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2006 Oklahoma Code - Title 36. — Insurance

OKLAHOMA STATUTES

TITLE 36.

INSURANCE

_________

§36101. Short title.

Title 36 of the Oklahoma Statutes shall be known and may be cited as the Oklahoma Insurance Code.

Amended by Laws 1983, c. 68, § 1, eff. Nov. 1, 1983.

§36102. "Insurance" defined.

"Insurance" is a contract whereby one undertakes to indemnify another or to pay a specified amount upon determinable contingencies.

Laws 1957, p. 215, § 102.

§36103. "Insurer" defined.

A. "Insurer" includes every person engaged in the business of making contracts of insurance or indemnity.

B. A nonprofit hospital service and medical indemnity corporation is an insurer within the meaning of this Code.

C. Burial associations shall be deemed not to be insurers.

Laws 1957, p. 215, § 103.

§36104. "Person" defined.

"Person" includes an individual, company, insurer, association, organization, society, reciprocal or interinsurance exchange, partnership, syndicate, business trust, corporation, Lloyd's association, and entity, and association, group or department of underwriters and any farmer's educational and cooperative union.

Added by Laws 1957, p. 216, § 104, operative July 1, 1957. Amended by Laws 2004, c. 16, § 1, eff. Nov. 1, 2004.

§36105. "Transacting" insurance.

"Transact" with respect to insurance includes any of the following:

1. Solicitation and inducement.

2. Preliminary negotiations.

3. Effectuation of a contract of insurance.

4. Transaction of matters subsequent to effectuation of the contract and arising out of it.

Laws 1957, p. 216, § 105.

§36106. "Insurance Commissioner" defined.

A. When used with reference to administration of this Code, "Insurance Commissioner" or "Commissioner" means the Insurance Commissioner of the State of Oklahoma.

Laws 1957, p. 216, § 106.

§36107. "Board" defined.

When used with reference to the administration of this Code, "State Insurance Board", "Insurance Board" or "Board" means the State Board for Property and Casualty Rates established by Section 331, Article 3, of this Code.

Laws 1957, p. 216, § 107; Laws 1965, c. 60, § 1, eff. July 1, 1965.

§36-107.2. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36108. "Insurance Department" defined.

Unless the context otherwise requires, "Insurance Department" or "Department" means the Insurance Department established by Section 301, Article 3 of this Code.

Laws 1957, p. 216, § 108.

§36109. Compliance required.

No person shall transact a business of insurance in Oklahoma without complying with the applicable provisions of this Code.

Laws 1957, p. 216, § 109.

§36110. Application as to particular types of insurers.

No provision of the Oklahoma Insurance Code, Section 101 et seq. of this title, shall apply to:

1. Nonprofit hospital service and medical indemnity corporations, except as stated in Sections 601 et seq. and 2601 et seq. of this title;

2. Fraternal benefit societies, except as stated in Section 2701.1 et seq. of this title;

3. Farmers' mutual fire insurance associations, except as stated in Section 2801 et seq. of this title;

4. Mutual benefit associations, except as stated in Section 2401 et seq. of this title;

5. Domestic burial associations;

6. Any domestic association organized subject to the supervision or by the authority of any incorporated Grange Order of Patrons of Husbandry, when the association is formed exclusively for the mutual benefit of the members of such order. Effective January 1, 1982, The Oklahoma State Union of the Farmers' Educational and Cooperative Union of America shall comply with all provisions of the Oklahoma Insurance Code;

7. Trust companies organized pursuant to the provisions of Title 6 of the Oklahoma Statutes except that the title insurance and surety insurance business of such trust companies shall be subject to the Oklahoma Insurance Code;

8. Soliciting agents of mutual insurance corporations or associations, operating only in this state, that issue no stock or other form of security, do not operate for profit, and have none of their funds inure to the benefit of individuals except in the form of less expensive insurance and necessary expenses of operation, if provisions are made in the bylaws of the insurer for the election of any soliciting agents by a majority of the policyholders in the area where the soliciting agent solicits insurance;

9. The Mutual Aid Association of the Church of the Brethren or the Mutual Aid Association of the Mennonite and Brethren in Christ;

10. Incorporated or unincorporated banking associations having been in existence for over fifteen (15) years and consisting of more than seventy-five (75) member banks within this state for issuance of blanket fidelity bonds for banks within this state for each bank's own use, or any nonprofit trust sponsored by such associations' member banks providing employee benefits such as life, health, accident, disability, pension and retirement benefits for banks, bank holding companies and subsidiaries thereof, the associations' employees and associate members;

11. A religious publication, or subscribers of the publication, when the publication:

a. is a nonprofit religious organization,

b. is limited to subscribers who are members of the same denomination or religion,

c. acts as an organizational clearinghouse for information between subscribers who have financial, physical or medical needs and subscribers with the present ability to pay subscribers with present financial or medical needs,

d. provides for the financial or medical needs of a subscriber through payments directly from one subscriber to another, and

e. suggests amounts that subscribers may voluntarily give with no assumption of risk or promise to pay either among the subscribers or between the subscribers and the publication; or

12. Charitable organizations that:

a. are described in Section 501(c)(3) of the Internal Revenue Code and Section 170(c) of the Internal Revenue Code,

b. issue qualified charitable gift annuity contracts,

c. have a minimum of One Hundred Thousand Dollars ($100,000.00) in unrestricted assets that are exclusive of the assets comprising its qualified charitable gift annuities, and

d. have been in continuous operation for at least three (3) years or are successors or affiliates of a charitable organization that has been in continuous operation for at least three (3) years,

except as stated in the Oklahoma Charitable Gift Annuity Act.

Added by Laws 1957, p. 216, § 110. Amended by Laws 1975, c. 334, § 1, emerg. eff. June 12, 1975; Laws 1979, c. 56, § 1, emerg. eff. April 11, 1979; Laws 1982, c. 190, § 1, operative Oct. 1, 1982; Laws 1984, c. 110, § 1, eff. Nov. 1, 1984; Laws 1988, c. 83, § 3, emerg. eff. March 25, 1988; Laws 1993, c. 34, § 1, emerg. eff. April 2, 1993; Laws 1994, c. 118, § 1, eff. Sept. 1, 1994; Laws 1996, c. 249, § 1, emerg. eff. May 28, 1996; Laws 1997, c. 418, § 2, eff. Nov. 1, 1997; Laws 1998, c. 141, § 13, emerg. eff. April 21, 1998.

§36114. Existing actions, violations.

Repeal by this act of any law shall not affect or abate any right heretofore accrued, action or proceeding heretofore commenced, or any unlawful act heretofore committed under such laws and punishment or deprivation of license or authority as a consequence thereof as provided by such law, but all proceedings hereafter taken with respect thereto shall conform to the applicable provisions of this Code insofar as possible. All such laws shall be deemed to continue in force to the extent made necessary by this provision.

Laws 1957, p. 217, § 114.

§36115. Particular provisions prevail.

Provisions of this Code relative to a particular kind of insurance or a particular type of insurer or to a particular matter shall prevail over provisions relating to insurance in general or insurers in general or to such matter in general.

Laws 1957, p. 217, § 115.

§36117. General penalty.

In addition to any other penalty which may be applicable thereto, either under this Code or otherwise, violation of any provision of this Code shall constitute a misdemeanor and shall be punishable as such where no greater penalty is provided therefor.

Laws 1957, p. 217, § 117.

§36-121. Computation of time periods.

In computing any period of time prescribed or allowed by this title, by the rules of the Commissioner or the State Board for Property and Casualty Rates, or by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, a legal holiday as defined by the Oklahoma Statutes, or any day when the office of the Commissioner does not remain open for public business until 4:00 p.m., in which event the period runs until the end of the next day when the office of the Commissioner is open until 4:00 p.m. When the period of time prescribed or allowed is less than seven (7) days, intermediate Saturdays, Sundays and legal holidays shall be excluded in the computation.

Added by Laws 1997, c. 418, § 3, eff. Nov. 1, 1997.

§36-301. Insurance Department.

The Insurance Department of the State of Oklahoma is hereby created. The Department shall consist of the Insurance Commissioner and the State Board for Property and Casualty Rates. The powers and duties of the Insurance Commissioner shall be those created by this Code and not reserved to the Board and such powers and duties of the Board as the Board may request the Commissioner to perform. The powers and duties of the State Board for Property and Casualty Rates shall be those created by the applicable provisions of the Insurance Code. The Insurance Department shall be situated in one area in the State Capitol or some other location conveniently accessible to the general public subject to the provisions of Sections 63 and 94 of Title 74 of the Oklahoma Statutes and Section 580:20-13-5 of the Oklahoma Administrative Code.

Added by Laws 1957, p. 217, § 301. Amended by Laws 1965, c. 60, § 2, eff. July 1, 1965; Laws 1980, c. 322, § 2, eff. Jan. 1, 1981; Laws 1986, c. 207, § 76, operative July 1, 1986; Laws 1987, c. 210, § 1, eff. July 1, 1987; Laws 1996, c. 10, § 1, emerg. eff. March 26, 1996.

§36302. Insurance Commissioner.

The Insurance Commissioner of the State of Oklahoma shall be at least twentyfive (25) years of age and a resident of the State of Oklahoma for at least five (5) years, and have had at least five (5) years' experience in the insurance industry in administration, sales, servicing or regulation. The Insurance Commissioner shall not be financially interested, directly or indirectly, in any insurer, agency or insurance transaction except as a policyholder or claimant under a policy.

Amended by Laws 1983, c. 68, § 2, eff. Nov. 1, 1983.

§36303. Official seal of Insurance Commissioner.

The Insurance Commissioner shall have an official seal, the center of which shall be the same as that of the Great Seal of the State of Oklahoma, and which shall be distinguished by the words "Insurance Commissioner State of Oklahoma" inscribed in the circular band surrounding the remainder of the device. This seal shall be the official seal of the office. Every certificate and other document or paper duly executed by the Insurance Commissioner, authorized employees of the Insurance Department, or independent hearing examiners and all copies or photographic copies of papers certified by authority of the Commissioner and authenticated by the seal shall have the same force and effect as the original would in any suit or proceedings in any court of this state.

Added by Laws 1957, p. 218, § 303. Amended by Laws 1997, c. 418, § 4, eff. Nov. 1, 1997.

§36304. Funds to be deposited weekly.

The State Insurance Commissioner shall deposit weekly with the State Treasurer all funds in his hands collected for the use of the state.

Laws 1957, p. 218, § 304; Laws 1980, c. 159, § 4, emerg. eff. April 2, 1980.

§36-305. Commissioner may appoint assistants; legal counsel.

A. The Insurance Commissioner may appoint such deputies, assistants, examiners, actuaries, attorneys, clerks and employees, at salaries to be fixed by the Insurance Commissioner, as may be necessary properly to discharge the duties imposed upon the Insurance Commissioner under this Code. The Insurance Commissioner shall appoint all examiners for his office. The attorneys appointed by the Insurance Commissioner shall be the legal advisors for the office of Insurance Commissioner and are authorized to appear for and represent the Insurance Commissioner in any and all litigation that may arise in the discharge of his duties except as otherwise provided elsewhere in this Code. Provided, the Insurance Commissioner, whenever he deems it necessary, may call upon the Attorney General of the State of Oklahoma for legal counsel, and such assistance as may be required to enforce provisions of this Code.

B. No deputy, assistant or employee of the Commissioner shall be financially interested, directly or indirectly, in any insurer, agency or insurance transaction except as a policyholder or claimant under a policy; except, that as to such matters wherein a conflict of interests does not exist on the part of any such individual, the Commissioner may employ from time to time insurance actuaries or other technicians who are independently practicing their professions even though similarly employed by insurers and others. This section shall not be deemed to prohibit employment by the Commissioner of retired or pensioned personnel of insurers or insurance organizations.

Added by Laws 1957, p. 218, § 305.

§36305.1. Delinquency proceedings; appointment of personnel; exemptions.

In any proceeding commenced against an insurer pursuant to Article 18 or 19 of Title 36 of the Oklahoma Statutes for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer:

1. No former employee of the Insurance Department shall be employed or appointed to serve in any capacity by the court to assist the Insurance Department for a period of one (1) year following such employee's former employment;

2. No former member of the State Legislature shall be employed to assist the Insurance Department for a period of two (2) years following the expiration of such member's service in office; and

3. If any former officer or employee of any other company has been employed to assist the Insurance Department with the said proceeding against the insurer, such other company may not purchase the assets of or acquire any other interest in said insurer for a period of one (1) year following the expiration or termination of such officer's or employee's term of office or employment.

Amended by Laws 1987, c. 210, § 3, eff. July 1, 1987.

§36-306. Records - Disclosure.

A. The records, books, and papers pertaining to the official transactions, filings, examinations, investigations, and proceedings of the Insurance Department shall be maintained by the Department until disposition thereof has been approved by the Archives and Records Commission. These records, books, and papers shall be public records of the state. However, reports of examinations of insurers shall be filed and made public only as provided in Section 309.4 of this title. Open and ongoing investigative and disciplinary files shall not be made public until their completion or unless they are ordered to be made public by the proper judicial official. Files of the claims division of the Commissioner's office, including complaints and requests for assistance from insureds, and insurance agency and company records, shall not be public records and shall not be disclosed except in connection with disciplinary proceedings by the Commissioner. Final market conduct orders shall be open public records.

B. Any document or other information generated by the Insurance Department or received by the Insurance Department from a governmental agency or any other public body of any kind, including an insurance guaranty fund or risk pool board, that has a protection from disclosure under any statute or evidentiary privilege from disclosure, while in the possession of the body that generated the information, shall retain its confidential character while in the possession of the Insurance Department. The Insurance Department may require that any agency or public body providing a document or other information, if it expects the information to be treated confidentially by the Insurance Department, to also provide simultaneously an express reference to the claimed protection from disclosure.

C. A court shall quash any subpoena commanding the disclosure of confidential information or closed records of the Insurance Department absent a showing of justification for such disclosure.

Added by Laws 1957, p. 219, § 306. Amended by Laws 1980, c. 322, § 3, eff. Jan. 1, 1981; Laws 1983, c. 68, § 3, eff. Nov. 1, 1983; Laws 1985, c. 328, § 1, emerg. eff. July 29, 1985; Laws 1997, c. 418, § 5, eff. Nov. 1, 1997.

§36-306.1. Availability of data necessary for review - Confidentiality - Sharing of data - Definitions.

A. A supervisory agency shall make available to a requesting agency any data obtained or generated by, and in the possession of, the supervisory agency and that the requesting agency deems necessary for review in connection with the supervision of any person over which the requesting agency has direct supervisory authority. However, the requested data must relate to the person, or an affiliate of the person, over which the requesting agency has direct supervisory authority. An agency has direct supervisory authority over a person if such authority is specifically provided by statute, or the agency granted the person's charter, license, or registration, or otherwise granted permission for the person to conduct its business in this state.

B. When a requesting agency and a federal regulatory agency or self-regulatory association have concurrent jurisdiction over a person, a requesting agency may share with such agency or association data received from a supervisory agency. However, the federal regulatory agency or self-regulatory association must return such shared data to the requesting agency unless the federal regulatory agency or self-regulatory association has obtained approval from the supervisory agency to retain the data. The term "federal regulatory agency" shall not include law enforcement agencies.

C. 1. Notwithstanding any other statute, rule, or policy governing or relating to records of the requesting agency, all data received by a requesting agency from a supervisory agency shall be and remain confidential and not open to public inspection, subpoena, or any other form of disclosure while in the possession of the requesting agency. Any request for inspection, subpoena, or other form of disclosure must be directed at the supervisory agency from which the data originated and disclosure thereof shall be subject to the laws, rules, and policies governing or relating to records of the supervisory agency.

2. The provisions of data by a supervisory agency to a requesting agency under this section shall not constitute a waiver of, or otherwise affect, any privilege or claim of confidentiality that a supervisory agency may claim with respect to such data under any federal laws or laws of this state.

D. A supervisory agency is not required to share original documents with a requesting agency. A requesting agency shall reimburse the supervisory agency for costs associated with providing copies of data to the requesting agency.

E. Nothing in the Oklahoma Financial Privacy Act, Sections 2201 through 2206 of Title 6 of the Oklahoma Statutes, shall prohibit the sharing of data as described in this section. Additionally, neither a supervisory agency nor requesting agency shall be required to follow any procedure described in the Oklahoma Financial Privacy Act when sharing data as described in this section.

F. As used in this section:

1. "Affiliate" shall mean any person that controls, is controlled by, or is under common control with another person. A person shall be deemed to have "control" over any person if the person:

a. directly or indirectly or acting through one or more other persons owns, controls, or has power to vote ten percent (10%) or more of any class of voting securities of the other person, or

b. the person controls in any manner the election, appointment, or designation of a majority of the directors, trustees, or other managing officers of the person;

2. "Data" shall mean copies of any documents, reports, examination reports, letters, correspondence, orders, stipulations, memorandums of understanding, agreements, or any other records not open for public inspection generated by a supervisory agency or obtained by a supervisory agency from the person it supervises, whether in paper or electronic format. However, "data" shall not include records that a requesting agency receives from a supervisory agency pursuant to this section;

3. "Requesting agency" shall mean, as applicable, the Oklahoma State Banking Department, the Oklahoma Insurance Department, or the Oklahoma Department of Securities, that requests from a supervisory agency data relating to a person over which the requesting agency does not have direct supervisory authority;

4. "Supervision" shall mean any examination, assessment, order, stipulation, agreement, report, memorandum of understanding, or other regulatory matter or process that a requesting agency is authorized to perform in relation to a person; and

5. "Supervisory agency" shall mean, as applicable, the Oklahoma State Banking Department, the Oklahoma Insurance Department, or the Oklahoma Department of Securities, that maintains data relating to a person over which the agency has direct supervisory authority.

Added by Laws 2000, c. 205, § 32, emerg. eff. May 17, 2000.

§36-307. Duties of Insurance Commissioner.

The Insurance Commissioner shall be charged with the duty of administration and enforcement of the provisions of this Code and of any requirements placed on an insurance company pursuant to subsection L of section 1111 of Title 47 of the Oklahoma Statutes, except those duties specifically assigned to the State Board for Property and Casualty Rates. The Insurance Commissioner shall provide such administrative and staff support as required by the Board. The Insurance Commissioner shall have jurisdiction over complaints against all persons engaged in the business of insurance, and shall hear all matters either in person, by authorized disinterested employees, or by hearing examiners appointed by the Commissioner for that purpose. It shall be the duty of the Insurance Commissioner to file and safely keep all books and papers required by law to be filed with the Insurance Department, and to keep and preserve in permanent form a full record of proceedings, including a concise statement of the conditions of such insurers and other entities reported and examined by the Department and its examiners. The Commissioner shall, annually, at the earliest practicable date after returns are received from the several authorized insurers and other organizations, make a report to the Governor of the State of Oklahoma of the affairs of the Office of the Insurance Commissioner, which report shall contain a tabular statement and synopsis of the several statements, as accepted by the Insurance Commissioner, which shall include with respect to each insurance company the admitted assets, liabilities except capital, capital and surplus, Oklahoma premium income, amount of claims paid in Oklahoma, and such other matters as may be of benefit to the public. The Commissioner may make recommendations regarding the subject of insurance in this state, and shall set forth in a statement the various sums received and disbursed by the Department, from and to whom and for what purpose. Such report shall be published by and subject to the order of the said Insurance Commissioner. The Insurance Commissioner shall, upon retiring from office, deliver to the qualified successor all furniture, records, papers and property of the office.

Added by Laws 1957, p. 219, § 307. Amended by Laws 1965, c. 60, § 3, eff. July 1, 1965; Laws 1972, c. 162, § 1, emerg. eff. April 7, 1972; Laws 1980, c. 322, § 4, eff. Jan. 1, 1981; Laws 1986, c. 207, § 77, operative July 1, 1986; Laws 1987, c. 210, § 4, eff. July 1, 1987; Laws 1997, c. 418, § 6, eff. Nov. 1, 1997; Laws 2005, c. 355, § 3, eff. Nov. 1, 2005.

§36307.1. Rules and regulations.

The Commissioner may adopt reasonable rules and regulations for the implementation and administration of the provisions of the Insurance Code.

Added by Laws 1983, c. 89, § 14, eff. Nov. 1, 1983.

§36-307.2. Nonpublic personal information.

A. No person shall disclose any nonpublic personal information contrary to the provisions of Title V of the Gramm-Leach-Bliley Act of 1999, Public Law No. 106-102.

B. The Insurance Commissioner may promulgate rules necessary to carry out the provisions of this section.

C. Nothing in this section shall be construed to create a private cause of action.

Added by Laws 2001, c. 363, § 1, eff. July 1, 2001.

§36-308. Repealed by Laws 1991, c. 204, § 14, eff. Sept. 1, 1991.

§36-309. Repealed by Laws 1991, c. 204, § 14, eff. Sept. 1, 1991.

§36-309.1. Examinations - Definitions.

As used in Sections 309.1 through 309.7 of this title:

1. "Commissioner" means the Insurance Commissioner;

2. "Company" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative or regulatory authority of the Commissioner;

3. "Department" means the Insurance Department;

4. "Examiner" means any individual or firm having been authorized by the Commissioner to conduct an examination;

5. "Insurer" means every person engaged in the business of making contracts of insurance or indemnity including not-for-profit hospital service and medical indemnity corporations; and

6. "Person" means any individual, aggregation of individuals, trust, association, recognized legal entity, or any affiliate thereof.

Added by Laws 1991, c. 204, § 1, eff. Sept. 1, 1991. Amended by Laws 1997, c. 418, § 7, eff. Nov. 1, 1997.

§36-309.2. Nature and frequency of examinations - Reports in lieu of examinations.

A. The Insurance Commissioner or an examiner may conduct an examination under Sections 309.1 through 309.7 of this title of any company as often as the Commissioner deems appropriate but shall at a minimum, conduct an examination of every domestic insurer licensed in this state not less frequently than once every three (3) years. The Commissioner shall, at a minimum, conduct or cause to be conducted an examination of every foreign insurer licensed in this state not less frequently than once every five (5) years. The Commissioner may accept examinations conducted by other states on foreign insurers domiciled in such states pursuant to subsection C of this section. In scheduling and determining the nature, scope and frequency of the examinations, the Commissioner shall consider such matters as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified financial examiners or public accountants and other criteria as set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners and in effect when the Commissioner exercises discretion under this subsection. The Commissioner may also make examinations upon the request of one or more persons pecuniarily interested therein, who shall make affidavit of their belief, with specifications of their reasons therefor, that the company is in an unsound condition.

B. For purposes of completing an examination of any company under Sections 309.1 through 309.7 of this title, the Commissioner may examine or investigate any person, or the business of any person, insofar as such examination or investigation is, in the sole discretion of the Commissioner, necessary or material to the examination of the company.

C. In lieu of an examination under Sections 309.1 through 309.7 of this title of any foreign or alien insurer licensed in this state, the Commissioner may accept an examination report on such company as prepared by the insurance department for the company's state of domicile or port-of-entry state if:

1. The insurance department was at the time of the examination accredited under the National Association of Insurance Commissioners' Financial Regulation Standards and Accreditation Program; or

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

D. The Commissioner may authorize any employee of the Insurance Department to exercise the Commissioner's authority under Sections 309.1 through 309.7 of this title.

Added by Laws 1991, c. 204, § 2, eff. Sept. 1, 1991. Amended by Laws 1993, c. 79, § 1, eff. Sept. 1, 1993; Laws 1997, c. 418, § 8, eff. Nov. 1, 1997.

§36-309.3. Appointment of examiner - Compliance with examiner's requests - Powers of Commissioner.

A. Upon determining that an examination should be conducted, the Insurance Commissioner shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners as supplemented by rules of the Commissioner. The Commissioner may also employ such other guidelines or procedures as the Commissioner may deem appropriate.

B. Every company or person from whom information is sought, including all of its officers, directors, employees and agents, shall provide to the Commissioner and examiners timely, convenient, and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, and any or all computer or other recordings relating to the property, assets, business and affairs of the company being examined. The officers, directors, employees and agents of the company or person shall facilitate such examination and aid in such examination so far as it is in their power to do so. The refusal of any company, by its officers, directors, employees or agents, to submit to examination or to comply with any reasonable written request of the examiners shall be grounds for suspension or refusal of, or nonrenewal of any license or authority held by the company to engage in an insurance or other business subject to the Commissioner's jurisdiction. Any such proceedings for suspension, revocation or refusal of any license or authority shall be conducted pursuant to Section 619 of this title.

C. The Commissioner or examiners shall have the power to issue subpoenas, to administer oaths and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of any person to obey a subpoena, the Commissioner may petition a court of competent jurisdiction, and upon proper showing, the Court may enter any order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court.

D. When making an examination under Sections 309.1 through 309.7 of this title, the Commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or an accounting firm or individual holding a permit to practice public accounting, certified financial examiners or other professionals and specialists as examiners, the cost of which shall be borne by the company which is the subject of the examination.

E. Nothing contained in Sections 309.1 through 309.7 of this title shall be construed to limit the Commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions made in any examination report shall be prima facie evidence in any legal or regulatory action.

F. Nothing contained in Sections 309.1 through 309.7 of this title shall be construed to limit the Commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or company workpapers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action which the Commissioner may deem appropriate.

Added by Laws 1991, c. 204, § 3, eff. Sept. 1, 1991. Amended by Laws 1997, c. 418, § 9, eff. Nov. 1, 1997.

§36-309.4. Report of examination - Review by Commissioner - Investigatory hearing - Disclosure.

A. All examination reports shall be comprised of only facts appearing upon the books, records, or other documents of the company, its agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs, and such conclusions and recommendations as the examiners find reasonably warranted from such facts.

B. No later than thirty (30) days following completion of the examination, the examiner in charge shall file with the Insurance Department a verified written report of examination under oath. Upon receipt of the verified report, the Department shall transmit the report to the company examined, together with a notice which shall afford such company examined a reasonable opportunity of not more than twenty (20) days to make a written submission or written rebuttal with respect to any matters contained in the examination report.

C. Within twenty (20) days of the end of the period allowed for the receipt of written submissions or written rebuttals, the Insurance Commissioner shall fully consider and review the report, together with any written submissions or written rebuttals and any relevant portions of the examiners' workpapers and enter an order:

1. Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, regulation or prior order of the Commissioner, the Commissioner may order the company to take any action the Commissioner considers necessary and appropriate to cure such violation;

2. Rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling pursuant to subsection A of this section; or

3. Calling for an investigatory hearing with notice pursuant to the Administrative Procedures Act to the company for purposes of obtaining additional documentation, data, information and testimony.

D. 1. All orders entered pursuant to paragraph 1 of subsection C of this section shall be accompanied by findings and conclusions resulting from the Commissioner's consideration and review of the examination report, relevant examiner workpapers and any written submissions or rebuttals. Any such order shall be considered a final administrative decision and may be appealed pursuant to the Administrative Procedures Act, and shall be served upon the company by certified mail, together with a copy of the adopted examination report. Within thirty (30) days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders. Upon proper order of the Commissioner, the company shall deliver by mail or otherwise, within thirty (30) days of the date of the order, a copy of the adopted report and related orders to all states and jurisdictions in which the company is licensed to transact the business of insurance.

2. Any hearing conducted pursuant to paragraph 3 of subsection C of this section by the Commissioner or authorized representative, shall be conducted as a nonadversarial confidential investigatory proceeding as necessary for the resolution of any inconsistencies, discrepancies or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the Commissioner's review of relevant workpapers or by the written submission or rebuttal of the company. Within thirty (30) days of the conclusion of any such hearing, the Commissioner shall enter an order pursuant to paragraph 1 of subsection C of this section.

3. The Commissioner shall not appoint an examiner as an authorized representative to conduct the hearing. The Commissioner or a representative of the Commissioner may issue subpoenas for the attendance of any witnesses or the production of any documents deemed relevant to the investigation whether under the control of the Department, the company or other persons. The documents produced shall be included in the record, and testimony taken by the Commissioner or representative of the Commissioner shall be under oath and preserved for the record.

4. Nothing contained in this section shall require the Department to disclose any information or records which would indicate or show the existence or content of any investigation or activity of a criminal justice agency.

5. The hearing shall proceed with the Commissioner or a representative of the Commissioner posing questions to the persons subpoenaed. Thereafter the company and the Department may present testimony relevant to the investigation. The company and the Department shall be permitted to make closing statements and may be represented by counsel of their choice.

E. 1. Upon the adoption of the examination report under paragraph 1 of subsection C of this section, the Commissioner shall continue to hold the content of the examination report as private and confidential information for a period of two (2) days except to the extent provided in subsection B of this section and subsection F of Section 309.3 of this title. Thereafter, the Commissioner may open the report for public inspection so long as no court of competent jurisdiction has stayed its publication.

2. Nothing contained in Sections 309.1 through 309.7 of this title shall prevent or be construed as prohibiting the Commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the insurance department of this or any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time, so long as such agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with Sections 309.1 through 309.7 of this title.

3. In the event the Commissioner determines that regulatory action is appropriate as a result of any examination, the Commissioner may initiate any proceedings or actions as provided by law.

F. All working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the Commissioner or any other person in the course of an examination made under Sections 309.1 through 309.7 of this title shall be given confidential treatment and are not subject to subpoena and may not be made public by the Commissioner or any other person, except to the extent provided in subsection E of this section and subsection F of Section 309.3 of this title. Access may also be granted to the National Association of Insurance Commissioners. Such parties shall agree in writing prior to receiving the information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the company to which it pertains has been obtained.

Added by Laws 1991, c. 204, § 4, eff. Sept. 1, 1991. Amended by Laws 2001, c. 363, § 2, eff. July 1, 2001.

§36-309.5. Examiner's conflict of interest.

A. No examiner may be appointed by the Insurance Commissioner if such examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under Sections 309.1 through 309.7 of this title. This section shall not be construed to automatically preclude an examiner from being:

1. A policyholder or claimant under an insurance policy;

2. A grantor of a mortgage or similar instrument on such examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business;

3. An investment owner in shares of regulated diversified investment companies; or

4. A settlor or beneficiary of a blind trust into which any otherwise impermissible holdings have been placed.

B. Notwithstanding the requirements of this section, the Commissioner may retain from time to time, on an individual basis, qualified actuaries, an accounting firm or individual holding a permit to practice public accounting in this state, or other similar individuals who are independently practicing their professions, even though said persons may from time to time be similarly employed or retained by persons subject to examination under this act. An examiner shall disclose to the Commissioner in writing any prior or existing personal or business relationship with any company to be examined by that examiner.

Added by Laws 1991, c. 204, § 5, eff. Sept. 1, 1991. Amended by Laws 1997, c. 418, § 10, eff. Nov. 1, 1997.

§36-309.6. Payment of charges.

Any insurer or person examined under the provisions of Sections 309.1 through 309.7 of this title shall pay the proper charges incurred in such examination, including the actual expense of the Insurance Commissioner or the expenses and compensation of an authorized representative and the expense and compensation of assistants and examiners employed therein. All expenses incurred in such examination shall be verified by affidavit and a copy shall be filed in the office of the Commissioner.

Added by Laws 1991, c. 204, § 6, eff. Sept. 1, 1991. Amended by Laws 1997, c. 418, § 11, eff. Nov. 1, 1997.

§36-309.7. Liability.

A. No cause of action shall arise nor shall any liability be imposed against the Insurance Commissioner, the Commissioner's authorized representatives, or any examiner appointed by the Commissioner for any statements made or conduct performed while carrying out the provisions of Sections 309.1 through 309.7 of this title, unless the conduct was objectively unreasonable and outside the scope of the person's duties.

B. No cause of action shall arise, nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the Commissioner or the Commissioner's authorized representative or examiner pursuant to an examination made under Sections 309.1 through 309.7 of this title, if such act of communication or delivery was not a fraudulent or criminal act.

C. This section does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in subsection A of this section.

D. A person identified in subsection A of this section shall be entitled to an award of attorney's fees and costs if determined to be the prevailing party in a civil action arising out of activities in carrying out the provisions of Sections 309.1 through 309.7 of this title, if the court determines that the party bringing the action was not substantially justified in doing so. For purposes of this section, a proceeding is substantially justified if it had a reasonable basis in law or fact at the time that it was initiated.

Added by Laws 1991, c. 204, § 7, eff. Sept. 1, 1991. Amended by Laws 1997, c. 418, § 12, eff. Nov. 1, 1997.

§36310. Examination reports.

A. The Insurance Commissioner shall make a full written report of each examination, certified to by the Insurance Commissioner or the examiner in charge of the examination.

B. The Insurance Commissioner shall furnish a copy of the report to the person examined not less than ten (10) days prior to filing the same in his office. If such person so requests in writing within such tenday period, the Insurance Commissioner shall consider the objections of such person to the report as proposed, and shall not so file the report until after such modifications, if any, have been made therein as the Insurance Commissioner deems proper.

C. The report, when filed, shall be admissible in evidence in any action or proceeding brought by the Insurance Commissioner against the person examined, or its officers or agents. The Insurance Commissioner or his examiners may at any time testify and offer other proper evidence as to information secured during the course of an examination, whether or not a written report of the examination has at that time been either made, served, or filed in the Insurance Commissioner's office.

D. The Insurance Commissioner may withhold from public inspection any examination or investigation report for so long as he deems prudent, but not to exceed thirty (30) days.

Laws 1957, p. 220, § 310.

§36-310.1. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-310.2. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-310A.1. Reporting of material acquisitions and disposition of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements.

A. Every insurer domiciled in this state shall file a report with the Insurance Commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements unless the acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements have been submitted to the Commissioner for review, approval or information purposes pursuant to other provisions of the Oklahoma Insurance Code.

B. The report required in subsection A of this section is due within fifteen (15) days after the end of the calendar month in which any of the foregoing transactions occur.

C. One complete copy of the report, including any exhibits or other attachments, shall be filed with the National Association of Insurance Commissioners.

Added by Laws 1997, c. 273, § 1, eff. July 1, 1997.

§36-310A.2. Material acquisitions or dispositions defined - Information to be disclosed in report.

A. No acquisitions or dispositions of assets need be reported pursuant to Section 1 of this act if the acquisitions or dispositions are not material. For purposes of this act, a material acquisition, or the aggregate of any series of related acquisitions during any thirty-day period, or disposition, or the aggregate of any series of related dispositions during any thirty-day period, is one that is nonrecurring and not in the ordinary course of business and involves more than five percent (5%) of the reporting insurer's total admitted assets as reported in its most recent annual statement filed with the Insurance Commissioner pursuant to Section 311 of Title 36 of the Oklahoma Statutes.

B. 1. Asset acquisitions subject to Section 1 of this act include every purchase, lease, exchange, merger, consolidation, succession or any other acquisition.

2. Asset dispositions subject to this act include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment whether for the benefit of creditors or otherwise, abandonment, destruction or other disposition.

C. 1. The following information is required to be disclosed in any report of a material acquisition or disposition of assets:

a. date of the transaction,

b. manner of acquisition or disposition,

c. description of the assets involved,

d. nature and amount of the consideration given or received,

e. purpose of, or reason for, the transaction,

f. manner by which the amount of consideration was determined, and

g. gain or loss recognized or realized as a result of the transaction.

2. Insurers are required to report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if:

a. the insurer has less than One Million Dollars ($1,000,000.00) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement, and

b. the net income of the business not subject to the pooling arrangement represents less than five percent (5%) of the insurer's capital and surplus.

Added by Laws 1997, c. 273, § 2, eff. July 1, 1997.

§36-310A.3. Material nonrenewals, cancellations or revisions of ceded reinsurance agreements defined - Information to be disclosed in report.

A. 1. No nonrenewals, cancellations or revisions of ceded reinsurance agreements need be reported pursuant to Section 1 of this act if the nonrenewals, cancellations or revisions are not material. For purposes of this act, a material nonrenewal, cancellation or revision is one that affects:

a. as respects property and casualty business, including accident and health business written by a property and casualty insurer:

(1) more than fifty percent (50%) of the insurer's total ceded written premium, or

(2) more than fifty percent (50%) of the insurer's total ceded indemnity and loss adjustment reserves,

b. as respects life, annuity, and accident and health business: more than fifty percent (50%) of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer's most recent annual statement, and

c. as respects either property and casualty or life, annuity, and accident and health business, either of the following events shall constitute a material revision which must be reported:

(1) an authorized reinsurer representing more than ten percent (10%) of a total cession is replaced by one or more unauthorized reinsurers, or

(2) previously established collateral requirements have been reduced or waived as respects one or more unauthorized reinsurers representing collectively more than ten percent (10%) of a total cession.

2. However, no filing shall be required if:

a. as respects property and casualty business, including accident and health business written by a property and casualty insurer: the insurer's total ceded written premium represents, on an annualized basis, less than ten percent (10%) of its total written premium for direct and assumed business, or

b. as respects life, annuity, and accident and health business: the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent (10%) of the statutory reserve requirement prior to any cession.

B. 1. The following information is required to be disclosed in any report of a material nonrenewal, cancellation or revision of ceded reinsurance agreements:

a. effective date of the nonrenewal, cancellation or revision,

b. the description of the transaction with an identification of the initiator thereof,

c. purpose of, or reason for, the transaction, and

d. if applicable, the identity of the replacement reinsurers.

2. Insurers are required to report all material nonrenewals, cancellations or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if:

a. the insurer has less than One Million Dollars ($1,000,000.00) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement, and

b. the net income of the business not subject to the pooling arrangement represents less than five percent (5%) of the insurer's capital and surplus.

Added by Laws 1997, c. 273, § 3, eff. July 1, 1997.

§36-311. Annual statement by companies - Annual license or certificate of authority to transact business.

A. 1. All insurers authorized to do business under the provisions of this Code shall, annually, on or before the first day of March, file with the National Association of Insurance Commissioners (NAIC), statements which shall exhibit the financial condition of insurers on the thirty-first day of December of the previous year and its business of that year. Annual statements shall be filed electronically as approved by the NAIC, along with applicable fees. Domestic insurers shall file a printed annual financial statement along with all supplement filings in the office of the Insurance Commissioner annually on or before the first day of March.

2. Foreign insurers shall file an Affidavit of Filing and Financial Statement Attestation annually on or before the first day of March. The Insurance Commissioner may require foreign insurers to file the annual financial statement in a printed format. Such document required by the Insurance Commissioner shall be due annually on or before the first day of March.

3. For good cause shown, the Insurance Commissioner may extend the time within which such statements may be filed. The statements shall be in such general form and context as approved by the National Association of Insurance Commissioners for the kinds of insurance to be reported upon, and as supplemented for additional information required by the Insurance Commissioner by rule. In addition, the statements shall be prepared in accordance with the NAIC annual statement instruction handbooks, including any supplemental filings described in the NAIC annual instruction handbook, and follow the accounting procedures and practices prescribed by the NAIC accounting practices and procedure manuals as supplemented by the Insurance Commissioner by rule. The assets and liabilities shall be computed pursuant to the most conservative method allowed by the laws of this state. Such statements shall be subscribed and sworn to by the president and secretary and other proper officers. The license or certificate of authority to transact the business of insurance in this state shall be renewed unless the Insurance Commissioner finds that the facts do not warrant renewal, and that the insurer has not fully complied with all laws applicable to the insurer. Upon initial licensure, the Commissioner shall issue a license, or certificate of authority, subject to all requirements and conditions of the law, to transact business in this state, specifying in the certificate the particular kind or kinds of insurance it is authorized to transact. The annual statement of an insurer of a foreign country shall embrace only its business and condition in the United States, and shall be subscribed and sworn to by its resident manager or principal representative in charge of its United States business, or other officer duly authorized. Any amendments and addendums to the annual statement subsequently filed with the Commissioner shall also be filed with the National Association of Insurance Commissioners, and the insurer shall pay the applicable filing fees.

B. In the absence of actual malice, or gross negligence, members of the National Association of Insurance Commissioners, their duly authorized committees, subcommittees and task forces, their delegates, National Association of Insurance Commissioners' employees, and all others charged with the responsibility of collecting, reviewing, analyzing and disseminating the information developed from the filing of the annual statement shall be acting as agents of the Commissioner under the authority of this section and shall not be subject to civil liability for libel, slander or any other cause of action by virtue of their collection, review and analysis or disseminating of the data and information collected from the filings required under this section.

C. All financial analysis ratios and examination synopses pertaining to insurance companies, which are submitted to the Commissioner by the National Association of Insurance Commissioners' Insurance Regulatory Information System, are confidential records which shall not be available for public inspection and shall not be disclosed by the Commissioner except in receivership proceedings.

Added by Laws 1957, p. 220, § 311, operative July 1, 1957. Amended by Laws 1976, c. 23, § 1, emerg. eff. March 15, 1976; Laws 1986, c. 251, § 1, eff. Nov. 1, 1986; Laws 1987, c. 175, § 1, eff. Nov. 1, 1987; Laws 1992, c. 178, § 1, eff. Sept. 1, 1992; Laws 1993, c. 79, § 2, eff. Sept. 1, 1993; Laws 1997, c. 418, § 13, eff. Nov. 1, 1997; Laws 2001, c. 363, § 3, eff. July 1, 2001; Laws 2002, c. 307, § 1, eff. Nov. 1, 2002; Laws 2003, c. 150, § 1, eff. Nov. 1, 2003; Laws 2004, c. 274, § 1, eff. July 1, 2004.

§36-311.1. Fraudulent or false statement - Failure to timely file statement - Penalty.

A. Any insurer who files with the Insurance Commissioner any statement required by this Code knowing such statement to be fraudulent and materially false, upon conviction, shall be guilty of a felony, for which the punishment shall be a fine of not to exceed Fifty Thousand Dollars ($50,000.00). Any officer, actuary, or employee of such insurer who causes such statement to be filed, knowing the fraudulent and materially false nature thereof, upon conviction, shall be guilty of a felony, for which the punishment for each occurrence shall be a fine of not to exceed Twenty-five Thousand Dollars ($25,000.00), or commitment to the custody of the Department of Corrections for not less than one (1) year and not more than five (5) years or both said fine and commitment, and shall never again be permitted to act as an actuary, officer, or director of any insurer licensed to do business in this state.

B. Any insurer who fails without reasonable cause and permission of the Commissioner to timely file any statement required by this Code shall be subject, after notice and opportunity for hearing, to censure, suspension or revocation of certificate. Annual statements filed after the first day of March without express written advance permission of the Commissioner shall be accompanied by a late filing fee in the amount of Two Hundred Fifty Dollars ($250.00) or One Hundred Dollars ($100.00) per day, whichever is greater. Repeated willful violations, after notice and opportunity for hearing, may subject the insurer to both censure, suspension, or revocation of certificate and civil penalty of not less than One Hundred Dollars ($100.00) nor more than Ten Thousand Dollars ($10,000.00) for each occurrence in addition to the late filing fee. Any late filing fees and civil penalties collected pursuant to this subsection shall be deposited to the Insurance Commissioner Revolving Fund.

C. Prosecution or administrative action for any violation of the provisions of this section shall be commenced within four (4) years after the violation is discovered.

Added by Laws 1957, p. 221, § 311.1. Amended by Laws 1983, c. 68, § 4, eff. Nov. 1, 1983; Laws 1985, c. 328, § 2, emerg. eff. July 29, 1985; Laws 1986, c. 251, § 2, emerg. eff. June 13, 1986; Laws 1993, c. 270, § 36, eff. Sept. 1, 1993; Laws 1997, c. 418, § 14, eff. Nov. 1, 1997.

NOTE: Laws 1997, c. 133, § 444 repealed by Laws 1999, 1st Ex.Sess., c. 5, § 452, eff. July 1, 1999.

NOTE: Laws 1998, 1st Ex.Sess., c. 2, § 23 amended the effective date of Laws 1997, c. 133, § 444 from July 1, 1998, to July 1, 1999.

§36311.2. Reports on financial condition.

A. The Insurance Commissioner may request financial information more frequently than quarterly if it appears an insurer is having financial difficulty, if erratic changes are occurring in the financial data of the company, if a considerable number of consumer complaints have been received, or if one or more transactions have occurred which appear to jeopardize the welfare of the policyholders. The insurer also may be requested to furnish a plan of action to improve its underwriting performance.

B. Any insurer upon request of the Commissioner shall furnish to the Insurance Commissioner within fortyfive (45) days following the close of any calendar quarter, except the fourth quarter, on blank forms prescribed by the Insurance Commissioner, a statement which shall exhibit the financial condition of the company as of the last date of the month immediately preceding reporting date. Such reports for information purposes shall contain a complete listing of all written commitments to loan, guaranties of loans, or contractual obligations concerning loans or conditional liabilities to borrowers or lenders made during the quarter reported. Such reports may require the inclusion of an exhibit of the operating results of the company for the three (3) months' period immediately preceding the date for which the financial condition is shown. A completed blank form prescribed by the Commissioner for said statement shall be furnished by each insurer for each such reporting date. Such statements shall be subscribed and sworn to by the president and the secretary and other proper officers of the company. Failure of any insurer to execute and file such statements or exhibits as required herein shall constitute cause, after notice and hearing, for censure, suspension, or revocation of certificate of authority to transact an insurance business in this state or a fine of not less than One Hundred Dollars ($100.00) nor more than One Thousand Dollars ($1,000.00) for each occurrence, or both censure, suspension, or revocation, and fine. The Commissioner shall set such cause for hearing and if he finds that the facts warrant, he shall order said censure, suspension, or revocation of the certificate of authority of the insurer found to be in default or said fine, or both said censure, suspension, or revocation, and fine. Willful violations, after notice and hearing, may subject the insurer to both censure, suspension or revocation of certificate and a fine of not less than One Hundred Dollars ($100.00) or not more than Five Thousand Dollars ($5,000.00) for each violation. The Insurance Commissioner may establish rules or regulations to carry out the purposes of this section.

Added by Laws 1970, c. 108, § 1, operative Sept. 30, 1970. Amended by Laws 1974, c. 264, § 4, emerg. eff. May 29, 1974; Laws 1983, c. 68, § 5, eff. Nov. 1, 1983; Laws 1985, c. 328, § 3, emerg. eff. July 29, 1985; Laws 1986, c. 251, § 3, emerg. eff. June 13, 1986; Laws 2002, c. 307, § 2, eff. Nov. 1, 2002.

§36311.3. Financial reports regarding real property.

In all financial reports of an insurer to the Insurance Commissioner, real property acquired by the insurer shall be entered as an asset on the basis of its original cost along with appropriate adjustments, or the appraised market value where it is expressly indicated that such amount is based on the appraised market value and such appraisal has approval of the Insurance Commissioner.

Laws 1972, c. 151, § 1, eff. Oct. 1, 1972.

§36-312. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-312.1. Report, disbursement and appropriation of taxes - Record and statement - Annual reports.

A. For the fiscal year ending June 30, 2004, the Insurance Commissioner shall report and disburse one hundred percent (100%) of the fees and taxes collected under Section 624 of this title to the State Treasurer to be deposited to the credit of the Education Reform Revolving Fund created pursuant to Section 41.29b of Title 62 of the Oklahoma Statutes. The Insurance Commissioner shall keep an accurate record of all such funds and make an itemized statement and furnish same to the State Auditor and Inspector, as to all other departments of this state. The report shall be accompanied by an affidavit of the Insurance Commissioner or the Chief Clerk of such office certifying to the correctness thereof.

B. For the fiscal year beginning July 1, 2006, and for each fiscal year thereafter, the Insurance Commissioner shall apportion an amount of the taxes and fees received from Section 624 of this title, which shall be at least One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) each year, but which shall also be computed on an annual basis by the Commissioner as the amount of insurance premium tax revenue loss attributable to the provisions of subsection H of Section 625.1 of this title and increased if necessary to reflect the annual computation, and which shall be apportioned before any other amounts, to the following pension systems and in the following amounts:

1. Sixty-five percent (65%) to the Oklahoma Firefighters Pension and Retirement Fund in the manner provided for in Sections 49-119, 49-120 and 49-123 of Title 11 of the Oklahoma Statutes;

2. Twenty-six percent (26%) to the Oklahoma Police Pension and Retirement System pursuant to the provisions of Sections 50-101 through 50-136 of Title 11 of the Oklahoma Statutes; and

3. Nine percent (9%) to the Law Enforcement Retirement Fund.

C. After the apportionment required by subsection B of this section, for the fiscal years beginning July 1, 2004, and ending June 30, 2009, the Insurance Commissioner shall report and disburse all of the fees and taxes collected under Section 624 of this title and Section 61 of this act, and the same are hereby apportioned as follows:

1. Forty-one and seven-tenths percent (41.7%) of the taxes collected on premiums shall be allocated and disbursed for the Oklahoma Firefighters Pension and Retirement Fund, in the manner provided for in Sections 49-119, 49-120 and 49-123 of Title 11 of the Oklahoma Statutes;

2. Seventeen percent (17%) of the taxes collected on premiums shall be allocated and disbursed to the Oklahoma Police Pension and Retirement System pursuant to the provisions of Sections 50-101 through 50-136 of Title 11 of the Oklahoma Statutes;

3. Six and one-tenth percent (6.1%) of the taxes collected on premiums shall be allocated and disbursed to the Law Enforcement Retirement Fund; and

4. All the balance and remainder of the taxes and fees provided in Section 624 of this title shall be paid to the State Treasurer to the credit of the General Revenue Fund of the state to provide revenue for general functions of state government. The Insurance Commissioner shall keep an accurate record of all such funds and make an itemized statement and furnish same to the State Auditor and Inspector, as to all other departments of this state. The report shall be accompanied by an affidavit of the Insurance Commissioner or the Chief Clerk of such office certifying to the correctness thereof.

D. After the apportionment required by subsection B of this section, for the fiscal year ending June 30, 2010, and for each fiscal year thereafter the Insurance Commissioner shall report and disburse all of the fees and taxes collected under Section 624 of this title and Section 2204 of this title, and the same are hereby apportioned as follows:

1. Thirty-four percent (34%) of the taxes collected on premiums shall be allocated and disbursed for the Oklahoma Firefighters Pension and Retirement Fund, in the manner provided for in Sections 49-119, 49-120 and 49-123 of Title 11 of the Oklahoma Statutes;

2. Fourteen percent (14%) of the taxes collected on premiums shall be allocated and disbursed to the Oklahoma Police Pension and Retirement System pursuant to the provisions of Sections 50-101 through 50-136 of Title 11 of the Oklahoma Statutes;

3. Five percent (5%) of the taxes collected on premiums shall be allocated and disbursed to the Law Enforcement Retirement Fund; and

E. The disbursements provided for in subsections A, B, C and D of this section shall be made monthly. The Insurance Commissioner shall report annually to the Governor, the Speaker of the House of Representatives, the President Pro Tempore of the Senate and the State Auditor and Inspector, the amounts collected and disbursed pursuant to this section.

Added by Laws 1957, p. 221, § 312.1, operative July 1, 1957. Amended by Laws 1957, p. 632, § 3, emerg. eff. May 31, 1957; Laws 1959, p. 133, § 1, emerg. eff. July 8, 1959; Laws 1963, c. 316, § 1, emerg. eff. June 19, 1963; Laws 1967, c. 43, § 1, emerg. eff. March 29, 1967; Laws 1969, c. 132, § 1, eff. July 1, 1969; Laws 1972, c. 58, § 1, emerg. eff. March 21, 1972; Laws 1975, c. 34, § 1, emerg. eff. March 25, 1975; Laws 1979, c. 30, § 10, emerg. eff. April 6, 1979; Laws 1981, c. 6, § 1, emerg. eff. March 19, 1981; Laws 1988, c. 83, § 4, emerg. eff. March 25, 1988; Laws 2003, c. 315, § 1, eff. July 1, 2003; Laws 2004, c. 368, § 54, eff. July 1, 2004; Laws 2005, c. 381, § 1, eff. July 1, 2006.

§36-312A. Enforcement and recording of penalties and fees.

Civil penalties and fees imposed pursuant to the provisions of Title 36 of the Oklahoma Statutes may be enforced in the same manner in which civil judgments may be enforced. All final orders of the Insurance Commissioner or State Board for Property and Casualty Rates imposing administrative charges, fees, civil penalties or fines may be recorded in the office of the Clerk of the District Court of Oklahoma County and, upon such recording, all appropriate writs and process shall issue and shall be enforced by the judges of said court upon application.

Added by Laws 1997, c. 418, § 15, eff. Nov. 1, 1997.

§36-313. Requirements for orders and notices - Final agency action - Applicability of Administrative Procedure Act.

A. Orders and notices of the Insurance Commissioner shall be in writing and shall be signed by either the Commissioner, an authorized employee of the Insurance Department, or an independent hearing examiner. A final order signed by an independent hearing examiner, after hearing, shall be final agency action, notwithstanding the provisions of Section 311 of Title 75 of the Oklahoma Statutes.

B. In the exercise of the powers and the performance of the duties enumerated in this title, the Commissioner and the State Board for Property and Casualty Rates shall comply with the procedures of the Administrative Procedures Act. Any conflict between the provisions of Title 75 of the Oklahoma Statutes and of this title shall be resolved in favor of the provisions of this title.

Added by Laws 1957, p. 222, §313. Amended by Laws 1987, c. 175, § 2, eff. Nov. 1, 1987; Laws 1997, c. 418, § 16, eff. Nov. 1, 1997.

§36-314. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-315. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-316. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-317. Witnesses or evidence.

A. The Insurance Commissioner may take depositions, subpoena witnesses or documentary evidence, administer oaths, and examine under oath any individual relative to the affairs of any person being examined, or relative to the subject of any hearing or investigation.

B. All administrative subpoenas shall be served in the same manner as if issued from a district court or in accordance with the Administrative Procedures Act. If any person fails to obey a subpoena lawfully served, the Commissioner may forthwith report such disobedience, together with a copy of the subpoena and proof of service thereof, to the district court of the county in which the person was required to appear, and such court shall forthwith cause such person to be produced and shall impose penalties as though the person had disobeyed a subpoena issued out of such court.

Added by Laws 1957, p. 223, § 317. Amended by Laws 1997, c. 418, § 17, eff. Nov. 1, 1997.

NOTE: Laws 1997, c. 133, § 445 repealed by Laws 1999, 1st Ex.Sess., c. 5, § 452, eff. July 1, 1999.

NOTE: Laws 1998, 1st Ex.Sess., c. 2, § 23 amended the effective date of Laws 1997, c. 133, § 445 from July 1, 1998, to July 1, 1999.

§36-318. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-319. Appointment of independent hearing examiner - Fees - Time period for issuance of final order.

In conducting any hearing pursuant to the Insurance Code, the Insurance Commissioner may appoint an independent hearing examiner who shall sit as a quasi-judicial officer. The ordinary fees and costs of such hearing examiner shall be assessed by the hearing examiner against the respondent, unless the respondent is the prevailing party. Within thirty (30) days after termination of the hearing or of any rehearing thereof or reargument thereon, unless such time is extended by stipulation, a final order shall be issued.

Added by Laws 1957, p. 224, § 319. Amended by Laws 1987, c. 175, § 3, eff. Nov. 1, 1987; Laws 1997, c. 418, § 18, eff. Nov. 1, 1997.

§36-320. Judicial review.

A. Any person aggrieved by a final order of the Insurance Commissioner may obtain judicial review in accordance with the Administrative Procedures Act. The venue of any such action shall be in the district court of Oklahoma County. A copy of such petition shall also forthwith be served upon the Insurance Commissioner and other parties in interest, if any, and the Insurance Commissioner shall thereupon certify and file in such court a transcript of the record of such hearing and a copy of the order appealed from.

B. Upon filing of the petition the court shall have full jurisdiction, and shall determine whether such filing shall operate as a stay of the order appealed from.

Added by Laws 1957, p. 224, § 320. Amended by Laws 1997, c. 418, § 19, eff. Nov. 1, 1997.

§36-321. Fees and licenses - Revolving fund - Deposits.

A. The Insurance Commissioner shall collect in advance the following fees and licenses:

1. For filing charter documents:

Original charter documents, articles of incorporation, bylaws, or record of organization of alien or foreign insurers, or certified copies thereof $50.00

2. Certificate of Authority:

(a) Issuance:

Fraternal benefit societies, alien or foreign $150.00

Hospital service and medical indemnity corporations, alien or foreign $150.00

All other alien or foreign insurers $150.00

(b) Renewal:

Fraternal benefit societies, alien or foreign $150.00

Hospital service and medical indemnity corporations, alien or foreign $150.00

All other alien or foreign insurers $150.00

3. For filing appointment of Insurance Commissioner as agent for service of process $10.00

4. Miscellaneous:

(a) Copies of records, per page $0.40

(b) Amended charter documents, articles of incorporation or bylaws of domestic, alien or foreign insurers or health maintenance organizations $50.00

(d) For filing Merger and Acquisition Forms $1,000.00

(e) For filing Variable Product Forms $200.00

(f) For filing a Life, Accident and Health Policy and Health Maintenance Organization contract $50.00

(g) For filing an advertisement or rider application to a Life, Accident and Health Policy and Health Maintenance Organization contract $25.00

(h) Pending Company Review $1,000.00

(i) For filing a Viatical Settlement Contract or Life Settlement $50.00

(j) For filing an advertisement for Viatical Settlement or Life Settlement $25.00

(k) For filing application for Viatical Settlement or Life Settlement Contract $25.00

(l) Miscellaneous form filing $25.00

B. All fees and licenses not above dedicated, nor dedicated by Section 628 of this title, collected by the Insurance Commissioner as provided by this Code, shall be paid into the State Treasury weekly. The State Treasury is authorized and directed to deduct from said amount so paid a sum equal to one-tenth (1/10) of such payment and place the same to the credit of the General Revenue Fund of the state. The remainder of said amount so paid is hereby allocated and appropriated to the State Insurance Commissioner Revolving Fund and shall by the State Treasurer be placed to the credit of the State Insurance Commissioner Revolving Fund.

C. There shall be assessed an annual fee of Five Hundred Dollars ($500.00) payable by each insurer, health maintenance organization, fraternal benefit society, hospital service and medical indemnity corporation, charitable and benevolent corporation, or United States surplus lines insurance companies licensed to do business in this state, to pay for the filing, processing, and reviewing of annual and quarterly financial statements by personnel of the Office of the State Insurance Commissioner.

D. Filings required as part of a health maintenance organization application for a certificate of authority shall not be subject to the fees set out in this section except for the original charter documents, issuance of certificate of authority, and pending company review fees.

Added by Laws 1957, p. 224, § 321, operative July 1, 1957. Amended by Laws 1965, c. 60, § 6, eff. July 1, 1965; Laws 1967, c. 389, § 1, emerg. eff. May 23, 1967; Laws 1968, c. 244, § 1, emerg. eff. April 24, 1968; Laws 1969, c. 84, § 1, emerg. eff. March 18, 1969; Laws 1977, c. 202, § 4, emerg. eff. June 14, 1977; Laws 1980, c. 164, § 14, emerg. eff. April 15, 1980; Laws 1983, c. 68, § 7, eff. Nov. 1, 1983; Laws 1985, c. 328, § 4, emerg. eff. July 29, 1985; Laws 1990, c. 258, § 79, operative July 1, 1990; Laws 1992, c. 65, § 1, eff. Sept. 1, 1992; Laws 1993, c. 270, § 37, eff. Sept. 1, 1993; Laws 1994, c. 129, § 1, eff. Sept. 1, 1994; Laws 2002, c. 307, § 3, eff. Nov. 1, 2002; Laws 2004, c. 274, § 2, eff. July 1, 2004.

§36-321.1. Report fees - Information requests - Costs.

A. There shall be collected at the time of filing of a report, a fee payable by each insurer required to file a report under Section 101 et seq. of this title, provided the insurer's total written premium per liability category exceeds the requisite filing fee, which shall be Four Hundred Dollars ($400.00) for each periodic claims report required by Section 1250.9 of this title.

B. All public requests for information provided by this act shall be in writing. All requests for copying such data shall be in writing and may be provided to the requestor after such reasonable time to process such copying and shall be at such costs as provided in Section 321 of this title or, if computerized printouts are necessary, at such reasonable costs as established by the Commissioner, or if such items cannot be reproduced by the Commissioner, then such information may, after notification to the requestor, be sent to a private contractor, and such costs shall be payable by the requestor.

C. All amounts received pursuant to this section by the Insurance Commissioner shall be paid into the State Treasury to the credit of the State Insurance Commissioner's Revolving Fund for the purpose of fulfilling and accomplishing the conditions and purposes of Section 101 et seq. of this title.

Added by Laws 1986, c. 315, § 15, emerg. eff. June 24, 1986. Amended by Laws 1994, c. 294, § 1, eff. Sept. 1, 1994; Laws 1997, c. 418, § 20, eff. Nov. 1, 1997.

§36331. Board created; membership; terms; qualifications; travel expenses; conflict of interest; meetings.

A. There is hereby created the State Board for Property and Casualty Rates composed of five (5) members. Four members shall be appointed by the Governor, with the advice and consent of the Senate, one of whom shall be designated by the Governor as Secretary. The Insurance Commissioner shall serve as Chairman and may temporarily designate various members of his staff to serve as his designee for all purposes stated in Sections 331 through 348.1 of this title. Any person who has been appointed to the Board shall not file as a candidate for any public office while serving on the Board or within two (2) years from the time his term of service with the Board has ended. The members appointed by the Governor shall serve for terms of one (1), two (2), three (3) and four (4) years, respectively. Upon the expiration of the terms of the four members first appointed by the Governor pursuant to the provisions of Sections 331 through 348.1 of this title, their successors shall be appointed for terms of four (4) years. The members of the Board appointed by the Governor shall hold office for the terms of their appointment and shall be removed only for cause.

B. The appointed members of the State Board for Property and Casualty Rates shall be at least twentyseven (27) years of age and shall each have been a resident of the state for three (3) years immediately preceding his appointment. Each member of the Board shall be reimbursed for travel expenses as provided for in the State Travel Reimbursement Act.

C. No member of the Board or any employee of the Insurance Department of the State of Oklahoma shall represent, directly or indirectly, in any capacity or for any consideration, an admitted or nonadmitted insurer or any person, firm, or corporation who has or who may have proceedings before the Insurance Department. No member of the Board or any employee of the Insurance Department shall accept any gift, lodging, transportation, or other thing of value from any such person, firm, or corporation, except those fees and charges authorized by law. Violation of any provision of this subsection shall be grounds for removal from office or position.

D. A majority of the members of said Board shall constitute a quorum.

E. All meetings of the Board shall be subject to the requirements of the Oklahoma Open Meeting Act, Section 301 et seq. of Title 25 of the Oklahoma Statutes.

Amended by Laws 1983, c. 248, § 2, emerg. eff. June 21, 1983; Laws 1985, c. 178, § 15, operative July 1, 1985; Laws 1986, c. 207, § 78, operative July 1, 1986; Laws 1987, c. 210, § 2, eff. July 1, 1987.

§36332. General duties - Powers.

A. The State Board for Property and Casualty Rates is hereby vested with the duty and authority of enforcing and administering all applicable provisions of the Insurance Code pertaining to the jurisdiction of the Board. The Board may make reasonable rules and regulations necessary for effectuating such provisions of this Code.

B. The Board shall have powers and authority expressly conferred upon it by or reasonably implied from the provisions of this Code. The Board shall have the power to approve, disapprove, or approve with modifications, filings submitted to it.

C. The Board may conduct such examinations and investigations of insurance matters, within the scope of its authority, as it may deem proper to secure information useful in the lawful administration of the applicable provisions of the Insurance Code.

D. The Insurance Commissioner on behalf of the Board shall have the authority to employ actuaries, statisticians, accountants, attorneys, auditors, investigators or any other technicians as the Insurance Commissioner may deem necessary or beneficial to examine any filings for rate revisions made by insurers or rating organizations and to examine such records of the insurers or rating organizations as may be deemed appropriate in conjunction with the filing for a rate revision in order to determine that the rates or other filings are consistent with the terms, conditions, requirements and purposes of the Insurance Code, and to verify, validate and investigate the information upon which the insurer or rating organization relies to support such filing.

1. The Commissioner shall maintain a list of technicians qualified pursuant to rules adopted by the Board who are proficient in the lines of insurance for which the Board approves rates. Upon request of the Commissioner or the Board, the Commissioner shall employ the next available technician in rotation on the list, proficient in the line or lines of insurance being reviewed. The Commissioner may deviate from the list when employing technicians for loss cost filings pursuant to Section 901.5 of this title.

2. All reasonable expenses incurred in such filing review shall be paid by the insurer or rating organization making the filing.

E. The Commissioner shall employ for the Board examiners to ensure that the rates which have been approved by or filed with the Board are the rates which are being used by the insurer or by the insurers whose rating organization has had a rate approval or rate filing.

1. Any insurer examined pursuant to the provisions of this section shall pay all reasonable charges incurred in such examination, including the actual expense of the Commissioner or the expenses and compensation of the authorized representative of the Commissioner and the expense and compensation of assistants and examiners employed therein.

2. All expenses incurred in such examination shall be verified by affidavit and a copy shall be filed and kept in the office of the Insurance Commissioner.

Added by Laws 1957, p. 226, § 332. Amended by Laws 1965, c. 60, § 5, eff. July 1, 1965; Laws 1979, c. 276, § 2, emerg. eff. June 5, 1979; Laws 1980, c. 322, § 6, eff. Jan. 1, 1981; Laws 1986, c. 207, § 79, operative July 1, 1986; Laws 1987, c. 210, § 5, eff. July 1, 1987; Laws 2001, c. 363, § 4, eff. July 1, 2001.

§36333. Board records; voting; seal.

The Insurance Commissioner shall keep a record of the proceedings of the Board. All acts of the Board shall be by majority vote of the members. The decision of a majority of the members of the Board shall be binding. The Insurance Commissioner shall have a seal, the center of which shall be the same as that of the Great Seal of the State of Oklahoma and shall be distinguished by the words "State Board for Property and Casualty Rates" inscribed in the circular band surrounding the remainder of the device. The Insurance Commissioner shall certify to the proceedings of the Board under seal and his certificates under seal shall be evidence of the record of the proceedings of the Board.

Amended by Laws 1986, c. 207, § 80, operative July 1, 1986.

§36334.1. Training of rate analysts and assistant rate analysts; tuition and fees.

The Insurance Commissioner is hereby authorized to arrange for the training of rate analysts and assistant rate analysts. Funds appropriated to the Insurance Commissioner may be used to pay the tuition and fees of the above personnel while receiving training related to the operations of the Board.

Amended by Laws 1982, c. 238, § 4, emerg. eff. May 4, 1982; Laws 1986, c. 207, § 81, operative July 1, 1986.

§36-335. Conflicts of interest - Exceptions.

No employee of the Insurance Department shall be financially interested, directly or indirectly, in any insurer, agency or insurance transaction except as a policyholder or claimant under a policy; except, that as to such matters wherein a conflict of interest does not exist on the part of any such individual, the Insurance Commissioner may employ from time to time insurance actuaries or other technicians who are independently practicing their professions even though similarly employed by insurers and others. This section shall not be deemed to prohibit employment by the Insurance Commissioner of retired or pensioned personnel of insurers or insurance organizations. In addition, this section shall not be deemed to prohibit employees of the Insurance Department from investing in mutual funds that may own stock in insurance companies, or from having an interest in retirement or pension plans, other than self-directed plans, that may own stock in insurance companies.

Added by Laws 1957, p. 226, § 335. Amended by Laws 1980, c. 322, § 9, eff. Jan. 1, 1981; Laws 1986, c. 207, § 82, operative July 1, 1986; Laws 1997, c. 418, § 21, eff. Nov. 1, 1997.

§36-341.1. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-344. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-346. Order on hearing.

A. In conducting any hearing the State Board for Property and Casualty Rates shall sit as a quasi-judicial or quasi-legislative body. Within thirty (30) calendar days after termination of the hearing or of any rehearing thereof or reargument thereon, it shall make its order on hearing in writing by the Board or by the Insurance Commissioner when authorized by the Board, covering matters involved in such hearing and in any rehearing or reargument thereof, and shall give a copy of such order to the same persons given notice of the hearing.

B. The order shall be signed by a majority of the members of the Board and shall comply with the provisions of Section 312 of Title 75 of the Oklahoma Statutes.

C. The order may affirm, modify, or nullify action theretofore taken or may constitute the taking of new action within the scope of the notice of hearing.

D. An order or notice may be served in accordance with the Administrative Procedures Act.

Added by Laws 1957, p. 228, § 346. Amended by Laws 1987, c. 210, § 8, eff. July 1, 1987; Laws 1997, c. 418, § 22, eff. Nov. 1, 1997.

§36348.1. Fees and licenses.

A. The Insurance Commissioner shall collect the following fees and licenses for the Board and the Property and Casualty Division:

1. Rating organizations, application fee for issuance of license $200.00

2. Miscellaneous:

a. Certificate of Insurance Commissioner, under seal $20.00

b. Upon each transaction of filing of documents required pursuant to the provisions of Section 3610 of this title:

(1) For an individual insurer $50.00

(2) For an approved rating or advisory organization:

(a) Basic fee $50.00

(b) Additional fee for each member or subscriber insurer $10.00,

not to exceed $500.00

3. For each rate, loss cost and rule filing request pursuant to the provisions of Sections 902.1, 903 et seq., and 981 et seq. of this title:

a. For an individual insurer $100.00

b. For an approved rating or advisory organization:

(1) Basic fee $100.00

(2) Additional fee for each member or subscriber insurer $10.00,

not to exceed $500.00.

B. All fees and licenses collected by the Insurance Commissioner as provided in this section shall be paid into the State Treasury on a weekly basis to the credit of the Insurance Commissioner's Revolving Fund for the purpose of carrying out and enforcing the provisions of Article 9 of the Insurance Code.

C. The fees, licenses, and taxes imposed by the Board or the Commissioner upon persons, firms, associations, or corporations licensed pursuant to this section shall be payment in full with respect thereto of and in lieu of all demands for any and all state, county, district, and municipal license fees, license taxes, business privilege taxes, business privilege fees, and charges of every kind now or hereafter imposed upon all such persons, firms, associations, or corporations. This subsection shall not affect other fees, licenses and taxes imposed by the Insurance Code.

D. Any costs incurred by the Board or the Commissioner in the process of review and analysis of a filing shall be assessed against the company or organization making the filing.

Added by Laws 1957, p. 229, § 348.1, operative July 1, 1957. Amended by Laws 1965, c. 60, § 7, eff. July 1, 1965; Laws 1980, c. 322, § 14, eff. Jan. 1, 1981; Laws 1983, c. 248, § 4, emerg. eff. June 21, 1983; Laws 1985, c. 236, § 3, operative Sept. 1, 1985; Laws 1986, c. 207, § 86, operative July 1, 1986; Laws 1987, c. 210, § 10, eff. July 1, 1987; Laws 1991, c. 215, § 6, eff. July 1, 1991; Laws 2002, c. 307, § 4, eff. Nov. 1, 2002; Laws 2005, c. 129, § 1, eff. Nov. 1, 2005.

§36-349. Repealed by Laws 2001, c. 363, § 30, eff. July 1, 2001.

§36-351. Renumbered as § 1938 of this title by Laws 1997, c. 418, § 127, eff. Nov. 1, 1997.

§36-352. Commissioner authorized to refund certain fees.

A. 1. Upon request by an applicant, the Insurance Commissioner may refund to the applicant all or any portion of any fees collected by the Commissioner pursuant to law including but not limited to any unearned fees and application fees. Such fees may be refunded, if requested, prior to any official action being taken by the Commissioner or prior to the occurrence of the action for which the application was made or in such other circumstances that the Commissioner deems proper.

2. The Commissioner may retain a portion of the fee if it is determined that administrative costs were incurred by the Insurance Department in the action.

B. The Commissioner shall promulgate permanent rules and may promulgate emergency rules to implement the provisions of this section pursuant to the Administrative Procedures Act.

Added by Laws 1997, c. 418, § 24, eff. Nov. 1, 1997.

§36-353. Repealed by Laws 1999, c. 397, § 47, emerg. eff. June 10, 1999.

§36-361. Anti-Fraud Unit - Investigations - Confidentiality of records.

A. There is hereby created within the Insurance Department, under the control and direction of the Insurance Commissioner, an "Anti-Fraud Unit" within the Legal and Investigation Division of the Insurance Department.

B. The Anti-Fraud Unit, upon inquiry, complaint, or referral shall investigate the extent, if any, to which a violation has occurred of any statute or administrative rule of this state pertaining to insurance fraud and may initiate any necessary investigation. Whenever the Unit determines that a violation of any criminal law of this state may have occurred, it may refer the matter to the Oklahoma State Bureau of Investigation for further investigation pursuant to Section 150.5 of Title 74 of the Oklahoma Statutes or the Attorney General pursuant to Section 18b of Title 74 of the Oklahoma Statutes. The Insurance Department shall retain the authority to initiate and prosecute any civil action it deems necessary or advisable.

C. The Anti-Fraud Unit may employ investigators who are commissioned by the Insurance Commissioner to serve as peace officers, as defined by and pursuant to the guidelines and requirements of Section 3311 of Title 70 of the Oklahoma Statutes and Sections 99 and 99a of Title 21 of the Oklahoma Statutes.

D. Records, documents, reports and evidence obtained or created by the Anti-Fraud Division as a result of an inquiry or investigation of suspected insurance fraud shall be confidential and shall not be subject to the Oklahoma Open Records Act or to outside review or release by any individual, but shall be subject to court order. Information and records shall be disclosed upon request to officers and agents of federal, state, county, or municipal law enforcement agencies, to the Oklahoma State Bureau of Investigation, to the Attorney General's office and to district attorneys, in the furtherance of criminal investigations.

Added by Laws 1999, c. 344, § 1, emerg. eff. June 8, 1999. Amended by Laws 2002, c. 307, § 5, eff. Nov. 1, 2002; Laws 2004, c. 131, § 1; Laws 2005, c. 129, § 2, eff. Nov. 1, 2005.

§36-362. Insurance Department Anti-Fraud Revolving Fund - Fees.

A. There is hereby created in the State Treasury a revolving fund for the Insurance Commissioner to be designated the "Insurance Department Anti-Fraud Revolving Fund". The fund shall be a continuing fund, not subject to fiscal year limitations and shall consist of all monies received and collected by the Insurance Department pursuant to subsection B of this section and all other monies designated to the fund by law. All monies accruing to the credit of said fund are hereby appropriated and may be budgeted and expended by the Insurance Commissioner for the purposes of investigation of suspected insurance fraud and civil or administrative action in cases involving suspected insurance fraud. Expenditures from said fund shall be made upon warrants issued by the State Treasurer against claims filed as prescribed by law with the Director of State Finance for approval and payment.

B. The following shall pay an annual fee of Seven Hundred Fifty Dollars ($750.00) to the Insurance Department which shall be payable quarterly in the amount of One Hundred Eighty-seven Dollars and fifty cents ($187.50): Life, accident and health insurers; property and casualty insurers; county mutual fire insurers; mutual benefit associations; fraternal benefit societies; reciprocal insurers; motor service clubs; title insurers; nonprofit insurers; health maintenance organizations (HMOs); service warranty associations; surplus lines carriers; multiple employer welfare arrangements (MEWAs); trusts which write surety policies; prepaid dental plan organizations; and accredited reinsurers. The payments shall be due on or before the last day of the month following each calendar quarter. Within sixty (60) days after each calendar quarter, the Commissioner shall transfer:

1. Twenty-five percent (25%) of all monies collected by the Insurance Department pursuant to this section to the Attorney General's Insurance Fraud Unit Revolving Fund created in Section 19.3 of Title 74 of the Oklahoma Statutes, for use by the Attorney General in the investigation and prosecution of insurance fraud; and

2. Fifteen percent (15%) of all monies collected by the Insurance Department pursuant to this section to the OSBI Revolving Fund created in Section 150.19a of Title 74 of the Oklahoma Statutes, for use by the Oklahoma State Bureau of Investigation in the investigation of insurance fraud.

Added by Laws 1999, c. 344, § 2, emerg. eff. June 8, 1999. Amended by Laws 2001, c. 363, § 5, eff. July 1, 2001; Laws 2002, c. 307, § 6, eff. Nov. 1, 2002; Laws 2004, c. 131, § 2.

§36-363. Notification of suspected fraud.

A. Any insurer who has reason to believe that a person or entity has engaged in or is engaging in an act or practice that violates any statute or administrative rule of this state related to insurance fraud shall immediately notify the Anti-Fraud Unit of the Insurance Department.

B. In the absence of fraud, bad faith, reckless disregard for the truth, or actual malice, no person, insurer, or agent of an insurer shall be liable for damages in a civil action or subject to criminal prosecution for supplying information about suspected insurance fraud to the Anti-Fraud Division of the Insurance Department or any other agency involved in the investigation or prosecution of suspected insurance fraud. The immunity provided in this subsection shall not extend to any person, insurer, or agent of an insurer for communications or publications about suspected insurance fraud to any other person or entity.

Added by Laws 1999, c. 344, § 3, emerg. eff. June 8, 1999.

§36601. "Domestic" insurer defined.

A "domestic" insurer is one formed under the laws of Oklahoma.

Laws 1957, p. 230, § 601.

§36602. "Foreign" insurer defined.

A "foreign" insurer is one formed under the laws of another state or government of the United States.

Laws 1957, p. 230, § 602.

§36603. "Alien" insurer defined.

An "alien" insurer is one formed under the laws of a country other than the United States.

Laws 1957, p. 230, § 603.

§36604. "State," "United States" defined.

A. "State" means any state, commonwealth, territory, or district of the United States.

B. "United States" includes the states, territories, districts, and commonwealths thereof.

Laws 1957, p. 230, § 604.

§36605. "Charter" defined.

"Charter" means articles of incorporation, of agreement, of association, or other basic constituent document of a corporation, subscribers' agreement and power of attorney of a reciprocal insurer, or underwriters' agreement and power of attorney of a Lloyd's insurer.

Laws 1957, p. 231, § 605.

§36606. Authority to transact insurance required.

A. No person shall act as an insurer and no insurer shall transact insurance in Oklahoma except as authorized by a subsisting authority granted to it by the Insurance Commissioner, except as to such transactions as are expressly otherwise provided for in this Code.

B. No such authority shall be required for an insurer, formerly so licensed in Oklahoma and now licensed in another state as a resident insurer or who has merged with an insurer in another state, to enable it to investigate and settle losses under its policies lawfully written in Oklahoma, or to liquidate such assets and liabilities of the insurer (other than collection of new premiums) as may have resulted from its former authorized operations in Oklahoma.

C. An insurer, who has relocated in another state or has merged with an insurer in another state and is not transacting new insurance business in Oklahoma but continuing collection of premiums on and servicing of policies remaining in force as to residents of or risks located in Oklahoma, is transacting insurance in Oklahoma for the purpose of premium tax requirements only and is not required to have a certificate of authority therefor. This subsection shall not apply to insurers which have withdrawn from Oklahoma prior to the effective date of this Code.

