Chapter 731 — Administration and General Provisions

2023 EDITION

TITLE 56

INSURANCE

Chapter 731. Administration and General Provisions

732. Organization and Corporate Procedures of Domestic Insurers; Regulation of Insurers Generally

733. Accounting and Investments

734. Rehabilitation, Liquidation and Conservation of Insurers

735. Alternative Insurance

737. Rates and Rating Organizations

741. Health Insurance Exchange

742. Insurance Policies Generally; Property and Casualty Policies

743. Health and Life Insurance and Annuities

743A. Health Insurance: Reimbursement of Claims

743B. Health Benefit Plans: Individual and Group

744. Insurance Producers; Life Settlement Providers, Brokers and Contracts; Adjusters; Consultants; Third Party Administrators; Reinsurance Intermediaries; Limited Licenses

746. Trade Practices

748. Fraternal Benefit Societies

750. Health Care Service Contractors; Multiple Employer Welfare Arrangements; Legal Expense Organizations

751. Universal Health Care System

752. Professional Liability Funds

_______________

ADMINISTRATION AND GENERAL PROVISIONS

INSURANCE

SHORT TITLE; PURPOSE AND CONSTRUCTION

731.004 Short title

731.008 Purpose of Insurance Code

731.012 Effect of federal law

731.016 Construction of Insurance Code

APPLICATION OF INSURANCE CODE

731.022 Compliance with Insurance Code required

731.026 Application of Insurance Code to particular insurers

731.028 Applicability of certain Insurance Code provisions to State Accident Insurance Fund Corporation

731.036 Persons completely exempt from application of Insurance Code

731.038 Application of Insurance Code to charitable organizations that issue charitable gift annuities

731.039 Requirements for certain educational institutions or nonprofit corporations issuing charitable gift annuities

731.042 Certificate of exemption; application of certain Insurance Code provisions to exempt insurers

731.046 Exemption of policies from Securities Law

DEFINITIONS GENERALLY

731.052 Insurance Code definitions

731.056 “Action”

731.066 “Authorized,” “unauthorized” insurer

731.069 “Certificate,” “certificate holder”

731.072 “Certificate of authority,” “license”

731.074 “Commercial liability insurance”

731.075 “Covered life”

731.076 “Department,” “director”

731.082 “Domestic,” “foreign,” “alien” insurer

731.086 “Domestic risk”

731.092 “Domicile”

731.096 “Domicile of alien insurer”

731.097 “Essential health benefits”

731.098 “Group health insurance”

731.099 “Independently procured insurance”

731.102 “Insurance”

731.104 “Insurance producer”

731.106 “Insurer”

731.112 “Judgment”

731.114 “Limited benefit coverage”

731.116 “Person”

731.122 “Policy”

731.126 “Reinsurance”

731.132 “Required capitalization”

731.136 “State”

731.142 “Stock,” “mutual” and “reciprocal” insurer

731.144 “Surplus lines insurance”

731.146 “Transact insurance”

CLASSES OF INSURANCE DEFINED

731.150 Definitions of classes of insurance not mutually exclusive

731.154 “Annuity”

731.156 “Variable life insurance”; “variable annuity”

731.158 “Casualty insurance”

731.162 “Health insurance”

731.164 “Home protection insurance,” “home protection insurer”

731.166 “Industrial life insurance”

731.170 “Life insurance”; includes annuities

731.174 “Marine and transportation insurance”

731.178 “Mortgage insurance”

731.182 “Property insurance”

731.186 “Surety insurance”

731.190 “Title insurance”

731.194 “Wet marine and transportation insurance”

INSURANCE ADMINISTRATION

731.216 Administrative power of director

731.228 Prohibited interests and rewards

731.232 Subpoena power

731.236 General powers and duties

731.240 Hearings in general

731.244 Rules

731.248 Orders

731.252 Cease and desist orders

731.256 Enforcement generally; restitution

731.258 Enforcement of orders and decisions by Attorney General; filing, enforcement and effect of foreign decrees

731.259 Requirement for written notice to insured; rules

731.260 False or misleading filings

731.264 Complaints and investigations confidential; permitted disclosures; rules

731.268 Use of reproductions and certified copies as evidence; fee

731.272 Director’s annual reports; notice of publication of report

731.276 Recommendations for changes in Insurance Code

731.280 Publications authorized

731.282 Authority to sell publications

731.284 Distribution of insurance laws

731.288 Recording complaints; director to consider complaints before issuing licenses

731.292 Disposition of fees, charges, taxes, penalties and other moneys

731.296 Director’s inquiries

731.300 Examination of insurers; when required

731.302 Appointment of examiners; retaining of appraisers, actuaries and others; evidentiary status of facts and conclusions

731.304 Investigation of persons transacting insurance

731.308 Procedure at examination or investigation; production of books and other records

731.312 Report of examination; review by person examined; hearing; confidentiality of certain information and documents; permitted disclosures

731.314 Immunity for director, examiner and others

731.316 Expenses of examination of insurer

731.324 Service of process on Secretary of State; notice to unauthorized insurer

731.328 Deposits by unauthorized insurers in actions or proceedings

AUTHORIZATION OF INSURERS AND GENERAL REQUIREMENTS

731.354 Certificate of authority required

731.356 Unauthorized insurance transaction enforcement

731.358 Requirements of domestic insurers generally

731.362 Requirements of foreign or alien insurers generally

731.363 Authorized foreign insurer becoming domestic insurer

731.364 Domestic insurer transferring domicile to another state

731.365 Effect of transfer of domicile by domestic or foreign insurer; notice to director by transferring insurer

731.367 Transfer of domicile by unincorporated authorized foreign insurer

731.369 Requirements of reciprocal insurers generally

731.370 Reciprocal insurer’s financial statement; service of process

731.371 Powers of reciprocal insurer regarding real estate

731.374 Exemptions to certificate of authority requirement

731.378 Foreign and alien insurers exempt from laws governing admission of foreign and alien corporations

731.380 Authority of foreign and alien insurers to take, acquire, hold and enforce notes secured by mortgages; statement; fees

731.381 Exemption from taxes for foreign and alien insurers engaging in activities authorized by ORS 731.380

731.382 General eligibility for certificate of authority

731.385 Standards for determining whether continued operation of insurer is hazardous; rules; order; hearing

731.386 Management of insurers

731.390 Government insurers not to be authorized

731.394 Combinations of insuring powers in one insurer

731.396 Certificate of authority and good financial condition required to issue variable life insurance or variable annuity policies

731.398 Amendment of certificate of authority

731.402 Issuance or refusal of certificate of authority

731.406 What certificate evidences; ownership of certificate

731.410 Continuance, expiration or reinstatement of certificate of authority

731.414 Suspension or revocation of certificate of authority; mandatory grounds

731.418 Grounds for suspension or revocation of certificate of authority

731.422 Order of suspension, revocation or refusal; effect upon insurance producers’ authority

731.426 Duration of suspension; insurer’s obligations during suspension period; reinstatement

731.428 Written consent to engage or participate in business of insurance; rules

731.430 Name of insurer

731.434 Registered office and agent

731.438 Title plant requirement for title insurers; posting of indexes; plant ownership and maintenance

731.439 Satisfaction of requirements of ORS 731.438 (1) by certain title plants

731.442 Prohibition on transacting life insurance business on mutual assessment plan

731.446 Policyholder deposits

731.450 Unrelated business prohibited; exceptions; title insurer as escrow agent

731.454 Domestic insurers not to transact business in jurisdiction where not authorized

731.458 Exchange of reciprocal or interinsurance contracts

731.462 Nonassessable policies of reciprocal insurer

731.466 Power of attorney for reciprocal insurer

731.470 Attorney for reciprocal insurer

731.475 Claims processing by workers’ compensation insurer; permission for remote claims processing; availability and disposition of claims records; auditing and examinations by director; rules

731.480 Workers’ compensation policies; conditions for issuing

731.482 Withdrawal from, failure to renew or cancellation of line by commercial liability insurer

731.484 Prohibition on certain sales related to group health and group life insurance

731.485 Conditions under which insurer may limit insured’s choice of drug outlets and pharmacies

731.486 Exemption from definition of “transact insurance” for group health and life policies; master group health and life insurance coverage; rules

731.488 Annual audit of insurer; rules

731.492 Required notification to claimant upon insurer’s payment to settle third-party liability claim; required contents of notification

LIMIT OF RISK; REINSURANCE

731.504 Limit of risk

731.508 Approved reinsurance

731.509 Legislative intent; criteria for allowing credit for reinsurance; rules

731.510 Criteria for allowing reduction from liability for reinsurance; rules

731.511 Criteria to be met by assuming insurer in order to be accredited as reinsurer; rules

731.512 Withdrawal of insurer; reinsurance

731.514 Ceding insurer’s management of reinsurance recoverables; requirement to diversify reinsurance program

731.516 Mortgage insurance limitation; waiver of limitation; rules; fees

731.520 Conditions that insurers assuming ceded reinsurance must meet for allowance of credit; list of reciprocal jurisdictions; list of qualifying assuming insurers; rules

CAPITAL AND SURPLUS

731.554 Capital and surplus requirements

731.562 Title insurer capital and surplus requirements

731.566 Reciprocal insurer surplus requirements

731.570 Withdrawing advancements made to reciprocal insurer

731.574 Annual financial statement

REPORTS OF CRIMINAL CONDUCT

731.590 “Insurer” defined for ORS 731.592 and 731.594

731.592 Reporting criminal conduct involving insurance

731.594 Immunity from civil liability

DEPOSITS

731.604 Acceptance of deposits of insurers

731.608 Purpose of deposit

731.612 Rights of insurer regarding deposits

731.616 Valuation of deposits; deficiencies

731.620 Assignment of deposited securities

731.624 Special deposits; foreign and alien insurers

731.628 Deposit required of workers’ compensation insurers

731.632 Deposit required of domestic reciprocal insurers; exception

731.636 Deposit or trusteed assets of alien insurer required

731.640 Eligible deposits; rules

731.642 Contracts for security deposits

731.644 Payment of losses out of deposits, generally

731.648 Duration and release of deposit

731.652 Proofs for release of deposit to insurers; director’s responsibility

EXCHANGE OF INFORMATION BY REGULATORS

731.730 Insurer filings with National Association of Insurance Commissioners

731.731 Immunity for certain persons dealing with information collected from filings under ORS 731.730

731.735 Certain information confidential

731.737 Immunity from liability for certain persons filing reports or furnishing information about specified activities to specified persons

CONFIDENTIALITY OF REPORTS

731.750 Confidentiality of report of material acquisitions or dispositions of assets, material nonrenewals, cancellations and revisions of ceded reinsurance agreements

731.752 Confidentiality of report used for determination of required amount of capital or surplus; confidentiality of financial plan of action and report of examination connected with plan

731.754 Permissible uses of reports and plans described in ORS 731.752

INSURANCE COMPLIANCE AUDIT REPORTS

731.760 Definitions for ORS 731.760 to 731.770

731.761 Privileged information

731.762 Authority of director

731.764 Waiver of privilege; permitted disclosures

731.766 Petition for in camera hearing; hearing; compelled disclosure

731.768 Privilege; exceptions

731.770 Other privileges or limitations pertaining to audit document

ASSESSMENTS, FEES AND TAXES

731.804 Assessments; rules; fees; how determined

731.808 “Gross amount of premiums” defined

731.812 Foreign and alien insurer’s report of Oregon business

731.820 Gross premium tax on fire insurance premiums

731.822 Prepayment of tax due

731.824 Tax on underwriting profits of wet marine and transportation insurers

731.828 Computation of wet marine and transportation insurance tax

731.830 Premium tax on gross amount of premiums insurer receives for wet marine and transportation insurance

731.833 Record keeping requirements for wet marine and transportation insurance contracts

731.834 Insurance producer’s collection of taxes on wet marine and transportation insurance; report to director; rules

731.836 Limitation on enforcement of insurer’s tax obligations

731.840 Retaliatory or corporate excise tax in lieu of certain taxes and assessments; certain local taxes prohibited

731.841 Conditions under which local authority to tax insurer is preempted

731.842 Adjustment of amount to be prepaid for taxes; extension of time for payment; interest; penalty for late payment

731.844 No personal liability for paying invalid tax

RETALIATORY PROVISIONS

731.854 Retaliatory tax

731.859 Applicability of retaliatory provisions; disclosure of tax returns

MISCELLANEOUS

731.870 State of emergency; effect upon insurance policies; rules

PENALTIES

731.988 Civil penalties

731.992 Criminal penalty

SHORT TITLE; PURPOSE AND CONSTRUCTION

731.004 Short title. ORS chapters 731, 732, 733, 734, 735, 737, 742, 743, 743A, 743B, 744, 746, 748 and 750 may be cited as the Insurance Code. [1967 c.359 §1; 1973 c.97 §1; 1975 c.769 §1]

731.008 Purpose of Insurance Code. The Legislative Assembly declares that the Insurance Code is for the protection of the insurance-buying public. [Formerly 736.003]

731.010 [Repealed by 1965 c.241 §3]

731.012 Effect of federal law. The Insurance Code shall regulate the business of insurance and every person engaged therein in accordance with the intent of Congress as expressed in the Act of March 9, 1945, as amended (Public Law 15, 79th Congress, 15 U.S.C. 1011 to 1014) which states in part that no Act of Congress shall be construed to invalidate, impair or supersede any law enacted by any state for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance. [1967 c.359 §3]

731.016 Construction of Insurance Code. The Insurance Code shall be liberally construed and shall be administered and enforced by the Director of the Department of Consumer and Business Services to give effect to the policy stated in ORS 731.008. [1967 c.359 §4]

731.020 [Repealed by 1965 c.241 §3]

APPLICATION OF INSURANCE CODE

731.022 Compliance with Insurance Code required. No person shall transact insurance in this state or relative to a domestic risk without complying with the applicable provisions of the Insurance Code. [1967 c.359 §5]

731.026 Application of Insurance Code to particular insurers. The Insurance Code applies to:

(1) A fraternal benefit society complying with ORS chapter 748, only as provided in such chapter.

(2) A health care service contractor complying with ORS 750.005 to 750.095, only as provided in such sections.

(3) A legal expense organization complying with ORS 750.505 to 750.715, only as provided in such sections.

(4) A multiple employer welfare arrangement complying with ORS 750.301 to 750.341, only as provided in such sections. [1967 c.359 §6; 1971 c.425 §1; 1973 c.97 §2; 1975 c.769 §2; 1989 c.331 §23; 1993 c.265 §2; 1993 c.615 §26; 2005 c.31 §6]

731.028 Applicability of certain Insurance Code provisions to State Accident Insurance Fund Corporation. (1) The State Accident Insurance Fund Corporation is subject as a domestic insurer to ORS 731.248, 731.252, 731.256, 731.258, 731.260, 731.296 to 731.316, 731.488, 731.574, 731.592, 731.594, 731.730, 731.731, 731.735, 731.737, 731.870, 731.988, 731.992, 733.010 to 733.060, 733.140 to 733.170, 733.210, 737.205, 737.215, 737.225, 737.235 to 737.340, 737.505 and 737.560, ORS chapters 742, 743, 743A, 743B and 744 and ORS 746.015, 746.075, 746.110, 746.145 to 746.155, 746.230 and 746.240. However:

(a) The requirements of the Director of the Department of Consumer and Business Services under ORS 733.010 to 733.060, 733.140 to 733.170 and 733.210 govern in the case of a conflict between those requirements and the requirements of any accounting system prescribed by the Oregon Department of Administrative Services.

(b) The filing requirements of ORS 737.205 to 737.340, 737.505 and 737.560 are in lieu of any similar filing requirements prescribed by any other law of this state.

(c) The requirements of ORS chapters 743, 743A and 743B are applicable only with respect to excess workers’ compensation insurance furnished by the corporation.

(d) The provisions of ORS chapter 744 apply only with respect to the regulation of insurance producers.

(e) For each year that the Secretary of State conducts an audit of the State Accident Insurance Fund Corporation under ORS 297.210, the director may accept the audit and a copy of the Secretary of State’s audit report in lieu of the requirements of ORS 731.488 if the director determines that the purposes of ORS 731.488 are adequately served by the Secretary of State’s audit and report. The Secretary of State shall file a copy of its audit report of the State Accident Insurance Fund Corporation with the director.

(2) The provisions of subsection (1) of this section govern in the case of a conflict between those provisions and the provisions of ORS chapter 656 that apply only to the State Accident Insurance Fund Corporation. [1971 c.385 §2; 1977 c.405 §5; 1979 c.815 §7; 1979 c.829 §7; 1987 c.884 §4; 1989 c.701 §69; 1991 c.340 §1; 1991 c.401 §31; 1993 c.447 §116; 1995 c.79 §356; 1999 c.633 §5; 2003 c.364 §63; 2003 c.689 §1; 2008 c.22 §3]

731.030 [Repealed by 1965 c.241 §3]

731.032 [1967 c.359 §7; 1971 c.69 §1; 1971 c.538 §1; 1979 c.848 §1; 1993 c.265 §3; repealed by 2003 c.802 §173]

731.036 Persons completely exempt from application of Insurance Code. Except as provided in ORS 743.029 or as specifically provided by law, the Insurance Code does not apply to any of the following to the extent of the subject matter of the exemption:

(1) A bail bondsman, other than a corporate surety and its agents.

(2) A fraternal benefit society that has maintained lodges in this state and other states for 50 years prior to January 1, 1961, and for which a certificate of authority was not required on that date.

(3) A religious organization providing insurance benefits only to its employees, if the organization is in existence and exempt from taxation under section 501(c)(3) of the federal Internal Revenue Code on September 13, 1975.

(4) Public bodies, as defined in ORS 30.260, that either individually or jointly establish a self-insurance program for tort liability in accordance with ORS 30.282.

(5) Public bodies, as defined in ORS 30.260, that either individually or jointly establish a self-insurance program for property damage in accordance with ORS 30.282.

(6) Cities, counties, school districts, community college districts, community college service districts or districts, as defined in ORS 198.010 and 198.180, that either individually or jointly insure for health insurance coverage, excluding disability insurance, their employees or retired employees, or their dependents, or students engaged in school activities, or combination of employees and dependents, with or without employee or student contributions, if all of the following conditions are met:

(a) The individual or jointly self-insured program meets the following minimum requirements:

(A) In the case of a school district, community college district or community college service district, the number of covered employees and dependents and retired employees and dependents aggregates at least 500 individuals;

(B) In the case of an individual public body program other than a school district, community college district or community college service district, the number of covered employees and dependents and retired employees and dependents aggregates at least 500 individuals; and

(C) In the case of a joint program of two or more public bodies, the number of covered employees and dependents and retired employees and dependents aggregates at least 1,000 individuals;

(b) The individual or jointly self-insured health insurance program includes all coverages and benefits required of group health insurance policies under ORS chapters 743, 743A and 743B;

(c) The individual or jointly self-insured program must have program documents that define program benefits and administration;

(d) Enrollees must be provided copies of summary plan descriptions including:

(A) Written general information about services provided, access to services, charges and scheduling applicable to each enrollee’s coverage;

(B) The program’s grievance and appeal process; and

(C) Other group health plan enrollee rights, disclosure or written procedure requirements established under ORS chapters 743, 743A and 743B;

(e) The financial administration of an individual or jointly self-insured program must include the following requirements:

(A) Program contributions and reserves must be held in separate accounts and used for the exclusive benefit of the program;

(B) The program must maintain adequate reserves. Reserves may be invested in accordance with the provisions of ORS chapter 293. Reserve adequacy must be calculated annually with proper actuarial calculations including the following:

(i) Known claims, paid and outstanding;

(ii) A history of incurred but not reported claims;

(iii) Claims handling expenses;

(iv) Unearned contributions; and

(v) A claims trend factor; and

(C) The program must maintain adequate reinsurance against the risk of economic loss in accordance with the provisions of ORS 742.065 unless the program has received written approval for an alternative arrangement for protection against economic loss from the Director of the Department of Consumer and Business Services;

(f) The individual or jointly self-insured program must have sufficient personnel to service the employee benefit program or must contract with a third party administrator licensed under ORS chapter 744 as a third party administrator to provide such services;

(g) The public body, or the program administrator in the case of a joint insurance program of two or more public bodies, files with the Director of the Department of Consumer and Business Services copies of all documents creating and governing the program, all forms used to communicate the coverage to enrollees, the schedule of payments established to support the program and, annually, a financial report showing the total incurred cost of the program for the preceding year. A copy of the annual audit required by ORS 297.425 may be used to satisfy the financial report filing requirement; and

(h) Each public body in a joint insurance program is liable only to its own employees and no others for benefits under the program in the event, and to the extent, that no further funds, including funds from insurance policies obtained by the pool, are available in the joint insurance pool.

(7) All ambulance services.

(8) A person providing any of the services described in this subsection. The exemption under this subsection does not apply to an authorized insurer providing such services under an insurance policy. This subsection applies to the following services:

(a) Towing service.

(b) Emergency road service, which means adjustment, repair or replacement of the equipment, tires or mechanical parts of a motor vehicle in order to permit the motor vehicle to be operated under its own power.

(c) Transportation and arrangements for the transportation of human remains, including all necessary and appropriate preparations for and actual transportation provided to return a decedent’s remains from the decedent’s place of death to a location designated by a person with valid legal authority under ORS 97.130.

(9)(a) A person described in this subsection who, in an agreement to lease or to finance the purchase of a motor vehicle, agrees to waive for no additional charge the amount specified in paragraph (b) of this subsection upon total loss of the motor vehicle because of physical damage, theft or other occurrence, as specified in the agreement. The exemption established in this subsection applies to the following persons:

(A) The seller of the motor vehicle, if the sale is made pursuant to a motor vehicle retail installment contract.

(B) The lessor of the motor vehicle.

(D) The assignee of a person described in this paragraph.

(b) The amount waived pursuant to the agreement shall be the difference, or portion thereof, between the amount received by the seller, lessor, lender or assignee, as applicable, that represents the actual cash value of the motor vehicle at the date of loss, and the amount owed under the agreement.

(10) A self-insurance program for tort liability or property damage that is established by two or more affordable housing entities and that complies with the same requirements that public bodies must meet under ORS 30.282 (6). As used in this subsection:

(a) “Affordable housing” means housing projects in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to individuals of low income.

(b) “Affordable housing entity” means any of the following:

(A) A housing authority created under the laws of this state or another jurisdiction and any agency or instrumentality of a housing authority, including but not limited to a legal entity created to conduct a self-insurance program for housing authorities that complies with ORS 30.282 (6).

(B) A nonprofit corporation that is engaged in providing affordable housing.

(C) A partnership or limited liability company that is engaged in providing affordable housing and that is affiliated with a housing authority described in subparagraph (A) of this paragraph or a nonprofit corporation described in subparagraph (B) of this paragraph if the housing authority or nonprofit corporation:

(i) Has, or has the right to acquire, a financial or ownership interest in the partnership or limited liability company;

(ii) Has the power to direct the management or policies of the partnership or limited liability company;

(iii) Has entered into a contract to lease, manage or operate the affordable housing owned by the partnership or limited liability company; or

(iv) Has any other material relationship with the partnership or limited liability company.

(11) Except as provided in ORS 735.500 and 735.510, a person certified by the Department of Consumer and Business Services to operate a retainer medical practice.

(12) A fund established by the Board of Governors of the Oregon State Bar under ORS 9.080.

(13) An association or group of eligible employers, as defined in ORS 735.520, that administers a self-insured program to provide health insurance coverage, excluding disability insurance, to their employees or retired employees or their dependents or a combination of employees and dependents, with or without employee contributions, if all of the following conditions are met:

(a) The number of covered employees and dependents and retired employees and dependents aggregates at least 500 individuals;

(b) The program includes all coverages and benefits required of group health insurance policies under ORS chapters 743, 743A and 743B;

(d) Enrollees of the program are provided copies of summary plan descriptions including:

(A) Written general information about services provided, access to services, charges and scheduling applicable to each enrollee’s coverage;

(B) The program’s grievance and appeal process; and

(C) Other group health plan enrollee rights, disclosure or written procedure requirements established under ORS chapters 743, 743A and 743B;

(e) Program contributions and reserves are held in separate accounts and used for the exclusive benefit of the program;

(f) The program maintains adequate reserves, which may be invested in accordance with the provisions of ORS chapter 293, calculated annually with proper actuarial calculations including the following:

(A) Known claims, paid and outstanding;

(B) A history of incurred but not reported claims;

(D) Unearned contributions; and

(E) A claims trend factor;

(g) The program maintains adequate reinsurance against the risk of economic loss in accordance with the provisions of ORS 742.065 unless the program has received written approval for an alternative arrangement for protection against economic loss from the Director of the Department of Consumer and Business Services;

(h) The program has sufficient personnel to service the program or contracts with a third party administrator licensed under ORS chapter 744 as a third party administrator to provide such services; and

(i) The program files with the director copies of all documents creating and governing the program, all forms used to communicate the coverage to enrollees, the schedule of payments established to support the program and, annually, a financial report showing the total incurred cost of the program for the preceding year. [1967 c.359 §8; 1975 c.314 §1; 1977 c.428 §4; 1981 c.891 §1; 1985 c.811 §1; 1987 c.97 §1; 1987 c.288 §1; 1991 c.958 §2; 1993 c.265 §4; 1995 c.79 §357; 1995 c.582 §1; 1995 c.629 §1; 1997 c.795 §3; 1999 c.502 §4; 2003 c.342 §1; 2005 c.175 §1; 2007 c.174 §1; 2007 c.826 §1; 2009 c.244 §1; 2009 c.470 §5; 2009 c.867 §48; 2011 c.9 §90; 2011 c.130 §6; 2011 c.499 §4; 2013 c.698 §§12,37; 2015 c.318 §§41,42; 2017 c.101 §§51,52; 2017 c.384 §§8,9; 2021 c.497 §16; 2021 c.595 §2]

731.038 Application of Insurance Code to charitable organizations that issue charitable gift annuities. (1) As used in this section:

(a) “Charitable gift annuity” has the meaning given that term in section 501(m)(5) of the Internal Revenue Code, as amended and in effect on January 1, 2006.

(b) “Charitable organization” means an organization to which contributions may be made that are charitable contributions under section 170(c) of the Internal Revenue Code, as amended and in effect on January 1, 2006.

(2) The Insurance Code does not apply to a charitable organization that issues charitable gift annuities if, on the date that the charitable organization issues the charitable gift annuity, the charitable organization:

(a) Has a minimum of $300,000 in net assets as shown by an annual audited financial statement prepared by an independent certified public accountant and kept on file by the charitable organization;

(b) Except as provided in subsection (3) of this section, has been in continuous operation for at least five years or is a successor to or an affiliate of a charitable organization that has been in continuous operation for at least five years; and

(c) Maintains a separate and distinct trust fund as a reserve fund adequate to meet the future payments under all outstanding annuity agreements. The amount in the reserve fund must be an amount no less than an amount computed on the basis of the transfers to which it relates in accordance with the standard of valuation based on current mortality tables and interest rate recommended by a national organization organized for the purpose of providing educational and other services to American charities regarding gift annuities and other forms of planned gifts. The reserve fund may include one or more single premium annuities that pay the entire amount of one or more charitable gift annuities issued by the charitable organization if each single premium annuity is issued by an authorized insurer that is also authorized to transact insurance in the state in which the charitable organization has its principal office and in the state in which the single premium annuity is issued.

