2007 Oregon Code - Chapter 737 :: Chapter 737 - Rates and Rating Organizations
Chapter 737 —
Rates and Rating Organizations
2007 EDITION
RATES AND RATING ORGANIZATIONS
INSURANCE
GENERAL PROVISIONS
737.007    “Rating
organization” defined
737.012    “Advisory
organization” defined
737.017    “Member,”
“subscriber” defined
737.025Â Â Â Â Purpose,
intent of chapter
737.035Â Â Â Â Application
of chapter
737.045Â Â Â Â Remedies
of director for violations of chapter
RATES AND RATE MAKING
737.205Â Â Â Â Filing
rates, plans with director; public inspection of filings; effect on workersÂ’
compensation filings
737.207Â Â Â Â Commercial
liability insurance rate filings; prior approval by director
737.209Â Â Â Â Hearing
on rate filings under ORS 737.207; order; review
737.215Â Â Â Â Effect
of noncompliance with rating regulation
737.225Â Â Â Â Records
requirements; inspection; statistics; workersÂ’ compensation statistical agency;
rules
737.230Â Â Â Â Data
must include certain information
737.235Â Â Â Â Examining
rating systems of insurers; costs
737.245Â Â Â Â Collusive
ratings prohibited; liability for damages
737.255Â Â Â Â Authority
for cooperative ratings and systems
737.265Â Â Â Â Unauthorized
adherence to rates, rating systems; workersÂ’ compensation insurance policy
forms
737.270Â Â Â Â Determination
of workersÂ’ compensation premiums for worker leasing company; reporting
statistical experience
737.275Â Â Â Â Preparation
of rates, rating systems and other administrative matters by insurers under
common ownership
737.310Â Â Â Â Method
of rate making; factors considered; rules
737.312Â Â Â Â Agreements
among insurers for assignment of risks; rate modifications
737.316Â Â Â Â Combining
employers for workersÂ’ compensation insurance; conditions
737.318Â Â Â Â Premium
audit program for workersÂ’ compensation insurance; rules
737.320Â Â Â Â Review
of certain filings; effective date of filings; investigation and evaluation of
workersÂ’ compensation rate filings
737.322Â Â Â Â Rating
plan approval; rules; hearing on disapproval; costs
737.325Â Â Â Â Suspension
or modification of filing requirement; rules; excess rates for specific risks
737.330Â Â Â Â Contracts
to comply with effective filings; exception
737.336Â Â Â Â Disapproval
of filings by director; noncompliance with chapter
737.340Â Â Â Â Initiation
of proceedings by aggrieved person to determine lawfulness of filings; hearing
737.342Â Â Â Â Hearing
and order procedure
RATING ORGANIZATIONS
737.350Â Â Â Â Application
for license by rating organization
737.355Â Â Â Â Licensing
rating organizations generally; licensing workersÂ’ compensation rating
organizations; rules; revocation and suspension; fees
737.360Â Â Â Â Rating
organization to accept insurers as subscribers; rules of organization to be
reasonable; review of applications for subscribership and of reasonableness of
rules
737.365Â Â Â Â Cooperative
activities among rating organizations and insurers
737.390Â Â Â Â Regulation
of joint underwriting and joint reinsurance
737.505Â Â Â Â Insured
entitled to rate information; remedies of aggrieved persons
737.510Â Â Â Â Advisory
organizations; registration; jurisdiction of director to restrict unfair
practices
737.515Â Â Â Â Examination
of rating, advisory and other organizations; payment of costs; acceptance of
report from another state
737.526Â Â Â Â Interchange
of data; rules; promoting uniformity of rating laws
737.535Â Â Â Â Withholding
or giving false information prohibited
737.545Â Â Â Â Procedure
for suspension of rating organization license
737.560Â Â Â Â Rating
organization membership
FICTITIOUS GROUPINGS
737.600Â Â Â Â Fictitious
grouping for rate purposes prohibited; rules; exceptions
737.602Â Â Â Â Authorization
for insurance for certain projects; premiums; qualifications
737.604Â Â Â Â Rules
AUTHORIZATION FOR INSURANCE FOR COMBINED
SEWER OVERFLOW PROJECTS
(Temporary provisions relating to authorization for insurance for
combined sewer overflow projects are compiled as notes following ORS 737.604)
     737.005 [Amended by 1963 c.580 §92; repealed by 1967 c.359 §704]
GENERAL PROVISIONS
     737.007
“Rating organization” defined.
(1) As used in this chapter, unless the context requires otherwise, “rating
organization” means:
     (a) Every person, other than an insurer,
whether located within or outside this state who has as the personÂ’s object or
purpose the making of rates, rating plans or rating systems; or
     (b) Two or more insurers which act in
concert for the purpose of making rates, rating plans or rating systems.
     (2) Subsection (1) of this section does
not include, apply to or affect two or more insurers operating within the
specific authorizations contained in ORS 737.275, 737.312, 737.365, 737.390 and
737.526. [1969 c.690 §14]
     737.010 [Amended by 1967 c.359 §303; renumbered
737.280]
     737.012
“Advisory organization” defined. As used in this chapter, unless the context requires otherwise, “advisory
organization” means every group, association or other organization of insurers,
whether located within or outside this state, which assists authorized insurers
which make their own filings or licensed rating organizations in rate making,
by the collection and furnishing of loss or expense statistics or by the
submission of recommendations, but which does not make filings under this
chapter. [1969 c.690 §15]
     737.015 [Repealed by 1967 c.359 §704]
     737.017
“Member,” “subscriber” defined.
As used in this chapter, unless the context requires otherwise:
     (1) “Member” means:
     (a) An insurer that participates in or is
entitled to participate in the management of a rating, advisory or other
organization; or
     (b) For purposes of workers’ compensation
insurance, an insurer that is affiliated or associated with a rating, advisory
or other organization by agreement with the organization for the purpose of
obtaining the rates and rating manuals or the services offered by the
organization.
     (2) “Subscriber” means an insurer that is
furnished at its request:
     (a) With rates and rating manuals by a
rating organization of which it is not a member; or
     (b) With advisory services by an advisory
organization of which it is not a member. [1969 c.690 §16; 1999 c.235 §6]
     737.020 [1967 c.359 §299; repealed by 1969 c.690 §29]
     737.025
Purpose, intent of chapter.
(1) The purpose of this chapter is to promote the public welfare by regulating
insurance rates to the end that they shall not be excessive, inadequate or
unfairly discriminatory and to authorize cooperation between insurers in rate
making and other related matters.
     (2) It is the express intent of this
chapter to permit and encourage competition between insurers on a sound
financial basis. [1969 c.690 §1]
     737.030 [1967 c.359 §300; repealed by 1969 c.690 §29]
     737.035
Application of chapter. This
chapter applies to all forms of insurance on risks or operations in this state,
except:
     (1) Reinsurance, other than joint
reinsurance to the extent stated in ORS 737.390;
     (2) Insurance against loss of, or damage
to, aircraft, including accessories and equipment, or against liability arising
out of ownership, maintenance or use of aircraft;
     (3) Wet marine and transportation
insurance;
     (4) Life insurance;
     (5) Health insurance; or
     (6) Surplus lines insurance. [1969 c.690 §2;
2005 c.185 §10]
     737.040 [1967 c.359 §301; repealed by 1969 c.690 §29]
     737.045
Remedies of director for violations of chapter. (1) If the Director of the Department of
Consumer and Business Services has reason to believe that a rate, rating plan
or rating system filed or used by an insurer or filed by a rating or advisory
organization on behalf of an insurer does not comply with the requirements and
standards of this chapter, the director may issue an order directing the
insurer or the rating or advisory organization to discontinue or desist from
the noncompliance. An order issued under this subsection is subject to the
provisions of ORS 731.252.
     (2) If the director holds a hearing on an
order issued pursuant to subsection (1) of this section, the insurer or rating
or advisory organization filing or using the rate, rating plan or rating system
shall pay to the director the just and legitimate costs of the hearing,
including actual necessary expenses.
     (3) If the director finds after a hearing
under ORS 737.340 that any rate, rating plan or rating system violates the
provisions of this chapter, the director may issue an order specifying the
violation and stating when, within a reasonable period of time, the further use
of such rate, rating plan or rating system by an insurer or rating or advisory
organization shall be prohibited.
