating
organizations and insurers in rate making or in other matters within the
scope of this chapter hereby is authorized, provided the filings
resulting from such cooperation are subject to and consistent with those
sections which are applicable to filings generally.

(2) The Director of the Department of Consumer and Business
Services may review such cooperative activities and practices and if,
after a hearing, the director finds that any such activity or practice is
unfair or unreasonable or otherwise inconsistent with this chapter, the
director may issue a written order specifying in what respects such
activity or practice is unfair or unreasonable or otherwise inconsistent
with those sections and requiring the discontinuance of such activity or
practice. [Amended by 1967 c.359 §321; 1969 c.690 §20] No
group, association or other organization of insurers which engages in
joint underwriting or joint reinsurance shall engage in any activity
which is unfair, unreasonable or otherwise inconsistent with the
provisions of this chapter. [Amended by 1967 c.359 §326; 1969 c.690 §22](1) Every rating organization and every insurer which makes its
own rates, within a reasonable time after receiving written request
therefor and upon payment of such reasonable charge as it may make, shall
furnish to any insured affected by a rate made by it, or to the
authorized representative of such insured, all pertinent information as
to such rate.

(2) Every rating organization and every insurer which makes its own
rates shall provide within this state reasonable means whereby any person
aggrieved by the application of its rating system may be heard, in person
or by the authorized representative, on written request by the person or
authorized representative to review the manner in which such rating
system has been applied in connection with the insurance afforded the
person. If the rating organization or insurer fails to grant or reject
such request within 30 days after it is made, the applicant may proceed
in the same manner as if the application had been rejected.

(3) Any party affected by the action of such rating organization or
such insurer on such request, within 30 days after written notice of such
action, may appeal to the Director of the Department of Consumer and
Business Services, who, after a hearing held at a place designated by the
director upon not less than 10 days’ written notice to the appellant and
to such rating organization or insurer, shall affirm or reverse such
action.

(4) Appeals to the director pursuant to ORS 737.318 with regard to
a final premium audit billing must be made within 60 days after receipt
of the billing.

(5) The director may, upon a showing of good cause, stay any
workers’ compensation insurer’s collection effort on a final premium
audit billing during the pendency of an appeal authorized by subsection
(4) of this section. [Amended by 1967 c.359 §327; 1987 c.884 §6](1) Every advisory organization
shall file with the Director of the Department of Consumer and Business
Services:

(a) A copy of its constitution, its articles of agreement or
association or its certificate of incorporation and of its bylaws, rules
and regulations governing its activities.

(b) A list of its members.

(c) The name and address of a resident of this state upon whom
notices may be served.

(d) An agreement that the director may examine such advisory
organization in accordance with ORS 737.515.

(2) Any insurer which makes its own filings or any rating
organization may support its filings by statistics or adopt rate-making
recommendations furnished to it by an advisory organization which has
complied with this section. If, after a hearing, the director finds that
the furnishing of such information or assistance involves any act or
practice which is unfair or unreasonable or otherwise inconsistent with
this chapter, the director may issue a written order specifying in what
respects such act or practice is unfair or unreasonable or otherwise
inconsistent with this chapter. If the act or practice thus specified is
not modified to comply with such order, the director may issue an order
requiring any insurer which makes its own filings or any rating
organization to discontinue the use of the statistics or rate-making
recommendations furnished to it by such advisory organization. [Amended
by 1967 c.359 §328; 1969 c.690 §23](1) The
Director of the Department of Consumer and Business Services shall make
or cause to be made an examination:

(a) At least once in five years, of each rating organization
licensed in this state.

(b) As often as the director deems it expedient, of each advisory
organization complying with and referred to in ORS 737.510 and of each
organization referred to in ORS 737.390.

(2) The reasonable costs of any such examination shall be paid by
the organization examined, upon presentation to it of a detailed account
of such costs. The officers, manager, agents and employees of any such
organization may be examined at any time under oath and shall exhibit all
books, records, accounts, documents or agreements governing its methods
of operation.

(3) All such examinations shall be conducted as provided in ORS
731.300 to 731.316.