(3) The Insurance Code does not apply to an educational institution or nonprofit corporation that issued a charitable gift annuity before January 1, 2006, under a certificate of authority issued under ORS 731.704 (repealed in 2005).

(4) When a charitable organization that is subject to subsection (2) of this section enters into an agreement for a charitable gift annuity, the charitable organization shall disclose in writing to the donor that the charitable gift annuity is not issued by an insurance company, is not subject to regulation by the State of Oregon and is not protected by an insurance guaranty association.

(5) A charitable organization that is not subject to subsection (2) of this section must hold a certificate of authority to issue charitable gift annuities. [2005 c.31 §2]

Note: 731.038 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 731 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

731.039 Requirements for certain educational institutions or nonprofit corporations issuing charitable gift annuities. ORS 731.038 (2)(a) and (b) does not apply to an educational institution or nonprofit corporation that holds a certificate of authority issued under ORS 731.704 (repealed in 2005) on the day before January 1, 2006. An educational institution or nonprofit corporation subject to this section shall keep on file an annual audited financial statement prepared by an independent certified public accountant. [2005 c.31 §3]

Note: 731.039 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 731 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

731.040 [Repealed by 1965 c.241 §3]

731.042 Certificate of exemption; application of certain Insurance Code provisions to exempt insurers. (1) An exempt insurer who holds a certificate of exemption issued by the Director of the Department of Consumer and Business Services before January 1, 2003, may continue transacting insurance.

(2) In order to continue a certificate of exemption, an exempt insurer to whom subsection (1) of this section applies must file its annual statement and pay the fees established by the director by March 1 of each year.

(3) An exempt insurer shall be subject to ORS 731.296 to 731.316, 731.414, 731.418, 731.574, 731.988, 731.992, 733.010 to 733.115, 733.140 to 733.210, 743A.040, 746.075 and 746.110. [Formerly 736.020; 1979 c.870 §1; 1981 c.752 §15; 1989 c.413 §2; 2003 c.802 §174; 2005 c.22 §485]

731.046 Exemption of policies from Securities Law. Any policy, other than a variable annuity policy, whose form has been filed with and approved by the Director of the Department of Consumer and Business Services is exempt from the application of ORS 59.005 to 59.505, 59.710 to 59.830, 59.991 and 59.995, and the marketing of such policy is likewise exempt. [1967 c.359 §10; 2007 c.393 §2]

731.050 [Repealed by 1965 c.241 §3]

DEFINITIONS GENERALLY

731.052 Insurance Code definitions. Except where the context otherwise requires, the definitions given in the Insurance Code govern its construction. [1967 c.359 §11]

731.056 “Action.” “Action” means any action, suit or legal proceeding. [1967 c.359 §12]

731.060 [Repealed by 1965 c.241 §3]

731.062 [1967 c.359 §13; 1991 c.810 §1; 2001 c.191 §20; 2003 c.364 §1; renumbered 731.104 in 2003]

731.066 “Authorized,” “unauthorized” insurer. (1) An “authorized” insurer is one authorized by a subsisting certificate of authority to transact insurance in this state.

(2) An “unauthorized” insurer is one not so authorized. [1967 c.359 §14]

731.069 “Certificate,” “certificate holder.” (1) “Certificate” means a written statement evidencing the coverage of a person insured under a group insurance policy.

(2) “Certificate holder” means an employee or member of a group insured under a group insurance policy. [1981 c.752 §11]

731.070 [Repealed by 1965 c.241 §3]

731.072 “Certificate of authority,” “license.” (1) A “certificate of authority” is one issued by the Director of the Department of Consumer and Business Services pursuant to the Insurance Code evidencing the authority of an insurer to transact insurance in this state.

(2) A “license” is authority granted by the director pursuant to the Insurance Code for the licensee to engage in a business or operation of insurance in this state other than as an insurer, and the certificate by which such authority is evidenced. [1967 c.359 §15]

731.074 “Commercial liability insurance.” (1) “Commercial liability insurance” means insurance for a business, professional, nonprofit or governmental entity against legal, contractual or assumed liability for death, injury or disability of any human, or for damage to property, arising out of acts or omissions in the course of the conduct of the entity.

(2) “Commercial liability insurance” does not include the following lines of insurance or classes of business:

(a) Marine and transportation insurance;

(b) Wet marine and transportation insurance;

(d) Workers’ compensation and employers’ liability insurance;

(e) Nuclear liability insurance;

(f) Fidelity and surety insurance;

(g) Hazardous waste and environmental impairment insurance;

(h) Aviation insurance; or

(i) Commercial automobile insurance.

(3) As used in this section, “commercial automobile” means a four wheel passenger or station wagon type of vehicle used as a public or private conveyance, including a motor vehicle of the utility, pickup, sedan delivery or panel truck type used for wholesale or retail delivery, and a farm truck. [1987 c.774 §32]

Note: 731.074 was added to and made a part of the Insurance Code but was not added to ORS chapter 731 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

731.075 “Covered life.” “Covered life” means a subscriber, policyholder, certificate holder, spouse, dependent child or any other individual insured under an insurance policy or whose benefits are administered by a third party administrator licensed under ORS 744.702. [2009 c.595 §1194]

Note: 731.075 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 731 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

731.076 “Department,” “director.” (1) “Department” means the Department of Consumer and Business Services.

(2) “Director” means the Director of the Department of Consumer and Business Services. [1967 c.359 §16; 1987 c.373 §76; 1993 c.744 §28]

731.080 [Repealed by 1965 c.241 §3]

731.082 “Domestic,” “foreign,” “alien” insurer. (1) “Domestic insurer” means an insurer formed under the laws of this state.

(2) “Foreign insurer” means an insurer formed under the laws of a state other than this state.

(3) “Alien insurer” means an insurer formed under the laws of any country other than the United States of America or a state thereof. [1967 c.359 §17]

731.086 “Domestic risk.” “Domestic risk” means a subject of insurance resident, located or to be performed in this state. [1967 c.359 §18]

731.090 [Repealed by 1965 c.241 §3]

731.092 “Domicile.” The “domicile” of an insurer means:

(1) As to insurers formed under the laws of Canada or any province thereof, the province in which the insurer’s head office is located.

(2) As to other alien insurers, as provided in ORS 731.096.

(3) As to all other insurers, the state under the laws of which the insurer was formed or, if the insurer has been redomesticated to another state, the state to which it has been redomesticated. [1967 c.359 §19; 1995 c.639 §13]

731.096 “Domicile of alien insurer.” (1) The domicile of an alien insurer, other than insurers formed under the laws of Canada or a province thereof, shall be that state designated by the insurer in writing filed with the Director of the Department of Consumer and Business Services at time of admission to this state or before January 1, 1962, whichever date is the later, and may be any one of the following states:

(a) The state in which the insurer was first authorized to transact insurance;

(b) The state in which is located the insurer’s principal place of business in the United States; or

(c) The state in which is held the largest deposit of assets of the insurer in trust for the protection of its policyholders and creditors in the United States.

(2) If the insurer makes no such designation its domicile shall be deemed to be that state in which is located its principal place of business in the United States. [Formerly 736.240]

731.097 “Essential health benefits.” “Essential health benefits” are the items and services prescribed by the Department of Consumer and Business Services by rule in accordance with federal law, including:

(1) Ambulatory patient services.

(2) Emergency services.

(3) Hospitalization.

(4) Maternity and newborn care.

(5) Mental health and substance use disorder services, including behavioral health treatment.

(6) Prescription drugs.

(7) Rehabilitative and habilitative services and devices.

(8) Laboratory services.

(9) Preventive and wellness services and chronic disease management.

(10) Pediatric services, including oral and vision care. [2013 c.681 §2]

Note: 731.097 and 731.098 were added to and made a part of 731.004 to 731.150 by legislative action but were not added to any smaller series therein. See Preface to Oregon Revised Statutes for further explanation.

731.098 “Group health insurance.” “Group health insurance” means that form of health insurance covering groups of persons described in this section, with or without one or more members of their families or one or more of their dependents, or covering one or more members of the families or one or more dependents of such groups of persons, and issued upon one of the following bases:

(1) Under a policy issued to an employer or trustees of a fund established by an employer, who shall be deemed the policyholder, insuring employees of such employer for the benefit of persons other than the employer. As used in this subsection, “employees” includes:

(a) The officers, managers and employees of the employer;

(b) The individual proprietor or partners if the employer is an individual proprietor or partnership;

(d) The individual proprietors, partners and employees of individuals and firms, if the business of the employer and such individual or firm is under common control through stock ownership, contract or otherwise;

(e) The trustees or their employees, or both, if their duties are principally connected with such trusteeship;

(f) The leased workers of a client employer; and

(g) Elected or appointed officials if a policy issued to insure employees of a public body provides that the term “employees” includes elected or appointed officials.

(2) Under a policy issued to an association, including a labor union, that has an active existence for at least one year, that has a constitution and bylaws and that has been organized and is maintained in good faith primarily for purposes other than that of obtaining insurance, which shall be deemed the policyholder, insuring members, employees or employees of members of the association for the benefit of persons other than the association or its officers or trustees.

(3) Under a policy issued to the trustees of a fund established by two or more employers in the same or related industry or by one or more labor unions or by one or more employers and one or more labor unions or by an association as described in subsection (2) of this section, insuring employees of the employers or members of the unions or of such association, or employees of members of such association for the benefit of persons other than the employers or the unions or such association. As used in this subsection, “employees” may include the officers, managers and employees of the employer, and the individual proprietor or partners if the employer is an individual proprietor or partnership. The policy may provide that the term “employees” includes the trustees or their employees, or both, if their duties are principally connected with such trusteeship.

(4) Under a policy issued to any person or organization to which a policy of group life insurance may be issued or delivered in this state, to insure any class or classes of individuals that could be insured under such group life policy. [2013 c.681 §7]

Note: See note under 731.097.

731.099 “Independently procured insurance.” “Independently procured insurance” means insurance procured directly by an insured from a nonadmitted insurer as defined in ORS 735.405. [2011 c.660 §2]

Note: 731.099 was added to and made a part of ORS chapter 731 by legislative action but was not added to any smaller series therein. See Preface to Oregon Revised Statutes for further explanation.

731.100 [Repealed by 1965 c.241 §3]

731.102 “Insurance.” (1) “Insurance” means a contract whereby one undertakes to indemnify another or pay or allow a specified or ascertainable amount or benefit upon determinable risk contingencies.

(2) “Insurance” so defined includes annuities.

(3) “Insurance” so defined includes a contract under which one other than a manufacturer, builder, seller or lessor of the subject property undertakes to perform or provide, for a fixed term and consideration, repair or replacement service or indemnification therefor for the operational or structural failure of specified real or personal property or property components. Insurance does not include contracts with a telecommunications utility as defined in ORS 759.005, for repair, replacement or maintenance of customer-owned inside wiring.

(4) “Insurance” so defined does not include a contract under which an owner rents or leases an animal to a person or to a public body, as defined in ORS 174.109, if the owner retains an obligation to provide for veterinary care or other needs of the animal. [1967 c.359 §21; 1981 c.247 §1; 1985 c.633 §5; 1987 c.447 §111; 2017 c.677 §5]

731.104 “Insurance producer.” “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance. For purposes of this definition:

(1) “Negotiate” means to confer directly with or to offer advice directly to a purchaser or prospective purchaser of a particular policy of insurance concerning any of the substantive benefits, terms or conditions of the policy, if the person engaged in that act:

(a) Sells insurance; or

(b) Obtains insurance from insurers for purchasers.

(2) “Sell” means to exchange a policy of insurance by any means, for money or its equivalent, on behalf of an insurer.

(3) “Solicit” means to attempt to sell a policy of insurance or to ask or urge a person to apply for a particular kind of insurance from a particular insurer. [Formerly 731.062]

731.106 “Insurer.” “Insurer” includes every person engaged in the business of entering into policies of insurance. [1967 c.359 §22]

731.110 [Repealed by 1965 c.241 §3]

731.112 “Judgment.” “Judgment” includes a final order. [1967 c.359 §23; 2003 c.576 §553]

731.114 “Limited benefit coverage.” “Limited benefit coverage” means:

(1) Health insurance that provides:

(a) Coverage for accident only, specific disease or condition only, credit or disability income;

(b) Dental only coverage; or

(2) Independent, noncoordinated, hospital-only indemnity insurance or other fixed indemnity insurance. [2016 c.11 §2]

Note: 731.114 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 731 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

731.116 “Person.” “Person” means an individual or a business entity. For the purpose of this definition, “business entity” means a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity. [1967 c.359 §24; 1983 c.327 §12; 2001 c.191 §21]

731.120 [Repealed by 1965 c.241 §3]

731.122 “Policy.” “Policy” means the written contract or written agreement for or effecting insurance, by whatever name called, and includes all clauses, riders, indorsements and papers which are a part thereof and annuities. [1967 c.359 §25]

731.126 “Reinsurance.” “Reinsurance” means a contract under which an originating insurer, called the “ceding” insurer, procures insurance for itself in another insurer, called the “assuming” insurer or the “reinsurer,” with respect to part or all of an insurance risk of the originating insurer. [1967 c.359 §26]

731.130 [Repealed by 1965 c.241 §3]

731.132 “Required capitalization.” “Required capitalization” means the minimum combined paid-up capital and surplus required by the Insurance Code of a stock insurer, or the minimum surplus so required of an insurer without capital stock. [1967 c.359 §27]

731.136 “State.” When used in context signifying a jurisdiction other than the State of Oregon, “state” means any state, district, territory, commonwealth or possession of the United States of America. [1967 c.359 §28; 2001 c.191 §22]

731.140 [Repealed by 1965 c.241 §3]

731.142 “Stock,” “mutual” and “reciprocal” insurer. (1) “Stock insurer” means an incorporated insurer whose capital is divided into shares and owned by its stockholders.

(2) “Mutual insurer” means an incorporated insurer without capital stock and the governing body of which is elected by its policyholders. This definition does not exclude as a “mutual insurer” a foreign insurer found by the Director of the Department of Consumer and Business Services to be organized on the mutual plan under the laws of its domicile, but having temporary share capital or providing for election of the insurer’s governing body on a reasonable basis by policyholders and others.

(3) “Reciprocal insurer” means an unincorporated aggregation of persons known as “subscribers,” operating individually and collectively through an attorney in fact common to all such persons, interexchanging among themselves reciprocal agreements of indemnity. [1967 c.359 §29]

731.144 “Surplus lines insurance.” “Surplus lines insurance” means any insurance on an Oregon home state risk, permitted to be placed through a surplus lines licensee with a nonadmitted insurer eligible to accept such insurance, other than reinsurance, wet marine and transportation insurance, independently procured insurance, life insurance and health insurance and annuities. For purposes of this section, “home state” has the meaning given that term in ORS 735.405. [1987 c.774 §113; 1991 c.810 §24; 2011 c.660 §20]

Note: 731.144 was added to and made a part of ORS chapter 731 but was not added to any smaller series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

731.146 “Transact insurance.” (1) “Transact insurance” means one or more of the following acts effected by mail or otherwise:

(a) Making or proposing to make an insurance contract.

(b) Taking or receiving any application for insurance.

(c) Receiving or collecting any premium, commission, membership fee, assessment, due or other consideration for any insurance or any part thereof.

(d) Issuing or delivering policies of insurance.

(e) Directly or indirectly acting as an insurance producer for, or otherwise representing or aiding on behalf of another, any person in the solicitation, negotiation, procurement or effectuation of insurance or renewals thereof, the dissemination of information as to coverage or rates, the forwarding of applications, the delivering of policies, the inspection of risks, the fixing of rates, the investigation or adjustment of claims or losses, the transaction of matters subsequent to effectuation of the policy and arising out of it, or in any other manner representing or assisting a person with respect to insurance.

(f) Advertising locally or circularizing therein without regard for the source of such circularization, whenever such advertising or circularization is for the purpose of solicitation of insurance business.

(g) Doing any other kind of business specifically recognized as constituting the doing of an insurance business within the meaning of the Insurance Code.

(h) Offering a multistate qualified health plan to individuals or small employers through the program administered by the United States Office of Personnel Management pursuant to 42 U.S.C. 18054.

(i) Doing or proposing to do any insurance business in substance equivalent to any of paragraphs (a) to (h) of this subsection in a manner designed to evade the provisions of the Insurance Code.

(2) Subsection (1) of this section does not include, apply to or affect the following:

(a) Making investments within a state by an insurer not admitted or authorized to do business within such state.

(b) Except as provided in ORS 743.015, doing or proposing to do any insurance business arising out of a policy of group life insurance or a policy of blanket health insurance, if the master policy was validly issued to cover a group organized primarily for purposes other than the procurement of insurance and was delivered in and pursuant to the laws of another state in which:

(A) The insurer was authorized to do an insurance business;

(B) The policyholder is domiciled or otherwise has a bona fide situs; and

(c) Except as provided in ORS 743.015, doing or proposing to do any insurance business arising out of a policy of group health insurance, if the master policy was validly issued to cover an employer group other than an association, trust or multiple employer welfare arrangement and was delivered in and pursuant to the laws of another state in which:

(A) The insurer was authorized to do an insurance business; and

(B) The policyholder is domiciled or otherwise has a bona fide situs.

(d) Investigating, settling, or litigating claims under policies lawfully written within a state, or liquidating assets and liabilities, all resulting from the insurer’s former authorized operations within such state.

(e) Transactions within a state under a policy subsequent to its issuance if the policy was lawfully solicited, written and delivered outside the state and did not cover a subject of insurance resident, located or to be performed in the state when issued.

(f) The continuation and servicing of life or health insurance policies remaining in force on residents of a state if the insurer has withdrawn from such state and is not transacting new insurance therein.

(3) If mail is used, an act shall be deemed to take place at the point where the matter transmitted by mail is delivered and takes effect. [1967 c.359 §30; 1971 c.231 §10; 1989 c.784 §4; 2003 c.364 §64; 2007 c.752 §§1,6; 2013 c.681 §9; 2015 c.515 §4; 2019 c.285 §3]

CLASSES OF INSURANCE DEFINED

731.150 Definitions of classes of insurance not mutually exclusive. It is intended that certain insurance coverages may come within the definitions of two or more classes of insurance as defined in the Insurance Code, and the inclusion of such coverage within one definition shall not exclude it as to any other class of insurance within the definition of which such coverage is likewise reasonably includable. [1967 c.359 §32]

731.154 “Annuity.” (1) “Annuity” or “annuity policy” means any agreement to make periodic payments, whether fixed or variable in amount, where the making of all or some of such payments, or the amount of any such payment, is dependent upon the continuance of human life, except payments made pursuant to the settlement provisions of a life insurance policy, and includes additional benefits operating to safeguard the policy from lapse or to provide a special surrender value or special benefit or annuity in the event of total and permanent disability of the annuitant.

(2) “Annuity” does not include a charitable remainder annuity trust or a charitable remainder unitrust as defined in section 664(d) of the Internal Revenue Code. [1967 c.359 §33; 1993 c.377 §1]

731.156 “Variable life insurance”; “variable annuity.” “Variable life insurance” and “variable annuity” mean forms of life insurance or annuity benefits, respectively, that vary according to the investment experience of a separate account or accounts maintained by the insurer with respect to policies providing such benefits or are securities under the Securities Act of 1933, 15 U.S.C. 77a et seq., as in effect on January 1, 2024, that vary according to the performance of a benchmark index, rate or fund if the principal or minimum rate of interest is not guaranteed and might be subject to a market value adjustment. For convenience, reference to “variable life insurance” in the Insurance Code includes variable life insurance and variable annuities as defined in this section, except if the inclusion of variable annuities obviously is inapplicable or if the context requires, or the Insurance Code provides, otherwise. [1973 c.435 §2; 2023 c.143 §3]

731.158 “Casualty insurance.” “Casualty insurance” means:

(1) Insurance against legal, contractual or assumed liability for death, injury or disability of any human, or for damage to property; and provision for medical, hospital, surgical and disability benefits to injured persons including insurance against the risk of economic loss assumed under a less than fully insured employee health benefit plan and funeral and death benefits to dependents, beneficiaries or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as coverage for personal injury protection benefits under a motor vehicle liability policy or as an incidental coverage with or supplemental to liability insurance;

(2) Motor vehicle physical damage, burglary and theft, glass, boiler and machinery, credit and livestock insurance;

(3) Insurance of the obligations accepted by, imposed upon or assumed by employers under law for death, disablement or occupational diseases of employees;

(4) Insurance which undertakes to perform or provide repair or replacement service or indemnification therefor for the operational or structural failure of specified real or personal property or property components; and

(5) Insurance against any other kind of loss, damage or liability properly a subject of insurance and not within any other class of insurance otherwise defined, if such insurance is not disapproved by the Director of the Department of Consumer and Business Services as being contrary to law or public policy. [1967 c.359 §34; 1981 c.247 §2; 1993 c.649 §5; 2007 c.241 §22]

731.162 “Health insurance.” “Health insurance” means insurance of humans against bodily injury, disablement or death by accident or accidental means, or the expense thereof, or against disablement or expense resulting from sickness or childbirth, or against expense incurred in prevention of sickness, in dental care or optometrical service, and every insurance appertaining thereto, including insurance against the risk of economic loss assumed under a less than fully insured employee health benefit plan. “Health insurance” does not include workers’ compensation coverages. [1967 c.359 §35; 1993 c.649 §6]

731.164 “Home protection insurance,” “home protection insurer.” (1)(a) “Home protection insurance” means that part of casualty insurance that includes only insurance which undertakes to perform or provide repair or replacement service or indemnification therefor for the operational or structural failure of the insured home, components of the home or personal property relating to the home or its components, and does not include protection against consequential damage from the operational or structural failure.

(b)(A) “Home protection insurance” does not include a home service agreement.

(B) As used in this paragraph, “home service agreement” means a contract or agreement for a specific limited duration to:

(i) Service, repair or replace in an existing home the mechanical or appliance system or the components that break down due to normal wear and tear or inherent defects; or

(ii) Provide incidental service, repair or replacement to cover leaks and failures in roofing systems.

(c) As used in this subsection, “home” means a single living unit or multiple living units, including manufactured dwellings, used primarily as residences.

(2) “Home protection insurer” means an insurer under policies of home protection insurance, other than an insurer transacting other forms of casualty insurance or any form of reinsurance. [1981 c.247 §4; 2003 c.283 §1]

731.166 “Industrial life insurance.” “Industrial life insurance” means that form of life insurance written under policies of face amount of $2,500 or less, under which premiums are payable monthly or more often and the policy specifies it is an industrial life insurance policy. [1967 c.359 §36]

731.170 “Life insurance”; includes annuities. (1) “Life insurance” means insurance on human lives and every insurance appertaining thereto and includes the granting of endowment benefits, additional benefits in event of death or dismemberment by accident or accidental means, additional benefits in event of the insured’s or premium payer’s disability and optional modes of settlement of proceeds of life insurance including annuity benefits payable under such a settlement provision. “Life insurance” does not include workers’ compensation coverages.

(2) For convenience, reference to “life insurance” in the Insurance Code includes life insurance as defined in subsection (1) of this section and annuities as defined in ORS 731.154, except if the inclusion of annuities obviously is inapplicable or if the context requires, or the Insurance Code provides, otherwise. [1967 c.359 §37]

731.174 “Marine and transportation insurance.” “Marine and transportation insurance” includes:

(1) Insurance against any and all kinds of loss of or damage to:

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

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

(c) Precious stones, jewels, jewelry, gold, silver and other precious metals, whether used in business or trade or otherwise and whether the same is in course of transportation or otherwise; and

(d) Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion, or any of them, are the only hazards to be covered; piers, wharves, docks, and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion or any of them; other aids to navigation and transportation, including dry docks and marine railways, against all risks.

(2) Marine protection and indemnity insurance meaning insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person. [Formerly 745.005]

731.178 “Mortgage insurance.” “Mortgage insurance” means insurance against financial loss by reason of:

(1) Nonpayment of principal, interest and other sums agreed to be paid under the terms of an obligation secured by a mortgage, deed of trust or other instrument constituting a lien or charge on real or personal property; or

(2) Nonpayment of rent and other sums agreed to be paid under the terms of a written lease for the possession, use or occupancy of real property, such insurance also being referred to in the Insurance Code as “lease insurance.” [1967 c.359 §39; 1969 c.692 §1]

731.182 “Property insurance.” “Property insurance” means insurance on real or personal property of every kind and of every interest therein, whether on land, water or in the air, against loss or damage from any and all hazard or cause, and against consequential loss from such loss or damage, other than noncontractual legal liability for loss or damage. “Property insurance” does not include title insurance. [1967 c.359 §40]

731.186 “Surety insurance.” “Surety insurance” means insurance guaranteeing the fidelity of persons holding places of trust, the performance of duties, contracts, bonds and undertakings, including the signing thereof as surety, and insuring the performance of obligations of employers under workers’ compensation laws by surety bond. [1967 c.359 §41]

731.190 “Title insurance.” “Title insurance” means insurance of owners of property or others having an interest therein or liens or encumbrances thereon, against loss by encumbrance, defective titles, invalidity or adverse claim to title. [1967 c.359 §42]

731.194 “Wet marine and transportation insurance.” “Wet marine and transportation insurance” is that part of marine and transportation insurance that includes only:

(1) Insurance upon vessels, crafts, hulls and of interests therein or with relation thereto;

(2) Insurance of marine builder’s risks, marine war risks and contracts referred to in ORS 731.174 (2) or any replacement thereof;

(3) Insurance of freights and disbursements pertaining to a subject of insurance coming within this section;

(4) Insurance of personal property and interests therein, in course of exportation from or importation into any country, and in course of transportation coastwise or on inland waters, including transportation by land, water, or air from point of origin to final destination, in respect to, appertaining to or in connection with, any and all risks or perils of navigation, transit or transportation, and while being prepared for and while awaiting shipment, and during any delays, storage, transshipment or reshipment incident thereto;

(5) Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations; and

(6) Insurance of aircraft operated in scheduled interstate flight, or cargo of such aircraft, or against this liability other than workers’ compensation and employers’ liability arising out of the ownership, maintenance or use of such aircraft. [1967 c.359 §43; 1987 c.774 §114]

731.204 [Formerly 736.495; repealed by 1987 c.373 §85]

731.208 [Formerly 736.500; repealed by 1987 c.373 §85]

731.212 [1967 c.359 §46; repealed by 1987 c.373 §85]

INSURANCE ADMINISTRATION

731.216 Administrative power of director. The Director of the Department of Consumer and Business Services shall have the power to:

(1) Contract for and procure, on a fee or part-time basis, or both, such actuarial, technical or other professional services as may be required for the discharge of duties.

(2) Obtain such other services as the director considers necessary or desirable, including participation in organizations of state insurance supervisory officials and appointment of advisory committees. A member of an advisory committee so appointed shall receive no compensation for services as a member, but, subject to any other applicable law regulating travel and other expenses of state officers, shall receive actual and necessary travel and other expenses incurred in the performance of official duties.

