2007 Oregon Code - Chapter 734 :: Chapter 734 - Rehabilitation - Liquidation and Conservation of Insurers
Chapter 734 —
Rehabilitation, Liquidation and Conservation of Insurers
2007 EDITION
REHABILITATION, LIQUIDATION &
CONSERVATION INSURANCE
GENERAL PROVISIONS
734.014Â Â Â Â Definitions
734.026    “Domiciliary,”
“ancillary” and “reciprocal state” defined
734.043Â Â Â Â Supervision
of insurer; order; consequences; insurer remedies
734.047Â Â Â Â Time
for correction of condition leading to order of supervision
734.051Â Â Â Â Actions
by director during period of supervision
734.055Â Â Â Â Action
against person violating order of supervision
734.059Â Â Â Â Request
for court order
734.063Â Â Â Â Court
order; hearings; notice
734.067Â Â Â Â Review
of court order
734.110Â Â Â Â Jurisdiction
of delinquency proceedings; venue
734.120Â Â Â Â Exclusive
remedy; appeal
734.130Â Â Â Â Commencement
of delinquency proceeding
734.140Â Â Â Â Injunctions
734.142Â Â Â Â Cooperation
with director in delinquency proceedings
734.144Â Â Â Â Immunity
of certain persons from civil liability
734.150Â Â Â Â Grounds
for rehabilitation of domestic insurers
734.160Â Â Â Â Order
of rehabilitation for domestic insurers
734.170Â Â Â Â Grounds
for liquidation of domestic insurers
734.180Â Â Â Â Order
of liquidation of domestic insurers
734.190Â Â Â Â Grounds
for conservation of foreign and alien insurers
734.200Â Â Â Â Conservation
or ancillary receivership of foreign and alien insurers
734.210Â Â Â Â Conduct
of delinquency proceedings for domestic insurers
734.220Â Â Â Â Powers
of director as receiver
734.230Â Â Â Â Deputies
and assistants
734.240Â Â Â Â Conduct
of delinquency proceedings for foreign insurers
734.250Â Â Â Â Right
of domiciliary receiver to sue in this state
734.260Â Â Â Â Claims
of nonresidents against domestic insurers
734.270Â Â Â Â Claims
of residents against foreign insurers
734.280Â Â Â Â Form
of claim; notice; hearing
734.290Â Â Â Â Priority
of preferred claims
734.300Â Â Â Â Priority
of special deposit claims
734.310Â Â Â Â Priority
of secured claims
734.320Â Â Â Â Attachment
and garnishment of assets
734.340Â Â Â Â Date
rights fixed on liquidation
734.350Â Â Â Â Voidable
transfers
734.360Â Â Â Â Preference
of claims
734.370Â Â Â Â Offsets
734.380Â Â Â Â Allowance
of certain claims
734.390Â Â Â Â Time
to file claims
734.400Â Â Â Â Report
for assessment; domestic mutual and reciprocal insurers
734.410Â Â Â Â Levy
of assessment; domestic mutual and reciprocal insurers
734.420Â Â Â Â Order
to pay assessment
734.430Â Â Â Â Publication
and transmittal of assessment order
734.440Â Â Â Â Judgment
upon assessment
734.510Â Â Â Â Definitions
for ORS 734.510 to 734.710
734.520Â Â Â Â Purpose
734.530Â Â Â Â Construction
734.540Â Â Â Â Application
734.550Â Â Â Â Oregon
Insurance Guaranty Association; all insurers required to be members; formation
of operating plan
734.555Â Â Â Â Application
to association of certain laws governing corporations; exception
734.560Â Â Â Â Association
board of directors; terms; vacancies; compensation and expenses; quorum
734.570Â Â Â Â Required
functions of association
734.575Â Â Â Â Refunds
from association deposited in General Fund
734.579Â Â Â Â Recoupment
assessments; rules
734.580Â Â Â Â Discretionary
functions of association
734.590Â Â Â Â Plan
of operation; submission to director; rules
734.600Â Â Â Â Contents
of plan of operation
734.610Â Â Â Â Notification
to association of insurer insolvency; furnishing association with premium
information
734.620Â Â Â Â Notification
of insolvency to insured persons; revocation of designation of servicing
facility
734.630Â Â Â Â Assignment
of claim rights; filing statements of paid claims; effect of claim settlements
734.635Â Â Â Â Disbursing
assets of insolvent insurer to association; court approval; notice to other
states
734.640Â Â Â Â Claim
priority
734.650Â Â Â Â Notifying
director of impaired insurers; examination; reports on impaired insurers
734.660Â Â Â Â Regulation
of association as insurer
734.670Â Â Â Â Exemption
of association from payment of fees and taxes
734.690Â Â Â Â Immunity
from legal action
734.695Â Â Â Â Liability
of insured of insolvent insurer
734.700Â Â Â Â Defense
of claims on default of insolvent insurer
734.710Â Â Â Â Administration
of delinquency proceeding claims and expenses; application of ORS 734.014,
734.026 and 734.110 to 734.440 to insurers
734.750Â Â Â Â Short
title
734.760Â Â Â Â Definitions
for ORS 734.750 to 734.890
734.770Â Â Â Â Purpose
734.780Â Â Â Â Construction
734.790Â Â Â Â Application
734.800Â Â Â Â Oregon
Life and Health Insurance Guaranty Association; all insurers required to be
members; required accounts
734.805Â Â Â Â Association
board of directors; terms; selection; vacancies; compensation and expenses
734.810Â Â Â Â Duties
and powers of association
734.815Â Â Â Â Assessment
of members; classes of assessments; amounts; refunds
734.820Â Â Â Â Plan
of operation; submission of amendments to director; rules; contents of plan
734.825Â Â Â Â Powers
and duties of director
734.830Â Â Â Â Notifying
director of impaired insurers; examination; reports on impaired insurers
734.835Â Â Â Â Assessments
offset against tax liabilities; rate
734.840Â Â Â Â Conduct
of liquidation, rehabilitation or conservation proceeding involving impaired or
insolvent insurer
734.850Â Â Â Â Examination
and regulation of association by director; required reports
734.860Â Â Â Â Exemption
of association from payment of fees and taxes
734.870Â Â Â Â Immunity
from legal action
734.880Â Â Â Â Stay
of proceeding involving insolvent insurer
734.890Â Â Â Â Association
not to be used in sales or solicitation
     734.010 [1967 c.359 §258; repealed by 1993 c.447 §122]
GENERAL PROVISIONS
     734.014
Definitions. As used in this
chapter:
     (1) “Delinquency proceeding” means any
proceeding commenced against an insurer pursuant to this chapter for the
purpose of liquidating, rehabilitating or conserving the insurer.
     (2) “Foreign country” means territory not
in any state.
     (3) “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. As to specifically encumbered property, “general
assets” 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 more than a single state, shall be treated
as general assets.
     (4) An insurer is “impaired” when its
allowed assets do not exceed its liabilities plus its required capitalization.
     (5) An insurer is “insolvent” when the
insurer is unable to pay its obligations when they are due, or when its allowed
assets do not exceed its liabilities.
     (6) “Insurer” includes:
     (a) All persons transacting or purporting
to transact insurance as insurers in this state; and
     (b) All persons in process of organization
to become insurers.
     (7) “Receiver” means receiver,
rehabilitator, liquidator or conservator, as the context may require.
     (8) “Secured claim” means any claim
secured by mortgage, trust deed, pledge, deposit as security, escrow or
otherwise, but not including special deposit claims or claims against general
assets. “Secured claim” also includes claims which more than four months prior
to the commencement of delinquency proceedings in the state of the insurerÂ’s
domicile have become liens upon specific assets by reason of judicial process.
     (9) “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 claim secured
by general assets. [Formerly 734.020; 1993 c.447 §90]
     734.018 [Formerly 751.010; and then 734.030 in 1989;
repealed by 1993 c.447 §122]
     734.020 [1967 c.359 §257; renumbered 734.014 in
1989]
     734.022 [Formerly 734.040; repealed by 1993 c.447 §122]
     734.026
“Domiciliary,” “ancillary” and “reciprocal state” defined. As used in this chapter:
     (1) “Domiciliary state” means the state in
which an insurer is incorporated or organized or, in the case of an alien
insurer, its state of entry.
     (2) “Ancillary state” means any state
other than a domiciliary state.
     (3) “Reciprocal state” means any state
other than this state in which in substance and effect the provisions of this
chapter relating to delinquency proceedings are in force, including provisions
requiring that the Director of the Department of Consumer and Business Services
or equivalent insurance supervisory official be the receiver of a delinquent
insurer and in which some provision exists for the avoidance of fraudulent
conveyances and preferential transfers. [Formerly 734.050; 1993 c.447 §91]
     734.030 [Formerly 751.010; renumbered 734.018 in
1989]
     734.031 [Formerly 734.060; repealed by 1993 c.447 §122]
     734.035 [Formerly 734.070; repealed by 1993 c.447 §122]
     734.039 [Formerly 734.080; repealed by 1993 c.447 §122]
     734.040 [1967 c.359 §260; renumbered 734.022 in
1989]
     734.043
Supervision of insurer; order; consequences; insurer remedies. (1) For any reason stated in subsection (2)
of this section, the Director of the Department of Consumer and Business
Services by order may place under supervision:
     (a) A domestic insurer; or
     (b) A foreign or alien insurer, if the insurance
regulatory official of its state of domicile or entry has asked the director to
apply this section and ORS 734.047, 734.051 and 734.055 to the insurer.
     (2) The director may place an insurer
under supervision if upon examination or at any other time the director
determines that:
     (a) The condition of the insurer renders
the continuance of its business hazardous to the public or to its insureds.
     (b) The insurer has refused to permit
examination of its books, papers, accounts, records or affairs by the director
or any deputy, examiner or employee representing the director.
     (c) A domestic insurer has unlawfully
removed from this state books, papers, accounts or records necessary for an
examination of the insurer.
     (d) The insurer has failed to comply promptly
with the applicable financial reporting statutes or rules and any request of
the Department of Consumer and Business Services relating thereto.
     (e) The insurer has failed to observe an
order of the director to make good, within the time prescribed by law, any
prohibited deficiency in its capital, capital stock or surplus.
     (f) The insurer is continuing to transact
insurance or write business after its certificate of authority has been revoked
or suspended by the director.
     (g) The insurer, by contract or otherwise,
has done any of the following unlawfully, in violation of an order of the
director or without first having obtained written approval of the director:
     (A) Totally reinsured its entire
outstanding business; or
     (B) Merged or consolidated substantially
its entire property or business with another insurer.
     (h) The insurer has engaged in any
transaction in which it is not authorized to engage under the laws of this
state.
     (i) The insurer has failed to comply with
any other order of the director.
     (j) The insurer has failed to comply with
any other applicable provisions of the Insurance Code.
     (k) The business of the insurer is being
conducted fraudulently.
     (L) The insurer agrees to supervision.
     (3) If the director determines that one or
more conditions set forth in subsection (2) of this section exist, the director
may do all of the following:
     (a) Notify the insurer of the
determination of the director.
     (b) Furnish to the insurer a written list
of the requirements to abate the condition or conditions determined to exist.
     (c) Notify the insurer that it is under
the supervision of the director and that the director is applying this section
and ORS 734.047, 734.051 and 734.055.
     (4) The director may act as the supervisor
to conduct the supervision and otherwise carry out an order under subsection
(1) of this section or may appoint another person as supervisor.
     (5) The director or the appointed
supervisor may prohibit any person from taking any of the following actions
during the period of supervision without the prior approval of the director or
supervisor:
     (a) Disposing of, conveying or encumbering
any of the insurerÂ’s assets or its business in force.
     (b) Withdrawing from any of the insurer’s
bank accounts.
     (c) Lending any of the insurer’s funds.
     (d) Investing any of the insurer’s funds.
     (e) Transferring any of the insurer’s
property.
     (f) Incurring any debt, obligation or
liability on behalf of the insurer.
     (g) Merging or consolidating the insurer
with another insurer or other person.
     (h) Entering into any new reinsurance
contract or treaty.
     (i) Approving new premiums or renewing any
policies.
     (j) Terminating, surrendering, forfeiting,
converting or lapsing any insurance policy, certificate or contract, except for
nonpayment of premiums due.
     (k) Releasing, paying or refunding premium
deposits, accrued cash or loan values, unearned premiums, or other reserves on
any insurance policy, certificate or contract.
     (L) Making any material change in
management.
     (m) Increasing salaries and benefits of
officers or directors.