     (4) If the director finds after a hearing
under ORS 737.215 or 737.340 that an insurer or rating or advisory organization
is in violation of any provision of this chapter other than the provisions
dealing with rates, rating plans or rating systems, the director may issue an
order specifying the violation and requiring compliance within a reasonable
time.
     (5) If the director finds after a hearing
under ORS 737.215 that the violation of any of the provisions of this chapter
applicable to it by any insurer or rating organization that has been the
subject of a hearing was willful, the director may suspend or revoke the
certificate of authority of such insurer or the license of such rating
organization.
     (6) If the director finds after a hearing
that any rating organization has willfully engaged in any fraudulent or
dishonest act or practices, the director may suspend or revoke the license of
such organization. [1969 c.690 §10; 1987 c.774 §143]
     737.050 [1967 c.359 §302; repealed by 1969 c.690 §29]
     737.105 [Amended by 1961 c.562 §7; 1965 c.611 §17;
repealed by 1967 c.359 §704]
     737.110 [Repealed by 1967 c.359 §704]
     737.115 [Repealed by 1967 c.359 §704]
     737.120 [Repealed by 1967 c.359 §704]
     737.125 [Repealed by 1967 c.359 §704]
     737.130 [Repealed by 1967 c.359 §704]
     737.135 [Repealed by 1969 c.336 §21 and 1969 c.690 §29]
     737.140 [Repealed by 1967 c.359 §704]
     737.145 [Repealed by 1967 c.359 §704]
     737.150 [Repealed by 1967 c.359 §704]
     737.155 [Repealed by 1967 c.359 §704]
     737.160 [Repealed by 1967 c.359 §704]
     737.165 [Repealed by 1967 c.359 §704]
     737.170 [Repealed by 1967 c.359 §704]
     737.175 [Repealed by 1967 c.359 §704]
     737.180 [Amended by 1967 c.359 §308; renumbered
737.312]
     737.185 [Repealed by 1967 c.359 §704]
RATES AND
RATE MAKING
     737.205
Filing rates, plans with director; public inspection of filings; effect on
workersÂ’ compensation filings.
(1) Every insurer shall file with the Director of the Department of Consumer
and Business Services copies of the rates, rating plans and rating systems used
by it. Except as provided in ORS 737.207, 737.209 and 737.320 (2), each filing
shall become effective immediately on the date specified therein but not
earlier than the date such filing is received by the director. This subsection
does not apply to inland marine risks which by general custom of the business
are not written according to manual rates or rating plans.
     (2) An insurer may satisfy its obligation
to make such filings by becoming a member of or a subscriber to a licensed
rating organization which makes such filings, and by authorizing the director
to accept such filings on its behalf. Such insurer may so adopt the filings of
a rating organization on part of the classes of risks insured by it and may
make its own filings as to other classes which shall be uniform throughout the
insurerÂ’s territorial classification. This subsection does not apply to workersÂ’
compensation insurance filings except to the extent that the rating
organization filings of rating plans or systems under ORS 737.320 are complete
and usable by an insurer without the addition of allowances for expenses, taxes
or profit.
     (3) A filing shall be open to public
inspection immediately upon submission to the director. [1969 c.690 §4; 1981
c.535 §16; 1987 c.774 §50]
     737.207
Commercial liability insurance rate filings; prior approval by director. (1) As used in this section, a market may be
a line, subline or classification of commercial liability insurance.
     (2) Filings of commercial liability
insurance rates for markets specified by the Director of the Department of
Consumer and Business Services shall be submitted by an insurer or rating
organization to the director for review prior to the effective date if the
average annual rate level increase or decrease for each market exceeds 15
percent. Factors to be considered by the director in specifying a market to be
subject to this section may include:
     (a) The nature and extent of competition;
     (b) The size and significance of the
coverage provided;
     (c) Reinsurance availability;
     (d) The volume of cancellations and
nonrenewals; and
     (e) Changing conditions in the economic,
judicial and social environment.
     (3) Except as otherwise provided in ORS
737.209, the effective date of a commercial liability insurance filing required
by subsection (2) of this section to be submitted to the director for review
shall be the date specified therein but not earlier than the 30th day after the
filing is received by the director. After review of the filing, the director
may authorize an earlier effective date, if appropriate. The 30-day waiting
period may be extended to 60 days if the director gives written notice within
such waiting period to the insurer or rating organization which made the filing
that the extended period is needed for consideration of the filing. A filing
subject to subsection (2) of this section that has not been approved or
disapproved within the waiting period, or any extension thereof, shall be
deemed approved.
     (4) Supporting actuarial data shall
accompany every filing of commercial liability insurance rates. The data shall
be in sufficient detail to justify the rate level change and shall demonstrate
compliance with ORS 737.310 governing the making of rates. [1987 c.774 §48]
     737.209
Hearing on rate filings under ORS 737.207; order; review. (1) The Director of the Department of
Consumer and Business Services may hold a hearing on a filing made pursuant to
ORS 737.207 if the director determines that such a hearing would aid the
director in determining whether to approve or disapprove the filing. A hearing
under this section may be held at a place designated by the director and upon
not less than 10 daysÂ’ written notice to the insurer or rating organization
that made the filing and to any other person the director decides should be
notified. A filing that is the subject of a hearing under this section becomes
effective, if approved, as provided in subsection (4) of this section.
     (2) A hearing held pursuant to subsection
(1) of this section must be conducted by an administrative law judge assigned
from the Office of Administrative Hearings established under ORS
183.605. The administrative law judge shall report findings, conclusions
and recommendations to the director within 30 days of the close of the hearing.
The insurer or rating organization proposing the rate filing shall have the
burden of proving that the rate proposal is justified and shall pay to the
director the fair and reasonable costs of the hearing, including actual
necessary expenses.
     (3) Within 10 days of receiving a report
from the administrative law judge, the director shall issue an order approving
or disapproving the filing.
     (4) An order issued under subsection (3)
of this section may be reviewed as provided in ORS 183.480 to 183.540 for
review of contested cases. A filing approved by the director under this section
shall be effective 10 days after the order issued under subsection (3) of this
section and shall remain effective during any review of the order. [1987 c.774 §48a;
1999 c.849 §§175,176; 2003 c.75 §62]
     737.215
Effect of noncompliance with rating regulation. If the Director of the Department of
Consumer and Business Services has reason to believe that noncompliance by an
insurer with the requirements and standards of this chapter to be willful, or
if within the period prescribed by the director in the notice required by ORS
737.336, the insurer, rating or advisory organization does not make such
changes as may be necessary to correct the noncompliance specified by the
director or establish to the satisfaction of the director that such specified
noncompliance does not exist, then the director may hold a hearing in connection
therewith, provided that within a reasonable period of time which shall be not
less than 10 days before the date of such hearing, the director shall mail
written notice to the insurer, rating or advisory organization involved
specifying the matters to be considered at such hearing. [1969 c.690 §8]
     737.225
Records requirements; inspection; statistics; workersÂ’ compensation statistical
agency; rules. (1) Each
insurer, rating organization or advisory organization shall maintain reasonable
records, of the type and kind reasonably adapted to its method of operation, of
its experience or the experience of its members and of the data, statistics or
information collected or used by it in connection with the rates, rating plans,
rating systems, underwriting rules, policy or bond forms, surveys or
inspections made or used by it. An insurer providing workersÂ’ compensation
insurance shall maintain reasonable records showing investment income earned by
the insurer, insurer profit on workersÂ’ compensation insurance, accumulated
reserves for vocational rehabilitation services and accumulated reserves for
claim costs related to orders or awards made pursuant to ORS 656.278.
     (2) The maintenance of such records in the
office of a licensed rating organization of which an insurer is a member or
subscriber will be sufficient compliance with this section for any insurer
maintaining membership or subscribership in such organization, to the extent
that the insurer uses the rates, rating plans, rating systems or underwriting
rules of such organization.
     (3) Such records shall be available to the
Director of the Department of Consumer and Business Services for examination
and inspection at any time in order to determine whether the filings made
pursuant to ORS 737.205 comply with this chapter.