(3) Establish within the Department of Consumer and Business Services a workers’ compensation rating bureau to provide rating information that is based upon and relevant to activities conducted in this state, to enable the director to carry out the provisions of ORS chapter 737. In lieu of creating a rating bureau within the department, the director may contract with any rating organization in other states if the director finds that such a contract would provide the information required by this section. [Formerly 736.503; 1987 c.373 §77; 1987 c.884 §50; 2003 c.14 §445]

731.220 [Formerly 736.507; repealed by 1987 c.373 §85]

731.224 [1967 c.359 §49; repealed by 1987 c.373 §85]

731.228 Prohibited interests and rewards. (1) No officer or employee of the Department of Consumer and Business Services delegated responsibilities in the enforcement of the Insurance Code shall:

(a) Be a director, officer, or employee of or be financially interested in any person regulated by the department or office of the department that is delegated responsibility in the enforcement of the Insurance Code, except as a policyholder or claimant under an insurance policy or by reason of rights vested in commissions, fees, or retirement benefits related to services performed prior to affiliation with the department; or

(b) Be engaged in any other business or occupation interfering with or inconsistent with the duties of the office or employment.

(2) No person shall directly or indirectly give or pay, or offer to give or pay, to the Director of the Department of Consumer and Business Services, or any officer or employee of the department, and the director or such officer or employee shall not directly or indirectly solicit, receive or accept any fee, compensation, loan, gift or other thing of value in addition to the compensation and expense allowance provided by law, for:

(a) Any service rendered or to be rendered as such director, officer or employee, or in connection therewith;

(b) Services rendered or to be rendered in relation to legislation;

(d) Any cause whatsoever related to any person regulated by the department or office of the department that is delegated responsibility in the enforcement of the Insurance Code.

(3) This section does not permit any conduct, affiliation or interest that is otherwise prohibited by public policy. [1967 c.359 §50; 1987 c.373 §78]

731.232 Subpoena power. (1) For the purpose of an investigation or proceeding under the Insurance Code, the Director of the Department of Consumer and Business Services may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence and require the production of books, papers, correspondence, memoranda, agreements or other documents or records which the director considers relevant or material to the inquiry. Each witness who appears before the director under a subpoena shall receive the fees and mileage provided for witnesses in ORS 44.415 (2).

(2) If a person fails to comply with a subpoena so issued or a party or witness refuses to testify on any matters, the judge of the circuit court for any county, on the application of the director, shall compel obedience by proceedings for contempt as in the case of disobedience of the requirements of a subpoena issued from such court or a refusal to testify therein. [1967 c.359 §51; 1989 c.980 §22]

731.236 General powers and duties. (1) The Director of the Department of Consumer and Business Services shall enforce the provisions of the Insurance Code for the public good, and shall execute the duties imposed by the code.

(2) The director has the powers and authority expressly conferred by or reasonably implied from the provisions of the Insurance Code.

(3) The director may conduct such examinations and investigations of insurance matters, in addition to examinations and investigations expressly authorized, as the director considers proper to determine whether any person has violated any provision of the Insurance Code or to secure information useful in the lawful administration of any such provision. The cost of such additional examinations and investigations shall be borne by the state.

(4) The director has such additional powers and duties as may be provided by other laws of this state. [1967 c.359 §52]

731.240 Hearings in general. (1) The Director of the Department of Consumer and Business Services shall hold a hearing upon written demand for a hearing by a person aggrieved by any act, threatened act or failure of the director to act. The demand must state the grounds therefor.

(2) To the extent applicable and not inconsistent with subsection (1) of this section, the provisions of ORS chapter 183 shall govern the hearing procedure and any judicial review thereof. [1967 c.359 §53; 1991 c.401 §1]

731.244 Rules. In accordance with the applicable provisions of ORS chapter 183, the Director of the Department of Consumer and Business Services may make reasonable rules necessary for or as an aid to the effectuation of the Insurance Code. No such rule shall extend, modify or conflict with the Insurance Code or the reasonable implications thereof. [1967 c.359 §54]

731.248 Orders. (1) Orders of the Director of the Department of Consumer and Business Services shall be effective only when in writing and signed by the director or by the authority of the director. Orders shall be filed in the Department of Consumer and Business Services.

(2) Every such order shall state:

(a) Its effective date;

(b) Its intent or purpose;

(d) The provisions of the Insurance Code pursuant to which action is taken or proposed to be taken.

(3) Except as may be provided in the Insurance Code respecting particular procedures, an order or notice may be given by delivery to the person to be ordered or notified or by mailing it by certified or registered mail, return receipt requested, postage prepaid, addressed to the person at the residence or principal place of business of the person as last of record in the department. Notice so mailed shall be deemed to have been given when deposited in a letter depository of a United States post office. [1967 c.359 §55]

731.252 Cease and desist orders. (1) Whenever the Director of the Department of Consumer and Business Services has reason to believe that any person has been engaged or is engaging or is about to engage in any violation of the Insurance Code, the director may issue an order, directed to such person, to discontinue or desist from such violation or threatened violation. The copy of the order forwarded to the person involved shall set forth a statement of the specific charges and the fact that the person may request a hearing within 20 days of the date of mailing. Where a hearing is requested, the director shall set a date for the hearing to be held within 30 days after receipt of the request, and shall give the person involved written notice of the hearing date at least seven days prior thereto. The person requesting the hearing must establish to the satisfaction of the director that such order should not be complied with. The order shall become final 20 days after the date of mailing unless within such 20-day period the person to whom it is directed files with the director a written request for a hearing. To the extent applicable and not inconsistent with the foregoing, the provisions of ORS chapter 183 shall govern the hearing procedure and any judicial review thereof. Where the hearing has been requested, the director’s order shall become final at such time as the right to further hearing or review has expired or been exhausted.

(2) No order of the director under this section or order of a court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.

(3) The powers vested in the director pursuant to this section are supplementary and not in lieu of any other powers to suspend or revoke certificates of authority or licenses or to enforce any penalties, fines or forfeitures, authorized by law with respect to any violation for which an order of discontinuance has been issued. [Formerly 736.835]

731.256 Enforcement generally; restitution. (1) The Director of the Department of Consumer and Business Services may institute actions or other lawful proceedings that the director deems necessary to enforce a provision of the Insurance Code or any order or action the director makes or takes in pursuance of law.

(2) As part of or in addition to any action or proceeding the director institutes against an insurer under subsection (1) of this section, the director may:

(a) Seek restitution on a consumer’s behalf for actual damages the consumer suffers as a result of the insurer’s violation of a provision of the Insurance Code or applicable federal law or the insurer’s breach of an insurance contract or policy the insurer has with the consumer; and

(b) Seek other equitable relief the director deems appropriate under the circumstances.

(3) If the director has reason to believe that a person has violated a provision of the Insurance Code or another law that applies to insurance operations, and if the violation is subject to criminal prosecution and in the opinion of the director criminal prosecution is warranted, the director shall give the information about the violation to the Attorney General or district attorney that has jurisdiction over the violation. The Attorney General or district attorney promptly shall institute an action or a proceeding against the person as the information requires or justifies.

(4) An action or proceeding that the director institutes under subsection (1) of this section is an exercise of the director’s regulatory authority and, except as otherwise provided in subsection (3) of this section, does not create a cause of action for any other person. [1967 c.359 §57; 2013 c.618 §1]

731.258 Enforcement of orders and decisions by Attorney General; filing, enforcement and effect of foreign decrees. (1) The Attorney General upon request of the Director of the Department of Consumer and Business Services may proceed in the courts of this state or any reciprocal state to enforce an order or decision in any court proceeding or in any administrative proceeding before the director.

(2) As used in this section:

(a) “Reciprocal state” means any state the laws of which contain procedures substantially similar to those specified in this section for the enforcement of decrees or orders in equity issued by courts located in other states, against any insurer incorporated or authorized to do business in such state.

(b) “Foreign decree” means any decree or order in equity of a court located in a reciprocal state, including a court of the United States located therein, against any insurer incorporated or authorized to do business in this state.

(3) The Director of the Department of Consumer and Business Services of this state shall determine which states qualify as reciprocal states and shall maintain at all times an up-to-date list of such states.

(4) A copy of any foreign decree authenticated in accordance with the statutes of this state may be filed in the office of the clerk of any circuit court of this state. The clerk, upon verifying with the director that the decree or order qualifies as a foreign decree shall treat the foreign decree in the same manner as a judgment of a circuit court of this state. A foreign decree so filed has the same effect and shall be deemed as a judgment of a circuit court of this state, and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of a circuit court of this state and may be enforced or satisfied in like manner.

(5)(a) At the time of the filing of the foreign decree, the Attorney General shall make and file with the clerk of the court an affidavit setting forth the name and last-known post-office address of the defendant.

(b) Promptly upon the filing of the foreign decree and the affidavit, the clerk shall mail notice of the filing of the foreign decree to the defendant at the address given and to the director of this state and shall make a note of the mailing in the register of the court. In addition, the Attorney General may mail a notice of the filing of the foreign decree to the defendant and to the director of this state and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk shall not affect the enforcement proceedings if proof of mailing by the Attorney General has been filed.

(c) No execution or other process for enforcement of a foreign decree filed under subsection (4) of this section shall issue until 30 days after the date the decree is filed.

(6)(a) If the defendant shows the circuit court that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, the court shall stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.

(b) If the defendant shows the circuit court any ground upon which enforcement of a judgment of any circuit court of this state would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree which is required in this state for a judgment. [1969 c.336 §5; 2003 c.576 §219]

731.259 Requirement for written notice to insured; rules. (1) The Department of Consumer and Business Services may require an insurer to provide a written notice to an insured to fully effectuate any law the department is responsible for enforcing, including, but not limited to, laws regarding:

(a) Enrollment periods.

(b) The termination of coverage.

(d) The rights of insureds.

(2) The department may prescribe by rule the form, manner and contents of any required notices. Any requirements must be designed to minimize the administrative burden on insurers, including by allowing notices to be combined into one notice, as appropriate. [2013 c.681 §5]

Note: 731.259 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 731 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

731.260 False or misleading filings. No person shall file or cause to be filed with the Director of the Department of Consumer and Business Services any article, certificate, report, statement, application or any other information required or permitted to be so filed under the Insurance Code and known to such person to be false or misleading in any material respect. [Formerly 736.650]

731.264 Complaints and investigations confidential; permitted disclosures; rules. (1) A complaint made to the Director of the Department of Consumer and Business Services against any person regulated by the Insurance Code, and the record of the complaint, is confidential and may not be disclosed except as provided in ORS 705.137. The complaint, and the record of the complaint, may not be used in any action, suit or proceeding except to the extent the director considers necessary in prosecuting apparent violations of the Insurance Code or other law.

(2) Data gathered pursuant to an investigation by the director of a complaint is confidential, may not be disclosed except as provided in ORS 705.137 and may not be used in any action, suit or proceeding except to the extent the director considers necessary in investigating or prosecuting apparent violations of the Insurance Code or other law.

(3) Notwithstanding subsections (1) and (2) of this section, the director shall establish by rule a method for publishing an annual statistical report containing the insurer’s name and the number, percentage, type and disposition of complaints the Department of Consumer and Business Services receives against each insurer that transacts insurance within this state. [1967 c.359 §59; 1971 c.231 §11; 1987 c.481 §1; 1987 c.774 §149; 2001 c.377 §4; 2016 c.62 §§1,2]

731.268 Use of reproductions and certified copies as evidence; fee. (1) Photographs or microphotographs in the form of film or prints of documents and records made by the Director of the Department of Consumer and Business Services for the files of the director shall have the same force and effect as the originals thereof, and duly certified or authenticated reproductions of such photographs or microphotographs shall be as admissible in evidence as are the originals.

(2) Upon request of any person and payment of the applicable fee, the director shall furnish a certified copy of any record in the office of the director which is then subject to public inspection.

(3) Copies of original records or documents in the office of the director certified by the director shall have the same force and effect and be received in evidence in all courts equally and in like manner as if they were originals. [1967 c.359 §60]

731.272 Director’s annual reports; notice of publication of report. (1) The Director of the Department of Consumer and Business Services shall prepare annually, as soon after March 1 as is consistent with full and accurate preparation, a report of the official transactions of the director under the Insurance Code. The report shall include:

(a) In condensed form statements made to the director by every insurer authorized to do business in this state.

(b) A statement of all insurers authorized to do business in this state as of the date of the report.

(c) A list of insurers whose business in this state was terminated and the reason for the termination. If the termination was a result of liquidation or delinquency proceedings brought against the insurer in this or any other state, the report shall include the amount of the insurer’s assets and liabilities so far as those amounts are known to the director.

(d) A statement of the operating expenses of the Department of Consumer and Business Services under the Insurance Code, including salaries, transportation, communication, printing, office supplies, fixed charges and miscellaneous expenses.

(e) A detailed statement of the moneys, fees and taxes received by the department under the Insurance Code and from what source.

(f) Any other pertinent information and matters as the director considers to be in the public interest.

(2) The director shall give notice of the publication of the report to:

(a) The office of the Speaker of the House of Representatives;

(b) The office of the President of the Senate; and

(c) The chair or cochairs of the Joint Committee on Ways and Means if the Legislative Assembly is in session or of the Emergency Board or the Joint Interim Committee on Ways and Means if during the interim. [Formerly 736.520; 1987 c.373 §79; 2005 c.185 §8; 2012 c.107 §18]

731.276 Recommendations for changes in Insurance Code. The Director of the Department of Consumer and Business Services shall continuously review the Insurance Code and shall work with the Director of the Oregon Health Authority to review the health insurance provisions of the Insurance Code and may, from time to time, make recommendations for changes therein. [1967 c.359 §62; 2009 c.595 §1117]

731.280 Publications authorized. The Director of the Department of Consumer and Business Services shall publish:

(1) Pamphlet or booklet copies of the insurance laws of this state;

(2) The director’s annual report;

(3) Such copies of results of investigations or examinations of insurers for public distribution as the director considers to be in the public interest;

(4) Such compilations as the director considers advisable from time to time of the general orders of the director then in force; and

(5) Such other material as the director may compile and consider relevant and suitable for the effective administration of the Insurance Code. [1967 c.359 §63]

731.282 Authority to sell publications. The Director of the Department of Consumer and Business Services may sell, at a price reasonably calculated to cover the costs of preparation, any of the copies, compilations or materials described in ORS 731.280. [1971 c.231 §2; 1982 s.s.1 c.17 §3]

731.284 Distribution of insurance laws. Copies of the insurance laws in pamphlet form may be sold by the Director of the Department of Consumer and Business Services at a reasonable price. The director may distribute free of charge one copy of such pamphlet to each of the following:

(1) Authorized insurers and licensed rating organizations;

(2) Insurance departments of other states; and

(3) Public agencies. However, the director may distribute such quantities to public agencies as the director determines. [1967 c.359 §64; 2003 c.364 §65]

731.288 Recording complaints; director to consider complaints before issuing licenses. The Department of Consumer and Business Services shall record each complaint the department receives, including the subsequent disposition of the complaint. The record of a complaint shall be maintained for a period of not less than seven years. The records of complaints shall be indexed whenever applicable both by the name of the insurer and by the name of the insurance producer involved. The Director of the Department of Consumer and Business Services shall consider such complaints before issuing or continuing any certificate of authority or license of an insurer or insurance producer named in such complaints. [Formerly 736.580; 2003 c.364 §66; 2003 c.802 §168]

731.292 Disposition of fees, charges, taxes, penalties and other moneys. (1) Except as provided in subsections (2), (3) and (4) of this section, all fees, charges and other moneys received by the Department of Consumer and Business Services or the Director of the Department of Consumer and Business Services under the Insurance Code shall be deposited in the fund created by ORS 705.145 and are continuously appropriated to the department for the payment of the expenses of the department in carrying out the Insurance Code.

(2) All taxes and penalties paid pursuant to the Insurance Code shall be paid to the director and after deductions of refunds shall be paid by the director to the State Treasurer, at the end of every calendar month or more often in the director’s discretion, for deposit in the General Fund to become available for general governmental expenses.

(3) All premium taxes received by the director pursuant to ORS 731.820 shall be paid by the director to the State Treasurer for deposit in the State Fire Marshal Fund.

(4) Assessments received by the department under sections 3 and 5, chapter 538, Oregon Laws 2017, and penalties received by the department under section 6, chapter 538, Oregon Laws 2017, shall be paid into the State Treasury and credited to the Health System Fund established under section 2, chapter 538, Oregon Laws 2017. [Formerly 736.525; 1981 c.652 §3; 1982 s.s.1 c.17 §1; 1987 c.373 §80; 1991 c.67 §193; 2009 c.867 §13; 2011 c.597 §296; 2015 c.70 §21; 2017 c.538 §13]

731.296 Director’s inquiries. The Director of the Department of Consumer and Business Services may address any proper inquiries to any insurer, licensee or its officers in relation to its activities or condition or any other matter connected with its transactions. Any such person so addressed shall promptly and truthfully reply to such inquiries using the form of communication requested by the director. The reply shall be verified by an officer of such person, if the director so requires. A reply is subject to the provisions of ORS 731.260. [Formerly 736.542; 1975 c.298 §1]

731.300 Examination of insurers; when required. (1) The Director of the Department of Consumer and Business Services shall examine every authorized insurer, including an audit of the financial affairs of such insurer, as often as the director determines an examination to be necessary but at least once each five years. An examination shall be conducted for the purpose of determining the financial condition of the insurer, its ability to fulfill its obligations and its manner of fulfillment, the nature of its operations and its compliance with the Insurance Code. The director may also make such an examination of any surplus lines insurance producer or any person holding the capital stock of an authorized insurer or surplus lines insurance producer for the purpose of controlling the management thereof as a voting trustee or otherwise, or both.

(2) Instead of conducting an examination of an authorized foreign or alien insurer, the director may accept an examination report on the insurer that is prepared by the insurance department for the state of domicile or state of entry of the insurer if:

(a) At the time of the examination the insurance department of the state was accredited under the Financial Regulation Standards and Accreditation Program or successor program of the National Association of Insurance Commissioners; or

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

(3) Examination of an alien insurer shall be limited to its insurance transactions, assets, trust deposits and affairs in the United States except as otherwise required by the director. [Formerly 736.545; 1979 c.870 §2; 1981 c.874 §18; 1990 c.2 §46; 1993 c.447 §1; 2003 c.364 §67]

731.302 Appointment of examiners; retaining of appraisers, actuaries and others; evidentiary status of facts and conclusions. (1) When the Director of the Department of Consumer and Business Services determines that an examination should be conducted, the director shall appoint one or more examiners to perform the examination and instruct them as to the scope of the examination. In conducting the examination, each examiner shall consider the guidelines and procedures in the examiner handbook, or its successor publication, adopted by the National Association of Insurance Commissioners. The director may prescribe the examiner handbook or its successor publication and employ other guidelines and procedures that the director determines to be appropriate.

(2) When making an examination, the director may retain appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as needed. The cost of retaining such professionals and specialists shall be borne by the person that is the subject of the examination.

(3) At any time during the course of an examination, the director may take other action pursuant to the Insurance Code.

(4) Facts determined and conclusions made pursuant to an examination shall be presumptive evidence of the relevant facts and conclusions in any judicial or administrative action. [1993 c.447 §2]

731.304 Investigation of persons transacting insurance. The Director of the Department of Consumer and Business Services, whenever the director deems it advisable in the interest of policyholders or for the public good, shall investigate into the affairs of any person engaged in, proposing to engage in or claiming or advertising to engage in:

(1) Transacting insurance in this state;

(2) Organizing or receiving subscriptions for or disposing of the stock of or in any manner taking part in the formation or business of an insurer; or

(3) Holding capital stock of one or more insurers for the purpose of controlling the management thereof as voting trustee or otherwise. [1967 c.359 §69]

731.308 Procedure at examination or investigation; production of books and other records. (1) Upon an examination or investigation the Director of the Department of Consumer and Business Services may examine under oath all persons who may have material information regarding the property or business of the person being examined or investigated.

(2) Every person being examined or investigated shall produce all books, records, accounts, papers, documents and computer and other recordings in its possession or control relating to the matter under examination or investigation, including, in the case of an examination, the property, assets, business and affairs of the person.

(3) With regard to an examination, the officers, directors and agents of the person being examined shall provide timely, convenient and free access at all reasonable hours at the offices of the person being examined to all books, records, accounts, papers, documents and computer and other recordings. The officers, directors, employees and agents of the person must facilitate the examination. [Formerly 736.555; 1993 c.447 §3]

731.312 Report of examination; review by person examined; hearing; confidentiality of certain information and documents; permitted disclosures. (1) Not later than the 60th day after completion of an examination, the examiner in charge of the examination shall submit to the Director of the Department of Consumer and Business Services a full and true report of the examination, verified by the oath of the examiner. The report shall comprise only facts appearing upon the books, papers, records, accounts, documents or computer and other recordings of the person, its agents or other persons being examined or facts ascertained from testimony of individuals concerning the affairs of such person, together with such conclusions and recommendations as reasonably may be warranted from such facts.

(2) The director shall make a copy of the report submitted under subsection (1) of this section available to the person who is the subject of the examination and shall give the person an opportunity to review and comment on the report. The director may request additional information or meet with the person for the purpose of resolving questions or obtaining additional information, and may direct the examiner to consider the additional information for inclusion in the report.

(3) Before the director files the examination report as a final examination report or makes the report or any matters relating thereto public, the person being examined shall have an opportunity for a hearing. A copy of the report must be mailed by certified mail to the person being examined. The person may request a hearing not later than the 30th day after the date on which the report was mailed. This subsection does not limit the authority of the director to disclose a preliminary or final examination report as otherwise provided in this section.

(4) The director shall consider comments presented at a hearing requested under subsection (3) of this section and may direct the examiner to consider the comments or direct that the comments be included in documentation relating to the report, although not as part of the report itself. The director may file the report as a final examination report at any time after consideration of the comments or at any time after the period for requesting a hearing has passed if a hearing is not requested.

(5) A report filed as a final examination report is subject to public inspection. The director, after filing any report, if the director considers it for the interest of the public to do so, may publish any report or the result of any examination as contained therein in one or more newspapers of the state without expense to the person examined.

(6) All work papers, recorded information, documents and copies thereof that are produced or obtained by or disclosed to the director or any other person in the course of an examination or in the course of analysis by the director of the financial condition or market conduct of an insurer are confidential and are exempt from public inspection as provided in ORS 705.137. If the director, in the director’s sole discretion, determines that disclosure is necessary to protect the public interest, the director may make available work papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the director or any other person in the course of the examination.

(7) The director may disclose the content of an examination report that has not yet otherwise been disclosed or may disclose any of the materials described in subsection (6) of this section as provided in ORS 705.137. [Formerly 736.560; 1993 c.447 §4; 1999 c.364 §1; 2001 c.377 §5]

731.314 Immunity for director, examiner and others. (1) No cause of action may arise and no liability may be imposed against the Director of the Department of Consumer and Business Services, an authorized representative of the director or any examiner appointed by the director for any statements made or conduct performed in good faith pursuant to an examination or investigation.

(2) No cause of action may arise and no liability may be imposed against any person for communicating or delivering information or data to the director or an authorized representative of the director or examiner pursuant to an examination or investigation if the communication or delivery was performed in good faith and without fraudulent intent or an intent to deceive.

(3) This section does not abrogate or modify in any way any common law or statutory privilege or immunity otherwise enjoyed by any person to which subsection (1) or (2) of this section applies.

(4) The court may award reasonable attorney fees to the prevailing party in a cause of action arising out of activities of the director or an examiner in carrying out an examination or investigation. [1993 c.447 §5; 1995 c.618 §127]

731.316 Expenses of examination of insurer. Any person examined under ORS 731.300 shall pay to the Director of the Department of Consumer and Business Services the just and legitimate costs of the examination as determined by the director, including actual necessary transportation and traveling expenses. [Formerly 736.565; 1969 c.336 §6]

731.324 Service of process on Secretary of State; notice to unauthorized insurer. (1) Any act set forth in ORS 731.146 by an unauthorized insurer is equivalent to and shall constitute an irrevocable appointment by such insurer, binding upon the insurer, the executor of the insurer or administrator, or successor in interest if a corporation, of the Secretary of State or the successor in office, to be the true and lawful attorney of such insurer. All lawful process in any action in any court by the Director of the Department of Consumer and Business Services or by the state and any notice, order, pleading or process in any proceeding before the director which arises out of transacting insurance in this state by such insurer may be served upon the Secretary of State or the successor in office. Transacting insurance in this state by an unauthorized insurer shall be signification of its agreement that lawful process in a court action and any notice, order, pleading, or process in an administrative proceeding before the director so served shall be of the same legal force and validity as personal service of process in this state upon such insurer.

(2) Service of process in such action shall be made by delivering to and leaving with the Secretary of State, or one of the assistants, two copies of the document served and by payment to the Secretary of State of the fee prescribed by law. Service upon the Secretary of State shall be service upon the principal.

(3) The Secretary of State shall forward by certified mail one of the copies of such process or such notice, order, pleading, or process in proceedings before the director to the defendant in such court proceeding or to whom the notice, order, pleading, or process in such administrative proceeding is addressed or directed at its last-known principal place of business and shall keep a record of all process so served on the defendant. Such record shall show the day and hour of service. Service is sufficient, provided:

(a) Notice of service and a copy of the court process or the notice, order, pleading, or process in the administrative proceeding are sent within 10 days thereafter by certified mail by the plaintiff or the plaintiff’s attorney in the court proceeding or by the director in the administrative proceeding to the defendant at the last-known principal place of business of the defendant.

(b) The defendant’s receipt or receipts issued by the post office with which the letter is certified or registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and an affidavit of the plaintiff or the plaintiff’s attorney in court proceeding or of the director in administrative proceeding, showing compliance therewith are filed with the clerk of the court in which such action is pending or with the director in administrative proceedings, on or before the date the defendant in the court or administrative proceeding is required to appear or respond thereto, or within such further time as the court or director may allow.

(4) No plaintiff shall be entitled to a judgment or a determination by default in any court or administrative proceeding in which court process or notice, order, pleading, or process in proceedings before the director is served under this section until the expiration of 45 days after the date of filing of the affidavit of compliance.

(5) Nothing in this section shall limit or affect the right to serve any process, notice, order, or demand upon any person or insurer in any other manner now or hereafter permitted by law. [1969 c.336 §3]

731.328 Deposits by unauthorized insurers in actions or proceedings. (1) Before an unauthorized insurer files or causes to be filed any pleading in any court action or any notice, order, pleading, or process in an administrative proceeding before the Director of the Department of Consumer and Business Services instituted against such person or insurer, by services made as provided in ORS 731.324, such insurer shall deposit with the clerk of the court in which such action is pending, or with the director in administrative proceedings before the director, cash or securities. The insurer may also file with such clerk or director a bond with good and sufficient sureties, to be approved by the clerk or director, or an irrevocable letter of credit issued by an insured institution, as defined in ORS 706.008, in an amount to be fixed by the court or director sufficient to secure the payment of any final judgment which may be rendered in such action or administrative proceeding.