D. As to an insurance coverage on a subject of insurance not resident, located, or expressly to be performed in Oklahoma at time of issuance, and solicited, written, and delivered outside Oklahoma at the time of issuance, no such authority shall be required of an insurer as to subsequent transactions in Oklahoma on account thereof, and the provisions of this Code shall not apply to such insurance or insurance coverage, except for the purpose of premium tax requirements.

Amended by Laws 1985, c. 328, § 5, emerg. eff. July 29, 1985.

§36606.1. Certain foreign insurers may become domestic insurers Requirements and procedures.

A. 1. Any insurer which is organized under the laws of any other state and is admitted to do business in this state for the purpose of transacting insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by designating its principal place of business at a location in this state, provided, the Insurance Commissioner approves the insurer's application for redomestication following a public hearing. Said domestic insurer will be entitled to like certificates and licenses to transact business in this state and shall be subject to the authority and jurisdiction of this state.

2. The Commissioner shall approve an insurer's application to redomesticate unless, after a public hearing thereon, he finds that: a. the insurer cannot comply with all the requirements of law relative to the organization and licensing of a domestic insurer,

b. after redomestication, the insurer would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed,

c. the effect of the redomestication would be substantially to lessen competition in insurance in this state or tend to create a monopoly therein,

d. the financial condition of the insurer is such as might jeopardize or prejudice the interest of its policyholders or the state and is not in the public interest, or

e. the competence, experience and integrity of those persons who control the operation of the insurer are such that it would not be in the interest of the policyholders, the public or the state to permit the redomestication.

3. The insurer's application to redomesticate shall contain information acceptable to the Commissioner concerning its financial condition, its plan of operation for the succeeding three (3) years, and information concerning the competence, experience and integrity of those persons who control the operation of the insurer.

4. The application for redomestication shall be deemed approved unless the Commissioner has, within thirty (30) days after the conclusion of the hearing, entered his order disapproving the redomestication.

B. Any domestic insurer may, upon the approval of the Insurance Commissioner, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer, shall cease to be a domestic insurer, and shall be admitted to this state if qualified as a foreign insurer. The Commissioner shall approve any such proposed transfer unless he shall determine such transfer is not in the interest of the policyholders of this state.

C. The certificate of authority, agents appointments and licenses, rates, and other items which the Insurance Commissioner allows, in his discretion, which are in existence at the time any insurer licensed to transact the business of insurance in this state transfers its corporate domicile to this or any other state by merger, consolidation or any other lawful method shall continue in full force and effect upon such transfer if such insurer remains duly qualified to transact the business of insurance in this state. All outstanding policies of any transferring insurer shall remain in full force and effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the Commissioner. Every transferring insurer shall file new policy forms with the Commissioner on or before the effective date of the transfer, but may use existing policy forms with appropriate endorsements if allowed by, and under such conditions as approved by, the Commissioner. However, every such transferring insurer shall notify the Commissioner of the details of the proposed transfer, and shall file promptly, any resulting amendments to corporate documents required to be filed with the Commissioner.

D. The Insurance Commissioner may promulgate rules and regulations to carry out the purposes of this section.

§36607. General qualifications to transact insurance.

A. To qualify for and hold authority to transact insurance in Oklahoma an insurer must be otherwise in compliance with the provisions of this Code and with its charter powers, and must be an incorporated stock insurer, an incorporated mutual insurer, a mutual benefit association, a nonprofit hospital service and medical indemnity corporation, a farmers mutual fire insurance association, a Lloyd's association or a reciprocal insurer, of the same general type as may be formed as a domestic insurer under this Code; except, that no foreign or alien insurer shall be authorized to transact insurance in Oklahoma which does not maintain reserves as required by Article 15 (Assets and Liabilities) applicable to the kind or kinds of insurance transacted by such insurer.

B. No certificate of authority or license to transact any kind of insurance business in this state shall be issued, renewed or continued in effect, to any domestic, foreign or alien insurance company or other insurance entity which is owned or financially controlled in whole or in part by another state of the United States, or by a foreign government, or by any political subdivision of either, or which is an agency of any such state, government or subdivision.

Laws 1957, p. 231, § 607.

§36-607.1. Certain entities considered insurers.

Notwithstanding any other provision of law, an entity organized pursuant to the Interlocal Cooperation Act, Section 1001 et seq. of Title 74 of the Oklahoma Statutes, for the purpose of transacting insurance shall be considered an insurer at such time that the entity has within a twelve-month period received aggregate premiums of One Million Dollars ($1,000,000.00) for all kinds of insurance that the entity transacts. Such an entity shall be eligible to qualify for and hold a certificate of authority to transact insurance in this state.

Added by Laws 1994, c. 214, § 1, eff. July 1, 1994.

§36608. Workers' compensation insurance.

A casualty insurer shall not be authorized to transact workers' compensation insurance in this state without first complying with the applicable provisions of Title 85, Oklahoma Statutes 1951, as amended.

Added by Laws 1957, p. 231, § 608, operative July 1, 1957.

§36609. Kinds of insurance an insurer may transact.

An insurer which otherwise qualifies therefor may be authorized to transact any one kind or combination of kinds of insurance as defined in Section 701 et seq. of this title, except:

1. A life insurer shall not be authorized to transact any other kind of insurance except accident and health and workers' compensation and employer liability equivalent insurance if otherwise qualified to do so on or after September 1, 1994, pursuant to the provisions of Section 65 of Title 85 of the Oklahoma Statutes or if immediately prior to the effective date of this Code any life insurer lawfully held a subsisting certificate of authority granting it the right to transact in Oklahoma additional kinds of insurance other than accident and health, so long as the insurer is otherwise in compliance with this Code the Insurance Commissioner shall continue to authorize such insurer to transact the same kinds of insurance as those specified in such prior certificate of authority;

2. A reciprocal insurer shall not transact life insurance;

3. A Lloyd's insurer shall not transact life insurance;

4. A title insurer shall be a stock insurer and shall not transact any other kind of insurance; and

5. No insurer shall issue for delivery or deliver in this state any contract of insurance which imposes contingent or assessment liability upon a resident of this state.

Added by Laws 1957, p. 231, § 609. Amended by Laws 1981, c. 112, § 1; Laws 1986, c. 251, § 4, eff. Nov. 1, 1986; Laws 1995, c. 355, § 1, eff. July 1, 1995.

§36610. Capital funds or minimum surplus required.

A. To qualify for authority to incorporate an insurance company or to transact any one or more kinds of insurance an insurer shall possess and maintain, after the effective date of this act, surplus in regard to policyholders, which is defined as the aggregate of the capital and surplus, in an amount not less than One Million Five Hundred Thousand Dollars ($1,500,000.00).

B. Any domestic insurer lawfully authorized to transact the business of insurance in Oklahoma immediately prior to the effective date of this act shall not be required to increase its capital or surplus to meet increased requirements of this act, provided, however, that in no event shall such insurer reduce its capital or surplus below the figure required of such insurer on October 31, 2002.

C. Wherever the language paidin capital, capital, capital stock or a similar term (if a stock company) or surplus, expendable surplus or a similar term (if a mutual or reciprocal insurer) is used elsewhere in this code, the term surplus in regard to policyholders may be used interchangeably when applicable.

Added by Laws 1957, p. 232, § 610, operative July 1, 1957. Amended by Laws 1961, p. 266, § 1, emerg. eff. March 29, 1961; Laws 1967, c. 231, § 1, emerg. eff. May 4, 1967; Laws 1980, c. 185, § 1, eff. Oct. 1, 1980; Laws 2002, c. 307, § 7, eff. Nov. 1, 2002.

§36-611. Repealed by Laws 2003, c. 150, § 8, eff. Nov. 1, 2003.

§36612. Additional kinds of insurance Requirments.

A. An insurance company which incorporates or is authorized initially to transact the business of insurance in Oklahoma after the effective date of this act may transact all kinds of insurance with no additional capital or surplus requirements.

B. An insurance company which incorporated or was initially authorized to transact the business of insurance in Oklahoma prior to the effective date of this act and which is otherwise qualified therefor may be authorized to transact combinations of kinds of insurance (other than the life and accident and health combination shown in Section 610 of this article) while possessing and maintaining thereafter additional surplus in regard to policyholders not less in amount than that determined in subsection C of this section.

C. For any lawful combination add One Hundred Thousand Dollars ($100,000.00) for each additional kind of insurance included in the combination, to the amount required under Section 610 of this article for that one kind of insurance in the combination for which the largest amount is required under said Section 610, except:

1. Vehicle and accident and health insurance may be combined with casualty, and in any combination including casualty, without funds in addition to those required because of casualty.

2. An insurer, if otherwise qualified therefor, may be authorized to transact all kinds of insurance except life and title insurance.

3. The amount of such surplus in regard to policyholders shall not in any event be less than would be required if the insurer proposed to transact in Oklahoma all those kinds of insurance which it is transacting elsewhere.

Laws 1957, p. 233, § 612; Laws 1967, c. 231, § 2, emerg. eff. May 4, 1967; Laws 1980, c. 185, § 3, eff. Oct. 1, 1980.

§36612.1. Kinds of insurance; requirements.

No insurer organized or authorized to write or issue noncancelable or guaranteed renewable accident and health policies in any state shall be, or continue to be, licensed to do business in this state unless the insurer possesses and maintains a surplus as regards policyholders in excess of Two Million Dollars ($2,000,000.00). Insurers licensed in this state on or before November 1, 1984, may maintain no less than One Million Dollars ($1,000,000.00) surplus as regards policyholders.

Amended by Laws 1984, c. 149, § 3, eff. Nov. 1, 1984.

§36612.2. Workers' compensation insurance Required capital and surplus.

After November 1, 1987, no insurer who requests to write workers' compensation insurance in this state shall be permitted to transact the business of workers' compensation insurance in this state unless the insurer possesses and maintains a surplus as regards policyholders, as defined in Section 610 of Title 36 of the Oklahoma Statutes, in excess of Five Million Dollars ($5,000,000.00). Should the surplus as regards policyholders fall below Five Million Dollars ($5,000,000.00), the insurer shall not be permitted to write any additional workers' compensation insurance until the surplus meets the statutory requirements as established in this section.

Added by Laws 1987, c. 175, § 4, eff. Nov. 1, 1987.

§36-613. Deposit requirements.

A. Except as provided in subsection C of this section, any insurer that incorporates or is authorized initially to transact the business of insurance in Oklahoma after the effective date of this act shall not be issued a certificate of authority by the Insurance Commissioner unless it has deposited in trust with the State Treasurer through the Insurance Commissioner's office cash or securities eligible for the investment of capital funds of domestic insurers under this Code in an amount not less than Three Hundred Thousand Dollars ($300,000.00). The Insurance Commissioner may require a greater amount to be deposited in trust if the Insurance Commissioner finds that a greater amount is warranted for the protection of the policyholders of the insurer pursuant to rules promulgated by the Insurance Commissioner. Any amount over Three Hundred Thousand Dollars ($300,000.00) must be documented and reasons stated by the Commissioner in writing for the excess deposit amount. The Commissioner will annually review those insurers with deposits above Three Hundred Thousand Dollars ($300,000.00) to determine whether such additional deposits remain justified.

B. The Insurance Commissioner shall not issue a certificate of authority to any insurer that incorporated or was initially authorized to transact the business of insurance in Oklahoma prior to the effective date of this act unless it has deposited in trust with the State Treasurer through the Insurance Commissioner's office cash or securities eligible for the investment of capital funds of domestic insurers under this Code in an amount not less than the surplus in regard to policyholders, or net admitted assets (if a Lloyd's association) required pursuant to this Code to be maintained for authority to transact the kinds of insurance to be transacted, except that in the case of life and/or accident and health insurers the deposit shall be in the amount of One Hundred Thousand Dollars ($100,000.00).

C. 1. As to domestic title insurers, the deposit shall be as required by Article 50 (Title Insurers).

2. As to foreign insurers, in lieu of such deposit or part thereof in this state, the Insurance Commissioner may accept the current certificate in proper form of the public official having supervision over insurers in any other state to the effect that a like deposit or part thereof by such insurer is being maintained in public custody in such state in trust for the purpose, among other reasonable purposes, of protection of all the insurer's policyholders or of all its policyholders and creditors.

3. As to alien insurers, other than title insurers, in lieu of such deposit or part thereof in this state, the Insurance Commissioner may accept the certificate of the official having supervision over insurance of another state in the United States, given under his hand and seal, that the insurer maintains within the United States by way of deposits with public depositaries, or in trust institutions within the United States approved by such official, assets available for discharge of its United States insurance obligations, which assets shall be in amount not less than the outstanding liabilities of the insurer arising out of its insurance transactions in the United States, together with the largest deposit required by this Code to be made in this state by any type of domestic insurer transacting like kinds of insurance.

D. Any securities deposited by insurers shall be issued to the Insurance Commissioner and the insurer and shall not be released by any company holding such security without the signatures of the Insurance Commissioner and the authorized insurer's personnel. Failure of any company holding such security to comply with this subsection may result, after hearing by the proper licensing authority, in a fine of not more than Twenty-five Thousand Dollars ($25,000.00) per occurrence.

Added by Laws 1957, p. 233, § 613. Amended by Laws 1980, c. 185, § 4, eff. Oct. 1, 1980; Laws 1986, c. 251, § 5, eff. Nov. 1, 1986; Laws 2000, c. 353, § 2, eff. Nov. 1, 2000.

§36613.1. Surety bond or other security arrangement required.

Any insurance company transacting the business of property and casualty insurance in this state shall not be issued a new or renewal certificate of approval unless the company has provided a corporate surety bond or approved alternative security arrangement in an amount determined by the State Insurance Commissioner to be sufficient to provide for the return of unearned premiums if a policy is canceled during the term thereof by an insurance company. The State Insurance Commissioner shall promulgate rules and regulations to implement and carry out the provisions of this section.

Added by Laws 1986, c. 134, § 1, emerg. eff. April 17, 1986.

§36-615. Repealed by Laws 2002, c. 307, § 36, eff. Nov. 1, 2002.

§36-615.1. Application to transact insurance.

Unless otherwise instructed by the Insurance Commissioner, an applicant requesting to be admitted to transact insurance in this state shall follow the instructions outlined in the National Association of Insurance Commissioners (NAIC) Uniform Certificate of Authority Application (UCAA) instructions.

Added by Laws 2002, c. 307, § 8, eff. Nov. 1, 2002.

§36-615.2. Biographical affidavit.

All domestic insurers and health maintenance organizations are required to keep biographical information current. Domestic insurers and health maintenance organizations are required to provide Biographical Affidavits within thirty (30) days of any change in officers, directors, key management or any person acquiring ten percent (10%) or more controlling interest in a domestic insurer. The information shall be on the National Association of Insurance Commissioners (NAIC) UCAA Biographical Affidavit Form. The Biographical Affidavit is to be certified by an independent third party acceptable to the Insurance Commissioner that has conducted a comprehensive review of the background of the applicant and has indicated that the Biographical Affidavit has no significantly inaccurate or conflicting information and is accepted as the Business Character Report. As used in this section, "independent third party" is one that has no affiliation with the applicant and is in the business of providing background checks or investigations. The Business Character Report must be current and shall not be older than one (1) year.

Added by Laws 2004, c. 274, § 3, eff. July 1, 2004. Amended by Laws 2005, c. 129, § 3, eff. Nov. 1, 2005.

§36616. Issuance or refusal of certificate.

A. If upon completion of application the Insurance Commissioner finds that the insurer has met the requirements for and is entitled thereto under this Code, he shall issue to the insurer a proper certificate of authority; if he does not so find, the Insurance Commissioner shall issue his order refusing such certificate. The Insurance Commissioner shall not issue a certificate of authority to any domestic insurer incorporated after January 1, 1970, unless each of the shareholders of the common capital stock thereof is entitled at the shareholders meetings to one vote for each share standing in his name in the books of the corporation. The Insurance Commissioner shall act upon an application for a certificate of authority within thirty (30) days after its completion.

B. The certificate, if issued, shall specify the kind or kinds of insurance the insurer is authorized to transact in Oklahoma. At the insurer's request, the Insurance Commissioner may issue a certificate of authority limited to particular types of insurance included within a kind of insurance as defined in this code.

Laws 1957, p. 234, § 616; Laws 1969, c. 289, § 1; Laws 1970, c. 109, § 1, emerg. eff. April 1, 1970.

§36617. Renewal and amendment of certificate.

A. All certificates of authority shall, beginning November 1, 2002, be perpetual and automatically renewed as of March 1 of each year, unless the insurer fails to qualify for renewal pursuant to the requirements of the Insurance Code.

B. The Insurance Commissioner may amend a certificate of authority at any time to accord with changes in the insurer's charter or insuring powers.

Added by Laws 1957, p. 235, § 617, operative July 1, 1957. Amended by Laws 2002, c. 307, § 9, eff. Nov. 1, 2002.

§36618. Mandatory revocation or suspension.

The Insurance Commissioner shall refuse to renew or shall revoke or suspend an insurer's certificate of authority:

1. If such action is required by any provision of this Code, or

2. If the insurer no longer meets the requirements for the authority originally granted, on account of deficiency in assets or otherwise.

Laws 1957, p. 235, § 618.

§36-619. Discretionary revocation or suspension; civil fines.

A. The Insurance Commissioner may after opportunity for a hearing refuse to renew, or may revoke or suspend an insurer's certificate of authority, in addition to other grounds in this Code, if the insurer:

1. Violates any provision of this Code other than those as to which refusal, suspension, or revocation is mandatory;

2. Knowingly fails to comply with any lawful rule or order of the Insurance Commissioner;

3. Is found by the Insurance Commissioner to be in unsound condition or in such condition as to render its further transaction of insurance in this state hazardous to its policyholders or to the people of this state;

4. Without reasonable cause compels claimants under its policies to accept less than the amount due them or to bring suit against it to secure full payment;

5. Refuses to be examined or to produce its accounts, records, and files for examination by the Insurance Commissioner when required;

6. Fails to pay any final judgment rendered against it in this state within thirty (30) days after the judgment becomes final; or

7. Is affiliated with and under the same general management or interlocking directorate or ownership as another insurer which transacts direct insurance in this state without having a certificate of authority therefor, except as permitted to a surplus line insurer under Article 11 of this title (Unauthorized Insurers).

B. In addition to or in lieu of any applicable revocation or suspension of an insurer's certificate of authority, any insurer who knowingly and willfully violates this Code may be subject to a civil penalty of not more than Five Thousand Dollars ($5,000.00) for each occurrence.

C. In addition to or in lieu of any sanction, the Commissioner may require an insurer to restrict its insurance writings, obtain additional contributions to surplus, withdraw from the state, reinsure all or part of its business, increase capital, surplus, deposits or any other account for the security of policyholders or creditors, or provide independent actuarial review.

Added by Laws 1957, p. 235, § 619. Amended by Laws 1980, c. 182, § 1, eff. Oct. 1, 1980; Laws 1986, c. 251, § 6, eff. Nov. 1, 1986; Laws 1997, c. 418, § 25, eff. Nov. 1, 1997.

§36619.1. Availability of coverage without regard to geographic location.

All insurers, as a condition of their authority to transact insurance in this state, shall make available all of the kinds of insurance coverage that they are transacting in this state to all Oklahoma residents, without regard to geographic location, but subject to the insurers' underwriting standards.

Added by Laws 1986, c. 134, § 2, emerg. eff. April 17, 1986.

§36-619.2. Workers' Compensation Fraud Unit of Office of Attorney General - Notification of certain violations.

Any insurer which has reason to believe that a person has engaged in or is engaging in an act or practice that violates any workers' compensation fraud statute or administrative rule of this state shall immediately notify the Workers' Compensation Fraud Unit of the Office of the Attorney General.

Added by Laws 1993, c. 349, § 30, eff. Sept. 1, 1993.

§36620. Name of insurer.

A. No insurer shall be authorized to transact insurance in Oklahoma which has or uses a name so similar to that of any insurer already so authorized as to cause uncertainty or confusion; except, that in case of conflict of names between two insurers the Insurance Commissioner may permit or require the newlyauthorized insurer to use in Oklahoma such supplementation or modification of its name as may reasonably be necessary to avoid such conflict.

B. No insurer shall be authorized to transact insurance in Oklahoma which has or uses a name which tends to deceive or mislead as to the type of organization of the insurer.

Laws 1957, p. 235, § 620.

§36-621. Service of legal process on foreign or alien insurers.

A. Each authorized foreign or alien insurer shall appoint the Insurance Commissioner as its agent to receive service of legal process, other than a subpoena, issued against it in this state upon any cause of action arising from its transaction of business in this state. The appointment shall be irrevocable, shall bind any successor and shall remain in effect as long as there is in force in this state any contract made by the insurer or obligations arising therefrom.

B. Service of such process against a foreign or alien insurer shall be made only by service of process upon the Insurance Commissioner. Service of process against a domestic insurer may be made upon the insurer in the manner provided by laws applying to business entities generally, or upon the insurer's attorneyinfact if a reciprocal insurer or a Lloyds association.

C. Each such insurer at time of application for a certificate of authority shall file with the Insurance Commissioner designation of the name and address of the person to whom process against it served upon the Insurance Commissioner is to be forwarded. The insurer may change such designation by a new filing.

Added by Laws 1957, p. 235, § 621. Amended by Laws 1997, c. 418, § 26, eff. Nov. 1, 1997; Laws 1997, c. 418, § 26, eff. Nov. 1, 1997.

§36-622. Manner of service of process.

A. Triplicate copies of legal process against an insurer for whom the Insurance Commissioner is agent shall be served upon the Commissioner at the principal offices of the Insurance Department. When legal process against an insurer for whom the Insurance Commissioner is agent is issued, it shall be served in triplicate by any manner now provided by law or in lieu thereof by mailing triplicate copies of such legal process in the United States mails with postage prepaid to the Insurance Commissioner with return receipt requested, in which event service shall be sufficient upon showing of proof of mailing to the Commissioner with the return receipt attached. At the time of service the plaintiff shall pay to the Insurance Commissioner Twenty Dollars ($20.00), taxable as costs in the action. Upon receiving service, the Insurance Commissioner shall promptly forward a copy thereof by mail with return receipt requested to the person last so designated by the insurer to receive the same.

B. Process served upon the Insurance Commissioner and copy thereof forwarded as provided in this section shall constitute service upon the insurer.

C. Any monies received by the Insurance Commissioner pursuant to subsection A of this section shall be deposited with the State Treasurer, who shall place the same to the credit of the State Insurance Commissioner Revolving Fund.

Added by Laws 1957, p. 236, § 622. Amended by Laws 1983, c. 68, § 6, eff. Nov. 1, 1983; Laws 1984, c. 215, § 3, operative June 30, 1984; Laws 1986, c. 251, § 7, emerg. eff. June 13, 1986; Laws 1997, c. 418, § 27, eff. Nov. 1, 1997.

§36-623. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-624. Report of premiums, fees and taxes - Payment - Penalties.

A. Every insurance company, copartnership, insurance association, interinsurance exchange, person, insurer, nonprofit hospital service and medical indemnity corporation, or health maintenance organization, doing business in this state in the execution or exchange of contracts of insurance, indemnity or health maintenance services, or as an insurance company of any nature or character whatsoever, hereinafter referred to in this article as an insurance company, or company, shall, annually, on or before the first day of March, report under oath of the president or secretary or other chief officer of such company to the Insurance Commissioner, the total amount of direct written premiums, membership, application, policy and/or registration fees charged during the preceding calendar year, or since the last return of such direct written premiums, membership, application, policy and/or registration fees was made by such company, from insurance of every kind upon persons or on the lives of persons resident in this state, or upon real and personal property located within this state, and/or upon any other risks insured within this state, provided, that with respect to the tax payable annually, considerations received for annuity contracts and payments received by a health maintenance organization from the Secretary of Health and Human Services pursuant to a contract issued under the provisions of 42 U.S.C., Section 1395mm(g) shall no longer be deemed to be premiums for insurance and shall no longer be subject to the tax imposed by this section. Every such company shall, at the same time, pay to the Insurance Commissioner:

1. An annual license fee as prescribed by Section 321 of this title; and

2. An annual tax on all of the direct written premiums after all returned premiums are deducted, and on all membership, application, policy and/or registration fees, installment and/or finance fees or charges collected thereby, for the privileges of having written, continued and/or serviced insurance on lives, property and/or other risks in this state and of having made and serviced investments therein during the then expiring license year except premiums or fees paid by any county, city, town or school district funds or by their duly constituted authorities performing a public service organized pursuant to Sections 1001 through 1008 of Title 74 of the Oklahoma Statutes, or Sections 176 through 180.4 of Title 60 of the Oklahoma Statutes. Provided, no deduction shall be made from premiums for dividends paid to policyholders. The rate of taxation for all entities subject to the tax shall be two and twentyfive onehundredths percent (2.25%). If any insurance company or other entity liable for the taxes levied pursuant to the provisions of this section fails to remit such taxes in a timely manner, it shall remain liable therefor together with interest thereon at an annual rate equal to the average United States Treasury Bill rate of the preceding calendar year as certified by the State Treasurer on the first regular business day in January of each year, plus four percentage points.

B. For all insurance companies or other entities taxed pursuant to this section, the annual license fee and tax and all required membership, application, policy, registration, and agent appointment fees shall be in lieu of all other state taxes or fees, except those taxes and fees provided for in the Insurance Code, and the taxes and fees of any subdivision or municipality of the state, except ad valorem taxes and the tax required to be paid pursuant to Section 50001 of Title 68 of the Oklahoma Statutes. Any company, except health maintenance organizations, failing to make such returns and payments promptly and correctly shall forfeit and pay to the Insurance Commissioner, in addition to the amount of the taxes and fees and interest, the sum of Five Hundred Dollars ($500.00) or an amount equal to one percent (1%) of the unpaid amount, whichever is greater; and the company so failing or neglecting for sixty (60) days shall thereafter be debarred from transacting any business of insurance in this state until the taxes, fees and penalties are fully paid, and the Insurance Commissioner shall revoke the license or certificate of authority granted to the agent or agents of that company to transact business in this state. Provided, that when any such insurance company, copartnership, insurance association, interinsurance exchange, person, insurer, or nonprofit hospital service and indemnity corporation, applies for the first time for a license to do business in Oklahoma, it shall, at the time of making such application, pay a license fee as prescribed by Section 1425 of this title, and, on or before the first day of March, following, pay the premium tax, membership, application, policy, registration, and agent appointment fees, as hereinbefore provided. Such license fee, tax and membership, application, policy, registration, and appointment fees shall be in lieu of all other state taxes or fees, except those taxes and fees provided for in the Insurance Code, and the taxes and fees of any subdivision or municipality of the state, except ad valorem taxes and the tax required to be paid pursuant to Section 50001 of Title 68 of the Oklahoma Statutes.

C. Any health maintenance organization failing to file premium tax returns and payments promptly and correctly shall forfeit and pay to the Insurance Commissioner, in addition to the amount of the taxes, the sum of Five Hundred Dollars ($500.00) or an amount equal to one percent (1%) of the unpaid amount, whichever is greater. Any health maintenance organization failing or neglecting to pay the tax and penalty shall be debarred from operating in this state and the Insurance Commissioner shall revoke the license of the health maintenance organization, until such taxes and penalties are fully paid.

Added by Laws 1957, p. 236, § 624. Amended by Laws 1965, c. 60, § 10, eff. July 1, 1965; Laws 1965, c. 194, § 1; Laws 1979, c. 39, § 1, eff. July 1, 1979; Laws 1982, c. 138, § 1, emerg. eff. April 9, 1982; Laws 1985, c. 179, § 1, emerg. eff. June 21, 1985; Laws 1986, c. 251, § 8, eff. Nov. 1, 1986; Laws 1987, c. 175, § 5, eff. Nov. 1, 1987; Laws 1988, c. 83, § 5, emerg. eff. March 25, 1988; Laws 1989, c. 227, § 1; Laws 1989, c. 373, § 17, operative July 1, 1989; Laws 1990, c. 227, § 1, emerg. eff. May 18, 1990; Laws 1997, c. 418, § 28, eff. Nov. 1, 1997; Laws 2001, c. 363, § 6, eff. July 1, 2001; Laws 2003, c. 197, § 55, eff. Nov. 1, 2003.

§36624.1. Tax credit for taxes paid by domestic insurer in foreign state.

If, by the laws of any state other than this state, or by the action of any public official of another state, any insurer or company, as defined in Section 624 of this Code, organized or domiciled in this state, shall be required to pay taxes for the privilege of doing business in such other state, and such amounts are imposed or assessed so that the taxes which are or would be imposed against Oklahoma domestic insurance companies are greater than those taxes required of insurers organized or domiciled in such other states, to the extent such amounts are legally due to such other states, an insurer or company organized or domiciled in this state may claim a credit against the tax payable pursuant to this article for any calendar year prior to 1989 of a sum not to exceed one hundred percent (100%) of such amount. Provided, for the tax attributed to premiums collected prior to July 1, 1988, the credit shall not be greater than the tax payable for such premiums; for the tax attributed to premiums collected on or after July 1, 1988 through December 31, 1988, the credit authorized by this section and the investment credit authorized by Section 625 of this title shall not reduce the tax payable for such premiums to less than one percent (1%).

Beginning with the taxes payable for calendar year 1989, the premium tax levied by Section 624 of this title shall not be reduced by the credit provided for in this section.

Added by Laws 1985, c. 328, § 6, emerg. eff. July 29, 1985. Amended by Laws 1988, c. 83, § 6, emerg. eff. March 25, 1988.

§36-624.2. Refund of erroneously paid premium tax - Filing - Demand for hearing.

A. Any taxpayer who has paid to the State of Oklahoma, through error of fact, or computation, or misinterpretation of law, any premium tax collected by the Oklahoma Insurance Commissioner may, as hereinafter provided, be refunded the amount of such tax so erroneously paid, without interest.

B. Any taxpayer who has so paid any such premium tax may, within three (3) years from the date of payment thereof, file with the Insurance Commissioner a verified claim for refund of such tax so erroneously paid. The Insurance Commissioner may accept an amended premium report or return as a verified claim for refund if the amended report or return establishes a liability less than the original report or return previously filed.

C. Said claim so filed with the Insurance Commissioner, except for an amended report or return, shall specify the name of the taxpayer, certificate of authority or license number of the taxpayer, the time when and period for which said premium tax was paid, the nature and kind of premium tax so paid, the amount of the premium tax which said taxpayer claimed was erroneously paid, the grounds upon which a refund is sought, and such other information or data relative to such payment as may be necessary to an adjustment thereof by the Insurance Commissioner. It shall be the duty of the Insurance Commissioner to determine what amount of refund, if any, is due as soon as practicable, but no later than ninety (90) days after such claim has been filed, and advise the taxpayer about the correctness of the taxpayer's claim, and the claim for refund shall be approved or denied by written notice to the taxpayer.

D. If the claim for refund is denied, the taxpayer may file a demand for hearing with the Insurance Commissioner. The demand for hearing must be filed on or before the thirtieth day after the date the notice of denial was mailed. If the taxpayer fails to file a demand for hearing, the claim for refund shall be barred.

E. Upon the taxpayer's timely filing of a demand for hearing, the Insurance Commissioner shall set a date for hearing upon the claim for refund which date shall not be later than sixty (60) days from the date the demand for hearing was mailed. The taxpayer shall be notified of the time and place of the hearing. The hearing may be held after the sixty-day period provided by this subsection upon agreement of the taxpayer.

Added by Laws 2003, c. 124, § 1, eff. Nov. 1, 2003.

§36-624.3. Refund of adverse economically targeted and home office credit deductions.

A. As used in this section:

1. "Economically targeted credits" means any credit against the insurance premium tax other than the home office credits;

2. "Home office credits" means the credits against insurance premium tax authorized pursuant to Section 625.1 of Title 36 of the Oklahoma Statutes;

3. "Insurance premium tax" means those levies imposed pursuant to Sections 624 and 628 of Title 36 of the Oklahoma Statutes; and

4. "Insurance premium tax liabilities" means the total liability of any insurance company created by the insurance premium tax.

B. Any taxpayer adversely affected by a requirement of the Oklahoma Insurance Department for deducting home office credits after the deduction of economically targeted credits in computation of the taxpayer's insurance premium tax liabilities for the period July 2003, through June 2006, shall be granted a refund, pursuant to the provisions of Section 624.2 of Title 36 of the Oklahoma Statutes, for the difference between the insurance premium tax liability as it would have been computed had the home office credit been deducted prior to economically targeted credits and the insurance premium tax liability as it was actually computed for such periods.

C. The provisions of this section shall be deemed sufficient grounds for the granting of a refund claim pursuant to subsection C of Section 624.2 of Title 36 of the Oklahoma Statutes.

D. No refund otherwise payable pursuant to the provisions of this section shall be paid to a claimant prior to July 1, 2007.

E. Refunds paid on or after July 1, 2007, pursuant to the provisions of this section shall only be paid from those insurance premium taxes and fees that would be apportioned to the General Revenue Fund of the State Treasury. No refund otherwise payable pursuant to the provisions of this section shall be paid from insurance premium taxes or fees that would be apportioned to the Oklahoma Firefighters Pension and Retirement Fund, the Oklahoma Police Pension and Retirement System or the Law Enforcement Retirement Fund.

F. Any and all premium tax credits to be utilized or recovered in a subsequent year are fully admitted as an asset to the insurer owning or generating said credits.

Added by Laws 2005, c. 381, § 3, eff. July 1, 2006.

§36625. Credit against tax by investment in Oklahoma securities.

A. If the annual statement of any insurance company or other entity taxed pursuant to the provisions of Section 624 of this title covering the period of time from January 1, 1988 through June 30, 1988, shows it to have investments at the close of said period of time in Oklahoma securities, as hereinafter defined, of as much as two percent (2%) but less than twelve percent (12%) of its admitted assets, it will be entitled to a credit on the premium tax levied on premiums collected during said period of time by paragraph 2 of Section 624 of this article so as to reduce the same to a tax of two and threefourths percent (2 3/4%); if said investments are as much as twelve percent (12%) but less than fourteen percent (14%) of said assets its annual premium tax shall be reduced to a tax of two and onehalf percent (2 1/2%); if said investments are as much as fourteen percent (14%) but less than sixteen percent (16%) of said assets its annual premium tax shall be reduced to a tax of two and onefourth percent (2 1/4%); if said investments are as much as sixteen percent (16%) but less than eighteen percent (18%) of said assets its annual premium tax shall be reduced to a tax of two percent (2%); if said investments are as much as eighteen percent (18%) but less than twenty percent (20%) of said assets its annual premium tax shall be reduced to a tax of one and threefourths percent (1 3/4%); if said investments are as much as twenty percent (20%) but less than twentytwo percent (22%) of said assets its annual premium tax shall be reduced to a tax of one and onehalf percent (1 1/2%); if said investments are as much as twentytwo percent (22%) but less than twentyfour percent (24%) of said assets its annual premium tax shall be reduced to a tax of one and onefourth percent (1 1/4%); if said investments are as much as twentyfour percent (24%) but less than twentysix percent (26%) of said assets its annual premium tax shall be reduced to a tax of one percent (1%); if said investments are as much as twentysix percent (26%) percent but less than twentyeight percent (28%) of said assets its annual premium tax shall be reduced to a tax of threefourths of one percent (3/4 of 1%); if said investments are as much as twentyeight percent (28%) but less than thirty percent (30%) of said assets its annual premium tax shall be reduced to a tax of onehalf of one percent (1/2 of 1%); if said investments are as much as thirty percent (30%) of said assets its annual premium tax shall be reduced to no percent (0%).

B. If the annual statement of any insurance company or other entity taxed pursuant to the provisions of Section 624 of this title covering calendar year 1988 shows it to have investments in Oklahoma securities, as hereinafter defined, for the period of time beginning July 1, 1988 through December 31, 1988, of as much as two percent (2%) but less than twelve percent (12%) of its admitted assets, it will be entitled to a credit on the premium tax levied by paragraph 2 of Section 624 of this article so as to reduce the same to a tax of two and threefourths percent (2 3/4%); if said investments are as much as twelve percent (12%) but less than fourteen percent (14%) of said assets its annual premium tax shall be reduced to a tax of two and onehalf percent (2 1/2%); if said investments are as much as fourteen percent (14%) but less than sixteen percent (16%) of said assets its annual premium tax shall be reduced to a tax of two and onefourth percent (2 1/4%); if said investments are as much as sixteen percent (16%) but less than eighteen percent (18%) of said assets its annual premium tax shall be reduced to a tax of two percent (2%); if said investments are as much as eighteen percent (18%) but less than twenty percent (20%) of said assets its annual premium tax shall be reduced to a tax of one and threefourths percent (1 3/4%); if said investments are as much as twenty percent (20%) but less than twentytwo percent (22%) of said assets its annual premium tax shall be reduced to a tax of one and onehalf percent (1 1/2%); if said investments are as much as twentytwo percent (22%) but less than twentyfour percent (24%) of said assets its annual premium tax shall be reduced to a tax of one and onefourth percent (1 1/4%); if said investments are as much as twentyfour percent (24%) of said assets its annual premium tax shall be reduced to a tax of one percent (1%). The credits authorized by this subsection and the credits authorized by Section 624.1 of this title shall not reduce the premium tax rate for premiums collected on or after July 1, 1988 through December 31, 1988, of an insurance company or other entity subject to said tax to less than one percent (1%).

C. Beginning with the taxes payable for calendar year 1989, the premium tax levied by Section 624 of this title shall not be reduced by the credits for investment of assets provided for in this section.

D. Oklahoma securities as used in this section shall mean real estate in this state, bonds of the State of Oklahoma, bonds or interestbearing warrants of any county, city, town, school district or municipality or subdivision of the State of Oklahoma, notes or bonds secured by mortgages or other liens on real estate located in the State of Oklahoma, cash deposits in regularly established national or state banks, Federal Savings and Loan Associations, Federal Savings Banks, or any institution insured by either the Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance Corporation, in this state on the basis of the average monthly deposits throughout the calendar year, policy loans secured by the legal reserve on policies insuring residents of the State of Oklahoma, and any other Oklahoma property or securities in which by the laws of the State of Oklahoma such insurance companies may invest their funds.

Provided, that if any insurance company, copartnership, association, interinsurance exchange, person, insurer, nonprofit hospital service and medical indemnity corporation, or health maintenance organization secures such a credit prior to such a holding, it shall, within ninety (90) days after the mailing thereto by the Insurance Commissioner of a registered notice of said holding and the amount of said credit, pay said amount to the Insurance Commissioner, and if it fails to do so it shall be the duty of the Attorney General to institute proceedings in the name of the State of Oklahoma on the relation of the Insurance Commissioner in a court of competent jurisdiction to collect said amount.

Amended by Laws 1985, c. 179, § 2, emerg. eff. June 21, 1985; Laws 1988, c. 83, § 7, emerg. eff. March 25, 1988.

§36-625.1. Premium tax credit.

A. A foreign or alien insurer which is subject to the tax imposed by Section 624 of this title shall be entitled to a credit against said tax actually paid to and placed in the General Revenue Fund of the state, not including any of said tax monies placed in pension funds and not including any of said tax monies placed in escrow, if, during the year for which the tax is being assessed, the insurer or its affiliate maintained a regional home office in this state in a building owned or leased by the insurer. To receive a credit against the tax imposed for the year in which the regional home office was established, said office must have been maintained continuously from on or before August 1 of that year through the last day of the calendar year. For succeeding years, an insurer or its affiliate shall have maintained the regional home office continuously from the first day of the calendar year for which the tax is imposed through the last day of that calendar year. The credit shall be equal to the following percentages of the amount due after the credits authorized by Sections 624.1 and 625 of this title have been deducted:

1. Fifteen percent (15%), if there are more than two hundred full-time, year-round Oklahoma employees, but less than three hundred full-time, year-round Oklahoma employees;

2. Twenty-five percent (25%), if there are more than three hundred full-time, year-round Oklahoma employees, but less than four hundred full-time, year-round Oklahoma employees;

3. Thirty-five percent (35%), if there are more than four hundred full-time, year-round Oklahoma employees, but less than five hundred full-time, year-round Oklahoma employees; or

4. Fifty percent (50%), if there are five hundred or more full-time, year-round Oklahoma employees.

B. A domestic insurer with four hundred or more full-time, year-round Oklahoma employees which is subject to the tax imposed by Section 624 of this title shall be entitled to a credit against said tax actually paid to and placed in the General Revenue Fund of the state, not including any of said tax monies placed in pension funds and not including any of said tax monies placed in escrow, if, during the year previous to the year for which the tax is being assessed, the insurer or its affiliate maintained a regional home office in this state in a building owned or leased by the insurer and during the year for which the tax is being assessed, the insurer establishes its home office in this state in a building owned or leased by the insurer. To receive a credit against the tax imposed for the year in which the home office was established, said office must have been maintained continuously from on or before August 1 of that year through the last day of the calendar year. For succeeding years, an insurer shall have maintained the home office continuously from the first day of the calendar year for which the tax is imposed through the last day of that calendar year. Insurers who take action before August 1, 2000, to establish their home office in this state shall be entitled to a credit against the tax imposed on or after January 1, 2001, which shall be in addition to the credit the insurer is entitled to for that year. The credit shall be equal to the following percentages of the amount due after the credits authorized by Sections 624.1 and 625 of this title have been deducted:

1. Thirty-five percent (35%), if there are more than four hundred full-time, year-round Oklahoma employees, but less than five hundred full-time, year-round Oklahoma employees; or

2. Fifty percent (50%), if there are five hundred or more full-time, year-round Oklahoma employees.

C. A domestic insurer which is subject to the tax imposed by Section 624 of this title shall be entitled to a credit against said tax actually paid to and placed in the General Revenue Fund of the state, not including any of said tax monies placed in pension funds and not including any of said tax monies placed in escrow, if, during the year for which the tax is being assessed, the insurer maintained a regional home office in at least five (5) or more counties in this state in buildings owned or leased by the insurer. To receive a credit against the tax imposed for the year in which the regional home offices were established, said offices must have been maintained continuously from on or before August 1 of that year through the last day of the calendar year. For succeeding years, an insurer shall have maintained the regional home offices continuously from the first day of the calendar year for which the tax is imposed through the last day of that calendar year. The credit shall be equal to the percentage of the amount due after the credits authorized by Sections 624.1 and 625 of this title have been deducted as established in subsection A of this section.

D. Proof that an insurer qualifies for the credit authorized by this section shall be on forms prescribed by the Insurance Commissioner and shall be submitted to the Commissioner annually with the report which is filed pursuant to Section 624 of the Insurance Code.

E. The credit provided for in subsections A, B and C of this section shall be based on the total number of Oklahoma employees in the regional or home office when a group of insurers which are under common management and control maintain a regional home office or home office in this state in a building owned or leased by the group of insurers. The credit provided for in subsections A, B and C of this section may be allocated among the insurance company and the insurance company affiliates at the discretion of the insurance company on a per-insurance-company basis.

F. As used in this section:

1. "Regional home office" means an office transacting insurance, as defined in Section 105 of this title, and performing insurance company operations, which is defined as one or more or any combination of the following functions and services performed in connection with the development, sale, and administration of products giving rise to receipts subject to a premium tax on domestic and foreign insurance companies, or domestic or foreign health care insurance corporations: actuarial, medical, legal, investments, accounting, auditing, underwriting, policy issuance, information, policyholder services, premium collection, claims, advertising and publications, public relations, human resources, marketing, sales office staff, training of sales and service personnel, and clerical, managerial, and other support for any such functions or services;

2. "Common management and control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an insurer, whether through the ownership of voting securities, by contract, or otherwise, unless the power is executed by a person acting in an official capacity, performing duties imposed and exercising authority granted because of the person's position as an officer or employee of the insurer. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing twenty-five percent (25%) or more of the voting securities of the insurer;

3. "Oklahoma employees" means persons who are employed in Oklahoma after January 1, 2000, and who are common law employees of an insurance company or its affiliate. Oklahoma employees do not include independent contractors or any persons to the extent that the compensation of that person is based on commissions;

4. "Insurance company" means any entity subject to a premium tax on domestic and foreign insurance companies, or domestic or foreign health care insurance corporations, including the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or inter-insurance exchange under powers of attorney. A reciprocal and its attorney-in-fact shall be a single entity; and

5. "Home office" means the executive offices of an insurance company which is domiciled in this state.

G. Each insurer or insurance group requesting a credit under this section shall certify by affidavit, approved as to form by the Commissioner, that the insurer has met all of the qualifications required by this section and is authorized to a credit against the premium tax which actually shall be paid to, and placed in the General Revenue Fund of the state, exclusive of any amounts of the tax which shall be credited to pension funds pursuant to law and exclusive of any amounts which shall be placed into escrow. The Commissioner may do an examination for the sole purpose of certifying that all requirements of this section are being met by the insurer requesting to obtain any credits against premium tax.

H. For the fiscal year beginning July 1, 2006, and for each fiscal year thereafter, and notwithstanding any other provisions of Title 36 of the Oklahoma Statutes or any other provision of law governing the order in which the credit authorized by this section is to be deducted from the liability of the company claiming such credit to the contrary, the credit authorized by this section shall be deducted from the insurance premium tax liability of the company claiming such credit prior to the deduction of any other credits that may be claimed against such liability.

Added by Laws 1987, c. 137, § 1, eff. Nov. 1, 1987. Amended by Laws 2000, c. 346, § 1, eff. Jan. 1, 2001; Laws 2005, c. 381, § 2, eff. July 1, 2006.

§36625.2. Premium tax credit Applicable insurers.

A. The tax credits set forth in Section 1 of this act shall apply to insurers who take action after November 1, 1987, to:

1. Establish new regional home offices; or

2. Expand existing regional home offices, and hire new employees.

B. An insurer in either category of the requirements of paragraph A of this section must also meet the hiring minimum requirements for the applicable tax credit bracket in Section 1 of this act.

Added by Laws 1987, c. 137, § 2, eff. Nov. 1, 1987.

§36-625.3. Insurance companies - Home office - Tax credit.

An insurance company that has operated a regional home office in this state that has qualified for the tax credit provided for in Section 625.1 of Title 36 of the Oklahoma Statutes and that redomiciles and moves its home office to this state shall continue to receive such tax credit under the terms for which is was originally allowed.

Added by Laws 2000, c. 315, § 10, eff. July 1, 2000.

§36-625.4. Credit against premium tax.

A. One hundred percent (100%) of any assessment paid by an insurer under the Oklahoma Property and Casualty Insurance Guaranty Association Act shall be allowed to that insurer as a credit against its premium tax levied under Section 624 of Title 36 of the Oklahoma Statutes. The tax credit referred to in this section shall be allowed at a rate of ten percent (10%) per year for ten (10) successive years following the date of assessment and, at the option of the insurer, may be taken over an additional number of years. The balance of any tax credit not claimed in a particular year may be reflected in the books and records of the insurer as an admitted asset of the insurer for all purposes.

B. Available credit against premium tax allowed under subsection A of this section may be transferred or assigned among or between insurers if:

1. A merger, acquisition, or total assumption of reinsurance among or between the insurers occurs; or

2. The Insurance Commissioner by order approves the transfer or assignment.

Added by Laws 2002, c. 307, § 11, eff. Nov. 1, 2002.

§36626. Collection proceedings.

If any entity such as is referred to in this article fails to pay the annual premium tax levied by Section 624 of this Code, it shall be the duty of the Attorney General to institute proceedings in the name of the State of Oklahoma on the relation of the Insurance Commissioner in a court of competent jurisdiction to collect said amount.

Amended by Laws 1985, c. 179, § 3, emerg. eff. June 21, 1985.

§36-627. Repealed by Laws 2005, c. 129, § 26, eff. Nov. 1, 2005.

§36628. Retaliation.

When by or pursuant to the laws of any other state or foreign country any premium or income or other taxes, or any fees, fines, penalties, licenses, deposit requirements or other material obligations, prohibitions or restrictions are imposed upon Oklahoma insurers doing business, or that might seek to do business in such other state or country, or upon the agents of such insurers, which in the aggregate are in excess of such taxes, fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions or restrictions directly imposed upon similar insurers or agents of such other state or foreign country under the statutes of this state, so long as such laws continue in force or are so applied, the same obligations, prohibitions and restrictions of whatever kind shall be imposed upon similar insurers or agents of such other state or foreign country doing business in Oklahoma. All insurance companies of other nations shall be held to the same obligations and prohibitions that are imposed by the state where they have elected to make their deposit and establish their principal agency in the United States. Any tax, license or other obligation imposed by any city, county or other political subdivision of a state or foreign country on Oklahoma insurers or their agents shall be deemed to be imposed by such state or foreign country within the meaning of this section. The provisions of this section shall not apply to ad valorem taxes on real or personal property or to personal income taxes. Monies collected pursuant to this section shall be paid by the Insurance Commissioner to the State Treasury to the credit of the General Revenue Fund of the state.

Added by Laws 1957, p. 239, § 628. Amended by Laws 1990, c. 258, § 80, operative July 1, 1990; Laws 2001, c. 363, § 7, eff. July 1, 2001.

§36-629. Estimate and prepayment of premium tax - Crediting.

A. Every insurance company transacting business in this state whose premium tax, paid with respect to the previous calendar year's premiums, was One Thousand Dollars ($1,000.00) or more, shall make an estimate each year as provided herein and remit with each estimate a prepayment of its annual premium tax for the current calendar year equal to one-fourth (1/4) of its annual premium tax paid with respect to the previous calendar year's premiums. Estimates, with remittance, shall be made on or before April 15, June 15, September 15 and December 15, respectively.

B. All sums prepaid by an insurance company shall be allowed as credits against its annual return for premium tax payable on or before the first day of March. If sums prepaid exceed the insurance company's annual premium tax payable on or before the first day of March, the excess shall be refunded or shall be allowed as credits against subsequent prepayments of the tax as the insurance company shall elect on the annual return for premium tax filed for the year by the insurance company with respect to which such excess prepayments were made. Provided, in the case of an insurance company which has made prepayments of its premium tax in excess of its annual premium tax payable, the part of the excess prepayments as has not been credited against subsequent prepayments of the tax shall be refunded to the insurance company upon application within one hundred eighty (180) days after application is made.

Added by Laws 1971, c. 191, § 1, emerg. eff. June 4, 1971. Amended by Laws 1972, c. 59, § 1, emerg. eff. March 25, 1972; Laws 1982, c. 164, § 1, operative July 1, 1982; Laws 1988, c. 83, § 8, emerg. eff. March 25, 1988; Laws 1997, c. 418, § 29, eff. Nov. 1, 1997; Laws 2004, c. 274, § 4, eff. July 1, 2004; Laws 2005, c. 129, § 4, eff. Nov. 1, 2005.

§36-630. Failure to make payments timely - Penalties.

Failure to make such payments timely shall subject the insurance company to a penalty of ten percent (10%) of the tax due and said tax and penalty shall be further subject to interest at the rate of six percent (6%) per annum, from the date said payment should have been paid, until the tax, penalty and interest are paid.

Added by Laws 1971, c. 191, § 2, emerg. eff. June 4, 1971. Amended by Laws 2004, c. 274, § 5, eff. July 1, 2004.

§36-631. Deposit of premium tax - Payments to Medicaid Contingency Revolving Fund - Transfer of funds received from tax protest litigation.

A. Said premium tax as collected shall be deposited by the thirtieth day of the month of receipt to the credit of the General Revenue Fund subject only to the allocations thereof as otherwise provided by law.

B. That portion of premium tax assessed on the premiums of Medicaid recipients collected from the University of Oklahoma Managed Care Plan sponsored by the University of Oklahoma Health Sciences Center and from qualified health plans that contract with the Oklahoma Health Care Authority to provide managed care to participants in the State Medicaid program, as provided in Section 624 of this title, shall be paid by the thirtieth day of the month of receipt to the credit of the Medicaid Contingency Revolving Fund, created in Section 1010.8 of Title 56 of the Oklahoma Statutes.

Added by Laws 1971, c. 191, § 3, emerg. eff. June 4, 1971. Amended by Laws 1987, c. 203, § 107, operative July 1, 1987; Laws 1988, c. 127, § 2, emerg. eff. April 12, 1988; Laws 1988, c. 204, § 1, operative July 1, 1988; Laws 1995, c. 331, § 1, eff. Nov. 1, 1995; Laws 1996, c. 302, § 1, eff. July 1, 1996.

§36-632. Certain entities subject to jurisdiction of Insurance Commissioner and Oklahoma Insurance Code - Exemptions.

A. Unless otherwise provided for by law or exempted by the provisions of this section, any person or other entity which provides coverage in this state for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or ophthalmologic expenses, whether coverage is by direct payment, reimbursement, or other means, shall be presumed to be subject to the jurisdiction of the Insurance Commissioner unless the person or other entity shows that while providing coverage the person or entity is subject to the jurisdiction of another agency of this or another state, any subdivision of this state, or the federal government, or provides a plan of selfinsurance or other employee welfare benefit program for an individual employer or labor union maintained pursuant to a collective bargaining agreement or other arrangement which provides for health care services solely for its employees or members and their dependents.

B. A person or entity may show that it is subject to the jurisdiction of another agency of this or another state, any subdivision of this state, or the federal government by providing to the Insurance Commissioner the certificate, license, or other document issued by the other governmental agency which permits or qualifies the person or entity to provide those services.

C. Any person or entity which is unable to show that it is subject to the jurisdiction of another agency of this or another state, any subdivision of this state, or the federal government, or provides an employee welfare benefit program for an individual employer or labor union as provided for in subsection A of this section, shall submit to an examination by the Insurance Commissioner to determine the organization and solvency of the person or entity, and to determine whether or not the person or entity is in compliance with applicable provisions of the Oklahoma Insurance Code, Section 101 et seq. of this title.

D. Any person or entity unable to show that it is subject to the jurisdiction of another agency of this or another state, any subdivision of this state, or the federal government, or provides an employee welfare benefit program for an individual employer or labor union as provided for in subsection A of this section, shall be subject to all appropriate provisions of the Oklahoma Insurance Code regarding the conduct of its business.

1. Any agent, broker, administrator, or other person or company which advertises, solicits, negotiates, procures, sells, renews, continues, or administers coverage in this state which is provided by any person or entity specified in subsection C of this section for expenses specified in subsection A of this section shall advise any purchaser, prospective purchaser, and covered person of the lack of insurance or other coverage, if the coverage for expenses specified in subsection A of this section is not fully insured or otherwise fully covered by a company authorized to do such business in this state; and

2. Any administrator who advertises or administers coverage in this state which is provided by any person or entity specified in subsection C of this section for expenses specified in subsection A of this section shall advise any agent, broker, or other person or company which advertises, solicits, negotiates, sells, procures, renews, or continues said coverage of the elements of the coverage including the amount of stoploss insurance in effect.

E. 1. Those entities which are not licensed insurers in this state, other than a hospital service and medical indemnity corporation as authorized in Section 2601 et seq. of this title, shall place the following statement in conspicuous boldface type on the front page of their policy or certificate: "State insurance insolvency guaranty funds are not available for your use in the event of insolvency or liquidation of this company"; and

2. Those entities which are not licensed insurers, or not subject to the jurisdiction of the Insurance Commissioner or any other state agency, shall place the following statement in conspicuous boldface type on the front page of their policy, plan or certificate: "This policy, plan or certificate and this entity are not subject to the jurisdiction of the Oklahoma State Insurance Commissioner".

Added by Laws 1984, c. 42, § 1, eff. Nov. 1, 1984. Amended by Laws 1987, c. 172, § 1, eff. Nov. 1, 1987; Laws 1997, c. 418, § 30, eff. Nov. 1, 1997.

§36-633. MEWA defined - Information relating to administrative services contracts.

A. As used in this act, the term "Multiple Employer Welfare Arrangement" or "MEWA" means that term as defined in Section 3 of the Employee Retirement Income Security Act of 1974, 29 U.S.C., Section 1002(40)(A), as amended, that meets either or both of the following criteria:

1. One or more of the employer members of the MEWA is either domiciled in this state or has its principal place of business or principal administrative office in this state; or

2. The MEWA solicits an employer that is domiciled in this state or that has its principal place of business or principal administrative office in this state.

B. Each insurer licensed to do business in this state, including any corporation organized under the provisions of Article 26 of Title 36 of the Oklahoma Statutes, that administers a MEWA shall provide the Insurance Commissioner with such information regarding the insurer's administrative services contract or contracts with such MEWA or MEWAs that the Commissioner may reasonably require.

C. A MEWA shall be administered only by a licensed insurer or a licensed third party administrator.

Added by Laws 1992, c. 374, § 1, eff. Jan. 1, 1993.

§36-634. Valid license required - Exempt entities.

A. It is unlawful to operate, maintain or establish a MEWA unless the MEWA has a valid license issued by the Insurance Commissioner. Any MEWA operating in this state without a valid license is an unauthorized insurer.

B. This act shall not apply to:

1. A MEWA that offers or provides benefits that are fully insured by an authorized insurer;

2. A MEWA that is exempt from state insurance regulation in accordance with the Employee Retirement Income Security Act of 1974 (ERISA) (Public Law 43-406);

3. Any plan that has no more than two employer members which share substantial common support other than income generated by their respective similar business classification;

4. A plan that has no more than two employer members, which together have a combined net worth of more than Five Million Dollars ($5,000,000.00) and each of such member employers participated in the continuous sponsorship and maintenance of such MEWA for the benefit of their employees for a period of more than ten (10) years next preceding the effective date of this act;

5. A MEWA which has been in existence and has provided health insurance for at least five (5) years prior to January 1, 1993, and which was established by a trade, industry or professional association of employers that has a constitution or by-laws, that has been organized and maintained in good faith for at least thirty (30) continuous years prior to January 1, 1993, and its members are persons, firms or corporations qualified to print legal notices pursuant to Section 106 of Title 25 of the Oklahoma Statutes; or

6. A nonprofit professional trade association pursuant to Section 501(c)(3) of the Internal Revenue Code, 26 U.S.C., Section 501(c)(3), which has maintained either a self-funded plan or a fully insured plan of coverage for the payment of expenses to or for members of the association for a period of ten (10) or more consecutive years and which coverage is provided to at least five hundred covered participants to establish and maintain a self-funded plan.

C. Any entity which claims to be exempt from state regulation pursuant to subsection B of this section shall provide to the Commissioner strict proof establishing such exemption.

Added by Laws 1992, c. 374, § 2, eff. Jan. 1, 1993. Amended by Laws 2004, c. 416, § 1, emerg. eff. June 4, 2004.

§36-635. License eligibility requirements - Filing of contracts.

A. To meet the requirements for issuance of a license and to maintain a MEWA, a MEWA either must be:

1. a. nonprofit,

b. (1) established by a trade association, industry association or professional association of employers or professionals that has a constitution or bylaws and that has been organized and maintained in good faith for a continuous period of five (5) years for purposes other than that of obtaining or providing insurance, or

(2) requires membership in an association described in division (1) of this subparagraph in order to obtain the insurance offered by the MEWA,

c. operated pursuant to a trust agreement by a board of trustees that has complete fiscal control over the MEWA and that is responsible for all operations of the MEWA. Except as provided in this paragraph, the trustees must:

(1) be owners, shareholders, partners, officers, directors, or employees of one or more employers in the MEWA. With the Insurance Commissioner's approval, a person who is not such an owner, shareholder, partner, officer, director, or employee may serve as a trustee if that person possesses the expertise required for such service. A trustee may not be an owner, shareholder, partner, officer or employee of the administrator or service company of the MEWA,

(2) have the authority to approve applications of association members for participation in the MEWA, and

(3) have the authority to contract with an authorized administrator or service company to administer the operations of the MEWA,

d. neither offered nor advertised to the public generally,

e. operated in accordance with sound actuarial principles, and

f. offered only after Two Hundred Thousand Dollars ($200,000.00) of cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount or such other investments as the Commissioner may authorize by rule is titled in such a manner that it may not be traded, sold or otherwise expended without the consent of the Insurance Commissioner; provided, said funds shall be taken into account in determining whether the MEWA is actuarially sound, and evidence of said investment shall be filed with the State Treasurer; or

2. a. operated pursuant to a trust agreement for a trust which has its situs in this state, is operated pursuant to a trust agreement by a board of trustees that has complete fiscal control over the MEWA, is responsible for all operations of the MEWA, and which has as one of its trustees a financial institution which is independent of the entity which established the MEWA. Except as provided in this paragraph, the board of trustees must have owners, shareholders, partners, officers, directors or employees of one or more employers in the MEWA. With the Insurance Commissioner's approval, a person who is not such an owner, shareholder, partner, officer, director or employee may serve as a trustee if that person possesses the expertise required for such service. A trustee shall not be an owner, shareholder, partner, officer, director or employee of the administrator or service company of the MEWA,

b. operated and administered in a manner that causes all assets of the MEWA to be held in trust until paid either:

(1) for the benefit of individuals who receive medical, dental or similar benefits from the MEWA, or

(2) for the expenses of the MEWA, such as the fees of the trustee, licensed agents, administrator, service company, and all expenses of complying with the provisions of this act,

c. offered only to employers for the benefit of their employees,

d. operated in accordance with sound actuarial principles, and

e. offered only after Two Hundred Thousand Dollars ($200,000.00) of cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount or such other investments as the Commissioner may authorize by rule is titled in such a manner that it may not be traded, sold or otherwise expended without the consent of the Insurance Commissioner; provided, said funds shall be taken into account in determining whether the MEWA is actuarially sound, and evidence of said investment shall be filed with the State Treasurer.

B. 1. The MEWA shall issue to each covered employee a policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided. The policy, contract, certificate, summary plan description, or other evidence of the benefits, coverages provided, premium rates to be charged and any contracts between the MEWA and any administrator or service company, including any changes to those documents, must be filed with the Oklahoma Insurance Department. The evidence of benefits and coverages provided shall contain, in boldface type on the face page of the policy and the certificate, the following statement: "THE BENEFITS AND COVERAGES DESCRIBED HEREIN ARE PROVIDED THROUGH A TRUST FUND ESTABLISHED BY A GROUP OF EMPLOYERS (name of MEWA). THE TRUST FUND IS NOT SUBJECT TO ANY INSURANCE GUARANTY ASSOCIATION. OTHER RELATED FINANCIAL INFORMATION IS AVAILABLE FROM YOUR EMPLOYER OR FROM THE (name of MEWA). EXCESS INSURANCE IS PROVIDED BY A LICENSED INSURANCE COMPANY TO COVER CERTAIN CLAIMS WHICH EXCEED CERTAIN AMOUNTS. THIS IS THE ONLY SOURCE OF FUNDING FOR THESE BENEFITS AND COVERAGES."

2. If applicable, the same documents shall contain in boldface type on the face page of the policy and the certificate: "THE BENEFITS AND COVERAGE DESCRIBED HEREIN ARE FUNDED BY CONTRIBUTIONS FROM EMPLOYERS, EMPLOYEES, AND OTHER INDIVIDUALS ELIGIBLE FOR COVERAGE."

3. Any statement required by this subsection is not required on identification cards issued to covered employees or other insureds.

C. The Commissioner shall not grant or continue a license to any MEWA if the Commissioner reasonably deems that:

1. Any trust, manager or administrator is incompetent, untrustworthy, or so lacking in insurance expertise as to make the operations of the MEWA hazardous to the potential and existing insureds;

2. Any trustee, manager or administrator has been found guilty of or has pled guilty or no contest to a felony, a crime involving moral turpitude, or a crime punishable by imprisonment of one (1) year or more under the law of any state or country, whether or not a judgment or conviction has been entered; or

3. Any trustee, manager or administrator has had any type of insurance license justifiably revoked in this or any other state.

D. To qualify for and retain a license, a MEWA shall file all contracts with administrators or service companies with the Insurance Commissioner, and report any changes in such contracts to the Commissioner in advance of their implementation. The Commissioner shall have the authority to cause any contract with an administrator or service company to be renegotiated if the Commissioner reasonably determines that the charges under any such contract are excessively high in light of the services being delivered under the contract.

E. An initial filing fee of One Thousand Dollars ($1,000.00) is required for licensure. Each subsequent year the MEWA is in operation, an annual fee of Two Hundred Fifty Dollars ($250.00) shall be required.

F. Failure to maintain compliance with the eligibility requirements established by this section is a ground for denial, suspension or revocation of the license of a MEWA.

Added by Laws 1992, c. 374, § 3, eff. Jan. 1, 1993. Amended by Laws 2002, c. 129, § 1, eff. Nov. 1, 2002.

§36-636. Use of words or descriptions causing beneficiaries to believe MEWA is insurance company.

No licensed MEWA shall use in its name, contracts, literature, advertising in any medium, or any other printed matter any words or descriptions which would cause beneficiaries or potential beneficiaries to believe it is an insurance company.

Added by Laws 1992, c. 374, § 4, eff. Jan. 1, 1993.

§36-637. Application for license.

Each MEWA shall file with the Insurance Commissioner an application for a license on a form prescribed by the Commissioner and signed under oath by officers of the association or the administrator of the MEWA. The application shall include or have attached the following:

1. A copy of any articles of incorporation, constitution and bylaws of any association;

2. A list of the names, addresses and official capacities with the MEWA of the individuals who will be responsible for the management and conduct of the affairs of the MEWA, including all trustees, officers and directors. Such individuals shall fully disclose the extent and nature of any contracts or arrangements between them and the MEWA, including possible conflicts of interest;

3. A copy of the articles of incorporation, bylaws or trust agreement that governs the operation of the MEWA;

4. A copy of the policy, contract, certificate, summary plan description or other evidence of the benefits and coverages provided to covered employees, including a table of the rates charged or proposed to be charged for each form of such contract. A qualified actuary shall certify that:

a. the rates are neither inadequate, nor excessive, nor unfairly discriminatory,

b. the rates are appropriate for the classes of risks for which that have been computed, and

c. an adequate description of the rating methodology has been filed with the Commissioner and such methodology follows consistent and equitable actuarial principles.

For purposes of this section and Section 639 of this title, a qualified actuary is an actuary who is a Fellow of the Society of Actuaries (FSA), a member of the American Academy of Actuaries, or an Enrolled Actuary under the Employee Retirement Income Security Act of 1974 (29 U.S.C., Section 1001 et seq.) and has experience in establishing rates for a self-insured trust and health services being provided;

5. Any administrator retained by the MEWA must be a licensed third party administrator. The MEWA must provide proof of a fidelity bond which shall protect against acts of fraud or dishonesty in servicing the MEWA, covering each person responsible for servicing the MEWA, in an amount equal to the greater of ten percent (10%) of the contributions received by the MEWA or ten percent (10%) of the benefits paid, during the preceding calendar year, with a minimum amount requirement of Twenty Thousand Dollars ($20,000.00) and a maximum amount requirement of Five Hundred Thousand Dollars ($500,000.00);

6. A copy of the MEWA's stop-loss agreement. The stop-loss insurance agreement must be issued by an insurer authorized to do business in this state and must provide both specific and aggregate coverage with an aggregate retention of no more than one hundred twenty-five percent (125%) of the expected claims for the next plan year and a specific retention amount as annually indicated in the actuarial opinion. The Insurance Commissioner shall have the authority to waive the requirements for aggregate stop-loss coverage if deemed appropriate;

7. In the initial application, a feasibility study, made by a qualified actuary with an opinion acceptable to the Commissioner, that addresses market potential, market penetration, market competition, operating expenses, gross revenues, net income, total assets and liabilities, cash flow and other items as the Commissioner requires. The study shall be for the greater of three (3) years or until the MEWA has been projected to be profitable for twelve (12) consecutive months. The study must show that the MEWA would not, at any month end of the projection period, have less that ninety percent (90%) of the reserves as required by a qualified actuary;

8. A copy of an audited financial statement of the MEWA prepared by a licensed certified public accountant;

9. A copy of every contract between the MEWA and any administrator or service company; and

10. Such additional information as the Commissioner may reasonably require.

Added by Laws 1992, c. 374, § 5, eff. Jan. 1, 1993. Amended by Laws 2002, c. 129, § 2, eff. Nov. 1, 2002.

§36-638. Compliance with provisions of Title 36 relating to examinations, deposits and solvency regulation.

Every MEWA shall comply with Articles 15 through 19 and Sections 308 through 310, 311.1 and 619 of Title 36 of the Oklahoma Statutes which pertain to examinations, deposits and solvency regulation.

Added by Laws 1992, c. 374, § 6, eff. Jan. 1, 1993.

§36-639. Annual financial report - Actuarial certification - Quarterly financial statements - Penalties.

A. Every MEWA shall, within ninety (90) days after the end of each fiscal year of the MEWA, or within any such extension of time that the Insurance Commissioner for good cause grants, file a report with the Commissioner, on forms acceptable to the Commissioner and verified by the oath of a member of the board of trustees or by an administrator of the MEWA, showing its financial condition on the last day of the preceding fiscal year. The report shall contain an audited financial statement of the MEWA prepared in accordance with generally accepted accounting principles, including its balance sheet and a statement of the operations for the preceding fiscal year certified by an independent accounting firm or individual holding a permit to practice public accounting in this state. The report shall also include an analysis of the adequacy of reserves and contributions or premiums charged, based on a review of past and projected claims and expenses.

B. In conjunction with the annual report required in subsection A of this section, the MEWA shall submit an actuarial certification prepared by a qualified actuary that indicates:

1. The MEWA is actuarially sound, with the certification considering the rates, benefits, and expenses of, and any other funds available for the payment of obligations of the MEWA;

2. The rates being charged and to be charged for contracts are actuarially adequate to the end of the period for which rates have been guaranteed;

3. The recommended amount of cash reserves the MEWA should maintain, which shall not be less than the greater of twenty percent (20%) of the total contributions in the preceding plan year or twenty percent (20%) of the total estimated contributions for the current plan year. The cash reserves shall be calculated with proper actuarial regard for known claims, paid and outstanding, a history of incurred but not reported claims, claims handling expenses, unearned premium, a trend factor, and a margin for error. Cash reserves required by this section shall be maintained in cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount or such other investments as the Commissioner may authorize by rule;

4. Whether amounts reserved to cover the cost of health care benefits are:

a. calculated in accordance with the loss reserving standards that would be applicable to a private insurance company writing the same coverage,

b. computed in accordance with accepted loss reserving standards, including a reserve for Incurred But Not Reported Claims (IBNR), and

c. fairly stated in accordance with sound loss reserving standards;

5. The recommended level of specific and aggregate stop-loss insurance that the MEWA should maintain and whether the MEWA is funding at the aggregate retention plus all other costs of the MEWA; and

6. Such other information relating to the performance of the MEWA that is reasonably required by the Commissioner.

C. The MEWA shall send an annual report to all of the employers, describing the financial condition of the MEWA as of the end of the last fiscal year. The report must be sent at the same time as the filing of the annual statement of the MEWA.

D. The Commissioner may require a MEWA to file quarterly, within forty-five (45) days after the end of each of the remaining fiscal quarters, a financial statement on a form prescribed by the Commissioner, verified by the oath of a member of the board of trustees and an administrator of the MEWA, showing its financial condition on the last day of the preceding quarter and the statement of a qualified actuary setting forth the actuary's opinion relating to the level of cash reserves in accordance with paragraphs 3 and 4 of subsection B of this section.

E. Any MEWA that fails to file a report as required by this section is subject to Section 311 of this title; and, after notice and opportunity for hearing, the Commissioner may suspend the MEWA's authority to enroll new insureds or to do business in this state while the failure continues.

Added by Laws 1992, c. 374, § 7, eff. Jan. 1, 1993. Amended by Laws 2002, c. 129, § 3, eff. Nov. 1, 2002.

§36-640. Denial, suspension or revocation of license - Corrective action plans - Rescission or modification of suspension order.

A. The Insurance Commissioner shall deny, suspend or revoke a MEWA's license if, after notice and opportunity for a hearing, the Commissioner finds that the MEWA:

1. Is insolvent;

2. Is using such methods and practices in the conduct of its business as to render its further transaction of business in this state hazardous or injurious to its participating employees, covered employees and dependents, or to the public;

3. Has failed to pay any final judgment rendered against it in a court of competent jurisdiction within sixty (60) days after the judgment became final;

4. Is or has been in violation of any material provisions of this act;

5. Is no longer actuarially sound; or

6. Is charging rates that are excessive, inadequate or unfairly discriminatory.

B. The Commissioner may deny, suspend or revoke the license of any MEWA if, after notice and opportunity for a hearing, the Commissioner determines that the MEWA:

1. Has violated any lawful order or rule of the Commissioner or any applicable provisions of this act;

2. Has refused to produce its accounts, records or files for examination under Sections 308 through 310 of Title 36 of the Oklahoma Statutes or through any of its officers has refused to give information with respect to its affairs or to perform any other legal obligation as to an examination;

3. Utilized persons to solicit enrollments through an unlicensed agent; or

4. Has violated any provision of the Unfair Claim Settlement Practices Act, Section 1221 et seq. of Title 36 of the Oklahoma Statutes.

C. Whenever the financial condition of the MEWA is such that, if not modified or corrected, its continued operation would result in impairment or insolvency, in addition to any provisions in this act, the Commissioner may order the MEWA to file with the Commissioner and implement a corrective action plan designed to do one or more of the following:

1. Reduce the total amount of present potential liability for benefits by reinsurance or other means;

2. Reduce the volume of new business being accepted;

3. Reduce the expenses of the MEWA by specified methods; or

4. Suspend or limit the writing of new business for a period of time.

If the MEWA fails to submit a plan within the time specified by the Commissioner or submits a plan that is insufficient to correct the MEWA's financial condition, the Commissioner may order the MEWA to implement one or more of the corrective actions listed in this subsection.

D. The Commissioner shall, in the order suspending the authority of a MEWA to enroll new insureds, specify the period during which the suspension is to be in effect and the conditions, if any, that must be met prior to reinstatement of its authority to enroll new insureds. The order of suspension is subject to rescission or modification by further order of the Commissioner before the expiration of the suspension period. Reinstatement shall not be made unless requested in writing by the MEWA; however, the Commissioner shall not grant reinstatement if it is found that the circumstances for which suspension occurred still exist.

Added by Laws 1992, c. 374, § 8, eff. Jan. 1, 1993.

§36-641. Promulgation of rules relating to multiple employer welfare arrangements.

The Insurance Commissioner may promulgate rules to implement the provisions of Sections 633 through 640 of Title 36 of the Oklahoma Statutes relating to multiple employer welfare arrangements.

Added by Laws 2002, c. 129, § 4, eff. Nov. 1, 2002.

§36-650. Competition with Nine-One-One system prohibited.

Insurers, nonprofit health service plans, and health maintenance organizations shall not establish or promote an emergency medical response, triage, or transportation system in competition with or in substitution of the Nine-One-One system. Insurers, nonprofit health service plans, and health maintenance organizations shall not use false or misleading language to discourage or prohibit access to the Nine-One-One system.

Added by Laws 2000, c. 353, § 3, eff. Nov. 1, 2000.

§36701. Definitions not mutually exclusive.

It is intended that certain coverages may come within the definitions of two or more kinds of insurance as set forth in this article, and the fact that such a coverage is included within one definition shall not exclude such coverage as to any other kind of insurance within the definition of which such coverage likewise reasonably is includable.

Laws 1957, p. 239, § 701.

§36702. "Life insurance" defined.

"Life insurance" is insurance on human lives and insurance appertaining thereto or connected therewith. The transacting of life insurance includes the granting of endowment benefits, additional benefits in the event of death or dismemberment by accident or accidental means, additional benefits in the event of the disability of the insured, optional modes of settlement of proceeds of life insurance, and additional benefits providing acceleration of life or endowment or annuity benefits in advance of the time they would otherwise be payable, as an indemnity for longterm care which is certified or ordered by a physician, including but not limited to, professional nursing care, medical care expenses, custodial nursing care, nonnursing custodial care provided in a nursing home or at a residence of the insured or providing such acceleration upon the occurrence of a castastrophic disease or diseases as designated and defined by the policy. An insurer authorized to transact life insurance may also grant annuities.

Laws 1957, p. 239, § 702.

§36703. "Accident and health insurance" defined.

"Accident and health insurance" is insurance against bodily injury, disablement, or death by accident or accidental means, or the expense thereof, or against disablement or expense resulting from sickness, and every insurance appertaining thereto.

Laws 1957, p. 239, § 703.

§36704. "Property insurance" defined.

"Property insurance" is insurance on real or personal property of every kind and interest therein, against loss or damage from any or all hazard or cause, and against loss consequential upon such loss or damage, other than noncontractual legal liability for any such loss or damage. Property insurance shall also include miscellaneous insurance as defined in paragraph 11 of section 707 of this article except as to any noncontractual liability coverage includable therein.

Laws 1957, p. 239, § 704.

§36705. "Marine insurance" defined.

"Marine insurance" includes:

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

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

3. Insurance against any and all kinds of loss or damage to precious stones, jewelry, gold, silver and other precious metals, whether used in business or trade or otherwise and whether the same be in course of transportation or otherwise;

4. Insurance against any and all kinds of loss or damage to bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion or any or all of them are the only hazards to be covered;

5. Insurance against any and all kinds of loss or damage to piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion and each of them;

6. Insurance against any and all kinds of loss or damage to other aids to navigation and transportation, including dry docks and marine railways, dams and appurtenant facilities for the control of waterways; and

7. Marine protection and indemnity insurance, which is insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.

Laws 1957, p. 240, § 705.

§36706. "Vehicle insurance" defined.

"Vehicle insurance" is insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal or to property while contained therein or thereon or being loaded or unloaded therein or therefrom, from any hazard or cause, and against any loss, liability or expense resulting from or incident to ownership, maintenance or use of any such vehicle, aircraft or animal; together with insurance against accidental death or accidental injury to individuals, including the named insured, while in, entering, alighting from, adjusting, repairing, cranking, or caused by being struck by a vehicle, aircraft or draft or riding animal, if such insurance is issued as a part of insurance on the vehicle, aircraft or draft or riding animal.

Laws 1957, p. 240, § 706.

§36707. "Casualty insurance" defined.

"Casualty insurance" includes vehicle insurance as defined in Section 706 and accident and health insurance as defined in Section 703, of this article, and in addition includes:

1. Liability insurance, which is insurance against legal liability for the death, injury, or disability of any human being, or for damage to property; and provision of medical, hospital, surgical, disability benefits to injured persons and funeral and death benefits to dependents, beneficiaries or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental coverage with or supplemental to liability insurance.

2. Workers' compensation and employers' liability insurance, which is insurance of the obligations accepted by, imposed upon, or assumed by employers for death, disablement, or injury of employees.