     (4) Each insurer shall maintain statistics
under statistical plans compatible with the rating plans used by the insurer.
An insurer may report its statistics through a recognized agency or advisory
organization, except that workersÂ’ compensation insurance statistics shall be
reported to the workersÂ’ compensation rating organization of which the insurer
is a member. The director shall prescribe by rule the statistical plan for
workersÂ’ compensation insurance.
     (5)(a) The director shall designate one
workersÂ’ compensation statistical agency from the licensed rating organizations
as the agent to which all licensed workersÂ’ compensation rating organizations
shall report workersÂ’ compensation insurance statistics. The director shall
adopt rules to ensure a competitive process in the designation of the one
workersÂ’ compensation statistical agency.
     (b) The designated workers’ compensation
statistical agency shall assist the director in gathering workersÂ’ compensation
insurance statistics and making compilations of those statistics and shall make
the compilations available to insurers and other licensed workersÂ’ compensation
rating organizations, subject to rules adopted by the director.
     (c) If the director licenses only one
workersÂ’ compensation rating organization under ORS 737.355 (2), that rating
organization shall be the designated statistical agent under this subsection.
     (6) The ownership of the financial and
statistical data submitted to a workersÂ’ compensation statistical agency is
vested in the submitting member insurer. The financial and statistical data
shall be confidential and may not be disclosed, provided that the ownership
rights of an insurer shall not limit access by the director for the purposes of
performing the regulatory duties of the Department of Consumer and Business
Services. [1969 c.690 §11; 1981 c.535 §17; 1983 c.360 §2; 1987 c.884 §54; 1999
c.235 §2]
     737.230
Data must include certain information. The data collected and maintained by each insurer, rating organization
or advisory organization pursuant to ORS 737.225 shall be in sufficient detail
to demonstrate the statistical significance of differences or correlations
relevant to the rating plan definitions and rate differentials. [1979 c.870 §6]
     737.235
Examining rating systems of insurers; costs. (1) The Director of the Department of Consumer and Business Services
may make or cause to be made an examination of every insurer transacting any
class of insurance to which the provisions of this chapter are applicable to
ascertain whether such insurer and every rate and rating system used by it for
every such class of insurance complies with the requirements and standards of
this chapter.
     (2) The officers, managers, agents and
employees of any insurer, under examination, may be examined at any time under
oath and shall exhibit all books, records, accounts, documents or agreements
governing its method of operation, together with all data, statistics and
information of every kind and character collected or considered by such insurer
in the conduct of the operations to which such examination relates.
     (3) The reasonable cost of any examination
authorized by this section shall be paid by the organization or insurer to be
examined including actual necessary transportation and traveling expenses.
     (4) Notwithstanding any other provision of
law, all reimbursable expenses collected by the director under subsection (3)
of this section shall be deposited in the fund created by ORS 705.145 for the
payment of expenses incurred in conducting the examinations authorized by this
section. The moneys deposited shall be continuously appropriated for such
purpose. [1969 c.690 §12; 1987 c.373 §83]
     737.245
Collusive ratings prohibited; liability for damages. In the event any insurer shall in collusion
with any other insurer conspire to fix, set or adhere to insurance rates except
as expressly sanctioned by the Insurance Code, such insurer shall be liable to
any person damaged thereby for an amount equal to three times the amount of
such damage together with the damaged party’s attorney fees. [1969 c.690 §13]
     737.255
Authority for cooperative ratings and systems. Subject to and in compliance with the
provisions of this chapter authorizing insurers to be members or subscribers of
rating or advisory organizations or to engage in joint underwriting or joint
reinsurance, two or more insurers may act in concert with each other and with
others with respect to any matters pertaining to the making of rates or rating
systems, the preparation or making of insurance policy or bond forms,
underwriting rules, surveys, inspections and investigations, the furnishing of
loss or expense statistics or other information and data or carrying on of
research. [1969 c.690 §17]
     737.265
Unauthorized adherence to rates, rating systems; workersÂ’ compensation
insurance policy forms. (1)
Members and subscribers of rating or advisory organizations may use the rates,
rating systems, underwriting rules or policy or bond forms of such
organizations, either consistently or intermittently, but, except as provided
in ORS 737.275, 737.312, 737.365, 737.390, 737.526 and subsection (2) of this
section, shall not agree with each other or rating organizations or others to
adhere thereto. The fact that two or more authorized insurers, whether or not
members or subscribers of a rating or advisory organization, use, either
consistently or intermittently, the rates or rating systems made or adopted by
a rating organization, or the underwriting rules or policy or bond forms
prepared by a rating or advisory organization, shall not be sufficient in
itself to support a finding that an agreement to so adhere exists, and may be
used only for the purpose of supplementing or explaining any competent evidence
of the existence of any such agreement.
     (2) Each insurer transacting workers’
compensation insurance shall adhere to the policy forms filed by the licensed
workersÂ’ compensation rating organization of which the insurer is a member and
approved by the Director of the Department of Consumer and Business Services. [1969
c.690 §19; 1971 c.385 §4; 1977 c.333 §1; 1981 c.535 §18; 1999 c.235 §3]
     737.270
Determination of workersÂ’ compensation premiums for worker leasing company;
reporting statistical experience. (1) When a worker leasing company required to be licensed by ORS
656.850 provides workers to work for a client and also provides the workersÂ’
compensation coverage for those workers, the insurance premium for the clientÂ’s
exposure shall be based on the clientÂ’s own experience rating, in the same manner
as required for employers insuring directly employed workers.
     (2) An insurer that provides workers’
compensation to a worker leasing company shall maintain and report to the
licensed workersÂ’ compensation rating organization of which the insurer is a
member separate statistical experience for each client of the worker leasing
company according to the uniform statistical plan prescribed by the Director of
the Department of Consumer and Business Services according to ORS 737.225 (4).
     (3) To reimburse expenses incurred by the
insurer in segregating client experience, the insurer shall be permitted to
charge the worker leasing company a reasonable fee as determined by the
director.
     (4) The worker leasing company shall earn
a separate experience rating for any administrative personnel the company
employs. [1993 c.628 §5; 1999 c.235 §4]
     737.275
Preparation of rates, rating systems and other administrative matters by insurers
under common ownership. With
respect to any matters pertaining to the making of rates or rating systems, the
preparation or making of insurance policy or bond forms, underwriting rules,
surveys, inspections and investigations, the furnishing of loss or expense
statistics or other information and data, or carrying on of research, two or
more admitted insurers having a common ownership or operating in this state
under common management or control are hereby authorized to act in concert
between or among themselves the same as if they constituted a single insurer,
and to the extent that such matters relate to co-surety bonds, two or more
admitted insurers executing such bonds are hereby authorized to act in concert
between or among themselves the same as if they constituted a single insurer. [1969
c.690 §21]
     737.280 [Formerly 737.010; repealed by 1969 c.690 §29]
     737.290 [1967 c.359 §305; repealed by 1969 c.690 §29]
     737.300 [1967 c.359 §306; repealed by 1969 c.690 §29]
     737.305 [Repealed by 1967 c.359 §704]
     737.310
Method of rate making; factors considered; rules. The following standards shall apply to the
making and use of rates:
     (1) Rates shall not be excessive,
inadequate or unfairly discriminatory.
     (2) As to all classes of insurance, other
than workersÂ’ compensation and title insurance:
     (a) No rate shall be held to be excessive
unless:
     (A) Such rate is unreasonably high for the
insurance provided; and
     (B) A reasonable degree of competition
does not exist in the area with respect to the classification to which such
rate is applicable.
     (b) No rate shall be held inadequate unless
such rate is unreasonably low for the insurance provided and:
     (A) Use or continued use of such rate
endangers the solvency of the insurer; or
     (B) The use of such rate by the insurer
has, or if continued will have, the effect of destroying competition or
creating a monopoly.
     (3) Rates for each classification of
coverage shall be based on the claims experience of insurers within
     (4) Due consideration shall be given to
past and prospective loss experience within this state, to the hazards of
conflagration and catastrophe, to a reasonable margin for profit and to
contingencies, to dividends, savings or unabsorbed premium deposits allowed or
returned by insurers to their policyholders, members or subscribers, to past
and prospective expenses specially applicable to this state, and to all other
relevant factors, including judgment factors deemed relevant, within this
state.