(2) The director, in any administrative proceeding in which service is made as provided in ORS 731.324, may order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (1) of this section and to defend such action.

(3) Nothing in subsection (1) of this section shall be construed to prevent an unauthorized insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in ORS 731.324. [1969 c.336 §4; 1991 c.331 §126; 1997 c.631 §545]

AUTHORIZATION OF INSURERS AND GENERAL REQUIREMENTS

731.354 Certificate of authority required. No person shall act as an insurer and no insurer shall directly or indirectly transact insurance in this state except as authorized by a subsisting certificate of authority issued to the insurer by the Director of the Department of Consumer and Business Services. [1967 c.359 §73]

731.356 Unauthorized insurance transaction enforcement. When the Director of the Department of Consumer and Business Services believes, from evidence satisfactory to the director, that any insurer is violating or about to violate the provisions of ORS 731.354, the director may cause a complaint to be filed in the Circuit Court of Marion County to enjoin and restrain such insurer from continuing such violation. The court shall have jurisdiction of the proceeding and shall have the power to make and enter an order or judgment awarding such preliminary or final injunctive relief as in its judgment is proper. [1969 c.336 §2]

731.358 Requirements of domestic insurers generally. Upon application a domestic insurer shall be granted a certificate of authority to transact any class of insurance permitted by the Insurance Code and provided for in its articles of incorporation upon its compliance with all the laws of this state and the rules of the Department of Consumer and Business Services relating to such insurers. [Formerly 736.085]

731.362 Requirements of foreign or alien insurers generally. (1) A foreign or alien insurer may be authorized to transact insurance in this state when it has complied with the following requirements:

(a) It shall file with the Director of the Department of Consumer and Business Services a certified copy of its charter, articles of incorporation or deed of settlement and a statement of its financial condition and business in all states in such form and detail as the director may require, signed and sworn to by at least two of its executive officers or the United States manager.

(b) It shall satisfy the director that it is fully and legally organized under the laws of its state or government to do the business it proposes to transact.

(d) It shall make such deposits with the Department of Consumer and Business Services as are required by the provisions of the Insurance Code.

(2) Upon compliance with the requirements of this section and all other requirements imposed on such insurer by the Insurance Code, the director shall issue to it a certificate of authority. [Formerly 736.205; 1999 c.196 §1]

731.363 Authorized foreign insurer becoming domestic insurer. (1) An authorized foreign insurer may become a domestic insurer:

(a) By complying with all of the requirements of law relating to the organization and authorization of a domestic insurer of the same type;

(b) By filing articles of incorporation that are amended to comply with all of the requirements of law relating to the organization and authorization of a domestic insurer of the same type; and

(2) If the Director of the Department of Consumer and Business Services determines that an authorized foreign insurer has complied with the requirements of subsection (1) of this section, the insurer is entitled to a certificate of authority to transact insurance in this state and shall be subject as a domestic insurer to the authority and jurisdiction of this state. [1995 c.639 §9; 1997 c.771 §24]

731.364 Domestic insurer transferring domicile to another state. A domestic insurer, upon the approval of the Director of the Department of Consumer and Business Services, may transfer its domicile to any other state in which it is admitted to transact the business of insurance. Upon such a transfer the insurer ceases to be a domestic insurer and may be authorized in this state if qualified as a foreign insurer. The director shall approve such a proposed transfer unless the director determines that the transfer is not in the interest of the policyholders of this state. [1995 c.639 §10]

731.365 Effect of transfer of domicile by domestic or foreign insurer; notice to director by transferring insurer. (1) The certificate of authority, insurance producer appointments and licenses, rates and other items allowed by the Director of the Department of Consumer and Business Services pursuant to the discretion of the director that are in existence at the time an authorized insurer transfers its domicile to this or any other state as provided in ORS 731.363 or 731.367 or by merger, consolidation or any other lawful method shall continue in full force and effect upon the transfer if the insurer remains authorized to transact insurance in this state.

(2) All outstanding policies of a transferring insurer shall remain in full force and effect and need not be indorsed as to the new name of the insurer or its new location unless so ordered by the director. A transferring insurer shall file new policy forms with the director on or before the effective date of the transfer but may use existing policy forms with appropriate indorsements if allowed by the director, according to any conditions established by the director.

(3) Each transferring insurer shall notify the director of the details of the proposed transfer and shall file promptly any resulting amendments to corporate or other organizational documents filed or required to be filed with the director.

(4) This section applies to a domestic insurer that transfers its domicile to another state and to an authorized foreign insurer that transfers its domicile either to this state or to another state. [1995 c.639 §11; 1997 c.771 §25; 2003 c.364 §68]

731.366 [Formerly 749.040; 1971 c.231 §42; 1977 c.651 §1; 1993 c.709 §4; renumbered 731.369 in 1995]

731.367 Transfer of domicile by unincorporated authorized foreign insurer. An unincorporated authorized foreign insurer transfers its domicile to this state when the Director of the Department of Consumer and Business Services determines that it has complied with all of the requirements of law relating to the organization and authorization of a domestic insurer of the same type as provided in ORS 731.363. No merger, consolidation or other method shall be required to effect a transfer of the domicile of the unincorporated insurer to this state and no vote or approval of the policyholders, members or subscribers of the unincorporated insurer shall be required. Any agreement of indemnity, appointment or governance or any similar agreement shall continue in full force after the transfer if the unincorporated insurer remains an authorized insurer. The laws of this state, however, shall govern all such agreements regardless of any other law to the contrary, and such agreements shall be considered to be modified to reflect that this state is the principal place of business and domicile of the unincorporated insurer. [1995 c.639 §12]

731.369 Requirements of reciprocal insurers generally. (1) A reciprocal insurer, through its attorney, shall file with the Director of the Department of Consumer and Business Services a declaration, verified by the oath of such attorney, setting forth:

(a) The name or title of the reciprocal insurer.

(b) The location of the principal office of the reciprocal insurer.

(d) A copy of the form of power of attorney or instrument under which such insurance is to be effected or exchanged.

(e) A copy of the policy under or by which such contracts of insurance are effected or exchanged among the subscribers.

(f) That applications have been made for insurance in the amounts required by subsection (2) of this section, and that such applications will be concurrently effective when the reciprocal insurer is authorized to commence business by the director.

(g) If a foreign or alien reciprocal insurer, that there has been deposited and shall be maintained at all times with the State Treasurer or other proper official of the state in which the insurer is domiciled $50,000 in cash or securities, as a general deposit for the benefit of subscribers wherever located. Where the laws of the home state do not provide for the acceptance of such a deposit, the deposit may be made with a bank or trust company in escrow subject to the control of the insurance commissioner of the home state, and such deposit shall be released only upon the written order of such insurance commissioner. A certification from the insurance director or other proper state official of the state in which the reciprocal insurer is domiciled shall be attached to the application for the certificate of authority.

(2) The reciprocal insurer must have bona fide applications for insurance aggregating not less than $3 million upon at least 200 risks, except in the case of wet marine hull insurance written by a domestic reciprocal insurer for persons whose earned income, in whole or in part, is derived from taking and selling food resources living in an ocean, bay or river, the applications must cover at least 25 hulls and the insurance must aggregate at least $125,000.

(3) The applicant shall furnish any other relevant information required by the director, except no reciprocal insurer shall be required to furnish or file the names or addresses of its policyholders or subscribers. [Formerly 731.366]

731.370 Reciprocal insurer’s financial statement; service of process. (1) The application for a certificate of authority shall be accompanied by a sworn statement of a reciprocal insurer showing the financial condition of the insurer as of December 31 immediately preceding. The Director of the Department of Consumer and Business Services may require a supplemental statement to be furnished as of a later date.

(2) Concurrently with the filing of the declaration provided for by the terms of ORS 731.369, the attorney shall file with the director an instrument in writing executed for the subscribers conditioned that upon the issuance of certificate of authority, action may be brought in the county in which the property insured thereunder is situated or where the injured person resides, and service of process may be had as provided in ORS 731.434 in all actions in this state arising out of policies issued by the reciprocal insurer, which service shall be valid and binding upon all subscribers exchanging at any time reciprocal or interinsurance contracts through such attorney. Actions may be brought against or defended in the name of the reciprocal insurer adopted by the subscribers. [Formerly 749.050]

731.371 Powers of reciprocal insurer regarding real estate. Except where inconsistent with other provisions of the Insurance Code, a reciprocal insurer in its own name, as in the case of an individual, may purchase, receive, own, hold, lease, mortgage, pledge or encumber by deed of trust or otherwise, manage and sell real estate for the purposes and objects of the insurer including, but not limited to, investment for the production of income or for its accommodation in the convenient transaction of its business. Any contract, including but not limited to a deed, lease, mortgage, deed of trust, purchase or sale agreement or any other contract to be executed in the name of the insurer, may be executed by the attorney in fact designated by the insurer’s subscribers. [1991 c.401 §35]

Note: 731.371 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 731 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

731.374 Exemptions to certificate of authority requirement. A certificate of authority is not required of an insurer with respect to the following:

(1) Transactions pursuant to surplus lines coverages lawfully written under the Insurance Code.

(2) Reinsurance, when transacted by an insurer duly authorized by the insurer’s state of domicile to transact the class of insurance involved.

(3) Wet marine and transportation insurance. [1967 c.359 §78; 2015 c.505 §1]

731.378 Foreign and alien insurers exempt from laws governing admission of foreign and alien corporations. No foreign or alien insurer that has complied with the requirements of the Insurance Code shall be subject to any other provisions of the laws of this state relating to admission or licensing of foreign or alien corporations. [Formerly 736.220]

731.380 Authority of foreign and alien insurers to take, acquire, hold and enforce notes secured by mortgages; statement; fees. (1) Subject to subsection (2) of this section, any foreign or alien insurer, without being authorized to transact business in this state, may take, acquire, hold and enforce notes secured by real estate mortgages or trust deeds and make commitments to purchase such notes. A foreign or alien insurer may foreclose the mortgages and trust deeds in the courts of this state, acquire the mortgaged property, hold, own and operate the property for a period not exceeding five years and dispose of the property. The activities authorized under this subsection by such a foreign or alien insurer shall not constitute transacting business in this state for the purposes of ORS chapter 60.

(2) Before a foreign or alien insurer engages in any of the activities described in subsection (1) of this section, the foreign or alien insurer shall first file with the Department of Consumer and Business Services a statement signed by its president, secretary, treasurer or general manager that it constitutes the Director of the Department of Consumer and Business Services its attorney for service of process, and shall pay an initial filing fee of $200 and an annual license fee of $200. The statement shall include the address of the principal place of business of the foreign or alien insurer.

(3) The director, upon receiving service of process as authorized by subsection (2) of this section, immediately shall forward by registered mail or by certified mail with return receipt all documents served upon the director to the principal place of business of the foreign or alien insurer.

(4) A foreign or alien insurer that indirectly engages in the activities described in subsection (1) of this section because of its beneficial interest in a pool of notes secured by real estate mortgages or trust deeds need not comply with subsection (2) of this section. [1987 c.94 §118; 1991 c.249 §70]

731.381 Exemption from taxes for foreign and alien insurers engaging in activities authorized by ORS 731.380. Engaging in the activities authorized by ORS 731.380 by a foreign or alien insurer shall not subject the foreign or alien insurer to any tax, license fee or charge, except as provided in ORS 731.380, for the privilege of doing business within the State of Oregon or to any tax measured by net or gross income. However, if the foreign or alien insurer acquires any property given as security for such a mortgage or trust deed, all income accruing to the foreign or alien insurer solely from the ownership, sale or other disposal of such property is subject to taxation in the same manner and on the same basis as income of corporations doing business in this state. [1987 c.94 §119]

731.382 General eligibility for certificate of authority. To qualify for and hold authority to transact insurance in this state an insurer must be an incorporated insurer, or a reciprocal insurer or an incorporated fraternal benefit society. [1967 c.359 §80]

731.385 Standards for determining whether continued operation of insurer is hazardous; rules; order; hearing. (1) The Director of the Department of Consumer and Business Services shall establish standards by rule for determining whether the continued operation of an authorized insurer may be hazardous to the policyholders or to the insurance-buying public generally, for the purpose of carrying out ORS chapter 734 and other provisions of the Insurance Code that authorize the director to take action against such an insurer. If the director makes such a determination, the director may order the insurer to take one or more of the following actions:

(a) Reduce the total amount of present and potential liability for policy benefits by reinsurance.

(b) Reduce, suspend or limit the volume of business being accepted or renewed.

(d) Increase the capital and surplus of the insurer.

(e) Suspend or limit the declaration and payment of dividends by the insurer to its stockholders or to its policyholders.

(f) Limit or withdraw from certain investments or discontinue certain investment practices to the extent the director determines such action to be necessary.

(2) The director may exercise authority under subsection (1) of this section in addition to or instead of any other authority that the director may exercise under the Insurance Code.

(3) The director may issue an order under this section with or without a hearing. An insurer subject to an order issued without a hearing may file a written request for a hearing to review the order. Such a request shall not stay the effect of the order. The hearing shall be held within 30 days after the filing of the request. The director shall complete the review within 30 days after the record for the hearing is closed, and shall discontinue the action taken under subsection (1) of this section if the director determines that none of the conditions giving rise to the action exists. [1993 c.447 §14]

731.386 Management of insurers. The Director of the Department of Consumer and Business Services shall not grant or continue authority to transact insurance in this state for any insurer:

(1) The management of which is found by the director to be untrustworthy or so lacking in insurance experience as to make the proposed operation or the continued operation hazardous to the insurance-buying public; or

(2) That the director has good reason to believe is affiliated directly or indirectly through ownership, control, reinsurance transactions or other insurance or business relations, with any person whose business operations are or have been marked to the detriment of policyholders, stockholders, investors, creditors or the public, by manipulation or dissipation of assets, manipulation of accounts or reinsurance, or by similar injurious actions. [1967 c.359 §81; 1993 c.447 §15]

731.390 Government insurers not to be authorized. No certificate of authority may be issued to any state, province or foreign government nor to any instrumentality, political subdivision or agency thereof. [Formerly 736.080]

731.394 Combinations of insuring powers in one insurer. An insurer that otherwise qualifies therefor may be authorized to transact any one class or combination of classes of insurance, except:

(1) A reciprocal insurer shall not transact life insurance or title insurance.

(2) A title insurer shall be a stock insurer, and shall not transact any other class of insurance.

(3) A mortgage insurer shall be a stock insurer, and shall not transact any other class of insurance. [1967 c.359 §83; 1969 c.692 §2]

731.396 Certificate of authority and good financial condition required to issue variable life insurance or variable annuity policies. No domestic, foreign or alien insurer shall deliver or issue for delivery in this state variable life insurance or variable annuity policies unless the insurer is authorized to transact life insurance in this state and the Director of the Department of Consumer and Business Services is satisfied that its condition and method of operation in connection with the issuance of such policies will not render its operation hazardous to its policyholders or the public in this state. In making the determination the director shall consider, among other things:

(1) The history and financial condition of the insurer;

(2) The character, responsibility and fitness of the officers and directors of the insurer; and

(3) The laws and rules under which the insurer is authorized by its domicile to issue such policies. [1973 c.435 §4]

731.398 Amendment of certificate of authority. The Director of the Department of Consumer and Business Services at any time may amend an insurer’s certificate of authority to accord with lawful changes in the insurer’s charter or insuring powers. [1967 c.359 §84]

731.402 Issuance or refusal of certificate of authority. (1) The Director of the Department of Consumer and Business Services shall issue to an insurer a certificate of authority if upon completion of the application for a certificate of authority by the insurer the director finds, from the application and such other investigation and information the director may acquire, that the insurer is fully qualified and entitled thereto under the Insurance Code.

(2) The director shall take all necessary action and shall either issue or refuse to issue a certificate of authority within a reasonable time after the completion of the application for such authority.

(3) The certificate of authority, if issued, shall specify the class or classes of insurance the insurer is authorized to transact in this state. The director may issue authority limited to particular subclasses of insurance or types of insurance coverages within the scope of a class of insurance. [1967 c.359 §85]

731.406 What certificate evidences; ownership of certificate. (1) An insurer’s subsisting certificate of authority is evidence of its authority to transact in this state the class or classes of insurance specified therein, either as direct insurer or as reinsurer or as both.

(2) Although issued to the insurer the certificate of authority is at all times the property of this state. Upon any suspension, revocation or termination thereof the insurer promptly shall deliver the certificate of authority to the Director of the Department of Consumer and Business Services. [1967 c.359 §86]

731.410 Continuance, expiration or reinstatement of certificate of authority. (1) A certificate of authority shall continue in force as long as the insurer is entitled thereto under the Insurance Code and until suspended or revoked by the Director of the Department of Consumer and Business Services, or terminated at the request of the insurer; subject, however, to continuance of the certificate by the insurer each year by:

(a) Payment prior to April 1 of the continuation fee established by the director;

(b) Due filing by the insurer of its annual statement for the calendar year preceding;

(d) Payment by the insurer of premium taxes with respect to the preceding calendar year as required by ORS 731.808 to 731.834.

(2) A certificate of authority that is not continued by the insurer under subsection (1) of this section expires on the 60th day after the date on which the payment or filing is due.

(3) The director promptly shall notify the insurer of impending expiration of its certificate of authority.

(4) The director, in the discretion of the director, upon the insurer’s request made not later than the 90th day after expiration, may reinstate a certificate of authority which the insurer has permitted to expire, after the insurer has cured all its failures which resulted in the expiration and has paid the fee for reinstatement established by the director. Otherwise the insurer shall be granted another certificate of authority only after filing application therefor and meeting all other requirements as for an original certificate of authority in this state. [1967 c.359 §87; 1989 c.413 §3; 1995 c.639 §1]

731.414 Suspension or revocation of certificate of authority; mandatory grounds. (1) The Director of the Department of Consumer and Business Services shall refuse to continue, or shall suspend or revoke, an insurer’s certificate of authority if:

(a) As a foreign insurer, it no longer meets the requirements for the authority; or as a domestic insurer, it has failed to cure an impairment of required capitalization within the time allowed therefor by the director under ORS 732.230;

(b) The insurer knowingly exceeds its charter powers or powers granted under its certificate of authority; or

(c) As a foreign or alien insurer, its certificate of authority to transact insurance is suspended or revoked by its domicile.

(2) Except in cases of impairment of required capitalization or suspension or revocation by another domicile as referred to in subsection (1)(c) of this section, the director shall refuse, suspend or revoke the certificate of authority only after a hearing granted to the insurer, unless the insurer waives such hearing in writing. [1967 c.359 §88]

731.418 Grounds for suspension or revocation of certificate of authority. (1) The Director of the Department of Consumer and Business Services may refuse to continue or may suspend or revoke an insurer’s certificate of authority if the director finds after a hearing that:

(a) The insurer has violated or failed to comply with any lawful order of the director, or any provision of the Insurance Code other than those for which suspension or revocation is mandatory.

(b) The insurer is in unsound condition, or in such condition or using such methods and practices in the conduct of its business, as to render its further transaction of insurance in this state hazardous or injurious to its policyholders or to the public.

(c) The insurer has failed, after written request by the director, to remove or discharge an officer or director who has been convicted in any jurisdiction of an offense which, if committed in this state, constitutes a misdemeanor involving moral turpitude or a felony, or is punishable by death or imprisonment under the laws of the United States, in any of which cases the record of the conviction shall be conclusive evidence.

(d) The insurer is affiliated with and under the same general management, interlocking directorate or ownership as another insurer that transacts direct insurance in this state without having a certificate of authority therefor, except as permitted under the Insurance Code.

(e) The insurer or an affiliate or holding company of the insurer refuses to be examined or any director, officer, employee or representative of the insurer, affiliate or holding company refuses to submit to examination relative to the affairs of the insurer, or to produce its accounts, records, and files for examination when required by the director or an examiner of the Department of Consumer and Business Services, or refuse to perform any legal obligation relative to the examination.

(f) The insurer has failed to pay any final judgment rendered against it in this state upon any policy, bond, recognizance or undertaking issued or guaranteed by it, within 30 days after the judgment became final, or within 30 days after time for taking an appeal has expired, or within 30 days after dismissal of an appeal before final determination, whichever date is the later.

(g) The insurer fails to comply with ORS 742.534 (1).

(h) The insurer has failed to comply with ORS 476.270 (1), (2) or (3) or 654.097 (1).

(2) Without advance notice or a hearing thereon, the director may suspend immediately the certificate of authority of any insurer as to which proceedings for receivership, conservatorship, rehabilitation, or other delinquency proceedings, have been commenced in any state by the public insurance supervisory official of such state. [1967 c.359 §89; 1971 c.321 §17; 1971 c.523 §10; 1975 c.585 §4; 1981 c.701 §3; 1993 c.447 §7]

731.422 Order of suspension, revocation or refusal; effect upon insurance producers’ authority. (1) All suspensions or revocations of, or refusals to continue, an insurer’s certificate of authority shall be by order of the Director of the Department of Consumer and Business Services order.

(2) Upon suspending, revoking or refusing to continue the insurer’s certificate of authority, the director forthwith shall give notice thereof to the insurer’s insurance producers in this state of record in the Department of Consumer and Business Services, and likewise shall suspend or revoke the authority of such insurance producers to represent the insurer. The director also shall give notice to the insurance supervisory authority in jurisdictions in which the insurer is authorized, if a domestic insurer, or in its domicile if a foreign or alien insurer.

(3) In the discretion of the director, the director may publish notice of such suspension, revocation or refusal in one or more newspapers of general circulation in this state. [1967 c.359 §90; 2003 c.364 §69]

731.426 Duration of suspension; insurer’s obligations during suspension period; reinstatement. (1) In an order suspending the certificate of authority of an insurer, the Director of the Department of Consumer and Business Services may provide that the suspension expires at the end of a specified period or when the director determines that the cause or causes of the suspension have terminated. During the suspension the director may rescind or shorten the suspension by further order.

(2) During the suspension period the insurer shall not solicit or write any new business in this state, but shall file its annual statement and pay fees, licenses and taxes as required under the Insurance Code, and may service its business already in force in this state, as if the certificate of authority had continued in full force.

(3) Upon expiration of a specific suspension period, if within such period the certificate of authority has not terminated, the insurer’s certificate of authority automatically shall reinstate unless the director finds that the cause or causes of the suspension have not terminated, or that the insurer is otherwise not in compliance with the requirements of the Insurance Code, and of which the director shall give the insurer notice not less than 30 days in advance of the expiration of the suspension period.

(4) When the director determines that a suspension should expire because the cause or causes have terminated, the director shall reinstate the certificate of authority of the insurer unless the certificate of authority has expired within the suspension period.

(5) Upon reinstatement of the insurer’s certificate of authority, the authority of its insurance producers in this state to represent the insurer shall likewise reinstate. The director promptly shall notify the insurer and its insurance producers in this state of record in the Department of Consumer and Business Services, of such reinstatement. If pursuant to ORS 731.422 the director has published notice of suspension, in like manner the director shall publish notice of the reinstatement. [1967 c.359 §91; 1989 c.700 §1; 2003 c.364 §70]

731.428 Written consent to engage or participate in business of insurance; rules. (1) A person who is prohibited by 18 U.S.C. 1033 from engaging or participating in the business of insurance because of a conviction of a felony involving dishonesty or a breach of trust or conviction of a crime under 18 U.S.C. 1033 may apply to the Director of the Department of Consumer and Business Services for a written consent to engage or participate in the business of insurance.

(2) The director shall establish by rule a procedure and standards by which the director may issue a written consent to engage or participate in the business of insurance to a person convicted of a crime described in subsection (1) of this section.

(3) The director shall not issue a license under the Insurance Code to an applicant who has been convicted of a crime referred to in subsection (1) of this section unless the director also issues a written consent.

(4) If a person issued a license under the Insurance Code has been convicted of a crime referred to in subsection (1) of this section or is subsequently the subject of such a conviction, the director shall revoke, suspend or refuse to renew the license. The person may apply to the director for a written consent as provided in subsection (1) of this section. [2001 c.191 §59]

Note: 731.428 was added to and made a part of ORS chapter 731 by legislative action but was not added to any smaller series therein. See Preface to Oregon Revised Statutes for further explanation.

731.430 Name of insurer. (1) No insurer shall be formed or authorized to transact insurance in this state which has or will have, or which uses or will use as an assumed business name, a name or principal identifying name factor:

(a) That is the same as or deceptively similar to:

(A) Any other insurer so formed or authorized;

(B) Any name reserved or registered as authorized by this section;

(D) The name of any insurer that was authorized to transact insurance in this state within the preceding 10 years if insurance policies issued by such other insurer still are outstanding in this state. With the consent of the insurer issuing such policies, the Director of the Department of Consumer and Business Services may waive this provision if the director finds that the waiver will not be detrimental to the public; or

(b) That is deceptive or misleading as to the type of organization of the insurer or that does not indicate the insurer is transacting insurance.

(2) Any insurer doing business in this state may file and register with the director in writing, in its articles of incorporation or otherwise, an assumed name that it will use in transacting insurance in this state. Such name may not be a name prohibited by subsection (1) of this section.

(3) Any person may reserve a name for use as a corporate name or an assumed business name in transacting insurance in this state by filing in writing with the director a reservation of such name. Such name may not be a name prohibited by subsection (1) of this section. Such reservation shall expire six months after the date of filing unless:

(a) If filed by an insurer, it is using such name as an authorized insurer; or

(b) If filed by a noninsurer, it has filed with the director a formal application for a permit to form an insurer in this state. If a valid reservation is on file, the director may accept the filing of a same or deceptively similar name by another person which filing shall become effective, in the order of filing, at the expiration of the six-month provision unless the original reservation does not expire pursuant to this subsection.

(4) When an insurer is merged as provided in the Insurance Code, the surviving insurer may retain the use of the name for a period of five years after the effective date of merger. If such name is retained, use of the same or deceptively similar name by other insurers shall be prohibited as specified under this section during the five-year period. [1967 c.359 §92; 1987 c.414 §161a; 1987 c.846 §2; 1993 c.447 §104]

731.434 Registered office and agent. (1) 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 all insurers transacting insurance in this state, whether authorized or unauthorized, 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.

(2) This section shall not apply to insurers for whom a certificate of authority is not required under ORS 731.374. [1967 c.359 §93; 1987 c.846 §3; 1995 c.79 §358]

731.438 Title plant requirement for title insurers; posting of indexes; plant ownership and maintenance. (1) A title insurer, in order to receive and maintain a certificate of authority, shall own and maintain at all times a title plant covering a period of at least the immediately preceding 50 years except years before 1960 and consisting of a general index, adequate maps and currently posted tract or geographic indexes for all the lands in the county in which title insurance policies or other title services are to be issued or provided. Either directly or through its insurance producer, a title insurer also shall own and maintain for each additional county in which it shall be authorized to transact a title insurance business a comparable title plant or obtain from a person having a comparable title plant for such additional county or counties title insurance showing the status of the title.

(2) The means by which tract or geographic indexes may be currently posted for purposes of subsection (1) of this section include but are not limited to maintenance of the information on ledger sheets, separate cards or sheets of film, whether bound in books or contained in envelopes or storage files, or maintenance of the information on punch cards, computer tape, disc or similar machine compatible form. All title services by a title insurer must be provided in this state. The information upon which the title services are based must be maintained and must be capable of reproduction in this state at all times.