3. Burglary and theft insurance, which is insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal, or concealment, or from any attempt at any of the foregoing, including supplemental coverages for medical, hospital, surgical, and funeral benefits sustained by the named insured or other person as a result of bodily injury during the commission of a burglary, robbery, or theft by another; also insurance against loss of or damage to monies, coins, bullion, securities, notes, drafts, acceptances, or any other valuable papers and documents, resulting from any cause.

4. Personal property floater insurance, which is insurance upon personal effects against loss or damage from any cause.

5. Glass insurance, which is insurance against loss or damage to glass, including its lettering, ornamentation, and fittings.

6. Boiler and machinery insurance, which is insurance against any liability and loss or damage to property or interest resulting from accidents to or explosion of boilers, pipes, pressure containers, machinery, or apparatus, and to make inspection of and issue certificates of inspection upon boilers, machinery, and apparatus of any kind, whether or not insured.

7. Leakage and fire extinguishing equipment insurance, which is insurance against loss or damage to any property or interest caused by the breakage or leakage of sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus, water pipes and containers, or by water entering through leaks or openings in buildings, and insurance against loss or damage to such sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus.

8. Credit insurance, which is insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured.

9. Malpractice insurance, which is insurance against legal liability of the insured, and against loss, damage, or expense incidental to a claim of such liability, and including medical, hospital, surgical, and funeral benefits to injured persons, irrespective of legal liability of the insured, arising out of the death, injury, or disablement of any person, or arising out of damage to the economic interest of any person, as the result of negligence in rendering expert, fiduciary, or professional services.

10. Entertainments insurance, which is insurance indemnifying the producer of any motion picture, television, radio, theatrical, sport, spectacle, entertainment, or similar production, event, or exhibition against loss from interruption, postponement, or cancellation thereof due to death, accidental injury, or sickness of performers, participants, directors, or other principals.

11. Miscellaneous insurance, which is insurance against any other kind of loss, damage, or liability properly a subject of insurance and not within any other kind of insurance as defined in this article, if such insurance is not disapproved by the Insurance Commissioner as being contrary to law or public policy.

Added by Laws 1957, p. 240, § 707, operative July 1, 1957.

§36708. "Surety insurance" defined.

"Surety insurance" includes:

1. Fidelity insurance, which is insurance guaranteeing the fidelity of persons holding positions of public or private trust.

2. Insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings and contracts of suretyship.

3. Insurance indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, including any loss while the same are being transported in armored motor vehicles, or by messenger, but not including any other risks of transportation or navigation; also insurance against loss or damage to such an insured's premises or to his furnishings, fixtures, equipment, safes, and vaults therein, caused by burglary, robbery, theft, vandalism or malicious mischief, or any attempt thereat.

Laws 1957, p. 241, § 708.

§36709. "Title insurance" defined.

"Title insurance" is insurance of owners of property or others having an interest therein, or liens or encumbrances thereon, against loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.

Laws 1957, p. 242, § 709.

§36710. Limit of risk.

A. No insurer shall retain any risk on any one subject of insurance, whether located or to be performed in Oklahoma or elsewhere, in an amount exceeding ten percent (10%) of its surplus to policyholders.

B. A "subject of insurance" for the purposes of this section, as to insurance against fire and hazards other than windstorm or earthquake, includes all properties insured by the same insurer which are customarily considered by underwriters to be subject to loss or damage from the same fire or other such hazard insured against.

C. Reinsurance authorized by Section 711 of this article shall be deducted in determining risk retained. As to surety risks, deduction shall also be made of the amount assumed by any established incorporated cosurety and the value of any security deposited, pledged, or held subject to the surety's consent and for the surety's protection.

D. "Surplus to policyholders" for the purpose of this section shall be deemed to include any voluntary reserves which are not required pursuant to law, and shall be determined from the last sworn statement of the insurer on file with the Insurance Commissioner or by the last report of examination by the Insurance Commissioner, whichever is the more recent at time of assumption of such risk.

E. As to alien insurers, other than life insurers domiciled in Canada, this section shall relate only to risks and surplus to policyholders of the insurer's United States branch.

F. This section shall not apply to group life or group or blanket accident and health insurance, title insurance, insurance of ocean marine risks or maine protection and indemnity risks, workers' compensation insurance, employers' liability coverages, nor to any policy or type of coverage as to which the maximum possible loss to the insurer is not readily ascertainable on issuance of the policy.

Added by Laws 1957, p. 242, § 710, operative July 1, 1957.

§36711. Allowance for credit or increase in amount at risk - Contract requirements.

A. 1. No credit shall be allowed, as an admitted asset or as a deduction from liability, to any ceding insurer for reinsurance nor increase the amount it is authorized to have at risk unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer, the reinsurance shall be payable under a contract or contracts reinsured by the assuming insurer on the basis of reported claims allowed by the liquidation court, without diminution because of the insolvency of the ceding insurer. Such payments shall be made directly to the ceding insurer or to its domiciliary liquidator, except:

a. if the contract or other written agreement specifically provides another payee of such reinsurance in the event of the insolvency of the ceding insurer, or

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

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

B. This section shall not apply to insurance of ocean marine risks or marine protection and indemnity risks.

Added by Laws 1957, p. 242, § 711. Amended by Laws 1984, c. 149, § 4, eff. Nov. 1, 1984; Laws 1993, c. 79, § 3, eff. Sept. 1, 1993; Laws 2000, c. 169, § 5, eff. Nov. 1, 2000.

§36900.1. Short title.

Sections 11 through 36 of this act shall be known and may be cited as the "Oklahoma Insurance Rating Act".

Added by Laws 1987, c. 210, § 11, eff. July 1, 1987.

§36-901. Application of article.

A. This article applies to every insurer including every stock or mutual insurer, reciprocal or interinsurance exchange or Lloyd's association authorized by any provisions of the laws of this state to transact any of the kinds of insurance covered by this article except:

1. Life insurance;

2. Accident and health insurance;

3. Reinsurance, other than joint reinsurance, to the extent stated in this act;

4. Insurance of vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine, insurance policies;

5. Insurance of hulls of aircraft, including their accessories and equipment, or against liability arising out of the ownership, maintenance or use of aircraft;

6. Insurers exempted under Section 110 of this title;

7. Title insurance;

8. Insurance of bail bonds; and

9. Personal risk property and casualty insurance.

B. This article shall be administered by the State Board for Property and Casualty Rates.

Added by Laws 1957, p. 243, § 901, operative July 1, 1957. Amended by Laws 1980, c. 322, § 32, eff. Jan. 1, 1981; Laws 1987, c. 210, § 12, eff. July 1, 1987; Laws 1994, c. 376, § 2; Laws 2004, c. 519, § 4, eff. Nov. 1, 2004.

NOTE: Laws 1994, c. 331, § 1 repealed by Laws 1995, c. 1, § 40, emerg. eff. March 2, 1995.

§36901.1. Purposes of act.

A. The purposes of this act are:

1. To promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory;

2. To improve availability, fairness and reliability of insurance and insurance rates;

3. To authorize essential cooperative action among insurers in the ratemaking process and to regulate such activity to prevent practices that tend to substantially lessen competition or to create a monopoly;

4. To encourage the most efficient and economic marketing practices; and

5. To encourage the providing of price and other information to enable consumers to purchase insurance suitable for their needs and to foster competitive insurance markets.

B. This act shall be liberally construed to effectuate its purposes.

Added by Laws 1987, c. 210, § 13, eff. July 1, 1987.

§36901.2. Definitions.

As used in this act unless the context otherwise requires:

1. "Act" means the Oklahoma Insurance Rating Act;

2. "Board" means the State Board for Property and Casualty Rates created pursuant to Section 331 et seq. of Title 36 of the Oklahoma Statutes;

3. "Commissioner" means the Insurance Commissioner of the State of Oklahoma or his designee;

4. "Department" means the Insurance Department of the State of Oklahoma;

5. "Rate" means the cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost and an adjustment to account for the treatment of expenses, profit and variations in loss experience, prior to any application of individual risk variations based on loss or expense considerations, and does not include minimum premiums:

a. "prospective loss cost", as used in this paragraph, means that portion of a rate that does not include provisions for expenses, other than loss adjustment expenses, or profit, and are based on historical aggregate losses and loss adjustment expenses adjusted through development to their ultimate value and projected through trending to a future point in time, and

b. "expenses", as used in this paragraph, means that portion of a rate attributable to acquisition, field supervision, collection expenses, general expenses, taxes, licenses, and fees; and

6. "Rating organization" means any two or more insurers acting in cooperation or in concert for the purpose of making rates, rating plans or rating systems.

Added by Laws 1987, c. 210, § 14, eff. July 1, 1987. Amended by Laws 1994, c. 129, § 2, eff. Sept. 1, 1994.

§36901.3. Certification of filing.

A. In order to be certified by the Insurance Commissioner as complete, a filing shall contain, unless the Commissioner includes as part of the certification a specific finding that a particular item is not necessary and stating the reasons therefor, the following:

1. A memorandum briefly summarizing the gist of the filing;

2. An index to the filing;

3. A clear and concise statement of the action desired to be taken by the State Board for Property and Casualty Rates;

4. References to the sections of law and to rules and regulations which authorize the action desired to be taken by the Board or which support the information contained in the filing;

5. An explanation of the application of the filing factors, which are contained in subsection A of Section 902.2 of this title, together with assumptions and conclusions concerning such factors;

6. References to exhibits and other documents contained in the filing which are relied upon to support the action requested by the filing; and

7. Any other information required by the Commissioner or the Board.

B. If the filer is a rating organization, it is sufficient for such information to be provided in summary form for all the filer's members and subscribers.

C. If a filing is incomplete, the Commissioner shall notify the filer, in writing, of the necessary materials required by this article, by rules of the Board or by orders adopted by the Board to complete the filing for certification. The time for certification of the filing shall be tolled pending receipt of such information from the filer. Upon receipt of the required information the time for completion of certification shall again begin to run.

D. Upon certification of the completion of a filing by the Commissioner, the filing shall be placed on the agenda of the next regularly scheduled meeting of the Board. Following certification, no meeting regarding a filing shall be held unless the requirements of subsection A of Section 901.4 of this title are met.

E. If the Commissioner fails or refuses to certify completion of a filing which meets or exceeds the requirements of this act, the company or organization making the filing may request, in writing, that the Board certify the filing. Certification by the Board shall have the same effect as if the Commissioner had certified the filing.

F. Certification of the completion of the filing shall be accomplished within thirty (30) calendar days. If the filing is not certified to be complete or if a dispute occurs regarding the certification of completion of the filing, then the dispute or failure or refusal to certify completion shall be presented to the Board at the next scheduled meeting for the Board's review and decision on certification.

Added by Laws 1987, c. 210, § 15, eff. July 1, 1987. Amended by Laws 1997, c. 418, § 31, eff. Nov. 1, 1997.

§36901.4. Hearings; period of advisement; additional information, analysis, consideration and investigation; exempt board meetings.

A. Not less than ten (10) days in advance of a meeting to determine whether a hearing will be held, the Board shall give notice to each insurer or organization making the filing, to each party to the filing and to any person who annually requests in writing to be notified of filings made pursuant to this act, of the date, time and location of any hearing or rehearing, the name of the insurer or organization making the filing and of the parties to the filing and a brief statement of the action requested in the filing.

B. Hearings shall be open to the public.

C. Any person aggrieved with respect to a rate filing may make written application to the Board to participate in any hearing called by the Board. If the Board finds the application to be supported by reasonable grounds, it may allow the applicant to appear in person or by counsel.

At the conclusion of any formal hearing and before the final closing of such hearing, any party in interest upon timely request shall be granted, as a matter of right, a continuance of twentyfour (24) hours for the purpose of making examination and analyses of documents introduced in the hearing.

D. The evidentiary procedures of the Administrative Procedures Act, Sections 310 and 315 of Title 75 of the Oklahoma Statutes, shall apply to hearings conducted pursuant to this act.

E. Upon written request seasonably made by a person affected by the hearing, and at such person's expense, the Board shall cause a full stenographic record of the proceedings to be made by a competent court reporter. If transcribed, such record shall be a part of the Board's record of the hearing, and a copy of such stenographic record shall be furnished to any other party having a direct interest therein at the request and expense of such party.

F. Following a hearing on a filing made pursuant to this act, the Board may take the matter under advisement for up to thirty (30) calendar days, subject to the provisions of Section 903 of Title 36 of the Oklahoma Statutes.

G. At any time during the pendency of a filing, the Board may:

1. Require the submission of additional information by any party to the filing;

2. Solicit proposals for independent analysis of the filing by qualified technicians, such technicians to be chosen pursuant to the provisions of Section 332 of Title 36 of the Oklahoma Statutes;

3. Consider the findings of its employees or the technician; and

4. Conduct other or additional investigations including additional hearings.

H. The provisions of this section shall not apply to regularly scheduled meetings of the Board which are governed by the provisions of the Oklahoma Open Meeting Act and where no hearing has been requested.

I. The Board may utilize hearing officers to hear matters before the Board. The hearing officer shall file a proposed order for any such matter with the Board. The proposed order shall include findings of fact and conclusions of law. Such proceedings shall be conducted in accordance with the Administrative Procedures Act.

Added by Laws 1987, c. 210, § 16, eff. July 1, 1987. Amended by Laws 1991, c. 204, § 8, eff. Sept. 1, 1991.

§36-901.5. Filing of advisory prospective loss costs and supporting actuarial data and statistical data for workers' compensation insurance.

A. Rating organizations shall develop and file for approval with the Insurance Commissioner in accordance with the provisions of this section, a filing containing advisory prospective loss costs and supporting actuarial and statistical data for workers' compensation insurance. Each insurer shall individually file their own specific profit and expense factors used to determine the final rates it will file for approval and the effective date of any rate changes.

B. As used in this section:

1. "Expenses" means that portion of a rate attributable to acquisition, field supervision, collection expenses, general expenses, taxes, licenses and fees;

2. "Rate" means the cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost with an adjustment to account for the treatment of expenses, profit and variations in loss experience, prior to any application of individual risk variations based on loss or expense considerations, and does not include minimum premiums; and

3. "Prospective loss costs" means that portion of a rate that does not include provision for expenses (other than loss adjustment expenses) or profit, and is based on historical aggregate losses and loss adjustment expenses adjusted through development to its ultimate value and projected through trending to a future point in time.

Added by Laws 1993, c. 349, § 22, eff. Sept. 1, 1993. Amended by Laws 1997, c. 418, § 32, eff. Nov. 1, 1997.

§36902. Excessive, inadequate or unfairly discriminatory rates.

A. The Board shall not approve rates for insurance which are excessive, inadequate, or unfairly discriminatory.

1. An excessive rate is one which:

a. is unreasonably high for the insurance provided, or

b. is unreasonable because (1) a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable and (2) the rate is unreasonably high for the insurance provided.

2. An inadequate rate is one which:

a. is (1) unreasonably low for the insurance provided and (2) the continued use of such rate endangers, or if continued would endanger, the solvency of the insurer, or

b. is (1) unreasonably low for the insurance provided and (2) the continued use of such rate by the insurer has, or if continued would have, the effect of destroying competition or creating a monopoly, or

c. is insufficient to cover projected losses, expenses and a reasonable margin for profit for the line of insurance coverage to be offered in this state by the filer.

3. A rate shall not be unfairly discriminatory.

a. A rate is not unfairly discriminatory because it is based in part upon the establishment or modification of classifications of risks based upon:

(1) the size of the risk,

(2) the expense or difficulty in management of the risk,

(3) the individual experience of the risk,

(4) the location or dispersion of the risk, or

(5) any other reasonable consideration attributable to the risk.

b. A rate is not unfairly discriminatory in relation to another in the same class of business if it reflects equitably the differences in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or with like expense factors but different loss exposures, if the rates reflect the differences with reasonable accuracy.

c. A rate shall be deemed unfairly discriminatory as to a risk or group of risks if the application of premium discounts, credits, or surcharges among such risks does not bear a reasonable relationship to the expected loss and expense experience among the various risks.

d. A rate shall never be based upon race, color, creed or national origin.

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

C. Nothing in this act shall be construed to require uniformity in insurance rates, classifications, rating plans, or practices.

D. Nothing in this act shall abridge or restrict the freedom of contract of insurers, agents, brokers or employees with reference to the commissions, compensation, or salaries to be paid to such agents, brokers, or employees by insurers.

E. No insurer, agent, or broker shall make, issue, or deliver, or knowingly permit the making, issuance, or delivery of any policy of insurance within the scope of this law contrary to pertinent filings which are in effect for the insurer as provided in this article, except upon the written application of the insured stating his reasons therefor and filed with the Board, a rate in excess of that provided by a filing otherwise applicable may be used on any specific risk. In the event of noncompliance with this subsection, the Board may, in addition to any other penalty provided by law, order a return of premium to the policyholder; plus interest thereon at an annual rate equal to the average United States Treasury Bill rate of the preceding calendar year as certified by the State Treasurer on the first regular business day in January of each year, plus four percentage points.

F. The burden of compliance with the provisions of this act shall rest upon the insurer or rating organization in all matters involving a filing made pursuant to this act.

G. Nothing in this act shall be construed to require the Board, when considering a filing made in accordance with the provisions of this act, to determine that existing rates no longer meet the requirements of this article.

Amended by Laws 1986, c. 251, § 9, eff. Nov. 1, 1986; Laws 1987, c. 210, § 17, eff. July 1, 1987; Laws 1988, c. 291, § 2, eff. Nov. 1, 1988.

§36-902.1. Repealed by Laws 2005, 1st Ex.Sess., c. 1, § 33, eff. July 1, 2005.

§36902.2. Factors for review of filing - Weight - Prohibited expenses.

A. The State Board for Property and Casualty Rates when reviewing a filing shall give due consideration to the following when, in its discretion, it determines that such factor or factors are applicable:

1. Past loss experience within and outside this state;

2. Prospective loss experience within and outside this state;

3. Physical hazards insured;

4. Safety and loss prevention programs;

5. Underwriting practices and judgment;

6. Catastrophe hazards;

7. Reasonable underwriting profit and contingencies;

8. Dividends, savings or unabsorbed premium deposits allowed or returned to policyholders;

9. Past expenses within and outside this state;

10. Prospective expenses within and outside this state;

11. Existence of classification rates for a given risk;

12. Investment income within and outside this state;

13. Rarity or peculiarity of the risks within and outside this state;

14. In the case of workers' compensation rates, differences in the hazard levels of different geographical regions of the state;

15. All other relevant factors within and outside this state; and

16. Whether existing rates continue to meet the standards of this article.

B. The Board shall determine the weight to be accorded each of the factors contained in subsection A of this section.

C. Past or prospective expenses within or outside this state pursuant to paragraphs 9 and 10 of subsection A of this section shall not include prohibited expenses for advertising or prohibited expenses for membership in organizations.

1. For the purpose of this subsection:

a. "prohibited expenses for advertising" means the cost of advertising in any media the purpose of which is to influence legislation or to advocate support for or opposition to a candidate for public office;

b. "prohibited expenses for advertising" shall not mean:

(1) any communication to customers and the public of information regarding an insurer's insurance products,

(2) any communication to customers and the public of safety, safety education or loss prevention information,

(3) periodic publications or reports to stockholders or members required by the certificate or bylaws of the insurer,

(4) any communication with customers and the public which provides instruction in the use of the insurer's products and services, or

(5) any communication with customers and the public for giving notice or information required by law or otherwise necessary;

c. "prohibited expenses for membership" means the cost of membership in any organization which conducts substantial efforts, including but not limited to prohibited expenses for advertising, the purpose of which is to influence legislation or to advocate support for or opposition to a candidate for public office; and

d. "prohibited expenses for membership" shall not mean the cost of membership in rating organizations or other organizations the primary purpose of which is to provide statistical information on losses.

2. The Board shall promulgate rules for the implementation of this subsection.

Added by Laws 1987, c. 210, § 18, eff. July 1, 1987. Amended by Laws 1993, c. 349, § 23, eff. Sept. 1, 1993; Laws 1994, c. 129, § 3, eff. Sept. 1, 1994; Laws 1997, c. 418, § 34, eff. Nov. 1, 1997; Laws 2004, c. 519, § 6, eff. Nov. 1, 2004.

§36-902.3. Workers' compensation.

A. Workers' compensation premiums shall be calculated on a basis that, as nearly as is practicable, after the effects of experience rating and other applicable rating plans have been considered, the sum of expected losses and expected expenses as a percentage of premium shall be the same for high and low wage-paying employers in the same job classification.

B. The State Board for Property and Casualty Rates and the Board of Managers of the State Insurance Fund shall:

1. Determine the extent to which high wage-paying employers are paying premiums higher than those which would produce the same ratio of expected losses and expenses to premiums as for employers paying lower wages;

2. Determine whether this effect is primarily seen in certain types of job classifications;

3. Investigate alternatives and modifications to the current method of computing workers' compensation premiums, including wage rate recognition plans used in other states, split classifications, wage rate caps, and hours worked;

4. Conduct a hearing or hearings on this matter, including consideration of other alternatives; and

5. Adopt rules by January 1, 1996, to become effective on July 1, 1996, unless disapproved by the Legislature, to equalize, as nearly as is practicable, expected losses and expenses as a percentage of workers' compensation premiums for high and low wage-paying employers in the same job classification. If the effect is found to be primarily seen in certain types of job classifications, the rules shall be adopted to apply only to such types of job classifications. The adopted rules shall be subject to legislative review and shall be promulgated as permanent rules pursuant to the Administrative Procedures Act. The agency rule report required by the Administrative Procedures Act shall include a rule impact statement together with an actuarial analysis of the proposed rule describing in detail the classes of persons who most likely will be affected by the proposed rules; the classes of persons who will benefit from the adopted rules; and the probable economic impact of the proposed rules upon the affected classes of persons. The actuarial analysis shall be prepared by an independent actuary selected by the State Board of Property and Casualty Rates. The rules shall not be invalidated on the ground that the contents of the rule impact statement or the actuarial analysis are insufficient or inaccurate.

C. The cost of the premium adjustment plan shall be allocated among all employers purchasing workers' compensation insurance from all carriers, including the State Insurance Fund.

Added by Laws 1994, 2nd Ex. Sess., c. 1, § 3, emerg. eff. Nov. 4, 1994.

§36-902.4. Use of workers' compensation insurance rates prior to filing - Licensed rating organization - Required filings.

A. Rates for workers' compensation insurance may be used before being filed with the Insurance Department; provided, a rate shall be filed with the Department within thirty (30) days of initial use. The rate shall stay in effect unless the Department reviews and disapproves the filing.

B. Each licensed rating organization must file with the Department every manual of classification, every manual of rules and advisory rates, pure premium which has been fully adjusted and fully developed, every rating plan and modifications of any of the foregoing it intends to recommend for use no later than thirty (30) days after they take effect. Further, each licensed rating organization must file with the Department the rate classification system, all rating rules, rating plans, policy forms, and underwriting rules or similar materials, and each modification of any of the foregoing which it requires its members and subscribers to adhere to no later than thirty (30) days before such filings or modifications are to take effect.

Added by Laws 2005, 1st Ex.Sess., c. 1, § 2, eff. July 1, 2005.

§36903. Filing rates, rating plans, classifications, schedules, loss costs and other supplementary rate information - Procedure for approval or disapproval.

A. 1. Every insurance company governed by the provisions of this act shall file with the Board, either directly or through a licensed rating organization of which it is a member or subscriber, all rates and rating plans and classifications, class rates, rating schedules, loss cost and all other supplementary rate information and every modification of any of the foregoing, which it uses or proposes to use in this state except as otherwise provided in this section.

2. The Board shall send a notification of filing of rates to any person who annually requests, in writing, to be notified of filings pursuant to regulation of the Board.

3. The Attorney General shall be notified within ten (10) days, in writing, of each:

a. filing of rates, whether for prior approval or for immediate use, and

b. certification of completion of a filing.

4. The Attorney General shall be notified at least ten (10) days in advance, in writing, of each:

a. meeting of the Board, and

b. hearing conducted by the Board.

B. Rates, rating plans, classifications, schedules, loss cost and other information shall be deemed approved ninety (90) calendar days following certification of completion of the filing as provided in this act unless, within the ninety-calendarday period:

1. The Board by majority vote, approves, disapproves or approves with modification, the filing at one of its scheduled meetings or hearings;

2. The Board orders a formal hearing on the filing; or

3. The Board or the Commissioner, if a quorum of the Board is not available at the next regularly scheduled meeting, extends this period for one additional ninety-calendarday period.

C. Nothing in this act shall be construed to require any filing for approval of rates, rating plans, classifications, schedules, loss cost and other information approved by the Board prior to July 1, 1987.

D. Any formal hearing ordered by the Board shall be completed and a written order on the filing issued by the Board within one hundred twenty (120) calendar days from the date of the order setting the formal hearing, or the filing shall be deemed approved at the expiration of the one-hundred-twenty-day period.

E. Rates or risks which are not by general custom of the business, or because of rarity or peculiar characteristics, written according to normal classification or rating procedure and which cannot be practicably filed before they are used, may be used before being filed. The Board may make such examination as it may deem advisable to ascertain whether any such rates meet the requirements of this act.

F. Whenever it shall be made to appear to the Board, either from its own information or from complaint of any party alleging to be aggrieved thereby, that there are reasonable grounds to believe that the rates on any or on all risks or classes of risks or kinds of insurance within the scope of this article are not in accordance with the terms of this act, it shall be the duty of the Board to investigate and determine whether or not any or all of such rates meet the requirements of this act.

G. When investigating rates to determine whether or not they comply with the provisions of this act, the previously approved filing shall not be changed, altered, amended, or held in abeyance until after completion of the investigation and an opportunity for hearing in accordance with the provisions of this article. Following such hearing, the Board shall enter its order in accordance with the provisions of this act. The effective date of such order shall not be less than thirty (30) days nor more than sixty (60) days after the date of the order unless the Board determines that, in the public interest, a shorter or longer period is appropriate; provided, the filer has adequate time to implement such rate change. Any such order shall apply prospectively only and shall not affect premiums collected on new or renewal policies issued prior to the effective date of this order.

H. Under such rules as it shall adopt, the Board may, by written order, suspend or modify the requirements of filing as to any kind of insurance, subdivision or combination thereof, or as to classes of risks, the rates for which cannot practicably be filed before they are used. Such orders, rules and regulations shall be made known to insurers and rating organizations affected thereby. The Board may make such examination as it may deem advisable to ascertain whether any rates affected by such order meet the standards set forth in this act. This subsection shall not apply to workers' compensation filings.

I. If the Board finds that a filing does not meet the requirements of this act, it shall send to the insurer or rating organization which made such filing, written notice of disapproval of such filing, specifying therein in what respects it finds that such filing fails to meet the requirements of this act and stating that such filing shall not become effective to the extent disapproved.

Added by Laws 1957, p. 244, § 903, operative July 1, 1957. Amended by Laws 1970, c. 314, § 1, emerg. eff. April 27, 1970; Laws 1982, c. 59, § 1, operative Oct. 1, 1982; Laws 1987, c. 210, § 19, eff. July 1, 1987; Laws 1988, c. 291, § 3, eff. Nov. 1, 1988; Laws 1991, c. 204, § 10, eff. Sept. 1, 1991; Laws 1994, c. 129, § 4, eff. Sept. 1, 1994; Laws 1997, c. 418, § 35, eff. Nov. 1, 1997; Laws 2001, c. 363, § 8, eff. July 1, 2001; Laws 2004, c. 519, § 7, eff. Nov. 1, 2004; Laws 2005, c. 1, § 36, emerg. eff. March 15, 2005; Laws 2005, c. 129, § 5, eff. Nov. 1, 2005.

NOTE: Laws 2004, c. 274, § 6 repealed by Laws 2005, c. 1, § 37, emerg. eff. March 15, 2005.

§36-903.1. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-903.2. Workplace safety plans - Expenses of implementation - Prohibition of increase of rate filings or reimbursement.

A. No insurance company shall request and the State Board for Property and Casualty Rates shall not approve an increase for the expense portion of insurance company rate filings based upon the requirements of Sections 11 through 14 of this act.

B. The State Insurance Fund shall not request and its Board of Managers shall not approve reimbursement for expenses based upon the requirements of Sections 11 through 14 of this act above the limitation on expenses of administration of the State Insurance Fund specified in Section 139 of Title 85 of the Oklahoma Statutes.

Added by Laws 1994, 2nd Ex. Sess., c. 1, § 15, emerg. eff. Nov. 4, 1994.

§36904. Inspection of filed rates; information to insured; proceedings by aggrieved persons; false or misleading information; withholding policy or evidence.

A. All schedules and insurance rates and supporting information filed in accordance with the provisions of this article shall be open to inspection to the public after such filings are made.

B. Every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charge as it may make, furnish to any insured affected by a rate made by it, or to the authorized representative of such insured, all pertinent information as to such rate.

C. Every rating organization and every insurer which makes its own rates shall provide within the state reasonable means whereby any person, aggrieved by the application of its rating system, may be heard, in person or by his authorized representative, on his written request to revise the manner in which such rating system has been applied in connection with the insurance afforded him. If the rating organization or insurer fails to grant or reject such request, within thirty (30) days after it is made, this applicant may proceed in the same manner as if his application had been rejected. Any party affected by the action of such rating organization or such insurer on such request may, within thirty (30) days after written notice of such action, appeal to the Board, which, after a hearing held upon not less than ten (10) days written notice to the appellant and to such rating organization or insurer, may modify, affirm or reverse such action.

D. No insurer, agent, broker, or rating organization may willfully withhold required information from or give false or misleading information to the Board.

E. No insurer, agent, or broker shall fail to furnish to an insured any policy or comparable evidence of insurance to which the insured is entitled.

Amended by Laws 1987, c. 210, § 20, eff. July 1, 1987.

§36905. Cooperation by insurers; membership in rating organization not required.

A. Subject to the provisions of this article and when licensed by the Board, two or more insurers may cooperate or act in concert with each other:

1. As a rating organization, for the purpose of making rates, rating plans, or rating systems. No insurer or group of insurers under the same general management and control shall be deemed to be a rating organization; and

2. As an advisory organization, for the purpose of preparing policy forms, making underwriting rules, surveys, or inspections incident to but not including the making of rates, rating plans or rating systems, or collecting and furnishing to insurers or rating organizations loss or expense statistics or other statistical data, and acting in an advisory as distinguished from a rate making capacity.

B. Subject to the provisions of this article, two or more insurers may cooperate or act in concert with each other:

1. As a group or fleet of insurers operating under the same general management and control, for the purpose of conducting a complete insurance service; or

2. As a group, association, or other organization for the purpose of joint underwriting or joint reinsurance, or of equitable apportionment and proper rating of insurance which may be afforded applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods.

C. No insurer shall be required by this law to be a member or subscriber of any rating organization or stamping bureau.

Amended by Laws 1987, c. 210, § 21, eff. July 1, 1987.

§36906. Group, associations and organizations; duties; licensing; adherence to filings.

A. Every group, association, or other organization of insurers authorized to act as such under the terms of this article, except groups or fleets described in subsections C and D of Section 905 shall file with the Board (1) a copy of its constitution, its articles of agreement or association, or its certificate of incorporation, and of its bylaws, rules, and regulations governing the conduct of its business; (2) a list of its members and subscribers, if any; (3) the name and address of a resident of the state upon whom notices or orders of the Board or process affecting it may be served; and shall notify and file with the Board promptly any change in the foregoing.

B. No group, association, or organization shall engage in any unfair or unreasonable practice in the conduct of its business.

C. No rating organization shall conduct its business with respect to insurance on risks located within the state without a license from the Board. To obtain such a license, a rating organization shall, in addition to the matters specified in subsection A of this section, supply to the Board a statement relating to its qualifications as a rating organization and its ability adequately to administer the rates, rules and regulations which it may make in behalf of its members and subscribers. No rating organization shall be licensed in this state unless it execute and file with the Board its permission for any of its members to deviate from its rate, in accordance with subsection F of this section.

If the Board finds that the applicant is competent, trustworthy, and otherwise qualified to act as a rating organization, it shall forthwith issue a license specifying the kinds of insurance and subdivisions thereof for which the applicant is authorized to act as a rating organization, but if the Board does not so find within thirty (30) days after it has received such application, it shall at the request of the applicant, give the applicant a full hearing.

Licenses issued pursuant to this section shall remain in effect until suspended or revoked by the Board unless voluntarily surrendered by the rating organization. The fee for said license shall be Twentyfive Dollars ($25.00).

The license of any rating organization may be suspended or revoked by the Board for failure to comply with this law or for incompetence or untrustworthiness. The Board shall not revoke or suspend the license of any rating organization until it has given it not less than thirty (30) days notice of the proposed revocation or suspension and of the grounds alleged therefor and has afforded the rating organization an opportunity to be heard. In lieu of revoking or suspending the license of any rating organization after hearing and for the causes named herein, the Board may subject such rating organization to a penalty of not more than Two Hundred Fifty Dollars ($250.00) when in its judgment it finds that the public interest would be best served by the continued operation of the rating organization.

D. Every licensed rating organization shall, subject to reasonable rules and regulations, permit any insurer not a member to be subscriber to its rating services for any kind of insurance, or subdivision thereof for which it is authorized to act; shall give notice of changes in such rules and regulations to its subscribers; and shall furnish its rating services without discrimination to its members and subscribers.

E. No licensed rating organization shall adopt any rule, effect any agreement, or take any action contrary to or inconsistent with the provisions of this law or which would have the effect of prohibiting, restricting, or regulating the payment or allowance by any of its members or subscribers of dividends, savings, or unabsorbed premium deposits; nor practice or sanction any plan or act of boycott, coercion, or intimidation; nor enter into or sanction any contract or act by which any person is restrained from lawfully engaging in the business of insurance.

F. Every member of or a subscriber to a licensed rating organization shall adhere to the filings made on its behalf by such organization except that any such member or subscriber may deviate from such filing if it has filed with the rating organization and with the Board, at least fifteen (15) days before the effective date thereof, the deviation to be applied and the information upon which such deviation is based. The Board shall disapprove such deviation if it finds that the deviation to applied would not be uniform in its application or would be inconsistent with the provisions of this article.

§36907. General powers of Board.

In addition to any powers hereinbefore expressly enumerated in this law, the Board shall have full power and authority to enforce by regulations, orders, or otherwise all and singular, the provisions of this law, and the full intent thereof. In particular it shall have the authority and power:

1. To examine all records of insurers, advisory organizations and rating organizations and to require any insurer, agent, broker, advisory organization, and rating organization to furnish under oath such information as it may deem necessary for the administration of this law. The expense of such examination shall be paid by the insurer, advisory organization, or rating organization examined. In lieu of such examination the Board may, in its discretion, accept a report of examination made by any other insurance supervisory authority;

2. To make and enforce such reasonable orders, rules, and regulations as may be necessary in making this law effective, but such orders, rules and regulations shall not be contrary to or inconsistent with the provisions of this law; and

3. To issue an order, after a full hearing to all parties in interest requiring any insurer, group, association, or organization of insurers and the members and subscribers thereof to cease and desist from any unfair or unreasonable practice.

Amended by Laws 1987, c. 210, § 22, eff. July 1, 1987.

§36907.1. Monitoring and examination of rates and rating organizations.

A. The Board shall monitor and examine the adequacy of rates of any insurer and rating organization in this state. In so doing, the Board shall:

1. Utilize existing relevant information, analytical systems and other sources; or

2. Cause or participate in the development of new relevant information, analytical systems and other sources.

B. The Board may require the maintenance and submission of records, memoranda or information relating to rates from such insurers and rating organizations. The Board or any authorized representative of the Board may examine any such record, memoranda or information concerning rates. The application for the acceptance of any license or permit issued pursuant to the provision of this title shall be deemed consent for the inspection and examination of such records, memoranda or information.

C. The Board shall conduct such monitoring and examination required pursuant to this section within the Insurance Department, at the place of business of such insurers and rating organizations, in cooperation with other state insurance departments, through outside contractors or in any other appropriate manner.

D. The cost of such examination and monitoring shall be assessed against insurers and rating organizations on an equitable and practical basis established, after hearing, in a rule promulgated by the Board.

E. The monitoring and examinations required pursuant to the provisions of this section, shall be conducted in a reasonably economical manner.

F. Any monies collected from administrative fees, fines, penalties and assessments against insurers and rating organizations pursuant to this act shall be deposited to the credit of the Insurance Commissioner's Revolving Fund for the purpose of carrying out and enforcing the provisions of this article.

Added by Laws 1985, c. 236, § 4, emerg. eff. July 8, 1985. Amended by Laws 1987, c. 210, § 23, eff. July 1, 1987.

§36-908. Administrative penalties; suspension of licenses.

The State Board for Property and Casualty Rates may, if it finds that any person or organization has violated the provisions of any statute for which the Board has jurisdiction, impose a penalty of not less than One Hundred Dollars ($100.00) nor more than Five Thousand Dollars ($5,000.00) for each such violation. Such penalties may be in addition to any other penalty provided by law.

No penalty shall be imposed except upon a written order of the Board, stating its findings made after a hearing held not less than ten (10) days after written notice to a person or organization alleged to have violated any statute for which the Board has jurisdiction specifying the alleged violation.

Added by Laws 1957, p. 247, § 908. Amended by Laws 1983, c. 68, § 8, eff. Nov. 1, 1983; Laws 1987, c. 210, § 24, eff. July 1, 1987; Laws 1997, c. 418, § 36, eff. Nov. 1, 1997.

§36924.1. Automobile or motorcycle accident prevention course for certain individuals Reduction of premium charges.

A. Any schedule of rates or rating plan for automobile or motorcycle liability and physical damage insurance submitted to or filed with the State Insurance Commissioner shall provide for an appropriate reduction in premium charges for those insured persons for a three-year period after successfully completing a motor vehicle accident prevention course which shall include but not be limited to an automobile or motorcycle accident prevention course meeting the criteria established by the Department of Public Safety. Provided, however, there shall be no reduction in premiums for a selfinstructed course or a course which does not provide for actual classroom or field driving instruction for a minimum number of hours as determined by the Department of Public Safety. Provided further, there shall be no reduction in premiums for a course attended pursuant to a court order in connection with a motor vehicle violation or an alcohol or drugrelated offense.

B. All insurance companies writing automobile or motorcycle liability and physical damage insurance in this state shall allow an appropriate reduction in premium charges to all eligible persons pursuant to this section.

C. The approved course shall be taught by instructors approved by the Department of Public Safety.

D. Upon successfully completing the approved course, each participant shall be issued by the sponsoring agency of the course, a certificate which shall be the basis of qualification for the discount on insurance.

E. Each participant shall successfully complete an approved course each three (3) years to continue to be eligible for the discount on insurance.

F. An approved course pursuant to this section shall provide at least six (6) hours of instruction.

Added by Laws 1985, c. 122, § 1, eff. Jan. 1, 1986. Amended by Laws 1990, c. 297, § 1, eff. Sept. 1, 1990; Laws 1991, c. 204, § 11, eff. Sept. 1, 1991; Laws 1995, c. 138, § 1, eff. Nov. 1, 1995; Laws 2002, c. 49, § 1, eff. Nov. 1, 2002; Laws 2004, c. 519, § 8, eff. Nov. 1, 1004.

§36924.2. Rating plans for workers' compensation selfinsureds Reduced premium charges for successful participation in occupational safety and health programs Qualification Certificate Records Review of premium credit program.

A. Any rate, schedule of rates or rating plan for workers' compensation insurance submitted to or filed with the State Board for Property and Casualty Rates, or fixed by the Board of Managers of CompSource Oklahoma, and premiums, by whatever name, for workers' compensation for selfinsureds except for group selfinsured associations shall provide for an appropriate reduction in premium charges, by whatever name, for those eligible insured employers who have successfully participated in the occupational safety and health consultation, education and training program administered by the Commissioner of the Department of Labor pursuant to Section 414 of Title 40 of the Oklahoma Statutes.

B. All insurance companies writing workers' compensation insurance in this state, including CompSource Oklahoma, and all selfinsureds providing workers' compensation insurance except for group selfinsured associations, shall allow an appropriate reduction in premium charges to all eligible employers who qualify for the reduction pursuant to the provisions of this section.

C. Eligible employers shall be those employers:

1. Who are insured by an insurance company writing workers' compensation insurance in this state;

2. Who are selfinsured; or

3. Who are insured by CompSource Oklahoma.

D. In order to qualify for the reduction in workers' compensation insurance premium, an employer shall successfully participate annually in the occupational safety and health consultation, education and training program administered by the Department of Labor. Successful participation shall be defined as:

1. Undergoing a safety and health hazard survey of the workplace, including an evaluation of the employer's safety and health program and onsite interviews with employees by the Department's consultant;

2. Correcting all hazards identified during the onsite visit within a reasonable period of time as established by the Department;

3. Establishing an effective workplace safety and health program and implementing program provisions within a reasonable period of time as established by the Department. The program shall include:

a. demonstration of management commitment to worker safety and health,

b. procedures for identifying and controlling workplace hazards,

c. development and communication of safety plans, rules and work procedures, and

d. training for supervisors and employees in safe and healthful work practices;

4. Reducing by onethird (1/3) or more the extent to which the lost workday case rate, as measured by the Department of Labor, was above the national average for the industry at the time the employer elected to participate in the occupational safety and health consultation, education and training program, or maintaining a rate at or below the national average for the industry; and

5. Documenting a reduction in workers' compensation claims for the preceding year by showing one of the following:

a. a ten percent (10%) reduction in the dollar amount of claims,

b. a ten percent (10%) reduction in the severity of claims, or

c. no reported claims,

as a result of attending the occupational safety and health consultation, education and training program administered by the Department of Labor.

E. 1. Upon successful participation in the occupational safety and health consultation, education and training program as defined in subsection D of this section, an employer shall be issued a certificate by the Commissioner of the Department of Labor which shall be the basis of qualification for the reduction in workers' compensation insurance premium, by whatever name. The certificate shall qualify the employer for a premium reduction for a oneyear period.

2. Upon issuance of a certificate to an employer, the Commissioner of the Department of Labor shall mail a copy of the certificate to the employer's insurer. Any insurer required by this section to allow an appropriate reduction in premium charges to a qualified employer which willfully fails to allow such reduction after receiving a copy of the certificate shall be subject, after notice and hearing, to an administrative fine, imposed by the Insurance Commissioner, which shall be not less than Ten Thousand Dollars ($10,000.00) or three times the amount of the premium reduction, whichever is greater. The Insurance Commissioner shall promulgate rules necessary to carry out the provisions of this paragraph.

F. The Insurance Commissioner, the Administrator of the Workers' Compensation Court and the CompSource Oklahoma President and Chief Executive Officer shall maintain records documenting reductions in workers' compensation insurance premiums granted pursuant to this section and shall make an annual report of such reductions to the President Pro Tempore of the Senate and the Speaker of the House of Representatives by May 1 of each year. Insurers shall report such premium reductions in their annual statement.

G. CompSource Oklahoma shall instruct its actuary to continually review the insurance premium credit program, developed and implemented pursuant to Section 142a of Title 85 of the Oklahoma Statutes, to determine if the program is detrimental to the financial stability of CompSource Oklahoma. If the actuary determines that the program contributes detrimentally to the financial stability of CompSource Oklahoma, the actuary shall immediately recommend to the CompSource Oklahoma President and Chief Executive Officer that the safety premium reduction cease for a oneyear period.

Added by Laws 1988, c. 317, § 1, eff. Nov. 1, 1988. Amended by Laws 1990, c. 2, § 1, eff. Sept. 1, 1990; Laws 1993, c. 349, § 24, eff. Sept. 1, 1993; Laws 1994, c. 129, § 5, eff. Sept. 1, 1994; Laws 2002, c. 50, § 1, eff. Nov. 1, 2002.

§36-924.3. Appeals of rating classification.

The State Board for Property and Casualty Rates shall adopt rules and regulations creating a procedure for an employer to appeal its rating classification for workers' compensation insurance to the Board. Any hearings pursuant to this procedure shall be subject to the Administrative Procedures Act.

Added by Laws 1990, c. 283, § 21, eff. Sept. 1, 1990.

§36928. Rating organizations.

A. Every group, corporation, unincorporated association, organization of insurers, partnership or individual, whether located within or outside this state, may make application to the Board for license as a rating organization for such kinds of insurance, or subdivision or class of risk or a part or combination thereof as are specified in its application and shall file: (1) a copy of its constitution, its articles of agreement or association, or its certificate of incorporation, and of its bylaws, rules and regulations governing the conduct of its business, (2) a list of its members and subscribers, (3) the name and address of a resident of this state upon whom notices or orders of the Board or process affecting such rating organization may be served, and (4) a statement of its qualifications as a rating organization. If the Board finds that the applicant is competent, trustworthy and otherwise qualified to act as a rating organization and that its constitution, articles of agreement or association, or certificate of incorporation and its bylaws, rules and regulations governing the conduct of its business conform to the requirements of law, it may issue a license specifying the kinds of insurance, or subdivision or class of risk, or part or combination thereof, for which the applicant is authorized to act as a rating organization. Every such application shall be granted or denied in whole or in part by the Board within ninety (90) days of the date of its filing with it. Licenses pursuant to this section shall remain in effect for one (1) year until suspended or revoked by the Board. The fee for said license shall be Five Hundred Dollars ($500.00).

B. Licenses issued pursuant to this section may be suspended or revoked by the Board, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this section. The Board shall not revoke or suspend the license of any rating organization until it has given not less than thirty (30) days' notice of the proposed revocation or suspension and of the grounds alleged therefor. In lieu of revoking or suspending a license, the Board may impose a penalty of not more than One Hundred Dollars ($100.00) for each violation. Each day such violation continues shall constitute a separate offense.

C. Every rating organization shall notify and file promptly with the Board every change in: (1) its constitution, its articles of agreement or association, or its certificate of incorporation and its bylaws, rules and regulations governing the conduct of its business, (2) its list of members and subscribers, and (3) the name and address of the resident of this state designated by it upon whom notices or orders of the Board or process affecting such rating organization may be served.

D. Subject to rules and regulations which have been approved by the Board as reasonable, each rating organization shall permit any insurer, not a member, to be a subscriber to its rating services for any kind of insurance, subdivision or class of risk, or a part or combination thereof, for which it is authorized to act as a rating organization. Notice of proposed changes in such rules and regulations shall be given to subscribers. Each rating organization shall furnish its rating services without discrimination to its members and subscribers. The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit an insurer as a subscriber shall, at the request of any subscriber or any such insurer, be reviewed by the Board at a hearing held upon at least ten (10) days' written notice to such rating organization and to such subscriber or insurer. If the Board finds that such rule or regulation is unreasonable in its application to subscribers, it shall order that such rule or regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject an insurer's application for subscribership within thirty (30) days after it was made, the insurer may request a review by the Board as if the application had been rejected. If the Board finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, it shall order the rating organization to admit the insurer as a subscriber. If it finds that the action of the rating organization was justified, it shall make an order affirming its action.

E. No rating organization shall adopt any rule or effect any agreement, or take any action contrary to or inconsistent with the provisions of this act or the effect of which would be, to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers; nor practice nor sanction any plan or act of boycott, coercion, or intimidation; nor enter into nor sanction any contract or act by which any person is restrained from lawfully engaging in the business of insurance.

F. Cooperation among rating organizations or among rating organizations and insurers in ratemaking or in other matters within the scope of this act is hereby authorized, provided the filings resulting from such cooperation are subject to all the provisions of this act which are applicable to filings generally. The Board may review such cooperative activities and practices and if, after a hearing, it finds that any such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this act, it may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this act, and require the discontinuance of such activity or practice.

G. Any rating organization may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements or other evidences of insurance, or the cancellation thereof, and may make reasonable rules governing their submission. Such rules shall contain a provision that in the event any insurer does not, within ninety (90) days, furnish satisfactory evidence to the rating organization of the correction of any error or omission previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the Board thereof. All information so submitted for examination shall be confidential.

H. Any rating organization may subscribe for or purchase actuarial, technical or other services, and such services shall be available to all members and subscribers without discrimination.

Amended by Laws 1987, c. 210, § 25, eff. July 1, 1987.

§36929. Adherence to filings of rating organization - Deviations.

Every member of, or subscriber to, a licensed rating organization may adhere to the filings made on its behalf by such organization, except that any such member or subscriber may deviate from such filings as authorized herein if it has filed with the rating organization and with the Board, the deviation to be applied and information necessary to justify the deviation, provided such deviation, other than direct deviations as are authorized by this act, is approved by the Board. If approved, the deviation shall remain in force until such approval is withdrawn by the insurer with the approval of the Board when required. The Board shall approve any such deviation requiring Board action unless it finds that the deviation to be applied would not be uniform in its application or would be inconsistent with the provisions of this act, but unless it approves the deviation within thirty (30) days it shall, within a reasonable time, grant a hearing to the applicant at the applicant's request.

Added by Laws 1980, c. 322, § 23, eff. Jan. 1, 1981. Amended by Laws 1987, c. 210, § 26, eff. July 1, 1987; Laws 2001, c. 363, § 9, eff. July 1, 2001; Laws 2004, c. 519, § 9, eff. Nov. 1, 2004.

§36930. Appeals from actions or decisions of rating organization.

Any member or subscriber of a rating organization may appeal to the Board from the action or decision of such rating organization in approving or rejecting any proposed change in, or addition to, the filings of such rating organization and the Board shall, after a hearing held upon not less than ten (10) days' written notice to the appellant and to the rating organization, issue an order approving the action or decision of such rating organization or directing it to give further consideration to such proposal, or if such appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, it may, in the event it finds that such action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, in a manner consistent with its findings, within a reasonable time after the issuance of such order.

Amended by Laws 1987, c. 210, § 27, eff. July 1, 1987.

§36931. Advisory organizations.

A. Every group, association or other organization of insurers or rating organizations, whether located within or outside this state, which assists insurers who make their own filings by the collection and furnishing of loss or expense statistics, or by the submission of recommendations, but which do not make rate filings under this act, shall be known as an advisory organization.

B. Every advisory organization shall file with the Board:

1. A copy of its constitution, its articles of agreement or association, or its certificate of incorporation, and its bylaws, rules and regulations governing its activities;

2. A list of its members;

3. The name and address of a resident of this state upon whom notices or orders of the Board, or process issued at its direction, may be served; and

4. An agreement that the Board may examine such advisory organization in accordance with the provisions of this act.

C. If, after a hearing, the Board finds that the furnishing of such information, or assistance, involved any act or practice which is unfair or unreasonable or otherwise inconsistent with the provisions of this act, it may issue a written order specifying in what respects such act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this act, and require the discontinuance of such act or practice.

D. No insurer which makes its own filings, nor any rating organization shall support its filings by statistics, or adopt ratemaking recommendations, furnished to it by an advisory organization which has not complied with this section, or with an order of the Board involving such statistics or recommendations issued under subsection C of this section. If the Board finds such insurer or rating organization to be in violation of this subsection it may issue an order requiring the discontinuance of such act or practice.

Amended by Laws 1987, c. 210, § 28, eff. July 1, 1987.

§36932. Joint underwriting or joint reinsurance.

A. Every group, association or other organization of insurers which engages in joint underwriting or joint reinsurance, shall be subject to regulation with respect thereto, as herein provided, subject, with respect to joint underwriting, to all other provisions of this act, and with respect to joint reinsurance as provided in this act.

B. If, after a hearing, the Board finds that any activity or practice of any such group, association or other organization, is unfair or unreasonable, or otherwise inconsistent with the provisions of this act, it may issue a written order specifying in what respects such act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this act, and require the discontinuance, within a reasonable time under the circumstances, of such act or practice.

Amended by Laws 1987, c. 210, § 29, eff. July 1, 1987.

§36933. Periodic examination of organizations and groups.

A. The Board shall, at least once in five (5) years, make or cause to be made an examination of each rating organization licensed in this state as provided in this act, and it may, as often as it may deem expedient, make or cause to be made an examination of each advisory organization referred to in this act, and of each group, association, or other organization, referred to in this act. The reasonable cost of any such examination shall be paid by the rating organization, advisory organization, group, or other organization, examined upon presentation of a detailed account of such costs.

B. The officers, managers, agents and employees of such rating organization, advisory organization, group, association or other organization may be examined, at any time, under oath, and shall exhibit all books, records, accounts, documents or agreements governing its method of operation.

C. In lieu of any such examination the Board may accept the report of an examination made by the insurance supervisory official of another state, pursuant to the laws of such state.

Amended by Laws 1987, c. 210, § 30, eff. July 1, 1987.

§36934. Statistics and data; rules and regulations.

A. The Board shall promulgate rules and statistical plans adapted to each of the rating systems on file, which may be modified, from time to time, and which shall be used thereafter by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available, at least annually, in such form and detail as may be necessary to aid it in determining whether rating systems comply with the standards set forth in this act.

1. Such rules and plans may also provide for the recording and reporting of expense experience items which are specially applicable to this state and are not susceptible to determination by a prorating of countrywide expense experience.

2. In promulgating such rules and plans, the Board shall give due consideration to the rating system on file and, in order that such rules and plans may be as uniform as is practicable among the several states, to the rules and to the form of the plans used for such rating systems in other states.

3. No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it.

4. The Board may designate one or more rating organizations or other agencies to assist it in gathering such experience and making compilations thereof, and such compilations shall be made available, subject to reasonable rules promulgated by the Board, to insurers and rating organizations.

B. Reasonable rules and plans may be promulgated by the Board for the interchange of data necessary for the application of rating plans.

C. In order to further uniform administration of rate regulatory laws, the Board and every insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers and rating organizations in other states and may consult with them with respect to ratemaking and the application of rating systems.

D. The Board may make reasonable rules and regulations necessary to effect the purposes of this act.

Amended by Laws 1987, c. 210, § 31, eff. July 1, 1987.

§36-935. Withholding or giving false or misleading information - Violations - Penalties.

A. No person shall willfully withhold information from, or knowingly give false or misleading information to, the Board, or any statistical agency designated by the Board, or any rating organization, which will affect the rates or premiums chargeable under this act.

B. A person convicted of violating this section shall be guilty of a felony and, upon conviction, shall be punished by a fine of not less than One Thousand Dollars ($1,000.00) nor more than Ten Thousand Dollars ($10,000.00), or by imprisonment for not more than three (3) years or by both such fine and imprisonment.

Added by Laws 1980, c. 322, § 29, eff. Jan. 1, 1981. Amended by Laws 1987, c. 210, § 32, eff. July 1, 1987; Laws 1997, c. 133, § 446, eff. July 1, 1999; Laws 1999, 1st Ex.Sess., c. 5, § 328, eff. July 1, 1999.

NOTE: Laws 1998, 1st Ex.Sess., c. 2, § 23 amended the effective date of Laws 1997, c. 133, § 446 from July 1, 1998, to July 1, 1999.

§36-936. Suspension or revocation of license.

A. The Board may suspend the license of any rating organization which fails to comply with an order of the Board within the time limit established by such order, or any extension thereof which the Board may grant. The Board shall not suspend the license of any rating organization for failure to comply with an order until the time prescribed for judicial review has expired or if an action for judicial review has been commenced, until the order has been affirmed or the action has been dismissed. The Board may determine when a suspension of license shall become effective and when it shall terminate, unless it modifies or rescinds the suspension, or until the order upon which the suspension is based is modified, rescinded, or reversed.

B. No license shall be suspended or revoked except upon a written order of the Board, stating its findings of fact and conclusions of law, made after a hearing held upon not less than ten (10) days' written notice to the person or legal entity, specifying the alleged violation.

Added by Laws 1980, c. 322, § 30, eff. Jan. 1, 1981. Amended by Laws 1987, c. 210, § 33, eff. July 1, 1987; Laws 1997, c. 418, § 37, eff. Nov. 1, 1997.

§36937. Hearing on order or decision by Board made without a hearing Appeal to Supreme Court.

A. Any insurer or rating organization aggrieved by any order or decision of the Board, made without a hearing, may, within thirty (30) days after notice of the order to the insurer or organization, make written request to the Board for a hearing thereon. The Board shall hear such party or parties within twenty (20) days after receipt of such request and shall give not less than ten (10) days' written notice of the time and place of the hearing. Within fifteen (15) days after such hearing, the Board shall affirm, reverse or modify its previous action, specifying its reasons therefor. Pending such hearing and decision thereon, the Board may suspend or postpone the effective date of its previous action.

B. Nothing contained in this act shall require the observance at any hearing, of formal rules of pleading or evidence.

C. Except as otherwise provided in this act, any order or decision of the State Board for Property and Casualty Rates made pursuant to this act shall be subject to review by appeal to the Supreme Court of Oklahoma at the instance of any party in interest. Such party in interest may appeal from such order or decision by filing with the Clerk of the Supreme Court, within thirty (30) days from the date of such order or decision, a petition in error with a copy of the order or decision appealed from. The time limit prescribed herein for filing the petition in error may not be extended. The Supreme Court shall prescribe, by rule, the manner in which the record of the proceedings, sought to be reviewed, shall be perfected and the time for its completion. The appeal shall not stay the execution of any order or decision of the Board unless the Supreme Court shall, for cause shown, order that said decision or order be stayed pending such appeal, in which event the Court shall determine the terms and conditions upon which the same shall be stayed; provided, premiums collected prior to the effective date of the order of the Court imposing a stay shall be retained by the insurer unless the Court finds that such premiums were obtained by fraud, or unless otherwise ordered by the Court.

The Court may, in disposing of the issue before it, determine all issues of law and fact, and may modify, affirm or reverse the order or decisions of the Board in whole or in part.

Amended by Laws 1988, c. 28, § 1, eff. Nov. 1, 1988.

§36-940. Inquiry regarding making claim - Prohibited acts.

No insurer that issues any type of property or casualty insurance policy in this state shall increase premium rates, cancel a policy, or refuse to issue or renew a policy solely on the basis of a policyholder inquiring about making a claim, if the policyholder does not in fact submit a claim.

Added by Laws 2004, c. 32, § 1, eff. Nov. 1, 2004.

§36941. Certain cancellation, refusal to renew or increase of premium rate for motor vehicle liability or collision insurance policies prohibited Exemptions.

A. No insurance carrier who issues motor vehicle insurance policies in this state shall assign driving record points, cancel, refuse to issue or renew, or charge a higher premium rate for any motor vehicle liability or collision insurance policy for the reason that the insured has been involved in a motor vehicle collision and was not at fault.

B. No insurance carrier who issues motor vehicle insurance policies in this state shall cancel, refuse to issue or renew, or charge a higher premium for any motor vehicle liability or collision insurance policy for the reason that the insured had lower liability limits with a previous insurer without actuarial justification. This prohibition includes using prior limits for company or tier placement unless the insurer provides actuarial justification.

C. This section shall not apply to an insured who has been convicted of:

1. Homicide or assault arising out of the operation of any motor vehicle; or

2. A violation of Section 11902 or 761 of Title 47 of the Oklahoma Statutes as being impaired by or under the influence of alcohol or intoxicating liquor or who was under the influence of any substance included in the Uniform Controlled Dangerous Substances Act.

Added by Laws 1980, c. 99, § 1, eff. Oct. 1, 1980. Amended by Laws 1984, c. 254, § 4, eff. Nov. 1, 1984; Laws 1988, c. 27, § 1, eff. Nov. 1, 1988. Renumbered from § 7508 of Title 47 by Laws 1988, c. 27, § 4, eff. Nov. 1, 1988. Amended by Laws 2001, c. 363, § 10, eff. July 1, 2001; Laws 2004, c. 519, § 10, eff. Nov. 1, 2004; Laws 2005, c. 1, § 38, emerg. eff. March 15, 2005.

NOTE: Laws 2004, c. 96, § 1 repealed by Laws 2005, c. 1, § 39, emerg. eff. March 15, 2005.

§36-941.2. Motor vehicle liability policies - Provision relating to financial responsibility limits of another state or province.

Every motor vehicle liability insurance policy approved by the Insurance Commissioner shall include a provision providing that the financial responsibility limits of another state or province shall be met if so required by the other state and if the financial responsibility limits of the other state or province are higher than those required by the state where the motor vehicle is principally garaged. The policy does not have to contain the exact wording of this section or any other exact wording. Language which is substantially similar to this section shall be considered to be in compliance with this section.

Added by Laws 2004, c. 96, § 2, eff. Nov. 1, 2004.

§36942. Motor vehicle liability or collision policies Traffic record as basis of determination Penalties.

Any insurance carrier that issues motor vehicle liability or collision insurance policies in this state shall not establish or apply premium rates, increase premium rates, cancel a policy, or refuse to issue or renew a policy, based on any traffic record maintained by the Department of Public Safety which covers a period of time more than three (3) years prior to the date the insurance carrier makes a determination to take any such action.

Added by Laws 1988, c. 27, § 2, eff. Nov. 1, 1988. Amended by Laws 2004, c. 519, § 11, eff. Nov. 1, 2004.

§36-943. Motor vehicle policies - Insurers prohibited from canceling, increasing premium rates or refusing to issue or renew policy based on traffic charges under certain circumstances.

A. No insurance carrier who issues motor vehicle policies in this state shall use traffic complaints, traffic citations or other legal forms of traffic charges as a basis for cancellation of a motor vehicle insurance policy, increasing premium rates for a motor vehicle insurance policy or refusing to issue or renew a motor vehicle insurance policy, where:

1. the insured was acquitted of the charge;

2. the insured was arrested and no charges were filed; or

3. the insured was arrested and the charges were dismissed.

B. The Insurance Commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance business in this state of any insurance carrier violating the provisions of this section or may censure the insurer or impose a fine.

Added by Laws 1990, c. 81, § 1, eff. Sept. 1, 1990.

§36-944. Motor vehicle policies - Restriction on cancellation or increasing rates.

No insurer shall, directly or indirectly, use traffic tickets or convictions for traffic offenses as a basis for cancellation of automobile insurance policies or increasing insurance premium rates for automobile insurance policies where such ticket or conviction is for exceeding the speed limit specified in Article 8 of Chapter 11 of Title 47 of the Oklahoma Statutes, but not exceeding the speed limit previously in force where the violation occurred; nor shall any insurer in any way penalize or adversely affect any insured for any such violation or conviction.

Added by Laws 1974, c. 3, § 2, operative March 4, 1974. Amended by Laws 1987, c. 25, § 2, emerg. eff. April 15, 1987. Renumbered from § 11-801b of Title 47 by Laws 2002, c. 397, § 35, eff. Nov. 1, 2002. Amended by Laws 2005, c. 129, § 6, eff. Nov. 1, 2005.

§36-950. Short title.

This act shall be known and may be cited as the "Use of Credit Information in Personal Insurance Act".

Added by Laws 2003, c. 127, § 1, eff. Nov. 1, 2003.

§36-951. Application of act.

This act shall apply to personal insurance and not to commercial insurance. This act shall apply to personal insurance policies either written to be effective or renewed on or after nine (9) months following the effective date of this act.

Added by Laws 2003, c. 127, § 2, eff. Nov. 1, 2003.

§36-952. Definitions.

As used in this act:

1. "Adverse action" means a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of personal insurance;

2. "Affiliate" means any company that controls, is controlled by, or is under common control with another company;

3. "Applicant" means an individual who has applied to be covered by a personal insurance policy with an insurer;

4. "Consumer" means an insured whose credit information is used or whose insurance score is calculated in the underwriting or rating of a personal insurance policy or an applicant for such a policy;

5. "Consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties;

6. "Credit information" means any credit-related information derived from a credit report, found on a credit report itself, or provided on an application for personal insurance. Information that is not credit-related shall not be considered "credit information", regardless of whether it is contained in a credit report or in an application, or is used to calculate an insurance score;

7. "Credit report" means any written, oral, or other communication of information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing or credit capacity which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor to determine personal insurance premiums, eligibility for coverage, or tier placement;

8. "Insurance score" means a number or rating that is derived from an algorithm, computer application, model, or other process that is based in whole or in part on credit information for the purposes of predicting the future insurance loss exposure of an individual applicant or insured; and

9. "Personal insurance" means private passenger automobile, homeowners, motorcycle, mobile-homeowners and noncommercial dwelling fire insurance policies and boat, personal watercraft, snowmobile and recreational vehicle policies. Such policies must be individually underwritten for personal, family or household use. No other type of insurance shall be included as personal insurance for the purpose of this act.

Added by Laws 2003, c. 127, § 3, eff. Nov. 1, 2003.

§36-953. Use of credit information - Prohibited acts.

An insurer authorized to do business in this state that uses credit information to underwrite or rate risks, shall not:

1. Use an insurance score that is calculated using income, gender, address, zip code, ethnic group, religion, marital status, or nationality of the consumer as a factor;

2. Deny, cancel or fail to renew a policy of personal insurance solely on the basis of credit information, without consideration of any other applicable underwriting factor independent of credit information and not expressly prohibited by paragraph 1 of this section;

3. Base an insured's renewal rates for personal insurance solely upon credit information, without consideration of any other applicable factor independent of credit information;

4. Take an adverse action against a consumer solely because he or she does not have a credit card account, without consideration of any other applicable factor independent of credit information;

5. Consider an absence of credit information or an inability to calculate an insurance score in underwriting or rating personal insurance, unless the insurer does one of the following:

a. treats the consumer as otherwise approved by the Insurance Commissioner, if the insurer presents information that such an absence or inability relates to the risk for the insurer,

b. treats the consumer as if the applicant or insured had neutral credit information, as defined by the insurer, or

c. excludes the use of credit information as a factor and use only other underwriting criteria;

6. Take an adverse action against a consumer based on credit information, unless an insurer obtains and uses a credit report issued or an insurance score calculated within ninety (90) days from the date the policy is first written or renewal is issued;

7. Use credit information unless not later than every thirty-six (36) months following the last time that the insurer obtained current credit information for the insured, the insurer recalculates the insurance score or obtains an updated credit report. Regardless of the requirements of this subsection:

a. at annual renewal, upon the request of a consumer or the consumer's agent, the insurer shall reunderwrite and rerate the policy based upon a current credit report or insurance score. An insurer need not recalculate the insurance score or obtain the updated credit report of a consumer more frequently than once in a twelve-month period,

b. the insurer shall have the discretion to obtain current credit information upon any renewal before the thirty-six (36) months, if consistent with its underwriting guidelines, and

c. no insurer need obtain current credit information for an insured, despite the requirements of paragraph 7 of this section, if one of the following applies:

(1) the insurer is treating the consumer as otherwise approved by the Commissioner,

(2) the insured is in the most favorably priced tier of the insurer, within a group of affiliated insurers. However, the insurer shall have the discretion to order such report, if consistent with its underwriting guidelines,

(3) credit was not used for underwriting or rating such insured when the policy was initially written. However, the insurer shall have the discretion to use credit for underwriting or rating such insured upon renewal, if consistent with its underwriting guidelines, or

(4) the insurer reevaluates the insured beginning no later than thirty-six (36) months after inception and thereafter based upon other underwriting or rating factors, excluding credit information; and

8. Use the following as a negative factor in any insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a policy of personal insurance:

a. credit inquiries not initiated by the consumer or inquiries requested by the consumer for his or her own credit information,

b. inquiries relating to insurance coverage, if so identified on a consumer's credit report,

c. collection accounts with a medical industry code, if so identified on the consumer's credit report,

d. multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the home mortgage industry and made within thirty (30) days of one another, unless only one inquiry is considered, and

e. multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry and made within thirty (30) days of one another, unless only one inquiry is considered.

Added by Laws 2003, c. 127, § 4, eff. Nov. 1, 2003.

§36-954. Reunderwriting and rerating of insured - Refund of overpayment.

If it is determined through the dispute resolution process set forth in the federal Fair Credit Reporting Act, 15 USC 1681i(a)(5), that the credit information of a current insured was incorrect or incomplete and if the insurer receives notice of such determination from either the consumer reporting agency or from the insured, the insurer shall reunderwrite and rerate the consumer within thirty (30) days of receiving the notice. After reunderwriting or rerating the insured, the insurer shall make any adjustments necessary, consistent with its underwriting and rating guidelines. If an insurer determines that the insured has overpaid premium, the insurer shall refund to the insured the amount of overpayment calculated back to the shorter of either the last twelve (12) months of coverage or the actual policy period.

Added by Laws 2003, c. 127, § 5, eff. Nov. 1, 2003.

§36-955. Disclosure statement.

A. If an insurer writing personal insurance uses credit information in underwriting or rating a consumer, the insurer or its agent shall disclose, either on the insurance application or at the time the insurance application is taken, that it may obtain credit information in connection with such application. Such disclosure shall be either written or provided to an applicant in the same medium as the application for insurance. The insurer need not provide the disclosure statement required under this section to any insured on a renewal policy, if such consumer has previously been provided a disclosure statement.

B. Use of the following example disclosure statement constitutes compliance with this section: "In connection with this application for insurance, we may review your credit report or obtain or use a credit-based insurance score based on the information contained in that credit report. We may use a third party in connection with the development of your insurance score".

Added by Laws 2003, c. 127, § 6, eff. Nov. 1, 2003.

§36-956. Adverse action based upon credit information - Notification to consumer.

If an insurer takes an adverse action based upon credit information, the insurer shall:

1. Provide notification to the consumer that an adverse action has been taken, in accordance with the requirements of the federal Fair Credit Reporting Act, 15 USC 1681m(a); and

2. Provide notification to the consumer explaining the reason for the adverse action. The reasons must be provided in sufficiently clear and specific language so that a person can identify the basis for the insurer's decision to take an adverse action. Such notification shall include a description of up to four factors that were the primary influences of the adverse action. The use of generalized terms such as "poor credit history", "poor credit rating", or "poor insurance score" does not meet the explanation requirements of this subsection. Standardized credit explanations provided by consumer reporting agencies or other third-party vendors are deemed to comply with this section.

Added by Laws 2003, c. 127, § 7, eff. Nov. 1, 2003.

§36-957. Filing of scoring models or other scoring processes.

A. Insurers that use insurance scores to underwrite and rate risks must file their scoring models or other scoring processes with the Insurance Department. A third party may file scoring models on behalf of insurers. A filing that includes insurance scoring may include loss experience justifying the use of credit information.

B. Any filing relating to credit information is considered trade secret under Section 85 et seq. of Title 78 of the Oklahoma Statutes.

Added by Laws 2003, c. 127, § 8, eff. Nov. 1, 2003.

§36-958. Indemnification of agents.

An insurer shall indemnify, defend, and hold agents harmless from and against all liability, fees, and costs arising out of or relating to the actions, errors, or omissions of an agent who obtains or uses credit information or insurance scores for an insurer, provided the agent follows the instructions of or procedures established by the insurer and complies with any applicable law or regulation. Nothing in this section shall be construed to provide a consumer or other insured with a cause of action that does not exist in the absence of this section.

Added by Laws 2003, c. 127, § 9, eff. Nov. 1, 2003.

§36-959. Sale of data or lists by consumer reporting agencies.

A. No consumer reporting agency shall provide or sell data or lists that include any information that in whole or in part was submitted in conjunction with an insurance inquiry about a consumer's credit information or a request for a credit report or insurance score. Such information includes, but is not limited to, the expiration dates of an insurance policy or any other information that may identify time periods during which a consumer's insurance may expire and the terms and conditions of the consumer's insurance coverage.

B. The restrictions provided in subsection A of this section do not apply to data or lists the consumer reporting agency supplies to the insurance agent from whom information was received, the insurer on whose behalf such agent acted, or such insurer's affiliates or holding companies.

C. Nothing in this section shall be construed to restrict any insurer from being able to obtain a claims history report or a motor vehicle report.

Added by Laws 2003, c. 127, § 10, eff. Nov. 1, 2003.

§36-981. Short title and purposes of act.

Short Title and Purposes of Act.

A. Sections 981 through 998 of this title and Sections 22, 23 and 24 of this act shall constitute a part of the Oklahoma Insurance Code and shall be known and may be cited as the "Property and Casualty Competitive Loss Cost Rating Act".

B. The purposes of the Property and Casualty Competitive Loss Cost Rating Act are:

1. To promote price competition among insurers so as to provide rates that are responsive to competitive market conditions;

2. To protect policyholders and the public against the adverse effects of excessive, inadequate or unfairly discriminatory rates;

3. To prohibit unlawful price-fixing agreements and other anticompetitive behavior by insurers;

4. To provide regulatory procedures for the maintenance of appropriate data reporting systems;

5. To provide regulatory controls in the absence of a competitive marketplace; and

6. To authorize essential cooperative action among insurers in the ratemaking process and to regulate such activity to prevent practices that substantially lessen competition or create a monopoly.

Added by Laws 1999, c. 83, § 1, eff. Nov. 1, 1999. Amended by Laws 2004, c. 591, § 12, eff. Nov. 1, 2004.

§36-982. Definitions.

Definitions.

As used in the Property and Casualty Competitive Loss Cost Rating Act:

1. "Accepted actuarial standards" means the standards adopted by the Casualty Actuarial Society Statement of Principles regarding property and casualty ratemaking or the Standards of Practice adopted by the Actuarial Standards Board;

2. "Advisory organization" means any corporation, unincorporated association, partnership or person, whether located inside or outside this state, that is licensed in accordance with Section 991 of this title and which assists insurers in ratemaking-related activities such as enumerated in Section 993 of this title;

3. "Classification system" or "classification" means the process of grouping risks with similar risk characteristics so that differences in costs may be recognized;

4. "Commercial risk" means any kind of risk that is not a personal risk;

5. "Commissioner" means the Commissioner of Insurance of this state;

6. "Competitive market" means a market which has not been found to be noncompetitive pursuant to Section 984 of this title;

7. "Developed losses" means losses, including loss adjustment expenses, adjusted using accepted actuarial standards, to eliminate the effect of differences between current payment or reserve estimates and those which are anticipated to provide actual ultimate loss, including loss adjustment expense payments;

8. "Expenses" means that portion of a rate attributable to acquisition, field supervision, collection expenses, general expenses, taxes, licenses and fees;

9. "Experience rating" means a rating procedure utilizing past insurance experience of the individual policyholder to forecast future losses by measuring the policyholder's loss experience against the loss experience of policyholders in the same classification to produce a prospective premium credit, debit or unity modification;

10. "Joint underwriting" means a voluntary arrangement established to provide insurance coverage for a risk pursuant to which two or more insurers jointly contract with the insured at a price and under policy terms agreed upon between the insurers;

11. "Loss adjustment expense" means the expenses incurred by the insurer in the course of settling claims;

12. "Market" means the statewide interaction between buyers and sellers of identical or readily substitutable products that provide insurance protection of identifiable perils to buyers;

13. "Mass marketed plan" means a method of selling property-liability insurance wherein the insurance is offered to employees of particular employers or to members of particular associations or organizations or to persons grouped in other ways, and the employer or association or other organization has agreed to, or otherwise affiliated itself with, the sale of such insurance to its employees or members;

14. "Noncompetitive market" means a market for which there is a ruling in effect pursuant to Section 984 of this title that a reasonable degree of competition does not exist;

15. "Personal risk" means homeowners, tenants, private passenger nonfleet automobiles, manufactured homes and other property and casualty insurance for personal, family or household needs, including any property and casualty insurance that is otherwise intended for noncommercial coverage;

16. "Pool" means a voluntary arrangement, established on an ongoing basis, pursuant to which two or more insurers participate in the sharing of risks on a predetermined basis. The pool may operate through an association, syndicate or other pooling agreement;

17. "Prospective loss costs" means historical aggregate losses and may include loss adjustment expenses, including all assessments that are loss based, projected through development to their ultimate value and through trending to a future point in time;

18. "Pure premium rate" means that portion of the rate which represents the loss costs per unit of exposure including loss adjustment expense;

19. "Rate" or "rates" means that cost of insurance per exposure unit whether expressed as a single number or as a prospective loss cost with an adjustment to account for the treatment of expenses, profit, and individual insurer variation in loss experience, prior to any application of individual risk variations based on loss or expense considerations, and does not include minimum premium;

20. "Residual market mechanism" means an arrangement, either voluntary or mandated by law, involving participation by insurers in the equitable apportionment among them of insurance which may be afforded applicants who are unable to obtain insurance through ordinary methods;

21. "Special assessments" means guaranty fund assessments, Special Indemnity Fund assessments, Vocational Rehabilitation Fund assessments, and other similar assessments. Special assessments shall not be considered as either expenses or losses;

22. "Statistical plan" means the plan, system or arrangement used in collecting data;

23. "Supplementary rating information" means any manual or plan of rates, classification, rating schedule, minimum premium, policy fee rating rule and any other information needed to determine the applicable premium in effect or to be in effect. This includes, rating plans, territory codes and descriptions and rules which include factors or relativities such as increased limits factors, deductible discounts or relativities, classification relativities or similar factors used to determine the rate in effect or to be in effect;

24. "Supporting information" means the experience and judgment of the filer and the experience or data of other insurers or advisory organizations relied upon by the filer, the interpretation of any other data relied upon by the filer, descriptions of methods used in making the rates and any other information required by the Commissioner to be filed; and

25. "Trending" means any procedure for projecting losses to the average date of loss, or premiums or exposures to the average date of writing, for the period during which the policies are to be effective.

Added by Laws 1999, c. 83, § 2, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 13, eff. Nov. 1, 2004.

§36-983. Scope of act.

The Property and Casualty Competitive Loss Cost Rating Act applies to all forms of property and casualty insurance written in this state by insurers licensed in this state. The Property and Casualty Competitive Loss Cost Rating Act shall not apply to:

1. Reinsurance;

2. Life insurance;

3. Accident and health insurance;

4. Insurance of vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine, excluding inland marine, insurance as determined by the Commissioner; and

5. Title insurance.

Added by Laws 1999, c. 83, § 3, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 14, eff. Nov. 1, 2004; Laws 2005, 1st Ex.Sess., c. 1, § 3, eff. July 1, 2005.

§36-984. Competitive market.

Competitive Market.

A. A competitive market is presumed to exist for a line of insurance unless the Commissioner, after a hearing, issues an order stating that a reasonable degree of competition does not exist in the market. The burden of proof in any hearing shall be placed on the party or parties advocating the position that competition does not exist. Any ruling that a market is not competitive shall identify the factors causing the market not to be competitive. Such order shall expire no later than one (1) year after issue unless rescinded earlier by the Commissioner or unless the Commissioner renews the rule after a hearing and a finding as to the continued lack of a reasonable degree of competition. Any ruling that renews the finding that competition does not exist shall also identify the factors that cause the market to continue not to be competitive.

B. 1. In determining whether a reasonable degree of competition exists within a line of insurance, the Commissioner shall consider the following factors:

a. the number of insurers actively engaged in writing coverage,

b. market shares of the leading writers and the changes in market shares over a reasonable period of time,

c. existence of financial or economic barriers that could prevent new firms from entering the market,

d. measures of market concentration and changes of market concentration over time,

e. whether long-term profitability for insurers in the market is reasonable in relation to industries of comparable business risk, and

f. the relationship of insurers' costs to revenue over a reasonable period of time.