     (n) Making or increasing preferential
payment of bonuses, dividends or other payments determined by the director to
be preferential.
     (o) Any other action affecting the
business or condition of the insurer.
     (6) The director may apply to any circuit
court for any restraining order, preliminary and permanent injunctions and
other orders necessary to enforce a supervision order.
     (7) During the period of supervision, the
insurer may file a written request for a hearing to review the supervision or
any action taken or proposed to be taken. A request under this subsection shall
not suspend the supervision. The insurer must specify in the request the manner
in which the action being complained of would not result in improving the
condition of the insurer. The hearing shall be held within 30 days after the
filing of the request. The director shall complete the review of the
supervision or other action and shall take action under subsection (8) of this
section if appropriate within 30 days after the record for the hearing is
closed.
     (8) The director shall release an insurer
from supervision if the director determines upon hearing that none of the
conditions giving rise to the supervision exist. [1989 c.425 §6; 1991 c.401 §6;
1993 c.447 §88]
     734.047
Time for correction of condition leading to order of supervision. (1) An insurer placed under supervision must
correct, eliminate or remedy the acts, transactions or practices that are the
basis for the order of supervision and otherwise comply with the requirements
of the Director of the Department of Consumer and Business Services within the
period of time allowed by the director, not to exceed 60 days, after the date
on which the order is served on the insurer.
     (2) If the director determines that the
conditions giving rise to the supervision still exist at the end of the
supervision period established in subsection (1) of this section, the director
may extend the period. [1989 c.425 §7; 1993 c.447 §89]
     734.050 [1967 c.359 §261; renumbered 734.026 in
1989]
     734.051
Actions by director during period of supervision. During the period of supervision of an
insurer, the Director of the Department of Consumer and Business Services may
institute rehabilitation or liquidation proceedings, extend the period of
supervision or take any other action under the authority of the director with
respect to the insurer. [1989 c.425 §8]
     734.055
Action against person violating order of supervision. The Director of the Department of Consumer
and Business Services or supervisor on behalf of an insurer under supervision
may bring an action for damages against any person who violates any order of
the director under ORS 734.043 if the violation reduces the net worth of the
insurer or results in loss to the insurer that the insurer would not have
suffered otherwise. The director or supervisor may recover damages to the
extent of the reduction or loss. [1989 c.425 §9]
     734.059
Request for court order. (1)
The Director of the Department of Consumer and Business Services may file a
petition with the circuit court requesting an order that:
     (a) Authorizes the director to seize all
or part of the property, books, accounts and other records of a domestic
insurer as well as the premises occupied by the insurer for transacting its
business; and
     (b) Enjoins the domestic insurer from
disposing of its property and transacting business except as allowed by written
consent of the director.
     (2) The director must include all of the
following in the petition under subsection (1) of this section:
     (a) An allegation that one or more grounds
exist that would justify a court order for a rehabilitation or liquidation
proceeding against the insurer.
     (b) An allegation that the interests of
policyholders, creditors or the public will be endangered by delay.
     (c) The contents of the order that the
director requests the court to issue. [1989 c.425 §10]
     734.060 [1967 c.359 §262; renumbered 734.031 in
1989]
     734.063
Court order; hearings; notice.
(1) Upon petition by the Director of the Department of Consumer and Business
Services under ORS 734.059, the court may issue the requested order
immediately, ex parte and without hearing. The court in its order shall specify
the duration of the order. The duration of an order shall be a period sufficient
to enable the director to ascertain the condition of the insurer.
     (2) On motion of the director or the
insurer against whom an order under this section is issued, or on the courtÂ’s
own motion, the court may hold such hearings from time to time as the court
determines are desirable, after such notice as it determines appropriate, and
may extend, shorten or modify the terms of the order.
     (3) The court may vacate an order issued
under this section if the court determines that the director has not commenced
a rehabilitation or liquidation proceeding within a reasonable time.
     (4) An order of the court directing a
rehabilitation or liquidation proceeding vacates the order issued under this
section.
     (5) Entry of a seizure order under this
section does not constitute an anticipatory breach of any contract of the
insurer.
     (6) At any time after a court issues an
order under this section, the court may direct that notice of the order be
given to a person if the court determines both of the following:
     (a) That the person was not notified of
the hearing on the order and did not appear at the hearing.
     (b) That the interest of the person is or
will be substantially affected by the order. [1989 c.425 §11]
     734.067
Review of court order. (1)
An insurer against whom an order under ORS 734.059 is directed may petition the
court for a hearing and review of the order.
     (2) Not later than the 15th day after the
court receives a petition under subsection (1) of this section, the court shall
hold the hearing and review the order. [1989 c.425 §12]
     734.070 [1967 c.359 §263; renumbered 734.035 in
1989]
     734.080 [1967 c.359 §264; renumbered 734.039 in
1989]
     734.110
Jurisdiction of delinquency proceedings; venue. (1) The circuit court shall have original
jurisdiction of delinquency proceedings under this chapter, and any court with
jurisdiction is authorized to make all necessary or proper orders to carry out
the purposes of this chapter.
     (2) The venue of delinquency proceedings
and proceedings under ORS 734.059 and 734.063 against a domestic insurer and
the venue of delinquency proceedings against foreign and alien insurers shall
be in the Circuit Court for
     (3) At any time after the commencement of
a delinquency proceeding or a proceeding under ORS 734.059 and 734.063 the
court may issue an order changing the venue of the proceeding on motion of the
Director of the Department of Consumer and Business Services or other
interested person if the court finds the proceedings may be more economically
and efficiently conducted thereby. [1967 c.359 §265; 1989 c.425 §13]
     734.120
Exclusive remedy; appeal.
(1) Delinquency proceedings pursuant to this chapter shall constitute the sole
and exclusive method of rehabilitating, liquidating or conserving an insurer,
and no court shall entertain a petition for the commencement of such
proceedings, or any other similar procedure, unless the same has been filed in
the name of the state on the relation of the Director of the Department of
Consumer and Business Services.
     (2) An appeal shall lie to the Court of
Appeals from an order granting or refusing rehabilitation, liquidation, or
conservation, and from every order in delinquency proceedings having the
character of a final order as to the particular portion of the proceedings
embraced therein. [1967 c.359 §266; 1979 c.562 §33]
     734.130
Commencement of delinquency proceeding. (1) The Director of the Department of Consumer and Business Services
shall commence a delinquency proceeding by an application to the court for an
order directing the insurer to show cause why the director should not have the
relief prayed for.
     (2) The application shall be by petition,
verified by the director, setting forth the ground or grounds for the
proceeding and the relief demanded.
     (3) If the court is satisfied from reading
the directorÂ’s petition that the facts therein alleged, if established, would
constitute grounds for a delinquency proceeding under this chapter, the court
shall issue an order to the insurer to show cause.
     (4) On the return of the 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 the policyholders, creditors, stockholders, members,
subscribers or the public may require.
     (5) After commencement of a delinquency
proceeding by the director, orders of the court may thereafter be made for any
of the purposes relevant upon application of any interested person. [1967 c.359
§267]
     734.140
Injunctions. (1) Upon
application by the Director of the Department of Consumer and Business Services
for an order to show cause under ORS 734.130, or at any time thereafter, the
court may, without notice, issue an injunction restraining the insurer, its
officers, directors, stockholders, members, subscribers, agents, employees and
all other persons from the transaction of its business or the waste or
disposition of its property until the further order of the court.
     (2) The court may, at any time during a
proceeding under this chapter, issue such other injunctions or orders to
prevent any of the following activities:
     (a) The transaction of further business.
     (b) The transfer of property.
     (c) Interference with the receiver or with
a delinquency proceeding.
     (d) Waste of the assets of an insurer.
     (e) Dissipation and transfer of bank
accounts.
     (f) The institution or further prosecution
of any actions or proceedings.
     (g) The obtaining of preferences,
judgments, attachments, garnishments or liens against the insurer, its assets
or its policyholders.
     (h) The levying of execution against the
insurer, its assets or its policyholders.
     (i) The making of any sale or deed for
nonpayment of taxes or assessments that would lessen the value of the assets of
the insurer.
     (j) The withholding from the receiver of
books, accounts, documents or other records relating to the business of the
insurer.
     (k) Any other threatened or contemplated
action that might lessen the value of the assets of the insurer or prejudice
the rights of policyholders, creditors or shareholders, or the administration
of any delinquency proceeding.
     (3) Notwithstanding any other provision of
law, no bond shall be required of the director as a prerequisite for the
issuance of any injunction or restraining order pursuant to this section. [1967
c.359 §268; 1993 c.447 §92]
     734.142
Cooperation with director in delinquency proceedings. (1) Each officer, manager, director,
trustee, owner, employee or agent of an insurer, and any other person with
authority over or in charge of any portion of the insurerÂ’s affairs, including
any person who exercises control directly or indirectly over activities of the
insurer through a holding company or other affiliate of the insurer, shall
cooperate with the Director of the Department of Consumer and Business Services
in any delinquency proceeding or any investigation preliminary to the
proceeding. For purposes of this section, cooperation with the director
includes at least the following:
     (a) Replying promptly in writing to any
inquiry from the director requesting such a reply; and
     (b) Making available to the director any
books, accounts, documents or other records, information or property of or
pertaining to the insurer and in the possession, custody or control of the
insurer.
     (2) A person shall not obstruct or
interfere with the director in the conduct of any delinquency proceeding or any
investigation preliminary or incidental thereto.
     (3) This section shall not be construed to
abridge otherwise existing legal rights, including the right to resist a
petition for liquidation or other delinquency proceedings, or other orders. [1993
c.447 §94]
     Note: 734.142 and 734.144 were added to and made a
part of ORS chapter 734 by legislative action but were not added to any smaller
series therein. See Preface to Oregon Revised Statutes for further explanation.
     734.144
Immunity of certain persons from civil liability. (1) The following persons are entitled to
protection under this section:
     (a) All receivers responsible for the
conduct of a delinquency proceeding, including present and former receivers.
     (b) All employees of the receiver. For
purposes of this section, such employees include all present and former special
deputies and assistant special deputies appointed by the Director of the
Department of Consumer and Business Services and all persons whom the director,
special deputies, or assistant special deputies have employed to assist in a
delinquency proceeding. Unless designated as special deputies, attorneys,
accountants, auditors and other professional persons or firms who are retained
by the receiver as independent contractors and their employees are not entitled
to protection under this section.
     (2) The receiver and employees of the
receiver shall have official immunity and shall be immune from civil action and
liability, both personally and in their official capacities, for any tort claim
or demand, whether groundless or otherwise, arising out of any alleged act,
error or omission of the receiver or any employee occurring in the performance
of their duties. For purposes of this section, “tort” has the meaning given
that term in ORS 30.260.
     (3) The receiver and employees of the
receiver shall be indemnified from the assets of the insurer against any tort
claim arising out of any alleged act, error or omission of the receiver or any
employee occurring in the performance of their duties, whether personally or in
the official capacity of the receiver or employee. Any indemnification made
under this subsection is an administrative expense of the insurer.
     (4) The provisions of subsections (2) and
(3) of this section do not apply in case of malfeasance in office or willful or
wanton neglect of duty.
     (5) In any legal action in which the
receiver is a defendant, the portion of any settlement relating to the alleged
act, error or omission of the receiver is subject to the approval of the court
before which the delinquency proceeding is pending. The court may not approve
the portion of the settlement if it determines:
     (a) That the claim did not occur in the
performance of the receiverÂ’s duties; or
     (b) That the claim was caused by
malfeasance in office or willful or wanton neglect of duty by of the receiver.
     (6) This section shall not be construed or
applied to deprive the receiver or any employee of any immunity, indemnity,
benefits of law, rights or any defense otherwise available. [1993 c.447 §95]
     Note: See note under 734.142.
     734.150
Grounds for rehabilitation of domestic insurers. The Director of the Department of Consumer
and Business Services may apply for an order directing the director to
rehabilitate a domestic insurer on one or more of the following grounds:
     (1) The insurer is impaired.
     (2) The insurer has failed to submit its
books, papers, accounts or affairs to the reasonable inspection and examination
of the director.
     (3) Without first obtaining the written
consent of the director, the insurer has by contract of reinsurance, or
otherwise, transferred or attempted to transfer substantially its entire
property or business, or has entered into any transaction the effect of which
is to merge, consolidate or reinsure substantially its entire property or
business in or with the property or business of any other person, without first
having complied with ORS 732.517 to 732.546 and 742.150 to 742.162.
     (4) The insurer is in such condition that
its further transaction of business would be hazardous to its policyholders,
creditors, stockholders or the public.