(4) In lieu of any such examination the director may accept the
report of an examination made by the insurance supervisory official of
another state, pursuant to the laws of such state. [Amended by 1967 c.359
§329](1) Reasonable rules and plans may be promulgated by the Director
of the Department of Consumer and Business Services for the interchange
of data necessary for the application of rating plans.

(2) In order to further uniform administration of rate regulatory
laws, the director and every insurer and rating organization may exchange
information and experience data with insurance supervisory officials,
insurers and rating organizations in other states and may consult and
cooperate with them with respect to rate making and the application of
rating systems. [1967 c.359 §331] No
person shall willfully withhold information from or knowingly give false
or misleading information to the Director of the Department of Consumer
and Business Services, to any statistical agency designated by the
director, to any rating organization, or to any insurer, which will
affect the rates or premiums chargeable under this chapter. [Amended by
1967 c.359 §332; 1969 c.690 §24]
The Director of the Department of Consumer and Business Services may
suspend the license of any rating organization which fails to comply with
an order of the director within the time limited by such order, or any
extension thereof which the director may grant. The director shall not
suspend the license of any rating organization for failure to comply with
an order until the time prescribed for an appeal therefrom has expired
or, if an appeal has been taken, until such order has been affirmed. The
director may determine when a suspension of license shall become
effective, and it shall remain in effect for the period fixed by the
director, unless the director modifies or rescinds such suspension, or
until the order upon which such suspension is based is modified,
rescinded or reversed. [Amended by 1967 c.359 §333] (1) Except as provided in
subsection (2) of this section, nothing contained in this chapter shall
be construed as requiring any insurer to become a member of or a
subscriber to any rating organization.

(2) Each workers’ compensation insurer, including the State
Accident Insurance Fund Corporation, shall be a member of a licensed
workers’ compensation rating organization. [Amended by 1967 c.359 §334;
1969 c.690 §25; 1981 c.535 §21; 1999 c.235 §5]FICTITIOUS GROUPINGS(1) As used in this section, “fictitious grouping” means a
grouping by way of membership, license, franchise, contract, agreement or
any method other than common ownership, or use and control.

(2) No insurer shall:

(a) Make available, through any rating plan or form, property,
inland marine, casualty or surety insurance, or any combination thereof,
at a preferred rate or premium to any person based upon a fictitious
grouping of that person.

(b) Write or deliver a form, plan or policy of insurance covering a
grouping or combination of persons or risks, any of which are within this
state, at a preferred rate or form other than that offered to the public
generally and persons not in the group, unless the form, plan or policy
and the rates or premiums to be charged therefor have been approved by
the Director of the Department of Consumer and Business Services. The
director shall not approve any form, plan or policy, or the rates
therefor, that would constitute a violation of paragraph (a) of this
subsection.

(3) Nothing in this section applies:

(a) To policies of life or health insurance;

(b) To insurance for public bodies as defined in ORS 30.260;

(c) To insurance for employers subject to ORS chapter 656 who are
primarily engaged in farming. Any contract negotiated by an exempt
farming group, including the rate, shall be restricted to members of the
group;

(d) To property and casualty insurance policies for personal,
family or household purposes, and not for commercial or business
purposes, under the following conditions:

(A) If the policies are offered to members of an association,
including a labor union, which has had an active existence for at least
one year, has a constitution and bylaws and is maintained in good faith
for purposes other than that of obtaining insurance;

(B) If the policies are based on premiums that are adequate to
support coverage of the group without subsidy by other rate payers; and

(C) If the insurer does not unfairly discriminate against holders
of other insurance policies;

(e) To liability and property insurance required under ORS 825.160
for persons who apply for or who have received authority issued by the
Department of Transportation under ORS chapter 825 to transport logs,
poles, pilings, peeler cores, lumber, shingles, veneer, plywood, particle
board, wallboard, siding, cordwood in long or short lengths, sawdust, hog
fuel, wood chips, wood pellets, bark dust or cut trees that are or will
be sold for use as Christmas trees;

(f) To liability or casualty insurance issued in this state on
commercial risks, if:

(A) The policy requires active participation in a plan of risk
management which has established measures and procedures to minimize both
the frequency and severity of losses;

(B) The policy passes on the benefits of reduced losses to plan
participants; and

(C) Rates are actuarially measurable and credible and sufficiently
related to actual and expected loss and expense experience of the group
so as to assure that nonmembers of the group are not unfairly
discriminated against; or

(g) To insurance for child care facilities that are certified in
accordance with ORS chapter 657A.