2. All determinations by the Commissioner shall be made on the basis of findings of fact and conclusions of law.

3. The ruling may be challenged in the district court.

C. The Commissioner shall monitor the degree and continued existence of competition in this state on an ongoing basis. In doing so, the Commissioner may utilize existing relevant information, analytical systems and other sources, or rely on some combination thereof. Such activities may be conducted internally within the Insurance Department, in cooperation with other state insurance departments, through outside contractors or in any other appropriate manner.

Added by Laws 1999, c. 83, § 4, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 15, eff. Nov. 1, 2004.

§36-985. Ratemaking standards.

Ratemaking Standards.

A. A rate may not be excessive, inadequate or unfairly discriminatory.

1. No rate in a competitive market may be determined to be excessive. A rate in a noncompetitive market may be determined to be excessive if it is likely to produce a profit that is unreasonably high for the insurance provided.

2. A rate may not be determined to be inadequate unless:

a. the rate is clearly insufficient to sustain projected losses, expenses and special assessments, and

b. the rate is unreasonably low and use of the rate by the insurer has tended or, if continued, will tend to create a monopoly in the market.

3. Unfair discrimination may be determined to exist if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate may not be determined to be unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense levels, or like expenses but different loss exposures, or if it averaged broadly among persons insured within a group, franchise or blanket policy or a mass-marketed plan. No rate in a competitive market shall be considered unfairly discriminatory unless it classifies risk on the basis of race, color, creed, or national origin.

B. In determining whether rates in a noncompetitive market are excessive, inadequate, or unfairly discriminatory, due consideration may be given to:

1. Past and prospective loss experience within and outside this state, in accordance with accepted actuarial principles;

2. Conflagration and catastrophe hazards;

3. A reasonable margin for underwriting profit and contingencies;

4. Loadings for leveling premium rates over time for dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers;

5. Past and prospective expenses both countrywide and those specially applicable to this state; and

6. Provisions for special assessments; and to all other relevant factors including judgment within and outside this state.

C. Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses. No risk classification however, may be based on race, creed, national origin, or the religion of the insured.

D. The expense provisions included in the rates for use by an insurer or group of insurers may differ from those of any other insurer or group of insurers to reflect the requirements of the operating methods of the insurer or group of insurers.

E. The rates may contain provision for contingencies and an allowance permitting a reasonable profit. In determining the reasonableness of the profit, consideration shall be given to the investment income attributable to the line of insurance.

F. Risks may be classified in any way except that no risk may be classified on the basis of race, color, creed, or national origin.

Added by Laws 1999, c. 83, § 5, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 16, eff. Nov. 1, 2004.

§36-985.1. Regulation of rates in market without competition.

A. If the Commissioner determines that competition does not exist in a market and issues a ruling to that effect pursuant to Section 984 of Title 36 of the Oklahoma Statutes, the rates applicable to insurance sold in that market shall be regulated in accordance with the provisions of Sections 985 through 989 of Title 36 of the Oklahoma Statutes that are applicable to noncompetitive markets.

B. Any rate in effect at the time the Commissioner determines that competition does not exist pursuant to Section 984 of Title 36 of the Oklahoma Statutes shall be deemed to be in compliance with the laws of this state unless disapproved pursuant to the procedures and rating standards contained in Sections 985 through 989 of Title 36 of the Oklahoma Statutes that are applicable to noncompetitive markets.

C. Any insurer having a rate filing in effect at the time the Commissioner determines that competition does not exist pursuant to Section 984 of Title 36 of the Oklahoma Statutes may be required to furnish supporting information within thirty (30) days of a written request by the Commissioner.

Added by Laws 2004, c. 519, § 17, eff. Nov. 1, 2004.

§36-986. Rate administration.

Rate Administration.

A. In only those markets found to be noncompetitive pursuant to Section 984 of this title, insurers and advisory organizations shall file with the Commissioner and the Commissioner shall review reasonable rules and plans for recording and reporting their rates, loss and expense experience and other information determined by the Commissioner to be necessary or appropriate for the administration of the Property and Casualty Competitive Loss Cost Rating Act. The Commissioner may designate one or more advisory organizations or other agencies to assist in gathering such experience and making compilation thereof.

B. Reasonable rules and plans may be promulgated by the Commissioner for the exchange of data necessary for the development and application of rating plans.

C. In order to further uniform administration of rate regulatory laws, the Commissioner and every insurer and advisory organization may exchange information and experience data with insurance supervisory officials, insurers and advisory organizations in other states and may consult with them with respect to the application of rating systems.

D. Cooperation among advisory organizations or among advisory organizations and insurers in ratemaking or in other matters within the scope of the Property and Casualty Competitive Loss Cost Rating Act is authorized. The Commissioner may review such cooperative activities and practices, and if, after a hearing, any such activity or practice is found to violate the provisions of the Property and Casualty Competitive Loss Cost Rating Act, a written order may be issued specifying that such activity or practice violates the provisions of this act and requiring the discontinuance of such activity.

Added by Laws 1999, c. 83, § 6, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 18, eff. Nov. 1, 2004.

§36-987. Rate filings.

Rate Filings.

A. In a competitive market, every insurer shall file with the Commissioner all rates and supplementary rate information to be used in this state no later than thirty (30) days after the effective date; provided, that the rates and supplementary rate information need not be filed for commercial risks, which by general custom are not written according to manual rules or rating plans.

B. In a noncompetitive market, every insurer shall file with the Commissioner all rates, supplementary rate information and supporting information at least thirty (30) days before the proposed effective date. The Commissioner may give written notice, within thirty (30) days of receipt of the filing, that the Commissioner needs additional time, not to exceed thirty (30) days from the date of the notice to consider the filing. Upon written application of the insurer, the Commissioner may authorize rates to be effective before the expiration of the waiting period or an extension thereof. A filing shall be deemed to meet the requirements of the Property and Casualty Competitive Loss Cost Rating Act and to become effective unless disapproved pursuant to Section 988 of this title by the Commissioner before the expiration of the waiting period or an extension thereof.

In a noncompetitive market, the filing shall be deemed in compliance with the filing provision of this section unless the Commissioner informs the insurer within ten (10) days after receipt of the filings as to what supplementary rate information or supporting information is required to complete the filing.

C. Every authorized insurer shall file with the Commissioner, except as to rates for those lines of insurance exempted from the provisions of the Property and Casualty Competitive Loss Cost Rating Act by the Commissioner under subsections E and F of this section and except for those risks designated as special risks under Section 997 of this title, all rates, supplementary rate information and any changes and amendments which it proposes to use. An insurer may file its rates by either filing its final rates or by filing a multiplier and, if applicable, an expense constant adjustment to be applied to prospective loss costs that have been filed by an advisory organization as permitted by Section 993 of this title. Such loss cost multiplier filing and expense constant filings made by insurers shall remain in effect until amended or withdrawn by the insurer. Every filing shall state the effective date.

D. Under rules as may be adopted, the Commissioner may, by written order, suspend or modify the requirement of filing as to any kind of insurance, subdivision or combination thereof, or as to classes of risks.

E. Notwithstanding any other provision of the Property and Casualty Competitive Loss Cost Rating Act, upon the written consent of the insured in a separate written document, a rate in excess of that determined in accordance with the other provisions of the Property and Casualty Competitive Loss Cost Rating Act may be used on a specific risk.

F. A filing and any supporting information required to be filed shall be open to public inspection once the filing becomes effective except information marked confidential, trade secret, or proprietary by the insurer or filer.

Added by Laws 1999, c. 83, § 7, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 19, eff. Nov. 1, 2004; Laws 2005, c. 129, § 7, eff. Nov. 1, 2005.

§36-988. Repealed by Laws 2004, c. 519, § 37, eff. Nov. 1, 2004.

§36-989. Improper rates - Disapproval - Hearing.

Improper Rates; Disapproval; Hearing.

A. Basis for disapproval.

1. The Commissioner shall disapprove a rate in a competitive market only if the Commissioner finds, pursuant to subsection B of this section, that the rate is inadequate or unfairly discriminatory pursuant to Section 985 of this title.

2. The Commissioner may disapprove a rate for use in a noncompetitive market only if the Commissioner finds, pursuant to subsection B of this section, that the rate is excessive, inadequate or unfairly discriminatory under this subsection.

B. Procedures for disapproval.

1. Prior to the expiration of a waiting period or an extension thereof, made pursuant to subsection B of Section 987 of this title, the Commissioner may disapprove, by written order, rates filed pursuant to subsection B of Section 987 of this title with a hearing. The order shall specify in what respects the filing fails to meet the requirements of this act. Any insurer whose rates are disapproved pursuant to this section shall be given a hearing upon written request made within thirty (30) days of disapproval.

2. If, at any time, the Commissioner finds that a rate applicable to insurance sold in a noncompetitive market does not comply with the standards set forth in Section 985 of this title, the Commissioner may, after a hearing held upon not less than twenty (20) days' written notice, issue an order pursuant to subsection C of this section, disapproving such rate. The hearing notice shall be sent to every insurer and advisory organization that adopted the rate and shall specify the matters to be considered at the hearing. The disapproval order shall not affect any contract or policy made or issued prior to the effective date set forth in the order.

3. If, at any time, the Commissioner finds that a rate applicable to insurance sold in a competitive market is inadequate or unfairly discriminatory under paragraph 2 or 3 of subsection A of Section 985 of this title, the Commissioner may issue an order pursuant to subsection C of this section disapproving the rate. The order shall not affect any contract or policy made or issued prior to the effective date set forth in the order.

C. Order of disapproval.

If the Commissioner disapproves a rate pursuant to subsection B of this section, the Commissioner shall issue an order within thirty (30) days of the close of the hearing specifying in what respects the rate fails to meet the requirements of this act. The order shall state an effective date no sooner than thirty (30) business days after the date of the order when the use of the rate shall be discontinued. This order shall not affect any policy made before the effective date of the order.

D. Appeal of orders and establishment of reserves.

If an order of disapproval is appealed pursuant to Section 990 of this title, the insurer may implement the disapproved rate upon notification to the court, in which case any excess of the disapproved rate over a rate previously in effect shall be placed in a reserve established by the insurer. The court shall have control over the disbursement of funds from such reserve. The funds shall be distributed as determined by the court in its final order except that de minimus refunds to policyholders shall not be required.

E. All determinations made by the Commissioner under this section shall be on the basis of findings of fact and conclusions of law.

Added by Laws 1999, c. 83, § 9, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 20, eff. Nov. 1, 2004.

§36-990. Challenge and review of application of rating system.

Challenge and Review of Application of Rating System.

A. Every advisory organization and every insurer subject to the Property and Casualty Competitive Loss Cost Rating Act which makes its own rates shall provide within this state reasonable means whereby any insured aggrieved by the application of its rating system may, upon that insured's written request, be heard in person or by the insured's authorized representative to review the manner in which such rating system has been applied in connection with the insurance afforded the aggrieved insurer.

B. An insurer or any party affected by the action of an advisory organization may, within thirty (30) days after written notice of that action, make application, in writing, for an appeal to the Commissioner, setting forth the basis for the appeal and the grounds to be relied upon by the applicant.

C. Within thirty (30) days, the Commissioner shall review the application and, if the Commissioner finds that the application is made in good faith and that it sets forth on its face grounds which reasonably justify holding a hearing, the Commissioner shall conduct a hearing held not less than ten (10) days after written notice to the applicant and to the advisory organization or insurer. The Commissioner, after a hearing, shall affirm or reverse the action of the advisory organization or insurer.

Added by Laws 1999, c. 83, § 10, eff. Nov. 1, 1999. Amended by Laws 2004, c. 519, § 21, eff. Nov. 1, 2004.

§36-991. Licensing advisory organizations.

Licensing Advisory Organizations.

A. No advisory organization shall provide any service relating to the rates of any insurance subject to the Property and Casualty Competitive Loss Cost Rating Act, and no insurer shall utilize the services of such organization unless the organization has obtained a license.

B. No advisory organization shall refuse to supply any services for which it is licensed in this state to any insurer authorized to do business in this state and offering to pay the usual compensation for the services.

C. 1. An advisory organization applying for a license shall include with its application:

a. a copy of its constitution, charter, articles of organization, agreement, association or incorporation, and a copy of its bylaws, plan of operation and any other rules or regulations governing the conduct of its business,

b. a list of its members and subscribers,

c. the name and address of one or more residents of this state upon whom notices, process affecting it, or orders of the Commissioner may be served,

d. a statement showing its technical qualifications for acting in the capacity for which it seeks a license,

e. a biography of the ownership and management of the organization, and

f. any other relevant information and documents that the Commissioner may require.

2. Every organization which has applied for a license shall notify the Commissioner of every material change in the facts or in the documents on which its application was based. Any amendment to a document filed under this section shall be filed at least thirty (30) days before it becomes effective.

3. If the Commissioner finds that the applicant and the natural persons through whom it acts are competent, trustworthy and technically qualified to provide the services proposed, and that all requirements of the law are met, he or she shall issue a license specifying the authorized activity of the applicant. The Commissioner shall not issue a license if the proposed activity would tend to create a monopoly or to substantially lessen the competition in the market.

4. Licenses issued pursuant to this section shall remain in effect unless suspended or revoked. The Commissioner may at any time, after a hearing, revoke or suspend the license of any advisory organization which does not comply with the requirements and standards of the Property and Casualty Competitive Loss Cost Rating Act.

Added by Laws 1999, c. 83, § 11, eff. Nov. 1, 1999. Amended by Laws 2005, c. 129, § 8, eff. Nov. 1, 2005.

§36-992. Insurers and advisory organization - Prohibited activity.

Insurers and Advisory Organization; Prohibited Activity.

A. No insurer or advisory organization shall:

1. Attempt to monopolize, or combine or conspire with any person or persons to monopolize an insurance market;

2. Engage in a boycott, on a concerted basis, of an insurance market; and

3. Except as set forth in subsection B of this section, agree to mandate adherence to or to mandate use of any rate, prospective loss cost, rating plan, rating schedule, rating rule, policy or bond form, rate classification, rate territory, underwriting rule, survey, inspection or similar material. Insurers and advisory organizations may agree to develop and adhere to statistical plans permitted by Section 993 of this title.

B. The fact that two or more insurers, whether or not members or subscribers of an advisory organization, use consistently or intermittently the same rates, prospective loss costs, rating plans, rating schedules, rating rules, policy or bond forms, rate classifications, rate territories, underwriting rules, surveys or inspections or similar materials is not sufficient in itself to support a finding that an agreement exists.

C. Two or more insurers having a common ownership or operating in this state under common management or control may act in concert between or among themselves with respect to any matters pertaining to those activities authorized in the Property and Casualty Competitive Loss Cost Rating Act as if they constituted a single insurer.

D. Except as specifically permitted under Section 993 of this title, no advisory organization shall compile or distribute recommendations relating to rates that include expenses (other than loss adjustment expenses or loss-based taxes and assessments) or profit.

Added by Laws 1999, c. 83, § 12, eff. Nov. 1, 1999. Amended by Laws 2005, c. 129, § 9, eff. Nov. 1, 2005.

§36-993. Advisory organization - Permitted activity.

Advisory Organization; Permitted Activity.

Any licensed advisory organization, in addition to other activities not prohibited, is authorized on behalf of its members and subscribers to:

1. Develop statistical plans including territorial and class definitions;

2. Collect statistical data from members, subscribers or any other source;

3. Prepare, file and distribute prospective loss costs which may include provisions for special assessments and taxes;

4. Prepare, file and distribute factors, calculations or formulas pertaining to classification, territory, increased limits and other variables;

5. Prepare, file and distribute manuals of rating rules, rating schedules and other supplementary rating information that do not include final rates, expense provisions, profit provisions or minimum premiums;

6. Distribute information that is required or directed to be filed with the Commissioner;

7. Conduct research and on-site inspections in order to prepare classifications of public fire defenses;

8. Consult with public officials regarding public fire protection as it would affect members, subscribers and others;

9. Conduct research and collect statistics in order to discover, identify and classify information relating to causes or prevention of losses;

10. Conduct research and collect information to determine the impact of statutory and other law changes upon prospective loss costs and special assessments;

11. Prepare, file and distribute policy forms and endorsements and consult with members, subscribers and others relative to their use and application;

12. Conduct research and on-site inspections for the purpose of providing risk information relating to individual structures;

13. Conduct on-site inspections to determine rating classifications for individual insureds;

14. Collect, compile and publish past and current prices of individual insurers, provided such information is also made available to the general public for a reasonable price;

15. Collect and compile exposure and loss experience for the purpose of individual risk experience ratings;

16. File final rates, for residual market mechanisms; and

17. Furnish any other services, as approved or directed by the Commissioner, related to those enumerated in this section.

Added by Laws 1999, c. 83, § 13, eff. Nov. 1, 1999.

§36-994. Advisory organizations - Filing requirements.

Advisory Organizations; Filing Requirements.

Every advisory organization shall file with the Commissioner for approval every statistical plan, all prospective loss costs, provisions for special assessments and all supplementary rating information and every change or amendment or modification of any of the foregoing proposed for use in this state at least thirty (30) days prior to its effective date. Such filings will be deemed approved unless disapproved within the waiting period.

Added by Laws 1999, c. 83, § 14, eff. Nov. 1, 1999.

§36-995. Joint underwriting, joint reinsurance pool and residual market activities.

Joint Underwriting, Joint Reinsurance Pool and Residual Market Activities.

A. This section shall not apply to transactions involving the Oklahoma State Insurance Fund.

B. Notwithstanding paragraph 3 of subsection A of Section 12 of this act, insurers participating in joint underwriting, joint reinsurance pools or residual market mechanisms may in connection with such activity act in cooperation with each other in the making of rates, rating systems, policy forms, underwriting rules, surveys, inspections and investigations, the furnishing of loss and expense statistics or other information, or carrying on research. Joint underwriting, joint reinsurance pools and residual market mechanisms shall not be deemed an advisory organization.

C. Except to the extent modified by this section, joint underwriting, joint reinsurance pool and residual market mechanism activities are subject to the other provisions of the Commercial Property and Casualty Competitive Loss Cost Rating Act.

D. If, after a hearing, the Commissioner finds that any activity or practice of an insurer participating in joint underwriting or a pool is unfair, is unreasonable, will tend to lessen competition in any market or is otherwise inconsistent with the provisions or purposes of the Commercial Property and Casualty Competitive Loss Cost Rating Act, the Commissioner may issue a written order and require the discontinuance of such activity or practice.

E. Every pool shall file with the Commissioner a copy of its constitution, articles of incorporation, agreement or association, bylaws, rules and regulations governing its activities, list of members, the name and address of a resident of this state upon whom notice, orders of the Commissioner, or process may be served, and any changes in amendments or changes in the foregoing.

F. Any residual market mechanism, plan or agreement to implement such a mechanism, and any changes or amendments thereto, shall be submitted in writing to the Commissioner for consideration and approval, together with such information as may be reasonably required.

Added by Laws 1999, c. 83, § 15, eff. Nov. 1, 1999.

§36-996. Assigned risks.

Assigned Risks.

Agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to, but who are unable to procure such insurance through ordinary methods, and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance, such agreements and rate modifications to be subject to the approval of the Commissioner. Nothing in the Commercial Property and Casualty Competitive Loss Cost Rating Act shall permit disapproval of a residual market plan permitting an insurer to elect voluntary direct assignment.

Added by Laws 1999, c. 83, § 16, eff. Nov. 1, 1999.

§36-997. Commercial special risks.

Commercial Special Risks.

A. The following categories of commercial lines risks, excluding employer's liability line, are special risks and are exempted from the filing and review requirements set forth in Sections 7 and 8 of this act:

1. Risks which are written on an excess or umbrella basis;

2. Those commercial lines insurance risks, or portions thereof which are not rated according to manuals, rating plans, or schedules including "a" rates;

3. Commercial lines insurance risks which produce a minimum annual premium total of Ten Thousand Dollars ($10,000.00); and

4. Specifically designated special risks, including:

a. risks insured under the provisions of the Highly Protected Risks Rating Plan,

b. all commercial insurance aviation risks,

c. all credit insurance risks,

d. all boiler and machinery risks,

e. all inland marine risks,

f. all fidelity and surety risks, and

g. any other risk that the Commissioner determines to fall within the special risk category.

B. Underwriting files, premiums, loss and expense statistics, financial and other records with regard to special risks written by an insurer shall be maintained by the insurer and shall be subject to examination by the Commissioner.

Added by Laws 1999, c. 83, § 17, eff. Nov. 1, 1999.

§36-998. Appeals from Commissioner.

Appeals from Commissioner.

A. Any party aggrieved by an order or decision of the Commissioner may, within thirty (30) days after receiving the Commissioner's notice, make written request for a hearing.

B. Any order, decision or act of the Commissioner pursuant to the Commercial Property and Casualty Competitive Loss Cost Rating Act is subject to judicial review upon petition of any person aggrieved. The appeal shall be in accordance with the Administrative Procedures Act.

Added by Laws 1999, c. 83, § 18, eff. Nov. 1, 1999.

§36-999. Examination to ascertain compliance - Records - Cost - Report of examination in another state.

A. The Commissioner may examine any insurer, pool, advisory organization, or residual market mechanism to ascertain compliance with the Property and Casualty Competitive Loss Cost Rating Act.

B. Every insurer, pool, advisory organization, and residual market mechanism shall maintain adequate records from which the Commissioner may determine compliance with the provisions of the Property and Casualty Competitive Loss Cost Rating Act. The records shall contain the experience, data, statistics and other information collected or used and shall be available to the Commissioner for examination or inspection upon reasonable notice.

C. The reasonable cost of an examination made pursuant to this section shall be paid by the examined party upon presentation to the party of a detailed account of the costs.

D. The Commissioner may accept the report of an examination made by an insurance supervisor official of another state in lieu of an examination pursuant to this section.

Added by Laws 2004, c. 519, § 22, eff. Nov. 1, 2004.

§36-999.1. Short title.

Sections 1 through 7 of this act shall constitute Article 9C of the Insurance Code and shall be known and may be cited as the "Oklahoma Subsidence Insurance Act".

Added by Laws 2005, c. 118, § 1, eff. Jan. 1, 2006.

§36-999.2. Purpose of act.

The purpose of the Oklahoma Subsidence Insurance Act is to make mine subsidence insurance coverage available for residences, living units and commercial buildings located in this state.

Added by Laws 2005, c. 118, § 2, eff. Jan. 1, 2006.

§36-999.3. Definitions.

As used in the Oklahoma Subsidence Insurance Act:

1. "Commercial building" means any building, other than a residence or living unit, permanently affixed to realty located in this state, including basements, footings, foundations, septic systems and underground pipes directly servicing the building, but does not include sidewalks, driveways, parking lots, swimming pools, patios, pilings, piers, wharves, docks, retaining walls, fences, land, trees, plants, crops or agricultural field drainage tile;

2. "Commercial coverage" means mine subsidence insurance for a commercial building;

3. "Insurer" or "insurers" means insurance companies and reciprocals licensed and authorized to write homeowner's insurance and commercial property insurance policies in this state;

4. "Living unit" means the physical portion designated for separate ownership or occupancy for residential purposes, of a building or group of buildings, permanently affixed to realty located in this state, having elements which are owned or used in common, including an apartment unit, a condominium unit, a cooperative unit or any other similar unit, including appurtenant structures, basements, footings, foundations, septic systems and underground pipes directly servicing the dwelling or building, but does not include swimming pools, patios, pilings, wharves, docks, retaining walls, fences, sidewalks, driveways, land, trees, plants, crops or agricultural field drainage tile;

5. "Living unit coverage" means mine subsidence insurance for a living unit;

6. "Mine subsidence" means lateral or vertical ground movement caused by a failure initiated at the mine level, of man-made underground mines, including, but not limited to, coal mines, clay mines, lead and zinc mines, limestone mines, and fluorspar mines that directly damage residences or commercial buildings. "Mine subsidence" does not include lateral or vertical ground movement caused by earthquake, landslide, volcanic eruption, soil conditions, soil erosion, soil freezing and thawing, improperly compacted soil, construction defects, roots of trees and shrubs or collapse of storm and sewer drains and rapid transit tunnels;

7. "Policy" or "policies" means any contract or contracts of insurance providing the coverage of the Standard Fire Policy and Extended Coverage Endorsement on any residence, living unit or commercial building. It does not include those insurance contracts that are referred to as marine or inland marine policies;

8. "Residence" means a building used principally for residential purposes up to and including a four-family dwelling, permanently affixed to realty located in Oklahoma, including appurtenant structures, basements, footings, foundations, septic systems and underground pipes directly servicing the dwelling or building, but does not include living units, swimming pools, patios, pilings, wharves, docks, retaining walls, fences, sidewalks, driveways, land, trees, plants, crops or agricultural field drainage tile; and

9. "Residential coverage" means mine subsidence insurance for a residence.

Added by Laws 2005, c. 118, § 3, eff. Jan. 1, 2006.

§36-999.4. Subsidence coverage for residences, living units and commercial buildings - Exemption.

A. Beginning January 1, 2006, every insurer, as defined by Section 3 of this act, may offer mine subsidence coverage, upon the request by the policyholder, on policies, as defined by Section 3 of this act, issued or renewed, insuring residences, living units and commercial buildings.

B. The Insurance Commissioner may exempt policies insuring residences, living units or commercial buildings located in any specified county of this state from the provisions of this section if the Commissioner determines that such coverage is not necessary for a specified county.

Added by Laws 2005, c. 118, § 4, eff. Jan. 1, 2006.

§36-999.5. Coverage for additional living expenses.

The residential coverage provided pursuant to the Oklahoma Subsidence Insurance Act may also cover the additional living expenses reasonably and necessarily incurred by the owner of a residence who has been temporarily displaced as the direct result of damage to the residence caused by mine subsidence if the underlying policy also covers this type of loss; provided, however, that the loss covered under living unit coverage shall be limited to losses to improvements and betterments and reimbursement of additional living expenses and assessments made against the insured on account of mine subsidence loss.

Added by Laws 2005, c. 118, § 5, eff. Jan. 1, 2006.

§36-999.6. Refusal to cover unrepaired damage.

An insurer may refuse to provide mine subsidence coverage on a residence, living unit or commercial building evidencing unrepaired mine subsidence damage until such damage has been repaired.

Added by Laws 2005, c. 118, § 6, eff. Jan. 1, 2006.

§36-999.7. Right of subrogation.

All insurers issuing mine subsidence policies shall retain the right of subrogation.

Added by Laws 2005, c. 118, § 7, eff. Jan. 1, 2006.

§36-1000. Exemption from regulation of Property and Casualty Rate Board - Exclusivity.

A line of insurance regulated pursuant to the Property and Casualty Competitive Loss Cost Rating Act shall be exempt from regulation of the Property and Casualty Rate Board under the provisions of Section 331 et seq. of this title. The administration and enforcement of the Property and Casualty Competitive Loss Cost Rating Act shall be governed solely by the provision of this act except as provided in this act. No other law relating to insurance and no other provisions in this Code heretofore or hereafter enacted shall apply to or be construed as supplementing or modifying the provisions of the Property and Casualty Competitive Loss Cost Rating Act unless such other law or provision expressly so provides and specifically refers to the sections of this act which it intends to supplement or modify.

Added by Laws 2004, c. 519, § 23, eff. Nov. 1, 2004.

§36-1001. Judicial review.

Any order, ruling, finding, decision or other act of the Oklahoma Insurance Commission made pursuant to the Property and Casualty Competitive Loss Cost Rating Act shall be subject to judicial review.

Added by Laws 2004, c. 519, § 24, eff. Nov. 1, 2004.

§361101. Representation of unauthorized insurers prohibited.

A. No person in Oklahoma shall in any manner:

1. Represent or assist any insurer not then duly authorized to transact insurance in Oklahoma, in the soliciting, procuring, placing, or maintenance of any insurance coverage upon or with relation to any subject of insurance resident, located, or to be performed in Oklahoma.

2. Inspect or examine any risk or collect or receive any premium on behalf of such insurer.

B. Any person transacting insurance in violation of this section shall be liable to the insured for the performance of any contract between the insured and the insurer resulting from such transaction.

C. This section shall not apply as to reinsurance, to surplus line insurance lawfully procured pursuant to this article, to transactions exempt under Section 606 of Article 6 (Authorization of Insurers and General Qualifications), or to professional services of an adjuster or attorneyatlaw from time to time with respect to claims under policies lawfully solicited, issued, and delivered outside of Oklahoma.

D. The investigation and adjustment of any claim in this state arising under an insurance contract issued by an unauthorized insurer shall not be deemed to constitute the transacting of insurance in this state.

E. Insurance companies not licensed in the State of Oklahoma shall not contract with the trustees of any fund which will insure residents in this state without the previous written approval of the State Insurance Commissioner.

Laws 1957, p. 256, § 1101; Laws 1976, c. 98, § 1, emerg. eff. May 10, 1976.

§361102. Validity of contracts illegally effectuated.

A contract of insurance effectuated by an unauthorized insurer in violation of this Code shall be voidable except at the instance of the insurer.

Laws 1957, p. 256, § 1102.

§36-1103. Service of process on unauthorized insurers.

A. Delivery, effectuation, or solicitation of any insurance contract, by mail or otherwise, within this state by an unauthorized insurer, or the performance within this state of any other service or transaction connected with such insurance by or on behalf of such insurer, shall be deemed to constitute an appointment by the insurer of the Insurance Commissioner and the Commissioner's successors in office as its attorney, upon whom may be served all lawful process issued within this state in any action or proceeding against such insurer arising out of any such contract or transaction.

B. Such service of process shall be made by delivering to and leaving with the Insurance Commissioner three copies thereof. At time of service the plaintiff shall pay Twenty Dollars ($20.00) to the Insurance Commissioner, taxable as costs in the action. The Insurance Commissioner shall mail by registered mail one of the copies of the process to the defendant at its principal place of business as last known to the Insurance Commissioner, and shall keep a record of all process so served.

C. Service of process in any such action or proceeding, in addition to the manner provided herein, shall also be valid if served upon any person within this state who, in this state on behalf of such insurer, is soliciting insurance, or making, issuing, or delivering any insurance policy, or collecting or receiving any premium, membership fee, assessment, or other consideration for insurance.

D. Service of process upon such an insurer in accordance with this section shall be as valid and effective as if served upon a defendant personally present in this state.

E. Means provided in this section for service of process upon such insurer shall not be deemed to prevent service of process upon the insurer by any other lawful means.

F. An insurer which has been so served with process shall have the right to appear in and defend such action and employ attorneys and other persons in this state to assist in its defense or settlement.

Added by Laws 1957, p. 256, § 1103. Amended by Laws 1985, c. 328, § 8, emerg. eff. July 29, 1985; Laws 1997, c. 418, § 38, eff. Nov. 1, 1997.

§361104. Exemptions from service of process provisions.

Sections 1103 and 1105 of this article shall not apply to surplus line insurance lawfully effectuated under this article, or to reinsurance, nor to any action or proceeding against an unauthorized insurer arising out of:

1. Ocean marine and foreign trade insurance,

2. Insurance on subjects located, resident, or to be performed wholly outside this state, or on vehicles or aircraft owned and principally garaged outside this state,

3. Insurance on property or operations of railroads engaged in interstate commerce, or

4. Insurance on aircraft or cargo of such aircraft, or against liability, other than employers' liability, arising out of the ownership, maintenance, or use of such aircraft, where the policy or contract contains a provision designating the Insurance Commissioner as its attorney for the acceptance of service of lawful process in any action or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such policy, or where the insurer enters a general appearance in any such action.

Laws 1957, p. 257, § 1104.

§361105. Attorneys' fees.

In any action against an unauthorized insurer pursuant to section 1103 of this article, if the insurer has failed for thirty (30) days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract of insurance, and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney's fee and include such fee in any judgment that may be rendered in such action. Such fee shall not exceed onethird (1/3) of the amount which the court or jury finds the plaintiff is entitled to recover against the insurer, but in no event shall such a fee be less than One Hundred Dollars ($100.00). Failure of an insurer to defend any such action shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause.

Laws 1957, p. 257, § 1105.

§361106. Surplus lines - Brokers.

If the amount of insurance required to protect the interest of the assured cannot be procured from authorized insurers, such amount, hereinafter designated as "surplus line", may be procured from unauthorized insurers subject to the following conditions:

1. The unauthorized insurer must have a certificate of approval from the Commissioner, and meet all relevant statutory requirements, including the following:

a. the insurer is financially stable, and

b. the insurer is controlled by persons possessing competence, experience and integrity, and

c. the insurer, if a foreign insurer, posts a special deposit in an amount to be determined by the Commissioner, or

d. the insurer, if an alien insurer, is listed on the National Association of Insurance Commissioners Non-Admitted Insurers Quarterly Listing.

The Commissioner may withdraw a certificate of approval or refuse to renew a certificate upon finding that the insurer no longer meets the criteria for approval set out herein;

2. The insurance must be procured through a licensed surplus line broker, hereinafter in this article referred to as the "broker"; and

3. The amount of insurance required to protect the interest of the assured is not procurable, after diligent effort has been made to do so, from a majority of the insurers accessible to the broker which are authorized to transact that kind and class of insurance in this state, and the placing of insurance with an unauthorized insurer must not be for the purpose of securing advantages either as to premium rate or terms of the insurance contract.

Added by Laws 1957, p. 257, § 1106. Amended by Laws 1986, c. 134, § 3, emerg. eff. April 17, 1986; Laws 1991, c. 146, § 1, eff. Sept. 1, 1991; Laws 1993, c. 79, § 4, eff. Sept. 1, 1993.

§361107. Broker's affidavit and report.

A. After procuring any surplus line insurance, the broker shall execute and file with the Insurance Commissioner his report thereof in duplicate and under oath, setting forth facts from which it may be determined whether the requirements of Section 1106 of this title have been met, and in addition thereto the following:

1. Name and address of the insurer, and name and address of the person named in the policy pursuant to Section 1118 of this title to whom the Insurance Commissioner shall send copies of legal process;

2. Number of the policy issued;

3. Name and address of the insured;

4. Nature and amount of liability assumed by the insurer;

5. Premium, and any membership, application, policy or registration fees; and

6. Other information reasonably required by the Insurance Commissioner.

B. The Insurance Commissioner shall prescribe and furnish the required report form. The Insurance Commissioner shall have the authority to grant approval to the surplus line broker for the master bordereau style reporting of surplus line activity on a quarterly basis.

C. Failure to file the report shall result, after notice and hearing, in censure, suspension, or revocation of license or a fine of up to Five Hundred Dollars ($500.00) for each occurrence or by both such fine and licensure penalty.

D. The brokers' affidavits and report shall be submitted on or before the end of each month following each calendar quarter.

Amended by Laws 1987, c. 175, § 7, eff. Nov. 1, 1987; Laws 1991, c. 146, § 2, eff. Sept. 1, 1991.

§361108. Recognized surplus lines.

A. If after a hearing thereon the Insurance Commissioner finds that a particular insurance coverage or type, class, or kind of coverage is not readily procurable from authorized insurers, he may by order declare such coverage or coverages to be recognized surplus lines until the Insurance Commissioner's further order. The broker's affidavit provided for in Section 1107 of this article shall not be required as to coverages while so recognized. Before holding any such hearing the Commissioner shall give notice to admitted insurers authorized to write such lines of insurance, to rating organizations licensed to make rates for such lines of insurance and to other interested persons in the manner provided by Article 3 of this Code.

B. Any such order shall be subject to modification, and the Insurance Commissioner shall so modify as to any coverage found by him to be no longer entitled to such recognition after a hearing held upon his own initiative or upon request of any insurance agent, surplus line broker, broker, insurer, rating or advisory organization, or other person.

Laws 1957, p. 257, § 1108.

§361109. Validity of surplus line insurance Notice of limitations of coverage.

A. Insurance contracts procured as surplus line coverage from unauthorized insurers in accordance with this article shall be fully valid and enforceable as to all parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.

B. Insurance contracts procured as surplus line coverage shall contain in bold-face type notification stamped on the declaration page of the policy that such contracts are not subject to the protection of any guaranty association in the event of liquidation or receivership of the insurer.

Amended by Laws 1986, c. 251, § 10, eff. Nov. 1, 1986; Laws 1991, c. 146, § 3, eff. Sept. 1, 1991.

§361111. Acceptance of surplus line business by brokers.

A licensed surplus line broker may accept and place surplus line business from any insurance agent or broker licensed in this state for the kind of insurance involved, and may compensate such agent or broker therefor. The broker shall have the right to receive from the insurer the customary commission.

Laws 1957, p. 258, § 1111.

§361112. Solvent insurer required License Approval.

A. A surplus line broker shall not knowingly place any such coverage in an insurer which is in an unsound financial condition. To be considered financially sound, a surplus line company shall have a minimum capital and surplus of not less than Fifteen Million Dollars ($15,000,000.00). A surplus line broker shall not place any such coverage in an insurer unless the insurer has been approved in writing by the Commissioner as a surplus line insurer and such approval has not been withdrawn. A surplus line broker shall not place any surplus line insurance in an insurer that has been disapproved by the Commissioner as a surplus line insurer.

B. For violation of this section, in addition to any other penalty provided by law, the broker's license shall be revoked, and the broker shall not again be so licensed within a period of two (2) years thereafter. In addition, any surplus line broker who violates this section shall be guilty of a misdemeanor and upon conviction thereof shall be punished for each offense, by a fine of not more than One Thousand Dollars ($1,000.00) or by confinement in jail for not more than ninety (90) days, or by both such fine and imprisonment.

Added by Laws 1957, p. 258, § 1112, operative July 1, 1957. Amended by Laws 1965, c. 132, § 1, eff. Oct. 1, 1965; Laws 1991, c. 146, § 4, eff. Sept. 1, 1991; Laws 2002, c. 307, § 10, eff. Nov. 1, 2002.

§361113. Records of surplus line brokers.

Each surplus line broker shall keep in the broker's office in this state a full and true record of each surplus line contract procured by the broker, and such record may be examined at any time within three (3) years thereafter by the Insurance Commissioner. The record shall include the following items as are applicable:

1. Name and address of the insurer;

2. Name and address of the insured;

3. Amount of insurance;

4. Gross premium charged;

5. Return premium paid, if any;

6. Rate of premium charged on the several items of coverage;

7. Effective date of the contract and the terms thereof; and

8. Brief general description of the risks insured against and the property insured.

Added by Laws 1957, p. 258, § 1113. Amended by Laws 1997, c. 418, § 39, eff. Nov. 1, 1997.

§361114. Broker's annual statement.

Each surplus line broker shall on or before the first day of April of each year file with the Insurance Commissioner a verified statement of all surplus line insurance transacted by him during the proceding calendar year. The statement shall be on a form prescribed and furnished by the Insurance Commissioner and shall show:

1. Gross amount of each kind of insurance transacted,

2. Aggregate gross premiums charged,

3. Aggregate of return premiums paid to insureds,

4. Aggregate of net premiums, and

5. Such additional information as may reasonably be required by the Insurance Commissioner.

Laws 1957, p. 259, § 1114.

§36-1115. Tax on surplus lines - Unauthorized insurers.

A. On or before the end of each month following each calendar quarter, each surplus line broker shall remit to the State Treasurer through the Insurance Commissioner a tax on the premiums, exclusive of sums collected to cover federal and state taxes and examination fees, on surplus line insurance subject to tax transacted by the broker for the period covered by the report. Such tax shall be at the rate of six percent (6%) of the gross premiums less premiums returned on account of cancellation or reduction of premium, and shall exclude gross premiums and returned premiums upon business exempted from surplus line provisions pursuant to Section 1119 of this title.

B. Except as provided in subsection C of this section, for the purpose of determining the surplus line tax, the total premium charged for surplus line insurance placed in a single transaction with one underwriter or group of underwriters, whether in one or more policies, shall be allocated to this state in such proportion as the total premium on the insured properties or operations in this state, computed on the exposure in this state on the basis of any single standard rating method in use in all states or countries where such insurance applies, bears to the total premium so computed in all such states or countries. Policies sold to federally recognized Indian tribes shall be reported as provided in Section 1107 of this title; however, such policies shall be exempt from the surplus line tax to the extent that the Insurance Commissioner can identify that coverage is for risks which are wholly owned by a tribe and located within Indian Country, as defined in Section 1151 of Title 18 of the United States Code.

C. The surplus line tax on insurance on motor transit operations conducted between this and other states shall be paid on the total premium charged on all surplus line insurance less:

1. The portion of the premium determined as provided in subsection B of this section charged for operations in other states taxing such premium of an insured maintaining its headquarters office in this state; or

2. The premium for operations outside of this state of an insured maintaining its headquarters office outside of this state and branch office in this state.

D. 1. Every person, association, or legal entity procuring or accepting any insurance coverage from an unauthorized insurer, upon, covering, or relating to a subject of insurance resident or having a situs in the this state, or any such insurance coverage which is to be performed in whole or part in this state, except such coverages as are lawfully obtained through a licensed surplus line broker in this state, shall report, within thirty (30) days next succeeding the issuance of evidence of coverage, the purchase of such coverages of insurance to the Insurance Commissioner, on forms prescribed by the Commissioner, and at the same time shall remit to the Insurance Commissioner a tax in the amount of six percent (6%) of the annual premium agreed to be paid, or paid, for such insurance. Such insurance coverages, providing for the payment of retrospective premiums, or coverages on which the premiums are not determinable at the time of issuance, shall be reported to the Insurance Commissioner, by the insured, within thirty (30) days next succeeding the date such coverages are issued and the tax payable on such coverages shall be remitted, by the insured, to the Insurance Commissioner within thirty (30) days next succeeding the date such premiums can be determined. The tax on renewal premiums shall be paid by the insured in accordance with this section, in like manner as provided for payment of the original premium tax, within thirty (30) days next succeeding the date such premiums can be determined.

2. The taxes imposed by the provisions of this section on surplus lines shall be paid into the State Treasury and deposited to the General Revenue Fund of this state.

Added by Laws 1957, p. 259, § 1115. Amended by Laws 1959, p. 134, § 1, emerg. eff. July 8, 1959; Laws 1961, p. 268, § 1, emerg. eff. July 5, 1961; Laws 1963, c. 48, § 1, emerg. eff. May 2, 1963; Laws 1965, c. 270, § 1, emerg. eff. June 23, 1965; Laws 1967, c. 194, § 1, emerg. eff. May 1, 1967; Laws 1968, c. 111, § 1; Laws 1969, c. 82, § 1, emerg. eff. March 18, 1969; Laws 1970, c. 288, § 1, emerg. eff. April 27, 1970; Laws 1971, c. 67, § 1, emerg. eff. April 12, 1971; Laws 1972, c. 54, § 1, emerg. eff. March 20, 1972; Laws 1983, c. 248, § 5, emerg. eff. June 21, 1983; Laws 1991, c. 146, § 5, eff. Sept. 1, 1991; Laws 1997, c. 418, § 40, eff. Nov. 1, 1997; Laws 1999, c. 96, § 1, emerg. eff. April 19, 1999.

§361116. Penalty for failure to remit tax.

A. Any surplus line broker who fails to remit the surplus line tax provided for by Section 1115 of this title for more than sixty (60) days after it is due shall be liable to a civil penalty of not to exceed Twenty-five Dollars ($25.00) for each additional day of delinquency. The Insurance Commissioner shall collect the tax by distraint and shall recover the penalty by an action in the name of the State of Oklahoma. The Commissioner may request the Attorney General to appear in the name of the state by relation of the Commissioner. All penalties shall be paid into the General Revenue Fund of this state.

B. If any person, association or legal entity procuring or accepting any insurance coverage from an unauthorized insurer, otherwise than through a licensed surplus line broker in this state, fails to remit the surplus line tax provided for by subsection D of Section 1115 of this title, such person, association or legal entity shall, in addition to said tax, be liable to a civil penalty in an amount equal to one percent (1%) of the premiums paid or agreed to be paid for such policy or policies of insurance for each calendar month of delinquency or a civil penalty in the amount of Twenty-five Dollars ($25.00) whichever shall be the greater. The Insurance Commissioner shall collect the tax by distraint and shall recover the civil penalty in an action in the name of the State of Oklahoma. The Commissioner may request the Attorney General to appear in the name of the state by relation of the Commissioner. All civil penalties shall be paid into the General Revenue Fund of the state.

Added by Laws 1957, p. 259, § 1116. Amended by Laws 1959, p. 135, § 1, eff. July 8, 1959; Laws 1991, c. 146, § 6, eff. Sept. 1, 1991; Laws 1992, c. 65, § 2, eff. Sept. 1, 1992; Laws 1997, c. 418, § 41, eff. Nov. 1, 1997.

§36-1118. Legal process against surplus line insurer.

A. Every unauthorized insurer issuing or delivering a surplus line policy through a surplus line broker in this state shall conclusively be deemed thereby to have irrevocably appointed the Insurance Commissioner as its attorney for acceptance of service of all legal process, other than a subpoena, issued in this state in any action or proceeding under or arising out of such policy, and service of such process upon the Insurance Commissioner shall be lawful personal service upon such insurer.

B. Each surplus line policy shall contain a provision stating the substance of subsection A of this section, and designating the person to whom the Insurance Commissioner shall mail process as provided in subsection C of this section.

C. Triplicate copies of legal process against such an insurer shall be served upon the Insurance Commissioner, and at time of service the plaintiff shall pay to the Insurance Commissioner Twenty Dollars ($20.00), taxable as costs in the action. The Insurance Commissioner shall forthwith mail one copy of the process so served to the person designated by the insurer in the policy for the purpose, by mail with return receipt requested. The insurer shall have forty (40) days after the date of mailing within which to plead, answer, or otherwise defend the action.

Added by Laws 1957, p. 260, § 1118. Amended by Laws 1986, c. 251, § 11, eff. Nov. 1, 1986; Laws 1997, c. 418, § 42, eff. Nov. 1, 1997.

§361119. Exemptions from surplus lines provisions.

The sections of this article relative to surplus line coverages shall not apply to reinsurance.

Laws 1957, p. 260, § 1119.

§361120. Records of insureds.

Upon request of the Insurance Commissioner any person in Oklahoma who is the insured under any policy issued by an unauthorized insurer upon a subject of insurance resident, located, or to be performed in Oklahoma at the time the policy was issued, shall produce for examination all policies and other documents evidencing and relating to the insurance, and shall disclose the amount of the gross premiums paid or agreed to be paid for the insurance, through whom the insurance was procured, and such other information relative to the placing of such insurance as may reasonably be required.

Laws 1957, p. 260, § 1120.

§361201. Declaration of purpose.

The purpose of this article is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945 (Public Law 15, 79th Congress), by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.

Laws 1957, p. 260, § 1201.

§361202. Definitions.

When used in this article:

1. "Person" shall mean any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, Lloyd's Name, Lloyd's Syndicate Name, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers and adjusters;

2. "Commissioner" shall mean the Insurance Commissioner of this state; and

3. "Name" shall mean any individual or corporate entity underwriting insurance for their own account through the Lloyd's of London market and any agents or employees of any such individual or corporate entity.

Added by Laws 1957, p. 260, § 1202. Amended by Laws 1996, c. 246, § 1, eff. July 1, 1996.

§361203. Unfair methods of competition or unfair and deceptive acts or practices prohibited.

No person shall engage in this state in any trade practice which is defined in this article as, or determined pursuant to this article to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

Laws 1957, p. 260, § 1203.

§361204. Unfair methods of competition and unfair or deceptive acts or practices defined.

The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:

1. Misrepresentations and false advertising of policy contracts. Making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or making any false or misleading statement as to the dividends or share of surplus previously paid on similar policies, or making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or title of any policy or class of policies misrepresenting the true nature thereof, or making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender his insurance.

2. False information and advertising generally. Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business which is untrue, deceptive or misleading. No insurance company shall issue, or cause to be issued, any policy of insurance of any type or description upon life, or property, real or personal, whenever such policy of insurance is to be furnished or delivered to the purchaser or bailee of any property, real or personal, as an inducement to purchase or bail said property, real or personal, and no other person shall advertise, offer or give free insurance, insurance without cost or for less than the approved or customary rate, in connection with the sale or bailment of real or personal property, except as provided in subsection B, Section 4101 of Article 41 (Group Life Insurance and Group Annuity Contracts). No person that is not an insurer shall assume or use any name which deceptively infers or suggests that it is an insurer.

3. Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting or encouraging the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance.

4. Boycott, coercion and intimidation. Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.

5. False financial statements. Filing with any supervisory or other public official, or making, publishing, disseminating, circulating or delivering to any person, or placing before the public or causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person or placed before the public, any false statement of financial condition of an insurer with intent to deceive.

Making any false entry in any book, report or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, willfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report or statement of such insurer.

6. Stock operations and advisory board contracts. Issuing or delivering or permitting agents, officers, or employees to issue or deliver agency company stock or other capital stock, or benefit certificates or shares in any commonlaw corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance.

7. Unfair discrimination. (a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.

(b) Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.

(c) As to kinds of insurance other than life and accident and health, no person shall make or permit any unfair discrimination in favor of particular persons, or between insureds or subjects of insurance having substantially like insuring, risk, and exposure factors, or expense elements, in the terms or conditions of any insurance contract, or in the rate or amount of premium charged therefor. This subsection shall not apply as to any premium rate in effect pursuant to Article 9 of the Insurance Code.

8. Rebates. (a) Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of insurance or agreement as to such contract other than as plainly expressed in the contract issued thereon; or paying or allowing, or giving or offering to pay, allow or give, directly or indirectly, as inducement to any contract of insurance, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; except in accordance with an applicable rate filing, rating plan or rating system filed with and approved by the Board or filed with and approved by the Commissioner; or giving or selling or purchasing or offering to give, sell, or purchase as inducement to such insurance, or in connection therewith, any stocks, bonds or other securities of any company, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract or receiving or accepting as inducement to contracts of insurance, any rebate of premium payable on the contract, or any special favor or advantage in the dividends or other benefit to accrue thereon, or any valuable consideration or inducement not specified in the contract.

(b) Nothing in subsection 7 or paragraph (a) of this subsection shall be construed as including within the definition of discrimination or rebates any of the following practices:

(1) In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided, that any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interest of the company and its policyholders;

(2) In the case of life or accident and health insurance policies issued on the industrial debit or weekly premium plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense;

(3) Making a readjustment of the rate of premium for a policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year;

(4) In the case of life insurance companies, allowing its bona fide employees to receive a commission on the premiums paid by them on policies on their own lives;

(5) Issuing life or accident and health policies on a salary saving or payroll deduction plan at a reduced rate commensurate with the savings made by the use of such plan;

(6) Paying commissions or other compensation to duly licensed agents or brokers, or allowing or returning to participating policyholders, members or subscribers, dividends, savings or unabsorbed premium deposits.

9. Coercion prohibited. Requiring as a condition precedent to the purchase of, or the lending of money upon the security of, real or personal property, that any insurance covering such property, or liability arising from the ownership, maintenance or use thereof, be procured by or on behalf of the vendee or by the borrower in connection with such purchase or loan through any particular person or agent or in any particular insurer, or requiring the payment of a reasonable fee as a condition precedent to the replacement of insurance coverage on mortgaged property at the anniversary date of the policy; provided, however, that this provision shall not prevent the exercise by any such vendor or lender of the right to approve or disapprove any insurer selected to underwrite the insurance; but any disapproval of any insurer shall be on reasonable grounds.

10. Inducements. No insurer, agent, broker, solicitor, or other person shall, as an inducement to insurance or in connection with any insurance transaction, provide in any policy for or offer, sell, buy, or offer or promise to buy, sell, give, promise, or allow to the insured or prospective insured or to any other person in his behalf in any manner whatsoever:

(a) Any employment.

(b) Any shares of stock or other securities issued or at any time to be issued or any interest therein or rights thereto.

(c) Any advisory board contract, or any similar contract, agreement or understanding, offering, providing for, or promising any special profits.

(d) Any prizes, goods, wares, merchandise, or tangible property of an aggregate value in excess of Twentyfive Dollars ($25.00).

(e) Any special favor, advantage or other benefit in the payment, method of payment or credit for payment of the premium through the use of credit cards, credit card facilities, credit card lists, or wholesale or retail credit accounts of another person. The provisions of this paragraph shall not apply to individual policies insuring against loss resulting from bodily injury or death by accident as defined by Article 44 of the Oklahoma Insurance Code.

11. Premature disposal of premium notes prohibited. No insurer or agent thereof shall hypothecate, sell, or dispose of a promissory note received in payment of any part of a premium on a policy of insurance applied for prior to the delivery of the policy.

12. Fraudulent statement in application; penalty. Any insurance agent, examining physician, or other person who knowingly or willfully makes a false or fraudulent statement or representation in or relative to an application for insurance, or who makes any such statement to obtain a fee, commission, money, or benefit shall be guilty of a misdemeanor.

Added by Laws 1957, c. 261, § 1204, operative July 1, 1957. Amended by Laws 1965, c. 261, § 2, emerg. eff. June 22, 1965; Laws 1980, c. 196, § 1, eff. Oct. 1, 1980; Laws 1987, c. 210, § 34, eff. July 1, 1987; Laws 2005, c. 129, § 10, eff. Nov. 1, 2005.

§361205. Power of commissioner.

The Commissioner shall have power to examine and investigate into the affairs of every person engaged in the business of insurance in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by Section 1203 of this article.

Laws 1957, p. 263, § 1205.

§36-1206. Statement of charges and notice of hearing - Opportunity to be heard.

A. Whenever the Insurance Commissioner shall have reason to believe that any person has been engaged or is engaging in this state in any unfair method of competition or any unfair or deceptive act or practice defined in Section 1204 of this title, and that a proceeding by the Commissioner in respect thereto would be to the interest of the public, the Commissioner shall issue and serve upon the person a statement of the charges in that respect and a notice in accordance with the Administrative Procedures Act.

B. At the time and place fixed for a hearing, the person shall have an opportunity to be heard and to show cause why an order should not be made by the Commissioner requiring the person to cease and desist from the acts, methods or practices so complained of. Upon good cause shown, the Commissioner shall permit any person to intervene, appear and be heard at the hearing by counsel or in person.

Added by Laws 1957, p. 263, § 1206. Amended by Laws 1997, c. 418, § 43, eff. Nov. 1, 1997.

§361207. Cease and desist orders and modifications thereof.

A. If, after a hearing or waiver of the right to a hearing, the Insurance Commissioner shall determine that the method of competition or the act or practice in question is defined in Section 1204 of this title and that the person complained of has engaged in a method of competition, act or practice in violation of this article, the Commissioner shall reduce these findings to writing and shall issue and cause to be served upon the person charged with the violation an order requiring the person to cease and desist from engaging in such method of competition, act or practice.

B. Until the expiration of the time allowed under subsection A of Section 1208 of this title for filing a petition for review, if no such petition has been duly filed within such time, or if a petition for review has been filed within such time, then until the transcript of the record in the proceeding has been filed in the court, as hereinafter provided, the Commissioner may at any time, upon such notice and in such manner as the Commissioner shall deem proper, modify or set aside in whole or in part any order issued by the Commissioner under this section.

C. After the expiration of the time allowed for filing a petition for review, if no petition has been duly filed within such time, the Commissioner may at any time, after notice and opportunity for hearing, reopen and later, modify or set aside, in whole or in part, any order issued by the Commissioner under this section whenever in the Commissioner's opinion conditions of fact or of law has so changed as to require such action or if the public interest shall so require.

Added by Laws 1957, p. 264, § 1207. Amended by Laws 1957, p. 264, § 1207; Laws 1997, c. 418, § 44, eff. Nov. 1, 1997.

§361208. Judicial review of cease and desist orders.

A. Any person required by an order of the Insurance Commissioner under Section 1207 of this title to cease and desist from engaging in any unfair method of competition or any unfair or deceptive act or practice defined in Section 1204 of this title may obtain a review of such order by filing in the district court of Oklahoma County, or the county in which the order was served, within thirty (30) days from the date of service of such order, a written petition praying that the order of the Commissioner be set aside. A copy of the petition shall be served upon the Commissioner, and thereupon the Commissioner shall certify and file in such court a transcript of the entire record in the proceeding, including all the evidence taken and the report and order of the Commissioner. Upon filing the petition and transcript, the court shall have jurisdiction of the proceeding and of the question determined therein, shall determine whether the filing of the petition shall operate as a stay of the order of the Commissioner, and shall have power to make and enter upon the pleadings, evidence, and proceedings set forth in the transcript a decree modifying, affirming or reversing the order of the Commissioner, in whole or in part. The findings of the Commissioner as to the facts, if supported by the evidence, shall be conclusive.

B. To the extent that the order of the Commissioner is affirmed, the court shall thereupon issue its own order commanding obedience to the terms of the order of the Commissioner. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Commissioner, the court may order additional evidence be taken before the Commissioner, and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commissioner may modify findings of fact, or make new findings by reason of the additional evidence so taken, and shall file such modified or new findings which, if supported by the evidence, shall be conclusive, and his recommendation, if any, for the modification or setting aside of his original order, with the return of such additional evidence. Appeal may be taken from the district court as provided in other civil cases.

C. A cease and desist order issued by the Commissioner under Section 1207 of this title shall become final:

1. Upon the expiration of the time allowed for filing a petition for review if no such petition has been duly filed within such time; except that the Commissioner may thereafter modify or set aside an order to the extent provided in subsection B of Section 1207 of this title; or

2. Upon the final decision of the court if the court directs that the order of the Commissioner be affirmed or the petition for review dismissed.

D. No order of the Commissioner under this article or order of a court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.

Added by Laws 1957, p. 265, § 1208. Amended by Laws 1997, c. 418, § 45, eff. Nov. 1, 1997.

§361209. Procedure as to unfair methods of competition and unfair or deceptive acts or practices which are not defined.

A. Whenever the Insurance Commissioner shall have reason to believe that any person engaged in the business of insurance is engaging in this state in any method of competition or in any act or practice in the conduct of such business which is not defined in Section 1204 of this title, that the method of competition is unfair or that the act or practice is unfair or deceptive and that an administrative proceeding in respect thereto would be to the interest of the public, the Commissioner may issue and serve such person a statement of the charges in that respect and a notice in accordance with the Administrative Procedures Act. The Commissioner shall, after a hearing or waiver of the right to a hearing, make a report in writing stating findings as to the facts and serve a copy thereof upon such person.

B. If such report charges a violation of this article and if such method of competition, act or practice has not been discontinued, the Commissioner may cause a petition to be filed in the district court of Oklahoma County or the district court of this state within the district wherein the person resides or has his or her principal place of business, to enjoin and restrain such person from engaging in such method, act or practice. The Commissioner may request the Attorney General to appear in the name of the state by relation of the Commissioner. The court shall have jurisdiction of the proceeding and shall have power to make and enter appropriate orders in connection therewith and to issue such writs as are ancillary to its jurisdiction or are necessary in its judgment to prevent injury to the public pendente lite.

C. A transcript of the proceedings before the Commissioner including all evidence taken and the report and findings shall be filed with such petition. If either party shall apply to the court for leave to adduce additional evidence and shall show, to the satisfaction of the court, that additional evidence is material and there were reasonable grounds for the failure to adduce evidence in the proceeding before the Commissioner, the court may order additional evidence to be taken before the Commissioner and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commissioner may modify findings of fact or make new findings by reason of the additional evidence so taken, and he shall file such modified or new findings with the return of such additional evidence.

D. If the court finds that the method of competition complained of is unfair or that the act or practice complained of is unfair or deceptive, that the proceeding by the Commissioner with respect thereto is to the interest of the public and that the findings of the Commissioner are supported by the weight of the evidence, it shall issue its order enjoining and restraining the continuance of such method of competition, act or practice.

Added by Laws 1957, p. 265, § 1209. Amended by Laws 1997, c. 418, § 46, eff. Nov. 1, 1997.

§361210. Judicial review by intervenor.

If the final order of the Insurance Commissioner does not charge a violation of this article, then any intervenor in the proceedings may, within thirty (30) days after the service of such order, cause an action for judicial review to be filed in the district court of Oklahoma County for a review of such order. Upon such review, the court shall have authority to issue appropriate orders and decrees in connection therewith, including, if the court finds that it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act or practice which it finds, notwithstanding such order of the Commissioner, constitutes a violation of this article.

Added by Laws 1957, p. 266, § 1210. Amended by Laws 1997, c. 418, § 47, eff. Nov. 1, 1997.

§36-1211. Civil penalty.

Any person who violates a cease and desist order of the Insurance Commissioner issued and served pursuant to the provisions of Section 1207 of this title, after it has become final, and while such order is in effect, shall, upon proof thereof to the satisfaction of the court, forfeit and pay to the State of Oklahoma a civil penalty of not less than One Hundred Dollars ($100.00), nor more than One Thousand Dollars ($1,000.00) for each violation.

Added by Laws 1957, p. 266, § 1211. Amended by Laws 1983, c. 68, § 10, eff. Nov. 1, 1983; Laws 1997, c. 418, § 48, eff. Nov. 1, 1997.

§361212. Provisions of act additional.

The powers vested in the Commissioner by this article shall be additional to any other powers to enforce penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices hereby declared to be unfair or deceptive.

Laws 1957, p. 266, § 1212.

§361213. Immunity from prosecution.

If any person shall ask to be excused from attending and testifying or from producing any books, papers, records, correspondence or other documents at any hearing on the ground that the testimony or evidence required of the person may tend to incriminate the person or subject the person to a penalty or forfeiture, and shall notwithstanding be directed to give such testimony or produce such evidence, the person must nonetheless comply with such direction, but shall not thereafter be prosecuted or subjected to any criminal penalty of forfeiture for or on account of any evidence which the person may testify or produce pursuant thereto. No testimony so given or evidence produced shall be received against the person upon any criminal action, investigation or proceeding; provided, however, individuals so testifying shall not be exempt from prosecution or punishment for any perjury committed by them while so testifying and the testimony or evidence so given or produced shall be admissible against them upon any criminal action, investigation or proceeding concerning such perjury, and such individuals shall not be exempt from the refusal, revocation or suspension of any license, permission or authority conferred, or to be conferred, pursuant to the insurance law of this state.

Added by Laws 1957, p. 266, § 1213. Amended by Laws 1997, c. 418, § 49, eff. Nov. 1, 1997.

§361214. Fair disclosure Protection against misleading sales methods.

The purpose of this act is to assure fair disclosure of relevant facts in the sale of life insurance and annuity contracts. This act is also designed to protect citizens of the State of Oklahoma as purchasers and prospective purchasers of life insurance policies or annuity contracts against the use of sales methods which are misleading because of:

1. The omission of facts fairly describing the subject matter as a life insurance policy or annuity contract and the benefits obtainable thereunder;

2. An undue emphasis upon facts which, even though correct, are not relevant to the sale of life insurance or annuities; or

3. An undue emphasis upon features which are of incidental or secondary importance to the life insurance aspects of a policy.

This act is deemed necessary for the effectuation of Section 1201 et seq., Title 36, Oklahoma Statutes, known as the Unfair Practices and Frauds Act; Section 1401 et seq., Title 36, Oklahoma Statutes; and Sections 2741 and 2742, Title 36, Oklahoma Statutes; and shall be construed as supplemental and cumulative to existing laws.

Laws 1972, c. 223, § 1, operative Jan. 15, 1974.

§361215. Definitions.

As used in this act, the following words, terms and phrases shall have the respective meanings hereinafter set forth, unless the context shall otherwise require:

1. A "coupon policy" is any policy or contract of life insurance, other than annuity, which contains, in addition to basic life insurance benefits, annual endowment benefits evidenced in the policy contract by coupons which mature as annual endowment benefits. For the purposes of this act, policies containing annual endowment benefits evidenced by coupons, passbooks or other devices generally identified with savings, banking or investment institutions shall be considered to be coupon policies;

2. A "profitsharing policy" is that form of life insurance policy or annuity contract which contains provisions representing or tending to create the understanding that the policyholder will be eligible to participate in any future distribution of general corporate profits, with special advantage not available to persons holding other types of policies issued by the insurer to individuals of the same class and equal expectation of life; and

3. A "charter policy" or "founders policy" is that form of life insurance policy or annuity contract, usually issued by a newly organized insurer, which is sold on the basis that its availability will be limited to a specific predetermined number of units of a fixed dollar amount and which generally provides that the policyholder shall participate in the earnings resulting from either the participating policies or the nonparticipating policies sold by the insurer, or both.

Laws 1972, c. 223, § 2, operative Jan. 15, 1974.

§361216. Prohibitions and regulations concerning use of certain types of policy forms, policy provisions and annuity contracts.

In accordance with the purpose expressed in Section 1 of this act, the use of certain types of policy forms, policy provisions and annuity contracts shall be subject to the following prohibitions and regulations:

1. No life insurance policy or annuity contract containing a series of guaranteed annual endowment benefits evidenced by coupons, passbooks or similar devices generally identified with investment or banking operations shall be approved for use, and no such policy or contract heretofore approved shall be issued or delivered in this state after January 15, 1974;

2. No life insurance policy or annuity contract containing a series of guaranteed annual endowment benefits shall be approved for use and no such policy or contract heretofore approved shall be issued or delivered in this state after January 15, 1974, unless the following requirements are satisfied:

a. the gross premium for the guaranteed annual endowment benefit shall be shown conspicuously and separately in the policy, distinct from the gross premium for the life insurance benefits and, unless the gross premium is so prominently and separately shown on the schedule of benefits and premiums page in the policy, the language shall be sub stantially in the following form: "The premium shown includes an additional (annual, semiannual, quarterly, monthly, etc.) premium of $_____ for endowment benefits,"

b. the insured shall be entitled to withdraw the guaranteed annual endowment benefits not less frequently than at the end of each policy year. The number of oneyear guaranteed endowment benefits shall equal the number of annual premiums for such benefits unless the insurance contract clearly and distinctly provides otherwise,

c. payment of any guaranteed annual endowment benefits shall not be made contingent on the payment of premiums falling due on or after the time the guaranteed annual endowment benefit has matured,

d. the separately stated gross premium for the series of guaranteed annual endowment benefits shall be based on reasonable assumptions, consistent with the basic policy form as to interest, mortality and expense,

e. the guaranteed annual endowment benefit shall be expressed in dollars, both in the policy and in any sales or advertising material relating thereto, and not as a percentage of any premium or benefit,

f. no guaranteed annual endowment benefit shall be described, either in the policy or in any sales or advertising material, as anything other than a guaranteed benefit for which a premium is being paid by the policyholder, and

g. at the time the policy form is filed with the Insurance Department for approval, said policy form shall be accompanied by all sales, advertising or other material which the insurer proposes to use in connection with the sale of such policy; such sales, advertising or other material shall be approved by the State Insurance Commissioner.

Nothing in this subsection shall apply to any policy in which the amount of any endowment or periodic benefit or benefits payable during any policy year is greater than the total annual premium for such year;

3. No coupon policy shall be approved or issued in this state after the effective date of this act, nor shall any coupon policy heretofore approved be issued or delivered in this state after January 15, 1974;

4. No profitsharing policy shall be approved for use in this state after the effective date of this act, nor shall any profit sharing policy heretofore approved be issued or delivered in this state after January 15, 1974. Nothing contained in this section shall apply to variable annuity contracts to the extent that such are permitted under the laws of this state.

This subsection shall not be construed to restrict or prohibit the sale in this state of any participating life insurance policy where the dividend or abatement of premium is derived solely from the profits of that class of participating business;

5. No charter, founders or coupon policy or policy with a name of similar connotation shall be approved for use in this state after the effective date of this act and no charter, founders or coupon policy or policy with a name of similar connotation heretofore approved shall be issued or delivered in this state after January 15, 1974; and

6. No annual endowment shall be described as being a guaranteed dividend, nor as earnings on the premium investment. Nothing in this section shall be construed to prohibit a representation that a holder of a participating life insurance policy or annuity contract will participate in the share of the divisible surplus, if any, apportioned to the policy or contract by the insurer.

Laws 1972, c. 223, § 3, operative Jan. 15, 1974.

§361217. Prohibitions and regulations relating to insurers, agents of insurers, representatives of insurers and brokers Group insurance and group annuity contracts exempt.

In accordance with the purpose expressed in Section 1 of this act, insurers, agents of insurers, representatives of insurers and brokers shall be subject to the following prohibitions and regulations:

1. No insurer, agent of an insurer or representative of an insurer shall deliver within this state, or issue for delivery within this state, any policy of life insurance or annuity contract which uses as its name or title a phrase which does not include the words, "Life Insurance" or "Annuity Contract" unless such phrase is accompanied by other language elsewhere in the policy or contract which indicates that it is a life insurance policy or annuity contract;

2. The use of the terms "Investment," "Investment Plan," "Expansion Plan," "Profit," "Profitsharing" and similar terms in connection with a policy of life insurance or an annuity contract, in a context or under such circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of such policy or contract to believe that he will receive, or that it is possible that he will receive, something other than a life insurance policy or annuity contract or some benefit not provided in the policy or contract or some benefit not available to other persons of the same class and equal expectation of life, is unlawful and is prohibited;

3. No insurer, agent or broker shall within this state:

a. make any statement or reference relating to the growth of the life insurance industry in connection with any solicitation of an application for life insurance or annuity contract in a context which could reasonably be understood to interest a prospect in the purchase of shares of stock in an insurer rather than in the purchase of a life insurance policy or annuity contract,

b. make any statement which reasonably gives rise to the inference that an insured or a prospective insured, by virtue of purchasing a policy of life insurance or an annuity contract, will enjoy a status common to a stockholder or will acquire a stock ownership interest in the insurer; provided, however, that nothing in this paragraph is intended to prohibit the practice of pointing out those aspects in which the status of a policyholder in a mutual life insurer is similar to that of a stockholder in a stock life insurer,

c. make any reference to or statement concerning an insurer's "Investment Department," "Insured Investment Department" or similar terminology, in such a manner as to imply that the policy was sold or issued by the investment department of the life insurer,

d. make any statement or reference which would reasonably tend to imply that, by purchasing a policy, the purchaser or prospective purchaser will become a member of a limited group of persons who may receive special advantages or favored treatment in the payment of dividends, unless such benefits are specifically provided in the insurance contract. This paragraph shall not apply to policies under which insured persons of one class of risk may receive dividends at a higher rate than persons of another class of risk,

e. state or imply that a particular kind of policy is available for only a limited time or that only a limited number of a particular kind of policy will be offered for sale or that only a limited number of persons, or a limited class of persons, will be eligible to buy a particular kind of policy, unless such limitation is specifically provided in the insurance contract,

f. state or imply that policyholders who are said to act as "centers of influence" or as an advisory board for an insurer will share, because of so acting, in the insurer's surplus earnings in some manner not available to other policyholders who are otherwise in the same class,

g. describe or refer to premium payments in language which states that the payment is a "deposit" unless:

(1) the payment sets up a debtorcreditor relationship between the life insurance company and the policyholder and a showing is made as to when and how the deposit may be withdrawn,

(2) the term is used in conjunction with the word "premium" in such a manner as to indicate clearly the true character of the payment, or

(3) the term is used in connection with pension trust or deposit administration plans,

h. use the words "dividends," "cash dividends," "surplus" or similar phrases in such a manner as to state or imply that the payment of dividends is guaranteed or certain to occur,

i. state or imply that a purchaser of a policy will share in a stated percentage or portion of the earnings of the insurer. Nothing in this paragraph is intended to prohibit a representation that a holder of a participating life insurance policy or annuity contract will participate in the share of the divisible surplus, if any, apportioned to the policy or contract by the insurer,

j. make any statement or implication that dividends under a participating policy will be sufficient at any time to assure the receipt of benefits, such as a paidup policy, without the further payment of premiums, unless the statement is accompanied by an adequate explanation as to what benefits or coverage would be provided at such time and the conditions under which this would occur,

k. state that the insured is guaranteed certain benefits if the policy is allowed to lapse without making an adequate explanation of the nonforfeiture benefits,

l. describe a life insurance policy or annuity contract or premium payments therefor in terms of "units of participation" unless accompanied by other language clearly indicating the reference to a life insurance policy or annuity contract or to premium payments, as the case may be,

m. include in sales kits and prepared sales presentations proposed answers to a prospect's questions as to whether life insurance policies or annuity contracts are being sold, which are designed to avoid a clear and unequivocal statement that life insurance or annuities are the subject matter of the solicitation,

n. display in any manner to a prospective policyholder any material which includes illustrations, using dollar amounts, in connection with the proposed sale of a life insurance or annuity contract unless the printed material clearly identifies that the subject, to which the dollar amounts pertain, has an economic relationship to guaranteed values and dividends of the policy,

o. make any general statement that an insurer makes a profit as a result of policy lapses or surrenders,

p. make comparisons to the past experience of other life insurers as a means of projecting possible experience of the soliciting insurer when those comparisons are designed to enhance the characteristics of the policy being sold by confining the comparisons to insurers having favorable experience with that type of policy without a fair disclosure of other insurers which have had unfavorable experience with such type of policy,

q. state that a policy contains certain features which are not found in other life insurance policies or annuity contracts, unless that be true,

r. represent an option to purchase insurance in the future in such a manner that the policyholder might reasonably infer that he is purchasing term insurance or some other form of life insurance that would result in a payment to the beneficiary in the event of the death of the policyholder, or

s. make any reference to a policy of life insurance or an annuity contract in such a manner as to misrepresent the true nature of the policy contract;

4. No insurer, agent for an insurer or representative for an insurer shall, as a competitive or "twisting" device, inform any policyholder or prospective policyholder that any other insurer is required to change a policy form or related material to comply with the provisions of this act; and

5. This section shall not apply to group insurance policies nor to group annuity contracts.

Laws 1972, c. 223, § 4, operative Jan. 15, 1974.

§36-1219. Clean claims - Reimbursement - Notice of defective claims - Interest of overdue payments - Attorney's fees.

A. In the administration, servicing, or processing of any accident and health insurance policy, every insurer shall reimburse all clean claims of an insured, an assignee of the insured, or a health care provider within forty-five (45) calendar days after receipt of the claim by the insurer.

B. As used in this section:

1. "Accident and health insurance policy" or "policy" means any policy, certificate, contract, agreement or other instrument that provides accident and health insurance, as defined in Section 703 of this title, to any person in this state, and any subscriber certificate or any evidence of coverage issued by a health maintenance organization to any person in this state;

2. "Clean claim" means a claim that has no defect or impropriety, including a lack of any required substantiating documentation, or particular circumstance requiring special treatment that impedes prompt payment; and

3. "Insurer" means any entity that provides an accident and health insurance policy in this state, including but not limited to, a licensed insurance company, a not-for-profit hospital service and medical indemnity corporation, a health maintenance organization, a fraternal benefit society, a multiple employer welfare arrangement, or any other entity subject to regulation by the Insurance Commissioner.

C. If a claim or any portion of a claim is determined to have defects or improprieties, including a lack of any required substantiating documentation, or particular circumstance requiring special treatment, the insured, enrollee or subscriber, assignee of the insured, enrollee or subscriber, or health care provider shall be notified in writing within thirty (30) calendar days after receipt of the claim by the insurer. The written notice shall specify the portion of the claim that is causing a delay in processing and explain any additional information or corrections needed. Failure of an insurer to provide the insured, enrollee or subscriber, assignee of the insured, enrollee or subscriber, or health care provider with the notice shall constitute prima facie evidence that the claim will be paid in accordance with the terms of the policy.

D. Upon receipt of the additional information or corrections which led to the claim's being delayed and a determination that the information is accurate, an insurer shall either pay or deny the claim or a portion of the claim within forty-five (45) calendar days.

E. Payment shall be considered made on:

1. The date a draft or other valid instrument which is equivalent to the amount of the payment is placed in the United States mail in a properly addressed, postpaid envelope; or

2. If not so posted, the date of delivery.

F. An overdue payment shall bear simple interest at the rate of ten percent (10%) per year.

G. In the event litigation should ensue based upon such a claim, the prevailing party shall be entitled to recover a reasonable attorney's fee to be set by the court and taxed as costs against the party or parties who do not prevail.

H. The Insurance Commissioner shall develop a standardized prompt pay form for use by providers in reporting violations of prompt pay requirements. The form shall include a requirement that documentation of the reason for the delay in payment or documentation of proof of payment must be provided within ten (10) days of the filing of the form. The Commissioner shall provide the form to health maintenance organizations and providers.

I. The provisions of this section shall not apply to the Oklahoma Life and Health Insurance Guaranty Association or to the Oklahoma Property and Casualty Insurance Guaranty Association.

Added by Laws 1975, c. 301, § 1, eff. Oct. 1, 1975. Amended by Laws 1986, c. 251, § 12, eff. Nov. 1, 1986; Laws 1987, c. 175, § 8, eff. Nov. 1, 1987; Laws 1992, c. 74, § 1, eff. Sept. 1, 1992; Laws 1997, c. 156, § 1, eff. Nov. 1, 1997; Laws 1997, c. 418, § 50, eff. Nov. 1, 1997; Laws 2001, c. 65, § 1, eff. Nov. 1, 2001; Laws 2003, c. 197, § 52, eff. Nov. 1, 2003.

§36-1219.1. Short title.

Sections 4 through 6 of this act shall be known and may be cited as the "Health Care Fraud Prevention Act".

Added by Laws 2000, c. 353, § 4, eff. Nov. 1, 2000.

§36-1219.2. Definitions.

As used in the Health Care Fraud Prevention Act:

1. "Accident and health insurance policy" means any policy, certificate, contract, agreement or other instrument that provides accident and health insurance, as defined in Section 703 of this title, to any person in this state;

2. "Health care provider" means a physician, hospital, ambulatory surgical center, pharmacy, pharmacist, laboratory, or any other state-licensed or state-recognized provider of health care services;

3. "Insured" means any person entitled to reimbursement for expenses of health care services and procedures under an accident and health insurance policy issued by an insurer;

4. "Insurer" means any entity that provides an accident and health insurance policy in this state, including but not limited to a licensed insurance company, a not-for-profit hospital service and medical indemnity corporation, a fraternal benefit society, a multiple employer welfare arrangement, or any other entity subject to regulation by the Insurance Commissioner;

5. "Perferred provider organization" means any entity defined as a "preferred provider organization (PPO)" in Section 6054 of this title; and

6. "Third-party administrator" means any person defined as an "administrator" in Section 1442 of this title.

Added by Laws 2000, c. 353, § 5, eff. Nov. 1, 2000.

§36-1219.3. Discounted reimbursement and disclosure of reimbursement terms prohibited.

A. An insurer or third-party administrator shall not reimburse a health care provider on a discounted fee basis for covered services that are provided to an insured unless:

1. The insurer or third-party administrator has contracted with either:

a. the health care provider, or

b. a preferred provider organization which has contracted with the health care provider;

2. The health care provider has agreed to provide health care services under the terms of the contract; and

3. The insurer or third-party administrator has agreed to provide coverage for those health care services under an accident and health insurance policy.