     (5) The insurer has violated its articles
of incorporation, its bylaws, any law of this state or any order of the
director.
     (6) Any person who in fact has executive
authority in the insurer, whether an officer, manager, general agent, director
or trustee, employee or other person, has refused to be examined under oath by
the director concerning its affairs, whether in this state or elsewhere, and
after reasonable notice of the fact, the insurer has not promptly and
effectively terminated the employment and status of the person and all
influence of the person on management.
     (7) The insurer or its property has been
or is the subject of an application for the appointment of a receiver, trustee,
custodian, conservator or sequestrator or similar fiduciary of the insurer or
of its property other than as authorized under the Insurance Code, and the
appointment has been made or is imminent, and the appointment might deprive the
courts of this state of jurisdiction or might prejudice orderly delinquency
proceedings.
     (8) The insurer has consented to such an
order through a majority of its directors, stockholders, members or
subscribers.
     (9) The insurer has failed to pay any
obligation to any state or any subdivision thereof or any final judgment
rendered against it in any state within 60 days after the judgment became final
or within 60 days after time for taking an appeal has expired, or within 60
days after dismissal of an appeal before final determination, whichever date is
the later, if the court in which the judgment was entered had jurisdiction over
the subject matter.
     (10) The insurer has had its certificate
of authority to transact insurance in this state revoked.
     (11) There is reasonable cause to believe
that there has been embezzlement from the insurer, wrongful sequestration or
diversion of the insurerÂ’s assets, forgery or fraud affecting the insurer or
other illegal conduct in, by or with respect to the insurer that if established
would endanger assets in an amount threatening the solvency of the insurer.
     (12) The insurer has failed to remove any
person who in fact has executive authority in the insurer, whether an officer,
manager, general agent, director or trustee, employee or other person, if the
person has been found by the director to be dishonest or untrustworthy in a way
affecting the insurerÂ’s business.
     (13) Control of the insurer, whether by
stock ownership or otherwise, and whether direct or indirect, is in a person or
persons found to be untrustworthy.
     (14) The insurer has failed to file its
annual report or other financial report required by statute within the time
allowed by law or within any additional time allowed by the director. [Formerly
738.450; 1993 c.447 §96; 1995 c.30 §11]
     734.160
Order of rehabilitation for domestic insurers. (1) An order to rehabilitate a domestic
insurer shall direct the Director of the Department of Consumer and Business
Services 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.
     (2) If at any time the director deems that
further efforts to rehabilitate the insurer would be useless, the director may
apply to the court for an order of liquidation under ORS 734.180.
     (3) The director, or any interested person
upon due notice to the director, at any time may apply for an order terminating
the rehabilitation proceeding and permitting the insurer to resume possession
of its property and the conduct of its business, but no such order shall be
granted except after a full hearing. [1967 c.359 §270]
     734.170
Grounds for liquidation of domestic insurers. The Director of the Department of Consumer and Business Services may
apply for an order directing the director to liquidate the business of a
domestic insurer, regardless of whether there has been a prior order directing
the director to rehabilitate such insurer, upon any of the grounds specified in
ORS 734.150, or if the insurer:
     (1) Has ceased transacting business for a
period of one year;
     (2) 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 laws except the Insurance Code;
     (3) Has not organized or completed its
organization and obtained a certificate of authority as an insurer within the
time authorized by law; or
     (4) Is insolvent. [1967 c.359 §271; 1993
c.447 §97]
     734.180
Order of liquidation of domestic insurers. (1) An order to liquidate the business of a domestic insurer shall
direct the Director of the Department of Consumer and Business Services
forthwith to take possession of the property of the insurer, to liquidate its
business, to deal with the insurerÂ’s property and business in the name of the
director 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.
     (2) The director may apply under this
chapter for an order dissolving the corporate existence of a domestic insurer:
     (a) Upon the application of the director
for an order of liquidation of such insurer, or at any time after such order
has been granted; or
     (b) Upon the grounds specified in ORS
734.170 (3), regardless of whether an order of liquidation is sought or has
been obtained. [Formerly 738.470]
     734.190
Grounds for conservation of foreign and alien insurers. The Director of the Department of Consumer
and Business Services may apply for an order directing the director to conserve
the assets within this state of a foreign or alien insurer upon any one or more
of the following grounds:
     (1) Any of the grounds specified in ORS
734.150; or
     (2) That its property has been
sequestrated in any jurisdiction. [1967 c.359 §273; 1993 c.447 §98]
     734.200
Conservation or ancillary receivership of foreign and alien insurers. (1) An order to conserve the assets of a
foreign or alien insurer shall direct the Director of the Department of
Consumer and Business Services 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.
     (2) Whenever a domiciliary receiver has
been appointed for any foreign or alien insurer in its domiciliary state, the
court shall, on application of the director, appoint the director as the
ancillary receiver in this state.
     (3) An order to liquidate the assets in
this state of a foreign or alien insurer shall direct the director 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 chapter. [1967
c.359 §274]
     734.210
Conduct of delinquency proceedings for domestic insurers. (1) Whenever under this chapter a receiver
is to be appointed in delinquency proceedings for an insurer domiciled in this
state, the court shall appoint the Director of the Department of Consumer and
Business Services as such receiver. The court shall direct the receiver
forthwith to take possession of the property of the insurer and to administer
the same under the orders of the court.
     (2) Any deed or other instrument executed
under this chapter shall be valid and effectual for all purposes as though the
same had been executed by the person affected by any proceedings under this
chapter or by its officers pursuant to the direction of its governing board or
authority. The filing or recording of the order directing possession to be
taken, or a certified copy thereof, in the office where instruments affecting
title to property are required to be filed or recorded shall impart the same
notice as would be imparted by a deed, bill of sale or other evidence of title
duly filed or recorded.
     (3) In cases where any real property sold
by the director is located in a county other than the county wherein the
proceeding is pending, the director shall cause a certified copy of the order
of the appointment, or order authorizing or ratifying the sale, to be filed
with the recording officer for the county in which the property is located.
     (4) The director as domiciliary receiver
shall be responsible on the official bond of the director for the proper
administration of all property coming into the possession or control of the
director. The court may at any time require an additional bond from the
director or the deputies of the director if deemed desirable for the protection
of the property. [Formerly 751.020]
     734.220
Powers of director as receiver.
(1) Upon taking possession of the property and business of any person in any
proceeding under this chapter, the Director of the Department of Consumer and
Business Services 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 the laws of this state for the purpose of rehabilitating,
liquidating or conserving the insurer.
     (2) Upon taking such possession of the
property and business of any person, the director as receiver shall:
     (a) Be vested with the insurer’s title and
interest in and to all assets and property of every kind, both tangible and
intangible, except that ancillary receivers in reciprocal states shall have, as
to assets located in their respective states, the rights and powers which are
prescribed in this chapter for ancillary receivers appointed in this state as
to assets located in this state;
     (b) Possess, in the name of the insurer or
in the name of the director, all rights, privileges, powers and authority
granted to insurers in this state or otherwise possessed by insurers generally,
without regard to any limitations thereon prescribed in the articles or bylaws
of such insurer; and
     (c) Perform and do all acts which the
director may deem necessary, advisable or expedient for the accomplishment or
in aid of the purpose for which such possession was taken. [1967 c.359 §276]
     734.230
Deputies and assistants. In
connection with delinquency proceedings, the Director of the Department of
Consumer and Business Services may appoint one or more special deputy directors
to act for the director, and may employ such counsel, clerks, and assistants as
the director deems necessary. Unless otherwise provided by the director, no
person so appointed shall be deemed a state employee solely by reason of such
appointment. The compensation of the special deputies, counsel, clerks or
assistants and all expenses of taking possession of the delinquent insurer and
of conducting the delinquency proceedings shall be paid out of the funds or
assets of the insurer. Within the limits of the duties imposed upon them
special deputies shall possess all the powers given to, and, in the exercise of
those powers, shall be subject to all the duties imposed upon, the receiver
with respect to delinquency proceedings. [1967 c.359 §277]
     734.240
Conduct of delinquency proceedings for foreign insurers. (1) Whenever under this chapter an ancillary
receiver is to be appointed in delinquency proceedings for an insurer not
domiciled in this state, the court shall appoint the Director of the Department
of Consumer and Business Services as ancillary receiver. The director shall
file a petition requesting the appointment:
     (a) If the director finds that there are
sufficient assets of such insurer located in this state to justify the
appointment of an ancillary receiver; or
     (b) If 10 or more persons resident in this
state having claims against such insurer file a petition with the director
requesting the appointment of such ancillary receiver.
     (2) The domiciliary receiver of an insurer
domiciled in a reciprocal state, shall be vested by operation of law with the
title to all the property, contracts and rights of action, and all the books
and records of the insurer located in this state, and the domiciliary receiver
shall have the immediate right to recover balances due from local insurance
producers and to obtain possession of any books and records of the insurer
found in this state. The domiciliary receiver 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 expenses of the
proceedings. All remaining assets the ancillary receiver shall promptly
transfer to the domiciliary receiver. Subject to the provisions of this section
the ancillary receiver and the deputies of the ancillary receiver 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. [Formerly 751.030; 2003 c.364 §85]
     734.250
Right of domiciliary receiver to sue in this state. 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 the domiciliary receiver may be entitled under the laws
of this state. [1967 c.359 §279]
     734.260
Claims of nonresidents against domestic insurers. (1) In a delinquency proceeding begun in
this state against an insurer domiciled in this state, 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.
     (2) Controverted claims belonging to
claimants residing in reciprocal states may either:
     (a) Be proved in this state as provided by
law; or
     (b) If ancillary proceedings have been
commenced in such reciprocal states, be proved in those proceedings.
     (3) In the event a claimant elects to
prove a 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 ORS 734.270 with respect to ancillary proceedings in this state,
the final allowance of such claim by the courts 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. [Formerly 751.040]
     734.270
Claims of residents against foreign insurers. (1) 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.
     (2) Controverted claims belonging to
claimants residing in this state may either:
     (a) Be proved in the domiciliary state as
provided by the law of that state; or
     (b) If ancillary proceedings have been
commenced in this state, be proved in those proceedings.
     (3) In the event that any such claimant
elects to prove a claim in this state, the claimant shall file a claim with the
ancillary receiver in the manner provided by this chapter for the proving of
claims against insurers domiciled in this state, and the claimant shall give
notice in writing to the receiver in the domiciliary state, either by
registered or certified mail or by personal service at least 40 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 30 days after the giving
of such notice, shall give notice in writing to the ancillary receiver and to
the claimant, either by registered or certified mail or by personal service, of
intention to contest such claim, the domiciliary receiver shall be entitled to
appear or to be represented in any proceeding in this state involving the
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. [Formerly 751.050]
     734.280
Form of claim; notice; hearing.
(1) 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
behalf of the claimant and having knowledge of the facts, and shall be
supported by such documents as may be material thereto.
     (2) 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 chapter.
     (3) After the expiration of any period for
filing of claims, the receiver shall report the claims filed within such period
to the court, specifying in such report the recommendation of the receiver with
respect to the action to be taken thereon. Upon receipt of such report, the
court shall fix a time for hearing such claims and shall direct that the claimants
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.
     (4) 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. [1967 c.359 §282]
     734.290
Priority of preferred claims.
(1) In a delinquency proceeding against an insurer domiciled in this state,
claims owing to residents of ancillary states shall be preferred claims if like
claims are preferred under the laws of this state. All such claims whether
owing to residents or nonresidents shall be given equal priority of payment
from general assets regardless of where such assets are located.
     (2) 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. [1967 c.359 §283]
     734.300
Priority of special deposit claims. 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 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. [1967 c.359 §284]
     734.310
Priority of secured claims.
The owner of a secured claim against an insurer for which a receiver has been
appointed in this or any other state may surrender the security and file a
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 chapter, 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 amount shall be
conclusive; otherwise the amount shall be determined in the delinquency
proceeding in the domiciliary state. [Formerly 751.080]
     734.320
Attachment and garnishment of assets. During the pendency of delinquency proceedings in this or any
reciprocal state no action or proceeding 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 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. [1967 c.359 §286]
     734.330 [Formerly 751.110; repealed by 1993 c.447 §122]
     734.340
Date rights fixed on liquidation. 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 makes the order,
subject to the provisions of ORS 734.380 with respect to the rights of
claimants holding contingent claims. [1967 c.359 §288]
     734.350
Voidable transfers. (1) Any
transfer of, or lien upon, the property of an insurer, other than as provided
in ORS 734.320 which is made or created within four months prior to the
commencement of a delinquency proceeding with the intent of giving to any
creditor, or of enabling the creditor to obtain, a greater percentage of the
debt than any other creditor of the same class, and which is accepted by such
creditor having reasonable cause to believe that such a preference will occur,
shall be voidable.