     (5) In addition to subsection (4) of this
section, rates for home protection insurance may include provision for
unreimbursed costs of risk inspection and for loss costs under policies which
are terminated without premium because the related home sale is not made.
     (6) In the case of fire insurance rates,
consideration may be given to the experience of the fire insurance business
during the most recent five-year period for which such experience is available.
     (7) The systems of expense provisions
included in the rates for use by any insurer or group of insurers may differ
from those of other insurers or groups of insurers to reflect the requirements
of the operating methods of any such insurer or group of insurers with respect
to any class of insurance, or with respect to any subdivision or combination
thereof for which subdivision or combination separate expenses are applicable.
     (8) Risks may be grouped by
classifications for the establishment of rates and minimum premiums.
Classification rates for casualty, surety or inland marine risks may be
modified to produce rates for individual risks in accordance with rating plans
which establish standards for measuring variations in hazards or expense
provisions or both. Such standards may measure any differences among risks that
can be demonstrated to have a probable effect upon losses or expenses.
     (9) Due consideration shall be given, in
the making and use of rates for all insurance, to investment income earned by
the insurer, to insurer profits and to accumulated reserves for vocational
rehabilitation services and for claim costs related to orders or awards made
pursuant to ORS 656.278.
     (10) The Director of the Department of
Consumer and Business Services, by rule, shall prescribe the conditions under
which a division of payroll between different manual classifications is
permitted for purposes of computing workersÂ’ compensation premiums.
     (11)(a) The director shall not approve any
workersÂ’ compensation rating system that does not include a plan for rewarding
employers, however small, that have good loss experience or programs likely to
improve accident prevention. However, this paragraph is not intended to require
that all employers be experience rated.
     (b) The director shall not approve any
workersÂ’ compensation rating system that does not allow the insurer to include
potential third party recovery as one of the variables in the claims reserving
process.
     (12) At the time an insurer issues a
workersÂ’ compensation insurance policy to an insured for the first time, the
insurer shall give written notice to the insured of the rating classifications
to which the insuredÂ’s employees are to be assigned and shall provide an
adequate description of work activities in each classification. In the event an
insurer recommences coverage following its termination, the notice required
under this subsection must be given only if the gap in coverage exceeds six
months.
     (13) If an insurer determines the workers’
compensation insurance policy of an insured needs reclassification, the
insurer:
     (a) May bill an additional premium for the
revised classification after the insurer has provided the insured at least 60
daysÂ’ written notice of the reclassification.
     (b) Shall bill retroactively to policy
inception or date of change in insuredÂ’s operations for any reclassification
that results in a net reduction of premium.
     (c) May, notwithstanding paragraph (a) of
this subsection, retroactively bill an insured for reclassification during the
policy year without prior notice of reclassification if the insurer shows by a
preponderance of the evidence that:
     (A) The insured knew that the employees
were misclassified, or the insured was adequately informed by the insurer of
the proper classification for the insuredÂ’s employees;
     (B) The insured provided improper or
inaccurate information concerning its operations; or
     (C) The insured’s operations changed after
the date information on the employees was obtained from the insured.
     (14) In consultation with system
participants, the director shall analyze the rating classification system to
investigate changes that simplify the system and reduce costs for employers and
insurers while preserving rate equity and minimizing the potential for abuse.
The director shall give particular emphasis to the method of allocating payroll
to rating classifications and to alternatives to methods that require
verifiable payroll records. Upon completion of this analysis, the director
shall implement appropriate changes to the system.
     (15) The director shall adopt rules to
carry out the provisions of this section and may by rule specify procedures
relating to rating and ratemaking by workersÂ’ compensation insurers.
     (16) A rate increase based solely upon an
insuredÂ’s attaining or exceeding 65 years of age shall be presumed to be unfairly
discriminatory unless the increase is clearly based on sound actuarial
principles or is related to actual or reasonably anticipated experience. [Amended
by 1967 c.359 §307; 1969 c.690 §3; 1981 c.247 §15; 1981 c.535 §19; 1981 c.874 §19;
1983 c.360 §1; 1987 c.676 §1; 1987 c.774 §146; 1987 c.884 §52; 1991 c.768 §1;
1997 c.766 §1; 1997 c.768 §1]
     737.312
Agreements among insurers for assignment of risks; rate modifications. Agreements may be made among insurers with
respect to the equitable apportionment among them of insurance which may be
afforded applicants who are in good faith entitled to such insurance but who
are unable to procure such insurance through ordinary methods. Such insurers
may agree among themselves on the use of reasonable rate modifications for such
insurance, such agreements and rate modifications to be subject to the approval
of the Director of the Department of Consumer and Business Services. [Formerly
737.180]
     737.315 [Amended by 1967 c.359 §309; 1967 c.366 §1;
repealed by 1969 c.690 §29]
     737.316
Combining employers for workersÂ’ compensation insurance; conditions. Notwithstanding ORS 737.600, but subject to
all other rate filing requirements of this chapter, an insurer may combine for
rating purposes the experience of a group of employers covered for workersÂ’
compensation insurance by the insurer, subject to applicable rules adopted by
the Director of the Department of Consumer and Business Services, if:
     (1) All the employers in the group are
members of an organization.
     (2) The employers in the group constitute
at least 50 percent of the employers in the organization, unless the number of
covered workers in the group exceeds 500, in which case the employers in the
group must constitute at least 25 percent of the employers in the organization.
     (3) The grouping of employers is likely to
substantially improve accident prevention, claims handling for the employers
and reduce expenses. [1983 c.706 §6; 1990 c.1 §4]
     737.318
Premium audit program for workersÂ’ compensation insurance; rules. (1) A workersÂ’ compensation insurer shall
maintain a premium audit program to aid in achieving equitable premium charges
to
     (2) The Director of the Department of
Consumer and Business Services shall prescribe by rule a premium audit program
system for workersÂ’ compensation insurance.
     (3) The premium audit system shall include
provisions for:
     (a) Employer education of the audit
reporting function of the rating system;
     (b) A continuing test audit program
providing for auditing of all insurers;
     (c) A continuous monitoring of the audit
program system pursuant to ORS 737.235;
     (d) An appeal process pursuant to ORS
737.505 for employers to question the results of a premium audit. This process
must include written notification to the employer that is included in the final
premium audit billing that informs the employer of appeal rights to the
director under ORS 737.505, of the requirement that a written request to
initiate an appeal must be received by the director not later than the 60th day
after the employer receives the final premium audit billing and of any other
information the director may request by rule; and
     (e) Civil penalties pursuant to ORS
731.988 for violations of prescribed standards of the premium audit system.
     (4) Notwithstanding ORS 737.505, the
provisions of this section apply to all premium audit disputes between
employers and insurers in existence on July 20, 1987, regardless of the policy
year involved or the date of the final audit billing. [1987 c.884 §8; 1999
c.1020 §5]
     737.320
Review of certain filings; effective date of filings; investigation and
evaluation of workersÂ’ compensation rate filings. (1) The Director of the Department of
Consumer and Business Services shall review title insurance filings, and each
workersÂ’ compensation insurance filing, as soon as reasonably possible after
they have been made in order to determine whether they meet the requirements of
this chapter.
     (2) The effective date of each title and
workersÂ’ compensation insurance filing shall be the date specified therein but
not earlier than the 30th day after the date the filing is received by the
director or from the date of receipt of the information furnished in support of
a filing or specific portions of such filing if such supporting information is
required by the director. The waiting period may be extended by the director
for not more than 30 days if the director gives written notice within such
waiting period to the insurer or rating organization which made the filing that
the director needs such additional time for the consideration of such filing or
specific portions of such filing. Upon written application by such insurer or
rating organization, the director may authorize a filing or specific portions
of such filing, which the director has reviewed, to become effective before the
expiration of the waiting period. A filing or portions of a filing shall be
deemed to meet the requirements of this chapter unless disapproved by the
director within the waiting period or any extension thereof.
     (3) Filings of workers’ compensation
rates, rating plans and rating systems by a workersÂ’ compensation rating
organization shall be limited to provisions for claim payment approved or established
by the director, and shall not include allowances for or recognition of
expenses, taxes or profit. A workersÂ’ compensation rating organization shall
make such filings with the director, which filings shall be subject to this
section. The organization shall also file the workersÂ’ compensation policy
forms to be used by its members. The filing shall include a report of
investment income.