(3) Every title insurance transaction by a title insurer or insurance producer involving the status of title of an Oregon title risk shall be based on one or more title plants which:

(a) Cover the location of the risk;

(b) Meet the requirements of this section; and

(c) Are owned and maintained by one or more title insurers or insurance producers as provided in subsections (4), (5) and (6) of this section.

(4) For any county with a population of 500,000 or more, or any county with a population of 200,000 or more that is contiguous to a county with a population of 500,000 or more, ownership and maintenance of a title plant shall be as provided in this subsection:

(a) The title plant referred to in subsection (1) of this section may be owned and maintained on an exclusive basis or on a joint basis as provided in paragraph (b) of this subsection.

(b) A title plant is owned and maintained on a joint basis under this subsection if two or more persons own and maintain a portion of the title plant as joint venturers, partners, shareholders or participants in another form of joint, several or common property ownership recognized under the laws of this state. If ownership of a title plant is held by fewer than four title insurers or insurance producers, each share of ownership shall be at least 25 percent. If ownership of a title plant is held by four or more insurers or insurance producers, all shares shall be equal.

(5) A title insurer authorized to transact title insurance in this state and every insurance producer of such an authorized title insurer shall own and maintain a title plant.

(6) In any county not described in subsection (4) of this section, a title insurer or its insurance producers transacting title insurance business shall solely own a title plant for that county in conformance with subsections (1) and (2) of this section and shall maintain a title plant for that county on an exclusive basis or a joint basis in conformance with subsections (1) and (2) of this section. A title plant for a county is maintained on a joint basis under this subsection if a title insurer or insurance producer obtains current posting information for its tract or geographic indexes from one or more other title insurers or insurance producers or from a provider that is wholly owned in equal shares by the title insurers or insurance producers utilizing the provider’s services. [Formerly 748.084; 1983 c.322 §1; 1999 c.183 §1; 2003 c.364 §71]

731.439 Satisfaction of requirements of ORS 731.438 (1) by certain title plants. A title plant that conforms on December 31, 1999, with ORS 731.438 (1) and (2) (1997 Edition) satisfies the requirements of ORS 731.438 (1) as amended by section 1, chapter 183, Oregon Laws 1999, if it also contains after that date a general index, adequate maps and currently posted tract or geographic indexes for all lands in the county. [1999 c.183 §3]

731.442 Prohibition on transacting life insurance business on mutual assessment plan. An insurer may not transact a life insurance business upon a mutual assessment plan within this state. [Formerly 739.105; 2005 c.185 §1]

731.446 Policyholder deposits. An insurer may accept, from a holder of a life insurance policy, deposits in addition to current premium payments to provide a fund for payment of future premiums or to make possible the future acquisition of additional insurance, annuities or other benefits, whether the interest to be paid on such deposits be fixed or variable. Such deposits, or any portion thereof, not used for the purposes described in this section shall be refunded to the policyholder or, upon the death of the policyholder, to designated beneficiaries. [1967 c.359 §96]

731.450 Unrelated business prohibited; exceptions; title insurer as escrow agent. Except as authorized by the federal Gramm-Leach-Bliley Act (P.L. 106-102), an insurer may not engage in any business except the making of insurance or a kind of business related to the insurance business. However, a foreign or alien insurer may engage, outside this state, in any business permitted by its articles of incorporation and the laws of the state of its domicile; and a title insurer also may engage in business as an escrow agent; provided, however, that a title insurer engaging in business as an escrow agent shall be subject to the provisions of ORS 696.505 to 696.590 in respect to its escrow activities. [1967 c.359 §97; 1971 c.398 §5; 1977 c.351 §13; 2001 c.377 §57]

731.454 Domestic insurers not to transact business in jurisdiction where not authorized. No domestic insurer, or any of the representatives thereof, shall transact insurance in any jurisdiction in which such insurer is not authorized in accordance with the laws of such jurisdiction. [Formerly 736.645]

731.458 Exchange of reciprocal or interinsurance contracts. (1) Individuals, partnerships and corporations of this state, hereby designated as subscribers, may exchange reciprocal or interinsurance contracts with each other, or with individuals, partnerships and corporations of other states and countries, providing indemnity among themselves from any loss which may be insured against under the Insurance Code, except life insurance and title insurance. Such contracts may be executed by an attorney, agent or other representative, hereby designated as attorney, duly authorized and acting for such subscribers. The attorney may be an individual, firm or corporation organized under the laws of this state or any other state or territory and having a principal office at the place designated by the subscribers in the power of attorney.

(2) Any corporation now or hereafter organized under the laws of the state, in addition to the rights, powers and franchises specified in its articles of incorporation, may exchange insurance contracts of the kind and character described in subsection (1) of this section. The right to exchange such contracts is declared to be incidental to the purpose for which such corporations are organized and as much granted as the rights and powers expressly conferred. [Formerly 749.010]

731.462 Nonassessable policies of reciprocal insurer. A reciprocal insurer having a surplus of not less than $500,000 may issue nonassessable policies. [1967 c.359 §100]

731.466 Power of attorney for reciprocal insurer. (1) The rights and power of the attorney of a reciprocal insurer shall be as provided in the power of attorney given it by the subscribers.

(2) The power of attorney must set forth:

(a) The powers of the attorney.

(b) That the attorney may accept service of process on behalf of the insurer.

(d) The maximum amount to be deducted from advance premiums or deposits to be paid to the attorney.

(e) Except as to nonassessable policies, a provision for a contingent several liability of each subscriber in a specified amount not less than one nor more than 10 times the premium or premium deposit stated in the policy.

(3) The power of attorney may:

(a) Provide for the right of substitution of the attorney and revocation of the power of attorney and rights thereunder;

(b) Impose such restrictions upon the exercise of the power as are agreed upon by the subscribers;

(d) Contain other lawful provisions.

(4) The terms of any power of attorney or agreement collateral thereto shall be reasonable and equitable, and no such power or agreement or any amendment thereof, shall be used or be effective in this state until approved by the Director of the Department of Consumer and Business Services. [1967 c.359 §101; 1997 c.249 §217]

731.470 Attorney for reciprocal insurer. (1) Any instrument required to be verified by the oath of the attorney for a reciprocal insurer may, in case of an incorporated attorney, be verified by the oath of the president, vice president, secretary or other executive officer of such corporation.

(2) The certificate of authority of a reciprocal insurer shall be issued to its attorney in the name of the insurer.

(3) The Director of the Department of Consumer and Business Services may refuse, suspend or revoke the certificate of authority, in addition to other grounds therefor, for failure of a reciprocal insurer’s attorney to comply with any provision of the Insurance Code.

(4) The attorney for an authorized foreign or alien reciprocal insurer shall not, by virtue of discharge of its duties as such attorney with respect to the insurer’s transactions in this state, be thereby deemed to be doing business in this state within the meaning of any laws of this state applying to foreign persons. [Formerly 749.140]

731.475 Claims processing by workers’ compensation insurer; permission for remote claims processing; availability and disposition of claims records; auditing and examinations by director; rules. (1)(a) Every insurer authorized to issue workers’ compensation coverage to subject employers as required by ORS chapter 656 shall maintain a place of business in this state where the insurer shall:

(A) Process claims and make available complete records of claims for compensation made to the insurer under ORS chapter 656.

(B) Make available upon request complete records, including all records submitted electronically, of all workers’ compensation insurance policies issued as required by ORS chapter 656.

(C) Make available records identifying the specific persons covered by an employer electing coverage pursuant to ORS 656.039.

(b) Notwithstanding the requirement in paragraph (a) of this subsection that an insurer process claims at a place of business in this state, the Director of the Department of Consumer and Business Services by rule may allow the insurer to process claims remotely from a place of business in this state.

(2) An insurer may dispose of the records described in subsection (1) of this section only in accordance with the rules of the director. The records must be available to the Department of Consumer and Business Services for examination and audit at all reasonable times upon notice by the department to the insurer.

(3) In lieu of maintaining a place of business in this state for the purpose of complying with this section, an insurer may make such records available at places of business in this state operated by service companies, if:

(a) Each service company is incorporated in or authorized to do business in this state;

(b) An agreement between the insurer and the service company grants each service company a power of attorney to act for the insurer in workers’ compensation coverage and claims proceedings under ORS chapter 656; and

(4) Notwithstanding subsection (3) of this section, an insurer may not:

(a) Enter into a service agreement contract with one of the insurer’s insureds unless the insured has service contracts with other insurers; or

(b) Process claims or maintain claims records at more than eight locations at any one time. [1975 c.585 §2; 1981 c.874 §8; 1987 c.373 §80a; 1989 c.630 §1; 1991 c.67 §194; 2003 c.170 §10; 2007 c.241 §23; 2021 c.21 §3]

731.480 Workers’ compensation policies; conditions for issuing. An insurer shall not issue workers’ compensation insurance policies pursuant to ORS chapter 656 unless it furnishes occupational safety and health loss control consultative services to its insured employers consistent with the requirements of ORS 654.097. [1975 c.585 §3; 1981 c.874 §9; 1987 c.373 §80b; 1987 c.884 §61; 2007 c.241 §24]

731.482 Withdrawal from, failure to renew or cancellation of line by commercial liability insurer. (1) Except as provided in subsection (5) of this section, an insurance company selling commercial liability insurance and authorized to do business in Oregon may not withdraw from, fail to renew or cancel any line of insurance or class of business without supplying appropriate written justification to the Director of the Department of Consumer and Business Services.

(2) Justification for withdrawal, failure to renew or cancellation may include, but need not be limited to:

(a) Insufficient premium income;

(b) Loss experience or expectation of future loss in the particular line of insurance or class of business;

(d) Increased hazard in the risks assumed or material change in the line of insurance or class of business that could not have been reasonably contemplated by the insurance company at the time the company began selling the line of insurance or class of business in Oregon; or

(e) Change in the availability or costs of reinsurance.

(3) The director shall issue an order approving or disapproving the withdrawal from, failure to renew or cancellation of a line of insurance or class of business.

(4) An order issued under this section shall include a provision requiring the insurer to notify affected insureds at least 60 days before the effective date of any withdrawal, failure to renew or cancellation approved by the director.

(5) This section does not apply to a surplus lines insurer. [1987 c.774 §34]

731.484 Prohibition on certain sales related to group health and group life insurance. (1) No insurer or insurance producer selling a policy of group life insurance or group health insurance subject to the exemption in ORS 731.146 (2)(b) is authorized to sell membership in a group for the purpose of qualifying an applicant who is an individual for the insurance.

(2) No insurer or insurance producer selling membership in a group is authorized to offer a policy of group life insurance or group health insurance subject to the exemption in ORS 731.146 (2)(b) for the purpose of selling membership in the group. [1989 c.784 §2; 2003 c.364 §72; 2007 c.752 §§2,7]

731.485 Conditions under which insurer may limit insured’s choice of drug outlets and pharmacies. (1) An insurer may limit the drug outlets or pharmacists from which a person covered under a health insurance policy issued by the insurer is authorized by the insurer to obtain services only if the insurer first provides an opportunity to drug outlets and pharmacists to offer to participate as a provider of services as provided in this section. An insurer to which this section applies must provide notice of the opportunity by mailing a notice to the professional organization representing drug outlets and pharmacists in the service area of the insurer. The notice must be given at least 10 days before the deadline for receiving offers. The notice shall state the following:

(a) The date after which offers will not be considered.

(b) The services to be provided under the policy.

(c) That each offer must contain a statement that the drug outlet or pharmacist is in compliance with the requirements of the State Board of Pharmacy.

(d) The name and address of the person or office designated for receipt of the offers.

(2) The services to which this section applies are the services normally provided by drug outlets and pharmacists, including but not limited to prescription drugs.

(3) A professional organization that has received notice pursuant to subsection (1) of this section shall take reasonable steps to relay the notice to each drug outlet registered with the State Board of Pharmacy that is in the relevant service area.

(4) The following apply to an offer submitted by a drug outlet or pharmacist in response to a notice given under subsection (1) of this section:

(a) The offer must be in writing.

(b) The offer must be submitted to the person or office designated in the notice.

(5) An insurer to which this section applies may select any drug outlet or pharmacist of its choice on whatever basis the insurer alone determines to be appropriate. Nothing in this section prohibits an insurer from contracting with one or more drug outlets or pharmacists exclusively for services to be provided to its insureds. [1993 c.391 §2]

731.486 Exemption from definition of “transact insurance” for group health and life policies; master group health and life insurance coverage; rules. (1) The exemption in ORS 731.146 (2)(b) does not apply to an insurer that offers coverage under a group health insurance policy or a group life insurance policy in this state unless the Director of the Department of Consumer and Business Services determines that the exemption applies.

(2) The insurer shall submit evidence to the director that the exemption applies. When a master policy is delivered or issued for delivery outside this state to trustees of a fund for two or more employers, for one or more labor unions, for one or more employers and one or more labor unions or for an association, the insurer shall also submit evidence showing compliance with:

(a) ORS 743.526, for a policy of group health insurance; or

(b) ORS 743.354, for a policy of group life insurance.

(3) The director shall review the evidence submitted and may request additional evidence as needed.

(4) An insurer shall submit to the director any changes in the evidence submitted under subsection (2) of this section.

(5) The director may order an insurer to cease offering a policy or coverage under a policy if the director determines that the exemption under ORS 731.146 (2)(b) is no longer satisfied.

(6) Coverage under a master group life or health insurance policy delivered or issued for delivery outside this state that does not qualify for the exemption in ORS 731.146 (2)(b) may be offered in this state if the director determines that the state in which the policy was delivered or issued for delivery has requirements that are substantially similar to those established under ORS 743.360 or 743.522 (2) and that the policy satisfies those requirements.

(7) This section does not apply to any master policy issued to a multistate employer or labor union.

(8) The director may adopt rules to carry out this section. [1989 c.784 §3; 2001 c.943 §1; 2005 c.22 §486; 2007 c.752 §§3,8]

731.488 Annual audit of insurer; rules. (1) Each insurer shall have an annual audit conducted by an independent certified public accountant and shall file an audited financial report annually with the Director of the Department of Consumer and Business Services. The annual audited financial report shall disclose:

(a) The financial position of the insurer as of the end of the most recent calendar year; and

(b) The results of the insurer’s operations, cash flows and changes in capital and surplus for the year then ended.

(2) The director shall adopt rules with respect to the following matters as needed for carrying out the requirements of this section:

(a) Required contents and format of the audited financial report.

(b) Requirements for filing the report.

(c) Requirements applicable to qualifications and designation of certified public accountants for purposes of audits under this section. The requirements may include limitations on length of service for certified public accountants and may permit recognition of accountants comparably qualified under the laws of another country.

(d) Requirements applicable to evaluation of the accounting procedures of an insurer and its system of internal control by a certified public accountant.

(e) Standards governing the scope and preparation of the audit.

(f) Requirements and procedures relating to the reporting of the adverse financial condition of an insurer by a certified public accountant.

(g) Requirements and procedures relating to the reporting of significant deficiencies for internal controls of an insurer.

(h) Exemptions.

(i) Any other matter that the director determines to be needed for preparation of or inclusion in the financial report. [1991 c.401 §15]

731.490 [1987 c.774 §52; repealed by 1997 c.131 §1]

731.492 Required notification to claimant upon insurer’s payment to settle third-party liability claim; required contents of notification. (1)(a) An insurer shall notify a claimant in writing at the time the insurer pays $5,000 or more to settle a third-party liability claim if:

(A) The claimant is a natural person;

(B) The insurer or an agent or other representative of the insurer, including the insurer’s attorney, delivers the payment to the claimant or to the claimant’s attorney, agent or other representative by draft, check or other form of payment; and

(b) An insurer may comply with paragraph (a) of this subsection by sending to the claimant a copy of the cover letter that accompanies the insurer’s settlement payment to the claimant’s attorney. Any notice to the claimant other than a copy of the cover letter may not include more than:

(A) A statement that the insurer has paid a settlement;

(B) The amount of the settlement;

(D) The insurer’s name; and

(E) Any identifying number for the claim.

(2) Subsection (1) of this section does not:

(a) Create a cause of action against an insurer for the insurer’s failure to provide the notice described in subsection (1) of this section; or

(b) Create for the claimant’s attorney a defense to any cause of action based on an insurer’s failure to provide the notice described in subsection (1) of this section.

(3) Subsection (1) of this section authorizes an insurer or the insurer’s attorney to communicate with the claimant for the purpose of delivering the notice described in subsection (1) of this section even if the insurer or the insurer’s attorney knows that the claimant is represented by an attorney.

(4) This section does not invalidate or otherwise affect a settlement for which an insurer made a payment. [2021 c.140 §2]

Note: 731.492 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 731 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

731.493 [1987 c.774 §53; repealed by 1997 c.131 §1]

731.496 [1987 c.774 §54; repealed by 1997 c.131 §1]

731.498 [1987 c.774 §58; repealed by 1997 c.131 §1]

731.500 [1987 c.774 §59; repealed by 1997 c.131 §1]

LIMIT OF RISK; REINSURANCE

731.504 Limit of risk. (1) No insurer shall retain any risk on any one subject of insurance, whether a domestic risk or not, in an amount exceeding 10 percent of its surplus to policyholders, or in the case of title insurance, more than 50 percent of such surplus, except that an insurance company, including a reciprocal insurance company, comprised solely of 1,000 or more licensed Oregon physicians organized for the purpose of insuring for professional liability may consider aggregate insurance as surplus to policyholders for purposes of this section and shall not be allowed to retain the risk on any one subject of insurance in excess of two and one-half percent of such aggregate insurance.

(2) For purposes of this section, aggregate insurance is insurance which provides coverage in the event that the total fund of an insurance company, including a reciprocal insurance company, which is available to pay claims for occurrences of any one year, is exhausted. Aggregate insurance shall be in an amount equal to at least five times the annual premium collected by the insurance company.

(3) A “subject of insurance” for the purposes of this section:

(a) As to insurance against fire and hazards other than windstorm, earthquake and other catastrophic hazards, includes all properties insured by the same insurer that customarily are considered by underwriters to be subject to loss or damage from the same fire or the same occurrence of any other hazard insured against;

(b) As to group life and health insurance, refers individually to each person benefited under the group policy as a separate subject; and

(c) As to mortgage insurance, includes all obligations secured by real property in a single tract, or in multiple tracts not separated by at least one-half mile.

(4) Reinsurance ceded as authorized by ORS 731.508 shall be deducted in determining risk retained. As to surety risks, deduction also shall be made of the amount assumed by any established incorporated cosurety and the value of any security deposited, pledged, or held subject to the surety’s consent and for the surety’s protection.

(5) As to alien insurers, this section relates only to risks and surplus to policyholders of the insurer’s United States branch.

(6) As used in this section, “surplus to policyholders,” in addition to the insurer’s capital and surplus, includes any voluntary reserves that are not required pursuant to law, includes the contingency reserve held for mortgage insurance as required by ORS 733.100, and shall be determined from the last sworn statement of the insurer on file with the Director of the Department of Consumer and Business Services, or by the last report of examination of the insurer, whichever is the more recent at time of assumption of risk.

(7) This section does not apply to wet marine and transportation insurance or to any policy or type of coverage as to which the maximum possible loss to the insurer is not readily ascertainable on issuance of the policy. [1967 c.359 §103; 1969 c.692 §3; 1975 c.796 §12]

731.508 Approved reinsurance. (1) An insurer may accept reinsurance only of such risks, and retain risk thereon within such limits, as it is otherwise authorized to insure.

(2) Except as provided in ORS 731.512, 732.517 to 732.546 or 742.150 to 742.162, an insurer may reinsure risks with an insurer authorized to transact such insurance in this state, or in any other solvent insurer approved or accepted by the Director of the Department of Consumer and Business Services for the purpose of such reinsurance. The director shall not approve or accept any such reinsurance by a ceding domestic insurer in an unauthorized insurer which the director finds for good cause would be contrary to the interests of the policyholders or stockholders of such domestic insurer.

(3) Credit shall not be allowed, as an asset or as a deduction from liability, to any ceding insurer for reinsurance unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer, the reinsurance shall be payable under a contract or contracts reinsured by the assuming insurer on the basis of reported claims allowed by the court hearing the liquidation proceeding, without diminution because of the insolvency of the ceding insurer. Such payments shall be made directly to the ceding insurer or to its domiciliary liquidator except:

(a) When the contract or other written agreement specifically provides another payee of the reinsurance in the event of the insolvency of the ceding insurer; or

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

(4) For the purposes of subsection (3) of this section, the reinsurance agreement may provide that the domiciliary liquidator of an insolvent ceding insurer shall, within a reasonable time after the claim is filed in the liquidation proceeding, give written notice to the assuming insurer of the pendency of a claim against the ceding insurer on the contract reinsured. During the pendency of the claim, an assuming insurer may investigate the claim and interpose, at its own expense, in the proceeding in which the claim is to be adjudicated any defenses that the assuming insurer determines to be available to the ceding insurer or its liquidator. The expense may be filed as a claim against the insolvent ceding insurer to the extent of a proportionate share of the benefit that may accrue to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. When two or more assuming insurers are involved in the same claim and a majority in interest elect to interpose one or more defenses to the claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement as though the expense had been incurred by the ceding insurer.

(5) The director may disallow credit that would otherwise be allowed if the director determines that allowing credit would be contrary to accurate financial reporting or proper financial management, or may be hazardous to policyholders of the insurer or the insurance-buying public generally. The director may make such a determination only according to standards established by the director by rule. This subsection applies only to insurers who transact life insurance or health insurance, or both.

(6) Upon request of the director, a ceding insurer promptly shall inform the director in writing of the cancellation or any other material change of any of its reinsurance treaties or arrangements.

(7) This section does not apply to wet marine and transportation insurance. [1967 c.359 §104; 1993 c.447 §68; 1995 c.30 §9; 1995 c.638 §1; 2001 c.318 §14]

731.509 Legislative intent; criteria for allowing credit for reinsurance; rules. (1) The purpose of ORS 731.509, 731.510, 731.511, 731.512 and 731.516 is to protect the interests of insureds, claimants, ceding insurers, assuming insurers and the public generally. The Legislative Assembly declares that the intent of the Legislative Assembly is to ensure adequate regulation of insurers and reinsurers and adequate protection for those to whom insurers and reinsurers owe obligations. In furtherance of that state interest, the Legislative Assembly mandates that upon the insolvency of an alien insurer or reinsurer that provides security to fund the alien insurer’s or reinsurer’s United States obligations in accordance with ORS 731.509, 731.510, 731.511, 731.512 and 731.516, the assets representing the security must be maintained in the United States and claims must be filed with and valued by the state insurance commissioner with regulatory oversight, and the assets must be distributed in accordance with the insurance laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic United States insurers. The Legislative Assembly declares that the laws contained in ORS 731.509, 731.510, 731.511, 731.512 and 731.516 are fundamental to the business of insurance in accordance with 15 U.S.C. 1011 and 1012.

(2) The Director of the Department of Consumer and Business Services may not allow credit for reinsurance to a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded unless credit is allowed as provided under ORS 731.508 and unless the reinsurer meets the requirements of:

(a) Subsection (4) of this section;

(b) Subsection (5) of this section and ORS 731.511 (1);

(d) Subsections (7) and (8) of this section;

(e) ORS 731.511; or

(f)(A) Subsection (9) of this section; and

(B) Additional requirements that the director specifies by rule, which may include:

(i) The valuation of assets or reserve credits;

(ii) The amount and forms of security that support reinsurance arrangements; and

(iii) The circumstances under which the director will reduce or eliminate credit.

(3) The director shall allow credit under subsection (4), (5) or (6) of this section or under ORS 731.511 only with respect to cessions of the kinds or classes of business that the assuming insurer is licensed or otherwise permitted to write or assume in the state in which the assuming insurer is domiciled or, if the assuming insurer is an alien insurer, the state in which the assuming insurer is entered and is licensed or authorized to transact insurance or reinsurance. The director may allow credit under subsection (6) or (7) of this section only if the assuming insurer satisfies applicable requirements under subsection (10) of this section.

(4) The director shall allow credit if the reinsurance is ceded to an authorized assuming insurer that accepts reinsurance of risks and retains the risk of the reinsurance within such limits as the assuming insurer is otherwise authorized to insure in this state, as provided in ORS 731.508.

(5) The director shall allow credit if the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state as provided in ORS 731.511. The director may not allow credit to a domestic ceding insurer if the director has revoked accreditation of the assuming insurer after notice and opportunity for hearing.

(6) The director shall allow credit if the reinsurance is ceded to a foreign assuming insurer or a United States branch of an alien assuming insurer meeting all of the following requirements:

(a) The foreign assuming insurer must be domiciled in a state employing standards regarding credit for reinsurance that equal or exceed the standards applicable under this section. The United States branch of an alien assuming insurer must be entered through a state employing such standards.

(b) The foreign assuming insurer or United States branch of an alien assuming insurer must maintain a combined capital and surplus in an amount not less than $20,000,000. The requirement of this paragraph does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

(c) The foreign assuming insurer or United States branch of an alien assuming insurer must submit to the authority of the director to examine the foreign assuming insurer’s or the alien assuming insurer’s books and records.

(7) The director shall allow credit if the reinsurance is ceded to an assuming insurer that maintains a trust fund meeting the requirements of this subsection and subsection (8) of this section and that also complies with other requirements of this subsection and subsection (8) of this section. The trust fund must be maintained in a qualified United States financial institution, as defined in ORS 731.510 (1), for the payment of the valid claims of the assuming insurer’s United States policyholders and ceding insurers and the assigns and successors in interest of the policyholders and ceding insurers. The assuming insurer must report annually to the director information that is substantially the same as information authorized insurers must report on the annual statement form under ORS 731.574, in order to enable the director to determine the sufficiency of the trust fund. The assuming insurer shall submit to the director’s examination of the assuming insurer’s books and records and shall pay to the director the expenses of the examination.

(8) The following requirements apply to the following categories of assuming insurers:

(a)(A) For a single assuming insurer, the trust fund must consist of funds in trust in an amount not less than the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers. In addition, except as provided in subparagraph (B) of this paragraph, the assuming insurer must maintain a trusteed surplus of not less than $20,000,000.

(B) At any time after the assuming insurer permanently discontinues underwriting, for at least three full years, new business that the trust secures, the commissioner that has principal regulatory oversight over the trust may authorize a reduction in the required trusteed surplus, but only after finding based on an assessment of the risk that the new required surplus level is adequate to protect United States ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and must consider all material risk factors including, if applicable, the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The commissioner may not reduce the amount of the minimum required trusteed surplus below 30 percent of the assuming insurer’s liabilities that are attributable to reinsurance that United States ceding insurers covered by the trust have ceded.

(b) For a group that includes incorporated and individual unincorporated underwriters:

(A) For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after August 1, 1995, the trust must consist of a trusteed account in an amount not less than the group’s several liabilities attributable to business United States domiciled ceding insurers have ceded to any member of the group.

(B) For reinsurance ceded under reinsurance agreements with an inception date on or before July 31, 1995, and not amended or renewed after that date, notwithstanding the other provisions of ORS 731.509, 731.510, 731.511, 731.512 and 731.516, the trust must consist of a trusteed account in an amount not less than the group’s several insurance and reinsurance liabilities attributable to business written in the United States.