     (2) Every director, officer, employee,
stockholder, member, 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 Director of the
Department of Consumer and Business Services.
     (3) The director, as receiver in any
proceeding under this chapter, 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 commencement
of the delinquency proceeding. Such property or its value may be recovered from
anyone who has received it, except a bona fide holder for value as specified in
this subsection. [1967 c.359 §289]
     734.360
Preference of claims. Except
as provided in ORS 734.310 for secured claims, the claims to be paid in full in
delinquency proceedings prior to the payment of any other claims, and the order
of payment, shall be:
     (1) Expenses of administration of the
delinquency proceedings and expenses of the Oregon Insurance Guaranty
Association or similar organization in another state handling claims in
accordance with ORS 734.510 to 734.710;
     (2) All claims under policies, including
third party claims and claims under nonassessable policies for unearned
premiums, and all claims by the Oregon Insurance Guaranty Association, the
Oregon Life and Health Insurance Guaranty Association or any similar
organization in another state for payment of covered claims or contractual
obligations;
     (3) Claims legally due and owing by the
insurer to the
     (4) If the insurer is domiciled in this
state, compensation or wages actually owing to salaried employees other than
officers of the insurer, for services rendered within three months prior to the
commencement of the delinquency proceeding, but not exceeding $2,000 for each
such employee;
     (5) Claims legally due and owing by the
insurer to this state; and
     (6) Claims, including special deposit
claims, owing to any person, including this state, that by the laws of this
state is entitled to priority. [1967 c.359 §290; 1977 c.793 §7; 1983 c.223 §1;
2001 c.974 §3]
     734.370
Offsets. No offsets shall be
allowed in cases of mutual debts or mutual credits between the insurer and
another person in connection with any domestic delinquency proceeding under
this chapter, except for cases of policy loans and cases of reinsurance and
except for insurance producersÂ’ balances, excluding unearned return
commissions. [1967 c.359 §291; 1989 c.425 §14; 2003 c.364 §86]
     734.380
Allowance of certain claims.
(1) A contingent claim against an insurer or a claim based upon a cause of
action or suit against an insured of an insurer shall be filed, presented and
reported in the same manner and within the same time limitations as provided in
this chapter for a noncontingent claim. Such claims shall be allowed to share
in a distribution of assets in the same manner as noncontingent claims of the
same class and priority, provided that before any such sharing and
distribution:
     (a) If the claim is a contingent claim
against the insurer, it becomes an absolute claim either as a result of proof
presented or litigation; or
     (b) If the claim is based upon a cause of
action or suit against an insured of the insurer, a judgment is obtained
against the insured or it may be reasonably inferred from proof presented that
the claimant would be able to obtain such a judgment; in no case, however,
shall all of the claims so presented and allowed arising out of a single act of
the insured exceed the maximum liability of the insurer under its policy with
or affecting the insured.
     (2) Nothing in subsection (1) of this
section shall prevent or bar the Director of the Department of Consumer and
Business Services from compromising a disputed claim with the claimant, whether
contingent or noncontingent, if such compromise is justified and supported by
the facts and circumstances.
     (3) If full or partial distribution to
noncontingent claimants is authorized or directed by the court prior to
satisfaction of the requirements of subsection (1)(a) or (b) of this section, with
respect to particular claims the director shall retain a sum equal to the
amount which would have been paid on the contingent claim if such requirements
had then been met. The amount so withheld shall be distributed to the person or
persons found by the court to be entitled thereto at such time as the claim is
fully established as provided in subsection (1) of this section, or the
director is satisfied that the claim is without merit or cannot be so proved or
established, or the statute of limitations, if timely asserted, would bar
further consideration or recovery thereon.
     (4) No judgment entered after the date of
entry of a liquidation order shall be considered in the liquidation proceedings
as evidence of liability or of the amount of damages, and no judgment entered
on default or inquest or by collusion after commencement of a delinquency
proceeding shall be considered as conclusive evidence in the liquidation
proceeding, either of liability or of the amount of damages. [1967 c.359 §292]
     734.390
Time to file claims. (1) If
upon the granting of an order of liquidation under this chapter, or at any time
thereafter during the liquidation proceeding, the insurer shall not be clearly
solvent, the court shall, after such notice and hearing as it considers proper,
make an order declaring the insurer to be insolvent. Thereupon, regardless of
any prior notice which may have been given to creditors, the Director of the
Department of Consumer and Business Services shall notify all persons who may
have claims against the insurer and who have not filed proper proofs thereof,
to present the same to the director, at a place specified in the notice, within
four months from the date of the entry of such insolvency order or within such
longer time as the court shall prescribe. The last day for filing of proofs of
claims shall be specified in the notice. The notice shall be given in a manner
determined by the court.
     (2) Proofs of claims may be filed
subsequent to the date specified, but no such claim shall share in the distribution
of the assets until all allowed claims, proofs of which have been filed on or
before such date, have been paid in full. [1967 c.359 §293]
     734.400
Report for assessment; domestic mutual and reciprocal insurers. Within three years from the date an order of
rehabilitation or liquidation of a domestic mutual insurer or a domestic
reciprocal insurer was filed in the office of the clerk of the court by which
such order was made, the Director of the Department of Consumer and Business
Services may make a report to the court setting forth:
     (1) The reasonable value of the assets of
the insurer;
     (2) The insurer’s probable liabilities;
and
     (3) The probable necessary assessment, if
any, to pay all claims and expenses in full, including expenses of administration.
[1967 c.359 §294]
     734.410
Levy of assessment; domestic mutual and reciprocal insurers. (1) Upon the basis of the report provided
for in ORS 734.400, including any amendments thereof, the court, ex parte, may
levy one or more assessments against all persons who, as shown by the records
of the insurer, were members (in the case of a mutual insurer) or subscribers
(in the case of a reciprocal insurer) at any time within one year prior to the
commencement of the delinquency proceeding.
     (2) Such assessment or assessments shall
cover the excess of the probable liabilities over the reasonable value of the
assets, together with the estimated cost of collection and percentage of
uncollectibility thereof. The total of all assessments against any member or
subscriber, with respect to any policy, whether levied pursuant to this chapter
or pursuant to any other provisions of the Insurance Code, shall be no greater
than the amount specified in the policy of the member or subscriber and as
limited under the Insurance Code; except that, if the court finds that the
policy was issued at a rate of premium below the minimum rate lawfully
permitted for the risk insured, the court may determine the upper limit of such
assessment on the basis of such minimum rate.
     (3) No assessment shall be levied against
any member or subscriber with respect to any nonassessable policy issued in
accordance with the Insurance Code. [1967 c.359 §295]
     734.420
Order to pay assessment.
After levy of assessment as provided in ORS 734.410 and upon the filing of a
further detailed report by the Director of the Department of Consumer and
Business Services, the court shall issue an order directing each member (in the
case of a mutual insurer) or each subscriber (in the case of a reciprocal insurer)
if the member or subscriber shall not pay the amount assessed against the
member or subscriber to the director on or before a day to be specified in the
order, to show cause why the member or subscriber should not be held liable to
pay such assessment together with costs as set forth in ORS 734.440, and why
the director should not have judgment therefor. [1967 c.359 §296]
     734.430
Publication and transmittal of assessment order. The Director of the Department of Consumer
and Business Services shall cause a notice of the assessment order issued under
ORS 734.420, which shall set forth a brief summary of the contents of such
order, to be:
     (1) Published in such manner as shall be
directed by the court; and
     (2) Enclosed in a sealed envelope,
addressed and mailed, postage prepaid, to each member or subscriber liable
thereunder, at the last-known address of the member or subscriber as it appears
on the records of the insurer, at least 20 days before the return day of the
order to show cause specified in the assessment order. [1967 c.359 §297]
     734.440
Judgment upon assessment.
(1) On the return day of the order to show cause specified in the assessment
order issued under ORS 734.420, if the member or subscriber does not appear and
serve verified objections upon the Director of the Department of Consumer and
Business Services, the court shall make an order adjudging that such member or
subscriber is liable for the amount of the assessment against the member or
subscriber, together with $10 costs, and that the director may have judgment
against the member or subscriber therefor.
     (2) If on such return day the member or
subscriber shall appear and serve verified objections upon the director, there
shall be a full hearing before the court or a referee to hear and determine the
matter. The court, after such hearing, shall make an order either negativing
the liability of the member or subscriber to pay the assessment or affirming
liability to pay the whole or some part thereof, together with $25 costs and
the necessary disbursements incurred at such hearing, and directing that the
director, in the latter case, may have judgment therefor. [1967 c.359 §298;
2003 c.576 §221]
     734.510
Definitions for ORS 734.510 to 734.710. As used in ORS 734.510 to 734.710, unless the context requires
otherwise:
     (1) “Association” means the Oregon
Insurance Guaranty Association created by ORS 734.550.
     (2) “Board” means the board of directors
of the association.
     (3) “Controlled insurer” means an insurer
70 percent or more of whose stock is owned by a corporation, or by two or more
corporations that are under common ownership.
     (4)(a) “Covered claim” means an unpaid
claim, including a claim for unearned premiums and a claim by the WorkersÂ’
Benefit Fund for payments made pursuant to ORS chapter 656, that arises out of
and is within the coverage and limits of an insurance policy to which ORS
734.510 to 734.710 apply and which is in force at the time of the occurrence
giving rise to the unpaid claim, made by a person insured under such policy or
by a person suffering injury or damage for which a person insured under such
policy is legally liable, if:
     (A) The insurer issuing the policy becomes
an insolvent insurer after September 9, 1971; and
     (B) The claimant or insured is a resident
of this state at the time of the occurrence giving rise to the unpaid claim, or
the property for which claim arises is permanently located in this state.
     (b) “Covered claim” does not include:
     (A) Any amount in excess of the applicable
limits of liability provided by an insurance policy to which ORS 734.510 to
734.710 apply;
     (B) Any amount due any reinsurer, insurer,
insurance pool or underwriting association as subrogated recoveries or
otherwise;
     (C) Except for claims arising out of
workersÂ’ compensation policies subject to ORS chapter 656, a claim filed with
the association after the final date set by the court for the filing of claims
against the liquidator or receiver of an insolvent insurer; or
     (D) Any first party claim by an insured
whose net worth exceeds $25 million on December 31 of the year next preceding
the date the insurer becomes an insolvent insurer, provided that an insuredÂ’s
net worth on such date is deemed to include the aggregate net worth of the
insured and all of its subsidiaries as calculated on a consolidated basis.
     (5) “Dividend” means any payment made to
the stockholders of a controlled insurer, which payment is directly related to
ownership of the stock.
     (6) “Insolvent insurer” means a member insurer:
     (a) Authorized to transact insurance in
this state either at the time the policy was issued or at the time of the
occurrence giving rise to the unpaid claim;
     (b) Against which a final order of
liquidation, with a finding of insolvency, has been entered by a court of
competent jurisdiction in the insurerÂ’s domicile after September 9, 1971; and
     (c) With respect to which no order,
judgment or finding relating to the insolvency of the insurer, whether
preliminary or temporary in nature or otherwise, has been issued by a court of
competent jurisdiction or by any insurance commissioner, insurance department
or similar official or body prior to September 9, 1971, or which was in fact
insolvent prior to September 9, 1971, and such de facto insolvency was or
should have been known by the chief insurance regulatory official of its
domicile.
     (7) “Member insurer” means an insurer,
including a reciprocal insurer, authorized to transact insurance in this state
that writes any kind of insurance to which ORS 734.510 to 734.710 apply.
     (8) “Net direct written premiums” means
direct gross premiums written in this state on insurance policies to which ORS
734.510 to 734.710 apply, less return premiums thereon and dividends paid or
credited to policyholders on such direct business. “Net direct written premiums”
does not include premiums on contracts between insurers or reinsurers.
