2007 Oregon Code - Chapter 735 :: Chapter 735 - Alternative Insurance
Chapter 735 —
Alternative Insurance
2007 EDITION
ALTERNATIVE INSURANCE
INSURANCE
ESSENTIAL PROPERTY INSURANCE
735.005Â Â Â Â Definitions
for ORS 735.005 to 735.145
735.015Â Â Â Â Purpose
735.025Â Â Â Â Construction
735.035Â Â Â Â Application
735.045Â Â Â Â Oregon
FAIR Plan Association; insurers required to be members; plan of operation
735.055Â Â Â Â Association
board of directors; appointment; compensation, expenses of members; quorum
735.065Â Â Â Â Required
association functions; assessments
735.075Â Â Â Â Discretionary
association functions
735.085Â Â Â Â Plan
of operation; submission to director; approval of plan; compliance with plan;
rules
735.095Â Â Â Â Contents
of plan of operation
735.105Â Â Â Â Regulation
of association as insurer; financial report to director
735.115Â Â Â Â Exemption
of association from fees and taxes
735.145Â Â Â Â Immunity
from legal action in carrying out duties
MARKET ASSISTANCE PLANS; JOINT UNDERWRITING
ASSOCIATIONS
735.200Â Â Â Â Legislative
findings; purpose
735.205Â Â Â Â Definitions
for ORS 735.200 to 735.260
735.210Â Â Â Â Formation
of market assistance plans; rules
735.215Â Â Â Â Findings
prior to formation of joint underwriting association; hearing
735.220Â Â Â Â Formation
of joint underwriting association; funds
735.225Â Â Â Â Membership
in joint underwriting association
735.230Â Â Â Â Rates;
approval
735.235Â Â Â Â Board
of directors
735.240Â Â Â Â Annual
statement
735.245Â Â Â Â Conditions
for policyholder surcharge
735.250Â Â Â Â Exemption
from liability
735.255Â Â Â Â State
not liable to pay debts of association
735.260Â Â Â Â Rules
735.265Â Â Â Â Liquor
liability insurance risk and rate classifications; rules
LIABILITY RISK RETENTION LAW
735.300Â Â Â Â Purpose
of ORS 735.300 to 735.365
735.305Â Â Â Â Definitions
for ORS 735.300 to 735.365
735.310Â Â Â Â Qualifications
for risk retention group; plan of operation; application; notification to
National Association of Insurance Commissioners
735.315Â Â Â Â Foreign
risk retention groups; conditions of doing business in
735.320Â Â Â Â Relationship
to insurance guaranty fund and joint underwriting association
735.325Â Â Â Â Exemption
of purchasing groups from certain laws
735.330Â Â Â Â Purchasing
groups; notice of intent to do business; registration; exceptions
735.335Â Â Â Â Purchase
of insurance by purchasing group
735.340Â Â Â Â Insurance
Code enforcement authority subject to federal law
735.345Â Â Â Â Violation
of ORS 735.300 to 735.365; penalties
735.350Â Â Â Â Agent
or broker; license
735.355Â Â Â Â Court
orders enforceable in
735.360Â Â Â Â Rules
735.365Â Â Â Â Short
title
SURPLUS LINES LAW
735.400Â Â Â Â Purposes
of ORS 735.400 to 735.495
735.405Â Â Â Â Definitions
for ORS 735.400 to 735.495
735.410Â Â Â Â Conditions
for procuring insurance through nonadmitted insurer; rules
735.415Â Â Â Â Qualifications
for placement of coverage with nonadmitted insurer; rules
735.420Â Â Â Â Declaration
of ineligibility of surplus lines insurer
735.425Â Â Â Â Filing
by licensee after placement of surplus lines insurance; rules
735.430Â Â Â Â Surplus
Line Association of
735.435Â Â Â Â Evidence
of insurance; contents; change; penalty; notice regarding Insurance Guaranty
Association; rules
735.440Â Â Â Â Validity
of contracts
735.445Â Â Â Â Effect
of payment of premium to surplus lines licensee
735.450Â Â Â Â Requirements
for license as surplus lines insurance licensee
735.455Â Â Â Â Authority
of licensee; rules
735.460Â Â Â Â Records
of licensee; examination
735.465Â Â Â Â Monthly
reports; rules
735.470Â Â Â Â Premium
tax; collection; payment; refund; rules
735.475Â Â Â Â Suit
to recover unpaid tax
735.480Â Â Â Â Suspension
or revocation of license; refusal to renew; grounds
735.485Â Â Â Â Actions
against surplus lines insurer
735.490Â Â Â Â Jurisdiction
in action against insurer; service of summons and complaint; response
735.492Â Â Â Â Application
of certain Insurance Code provisions to surplus lines insurers
735.495Â Â Â Â Short
title; severability
MEDICAL INSURANCE POOL
735.600Â Â Â Â Legislative
intent
735.605Â Â Â Â Definitions
for ORS 735.600 to 735.650
735.610Â Â Â Â Oregon
Medical Insurance Pool Board; members; authority; rules
735.612Â Â Â Â Oregon