     (4) Filings of workers’ compensation rates
by an insurer shall specify allowances for expenses, taxes and profits.
     (5) The director shall investigate and
evaluate all workersÂ’ compensation filings to determine whether the filings
meet the requirements of this chapter. The director shall employ such experts
and other personnel as may be reasonably necessary to make such investigation
and evaluation, the cost of which shall be paid out of the fund created under
ORS 705.145.
     (6) Notwithstanding the provisions of ORS
737.205 (1), the director may require any person to comply with the
requirements of subsection (2) of this section if the director has good cause
to believe that a reasonable degree of competition does not exist in the area
with respect to the classification to which such rate is applicable.
     (7) The director may require insurers to
use, as that portion of a rate filing that constitutes the amount for claim
payment, rates prescribed by the director based upon rating information
determined pursuant to ORS 731.216 (3). [Amended by 1967 c.359 §310; 1969 c.690
§5; 1973 c.353 §1; 1981 c.535 §20; 1981 c.874 §20; 1985 c.706 §5; 1987 c.373 §83a;
1987 c.884 §51; 1989 c.171 §83; 1989 c.700 §12]
     737.322
Rating plan approval; rules; hearing on disapproval; costs. Notwithstanding any other provision of this
chapter:
     (1) The Director of the Department of
Consumer and Business Services shall adopt rules providing for approval of
workersÂ’ compensation rating plans that include provisions allowing for
reasonable retroactive application of experience rating modification factors.
Nothing in this subsection affects retrospective rating plans.
     (2) If the director disapproves a workers’
compensation rate or rating plan and the insurer or rating organization
requests a hearing before the director, the burden of proof is upon the insurer
or rating organization to prove that the filing meets the requirements of this
chapter.
     (3) If the director holds a hearing on an
order disapproving a workersÂ’ compensation rate, rating plan or rating system,
the insurer or rating or advisory organization filing or using the rate, rating
plan or rating system shall pay to the director the just and legitimate costs
of the hearing, including actual necessary expenses. [1987 c.884 §49; 2007
c.275 §1]
     737.325
Suspension or modification of filing requirement; rules; excess rates for
specific risks. (1) Under
such rules and regulations as the Director of the Department of Consumer and
Business Services adopts, the director, by written order, may suspend or modify
the requirement of filing as to any class of insurance, or subdivision or
combination thereof, or as to classes of risks, for which the rates cannot
practicably be filed before they are used. Such orders, rules and regulations
shall be made known to insurers and rating organizations affected thereby. The
director may make such examination as the director deems advisable to ascertain
whether any rates affected by such order meet the standards set forth in ORS
737.310.
     (2) Upon the written application of the
insured, stating the reasons therefor, filed with the director and approved by
the director, a rate in excess of that provided by a filing otherwise
applicable may be used on any specific risk. [Amended by 1967 c.359 §311]
     737.330
Contracts to comply with effective filings; exception. (1) No insurer shall make or issue a policy
except in accordance with the filings which are in effect for the insurer as
provided in this chapter.
     (2) This section does not apply to
policies for inland marine risks as to which filings are not required. [Amended
by 1967 c.359 §312; 1969 c.690 §6]
     737.335 [Repealed by 1967 c.359 §704]
     737.336
Disapproval of filings by director; noncompliance with chapter. (1) If within the waiting period or the
extension thereof, if any, as provided in ORS 737.320 (2), the Director of the
Department of Consumer and Business Services finds that a filing does not meet
the requirements of this chapter, the director shall send to the insurer or
rating organization which made such filing written notice of disapproval of
such filing, specifying therein in what respects the director finds such filing
fails to meet the requirements and stating that such filing shall not become
effective.
     (2) If the director has reason to believe
that an insurer or rating or advisory organization is not complying with the
requirements and standards of this chapter other than the requirements and
standards dealing with rates, rating plans or rating systems, unless the
director has reason to believe such noncompliance is willful, the director
shall give notice in writing to such insurer or rating or advisory organization
stating in what manner such noncompliance is alleged to exist and specifying a
reasonable time, not less than 10 days after the date of mailing, in which such
noncompliance may be corrected. [1967 c.359 §313; 1969 c.690 §7; 1987 c.774 §144]
     737.340
Initiation of proceedings by aggrieved person to determine lawfulness of
filings; hearing. (1) Any
person aggrieved with respect to any filing that is in effect, other than the
insurer or rating organization that made the filing, may make written application
to the Director of the Department of Consumer and Business Services for a
hearing on the filing. The application shall specify the grounds to be relied
upon by the applicant.
     (2) If the director finds that the
application is made in good faith, that the applicant would be so aggrieved if
the grounds are established, and that such grounds otherwise justify holding
such a hearing, the director shall do one of the following:
     (a) Issue an order under ORS 737.045 (1).
The director shall not act under this paragraph if the filing concerns a rate,
rating plan or rating system subject to ORS 737.320 (1).
     (b) Hold a hearing, within 30 days after
receipt of such application, at a place designated by the director and upon not
less than 10 daysÂ’ written notice to the applicant and to the insurer or rating
organization that made the filing. [Amended by 1967 c.359 §314; 1969 c.690 §9;
1987 c.774 §145]
     737.342
Hearing and order procedure.
Conduct of the hearing, issuance of orders pursuant thereto and judicial review
of orders shall be as provided in ORS chapter 183. [1971 c.734 §181]
     737.345 [Amended by 1967 c.359 §315; repealed by
1969 c.690 §29]
     737.346 [Formerly 737.512; 1977 c.428 §5; 1979 c.850
§4; 1983 c.754 §1; 1985 c.484 §1; 1987 c.774 §71; 1995 c.79 §362; 1995 c.278 §58;
1995 c.306 §40; renumbered 737.600 in 1999]
     737.348 [Formerly 736.170; 1975 c.556 §50; repealed
by 1977 c.405 §6]
RATING
ORGANIZATIONS
     737.350
Application for license by rating organization. No rating organization shall conduct its
operations in this state without first filing with the Director of the
Department of Consumer and Business Services a written application for a
license as a rating organization for such classes of insurance, or subdivision
or class of risk or a part or combination thereof as are specified in its
application and shall file therewith:
     (1) A copy of its constitution, its
articles of agreement or association or its certificate of incorporation, and
of its bylaws, rules and regulations governing the conduct of its business.
     (2) A list of its members and subscribers.
     (3) The name and address of a resident of
this state upon whom notices or orders of the director or process affecting
such rating organization may be served.
     (4) A statement of its qualifications as a
rating organization. This statement shall be on forms prescribed and furnished
by the director and shall include:
     (a) In the case of a fire insurance rating
organization, a showing as to its facilities for inspecting and surveying the
various municipalities and fire risks in this state and for inspecting and
surveying in this state the facilities for the preventing, confining and
extinguishing of fires and such other information as the director may require;
and
     (b) In the case of a title insurance
rating organization, a showing that adequate representation, as determined by
the director, is provided for title insurance producers. [Amended by 1967 c.359
§318; 1969 c.690 §18; 1979 c.501 §2; 2003 c.364 §97]
     737.355
Licensing rating organizations generally; licensing workersÂ’ compensation
rating organizations; rules; revocation and suspension; fees. (1) If the Director of the Department of
Consumer and Business Services finds that the applicant represents a credible
statistical base, is competent, trustworthy and otherwise qualified to act as a
rating organization and that its constitution, articles of agreement or
association or certificate of incorporation, and its bylaws, rules and
regulations governing the conduct of its business conform to the requirements
of law, the director shall issue a license specifying the classes of insurance,
or subdivision or class of risk or a part or combination thereof for which the
applicant is authorized to act as a rating organization. Each application shall
be granted or denied in whole or in part by the director within 60 days of the
date of its filing with the director.