     (9) “Plan” means the plan of operation of
the association established pursuant to ORS 734.590. [1971 c.616 §5; 1977 c.793
§8; 2001 c.974 §1; 2003 c.576 §556]
     734.520
Purpose. The purpose of ORS
734.510 to 734.710 is to provide for the payment of covered claims under
certain insurance policies to avoid excessive delay in payment and to avoid
financial loss to claimants or policyholders because of the insolvency of an
insurer, to assist in the detection and prevention of insurer insolvencies, to
provide an association to assess the cost of such protection among insurers and
to assist in the liquidation of insurers as provided in this chapter. [1971
c.616 §2]
     734.530
Construction. ORS 734.510 to
734.710 shall be liberally construed to effect the purposes provided in ORS
734.520. [1971 c.616 §3]
     734.540
Application. ORS 734.510 to
734.710 apply to all kinds of direct insurance except life, health, title,
surety, credit, mortgage guaranty, home protection insurance, wet marine and
transportation insurance and insurance against the risk of economic loss
assumed under a less than fully insured employee health benefit plan whether
issued or delivered as health or casualty insurance. [1971 c.616 §4; 1977 c.600
§2; 1981 c.247 §14; 1993 c.649 §7]
     734.550
     734.555
Application to association of certain laws governing corporations; exception. The provisions, procedures and requirements
of ORS chapter 60 relating to a registered office, registered agent and to
service of process, notice and demand shall govern the Oregon Insurance
Guaranty Association, except that the Director of the Department of Consumer
and Business Services shall be substituted for the Secretary of State as the
person with whom all filings shall be made and upon whom, in the circumstances
specified by statute, such service may be effected. [1977 c.600 §6; 1987 c.846 §12]
     734.560
Association board of directors; terms; vacancies; compensation and expenses;
quorum. (1) The board of
directors of the Oregon Insurance Guaranty Association shall consist of nine
members selected by the member insurers, subject to the approval of the
Director of the Department of Consumer and Business Services. The term of each
member of the board shall be as specified in the plan, but in no event for
longer than four years. A vacancy on the board shall be filled for the
remainder of the unexpired term in the same manner as for the initial
selection. If the initial selection of members is not made within 60 days after
September 9, 1971, the director may select the initial members.
     (2) In making or approving selections to
the board, the director shall consider, among other things, whether member
insurers are fairly represented.
     (3) A member of the board shall receive no
compensation for services as a member. However, a member shall be reimbursed by
the association for actual and necessary travel and other expenses incurred by
the member in the performance of duties.
     (4) A majority of the members of the board
constitutes a quorum for the transaction of business. [1971 c.616 §7]
     734.570
Required functions of association. The Oregon Insurance Guaranty Association shall:
     (1) Be obligated to pay covered claims
existing at the time of determination of insolvency of an insurer or arising
within 30 days after the determination of insolvency. Except for covered claims
arising out of workersÂ’ compensation policies, such obligation shall include
only that amount of each covered claim that is less than $300,000. The
association shall pay the full amount of any covered claim arising out of a
workersÂ’ compensation policy, less any amount paid on a covered claim by the
WorkersÂ’ Benefit Fund pursuant to ORS chapter 656. In no event shall the
association be obligated in an amount in excess of the obligation of the
insolvent insurer under the policy from which the claim arises, or for claims
arising after the policy expiration, policy replacement by the insured or
policy cancellation caused by the insured.
     (2) Be the insurer to the extent of the
associationÂ’s obligation on the covered claims and to such extent have all the
rights, duties and obligations of the insolvent insurer as if the insurer had
not become insolvent.
     (3) Assess member insurers the amounts
necessary to pay the expenses incurred by the association in meeting its
obligations and exercising its duties and powers under ORS 734.510 to 734.710.
The assessments of each member insurer shall be in the proportion that the net
direct written premiums of the member insurer for the preceding calendar year
bears to the net direct written premiums of all member insurers for the
preceding calendar year, but shall in no event exceed in any one year two
percent of the member insurerÂ’s net direct written premiums for the preceding
calendar year. Each member insurer shall be notified of an assessment not later
than the 30th day before the day it is due. If the funds of the association do
not provide in any one year an amount sufficient to pay the obligations and
expenses of the association, the funds available shall be prorated among the
obligations and expenses, and the unpaid portions shall be paid as soon
thereafter as funds become available. If an assessment would cause a member
insurerÂ’s financial statement to reflect amounts of capital or surplus less
than the minimum amounts required for a certificate of authority by any
jurisdiction in which the member insurer is authorized to transact insurance,
the association may exempt from or defer payment of the assessment, in whole or
in part, by the member insurer. However, if the member insurer is a controlled
insurer, the association, in making determinations regarding the exemption or
deferral of assessments, shall treat all dividends paid during the three
calendar years immediately preceding the year in which the assessment is made
as assets of the insurer just as if such dividends had not been paid. Each
member insurer designated as a servicing facility may set off against any assessment
authorized payments made on covered claims and expenses incurred in the payment
of such claims by the member insurer in its capacity as a servicing facility.
     (4) Investigate claims brought against the
association and adjust, compromise, settle and pay covered claims to the extent
of the associationÂ’s obligation, and review settlements, releases and judgments
to which the insolvent insurer or its insureds were parties to determine the
extent to which such settlements, releases and judgments may be properly
contested.
     (5) Reimburse servicing facilities and
employees of the association for obligations and expenses incurred and paid in
the handling of claims on behalf of the association, and pay all other expenses
the association incurs in carrying out ORS 734.510 to 734.710. [1971 c.616 §8;
1977 c.793 §9; 2001 c.974 §9]
     734.575
Refunds from association deposited in General Fund. Any sums acquired by refund from the Oregon
Insurance Guaranty Association that have previously been written off by contributing
insurers and offset against corporate excise taxes or fire insurance gross
premiums taxes, and are not then needed for purposes of ORS 734.510 to 734.710,
shall be paid by the association to the Director of the Department of Consumer
and Business Services and deposited with the State Treasurer for credit to the
General Fund of this state. [1977 c.793 §3; 1985 c.686 §1; 1995 c.786 §8; 2003
c.568 §4]
     734.577 [1987 c.582 §1; 1991 c.67 §196; 2003 c.14 §448;
repealed by 2005 c.755 §59]
     734.579
Recoupment assessments; rules.
(1) Each member insurer subject to an Oregon Insurance Guaranty Association
assessment pursuant to ORS 734.570 (3) shall recoup the amount of the
assessment through a recoupment assessment imposed on net direct written
premiums. The member insurer shall fix the amount of the recoupment assessment
at an amount sufficient to reimburse the member insurer for the amount of
Oregon Insurance Guaranty Association assessments paid by the member insurer.
     (2) Each member insurer shall annually
certify to the Director of the Department of Consumer and Business Services the
total amount of recoupment assessments assessed for the year and that the
amount assessed does not exceed the amount of Oregon Insurance Guaranty
Association assessments imposed and not previously recouped or offset against
corporate excise taxes or fire insurance gross premiums taxes.
     (3) The director may by rule establish a
minimum threshold for which a recoupment assessment under subsection (1) of
this section need not be made.
     (4) The Department of Consumer and
Business Services, pursuant to rules adopted by the director, may audit member
insurer determinations of recoupment assessments.
     (5) Recoupment assessments shall be
separately stated on premium billing statements. Recoupment assessments may not
be considered gross premiums for any purpose. [2003 c.568 §2]
     734.580
Discretionary functions of association. The Oregon Insurance Guaranty Association may:
     (1) With the approval of the Director of
the Department of Consumer and Business Services, employ or retain such persons
or designate such servicing facilities as are necessary to handle claims and
perform the other duties of the association. Servicing facilities so designated
may be foreign corporations or associations.
     (2) Borrow funds necessary to carry out
ORS 734.510 to 734.710, in such manner as may be specified in the plan.
     (3) Sue or be sued.
     (4) Negotiate and become a party to such
contracts as are necessary to carry out ORS 734.510 to 734.710.
     (5) At the end of any calendar year,
refund to member insurers, in proportion to an insurerÂ’s payments to the
association, that amount by which the board of directors find that the funds of
the association exceed its current claims and expenses plus the liabilities estimated
for the coming year.
     (6) Perform such other acts as are
necessary or proper to carry out ORS 734.510 to 734.710. [1971 c.616 §9]
     734.590
Plan of operation; submission to director; rules. (1) The Oregon Insurance Guaranty
Association shall submit to the Director of the Department of Consumer and
Business Services not later than 90 days after September 9, 1971, a plan of
operation, and may thereafter submit such amendments thereto as will provide
for the reasonable and equitable exercise of the duties and powers of the
association. The plan of operation, and any amendments thereto, shall become
effective upon approval in writing by the director.
     (2) If the association fails to submit a
plan that receives the approval of the director as provided in subsection (1)
of this section, or if the association thereafter fails to maintain a plan
satisfactory to the director, the director shall by rule prescribe a plan of
operation that meets the standards provided in subsection (1) of this section.
A plan prescribed by the director shall remain in effect until the director by
rule provides otherwise.
     (3) No member insurer shall fail to comply
with the currently effective plan of operation. [1971 c.616 §10]
     734.600
Contents of plan of operation.
A plan of operation shall:
     (1) Establish procedures for the
submission, processing and payment of claims against the Oregon Insurance
Guaranty Association.
     (2) Establish procedures for record
keeping, payment of expenses and administration of all other financial affairs
of the association.
     (3) Establish times and places for
meetings of the board.
     (4) Establish procedures for selection of
the board of directors and for approval of that selection by the Director of
the Department of Consumer and Business Services.
     (5) Establish a procedure for appeal by a
member insurer to the director of final actions or decisions of the
association.
     (6) Establish such other procedures as may
be necessary or proper to carry out the duties and powers of the association. [1971
c.616 §11]
     734.610
Notification to association of insurer insolvency; furnishing association with
premium information. The
Director of the Department of Consumer and Business Services shall:
     (1) Notify the Oregon Insurance Guaranty
Association of the insolvency of an insurer not later than three days after the
director receives notice of the determination of insolvency.
     (2) Upon request of the board, provide the
association with a statement of the net direct written premiums of each member
insurer for the preceding calendar year. [1971 c.616 §12]
     734.620
Notification of insolvency to insured persons; revocation of designation of
servicing facility. The
Director of the Department of Consumer and Business Services may:
     (1) Require the Oregon Insurance Guaranty
Association to notify the insureds of an insolvent insurer of the determination
of insolvency and of their rights under ORS 734.510 to 734.710. Such
notification may be by:
     (a) Certified or first-class mail to the
address of each such person as it last appears in the records of the director
or the insurer;
     (b) Publication in a newspaper of general
circulation in this state if the addresses of those persons to be notified is
not available from the records of the director or the insurer; or
     (c) Any combination of the methods
referred to in paragraphs (a) and (b) of this subsection that the association
considers likely to inform the persons of their rights under ORS 734.510 to
734.710.
     (2) Revoke the designation of any
servicing facility that the director finds is not processing and paying claims
in the manner provided in the plan and in ORS 734.510 to 734.710. [1971 c.616 §13]
     734.630
Assignment of claim rights; filing statements of paid claims; effect of claim
settlements. (1) Any person
who recovers on a covered claim under ORS 734.510 to 734.710 thereby assigns
the rights of the person under the insurance policy to the Oregon Insurance
Guaranty Association to the extent of such recovery. Every person who seeks the
protection of ORS 734.510 to 734.710 shall cooperate with the association to
the same extent such person would have been required to cooperate with the
insolvent insurer. The association shall have no cause of action against the
insureds of an insolvent insurer for any sums paid, except for those causes of
action the insolvent insurer would have had if such sums had been paid by the
insolvent insurer. If an insolvent insurer operates on the assessment plan, the
payment of claims by the association does not reduce the liability of the insured
to the receiver for unpaid assessments.
     (2) Periodically the association shall
file with the receiver statements of the covered claims paid by the association
and estimates of anticipated claims against the association. Such filings shall
preserve the rights of the association against the assets of the insolvent
insurer.
     (3) The receiver shall be bound by
settlements of covered claims by the association or a similar organization in
another state. The court having jurisdiction shall grant such claims priority
in accordance with ORS 734.360. [1971 c.616 §14; 2001 c.974 §4]
     734.635
Disbursing assets of insolvent insurer to association; court approval; notice
to other states. (1) Not
later than 120 days from the date the order of liquidation of a member insurer
is filed in the office of the clerk of the court by which the order was made,
that insurerÂ’s receiver shall make application to the court for approval of a
proposal to disburse the insurerÂ’s marshalled assets to the Oregon Insurance
Guaranty Association from time to time as those assets become available.