Medical Insurance Pool Account; sources; uses
735.614Â Â Â Â Assessments
for expenses of pool
735.615Â Â Â Â Eligibility
for pool coverage; rules
735.616Â Â Â Â Portability
coverage under pool
735.620Â Â Â Â Administration
of pool insurance program
735.625Â Â Â Â Coverage;
rules
735.630Â Â Â Â Exemption
from liability
735.635Â Â Â Â Exemption
from taxation
735.640Â Â Â Â Study;
adjustment of operation and benefits plans
735.645Â Â Â Â Notice
of existence of pool
735.650Â Â Â Â Application
of provisions of Insurance Code
OFFICE OF PRIVATE HEALTH PARTNERSHIPS
(Generally)
735.700Â Â Â Â Definitions
for ORS 735.700 to 735.714
735.701Â Â Â Â Office
of Private Health Partnerships
735.702Â Â Â Â Duties
of office
735.703Â Â Â Â Administrator
735.705Â Â Â Â Appointment
of deputy director, officers and employees
735.706Â Â Â Â Office
of Private Health Partnerships Account
735.707Â Â Â Â Rules
735.709Â Â Â Â Appointment
of advisory committees
735.710Â Â Â Â Additional
duties of office; rules
735.711Â Â Â Â Criminal
records checks
735.712Â Â Â Â Office
to encourage health insurance coverage among small employers
735.714Â Â Â Â Renewal
of health benefit plans for small employers
(Family Health Insurance Assistance Program)
735.720Â Â Â Â Definitions
for ORS 735.720 to 735.740
735.722Â Â Â Â Family
Health Insurance Assistance Program; eligibility for participation; selection
of administrator
735.724Â Â Â Â Application
to participate in program; issuance of subsidies; restrictions; enrollment in
employer-sponsored coverage
735.726Â Â Â Â Level
of assistance determinations
735.728Â Â Â Â Subsidies
limited to funds appropriated; enrollment restrictions
735.730Â Â Â Â Establishment
of minimum benefit requirements for plan subsidy
735.731Â Â Â Â Coverage
of immunizations; rules
735.732Â Â Â Â Confidentiality
of information in enrollment applications; exchange of information with
governmental agencies; use of Social Security numbers
735.733Â Â Â Â Basic
benchmark health benefit plan eligible for subsidy
735.734Â Â Â Â Rules
735.736Â Â Â Â Family
Health Insurance Assistance Program Account
735.738Â Â Â Â Reports
of program operation
735.740Â Â Â Â Sanctions
for violation of program requirements; civil penalties
735.750Â Â Â Â Definitions
735.752Â Â Â Â Eligibility
for coverage for certain members
735.754Â Â Â Â System
for payment or reimbursement of subsidies and costs
735.756Â Â Â Â Determination
of subsidies and costs
ESSENTIAL PROPERTY INSURANCE
     735.005
Definitions for ORS 735.005 to 735.145. 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]
     735.015
Purpose. 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]
     735.025
Construction. ORS 735.005 to
735.145 shall be liberally construed to effect the purpose provided in ORS
735.015. [1971 c.321 §3]
     735.035
Application. ORS 735.005 to 735.145
apply only to essential property insurance on domestic risks. [1971 c.321 §4]
     735.045
     735.055
Association board of directors; appointment; compensation, expenses of members;
quorum. (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]
     735.065
Required association functions; assessments. (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 insurerÂ’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 insurerÂ’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]
     735.075
Discretionary association functions. 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 insurerÂ’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]
     735.085
Plan of operation; submission to director; approval of plan; compliance with
plan; rules. (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]
     735.095
Contents of plan of operation.
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]
     735.105
Regulation of association as insurer; financial report to director. 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]
     735.115
Exemption of association from fees and taxes. 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]
     735.125 [1971 c.321 §14; repealed by 1979 c.818 §5]
     735.135 [1971 c.321 §15; repealed by 1979 c.818 §5]
     735.145
Immunity from legal action in carrying out duties. 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
     735.200
Legislative findings; purpose.