B. A party to a preferred provider contract, including a contract with a preferred provider organization, may not sell, lease, or otherwise transfer information regarding the payment or reimbursement terms of the contract without the express authority and prior adequate notification of the other contracting parties.

Added by Laws 2000, c. 353, § 6, eff. Nov. 1, 2000.

§36-1219.4. Definitions - Requirements for discount medical plan organizations - Penalties.

A. As used in this section:

1. "Direct contract" means a contractual arrangement tying the ultimate seller purporting to offer discounts through the discount card to the health care provider, which expressly states the intent of this agreement to be used for the purpose of offering discounts on health-related purchases to uninsured or noncovered persons;

2. "Discount card" means a card or any other purchasing mechanism or device, which is not insurance, that purports to offer discounts or access to discounts in health-related purchases from health care providers;

3. "Discount medical plan" means a business arrangement or contract in which a person, in exchange for fees, dues, charges, or other consideration, provides access for plan members to providers of medical services and the right to receive medical services from those providers at a discount. The term discount medical plan does not include any product regulated as an insurance product, group health service product or health maintenance organization (HMO) product in the State of Oklahoma or discounts provided by an insurer, group health service, or health maintenance organizations (HMOs) where those discounts are provided at no cost to the insured or member and are offered due to coverage with a licensed insurer, group health service, or HMO;

4. "Discount medical plan organization" means a person or an entity which operates a discount medical plan;

5. "Health care provider" means any person or entity licensed by this state to provide health care services including, but not limited to, physicians, hospitals, home health agencies, pharmacies, and dentists;

6. "Health care provider network" means an entity which directly contracts with physicians and hospitals and has contractual rights to negotiate on behalf of those health care providers with a discount medical plan organization to provide medical services to members of the discount medical plan organization;

7. "Marketer" means a person or entity who markets, promotes, sells or distributes a discount medical plan, including a private label entity that places its name on and markets or distributes a discount medical plan but does not operate a discount medical plan;

8. "Medical services" means any care, service or treatment of illness or dysfunction of, or injury to, the human body including, but not limited to, physician care, inpatient care, hospital surgical services, emergency services, ambulance services, dental care services, vision care services, mental health services, substance abuse services, chiropractic services, podiatric care services, laboratory services, and medical equipment and supplies. The term does not include pharmaceutical supplies or prescriptions;

9. "Member" means any person who pays fees, dues, charges, or other consideration for the right to receive the purported benefits of a discount medical plan; and

10. "Person" means an individual, corporation, business trust, estate, trust, partnership, association, joint venture, limited liability company, or any other government or commercial entity.

B. 1. Before doing business in this state as a discount medical plan organization, an entity shall be a corporation, limited liability corporation, partnership, limited liability partnership or other legal entity, organized under the laws of this state or, if a foreign entity, authorized to transact business in this state, and shall be registered as a discount medical plan organization with the Insurance Department of the State of Oklahoma or be licensed by the Insurance Department of the State of Oklahoma as a licensed insurance company, licensed HMO, licensed group health service organization or motor service club.

2. To register as a discount medical plan organization, an applicant shall:

a. file with the Insurance Department of the State of Oklahoma an application on the form that the Insurance Commissioner requires, and

b. pay to the Department an application fee of Two Hundred Fifty Dollars ($250.00).

3. A registration is valid for a one-year term.

4. A registration expires one year following the registration unless it is renewed as provided in this subsection.

5. Before it expires, a registrant may renew the registration for an additional one-year term if the registrant:

a. otherwise is entitled to be registered,

b. files with the Department a renewal application on the form that the Insurance Commissioner requires, and

c. pays to the Department a renewal fee of Two Hundred Fifty Dollars ($250.00).

6. The Insurance Commissioner may deny a registration to an applicant or refuse to renew, suspend, or revoke the registration of a registrant if the applicant or registrant, or an officer, director, or employee of the applicant or registrant:

a. makes a material misstatement or misrepresentation in an application for registration,

b. fraudulently or deceptively obtains or attempts to obtain a registration for the applicant or registrant or for another,

c. in connection with the administration of a health care discount program, commits fraud or engages in illegal or dishonest activities, or

d. has violated any provisions of this section.

7. Prior to registration by the Insurance Department of the State of Oklahoma, each discount medical plan organization shall establish an Internet web site.

8. All amounts collected as registration or renewal fees shall be deposited into the General Revenue Fund.

9. Nothing in this subsection shall require a provider who provides discounts to his or her own patients to obtain and maintain a registration as a discount medical plan organization.

10. a. Nothing in this subsection shall apply to an affiliate of a licensed insurance company, HMO, group health service organization or motor service club, provided that the affiliate registers with and maintains registration in good standing with the Insurance Department of the State of Oklahoma in accordance with subparagraphs b and c of this paragraph.

b. An affiliate shall register as a discount medical plan organization on a form prescribed by the Insurance Commissioner prior to the sale, marketing or solicitation of a discount medical plan and pay an application fee of One Hundred Dollars ($100.00).

c. A registration shall expire one (1) year after the date of registration, and each year on that date thereafter. A registrant may renew the registration if the registrant pays an annual registration fee of One Hundred Dollars ($100.00) and remains in good standing with the Insurance Department of the State of Oklahoma.

d. For purposes of this section, "affiliate" means a person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with an insurance company, HMO, group health service organization or motor service club licensed in this state.

C. 1. The Department may examine or investigate the business and affairs of any discount medical plan organization. The Department may require any discount medical plan organization or applicant to produce any records, books, files, advertising and solicitation materials, or other information and may take statements under oath to determine whether the discount medical plan organization or applicant is in violation of the law or is acting contrary to the public interest. The expenses incurred in conducting any examination or investigation shall be paid by the discount medical plan organization or applicant. Examinations and investigations shall be conducted as provided in Sections 309.1 and 309.3 through 309.7 of this title. Discount medical plan organizations shall be governed by the provisions of this section and shall not be subject to the provisions of the Insurance Code unless specifically referenced.

2. Failure by the discount medical plan organization to pay the expenses incurred under paragraph 1 of this subsection shall be grounds for denial or revocation of the discount medical plan organization's registration.

D. 1. A discount medical plan organization may charge a reasonable one-time processing fee and a periodic charge.

2. If the member cancels the membership within the first thirty (30) days after receipt of the discount card and other membership materials, the member shall receive a reimbursement of all periodic charges paid. The return of all periodic charges shall be made within thirty (30) days of the date of the cancellation. If all of the periodic charges have not been paid within thirty (30) days, interest shall be assessed and paid on the proceeds at a rate of the Treasury Bill rate of the preceding calendar year, plus two (2) percentage points.

3. The right of cancellation shall be set out in the contract on the first page, in ten-point type or larger.

4. If a discount medical plan charges for a time period in excess of one (1) month, the plan shall, in the event of cancellation of the membership by either party, make a pro rata reimbursement of all periodic charges to the member.

E. 1. A discount medical plan organization may not:

a. use in its advertisements, marketing material, brochures, and discount cards the terms "insurance", "health plan", "coverage", "copay", "copayments", "preexisting conditions", "guaranteed issue", "premium", "PPO", "preferred provider organization", or other terms in a manner that could reasonably mislead a person to believe that the discount medical plan is health insurance,

b. except for hospital services, have restrictions on free access to plan providers including waiting periods and notification periods, or

c. pay providers any fees for medical services.

2. A discount medical plan organization may not collect or accept money from a member for payment to a provider for specific medical services furnished or to be furnished to the member unless the organization has an active license from the Insurance Department of the State of Oklahoma to act as an administrator.

F. 1. The following disclosures, to be printed in not less than twelve-point type, shall be made in writing to any prospective member and shall appear on the first page of any advertisements, marketing materials or brochures relating to a discount medical plan:

a. that the plan is not insurance,

b. that the plan provides discounts with certain health care providers for medical services,

c. that the plan does not make payments directly to the providers of medical services,

d. that the plan member is obligated to pay for all health care services but will receive a discount from those health care providers who have contracted with the discount plan organization, and

e. the name and the location of the registered discount medical plan organization, including the current telephone number of the registered discount medical plan organization or other entity responsible for customer service for the plan, if different from the registered discount medical plan organization.

2. If the discount medical plan is sold, marketed, or solicited by telephone, the disclosures required by this section shall be made orally and provided in the initial written materials that describe the benefits under the discount medical plan provided to the prospective or new member.

G. 1. All providers offering medical services to members under a discount medical plan shall provide such services pursuant to a written agreement. The agreement may be entered into directly by the health care provider or by a health care provider network to which the provider belongs if the provider network has contracts with the health care provider that allow the provider network to contract on behalf of the health care provider.

2. A health care provider agreement shall provide the following:

a. a description of the services and products to be provided at a discount,

b. the amount or amounts of the discounts or, alternatively, a fee schedule which reflects the health care provider's discounted rates, and

c. a provision that the health care provider will not charge members more than the discounted rates.

3. A health care provider agreement with a health care provider network shall require that the health care provider network have written agreements with its health care providers that:

a. contain the terms described in paragraph 2 of this subsection,

b. authorize the health care provider network to contract with the discount medical plan organization on behalf of the provider, and

c. require the network to maintain an up-to-date list of its contracted health care providers and to provide that list on a quarterly basis to the discount medical plan organization.

4. The discount medical plan organization shall maintain a copy of each active health care provider agreement into which it has entered.

H. 1. There shall be a written agreement between the discount medical plan organization and the member specifying the benefits under the discount medical plan and complying with the disclosure requirements of this section.

2. All forms used, including the written agreement pursuant to the provisions of paragraph 2 of this subsection, shall first be filed with the Department. Every form filed shall be identified by a unique form number placed in the lower left corner of each form. A filing fee of Twenty-five Dollars ($25.00) per form shall be payable to the Insurance Department of the State of Oklahoma for deposit into the General Revenue Fund.

I. 1. Each discount medical plan organization required to be registered pursuant to this section except an affiliate shall, at all times, maintain a net worth of at least One Hundred Fifty Thousand Dollars ($150,000.00).

2. The Insurance Department of the State of Oklahoma may not allow a registration unless the discount medical plan organization has a net worth of at least One Hundred Fifty Thousand Dollars ($150,000.00).

J. 1. The Insurance Department of the State of Oklahoma may suspend the authority of a discount medical plan organization to enroll new members, revoke any registration issued to a discount medical plan organization, or order compliance if the Department finds that any of the following conditions exist:

a. the organization is not operating in compliance with the provisions of this section,

b. the organization does not have the minimum net worth as required by this section,

c. the organization has advertised, merchandised or attempted to merchandise its services in such a manner as to misrepresent its services or capacity for service or has engaged in deceptive, misleading or unfair practices with respect to advertising or merchandising,

d. the organization is not fulfilling its obligations as a discount medical plan organization, or

e. the continued operation of the organization would be hazardous to its members.

2. If the Insurance Department of the State of Oklahoma has cause to believe that grounds for the suspension or revocation of a registration exist, the Department shall notify the discount medical plan organization in writing, specifically stating the grounds for suspension or revocation, and shall provide opportunity for a hearing on the matter in accordance with the Administrative Procedures Act and the Oklahoma Insurance Code.

3. When the registration of a discount medical plan organization is surrendered or revoked, such organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs transacted under the registration. The organization may not engage in any further advertising, solicitation, collecting of fees, or renewal of contracts.

4. The Insurance Department of the State of Oklahoma shall, in its order suspending the authority of a discount medical plan organization to enroll new members, specify the period during which the suspension is to be in effect and the conditions, if any, which shall be met by the discount medical plan organization prior to reinstatement of its registration to enroll new members. The order of suspension is subject to rescission or modification by further order of the Department prior to the expiration of the suspension period. Reinstatement may not be made unless requested by the discount medical plan organization; however, the Department may not grant reinstatement if it finds that the circumstances for which the suspension occurred still exist or are likely to reoccur.

K. Each discount medical plan organization required to be registered pursuant to this section shall provide the Insurance Department of the State of Oklahoma at least thirty (30) days' advance notice of any change in the discount medical plan organization's name, address, principal business address, or mailing address.

L. Each discount medical plan organization shall maintain an up-to-date list of the names and addresses of the providers with which it has contracted on an Internet web site page, the address of which shall be prominently displayed on all its advertisements, marketing materials, brochures, and discount cards. This section applies to those providers with whom the discount medical plan organization has contracted directly, as well as those who are members of a provider network with which the discount medical plan organization has contracted.

M. 1. All advertisements, marketing materials, brochures and discount cards used by marketers shall be approved in writing for such use by the discount medical plan organization.

2. The discount medical plan organization shall have an executed written agreement with a marketer prior to the marketer's marketing, promoting, selling, or distributing the discount medical plan.

N. The Insurance Commissioner may promulgate rules to administer the provisions of this section.

O. Regulation of discount medical plan organizations shall be done pursuant to the Administrative Procedures Act.

P. 1. A discount medical plan organization required to be registered pursuant to this section except an affiliate shall maintain a surety bond with the Insurance Department of the State of Oklahoma, having at all times a value of not less than Thirty-five Thousand Dollars ($35,000.00), for use by the Department in protecting plan members.

2. No judgment creditor or other claimant of a discount medical plan organization, other than the Insurance Department of the State of Oklahoma, shall have the right to levy upon the surety bond held pursuant to the provisions of paragraph 1 of this subsection.

Q. 1. A person who knowingly and wilfully operates as or aids and abets another operating as a discount medical plan organization in violation of subsection B of this section commits a felony, punishable as provided for in Oklahoma law, as if the discount medical plan organization were an unauthorized insurer, and the fees, dues, charges, or other consideration collected from the members by the discount medical plan organization or marketer were insurance premium.

2. A person who collects fees for purported membership in a discount medical plan but fails to provide the promised benefits commits a theft, punishable as provided in Oklahoma law.

R. 1. In addition to the penalties and other enforcement provisions of this section, the Department may seek both temporary and permanent injunctive relief if:

a. a discount medical plan organization is being operated by any person or entity that is not registered pursuant to this section, or

b. any person, entity, or discount medical plan organization has engaged in any activity prohibited by this section or any rule adopted pursuant to this section.

2. The venue for any proceeding brought pursuant to the provisions of this section shall be in the district court of Oklahoma County.

S. 1. The provisions of this section apply to the activities of a discount medical plan organization that is not registered pursuant to this section as if the discount medical plan organization were an unauthorized insurer.

2. A discount medical plan organization being operated by any person or entity that is not registered pursuant to this section, or any person, entity or discount medical plan organization that has engaged or is engaging in any activity prohibited by this section or any rules adopted pursuant to this section shall be subject to the Unauthorized Insurer Act as if the discount medical plan organization were an unauthorized insurer, and shall be subject to all the remedies available to the Insurance Commissioner under the Unauthorized Insurer Act.

Added by Laws 2001, c. 363, § 11, eff. July 1, 2001. Amended by Laws 2002, c. 307, § 12, eff. Nov. 1, 2002; Laws 2005, c. 425, § 1, eff. Nov. 1, 2005.

§36-1219.5. Modification of existing or issuance of new coverage - Consent.

No insurer shall modify a group or individual policy of existing coverage or issue new coverage under an accident and health insurance policy unless written consent for such modification or issuance is obtained from the policyholder. However, this section shall not be construed as prohibiting a modification that is provided for in an existing policy that has been filed and approved by the Insurance Commissioner.

Added by Laws 2003, c. 288, § 1, eff. Nov. 1, 2003.

§361220. Exclusive agents Restrictions.

No insurance company, including any subsidiary of any such company, may offer any insurance program in this state to exclusive agents without offering the same insurance program through all of its other authorized agents and brokers authorized for similar types of insurance coverage.

Added by Laws 1985, c. 328, § 9, emerg. eff. July 29, 1985.

§361221. Renumbered as § 1250.1 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§36-1222. Repealed by Laws 1994, c. 342, § 21, eff. Sept. 1, 1994.

§361223. Renumbered as § 1250.9 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361224. Renumbered as § 1250.10 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361225. Renumbered as § 1250.11 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361226. Renumbered as § 1250.13 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361227. Renumbered as § 1250.3 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§36-1228. Repealed by Laws 1994, c. 342, § 21, eff. Sept. 1, 1994.

§36-1241. Property and casualty insurer - Acceptance or denial of application.

A property and casualty insurer shall, within forty-five (45) business days of taking an application, determine whether or not the applicant should be accepted or denied as an insured and shall give written notice to the agent of the acceptance or denial. If the applicant is denied as an insured, any premium monies paid, less any expenses incurred either by the agent or the insurer, shall be immediately returned to the proposed purchaser of the policy. Failure of the insurer to return premium monies to the applicant within forty-five (45) business days of the initial submission to the insurer, broker, or agent, shall result in the applicant recovering any interest and bank charges which the proposed insured has incurred because of the delay in return of the initial premium, less expenses incurred. In addition, if the insurer does not return the premium monies, less expenses, within the forty-five-day period, the insurer shall remain liable for the insurance coverage and any claims pursuant thereto which the remaining premium monies would have purchased.

Added by Laws 1986, c. 251, § 23, eff. Nov. 1, 1986. Amended by Laws 1987, c. 175, § 9, eff. Nov. 1, 1987; Laws 2000, c. 353, § 8, eff. Nov. 1, 2000; Laws 2001, c. 363, § 12, eff. July 1, 2001.

§36-1241.1. Property and casualty policies - Provision relating to process for premium refund for cancellation prior to end of policy period.

Each property and casualty insurance policy approved by the Insurance Commissioner shall contain a provision describing the process for premium refund if the insured cancels the policy before the end of the policy period as defined in the policy. The provision is to be included in the policy, or by rider or endorsement attached to the policy. The policy does not have to contain the exact wording of this section or any other exact wording. Language which is substantially similar to this section shall be considered to be in compliance with this section.

Added by Laws 2004, c. 96, § 3, eff. Nov. 1, 2004.

§36-1241.2. Property and casualty policies - Inquiry regarding making claim - Increase of premium rates, cancellation, or refusal to issue or renew policy.

No insurer that issues any type of property or casualty insurance policy in this state shall increase premium rates, cancel a policy, or refuse to issue or renew a policy solely on the basis of a policyholder inquiring about making a claim or requesting information about a possible claim, if the policyholder does not in fact submit a claim.

Added by Laws 2004, c. 96, § 4, eff. Nov. 1, 2004.

§36-1250.1. Short title.

Sections 1250.1 through 1250.16 of this title shall constitute a part of the Oklahoma Insurance Code and shall be known and may be cited as the "Unfair Claims Settlement Practices Act".

Added by Laws 1986, c. 315, § 5, emerg. eff. June 24, 1986. Amended by Laws 1994, c. 342, § 1, eff. Sept. 1, 1994. Renumbered from § 1221 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1997, c. 5, § 1, emerg. eff. March 25, 1997.

§36-1250.2. Definitions.

As used in the Unfair Claims Settlement Practices Act:

1. "Agent" means any individual, corporation, association, partnership, or other legal entity authorized to represent an insurer with respect to a claim;

2. "Claimant" means either a first party claimant, a third party claimant, or both, and includes such claimant's designated legal representatives and includes a member of the claimant's immediate family designated by the claimant;

3. "Commissioner" means the Insurance Commissioner;

4. "First party claimant" means an individual, corporation, association, partnership, or other legal entity, including a subscriber under any plan providing health services, asserting a right to payment pursuant to an insurance policy or insurance contract for an occurrence of contingency or loss covered by such policy or contract;

5. "Insurance policy or insurance contract" means any contract of insurance, certificate, indemnity, medical or hospital service, suretyship, annuity, subscriber certificate or any evidence of coverage of a health maintenance organization issued, proposed for issuance, or intended for issuance by any entity subject to this Code;

6. "Insurer" means a person licensed by the Commissioner to issue or who issues any insurance policy or insurance contract in this state, including Compsource, and also includes health maintenance organizations. Provided that, for the purposes of paragraph 15 of Section 1250.5 of this title, "insurer" shall include the Oklahoma State and Education Employees Group Insurance Board;

7. "Investigation" means all activities of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract;

8. "Notification of claim" means any notification, whether in writing or other means acceptable under the terms of an insurance policy or insurance contract, to an insurer or its agent, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim; and

9. "Third party claimant" means any individual, corporation, association, partnership, or other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity insured under an insurance policy or insurance contract.

Added by Laws 1986, c. 251, § 14, eff. Nov. 1, 1986. Amended by Laws 1994, c. 342, § 2, eff. Sept. 1, 1994. Renumbered from § 1252 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 4, emerg. eff. Nov. 4, 1994; Laws 2003, c. 197, § 53, eff. Nov. 1, 2003; Laws 2004, c. 274, § 7, eff. July 1, 2004; Laws 2005, c. 170, § 1, eff. Nov. 1, 2005.

§36-1250.3. Application of law; conditions under which acts constitute unfair claims settlement practices.

A. The provisions of the Unfair Claims Settlement Practices Act shall apply to all claims arising under an insurance policy or insurance contract issued by any insurer.

B. It is an unfair claim settlement practice for any insurer to commit any act set out in Section 1250.5 of this title, or to commit a violation of any other provision of the Unfair Claims Settlement Practices Act, if:

1. It is committed flagrantly and in conscious disregard of this act or any rules promulgated hereunder; or

2. It has been committed with such frequency as to indicate a general business practice to engage in that type of conduct.

Added by Laws 1986, c. 315, § 11, emerg. eff. June 24, 1986. Amended by Laws 1992, c. 74, § 4, eff. Sept. 1, 1992; Laws 1994, c. 342, § 3, eff. Sept. 1, 1994. Renumbered from § 1227 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1997, c. 5, § 2, emerg. eff. March 25, 1997.

§36-1250.4. Claim files - Examination - Response to inquiries.

A. An insurer's claim files, other than the claim files of the State Insurance Fund, shall be subject to examination by the Insurance Commissioner or by duly appointed designees. Such files shall contain all notes and work papers pertaining to a claim in such detail that pertinent events and the dates of such events can be reconstructed. In addition, the Insurance Commissioner, authorized employees and examiners shall have access to any of an insurer's files that may relate to a particular complaint under investigation or to an inquiry or examination by the Insurance Department.

B. Every agent, adjuster, administrator, insurance company representative, or insurer, other than the State Insurance Fund and its representatives, upon receipt of any inquiry from the Commissioner concerning a claim or a problem involving premium monies shall, within twenty (20) days after receipt of such inquiry, furnish the Commissioner with an adequate response to the inquiry.

C. Every insurer, upon receipt of any pertinent written communication from a claimant which reasonably suggests that a response is expected, shall, within thirty (30) days after receipt thereof, furnish the claimant with an adequate response to the communication.

D. Any violation by an insurer of this section shall subject the insurer to discipline including a civil penalty of not less than One Hundred Dollars ($100.00) nor more than Five Thousand Dollars ($5,000.00).

Added by Laws 1986, c. 251, § 15, eff. Nov. 1, 1986. Amended by Laws 1989, c. 181, § 1, eff. Nov. 1, 1989; Laws 1994, c. 342, § 4, eff. Sept. 1, 1994. Renumbered from § 1253 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 5, emerg. eff. Nov. 4, 1994; Laws 1997, c. 418, § 51, eff. Nov. 1, 1997.

§36-1250.5. Acts constituting unfair claim settlement practices.

Any of the following acts by an insurer, if committed in violation of Section 1250.3 of this title, constitutes an unfair claim settlement practice:

1. Failing to fully disclose to first party claimants, benefits, coverages, or other provisions of any insurance policy or insurance contract when such benefits, coverages or other provisions are pertinent to a claim;

2. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue;

3. Failing to adopt and implement reasonable standards for prompt investigations of claims arising under its insurance policies or insurance contracts;

4. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;

5. Failing to comply with the provisions of Section 1219 of this title;

6. Denying a claim for failure to exhibit the property without proof of demand and unfounded refusal by a claimant to do so;

7. Except where there is a time limit specified in the policy, making statements, written or otherwise, which require a claimant to give written notice of loss or proof of loss within a specified time limit and which seek to relieve the company of its obligations if such a time limit is not complied with unless the failure to comply with such time limit prejudices an insurer's rights;

8. Requesting a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment;

9. Issuing checks or drafts in partial settlement of a loss or claim under a specified coverage which contain language which releases an insurer or its insured from its total liability;

10. Denying payment to a claimant on the grounds that services, procedures, or supplies provided by a treating physician or a hospital were not medically necessary unless the health insurer or administrator, as defined in Section 1442 of this title, first obtains an opinion from any provider of health care licensed by law and preceded by a medical examination or claim review, to the effect that the services, procedures or supplies for which payment is being denied were not medically necessary. Upon written request of a claimant, treating physician, or hospital, such opinion shall be set forth in a written report, prepared and signed by the reviewing physician. The report shall detail which specific services, procedures, or supplies were not medically necessary, in the opinion of the reviewing physician, and an explanation of that conclusion. A copy of each report of a reviewing physician shall be mailed by the health insurer, or administrator, postage prepaid, to the claimant, treating physician or hospital requesting same within fifteen (15) days after receipt of such written request. As used in this paragraph, "physician" means a person holding a valid license to practice medicine and surgery, osteopathic medicine, podiatric medicine, dentistry, chiropractic, or optometry, pursuant to the state licensing provisions of Title 59 of the Oklahoma Statutes;

11. Compensating a reviewing physician, as defined in paragraph 10 of this subsection, on the basis of a percentage of the amount by which a claim is reduced for payment;

12. Violating the provisions of the Health Care Fraud Prevention Act;

13. Compelling, without just cause, policyholders to institute suits to recover amounts due under its insurance policies or insurance contracts by offering substantially less than the amounts ultimately recovered in suits brought by them, when such policyholders have made claims for amounts reasonably similar to the amounts ultimately recovered;

14. Failing to maintain a complete record of all complaints which it has received during the preceding three (3) years or since the date of its last financial examination conducted or accepted by the Commissioner, whichever time is longer. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of each complaint, and the time it took to process each complaint. For the purposes of this paragraph, "complaint" means any written communication primarily expressing a grievance; or

15. Requesting a refund of all or a portion of a payment of a claim made to a claimant or health care provider more than twenty-four (24) months after the payment is made. This paragraph shall not apply:

a. if the payment was made because of fraud committed by the claimant or health care provider, or

b. if the claimant or health care provider has otherwise agreed to make a refund to the insurer for overpayment of a claim.

Added by Laws 1986, c. 251, § 16, eff. Nov. 1, 1986. Amended by Laws 1989, c. 238, § 1, eff. Nov. 1, 1989; Laws 1991, c. 134, § 9, eff. July 1, 1991; Laws 1993, c. 24, § 1, eff. Sept. 1, 1993; Laws 1994, c. 342, § 5, eff. Sept. 1, 1994. Renumbered from § 1254 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1997, c. 156, § 2, eff. Nov. 1, 1997; Laws 1997, c. 404, § 3, eff. Nov. 1, 1997; Laws 1997, c. 418, § 52, eff. Nov. 1, 1997; Laws 1999, c. 256, § 1, eff. Nov. 1, 1999; Laws 2000, c. 353, § 7, eff. Nov. 1, 2000.

NOTE: Laws 1997, c. 5, § 3 repealed by Laws 1997, c. 404, § 8, eff. Nov. 1, 1997.

§36-1250.6. Property and casualty insurer - Acknowledging receipt of claim - Commissioner's inquiry - Other communications - Claim forms, instructions and assistance.

A. Every property and casualty insurer, within thirty (30) days after receiving notification of a claim, shall acknowledge the receipt of such notification unless payment is made within such period of time. If an acknowledgement is made by means other than writing, an appropriate notation of such acknowledgement shall be made in the claim file of the property and casualty insurer, and dated. Notification given to an agent of a property and casualty insurer shall be notification to the insurer.

B. Every property and casualty insurer, upon receiving notification of a claim, promptly shall provide necessary claim forms, instruction, and reasonable assistance so that first party claimants can comply with the policy conditions and the reasonable requirements of the property and casualty insurer. Compliance with this paragraph within thirty (30) days after notification of a claim shall constitute compliance with subsection A of this section.

Added by Laws 1986, c. 251, § 17, eff. Nov. 1, 1986. Amended by Laws 1987, c. 175, § 10, eff. Nov. 1, 1987; Laws 1994, c. 342, § 6, eff. Sept. 1, 1994. Renumbered from § 1255 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994; Laws 1997, c. 418, § 53, eff. Nov. 1, 1997.

§36-1250.7. Property and casualty insurer - Denial or acceptance of claim.

A. Within forty-five (45) days after receipt by a property and casualty insurer of properly executed proofs of loss, the first party claimant shall be advised of the acceptance or denial of the claim by the insurer, or if further investigation is necessary. No property and casualty insurer shall deny a claim because of a specific policy provision, condition, or exclusion unless reference to such provision, condition, or exclusion is included in the denial. A denial shall be given to any claimant in writing, and the claim file of the property and casualty insurer shall contain a copy of the denial. If there is a reasonable basis supported by specific information available for review by the Commissioner that the first party claimant has fraudulently caused or contributed to the loss, a property and casualty insurer shall be relieved from the requirements of this subsection. In the event of a weather-related catastrophe or a major natural disaster, as declared by the Governor, the Insurance Commissioner may extend the deadline imposed under this subsection an additional twenty (20) days.

B. If a claim is denied for reasons other than those described in subsection A of this section, and is made by any other means than writing, an appropriate notation shall be made in the claim file of the property and casualty insurer until such time as a written confirmation can be made.

C. Every property and casualty insurer shall complete investigation of a claim within sixty (60) days after notification of proof of loss unless such investigation cannot reasonably be completed within such time. If such investigation cannot be completed, or if a property and casualty insurer needs more time to determine whether a claim should be accepted or denied, it shall so notify the claimant within sixty (60) days after receipt of the proofs of loss, giving reasons why more time is needed. If the investigation remains incomplete, a property and casualty insurer shall, within sixty (60) days from the date of the initial notification, send to such claimant a letter setting forth the reasons additional time is needed for investigation. Except for an investigation of possible fraud or arson which is supported by specific information giving a reasonable basis for the investigation, the time for investigation shall not exceed one hundred twenty (120) days after receipt of proof of loss. Provided, in the event of a weather-related catastrophe or a major natural disaster, as declared by the Governor, the Insurance Commissioner may extend this deadline for investigation an additional twenty (20) days.

D. Insurers shall not fail to settle first party claims on the basis that responsibility for payment should be assumed by others except as may otherwise be provided by policy provisions.

E. Insurers shall not continue or delay negotiations for settlement of a claim directly with a claimant who is neither an attorney nor represented by an attorney, for a length of time which causes the claimant's rights to be affected by a statute of limitations, or a policy or contract time limit, without giving the claimant written notice that the time limit is expiring and may affect the claimant's rights. Such notice shall be given to first party claimants thirty (30) days, and to third party claimants sixty (60) days, before the date on which such time limit may expire.

F. No insurer shall make statements which indicate that the rights of a third party claimant may be impaired if a form or release is not completed within a given period of time unless the statement is given for the purpose of notifying a third party claimant of the provision of a statute of limitations.

G. If a lawsuit on the claim is initiated, the time limits provided for in this section shall not apply.

Added by Laws 1986, c. 251, § 18, eff. Nov. 1, 1986. Amended by Laws 1987, c. 175, § 11, eff. Nov. 1, 1987; Laws 1993, c. 248, § 1, eff. Sept. 1, 1993; Laws 1994, c. 342, § 7, eff. Sept. 1, 1994. Renumbered from § 1256 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994; Laws 1997, c. 418, § 54, eff. Nov. 1, 1997.

§36-1250.8. Motor vehicle total loss or damage claim.

A. If an insurance policy or insurance contract provides for the adjustment and settlement of first party motor vehicle total losses, on the basis of actual cash value or replacement with another of like kind and quality, one of the following methods shall apply:

1. An insurer may elect to offer a replacement motor vehicle which is a specific comparable motor vehicle available to the insured, with all applicable taxes, license fees, and other fees incident to the transfer of evidence of ownership of the motor vehicle paid, at no cost to the insured other than any deductible provided in the policy. The offer and any rejection thereof shall be documented in the claim file; or

2. An insured may elect a cash settlement based upon the actual cost, less any deductible provided in the policy, to purchase a comparable motor vehicle, including all applicable taxes, license fees and other fees incident to a transfer of evidence of ownership, or a comparable motor vehicle. Such cost may be determined by:

a. the cost of a comparable motor vehicle in the local market area when a comparable motor vehicle is available in the local market area,

b. one of two or more quotations obtained by an insurer from two or more qualified dealers located within the local market area when a comparable motor vehicle is not available in the local market area, or

c. the cost of a comparable motor vehicle as quoted in the latest edition of the National Automobile Dealers Association Official Used Car Guide or monthly edition of any other nationally recognized published guidebook.

B. If a first party motor vehicle total loss is settled on a basis which deviates from the methods described in subsection A of this section, the deviation shall be supported by documentation giving particulars of the condition of the motor vehicle. Any deductions from such cost, including, but not limited to, deduction for salvage, shall be measurable, discernible, itemized and specified as to dollar amount and shall be appropriate in amount. The basis for such settlement shall be fully explained to a first party claimant.

C. If liability for motor vehicle damages is reasonably clear, insurers shall not recommend that third party claimants make claims pursuant to the third party claimants' own policies solely to avoid paying claims pursuant to such insurer's insurance policy or insurance contract.

D. Insurers shall not require a claimant to travel unreasonably either to inspect a replacement motor vehicle, obtain a repair estimate or have the motor vehicle repaired at a specific repair shop.

E. Insurers shall, upon the request of a claimant, include the deductible of a first party claimant, if any, in subrogation demands. Subrogation recoveries shall be shared on a proportionate basis with a first party claimant, unless the deductible amount has been otherwise recovered. No deduction for expenses shall be made from a deductible recovery unless an outside attorney is retained to collect such recovery. The deduction shall then be made for only a pro rata share of the allocated loss adjustment expense.

F. If an insurer prepares an estimate of the cost of automobile repairs, such estimate shall be in an amount for which it reasonably may be expected that the damage can be repaired satisfactorily. An insurer shall give a copy of an estimate to a claimant and may furnish to the claimant the names of one or more conveniently located repair shops, if requested by the claimant.

G. If an amount claimed is reduced because of betterment or depreciation, all information for such reduction shall be contained in the claim file. Such deductions shall be itemized and specified as to dollar amount and shall be appropriate for the amount of deductions.

H. An insurer or its representative shall not require a claimant to obtain motor vehicle repairs at a specific repair facility. An insurer or its representative shall not require a claimant to obtain motor vehicle glass repair or replacement at a specific motor vehicle glass repair or replacement facility. An insurer shall fully and promptly pay for the cost of the motor vehicle repair services or products, less any applicable deductible amount payable according to the terms of the policy. The claimant shall be furnished an itemized priced statement of repairs by the repair facility at the time of acceptance of the repaired motor vehicle. Unless a cash settlement is made, if a claimant selects a motor vehicle repair or motor vehicle glass repair or replacement facility, the insurer shall provide payment to the facility or claimant based on a competitive price, as established by that insurer through market surveys or by the insured through competitive bids at the insured's option, to determine a fair and reasonable market price for similar services. Reasonable deviation from this market price is allowed based on the facts in each case.

I. An insurer shall not use as a basis for cash settlement with a first party claimant an amount which is less than the amount which an insurer would pay if repairs were made, other than in total loss situations, unless such amount is agreed to by the insured.

J. An insurer shall not force a claimant to execute a full settlement release in order to settle a property damage claim involving a personal injury.

K. All payment or satisfaction of a claim for a motor vehicle which has been transferred by title to the insurer shall be paid by check or draft, payable on demand.

L. In the event of payment of a total loss to a third party claimant, the insurer shall include any registered lienholder as copayee to the extent of the lienholder's interest.

M. As used in this section, "total loss" means that the vehicle repair costs plus the salvage value of the vehicle meets or exceeds the actual cash value of the motor vehicle prior to the loss, as provided in used automobile dealer guidebooks.

Added by Laws 1986, c. 251, § 19, eff. Nov. 1, 1986. Amended by Laws 1987, c. 175, § 12, eff. Nov. 1, 1987; Laws 1993, c. 225, § 1, eff. Sept. 1, 1993; Laws 1994, c. 342, § 8, eff. Sept. 1, 1994. Renumbered from § 1257 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 2001, c. 363, § 13, eff. July 1, 2001; Laws 2003, c. 358, § 1, eff. Nov. 1, 2003.

§36-1250.9. Periodic reports.

A. If the Insurance Commissioner determines, based on an investigation of complaints of unfair claim settlement practices, that an insurer, other than the State Insurance Fund, has engaged in unfair claim settlement practices with such frequency as to indicate a general business practice and that such insurer should be subjected to closer supervision with respect to such practices, the Commissioner may require the insurer to file a report at such periodic intervals as the Commissioner deems necessary. The Commissioner shall also devise a statistical plan for such periodic reports, which shall contain but not be limited to the following information:

1. The total number of written claims filed, including the original amount filed for by the insured and the classification by line of insurance of each individual written claim, for the past twelve-month period or from the date of the insurer's last periodic report, whichever time is shorter;

2. The total number of written claims denied, for the past twelve-month period or from the date of the insurer's last periodic report, whichever time is shorter;

3. The total number of written claims settled, including the original amount filed for by the insured, the settled amount, and the classification of line of insurance of each individual settled claim, for the past twelve-month period or from the date of the insurer's last periodic report, whichever time is shorter;

4. The total number of written claims for which lawsuits were instituted against the insurer, including the original amount of the claim filed for by the insured, the amount of final adjudication, the reason for the lawsuit and the classification by line of insurance of each individual written claim, for the past twelve-month period or from the date of the insurer's last periodic report, whichever time is shorter; and

5. All information required by paragraph 12 of Section 1250.5 of this title.

B. For the purposes of this section, "written claims" means those claims reduced to writing and filed by a resident of this state with an insurer.

Added by Laws 1986, c. 315, § 7, emerg. eff. June 24, 1986. Amended by Laws 1992, c. 74, § 3, eff. Sept. 1, 1992; Laws 1994, c. 342, § 9, eff. Sept. 1, 1994. Renumbered from § 1223 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 6, emerg. eff. Nov. 4, 1994.

§36-1250.10. Enforcement - Standards of performance - Complaints - Investigations.

A. The Insurance Commissioner may hire additional employees and examiners as needed for the enforcement of the provisions of the Unfair Claims Settlement Practices Act.

B. The Commissioner shall compile the information received from an insurer pursuant to Section 1250.9 of this title in such a manner as to enable him to compare it to a minimum standard of performance which shall be promulgated by the Commissioner. If the Commissioner, after such comparison is made, finds that the insurer falls below the minimum standard of performance, he shall cause an investigation to be made of said insurer as to the reason, if any, for the substandard performance.

C. The Commissioner shall also provide for the receiving and processing of individual complaints alleging violations of the Unfair Claims Settlement Practices Act by both insurers who are required to make periodic reports and those who are not required to make such reports, but not by the State Insurance Fund. If the Commissioner in his complaint experience determines that the number and type of complaints against an insurer, other than the State Insurance Fund, do not meet the minimum standard of performance or are out of proportion to those against other insurers writing similar lines of insurance, the Commissioner shall cause an investigation to be made of the insurer.

Added by Laws 1986, c. 315, § 8, emerg. eff. June 24, 1986. Amended by Laws 1994, c. 342, § 10, eff. Sept. 1, 1994. Renumbered from § 1224 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 7, emerg. eff. Nov. 4, 1994.

§36-1250.11. Notice - Hearing.

A. Upon the receipt of the results of an investigation instituted pursuant to the provisions of Section 1250.10 of this title, the Insurance Commissioner shall review the results and shall determine whether, by the standards set out in Sections 1250.3 and 1250.5 of this title, further action is required. If the Insurance Commissioner deems further action necessary, the Commissioner shall issue and serve upon the insurer a statement of the charges and a notice in accordance with the Administrative Procedures Act. No insurer shall be deemed in violation of the Unfair Claims Settlement Practices Act solely by reason of the numbers and types of such complaints or claims.

B. The Insurance Commissioner shall not assert enforcement jurisdiction pursuant to this section over the State Insurance Fund.

Added by Laws 1986, c. 315, § 9, emerg. eff. June 24, 1986. Amended by Laws 1994, c. 342, § 11, eff. Sept. 1, 1994. Renumbered from § 1225 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 8, emerg. eff. Nov. 4, 1994; Laws 1997, c. 418, § 55, eff. Nov. 1, 1997.

§36-1250.12. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1250.13. Order - Authority to enforce - Review.

A. The Insurance Commissioner, upon finding an insurer, other than the State Insurance Fund, in violation of any provision of the Unfair Claims Settlement Practices Act, shall issue a cease and desist order to said insurer directing it to stop such unlawful practices. If the insurer refuses or fails to comply with said order, the Commissioner shall have the authority to revoke or suspend the insurer's certificate of authority. The Commissioner shall also have the authority to limit, regulate, and control the insurer's line of business, the insurer's writing of policy forms or other particular forms, and the insurer's volume of its line of business or its writing of policy forms or other particular forms. The Commissioner shall use the above authority to the extent deemed necessary to obtain the insurer's compliance with the order. The Attorney General shall offer his assistance if requested by the Commissioner to enforce the Commissioner's orders.

B. Reasonable attorneys fees shall be awarded the Commissioner if judicial action is necessary for the enforcement of the orders. Such fees shall be based upon those prevailing in the community. Fees collected by the Commissioner without the assistance of the Attorney General shall be credited to the Insurance Commissioner's Revolving Fund. Fees collected by the Attorney General shall be credited to the Attorney General's Revolving Fund.

Added by Laws 1986, c. 315, § 10, emerg. eff. June 24, 1986. Amended by Laws 1994, c. 342, § 13, eff. Sept. 1, 1994. Renumbered from § 1226 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 9, emerg. eff. Nov. 4, 1994; Laws 1997, c. 418, § 56, eff. Nov. 1, 1997.

§36-1250.14. Violation of act - Penalty.

For any violation of the Unfair Claims Settlement Practices Act, the Insurance Commissioner may, after notice and hearing, subject an insurer, other than the State Insurance Fund, to a civil penalty of not less than One Hundred Dollars ($100.00) nor more than Five Thousand Dollars ($5,000.00) for each occurrence. Such civil penalty may be enforced in the same manner in which civil judgments may be enforced. Such penalties shall be placed in the Insurance Commissioner's Revolving Fund.

Added by Laws 1986, c. 251, § 20, eff. Nov. 1, 1986. Amended by Laws 1994, c. 342, § 14, eff. Sept. 1, 1994. Renumbered from § 1258 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994. Amended by Laws 1994, 2nd Ex. Sess., c. 1, § 10, emerg. eff. Nov. 4, 1994; Laws 1997, c. 418, § 57, eff. Nov. 1, 1997.

§36-1250.15. Judicial review.

Any insurer affected by an order of the Insurance Commissioner issued pursuant to the Unfair Claims Settlement Practices Act may seek judicial review of such order by filing a petition in the District Court of Oklahoma County within thirty (30) days after the insurer is notified of the order.

Added by Laws 1994, c. 342, § 15, eff. Sept. 1, 1994. Amended by Laws 1997, c. 418, § 58, eff. Nov. 1, 1997.

§36-1250.16. Rules and regulations.

The Insurance Commissioner shall formulate, adopt and promulgate rules for the implementation and administration of the Unfair Claims Settlement Practices Act.

Added by Laws 1986, c. 251, § 22, eff. Nov. 1, 1986. Amended by Laws 1994, c. 342, § 16, eff. Sept. 1, 1994. Renumbered from § 1260 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§36-1251. Repealed by Laws 1994, c. 342, § 21, eff. Sept. 1, 1994.

§361252. Renumbered as § 1250.2 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361253. Renumbered as § 1250.4 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361254. Renumbered as § 1250.5 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§36-1255. Renumbered as § 1250.6 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361256. Renumbered as § 1250.7 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361257. Renumbered as § 1250.8 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361258. Renumbered as § 1250.14 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361259. Renumbered as § 1250.12 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§361260. Renumbered as § 1250.16 of this title by Laws 1994, c. 342, § 20, eff. Sept. 1, 1994.

§36-1421. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1422. Renumbered as § 1435.2 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1423. Renumbered as § 1435.3 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1424.1. Renumbered as § 1435.33 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.2. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1424.11. Renumbered as § 1435.20 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.12. Renumbered as § 1435.34 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.13. Renumbered as § 1435.32 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.14. Renumbered as § 1435.21 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.15. Renumbered as § 1435.35 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.16. Renumbered as § 1435.36 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.17. Renumbered as § 1435.37 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1424.18. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1424.19. Renumbered as § 1435.38 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1425. Renumbered as § 1435.23 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1425.1. Renumbered as § 1426A of this title by Laws 1997, c. 418, § 127, eff. Nov. 1, 1997.

§36-1425.2. Renumbered as § 1435.24 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1425.3. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1425.4. Renumbered as § 1435.25 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1425.5. Demonstration of competency and responsibility.

An applicant for any license required by the provisions of the Insurance Agents Licensing Act shall demonstrate to the Insurance Commissioner that the applicant is competent, trustworthy, financially responsible, and of good personal and business reputation.

Added by Laws 1997, c. 418, § 74, eff. Nov. 1, 1997.

§36-1425.6. Renumbered as § 1435.26 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1425.7. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1425.8. Renumbered as § 1435.39 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1425.9. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1426. Renumbered as § 1435.10 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1426.1. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1426A. Renumbered as § 1435.29 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1427. Renumbered as § 1435.30 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1427.1. Renumbered as § 1435.31 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1428. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1429. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1430. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1431. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1431.1. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1432. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1433. Repealed by Laws 2001, c. 156, § 34, eff. Nov. 1, 2001.

§36-1435.1. Short title - Application of act.

A. This act shall be known and may be cited as the "Oklahoma Producer Licensing Act".

B. This act governs the qualifications and procedures for the licensing of insurance producers. It simplifies and organizes statutory language to improve efficiency, permits the use of new technology, and reduces costs associated with issuing and renewing insurance licenses.

C. This act does not apply to excess and surplus lines agents and brokers licensed, except for Section 13 of this act and except where specifically referenced in this act.

Added by Laws 2001, c. 156, § 1, eff. Nov 1, 2001.

§361435.2. Definitions.

As used in the Oklahoma Producer Licensing Act:

1. "Commissioner" means the Insurance Commissioner;

2. "Business entity" means a corporation, association, partnership, limited liability company, limited partnership, or other legal entity;

3. "Customer service representative" means an individual appointed by an insurance producer, surplus lines insurance broker, managing general agent, or insurance agency to assist the insurance producer, broker, or agency in transacting the business of insurance from the office of the insurance producer, broker, or agency and whose salary may vary based on the production or volume of applications or premiums;

4. "Home state" means the District of Columbia and any state or territory of the United States in which an insurance producer maintains the producer's principal place of residence or principal place of business and is licensed to act as an insurance producer;

5. "Insurance" means any of the lines of authority in Title 36 of the Oklahoma Statutes, including workers' compensation insurance. Any insurer approved to offer workers' compensation equivalent insurance pursuant to the provisions of Section 65 of Title 85 of the Oklahoma Statutes may appoint property and casualty insurance producers. All producers appointed for workers' compensation equivalent insurance products must be licensed as property and casualty insurance producers by the Oklahoma Insurance Department;

6. "Insurance consultant" means an individual or legal entity who, for a fee, is held out to the public as engaged in the business of offering any advice, counsel, opinion or service with respect to the benefits, advantages, or disadvantages promised under any policy of insurance that could be issued or delivered in this state;

7. "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance. Any person not duly licensed as an insurance producer, surplus lines insurance broker, or limited lines producer who solicits a policy of insurance on behalf of an insurer shall be deemed to be acting as an insurance agent within the meaning of the Oklahoma Producer Licensing Act, and shall thereby become liable for all the duties, requirements, liabilities, and penalties to which an insurance producer of the company is subject, and the company by issuing the policy of insurance shall thereby accept and acknowledge the person as its agent in the transaction. For purposes of the laws of this state and the Oklahoma Insurance Code, the term "insurance agent" shall have the same meaning as the term "insurance producer";

8. "Insurer" has the meaning set out in Section 103 of this title;

9. "License" means a document issued by the Insurance Commissioner of this state authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance carrier;

10. "Limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, known as "gap" insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the Insurance Commissioner determines should be designated a form of limited line credit insurance;

11. "Limited line credit insurance producer" means a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group or individual policy;

12. "Limited lines insurance" means limited line credit and those lines of insurance defined in Section 20 of this act or any other line of insurance the Insurance Commissioner deems necessary to recognize for the purposes of complying with subsection E of Section 9 of this act;

13. "Limited lines producer" means a person who is authorized by the Commissioner to sell, solicit or negotiate limited lines insurance. For purposes of the laws of this state and the Oklahoma Insurance Code, the term "limited insurance representative" shall have the same meaning as the term "limited lines producer";

14. "Managing general agent" means an individual or legal entity appointed, as an independent contractor, by one or more insurers to exercise general supervision over the business of the insurer in this state, with authority to appoint insurance producers for the insurer, and to terminate appointments for the insurer;

15. "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchaser;

16. "Person" means an individual or a business entity;

17. "Sell" means to exchange a contract of insurance, by any means, for money or its equivalent, on behalf of an insurance company;

18. "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company;

19. "Surplus lines insurance broker" means an individual or legal entity who solicits, negotiates, or procures a policy of insurance in an insurance company not licensed to transact business in this state which cannot be procured from insurers licensed to do business in this state. All transactions under such license shall be subject to Article 11 of the Oklahoma Insurance Code;

20. "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance;

21. "Uniform Business Entity Application" means the current version of the National Association of Insurance Commissioners (NAIC) Uniform Business Entity Application for resident and nonresident business entities; and

22. "Uniform Application" means the current version of the NAIC Uniform Application for resident and nonresident producer licensing.

Added by Laws 1980, c. 164, § 2, emerg. eff. April 15, 1980. Amended by Laws 1995, c. 339, § 17, eff. Nov. 1, 1995; Laws 1997, c. 418, § 59, eff. Nov. 1, 1997; Laws 2001, c. 156, § 3, eff. Nov. 1, 2001. Renumbered from § 1422 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§361435.3. Agency of insurance producer Authority - Commissions.

A. Every insurance producer, customer service representative, or limited lines producer who solicits or negotiates an application for insurance of any kind shall, in any controversy between the insured or the insured's beneficiary and the insurer, be regarded as representing the insurer and not the insured or the insured's beneficiary. This provision shall not affect the apparent authority of an insurance producer.

B. Every surplus lines insurance broker who solicits an application for insurance of any kind shall, in any controversy between the insured or the insured's beneficiary and the insurer issuing any policy upon such application, be regarded as representing the insured or the insured's beneficiary and not the insurer. Any company which directly or through its agents delivers in this state to any insurance broker, a policy of insurance pursuant to the application or request of such broker, acting for an insured other than himself or herself, shall be deemed to have authorized such broker to receive on its behalf, payment of any premium which is due on such policy of insurance at the time of its issuance or delivery.

C. Every licensed insurance producer shall be entitled to commissions on all premiums collected for group insurance policies negotiated by the insurance producer on behalf of an insurer and an insurer shall be required to pay such commissions to the insurance producer, except entitlement to commissions shall automatically terminate without notice, effective on the date of the occurrence of any of the following events:

1. The insurance producer's license to engage in accident and health insurance business is terminated or revoked by the State of Oklahoma or any other public authority for cause. As used in this paragraph, "cause" shall be defined as perpetration by the insurance producer of fraud or embezzlement;

2. Material breach of the insurance producer's contract with the account or insurer, excluding production requirements;

3. Termination of the insurance producer's "Agent of Record" relationship with the employer or account; or

4. Death of the insurance producer, unless the contract between the insurer states otherwise or the right to the commission has vested.

Recovery of such commissions shall be through civil action. In any action brought pursuant to this subsection, the court may award reasonable attorneys fees to the prevailing party.

Added by Laws 1980, c. 164, § 3, emerg. eff. April 15, 1980. Amended by Laws 1992, c. 261, § 2, eff. Sept. 1, 1992; Laws 1996, c. 246, § 2, eff. July 1, 1996; Laws 2001, c. 156, § 3, eff. Nov. 1, 2001. Renumbered from § 1423 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.4. License required for selling, soliciting, or negotiating.

A person shall not sell, solicit, or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with the Oklahoma Producer Licensing Act.

Added by Laws 2001, c. 156, § 4, eff. Nov. 1, 2001.

§36-1435.5. When license not required.

A. Nothing in the Oklahoma Producer Licensing Act shall be construed to require an insurer to obtain an insurance producer license. In this section, the term "insurer" does not include an insurer's officers, directors, employees, subsidiaries or affiliates.

B. A license as an insurance producer shall not be required of the following:

1. An officer, director or employee of an insurer or of an insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state, and:

a. the officer, director or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance, or

b. the officer, director or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance, or

c. the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance;

2. A person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance; or for the purpose of enrolling individuals under plans, issuing certificates under plans or otherwise assisting in administering plans; or performs administrative services related to mass-marketed property and casualty insurance, where no commission is paid to the person for the service;

3. An employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, director or trustees are engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts;

4. Employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance;

5. A person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, provided that the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed in this state;

6. A person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract, provided that that person is otherwise licensed as an insurance producer to sell, solicit or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state; or

7. A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer, provided that the employee does not sell or solicit insurance or receive a commission.

Added by Laws 2001, c. 156, § 5, eff. Nov. 1, 2001.

§36-1435.6. Examinations.

A. A resident individual applying for an insurance producer license shall pass a written examination unless exempt pursuant to Section 1435.10 of this title. The examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and regulations of this state. Examinations required by this section shall be developed and conducted under rules and regulations prescribed by the Insurance Commissioner.

B. The Insurance Commissioner may make arrangements, including contracting with an outside testing service, for administering examinations and collecting the nonrefundable fee set forth in Section 1435.23 of this title.

C. Each individual applying for an examination shall remit a nonrefundable fee as prescribed by the Insurance Commissioner as set forth in Section 1435.23 of this title.

D. After completion and filing of the application with the Insurance Commissioner, except as provided in Section 1435.10 of this title, the Commissioner shall subject each applicant for license as an insurance agent, insurance consultant, limited insurance representative, or customer service representative to an examination approved by the Commissioner as to competence to act as a licensee, which each applicant shall personally take and pass to the satisfaction of the Commissioner. The Commissioner may accept examinations administered by a testing service as satisfying the examination requirements of persons seeking license as agents, solicitors, counselors, or adjusters under this Code. The Commissioner may negotiate agreements with such testing services to include performance of examination development, test scheduling, examination site arrangements, test administration, grading, reporting, and analysis. The Commissioner may require such testing services to correspond directly with the applicants with regard to the administration of such examinations and that such testing services collect fees for administering such examinations directly from the applicants. The Commissioner may stipulate that any agreements with such testing services provide for the administration of examinations in specific locales and at specified frequencies. The Commissioner shall retain the authority to establish the scope and type of all examinations.

E. If the applicant is a legal entity, the examination shall be taken by each individual who is to act for the entity as a licensee.

F. Each examination for a license shall be approved for use by the Commissioner and shall reasonably test the knowledge of the applicant as to the lines of insurance, policies, and transactions to be handled pursuant to the license applied for, the duties and responsibilities of the licensee, and the pertinent insurance laws of this state.

G. Examination for licensing shall be at such reasonable times and places as are designated by the Commissioner.

H. The Commissioner or testing service shall give, conduct, and grade all examinations in a fair and impartial manner and without discrimination among individuals examined.

I. The applicant shall pass the examination with a grade determined by the Commissioner to indicate satisfactory knowledge and understanding of the line or lines of insurance for which the applicant seeks qualification. Within ten (10) days after the examination, the Commissioner shall inform the applicant and the appointing insurer, when applicable, as to whether or not the applicant has passed. Formal evidence of licensing shall be issued by the Commissioner to the licensee within a reasonable time.

J. An applicant who has failed to pass the first examination for the license applied for may take a second examination within thirty (30) days following the first examination. Examination fees for subsequent examinations shall not be waived.

K. An applicant who has failed to pass the first two examinations for the license applied for shall not be permitted to take a subsequent examination until the expiration of thirty (30) days after the last previous examination. Examination fees for subsequent examinations shall not be waived.

Added by Laws 2001, c. 156, § 6, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 13, eff. Nov. 1, 2002; Laws 2004, c. 274, § 8, eff. July 1, 2004.

§36-1435.7. Applications for resident insurance producer and business entity insurance producer licenses - Requirements for approval.

A. A person applying for a resident insurance producer license shall make application to the Insurance Commissioner on the Uniform Application or an application approved by the Commissioner and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the individual's knowledge and belief. Before approving the application, the Insurance Commissioner shall find that the individual:

1. Is at least eighteen (18) years of age;

2. Has not committed any act that is a ground for denial, suspension or revocation set forth in Section 1435.13 of this title;

3. Where required by the Insurance Commissioner, has completed a prelicensing course of study for the lines of authority for which the person has applied;

4. Has paid the fees set forth in Section 1435.23 of this title; and

5. Has successfully passed the examinations for the lines of authority for which the person has applied.

B. In connection with the licensure of an applicant for a resident insurance producer license, the applicant shall submit either a letter from the appointing insurer verifying acceptance of responsibility for the actions of the applicant in the scope of that person's appointment, or submit and maintain an errors and omissions policy acceptable to the Commissioner, or, if errors and omissions coverage is provided by the insurer for agents by utilizing a blanket errors and omissions policy for coverage, a copy of the policy providing the errors and omissions coverage shall be on file with the Commissioner. The insurer providing coverage shall maintain an accurate list of all agents covered by such policy.

C. A business entity acting as an insurance producer is required to obtain an insurance producer license. Application shall be made using the Uniform Business Entity Application or an application approved by the Commissioner. Before approving the application, the Insurance Commissioner shall find that:

1. The business entity has paid the fees set forth in Section 1435.23 of this title;

2. The business entity has designated a licensed producer responsible for the business entity's compliance with the insurance laws, rules and regulations of this state;

3. A domestic business entity is organized pursuant to the provisions of the laws of this state and maintains its principal place of business in this state;

4. No person whose license as an insurance producer has been revoked by order of the Commissioner, nor any business entity in which such person has a majority ownership interest, whether direct or indirect, owns any interest in the business entity licensed as an insurance producer; and

5. The business entity has provided proof satisfactory to the Commissioner that a trade name has been lawfully registered for an insurance producer license to be issued in a trade name.

D. A business entity acting as an insurance producer shall notify the Commissioner of all changes among its members, directors and officers and all other individuals designated in the license within fifteen (15) days after the change.

E. An applicant for any license required by the provisions of the Oklahoma Producer Licensing Act shall demonstrate to the Insurance Commissioner that the applicant is competent, trustworthy, financially responsible, and of good personal and business reputation.

F. The Insurance Commissioner may require any documents reasonably necessary to verify the information contained in an application.

Added by Laws 2001, c. 156, § 7, eff. Nov. 1, 2001. Amended by 2002, c. 307, § 14, eff. Nov. 1, 2002; Laws 2003, c. 150, § 3, eff. Nov. 1, 2003.

§36-1435.8. Lines of authority - Continuation in effect of license - Reinstatement - Contracting by Insurance Commissioner with nongovernmental entities.

A. Unless denied licensure pursuant to Section 1435.13 of this title, persons who have met the requirements of Sections 1435.6 and 1435.7 of this title shall be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the following lines of authority:

1. Life - insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income;

2. Accident and health or sickness - insurance coverage for sickness, bodily injury or accidental death and may include benefits for disability income;

3. Property - insurance coverage for the direct or consequential loss or damage to property of every kind;

4. Casualty - insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property;

5. Variable life and variable annuity products - insurance coverage provided under variable life insurance contracts and variable annuities;

6. Personal lines - property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;

7. Commercial lines - property and casualty insurance coverage sold to businesses for primarily commercial purposes;

8. Credit - limited line credit insurance;

9. Title insurance; and

10. Any other line of insurance permitted under state laws or regulations.

B. An insurance producer license shall remain in effect unless revoked or suspended as long as the fee set forth in Section 1435.23 of this title is paid and education requirements for resident individual producers are met by the due date.

C. An individual insurance producer who allows the license to lapse may, within twenty-four (24) months from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination unless the license was revoked, suspended, or continuation thereof was refused by the Commissioner. However, a penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date. Continuing education requirements must be kept current.

D. A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures. The producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.

E. The license shall contain the licensee's name, address, personal identification number, and the date of issuance, the lines of authority, the expiration date and any other information the Insurance Commissioner deems necessary.

F. Licensees shall inform the Insurance Commissioner by any means acceptable to the Insurance Commissioner of a change of address within thirty (30) days of the change. Failure to timely inform the Insurance Commissioner of a change in legal name or address shall result in a penalty pursuant to Section 1435.13 of this title.

G. In order to assist in the performance of the Insurance Commissioner's duties, the Insurance Commissioner may contract with nongovernmental entities, including the National Association of Insurance Commissioners (NAIC) or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees, related to producer licensing that the Insurance Commissioner and the nongovernmental entity may deem appropriate.

H. The Commissioner may participate, in whole or in part, with the National Association of Insurance Commissioners, or any affiliates or subsidiaries the National Association of Insurance Commissioners oversees, in a centralized producer license registry where insurance producer licenses and appointments may be centrally or simultaneously effected for all states that require an insurance producer license and participate in such centralized producer license registry. If the Commissioner finds that participation in such a centralized producer license registry is in the public interest, the Commissioner may adopt by rule any uniform standards or procedures as are necessary to participate in the registry. This includes the central collection of all fees for licenses or appointments that are processed through the registry.

Added by Laws 2001, c. 156, § 8, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 15, eff. Nov. 1, 2002.

§36-1435.9. Nonresident producer license.

A. Unless denied licensure pursuant to Section 1435.13 of this title, a nonresident person shall receive a nonresident producer license if:

1. The person is currently licensed as a resident and in good standing in that person's home state;

2. The person has submitted the proper request for licensure and has paid the fees required by Section 1435.23 of this title;

3. The person has submitted or transmitted to the Insurance Commissioner the application for licensure that the person submitted to the person's home state, or in lieu of the same, a completed Uniform Application; and

4. The person's home state awards nonresident producer licenses to residents of this state on the same basis.

B. Any nonresident application submitted pursuant to this section shall constitute the applicant's designation of the Insurance Commissioner as the person upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of any interested person arising out of the insurance business of the applicant in this state. This designation constitutes an agreement that said service of process is of the same legal force and validity as personal service of process in this state upon the nonresident licensee.

C. The Insurance Commissioner may verify the producer's licensing status through the Producer Database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries.

D. A nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state shall file a change of address and provide certification from the new resident state within thirty (30) days of the change of legal residence. No fee or license application is required.

E. Notwithstanding any other provision of the Oklahoma Producer Licensing Act or of the Oklahoma Insurance Code, a person licensed as a surplus lines producer in that person's home state shall receive a nonresident surplus lines producer license pursuant to subsections A and B of this section.

F. Notwithstanding any other provision of the Oklahoma Producer Licensing Act, a person licensed as a limited line credit insurance or other type of limited lines producer in that person's home state shall receive a nonresident limited lines producer license, pursuant to subsections A and B of this section, granting the same scope of authority as granted under the license issued by the producer's home state. For the purpose of this subsection, limited line insurance is any authority granted by the home state which restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to subsection A of Section 1435.8 of this title.

Added by Laws 2001, c. 156, § 9, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 16, eff. Nov. 1, 2002.

§36-1435.10. Exemptions from examination requirement.

The following are exempt from the requirement for an examination, if the Insurance Commissioner determines, in accordance with rules adopted by the Commissioner, that the applicant is cognizant of and capable of fulfilling the responsibilities of the license:

1. Any limited lines producer; and

2. A surplus lines insurance broker.

Added by Laws 1980, c. 164, § 6, emerg. eff. April 15, 1980. Amended by Laws 1983, c. 90, § 4, emerg. eff. May 9, 1983; Laws 1985, c. 258, § 3, eff. Nov. 1, 1985; Laws 1997, c. 418, § 79, eff. Nov. 1, 1997; Laws 2001, c. 156, § 10, eff. Nov. 1, 2001. Renumbered from § 1426 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.11. Use of assumed name.

An insurance producer doing business under any name other than the producer's legal name is required to notify the Insurance Commissioner prior to using the assumed name.

Added by Laws 2001, c. 156, § 11, eff. Nov. 1, 2001.

§36-1435.12. Temporary license without examination - Protection of insureds and public.

A. The Insurance Commissioner may issue a temporary license for a period not to exceed one hundred eighty (180) days without requiring an examination if the Insurance Commissioner deems that the temporary license is necessary for the servicing of an insurance business in the following cases:

1. To the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business;

2. To a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license;

3. To the designee of a licensed insurance producer entering active service in the Armed Forces of the United States of America; or

4. In any other circumstance in which the Insurance Commissioner deems that the public interest will best be served by the issuance of this license.

B. The Insurance Commissioner may by order limit the authority of any temporary licensee in any way deemed necessary to protect insureds and the public. The Insurance Commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The Insurance Commissioner may by order revoke a temporary license if the interest of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business. If the applicant fails to pass the licensure examination, the temporary license shall terminate automatically.

C. As to a temporary agent's license issued because of the death or disability of an agent, no insurers shall be represented by the temporary licensee in addition to those represented by the deceased or disabled agent.

D. The fee paid for the temporary license shall not be applied upon the fee for any permanent license of the same category issued to the licensee before expiration of the temporary license.

E. No license issued pursuant to the provisions of subsection A of this section shall be effective for more than six (6) months. The Commissioner, in his discretion, may renew the license once upon proper application and for good cause. However, no temporary license shall be issued for any line of insurance to any applicant who has failed to pass the required examination.

Added by Laws 2001, c. 156, § 12, eff. Nov. 1, 2001.

§36-1435.13. Suspension, revocation or refusal to issue or renew license - Probation and censure - Grounds - Notice - Fines.

A. The Insurance Commissioner may place on probation, censure, suspend, revoke or refuse to issue or renew a license issued pursuant to the Oklahoma Producer Licensing Act or may levy a civil penalty in accordance with subsection D of this section or any combination of actions, for any one or more of the following causes:

1. Providing incorrect, misleading, incomplete or materially untrue information in the license application;

2. Violating any insurance laws, or violating any regulation, subpoena or order of the Insurance Commissioner or of another state's Insurance Commissioner;

3. Obtaining or attempting to obtain a license through misrepresentation or fraud;

4. Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business;

5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;

6. Having been convicted of a felony;

7. Having admitted or been found to have committed any insurance unfair trade practice or fraud;

8. Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;

9. Having an insurance producer license, or its equivalent, denied, suspended, censured, placed on probation or revoked in any other state, province, district or territory;

10. Forging another's name to an application for insurance or to any document related to an insurance transaction;

11. Improperly using notes or any other reference material to complete an examination for an insurance license;

12. Knowingly accepting insurance business from an individual who is not licensed;

13. Failing to comply with an administrative or court order imposing a child support obligation; or

14. Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

B. In the event that the action by the Insurance Commissioner is to nonrenew or to deny an application for a license, the Insurance Commissioner shall notify the applicant or licensee and advise the applicant or licensee, in writing, of the reason for the denial or nonrenewal of the applicant's or licensee's license. The applicant or licensee may make written demand upon the Insurance Commissioner within thirty (30) days of the date of notification of said notification by the Insurance Commissioner for a hearing before the Insurance Commissioner or an independent hearing examiner to determine the reasonableness of the Insurance Commissioner's action. The hearing shall be heard within a reasonable time period and shall be held pursuant to the Oklahoma Administrative Procedures Act.

C. The license of a business entity may be suspended, revoked or refused if the Insurance Commissioner finds, after opportunity for hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported to the Insurance Commissioner nor corrective action taken.

D. In addition to or in lieu of any applicable denial, probation, censure, suspension or revocation of a license, a person may, after opportunity for hearing, be subject to a civil fine of not less than One Hundred Dollars ($100.00) nor more than One Thousand Dollars ($1,000.00) for each occurrence. Said penalty may be enforced in the same manner in which civil judgments may be enforced.

E. Every licensee licensed pursuant to the provisions of the Oklahoma Producer Licensing Act shall keep at the licensee's place of business the usual and customary records pertaining to transactions authorized by the license. All records as to any particular transactions shall be kept available and open to the inspection of the Commissioner at any time during business hours during the three (3) years immediately following the date of completion of the transaction. The Commissioner may require a financial or market conduct examination during any investigation of a licensee. The cost of such examination shall be apportioned among all of the appointing insurers of the licensee.

F. The Insurance Commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by the Oklahoma Producer Licensing Act and Title 36 of the Oklahoma Statutes against any person who is under investigation for or charged with a violation of the Oklahoma Producer Licensing Act or Title 36 of the Oklahoma Statutes even if the person's license or registration has been surrendered or has lapsed by operation of law.

G. Files pertaining to investigations or legal matters which contain information concurring a current and ongoing investigation of allegations of violations of the Oklahoma Insurance Code by a licensed agent shall not be available for public inspection without proper judicial authorization; however, a licensee under investigation for alleged violations of the Oklahoma Insurance Code, or against whom an action for alleged violations of the Oklahoma Insurance Code has been commenced, may view evidence and complaints pertaining to the investigation, other than privileged information, at reasonable times at the Commissioner's office. All qualification examination materials, booklets and answers for any license authorized to be issued by the Commissioner under any statute shall not be available for public inspection.

H. The Commissioner shall promptly notify all appointing insurers, where applicable, and the licensee regarding any censure, suspension, revocation or termination of license by the Commissioner.

I. Upon suspension, revocation or termination of the license of a resident or nonresident of this state, the Commissioner shall notify the Central Office of the National Association of Insurance Commissioners, or its appropriate nonprofit affiliates and the Insurance Commissioner of each state for whom the Commissioner has executed a certificate of licensure status.

J. Any licensee who ceases to maintain residency in this state shall deliver the licensee's insurance license to the Commissioner by personal delivery or by mail with return receipt requested within ten (10) days after terminating residency.

K. The Commissioner may issue a duplicate license for any lost, stolen or destroyed license issued pursuant to this act upon an affidavit of the licensee prescribed by the Commissioner concerning the facts of such loss, theft or destruction.

Added by Laws 2001, c. 156, § 13, eff. Nov. 1, 2001. Amended by Laws 2004, c. 274, § 9, eff. July 1, 2004.

§36-1435.14. Payment or acceptance of commission, service fee, brokerage or other valuable consideration - Recipient to be licensed.

A. An insurance company or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this act and is not so licensed.

B. A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this act and is not so licensed.

C. Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was required to be licensed under this act at the time of the sale, solicitation or negotiation and was so licensed at that time.

D. An insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would violate Section 1204 of Title 36 of the Oklahoma Statutes.

Added by Laws 2001, c. 156, § 14, eff. Nov. 1, 2001.

§36-1435.15. Appointment of producer as agent of insurer - Notice of appointment - Discrimination among producers - Penalties.

A. An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed.

B. To appoint a producer as its agent, the appointing insurer, or an authorized representative of the insurer, shall file, in a format approved by the Insurance Commissioner, a notice of appointment within forty-five (45) days from the date the agency contract is executed or the first insurance application is submitted. For purposes of this section, an "authorized representative of the insurer" means a person or entity licensed by the Insurance Commissioner pursuant to the laws of this state who is authorized in writing by the appointing insurer to file appointments for the appointing insurer. A copy of said written authorization shall accompany each notice of appointment filed by an authorized representative of the insurer. An insurer or authorized representative of an insurer may also elect to appoint a producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request.

C. Upon receipt of the notice of appointment, the Insurance Commissioner shall verify within a reasonable time not to exceed thirty (30) days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the Insurance Commissioner shall notify the insurer and the authorized representative of the insurer within five (5) days of its determination.

D. An insurer or authorized representative of an insurer shall pay a biennial appointment fee, in the amount and method of payment set forth in Section 1435.23 of this title, for each insurance producer appointed by the insurer for each insurer for which the insurance producer is appointed.

E. It shall be unlawful for any insurer to discriminate among or between the insurance producers it has appointed. Any person or company convicted of violating the provisions of this section shall be guilty of a misdemeanor and shall be punished by the imposition of a fine of not more than Five Hundred Dollars ($500.00) or imprisonment in the county jail for not less than six (6) months nor more than one (1) year, or be punished by both said fine and imprisonment.

Added by Laws 2001, c. 156, § 15, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 17, eff. Nov. 1, 2002.

§36-1435.16. Termination of appointment, employment, contract or other business relationship - Notification - Immunity from liability - Confidentiality - Final adjudicated actions.

A. An insurer or authorized representative of the insurer that terminates the appointment, employment, contract or other insurance business relationship with a producer shall notify the Insurance Commissioner within thirty (30) days following the effective date of the termination, using a format prescribed by the Insurance Commissioner, if the reason for termination is one of the reasons set forth in Section 13 of this act or the insurer has knowledge the producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities in Section 13 of this act. Upon the written request of the Insurance Commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination or activity of the producer.

B. An insurer or authorized representative of the insurer that terminates the appointment, employment, or contract with a producer for any reason not set forth in Section 13 of this act, shall notify the Insurance Commissioner within thirty (30) days following the effective date of the termination, using a format prescribed by the Insurance Commissioner. Upon written request of the Insurance Commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination.

C. The insurer or the authorized representative of the insurer shall promptly notify the Insurance Commissioner in a format acceptable to the Insurance Commissioner if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the Insurance Commissioner in accordance with subsection A of this section had the insurer then known of its existence.

D. 1. Within fifteen (15) days after making the notification required by subsections A, B and C of this section, the insurer shall mail a copy of the notification to the producer at the producer's last-known address. If the producer is terminated for cause for any of the reasons listed in Section 13 of this act, the insurer shall provide a copy of the notification to the producer at the producer's last-known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using a nationally recognized carrier.

2. Within thirty (30) days after the producer has received the original or additional notification, the producer may file written comments concerning the substance of the notification with the Insurance Commissioner. The producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the Insurance Commissioner's file and accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subsection F of this section.

E. 1. In the absence of actual malice, an insurer, the authorized representative of the insurer, a producer, the Insurance Commissioner, or an organization of which the Insurance Commissioner is a member and that compiles the information and makes it available to other Insurance Commissioners or regulatory or law enforcement agencies shall not be subject to civil liability, and a civil cause of action of any nature shall not arise against these entities or their respective agents or employees, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the Insurance Commissioner, from an insurer or producer; or a statement by a terminating insurer or producer to an insurer or producer limited solely and exclusively to whether a termination for cause under subsection A of this section was reported to the Insurance Commissioner, provided that the propriety of any termination for cause under subsection A of this section is certified in writing by an officer or authorized representative of the insurer or producer terminating the relationship.

2. In any action brought against a person that may have immunity under paragraph 1 of this subsection for making any statement required by this section or providing any information relating to any statement that may be requested by the Insurance Commissioner, the party bringing the action shall plead specifically in any allegation that paragraph 1 of this subsection does not apply because the person making the statement or providing the information did so with actual malice.

3. Paragraph 1 or 2 of this subsection shall not abrogate or modify any existing statutory or common law privileges or immunities.

F. 1. Any documents, materials or other information in the control or possession of the Department of Insurance that is furnished by an insurer, producer or an employee or agent thereof acting on behalf of the insurer or producer, or obtained by the Insurance Commissioner in an investigation pursuant to this section shall be confidential by law and privileged, shall not be subject to the Open Records Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the Insurance Commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the Insurance Commissioner's duties.

2. Neither the Insurance Commissioner nor any person who received documents, materials or other information while acting under the authority of the Insurance Commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to paragraph 1 of this subsection.

3. In order to assist in the performance of the Insurance Commissioner's duties under this act, the Insurance Commissioner:

a. may share documents, materials or other information, including the confidential and privileged documents, materials or information subject to paragraph 1 of this subsection, with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information,

b. may receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information, and

c. may enter into agreements governing sharing and use of information consistent with this subsection.

4. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the Commissioner under this section or as a result of sharing as authorized in paragraph 3 of this subsection.

5. Nothing in the Oklahoma Producer Licensing Act shall prohibit the Insurance Commissioner from releasing final, adjudicated actions including for cause terminations that are open to public inspection pursuant to the Open Records Act to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries of the National Association of Insurance Commissioners.

G. An insurer, the authorized representative of the insurer, or producer that fails to report as required under the provisions of this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with Section 13 of this act.

Added by Laws 2001, c. 156, § 16, eff. Nov. 1, 2001.

§36-1435.17. Waiver of requirements for nonresident producers - Reciprocity - Continuing education requirements.

A. The Insurance Commissioner shall waive any requirements for a nonresident producer license applicant with a valid license from the applicant's home state, except the requirements imposed by Section 9 of this act, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.

B. A nonresident producer's satisfaction of the producer's home state's continuing education requirements for licensed insurance producers shall constitute satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis.

Added by Laws 2001, c. 156, § 17, eff. Nov. 1, 2001.

§36-1435.18. Administrative actions or criminal prosecutions against producer - Duty to report to Commissioner.

A. A producer shall report to the Insurance Commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within thirty (30) days of the final disposition of the matter. This report shall include a copy of the order, consent to order or other relevant legal documents.

B. Within thirty (30) days of the initial pretrial hearing date, a producer shall report to the Insurance Commissioner any criminal prosecution of the producer taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.

Added by Laws 2001, c. 156, § 18, eff. Nov. 1, 2001.

§36-1435.19. Rules.

The Insurance Commissioner may, in accordance with Section 307.1 of Title 36 of the Oklahoma Statutes, promulgate reasonable rules as are necessary or proper to carry out the purposes of the Oklahoma Producer Licensing Act.

Added by Laws 2001, c. 156, § 19, eff. Nov. 1, 2001.

§36-1435.20. Limited lines producers - Qualification for license - Travel accident and baggage policies.

A. A limited lines producer may receive qualification for a license in one or more of the following categories:

1. As a ticket-selling agent of a common carrier who acts only with reference to the issuance of insurance on personal effects carried as baggage, in connection with the transportation provided by such common carrier;

2. To engage in the sale of only limited travel accident insurance;

3. To engage in the sale of motor vehicle insurance at a vehicle rental counter or at any other point of sale at which motor vehicle insurance is offered or sold in connection with the short-term renting or leasing of motor vehicles; provided, the branch manager of the rental or leasing company shall hold the license under which the employees working for the rental or leasing company operate;

4. To engage in the sale of limited line credit insurance;

5. To engage in the sale of nonfiling insurance relating to mortgages and security interests arising under the Uniform Commercial Code, Section 1-101 et seq. of Title 12A of the Oklahoma Statutes;

6. Prepaid legal liability insurance, which means the assumption of an enforceable contractual obligation to provide specified legal services or to reimburse policyholders for specified legal expenses, pursuant to the provisions of a group or individual policy;

7. Crop hail and multiperil crop hail insurance; and

8. Prepaid dental insurance, provided the individual selling the prepaid dental insurance has been appointed by the prepaid dental plan organization to sell such insurance.