     (2) A proposal made by a receiver under
subsection (1) of this section shall include, but not be limited to, provisions
for:
     (a) Reserving amounts for the payment of
those claims described in ORS 734.360;
     (b) Disbursing the marshalled assets of
the insolvent insurer to the association in an amount estimated to be at least
equal to the claim payments to be made by the association for which the
association could assert a claim against the insolvent insurer;
     (c) Disbursing the marshalled assets in
the amount available when the marshalled assets do not equal the amount of the
claim payments to be made by the association for which the association could
assert a claim against the insolvent insurer;
     (d) Securing an agreement from the
association to return to the receiver any assets previously disbursed that may
be required to pay the claims of secured creditors and the claims described in
ORS 734.360; and
     (e) A complete report by the association
to the receiver accounting for all assets disbursed to the association under
this section, expenditures made from those assets and any interest earned by
the association on those assets.
     (3) When an insurer’s receiver intends to
make application to a court for approval of a proposal to disburse the insurerÂ’s
marshalled assets to the association under this section, the receiver shall
give notice of the application, at least 30 days prior to filing the
application with the court, to the insurance supervisory official and the
insurance guaranty agency that performs functions similar to that of the
association of each state in which the insolvent insurer was authorized. [1977
c.793 §2; 2001 c.974 §10]
     734.640
Claim priority. (1) Any
person who has a claim under an insurance policy against an insurer other than
an insolvent insurer which would also be a covered claim against an insolvent
insurer must first exhaust the remedies under such policy.
     (2) Any person who has a claim that may
also be recovered from one or more insurance guaranty agencies that perform
functions similar to that of the Oregon Insurance Guaranty Association shall
first seek recovery from whichever organization serves the place of residence
of the insured, except that:
     (a) Recovery on first party claims for
damage to property with a permanent location shall first be sought from
whichever organization serves the location of the property; and
     (b) Recovery on workers’ compensation
claims shall first be sought from whichever organization serves the residence
of the claimant.
     (3) Any recovery under ORS 734.510 to
734.710 from the association shall be reduced by the amount of any recovery
pursuant to subsections (1) and (2) of this section. [1971 c.616 §16; 1977
c.793 §10]
     734.650
Notifying director of impaired insurers; examination; reports on impaired insurers. (1) Whenever the board obtains any
information indicating that any member insurer is impaired or in a financial
condition hazardous to the policyholders or the public, the board shall so
notify the Director of the Department of Consumer and Business Services.
     (2) The board may request the director to
examine any member insurer that the board in good faith believes to be impaired
or in a financial condition hazardous to the policyholders or the public. The
director shall cause the examination to begin within 30 days after the receipt
of any such request. Except as otherwise provided in ORS 734.510 to 734.710,
the examination shall be conducted as provided in ORS chapter 731.
     (3) The director shall report the results
of an examination to the board and shall notify the board whenever the director
has reasonable cause to believe during an examination that the insurer is
impaired or insolvent. The results of the completed examination shall not be released
to the board before release to the public. The request for examination shall
not be available for public inspection before release of the results of the
examination to the public.
     (4) The board may make such reports and
recommendations to the director regarding the insolvency, liquidation,
rehabilitation or conservation of member insurers as the board considers
appropriate. Any such reports or recommendations are not public records. [1971
c.616 §17]
     734.660
Regulation of association as insurer. The Oregon Insurance Guaranty Association is subject to regulation by
the Director of the Department of Consumer and Business Services in the same
manner as an insurer. Not later than March 30 of each year, the board shall
submit to the director, in a form approved by the director, a financial report
for the preceding year. [1971 c.616 §18]
     734.670
Exemption of association from payment of fees and taxes. Except for taxes levied on real or personal
property, the Oregon Insurance Guaranty Association shall be exempt from the
payment of all fees and taxes levied by this state or by any city, county,
district or other political subdivision of this state. [1971 c.616 §19]
     734.680 [1971 c.616 §20; repealed by 1977 c.793 §11]
     734.690
Immunity from legal action.
No person shall have a cause of action against any member insurer, the Oregon
Insurance Guaranty Association or its employees or servicing facilities, any
member of the board, or the Director of the Department of Consumer and Business
Services or employees of the director for any action taken by them in carrying
out ORS 734.510 to 734.710. [1971 c.616 §21]
     734.695
Liability of insured of insolvent insurer. (1) The insured of an insolvent insurer may not be personally liable
for amounts due any reinsurer, insurer, insurance pool or underwriting
association as subrogation recoveries or otherwise up to the applicable limits
of liability provided by the insurance policy issued by the insolvent insurer.
     (2) Notwithstanding the provisions of
subsection (1) of this section, and except for claims arising out of workersÂ’
compensation policies subject to ORS chapter 656, the Oregon Insurance Guaranty
Association may recover from the following persons the amount of any covered
claim paid on behalf of such person under ORS 734.510 to 734.710:
     (a) Any insured whose net worth exceeds
$25 million on December 31 of the year next preceding the date the insurer
becomes an insolvent insurer and whose liability obligations to other persons
are satisfied in whole or in part by payments made under ORS 734.510 to
734.710; and
     (b) Any person who is an affiliate of the
insolvent insurer and whose liability obligations to other persons are
satisfied in whole or in part by payments made under ORS 734.510 to 734.710. [1977
c.793 §4; 2001 c.974 §2]
     734.700
Defense of claims on default of insolvent insurer. (1) Any pending proceeding in which an
insolvent insurer is a party or is obligated to defend a party in any court of
this state shall be stayed for 60 days after the date a receiver is appointed
by the court to permit the Oregon Insurance Guaranty Association time to
prepare a defense in such proceedings.
     (2) If any covered claim arises from a
judgment based on the default of the insolvent insurer or its failure to defend
an insured, the association may apply to have such judgment set aside, and,
upon such application shall be permitted to defend against the claim on the
merits. [1971 c.616 §22]
     734.710
Administration of delinquency proceeding claims and expenses; application of ORS
734.014, 734.026 and 734.110 to 734.440 to insurers. (1) In any delinquency proceeding involving
a member insurer, the claims and expenses of the insurer shall be administered
as provided in ORS 734.510 to 734.710.
     (2) Except as otherwise provided in ORS
734.510 to 734.710, ORS 734.014, 734.026 and 734.110 to 734.440 apply to a
member insurer. [1971 c.616 §23]
     734.750
Short title. ORS 734.750 to
734.890 may be cited as the Oregon Life and Health Insurance Guaranty
Association Act. [1975 c.251 §2]
     734.760
Definitions for ORS 734.750 to 734.890. As used in ORS 734.750 to 734.890, unless the context requires
otherwise:
     (1) “Account” means any of the three
accounts created under ORS 734.800.
     (2) “Association” means the Oregon Life
and Health Insurance Guaranty Association created under ORS 734.800.
     (3) “Contractual obligation” means any
obligation under covered policies.
     (4) “Covered policy” means any policy or
contract to which ORS 734.750 to 734.890 apply.
     (5) “Impaired insurer” means a member
insurer deemed by the Director of the Department of Consumer and Business
Services after September 13, 1975, to be potentially unable to fulfill its
contractual obligations, excluding insolvent insurers.
     (6) “Insolvent insurer” means an insurer:
     (a) That was a member insurer either at
the time the policy was issued or when the insured event occurred, or any
insurer that has acquired direct policy obligations from a member insurer
through purchase, merger, consolidation, reinsurance or otherwise, whether or
not the acquiring insurer held a certificate of authority to transact insurance
in this state at the time the policy was issued or when the insured event
occurred; and
     (b) That, after September 13, 1975,
becomes insolvent and is placed under a final order of liquidation,
rehabilitation or conservation by a court of competent jurisdiction.
     (7) “Member insurer” means any insurer
authorized to transact in this state any kind of insurance to which ORS 734.750
to 734.890 apply.
     (8) “Premiums” means direct gross
insurance, including annuity, premiums written on covered policies, less return
premiums thereon and dividends paid or credited to policyholders on such direct
business. “Premiums” does not include premiums on contracts between insurers
and reinsurers or any premiums on policies or contracts excluded under ORS
734.790.
     (9) “Resident” means a person to whom
contractual obligations are owed by a member insurer which is determined to be
an impaired or insolvent insurer at a time when the person is a resident of
this state. [1975 c.251 §6; 1987 c.414 §180; 1991 c.811 §1]
     734.770
Purpose. The purpose of ORS
734.750 to 734.890 is to protect the persons specified in ORS 734.790, subject
to certain limitations, against failure in the performance of contractual
obligations, under life and health insurance policies and annuity contracts
specified in ORS 734.790, because of the impairment or insolvency of the
insurer issuing such policies or contracts. To provide this protection:
     (1) An association of insurers is created
to enable the guarantee of payment of benefits and continuation of coverages;
     (2) Members of the Oregon Life and Health
Insurance Guaranty Association are subject to assessment to provide funds to
carry out the purpose of ORS 734.750 to 734.890; and
     (3) The association is authorized to
assist the Director of the Department of Consumer and Business Services, in the
prescribed manner, in the detection and prevention of insurer impairments or
insolvencies. [1975 c.251 §3; 1991 c.811 §2]
     734.780
Construction. ORS 734.750 to
734.890 shall be liberally construed to effect the purpose provided in ORS
734.770. [1975 c.251 §5]
     734.790
Application. (1) ORS 734.750
to 734.890 provide coverage to the following persons for policies and contracts
specified in subsection (2) of this section:
     (a) To a person who is a resident, if the
person is an owner of or a certificate holder under the policy or contract or,
in the case of an unallocated annuity contract, an employee participating in a
governmental retirement plan established under section 401, 403(b) or 457 of
the United States Internal Revenue Code or the beneficiaries of each such
individual if deceased.
     (b) To a person who is not a resident, if
the person is an owner of or a certificate holder under the policy or contract
or, in the case of an unallocated annuity contract, an employee participating
in a governmental retirement plan established under section 401, 403(b) or 457
of the United States Internal Revenue Code or the beneficiaries of each such
individual if deceased. This paragraph applies to a person who is not a
resident only if all of the following conditions are met:
     (A) The insurer that issued the policy or
contract must be a domestic insurer.
     (B) The insurer must never have held a
license or certificate of authority in the state in which the person resides.
     (C) The state in which the person resides
must have an association similar to the Oregon Life and Health Insurance
Guaranty Association.
     (D) The person must not be eligible for
coverage by the association in the state in which the person resides, as
described in subparagraph (C) of this paragraph.
     (c) To a person who, regardless of where
the person resides, is a beneficiary, assignee or payee of the persons covered
under paragraph (a) or (b) of this subsection. This paragraph does not include
a nonresident certificate holder under a group policy or contract.
     (2) ORS 734.750 to 734.890 provide
coverage to the persons specified in subsection (1) of this section for direct
life insurance, including annuity, policies, health insurance policies, and
contracts supplemental to life and health insurance policies, issued by
authorized insurers.
     (3) ORS 734.750 to 734.890 do not provide
coverage for:
     (a) That portion or part of a variable
life insurance or variable annuity policy not guaranteed by an insurer.
     (b) That portion or part of any policy or
contract under which the risk is borne by the policyholder.
     (c) Any policy or contract or part thereof
assumed by the impaired or insolvent insurer under a contract of reinsurance,
other than reinsurance for which assumption certificates have been issued.
     (d) Any policy or contract issued by a
health care service contractor complying with ORS 750.005 to 750.095.
     (e) Any policy or contract issued by a
fraternal benefit society.
     (f) Any portion of a policy or contract to
the extent that the rate of interest on which it is based:
     (A) Exceeds, when averaged over the period
of four years prior to the date on which the association becomes obligated with
respect to the policy or contract, a rate of interest determined by subtracting
four percentage points from MoodyÂ’s Corporate Bond Yield Average averaged for
that same four-year period or for a lesser period if the policy or contract was
issued less than four years before the association became obligated; and
     (B) Exceeds, on and after the date on
which the association becomes obligated with respect to the policy or contract,
the rate of interest determined by subtracting three percentage points from
MoodyÂ’s Corporate Bond Yield Average as most recently available.
     (g) Any plan or program of an employer,
association or similar entity to provide life, health or annuity benefits to
its employees or members to the extent that the plan or program is self-funded
or uninsured, including benefits payable by an employer, association or similar
entity under any of the following:
     (A) A multiple employer welfare
arrangement as defined in section 514 of the Employee Retirement Income
Security Act of 1974, as amended.
     (B) A minimum premium group insurance
plan.
     (C) A stop-loss group insurance plan.
     (D) An administrative services only
contract.
     (h) Any portion of a policy or contract to
the extent that it provides dividends or experience rating credits, or provides
that any fees or allowances be paid to any person, including the policy or
contract holder, in connection with the service to or administration of the
policy or contract.
     (i) Any policy or contract issued in this
state by a member insurer at a time that it did not have a certificate of
authority to issue the policy or contract in this state.