(1) The Legislative Assembly finds that:
     (a) Some businesses and service providers
in
     (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
     (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]
     735.205
Definitions for ORS 735.200 to 735.260. 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]
     735.210
Formation of market assistance plans; rules. (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]
     735.215
Findings prior to formation of joint underwriting association; hearing. (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
     (b) There is a need in
     (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]
     735.220
Formation of joint underwriting association; funds. 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]
     735.225
Membership in joint underwriting association. 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]
     735.230
Rates; approval. 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]
     735.235
Board of directors. 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]
     735.240
Annual statement. 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]
     735.245
Conditions for policyholder surcharge. (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]
     735.250
Exemption from liability.
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]
     735.255
State not liable to pay debts of association. 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]
     735.260
Rules. 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]
     735.265
Liquor liability insurance risk and rate classifications; rules. 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
     (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 licenseeÂ’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 licenseeÂ’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 licenseeÂ’s business. [1987
c.774 §88]
LIABILITY
RISK RETENTION LAW
     735.300
Purpose of ORS 735.300 to 735.365. 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]
     735.305
Definitions for ORS 735.300 to 735.365. 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 employerÂ’s liability with respect to its employees other than
legal liability under the Federal EmployersÂ’ 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
     (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
     735.310
Qualifications for risk retention group; plan of operation; application;
notification to National Association of Insurance Commissioners. (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]
     735.315
Foreign risk retention groups; conditions of doing business in
     (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]
     735.320
Relationship to insurance guaranty fund and joint underwriting association. (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 stateÂ’s joint underwriting associations and mandatory
liability pools as provided by the Insurance Code. [1987 c.774 §102]
     735.325
Exemption of purchasing groups from certain laws. 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]
     735.330
Purchasing groups; notice of intent to do business; registration; exceptions. (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]
     735.335
Purchase of insurance by purchasing group. 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]
     735.340
Insurance Code enforcement authority subject to federal law. 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
directorÂ’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]
     735.345
Violation of 735.300 to 735.365; penalties. 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]
     735.350
Agent or broker; license.
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]
     735.355
Court orders enforceable in
     735.360
Rules. 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]
     735.365
Short title. 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
     735.400
Purposes of ORS 735.400 to 735.495. ORS 735.400 to 735.495 shall be liberally construed and applied to
promote its underlying purposes which include:
     (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]
     735.405
Definitions for ORS 735.400 to 735.495. 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]
     735.410
Conditions for procuring insurance through nonadmitted insurer; rules. (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]
     735.415
Qualifications for placement of coverage with nonadmitted insurer; rules. (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 insurerÂ’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
groupÂ’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 insurerÂ’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]
     735.420
Declaration of ineligibility of surplus lines insurer. (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]
     735.425
Filing by licensee after placement of surplus lines insurance; rules. (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]
     735.430
Surplus Line Association of
     (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 Line Association of Oregon. The reasonable
cost of any such examination shall be paid by the association upon presentation
to it by the director of a detailed account of each cost. The officers,
managers, agents and employees of the association 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 association and shall notify the
association 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
association 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; 2007 c.71 §235]
     735.435
Evidence of insurance; contents; change; penalty; notice regarding Insurance Guaranty
Association; rules. (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 licenseeÂ’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 licenseeÂ’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
     (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]
     735.440
Validity of contracts.
Insurance contracts procured under ORS 735.400 to 735.495 shall be valid and
enforceable as to all parties. [1987 c.774 §125]
     735.445
Effect of payment of premium to surplus lines licensee. 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]
     735.450
Requirements for license as surplus lines insurance licensee. (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]
     735.455
Authority of licensee; rules.
(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]
     735.460
Records of licensee; examination. (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]
     735.465
Monthly reports; rules. (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 Line
Association of Oregon and that the Surplus Line 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; 2007 c.71 §236]
     735.470
Premium tax; collection; payment; refund; rules. (1) The surplus lines licensee shall pay the
Director of the Department of Consumer and Business Services an amount equal to
the tax that would have been imposed under ORS 731.816 (1993 Edition) if that
section were in effect and operative, and the tax that 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 directorÂ’s order paid to and reported on forms prescribed
by the Surplus Line Association of Oregon.
     (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
     735.475
Suit to recover unpaid tax.
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]
     735.480
Suspension or revocation of license; refusal to renew; grounds. 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 stateÂ’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]
     735.485
Actions against surplus lines insurer. (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]
     735.490
Jurisdiction in action against insurer; service of summons and complaint;
response. (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]
     735.492
Application of certain Insurance Code provisions to surplus lines insurers. ORS 731.324, 731.328, 731.512 and 731.624 do
not apply to surplus lines insurers. [2005 c.185 §17]
     735.495
Short title; severability.