B. 1. An insurance producer or limited lines producer may solicit applications for and issue travel accident policies or baggage insurance by means of mechanical vending machines supervised by the insurance producer or limited lines producer only if the Insurance Commissioner shall determine that the form of policy to be sold is reasonably suited for sale and issuance through vending machines, that use of vending machines for the sale of said policies would be of convenience to the public, and that the type of vending machine to be used is reasonably suitable and practical for the sale and issuance of said policies. Policies so sold do not have to be countersigned.

2. The Commissioner shall issue to the insurance agent or limited insurance representative a special vending machine license for each such machine to be used. The license shall specify the name and address of the insurer and licensee, the kind of insurance and type of policy to be sold, and the place where the machine is to be in operation. The license shall expire, be renewable, and be suspended or revoked coincidentally with the insurance agent license or limited representative license of the licensee. The license fee for each vending machine shall be that stated in the provisions of Section 23 of this act. Proof of existence of the license shall be displayed on or about each machine in such manner as the Commissioner may reasonably require.

Added by Laws 1997, c. 418, § 60, eff. Nov. 1, 1997. Amended by Laws 1999, c. 36, § 1, eff. Nov. 1, 1999; Laws 1999, c. 333, § 1, eff. July 1, 1999; Laws 2000, c. 353, § 9, eff. Nov. 1, 2000; Laws 2001, c. 156, § 20, eff. Nov. 1, 2001. Renumbered from § 1424.11 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001. Amended by Laws 2003, c. 150, § 4, eff. Nov. 1, 2003.

§36-1435.21. Licensure for purposes of writing controlled business prohibited.

A. The Commissioner shall not grant, renew, continue, or permit to continue any license if the Commissioner finds that the license is being or will be used by the applicant or licensee for the purpose of writing controlled business. "Controlled business" means:

a. insurance written on the interests of the licensee or those of his or her relatives to the second degree or of his or her employer, or

b. insurance covering the licensee or relatives of the licensee to the second degree or a corporation, association, or partnership of which the licensee or a member of the licensee's immediate family is an officer, director, substantial stockholder, partner, associate, or employee, or the officers, directors, substantial stockholders, partners, or employees of such a corporation, association, or partnership. A vendor's or lender's interest in property sold or being sold pursuant to contract or which is security for any loan shall not be deemed for the purpose of this provision to constitute property or an interest of the vendor or lender.

B. A license shall be deemed to have been or intended to be used for the purpose of writing controlled business if the Commissioner finds that during any twelve-month period the aggregate commissions earned from controlled business has exceeded twenty-five percent (25%) of the aggregate commissions earned on all business written by the applicant or licensee during the same period.

C. The prohibitions contained in this section concerning licensing for the writing of controlled business shall not apply to title insurance producers and limited lines producers.

Added by Laws 1997, c. 418, § 63, eff. Nov. 1, 1997. Amended by Laws 2001, c. 156, § 21, eff. Nov. 1, 2001. Renumbered from § 1424.14 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.22. Application for customer service representative license or license renewal - Written appointment - Surety protection.

A. Application for a customer service representative license or license renewal shall be accompanied by a written appointment, which shall remain in effect until expressly terminated in writing, signed by the insurance agent or broker who will supervise the customer service representative, on forms prescribed by the Insurance Commissioner.

B. 1. Prior to issuance of a license as an insurance consultant or surplus lines insurance broker, the applicant shall file with the Commissioner and thereafter, for as long as the license remains in effect, shall keep in force a bond in an amount of not less than Five Thousand Dollars ($5,000.00) and not more than Forty Thousand Dollars ($40,000.00) with an authorized corporate surety approved by the Commissioner. The exact amount of the bond shall be determined pursuant to the rules of the Commissioner and shall be based upon the actual or reasonably estimated premium for policies issued in connection with the services of the licensee. The surety shall notify the Commissioner of any changes in the bond of any licensee. The aggregate liability of the surety for any and all claims on a bond required by the provisions of this subsection shall in no event exceed the amount of the bond. No such bond shall be terminated unless at least thirty (30) days' prior written notice of the termination is given by the surety to the licensee and the Commissioner. Upon termination of the license for which the bond was in effect, the licensee shall notify the surety within ten (10) working days.

2. The Commissioner may waive bonding requirements for nonresident surplus lines insurance brokers.

3. All surety protection required by the provisions of this section is to inure to the benefit of any party aggrieved by the acts of a consultant or broker arising pursuant to conduct as a licensed insurance consultant or surplus lines insurance broker.

Added by Laws 2001, c. 156, § 22, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 18, eff. Nov. 1, 2002.

§36-1435.23. License fees - Deposits to credit of State Insurance Commissioner Revolving Fund.

A. All applications shall be accompanied by the applicable fees. An appointment may be deemed by the Commissioner to have terminated upon failure by the insurer to pay the prescribed renewal fee. The Commissioner may also by order impose a civil penalty equal to double the amount of the unpaid renewal fee.

The Insurance Commissioner shall collect in advance the following fees and licenses:

1. For filing appointment of Insurance Commissioner

as agent for service of process ....... $ 20.00

Miscellaneous:

a. Certificate and Clearance of Commissioner

.............................. $ 3.00

b. Insurance producer's study manual:

Life, Accident & Health.................not to exceed

$ 40.00

Property and Casualty...................not to exceed

$ 40.00

c. For filing organizational documents of

an entity applying for a license as an

insurance producer $ 20.00

3. Examination for license:

For each examination covering laws and

one or more lines of insurance not to exceed

$100.00

Licenses:

a. Insurance producer's biennial license,

regardless of number of companies

represented ...$ 60.00

b. Insurance producer's biennial license

for sale or solicitation of separate

accounts or agreements, as provided for

in Section 6061 of this title...............$ 60.00

c. Limited lines producer biennial license.....$ 40.00

d. Temporary license as agent..................$ 20.00

e. Managing general agent's biennial

license.....................................$ 60.00

f. Surplus lines broker's biennial license ...$100.00

g. Insurance vending machine, each machine,

biennial fee ....$100.00

h. Insurance consultant's biennial license,

resident or nonresident.....................$100.00

i. Customer service representative biennial

license.....................................$ 40.00

5. Biennial fee for each appointed insurance producer, managing general agent, or limited lines producer by insurer, each license of each insurance producer or representative. ........... .....................$ 40.00

6. Renewal fee for all licenses shall be the same as the current initial license fee.

7. The fee for a duplicate license shall be one-half (1/2) the fee of an original license.

8. The renewal of a license shall require a fee of double the current original license fee if the application for renewal is late, or incomplete on the renewal deadline.

B. 1. The fees and monies received by the Insurance Commissioner pursuant to the provisions of paragraphs 1, 2, 7 and 8 of subsection A of this section shall be deposited with the State Treasurer, who shall place the same to the credit of the State Insurance Commissioner Revolving Fund for the purpose of fulfilling and accomplishing the conditions and purposes of the Oklahoma Producer Licensing Act, including the use of postal mail facilities for the Department.

2. The fees and monies received by the Insurance Commissioner pursuant to the provisions of paragraphs 3 through 6 of subsection A of this section shall be paid into the State Treasury to the credit of the General Revenue Fund of the state.

C. There is hereby created in the State Treasury the State Insurance Commissioner Revolving Fund which shall be a continuing fund not subject to fiscal year limitations. The revolving fund shall consist of fees and monies received by the Insurance Commissioner as required by law to be deposited in said fund and any other funds not dedicated in the Oklahoma Insurance Code. The revolving fund shall be used to fund the general operations of the Insurance Commissioner's Office for the purpose of fulfilling and accomplishing the conditions and purposes of the Oklahoma Producer Licensing Act. All expenditures from said revolving fund shall be on claims approved by the Insurance Commissioner and filed with the Director of State Finance for payment.

D. All fees, fines, monies, and license fees authorized by the provisions of this section and not dedicated by the provisions of subsection B of this section to the State Insurance Commissioner Revolving Fund shall be paid into the State Treasury to the credit of the General Revenue Fund of this state.

E. If for any reason an insurance producer license or appointment is not issued or renewed by the Commissioner, all fees accompanying the appointment or application for the license shall be deemed earned and shall not be refundable except as provided in Section 352 of this title.

Added by Laws 1980, c. 164, § 5, emerg. eff. April 15, 1980. Amended by Laws 1981, c. 230, § 3, emerg. eff. June 22, 1981; Laws 1982, c. 221, § 2, operative Oct. 1, 1982; Laws 1983, c. 90, § 3, emerg. eff. May 9, 1983; Laws 1983, c. 248, § 6, emerg. eff. June 21, 1983; Laws 1984, c. 173, § 3, emerg. eff. May 7, 1984; Laws 1984, c. 215, § 4, operative June 30, 1984; Laws 1985, c. 179, § 96, operative July 1, 1985; Laws 1985, c. 258, § 2, eff. Nov. 1, 1985; Laws 1987, c. 208, § 73, operative July 1, 1987; Laws 1987, c. 236, § 90, emerg. eff. July 20, 1987; Laws 1988, c. 116, § 3, eff. Nov. 1, 1988; Laws 1988, c. 204, § 2, operative July 1, 1988; Laws 1993, c. 270, § 38, eff. Sept. 1, 1993; Laws 1994, c. 337, § 1, eff. Sept. 1, 1994; Laws 1995, c. 1, § 11, emerg. eff. March 2, 1995; Laws 1996, c. 246, § 4, eff. July 1, 1996; Laws 1997, c. 418, § 69, eff. Nov. 1, 1997; Laws 2001, c. 156, § 23, eff. Nov. 1, 2001. Renumbered from § 1425 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 19, eff. Nov. 1, 2002.

NOTE: Laws 1994, c. 272, § 4 and Laws 1994, c. 294, § 2 repealed by Laws 1995, c. 1, § 40, emerg. eff. March 2, 1995. Laws 1997, c. 133, § 447 repealed by Laws 1999, 1st Ex. Sess., c. 5, § 452, eff. July 1, 1999.

NOTE: Laws 1998, 1st Ex. Sess., c. 2, § 23 amended the effective date of Laws 1997, c. 133, § 447 from July 1, 1998, to July 1, 1999.

§36-1435.24. Insurance consultant's license - Nonresident applicants - Designation of service of process.

A. The Insurance Commissioner shall issue an insurance consultant's license to any duly qualified resident or nonresident of this state, whether an individual or legal entity, in accordance with this section.

1. An applicant may qualify as a resident if the applicant resides in this state. Any license issued pursuant to any such application claiming residency in this state for licensing in this state shall constitute an election of residency in this state and shall be void if the licensee, while holding a resident license in this state, also holds or makes application for a license in or thereafter claims to be a resident of any other state or other jurisdiction or ceases to be a resident of this state. However, if the applicant is a resident of a community or trade area, the border of which is contiguous with the state line of this state, the applicant may qualify as a resident in such other state and may hold a resident license from each state, so long as both states are party to a reciprocal dual licensing agreement.

2. A license issued to a nonresident of this state shall grant the same rights and privileges afforded a resident licensee, except as otherwise provided for by law.

B. The Commissioner shall not issue a license to any nonresident applicant until the applicant files with the Commissioner the applicant's designation of the Commissioner as the person upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of any interested person arising out of the insurance business of the applicant in this state. This designation shall constitute an agreement that said service of process is of the same legal force and validity as personal service of process in this state upon the nonresident licensee. Service of process upon any such licensee in any such action or proceeding in any court of competent jurisdiction of this state may be made by serving the Commissioner with three copies thereof and by paying to the Commissioner a fee of Twenty Dollars ($20.00). The Commissioner shall forward a copy of the process by mail with return receipt requested to the licensee at the licensee's lastknown address of record or principal place of business, and the Commissioner shall keep a record of all process so served upon the licensee.

C. Service of process upon any such licensee in any action or proceeding instituted by the Commissioner pursuant to the provisions of this Code shall be made by the Commissioner by mailing the process by mail with return receipt requested to the licensee at the licensee's last-known address of record or principal place of business. Service of process, other than a subpoena, upon any nonresident licensee is sufficient, provided notice of the service and a copy of the process are sent within ten (10) days thereafter to the licensee at the licensee's last-known address of record or principal place of business by mail with return receipt requested.

Added by Laws 1997, c. 418, § 71, eff. Nov. 1, 1997. Amended by Laws 2000, c. 205, § 34, emerg. eff. May 17, 2000; Laws 2001, c. 156, § 24, eff. Nov. 1, 2001. Renumbered from § 1425.2 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.25. Applicants for surplus lines insurance broker's licenses.

An applicant for a surplus lines insurance broker's license shall first be licensed in this state as a resident insurance producer qualified as to the line or lines of insurance to be written.

Added by Laws 1997, c. 418, § 73, eff. Nov. 1, 1997. Amended by Laws 2001, c. 156, § 25, eff. Nov. 1, 2001. Renumbered from § 1425.4 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.26. Unlawful acts and penalties.

A. It shall be unlawful for any person whose license to act as an insurance producer, limited lines producer, managing general agent, insurance consultant, surplus lines insurance broker, or customer service representative has been suspended, revoked, surrendered, or refused to do or perform any of the acts of an insurance producer, limited lines producer, managing general agent, insurance consultant, surplus lines insurance broker, or customer service representative. Any person convicted of violating the provisions of this section shall be guilty of a felony and shall be punished by the imposition of a fine of not more than Five Thousand Dollars ($5,000.00) or shall be committed to the custody of the Department of Corrections for not less than one (1) year nor more than five (5) years, or be punished by both said fine and commitment to custody.

B. It shall be unlawful for any insurance producer, limited lines producer, managing general agent, insurance consultant, surplus lines insurance broker, or customer service representative to assist, aid, or conspire with a person whose license as an insurance producer, limited lines producer, managing general agent, insurance consultant, surplus lines insurance broker, or customer service representative has been suspended, revoked, surrendered, or refused to engage in any acts as an insurance producer, limited lines producer, managing general agent, insurance consultant, surplus lines insurance broker, or customer service representative. Any person convicted of violating the provisions of this section shall be guilty of a felony and shall be punished by the imposition of a fine of not more than Five Thousand Dollars ($5,000.00) or shall be committed to the custody of the Department of Corrections for not less than one (1) year nor more than five (5) years, or be punished by both said fine and commitment to custody.

C. Except for those persons exempt from licensure, it shall be unlawful for any person to do or perform any of the acts of an insurance producer, limited lines producer, managing general agent, surplus lines insurance broker, insurance consultant, or customer service representative without being duly licensed. Any person convicted of violating the provisions of this section shall be guilty of a misdemeanor and shall be punished by the imposition of a fine of not more than Five Hundred Dollars ($500.00) or imprisonment in the county jail for not less than six (6) months nor more than one (1) year, or be punished by both said fine and imprisonment.

Added by Laws 1997, c. 418, § 75, eff. Nov. 1, 1997. Amended by Laws 2001, c. 156, § 26, eff. Nov. 1, 2001. Renumbered from § 1425.6 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.27. Facsimile signature stamp as proof.

If an insurance producer or insurance producers choose to use a facsimile signature stamp in their business, such stamp shall be proof that the producer or producers have authorized the signing of any documents relating to the business of insurance.

Added by Laws 2001, c. 156, § 27, eff. Nov. 1, 2001.

§36-1435.28. Ownership interest by producer in policy - Insurable interest.

It shall be unlawful for any insurance producer to receive an ownership interest in any policy, by assignment or otherwise, unless the insurance producer has an insurable interest in the life of the insured.

Added by Laws 2001, c. 156, § 28, eff. Nov. 1, 2001.

§36-1435.29. Continuing education.

A. 1. Each insurance producer shall, biennially, complete not less than fourteen (14) clock hours of continuing insurance education which shall cover subjects in the lines for which the insurance producer is licensed. Such education may include a written or oral examination.

2. Each customer service representative shall, biennially, complete not less than ten (10) clock hours of continuing insurance education which shall cover subjects in the lines for which the licensee is authorized to conduct insurance-related business on behalf of the appointing agent, broker, or agency.

3. Licensees shall complete, in addition to the foregoing, two (2) clock hours of ethics course work in this same period.

B. 1. The Insurance Commissioner shall approve courses and providers of continuing education. The Insurance Department may use one or more of the following to review and provide a nonbinding recommendation to the Insurance Commissioner on approval or disapproval of courses and providers of continuing education:

a. employees of the Insurance Commissioner,

b. a continuing education advisory committee, or

c. an independent service whose normal business activities include the review and approval of continuing education courses and providers. The Commissioner may negotiate agreements with such independent service to review documents and other materials submitted for approval of courses and providers and provide the Commissioner with its nonbinding recommendation. The Commissioner may require such independent service to collect the fee charged by the independent service for reviewing materials provided for review directly from the course providers.

The Insurance Commissioner has sole authority to approve courses and providers of continuing education. If the Insurance Commissioner uses one of the entities listed above to provide a nonbinding recommendation, the Commissioner shall adopt or decline to adopt the recommendation within thirty (30) days of receipt of the recommendation. In the event the Insurance Commissioner takes no action within said thirty-day period, the recommendation made to the Commissioner will be deemed to have been adopted by the Commissioner.

2. Each insurance company shall be allowed to provide continuing education to insurance producers and customer service representatives as required by this section; provided that such continuing education meets the general standards for education otherwise established by the Insurance Commissioner.

3. An insurance producer who, during the time period prior to renewal, successfully completes any one of the following courses or programs of instruction and equivalent classroom hours approved by the Insurance Commissioner shall be deemed to have met the biennial requirement for continuing education:

a. any part of a life course curriculum totaling fifty (50) classroom hours, or a health course totaling twenty-six (26) classroom hours offered by the Life Underwriter Training Council,

b. any part of the American College diploma curriculum for Chartered Life Underwriters (CLU), Registered Health Underwriters (RHU), Chartered Financial Consultants (ChFC), or Registered Employee Benefits Consultants (REBC), totaling thirty (30) classroom hours,

c. any part of the Accredited Advisor in Insurance (AAI) program totaling twenty-five (25) classroom hours offered by the Insurance Institute of America,

d. any part of the Chartered Property and Casualty Underwriter (CPCU) professional designation program totaling thirty (30) classroom hours offered by the American Institute of Property and Liability Underwriters, or

e. any part of the Certified Insurance Counselor Program totaling twenty (20) classroom hours.

4. Subject to approval by the Commissioner, the active membership of the licensed agent or broker in local, regional, state, or national professional insurance organizations or associations may be approved for up to one (1) annual hour of instruction. The hour shall be credited upon timely filing with the Commissioner, or designee of the Commissioner, and appropriate written evidence acceptable to the Commissioner of such active membership in the organization or association.

C. Each provider of continuing education shall, after approval by the Commissioner, submit an annual fee of Two Hundred Dollars ($200.00) payable to the Insurance Commissioner which shall be deposited in the State Insurance Commissioner Revolving Fund, created in subsection C of Section 1435.23 of this title, for the purposes of fulfilling and accomplishing the conditions and purposes of the Oklahoma Producer Licensing Act and the Insurance Adjusters Licensing Act. Provided, public-funded educational institutions shall be exempt from this subsection.

D. Failure of an insurance producer or customer service representative to comply with the requirements of this act may, after notice and opportunity for hearing, result in censure, suspension, nonrenewal of license or a civil penalty of up to Five Hundred Dollars ($500.00) or by both such penalty and civil penalty. Said civil penalty may be enforced in the same manner in which civil judgments may be enforced. Any civil penalties collected under this act shall be deposited in the State Insurance Commissioner Revolving Fund.

E. Limited lines producers and nonresident agents who have successfully completed an equivalent or greater requirement shall be exempt from the provisions of this section.

F. Insurance producers and limited lines producers who are sixty-five (65) years of age or older and who have at least thirty (30) years of experience as insurance producers or limited lines producers, and who do not write new business, shall be exempt from the provisions of this section.

G. Members of the Legislature shall be exempt from this section.

H. The Commissioner shall adopt and promulgate such rules as are necessary for effective administration of this section.

Added by Laws 1987, c. 198, § 1, eff. Nov. 1, 1987. Amended by Laws 1991, c. 204, § 12, eff. Sept. 1, 1991; Laws 1993, c. 270, § 39, eff. Sept. 1, 1993; Laws 1996, c. 246, § 5, eff. July 1, 1996; Laws 1997, c. 418, § 70, eff. Nov. 1, 1997. Renumbered from § 1425.1 of this title by Laws 1997, c. 418, § 127, eff. Nov. 1, 1997. Amended by Laws 2000, c. 353, § 12, eff. Nov. 1, 2000; Laws 2001, c. 156, § 29, eff. Nov. 1, 2001. Renumbered from § 1426A of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001. Amended by Laws 2002, c. 307, § 20, eff. Nov. 1, 2002; Laws 2003, c. 150, § 5, eff. Nov. 1, 2003.

§36-1435.30. Insurance consultants.

A. No person shall act as, or hold himself or herself out to be, an insurance consultant until a license as an insurance consultant has been issued to the person by the Insurance Commissioner. However, no insurance consultant's license shall be required of the following:

1. Attorneys licensed to practice law in this state acting in their professional capacity;

2. A duly licensed insurance producer or surplus lines insurance broker;

3. A trust officer of a bank acting in the normal course of employment; or

4. An actuary or a certified public accountant who provides information, recommendations, advice, or services in a professional capacity.

B. An application for a license to act as an insurance consultant shall be made to the Commissioner on forms prescribed by the Commissioner. Within a reasonable time after receipt of a properly completed application form, the Commissioner shall hold a written examination for the applicant, and may conduct investigations and propound interrogatories concerning the qualifications of the applicant, the residence, business affiliations, and any other matter which the Commissioner deems necessary or advisable to determine compliance with the provisions of the Oklahoma Producer Licensing Act or for the protection of the public.

C. In advance of rendering any service as an insurance consultant as defined in the provisions of Section 2 of this act, a written agreement on a form approved by the Commissioner shall be prepared by the consultant, and shall be signed by both the consultant and the client. The agreement shall outline the nature of the work to be performed by the consultant and shall state the fee for the work. The consultant shall retain a copy of the agreement for not less than three (3) years after completion of the services and shall make said copy available to the Insurance Commissioner upon request by the Insurance Commissioner.

D. No individual may concurrently hold a consultant's license and a license as an insurance producer, surplus lines insurance broker, or limited lines producer.

E. No licensed consultant in the performance of activities as a consultant may employ, be employed by, be in partnership with, or receive any remuneration whatsoever from, any licensed insurance producer, surplus lines insurance broker, limited producer, or insurer.

F. A license to act as an insurance consultant shall be valid for not longer than twenty-four (24) months and may be renewed biennially.

G. All requirements and standards relating to the denial, revocation, or suspension of an insurance producer's license, including penalties, shall apply to the denial, revocation, and suspension of an insurance consultant's license to the extent practicable.

H. A consultant is obligated by the terms of this license, to serve with objectivity and complete loyalty the interests of a client alone; and render to a client such information, counsel, and service as, within the knowledge, understanding, and opinion, in good faith, of the licensee, best serves the client's insurance needs and interests.

I. A duly licensed insurance producer or surplus lines insurance broker who acts as, or holds himself or herself out to be, an insurance consultant pursuant to the exemption from licensing as a consultant contained in the provisions of subsection A of this section shall nonetheless be subject to the provisions of subsections C and H of this section. However, nothing in this title shall prohibit the offset, in whole or in part, of the fee payable pursuant to the provisions of subsection C of this section by compensation otherwise payable to said duly licensed insurance producer or surplus lines insurance broker for acting as an insurance producer or broker.

Added by Laws 1980, c. 164, § 7, emerg. eff. April 15, 1980. Amended by Laws 1981, c. 230, § 4, emerg. eff. June 22, 1981; Laws 1982, c. 221, § 3, operative Oct. 1, 1982; Laws 1983, c. 90, § 5, emerg. eff. May 9, 1983; Laws 1997, c. 418, § 80, eff. Nov. 1, 1997; Laws 2001, c. 156, § 30, eff. Nov. 1, 2001. Renumbered from § 1427 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001. Amended by Laws 2003, c. 150, § 6, eff. Nov. 1, 2003.

§36-1435.31. Customer service representative - Appointment and employment - Scope of license.

A. As used in this section:

1. "Customer service representative" means an individual as defined by Section 2 of this act; and

2. a. "Insurance-related business" means taking applications, giving quotes, interpreting policies, explaining procedures, giving insurance advice, soliciting new customers at the appointing producer's, broker's, or agency's office or by telephone from that office, binding new or additional coverages, signing applications and binders in the customer service representative's own name, preliminary claims adjusting work, and such other transactions as authorized by rule of the Insurance Commissioner.

b. "Preliminary claims adjusting work" shall be limited to assisting in processing the claim which may include taking claims statements, getting estimates, advising claimants as to procedures, preparing claims paperwork, taking photos, and assembling and ordering claims files.

B. 1. Any person licensed and appointed as an insurance producer, broker, or managing general agent, except a limited lines producer, and any insurance agency may appoint and employ as customer service representatives any persons who hold or have qualified for a customer service representative's license.

2. No person shall be appointed and employed as a customer service representative by more than one appointing insurance producer, broker, or agency at any one time. The insurance producer or broker designated to supervise the work of the customer service representative shall sign the appointment form and shall thereby be obligated to supervise the customer service representative's conduct of insurance-related business and review such work.

3. A customer service representative shall be housed within the office of the insurance producer, broker, or agency by which the customer service representative is employed and shall not conduct insurance-related business as authorized herein from any other location. No advertising, letterhead, or telephone listing of the customer service representative shall indicate any business address other than that of the insurance producer, broker, or agency by which the customer service representative is employed.

C. 1. A customer service representative's license shall not cover any kind of insurance for which the appointing insurance producer, broker, or agency is not licensed or otherwise authorized to transact.

2. A customer service representative may conduct insurance-related business with customers who have been solicited by any insurance producer, broker, or customer service representative in the appointing agency, and may conduct insurance-related business with customers who have not been so solicited to the extent and under conditions that are otherwise consistent with this section and with the insurer's contract with the insurance producer or broker. In all such transactions the customer service representative must always identify himself or herself as a customer service representative of the appointing insurance producer, broker, or agency.

3. A customer service representative shall be a salaried employee of the appointing insurance producer, broker, or agency. Compensation shall not include commissions; however, up to forty-nine percent (49%) of such compensation may be based on production or volume of business.

4. All insurance-related business conducted by a customer service representative shall be in the name of the appointing insurance producer, broker, or agency. The insurance producer, broker, or agency shall be responsible and accountable for all acts of the customer service representative within the scope of such appointment.

Added by Laws 1996, c. 246, § 6, eff. July 1, 1996. Amended by Laws 2001, c. 156, § 31, eff. Nov. 1, 2001. Renumbered from § 1427.1 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.32. Licensure of business entities.

A. Any person or legal entity authorized to do business in this state may be licensed as an insurance producer, surplus lines insurance broker, limited lines producer, or insurance consultant.

B. In the case of a partnership which has been licensed, each general partner and each other individual acting for the partnership, and in the case of any entity which has been licensed each individual acting for the entity as an insurance producer, surplus lines insurance broker, limited lines producer, or consultant, shall be named in the license and shall qualify therefor as though an individual licensee. The State Insurance Commissioner shall charge a full additional license fee and a separate license shall be issued for each individual so named in such license. The agency shall notify the Commissioner within fifteen (15) days if any individual licensed on its behalf has been terminated, is no longer associated with the agency, or has left its employ.

C. A nonresident of this state shall only be named in a license for a resident insurance agency as a nonresident producer.

D. A domestic insurance agency must be organized pursuant to the provisions of the laws of this state and must maintain its principal place of business in this state.

E. A license shall not be issued in a trade name except upon proof satisfactory to the Commissioner that the trade name has been lawfully registered.

F. The licensee shall notify the Commissioner of all changes among its members, directors, and officers, and all other individuals designated in the license within fifteen (15) days after the change.

G. No person whose license as an insurance producer has been revoked by order of the Commissioner, nor any entity in which such person has a majority ownership interest, whether direct or indirect, shall own any interest in any entity licensed pursuant to the provisions of this section.

Added by Laws 1997, c. 418, § 62, eff. Nov. 1, 1997. Amended by Laws 2000, c. 205, § 33, emerg. eff. May 17, 2000; Laws 2001, c. 156, § 32, eff. Nov. 1, 2001. Renumbered from § 1424.13 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§361435.33. Maximum agent's fees on renewals.

No life insurance company doing business in the State of Oklahoma shall charge a fee in excess of ten percent (10%) on any agent's renewals collected by said life insurance company.

Added by Laws 1984, c. 173, § 2, emerg. eff. May 7, 1984. Renumbered from § 1424.1 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.34. Placement of business with insurers prior to approval or after termination of appointment.

A. An insurance agent may place only a kind or kinds of insurance for which the agent is licensed and appointed by an insurer. Such appointment by an insurer may be made within forty-five (45) days after the placement of business with said insurer. If an insurer accepts business from an agent, the insurer shall, within forty-five (45) days, appoint the agent through the proper procedure established by the Insurance Commissioner. In the event that an agent's appointments for one or more lines of insurance have been terminated, then the agent may elect to surrender the license as to that line or lines, and upon renewal the Commissioner will issue a license that includes only those lines for which the agent has both a license and an appointment.

B. An insurance agent may place a kind or kinds of insurance for which the agent is not appointed by an insurer, only by placing the insurance through a licensed agent holding an appointment for that kind or kinds of insurance from an insurer. This subsection shall not be interpreted to permit an agent to solicit insurance in a line for which the agent is not licensed.

C. A limited insurance representative may place only a kind or kinds of insurance for which the representative is licensed and appointed by an insurer. In the event that a representative's appointments have all been terminated, then the representative's license will be deemed to have expired unless, within ten (10) days after the last termination, a new appointment has been secured.

D. A limited insurance representative may place a kind or kinds of insurance for which he or she is not appointed as a limited insurance representative only by placing the insurance through a licensed limited insurance representative holding an appointment for that kind or kinds of insurance from an insurer.

Added by Laws 1997, c. 418, § 61, eff. Nov. 1, 1997. Amended by Laws 2000, c. 353, § 10, eff. Nov. 1, 2000. Renumbered from § 1424.12 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.35. Payment of commissions.

No insurer, insurance agent, surplus lines insurance broker, or limited insurance representative shall pay, directly or indirectly, any commission, brokerage, or other valuable consideration to any person for services as an insurance agent, surplus lines insurance broker, or limited insurance representative within this state unless the person performing services held at the time said services were performed a valid license for such services as required by the laws of this state. No person other than a person duly licensed by this state as an insurance agent, surplus lines insurance broker, or limited insurance representative at the time said services were performed shall accept any commission, brokerage, or other valuable consideration. Any person duly licensed as an insurance agent pursuant to the provisions of the Oklahoma Producer Licensing Act may pay or assign his or her commissions or direct that his or her commissions be paid to an entity licensed as an insurance agent pursuant to the provisions of this section of which the licensee is a member, partner, officer, employee, or agent. The provisions of this section shall not prevent payment or receipt of renewal or other deferred commissions to or by any person entitled thereto pursuant to the provisions of this section. Any person duly licensed as a limited insurance representative may pay or assign his or her commissions or direct that his or her commissions be paid to a financial institution or supervised lender licensed and regulated pursuant to the laws of this state or of any state or of the United States, or to any principal, corporation, partnership or other entity which is the credit granting party in any credit transaction involved, its parent, affiliate, successor or assign, or to a partnership or corporation licensed as a limited insurance representative of which the licensee is a member, officer, employee or agent.

Added by Laws 1997, c. 418, § 64, eff. Nov. 1, 1997. Renumbered from § 1424.15 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001. Amended by Laws 2005, c. 129, § 11, eff. Nov. 1, 2005.

§36-1435.36. Certain information to be included on license - Term of license.

A. The name, mailing address of the licensee, expiration date, the line or lines of insurance coverage by the license, and such other information as the Commissioner deems proper for inclusion in the license shall be indicated on the license.

B. All licenses issued pursuant to the provisions of the Insurance Agents Licensing Act shall continue in force not longer than twenty-four (24) months. The renewal dates for the licenses may be staggered throughout the year by notifying licensees in writing of the expiration and renewal date being assigned to the licensees by the Commissioner and by making appropriate adjustment in the biennial licensing fee.

Added by Laws 1997, c. 418, § 65, eff. Nov. 1, 1997. Renumbered from § 1424.16 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.37. Appointment of agents and limited insurance representatives.

A. An insurance agent or limited insurance representative may represent as many insurers as may appoint the agent or representative in accordance with the provisions of the Insurance Agents Licensing Act. A company shall not pay any commission or fee to an agent or limited insurance representative unless and until the appointment with that company has been approved by the Commissioner.

B. Such appointment by an insurer may be made forty-five (45) days after the placement of business with that insurer through the appropriate appointment process established by the Insurance Commissioner.

Added by Laws 1997, c. 418, § 66, eff. Nov. 1, 1997. Amended by Laws 2000, c. 353, § 11, eff. Nov. 1, 2000. Renumbered from § 1424.17 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.38. Repealed by Laws 2004, c. 274, § 21, eff. July 1, 2004.

§36-1435.39. Refusal of license - Fees not refundable.

A. If the Insurance Commissioner finds that the applicant has not fully met the requirements for licensing, the Commissioner shall refuse to issue the license and promptly notify the applicant and the appointing insurer, when applicable, in writing, of the denial, stating the grounds therefor.

B. If for any reason a license or appointment is not issued or renewed by the Commissioner, all fees accompanying the appointment or application for the license shall be deemed earned and shall not be refundable except as provided in Section 24 of this act.

Added by Laws 1997, c. 418, § 77, eff. Nov. 1, 1997. Renumbered from § 1425.8 of this title by Laws 2001, c. 156, § 35, eff. Nov. 1, 2001.

§36-1435.40. Applicants for licensure - Certain government employees barred.

A. Except as provided in subsections B and C of this section, an applicant for licensure shall not be a full-time employee of the government of the United States or of the executive or administrative branches of the government of this state or any county or municipality of this state.

B. The provisions of subsection A of this section shall not apply to:

1. Applicants for life or accident and health insurance producer licenses or limited lines producers; or

2. Persons who hold an elective office, except the office of Insurance Commissioner.

C. For the purpose of this section, a teacher shall not be considered a full-time employee of the executive or administrative branches of the government of the state or of any county or municipality of the state.

Added by Laws 2002, c. 307, § 21, eff. Nov. 1, 2002.

§361441. Short title.

Sections 1 through 13 of this act shall be known and may be cited as the "Thirdparty Administrator Act".

Added by Laws 1983, c. 89, § 1, eff. Nov. 1, 1983.

§361441.1. Administrator of certain group selfinsurance associations exempted from act.

The provisions of Section 1441 et seq. of Title 36 of the Oklahoma Statutes shall not apply to administrators of group selfinsurance associations created pursuant to Section 149.2 of Title 85 of the Oklahoma Statutes.

Added by Laws 1988, c. 164, § 1, emerg. eff. May 18, 1988.

§361442. Definitions.

As used in the Thirdparty Administrator Act, Section 1441 et seq. of this title:

1. "Administrator" means any person who collects premiums for an insurer or trust or who adjusts or settles claims for an insurer or trust, in connection with life or health insurance coverage or annuities in this state, but shall not include any person who collects premiums under the following circumstances:

a. Any employer on behalf of the employees of that employer or the employees of one or more subsidiary or affiliated corporations of that employer;

b. A union on behalf of its members;

c. An insurance company which is licensed to transact insurance business in this state;

d. A wholly owned subsidiary of an entity which is subject to the jurisdiction of the Insurance Commissioner;

e. An insurance company acting as an insurer with respect to a policy lawfully issued and delivered by said company in and pursuant to the laws of this state;

f. A hospital, medical, dental, or optometric service corporation or a health care service organization, including their agents, authorized by the Commissioner to issue contracts in this state pursuant to the provisions of the Oklahoma Insurance Code when engaged in the performance oftheir duties;

g. A life or disability agent or broker who is licensed in this state and whose activities are limited exclusively to the sale of insurance;

h. An adjuster licensed in this state for the kinds of business for which he is acting as an adjuster;

i. A creditor insuring a debt between the creditor and its debtors on behalf of said creditor's debtors;

j. A financial institution which is subject to supervision or examination by federal or state banking authorities;

k. A company which issues credit cards and advances credit for and collects premiums or charges from its credit card holders who have authorized said collection, if the company does not adjust or settle claims;

l. A person who adjusts or settles claims in the normal course of practice or employment as an attorneyatlaw and who does not collect charges or premiums in connection with life or health insurance coverage or annuities;

m. The State Insurance Fund;

n. Any workers' compensation trust; or

o. A trust providing benefits to the employees of any political subdivision of a city, county or the state. 2. "Trust" means any trust other than those exempted in paragraph 1 of this section which engages in the business of making contracts of insurance.

Added by Laws 1983, c. 89, § 2, eff. Nov. 1, 1983. Amended by Laws 1984, c. 173, § 5, emerg. eff. May 7, 1984; Laws 1987, c. 175, § 15, eff. Nov. 1, 1987.

§361443. Agreements and maintenance, examination, audit and inspection of records.

A. No person shall act as an administrator without a written agreement between that person and an insurer. The written agreement shall be retained as part of the official records of both the insurer and the administrator for the duration of the agreement and for five (5) years thereafter.

B. The written agreement required by the provisions of subsection A of this section shall contain provisions stating any of the requirements of Sections 4 through 8 of the Thirdparty Administrator Act which apply to the functions performed by the administrator.

C. If a policy is issued to a trustee, a copy of the trust agreement and any amendments to the agreement shall be furnished to the insurer by the administrator and shall be retained as part of the official records of both the insurer and the administrator for the duration of the policy and for five (5) years thereafter.

D. Every administrator shall maintain at the principal administrative office of the administrator for the duration of the agreement and for five (5) years thereafter the written agreement required by the provisions of this section and records of all transactions amongthe administrator, insurers or trusts, and insured persons.

E. For the purposes of examination, audit, and inspection, the Commissioner shall have access to books and records maintained by the administrator. Any trade secrets contained in these books and records, including the identity and addresses of policyholders and certificate holders, shall be confidential. The Commissioner may use this information in any proceedings instituted against the administrator.

F. The insurer or trust shall have the right of continuing access to books and records maintained by the administrator sufficient to permit the insurer or trust to fulfill all of its contractual obligations to insured persons, subject to any restriction in the written agreement between the insurer or trust and the administrator concerning the proprietary rights of the parties to said books and records.

G. The agreement required by the provisions of this section shall include provisions stating the underwriting standards or other standards pertaining to the business underwritten by the insurer or trust.

Added by Laws 1983, c. 89, § 3, eff. Nov. 1, 1983.

§361444. Payments to administrator Rights against administrator.

If an insurer or trust utilizes the services of an administrator pursuant to the terms of a written agreement, the payment to the administrator of any premiums or charges for insurance by or on behalf of the insured shall be deemed to have been received by the insurer or trust. The payment of return premiums or claims by the insurer or trust to the administrator shall not be deemed payment to the insured or claimant until the payments are received by the insured or claimant. Nothing in the Thirdparty Administrator Act shall limit any right of the insurer or trust against the administrator resulting from failure of the administrator to make payments to the insurer or trust, insureds, or claimants.

Added by Laws 1983, c. 89, § 4, eff. Nov. 1, 1983.

§361445. Fiduciary capacity and duties of administrator.

A. All insurance charges or premiums collected by an administrator for an insurer or trust and all return premiums received from the insurer or trust shall be held by the administrator in a fiduciary capacity. These funds shall be immediately remitted to the person entitled to the funds or shall be deposited promptly in a fiduciary bank account established and maintained by the administrator.

B. If charges or premiums deposited in a fiduciary account have been collected for more than one insurer or trust, the administrator shall keep records showing the deposits to and withdrawals from the account for each insurer or trust. The administrator, upon request of an insurer or trust, shall furnish copies of the records pertaining to deposits to and withdrawals from the account for that insurer or trust.

C. The administrator shall not pay any claim by withdrawals from a fiduciary account unless provisions for said withdrawals are included in the written agreement between the insurer or trust and the administrator. The written agreement shall authorize withdrawals by the administrator from the fiduciary account only for:

1. remittance to an insurer or trust entitled to a remittance; or

2. deposit in an account maintained in the name of an insurer or trust; or

3. transfer to and deposit in an account established for payment of claims, as provided for by subsection D of this section; or

4. payment to a group policyholder for remittance to the insurer or trust entitled to such remittance; or

5. payment of commission, fees, or charges to the administrator; or

6. remittance of return premiums to the person entitled to such return premiums.

D. All claims paid by the administrator from funds collected on behalf of the insurer or trust shall be paid on drafts or checks authorized by the insurer or trust.

Added by Laws 1983, c. 89, § 5, eff. Nov. 1, 1983.

§361446. Advertising.

An administrator shall obtain approval from an insurer or trust before publishing any advertising pertaining to the business underwritten by the insurer or trust. For purposes of this section, "publication" includes mailing of advertising material.

Added by Laws 1983, c. 89, § 6, eff. Nov. 1, 1983.

§361447. Delivery of written communications to administrator Compensation of administrator Use of licensed agents.

A. Any policies, certificates, booklets, termination notices, or other written communications delivered by the insurer or trust to the administrator for delivery to policyholders shall be delivered by the administrator promptly after receipt of instructions to do so from the insurer or trust.

B. Compensation to an administrator for any policies for which the administrator adjusts or settles claims shall not be contingent upon claims experience. The provisions of this subsection shall not prevent basing the compensation of an administrator on the amount of premiums or charges collected or number of claims paid or processed or the number of covered insureds.

C. An administrator shall only use licensed insurance agents to do the business of insurance for trusts or insurers administered by the thirdparty administrator.

Added by Laws 1983, c. 89, § 7, eff. Nov. 1, 1983. Amended by Laws 1987, c. 175, § 16, eff. Nov. 1, 1987.

§36-1448. Administrator's bond - Amount - Requirements - Purpose - limits of cumulative liability - Cancellation.

A. Every administrator shall be bonded.

B. Prior to issuance of a license as an administrator, the applicant shall file with the Insurance Commissioner and thereafter keep in effect as long as the license remains in effect, a surety bond in an amount sufficient to protect those with whom the administrator deals, as determined by the Insurance Commissioner, which amount shall not be less than Ten Thousand Dollars ($10,000.00), and in a form acceptable to the Insurance Commissioner. The bond is intended to secure performance of the administrator in conformity with the laws, rules and regulations governing thirdparty administrators. The bond shall be for the benefit of parties injured by the actions of the administrator.

C. In no event shall the cumulative liability of the Surety be more than the penal sum of the bond. In no event shall the Surety cancel the bond without first giving thirty (30) days' written notice to the principal and the Insurance Commissioner.

Added by Laws 1983, c. 89, § 8, eff. Nov. 1, 1983. Amended by Laws 1987, c. 172, § 2, eff. Nov. 1, 1987; Laws 1988, c. 164, § 2, emerg. eff. May 18, 1988; Laws 1997, c. 418, § 82, eff. Nov. 1, 1997.

§361449. Notice and information to be provided to insured individuals.

A. If the services of an administrator are utilized, the administrator shall provide a written notice to insured individuals advising them of the identities of the administrator, the policyholder, and the insurer or trust.

B. If an administrator collects funds from insured individuals, the administrator, upon request from an insured individual, shall furnish written information as to the amount of any charge or premium specified by the insurer or trust for insurance coverage for the insured individual. This information shall be furnished within ten (10) days after the administrator receives the request for information.

Added by Laws 1983, c. 89, § 9, eff. Nov. 1, 1983.

§36-1450. Licensing procedure - Violations.

A. No person shall act as or present himself or herself to be an administrator, as defined by the provisions of the Thirdparty Administrator Act, in this state, unless the person holds a valid license as an administrator which is issued by the Insurance Commissioner.

B. In the case of a partnership which has been licensed, each general partner and each other individual acting for the partnership, and in the case of any entity which has been licensed, each individual acting for the entity as a third-party administrator shall be named in the license and shall qualify therefore as though an individual licensee. The Commissioner shall charge a full additional license fee and a separate license shall be issued for each individual so named in such a license. The entity shall notify the Commissioner within fifteen (15) days if any individual licensed on its behalf has been terminated, or is no longer associated with or employed by the entity.

C. An application for an administrator's license shall be in a form prescribed by the Commissioner and shall be accompanied by a fee of One Hundred Dollars ($100.00). This fee shall not be refundable if the application is denied or refused for any reason by either the applicant or the Commissioner.

D. The administrator's license shall continue in force no longer than twelve (12) months from the original month of issuance. Upon filing a renewal form prescribed by the Commissioner, accompanied by a fee of One Hundred Dollars ($100.00), the license may be renewed annually for a oneyear term. Late application for renewal of a license shall require a fee of double the amount of the original license fee. The administrator shall submit, together with the application for renewal, a list of the names and addresses of the persons with whom the administrator has contracted in accordance with Section 1443 of this title. The Commissioner shall hold this information confidential except as provided in Section 1443 of this title.

E. The administrator's license shall be issued or renewed by the Commissioner unless, after notice and opportunity for hearing, the Commissioner determines that the administrator is not competent, trustworthy, or financially responsible, or has had any insurance license denied for cause by any state, has been convicted or has pleaded guilty or nolo contendere to any felony or to a misdemeanor involving moral turpitude or dishonesty.

F. After notice and opportunity for hearing, and upon determining that the administrator has violated any of the provisions of the Oklahoma Insurance Code or upon finding reasons for which the issuance or nonrenewal of such license could have been denied, the Commissioner may either suspend or revoke an administrator's license or assess a civil penalty of not more than Five Thousand Dollars ($5,000.00) for each occurrence. The payment of the penalty may be enforced in the same manner as civil judgments may be enforced.

G. Any person who is acting as or presenting himself or herself to be an administrator without a valid license shall be subject, upon conviction, to a fine of not less than One Thousand Dollars ($1,000.00) nor more than Ten Thousand Dollars ($10,000.00) for each occurrence. This fine shall be in addition to any other penalties which may be imposed for violations of the Oklahoma Insurance Code or other laws of this state.

H. Except as provided for in subsections E and F of this section, any person convicted of violating any provisions of the Thirdparty Administrator Act shall be guilty of a misdemeanor and shall be subject to a fine of not more than One Thousand Dollars ($1,000.00).

I. Any fees imposed pursuant to the provisions of this section and any civil penalties imposed pursuant to an administrative hearing order for violation of the provisions of the Thirdparty Administrator Act shall be deposited in the State Insurance Commissioner Revolving Fund.

Added by Laws 1983, c. 89, § 10, eff. Nov. 1, 1983. Amended by Laws 1984, c. 173, § 6, emerg. eff. May 7, 1984; Laws 1985, c. 258, § 4, eff. Nov. 1, 1985; Laws 1997, c. 418, § 83, eff. Nov. 1, 1997; Laws 2004, c. 274, § 10, eff. July 1, 2004.

§361452. Annual report - Penalties for failure to file.

On or before June 1 of each year, all licensed administrators shall file an annual report for the previous calendar year prepared by a certified public accountant and which shall be subscribed and sworn to by the president and attested to by the secretary or other proper officers substantiating that the information contained in the report is true and factual concerning each of the plans they administer which are governed pursuant to the provisions of the Thirdparty Administrator Act. The report shall include the name and address of each fund and a statement of fund equity, paid claims by the covered unit, the accumulated yeartodate paid claims, and the yeartodate reserve status. Failure of any third-party administrator to execute and file such annual reports as required by this section shall constitute cause, after notice and opportunity for hearing, for censure, suspension, or revocation of administrator licensure to transact business in this state, or a civil penalty of not less than One Hundred Dollars ($100.00) or more than One Thousand Dollars ($1,000.00) for each occurrence, or both censure, suspension, or revocation and civil penalty.

Added by Laws 1983, c. 89, § 12, eff. Nov. 1, 1983. Amended by Laws 1994, c. 129, § 6, eff. Sept. 1, 1994; Laws 1997, c. 418, § 84, eff. Nov. 1, 1997; Laws 2002, c. 307, § 22, eff. Nov. 1, 2002.

§36-1453. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1461. Short title.

Sections 1 through 6 of this act shall be known and may be cited as the "Oklahoma Life, Accident and Health Insurance Broker Act".

Added by Laws 1983, c. 165, § 1, eff. Nov. 1, 1983.

§36-1462. Life or accident and health insurance broker defined - Liability.

A. For purposes of the Oklahoma Life, Accident and Health Insurance Broker Act, "life or accident and health insurance broker" means an individual or legal entity who, for compensation, not being a licensed life or accident and health insurance agent or agency for the company in which a policy of life or accident and health insurance is placed, acts or aids in any manner in negotiating contracts of life or accident and health insurance or placing risks or effecting life or accident and health insurance for a party other than himself or herself. An individual or legal entity not licensed as a life or accident and health insurance broker who solicits a policy of life or accident and health insurance on behalf of others or transmits for others an application for a policy of life or accident and health insurance to or from an insurance company or offers or assumes to act in the negotiations of said life or accident and health insurance shall be a life or accident and health insurance broker for the purposes of the Oklahoma Life, Accident and Health Insurance Broker Act and shall be liable for all the duties, requirements, liabilities, and penalties to which said licensed life or accident and health insurance brokers are subject.

B. Insurers for whom a life or accident and health insurance broker acts shall be liable for said life or accident and health insurance broker's actions as if said life or accident and health insurance broker were directly employed by the insurer.

Added by Laws 1983, c. 165, § 2, eff. Nov. 1, 1983. Amended by Laws 1997, c. 418, § 85, eff. Nov. 1, 1997.

§36-1463. License required.

No person or corporation shall act as or hold himself out to be a life or accident and health insurance broker until said person or corporation has procured a license as required by the Oklahoma Life, Accident and Health Insurance Broker Act, and no life or accident and health insurance broker shall solicit or take applications for, promise, or place for others any kind of insurance for which said life or accident and health insurance broker is not licensed.

Added by Laws 1983, c. 165, § 3, eff. Nov. 1, 1983.

§36-1464. Requirements for licensure - Fees - Errors and omissions policy - Bond - Violations, fines and penalties.

A. 1. To be licensed as a life or accident and health insurance broker, an individual or legal entity shall have been a licensed resident or nonresident insurance agent or agency in this state continuously for at least two (2) years immediately prior to application and such agent's license shall remain in effect in order to maintain the broker's license.

2. Any applicant for a broker's license shall have no Oklahoma Insurance Code violations or record with the Insurance Commissioner or an insurance regulatory body of another state and shall not have been convicted, or pleaded guilty or nolo contendere to any felony or to a misdemeanor involving moral turpitude or dishonesty.

3. The fee for a life or accident and health insurance broker's license shall be Fifty Dollars ($50.00). The license may be renewed each year for the same fee. Late application for renewal of a license shall require a fee of double the amount of the original current license fee. The fees shall be placed in the State Insurance Commissioner Revolving Fund.

B. 1. Every applicant for a life or accident and health insurance broker's license shall file with the Commissioner and, upon approval of the application, maintain in force while licensed and for at least two (2) years following termination of the license, evidence satisfactory to the Commissioner of an errors and omissions policy covering the individual applicant in an amount of not less than One Hundred Thousand Dollars ($100,000.00) annual aggregate for all claims made during the policy period, or covering the applicant under a blanket liability policy insuring other life or accident and health insurance agents or brokers in an amount of not less than Five Hundred Thousand Dollars ($500,000.00) annual aggregate for all claims made during the policy period.

2. Such policy shall be issued by an insurance company authorized to do business in this state, shall be continuous in form, and shall provide coverage acceptable to the Commissioner for errors and omissions of the life or accident and health insurance broker. The policy carrier shall notify the Commissioner of any lapse or termination of errors and omissions coverage.

3. Failure to maintain a policy in force shall result in automatic termination of licensure, and the license shall be returned by its lawful custodian to the Commissioner for further cancellation.

C. 1. Every applicant shall also provide a bond in favor of the people of Oklahoma executed by an authorized surety company and payable to any party injured under the term of the bond.

2. The bond shall be continuous in form and in the amount of Five Thousand Dollars ($5,000.00) total aggregate liability, or more if the Commissioner deems it necessary. The bond shall be conditioned upon full accounting and due payments to the person or company entitled thereto as an incident of life or accident and health insurance transactions and funds brought into the life or accident and health insurance broker's possession under his or her license.

3. Said bond shall remain in force and effect until the surety is released from liability by the Commissioner or until the bond is canceled by the surety. The surety may cancel the bond and be released from further liability thereunder upon thirty (30) days of written notice, in advance, to the Commissioner. Said cancellation shall not affect any liability incurred or accrued thereunder before the termination of the thirty-day period. Upon receipt of any notice of cancellation, the Commissioner shall immediately notify the licensee.

4. Said license shall automatically terminate upon there being no bond in force, and the license shall be returned by its lawful custodian to the Commissioner for further cancellation.

D. Life or accident and health insurance brokers shall be subject to the same violations, fines, and penalties as stated in Section 1428 of this title. Violations of the provisions of the Oklahoma Life, Accident and Health Insurance Broker Act may result, after notice and hearing, in censure, suspension, or revocation of license or a civil penalty of not less than One Hundred Dollars ($100.00), nor more than One Thousand Dollars ($1,000.00), or a combination thereof for each occurrence.

Added by Laws 1983, c. 165, § 4, eff. Nov. 1, 1983. Amended by Laws 1984, c. 173, § 7, emerg. eff. May 7, 1984; Laws 1985, c. 258, § 5, eff. Nov. 1, 1985; Laws 1997, c. 418, § 86, eff. Nov. 1, 1997.

§36-1465. Compensation - Fiduciary duties.

A. Money, commissions, brokerages, or allowances of anything of value, including service fees, for or on account of solicitation for or negotiation or effecting of policies or contracts for life or accident and health insurance may be paid by:

1. a company duly licensed to do business in this state only to its duly licensed agent or agency or to a duly licensed life or accident and health insurance broker; or

2. an agent or agency only to a duly licensed agent or agency for the same company acting under his direct supervision, or to a duly licensed life or accident and health insurance broker; or

3. a life or accident and health insurance broker only to a duly licensed life or accident and health insurance broker.

B. Nothing in this section shall be construed as prohibiting the payment of renewal commissions on lawfully written life insurance.

C. Nothing in this section shall be construed as prohibiting the payment of compensation to licensed agents or agencies for other services rendered not involving the solicitation for or negotiation or effecting of policies or contracts for insurance.

D. No life or accident and health insurance broker shall have any right to compensation, other than commissions deductible from premiums on life or accident and health insurance policies or contracts for life or accident and health insurance, from any insured or prospective insured for or on account of the negotiation or procurement of or other services in connection with any policy or contract for life or accident and health insurance made or negotiated in this state, unless said right to compensation is based upon a written memorandum signed by the party to be charged, and specifying clearly the amount or extent of said compensation. Nothing herein contained shall affect the right of any said life or accident and health insurance broker to recover from the insured the amount of any premium or premiums for insurance effected by or through said life or accident and health insurance broker.

E. Every life or accident and health insurance broker acting as such in this state shall be responsible in a fiduciary capacity for all funds received or collected as a life or accident and health insurance broker and shall not mingle any such funds, without the express consent of his principal, with the broker's own funds or with funds held by the life or accident and health insurance broker in any other capacity. Nothing in this section shall be construed to require any broker to maintain a separate bank deposit if the funds of each principal are clearly ascertainable from the books of account and records of the life or accident and health insurance broker.

Added by Laws 1983, c. 165, § 5, eff. Nov. 1, 1983.

§36-1466. Rules and regulations.

The Commissioner is hereby authorized to adopt such rules and regulations as may be necessary to implement the provisions of the Oklahoma Life, Accident and Health Insurance Broker Act.

Added by Laws 1983, c. 165, § 6, eff. Nov. 1, 1983.

§36-1471. Short title.

This act shall be known and may be cited as the "Managing General Agents Act".

Added by Laws 1991, c. 134, § 1, eff. July 1, 1991.

§36-1472. Definitions.

As used in this act:

1. "Actuary" means a person who is a member in good standing of the American Academy of Actuaries;

2. "Insurer" means any person licensed pursuant to the Oklahoma Insurance Code to transact insurance;

3. a. "Managing General Agent" or "MGA" means any person who:

(1) manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office, and

(2) acts as an agent for such insurer, whether known as a managing general agent, manager or other similar term, and

(3) directly or indirectly, with or without the authority of the insurer, whether separately or together with affiliates, produces and underwrites an amount of gross direct written premium equal to or greater than five percent (5%) of the policyholder surplus, as reported in the last annual statement of the insurer in any one quarter or year together with the following activities related to the business produced:

(a) adjusts or pays claims in excess of an amount determined by the Insurance Commissioner, or

(b) negotiates reinsurance on behalf of the insurer.

b. Notwithstanding subparagraph a of this paragraph, the following persons shall not be considered to be managing general agents for the purpose of this act:

(1) an employee of the insurer,

(2) a U.S. Manager of the United States branch of an alien insurer,

(3) an underwriting manager which, pursuant to contract:

(a) manages all the insurance operations of the insurer,

(b) is under common control with the insurer, subject to the holding company regulatory act, and

(4) the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange under powers of an attorney;

4. "Underwrite" means the authority to accept or reject risk on behalf of the insurer.

Added by Laws 1991, c. 134, § 2, eff. July 1, 1991. Amended by Laws 1992, c. 65, § 3, eff. Sept. 1, 1992.

§36-1473. Agent license - Bond - Errors and omissions policy.

A. No person shall act in the capacity of a managing general agent with respect to risks located in this state for an insurer unless such person is licensed as an agent or broker pursuant to Section 1421 et seq. of Title 36 of the Oklahoma Statutes.

B. No person shall act in the capacity of a managing general agent, representing an insurer domiciled in this state with respect to risks located outside this state, unless such person is licensed as an agent or broker pursuant to Section 1421 et seq. of Title 36 of the Oklahoma Statutes. Provided, such license may be a nonresident license.

C. The Insurance Commissioner may require a bond in the amount acceptable to him for the protection of the insurer.

D. The Insurance Commissioner may require the managing general agent to maintain an errors and omissions policy.

Added by Laws 1991, c. 134, § 3, eff. July 1, 1991.

§36-1474. Written contract with insurer required - Minimum provisions.

No person acting in the capacity of a managing general agent shall place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party, and where both parties share responsibility for a particular function, specifies the division of such responsibilities, and which contains the following minimum provisions:

1. The insurer may terminate the contract for cause upon thirty (30) days' written notice to the managing general agent and the Insurance Commissioner. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination;

2. The managing general agent shall render accounts to the insurer detailing all transactions and shall remit all funds due under the contract to the insurer on not less than a monthly basis;

3. All funds collected for the account of an insurer shall be held by the managing general agent in a fiduciary capacity in a bank which is a member of the Federal Reserve System. This account shall be used for all payments on behalf of the insurer. The managing general agent may retain no more than three (3) months' estimated claims payment and allocated loss adjustment expenses;

4. Separate records of business written by the managing general agent shall be maintained. The insurer shall have access to and the right to copy all accounts and records related to its business in a form usable by the insurer. The Insurance Commissioner shall have access to all books, bank accounts and records of the managing general agent in a form usable to the Commissioner. Such records shall be retained according to the provisions of subsection E of Section 1435.13 of this title;

5. The contract may not be assigned in whole or part by the managing general agent;

6. The contract shall contain appropriate underwriting guidelines including:

a. the maximum annual premium volume,

b. the basis of the rates to be charged,

c. the types of risks which may be written,

d. maximum limits of liability,

e. applicable exclusions,

f. territorial limitations,

g. policy cancellation provisions, and

h. the maximum policy period;

7. The insurer shall have the right to cancel or not renew any policy of insurance subject to applicable laws and regulations;

8. If the contract permits the managing general agent to settle claims on behalf of the insurer:

a. all claims must be reported to the company in a timely manner,

b. a copy of the claim file shall be sent to the insurer at its request or as soon as it becomes known that the claim:

(1) has the potential to exceed a threshold determined by the Insurance Commissioner or exceeds the limit set by the company, whichever is less,

(2) involves a coverage dispute,

(3) may exceed the managing general agent's claims settlement authority,

(4) is open for more than six (6) months, or

(5) is closed by payment of an amount set by the Insurance Commissioner or an amount set by the company, whichever is less,

c. all claim files will be the joint property of the insurer and managing general agent. However, upon an order of liquidation of the insurer, such files shall become the sole property of the insurer or its estate and the managing general agent shall have reasonable access to and the right to copy the files on a timely basis,

d. any settlement authority granted to the managing general agent may be terminated for cause upon the insurer's written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination, and

e. nothing in this section shall be construed to give the Insurance Commissioner authority to settle or adjust claims on behalf of the insurer;

9. Where electronic claim files are in existence, the contract shall address the timely transmission of the data;

10. If the contract provides for a sharing of interim profits by the managing general agent, and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid to the managing general agent on the lines of business written by the managing general agent until at least ninety-seven percent (97%) of the ultimate loss has been developed for those lines of business, based on an opinion of the actuary who certifies the adequacy of the loss reserves for the insurer;

11. The managing general agent shall not:

a. bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded:

(1) a list of reinsurers with which such automatic agreements are in effect,

(2) the coverages and amounts or percentages that may be reinsured, and

(3) commission schedules,

b. commit the insurer to participate in insurance or reinsurance syndicates,

c. appoint any agent or broker without assuring that the agent or broker is lawfully licensed to transact the type of insurance for which he is appointed,

d. without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed one percent (1%) of the insurer's policyholder's surplus as of December 31 of the last completed calendar year,

e. collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer,

f. permit its sub-agent or sub-broker to serve on the insurer's board of directors,

g. jointly employ an individual who is employed with the insurer, or

h. appoint a sub-managing general agent.

Added by Laws 1991, c. 134, § 4, eff. July 1, 1991. Amended by Laws 2002, c. 307, § 23, eff. Nov. 1, 2002.

§36-1475. Financial examination and on-site reviews - Binding authority for contracts - Notice of appointment or termination - Review of books and records - Appointments to board.

A. The insurer shall have on file an independent financial examination, in a form acceptable to the Insurance Commissioner, of each managing general agent with which it has done business.

B. The insurer shall periodically, at least semi-annually, conduct an on-site review of the underwriting and claims processing operations of the managing general agent.

C. Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the managing general agent.

D. Within thirty (30) days of entering into or termination of a contract with a managing general agent, the insurer shall provide written notification of such appointment or termination to the Insurance Commissioner. Notices of appointment of a managing general agent shall include:

1. A statement of duties which the applicant is expected to perform on behalf of the insurer;

2. The lines of insurance for which the applicant is to be authorized to act; and

3. Any other information the Commissioner may request.

E. An insurer shall review its books and records each quarter to determine if any agent or broker has become a managing general agent as defined in Section 2 of this act. If the insurer determines that an agent or broker has become a managing general agent, the insurer shall promptly notify the agent or broker and the Insurance Commissioner of such determination, and the insurer and agent or broker shall fully comply with the provisions of this act within thirty (30) days of such notification.

F. An insurer shall not appoint to its board of directors an officer, director, employee, sub-agent, sub-broker or controlling shareholder of its managing general agents. This subsection shall not apply to relationships governed by the insurance holding company act, Section 1651 et seq. of this title.

Added by Laws 1991, c. 134, § 5, eff. July 1, 1991.

§36-1476. Acts of managing general agent - Imputation to insurer.

The acts of the managing general agent are considered to be the acts of the insurer on whose behalf the agent is acting. A managing general agent may be examined as if the agent were the insurer.

Added by Laws 1991, c. 134, § 6, eff. July 1, 1991.

§36-1477. Violations - Penalties - Judicial review - Rights effected.

A. If the Insurance Commissioner finds, after a hearing conducted in accordance with Article II of the Administrative Procedures Act, Section 309 et seq. of Title 75 of the Oklahoma Statutes, that any person had violated any provision of this act or rules promulgated pursuant thereto, the Commissioner may order:

1. For each separate violation, a penalty in an amount of not less than One Hundred Dollars ($100.00) nor more than Five Thousand Dollars ($5,000.00) for each occurrence;

2. Revocation or suspension of the agent's or broker's license; and

3. The managing general agent to reimburse the insurer, the rehabilitator or the liquidator of the insurer for any losses incurred by the insurer which were caused by a violation of this act committed by the managing general agent.

B. The decision, determination or order of the Commissioner pursuant to subsection A of this section shall be subject to judicial review pursuant to the Administrative Procedures Act and any applicable insurance laws and regulations.

C. Nothing contained in this section shall affect the right of the Commissioner to impose any other penalties provided for in the Oklahoma Insurance Code.

D. Nothing contained in this act is intended to or shall, in any manner, limit or restrict the rights of policyholders, claimants and auditors.

E. No insurer may continue to utilize the services of a managing general agent on or after July 1, 1991, unless such utilization is in compliance with this act.

Added by Laws 1991, c. 134, § 7, eff. July 1, 1991.

§36-1478. Rules and regulations.

The Insurance Commissioner may adopt reasonable rules and regulations for the implementation and administration of the provisions of this act.

Added by Laws 1991, c. 134, § 8, eff. July 1, 1991.

§361501. "Assets" defined.

In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the insurer and which consist of:

1. Cash in the possession of the insurer, or in transit under its control, and including the true balance of any deposit in a solvent bank or trust company.

2. Investments, securities, properties and loans acquired or held in accordance with this Code, and in connection therewith the following items:

(a) Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.

(b) Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset.

(d) Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the Insurance Commissioner a collectible asset.

(e) Interest due or accrued on a mortgage loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of eighteen (18) months be allowed as an asset.

(f) Rent due or accrued on real property if such rent is not in arrears for more than three (3) months, and rent more than three (3) months in arrears if the payment of such rent be adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral.

(g) The unaccrued portion of taxes paid prior to the due date on real property.

3. Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy.

4. The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer.

5. Premiums in the course of collection, other than for life insurance, not more than three (3) months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the United States government or by any of its instrumentalities.

6. Installment premiums other than life insurance premiums to the extent of the unearned premium reserves carried thereon.

7. Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon.

8. The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized under Section 711 of Article 7 (Kinds of Insurance; Reinsurance; Limits of Risk).

9. Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty.

10. Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds, or from any suspended banking institution, to the extent deemed by the Insurance Commissioner available for the payment of losses and claims and at values to be determined by him.

11. All assets, whether or not consistent with the provisions of this section, as may be allowed pursuant to the annual statement form approved by the national association of insurance commissioners for the kinds of insurance to be reported upon therein.

12. Rebates determined and accrued pursuant to Section 2 of this act.

13. Other assets, not inconsistent with the provisions of this section, deemed by the Insurance Commissioner to be available for the payment of losses and claims, at values to be determined by the Commissioner.

Added by Laws 1957, p. 280, § 1501, operative July 1, 1957. Amended by Laws 2002, c. 31, § 1, emerg. eff. April 10, 2002.

§361502. Assets as deductions from liabilities.

Assets may be allowable as deductions from corresponding liabilities, and liabilities may be charged as deductions from assets, and deductions from assets may be charged as liabilities, in accordance with the form of annual statement applicable to such insurer as prescribed by the Insurance Commissioner, or otherwise in his discretion.

Laws 1957, p. 281, § 1502.

§36-1503. Assets not allowed as deductions from liabilities.

In addition to assets impliedly excluded by the provisions of Section 1501 of this article, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer:

1. Trade names and other like intangible assets, excluding good will.

2. Advances to officers (other than policy loans) whether secured or not, and advances to employees, agents and other persons on personal security only.

3. Stock of such insurer, owned by it, or any equity therein or loans secured thereby, or any proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation or business unit.

4. Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature and supplies, except in the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under Article 50 (Title Insurers) of this Code and except, in the case of any insurer, such personal property as the insurer is permitted to hold pursuant to Article 16 (Investments) of this Code, or which is reasonably necessary for the maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office, branch office and similar purposes.

5. The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this Code.

Added by Laws 1957, p. 281, § 1503, operative July 1, 1957. Amended by Laws 2004, c. 334, § 41, emerg. eff. May 25, 2004.

§361504. Reporting assets not allowed.

All assets not allowed and all other assets of doubtful value or character included as assets in any statement by an insurer to the Insurance Commissioner, or in any examiner's report to said Commissioner, shall also be reported, to the extent of the value disallowed, as deductions from the gross assets of such insurer.

Laws 1957, p. 281, § 1504.

§361505. Liabilities Mandatory securities valuation reserves.

A. In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include:

1. The amount of its capital stock outstanding, if any.

2. The amount, estimated consistent with the provisions of this Code, necessary to pay all of its unpaid losses and claims incurred on or prior to the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof.

3. With reference to life and disability insurance and annuity contracts:

(a) The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to this Code which are applicable thereto,

(b) Reserves for disability benefits, for both active and disabled lives,

(d) Any additional reserves which may be required by the Insurance Commissioner consistent with practice formulated or approved by the National Association of Insurance Commissioners, on account of such insurance.

4. With reference to insurance other than specified in subsection 3 this section, and other than title insurance, the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with this article.

5. Taxes, expenses and other obligations due or accrued at the date of the statement.

B. All life insurance companies and fraternal benefit societies shall establish and maintain mandatory securities valuation reserves in accordance with the guidelines established by the National Association of Insurance Commissioners. Life insurance companies without mandatory securities valuation reserves as of December 31, 1989, shall begin accruing twenty percent (20%) of the mandatory securities value reserves per year and have reserves in accordance with the required guidelines within five (5) years.

Laws 1957, p. 281, § 1505.

§361506. Unearned premium reserve.

A. With reference to insurance against loss or damage to property (except as provided in Section 1507 of this article) and with reference to all general casualty insurance, and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force.

B. The Insurance Commissioner may require that such reserves shall be equal to the unearned portions of the gross premiums in force after deducting reinsurance in solvent insurers as computed on each respective risk from the policy's date of issue. If the Insurance Commissioner does not so require, the portions of the gross premium in force, less reinsurance in solvent insurers to be held as a premium reserve, shall be computed according to the following table:

Term for Which Policy Reserve for Unearned

Was Written Premium

_____________________ _____________________

1 Year or less 1/2

2 Years 1st year 3/4

2nd year 1/4

3 Years 1st year 5/6

2nd year 1/2

3rd year 1/6

4 Years 1st year 7/8

2nd year 5/8

3rd year 3/8

4th year 1/8

5 Years 1st year 9/10

2nd year 7/10

3rd year 1/2

4th year 3/10

5th year 1/10

Over 5 years pro rata

C. Unearned premium reserves on policies written for an intermediate period shall be calculated at the succeeding longer period or on a monthly pro rata basis.

D. In lieu of computation according to the foregoing table, all of such reserves may be computed, at the option of the insurer, on a monthly or more frequent pro rata basis.

E. After adopting a method for computing such reserve, an insurer shall not change methods without approval of the Insurance Commissioner.

F. This section does not apply to title insurance.

Laws 1957, p. 282, § 1506.

§361507. Unearned premium reserve for marine insurance.

With reference to marine insurance, premiums on trip risks not terminated shall be deemed unearned, and the Insurance Commissioner may require the insurer to carry a reserve thereon equal to one hundred percent (100%) on trip risks written during the month ended as of the date of statement.

Laws 1957, p. 282, § 1507.

§361508. Reserves for accident and health insurance.

For all accident and health policies the insurer shall maintain an active life reserve which shall place a sound value on its liabilities under such policies and which shall not be less than the reserve according to the standards set forth in regulations issued by the Commissioner and, in no event, less than the pro rata gross unearned premium reserve for such policies.

Laws 1957, p. 282, § 1508.

§36-1509. Increase of inadequate reserves - Present value discounting - Annual actuarial opinions - Investment limitations - Unusual dividend or benefit payments.

A. If the Insurance Commissioner determines in writing that an insurer's unearned premium reserve, however computed, is inadequate, the Commissioner may require the insurer to compute the reserve or any part thereof according to any other method or methods as are prescribed in this article.

B. If the loss experience of an insurer shows that its loss reserves, however estimated, are inadequate, the Commissioner, in writing, shall require the insurer to maintain loss reserves in an increased amount as is needed to make them adequate.

C. 1. Insurers shall not use present value discounting for computing reserves for property and casualty insurance, except for workers' compensation carriers and physicians' and hospitals' professional liability insurance written on an occurrence basis. Workers' compensation carriers may use present value discounting at a rate of four percent (4%) for disability and death claims. Property and casualty insurers which elect to use present value discounting for computing reserves on physicians' and hospitals' professional liability insurance shall file initially, and thereafter annually, an actuarial opinion certifying to the adequacy of such reserves which shall include an analysis of the propriety of loss payout patterns, interest rate assumptions used in developing the discount and the adequacy of the insurer's rates. Additionally, the actuary shall consider the quality and liquidity of the insurer's assets and the nature and extent of the insurer's reinsurance program. In no event shall the interest rate used to compute the discounted reserves exceed the insurer's average yield on invested assets for the year, less one percent (1%).

2. Annual actuarial opinions required pursuant to this subsection shall be filed by the insurer on or before the first day of April. All actuarial opinions shall be from an independent actuary with membership in the American Academy of Actuaries or The Casualty Actuarial Society.

3. Except for workers' compensation insurance carriers, insurers discounting reserves pursuant to this subsection shall invest and maintain their funds only in cash; securities described in the following sections of this Code:

a. Section 1607 (securities of or guaranteed by the United States),

b. Section 1608 (state and Canadian public obligations),

c. Section 1609 (county, municipal and district obligations),

d. Section 1610 (public improvement bonds),

e. Section 1611 (obligations payable from public utility revenues) limited to issues which, at time of purchase, are rated A or better by Standard and Poor's Bond Guide or Moody's Bond Record,

f. Section 1614 (corporate obligations) limited to issues which, at time of purchase, are rated A or better by Standard and Poor's Bond Guide or Moody's Bond Record, and

g. Section 1620 (deposits, banks, savings and loans);

and any other investment specifically approved by the Commissioner.

4. This subsection applies to reserves established in connection with incidents of loss occurring on or after January 1, 1989. The investment limitations prescribed by this subsection shall be applicable on or after January 1, 1989.

D. During any period of reserve strengthening mandated by the Commissioner pursuant to the provisions of this section, no insurer shall pay dividends or other benefits which would not be normal payments under the terms of a policy to any stockholder or policyholder of such insurer and such insurer shall be subject to any additional reasonable restrictions as the Commissioner shall deem prudent.

E. Insurers shall report, on a form prescribed by the Commissioner and filed with their annual statement, all funds collected through policy fees or assessments which were collected in response to a written request to increase inadequate reserves from the Commissioner made pursuant to the provisions of this section.

F. 1. Insurers domiciled in this state that are issuing policies of medical professional liability insurance to physicians, allied health care professionals and health care institutions, as defined by Section 2202 of this title, on July 1, 2004, are granted a moratorium on the applicability of any provisions of the laws of this state that require the maintenance of adequate reserves. The moratorium shall be in effect until December 31, 2008.

2. Any insurer eligible to utilize the moratorium provided by this section that elects to utilize the moratorium shall notify the Commissioner in writing of the election prior to the application of the moratorium to the insurer.

3. Any policy issued by an insurer utilizing the moratorium provided by this section shall, during the moratorium period, contain the following notice in ten-point type on the front page and the declaration page:

NOTICE

The insurer is not subject to the insurance laws and regulations related to maintenance of reserves and surplus.

Added by Laws 1957, p. 282, § 1509, operative July 1, 1957. Amended by Laws 1988, c. 151, § 1, eff. Nov. 1, 1988; Laws 1990, c. 227, § 2, emerg. eff. May 18, 1990; Laws 1996, c. 363, § 15, eff. Nov. 1, 1996; Laws 2004, c. 368, § 56, eff. July 1, 2004; Laws 2005, c. 44, § 1, eff. Nov. 1, 2005.

§361510. Valuation law; life.

A. 1. The Insurance Commissioner shall annually make calculations of all outstanding policies, additions thereto, unpaid dividends, annuity and pure endowment contracts and all other obligations of every life insurance corporation doing business in this state. All valuations made by the Insurance Commissioner shall be made upon the net premium basis. In the case of alien insurers, such valuation shall be limited to its United States business. The legal minimum standard for valuation of contracts issued before the first day of January, 1910, shall be the Actuaries or Combined Experience Table of Mortality, with interest at four percent (4%) per annum, and for valuation of contracts issued on or after said date and before June 6, 1949, shall be the American Experience Table of Mortality, or the American Men Table of Mortality, with interest at three and onehalf percent (3 1/2%) per annum. Except as otherwise provided policies issued on or after the operative date of paragraph 4 of subsection G of Section 4029 of this title, policies issued on or after June 6, 1949, shall be valued, collectively as to all such policies or severally as to policies of any plan or form at the option of the company according to the American Experience Table of Mortality, the American Men Table of Mortality, the Commissioners 1941 Standard Ordinary Mortality Table or on and after July 1, 1962, the Commissioners 1958 Standard Ordinary Mortality Table for policies of ordinary insurance, and the Standard Industrial Mortality Table (1907), or the 1941 Standard Industrial Mortality Table or the Commissioners 1961 Standard Industrial Mortality Table for policies of industrial insurance, with interest at not more than three and onehalf percent (3 1/2%) per annum, or four percent (4%) per annum in the case of policies issued on or after April 11, 1974, and prior to March 17, 1978, and four and onehalf percent (4 1/2%) per annum for policies issued on or after March 17, 1978; provided, however, that policies issued to substandard risks or other special classes may be valued according to such other mortality tables, with interest at not more than three and onehalf percent (3 1/2%) per annum, or four percent (4%) per annum in the case of policies issued on or after April 11, 1974, and prior to March 17, 1978, and four and onehalf percent (4 1/2%) per annum for policies issued on or after March 17, 1978, as may be approved by the Insurance Commissioner.

2. For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 Standard Annuity Mortality Table, or, at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the Commissioner.

3. For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the Group Annuity Mortality Table for 1951, any modification of such table approved by the Commissioner, or, at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.

4. The mortality table used in determining the minimum standard for the valuation of ordinary life insurance policies issued on or after the operative date of paragraph 4 of subsection G of Section 4029 of this title shall be (i) the Commissioners 1980 Standard Ordinary Mortality Table, or (ii) at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with TenYear Select Mortality Factors, or (iii) any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such policies.