     (j) Any unallocated annuity contract
issued to an employee benefit plan protected under the federal Pension Benefit
Guaranty Corporation.
     (k) Any portion of any unallocated annuity
contract that is issued to or in connection with a specific employee, union or
association of natural persons benefit plan, other than a government retirement
plan referred to in subsection (1) of this section, or a government lottery.
     (L) Any coverage issued by the Oregon
Medical Insurance Pool.
     (4) As used in this section, “Moody’s
Corporate Bond Yield Average” means the Monthly Average Corporates as published
by Moody’s Investors Service, Inc., or any successor thereto. [1975 c.251 §4;
1987 c.414 §181; 1991 c.811 §3]
     734.800
     (a) The health insurance account;
     (b) The life insurance account; and
     (c) The annuity account.
     (2) The association shall come under the
immediate supervision of the Director of the Department of Consumer and
Business Services and shall be subject to the applicable provisions of the
insurance laws of this state. [1975 c.251 §7]
     734.805
Association board of directors; terms; selection; vacancies; compensation and
expenses. (1) The board of
directors of the Oregon Life and Health Insurance Guaranty Association shall
consist of not less than five nor more than nine member insurers, serving terms
as established in the plan of operation. The members of the board shall be
selected by member insurers, subject to the approval of the Director of the
Department of Consumer and Business Services. Vacancies on the board shall be
filled for the remaining period of the term by a majority vote of the remaining
board members, subject to the approval of the director. To select the initial
board of directors, and initially organize the association, the director shall
give notice to all member insurers of the time and place of the organizational
meeting. In determining voting rights at the organizational meeting each member
insurer shall be entitled to one vote in person or by proxy. If the board of
directors is not selected within 60 days after notice of the organizational
meeting, the director may appoint the initial members.
     (2) In approving selections or in
appointing members to the board, the director shall consider, among other
things, whether all member insurers are fairly represented.
     (3) Members of the board of directors may
be reimbursed from the assets of the association for expenses incurred by them
as members of the board, but members of the board shall not otherwise be
compensated by the association for their services. [1975 c.251 §8]
     734.810
Duties and powers of association. In addition to the other powers and duties enumerated in ORS 734.750
to 734.890:
     (1) If a domestic insurer is an impaired
insurer, the Oregon Life and Health Insurance Guaranty Association may, subject
to any conditions imposed by the association and approved by the impaired
insurer and the Director of the Department of Consumer and Business Services,
other than those which impair the contractual obligations of the impaired
insurer:
     (a) Guarantee or reinsure, or cause to be
guaranteed, assumed, or reinsured, any or all of the covered policies of the
impaired insurer.
     (b) Provide such money, pledges, notes,
guarantees or other means as are proper to implement paragraph (a) of this
subsection and assure payment of the contractual obligations of the impaired
insurer pending action under paragraph (a) of this subsection.
     (c) Loan money to the impaired insurer.
     (2) If a member insurer is an insolvent
insurer, the association shall, subject to the approval of the director:
     (a) Guarantee, assume, or reinsure, or
cause to be guaranteed, assumed, or reinsured, the covered policies of the
insolvent insurer;
     (b) Assure payment of the contractual obligations
of the insolvent insurer; and
     (c) Provide such money, pledges, notes,
guarantees or other means as are reasonably necessary to discharge such duties.
     (3)(a) In carrying out its duties under
subsection (2) of this section, permanent policy liens or contract liens may be
imposed in connection with any guaranteed, assumption or reinsurance agreement,
if the court finds that the amounts which can be assessed under ORS 734.750 to
734.890 are less than the amounts needed to assure full and prompt performance
of the insolvent insurerÂ’s contractual obligations or that the economic or
financial conditions affecting member insurers are sufficiently adverse to
render the imposition of policy or contract liens to be in the public interest,
and approves the specific policy liens or contract liens to be used.
     (b) Before being obligated under
subsection (2) of this section the association may request that there be
imposed temporary moratoriums or liens on payments of cash values and policy
loans, in addition to any contractual provisions for deferral of cash or policy
loan values, and such temporary moratoriums and liens may be imposed if they
are approved by the court.
     (4) If the association fails to act as
required in subsection (2) of this section within a reasonable time, the
director shall have the powers and duties of the association under ORS 734.750
to 734.890 with respect to insolvent insurers.
     (5) The association may render assistance
and advice to the director, upon request of the director, concerning
rehabilitation, payment of claims, continuance of coverage or the performance
of other contractual obligations of any impaired or insolvent insurer.
     (6) The association shall have standing to
appear before any court in this state having jurisdiction over an impaired or
insolvent insurer concerning which the association is or may become obligated
under ORS 734.750 to 734.890. Such standing shall extend to all matters germane
to the powers and duties of the association including, but not limited to, proposals
for reinsuring or guaranteeing the covered policies of the impaired or
insolvent insurer and the determination of the covered policies and contractual
obligations. The association may also appear or intervene before a court in
another state with jurisdiction over an impaired or insolvent insurer for which
the association is or may become obligated or with jurisdiction over a third
party against whom the association may have rights through subrogation of the
policyholders of the insurer.
     (7)(a) Any person receiving benefits under
ORS 734.750 to 734.890 shall be considered to have assigned the rights under,
and any causes of action relating to, the covered policy to the association to
the extent of the benefits received because of ORS 734.750 to 734.890, whether
the benefits are payments of or on account of contractual obligations or
continuation of coverage. The association may require an assignment to it of
such rights by any payee, policy or contract owner, beneficiary, insured or
annuitant as a condition precedent to the receipt of any rights or benefits
conferred by ORS 734.750 to 734.890 upon such person. The association shall be
subrogated to these rights against the assets of any insolvent insurer.
     (b) The subrogation rights of the
association under this subsection shall have the same priority against the
assets of the insolvent insurer as that possessed by the person entitled to
receive benefits under ORS 734.750 to 734.890.
     (8) The contractual obligations of the
insolvent insurer for which the association becomes or may become liable shall
not exceed the lesser of:
     (a) The contractual obligations for which
the insurer is liable or would have been liable if it were not an insolvent
insurer, unless such obligations are reduced as permitted by subsection (3) of
this section; or
     (b) The applicable following benefits,
subject to subsection (9) of this section:
     (A) $300,000 in life insurance death
benefits, but not more than $100,000 in net cash surrender and net cash
withdrawal values for life insurance, with respect to any one life, regardless
of the number of policies or contracts.
     (B) $100,000 in health insurance benefits,
including any net cash surrender and net cash withdrawal values, with respect
to any one life, regardless of the number of policies or contracts.
     (C) $100,000 in the present value of
annuity benefits, including net cash surrender and net cash withdrawal values,
with respect to any one life, regardless of the number of policies or
contracts.
     (D) $100,000 in present value annuity
benefits, in the aggregate, including net cash surrender and net cash
withdrawal values, with respect to each individual participating in a
governmental retirement plan established under section 401, 403(b) or 457 of
the United States Internal Revenue Code covered by an unallocated annuity
contract or the beneficiaries of each such individual if deceased.
     (9) The association shall not be liable
for more than $300,000 in the aggregate with respect to any one individual
under subsection (8)(b) of this section.
     (10) Subject to the applicable limitation
with respect to any one individual under subsections (8) and (9) of this
section, the benefits for which the association may become liable with respect
to any one owner of policies or contracts other than an unallocated annuity
contract to which subsection (8)(b)(D) of this section applies, whether the
owner is an individual, corporation or other person, shall not exceed
$5 million in benefits in the aggregate for all persons covered by such
policies or contracts, regardless of the number of the policies and contracts
held by the owner.
     (11) The association may:
     (a) Enter into such contracts as are
necessary or proper to carry out the provisions and purposes of ORS 734.750 to
734.890.
     (b) Sue or be sued, including taking any
legal actions necessary or proper for recovery of any unpaid assessments under
ORS 734.815.
     (c) Borrow money to effect the purposes of
ORS 734.750 to 734.890. Any notes or other evidence of indebtedness of the
association not in default shall be legal investments for domestic insurers and
may be carried as admitted assets.
     (d) Employ or retain such persons as are
necessary to handle the financial transactions of the association, and to
perform such other functions as become necessary or proper under ORS 734.750 to
734.890.
     (e) Negotiate and contract with any
liquidator, rehabilitator, conservator or ancillary receiver to carry out the
powers and duties of the association.
     (f) Take such legal action as may be
necessary to avoid payment of improper claims.
     (g) Exercise, for the purposes of ORS
734.750 to 734.890 and to the extent approved by the director, the powers of a
domestic life or health insurer, but in no case may the association issue
policies other than those issued to perform the contractual obligations of the
impaired or insolvent insurer. [1975 c.251 §9; 1991 c.811 §4]
     734.815
Assessment of members; classes of assessments; amounts; refunds. (1) For the purpose of providing the funds
necessary to carry out the powers and duties of the Oregon Life and Health
Insurance Guaranty Association, the board of directors shall assess the member
insurers, separately for each account, at such time and for such amounts as the
board finds necessary. The board shall collect the assessments after 30 daysÂ’
written notice to the member insurers before payment is due.
     (2) There shall be two assessments, as
follows:
     (a) Class A assessments shall be made for
the purpose of meeting administrative and legal costs and other general
expenses whether or not related to a particular impaired or insolvent insurer.
     (b) Class B assessments shall be made to
the extent necessary to carry out the powers and duties of the association
under ORS 734.810 with regard to an impaired or insolvent insurer.
     (3)(a) The amount of any class A
assessment shall be determined by the board and may be made on a pro rata or
other basis. If pro rata, the board may provide that the class A assessment be
credited against future class B assessments. An assessment on another basis shall
not exceed $150 per member insurer in any one calendar year. The amount of any
class B assessment shall be allocated for assessment purposes among the
accounts in the proportion that the premiums received by the impaired or
insolvent insurer on the policies covered by each account, for the last
calendar year preceding the assessment in which the impaired or insolvent
insurer received premiums, bears to the premiums received by such insurer for
such calendar year on all covered policies.
     (b) Class B assessments for each account
shall be in the proportion that the premiums received on business in this state
by each assessed member insurer on policies covered by each account for the
three most recent calendar years for which information is available preceding
the year in which the insurer became impaired or insolvent, as the case may be,
bears to such premiums received on business in this state for such calendar
years by all assessed member insurers.
     (c) Assessments for funds to meet the
requirements of the association with respect to an impaired or insolvent
insurer shall not be made until necessary to implement the purposes of ORS
734.750 to 734.890. Classification of assessments under subsection (2) of this
section and computation of assessments under this subsection shall be made with
a reasonable degree of accuracy, recognizing that exact determinations may not
always be possible.
     (4) The association may abate or defer, in
whole or in part, the assessment of a member insurer if, in the opinion of the board,
payment of the assessment would endanger the ability of the member insurer to
fulfill its contractual obligations. In the event an assessment against a
member insurer is abated or deferred, in whole or in part, the amount by which
such assessment is abated or deferred shall be assessed against the other
member insurers.
     (5) A member insurer shall not be required
to pay assessments in any one calendar year exceeding two percent of the
insurerÂ’s premiums in this state on the policies covered by the account. If a
member insurerÂ’s total assessment cannot be collected in any one year because
of this limitation, the remaining amount due shall be collected from the
insurer in future years.
     (6) The board may, by an equitable method
as established in the plan of operation, refund to member insurers, in
proportion to the contribution of each insurer to that account, the amount by
which the assets of the account exceed the amount the board finds is necessary
to carry out during the coming year the obligations of the association with
regard to that account, including assets accruing from assignment, subrogation,
net realized gains and income from investments. A reasonable amount may be
retained in any account to provide funds for the continuing expenses of the association
and for future losses.
     (7) It shall be proper for any member
insurer, in determining its premium rates and policyowner dividends for any
kind of insurance within the scope of ORS 734.750 to 734.890, to consider the
amount reasonably necessary to meet its assessment obligations under ORS
734.750 to 734.890.
     (8) The association shall issue to each
insurer paying an assessment under ORS 734.750 to 734.890, other than a class A
assessment, a certificate of contribution in a form prescribed by the Director
of the Department of Consumer and Business Services for the amount so paid. All
outstanding certificates shall be of equal dignity and priority without
reference to amounts or dates of issue. A certificate of contribution may be
shown by the insurer in its financial statement as an asset in such form and
for such amount, if any, and period of time as the director may approve.