(C) In addition to the trusts described in subparagraphs (A) and (B) of this paragraph, the group shall maintain in trust a trusteed surplus of which $100,000,000 must be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account.

(D) The incorporated members of the group may not engage in any business other than underwriting as a member of the group and are subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are the unincorporated members.

(E) Within 90 days after the group’s financial statements are due to be filed with the group’s domiciliary regulator, the group shall provide to the director an annual certification by the group’s domiciliary regulator of the solvency of each underwriter member or, if certification is unavailable, financial statements of each underwriter member of the group prepared by independent certified public accountants.

(c) For the group of incorporated insurers described in this paragraph, the trust must be in an amount equal to the group’s several liabilities attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group. This paragraph applies to a group of incorporated insurers under common administration that complies with the annual reporting requirements contained in subsection (7) of this section and that has continuously transacted an insurance business outside the United States for at least three years immediately before applying for accreditation. Such a group must have an aggregate policyholders’ surplus of $10,000,000,000 and must submit to the authority of this state to examine the group’s books and records and bear the expense of the examination. The group shall also maintain a joint trusteed surplus of which $100,000,000 must be held jointly for the benefit of United States ceding insurers of any member of the group as additional security for any such liabilities. Each member of the group shall make available to the director an annual certification of the member’s solvency by the member’s domiciliary regulator and the member’s independent certified public accountant.

(d) The form of the trust and any amendment to the trust must be approved by the insurance commissioner of the state in which the trust is domiciled or by the insurance commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.

(e) The form of the trust and any trust amendments also must be filed with the insurance commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument must provide that contested claims are valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust must vest legal title to the trust’s assets in the trust’s trustees for the benefit of the assuming insurer’s United States ceding insurers and the assigns and successors in interest of the ceding insurers. The trust and the assuming insurer are subject to examination as determined by the director. The trust must remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust.

(f) Not later than March 1 of each year, the trustees of each trust shall report to the director in writing the balance of the trust, list the trust’s investments at the preceding year end and certify the date of termination of the trust, if a termination is planned, or certify that the trust will not expire prior to the following December 31.

(9) The director shall allow credit if the reinsurance is ceded to an assuming insurer that does not meet the requirements of subsection (4), (5), (6) or (7) of this section or ORS 731.511 (1) or (4), but only as to the insurance of risks located in jurisdictions in which the reinsurance is required by applicable law or regulation of that jurisdiction.

(10) If the assuming insurer is not licensed, accredited or certified to transact insurance or reinsurance in this state, the director may not allow the credit permitted by subsections (6) and (7) of this section unless the assuming insurer agrees in the reinsurance agreement to the provisions stated in this subsection. This subsection does not conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate the parties’ disputes, if such an obligation is created in the agreement. The assuming insurer must agree in the reinsurance agreement:

(a) That if the assuming insurer fails to perform the assuming insurer’s obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction and will abide by the final decision of the court or of any appellate court in the event of an appeal; and

(b) To designate the director or a designated attorney as the assuming insurer’s true and lawful attorney upon whom any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company may be served.

(11) If the assuming insurer does not meet the requirements of subsection (4), (5) or (6) of this section or ORS 731.511 (1) or (4), the director may not allow the credit permitted by subsection (7) of this section unless the assuming insurer agrees in the trust agreements to the following conditions:

(a) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because the trust fund contains an amount less than the applicable amount required by subsection (8)(a), (b) or (c) of this section, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation or similar proceedings under the laws of the grantor’s state or country of domicile, the trustee shall comply with an order of the insurance commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the insurance commissioner with regulatory oversight all the assets of the trust fund.

(b) The assets must be distributed by and claims must be filed with and valued by the insurance commissioner with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that apply to the liquidation of domestic insurance companies.

(c) If the insurance commissioner with regulatory oversight determines that the assets of the trust fund or any part of the assets is not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the insurance commissioner of the state in which the trust is domiciled shall return the assets or part of the assets in accordance with the laws of the state and the terms of the trust agreement that are consistent with the laws of the state.

(d) The grantor shall waive any right otherwise available to the grantor under United States law that is inconsistent with this subsection. [1993 c.447 §65; 1995 c.99 §1; 2001 c.318 §15; 2013 c.698 §§5,35; 2017 c.538 §§23,25; 2019 c.151 §§20,21]

731.510 Criteria for allowing reduction from liability for reinsurance; rules. (1) Subject to the provisions of ORS 731.508 relating to allowance of credit for reinsurance, the Director of the Department of Consumer and Business Services shall allow a reduction from liability for the reinsurance a domestic insurer cedes to a reinsurer that does not meet the requirements of ORS 731.509 in an amount that does not exceed the liabilities the ceding insurer carries, as provided in this section. The reduction must be in the amount of funds held by or on behalf of the ceding insurer, including funds a reinsurer holds in trust for the ceding insurer as security for payment of obligations under a reinsurance contract with the reinsurer, if the security:

(a) Is held in the United States subject to withdrawal solely by and under the exclusive control of the ceding insurer; or

(b) In the case of a trust, is held in a qualified United States financial institution. For purposes of this paragraph, a qualified United States financial institution is an institution that:

(A) Is organized, or, in the case of a United States branch or agency office of a foreign banking organization, is licensed, under the laws of the United States or any state and has been granted authority to operate with fiduciary powers; and

(B) Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.

(2) The security for purposes of subsection (1) of this section may be in any of the following forms:

(a) Cash.

(b) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners and qualifying as allowed assets.

(c) Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, effective not later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding company on or before the filing date of the ceding company’s annual statement. Letters of credit issued or confirmed by an institution meeting applicable standards of issuer acceptability as of the dates of issuance or confirmation of the letters of credit are acceptable as security, notwithstanding the subsequent failure of the issuing or confirming institution to meet applicable standards of issuer acceptability, until the letters of credit expire or are extended, renewed, modified or amended, whichever occurs first. For purposes of this paragraph, a qualified United States financial institution is an institution that:

(A) Is organized or, in the case of a United States office of a foreign banking organization, is licensed, under the laws of the United States or any state;

(B) Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and

(C) Has been determined by the director to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the director. For the purpose of making a determination under this subparagraph, the director shall consider and may accept determinations made by the Securities Valuation Office of the National Association of Insurance Commissioners as to whether a financial institution meets the office’s standards of financial conditions and standing.

(d) Any other form of security acceptable to the director.

(3) The director by rule may specify additional requirements for:

(a) Valuing assets or reserve credits;

(b) Setting the amount and forms of security to support reinsurance arrangements; and

(4) In addition to the authority of the director described in subsection (3) of this section, the director by rule may adopt guidelines, rules, regulations or interpretive letters from the National Association of Insurance Commissioners that apply to reinsurance collateral requirements for alien reinsurers. [1993 c.447 §66; 2001 c.318 §16; 2019 c.151 §22]

731.511 Criteria to be met by assuming insurer in order to be accredited as reinsurer; rules. (1) For purposes of allowing credit to a ceding domestic insurer under ORS 731.509 if the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state, an insurer may be accredited as a reinsurer in this state if the insurer:

(a) Files and maintains with the Director of the Department of Consumer and Business Services evidence of the insurer’s submission to the jurisdiction of this state;

(b) Submits to the authority of the director to examine the insurer’s books and records;

(c) Is authorized or licensed to transact insurance or reinsurance in at least one state or, in the case of a United States branch of an alien assuming insurer, is entered through and authorized or licensed to transact insurance or reinsurance in at least one state;

(d) Files annually with the director a copy of the insurer’s annual statement filed with the insurance department of the insurer’s state of domicile and a copy of the insurer’s most recent audited financial statement; and

(e) Satisfies either of the following requirements:

(A) Maintains combined capital and surplus in an amount that is not less than $20,000,000. An application for accreditation by an insurer who maintains the amount of combined capital and surplus specified in this subparagraph is approved if the application is not disapproved on or before the 90th day after the application is complete and is filed with the director.

(B) Maintains combined capital and surplus in an amount less than $20,000,000. An insurer applying for accreditation that maintains the amount of combined capital and surplus specified in this subparagraph is not accredited until the director approves the application for accreditation.

(2) An insurer that is accredited as a reinsurer in this state may accept reinsurance only of those risks and retain the risk of the reinsurance within such limits as the accredited reinsurer is otherwise authorized to insure directly in a state in which the accredited reinsurer is authorized or licensed to transact insurance.

(3) The director may revoke the accreditation of an assuming insurer if the director determines that the assuming insurer has failed to continue to meet any of the requirements of subsection (1) of this section.

(4)(a) The director shall allow credit if the reinsurance is ceded to an assuming insurer that the director certifies has:

(A) Maintained a minimum amount of capital and a surplus, or the equivalent, in an amount the director specifies by rule;

(B) Maintained a financial strength rating from two or more rating agencies that the director by rule deems acceptable for this purpose;

(C) Agreed to submit to the jurisdiction of the state, to appoint the director as the assuming insurer’s agent for the service of process in this state and to provide security for 100 percent of the assuming insurer’s liabilities that are attributable to reinsurance that ceding insurers have ceded, if the assuming insurer resists enforcement of a United States judgment;

(D) Agreed to meet applicable information filing requirements that the director specifies by rule;

(E) Included a covenant in the language of any trust the assuming insurer maintains to secure the assuming insurer’s obligations under ORS 731.509 (8), and in the language of an agreement between the assuming insurer and the commissioner with principal regulatory authority over the assuming insurer, that requires the assuming insurer to fund out of the remaining surplus of the trust any deficiency in a trust account that terminates; and

(F) Satisfied any other requirements that the director specifies for certification.

(b) The director may accredit an association as a reinsurer, including an incorporated underwriter or individual unincorporated underwriters, if the association, the incorporated underwriter or the individual unincorporated underwriter, as appropriate, meets the requirements set forth in paragraph (a) of this subsection and, in addition:

(A) Satisfies minimum capital and surplus requirements by means of the capital and surplus equivalents, net of liabilities, of the association and the association’s members, which must include a joint central fund with an amount that the director determines is adequate to satisfy any unsatisfied obligation of the association or a member of the association;

(B) Does not engage, as an incorporated member of the association, in any business other than underwriting and is subject to the same level of regulation and solvency control as the association’s unincorporated members are under the association’s domiciliary regulator; and

(C) Provides to the director each year, within 90 days after the association must file financial statements with the association’s domiciliary regulator, a certification from the association’s domiciliary regulator as to the solvency of each underwriting member of the association or, if a certification is not available, financial statements of each underwriting member of the association that certified public accounts have prepared.

(5)(a) The director shall publish a list of jurisdictions that the director considers qualified for the purpose of accrediting as a reinsurer an assuming insurer that is licensed and domiciled in the jurisdiction.

(b) To determine whether a domiciliary jurisdiction outside the United States is qualified for the purpose described in paragraph (a) of this subsection, the director shall:

(A) Evaluate and monitor how appropriate and effective the jurisdiction’s insurance supervisory system is and the extent to which the jurisdiction affords reinsurers that are licensed and domiciled in the United States rights, benefits and reciprocal recognition;

(B) Require that the jurisdiction share information and cooperate with the director in any matter that concerns a reinsurer that the director accredits and that is domiciled within the jurisdiction;

(C) Refuse to accredit a jurisdiction if the jurisdiction does not promptly and adequately enforce final United States judgments and arbitration awards; and

(D) Consider other criteria the director deems appropriate.

(c) To determine whether a domiciliary jurisdiction inside the United States is qualified for the purpose described in paragraph (a) of this subsection, the director shall:

(A) Consider the list of qualified jurisdictions that the National Association of Insurance Commissioners publishes and, if the director accredits a jurisdiction that does not appear on the National Association of Insurance Commissioners’ list, justify the director’s accreditation with appropriate documentation in accordance with rules the director adopts for this purpose; and

(B) Accredit United States jurisdictions that meet the requirements of the National Association of Insurance Commissioners’ financial standards and accreditation program.

(d) If an assuming insurer’s domiciliary jurisdiction ceases to qualify under paragraph (b) or (c) of this subsection, the director may suspend indefinitely the assuming insurer’s accreditation as a reinsurer.

(6)(a) The director by rule shall designate rating agencies upon which the director will rely for financial strength ratings for accredited reinsurers and shall give appropriate consideration to the rating agencies’ financial strength ratings in assigning ratings to each accredited reinsurer. The director shall publish a list of the accredited reinsurers together with the director’s corresponding rating for each.

(b) An accredited reinsurer shall secure obligations the accredited reinsurer assumes from ceding insurers at a level that is consistent with the rating the director assigns and in accordance with rules the director adopts.

(7)(a) In order for a ceding domestic insurer to qualify for full financial statement credit for reinsurance that the ceding domestic insurer cedes to an accredited reinsurer, the accredited reinsurer must maintain security in a form that is acceptable to the director and that is consistent with the requirements of ORS 731.510 or maintain security in a trust fund in accordance with ORS 731.509 (8), except as otherwise provided in this section.

(b) If an accredited reinsurer maintains a trust fund to fully secure the accredited reinsurer’s obligations under ORS 731.509 (8) and the trust fund is a multibeneficiary trust, the accredited reinsurer shall maintain separate trust accounts for the obligations the accredited reinsurer incurs under reinsurance agreements the accredited reinsurer issued or renewed as an accredited reinsurer with reduced security, as provided under this section or under comparable laws of other United States jurisdictions, and for obligations the accredited reinsurer incurs that are subject to ORS 731.509 (8).

(c) The minimum trusteed surplus requirements under ORS 731.509 (8) do not apply to an accredited reinsurer that maintains a multibeneficiary trust for the purpose of securing obligations under this subsection, except that the trust must maintain a minimum trusteed surplus of $10,000,000.

(8) The director shall reduce the allowable credit for ceding insurers by an amount that is proportionate to any deficiency in the security required for an accredited reinsurer under this section. The director may also reduce the allowable credit further if the director finds that a material risk exists that the accredited reinsurer will not pay the accredited reinsurer’s obligations in full when due.

(9)(a) Except as provided in paragraph (b) of this subsection, the director shall require an accredited reinsurer that has become inactive or has voluntarily surrendered accreditation as an accredited reinsurer, or for which the director has revoked or suspended accreditation, to secure 100 percent of the reinsurer’s obligations.

(b) The security requirement described in paragraph (a) of this subsection does not apply to an accredited reinsurer that is inactive, or for which the director has suspended accreditation, if the director maintains a high rating for the reinsurer under subsection (6) of this section.

(10) The director may accredit an assuming insurer as a reinsurer in this state if a jurisdiction that the National Association of Insurance Commissioners has qualified as meeting the association’s financial standards and accreditation has certified the assuming insurer as a reinsurer. The director may also assign to the accredited reinsurer the rating that the qualifying jurisdiction assigned to the accredited reinsurer.

(11) An accredited reinsurer that ceases to assume new business in this state may apply to the director to become inactive and to qualify for a reduction in security for the business the accredited reinsurer maintains. An inactive accredited reinsurer shall comply with all other applicable requirements of this section and the director shall assign a rating to the accredited reinsurer that accounts for the reasons that the accredited reinsurer is not assuming new business, if the reasons are relevant to the rating.

(12)(a) The director may suspend or revoke an assuming insurer’s accreditation as a reinsurer in this state if the assuming insurer fails to meet applicable requirements for accreditation.

(b) The director shall give an accredited reinsurer notice and an opportunity for a hearing before taking action under paragraph (a) of this subsection and a suspension or revocation is not effective until after the director’s final order unless:

(A) The accredited reinsurer waives the opportunity for a hearing;

(B) The director bases the final order on regulatory action by the accredited reinsurer’s domiciliary jurisdiction or on the accredited reinsurer’s having voluntarily surrendered or terminated the accredited reinsurer’s authorization to transact insurance or reinsurance in the domiciliary jurisdiction or in a jurisdiction whose certification of the reinsurer formed the basis upon which the director accredited the reinsurer in this state under subsection (10) of this section; or

(13) A reinsurance contract issued or renewed after the director suspends an accredited reinsurer’s certification does not qualify for credit unless the reinsurer secures the reinsurer’s obligations in accordance with ORS 731.510. The director may not grant credit for reinsurance after the effective date of the director’s revocation of accreditation unless the reinsurer secures the reinsurer’s obligations in accordance with subsections (6), (7) and (9) of this section or ORS 731.510.

(14) The director may adopt rules to implement the provisions of this section including, but not limited to, rules that adopt guidelines, rules, regulations or interpretive letters from the National Association of Insurance Commissioners that apply to reinsurance collateral requirements for alien reinsurers. [1993 c.447 §67; 2019 c.151 §23; 2021 c.204 §3]

731.512 Withdrawal of insurer; reinsurance. (1) No insurer shall withdraw from this state until its direct liability to its policyholders and obligees under all its insurance policies then in force in this state has been assumed by another authorized insurer under an agreement approved by the Director of the Department of Consumer and Business Services. In the case of a life insurer, its liability pursuant to policies issued in this state in settlement of proceeds under its policies shall likewise be so assumed.

(2) The director may waive this requirement if the director finds upon examination that a withdrawing insurer then is fully solvent and that the protection to be given its policyholders in this state will not be impaired by the waiver.

(3) The assuming insurer within a reasonable time shall replace the assumed insurance policies with its own, or by indorsement thereon acknowledge its liability thereunder.

(4) This section is in addition to the requirements of ORS 732.517 to 732.546 and 742.150 to 742.162. [1967 c.359 §105; 1995 c.30 §10]

731.514 Ceding insurer’s management of reinsurance recoverables; requirement to diversify reinsurance program. (1) A ceding insurer shall manage the ceding insurer’s reinsurance recoverables in proportion to the ceding insurer’s book of business. A domestic ceding insurer shall notify the Director of the Department of Consumer and Business Services within 30 days after reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers exceeds or is likely to exceed 50 percent of the domestic ceding insurer’s surplus, as last reported to the ceding insurer’s policyholders. In the notification, the domestic ceding insurer shall demonstrate that the domestic ceding insurer is safely managing the exposure.

(2) A ceding insurer shall diversify the ceding insurer’s reinsurance program. A domestic ceding insurer shall notify the director within 30 days after ceding to any single assuming insurer or group of affiliated assuming insurers more than 20 percent of the ceding insurer’s gross written premium in the previous calendar year or after determining that the ceded reinsurance will likely exceed this percentage. In the notification, the domestic ceding insurer shall demonstrate that the domestic ceding insurer is safely managing the exposure. [2019 c.151 §2]

731.516 Mortgage insurance limitation; waiver of limitation; rules; fees. (1) As used in this section, “policyholders’ position” means the aggregate amount of mortgage insurance policies covering amounts of insured obligations, divided by the insurer’s surplus to policyholders as defined in ORS 731.504 (6).

(2) Except as provided in subsection (3) of this section, a mortgage insurer shall not have outstanding at any time a policyholders’ position greater than 25.

(3)(a) The Director of the Department of Consumer and Business Services may waive the requirement in subsection (2) of this section in response to the request of a mortgage insurer if the director finds that the mortgage insurer’s policyholders’ position is reasonable in relation to the mortgage insurer’s aggregate insured risk and adequate to the mortgage insurer’s financial needs.

(b) The request of the mortgage insurer must be made in writing at least 60 days prior to the date the mortgage insurer expects to exceed the policyholders’ position allowed by subsection (2) of this section, and shall at a minimum address the factors set forth in subsection (4) of this section that the director may use in making a decision on the waiver request.

(4) In determining whether a mortgage insurer’s requested policyholders’ position is reasonable in relation to the mortgage insurer’s aggregate insured risk and adequate to the mortgage insurer’s financial needs, the director may consider the following factors:

(a) The size of the mortgage insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria.

(b) The extent to which the mortgage insurer’s business is diversified across time, geography, credit quality, origination and distribution channels.

(d) The quality, diversification and liquidity of the mortgage insurer’s assets and investment portfolio.

(e) The historical and projected trends in the magnitude of the mortgage insurer’s policyholders’ position.

(f) The policyholders’ position maintained by other comparable mortgage insurers.

(g) The adequacy of the mortgage insurer’s reserves.

(h) The quality and liquidity of investments in affiliates of the mortgage insurer. The director may treat any such investment as a nonadmitted asset for purposes of determining the adequacy of the mortgage insurer’s policyholders’ position.

(i) The quality of the mortgage insurer’s earnings and the extent to which the reported earnings of the mortgage insurer include extraordinary items.

(j) An independent actuary’s opinion as to the reasonableness and adequacy of the mortgage insurer’s historical and projected policyholders’ position.

(k) The capital contributions that have been invested or are available for future investment in the mortgage insurer.

(L) The historical and projected trends in the components of the mortgage insurer’s aggregate insured risk including, but not limited to, the quality and type of the risks included in the aggregate insured risk.

(m) Any other factors the director believes are relevant in making a decision on the request.

(5) The director may retain accountants, actuaries or other experts to assist the director in the review of the mortgage insurer’s request submitted under subsection (3) of this section.

(6) Any waiver granted by the director under subsection (3) of this section is:

(a) In effect for a specified period of time, not to exceed two years. The mortgage insurer may request an extension of the waiver for a period not exceeding two additional years, and the director shall review the extension request based upon the factors set forth in subsection (4) of this section.

(b) Subject to any terms and conditions that the director considers necessary to restore the mortgage insurer’s policyholders’ position to 25 or lower as required by subsection (2) of this section.

(7) The director may adopt rules to carry out the provisions of this section.

(8) The director shall charge a fee for a waiver request under this section designed to reimburse the Department of Consumer and Business Services for all costs incurred by the department in reviewing the waiver request. [1969 c.692 §5; 1977 c.600 §1; 2010 c.46 §1]

731.520 Conditions that insurers assuming ceded reinsurance must meet for allowance of credit; list of reciprocal jurisdictions; list of qualifying assuming insurers; rules. (1) Credit must be allowed if reinsurance is ceded to an assuming insurer that meets each of the conditions set forth below:

(a) The assuming insurer must be licensed in a reciprocal jurisdiction and have the assuming insurer’s home office in, or be domiciled in, as applicable, the reciprocal jurisdiction. For purposes of this paragraph, a reciprocal jurisdiction is a jurisdiction that meets one of the following:

(A) A jurisdiction outside the United States that is subject to an in-force covered agreement with the United States, each within the jurisdiction’s legal authority or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subparagraph, a covered agreement is an agreement entered into under the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. 313 and 314, that is currently in effect or in a period of provisional application and that addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance.

(B) A United States jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners’ Financial Regulation Standards and Accreditation Program.

(C) A qualified jurisdiction, as the Director of the Department of Consumer and Business Services determines in accordance with ORS 731.511 (5), that is not otherwise described in subparagraph (A) or (B) of this paragraph and that meets other requirements the director specifies by rule that are consistent with the terms and conditions of in-force covered agreements.

(b) The assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or an equivalent, calculated according to the methodology of the assuming insurer’s domiciliary jurisdiction, in an amount set forth in rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in the assuming insurer’s domiciliary jurisdiction, and a central fund containing a balance in amounts set forth in rule.

(c) The assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, that is set forth in rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer is licensed and has the assuming insurer’s head office or is domiciled.

(d) The assuming insurer must agree and provide adequate assurance to the director, in a form the director specifies by rule, as follows:

(A) The assuming insurer must provide prompt written notice and explanation to the director if the assuming insurer falls below the minimum requirements set forth in paragraph (b) or (c) of this subsection or if any regulatory action is taken against the assuming insurer for serious noncompliance with applicable law.

(B) The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the director as agent for service of process. The director may require that consent for service of process be provided to the director and included in each reinsurance agreement. This subparagraph does not limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent that such agreements are unenforceable under applicable insolvency or delinquency laws.

(C) Wherever enforcement is sought, the assuming insurer must consent in writing to pay all final judgments that a ceding insurer or the ceding insurer’s successor obtains in a jurisdiction that has declared the final judgment enforceable.

(D) Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded under the reinsurance agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which the final judgment was obtained or of a properly enforceable arbitration award, whether the ceding insurer or the ceding insurer’s legal successor obtains the final judgment or arbitration award on behalf of the ceding insurer or the ceding insurer’s resolution estate.

(E) The assuming insurer must confirm that the assuming insurer is not presently participating in any solvent scheme of arrangement that involves this state’s ceding insurers and, if the assuming insurer does enter into a solvent scheme of arrangement, must agree to notify the ceding insurer and the director and provide security in an amount equal to 100 percent of the assuming insurer’s liabilities to the ceding insurer. The security must be in a form that the director specifies by rule consistent with the provisions of ORS 731.510 and 731.511.

(e) At the director’s request, the assuming insurer or the assuming insurer’s legal successor must provide on the assuming insurer’s behalf and on behalf of any of the assuming insurer’s legal predecessors, documentation the director specifies by rule.

(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements in accordance with criteria the director specifies by rule.

(g) The assuming insurer’s supervisory authority must confirm to the director every year, as of the preceding December 31 or on the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in paragraphs (b) and (c) of this subsection.

(h) This subsection does not preclude an assuming insurer from providing the director with information on a voluntary basis.

(2) The director shall timely create and publish a list of reciprocal jurisdictions as follows:

(a) The director’s list must include any reciprocal jurisdiction described in subsection (1)(a)(A) and (B) of this section, and the director shall consider for inclusion in the list any other reciprocal jurisdiction included on the list of reciprocal jurisdictions that the National Association of Insurance Commissioners publishes. The director may include on the director’s list a jurisdiction that does not appear on the National Association of Insurance Commissioners’ list in accordance with criteria the director specifies by rule.

(b) The director may remove a jurisdiction from the list the director publishes after determining, in accordance with a process the director specifies by rule, that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, except that the director may not remove from the list a reciprocal jurisdiction described in subsection (1)(a)(A) and (B) of this section. The director shall allow credit for reinsurance ceded to an assuming insurer that has a home office in, or is domiciled in, a jurisdiction the director removed from the director’s list of reciprocal jurisdictions, if otherwise allowed under applicable provisions of the Insurance Code.

(3) The director shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions will be granted credit in accordance with this section. The director may add an assuming insurer to the list if a jurisdiction that the National Association of Insurance Commissioners has accredited has added the assuming insurer to the jurisdiction’s list of assuming insurers or if, upon initial eligibility, the assuming insurer submits information to the director as required under subsection (1)(d) of this section and complies with any additional requirements that the director may impose by rule, except to the extent that the additional requirements conflict with an applicable covered agreement.

(4) If the director determines that an assuming insurer no longer meets one or more of the requirements under this section, the director may revoke or suspend the eligibility of the assuming insurer for recognition under this section in accordance with procedures the director specifies by rule. The effect of the director’s revocation or suspension is:

(a) A reinsurance agreement issued, amended or renewed after the effective date of the assuming insurer’s suspension does not qualify for credit except to the extent that the assuming insurer’s obligations under the reinsurance agreement are secured in accordance with ORS 731.510 and rules the director adopts.