     (2) The director need not issue a license
to each workersÂ’ compensation rating organization that meets the qualifications
and requirements of subsection (1) of this section. Instead, the director may
issue licenses to one or more qualifying workersÂ’ compensation rating
organizations pursuant to a selection process established by rule. At the end
of the period for which one or more licenses are issued, the director may do
the following pursuant to the selection process established by rule under this
subsection:
     (a) Renew a license or issue a license to
another workersÂ’ compensation rating organization; and
     (b) Renew or issue licenses to more than
one workersÂ’ compensation rating organization.
     (3) A license issued pursuant to this
section shall remain in effect for three years unless suspended or revoked by
the director. The license fee shall be as established by the director. A
license issued pursuant to this section may be suspended or revoked by the
director, after a hearing upon notice, in the event the rating organization
ceases to meet the requirements of this section. If a license is issued to only
one workersÂ’ compensation rating organization and the license is suspended or
revoked, the director may issue a license to another workersÂ’ compensation
rating organization for the remainder of the period for which the suspended or
revoked license was issued.
     (4) Each rating organization shall notify
the director promptly of every change regarding matters listed in ORS 737.350
(1), (2) and (3).
     (5) As a condition of receiving and
holding its license, a workersÂ’ compensation rating organization must exchange
data with other licensed workersÂ’ compensation rating organizations pursuant to
rules adopted by the director that may include establishing fees for the
exchange of data. [Amended by 1967 c.359 §319; 1971 c.385 §5; 1989 c.413 §9;
1999 c.235 §1]
     737.360
Rating organization to accept insurers as subscribers; rules of organization to
be reasonable; review of applications for subscribership and of reasonableness
of rules. (1) Subject to
rules and regulations which have been approved by the Director of the
Department of Consumer and Business Services as reasonable, each rating
organization shall permit any insurer, not a member, to be a subscriber to its
rating services for any class of insurance, subdivision or class of risk or a
part or combination thereof for which it is authorized to act as a rating
organization. Notice of proposed changes in such rules and regulations shall be
given to subscribers.
     (2) Each rating organization shall furnish
its rating services without discrimination to its members and subscribers. Any
rating organization may subscribe to or purchase actuarial, technical or other
services, and such services shall be available to all members and subscribers
without discrimination.
     (3) The reasonableness of any rule or
regulation in its application to subscribers, or the refusal of any rating
organization to admit an insurer as a subscriber, at the request of any
subscriber or any such insurer, shall be reviewed by the director at a hearing
held at a place designated by the director and upon at least 10 daysÂ’ written
notice to such rating organization and to such subscriber or insurer. If the
director finds that such rule or regulation is unreasonable in its application
to subscribers, the director shall order that such rule or regulation shall not
be applicable to subscribers. If the rating organization fails to grant or
reject an insurerÂ’s application for subscribership within 30 days after it was
made, the insurer may request a review by the director as if the application
had been rejected. If the director finds that the insurer has been refused
admittance to the rating organization as a subscriber without justification,
the director shall order the rating organization to admit the insurer as a
subscriber. If the director finds that the action of the rating organization
was justified, the director shall make an order affirming its action.
     (4) No rating organization shall adopt any
rule, the effect of which would be to prohibit or regulate the payment of
dividends, savings or unabsorbed premium deposits allowed or returned by insurers
to their policyholders, members or subscribers. [Amended by 1967 c.359 §320]
     737.365
Cooperative activities among rating organizations and insurers. (1) Cooperation among rating organizations
or among rating organizations and insurers in rate making or in other matters
within the scope of this chapter hereby is authorized, provided the filings
resulting from such cooperation are subject to and consistent with those
sections which are applicable to filings generally.
     (2) The Director of the Department of
Consumer and Business Services may review such cooperative activities and
practices and if, after a hearing, the director finds that any such activity or
practice is unfair or unreasonable or otherwise inconsistent with this chapter,
the director may issue a written order specifying in what respects such
activity or practice is unfair or unreasonable or otherwise inconsistent with
those sections and requiring the discontinuance of such activity or practice. [Amended
by 1967 c.359 §321; 1969 c.690 §20]
     737.370 [Amended by 1967 c.359 §322; repealed by
1969 c.690 §29]
     737.375 [Amended by 1967 c.359 §323; repealed by
1969 c.690 §29]
     737.380 [Amended by 1967 c.359 §324; repealed by
1969 c.690 §29]
     737.385 [Repealed by 1967 c.359 §704]
     737.386 [1967 c.359 §325; repealed by 1969 c.690 §29]
     737.390
Regulation of joint underwriting and joint reinsurance. No group, association or other organization
of insurers which engages in joint underwriting or joint reinsurance shall
engage in any activity which is unfair, unreasonable or otherwise inconsistent
with the provisions of this chapter. [Amended by 1967 c.359 §326; 1969 c.690 §22]
     737.505
Insured entitled to rate information; remedies of aggrieved persons. (1) Every rating organization and every
insurer which makes its own rates, within a reasonable time after receiving
written request therefor and upon payment of such reasonable charge as it may
make, shall furnish to any insured affected by a rate made by it, or to the
authorized representative of such insured, all pertinent information as to such
rate.
     (2) Every rating organization and every
insurer which makes its own rates shall provide within this state reasonable
means whereby any person aggrieved by the application of its rating system may
be heard, in person or by the authorized representative, on written request by
the person or authorized representative to review the manner in which such
rating system has been applied in connection with the insurance afforded the
person. If the rating organization or insurer fails to grant or reject such
request within 30 days after it is made, the applicant may proceed in the same
manner as if the application had been rejected.
     (3) Any party affected by the action of
such rating organization or such insurer on such request, within 30 days after
written notice of such action, may appeal to the Director of the Department of
Consumer and Business Services, who, after a hearing held at a place designated
by the director upon not less than 10 daysÂ’ written notice to the appellant and
to such rating organization or insurer, shall affirm or reverse such action.
     (4) Appeals to the director pursuant to
ORS 737.318 with regard to a final premium audit billing must be made within 60
days after receipt of the billing.
     (5) The director may, upon a showing of
good cause, stay any workersÂ’ compensation insurerÂ’s collection effort on a
final premium audit billing during the pendency of an appeal authorized by
subsection (4) of this section. [Amended by 1967 c.359 §327; 1987 c.884 §6]
     737.510
Advisory organizations; registration; jurisdiction of director to restrict
unfair practices. (1) Every
advisory organization shall file with the Director of the Department of
Consumer and Business Services:
     (a) A copy of its constitution, its
articles of agreement or association or its certificate of incorporation and of
its bylaws, rules and regulations governing its activities.
     (b) A list of its members.
     (c) The name and address of a resident of
this state upon whom notices may be served.
     (d) An agreement that the director may
examine such advisory organization in accordance with ORS 737.515.
     (2) Any insurer which makes its own
filings or any rating organization may support its filings by statistics or
adopt rate-making recommendations furnished to it by an advisory organization
which has complied with this section. If, after a hearing, the director finds
that the furnishing of such information or assistance involves any act or
practice which is unfair or unreasonable or otherwise inconsistent with this
chapter, the director may issue a written order specifying in what respects
such act or practice is unfair or unreasonable or otherwise inconsistent with
this chapter. If the act or practice thus specified is not modified to comply with
such order, the director may issue an order requiring any insurer which makes
its own filings or any rating organization to discontinue the use of the
statistics or rate-making recommendations furnished to it by such advisory
organization. [Amended by 1967 c.359 §328; 1969 c.690 §23]
     737.512 [1959 c.324 §2; 1967 c.359 §316; renumbered
737.346]
     737.515
Examination of rating, advisory and other organizations; payment of costs;
acceptance of report from another state. (1) The Director of the Department of Consumer and Business Services
shall make or cause to be made an examination:
     (a) At least once in five years, of each
rating organization licensed in this state.
     (b) As often as the director deems it
expedient, of each advisory organization complying with and referred to in ORS
737.510 and of each organization referred to in ORS 737.390.
     (2) The reasonable costs of any such
examination shall be paid by the organization examined, upon presentation to it
of a detailed account of such costs. The officers, manager, agents and
employees of any such organization may be examined at any time under oath and
shall exhibit all books, records, accounts, documents or agreements governing
its methods of operation.
     (3) All such examinations shall be
conducted as provided in ORS 731.300 to 731.316.