(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
     735.600
Legislative intent. 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]
     735.605
Definitions for ORS 735.600 to 735.650. 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 workersÂ’ 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]
     735.610
     (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 directorÂ’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 producersÂ’ 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]
     735.612
     (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]
     735.614
Assessments for expenses of pool. (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 insurerÂ’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 insurerÂ’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]
     735.615
Eligibility for pool coverage; rules. (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. [1987 c.838 §5; 1989 c.838 §11; 1993 c.130 §1; 1993 c.212 §1;
1999 c.754 §1; 2005 c.305 §§1,3; 2005 c.634 §1; 2005 c.635 §§2,3]
     735.616
Portability coverage under pool. (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
     (B) The individual was an
     (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
     (B) A change in the geographic area served
by the group carrier; or
     (C) The carrier’s withdrawal from the
group market in
     (c) An individual who has left coverage
that was continuously in effect for a period of 180 days or more under one or
more
     (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 individualÂ’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]
     735.620
Administration of pool insurance program. (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]
     735.625
Coverage; rules. (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 insuredÂ’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 insuredÂ’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 workersÂ’ 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]
     735.630
Exemption from liability.
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]
     735.635
Exemption from taxation. The
pool established pursuant to ORS 735.600 to 735.650 shall be exempt from any
and all taxes assessed by the State of
     735.640
Study; adjustment of operation and benefits plans. 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]
     735.645
Notice of existence of pool.
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]
     735.650
Application of provisions of Insurance Code. (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, 743.801,
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, 743A.084, 743A.090, 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)
     735.700
Definitions for ORS 735.700 to 735.714. 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
employeeÂ’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 employeeÂ’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.
     735.701
Office of Private Health Partnerships. (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.
     735.702
Duties of office. 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
     (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. [Formerly 653.715; 2003 c.364 §96;
2003 c.742 §§2,7; 2005 c.744 §§16,17]
     Note: See note under 735.700.
     735.703
Administrator. (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.
     735.704 [Formerly 653.725; repealed by 2005 c.744 §41]
     735.705
Appointment of deputy director, officers and employees. (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.
     735.706
Office of Private Health Partnerships Account. 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.
     735.707
Rules. 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.
     735.708 [Formerly 653.735; repealed by 2005 c.744 §41]
     735.709
Appointment of advisory committees. (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.
     735.710
Additional duties of office; rules. (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 officeÂ’s judgment requires such action. [Formerly
653.745; 2003 c.742 §§3,8; 2005 c.238 §§3,4; 2005 c.262 §§3,4; 2005 c.727 §§3,4;
2005 c.744 §§19,20]
     Note: See note under 735.700.
     735.711
Criminal records checks. For
the purpose of requesting a state or nationwide criminal records check under
ORS 181.534, the Office of Private Health Partnerships may require the
fingerprints of a person who:
     (1)(a) Is employed or applying for
employment by the office; or
     (b) Provides services or seeks to provide
services to the office as a contractor, vendor or volunteer; and
     (2) Is, or will be, working or providing
services in a position in which the person has or will have access to
information that is confidential under state or federal laws, rules or
regulations. [2007 c.619 §3]
     Note: 735.711 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.
     735.712
Office to encourage health insurance coverage among small employers. (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.
     735.714
Renewal of health benefit plans for small employers. 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.
(Family
Health Insurance Assistance Program)
     735.720
Definitions for ORS 735.720 to 735.740. 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
     (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 adultÂ’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 child with a disability 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 workersÂ’ 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 applicantÂ’s family. Income does not
include earned income of the applicantÂ’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 applicantÂ’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; 2007 c.70 §317]
     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.
     735.722
Family Health Insurance Assistance Program; eligibility for participation; selection
of administrator. (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.
     735.724
Application to participate in program; issuance of subsidies; restrictions;
enrollment in employer-sponsored coverage. (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
individualÂ’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 individualÂ’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 individualÂ’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 individualÂ’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.
     735.726
Level of assistance determinations. (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.
     735.728
Subsidies limited to funds appropriated; enrollment restrictions. (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.
     735.730
Establishment of minimum benefit requirements for plan subsidy. 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.
     735.731
Coverage of immunizations; rules. (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.
     735.732
Confidentiality of information in enrollment applications; exchange of
information with governmental agencies; use of Social Security numbers. (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.
     735.733
Basic benchmark health benefit plan eligible for subsidy. 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
     Note: See note under 735.720.
     735.734
Rules. 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.
     735.736
Family Health Insurance Assistance Program Account. 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.
     735.738
Reports of program operation.
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.
     735.740
Sanctions for violation of program requirements; civil penalties. (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 pursuant 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; 2007 c.71 §238]
     Note: See note under 735.720.
     735.750
Definitions. 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.
     735.752
Eligibility for coverage for certain members. 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.
     735.754
System for payment or reimbursement of subsidies and costs. (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.
     735.756
Determination of subsidies and costs. (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.
     735.990 [1987 c.774 §135; repealed by 1991 c.810 §29]
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