(4) Under ORS 731.244, the director shall make rules necessary for
implementation of this section. [Formerly 737.346](1) As used in this section:

(a) “Project” means a construction project, a plant expansion or
improvements within Oregon with an aggregate construction value in excess
of $90 million that is to be completed within a defined period. The
average construction value during the defined period of the project must
be at least $18 million per year. “Project” does not mean a series of
unrelated construction projects artificially aggregated to satisfy the
$90 million requirement.

(b) “Project sponsor” means public bodies, utilities, corporations
and firms undertaking to construct a project in excess of $90 million and
conducting business in the State of Oregon.

(c) “Public body” has the meaning given the term in ORS 30.260.

(2) Notwithstanding ORS 279C.530, 656.126, 737.600 or 746.160, an
insurer approved to transact insurance in this state, including the State
Accident Insurance Fund Corporation or a guaranty contract insurer as
defined in ORS 656.005, may issue with the prior approval of the Director
of the Department of Consumer and Business Services a policy of insurance
or a guaranty contract covering and insuring the project sponsor, the
prime contractor under a contract for the construction of the project,
any contractors or subcontractors with whom the prime contractor may
enter into contracts for the purpose of fulfilling its contractual
obligations in construction of the project and any other contractors
engaged by a project sponsor to provide architectural or other design
services, engineering services, construction management services, other
consulting services relating to the design and construction of the
project or any combination thereof.

(3) The following provisions apply to premiums under a policy of
insurance or guaranty contract described in subsection (2) of this
section:

(a) A project sponsor or a prime contractor may not charge a
premium for coverage under a policy of insurance or a guaranty contract
to a contractor or subcontractor with whom the project sponsor or prime
contractor enters into a contract or engages for services described in
subsection (2) of this section.

(b) A prime contractor may not charge a project sponsor a premium
for coverage under a policy of insurance or a guaranty contract other
than a premium approved by the director under ORS chapter 737 prior to or
at the same time as the director approves the project to which the policy
or guaranty contract applies.

(c) Charging a premium prohibited by this subsection constitutes
the unlawful transaction of insurance in violation of ORS 731.354.

(4) The director, upon application of any insurer, shall approve
the issuance of a policy of insurance or a guaranty contract to any
grouping of the persons described in subsection (2) of this section if:

(a) The grouping was formed for the purpose of performing a
contract or a series of related contracts for the design and construction
of a project for the project sponsor;

(b) The project sponsor can reasonably demonstrate that the
formation and operation of the grouping will substantially improve
accident prevention and claims handling to the benefit of the project
sponsor and the contractors and workers employed by the project sponsor
on construction related projects;

(c) The established rating and auditing standards required by
authorized advisory organizations and rating organizations are adhered to;

(d) The insurer for the grouping guarantees adequate protection to
any other insurance producer that demonstrates that without such
protection the producer will suffer losses that will constitute a threat
to the continuation of the business of the producer;

(e) The insurer for the grouping guarantees insurance coverage of
the classes of insurance issued to the grouping to any contractor who,
because of participation in the group, has been unable to maintain the
contractor’s normal coverage. The insurer’s obligation under this
paragraph shall continue until 12 months after substantial completion of
the contractor’s work;

(f) By permitting this grouping for a project sponsor, greater
opportunities will be made available for historically underutilized
businesses to bid on the project;

(g) The project insurers agree to provide not less than 90 days’
notice to all insured parties of the cancellation or any material
reduction in coverage for the project;

(h) The insurance coverage for the grouping contains a severability
of interest clause with respect to liability claims between individuals
insured under the group policy and includes contractual liability
coverage that applies to the various contracts and subcontracts entered
into in connection with the project; and