(b) Credit for reinsurance after the effective date of the assuming insurer’s revocation of eligibility may not be granted with respect to any reinsurance agreements the assuming insurer entered into, including reinsurance agreements the assuming insurer entered into before the effective date of the revocation, except to the extent that the assuming insurer’s obligations under the reinsurance agreement are secured consistent with the provisions of ORS 731.510 and rules the director adopts.

(5) If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer or a representative of the ceding insurer may seek and obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities, if the court in which the proceedings are pending determines that the order is appropriate.

(6) This section does not limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in the reinsurance agreement, except as expressly prohibited under the Insurance Code or other applicable law, rule or regulation.

(7)(a) Credit may be taken under this section only for reinsurance agreements entered into, amended or renewed on or after September 25, 2021, and only with respect to losses incurred and reserves reported on or after the later of:

(A) The date on which the assuming insurer has met all eligibility requirements under subsection (1) of this section; and

(B) The effective date of the new reinsurance agreement, amendment or renewal.

(b) This subsection does not alter or impair a ceding insurer’s right to take credit for reinsurance, to the extent that credit is not available under this section, as long as the reinsurance qualifies for credit under any other applicable provision of the Insurance Code.

(8) This section does not:

(a) Authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement, except as permitted by the terms of the reinsurance agreement; or

(b) Limit or in any way alter the capacity of parties to any reinsurance agreement to renegotiate the reinsurance agreement. [2021 c.204 §2]

CAPITAL AND SURPLUS

731.554 Capital and surplus requirements. (1) Except as provided in subsections (2) to (6) of this section and ORS 731.562 and 731.566, to qualify for authority to transact insurance in this state an insurer shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than $2.5 million.

(2) An insurer transacting any workers’ compensation insurance business shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than $5 million.

(3) An insurer transacting mortgage insurance shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than $4 million.

(4) A home protection insurer shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than 10 percent of the aggregate of premiums charged on its policies currently in force, but the required amount shall not be less than $250,000 or more than $1 million.

(5) A domestic insurer applying for its original certificate of authority in this state shall possess, when first so authorized, additional capital or surplus, or any combination thereof, of not less than $500,000. However, the additional amount in the case of a home protection insurer shall be not less than $10,000.

(6) For the protection of the public, the Director of the Department of Consumer and Business Services may require an insurer to possess and maintain capital or surplus, or any combination thereof, in excess of the amount otherwise required under this section, ORS 731.562 or 731.566, owing to the type, volume and nature of insurance business transacted by the insurer, if the director determines that the greater amount is necessary for maintaining the insurer’s solvency according to standards established by rule. In developing such standards, the director shall consider model standards adopted by the National Association of Insurance Commissioners. For the purpose of determining the reasonableness and adequacy of an insurer’s capital and surplus, the director must consider at least the following factors, as applicable:

(a) The size of the insurer, as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria.

(b) The extent to which the business of the insurer is diversified among the several lines of insurance.

(d) The extent of the geographical dispersion of the insured risks of the insurer.

(e) The nature and extent of the reinsurance program of the insurer.

(f) The quality, diversification and liquidity of the investment portfolio of the insurer.

(g) The recent past and projected future trend in the size of the investment portfolio of the insurer.

(h) The combined capital and surplus maintained by other comparable insurers.

(i) The adequacy of the reserves of the insurer.

(j) The quality and liquidity of investments in affiliates. The director may treat any such investment as a disallowed asset for purposes of determining the adequacy of combined capital and surplus whenever in the judgment of the director the investment so warrants.

(k) The quality of the earnings of the insurer and the extent to which the reported earnings include extraordinary items. [1967 c.359 §106; 1969 c.335 §1; 1969 c.692 §6; 1981 c.247 §5; 1987 c.483 §1; 1993 c.447 §9; 2001 c.318 §1]

731.558 [1967 c.359 §107; repealed by 1993 c.447 §122]

731.562 Title insurer capital and surplus requirements. To qualify for authority to transact title insurance in this state, an insurer shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than $2.5 million. [Formerly 748.010; 1987 c.483 §2; 2001 c.318 §2]

731.566 Reciprocal insurer surplus requirements. To qualify for authority to transact insurance in this state, a reciprocal insurer shall possess and thereafter maintain a surplus of not less than $2.5 million, and any reciprocal insurer that exchanges policies of insurance covering workers’ compensation insurance shall possess and thereafter maintain a surplus of not less than $5 million. [1967 c.359 §109; 1975 c.274 §1; 1977 c.651 §2; 1987 c.483 §3; 1993 c.709 §3; 2001 c.318 §3]

731.568 [1993 c.709 §2; repealed by 2001 c.318 §4]

731.570 Withdrawing advancements made to reciprocal insurer. No advancement made by the subscribers or the attorney of a reciprocal insurer shall be withdrawn or refunded except out of the surplus of the insurer in excess of its required capitalization, and then only upon the written consent of the Director of the Department of Consumer and Business Services. [1967 c.359 §110]

731.574 Annual financial statement. (1) Except as provided in subsection (4) of this section, every authorized insurer shall file with the Director of the Department of Consumer and Business Services, on or before March 1 of each year, a financial statement for the year ending December 31 immediately preceding. This statement shall be on a form prescribed by the director. The statement shall contain such detailed exhibit of the condition and transactions of the insurer, in such form and otherwise, as the director prescribes. The director shall consider and may prescribe the annual statement blank or other form established by the National Association of Insurance Commissioners, including instructions prepared by the National Association of Insurance Commissioners for completing the blank or other form. If the director prescribes the blank or other form established by the National Association of Insurance Commissioners, including the instructions, an insurer submitting the annual statement blank or form established by the National Association of Insurance Commissioners must complete the blank or form according to the instructions. The director may require the filing of information in addition to the information required in the annual statement. The director may also require additional filings as the director determines necessary.

(2) The financial statement filed by an insurer under subsection (1) of this section shall be verified by the oaths of the president and secretary of the insurer or, in their absence, by two other principal officers. The statement of an alien company shall embrace only its condition and transactions in the United States, unless the director requires otherwise, and shall be verified by the oath of its resident manager or principal representatives in the United States. Facsimile signatures are acceptable and shall have the same force as original signatures.

(3) The director may grant an extension of time for filing the annual statement.

(4) A home protection insurer may adopt a fiscal year other than the calendar year for its financial statements filed with the director under subsection (1) of this section by declaring the fiscal year in its application for a certificate of authority. An adopted fiscal year may not be changed without the consent of the insurance supervisory official of the insurer’s domicile. The financial statement of a home protection insurer on other than the calendar year basis shall be filed with the director on or before the first day of the third month which follows the end of the fiscal year.

(5) An insurer, subject to requirements set forth in rules made by the director, may publish financial statements, or information based on financial statements, prepared on a basis that is in accordance with requirements of a competent authority and differs from the basis of the statements required to be filed with the director.

(6) It is the intention of the Legislative Assembly that the director consider and follow the accounting, reporting and other standards, practices and procedures established by the National Association of Insurance Commissioners in order to:

(a) Strengthen and improve regulation of insurer solvency by the Department of Consumer and Business Services;

(b) Promote uniform and consistent regulation of insurance by this state and the other states;

(d) Obtain and maintain accreditation of this state’s insurance regulatory program by the National Association of Insurance Commissioners. [Formerly 736.120; 1975 c.231 §1; 1981 c.247 §6; 1993 c.447 §12]

REPORTS OF CRIMINAL CONDUCT

731.590 “Insurer” defined for ORS 731.592 and 731.594. As used in ORS 731.592 and 731.594, “insurer” includes, but is not limited to:

(1) An insurer, as defined in ORS 731.106.

(2) A health care service contractor, as defined in ORS 750.005, including, but not limited to, a health maintenance organization.

(3) A multiple employer welfare arrangement, as defined in ORS 750.301.

(4) A legal entity that is self-insured and provides insurance services to its employees.

(5) An insurer, as defined in ORS 656.005.

(6) An employer authorized under ORS chapter 656 to self-insure its workers’ compensation risk.

(7) A fraternal benefit society, as described in ORS 748.106.

(8) An insurance producer, as defined in ORS 731.104. [1999 c.633 §2; 2003 c.364 §73; 2007 c.241 §25]

731.592 Reporting criminal conduct involving insurance. (1) Notwithstanding ORS 746.665, an insurer shall cooperate with any law enforcement agency or other state or federal agency that is investigating or prosecuting suspected criminal conduct involving insurance. The insurer shall provide any information requested by the agency unless the information is subject to a legal privilege that would prohibit disclosure.

(2) If an insurer has reason to believe that criminal conduct involving insurance has been, is being or is about to be committed, the insurer shall notify the appropriate agency of that fact. The insurer is not required to notify the agency if the information or any part of the information upon which the belief is based is protected from disclosure by legal privilege.

(3) An insurer providing information under this section may request information relating to the investigation that is in the possession or control of the agency. The agency may not provide an insurer with information that is privileged or confidential. Otherwise, the agency shall disclose requested information unless disclosure would jeopardize an ongoing investigation or prosecution. The agency may require that the insurer not disclose the information to any other person.

(4) A person who has reason to believe criminal conduct involving insurance has been, is being or is about to be committed, or who collects, reviews or analyzes information concerning suspected criminal conduct involving insurance, may furnish any unprivileged information in the person’s possession concerning the suspected criminal conduct to an insurer who requests the information for the purpose of detecting, prosecuting or preventing criminal conduct involving insurance.

(5) If an insurer or agency does not provide information as required by this section and the suspected criminal conduct results in a conviction, the insurer or agency is not eligible for any compensation to which the insurer or agency might otherwise be entitled from any award under ORS 137.106. [1999 c.633 §3]

731.594 Immunity from civil liability. Unless it is shown that the person, including an insurer, acted with actual malice, a person who discloses or provides information under ORS 731.592 has immunity from any civil liability that might otherwise be incurred or imposed with respect to the disclosure or provision of the information. A person has the same immunity with respect to participating in any judicial proceeding resulting from the disclosure or provision of information. [1999 c.633 §4]

DEPOSITS

731.604 Acceptance of deposits of insurers. The following deposits of insurers shall be accepted and held by the Department of Consumer and Business Services for the purposes for which such deposits are made and are subject to the applicable provisions of the Insurance Code:

(1) Deposits required or permitted under the Insurance Code.

(2) Deposits of domestic insurers made pursuant to the laws of other jurisdictions. [1967 c.359 §112; 1999 c.196 §2]

731.608 Purpose of deposit. (1) Except as provided in subsection (2) of this section, deposits made in this state under ORS 731.624 shall be held for the faithful performance by the insurer of all insurance obligations, including claims for unearned premiums, with respect to domestic risks pertaining to the particular class of insurance for which the deposit was made. However, there shall be excluded from each such obligation the same amount as is excluded in determining the obligation of the Oregon Insurance Guaranty Association under ORS 734.510 to 734.710.

(2) If at any time a deposit made under ORS 731.624 by a particular insurer is insufficient to perform the insurance obligations upon the faithful performance of which the deposit was conditioned, then any other deposit made under ORS 731.624 by that insurer shall be so used to the extent that such other deposit is not used to perform the insurance obligations upon the faithful performance of which such other deposit was conditioned.

(3) Deposits made by insurers and reinsurers in this state under ORS 731.628 shall be held for the payment of compensation benefits to workers employed by insured employers other than those insured with the State Accident Insurance Fund Corporation to whom the insurer has issued a workers’ compensation insurance policy under ORS chapter 656. Deposits made by insurers and reinsurers under ORS 731.628 also shall be held to reimburse the Department of Consumer and Business Services, subject to approval by the Director of the Department of Consumer and Business Services, for costs incurred by the department in processing workers’ compensation claims of insurers which have been placed in liquidation, receivership, rehabilitation or other such status for the orderly conservation or distribution of assets, pursuant to the laws of this state or any other state.

(4) A deposit made in this state by a domestic insurer transacting insurance in another jurisdiction, and as required by the laws of such jurisdiction, shall be held for the purpose or purposes required by such laws.

(5) Deposits of foreign and alien insurers required pursuant to ORS 731.854 shall be held for such purposes as are required by such law, and as specified by the director’s order by which the deposit is required.

(6) Deposits of domestic reciprocal insurers required pursuant to ORS 731.632 shall be held for the benefit of subscribers wherever located. [1967 c.359 §113; 1971 c.231 §12; 1977 c.793 §6; 1981 c.854 §57; 1987 c.236 §1; 1989 c.700 §2; 2007 c.241 §26]

731.612 Rights of insurer regarding deposits. While the insurer remains unimpaired and is in compliance with the Insurance Code it may:

(1) Demand, receive, sue for and recover the income from the assets deposited;

(2) Exchange and substitute for the deposited assets, or any part thereof, other eligible assets of equivalent or greater value; and

(3) At any reasonable time inspect such deposit. [1967 c.359 §114]

731.616 Valuation of deposits; deficiencies. (1) For the purpose of determining the sufficiency of its deposit in this state the assets of the insurer on deposit shall be valued at current market value.

(2) If assets deposited by an insurer are subject to material fluctuations in market value, the Director of the Department of Consumer and Business Services, in the discretion of the director, may require the insurer to deposit and maintain on deposit additional assets in such amount as reasonably is necessary to assure that the deposit at all times will have a market value of not less than the amount specified under or pursuant to the law by which the deposit is required.

(3) If for any reason the current market value of such assets falls below the amount of deposit required of the insurer, the insurer shall promptly deposit other or additional assets eligible for deposit in an amount sufficient to cure the deficiency. The insurer has 30 days in which to cure the deficiency after notice thereof from the director. [1967 c.359 §115]

731.620 Assignment of deposited securities. (1) The insurer shall assign in trust to the Director of the Department of Consumer and Business Services and successors in office all securities being deposited through the director under the Insurance Code that are not negotiable by delivery; or, in lieu of such assignment, the insurer may give the director an irrevocable power of attorney authorizing the director to transfer the securities or any part thereof for any purpose within the scope of the Insurance Code.

(2) Upon release to the insurer, or other person entitled thereto, of any such security the director shall reassign the security to such insurer or person; or, in the case of power of attorney given pursuant to subsection (1) of this section, the director shall deliver the power of attorney, together with the securities covered thereby, to the insurer or person entitled thereto. [1967 c.359 §116; 1979 c.870 §3; 1987 c.158 §154]

731.624 Special deposits; foreign and alien insurers. Every insurer, before transacting insurance in this state, shall make the following deposits with the Department of Consumer and Business Services:

(1) Foreign or alien insurers transacting surety insurance in this state, $250,000.

(2) Foreign or alien insurers transacting title insurance in this state, $100,000.

(3) Foreign or alien insurers transacting home protection insurance in this state, $100,000.

(4) Foreign or alien insurers transacting mortgage guaranty insurance in this state, $500,000. [1967 c.359 §117; 1981 c.247 §7; 1987 c.483 §4; 1999 c.196 §3]

731.628 Deposit required of workers’ compensation insurers. (1) In addition to any other requirement therefor under the Insurance Code, each insurer other than the State Accident Insurance Fund Corporation that issues workers’ compensation insurance policies to employers under ORS chapter 656 shall deposit with the Department of Consumer and Business Services an amount that is the greater of the following amounts:

(a) $100,000.

(b) An amount equal to the sum described in this paragraph less credits for approved reinsurance that the insurer may take under subsection (2) of this section. The sum under this paragraph is the sum of the following, computed as of December 31 next preceding in respect to workers’ compensation insurance policies written subject to ORS chapter 656:

(A) The aggregate of the present values at four percent interest of the determined and estimated future loss and loss-expense payments upon claims incurred more than three years next preceding the date of computation.

(B) The aggregate of the amounts computed under this subparagraph for each of the three years next preceding the date of computation. The amount for each year shall be 65 percent of the earned premiums for the year less all loss and loss-expense payments made upon claims incurred in the corresponding year, except that the amount for any year shall not be less than the present value at four percent interest of the determined and estimated future loss and loss-expense payments upon claims incurred in that year.

(2) Before an insurer may take a credit for reinsurance under subsection (1)(b) of this section, the reinsurer must deposit with the department an amount equal to the credit to be taken.

(3) An insurer may be allowed the credit referred to in subsection (1)(b) of this section only when the reinsurer has deposited with the department an amount equal to the credit. [1967 c.359 §118; 1971 c.231 §13; 1979 c.870 §4; 1981 c.854 §58; 1987 c.483 §5; 1989 c.700 §3; 1999 c.196 §4; 2007 c.241 §27]

731.632 Deposit required of domestic reciprocal insurers; exception. Every domestic reciprocal insurer shall deposit with the Department of Consumer and Business Services $50,000, except such an insurer which exchanges policies of insurance covering only wet marine hull insurance for persons whose earned income, in whole or in part, is derived from taking and selling food resources living in an ocean, bay or river. [1967 c.359 §119; 1977 c.651 §3; 1993 c.709 §5; 1999 c.196 §5]

731.636 Deposit or trusteed assets of alien insurer required. (1) Except as provided in subsection (3) of this section, every alien insurer, before transacting insurance in this state as an authorized insurer, shall deposit with the Department of Consumer and Business Services the sum of the following amounts:

(a) The amount of its outstanding liabilities arising out of its insurance transactions in the United States; and

(b) Its required capitalization.

(2) ORS 731.640 (1)(d) does not apply with respect to such deposit.

(3) In lieu of such deposit, the insurer may furnish evidence satisfactory to the Director of the Department of Consumer and Business Services that it maintains in the United States, by way of trust deposits with public depositories or with trust institutions acceptable to the director, assets at least equal to the deposit otherwise required by this section. [1967 c.359 §120; 1999 c.196 §6]

731.640 Eligible deposits; rules. (1) Deposits which are required or permitted under the Insurance Code shall consist only of the following:

(a) Cash.

(b) Amply secured obligations of the United States, a state or a political subdivision thereof.

(c) Certificates of deposit or other investments described in ORS 733.650 (4). The Director of the Department of Consumer and Business Services may promulgate rules to limit such investments.

(d) A surety bond, approved by the director, executed by an authorized surety insurer that is not under common ownership, management or control with the person making the deposit. This paragraph does not apply to deposits made by surety insurers or to workers’ compensation deposits made under ORS 731.628.

(e) Amply secured obligations of a corporation rated by the National Association of Insurance Commissioners as Class 1. This paragraph applies only to that portion of the total deposit that exceeds $50 million. The director may adopt rules to require periodic review of the secured obligations of a corporation allowed under this paragraph.

(2) Deposits of domestic insurers made pursuant to the laws of other jurisdictions shall consist of cash or securities as required or permitted by the laws of such jurisdictions. [1967 c.359 §121; 1973 c.450 §1; 1981 c.854 §61; 1999 c.196 §6a; 2003 c.123 §1]

731.642 Contracts for security deposits. The Director of the Department of Consumer and Business Services, in performing duties under ORS 731.604 to 731.652 and after consultation with the State Treasurer, may enter into contracts with banks qualified to act as trust companies and as depositories of state funds to hold and service securities deposited by insurers with the Department of Consumer and Business Services. The insurers whose securities are held and serviced by the banks shall pay for the cost of such contracts. [1969 c.143 §2; 1999 c.196 §7; 2001 c.104 §288]

731.644 Payment of losses out of deposits, generally. (1) Except as otherwise provided in the Insurance Code, no judgment creditor or other claimant of an insurer shall have the right to levy upon any of the assets or securities of the insurer held on deposit in this state.

(2) As to deposits made in this state pursuant to ORS 731.854, levy thereupon shall be permitted only if expressly so provided in the order of the Director of the Department of Consumer and Business Services under which the deposit is required. [1967 c.359 §122]

731.648 Duration and release of deposit. (1) Every deposit made in this state by an insurer pursuant to the Insurance Code shall be so held as long as there is outstanding any liability of the insurer as to which the deposit was required, except as follows:

(a) If the deposit was required under ORS 731.854, the deposit shall be held for so long as the basis of such retaliation exists.

(b) If the deposit was required of a reinsurer under ORS 731.628, the deposit shall be held as long as there is outstanding any liability of the reinsurer with respect to which the deposit was made.

(2) No surety insurer shall be permitted to withdraw its deposit for a period of three years after discontinuing business within this state.

(3) The Director of the Department of Consumer and Business Services shall release a deposit:

(a) To the insurer upon extinguishment by reinsurance or otherwise of all liability of the insurer for the security of which the deposit is held. If extinguishment is by reinsurance, the assuming insurer shall be one authorized to transact such insurance in this state.

(b) To the insurer, while unimpaired, to the extent such deposit is in excess of the amount required.

(c) To the surviving corporation or to such person as it may designate for the purpose, upon effectuation of a merger of the depositing insurer, if the surviving insurer is authorized to transact insurance in this state.

(4) The director shall release a deposit by an insurer upon order of a court of competent jurisdiction, to the receiver, conservator, rehabilitator, or liquidator of the insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer’s assets pursuant to delinquency proceedings brought against the insurer. The director shall release a deposit by a reinsurer under ORS 731.628 upon order of a court of competent jurisdiction, to the receiver, conservator, rehabilitator, or liquidator of the ceding insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer’s assets pursuant to delinquency proceedings brought against the ceding insurer. [1967 c.359 §123; 1989 c.700 §4; 1993 c.447 §106; 1999 c.196 §8]

731.652 Proofs for release of deposit to insurers; director’s responsibility. (1) Before releasing any deposit or portion thereof to the insurer, as provided in ORS 731.648, the Director of the Department of Consumer and Business Services shall require the insurer to file with the director a written statement in such form and with such verification as the director deems advisable setting forth the facts upon which it bases its entitlement to such release.

(2) If release of the deposit is claimed by the insurer upon the ground that all its liabilities, as to which the deposit was held, have been assumed by another insurer authorized to transact insurance in this state, the insurer shall file with the director a copy of the contract or agreement of such reinsurance duly attested under the oath of an officer of each of the insurers that are parties thereto.

(3) If release of the deposit is claimed by a domestic insurer upon the ground that all its liabilities, as to which the deposit was held, have been terminated other than by reinsurance, the director shall make an examination of the affairs of the insurer for determination of the actuality of such termination.

(4) Upon being satisfied by such statement and reinsurance contract, or examination of the insurer if required under subsection (3) of this section, or by such other examination of the affairs of the insurer as the director deems advisable to make, that the insurer is entitled to the release of its deposit or portion thereof as provided in ORS 731.648, the director shall release the deposit or excess portion thereof to the insurer or its authorized representative.

(5) If the director willfully fails faithfully to keep, deposit, account for or surrender any such assets or securities deposited through the director in the manner as authorized or required under the Insurance Code, the director shall be liable therefor upon the director’s official bond, and suit may be brought upon the bond by any person injured by such failure. The director shall not, however, have any liability as to any assets or securities of an insurer released by the director in good faith pursuant to the authority vested in the director under the Insurance Code. [1967 c.359 §124; 1999 c.196 §9]

731.704 [Formerly 128.820; 1971 c.425 §2; 1975 c.699 §1; 1983 c.740 §253; 1989 c.326 §1; 1989 c.413 §4; 1991 c.189 §1; 1991 c.190 §1; 1993 c.53 §1; 1997 c.735 §1; repealed by 2005 c.31 §4]

731.708 [Formerly 128.830; 1995 c.639 §2a; repealed by 2005 c.31 §4]

731.712 [1967 c.359 §127; 1971 c.425 §3; 1989 c.784 §15; repealed by 2005 c.31 §4]

731.716 [Formerly 128.850; 1971 c.425 §4; repealed by 2005 c.31 §4]

731.720 [Formerly 128.860; 1971 c.425 §5; 1993 c.377 §2; 1995 c.639 §2; 1997 c.131 §2; repealed by 2005 c.31 §4]

731.724 [Formerly 128.880; 1971 c.425 §6; repealed by 2005 c.31 §4]

EXCHANGE OF INFORMATION BY REGULATORS

731.730 Insurer filings with National Association of Insurance Commissioners. (1) Every authorized insurer shall file with the National Association of Insurance Commissioners, on or before March 1 of each year, a copy of its annual statement blank, along with additional filings required by the Director of the Department of Consumer and Business Services for the preceding year. The information filed with the National Association of Insurance Commissioners must be in the same format and scope as that required by the director and must include the signed jurat page and the actuarial certification. Each amendment and each addendum to the annual statement filing subsequently filed with the director must also be filed with the National Association of Insurance Commissioners.

(2) A foreign insurer that is domiciled in a state having a law substantially similar to the provisions of subsection (1) of this section is considered to be in compliance with this section.

(3) An insurer making a filing under subsection (1) of this section must pay the National Association of Insurance Commissioners the fee established by the National Association of Insurance Commissioners for filing, reviewing or processing the information. [1993 c.447 §100]

731.731 Immunity for certain persons dealing with information collected from filings under ORS 731.730. Except in the case of malfeasance in office or willful or wanton neglect of duty or authority, there shall be no liability on the part of, and no cause of action of any nature shall arise against, any of the following persons by virtue of their collection, review, analysis or dissemination of the data and information collected from the filings required by ORS 731.730:

(1) Members of the National Association of Insurance Commissioners and the delegates and authorized committees, subcommittees and task forces of the National Association of Insurance Commissioners.

(2) Employees of the National Association of Insurance Commissioners.

(3) The Director of the Department of Consumer and Business Services or any representative of the director.

(4) The insurance regulatory official of another state or any representative of such an official. [1993 c.447 §101]

731.735 Certain information confidential. All financial analysis ratios and examination synopses concerning insurers that are submitted to the Director of the Department of Consumer and Business Services by the Insurance Regulatory Information System of the National Association of Insurance Commissioners are confidential as provided in ORS 705.137. [1993 c.447 §102; 2001 c.377 §6]

731.737 Immunity from liability for certain persons filing reports or furnishing information about specified activities to specified persons. (1) A person or other entity described in this subsection acting without malice, fraudulent intent or bad faith is not subject to civil liability, and no cause of action of any nature may exist against such a person or entity, when the person is performing authorized functions, including publication or dissemination of information, regarding any activity described in subsection (3) of this section. This subsection applies to the following persons and entities:

(a) Law enforcement officials and their agents and employees.

(b) The National Association of Insurance Commissioners, the Department of Consumer and Business Services, a federal or state governmental agency established to detect and prevent activities described in subsection (3) of this section and any other organization established for the same purpose, and agents, employees or designees of any such person or entity.

(2) A person acting without malice, fraudulent intent or bad faith is not subject to liability by virtue of filing reports or furnishing information regarding any activity described in subsection (3) of this section with or to any person or other entity described in subsection (1) of this section.

(3) The activities referred to in subsections (1) and (2) of this section include but are not limited to the following, whether any activity is suspected or anticipated or has occurred:

(a) Acts or omissions by a person who presents a statement described in this paragraph to or by an insurer or an insurance producer, causes such a statement to be presented to or by an insurer or an insurance producer, or prepares such a statement with knowledge or belief that it will be presented to or by an insurer or an insurance producer. This paragraph applies to any statement that the person knows to contain false information as part of, in support of or concerning any fact relating to the following, or conceals relevant information relating to the following:

(A) An application for the issuance of insurance.

(B) The rating of insurance.

(D) Premiums paid on insurance.

(E) Payments made in accordance with the terms of insurance coverage.

(F) An application for a certificate of authority.

(G) The financial condition of an insurer.