5. Except as provided in subsection B of this section, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this section and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts shall be the Commissioner's reserve valuation methods defined in subsections E and F of this section and the following tables and interest rates:

(a) For individual annuity and pure endowment contracts issued prior to August 29, 1977, excluding any disability and accidental death benefit in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the Commissioner, and six percent (6%) interest for single premium immediate annuity contracts, and four percent (4%) interest for all other individual annuity and pure endowment contracts;

(b) For individual single premium immediate annuity contracts issued on or after August 29, 1977, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the Commissioner, and seven and onehalf percent (7 1/2%) interest;

(c) For individual annuity and pure endowment contracts issued on or after August 29, 1977, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the Commissioner, and five and onehalf percent (5 1/2%) interest for single premium deferred annuity and pure endowment contracts and four and onehalf percent (4 1/2%) interest for all other such individual annuity and pure endowment contracts;

(d) For all annuities and pure endowments purchased prior to August 29, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any modification of this table approved by the Commissioner, and six percent (6%) interest;

(e) For all annuities and pure endowments purchased on or after August 29, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table or any group annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the Commissioner, and seven and onehalf percent (7 1/2%) interest.

After June 14, 1973, any company may file with the Commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1985, which shall be the operative date of this section for such company, provided, a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no such election, the operative date of this section for such company shall be January 1, 1985.

B. 1. The interest rates used in determining the minimum standard for the valuation of all life insurance policies issued in a particular calendar year on or after the operative date of paragraph 4 of subsection G of Section 4029 of this title shall be the calendar year statutory valuation interest rates as defined in this section.

2. The interest rates used in determining the minimum standard valuation of all individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1985, and all annuities and pure endowments purchased in a particular calendar year on or after January 1, 1985, under group annuity and pure endowment contracts shall be the calendar year statutory valuation interest rates as defined in this section.

C. 1. The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearest onefourth of one percent (1/4 of 1%):

(a) For life insurance,

I = .03 + W (Ra .03) + (W/2) (Rb .09)

where Ra is the lesser of R and .09,

Rb is the greater of R and .09,

R is the reference interest rate defined

in this section, and W is the weighting

factor defined in this section.

(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,

I = .03 + W(r .03)

where R 1 is the lesser of R and .09,

R 2 is the greater of R and .09,

R is the reference interest rate defined in this section,

and W is the weighting factor defined in this section.

guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in subparagraph (b) of this paragraph, the formula for life insurance stated in subparagraph (a) of this paragraph shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten (10) years and the formula for single premium immediate annuities stated in subparagraph (b) of this paragraph shall apply to annuities and guaranteed interest contracts with guarantee duration of ten (10) years or less.

(d) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in subparagraph (b) of this paragraph shall apply.

(e) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in subparagraph (b) of this paragraph shall apply.

2. However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than onehalf of one percent (1/2 of 1%), the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, using the reference interest rate defined for 1979, and shall be determined for each subsequent calendar year.

D. 1. The weighting factors referred to in the formulas stated above are given in the following table:

(a) Weighting Factors for Life Insurance:

Guarantee

Duration Weighting

(Years) Factors

10 or less .50

More than 10, but not more than

20 .45

More than 20 .35

For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy.

(b) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options:

(c) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in subparagraph (b) of this paragraph, shall be as specified in tables (1), (2) and (3) below, according to the rules and definitions in (4) and (5) below:

(1) For annuities and guaranteed interest contracts valued on an issue year basis:

Guarantee Weighting Factor

Duration for Plan Type

(Years) A B C

5 or less .80 .60 .50

More than 5, but not more than 10 .75 .60 .50

More than 10, but not more than 20 .65 .50 .45

More than 20 .45 .35 .35

Plan Type

A B C

(2) For annuities and guaranteed

interest contracts valued on

a change in fund basis, the

factors shown in (1) above

increased by: .15 .25 .05

Plan Type

A B C

(3) For annuities and guaranteed

interest contracts valued on

an issue year basis (other than

those with no cash settlement

options) which do not guarantee

interest on considerations received

more than one (1) year after issue or

purchase and for annuities and

guaranteed interest contracts valued

on a change in fund basis which do

not guarantee interest rates on

considerations received more than

twelve (12) months beyond the valuation date,

the factors shown in (1) or derived

in (2) increased by: .05 .05 .05

(4) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty (20) years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

(5) Plan type as used in the above tables is defined as follows:

Plan Type A: At any time policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five (5) years or more, or (3) as an immediate life annuity, or (4) no withdrawal permitted.

Plan Type B: Before expiration of the interest rate guarantee, policyholder may withdraw funds only (1) with adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five (5) years or more, or (3) no withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five (5) years.

Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five (5) years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

2. A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options shall be valued on an issue year basis. As used in this section, an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

E. 1. The reference interest rate referred to above shall be defined as follows:

(a) For all life insurance, the lesser of the average over a period of thirtysix (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or year of purchase of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.

(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in subparagraph (b) of this paragraph, with guarantee duration in excess of ten (10) years, the lesser of the average over a period of thirtysix (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.

(d) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in subparagraph (b) of this paragraph, with guarantee duration of ten (10) years or less, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.

(e) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.

(f) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in subparagraph (b) of this paragraph, the average over a period of twelve (12) months, ending on June 30 of the calendar year of the change in the fund, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.

F. In the event that the Moody's Corporate Bond Yield Average Monthly Average Corporates is no longer published by Moody's Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that the Moody's Corporate Bond Yield Average Monthly Average Corporates as published by Moody's Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulation promulgated by the Commissioner, may be substituted.

G. The Commissioner may vary the standards of interest and mortality in particular cases of invalid life and other extra hazards and value policies in groups, use approximate averages for fractions of a year and otherwise, and accept the valuation of the Department of Insurance of any other state or country, if made upon a basis and according to standards not lower than herein required or authorized, in place of the valuation herein required.

H. If in any contract year the gross premium charged by any life insurance company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in computing the reserve liability thereon but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract, but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this subsection are those standards stated in this section.

Provided that for any life insurance policy issued on or after January 1, 1986, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess, and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this subsection shall be applied as if the method actually used in calculating the reserve for such policy were the method described in paragraph 2 of subsection J of this section, ignoring subparagraph (c) of that paragraph. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with paragraph 2 of subsection J of this section, including subparagraph (c) of that paragraph, and the minimum reserve calculated in accordance with this subsection.

I. Term Insurance.

Policies issued by life insurance companies doing business in this state may provide for not more than one (1) year preliminary term insurance, purchased by the whole or part of the premium to be received during the first policy year, under the conditions prescribed in this section.

J. Reserves.

1. Reserves on policies of ordinary insurance which are valued in accordance with the American Experience Table of Mortality, or the American Men Table of Mortality, and policies of industrial insurance which are valued in accordance with the Standard Industrial Mortality Table (1907), which are issued on or after June 6, 1949, may be computed as follows: If the premium charged for term insurance under a limited payment life preliminary term policy providing for the payment of all premiums thereon in less than twenty (20) years from the date of the policy or under an endowment preliminary term policy, exceeds that charged for life insurance, under twentyyear payment life preliminary term policies of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twentypayment life preliminary term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period equal to the difference between the value at the end of such period of such a twentypayment life preliminary term policy and the full reserve at such time of such a limited payment life or endowment policy. The premium payment period is the period during which premiums are concurrently payable under such twentypayment life preliminary term policy and such limited payment life or endowment policy. Any policy valued in accordance with this paragraph shall specify the mortality table, rate of interest, and method used in calculating the reserves on the policy.

2. Reserves on policies of ordinary insurance which are valued in accordance with the Commissioners 1941 Standard Ordinary Mortality Table, the Commissioners 1958 Standard Ordinary Mortality Table, or the Commissioners 1980 Standard Ordinary Mortality Table, policies of industrial insurance which are valued in accordance with the 1941 Standard Industrial Mortality Table or the Commissioners 1961 Standard Industrial Mortality Table and policies valued in accordance with any substandard mortality table approved by the Commissioner pursuant to this section, issued on or after June 6, 1949, may be computed in accordance with the Commissioners Reserve Valuation method, defined as follows: Reserves for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of subparagraph (a) over subparagraph (b) as follows:

(a) a net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that such level annual premium shall not exceed the net level annual premium on the nineteenyear premium whole life plan for insurance of the same amount at the age one (1) year higher than the age at issue of such policy,

(b) a net oneyear term premium for such benefits provided for in the first policy year, and

(c) provided that for any life insurance policy issued on or after January 1, 1986, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium shall, except as otherwise provided in subsection H of this section, be the greater of the reserve as of such policy anniversary calculated as described in this paragraph and the reserve as of such policy anniversary calculated as described in subparagraph (a) of this paragraph, but with (i) the value defined in subparagraph (a) of that paragraph being reduced by fifteen percent (15%) of the amount of such excess firstyear premium, (ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (iii) the policy being assumed to mature on such date as an endowment, and (iv) the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison, the mortality and interest bases stated in this section shall be used.

Reserves for life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums shall be calculated by a method consistent with the principles of paragraph 2 of this subsection, provided that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums. All modified net premiums and present values referred to in this section, except those based on sexdistinct mortality tables, may be calculated according to an age not more than six (6) years younger than the actual age of the insured in the case of any category of ordinary policies issued on female risks.

K. 1. Reserves on policies of any category may be computed, at the option of the company, according to any valuation standard which produces greater aggregate reserves than those computed according to the minimum standard provided in this section.

2. In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in subsections A, G, H, I, and L of this section, the reserves which are held under any such plan must:

(a) be appropriate in relation to the benefits and the pattern of premiums for that plan, and

(b) be computed by a method which is consistent with the principles of this Standard Valuation Law,

as determined by regulations promulgated by the Commissioner.

L. This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended.

Reserves according to the Commissioners Annuity Reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.

M. When the actual funds of any life insurance company doing business in this state, exclusive of its capital, are not of a net cash value equal to its liabilities including the net value of its policies according to the basis and minimum standards prescribed or authorized by the laws of this state, it shall be the duty of the Insurance Commissioner to give notice to such company and its agents to discontinue issuing new policies within this state, until such time as its funds have become equal to its liabilities as aforesaid. Any officer or agent who, after such notice has been given, issues or delivers a new policy from and on behalf of such company before its funds have become equal to its liabilities, as aforesaid, shall forfeit to the state for each offense a sum not less than One Hundred Dollars ($100.00) nor more than Five Thousand Dollars ($5,000.00) for each occurrence.

Amended by Laws 1982, c. 118, § 1, emerg. eff. April 6, 1982; Laws 1984, c. 149, § 5, eff. Nov. 1, 1984.

§361511. Valuation of bonds.

A. All bonds or other evidences of debt having a fixed term and rate of interest held by any insurer may, if amply secured and not in default as to principal or interest, be valued as follows:

1. If purchased at par, at the par value.

2. If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of such method, according to such accepted method of valuation as is approved by the Insurance Commissioner.

3. Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of such securities.

4. Unless otherwise provided by valuation established or approved by the National Association of Insurance Commissioners, no such security shall be carried at above the call price for the entire issue during any period within which the security may be so called.

B. The Insurance Commissioner shall have full discretion in determining the method of calculating values according to the rules set forth in this section and not inconsistent with any such methods then currently formulated or approved by the National Association of Insurance Commissioners.

Laws 1957, p. 285, § 1511.

§361512. Valuation of other securities.

A. Securities, other than those referred to in Section 1511 of this article, held by an insurer shall be valued, in the discretion of the Insurance Commissioner, at their market value, or at true book value, all consistent with any current method for the valuation of any such security formulated or approved by the National Association of insurance Commissioners.

B. Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, at the discretion of the Insurance Commissioner and in accordance with such method of computation as he may approve.

Laws 1957, p. 285, § 1512; Laws 1967, c. 242, § 1, emerg. eff. May 5, 1967.

§361513. Valuation of real property Improvements.

A. Real property acquired pursuant to a mortgage loan or contract for sale shall not be valued at an amount greater than the unpaid principal of the defaulted loan or contract at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such acquisition. In addition, the company may make improvements to such property, provided however, the cost of such improvements plus the acquisition costs and unpaid principal of the defaulted loan or contract shall not exceed the lesser of four percent (4%) of the admitted assets or surplus of the company in regard to policyholders.

B. Other real property held by an insurer shall be valued at an amount not to exceed the lower of current market value or cost plus capitalized improvements less normal depreciation. In lieu of writing down investment real estate or taking part of the value as nonadmitted when market value is less than book value, an insurer may establish a reserve for specific properties as a liability. If valuation is based on an appraisal more than three (3) years old, the Insurance Commissioner may at his discretion call for and require a new appraisal in order to determine fair value.

Real property held by an insurer prior to September 1, 1993, shall be in compliance with the limitations of this section by December 31, 1997. Insurers shall maintain accurate and adequate records reflecting the provisions of this section and submit such records with quarterly and annual statements.

Added by Laws 1957, p. 285, § 1513. Amended by Laws 1989, c. 181, § 3, eff. Nov. 1, 1989; Laws 1993, c. 79, § 5, eff. Sept. 1, 1993.

§361514. Valuation of purchase money mortgages.

Purchase money mortgages on real property referred to in subsection A of Section 1513 of this article shall be valued in an amount not exceeding the acquisition cost of the real property covered thereby or ninety percent (90%) of the fair value of such real property, whichever is less.

Laws 1957, p. 285, § 1514.

§361515. Information for valuation of securities.

It shall be the duty of every domestic insurance company holding securities valued under Sections 1511 or 1512 which do not have an established market value to furnish the Commissioner of Insurance, within thirty (30) days of his request, sufficient financial information concerning the issuing corporation, so as to enable him to arrive at a proper value of the security so held. Failure to furnish such information as specified herein shall result in the security being ineligible as a deduction from liabilities.

Laws 1967, c. 242, § 6, emerg. eff. May 5, 1967.

§36-1521. Short title.

This act shall be known and may be cited as the "Risk-based Capital for Insurers Act".

Added by Laws 1997, c. 229, § 2, eff. July 1, 1997.

§36-1522. Definitions.

As used in this act:

1. "Adjusted RBC Report" means an RBC report which has been adjusted by the Insurance Commissioner in accordance with subsection D of Section 4 of this act;

2. "Corrective order" means an order issued by the Commissioner specifying corrective actions which the Commissioner has determined are required;

3. "Domestic insurer" means any insurance company domiciled in this state;

4. "Foreign insurer" means any insurance company which has a certificate of authority to do business in this state but is not domiciled in this state;

5. "Life or health insurer" means any insurance company with a certificate of authority to write life or health insurance, or a licensed property and casualty insurer writing only accident and health insurance;

6. "Negative trend" means, with respect to a life or health insurer, negative trend over a period of time, as determined in accordance with the "Trend Test Calculation" included in the RBC Instructions;

7. "NAIC" means the National Association of Insurance Commissioners;

8. "Property and casualty insurer" means any insurance company with a certificate of authority to write property or casualty insurance, and shall not include monoline mortgage guaranty insurers, financial guaranty insurers, or title insurers;

9. "RBC" means risk-based capital;

10. "RBC Instructions" means the RBC Report including risk-based capital instructions adopted by the NAIC, as adopted by the Commissioner by rule, and any amendments thereto adopted by the Commissioner by rule;

11. "RBC Level" means an insurer's Company Action Level RBC, Regulatory Action Level RBC, Authorized Control Level RBC, or Mandatory Control Level RBC, where:

a. "Company Action Level RBC" means, with respect to any insurer, the product of 2.0 and its Authorized Control Level RBC,

b. "Regulatory Action Level RBC" means the product of 1.5 and its Authorized Control Level RBC,

c. "Authorized Control Level RBC" means the number determined under the risk-based capital formula in accordance with RBC Instructions, and

d. "Mandatory Control Level RBC" means the product of 0.70 and the Authorized Control Level RBC;

12. "RBC Plan" means a comprehensive financial plan containing the elements specified in subsection B of Section 5 of this act;

13. "Revised RBC Plan" means an RBC Plan which is rejected by the Commissioner and which is revised by the insurer with or without the Commissioner's recommendations;

14. "RBC Report" means the report required in Section 4 of this act; and

15. "Total adjusted capital" means the sum of:

a. an insurer's statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed with the Commissioner, and

b. such other items, if any, as the RBC Instructions, as adopted by rule by the Commissioner, may provide.

Added by Laws 1997, c. 229, § 3, eff. July 1, 1997.

§36-1523. Annual risk-based capital report - Factors - Adjustment of inaccurate reports.

A. Every domestic insurer shall, on or prior to each March 1, which shall be known as the filing date, prepare and submit to the Insurance Commissioner a report of its RBC Levels as of the end of the calendar year just ended, in a form and containing such information as is required by the RBC Instructions, as adopted by the Commissioner by rule. In addition, every domestic insurer shall file its RBC Report with the NAIC if required by the Commissioner.

B. 1. A life and health insurer's RBC shall be determined in accordance with the formula set forth in the RBC Instructions, as adopted by the Commissioner by rule. The formula shall take into account, and may adjust for the covariance between, the following factors:

a. the risk with respect to the insurer's assets,

b. the risk of adverse insurance experience with respect to the insurer's liabilities and obligations,

c. the interest rate risk with respect to the insurer's business, and

d. all other business risks and such other relevant risks as are set forth in the RBC Instructions.

2. These factors shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions.

C. 1. A property and casualty insurer's RBC shall be determined in accordance with the formula set forth in the RBC Instructions, as adopted by the Commissioner by rule. The formula shall take into account, and may adjust for the covariance between, the following factors:

a. asset risk,

b. credit risk,

c. underwriting risk, and

d. all other business risks and such other relevant risks as are set forth in the RBC Instructions.

2. These factors shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions.

D. If a domestic insurer files an RBC Report which in the judgment of the Commissioner is inaccurate, then the Commissioner, after notice and opportunity for comment, shall adjust the RBC Report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC Report so adjusted shall be referred to as an "Adjusted RBC Report".

Added by Laws 1997, c. 229, § 4, eff. July 1, 1997.

§36-1524. Company Action Level Event.

A. "Company Action Level Event" means any of the following events:

1. The filing of an RBC Report by an insurer which indicates that:

a. the insurer's Total Adjusted Capital is greater than or equal to its Regulatory Action Level RBC but less than its Company Action Level RBC, or

b. if a life or health insurer, the insurer has Total Adjusted Capital which is greater than or equal to its Company Action Level RBC but less than the product of its Authorized Control Level RBC and 2.5 and has a negative trend;

2. The notification by the Insurance Commissioner to the insurer of an Adjusted RBC Report that indicates an event described in paragraph 1 of this subsection, provided the insurer does not challenge the Adjusted RBC Report under Section 9 of this act; or

3. If, pursuant to Section 9 of this act, an insurer challenges an Adjusted RBC Report that indicates the event described in paragraph 1 of this subsection, the notification by the Commissioner to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge.

B. In the event of a Company Action Level Event, the insurer shall, unless otherwise directed by the Commissioner, prepare and submit to the Commissioner an RBC Plan which shall include the following five elements:

1. Conditions which contribute to the Company Action Level Event;

2. Proposals of corrective actions which the insurer intends to take and which would be expected to result in the elimination of the Company Action Level Event;

3. Projections of the insurer's financial results in the current year and at least the four (4) succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, or capital and surplus. Unless the Commissioner otherwise directs, the projections for both new and renewal business shall include separate projections for each major line of business and separately identify each significant income, expense and benefit component;

4. The key assumptions impacting the insurer's projections and the sensitivity of the projections to the assumptions; and

5. The quality of, and problems associated with, the insurer's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case.

C. The RBC Plan shall be submitted:

1. Within forty-five (45) days of the Company Action Level Event; or

2. If the insurer challenges an Adjusted RBC Report pursuant to Section 9 of this act, within forty-five (45) days after notification to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge.

D. Within sixty (60) days after the submission by an insurer of an RBC Plan to the Commissioner, the Commissioner shall notify the insurer whether the RBC Plan shall be implemented or is, in the judgment of the Commissioner, unsatisfactory. If the Commissioner determines the RBC Plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination, and may set forth proposed revisions which will render the RBC Plan satisfactory, in the judgment of the Commissioner. Upon notification from the Commissioner, the insurer shall prepare a Revised RBC Plan, which may incorporate by reference any revisions proposed by the Commissioner, and shall submit the Revised RBC Plan to the Commissioner:

1. Within forty-five (45) days after the notification from the Commissioner; or

2. If the insurer challenges the notification from the Commissioner under Section 9 of this act, within forty-five (45) days after a notification to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge.

E. In the event of a notification by the Commissioner to an insurer that the insurer's RBC Plan or Revised RBC Plan is unsatisfactory, the Commissioner may at the Commissioner's discretion, subject to the insurer's right to a hearing under Section 9 of this act, specify in the notification that the notification constitutes a Regulatory Action Level Event.

F. Every domestic insurer that files an RBC Plan or Revised RBC Plan with the Commissioner shall file a copy of the RBC Plan or Revised RBC Plan with the insurance commissioner in any state in which the insurer is authorized to do business if:

1. The state has an RBC provision substantially similar to subsection A of Section 12 of this act; and

2. The insurance commissioner of that state has notified the insurer of its request for the filing in writing. If such a request is made, the insurer shall file a copy of the RBC Plan or Revised RBC Plan in that state no later than the later of:

a. fifteen (15) days after the receipt of the request to file a copy of its RBC Plan or Revised RBC Plan with the state, or

b. the date on which the RBC Plan or Revised RBC Plan is filed under subsections C and D of this section.

Added by Laws 1997, c. 229, § 5, eff. July 1, 1997.

§36-1525. Regulatory Action Level Event.

A. "Regulatory Action Level Event" means, with respect to any insurer, any of the following events:

1. The filing of an RBC Report by the insurer which indicates that the insurer's Total Adjusted Capital is greater than or equal to its Authorized Control Level RBC but less than its Regulatory Action Level RBC;

2. The notification by the Insurance Commissioner to an insurer of an Adjusted RBC Report that indicates the event described in paragraph 1 of this subsection, provided the insurer does not challenge the Adjusted RBC Report under Section 9 of this act;

3. If, pursuant to Section 9 of this act, the insurer challenges an Adjusted RBC Report that indicates the event described in paragraph 1 of this subsection, the notification by the Commissioner to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge;

4. The failure of the insurer to file an RBC Report by the filing date, unless the insurer has provided an explanation for such failure in writing prior to the filing date which is satisfactory to the Commissioner, and has cured the failure within such time as may be allowed by the Commissioner;

5. The failure of the insurer to submit an RBC Plan to the Commissioner within the time period set forth in subsection C of Section 5 of this act;

6. Notification by the Commissioner to the insurer that:

a. the RBC Plan or Revised RBC Plan submitted by the insurer is, in the judgment of the Commissioner, unsatisfactory, and

b. such notification constitutes a Regulatory Action Level Event with respect to the insurer, provided the insurer has not challenged the determination under Section 9 of this act;

7. If, pursuant to Section 9 of this act, the insurer challenges a determination by the Commissioner under paragraph 6 of this subsection, the notification by the Commissioner to the insurer that the Commissioner has, after opportunity for a hearing, rejected such challenge;

8. Notification by the Commissioner to the insurer that the insurer has failed to adhere to its RBC Plan or Revised RBC Plan, but only if the failure has a substantial adverse effect on the ability of the insurer to eliminate the Company Action Level Event in accordance with the RBC Plan or Revised RBC Plan and the Commissioner has so stated in the notification, provided the insurer has not challenged the determination under Section 9 of this act; or

9. If, pursuant to Section 9 of this act, the insurer challenges a determination by the Commissioner under paragraph 8 of this subsection, the notification by the Commissioner to the insurer that the Commissioner has, after opportunity for a hearing, rejected the challenge.

B. In the event of a Regulatory Action Level Event:

1. The insurer shall, unless otherwise directed by the Commissioner, prepare and submit an RBC Plan or, if applicable, a Revised RBC Plan;

2. The Commissioner may perform such examination or analysis as the Commissioner deems necessary of the assets, liabilities, and operations of the insurer including a review of its RBC Plan or Revised RBC Plan; and

3. Subsequent to the examination or analysis, the Commissioner may issue a corrective order specifying the corrective actions which the Commissioner determines are required.

C. In determining corrective actions, the Commissioner may take into account the factors deemed relevant with respect to the insurer based upon the Commissioner's examination or analysis of the assets, liabilities, and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC Instructions. The RBC Plan or Revised RBC Plan shall be submitted:

1. Within forty-five (45) days after the occurrence of the Regulatory Action Level Event;

2. If the insurer challenges an Adjusted RBC Report pursuant to Section 9 of this act, within forty-five (45) days after the notification to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge; or

3. If the insurer challenges a Revised RBC Plan pursuant to Section 9 of this act, within forty-five (45) days after the notification to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge.

D. The Commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the Commissioner to review the insurer's RBC Plan or Revised RBC Plan, examine or analyze the assets, liabilities, and operations of the insurer, and formulate a corrective order with respect to the insurer. The fees, costs, and expenses relating to consultants shall be borne by the affected insurer or such other party as directed by the Commissioner.

Added by Laws 1997, c. 229, § 6, eff. July 1, 1997.

§36-1526. Authorized Control Level Event.

A. "Authorized Control Level Event" means any of the following events:

1. The filing of an RBC Report by the insurer which indicates that the insurer's Total Adjusted Capital is greater than or equal to its Mandatory Control Level RBC but less than its Authorized Control Level RBC;

2. The notification by the Insurance Commissioner to the insurer of an Adjusted RBC Report that indicates the event in paragraph 1 of this subsection, provided the insurer does not challenge the Adjusted RBC Report under Section 9 of this act;

3. If, pursuant to Section 9 of this act, the insurer challenges an Adjusted RBC Report that indicates the event in paragraph 1 of this subsection, notification by the Commissioner to the insurer that the Commissioner has, after opportunity for a hearing, rejected the insurer's challenge;

4. The failure of the insurer to respond, in a manner satisfactory to the Commissioner, to a corrective order, provided the insurer has not challenged the corrective order under Section 9 of this act; or

5. If the insurer has challenged a corrective order under Section 9 of this act and the Commissioner has, after opportunity for a hearing, rejected the challenge or modified the corrective order, the failure of the insurer to respond, in a manner satisfactory to the Commissioner, to the corrective order subsequent to rejection or modification by the Commissioner.

B. In the event of an Authorized Control Level Event with respect to an insurer, the Commissioner may:

1. Take such actions as are required under Section 6 of this act regarding an insurer with respect to which a Regulatory Action Level Event has occurred; or

2. If the Commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take such actions as are necessary to cause the insurer to be placed under regulatory control under Article 18 or 19 of the Insurance Code. In the event the Commissioner takes such actions, the Authorized Control Level Event shall be deemed sufficient grounds for the Commissioner to take action under Article 18 or 19 of the Insurance Code, and the Commissioner shall have the rights, powers, and duties with respect to the insurer as are set forth in Article 18 or 19 of the Insurance Code. In the event the Commissioner takes actions under this paragraph pursuant to an Adjusted RBC Report, the insurer shall be entitled to notice and opportunity for a hearing as required by the provisions of Article 18 or 19 of the Insurance Code.

Added by Laws 1997, c. 229, § 7, eff. July 1, 1997.

§36-1527. Mandatory Control Level Event.

A. "Mandatory Control Level Event" means any of the following events:

1. The filing of an RBC Report which indicates that the insurer's Total Adjusted Capital is less than its Mandatory Control Level RBC;

2. Notification by the Commissioner to the insurer of an Adjusted RBC Report that indicates the event in paragraph 1 of this subsection, provided the insurer does not challenge the Adjusted RBC Report under Section 9 of this act; or

B. In the event of a Mandatory Control Level Event:

1. With respect to a life insurer, the Commissioner may take the actions necessary to place the insurer under regulatory control under Article 18 or 19 of the Insurance Code. In that event, the Mandatory Control Level Event is deemed sufficient grounds for the Commissioner to take action under Article 18 or 19 of the Insurance Code, and the Commissioner shall have the rights, powers, and duties with respect to the insurer which are set forth in Article 18 or 19 of the Insurance Code. If the Commissioner takes actions pursuant to an Adjusted RBC Report, the insurer shall be entitled to notice and opportunity for a hearing as required by the provisions of Article 18 or 19 of the Insurance Code; and

2. With respect to a property and casualty insurer, the Commissioner may take the actions necessary to place the insurer under regulatory control under Article 18 or 19 of the Insurance Code, or, in case of an insurer which is writing no business and which is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the Commissioner. In either event, the Mandatory Control Level Event is deemed sufficient grounds for the Commissioner to take action under Article 18 or 19 of the Insurance Code and the Commissioner shall have the rights, powers, and duties with respect to the insurer which are set forth in Article 18 or 19 of the Insurance Code. If the Commissioner takes actions pursuant to an Adjusted RBC Report, the insurer shall be entitled to notice and opportunity for a hearing as required by the provisions of Article 18 or 19 of the Insurance Code.

Added by Laws 1997, c. 229, § 8, eff. July 1, 1997.

§36-1528. Confidential departmental hearing.

The insurer shall have the right to an opportunity for a confidential departmental hearing, on the record, at which the insurer may challenge any determination or action by the Commissioner. The insurer shall notify the Commissioner of its request for a hearing within five (5) days after the notification by the Commissioner of a decision affecting the insurer's substantial rights. Upon receipt of the insurer's request for a hearing, the Commissioner shall set a date for the hearing, which date shall be no less than five (5) days after the date of the insurer's request. The Commissioner may deny a request for hearing if the request is frivolous, or if no factual issues are presented.

Added by Laws 1997, c. 229, § 9, eff. July 1, 1997.

§36-1529. Confidentiality of RBC Reports and Plans.

A. RBC Reports and RBC Plans shall be kept confidential by the Insurance Commissioner. This information shall not be subject to subpoena. This information shall be made public by the Commissioner only for the purpose of enforcement actions taken by the Commissioner pursuant to this act or any other provision of the insurance laws of this state.

B. Except as otherwise required under the provisions of this act, the making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to the RBC Levels of any insurer, or of any component derived in the calculation, by an insurer, agent, broker, or other person engaged in any manner in the insurance business is misleading and is therefore prohibited. Any person who violates this subsection shall be subject to a civil penalty in an amount not less than One Thousand Dollars ($1,000.00) nor more than Ten Thousand Dollars ($10,000.00).

C. The RBC Reports and RBC Plans are intended solely for use by the Commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers. The RBC Reports and RBC Plans shall not be used by the Commissioner for ratemaking nor considered or introduced as evidence in any rate proceeding nor used by the Commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an insurer or any affiliate is authorized to write.

Added by Laws 1997, c. 229, § 10, eff. July 1, 1997.

§36-1530. Provisions of act supplemental - Promulgation of rules - Exemptions from act.

A. The provisions of this act are supplemental to any other provisions of the laws of this state, and shall not preclude or limit any other powers or duties of the Insurance Commissioner under such laws, including, but not limited to, Article 18 or 19 of the Insurance Code.

B. The Commissioner may promulgate reasonable rules necessary for the implementation of this act.

C. The Commissioner may exempt from the application of this act in any year any domestic insurer which:

1. Writes direct business only in this state; and

2. Assumes no reinsurance in excess of five percent (5%) of direct premium written.

D. Insurers domiciled in this state that are issuing policies of medical professional liability insurance to physicians, allied health care professionals and health care institutions as defined by Section 2202 of this title on July 1, 2004, which notify the Commissioner in writing of the insurer's election to utilize the moratorium provided in Section 1509 of this title shall be exempt from the provisions of this title which require an insurer to maintain an adequate surplus as regards policyholders as a condition to obtaining or renewal of a license to act as an insurer, until December 31, 2008. The Commissioner shall not enforce any recapitalization plan against any insurer domiciled in this state that is issuing policies of physicians', allied health care professionals' and health care institutions' professional liability insurance until December 31, 2008.

Added by Laws 1997, c. 229, § 11, eff. July 1, 1997. Amended by Laws 2004, c. 368, § 57, eff. July 1, 2004; Laws 2005, c. 44, § 2, eff. Nov. 1, 2005.

§36-1531. Foreign insurers.

A. 1. Any foreign insurer shall, upon the written request of the Insurance Commissioner, submit to the Commissioner an RBC Report as of the end of the calendar year just ended on a date which is the later of:

a. the date an RBC Report would be required to be filed by a domestic insurer under this act, or

b. fifteen (15) days after the request is received by the foreign insurer.

2. Any foreign insurer shall, at the written request of the Commissioner, promptly submit to the Commissioner a copy of any RBC Plan that is filed with the Insurance Commissioner of any other state.

B. 1. The Commissioner may require a foreign insurer to file an RBC Plan with the Commissioner in the event of a Company Action Level Event, Regulatory Action Level Event, or Authorized Control Level Event. The filing shall be made pursuant to the RBC statute applicable in the state of domicile of the insurer or, if no RBC statute is in force in that state, pursuant to the provisions of this act. If the insurance commissioner of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC Plan in the manner specified under that state's RBC statute or, if no RBC statute is in force in that state, the filing shall be made pursuant to Section 5 of this act.

2. The failure of the foreign insurer to file an RBC Plan with the Commissioner shall be grounds to order the insurer to cease and desist from writing new insurance business in this state.

C. In the event of a Mandatory Control Level Event with respect to any foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the Commissioner may make application to the Oklahoma County District Court as permitted under Article 19 of the Oklahoma Insurance Code with respect to the liquidation of property of foreign insurers found in this state.

Added by Laws 1997, c. 229, § 12, eff. July 1, 1997.

§36-1532. Immunity for Commissioner and employees.

There shall be no liability on the part of, and no cause of action shall arise against, the Insurance Commissioner or the Insurance Department or its employees or agents for any action taken by them in the performance of their powers and duties under this act.

Added by Laws 1997, c. 229, § 13, eff. July 1, 1997.

§36-1533. Notices to insurers - When effective.

All notices by the Insurance Commissioner to an insurer which may result in regulatory action hereunder shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the insurer's receipt of such notice.

Added by Laws 1997, c. 229, § 14, eff. July 1, 1997.

§361601. Scope of article.

Except as to Sections 1624 and 1625 and subdivision A of Section 1606 hereof, this article applies to domestic insurers only. This article shall apply to domestic title insurers except as provided in Article 50 (Title Insurers).

Laws 1957, p. 285, § 1601.

§361602. Eligible investments.

A. Insurers shall invest in or loan their funds on the security of, and shall hold as assets, only eligible investments as prescribed in this article.

B. Any particular investment held by an insurer on the effective date of this Code or any amendment hereto, and which was a legal investment at the time it was made, and which the insurer was legally entitled to possess immediately prior to such effective date, shall be deemed to be an eligible investment.

C. The eligibility of an investment shall be determined as of the date of its making or acquisition.

D. Any investment limitation based upon the amount of the insurer's assets or particular funds shall relate to assets or funds as shown by the insurer's annual statement as of December 31 last preceding date of investment, or as shown by a current financial statement on file with the Commissioner.

Laws 1957, p. 285, § 1602; Laws 1965, c. 123, § 1; Laws 1967, c. 242, § 2, emerg. eff. May 5, 1967.

§361603. Qualification of securities or property as eligible investments.

A. No security or investment (other than property or shares acquired pursuant to Sections 1612, 1616 or 1624 of this article) shall be eligible for acquisition unless it is interest bearing or interest accruing or dividend or income paying, is not then in default in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon. Defaults in interest or income occurring subsequent to acquisition of an investment shall not affect allowance thereof as an asset.

B. No security or investment shall be eligible for purchase at a price above its market value.

C. No provision of this article shall prohibit the acquisition by an insurer of other or additional securities or property if received as a dividend or as a lawful distribution of assets, or if acquired pursuant to a lawful and bona fide agreement of bulk reinsurance, merger, or consolidation. Any investment so acquired through bulk reinsurance, merger, or consolidation, which is not otherwise eligible under this article, shall be disposed of pursuant to Section 1625 of this article.

Laws 1957, p. 286, § 1603; Laws 1965, c. 123, § 2.

§361604. Approval of investment.

No investment or loan shall be made by an insurer unless the same has been authorized or approved by the insurer's board of directors or by a committee or corporate officer authorized thereby and charged with the duty of supervising or making such investment or loan. The minutes of any such committee shall be recorded and regular reports of such committee shall be submitted to the board of directors. This section does not apply to loans made by a life insurer on policies or annuity contracts.

Laws 1957, p. 286, § 1604; Laws 1965, c. 123, § 3.

§361605. Investments in any one person.

An insurer shall not, except with the consent of the Insurance Commissioner, have at any one time any combination of checking account moneys, investments in or loans upon the security of the obligations, property, or securities of any one person, institution, corporation, or municipal corporation, aggregating an amount exceeding ten percent (10%) of the insurer's assets. This restriction shall not apply to investments in or loans upon the security of general obligations of the United States or any state of the United States or include policy loans made under Section 1619 of this title, or investments made under Section 1616 of this title.

Amended by Laws 1984, c. 149, § 6, eff. Nov. 1, 1984.

§361606. Required capital investments.

After the effective date of this act, until an insurer authorized to transact business shall have assets of One Million Dollars ($1,000,000.00) or in the case of insurers authorized to transact business prior to the effective date of this act shall have assets in an amount equal to three (3) times the minimum paidin capital that was required of a like domestic stock insurer on January 1, 1979, it shall invest and maintain its funds only in cash and the securities described in the following sections of this article: Section 1607 (Securities of or guaranteed by the United States); Section 1608 (State and Canadian public obligations); Section 1609 (County, municipal and district obligations); Section 1610 (Public improvement bonds); and Section 1620 (Deposits: Banks, Savings and Loan).

Laws 1957, p. 286, § 1606; Laws 1959, p. 292, § 8; Laws 1965, c. 123, § 5; Laws 1967, c. 242, § 4, emerg. eff. May 5, 1967; Laws 1980, c. 185, § 8, eff. Oct. 1, 1980.

§361607. United States government obligations.

An insurer may invest any of its funds in:

1. Bonds or other evidences of indebtedness of the United States of America or of any of its agencies or instrumentalities when such obligations are guaranteed as to principal and interest by the United States of America or any agency or instrumentality thereof.

2. Bonds or other evidences of indebtedness which are guaranteed as to principal and interest by the United States of America or by any agency or instrumentality of the United States of America.

3. Bonds, debentures or other securities of the following agencies of the government of the United States, whether or not such obligations are quaranteed by such government:

(a) Commodity credit corporation.

(b) Federal national mortgage association and stock thereof when acquired in connection with sale of mortgage loans to such association.

(c) Federal land banks, issued under provisions of the Act of Congress entitled the "Federal Farm Loan Act" and approved July 17, 1916, and any acts amendatory or supplementary to that Act.

(d) Any federal home loan bank, issued under provisions of the Act of Congress entitled "Federal Home Loan Bank Act" and approved July 22, 1932.

(e) The Home Owners' Loan Corporation, created by the Act of Congress entitled "Home Owners' Loan Act of 1933" and approved June 13, 1933.

(f) Federal intermediate credit banks, created by the Act of Congress entitled "Agricultural Credits Act of March 4, 1923."

(g) Central bank for cooperatives and regional banks for cooperatives organized under the Farm Credit Act of 1933, or by any of such banks.

(h) Any other similar agency of the government of the United States and of similar financial quality.

Laws 1957, p. 287, § 1607; Laws 1965, c. 123, § 6.

§361608. State, district or Canadian obligations.

An insurer may invest in bonds, notes, warrants and other securities not in default which are the direct obligations of any state of the United States or of the District of Columbia, or of the government of Canada or any province thereof, or for which the full faith and credit of such state, district, government or province has been pledged for the payment of principal and interest.

Laws 1957, p. 287, § 1608; Laws 1965, c. 123, § 7.

§361609. County, district, city, school district or Canadian obligations.

An insurer may invest in bonds, notes, warrants and other securities not in default of any county, district, incorporated city, or school district in any state of the United States, or the District of Columbia, or in any province of Canada, which are the direct obligations of such county, district, city or school district and for payment of the principal and interest of which the county, district, city, or school district has lawful authority to levy taxes or make assessments.

Laws 1957, p. 287, § 1609; Laws 1965, c. 123, § 8.

§361610. Public structure or improvement obligations.

An insurer may invest in bonds, notes, certificates of indebtedness, warrants, or other evidences of indebtedness, which are payable from revenues or earnings specifically pledged therefor of any public structure or improvement owned by any state, incorporated city, or legallyconstituted public corporation or commission or trust, all within the United States, for the payment of the principal and interest if no default on the part of the issuer in payment of principal or interest has occurred on any of its bonds, notes, warrants, or other securities within five (5) years prior to the date of investment therein, or, if such obligations were issued less than five (5) years prior to the date of investment, no default in payment of principal or interest has occurred on the obligations to be purchased or on any other obligation of the issuer within five (5) years of such investment.

Laws 1957, p. 287, § 1610; Laws 1965, c. 123, § 9.

§361611. Obligations payable from public utility revenues.

An insurer may invest in the bonds, notes, certificates of indebtedness, warrants, or other evidences of indebtedness which are valid obligations issued, assumed, or guaranteed by the United States or any state thereof or by any county, municipal corporation, district, or political subdivision or civil division or public instrumentality of any such government or unit thereof, if by statute or other legal requirements such obligations are payable as to both principal and interest from revenues or earnings from the whole or any part of any utility supplying water, gas, sewage disposal facility or electricity or any other public service.

Laws 1957, p. 287, § 1611; Laws 1965, c. 123, § 10.

§36-1612. Repealed by Laws 2004, c. 334, § 42, emerg. eff. May 25, 2004.

§36-1612.1. Investments in office equipment, furniture and machines - Recreational, hospitalization, convalescent and/or retirement property for employees.

Any domestic company, in addition to the investments permitted by this article, may invest in electronic machines constituting a data processing system, or systems, and other office equipment, furniture and machines, and such other property, machines and equipment already purchased or purchased in the future for use in connection with the data processing of the transaction of the business of an insurance company and may further invest in property, which shall not be included in calculating the limitation in Section 1624 of Title 36 of the Oklahoma Statutes, used for recreational, hospitalization, convalescent and/or retirement purposes for its employees, to the extent that the total market value of all such property, which shall be depreciated over its useful life in accordance with standard accounting procedures, constitutes less than three percent (3%) of its otherwise admitted assets.

Added by Laws 2005, c. 95, § 1, emerg. eff. April 25, 2005. Amended by Laws 2005, c. 425, § 3, eff. Nov. 1, 2005.

§361613. Acceptances and bill of exchange.

An insurer may invest in bank and bankers' acceptances and other bills of exchange of the kind and maturity made eligible pursuant to law for purchase in the open market by federal reserve banks.

Laws 1957, p. 287, § 1613.

§361614. Corporate obligations.

A. An insurer may invest in bonds, debentures, notes and other evidences of indebtedness issued, assumed or guaranteed by any solvent institutions created or existing under the laws of the United States or of any state, district or territory thereof, which are not in default as to principal or interest.

B. An insurer may invest in fixed interest bearing obligations, other than those described in subsection A of this section, of such institutions if not in default.

Laws 1957, p. 288, § 1614; Laws 1965, c. 123, § 12.

§361615. Preferred or guaranteed stock.

An insurer may invest in preferred or guaranteed stocks or shares of any solvent institution created or existing under the laws of the United States or of any state, district or territory thereof, if such stock and all of the prior obligations and prior preferred stocks, if any, of such institution at the date of acquisition by such insurer are not then in default.

Laws 1957, p. 288, § 1615; Laws 1965, c. 123, § 13.

§36-1616. Investments in other insurance companies - Corporate stock.

A. Any domestic insurer, in addition to other investments permitted by this article, may invest in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, excluding investments in insurance subsidiaries, in amounts which do not exceed the lesser of ten percent (10%) of the assets of the insurer or fifty percent (50%) of the surplus of the insurer in regard to policyholders except instances where a greater investment has been approved by the Commissioner.

B. Except with the consent of the Insurance Commissioner, no domestic life insurer shall, in addition to other investments permitted by this article, invest an amount equal in the aggregate to more than ten percent (10%) of its assets, or in the case of a domestic nonlife insurer, an amount equal in the aggregate to more than twenty percent (20%) of its assets in the shares of solvent corporations created or existing under the laws of the United States or of any state, including the shares of a substantially owned or wholly owned subsidiary corporation. Investing in the shares of mutual funds that invest only in bonds or preferred stocks shall be considered as investing in bonds or preferred stocks, and investing in mutual funds that invest in common stocks shall be considered as investing in common stocks. However, investments in the shares of subsidiaries or companion insurance companies shall be governed by paragraph A of this section.

C. For the purpose of determining the investment limitation imposed by this article, the insurer shall value securities purchased pursuant to the provisions of this article at the cost of the security or at the market value of the security, whichever is lower.

Added by Laws 1957, p. 288, § 1616. Amended by Laws 1959, p. 136, § 1; Laws 1965, c. 123, § 14; Laws 1967, c. 242, § 5, emerg. eff. May 5, 1967; Laws 1975, c. 14, § 1; Laws 2005, c. 129, § 12, eff. Nov. 1, 2005; Laws 2005, c. 425, § 2, eff. Nov. 1, 2005.

§361617. Equipment trust certificates.

An insurer may invest in equipment trust obligations or certificates which in the opinion of the Insurance Commissioner are adequately secured, or other instruments so secured and evidencing an interest in transportation equipment, wholly or in part within the United States, which carry the right to receive determined portions of rental, purchase, or other fixed obligatory payments to be made for the use or purchase of such transportation equipment.

Laws 1957, p. 289, § 1617.

§361618. Obligations of receivers or trustees; investments not otherwise authorized; limitations.

A. An insurer may invest in certificates, notes or other obligations issued by trustees or receivers of any institution created or existing under the laws of the United States or of any state, district or territory thereof, which, or the assets of which, are being administered under the direction of any court having jurisdiction, if such obligation in the opinion of the Insurance Commissioner is adequately secured as to principal and interest.

B. An insurer may make loans or investments not otherwise qualifying or permitted under this article to an amount not exceeding in the aggregate five percent (5%) of the insurer's assets, and not exceeding one percent (1%) of such assets as to any one such loan or investment. But no such loan or investment shall be represented by:

1. Any item described in Section 1503 of Article 15 (Assets and Liabilities), or any loan or investment otherwise specifically prohibited.

2. Any loan or investment eligible under any other provision of this article.

3. Any asset theretofore acquired or held by the insurer under any other category of loans or investments eligible under this article.

The insurer shall keep a separate record of all loans and investments made under this subsection.

Laws 1957, p. 289, § 1618.

§361619. Policy loans.

A life insurer may lend to its policyholder upon pledge of the policy as collateral security a sum not exceeding the applicable cash surrender value specified in the policy.

Laws 1957, p. 289, § 1619.

§361620. Deposits; banks, savings and loan.

A. An insurer may have any of its cash funds on deposit in checking or savings accounts, under certificates of deposit, or in any other form in solvent banks or trust companies, which are insured by the Federal Deposit Insurance Corporation.

B. An insurer may invest or deposit any of its funds in checking, share or saving accounts in solvent savings and loan associations which are insured by the Federal Savings and Loan Insurance Corporation.

C. An insurer may invest or deposit any of its funds in share, share draft, certificates of deposit or in any other form in solvent credit unions which are insured by the National Credit Union Administration.

Laws 1957, p. 289, § 1620; Amended by Laws 1980, c. 362, § 20, emerg. eff. June 27, 1980; Laws 1986, c. 251, § 25, eff. Nov. 1, 1986; Laws 1987, c. 175, § 17, eff. Nov. 1, 1987.

§361621. Foreign securities.

Provided nothing contained herein shall prevent a domestic company doing business in other states of the United States or in foreign countries from investing the funds required to meet its obligations incurred in such other states or foreign countries in the kind of securities that such companies are required by law or permitted by law to invest in that state.

Laws 1957, p. 289, § 1621.

§361622. Mortgages on real estate.

A. An insurer may invest any of its funds in bonds, notes or other evidences of indebtedness which are secured by first mortgages or deeds of trust upon improved, unencumbered real property located in the United States, or which are secured by first mortgages or deeds of trust upon leasehold estates having an expired term of not less than twentyone (21) years, inclusive of the term which may be provided by an enforceable option of renewal, in improved, unencumbered real property located in the United States.

B. Real property shall not be deemed to be encumbered within the meaning of this section by reason of the existence of instruments reserving mineral, oil or timber rights, rightsofway, sewer rights, rights in walls, nor by reason of any liens for taxes or assessments not delinquent, nor by reason of building restrictions or other restrictive covenants, nor when such real property is subject to lease under which rents or profits are reserved to the owner, if in any event the security for such loan is a first lien upon such real property and if there is no condition or right of reentry or forfeiture under which, in the case of real property other than leaseholds, such lien can be cut off, subordinated, or otherwise disturbed or under which, in the case of leaseholds, the insurer is unable to continue the lease in force for the duration of the loan.

C. No such mortgage loan or loans made or acquired by an insurer on any one property shall, at the time of investment by the insurer, exceed eighty percent (80%) of the value, or if the loan is for purchase money, the lesser of eighty percent (80%) of the value or purchase price of the real property or leasehold securing the same, except that such loan or loans may equal the amount of any guaranty by the United States of America or by any agency or instrumentality of the United States of America or by any private insurance company licensed as an authorized insurer by the Insurance Department of the State of Oklahoma to write mortgage insurance. Additionally, no single mortgage loan to any individual shall exceed four percent (4%) of the company's admitted assets, with no more than twenty-five percent (25%) of the company's admitted assets invested in total aggregate amount in mortgage loans. The calculation of admitted assets is based on the insurer's annual statement as of December 31 last preceding the date of investment, or as shown by a current financial statement on file with the Commissioner.

Mortgage loans made or acquired by an insurer prior to December 31, 1992, shall be in compliance with the limitation provided in this subsection for total aggregate investment of admitted assets in mortgage loans by December 31, 1997. Mortgage loans made or acquired by an insurer on or after December 31, 1992, but prior to September 1, 1993, shall be in compliance with the limitations for investment of admitted assets in single mortgage loans to individuals and total aggregate investments of admitted assets in mortgage loans provided in this subsection by December 31, 1997. Insurers shall maintain accurate and adequate records reflecting the provisions of this section and submit such records with quarterly and annual statements.

D. No such mortgage loan or loans shall be made or acquired by an insurer except after an appraisal made by a qualified appraiser for the purpose of such investment. No change or modification shall be made to such appraisal by any mortgage underwriter unless such person is licensed or certified as an appraiser pursuant to the Oklahoma Certified Real Estate Appraisers Act or unless such person has been provided by the person who made the appraisal written consent to make the modification. Such modification shall be disclosed to the seller and buyer and/or the seller's agent.

E. No mortgage loan upon a leasehold shall be made or acquired pursuant to this section unless the terms thereof shall provide for amortization payments to be made by the borrower on the principal thereof at least once in each year in amounts sufficient completely to amortize the loan within a period of fourfifths (4/5) of the term of the leasehold, inclusive of the term which may be provided by an enforceable option of renewal, which is unexpired at the time the loan is made, but in no event exceeding thirtyfive (35) years.

Added by Laws 1957, p. 289, § 1622. Amended by Laws 1965, c. 123, § 15; Laws 1974, c. 83, § 1, emerg. eff. April 19, 1974; Laws 1993, c. 79, § 6, eff. Sept. 1, 1993; Laws 1993, c. 360, § 4, eff. Sept. 1, 1993.

NOTE: Laws 1993, c. 16, § 1 repealed by Laws 1993, c. 360, § 16, emerg. eff. June 10, 1993.

§361623. Purchase money mortgages.

An insurer may invest in purchase money mortgages or like securities, received by it upon the sale or exchange of real property theretofore owned by it. Provided, however, such investments shall be subject to the limitations of Section 1622 of this title.

Laws 1957, p. 290, § 1623.

§361624. Acquiring or holding real property.

No insurance company, foreign, alien or domestic, doing business in Oklahoma, may acquire or hold real property therein, except as follows:

1. Such as shall be requisite for the convenient accommodation of the transaction of its own business; the amount invested in such real property shall not exceed ten percent (10%) of the investing company's admitted assets but the Insurance Commissioner may grant permission to the company to invest in real property for such purpose in such increased amount as he may deem proper on the showing made, if upon a hearing held before him he shall find that the amount represented by such percentage of its admitted assets is insufficient to provide convenient accommodation for the company's business; real estate maintained for the convenient accommodation of the transaction of its own business, permitted to be carried as an admitted asset of the company pursuant to this section shall be carried at an amount equal to its cost at the time of acquisition together with the actual cost of improvements made thereon, less encumbrances and less depreciation provided, however, any real estate carried at fair market value as an admitted asset of the company on the effective date of this act shall be excluded from this provision;

2. Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted for moneys due;

3. Such as shall have been conveyed to it in satisfaction of debts previously contracted in course of its dealings;

4. Such as shall have been purchased at sales on judgments, decrees, or mortgages obtained or made for such debts;

5. Such real property as shall have been acquired in whole or in part, in exchange for real property of approximately the same value theretofore legally acquired and held by it;

6. Real property and improvements thereon located in incorporated cities and towns and as additions thereto or real property and improvements wherever located acquired for sale or lease to any other corporation, if such latter corporation could have legally acquired the same in the first instance, and may make improvements thereon for commercial and industrial purposes as an investment for the production of income. The phrase "commercial and industrial purposes" shall not include real property primarily intended for use or valued as agricultural, horticultural, farm, and ranch, unless adjacent to other real property the ownership of which is permitted under this section. The total amount invested in such real property and improvements thereon shall not exceed the company's capital and/or surplus, or ten percent (10%) of its admitted assets whichever is the lesser; provided, however, the amount invested in any one investment shall not exceed four percent (4%) of the company's admitted assets. The admitted assets shall be determined by the company's last annual report made as of December 31, immediately preceding and which has been filed with the Insurance Commissioner as required by law, or as shown by a current financial statement on file with the Commissioner; and

7. Real property acquired and held under Section 1612 of this title.

Laws 1957, p. 290, § 1624; Laws 1965, c. 123, § 16.

§361625. Time limits for disposal of other ineligible property and securities; penalty.

A. Any personal property or securities lawfully acquired by an insurer, which it could not otherwise have invested in or loaned its funds upon at the time of such acquisition, shall be disposed of within three (3) years from date of acquisition, unless within such period the security has attained to the standard of eligibility; the failure to make such disposition shall result in the disallowance of such property as an asset in any statement by an insurer to the Insurance Commissioner, in any published financial statement or in any examiner's report to said Commissioner; provided, however, that any security or property acquired under any agreement of bulk reinsurance, merger, or consolidation may be retained for a longer period than such three (3) years if so provided in such plan for the reinsurance, merger, or consolidation as was approved by the Insurance Commissioner pursuant to this Code. The Insurance Commissioner, upon application and proof that forced sale of any such property or security would be against the best interests of the insurer, may extend the disposal period for an additional reasonable time.

B. Any real property acquired in satisfaction of debt by an insurer, which the insurer could not otherwise have invested in or loaned funds upon at the time of such acquisition, shall be disposed of within three (3) years from the date of such acquisition. The Insurance Commissioner, upon application and proof that forced sale of any such property would be against the best interests of the insurer, may extend the disposal period for an additional reasonable time.

C. Any such real or personal property or security held by an insurer after expiration of the period for disposal thereof or any extension of such period granted by the Insurance Commissioner shall not be allowed as an asset of the insurer.

Laws 1957, p. 291, § 1625.

§361626. Investments of foreign, alien insurers.

The investments of a foreign or alien insurer shall be as permitted by the laws of its domicile but shall be of a quality substantially as high as those required under this article for similar funds of like domestic insurers.

Laws 1957, p. 291, § 1626.

§361627. Investments in loans secured by certain securities.

An insurer may invest in loans with a maturity not in excess of five (5) years from the date thereof which are secured by pledge of securities eligible for investment under this chapter, or by the pledge or assignment of life insurance policies issued by other insurers authorized to transact insurance in this state. On the date made, no such loan shall exceed in amount eighty percent (80%) of the market value of the collateral pledged.

Laws 1965, c. 123, § 17.

§36-1628. Definitions - Deposit of securities - Custodial responsibilities.

A. As used in this section:

1. "Agent" shall mean a national bank, state bank, or trust company which maintains an account in its name in a clearing corporation or which is a member of the Federal Reserve System and through which a custodian participates in a clearing corporation or the Federal Reserve book-entry system, except that with respect to securities issued by institutions organized or existing under the laws of any foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "agent" may, with the prior approval of the Commissioner, include a corporation which is organized or existing under the laws of any foreign country and which is legally qualified under such law to accept custody of securities;

2. "Clearing corporation" shall mean a corporation as defined in paragraph (5) of subsection (a) of Section 8-102 of Title 12A of the Oklahoma Statutes which is organized for the purpose of effecting transactions in securities by computerized book-entry, except that with respect to securities issued by institutions organized or existing under the laws of any foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "clearing corporation" may include a corporation which is organized or existing under the laws of any foreign country and which is legally qualified under such laws to effect transactions in securities by computerized book-entry. Such corporations shall have been approved for use by the Commissioner;

3. "Commissioner" shall mean the Insurance Commissioner of the State of Oklahoma or an authorized representative;

4. "Custodian" shall mean a national bank, state bank, or trust company which has at all times aggregate capital, surplus, and undivided profits of not less than Five Hundred Thousand Dollars ($500,000.00) and which is regulated by either state banking laws or is a member of the Federal Reserve System and which is legally qualified to accept custody of securities in accordance with the standards set forth below, except that with respect to securities issued by institutions organized or existing under the laws of any foreign country, or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "custodian" may include a bank, trust company, or similar institution which has at all times aggregate capital, surplus, and undivided profits of not less than the equivalent of Five Hundred Thousand Dollars ($500,000.00) and which is legally qualified to accept custody of securities;

5. "Federal Reserve book-entry system" shall mean the computerized systems sponsored by the United States Department of the Treasury and certain agencies and instrumentalities of the United States for holding and transferring securities of the United States government and the agencies and instrumentalities, respectively, in Federal Reserve Banks through banks which are members of the Federal Reserve System or which otherwise have access to the computerized systems; and

6. "Securities" shall mean certificated securities and uncertificated securities as defined in paragraphs (4) and (18) of subsection (a) of Section 8-102 of Title 12A of the Oklahoma Statutes.

B. 1. a. Notwithstanding any other provision of law, a domestic insurance company may deposit or arrange for the deposit of securities held in or purchased for its general account and its separate accounts in a clearing corporation or the Federal Reserve book-entry system. When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of the clearing corporation with any other securities deposited with the clearing corporation by any person, regardless of the ownership of the securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations. The records of any agent through which an insurance company holds securities in the Federal Reserve book-entry system, and the records of any custodian banks through which an insurance company holds securities in a clearing corporation, shall at all times show that the securities are held for the insurance company and for which accounts thereof.

b. Ownership of, and other interests in, the securities may be transferred by bookkeeping entry on the books of the clearing corporation or in the Federal Reserve book-entry system without, in either case, physical delivery of certificates representing such securities; and

2. Notwithstanding any other provision of law, securities eligible for deposit under the Oklahoma Insurance Code relating to deposit of securities by an insurance company as a condition of commencing or continuing to do an insurance business in this state may be deposited with a clearing corporation or held in the Federal Reserve book-entry system and used to meet the deposit requirements under the Oklahoma Insurance Code and shall be under the control of the Commissioner and shall not be withdrawn by the insurance company without the approval of the Commissioner. Any insurance company holding securities in this manner shall provide to the Commissioner evidence issued by its custodian or an agent through which the insurance company has deposited securities with a clearing corporation or held in the Federal Reserve book-entry system, respectively, in order to establish that the securities are actually recorded in an account in the name of the custodian or agent and evidence that the records of the custodian or agent reflect that the securities are held subject to the order of the Commissioner.

C. 1. An insurance company may, by written agreement with a custodian, provide for the custody of its securities with a custodian, which securities may be held by the custodian or its agent or in a clearing corporation or in the Federal Reserve book-entry system. Securities so held, whether held by the custodian or its agent or in a clearing corporation or in the Federal Reserve book-entry system, are referred to herein as "custodied securities";

2. Any such agreement shall be in writing and shall be authorized by a resolution of the board of directors of the insurance company or of an authorized committee thereof. The terms of the agreement shall comply with the following:

a. certified securities held by the custodian shall be held either separate from the securities of the custodian and of all of its other customers or in a fungible bulk of securities as part of a Filing of Securities by Issue (FOSBI) arrangement,

b. securities held in a fungible bulk by the custodian and securities in a clearing corporation or in the Federal Reserve book-entry system shall be separately identified on the custodian's official records as being owned by the insurance company. The records shall identify which custodied securities are held by the custodian or by its agent and which securities are in a clearing corporation or in the Federal Reserve book-entry system. If the securities are in a clearing corporation or in the Federal Reserve book-entry system, the records shall also identify where the securities are and if in a clearing corporation, the name of the clearing corporation and if through an agent, the name of the agent,

c. all custodied securities that are registered shall be registered in the name of the company or in the name of a nominee of the company or in the name of the custodian or its nominee or, if in a clearing corporation, in the name of the clearing corporation or its nominee,

d. custodied securities shall be held subject to the instructions of the insurance company and shall be withdrawable upon the demand of the insurance company, except that custodied securities used to meet the deposit requirements set forth in the Insurance Code shall, to the extent required by the Code, be under the control of the Commissioner and shall not be withdrawn by the insurance company without the approval of the Commissioner,

e. the custodian shall be required to send or cause to be sent to the insurance company a confirmation of all transfers of custodied securities to or from the account of the insurance company. In addition, the custodian shall be required to furnish the insurance company with reports of holdings of custodied securities at such times and containing such information as may be reasonably requested by the insurance company,

f. during the course of the custodian's regular business hours, any officer or employee of the insurance company, any independent accountant selected by the insurance company, and any representative of an appropriate regulatory body shall be entitled to examine, on the premises of the custodian, the custodian's records relating to custodied securities, but only upon furnishing the custodian with written instructions to that effect from an appropriate officer of the insurance company,

g. the custodian and its agents shall be required to send to the insurance company

(1) all reports which they receive from a clearing corporation or the Federal Reserve book-entry system on their respective systems of internal accounting control, and

(2) any reports prepared by outside auditors on the custodian's or its agents' internal accounting control of custodied securities that the insurance company may reasonably request,

h. the custodian shall maintain records sufficient to determine and verify information relating to custodied securities that may be reported in the insurance company's annual statement and supporting schedules and information required in any audit of the financial statements of the insurance company,

i. the custodian shall provide, upon written request from an appropriate officer of the insurance company, the appropriate affidavits, substantially in the form provided in subsections F, G and H of this section, with respect to custodied securities,

j. the custodian shall be obligated to indemnify the insurance company for any loss of custodied securities occasioned by the negligence or dishonesty of the custodian's officers and employees, or burglary, robbery, holdup, theft or mysterious disappearance, including loss by damage or destruction,

k. in the event that there is a loss of custodied securities for which the custodian shall be obligated to indemnify the insurance company as provided in subparagraph j of this paragraph, the custodian shall promptly replace the securities or the value thereof and the value of any loss of rights or privileges resulting from said loss of securities,

l. the agreement may provide that the custodian will not be liable for any failure to take any action required to be taken under the agreement in the event and to the extent that the taking of such action is prevented or delayed by war (whether declared or not and including existing wars), revolution, insurrection, riot, civil commotion, act of God, accident, fire, explosion, stoppage of labor, strikes or other differences with employees, laws, regulations, orders or other acts of any governmental authority, or any other cause whatever beyond its reasonable control, and

m. in the event that the custodian gains entry in a clearing corporation or in the Federal Reserve book-entry system through an agent, there shall be an agreement between the custodian and the agent under which the agent shall be subject to the same liability for loss of custodied securities as the custodian, provided, however, that, if the agent shall be subject to regulation under the laws of a jurisdiction which is different from the jurisdiction the laws of which regulate the custodian, the Commissioner may accept a standard of liability applicable to the agent which is different from the standard of liability applicable to the custodian.

D. A company may loan stocks or obligations held by it pursuant to the provisions of this act to a broker-dealer registered under the Securities and Exchange Act of 1934 or a member bank. The loan must be evidenced by a written agreement which provides that:

1. The loan will be fully collateralized by cash or obligations issued or guaranteed by the United States or an agency or an instrumentality thereof, and the collateral will be adjusted each business day during the term of the loan to maintain the required collateralization in the event of market value changes in the loaned securities or collateral;

2. The loan may be terminated by the company at any time, and the borrower will return the loaned stocks or obligations or their equivalent within five (5) business days after termination; and

3. The company has the right to retain the collateral or use the collateral to purchase investments equivalent to the loaned securities if the borrower defaults under the terms of the agreement and the borrower remains liable for any losses and expenses incurred by the company due to default that are not covered by the collateral.

E. An investment may consist of an individual interest in a pool of obligations or a fractional interest in a single obligation if the certificate of participation or interest or the confirmation of participation or interest in the investment shall be issued in the name of the company or the name of the custodian bank or the nominee of either and the certificate or confirmation must, if held by a custodian bank, be kept separate and apart from the investments of others so that at all times the participation may be identified as belonging solely to the company making the investment.

F. The following shall be substantially the form of custodian affidavit for use by a custodian bank where securities entrusted to its care have not been redeposited elsewhere:

FORM A

CUSTODIAN AFFIDAVIT

(For use by a custodian bank where securities entrusted to its care have not been redeposited elsewhere.)

STATE OF _____________________)

) ss

COUNTY OF ____________________)

________________________, being duly sworn deposes and says that he or she is _______________ of ___________________, a banking corporation organized under and pursuant to the laws of the _______ with the principal place of business at __________________________ (hereinafter called the "bank"):

That his or her duties involve supervision of activities of the bank as custodian and records relating thereto;

That the bank is custodian for certain securities of _______________ _____________________ having a place of business at ________________ _____________________________________________ (hereinafter called the "insurance company") pursuant to an agreement between the bank and the insurance company;

That the schedule attached hereto is a true and complete statement of securities (other than those caused to be deposited with The Depository Trust Company or like entity or a Federal Reserve Bank under the Federal Reserve book-entry procedure) which were in the custody of the bank for the account of the insurance company as of the close of business on _______________; that, unless otherwise indicated on the schedule, the next maturing and all subsequent coupons were then either attached to coupon bonds or in the process of collection; and that, unless otherwise shown on the schedule, all such securities were in bearer form or in registered form in the name of the insurance company or its nominee or of the bank or its nominee, or were in the process of being registered in such form;

That the bank as custodian has the responsibility for the safekeeping of the securities as that responsibility is specifically set forth in the agreement between the bank as custodian and the insurance company; and

That, to the best of his or her knowledge and belief, unless otherwise shown on the schedule, the securities were the property of the insurance company and were free of all liens, claims, or encumbrances whatsoever.

Subscribed and sworn to

before me this ______ day

of________19__

_____________________(L.S.)

Vice President (or other

authorized officer)

G. The following shall be substantially the form of custodian affidavit for use in instances where a custodian bank maintains securities on deposit with The Depository Trust Company or like entity:

FORM B

CUSTODIAN AFFIDAVIT

(For use in instances where a custodian bank maintains securities on deposit with The Depository Trust Company or like entity.)

STATE OF _____________________)

) ss

COUNTY OF ____________________)

That his or her duties involve supervision of activities of the bank as custodian and records relating thereto;

That the bank is custodian for certain securities of _______________ with a place of business at _________________ (hereinafter called the "insurance company") pursuant to an agreement between the bank and the insurance company;

That the bank has caused certain of such securities to be deposited with _______________________ and that the schedule attached hereto is a true and complete statement of the securities of the insurance company of which the bank was custodian as of the close of business on______________________________, and which were so deposited on such date;

That the bank as custodian has the responsibility for the safekeeping of the securities both in the possession of the bank or deposited with __________ as is specifically set forth in the agreement between the bank as custodian and the insurance company; and

Subscribed and sworn to

before me this _____day

of _______19__

_____________________(L.S.)

Vice President (or other

authorized officer)

H. The following shall be substantially the form of custodian affidavit for use where ownership is evidenced by book-entry at a Federal Reserve Bank:

FORM C

CUSTODIAN AFFIDAVIT

(For use where ownership is evidenced by book-entry at a Federal Reserve Bank.)

STATE OF _____________________)

) ss

COUNTY OF ____________________)

________________________, being duly sworn deposes and says that he is _______________ of the ________________, a banking corporation organized under and pursuant to the laws of the _________ with the principal place of business at ___________________ (hereinafter called the "bank"):

That his or her duties involve supervision of activities of the bank as custodian and records relating thereto;

That the bank is custodian for certain securities of _____________ with a place of business at ____________________ (hereinafter called the "insurance company") pursuant to an agreement between the bank and the insurance company;

That it has caused certain securities to be credited to its

book-entry account with the Federal Reserve Bank of ______________ under the Federal Reserve book-entry procedure; and that the schedule attached hereto is a true and complete statement of the securities of the insurance company of which the bank was custodian as of the close of business on __________ which were in a "General" book-entry account maintained in the name of the bank on the books and records of the Federal Reserve Bank of __________________ at that date;

That the bank has the responsibility for the safekeeping of the securities both in the possession of the bank or in the "General" book-entry account as is specifically set forth in the agreement between the bank as custodian and the insurance company; and

Subscribed and sworn to

before me this ____ day

of __________ 19__

__________________(L.S.)

Vice President (or other

authorized officer)

Added by Laws 1983, c. 99, § 1, emerg. eff. May 9, 1983. Amended by Laws 1999, c. 141, § 4, eff. Nov. 1, 1999.

§36-1629. Guaranteed or reinsured student loans.

Any insurer may make and invest in student loans guaranteed or reinsured as to principal and interest by a state or federally sponsored higher education assistance corporation, to the extent of such guaranty or reinsurance, or by a private nonprofit or for profit student loan insurance guarantor or reinsurer which has net worth of not less than Thirty-five Million Dollars ($35,000,000.00) and which has a financial rating of BBB or better from Standard and Poor's or Moody's rating agencies. Any investment pursuant to this section shall not exceed, except with the consent of the Insurance Commissioner of this state, twenty-five percent (25%) of the insurer's net admitted assets based upon the insurer's most recent financial statement filed with the Insurance Commissioner's office.

Added by Laws 1994, c. 142, § 1, eff. Sept. 1, 1994. Amended by Laws 1997, c. 418, § 87, eff. Nov. 1, 1997; Laws 2000, c. 100, § 1, eff. July 1, 2000.

§361651. Definitions.

As used in this act, the following terms shall have the respective meanings hereinafter set forth, unless the context shall otherwise require:

(a) Affiliate. An "affiliate" of, or person "affiliated" with, the specific person, is a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

(b) Commissioner. The term "Commissioner" shall mean the Insurance Commissioner, his deputies, or the Insurance Department, as appropriate.

(c) Control. The term "control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact in the manner provided in Section 4(i). The Commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

(d) Insurance Holding Company System. An "insurance holding company system" consists of two or more affiliated persons, one or more of which is an insurer.

(e) Insurer. The term "insurer" shall have the same meaning as set forth in 36 Oklahoma Statutes, Section 103, except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.

(f) Person. A "person" is an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but shall not include any securities broker performing no more than the usual and customary broker's function.

(g) Securityholder. A "securityholder" of a specified person is one who owns any security of such person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing.

(h) Subsidiary. A "subsidiary" of a specified person is an affiliate controlled by such person directly, or indirectly, through one or more intermediaries.

(i) Voting Security. The term "voting security" shall include any security convertible into or evidencing a right to acquire a voting security.

Laws 1970, c. 166, § 1, emerg. eff. April 9, 1970; Laws 1992, c. 178, § 2, eff. Sept. 1, 1992.

§361652. Subsidiaries of insurer.

Any domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries to the extent permitted by Article 16 of the Insurance Code. Such subsidiaries may conduct any type of business or businesses and their authority to do so will not be limited by the fact that they are subsidiaries of a domestic insurer.

Laws 1970, c. 166, § 2, emerg. eff. April 9, 1970.

§361653. Acquisition of control of or merger with domestic insurer.

A. No person other than the issuer shall make a tender offer for, request or invite tenders of, or enter into any agreement to exchange, seek to acquire or acquire, in the open market or otherwise, any voting security of a domestic insurer or of any other person controlling a domestic insurer if, after the consummation of such action, such person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of such insurer. No person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer unless, at the time any such offer, request, or invitation is made or any such agreement is entered into, or prior to the acquisition of such securities if no offer or agreement is involved, such person has filed with the Insurance Commissioner and has sent to such insurer, and such insurer has sent to its shareholders, a statement containing the information required by this section and such offer, request, invitation, agreement or acquisition has been approved by the Commissioner in the manner prescribed in subsection D of this section.

B. The statement to be filed with the Commissioner as required by subsection A of this section shall be made under oath or affirmation and shall contain the following information described in this subsection.

1. The name and address of each person, referred to in this section as the "acquiring party", by whom or on whose behalf the merger or other acquisition of control referred to in subsection A of this section is to be effected.

a. If such person is an individual:

(1) his or her principal occupation and all offices and positions held during the past five (5) years,

(2) any conviction of any felony or of a misdemeanor involving moral turpitude, dishonesty, or breach of trust, during his or her lifetime, and

(3) any conviction of crimes other than minor traffic violations and any administrative discipline imposed during the past ten (10) years.

b. If such person is not an individual:

(1) a report of the nature of its business operations during the past five (5) years or for such lesser period as such person and any predecessors thereof shall have been in existence,

(2) any conviction of any felony or of a misdemeanor involving moral turpitude, dishonesty, or breach of trust, during its existence, and any administrative discipline imposed during the past ten (10) years,

(3) an informative description of the business intended to be done by such person and such person's subsidiaries, and

(4) a list of all individuals who are or who have been selected to become directors or executive officers of such person, or who perform or will perform functions appropriate to such positions. Such list shall include for each such individual the information required by subparagraph a of this paragraph.

2. The source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction wherein funds were or are to be obtained for any such purpose, and the identity of persons furnishing such consideration; provided, however, that where a source of such consideration is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential, if the person filing such statement so requests.

3. Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five (5) fiscal years for each such acquiring party, or for such lesser period as such acquiring party and any predecessors thereof shall have been in existence, and similar unaudited information as of a date not earlier than ninety (90) days prior to the filing of the statement. However, the Commissioner has the discretionary ability to waive the audit requirements set forth in this section based upon review of substantially similar financial disclosure statements submitted by the acquiring party.

4. Any plans or proposals which each acquiring party may have to liquidate such insurer, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management.

5. The number of shares of any security referred to in subsection A of this section which each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement, or acquisition referred to in subsection A of this section, including any requested documentary evidence of the same, and a statement as to the method by which the fairness of the proposal was arrived at.

6. The amount of each class of any security referred to in subsection A of this section which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party.

7. A full description of any contracts, arrangements or understandings with respect to any security referred to in subsection A of this section in which any acquiring party is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies, including any required documentary evidence of the same. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered into.

8. A description of the purchase of any security referred to in subsection A of this section during the twelve (12) calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid therefor.

9. Copies of all tender offers for, advertisements for, invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in subsection A of this section, and, if distributed, of additional soliciting material relating thereto.

10. Such additional information as the Commissioner may require or by rule prescribe as necessary or appropriate for the protection of policyholders and securityholders of the insurer or in the public interest.

C. 1. If the person required to file the statement referred to in subsection A of this section is a partnership, limited partnership, limited liability company, syndicate or other group or legal entity, the Commissioner may require that the information called for by subsection B of this section shall be given with respect to each partner or each member of such entity, syndicate or group, and each person who controls such partner or member. If any such partner, member or person is a corporation or the person required to file the statement referred to in subsection A of this section is a corporation, the Commissioner may require that the information called for by subsection B of this section be given with respect to such corporation, each officer and director of such corporation, and each person who is directly or indirectly the beneficial owner of more than ten percent (10%) of the outstanding voting securities of such corporation.

2. If any material change occurs in the facts set forth in the statement filed with the Commissioner and sent to such insurer pursuant to this section, an amendment setting forth such change, together with copies of all documents and other material relevant to such change, shall be filed with the Commissioner and sent to such insurer within two (2) business days after the person learns of such change. Such insurer shall send such amendment to its shareholders.

3. If any offer, request, invitation, agreement or acquisition referred to in subsection A of this section is proposed to be made by means of a registration statement under the Securities Act of 1933, Public Law 22, or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, Public Law 291, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subsection A of this section may utilize such documents in furnishing the information called for by that statement.

D. 1. The Commissioner shall approve any merger or other acquisition of control referred to in subsection A of this section unless, after a public hearing thereon, he or she finds that:

a. after the change of control, the domestic insurer referred to in subsection A of this section would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed,

b. the effect of the merger or other acquisition of control would be substantially to lessen competition in insurance in this state or tend to create a monopoly therein,

c. the financial condition of any acquiring party is such as might jeopardize the financial stability of the insurer, or prejudice the interest of its policyholders,

d. the terms of the offer, request, invitation, agreement or acquisition referred to in subsection A of this section are unfair and unreasonable,

e. the plans or proposals which the acquiring party has to liquidate the insurer, sell its assets or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of the insurer and not in the public interest, or

f. the competence, experience and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders or the public to permit the merger or other acquisition of control.

2. The public hearing referred to in paragraph 1 of this subsection shall be held within thirty (30) days after the statement required by subsection A of this section is filed, or after the information required by the Commissioner has been supplied, and at least twenty (20) days' notice thereof shall be given by the Commissioner to the person filing the statement, unless the notice is waived. Not less than fourteen (14) days' notice of the public hearing shall be given by the person filing the statement to the insurer and to such other persons as may be designated by the Commissioner, unless the notice is waived in writing. The insurer shall give notice to its securityholders. The Commissioner shall make a determination within thirty (30) days after the conclusion of the hearing. At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interests may be affected thereby shall have the right to present evidence, examine and crossexamine witnesses, and offer oral and written arguments. All discovery proceedings shall be concluded not later than three (3) days prior to the commencement of the public hearing, except by consent.

3. The Commissioner may retain at the acquiring person's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the Commissioner's staff as may be reasonably necessary to assist the Commissioner in reviewing the proposed acquisition of control.

E. The provisions of this section shall not apply to any offer, request, invitation, agreement or acquisition which the Commissioner by order shall exempt therefrom as not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer, or as otherwise not comprehended within the purposes of this section.

F. The courts of this state are hereby vested with jurisdiction over every person not resident, domiciled, or authorized to do business in this state who files a statement with the Commissioner under this section, and over all actions involving such person arising out of violations of this section. Each such person shall be deemed to have performed acts equivalent to and constituting an appointment by such a person of the Commissioner to be the person's true and lawful agent upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of this section. Copies of all such lawful process shall be served on the Commissioner in triplicate and transmitted by certified mail with return receipt requested by the Commissioner to such person at the person's lastknown address.