     (9) The association may assess and collect
interest on the amount of an assessment owed by a member insurer that fails to
pay the assessment when due. The annual rate that may be charged under this
subsection shall not exceed the rate established by the director by rule. [1975
c.251 §10; 1991 c.811 §5]
     734.820
Plan of operation; submission of amendments to director; rules; contents of
plan. (1)(a) The Oregon Life
and Health Insurance Guaranty Association shall maintain on file with the
Director of the Department of Consumer and Business Services a plan of
operation and shall submit any amendments thereto necessary or suitable to
assure the fair, reasonable and equitable administration of the association.
Amendments to the plan shall become effective upon approval in writing by the
director.
     (b) If the association fails to submit
suitable amendments to the plan, the director shall, after notice and hearing,
adopt and promulgate such reasonable rules as are necessary or advisable to
implement the provisions of ORS 734.750 to 734.890. Such rules shall continue
in force until modified by the director or superseded by amendments submitted
by the association and approved by the director.
     (2) All member insurers shall comply with
the plan of operation.
     (3) The plan of operation shall, in
addition to requirements enumerated elsewhere in ORS 734.750 to 734.890:
     (a) Establish procedures for handling the
assets of the association.
     (b) Establish the amount and method of
reimbursing members of the board of directors.
     (c) Establish regular places and times for
meetings of the board of directors.
     (d) Establish procedures for records to be
kept of all financial transactions of the association, its agents, and the
board of directors.
     (e) Establish the procedures whereby
selections for the board of directors will be made and submitted to the
director.
     (f) Establish any additional procedures for
assessments under ORS 734.815.
     (g) Contain additional provisions
necessary or proper for the execution of the powers and duties of the
association.
     (4) The plan of operation may provide that
any or all powers and duties of the association, except those under of ORS
734.810 (11)(c) and 734.815, may be delegated to a corporation, association or
other organization which performs or will perform functions similar to those of
the association, or its equivalent, in two or more states. Such corporation, association
or organization shall be reimbursed for any payments made on behalf of the
association and shall be paid for its performance of any function of the
association. A delegation under this subsection shall take effect only with the
approval of both the board of directors and the director, and may be made only
to a corporation, association or organization which extends protection not
substantially less favorable and effective than that provided by ORS 734.750 to
734.890. [1975 c.251 §11; 1991 c.811 §6]
     734.825
Powers and duties of director.
In addition to the duties and powers enumerated elsewhere in ORS 734.750 to
734.820 and 734.830 to 734.890:
     (1) The Director of the Department of
Consumer and Business Services shall:
     (a) Upon request of the board of
directors, provide the Oregon Life and Health Insurance Guaranty Association
with a statement of the premiums in the appropriate states for each member
insurer.
     (b) When an impairment is declared and the
amount of the impairment is determined, serve a demand upon the impaired
insurer to make good the impairment within a reasonable time. Notice to the
impaired insurer shall constitute notice to its shareholders, if any. The
failure of the insurer to promptly comply with such demand shall not excuse the
association from the performance of its powers and duties under ORS 734.750 to
734.890.
     (2) The director may suspend or revoke,
after notice and hearing, the certificate of authority to transact insurance in
this state of any member insurer which fails to pay an assessment when due or
fails to comply with the plan of operation. As an alternative the director may
levy a forfeiture on any member insurer which fails to pay an assessment when
due. Such forfeiture shall not exceed five percent of the unpaid assessment per
month, but no forfeiture shall be less than $100 per month.
     (3) Any action of the board of directors
or the association may be appealed to the director by any member insurer if
such appeal is taken within 30 days of the action being appealed. Any final
action or order of the director shall be subject to judicial review in a court
of competent jurisdiction.
     (4) The liquidator, rehabilitator or
conservator of any impaired insurer may notify all interested persons of the
effect of ORS 734.750 to 734.890. [1975 c.251 §12]
     734.830
Notifying director of impaired insurers; examination; reports on impaired
insurers. To aid in the
detection and prevention of insurer impairments and insolvencies:
     (1) The board of directors shall, upon
majority vote, notify the Director of the Department of Consumer and Business
Services of any information indicating any member insurer may be an impaired
insurer or insolvent insurer.
     (2) The board of directors may, upon
majority vote, request that the director order an examination of any member
insurer which the board in good faith believes to be an impaired or insolvent
insurer. The director may conduct such examination. The examination may be
conducted as a National Association of Insurance Commissioners examination or
may be conducted by such persons as the director designates. The cost of such
examination shall be paid by the Oregon Life and Health Insurance Guaranty
Association and the examination report shall be treated as are other
examination reports in this state. In no event shall the examination report be
released to the board of directors of the association prior to its release to
the public, but this shall not excuse the director from the obligation to
comply with subsection (3) of this section. The director shall notify the board
of directors when the examination is completed. The request for an examination
shall be kept on file by the director but it shall not be open to public
inspection prior to the release of the examination report to the public and
shall be released at that time only if the examination discloses that the
examined insurer is an impaired insurer or insolvent insurer.
     (3) The director shall report to the board
of directors when the director has reasonable cause to believe that any member
insurer examined at the request of the board of directors may be an impaired
insurer or insolvent insurer.
     (4) The board of directors may, upon
majority vote, make reports and recommendations to the director upon any matter
germane to the solvency, liquidation, rehabilitation or conservation of any
member insurer. Such reports and recommendations shall not be considered public
records.
     (5) The board of directors may, upon
majority vote, make recommendations to the director for the detection and
prevention of insurer impairments or insolvencies.
     (6) The board of directors shall, at the
conclusion of any insurer impairment or insolvency in which the association
carried out its duties under ORS 734.750 to 734.890 or exercised any of its
powers under ORS 734.750 to 734.890, prepare a report on the history and causes
of such impairment or insolvency, based on the information available to the
association, and submit such report to the director. [1975 c.251 §13]
     734.835
Assessments offset against tax liabilities; rate. (1) A member insurer may offset against its
corporate excise tax liabilities to this state an assessment described in ORS
734.815 (8), at the rate of 20 percent of the amount of such assessment for
each of the five calendar years following the year in which such assessment was
paid. In the event a member insurer should cease doing business, all uncredited
assessments may be credited against its premium or corporate excise tax
liabilities for the year it ceases doing business.
     (2) Any sums acquired by refund pursuant
to ORS 734.815 (6) from the Oregon Life and Health Insurance Guaranty
Association which have theretofore been written off by contributing insurers
and offset against premium or corporate excise taxes as provided in subsection
(1) of this section, and are not then needed for purposes of ORS 734.750 to
734.890, shall be paid by the association to the Director of the Department of
Consumer and Business Services and deposited by the director with the State
Treasurer for credit to the General Fund of this state. [1975 c.251 §14; 1995
c.786 §9]
     734.840
Conduct of liquidation, rehabilitation or conservation proceeding involving
impaired or insolvent insurer.
(1) Nothing in ORS 734.750 to 734.890 shall be construed to reduce the
liability for unpaid assessments of the insureds on an impaired or insolvent
insurer operating under a plan with assessment liability.
     (2) Records shall be kept of all
negotiations and meetings in which the Oregon Life and Health Insurance
Guaranty Association or its representatives are involved to discuss the
activities of the association in carrying out its powers and duties under ORS
734.810. Records of such negotiations or meetings shall be made public only
upon the termination of a liquidation, rehabilitation or conservation
proceeding involving the impaired or insolvent insurer, upon the termination of
the impairment or insolvency of the insurer, or upon the order of a court of
competent jurisdiction. Nothing in this subsection shall limit the duty of the
association to render a report of its activities under ORS 734.850.
     (3) For the purpose of carrying out its
obligations under ORS 734.750 to 734.890, the association shall be considered
to be a creditor of the impaired or insolvent insurer to the extent of assets
attributable to covered policies reduced by any amounts to which the
association is entitled as subrogee pursuant to ORS 734.810 (7). All assets of
the impaired or insolvent insurer attributable to covered policies shall be
used to continue all covered policies and pay all contractual obligations of
the impaired or insolvent insurer as required by ORS 734.750 to 734.890. “Assets
attributable to covered policies,” as used in this subsection, is that
proportion of the assets which the reserves that should have been established
for such policies bear to the reserves that should have been established for
all policies of insurance written by the impaired or insolvent insurer.
     (4)(a) Prior to the termination of any
liquidation, rehabilitation or conservation proceeding, the court may take into
consideration the contributions of the respective parties, including the
association, the shareholders and policyowners of the insolvent insurer and any
other party with a bona fide interest, in making an equitable distribution of
the ownership rights of such insolvent insurer. In such a determination,
consideration shall be given to the welfare of the policyholders of the
continuing or successor insurer.
     (b) No distribution to stockholders, if
any, of an impaired or insolvent insurer shall be made until and unless the
total amount of valid claims of the association for funds expended in carrying
out its powers and duties under ORS 734.810 with respect to such insurer have
been fully recovered by the association.
     (5)(a) If an order for liquidation or
rehabilitation of an insurer domiciled in this state has been entered, the
receiver appointed under such order shall have a right to recover on behalf of
the insurer, from any affiliate that controlled it, the amount of distributions,
other than stock dividends paid by the insurer on its capital stock, made at
any time during the five years preceding the petition for liquidation or
rehabilitation, subject to the limitations of paragraphs (b), (c) and (d) of
this subsection.
     (b) No such dividend shall be recoverable
if the insurer shows that, when paid, the distribution was lawful and
reasonable, and that the insurer did not know and could not reasonably have
known that the distribution might adversely affect the ability of the insurer
to fulfill its contractual obligations.
     (c) Any person who was an affiliate that
controlled the insurer at the time the distributions were paid shall be liable
up to the amount of distributions the person received. Any person who was an
affiliate that controlled the insurer at the time the distributions were
declared shall be liable up to the amount of distributions the person would
have received if they had been paid immediately. If two persons are liable with
respect to the same distributions, they shall be jointly and severally liable.
     (d) The maximum amount recoverable under
this subsection shall be the amount needed in excess of all other available
assets of the insolvent insurer to pay the contractual obligations of the
insolvent insurer.
     (e) If any person liable under paragraph
(c) of this subsection is insolvent, all its affiliates that controlled it at
the time the dividend was paid shall be jointly and severally liable for any
resulting deficiency in the amount recovered from the insolvent affiliate. [1975
c.251 §15; 1991 c.811 §7]
     734.850
Examination and regulation of association by director; required reports. The Oregon Life and Health Insurance
Guaranty Association shall be subject to examination and regulation by the
Director of the Department of Consumer and Business Services. The board of
directors shall submit to the director, not later than May 1 of each year, a
financial report for the preceding calendar year in a form approved by the
director, and a report of its activities during the preceding calendar year. [1975
c.251 §16]
     734.860
Exemption of association from payment of fees and taxes. The Oregon Life and Health Insurance
Guaranty Association shall be exempted from payment of all fees and all taxes
levied by this state or any of its political subdivisions, except taxes levied
on real property. [1975 c.251 §17]
     734.870
Immunity from legal action.
There shall be no liability on the part of, and no cause of action of any
nature shall arise against, any member insurer or its agents or employees, the
Oregon Life and Health Insurance Guaranty Association or its agents or
employees, members of the board of directors, or the Director of the Department
of Consumer and Business Services or the representatives of the director, for
any action taken by them in the performance of their powers and duties under
ORS 734.750 to 734.890. [1975 c.251 §18]
     734.880
Stay of proceeding involving insolvent insurer. All proceedings in which an insolvent
insurer is a party in any court in this state shall be stayed 60 days from the
date an order of liquidation, rehabilitation or conservation is final to permit
proper legal action by the Oregon Life and Health Insurance Guaranty
Association on any matters germane to its powers or duties. As to judgment under
any decision, order, verdict or finding based on default the association may
apply to have such judgment set aside by the same court that made the judgment,
and shall be permitted to defend against such suit on the merits. [1975 c.251 §19]
     734.890
Association not to be used in sales or solicitation. No insurer or insurance producer shall make,
publish, disseminate, circulate or place before the public, or cause directly
or indirectly, to be made, published, disseminated, circulated or placed before
the public, in any newspaper, magazine or other publication, or in the form of
a notice, circular, pamphlet, letter or poster, or over any radio station or
television station, or in any other way, any advertisement, announcement or
statement which uses the existence of the Oregon Life and Health Insurance
Guaranty Association for the purpose of sales, solicitation or inducement to
purchase any form of insurance covered by the Oregon Life and Health Insurance
Guaranty Association Act. This section shall not apply however to the Oregon
Life and Health Insurance Guaranty Association or any other entity which does
not sell or solicit insurance or to public service institutional advertisements
by individual insurers. [1975 c.251 §20; 2003 c.364 §87]
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