     (4) In lieu of any such examination the
director may accept the report of an examination made by the insurance
supervisory official of another state, pursuant to the laws of such state. [Amended
by 1967 c.359 §329]
     737.520 [Amended by 1967 c.359 §330; repealed by
1969 c.690 §29]
     737.525 [Repealed by 1967 c.359 §704]
     737.526
Interchange of data; rules; promoting uniformity of rating laws. (1) Reasonable rules and plans may be
promulgated by the Director of the Department of Consumer and Business Services
for the interchange of data necessary for the application of rating plans.
     (2) In order to further uniform
administration of rate regulatory laws, the director and every insurer and
rating organization may exchange information and experience data with insurance
supervisory officials, insurers and rating organizations in other states and
may consult and cooperate with them with respect to rate making and the
application of rating systems. [1967 c.359 §331]
     737.530 [Repealed by 1967 c.359 §704]
     737.535
Withholding or giving false information prohibited. No person shall willfully withhold
information from or knowingly give false or misleading information to the
Director of the Department of Consumer and Business Services, to any
statistical agency designated by the director, to any rating organization, or
to any insurer, which will affect the rates or premiums chargeable under this
chapter. [Amended by 1967 c.359 §332; 1969 c.690 §24]
     737.540 [Repealed by 1967 c.359 §704]
     737.545
Procedure for suspension of rating organization license. The Director of the Department of Consumer
and Business Services may suspend the license of any rating organization which
fails to comply with an order of the director within the time limited by such
order, or any extension thereof which the director may grant. The director
shall not suspend the license of any rating organization for failure to comply
with an order until the time prescribed for an appeal therefrom has expired or,
if an appeal has been taken, until such order has been affirmed. The director
may determine when a suspension of license shall become effective, and it shall
remain in effect for the period fixed by the director, unless the director
modifies or rescinds such suspension, or until the order upon which such
suspension is based is modified, rescinded or reversed. [Amended by 1967 c.359 §333]
     737.547 [1971 c.734 §183; repealed by 1975 c.769 §10]
     737.550 [Repealed by 1967 c.359 §704]
     737.555 [Repealed by 1967 c.359 §704]
     737.560
Rating organization membership.
(1) Except as provided in subsection (2) of this section, nothing contained in
this chapter shall be construed as requiring any insurer to become a member of
or a subscriber to any rating organization.
     (2) Each workers’ compensation insurer,
including the State Accident Insurance Fund Corporation, shall be a member of a
licensed workers’ compensation rating organization. [Amended by 1967 c.359 §334;
1969 c.690 §25; 1981 c.535 §21; 1999 c.235 §5]
FICTITIOUS
GROUPINGS
     737.600
Fictitious grouping for rate purposes prohibited; rules; exceptions. (1) As used in this section, “fictitious
grouping” means a grouping by way of membership, license, franchise, contract,
agreement or any method other than common ownership, or use and control.
     (2) An insurer may not:
     (a) Make available, through any rating
plan or form, property, inland marine, casualty or surety insurance, or any
combination thereof, at a preferred rate or premium to any person based upon a
fictitious grouping of that person.
     (b) Write or deliver a form, plan or
policy of insurance covering a grouping or combination of persons or risks, any
of which are within this state, at a preferred rate or form other than that
offered to the public generally and persons not in the group, unless the form,
plan or policy and the rates or premiums to be charged therefor have been
approved by the Director of the Department of Consumer and Business Services.
The director shall not approve any form, plan or policy, or the rates therefor,
that would constitute a violation of paragraph (a) of this subsection.
     (3) This section does not apply to:
     (a) Policies of life or health insurance;
     (b) Insurance for public bodies as defined
in ORS 30.260;
     (c) Insurance for employers subject to ORS
chapter 656 who are primarily engaged in farming. Any contract negotiated by an
exempt farming group, including the rate, shall be restricted to members of the
group;
     (d) Property and casualty insurance
policies for personal, family or household purposes, and not for commercial or
business purposes, under the following conditions:
     (A) If the policies are offered to members
of an association, including a labor union, which has had an active existence
for at least one year, has a constitution and bylaws and is maintained in good
faith for purposes other than that of obtaining insurance;
     (B) If the policies are based on premiums
that are adequate to support coverage of the group without subsidy by other
rate payers; and
     (C) If the insurer does not unfairly
discriminate against holders of other insurance policies;
     (e) Liability and property insurance
required under ORS 825.160 for persons who apply for or who have received
authority issued by the Department of Transportation under ORS chapter 825 to
transport logs, poles, pilings, peeler cores, lumber, shingles, veneer,
plywood, particle board, wallboard, siding, cordwood in long or short lengths,
sawdust, hog fuel, wood chips, wood pellets, bark dust or cut trees that are or
will be sold for use as Christmas trees;
     (f) Liability or casualty insurance issued
in this state on commercial risks, if:
     (A) The policy requires active
participation in a plan of risk management which has established measures and
procedures to minimize both the frequency and severity of losses;
     (B) The policy passes on the benefits of
reduced losses to plan participants; and
     (C) Rates are actuarially measurable and
credible and sufficiently related to actual and expected loss and expense
experience of the group so as to assure that nonmembers of the group are not
unfairly discriminated against;
     (g) Insurance for child care facilities
that are certified in accordance with ORS chapter 657A; or
     (h) Liability insurance for contractors
licensed under ORS chapter 701.
     (4) Under ORS 731.244, the director shall
make rules necessary for implementation of this section. [Formerly 737.346;
2007 c.210 §1]
     737.602
Authorization for insurance for certain projects; premiums; qualifications. (1) As used in this section:
     (a) “Project” means a construction
project, a plant expansion or improvements within
     (b) “Project sponsor” means public bodies,
utilities, corporations and firms undertaking to construct a project in excess
of $90 million and conducting business in the State of
     (c) “Public body” has the meaning given
the term in ORS 30.260.
     (2) Notwithstanding ORS 279C.530, 656.126,
737.600 or 746.160, an insurer approved to transact insurance in this state,
including the State Accident Insurance Fund Corporation or a guaranty contract
insurer as defined in ORS 656.005, may issue with the prior approval of the
Director of the Department of Consumer and Business Services a policy of
insurance or a guaranty contract covering and insuring the project sponsor, the
prime contractor under a contract for the construction of the project, any
contractors or subcontractors with whom the prime contractor may enter into
contracts for the purpose of fulfilling its contractual obligations in
construction of the project and any other contractors engaged by a project
sponsor to provide architectural or other design services, engineering
services, construction management services, other consulting services relating
to the design and construction of the project or any combination thereof.
     (3) The following provisions apply to
premiums under a policy of insurance or guaranty contract described in
subsection (2) of this section:
     (a) A project sponsor or a prime
contractor may not charge a premium for coverage under a policy of insurance or
a guaranty contract to a contractor or subcontractor with whom the project
sponsor or prime contractor enters into a contract or engages for services described
in subsection (2) of this section.
     (b) A prime contractor may not charge a
project sponsor a premium for coverage under a policy of insurance or a
guaranty contract other than a premium approved by the director under ORS
chapter 737 prior to or at the same time as the director approves the project
to which the policy or guaranty contract applies.
     (c) Charging a premium prohibited by this
subsection constitutes the unlawful transaction of insurance in violation of
ORS 731.354.