(i) The insurer places with the Department of Consumer and Business
Services a special deposit of $25,000 per $100 million of construction
project value, or an amount prescribed by rule of the director, whichever
is greater. [1995 c.169 §2; 1999 c.196 §12; 1999 c.482 §1; 2003 c.364
§98; 2003 c.794 §326]Note: 737.602 was added to and made a part of the Insurance Code by
legislative action but was not added to ORS chapter 737 or any series
therein. See Preface to Oregon Revised Statutes for further explanation. In addition to other rulemaking authority of the
Director of the Department of Consumer and Business Services, the
director may make rules:

(1) Stating the necessary attributes that a construction project of
a project sponsor and the participants in the project must have in order
to qualify for the grouping permitted under ORS 737.602. The rules may
include but are not limited to matters regarding an appropriate trust
agreement for special deposit and adjustment of the construction project
value according to an appropriate cost index; and

(2) Establishing a process for a state agency or local contract
review board created under ORS 279A.060 to evaluate the purchase by a
public body of insurance authorized by ORS 737.602, or any agreements
related thereto. [1995 c.169 §3; 2003 c.794 §327]Note: 737.604 was added to and made a part of the Insurance Code by
legislative action but was not added to ORS chapter 737 or any series
therein. See Preface to Oregon Revised Statutes for further explanation.AUTHORIZATION FOR INSURANCE FOR COMBINED SEWER OVERFLOW PROJECTSNote: Sections 1 and 2, chapter 336, Oregon Laws 1995, provide:

Sec. 1. (1) As used in this section, “project” means the group of
projects that make up the combined sewer overflow program.

(2) Notwithstanding ORS 656.126, 737.600 or 746.160 or section 143
of this 2003 Act [279C.530], an insurer approved to transact insurance in
the State of Oregon, including a guaranty contract insurer as defined in
ORS 656.005, may issue with the prior approval of the Director of the
Department of Consumer and Business Services a policy of insurance or a
guaranty contract covering and insuring the City of Portland, the prime
contractor under contract for the construction of the project, any
contractors or subcontractors with whom the prime contractor may enter
into contracts for the purpose of fulfilling its contractual obligations
in construction of the project and any other contractors engaged by the
City of Portland to provide architectural or other design services,
engineering services, construction management service or other consulting
services relating to the design and construction of the projects or any
combination thereof.

(3) The director, upon application of any insurer, shall approve
the issuance of a policy of insurance or a guaranty contract to any
grouping of the persons described in subsection (2) of this section if:

(a) The grouping was formed for the purpose of performing a
contract or a series of related contracts for the design and construction
of the project;

(b) The combined total estimated cost of the project exceeds $100
million;

(c) The City of Portland can reasonably demonstrate that the
formation and operation of the grouping will substantially improve
accident prevention and claims handling to the benefit of the City of
Portland and the contractors and workers employed in the project;

(d) The established rating and auditing standards required by
authorized advisory organizations and rating organizations are adhered to;

(e) Adequate protection is guaranteed by the insurer for the
grouping to any other insurance producer that demonstrates that without
such protection the insurance producer will suffer losses which will
constitute a threat to the continuation of the insurance business of the
producer;

(f) The City of Portland can reasonably demonstrate that a
substantial savings will result from the formation of the grouping;

(g) The insurer for the grouping will guarantee insurance coverage
of the classes of insurance issued to the grouping to any contractor who,
because of participation in the group, has been unable to maintain the
contractor’s normal coverage. The insurer’s obligation under this
paragraph shall continue 12 months after substantial completion of the
contractor’s work on the project;

(h) Monoline workers’ compensation insurers domiciled in the State
of Oregon had the opportunity to propose a policy of insurance or a
guaranty contract covering persons referred to in subsection (2) of this
section; and

(i) The insurer places with the Department of Consumer and Business
Services a special deposit of $25,000 per $100 million of construction
project value per project phase, or an amount prescribed by rule of the
director, whichever is greater. [1995 c.336 §1; 1999 c.196 §11; 2003
c.364 §99; 2003 c.794 §325]_______________