Added by Laws 1970, c. 166, § 3, emerg. eff. April 9, 1970. Amended by Laws 1982, c. 258, § 1, operative Oct. 1, 1982; Laws 1986, c. 251, § 26, eff. Nov. 1, 1986; Laws 1992, c. 178, § 3, eff. Sept. 1, 1992; Laws 1993, c. 79, § 7, eff. Sept. 1, 1993; Laws 1997, c. 418, § 88, eff. Nov. 1, 1997; Laws 2001, c. 363, § 14, eff. July 1, 2001.

§361654. Registration of insurers.

(a) Registration. Every insurer which is authorized to do business in this state and which is a member of an insurance holding company system and every individual who controls an insurer shall annually register with the Insurance Commissioner, except a foreign insurer subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in this section. Any insurer which is subject to registration under this section shall register thirty (30) days after it becomes subject to registration, unless the Commissioner for good cause shown extends the time for registration, and then within such extended time. The Commissioner may require any authorized insurer which is a member of a holding company system which is not subject to registration under this section to furnish a copy to the Commissioner of the registration statement or other information filed by such insurance company with the insurance regulatory authority of domiciliary jurisdiction.

(b) Information and Form Required. Every insurer subject to registration shall file a registration statement on a form prescribed by the National Association of Insurance Commissioners, which shall contain current information about:

(i) the capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer;

(ii) the identity and relationship of every member of the insurance holding company system;

(iii) the following agreements in force, relationships subsisting, and transactions currently outstanding or which have occurred during the previous calendar year between such insurer and its affiliates:

(1) loans, other investments or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;

(2) purchases, sales or exchanges of assets;

(3) transactions not in the ordinary course of business;

(4) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;

(5) all management and service contracts and all costsharing arrangements;

(6) reinsurance agreements covering all or substantially all of one or more lines of insurance of the ceding company;

(7) dividends and other distributions to shareholders; and

(8) consolidated tax allocation agreements.

(iv) other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the Commissioner; and

(v) any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.

(c) Materiality. No information need be disclosed on the registration statement filed pursuant to subsection (b) of this section if such information is not material for the purposes of this section. Unless the Commissioner by rule, regulation or order provides otherwise, sales purchases, exchanges, loans or extensions of credit, or investments, involving onehalf of one percent (1/2 of 1%) or less of an insurer's admitted assets as of the 31st day of December next preceding shall not be deemed material for purposes of this section.

(d) Amendments to Registration Statements. Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions on amendment forms provided by the Commissioner within fifteen (15) days after the end of the month in which it learns of each such change or addition, provided, however, that subject to subsection (c) of Section 1655 of this title, each registered insurer shall so report all dividends and other distributions to shareholders within two (2) business days following the declaration thereof.

(e) Termination of Registration. The Commissioner shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system.

(f) Consolidated Filing. The Commissioner may require two or more affiliated insurers subject to registration hereunder to file a consolidated registration statement or consolidated reports amending their consolidated registration statement, so long as such consolidated filings correctly reflect the condition of and transactions between such persons.

(g) Alternative Registration. The Commissioner may allow an insurer which is authorized to do business in this state and which is a part of an insurance holding company system to register on behalf of any affiliated insurer which is required to register under subsection (a) and to file all information and material required to be filed under Section 1651 et seq. of this title.

(h) Exemptions. The provisions of this section shall not apply to any insurer, information or transaction if and to the extent that the Commissioner by rule, regulation, or order shall exempt the same from the provisions of this section.

(i) Disclaimer. Any person may file with the Commissioner a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by such insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and such insurer as well as the basis for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section which may arise out of the insurer's relationship with such person unless and until the Commissioner disallows such a disclaimer. The Commissioner shall disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support such disallowance.

(j) Summary of Registration Statement. All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.

(k) Reporting Dividends to Shareholders. Every domestic insurer that is a member of a holding company system shall report to the Insurance Department all dividends to shareholders within five (5) business days following declaration and at least ten (10) days, commencing from date of receipt by the Department, prior to payment thereof.

(l) Information of Insurers. Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer where such information is reasonably necessary to enable the insurer to comply with the provisions of this article.

(m) Violations. The failure to file a registration statement, any summary of the registration statement thereto, or any additional information required by this section within the time specified for such filing shall be a violation of this section.

Added by Laws 1970, c. 166, § 4, emerg. eff. April 9, 1970. Amended by Laws 1987, c. 175, § 18, eff. Nov. 1, 1987; Laws 1992, c. 178, § 4, eff. Sept. 1, 1992; Laws 1995, c. 86, § 1, eff. Nov. 1, 1995.

§36-1655. Standards.

(a) Transactions with Affiliates. Material transactions by registered insurers with their affiliates shall be subject to the provisions of Section 1604 of this title. The board of directors will be charged with exercising that degree of care which a prudent person would have exercised under similar circumstances. Material transactions shall be subject to the following standards:

(1) the terms shall be fair and reasonable;

(2) charges or fees for services performed shall be reasonable;

(3) expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;

(4) the books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the precise nature and details of the transaction including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties; and

(5) the insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs.

(b) Insurance Commissioner's Approval Required.

(1) The prior written approval of the Commissioner shall be required for the following transactions between a domestic insurer and its affiliates: sales, guarantees, purchases, exchanges, loans or extensions of credit or investments which, based upon an annual aggregate, involve more than three percent (3%) of the insurer's admitted assets or twentyfive percent (25%) of the insurer's surplus as regards policyholders, whichever is less, as of the latest statutory financial statement filed with the Commissioner; provided, however, that the Commissioner must either approve or disapprove within thirty (30) days after receiving written notification from the insurer of the proposed transaction and failure to disapprove the proposed transaction within thirty (30) days shall constitute approval of the transaction;

(2) The prior written approval of the Commissioner shall be required for any transactions between a domestic insurer and its affiliates where the insurer is found by the Commissioner to be in unsound condition or in such condition as to render its further transaction of insurance in Oklahoma hazardous to its policyholders or to the people of Oklahoma; provided, however, that the Commissioner must either approve or disapprove within ninety (90) days after written notification by the insurer and failure to disapprove the proposed transaction within ninety (90) days shall constitute approval of the transaction;

(3) The following transactions involving a domestic insurer and any person in its holding company system may not be entered into unless the insurer has notified the Commissioner in writing of its intention to enter into such transaction at least thirty (30) days prior thereto, or such shorter period as the Commissioner may permit, and the Commissioner has not disapproved it within such period.

(i) loans or extensions of credit to any person who is not an affiliate, where the insurer makes such loans or extensions of credit with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit provided such transactions are equal to or exceed: (a) with respect to nonlife insurers, the lesser of three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders; (b) with respect to life insurers, three percent (3%) of the insurer's admitted assets; each as of the 31st day of December next preceding;

(ii) reinsurance agreements or modifications thereto in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, as of the 31st day of December next preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurer;

(iii) all management agreements, service contracts and all cost-sharing arrangements; and

(4) The Insurance Commissioner shall promulgate reasonable rules and regulations governing the form and content of the notice required pursuant to subsection (b) of this section.

(c) Nothing in this section shall supersede approvals granted under other sections of this title or transactions occurring prior to the effective date of this section.

(d) Adequacy of Surplus. For purposes of Section 1651 et seq. of this title, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered:

(1) the size of the insurer as measured by its assets, capital and surplus, reserves, premium writing, insurance in force and other appropriate criteria;

(2) the extent to which the insurer's business is diversified among the several lines of insurance;

(3) the number and size of risks insured in each line of business;

(4) the extent of the geographical dispersion of the insurer's insured risks;

(5) the nature and extent of the insurer's reinsurance program;

(6) the quality, diversification, and liquidity of the insurer's investment portfolio;

(7) the recent past and projected future trend in the size of the insurer's investment portfolio;

(8) the surplus as regards policyholders maintained by other comparable insurers;

(9) the adequacy of the insurer's reserves;

(10) the quality and liquidity of investments in subsidiaries made pursuant to Section 1652 of this title. The Commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in his judgment such investment so warrants; and

(11) the quality of the insurer's earnings and the extent to which the reported earnings include extraordinary items.

(e) Dividends and Other Distributions. No insurer subject to registration under Section 1654 of this title shall pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until (i) thirty (30) days after the Commissioner has received notice of the declaration thereof and has not within such period disapproved such payment, or (ii) the Commissioner shall have approved such payment within such thirty-day period.

For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve months exceeds the greater of (i) ten percent (10%) of such insurer's surplus as regards policyholders as of the 31st day of December next preceding, or (ii) the net gain from operations of such insurer, if such insurer is a life insurer, or the net income, if such insurer is not a life insurer, not including realized capital gains, for the twelve-month period ending the 31st day of December next preceding, but shall not include pro rata distributions of any class of the insurer's own securities.

Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution which is conditional upon the Commissioner's approval thereof, and such a declaration shall confer no rights upon shareholders until (i) the Commissioner has approved the payment of such dividend or distribution or (ii) the Commissioner has not disapproved such payment within the thirty-day period referred to above.

Added by Laws 1970, c. 166, § 5, emerg. eff. April 9, 1970. Amended by Laws 1988, c. 94, § 1, eff. Nov. 1, 1988; Laws 1992, c. 178, § 5, eff. Sept. 1, 1992; Laws 1995, c. 86, § 2, eff. Nov. 1, 1995; Laws 2005, c. 129, § 13, eff. Nov. 1, 2005.

§361656. Examination.

(a) Power of Commissioner. In addition to the powers which the Commissioner has under Sections 309.1 through 309.7 of the Insurance Code, relating to the examination of insurers, the Commissioner shall also have the power to order any insurer registered under Section 1654 of this title to produce such records, books, or other information papers in the possession of the insurer or its affiliates as shall be necessary to verify the information required to be contained in the insurer's registration statement, and any additional information pertinent to transactions between the insurer and its affiliates. In the event such insurer fails to comply with such order, the Commissioner shall have the power to examine such affiliates to obtain such information at the expense of such noncomplying insurer.

(b) Use of Consultants. The Commissioner may retain at the registered insurer's expense such attorneys, actuaries, accountants and other experts not otherwise a part of the Commissioner's staff as shall be reasonably necessary to assist in the conduct of the examination under subsection (a) above. Any persons so retained shall be under the direction and control of the Commissioner and shall act in a purely advisory capacity.

(c) Expenses. Each registered insurer producing for examination records, books and papers pursuant to subsection (a) above shall be liable for and shall pay the expense of such examination in accordance with Section 309.6 of the Insurance Code.

Laws 1970, c. 166, § 6, emerg. eff. April 9, 1970; Laws 1992, c. 178, § 6, eff. Sept. 1, 1992.

§361657. Confidential treatment.

All information, documents and copies thereof obtained by or disclosed to the Commissioner or any other person in the course of an examination or investigation made pursuant to this act and all information reported pursuant to this title shall be given confidential treatment and shall not be made public by the Commissioner or any other person, except to insurance departments of other states, or the Oklahoma Securities Commission, without the prior written consent of the insurer to which it pertains unless the Commissioner, after giving the insurer and its affiliates who would be affected thereby, notice and opportunity to be heard, determines that the interests of policyholders, shareholders or the public will be served by the publication thereof, in which event he may publish all or any part thereof in such manner as he may deem appropriate. Provided that said information, documents and copies shall be subject to subpoena.

The provisions of this section shall not prohibit an investigating committee, duly authorized by the Senate or House of Representatives, from proceeding to carry out the instructions given the committee, and all information requested by said committee shall be duly furnished. Information received by such committee or legislative body shall receive such information in a confidential nature, until such time as it has determined that the public interest would be served by the release and/or publication thereof.

Laws 1970, c. 166, § 7, emerg. eff. April 9, 1970; Laws 1976, c. 7, § 1, emerg. eff. Feb. 11, 1976.

§36-1658. Repealed by Laws 1992, c. 178, § 41, eff. Sept. 1, 1992.

§36-1658.1. Injunctions - Voting of securities prohibited - Sequestration of voting securities.

(a) Injunctions. Whenever it appears to the Commissioner that any insurer or any director, officer, employee or agent thereof has committed or is about to commit a violation of Article 16A of the Insurance Code or of any rule, regulation or order issued by the Commissioner hereunder, the Commissioner may apply to the district court of Oklahoma County for an order enjoining such insurer or such director, officer, employee or agent thereof from violating or continuing to violate Article 16A of the Insurance Code or any such rule, regulation or order, and for such other equitable relief as the nature of the case and the interest of the insurer's policyholders, creditors and shareholders or the public may require.

(b) Voting of securities, when prohibited. No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of the provisions of this article or of any rule, regulation or order issued by the Commissioner hereunder may be voted at any shareholder's meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though such securities were not issued and outstanding; but no action taken at any such meeting shall be invalidated by the voting of such securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. If an insurer or the Commissioner has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of Article 16A of the Insurance Code or of any rule, regulation or order issued by the Commissioner hereunder, the insurer or the Commissioner may apply to the district court of Oklahoma County to enjoin any offer, request, invitation, agreement or acquisition made in contravention of Section 1653 of Title 36 of the Oklahoma Statutes or any rule, regulation or order issued by the Commissioner thereunder to enjoin the voting of any security so acquired, to void any vote of such security already cast at any meeting of shareholders and for such other equitable relief as the nature of the case and the interest of the insurer's policyholders, creditors and shareholders or the public may require.

(c) Sequestration of voting securities. In any case where a person has acquired or is proposing to acquire any voting securities in violation of Article 16A of the Insurance Code or any rule, regulation or order issued by the Commissioner hereunder, the district court of Oklahoma County may, on such notice as the court deems appropriate, upon the application of the insurer or the Commissioner, seize or sequester any voting securities of the insurer owned directly or indirectly by such person, and issue such order with respect thereto as may be appropriate to effectuate the provisions of Article 16A of the Insurance Code. Notwithstanding any other provisions of law, for the purposes of Article 16A of the Insurance Code the sites of the ownership of the securities of domestic insurers shall be deemed to be in this state.

Added by Laws 1992, c. 178, § 7, eff. Sept. 1, 1992.

§36-1658.2. Failure to file - Unlawful transactions or investments - False statements or reports - Penalties - Cease and desist orders - Criminal prosection.

A. Any insurer failing, without just cause, to file any registration statement, summary, or other information as required in Article 16A of the Insurance Code shall be required, after notice and opportunity for hearing, to pay a penalty of Two Hundred Dollars ($200.00) for each day's delay, to be recovered by the Insurance Commissioner and the penalty so recovered shall be paid into the General Revenue Fund of this state. The maximum penalty under this section shall be Twenty Thousand Dollars ($20,000.00). The Commissioner may reduce the penalty if the insurer demonstrates to the Commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

B. Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly shall permit any of the officers or agents of the insurer to engage in transactions or make investments which have not been properly reported or submitted pursuant to Section 1654 or subsection (e) of Section 1655 of this title, or which violate Article 16A of the Insurance Code, shall pay, in their individual capacity, a civil forfeiture of not more than Five Thousand Dollars ($5,000.00) per violation, after notice and opportunity for hearing before the Commissioner. In determining the amount of the civil forfeiture, the Commissioner shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require.

C. Whenever it appears to the Commissioner that any insurer subject to Article 16A of the Insurance Code or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract which is subject to Section 1655 of this title and which would not have been approved had such approval been requested, the Commissioner may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and opportunity for hearing, the Commissioner may also order the insurer to void any such contracts and restore the status quo if such action is in the best interest of the policyholders, creditors or the public.

D. Whenever it appears to the Commissioner that any insurer or any director, officer, employee or agent thereof has committed a willful violation of Article 16A of the Insurance Code, the Commissioner may submit such information to the district attorney for Oklahoma County for appropriate action. Any insurer which willfully violates Article 16A of the Insurance Code may be fined not more than Fifty Thousand Dollars ($50,000.00). Any individual convicted of willfully violating a provision of Article 16A of the Insurance Code may be fined in the individual capacity of such person not more than Twenty-five Thousand Dollars ($25,000.00) or be imprisoned for not more than three (3) years or be subject to both such fine and imprisonment.

E. Any officer, director or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the Commissioner in the performance of his or her duties under Article 16A of the Insurance Code, upon conviction thereof, shall be imprisoned for not more than three (3) years or fined Twenty-five Thousand Dollars ($25,000.00) or be subject to both such fine and imprisonment. Any fines imposed shall be paid by the officer, director or employee in the individual capacity of such person.

Added by Laws 1992, c. 178, § 8, eff. Sept. 1, 1992. Amended by Laws 1997, c. 418, § 89, eff. Nov. 1, 1997.

NOTE: Laws 1997, c. 133, § 448 repealed by Laws 1999, 1st Ex.Sess., c. 5, § 452, eff. July 1, 1999.

NOTE: Laws 1998, 1st Ex.Sess., c. 2, § 23 amended the effective date of Laws 1997, c. 133, § 448 from July 1, 1998, to July 1, 1999.

§36-1659. Repealed by Laws 1992, c. 178, § 41, eff. Sept. 1, 1992.

§36-1659.1. Violations threatening insolvency of domestic insurer - Possession taken by Commissioner.

Whenever it appears to the Commissioner that any person has committed a violation of Article 16A of the Insurance Code which so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders or the public, then the Commissioner may proceed as provided in Section 1901 et seq. of Title 36 of the Oklahoma Statutes to take possession of the property of such domestic insurer and to conduct the business thereof.

Added by Laws 1992, c. 178, § 9, eff. Sept. 1, 1992.

§36-1659.2. Recovery of distributions by receiver - Liability.

(a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under such order shall have a right to recover on behalf of the insurer, (i) from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock, or (ii) any payment in the form of a bonus, termination settlement or extraordinary lump-sum salary adjustment made by the insurer or its subsidiary or subsidiaries to a director, officer or employee, where the distribution or payment pursuant to (i) or (ii) is made at any time during the one (1) year preceding the petition for liquidation, conservation or rehabilitation, as the case may be, subject to the limitations of subsections (b), (c) and (d) of this section.

(b) No such distribution shall be recoverable if the parent or affiliate shows that when paid such distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that such distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.

(c) Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time such distributions were paid shall be liable up to the amount of distributions or payments under subsection (a) of this section such person received. Any person who otherwise controlled the insurer at the time such distributions were declared shall be liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.

(d) The maximum amount recoverable under this section shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.

(e) To the extent that any person liable under subsection (c) of this section is insolvent or otherwise fails to pay claims due from it pursuant to such subsection, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid, shall be jointly and severally liable for any resulting deficiency in the amount recovered from such parent corporation or holding company or person who otherwise controlled it.

Added by Laws 1992, c. 178, § 10, eff. Sept. 1, 1992.

§36-1659.3. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§361660. Powers, remedies, procedures and penalties as additional.

The powers, remedies, procedures and penalties provided in this act shall be in addition to, and not in limitation of, any other powers, remedies, procedures and penalties provided by law.

Laws 1970, c. 166, § 10, emerg. eff. April 9, 1970.

§361661. State Insurance Commissioner Revolving Fund.

The initial fee for registration required by the provisions of Section 1654 of this title shall be Two Hundred Fifty Dollars ($250.00) and an additional fee of One Hundred Dollars ($100.00) shall be payable on May 1 of each calendar year thereafter so long as such registration continues. All monies collected by the Commissioner from the fees herein provided for shall be deposited, upon receipt, with the State Treasurer, who shall place the same to the credit of the State Insurance Commissioner Revolving Fund, under and subject exclusively to the control of the Commissioner for the purpose of fulfilling and accomplishing the conditions and purposes of this act.

Laws 1970, c. 166, § 11, emerg. eff. April 9, 1970; Laws 1984, c. 215, § 5, operative June 30, 1984; Laws 1992, c. 178, § 12, eff. Sept. 1, 1992.

§361662. Inconsistent laws Antitrust laws.

All laws and parts of laws of this state inconsistent with this act are hereby superseded with respect to matters covered by this act. Provided, however, nothing in this act shall exclude an insurance holding company from the state antitrust laws.

Laws 1970, c. 166, § 12, emerg. eff. April 9, 1970.

§36-1671. Short title.

Sections 13 through 19 of this act may be cited as the "Business Transacted with Producer Controlled Insurer Act".

Added by Laws 1992, c. 178, § 13, eff. Sept. 1, 1992.

§36-1672. Definitions.

As used in the Business Transacted with Producer Controlled Insurer Act:

1. "Accredited State" means a state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established from time to time by the National Association of Insurance Commissioners (NAIC);

2. "Control" or "Controlled" has the meaning ascribed in subsection (c) of Section 1651 of Title 36 of the Oklahoma Statutes;

3. "Controlled Insurer" means a licensed insurer which is controlled, directly or indirectly, by a producer;

4. "Controlling Producer" means a producer who, directly or indirectly, controls an insurer;

5. "Licensed Insurer" or "Insurer" means any person, firm, association or corporation duly licensed to transact a property/casualty insurance business in this state. The following, inter alia, are not licensed insurers for the purposes of this act:

a. all risk retention groups as defined in the Superfund Amendments Reauthorization Act of 1986, Pub. L. No. 99-499,100 Stat. 1613 (1986) and the Risk Retention Act, 15 U.S.C. Section 3901 et seq. (1982 & Supp. 1986) and Section 6451 et seq. of Title 36 of the Oklahoma Statutes,

b. all residual market pools and joint underwriting authorities or associations, and

c. all captive insurers. For the purposes of the Business Transacted with Producer Controlled Insurer Act, captive insurers are insurance companies owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, insurance organizations owned by the insureds whose exclusive purpose is to insure risks to member organizations and/or group members and their affiliates; and

6. "Producer" means an insurance broker or brokers or any other person, firm, association or corporation, when, for any compensation, commission or other thing of value, such person, firm, association or corporation acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association or corporation.

Added by Laws 1992, c. 178, § 14, eff. Sept. 1, 1992.

§36-1673. Applicability of Act.

The Business Transacted with Producer Controlled Insurer Act shall apply to licensed insurers as defined in Section 14 of this act, either domiciled in this state or domiciled in a state that is not an accredited state having in effect a substantially similar law. All provisions of Article 16A of the Insurance Code, to the extent they are not superseded by this act, shall continue to apply to all parties within holding company systems subject to this act.

Added by Laws 1992, c. 178, § 15, eff. Sept. 1, 1992.

§36-1674. Required contract provisions - Producers and insurers affected - Audit Committees - Reporting requirements.

A. Applicability of section.

1. The provisions of this section shall apply if, in any calendar year, the aggregate amount of gross written premium on business placed with a controlled insurer by a controlling producer is equal to or greater than five percent (5%) of the admitted assets of the controlled insurer, as reported in the controlled insurers' quarterly statement filed as of September 30 of the prior year.

2. Notwithstanding paragraph 1 of this subsection, the provisions of this section shall not apply if:

a. the controlling producer:

(1) places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurer's holding company system, or the controlled insurer's parent, affiliate or subsidiary and receives no compensation based upon the amount of premiums written in connection with such insurance, and

(2) accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds, and

b. the controlled insurer, except for insurance business written through a residual market facility, accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer.

B. Required contract provisions. A controlled insurer shall not accept business from a controlling producer and a controlling producer shall not place business with a controlled insurer unless there is a written contract between the controlling producer and the insurer specifying the responsibilities of each party, which contract has been approved by the board of directors of the insurer and contains the following minimum provisions:

1. The controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination;

2. The controlling producer shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to, the controlling producer;

3. The controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums or installments thereof collected shall be remitted no later than ninety (90) days after the effective date of any policy placed with the controlled insurer under this contract;

4. All funds collected for the controlled insurer's account shall be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System, in accordance with the provisions of the insurance law as applicable. However, funds of a controlling producer not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling producer's domiciliary jurisdiction;

5. The controlling producer shall maintain separately identifiable records of business written for the controlled insurer;

6. The contract shall not be assigned in whole or in part by the controlling producer;

7. The controlled insurer shall provide the controlling producer with its underwriting standards, rules and procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to the standards, rules, procedures, rates and conditions. The standards, rules, procedures, rates and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer;

8. The rate and terms of the controlling producer's commissions, charges or other fees and the purposes for those charges or fees. The rates of the commissions, charges and other fees shall be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this paragraph and paragraph 7 of this subsection, examples of "comparable business" include the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business;

9. If the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then such compensation shall not be determined and paid until at least five (5) years after the premiums on liability insurance are earned and at least one (1) year after the premiums are earned on any other insurance. In no event shall the commissions be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified pursuant to subsection C of this section;

10. A limit on the controlling producer's writings in relation to the controlled insurer's surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling producer shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and

11. The controlling producer may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts of percentages that may be reinsured and commission schedules.

C. Audit Committee. Every controlled insurer shall have an Audit Committee of the Board of Directors composed of independent directors. The Audit Committee shall annually meet with management, the insurer's licensed public accountant or a certified public accountant holding a permit to practice in this state and an independent casualty actuary or other independent loss reserve specialist acceptable to the Commissioner to review the adequacy of the insurer's loss reserves.

D. Reporting requirements.

1. In addition to any other required loss reserve certification, the controlled insurer shall annually, on April 1 of each year, file with the Commissioner an opinion of an independent casualty actuary, or such other independent loss reserve specialist acceptable to the Commissioner, reporting loss ratios for each line of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year-end, including incurred but not reported losses, on business placed by the producer; and

2. The controlled insurer shall annually report to the Commissioner the amount of commissions paid to the producer, the percentage such amount represents of the net premiums written and comparable amounts and percentage paid to noncontrolling producers for placements of the same kinds of insurance.

Added by Laws 1992, c. 178, § 16, eff. Sept. 1, 1992.

§36-1675. Notice to insured.

The producer, prior to the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship between the producer and the controlled insurer, except that, if the business is placed through a subproducer who is not a controlling producer, the controlling producer shall retain in his records a signed commitment from the subproducer that the subproducer is aware of the relationship between the insurer and the producer and that the subproducer has or will notify the insured.

Added by Laws 1992, c. 178, § 17, eff. Sept. 1, 1992.

§36-1676. Powers of Commissioner or receiver - Civil actions.

A. 1. If the Commissioner believes that the controlling producer or any other person has not materially complied with the Business Transacted with Producer Controlled Insurer Act, or any regulation or order promulgated hereunder, after notice and opportunity to be heard, the Commissioner may order the controlling producer to cease placing business with the controlled insurer; and

2. If it was found that because of such material noncompliance that the controlled insurer or any policyholder thereof has suffered any loss or damage, the Commissioner may maintain a civil action or intervene in an action brought by or on behalf of the insurer or policyholder for recovery of compensatory damages for the benefit of the insurer or policyholder or other appropriate relief.

B. If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to Section 1903 of Title 36 of the Oklahoma Statutes, and the receiver appointed under that order believes that the controlling producer or any other person has not materially complied with this act, or any regulation or order promulgated hereunder, and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer.

C. Nothing contained in this section shall affect the right of the Commissioner to impose any other penalties provided for in the Insurance Code.

D. Nothing contained in this section is intended to or shall in any manner alter or affect the rights of policyholders, claimants, creditors or other third parties.

Added by Laws 1992, c. 178, § 18, eff. Sept. 1, 1992.

§36-1677. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§361701. Deposits of insurers.

The State Treasurer of Oklahoma shall accept and hold in trust, when made through the Insurance Commissioner, deposits of securities or funds by insurers as follows:

1. Deposits required for authority to transact insurance in Oklahoma.

2. Deposits of domestic, foreign, or alien insurers when made pursuant to the laws of other states, provinces, and countries as prerequisite for authority to transact insurance in such state, province, or country.

3. Deposits in such additional amounts as are permitted to be made by Section 1706 of this article.

Laws 1957, p. 291, § 1701.

§361702. Purpose of deposits.

Such deposits shall be held as follows:

1. When the deposit is required for authority to transact insurance in Oklahoma the deposit shall be held for the protection of all the insurer's policyholders and/or creditors within the United States.

2. When the deposit is required pursuant to the laws of another state, province, or country, the deposit shall be held for such purposes as is required by such laws, and as specified by the Insurance Commissioner at the time the deposit is made.

3. When the deposit is required pursuant to the retaliatory provision, Section 630 of Article 6 (Authorization of Insurers and General Requirements Article), the deposit shall be held for purposes as specified in the Insurance Commissioner's order requiring the deposit.

Laws 1957, p. 291, § 1702; Laws 1969, c. 122, § 1, emerg. eff. April 3, 1969.

§361703. Assets eligible for deposit.

A. All such deposits required for authority to transact insurance business in Oklahoma shall consist of cash, negotiable, transferable certificates of deposit issued by solvent insured banks, savings and loan associations, and trust companies in Oklahoma, or a combination of the foregoing and the securities described in the following sections of Article 16 of this Code: Sections 1607, 1608, 1609 and 1620.

B. All such deposits required pursuant to the laws of another state, province, or country, or pursuant to the retaliatory provision of Section 628 of this title, shall consist of such assets as are required or permitted by such laws, or as required pursuant to such retaliatory provision.

Amended by Laws 1986, c. 251, § 27, eff. Nov. 1, 1986; Laws 1987, c. 175, § 19, eff. Nov. 1, 1987. Amended by Laws 1990, c. 297, § 2, eff. Sept. 1, 1990.

§361704. Trust companies as depositaries.

A. Upon request of the insurer, the State Treasurer may designate any solvent trust company or other solvent financial institution having trust powers domiciled in this State as the treasurer's depositary to receive and hold any such deposit. Any such deposit so held shall be at the expense of the insurer.

B. The State of Oklahoma shall be responsible for the safekeeping and return of all funds and securities deposited pursuant to this Code with the State Treasurer or in any depositary so designated by him.

Laws 1957, p. 292, § 1704.

§361705. Rights of insurer during solvency.

So long as the insurer remains solvent and complies with this Code it may:

1. Demand, receive, sue for and recover the income from the securities or cash deposited;

2. Exchange and substitute for the deposited cash or securities, or any part thereof, cash or eligible securities of equivalent or greater value; and

3. Inspect, at reasonable times, any such deposit.

Laws 1957, p. 292, § 1705.

§361706. Excess deposits.

An insurer may so deposit cash or eligible securities in an amount exceeding its deposit required or otherwise permitted under this Code, for the purpose of absorbing fluctuations in the value of securities held in its deposit, and to facilitate the exchange and substitution of securities deposited. During the solvency of the insurer any such excess deposit or part thereof shall be released to the insurer upon its request. During the insolvency of the insurer such excess deposit shall be released only as provided in Section 1707 of this article.

Amended by Laws 1985, c. 328, § 11, emerg. eff. July 29, 1985.

§361707. Release of deposits.

Any deposit made in this state under this Code shall be released and returned:

1. To the insurer upon extinguishment by reinsurance or otherwise of substantially all liability of the insurer for the security of which the deposit is held;

2. To the insurer to the extent such deposit is in excess of the amount required; or

3. Upon proper order of a court of competent jurisdiction to the receiver, conservator, rehabilitator or liquidator of the insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer's assets.

Laws 1957, p. 292, § 1707.

§361708. Release only on order.

No such release of deposited funds shall be made except upon application to and the written order of the Insurance Commissioner. The Insurance Commissioner shall have no liability for any such release of any such deposit or part thereof so made by it in good faith.

Laws 1957, p. 292, § 1708.

§361709. Deposit not subject to levy.

No judgment creditor or other claimant of an insurer shall levy upon any deposit held pursuant to this Code, or upon any part thereof; except, that such levy may be permitted if so specified in the Insurance Commissioner's order requiring the deposit pursuant to the retaliatory provision, Section 630 of Article 6 (Authorization of Insurers and General Requirements).

Laws 1957, p. 293, § 1709.

§361801. Legislative findings and purposes.

A. The Legislature finds that:

1. Existing provisions of law and present procedures are sometimes not adequate nor appropriate under all circumstances inorder to remedy the financial condition and the management of certain insurers;

2. Present laws are not adequate for the rehabilitation of insurers who voluntarily requestrehabilitation;

3. A void exists in the laws with respect to those insurers most susceptible to rehabilitation or the regaining of solvency;

4. The placing of an insurer in receivership often destroys or diminishes, or is likely to destroy ordiminish, one or more of the following values or assets:

a. the value of the insurance account or inforce business of the insurer,

b. the value of the insurer as a going concern,

c. the value of its agency force, and

d. the value of other of its assets;

5. Such values and assets should be preserved if the circumstances of the insurer's financial condition warrant an attempt to conserve or rehabilitate such insurer and such rehabilitation or conservation is otherwise feasible;

6. In the event receivership ultimately becomes necessary, preliminary supervision and conservatorship is preventive of a dissipation of assets and will thus benefit policyholders, creditors and owners;

7. Insurer delinquency, or the state's inability to properly proceed in a threatened delinquency, directly or indirectly affects other insurers by creating a lack of public confidence in insurance and in insurance companies and are destructive of public confidence in the capacity of the state to regulate insurers, and these and other harmful results of insurer delinquency are properly minimized by a further enactment designed to protect and in aid of insureds, creditors and owners; and

8. It is a proper concern of this state to attempt to correct or remedy insurer misconduct, ineptness or misfortune.

B. It is the purpose of this act to:

1. Provide for rehabilitation and conservation of insurers by authorizing and requiring the additional facility of supervision and conservatorship by the Insurance Commissioner, authorize action to resolve whether an attempt be made to rehabilitate and conserve an insurer, and avoid, if possible and feasible, the necessity of temporary or permanent receivership;

2. Provide for protection of the assets of an insurer pending determination of whether or not an insurer can be successfully rehabilitated; and

3. Provide a facility and direction for attempting the rehabilitation without immediate resort to the harsher remedy of receivership.

C. The substance and procedure of this act is, therefore, declared to be the public policy of this state and necessary to the public welfare. Such policy and welfare require the availability of the remedies provided by this law whenever circumstances warrant, and it is a condition of doing an insurance business in this state.

Laws 1975, c. 316, § 1, emerg. eff. June 12, 1975.

§36-1802. Definitions.

As used in Article 18 of the Insurance Code, the following words and terms set forth below shall have the meanings ascribed to them unless the context otherwise indicates:

1. "Commissioner" means the Insurance Commissioner of this state;

2. "Insurer" is a person, organization, association or company, authorized or unauthorized, admitted or nonadmitted, acting as an insurer, or as principal or agent of an insurer, including any domestic, foreign or alien insurer, as defined in Article 6 of the Insurance Code, and including stock companies, reciprocals or insurance exchanges, Lloyds Associations, fraternal benefit societies, stipulated premium companies, and mutual companies of all kinds, including statewide mutual assessment corporations, local mutual aids, burial associations, county mutual insurance companies and farm mutual insurance companies, and health maintenance organizations;

3. "Insolvent" or "insolvency" means any actual or threatened insurer delinquency including, but not limited to, any one or more of the following circumstances:

a. an insurer's required surplus or capital is impaired to an extent prohibited by law,

b. an insurer continues to write new business when it is not possessed of the surplus or capital required of it by law,

c. the business of any such insurer is being conducted fraudulently,

d. any such insurer attempts to dissolve or liquidate without first having made provisions, satisfactory to the Commissioner, for liabilities arising from policies of insurance issued by such insurer; or

e. the insurer has made investments in violation of the Insurance Code or has knowingly overvalued insurer's assets;

4. "Exceeded its powers" includes, but is not limited to, the following circumstances:

a. an insurer's refusal to permit examination of its books, papers, accounts, records or affairs by the Commissioner, his or her deputy or duly-commissioned examiners; or if such insurer being organized in the State of Oklahoma removes from the state such books, papers, accounts or records necessary for an examination of such insurer,

b. an insurer's failure to promptly answer inquiries authorized by Section 1905(6) of this title,

c. an insurer's neglect or refusal to observe an order of the Commissioner to make good, within the time prescribed by law, any prohibited deficiency in its capital or surplus,

d. an insurer, without first obtaining written approval of the Commissioner, by contract or otherwise:

(1) totally reinsuring its entire outstanding business, or

(2) merging or consolidating substantially its entire property or business with another approved insurer, or

e. an insurer continuing to write business after its license has been revoked or suspended; and

5. "Consent" means any agreement by the insurer to either supervision or conservatorship.

Added by Laws 1975, c. 316, § 2, emerg. eff. June 12, 1975. Amended by Laws 2003, c. 197, § 56, eff. Nov. 1, 2003.

§361803. Duties of Commissioner.

A. The Insurance Commissioner shall, if there is substantial reason to believe that any insurer is insolvent, or if any insurer's condition is such as to render the continuance of its business hazardous to the public or to holders of its policies or certificates of insurance, or it has exceeded its powers, or it has failed to comply with the law, or if such insurer gives its consent:

1. Notify the insurer of the Commissioner's determination;

2. Furnish the insurer a written list of requirements to abate the Commissioner's determination; and

3. If the Commissioner makes a further determination to supervise, notify the insurer that it is under supervision pursuant to this article.

B. Such insurer shall comply with the lawful requirements of the Commissioner and, if placed under supervision, shall have ninety (90) days from the date of notice within which to comply with the requirements of the Commissioner unless the Commissioner designates a lesser or greater period of time or unless the Commissioner determines at any time during or after the ninety-day period of time that judicial or administrative proceedings should be initiated to place such insurer in conservation, rehabilitation or liquidation proceedings or other delinquency proceedings, pursuant to Articles 18 and 19 of this title. If such insurer does not comply with such requirements, such supervision may continue until such requirements are remedied or until the Commissioner approves or completes pursuit of additional options as provided in the Insurance Code.

Added by Laws 1975, c. 316, § 3, emerg. eff. June 12, 1975. Amended by Laws 1985, c. 328, § 12, emerg. eff. July 29, 1985; Laws 2002, c. 307, § 25, eff. Nov. 1, 2002.

NOTE: A former § 1803 of this title was renumbered as § 1903 of this title by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361804. Appointment of supervisor Acts prohibited Additional requirements.

A. During any period of supervision, the Commissioner may appoint a supervisor for such insurer and provide that the insurer may not do any of the following things without the prior approval of the Commissioner or his supervisor:

1. Dispose, convey or encumber any of its assets or its business in force;

2. Withdraw funds from bank accounts;

3. Lend funds;

4. Invest funds;

5. Transfer property;

6. Incur any debt, obligation or liability;

7. Merge or consolidate with another company; or

8. Enter into any new reinsurance contract or treaty.

B. In addition, the Commissioner may require of the insurer, the following:

1. Periodic actuarial reviews;

2. That the insurer limit or cease writing certain lines of insurance.

Amended by Laws 1986, c. 251, § 28, eff. Nov. 1, 1986.

§361805. Appointment of conservator; duties.

A. If, after notice and hearing, at the conclusion of the 90day period the Commissioner determines that the insurer has failed to comply with his lawful requirements, or upon consent of the insurer, he may appoint a conservator, who shall immediately:

1. Take charge of such insurer and all of the property, books, records and effects;

2. Conduct its business; and

3. Take such other steps toward the removal of the causes and conditions which have necessitated such order, as the Commissioner may direct.

B. During the pendency of conservatorship, the conservator shall make such reports as may be required by the Commissioner, and may:

1. Take all necessary measures to preserve, protect and recover any assets or property of such insurer including claims or causes of action belonging to orwhich may be asserted by such insurer in his own name as conservator; and

2. File, prosecute and defend any legal actions which have been filed, or which may thereafter be filed, by or against such insurer, as he deems necessary to protect all of the interested parties or any property affected thereby. The conservator shall file all quarterly and annual reports required by the Oklahoma Insurance Code and in the same manner as the insurer.

C. If upon appointment of a conservator or at any time during the pendency of such conservatorship it appears that the insurer can best be protected by reinsuring the same, the conservator may, with the approval of the Commissioner, after appraisal of all assets of the insurer:

1. Reinsure all or part of such insurer's policies or certificates of insurance with any solvent insurers authorized to transact business in this state; and

2. To the extent that such insurer is possessed of reserves attributable to such policies or certificates of insurance, transfer to the reinsuring company such reserves or any portion thereof as may be required to consummate the reinsurance of such policies, which transfer of reserves shall not be deemed a preference of creditors.

D. If the Commissioner is satisfied that the insurer is not in condition to continue business in the interest of its policy or certificate holders, under the conservator, the Commissioner shall apply to the appropriate court for an order appointing him as receiver for the insurer, under the provisions of Article 18 of this title. It shall be in the discretion of the Commissioner to determine whether or not he will operate the insurance company through a conservator, as provided above, or apply for an order appointing him receiver.

E. The cost incident to the supervisor's and conservator's service shall be fixed by the Commissioner and paid from the assets and funds of the insurer as the Commissioner may determine. The cost of the supervisor's or conservator's service must be reasonable under the circumstances and shall continue no longer than necessary to preserve the assets of the insurer, certificate holders and the policyholders. All legal work required under this act shall be performed by the Commissioner, his employees or special attorneys employed by the Commissioner. The cost of such attorneys' services must be reasonable under the circumstances and shall be paid from the assets and funds of the insurer to the Commissioner.

F. The supervision or conservation may continue until the Commissioner (1) feels certain that the insurer has corrected any deficiencies that caused the supervision or conservation, or (2) a receivership has been granted by the Court.

Amended by Laws 1985, c. 328, § 13, emerg. eff. July 29, 1985.

§36-1806. Limitation on appointments.

A. The Insurance Commissioner is hereby prohibited from appointing as supervisor or conservator during any period of supervision or conservatorship:

1. Any current or former officer, director, or employee of the insurer; and

2. Any person who is related to the Commissioner within the third degree of consanguinity or affinity.

B. The Commissioner is hereby prohibited from appointing as attorney for the insurer during any period of supervision or conservatorship:

1. Any current or former officer, director, or employee of the insurer; and

2. Any person who is related to the Commissioner within the third degree of consanguinity or affinity.

Laws 1975, c. 316, § 6, emerg. eff. June 12, 1975. Amended by Laws 2000, c. 197, § 1, eff. Nov. 1, 2000.

§361807. Foreign or alien insurers.

A. In the event that the Commissioner makes any of the findings provided for in Section 3 of this act concerning any foreign or alien insurer or finds that any such insurer is not possessed of the minimum surplus or capital required by the Insurance Code of this state for similar type domestic companies, or if a conservator, rehabilitator, receiver or liquidator has been appointed in the state of domicile, or if the insurer gives its consent, the Commissioner shall have the same power and jurisdiction to appoint a supervisor or conservator as to the assets of such insurer located in this state as provided herein for domestic insurance companies.

B. In the event that any such insurer shall fail to comply with the provisions of Section 4 of this act with respect to any of its assets or policies located within this state during any 90day period of supervision, such act or violation shall constitute sufficient grounds for the immediate revocation of its certificate of authority to do business in this state and for the immediate appointment of a conservator to take charge of its assets located within this state.

C. Any supervisor or conservator appointed with respect to assets located in this state belonging to a foreign or alien insurer shall have all of the power and authority provided for in Section 5 of this act with respect to such assets located in this state and, in addition, may reinsure all or any part of such insurer's policyholders or certificate holders located within this state with insurers authorized to transact business in this state and may transfer to the reinsuring company, as reserve funds, assets or any portion thereof in his possession as may be required to consummate the reinsurance of such policies and any of such assets transferred as reserve funds shall not be deemed a preference of creditors.

Laws 1975, c. 316, § 7, emerg. eff. June 12, 1975.

§361808. Review of actions.

During the period of supervision or conservatorship, the insurer may request the Commissioner to review an action taken or proposed to be taken by the supervisor or conservator, specifying wherein the action complained of is believed not to be in the best interest of the insurer, and such request shall stay the action specified pending review of such action by the Commissioner whose decision shall be final, subject to judicial review under the Administrative Procedures Act.

Laws 1975, c. 316, § 8, emerg. eff. June 12, 1975.

§361809. Venue.

A. Except for causes of action based upon terms of any insurance policy issued by an insurer placed in conservatorship, any action filed against such insurer or its conservator during such conservatorship shall be filed in district court of Oklahoma County, Oklahoma.

B. The conservator for such insurer may file suit in district court of Oklahoma County, Oklahoma, against any person for the purpose of preserving, protecting or recovering any assets or property of such insurer, including claims or causes of action belonging to or which may be asserted by such insurer.

C. Nothing in this act shall be construed as authorizing the staying of litigation against the insurer.

Laws 1975, c. 316, § 9, emerg. eff. June 12, 1975.

§361810. Rehabilitation.

A conservator shall serve for such time as is necessary to accomplish the purposes of conservatorship under this act. If rehabilitated, the insurer shall be returned to the management or new management under such conditions as determined by the Commissioner.

Laws 1975, c. 316, § 10, emerg. eff. June 12, 1975.

§361811. Proceedings.

If the Commissioner decides to proceed under this act, the sequence of steps and proceedings shall be as set forth herein. In regard to insurer delinquencies or suspected delinquencies, however, the Commissioner may proceed and administer either under this act or under any other applicable law, or both.

Laws 1975, c. 316, § 11, emerg. eff. June 12, 1975.

§36-1812. Repealed by Laws 1997, c. 418, § 125, eff. Nov. 1, 1997.

§36-1901. Definitions.

For the purpose of Article 19 of the Insurance Code:

1. "Impairment" or "insolvency." The capital of a stock insurer, or limited stock life, accident and health insurer, the net assets of a Lloyds association, or the surplus of a mutual or reciprocal insurer, shall be deemed to be impaired and the insurer shall be deemed to be insolvent, when such insurer shall not be possessed of assets at least equal to all liabilities and required reserves together with its total issued and outstanding capital stock if a stock insurer, the net assets if a Lloyds association, or the minimum surplus if a mutual or reciprocal insurer required by this code to be maintained for the kind or kinds of insurance it is then authorized to transact.

2. "Insurer" means any person, firm, corporation, health maintenance organizations, association or aggregation of persons doing an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization or conservation by the Insurance Commissioner or the equivalent insurance supervisory official of another state.

3. "Delinquency proceeding" means any proceeding commenced against an insurer pursuant to this article for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer.

4. "State" means any state of the United States and also the District of Columbia, Alaska, Hawaii, and Puerto Rico.

5. "Foreign country" means territory not in any state.

6. "Domiciliary state" means the state in which an insurer is incorporated or organized, or in the case of an insurer incorporated or organized in a foreign country, the state in which such insurer, having become authorized to do business in such state, has at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States, and any such insurer is deemed to be domiciled in such state.

7. "Ancillary state" means any state other than a domiciliary state.

8. "Reciprocal state" means any state other than this state in which in substance and effect the provisions of the Uniform Insurers Liquidation Act, as defined in Section 1921 of this title, are in force, including the provisions requiring that the Insurance Commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer.

9. "General assets" means all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders or all policyholders and creditors in the United States shall be deemed general assets.

10. "Preferred claim" means any claim with respect to which the law of the state or of the United States accords priority of payments from the general assets of the insurer.

11. "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any general assets.

12. "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claim or claims against general assets. The term also includes claims which more than four months prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process.

13. "Receiver" means receiver, liquidator, rehabilitator, or conservator as the context may require.

Added by Laws 1957, p. 293, § 1801, operative July 1, 1957. Renumbered from Title 36, § 1801 by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 2003, c. 197, § 57, eff. Nov. 1, 2003.

§361902. Delinquency proceedings - Jurisdiction - Arbitration - Venue - Appeal.

A. The district court is vested with exclusive original jurisdiction of delinquency proceedings pursuant to the provisions of this article, and is authorized to make all necessary and proper orders to carry out the purposes of this article.

B. Except as to claims against the estate, nothing in this article shall deprive a party in interest of any contractual right to pursue arbitration of any dispute under any law. Where an insurer subject to this article is a party to an arbitration proceeding, the venue of such arbitration proceeding shall be in Oklahoma County.

C. In addition to grounds otherwise provided by law, the following persons are subject to the personal jurisdiction of the district court:

1. Current and former agents and brokers of the insurer;

2. Policy holders and reinsurers of the insurer;

3. Current and former officers, directors, managers, trustees, organizers, promoters, and any other persons in control of the insurer; and

4. Any third party administrator for an insurer and any person that maintains information for an insurer.

D. Notwithstanding any other provision in this article, this section shall not confer jurisdiction on the district court to resolve coverage disputes between guaranty associations and those asserting claims against an association resulting from the initiation of a delinquency proceeding under this article except to the extent that the guaranty association has otherwise expressly consented to such jurisdiction pursuant to a plan of rehabilitation or liquidation that resolves its obligations to covered policyholders.

E. The determination of any dispute with respect to the statutory obligations of any guaranty association by a court or administrative agency or body with jurisdiction in the state of domicile of the guaranty association shall be binding and conclusive as to the parties in a delinquency proceeding initiated in the district court, including, without limitation, the policyholders of the insurer.

F. The venue of delinquency proceedings against any insurer shall be in Oklahoma County.

G. No person other than the Insurance Commissioner, his attorney, or the Attorney General representing the Insurance Commissioner shall appear in the courts of this state requesting the appointment of a receiver or otherwise commence delinquency proceedings to take over, liquidate, rehabilitate, reorganize, or conserve an insurer and no court shall entertain a petition for the commencement of such proceedings unless the same has been filed in the name of the state on the relation of the Insurance Commissioner.

H. An appeal shall lie to the Supreme Court from an order granting or refusing rehabilitation, liquidation, or conservation, and from every other order in delinquency proceedings having the character of a final order as to the particular portion of the proceedings embraced therein.

Added by laws 1957, p. 294, § 1802. Renumbered from § 1802 of this title by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 1983, c. 68, § 11, eff. Nov. 1, 1983; Laws 1999, c. 333, § 2, eff. July 1, 1999.

§361903. Commencement of delinquency proceedings.

The Insurance Commissioner shall commence any such proceeding, his attorney or the Attorney General representing him, by an application to the court for an order directing the insurer to show cause why the Insurance Commissioner should not have the relief prayed for. On the return of such order to show cause, and after a full hearing, the court shall either deny the application or grant the application, together with such other relief as the nature of the case and the interests of policyholders, creditors, stockholders, members, subscribers, or the public may require.

Laws 1957, p. 294, § 1803; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361904. Injunctions.

A. Upon application by the Insurance Commissioner for such an order to show cause, or at any time thereafter, the court may without notice issue an injunction restraining the insurer, its officers, directors, stockholders, members, subscribers, agents and all other persons for the transaction of its business or the waste or disposition of its property until the further order of the court.

B. The court may at any time during a proceeding under this article issue such other injunctions or orders as may be deemed necessary to prevent interference with the Insurance Commissioner or the proceedings, or waste of the assets of the insurer, or the commencement or prosecution of any actions, or the obtaining of preferences, judgments, attachments or other liens, or the making of any levy against the insurer or against its assets or any part thereof.

C. Notwithstanding any other provision of law, no bond shall be required of the Insurance Commissioner as a prerequisite for the issuance of any injunction or restraining order pursuant to this section.

D. Nothing in this section shall deprive a party in interest of any contractual right to pursue arbitration of any dispute under any law, and venue shall be as provided in subsection B of Section 1902 of this title.

Added by Laws 1957, p. 294, § 1804. Renumbered from § 1804 of this title by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 1999, c. 333, § 3, eff. July 1, 1999.

§36-1905. Grounds for rehabilitation of domestic insurers.

The Insurance Commissioner may apply to the court for an order appointing the Commissioner as receiver of and directing the Commissioner to rehabilitate a domestic insurer upon one or more of the following grounds. That the insurer:

1. Is impaired or insolvent.

2. Is in a condition such that the continued operation would be hazardous to the policyholders, the creditors of the insurer, or the general public.

3. Has refused to submit its books, records, accounts or affairs to reasonable examination by the Insurance Commissioner.

4. Has failed to comply with an order of the Insurance Commissioner to make good an impairment of capital or surplus or both.

5. Has transferred or attempted to transfer substantially its entire property or business, or has entered into any transaction the effect of which is to merge substantially its entire property or business in that of any other insurer without having first obtained the written approval of the Insurance Commissioner.

6. Has willfully violated its charter or any law of this state.

7. Has an officer, director, or manager who has refused to be examined under oath concerning its affairs, for which purpose the Insurance Commissioner is hereby authorized to conduct and to enforce by all appropriate and available means any such examination under oath in any other state or territory of the United States, in which any such officer, director, or manager may then presently be, to the full extent permitted by the laws of such other state or territory, this special authorization considered.

8. Has been the subject of an application for the appointment of a receiver, trustee, custodian, or sequestrator of the insurer or its property otherwise pursuant to the provisions of this code, but only if such appointment has been made or is imminent and its effect is or would be to oust the courts of this state of jurisdiction hereunder.

9. Has consented to such an order through a majority of its directors, stockholders, members or subscribers.

10. Has failed to pay a final judgment rendered against it in this state upon any insurance contract issued or assumed by it, within thirty (30) days after the judgment became final or within thirty (30) days after the time for taking an appeal has expired, or within thirty (30) days after dismissal of an appeal before final termination, whichever date is the later.

Added by Laws 1957, p. 295, § 1805. Renumbered from § 1805 of this title by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 2001, c. 363, § 15, eff. July 1, 2001.

§361906. Grounds for liquidation.

The Insurance Commissioner may apply to the court for an order appointing the Commissioner as receiver (if the appointment of the Commissioner as receiver shall not be then in effect) and directing the Commissioner to liquidate the business of a domestic insurer, foreign or of the United States branch of an alien insurer having trusteed assets in this State, regardless of whether or not there has been a prior order directing the Commissioner to rehabilitate such insurer, upon any grounds specified in Section 1905 of this title, or if such insurer:

1. Has ceased transacting business for a period of one (1) year, or

2. Is an insolvent insurer and has commenced voluntary liquidation or dissolution, or attempts to commence or prosecute any action or proceeding to liquidate its business or affairs, or to dissolve its corporate charter, or to procure the appointment of a receiver, trustee, custodian, or sequestrator under any law except this Code.

3. Has failed, if a domestic insurer, to obtain from the Insurance Commissioner a certificate of authority to transact a business of insurance in Oklahoma for one of the immediately preceding five (5) years.

Added by Laws 1957, p. 295, § 1806. Renumbered from § 1806 of this title by Laws 1967, c. 212, § 1, emerg. eff. May 1, 1967. Amended by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975; Laws 2001, c. 363, § 16, eff. July 1, 2001.

§361907. Grounds for conservation of foreign insurers.

The Insurance Commissioner may apply to the court for an order appointing him as receiver or ancillary receiver, and directing him to conserve the assets within this state of a foreign insurer upon any of the following grounds:

1. Upon any of the grounds specified in sections 1805 or 1806 of this article, or

2. Upon the ground that its property has been sequestrated in its domiciliary sovereignty or in any other sovereignty.

Laws 1957, p. 295, § 1807; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361908. Grounds for conservation of alien insurers.

The Insurance Commissioner may apply to the court for an order appointing him as receiver or ancillary receiver, and directing him to conserve the assets within this state of any alien insurer upon any of the following grounds:

1. Upon any of the grounds specified in sections 1805 or 1806 of this article.

2. Upon the ground that the insurer has failed to comply, within the time designated by the Insurance Commissioner, with an order made by him to make good an impairment of its trusteed funds, or

3. Upon the ground that the property of the insurer has been sequestrated in its domiciliary sovereignty or elsewhere.

Laws 1957, p. 295, § 1808; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361909. Grounds for ancillary liquidation of foreign insurers.

The Insurance Commissioner may apply to the court for an order appointing him as ancillary receiver of and directing him to liquidate the business of a foreign insurer having assets, business, or claims in this state upon the appointment in the domiciliary state of such insurer of a receiver, liquidator, conservator, rehabilitator or other officer by whatever name called for the purpose of liquidating the business of such insurer.

Laws 1957, p. 296, § 1809; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361910. Order of rehabilitation; termination.

A. An order to rehabilitate a domestic insurer shall direct the Insurance Commissioner forthwith to take possession of the property of the insurer and to conduct the business thereof, and to take such steps toward removal of the causes and conditions which have made rehabilitation necessary as the court may direct.

B. If at any time the Insurance Commissioner deems that further efforts to rehabilitate the insurer would be useless, he may apply to the court for an order of liquidation.

C. The Insurance Commissioner, or any interested person upon due notice to the Insurance Commissioner, at any time may apply to the court for an order terminating the rehabilitation proceedings and permitting the insurer to resume possession of its property and the conduct of its business, but no such order shall be granted except when, after a full hearing, the court has determined that the purposes of the proceeding have been fully accomplished. Laws 1957 P. 296, Sec. 1810. Renumbered by Laws 1975, c. 316, Sec. 12. Emer. Eff. June 12, 1975.

Laws 1957, p. 296, § 1809; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361911. Order of liquidation of domestic insurers.

A. An order to liquidate the business of a domestic insurer shall direct the Insurance Commissioner forthwith to take possession of the property of the insurer, to liquidate its business, to deal with the insurer's property and business in his own name as Insurance Commissioner or in the name of the insurer, as the court may direct, and to give notice to all creditors who may have claims against the insurer to present such claims.

B. The Insurance Commissioner may apply for and secure an order dissolving the corporate existence of a domestic insurer upon his application for an order of liquidation of such insurer or at any time after such order has been granted.

Laws 1957, p. 296, § 1811; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361912. Order of liquidation of alien insurers.

An order to liquidate the business of a United States branch of an alien insurer having trusteed assets in this state shall be in the same terms as those prescribed for domestic insurers, save and except only that the assets of the business of such United States branch shall be the only assets included therein.

Laws 1957, p. 296, § 1812; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361913. Order of conservation or ancillary liquidation of foreign or alien insurers.

A. An order to conserve the assets of a foreign or alien insurer shall require the Insurance Commissioner forthwith to take possession of the property of the insurer within this state and to conserve it, subject to the further direction of the court.

B. An order to liquidate the assets in this state of a foreign insurer shall require the Insurance Commissioner forthwith to take possession of the property of the insurer within this state and to liquidate it subject to the orders of the court and with due regard to the rights and powers of the domiciliary receiver, as provided in this article.

Laws 1957, p. 296, § 1813; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§36-1914. Conduct of delinquency proceedings against domestic and alien insurers - Limitations on power of Commissioner - Conflict of interest.

A. Whenever under this article of this title a receiver is to be appointed in delinquency proceedings for a domestic or alien insurer, the court shall appoint the Insurance Commissioner as the receiver. The court shall order the Insurance Commissioner forthwith to take possession of the assets of the insurer and to administer the same under the orders of the court.

B. As domiciliary receiver, the Insurance Commissioner shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer, wherever located, as of the date of entry of the order directing the Commissioner to rehabilitate or liquidate a domestic insurer or to liquidate the United States branch of an alien insurer domiciled in this state, and the Commissioner shall have the right to recover the same and reduce the same to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are herein prescribed for ancillary receivers appointed in this state as to assets located in this state.

C. The recording of a certified copy of the order directing possession to be taken in the office of the county clerk of the county where the proceedings are pending shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly recorded or filed.

D. The Insurance Commissioner as domiciliary receiver shall be responsible for the proper administration of all assets coming into the Commissioner's possession or control. The court may at any time require a bond from the Commissioner or any assistants or deputies if deemed desirable for the protection of the assets.

E. Upon taking possession of the assets of an insurer, the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take such steps as are authorized by this article for the purpose of rehabilitating, liquidating, or conserving the affairs or assets of the insurer.

F. 1. In connection with delinquency proceedings, the Insurance Commissioner may appoint one or more assistant commissioners to act for the Commissioner and may employ such counsel, clerks, and assistants as are deemed necessary. The compensation of the assistant commissioners, counsel, clerks, or deputies and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of duties imposed upon them, assistant commissioners shall possess all the powers given to the receiver and, in the exercise of those powers, shall be subject to all of the duties, powers, and limitations imposed upon the receiver with respect to such proceedings.

2. The Commissioner, as receiver, is prohibited from appointing any person who is related to the Commissioner within the third degree of consanguinity or affinity. Any appointment in violation of this paragraph is void.

3. The Commissioner, as receiver, is prohibited from entering into any contract with any person who is related to the Commissioner within the third degree of consanguinity or affinity. Any contract in violation of this paragraph is void.

Added by Laws 1957, p. 296, § 1814. Renumbered from § 1814 of this title by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 2000, c. 197, § 2, eff. Nov. 1, 2000.

§361915. Conduct of delinquency proceedings against foreign insurers.

A. Whenever under this article an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the court shall appoint the Insurance Commissioner as ancillary receiver. The Insurance Commissioner shall file a petition requesting the appointment on the grounds set forth in section 1809 of this article (1) if he finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver, or (2) if ten (10) or more persons resident in this state having claims against such insurer file a petition with the Insurance Commissioner requesting the appointment of such ancillary receiver.

B. The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer located in this state, and he shall have the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this state. He shall also be entitled to recover the other assets of the insurer located in this state, except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expense of the proceedings. All remaining assets he shall promptly transfer to the domiciliary receiver. Subject to the foregoing provisions, the ancillary receiver and his deputies shall have the same powers and be subject to the same duties with respect to the administration of such assets as a receiver of an insurer domiciled in this state.

C. The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of such insurer to which he may be entitled under the laws of this state.

Laws 1957, p. 297, § 1815; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361916. Claims of nonresidents against domestic insurers.

A. In a delinquency proceeding begun in this state against a domestic insurer, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

B. Controverted claims belonging to claimants residing in reciprocal states may either (1) be proved in this state, or (2) if ancillary proceedings have been commenced in such reciprocal states, may be proved in those proceedings. In the event a claimant elects to prove his claim in ancillary proceedings, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state as provided in section 1817 of this article with respect to ancillary proceedings in this state, the final allowance of such claim by the court in the ancillary state shall be accepted in this state as conclusive as to its amount and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within the ancillary state.

Laws 1957, p. 298, § 1816; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361917. Claims against foreign insurers.

A. In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against such insurer who reside within this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

B. Controverted claims belonging to claimants residing in this state may either (1) be proved in the domiciliary state as provided by the law of that state, or (2) if ancillary proceedings have been commenced in this state, be approved in those proceedings. In the event that any such claimant elects to prove his claim in this state, he shall file his claim with the ancillary receiver and shall give notice in writing to the receiver in the domiciliary state, either by registered mail or by personal service at least forty days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. If the domiciliary receiver within thirty (30) days after the giving of such notice shall give notice in writing to the ancillary receiver and to the claimant, either by registered mail or by personal service, of his intention to contest such claim, he shall be entitled to appear or to be represented in any proceeding in this state involving adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state.

Laws 1957, p. 298, § 1817; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361918. Proof of claims; notice; hearing.

A. All claims against an insurer against which delinquency proceedings have been begun shall set forth in reasonable detail the amount of the claim, or the basis upon which such amount can be ascertained, the facts upon which the claim is based, and the priorities asserted, if any. All such claims shall be verified by the affidavit of the claimant, or someone authorized to act on his behalf and having knowledge of the facts, and shall be supported by such documents as may be material thereto.

B. All claims filed in this state shall be filed with the receiver, whether domiciliary or ancillary, in this state, on or before the last date for filing as specified in this article.

C. Within ten (10) days of the receipt of any claim, or within such further period as the court may, for good cause shown; fix, the receiver shall report the claim to the court, specifying in such report his recommendation with respect to the action to be taken thereon. Upon receipt of such report, the court shall fix a time for hearing the claim and shall direct that the claimant or the receiver, as the court shall specify, shall give such notice as the court shall determine to such persons as shall appear to the court to be interested therein. All such notices shall specify the time and place of the hearing and shall concisely state the amount and nature of the claim, the priorities asserted, if any, and the recommendation of the receiver with reference thereto.

D. At the hearing, all persons interested shall be entitled to appear and the court shall enter an order allowing, allowing in part, or disallowing the claim. Any such order shall be deemed to be an appealable order.

Laws 1957, p. 298, § 1818; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361919. Priority of certain claims.

A. In a delinquency proceeding against an insurer domiciled in this state, claims owning to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this state. All such claims owing to residents or nonresidents shall be given equal priority of payment from general assets regardless of where such assets are located.

B. In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this state shall be preferred if like claims are preferred by the laws of that state.

C. The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation and maintenance of such deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.

D. The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other state may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this article or if it has been adjudicated by a court of competent jurisdiction in proceedings in which the domiciliary receiver has had notice and opportunity to be heard, such amounts shall be conclusive; otherwise the amount shall be determined in the delinquency proceeding in the domiciliary state.

Laws 1957, p. 299, § 1819; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361920. Attachment and garnishment of assets.

During the pendency of delinquency proceedings in this or any reciprocal state, no action or proceedings in the nature of an attachment, garnishment or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within four (4) months prior to the commencement of any such delinquency proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding.

Laws 1957, p. 299, § 1820; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361921. Uniform insurers liquidation act.

A. Paragraphs 1 to 13, inclusive, of section 1801 of this article, together with sections 1803, 1804, 1814 to 1820, inclusive, of this article constitute and may be referred to as the uniform insurers liquidation act.

B. The uniform insurers liquidation act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it. To the extent that its provisions when applicable conflict with other provisions of this article the provisions of such act shall control.

Laws 1957, p. 299, § 1821; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361922. Deposit of monies collected.

The monies collected by the Insurance Commissioner in a proceeding under this article shall be from time to time deposited in one or more state or national banks, savings banks, or trust companies, and in the case of the insolvency or voluntary or involuntary liquidation of any such depositary which is an institution organized and supervised under the laws of this state, such deposits shall be entitled to priority of payment on an equality with any other priority given by the banking laws of this state. The Insurance Commissioner may in his discretion deposit such monies or any part thereof in a national bank or trust company as a trust fund.

Laws 1957, p. 300, § 1822; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361923. Exemption of Commissioner from fees.

The Insurance Commissioner shall not be required to pay any fee to any public officer in this state for filing, recording, issuing a transcript or certificate or authenticating any paper or instrument pertaining to the exercise by the Insurance Commissioner of any of the powers or duties conferred upon him under this article, whether or not such paper or instrument be executed by the Insurance Commissioner or his assistants, deputies, employees or attorneys of record and whether or not it is connected with the commencement of any action or proceeding by or against the Insurance Commissioner, or with the subsequent conduct of such action or proceeding.

Laws 1957, p. 300, § 1823; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361924. Borrowing on pledge of assets.

For the purpose of facilitating the rehabilitation, liquidation, conservation or dissolution of an insurer pursuant to this article, the Insurance Commissioner may, subject to the approval of the court, borrow money and execute, acknowledge and deliver notes or other evidences of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust, or hypothecation of any or all of the property, whether real, personal or mixed, of such insurer, and the Insurance Commissioner, subject to the approval of the court, shall have power to take any and all other action necessary and proper to consummate any such loan and to provide for the repayment thereof. The Insurance Commissioner shall be under no obligation personally or in his official capacity to repay any loan made pursuant to this section.

Laws 1957, p. 300, § 1824; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361925. Rights and liabilities fixed as of date liquidation order filed.

The rights and liabilities of the insurer and of its creditors, policyholders, stockholders, members, subscribers, and all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date on which the order directing the liquidation of the insurer is filed in the office of the clerk of the court which made the order, subject to the provisions of this article with respect to the rights of claimants holding contingent claims.

Laws 1957, p. 300, § 1825; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361926. Fraudulent transfers or transactions - Avoidance.

A. Every transfer made or suffered to be made and every obligation incurred by an insurer within one (1) year prior to the filing of a successful petition for rehabilitation or liquidation under the Insurance Code is fraudulent as to then existing and future creditors if made or incurred without fair consideration or with actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under the Insurance Code, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value, and except that any purchaser, lienor or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation, may retain the property, lien or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.

B. Every director, officer, employee, stockholder, member, agent, subscriber, and any other person acting on behalf of such insurer who shall be concerned in any such act or deed and every person receiving thereby any property of such insurer or the benefit thereof shall be personally liable therefor and shall be bound to account to the Insurance Commissioner.

C. The Insurance Commissioner as receiver in any proceeding under this article may avoid any transfer of or lien upon the property of an insurer which any creditor, stockholder, subscriber or member of such insurer might have avoided and may recover the property so transferred unless such person was a bona fide holder for value prior to the date of the granting of an order to show cause under this article. Such property or its value may be recovered from anyone who has received it except a bona fide holder for value as herein specified.

D. Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under this section if:

1. The transaction consists of the termination, adjustment or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transactions, unless the reinsurer gives a present fair equivalent value for the release; and

2. Any part of the transaction took place within one (1) year prior to the date of filing of the petition through which the receivership was commenced.

Laws 1957, p. 300, § 1826; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 1990, c. 297, § 3, eff. Sept. 1, 1990.

§36-1927. Repealed by Laws 1996, c. 246, § 25, eff. July 1, 1996.

§36-1927.1. Priority of distribution of claims from insurer's estate.

A. The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is set forth in this section. Before the members of the next class receive any payment, every claim in each class shall be:

1. Paid in full; or

2. Protected by adequate funds retained for such payment.

Once such funds are approved by the court and paid or retained by the liquidator, the insurer's estate shall have no further liability to members of that class except to the extent of the retained funds and any other undistributed funds. Payment of retained funds pursuant to court order under this section extinguishes the potential liability of the receiver to the United States or any other governmental entity. No subclasses shall be established within any class except as otherwise provided by law. No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies. The order of distribution of claims shall be as provided in subsection B of this section.

B. 1. Class 1. The reasonable costs and expenses of administration expressly approved by the receiver, including but not limited to the following:

a. the actual and necessary costs of preserving or recovering the assets of the insurer,

b. compensation for all authorized services rendered in the conservation, rehabilitation or liquidation,

c. any necessary filing or recordation fees,

d. the fees and mileage payable to witnesses, including experts, and other litigation costs and expenses,

e. authorized reasonable attorney's fees and other professional services rendered in the conservation, rehabilitation or liquidation, and

f. any reasonable expenses that were incurred in furtherance of activities that provided a material economic benefit to the estate.

2. Class 2. The administrative expenses of guaranty associations. For purposes of this section these expenses shall be the reasonable expenses incurred by guaranty associations where the expenses are not payments or expenses which are required to be incurred as direct policy benefits in fulfillment of the terms of the insurance contract or policy, and that are of the type and nature that, but for the activities of the guaranty association otherwise would have been incurred by the receiver, including but not limited to evaluations of policy coverage, activities involved in the adjustment and settlement of claims under policies, including those of in-house or outside adjusters, and the reasonable expenses incurred in connection with the arrangements for ongoing coverage through transfer to other insurers, policy exchanges or maintaining policies in force. The receiver may in his or her sole discretion approve as an administrative expense under this section any other reasonable expenses of the guaranty association if the receiver finds:

a. the expenses are not expenses required to be paid or incurred as direct policy benefits by the terms of the policy, and

b. the expenses were incurred in furtherance of activities that provided a material economic benefit to the estate as a whole, irrespective of whether the activities resulted in additional benefits to covered claimants.

The court shall approve such expenses unless it finds the receiver abused his or her discretion in approving the expenses. If the receiver determines that any administrative expenses of a guaranty association were not reasonable expenses, but were nevertheless paid out of a statutory deposit or the proceeds of any bond or other asset located in another state or foreign country, then the court shall adjudge the Class 3 claims of that association to have been paid to the extent of the amount of unreasonable expenses thus paid from those assets.

If the receiver determines that the assets of the estate will be sufficient to pay all Class 1 claims in full, Class 2 claims shall be paid, provided that the liquidator shall secure from each of the associations receiving disbursements pursuant to this section an agreement to return to the liquidator such disbursements, together with investment income actually earned on such disbursements, as may be required to pay Class 1 claims. No bond shall be required of any such association.

3. Class 3. All claims under policies including claims of the federal or any state or local government for losses incurred ("loss claims") including third party claims, claims for unearned premiums, all claims of a guaranty association for payment of covered claims or covered obligations of the insurer and all claims of a guaranty association for reasonable expenses other than those included in Class 2. All claims under life and health insurance and annuity policies, whether for death proceeds, health benefits, annuity proceeds, or investment values shall be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his employee shall be treated as a gratuity.

Notwithstanding the foregoing, the following claims shall be excluded from Class 3 priority:

a. obligations of the insolvent insurer arising out of reinsurance contracts,

b. obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured's request or after the policy has been canceled as provided in this act. Notwithstanding the provisions of this paragraph, earned premium claims on policies, other than reinsurance agreements, shall not be excluded,

c. obligations to insurers, insurance pools or underwriting associations and their claims for contribution, indemnity or subrogation, equitable or otherwise,

d. any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer,

e. any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy, and

f. tort claims of any kind against the insurer, and claims against the insurer for bad faith or wrongful settlement practices.

4. Class 4. Claims of the federal government other than those claims included in Class 3.

5. Class 5. Debts due employees for services, benefits, contractual or otherwise due arising out of such reasonable compensation to employees for services performed to the extent that they do not exceed two (2) months of monetary compensation and represent payment for services performed within six (6) months before the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within one (1) year before the filing of the petition for rehabilitation. Principal officers and directors shall not be entitled to the benefit of this priority except as otherwise approved by the liquidator and the court. This priority shall be in lieu of any other similar priority which may be authorized by law as to wages or compensation of employees.

6. Class 6. Claims of any person, including claims of state or local governments, except those specifically classified elsewhere in this section.

7. Class 7. Claims for commissions and service fees, and claims of attorneys for fees and expenses owed them by a person for services rendered in opposing a formal delinquency proceeding. In order to prove the claim, the claimant must show that the insurer which is the subject of the delinquency proceeding incurred such fees and expenses based on its best knowledge, information and belief, formed after reasonable inquiry indicating opposition was in the best interests of the person, was well grounded in fact and was warranted by existing law or a good faith argument for the extension, modification or reversal of existing law, and that opposition was not pursued for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of the litigation.

8. Class 8. Claims of any state or local government for a penalty or forfeiture, but only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under paragraph 9 of this section.

9. Class 9. Surplus or contribution notes or similar obligations, premium refunds on assessable policies, interest on claims of Classes 1 through 8 and any other claims specifically subordinated to this class.

10. Class 10. Claims of shareholders or other owners arising out of their capacity as shareholders or other owners, or arising in any other capacity or facts except as they may be qualified in Class 3 or 4 above.

C. If any claimant of this state, another state or foreign country shall be entitled to or shall receive a dividend upon his or her claim out of a statutory deposit or the proceeds of any bond or other asset located in another state or foreign country, unless such deposit or proceeds shall have been delivered to the domiciliary liquidator, then the claimants shall not be entitled to any further dividend from the receiver until and unless all other claimants of the same class, irrespective of residence or place of the acts or contracts upon which their claims are based, shall have received an equal dividend upon their claims, and after such equalization, such claimants shall be entitled to share in the distribution of further dividends by the receiver, along with and like all other creditors of the same class, wheresoever residing.

D. Upon the declaration of a dividend, the receiver shall apply the amount of the dividend against any indebtedness owed to the insurer by the person entitled to the dividend. There shall be no claim allowed for any deductible charged by a guaranty association or entity performing a similar function.

E. This section shall apply to pending and future claims in existing delinquency proceedings as well as to claims in delinquency proceedings arising after the effective date of this section.

F. If any provision of this section or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or application of this section to the extent such other provisions or application can be given effect without the invalid provision or application.

Added by Laws 1996, c. 246, § 7, eff. July 1, 1996. Amended by Laws 1997, c. 418, § 90, eff. Nov. 1, 1997.

§36-1928. Offsets.

A. In all cases of mutual debts or mutual credits between the insurer and another person, whether arising out of one or more contracts between the insurer and another person, in connection with any action or proceeding under this article, such credits and debts shall be offset and the balance only shall be allowed or paid, except as provided in subsection B of this section.

B. No offset shall be allowed if:

1. The obligation of the insurer would not, at the date of the entry of any liquidation order or otherwise as provided in Section 1925 of this title, entitle the claimant to share in the assets of the insurer;

2. The obligation of the insurer was purchased by or transferred to the claimant to be used as an offset;

3. The obligation is to pay an assessment levied against the members of a mutual insurer, or against the subscribers of a reciprocal insurer, or to pay a balance upon the subscription to the capital stock of a stock insurer;

4. The obligation of the insurer is owed to an affiliate of such person, or any other entity or association other than the person;

5. The obligation of the person is owed to an affiliate of the insurer, or any other entity or association other than the insurer; or

6. The obligation between the person and the insurer arises from business where either the person or the insurer has assumed risks and obligations from the other party and then has ceded back to that party substantially the same risks and obligations.

Added by Laws 1957, p. 301, § 1828, operative July 1, 1957. Renumbered from § 1828 of this title by Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975. Amended by Laws 1988, c. 252, § 2, eff. Nov. 1, 1988; Laws 1996, c. 246, § 8, eff. July 1, 1996; Laws 1997, c. 156, § 3, eff. Nov. 1, 1997; Laws 1999, c. 333, § 4, eff. July 1, 1999; Laws 2004, c. 274, § 11, eff. July 1, 2004.

§361929. Allowance of certain claims.

A. No contingent claim shall share in a distribution of the assets of an insurer which has been adjudicated to be insolvent by an order made pursuant to this article, except that such claim shall be considered, if properly presented, and may be allowed to share where:

1. Such claim becomes absolute against the insurer on or before the last day for filing proof of claims against the assets of such insurer, or

2. There is a surplus and the liquidation is thereafter conducted upon the basis that such insurer is solvent.

B. Where an insurer has been so adjudicated to be insolvent any person who has a cause of action against an insured of such insurer under a liability insurance policy issued by such insurer shall have the right to file a claim in the liquidation proceeding, regardless of the fact that such claim may be contingent, and such claim may be allowed:

1. If it may be reasonably inferred from the proof presented upon such claim that such person would be able to obtain a judgment upon such cause of action against such insured, and

2. If such person shall furnish suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claim against such insurer arising out of his cause of action other than those already presented can be made, and

3. If the total liability of such insurer to all claimants arising out of the same act of its insured shall be no greater than his maximum liability would be were it not in liquidation.

C. No judgment against such an insured taken after the date of entry of the liquidation order shall be considered in the liquidation proceedings as evidence of liability, or of the amount of damages, and no judgment against an insured taken by default or by collusion prior to the entry of the liquidation order shall be considered as conclusive evidence in the liquidation proceedings, either of the liability of such insured to such person upon such cause of action or of the amount of damages to which such person is therein entitled.

D. No claim of any secured claimant shall be allowed at a sum greater than the difference between the value of the claim without security and value of the security itself as of the date of the entry of the order of liquidation or such other date set by the court for determining rights and liabilities as provided in section 1825 of this article unless the claimant shall surrender his security to the Insurance Commissioner, in which event the claim shall be allowed in the full amount for which it is valued.

Laws 1957, p. 301, § 1829; Laws 1975, c. 316, § 12, emerg. eff. June 12, 1975.

§361930. Time to file claims.

If upon commencement of delinquency proceedings under this article or at any time during the proceedings the insurer shall not be clearly solvent, the court shall, after such notice and hearing as it deems proper, make an order declar