     (4) The director, upon application of any
insurer, shall approve the issuance of a policy of insurance or a guaranty
contract to any grouping of the persons described in subsection (2) of this
section if:
     (a) The grouping was formed for the
purpose of performing a contract or a series of related contracts for the
design and construction of a project for the project sponsor;
     (b) The project sponsor can reasonably
demonstrate that the formation and operation of the grouping will substantially
improve accident prevention and claims handling to the benefit of the project
sponsor and the contractors and workers employed by the project sponsor on
construction related projects;
     (c) The established rating and auditing
standards required by authorized advisory organizations and rating
organizations are adhered to;
     (d) The insurer for the grouping
guarantees adequate protection to any other insurance producer that
demonstrates that without such protection the producer will suffer losses that
will constitute a threat to the continuation of the business of the producer;
     (e) The insurer for the grouping
guarantees insurance coverage of the classes of insurance issued to the
grouping to any contractor who, because of participation in the group, has been
unable to maintain the contractorÂ’s normal coverage. The insurerÂ’s obligation
under this paragraph shall continue until 12 months after substantial
completion of the contractorÂ’s work;
     (f) By permitting this grouping for a
project sponsor, greater opportunities will be made available for historically
underutilized businesses to bid on the project;
     (g) The project insurers agree to provide
not less than 90 daysÂ’ notice to all insured parties of the cancellation or any
material reduction in coverage for the project;
     (h) The insurance coverage for the
grouping contains a severability of interest clause with respect to liability
claims between individuals insured under the group policy and includes
contractual liability coverage that applies to the various contracts and
subcontracts entered into in connection with the project; and
     (i) The insurer places with the Department
of Consumer and Business Services a special deposit of $25,000 per $100 million
of construction project value, or an amount prescribed by rule of the director,
whichever is greater. [1995 c.169 §2; 1999 c.196 §12; 1999 c.482 §1; 2003 c.364
§98; 2003 c.794 §326]
     Note: The amendments to 737.602 by section 28,
chapter 241, Oregon Laws 2007, become operative July 1, 2009. See section 31,
chapter 241, Oregon Laws 2007. The text that is operative on and after July 1,
2009, is set forth for the userÂ’s convenience.
     737.602. (1) As used in this section:
     (a) “Project” means a construction
project, a plant expansion or improvements within
     (b) “Project sponsor” means public bodies,
utilities, corporations and firms undertaking to construct a project in excess
of $90 million and conducting business in the State of
     (c) “Public body” has the meaning given
the term in ORS 30.260.
     (2) Notwithstanding ORS 279C.530, 656.126,
737.600 or 746.160, an insurer approved to transact insurance in this state,
including the State Accident Insurance Fund Corporation or an insurer as
defined in ORS 656.005, may issue with the prior approval of the Director of
the Department of Consumer and Business Services a policy of insurance covering
the project sponsor, the prime contractor under a contract for the construction
of the project, any contractors or subcontractors with whom the prime
contractor may enter into contracts for the purpose of fulfilling its
contractual obligations in construction of the project and any other
contractors engaged by a project sponsor to provide architectural or other
design services, engineering services, construction management services, other
consulting services relating to the design and construction of the project or
any combination thereof.
     (3) The following provisions apply to
premiums under a policy of insurance described in subsection (2) of this
section:
     (a) A project sponsor or a prime
contractor may not charge a premium for coverage under a policy of insurance to
a contractor or subcontractor with whom the project sponsor or prime contractor
enters into a contract or engages for services described in subsection (2) of
this section.
     (b) A prime contractor may not charge a
project sponsor a premium for coverage under a policy of insurance other than a
premium approved by the director under ORS chapter 737 prior to or at the same
time as the director approves the project to which the policy applies.
     (c) Charging a premium prohibited by this
subsection constitutes the unlawful transaction of insurance in violation of
ORS 731.354.
     (4) The director, upon application of any
insurer, shall approve the issuance of a policy of insurance to any grouping of
the persons described in subsection (2) of this section if:
     (a) The grouping was formed for the
purpose of performing a contract or a series of related contracts for the
design and construction of a project for the project sponsor;
     (b) The project sponsor can reasonably
demonstrate that the formation and operation of the grouping will substantially
improve accident prevention and claims handling to the benefit of the project
sponsor and the contractors and workers employed by the project sponsor on
construction related projects;
     (c) The established rating and auditing
standards required by authorized advisory organizations and rating
organizations are adhered to;
     (d) The insurer for the grouping
guarantees adequate protection to any other insurance producer that
demonstrates that without such protection the producer will suffer losses that
will constitute a threat to the continuation of the business of the producer;
     (e) The insurer for the grouping
guarantees insurance coverage of the classes of insurance issued to the
grouping to any contractor who, because of participation in the group, has been
unable to maintain the contractorÂ’s normal coverage. The insurerÂ’s obligation
under this paragraph shall continue until 12 months after substantial
completion of the contractorÂ’s work;
     (f) By permitting this grouping for a
project sponsor, greater opportunities will be made available for historically
underutilized businesses to bid on the project;
     (g) The project insurers agree to provide
not less than 90 daysÂ’ notice to all insured parties of the cancellation or any
material reduction in coverage for the project;
     (h) The insurance coverage for the
grouping contains a severability of interest clause with respect to liability
claims between individuals insured under the group policy and includes
contractual liability coverage that applies to the various contracts and
subcontracts entered into in connection with the project; and
     (i) The insurer places with the Department
of Consumer and Business Services a special deposit of $25,000 per $100 million
of construction project value, or an amount prescribed by rule of the director,
whichever is greater.
     Note: 737.602 was added to and made a part of the
Insurance Code by legislative action but was not added to ORS chapter 737 or
any series therein. See Preface to Oregon Revised Statutes for further
explanation.
     737.604
Rules. In addition to other
rulemaking authority of the Director of the Department of Consumer and Business
Services, the director may make rules:
     (1) Stating the necessary attributes that
a construction project of a project sponsor and the participants in the project
must have in order to qualify for the grouping permitted under ORS 737.602. The
rules may include but are not limited to matters regarding an appropriate trust
agreement for special deposit and adjustment of the construction project value
according to an appropriate cost index; and
     (2) Establishing a process for a state
agency or local contract review board created under ORS 279A.060 to evaluate
the purchase by a public body of insurance authorized by ORS 737.602, or any
agreements related thereto. [1995 c.169 §3; 2003 c.794 §327]
     Note: 737.604 was added to and made a part of the
Insurance Code by legislative action but was not added to ORS chapter 737 or
any series therein. See Preface to Oregon Revised Statutes for further
explanation.
AUTHORIZATION
FOR INSURANCE FOR COMBINED SEWER OVERFLOW PROJECTS
     Note: Sections 1 and 2, chapter 336, Oregon Laws
1995, provide:
     Sec.
1. (1) As used in this
section, “project” means the group of projects that make up the combined sewer
overflow program.
     (2) Notwithstanding ORS 656.126, 737.600
or 746.160 or section 143 of this 2003 Act [279C.530], an insurer approved to
transact insurance in the State of Oregon, including a guaranty contract
insurer as defined in ORS 656.005, may issue with the prior approval of the
Director of the Department of Consumer and Business Services a policy of
insurance or a guaranty contract covering and insuring the City of Portland,
the prime contractor under contract for the construction of the project, any
contractors or subcontractors with whom the prime contractor may enter into
contracts for the purpose of fulfilling its contractual obligations in
construction of the project and any other contractors engaged by the City of
Portland to provide architectural or other design services, engineering
services, construction management service or other consulting services relating
to the design and construction of the projects or any combination thereof.
     (3) The director, upon application of any
insurer, shall approve the issuance of a policy of insurance or a guaranty
contract to any grouping of the persons described in subsection (2) of this
section if:
     (a) The grouping was formed for the
purpose of performing a contract or a series of related contracts for the
design and construction of the project;
     (b) The combined total estimated cost of
the project exceeds $100 million;
     (c) The City of
     (d) The established rating and auditing
standards required by authorized advisory organizations and rating
organizations are adhered to;
     (e) Adequate protection is guaranteed by
the insurer for the grouping to any other insurance producer that demonstrates
that without such protection the insurance producer will suffer losses which
will constitute a threat to the continuation of the insurance business of the
producer;
     (f) The City of
     (g) The insurer for the grouping will
guarantee insurance coverage of the classes of insurance issued to the grouping
to any contractor who, because of participation in the group, has been unable
to maintain the contractorÂ’s normal coverage. The insurerÂ’s obligation under
this paragraph shall continue 12 months after substantial completion of the
contractorÂ’s work on the project;
     (h) Monoline workers’ compensation insurers
domiciled in the State of Oregon had the opportunity to propose a policy of
insurance or a guaranty contract covering persons referred to in subsection (2)
of this section; and
     (i) The insurer places with the Department
of Consumer and Business Services a special deposit of $25,000 per $100 million
of construction project value per project phase, or an amount prescribed by
rule of the director, whichever is greater. [1995 c.336 §1; 1999 c.196 §11;
2003 c.364 §99; 2003 c.794 §325]
     Sec.
2. Section 1 of this Act is
repealed July 1, 2015. [1995 c.336 §2]
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