(H) The acquisition of any insurer.

(b) Solicitation or an attempt to solicit new or renewal insurance by or for an insolvent insurer or other person subject to regulation under the Insurance Code.

(c) Removal or an attempt to remove assets or any record of assets, transactions and affairs from the home office or other place of business of the insurer or other person subject to regulation under the Insurance Code, or from the place of safekeeping of such a person, or who conceals or attempts to conceal the assets or record from the Director of the Department of Consumer and Business Services.

(d) Diversion, an attempt to divert or a conspiracy to divert funds of an insurer or other person subject to regulation under the Insurance Code, or of any other person, in connection with:

(A) The transaction of insurance.

(B) The conduct of business activities by an insurer or other person subject to regulation under the Insurance Code.

(C) The formation, acquisition or dissolution of an insurer or other person subject to regulation under the Insurance Code.

(4) This section does not abrogate or modify in any way any common law or statutory privilege or immunity otherwise enjoyed by a person or entity made immune from liability under this section.

(5) The court may award reasonable attorney fees to the prevailing party in any tort action against a person who claims immunity under the provisions of this section. [1993 c.447 §103; 1995 c.618 §128; 2003 c.364 §74]

731.740 [1995 c.638 §5a; repealed by 2001 c.377 §59]

CONFIDENTIALITY OF REPORTS

731.750 Confidentiality of report of material acquisitions or dispositions of assets, material nonrenewals, cancellations and revisions of ceded reinsurance agreements. (1) A report filed with the Director of the Department of Consumer and Business Services according to requirements established by rule for disclosure of material acquisitions or dispositions of assets and disclosure of material nonrenewals, cancellations and revisions of ceded reinsurance agreements shall be confidential as provided in ORS 705.137.

(2) The director may direct the insurer to furnish copies of a report described in subsection (1) of this section to the National Association of Insurance Commissioners.

(3) The director may disclose or use a report as considered necessary by the director in the administration of the Insurance Code or other law.

(4) Information contained in documents described in subsections (1) to (3) of this section that is also contained in financial statements of insurers filed under ORS 731.574 or in final examination reports filed under ORS 731.312 is not confidential under this section. [1995 c.638 §3; 2001 c.377 §7]

731.752 Confidentiality of report used for determination of required amount of capital or surplus; confidentiality of financial plan of action and report of examination connected with plan. (1) A report filed with the Director of the Department of Consumer and Business Services according to requirements established by rule for the purpose of determining the amount of capital or surplus, or any combination thereof, that should be possessed and maintained by an insurer under ORS 731.554 or by a health care service contractor under ORS 750.045, or under the laws of another state establishing similar requirements, shall be confidential and shall not be disclosed except as provided in ORS 705.137.

(2) A financial plan of action stating corrective actions to be taken by an insurer or health care service contractor in response to a determination of inadequate capital or surplus, or any combination thereof, that is filed by the insurer or health care service contractor with the director according to requirements established by rule shall be confidential and shall not be disclosed except as provided in ORS 705.137.

(3) The results or report of any examination or analysis of an insurer or health care service contractor performed by the director in connection with a financial plan described in subsection (2) of this section and any corrective order issued by the director pursuant to such an examination or analysis shall be confidential and shall not be disclosed except as provided in ORS 705.137.

(4) Information contained in documents described in subsections (1) to (3) of this section that is also contained in financial statements of insurers or health care service contractors filed under ORS 731.574 or in final examination reports filed under ORS 731.312 is not confidential under this section. [1995 c.638 §4; 2001 c.318 §19; 2001 c.377 §8]

731.754 Permissible uses of reports and plans described in ORS 731.752. (1) The Director of the Department of Consumer and Business Services may use the following only for the purpose of monitoring the solvency of insurers and health care service contractors and the need for possible corrective action with respect to insurers and health care service contractors:

(a) Reports and financial plans of action that are made confidential under ORS 731.752; and

(b) Instructions adopted and amended by the National Association of Insurance Commissioners for use by insurers and health care service contractors in preparing reports and financial plans of action referred to in paragraph (a) of this subsection.

(2) The director may not use reports, financial plans of action and instructions referred to in subsection (1) of this section for ratemaking, for reviewing rate filings or in a rate proceeding related thereto, or to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that an insurer, a health care service contractor or an affiliate is authorized to transact. Such reports and financial plans of action also shall not be introduced as evidence in a rate proceeding.

(3) This section does not restrict the authority of the director to use information included in reports, financial plans or instructions referred to in subsection (1) of this section that is available from other sources. [1995 c.638 §5; 2001 c.318 §20]

INSURANCE COMPLIANCE AUDIT REPORTS

731.760 Definitions for ORS 731.760 to 731.770. As used in ORS 731.760 to 731.770:

(1) “Insurance compliance audit” means a voluntary internal evaluation, review, assessment, audit or investigation that is undertaken to identify or prevent noncompliance with, or promote compliance with, laws, regulations, orders or industry or professional standards, and that is conducted by or on behalf of an insurer regulated under the Insurance Code.

(2) “Insurance compliance self-evaluative audit document” means a document prepared as a result of or in connection with an insurance compliance audit. “Insurance compliance self-evaluative audit document” includes, but is not limited to:

(a) A written response to the findings of an insurance compliance audit.

(b) Field notes and records of observations, findings, opinions, suggestions, conclusions, drafts, memoranda, drawings, photographs, exhibits, computer-generated or electronically recorded information, phone records, maps, charts, graphs and surveys, provided this supporting information is collected or developed solely for the purpose of an insurance compliance audit.

(c) An insurance compliance audit report prepared by an auditor, who may be an employee of the insurer or an independent contractor, which may include the scope of the audit, the information gained in the audit and conclusions and recommendations, with exhibits and appendices.

(d) Memoranda and documents analyzing portions or all of the insurance compliance audit report and discussing potential implementation issues.

(e) An implementation plan that addresses correcting past noncompliance, improving current compliance and preventing future noncompliance.

(f) Analytic data generated in the course of conducting the insurance compliance audit, not including any analytic data that exists independently of the audit or existed before the audit was conducted. [2001 c.329 §2]

731.761 Privileged information. (1) Except as provided in ORS 731.760 to 731.770, an insurance compliance self-evaluative audit document is privileged information and is not discoverable, or admissible as evidence, in any civil, criminal or administrative proceeding.

(2) Except as provided in ORS 731.760 to 731.770, any person who performs or directs the performance of an insurance compliance audit, any officer, employee or agent of an insurer who is involved with an insurance compliance audit and any consultant who is hired for the purpose of performing an insurance compliance audit may not be examined in any civil, criminal or administrative proceeding about the insurance compliance audit or any insurance compliance self-evaluative audit document. [2001 c.329 §3]

731.762 Authority of director. (1) ORS 731.761 does not limit the authority of the Director of the Department of Consumer and Business Services to acquire any insurance compliance self-evaluative audit document or to examine any person in connection with the document. If the director determines that the actions of an insurer are egregious, the director may introduce and use the document in any administrative proceeding or civil action under the Insurance Code. The director may require that an insurer submit an insurance compliance self-evaluative audit document for the purpose of an examination or investigation conducted under this chapter. An insurer may also voluntarily submit an insurance compliance self-evaluative audit document to the director.

(2) Any insurance compliance self-evaluative audit document submitted to the director under this section and in the possession of the director remains the property of the insurer and is not subject to disclosure or production under ORS 192.311 to 192.478.

(3)(a) The director shall consider the corrective action taken by an insurer to eliminate problems identified in the insurance compliance self-evaluative audit document as a mitigating factor when determining a civil penalty or other action against the insurer.

(b) The director may, in the director’s sole discretion, decline to impose a civil penalty or take other action against an insurer based on information obtained from an insurance compliance self-evaluative audit document if the insurer has taken reasonable corrective action to eliminate the problems identified in the document.

(4) Disclosure of an insurance compliance self-evaluative audit document to a governmental agency, whether voluntarily or pursuant to compulsion of law, does not constitute a waiver of the privilege set forth in ORS 731.761 for any other purpose.

(5) The director may not be compelled to produce an insurance compliance self-evaluative audit document. [2001 c.329 §4]

731.764 Waiver of privilege; permitted disclosures. (1) The privilege set forth in ORS 731.761 does not apply to the extent that the privilege is expressly waived by the insurer that prepared or caused to be prepared the insurance compliance self-evaluative audit document.

(2) The privilege set forth in ORS 731.761 does not apply in any civil, criminal or administrative proceeding commenced by the Attorney General relating to Medicaid fraud, without regard to whether the proceeding is brought on behalf of the state, a state agency or a federal agency. An insurer may request an in camera review of any document or other evidence to be released or used under this subsection and may request that appropriate protective orders be entered governing release and use of the material.

(3) In any civil proceeding a court of record may, after an in camera review, require disclosure of material for which the privilege set forth in ORS 731.761 is asserted if the court determines that the material is not subject to the privilege, or that the privilege is asserted for a fraudulent purpose, including but not limited to an assertion of the privilege for an insurance compliance audit that was conducted for the purpose of concealing a violation of any federal, state or local law or rule. Nothing in this subsection shall be construed to limit the authority of the Director of the Department of Consumer and Business Services to acquire, examine and use insurance compliance self-evaluative audit documents under ORS 731.762.

(4) In a criminal proceeding, a court of record may, after an in camera review, require disclosure of material for which the privilege set forth in ORS 731.761 is asserted if the court determines that:

(a) The privilege is asserted for a fraudulent purpose, including but not limited to an assertion of the privilege for an insurance compliance audit that was conducted for the purpose of concealing a violation of any federal, state or local law or rule;

(b) The material is not subject to the privilege; or

(A) A district attorney or the Attorney General has a compelling need for the information;

(B) The information is not otherwise available; or

(C) The district attorney or Attorney General is unable to obtain the substantial equivalent of the information by any other means without incurring unreasonable cost and delay. [2001 c.329 §5]

731.766 Petition for in camera hearing; hearing; compelled disclosure. (1) Within 30 days after a district attorney or the Attorney General serves on an insurer a written request by certified mail for disclosure of an insurance compliance self-evaluative audit document, the insurer that prepared or caused the document to be prepared may file in circuit court a petition requesting an in camera hearing on whether the insurance compliance self-evaluative audit document or portions of the document are privileged under ORS 731.761 or subject to disclosure. Failure by the insurer to file a petition waives the privilege only with respect to the specific request.

(2) A petition filed by an insurer under this section must contain the following information:

(a) The date of the insurance compliance self-evaluative audit document.

(b) The identity of the person that conducted the audit.

(d) An identification of the portions of the insurance compliance self-evaluative audit document for which the privilege is being asserted.

(3) Within 45 days after the filing of a petition by an insurer under this section, the court shall schedule an in camera hearing to determine whether the insurance compliance self-evaluative audit document or portions of the document are privileged under ORS 731.761.

(4) The court, after an in camera review pursuant to this section, may require disclosure of material for which the privilege established by ORS 731.761 is asserted if the court determines that any of the conditions set forth in ORS 731.764 are met. Upon making such a determination, the court may compel the disclosure of only those portions of an insurance compliance self-evaluative audit document relevant to issues in dispute in the underlying proceeding. Any disclosure that is compelled by the court will not be considered to be a public document or be deemed to be a waiver of the privilege for any other civil, criminal or administrative proceeding. A party unsuccessfully opposing disclosure may apply to the court for an appropriate order protecting the document from further disclosure.

(5) An insurer asserting the privilege established under ORS 731.761 has the burden of establishing that the privilege applies. If the insurer establishes that the privilege applies, a party seeking disclosure under ORS 731.764 has the burden of proving the elements set forth in ORS 731.764. [2001 c.329 §6]

731.768 Privilege; exceptions. The privilege established under ORS 731.761 does not apply to any of the following:

(1) Documents, communications, data, reports or other information expressly required to be collected, developed, maintained or reported to a regulatory agency under the Insurance Code or other state or federal law;

(2) Information obtained by observation or monitoring by any regulatory agency; or

(3) Information obtained from a source other than the insurance compliance audit. [2001 c.329 §7]

731.770 Other privileges or limitations pertaining to audit document. Nothing in ORS 731.760 to 731.770, or in the release of any insurance compliance self-evaluative audit document under ORS 731.760 to 731.770, shall limit, waive or abrogate the scope or nature of any statutory or common law privilege or other limitation on admissibility of evidence including, but not limited to, the work product doctrine, the lawyer-client privilege under ORS 40.225 or the subsequent remedial measures exclusion provided by ORS 40.185. [2001 c.329 §8]

ASSESSMENTS, FEES AND TAXES

731.804 Assessments; rules; fees; how determined. (1) Except as otherwise provided in this section, each authorized insurer doing business in this state shall pay assessments that the Director of the Department of Consumer and Business Services determines are necessary to support the legislatively authorized budget of the Department of Consumer and Business Services with respect to functions of the department under the Insurance Code. The director shall determine the assessments according to one or more percentage rates established by the director by rule. The director shall specify in the rule when assessments shall be made and payments shall be due. The premium-weighted average of the percentage rates may not exceed nine-hundredths of one percent of the gross amount of premiums received by an insurer or the insurer’s insurance producers from and under the insurer’s policies covering direct domestic risks, after deducting the amount of return premiums paid and the amount of dividend payments made to policyholders with respect to such policies. In the case of reciprocal insurers, the amount of savings paid or credited to the accounts of subscribers shall be deducted from the gross amount of premiums. In establishing the percentage rate or rates, the director shall use the most recent premium data approved by the director. In establishing the amounts to be collected under this subsection, the director shall take into consideration the expenses of the department for administering the Insurance Code and the fees collected under subsection (2) of this section. When the director establishes two or more percentage rates:

(a) Each rate shall be based on such expenses of the department ascribed by the director to the line of insurance for which the rate is established.

(b) Each rate shall be applied to the gross amount of premium received by an insurer or its insurance producers for the applicable line of insurance as provided in this subsection.

(2) The director may collect fees for specific services provided by the department under the Insurance Code according to a schedule of fees established by the director by rule. The director may collect such fees in advance. In establishing the schedule for fees, the director shall take into consideration the cost of each service for which a fee is imposed.

(3)(a) Notwithstanding the provisions of ORS 743A.067 (7)(e) and 743A.067 (9), for the purpose of mitigating inequity in the health insurance market, the director may assess a fee on any insurer that offers a health benefit plan, as defined in ORS 743B.005, that is exempt from a provision of ORS chapter 743A or other provision of the Insurance Code that requires specified coverage by health benefit plans.

(b) Any fees collected under paragraph (a) of this subsection must be the actuarial equivalent of costs attributed to the provision and administration of the required coverage by an insurer that is not exempt.

(c) Nothing in this section limits the authority of the director to enforce the provisions of ORS chapter 743A if an insurer unlawfully fails to comply.

(d) Notwithstanding ORS 646A.628, fees paid in accordance with paragraph (a) of this subsection shall be deposited in the General Fund to become available for general governmental expenses.

(4) Establishment and amendment of the schedule of fees under subsection (2) of this section are subject to prior approval of the Oregon Department of Administrative Services and shall be within the budget authorized by the Legislative Assembly as that budget may be modified by the Emergency Board.

(5) The director may not collect an assessment under subsection (1) of this section from any of the following persons:

(a) A fraternal benefit society complying with ORS chapter 748.

(b) Any person or class of persons designated by the director by rule.

(6) The director may not collect an assessment under subsection (1) of this section with respect to premiums received from any of the following policies:

(a) Workers’ compensation insurance policies.

(b) Wet marine and transportation insurance policies.

(c) Any category of policies designated by the director by rule. [1967 c.359 §131; 1971 c.231 §14; 1971 c.425 §7; 1983 c.94 §1; 1985 c.697 §17; 1987 c.373 §81; 1989 c.331 §24; 1989 c.413 §1; 1991 c.371 §1; 1991 c.703 §40; 1991 c.958 §5; 1993 c.265 §5; 2003 c.364 §75; 2005 c.31 §7; 2007 c.560 §1; 2019 c.285 §4; 2023 c.602 §30]

731.808 “Gross amount of premiums” defined. As used in ORS 731.804, 731.812, 731.820, 731.830 and 731.834, “gross amount of premiums” means the consideration paid by insureds to an insurer for policies of insurance, and includes all premiums, assessments, dues and fees received or derived, or obligations taken therefor, by whatever term known. [1967 c.359 §132; 1989 c.413 §5; 2019 c.493 §4]

731.812 Foreign and alien insurer’s report of Oregon business. Every foreign or alien insurer, in its annual statement to the Director of the Department of Consumer and Business Services, shall set forth the gross amount of premiums received by it or its insurance producers, return premiums paid, dividend payments made to policyholders, savings paid or credited to the accounts of subscribers in the case of a reciprocal insurer, and insurance benefit payments to policyholders, from and under its policies covering direct domestic risks in the preceding calendar year. [1967 c.359 §133; 2003 c.364 §76]

731.816 [1967 c.359 §134; 1971 c.560 §1; 1989 c.700 §5; repealed by 1995 c.786 §1]

731.820 Gross premium tax on fire insurance premiums. (1)(a) For the purpose of maintaining the Department of the State Fire Marshal and paying the expenses incident thereto, every insurer transacting insurance covering the peril of fire shall pay a tax to the Director of the Department of Consumer and Business Services, on or before April 1 of each year, equal to 1.15 percent of the gross amount of premiums received by it or its insurance producers from such business, from and under its policies covering direct domestic risks in the preceding calendar year after deducting the amount of return premiums paid and the amount of dividend payments made to policyholders or, in the case of a reciprocal insurer, the amount of savings paid or credited to the accounts of subscribers, with respect to such policies.

(b) For the purpose of paragraph (a) of this subsection the following portions of the amounts required to be reported by line of business in the annual financial statement required by ORS 731.574 shall be considered premiums for insurance covering the peril of fire:

(A) Fire, 100 percent.

(B) Homeowners and farm owners multiple peril, 65 percent.

(D) Inland marine, 20 percent.

(E) Automobile physical damage, eight percent.

(F) Aircraft physical damage, eight percent.

(2) If an insurer ceases to do business or collect premiums on direct domestic risks, it thereupon shall make a report to the director of its premiums subject to taxation as provided in subsection (1) of this section and collected or due as of the date when it ceased to do business or collect premiums on direct domestic risks, and not theretofore reported, and shall forthwith pay to the director the tax thereon.

(3) If the director, during the period in which the director under ORS 731.836 may collect taxes owing under this section, finds the amount of such taxes paid by an insurer to have been incorrect, the director shall charge or credit the insurer with the difference between the correct amount of tax and the amount actually paid. [1967 c.359 §135; 1967 c.453 §4; 1971 c.231 §15; 1975 c.275 §1; 1983 c.130 §1; 1989 c.700 §6; 2003 c.364 §77; 2013 c.191 §1; 2021 c.539 §144]

731.822 Prepayment of tax due. (1) Every insurer with a tax obligation under section 2, chapter 786, Oregon Laws 1995, ORS 731.820 or ORS 731.854 and 731.859 shall make prepayment of the tax obligations under section 2, chapter 786, Oregon Laws 1995, ORS 731.820, 731.854 and 731.859 for the current calendar year’s business, if the sum of the tax obligations under section 2, chapter 786, Oregon Laws 1995, ORS 731.820, 731.854 and 731.859 for the preceding calendar year’s business is $400 or more.

(2) The Director of the Department of Consumer and Business Services shall credit the prepayment toward the appropriate tax obligations of the insurer for the current calendar year under section 2, chapter 786, Oregon Laws 1995, or ORS 731.820 or ORS 731.854 and 731.859.

(3) The amounts of the prepayments shall be percentages of the insurer’s tax obligation based on the preceding calendar year’s business adjusted, if necessary, to reflect the declining percentages set forth in section 2 (3), chapter 786, Oregon Laws 1995, applicable for the current year, and shall be paid to the director by the due dates and in the following amounts:

(a) On or before June 15, 45 percent;

(b) On or before September 15, 25 percent; and

(4) The effect of transferring policies of insurance from one insurer to another insurer is to transfer the tax prepayment obligation with respect to such policies.

(5) On or before June 1 of each year, the director shall notify each insurer required to make prepayments in that year of the amount of each prepayment, and shall provide remittance forms to be used by the insurer. However, an insurer’s responsibility to make prepayments is not affected by failure of the director to send, or the insurer to receive, the notice or forms. [1980 c.10 §2; 1995 c.786 §5]

731.824 Tax on underwriting profits of wet marine and transportation insurers. (1) Wet marine and transportation insurance written by authorized foreign or alien insurers within this state shall be taxed only on that proportion of the total underwriting profit of the authorized insurer from wet marine and transportation insurance written within the United States that the gross premiums of the authorized insurer from wet marine and transportation insurance written within this state bear to the gross premiums of the authorized insurer from wet marine and transportation insurance written within the United States.

(2) The “underwriting profit,” for purposes of this section, is arrived at by deducting from the net earned premiums on wet marine and transportation insurance policies written within the United States during the calendar year:

(a) The losses incurred; and

(b) Expenses incurred, including all taxes, state and federal, in connection with net earned premiums.

(3) The amount of “net earned premiums” on wet marine and transportation insurance policies written during the calendar year is the sum of paragraphs (a) and (b) of this subsection less paragraph (c) of this subsection:

(a) Gross premiums on wet marine and transportation insurance policies written during the calendar year, less any and all return premiums, any and all premiums on policies not taken and any and all premiums paid for reinsurance.

(b) Unearned premiums on outstanding marine business at the end of the preceding calendar year.

(4) “Losses incurred,” as used in this section, means gross losses incurred during the calendar year under policies written within the United States, less reinsurance claims collected or collectible and salvages or recoveries collectible from any source applicable to the losses.

(5) “Expenses incurred” includes:

(a) Specific expenses incurred on earned wet marine and transportation insurance premiums, consisting of all commissions, agency expenses, taxes, licenses, fees, loss-adjustment expenses, and all other expenses incurred directly and specifically in connection with the premiums, less recoveries or reimbursements on account of or in connection with commissions or other expenses collected or collectible because of reinsurance or from any other source.

(b) General expenses incurred on earned premiums, consisting of that proportion of general or overhead expenses, such as salaries of officers and employees, printing and stationery, all taxes of this state and of the United States, except as otherwise provided in this section, and all other expenses not chargeable specifically to a particular class of insurance, that the net premiums of insurance written bear to the total net premiums written by an authorized insurer from all classes of insurance written by the authorized insurer during the current calendar year. However, in arriving at the “underwriting profit” for purposes of taxation under this section there may not be deducted in respect to expenses incurred, as defined and specified in this subsection, amounts that, in the aggregate, exceed 40 percent of the gross premiums on the insurance policies. [Formerly 745.145; 2019 c. 493 §1]

731.828 Computation of wet marine and transportation insurance tax. (1) Each authorized insurer transacting wet marine and transportation insurance in this state shall file annually on or before June 15 with the Director of the Department of Consumer and Business Services and in the form prescribed by the director, a report of all the items pertaining to the authorized insurer’s insurance business as enumerated and prescribed in ORS 731.824.

(2) Each authorized insurer that has written wet marine and transportation insurance in this state for three years shall furnish to the director a statement of all of the items referred to in subsection (1) of this section, in the form prescribed by the director, for each of the preceding three calendar years. An authorized insurer that has not written wet marine and transportation insurance for three years shall furnish to the director a statement of all items for each of the calendar years during which the authorized insurer has written wet marine and transportation insurance.

(3) On or before June 15 of each year, if the authorized insurer has transacted wet marine and transportation insurance for three years, the authorized insurer shall:

(a) Ascertain the average annual underwriting profit, as provided in ORS 731.824, derived by the authorized insurer from wet marine and transportation insurance business written within the United States during the last preceding three calendar years.

(b) Ascertain the proportion that the average annual premiums of the authorized insurer from wet marine and transportation insurance written by the authorized insurer in this state during the last preceding three calendar years bears to the average total of wet marine and transportation insurance premiums of the authorized insurer during the same three years.

(c) Pay five percent on this proportion of the average annual underwriting profit of the authorized insurer from wet marine and transportation insurance to the director as a tax upon the insurance written by the authorized insurer in this state during the current calendar year.

(4) The authorized insurer each year shall compute the tax, according to the method described in this section, upon the authorized insurer’s average annual underwriting profit from wet marine and transportation insurance during the preceding three years, including the current calendar year. At the expiration of each current calendar year, the profit or loss on wet marine and transportation insurance business of that year is to be added or deducted, and the profit or loss upon the insurance business of the first calendar year of the preceding three-year period is to be dropped so that the computation of underwriting profit for purposes of taxation under this section will always be on a three-year average.

(5) An authorized insurer that has not written wet marine and transportation insurance in this state for three years shall, until the authorized insurer has transacted wet marine and transportation insurance in this state for three years, be taxed on the basis of the authorized insurer’s annual underwriting profit on wet marine and transportation insurance written within the United States for the current calendar year, subject, however, to an adjustment in the tax as soon as the authorized insurer, in accordance with the provisions of this section, is enabled to compute the tax on the three-year basis.

(6) In the case of authorized mutual insurers, the authorized insurer may not include in the underwriting profit, when computing the tax prescribed by this section, the amounts refunded by the mutual insurers on account of premiums previously paid by the policyholders of the mutual insurers.

(7) If the director, during the period in which the director under ORS 731.836 may collect taxes owing under this section, finds the amount of taxes paid by an authorized insurer to have been incorrect, the director shall charge or credit the authorized insurer with the difference between the correct amount of tax and the amount actually paid.

(8) If an authorized insurer ceases to transact wet marine and transportation insurance in this state, the authorized insurer shall report to the director the items the authorized insurer has not previously reported pertaining to the insurance business, as enumerated and described in this section, to the date on which the authorized insurer ceased to transact wet marine and transportation insurance, and shall forthwith pay to the director the taxes computed according to this section and the annual authorization fees thereon. [Formerly 745.150; 1969 c.158 §1; 1975 c.250 §1; 1989 c.700 §7; 2019 c.493 §2]

731.830 Premium tax on gross amount of premiums insurer receives for wet marine and transportation insurance. An insurance producer shall pay to the Director of the Department of Consumer and Business Services a premium tax that is equal to three-fourths of one percent of the gross amount of premiums the insurance producer receives for wet marine and transportation insurance that the insurance producer places with unauthorized or nonadmitted insurers if the insured’s home state is Oregon. [2019 c.493 §6]

731.832 [Formerly 736.175; 1987 c.373 §82; repealed by 1995 c.786 §4]

731.833 Record keeping requirements for wet marine and transportation insurance contracts. (1) Each producer of nonadmitted wet marine and transportation insurance shall keep a full and true record of each nonadmitted wet marine and transportation insurance contract placed on an Oregon home state risk. The record must include a copy of the policy, certificate, cover note or other evidence of insurance that the Director of the Department of Consumer and Business Services specifies by rule.

(2) A producer shall keep the record described in subsection (1) of this section open at all reasonable times to the director’s examination, without notice, for a period of not less than five years after termination of the nonadmitted wet marine and transportation insurance contract. [2019 c.493 §7]

731.834 Insurance producer’s collection of taxes on wet marine and transportation insurance; report to director; rules. (1) An insurance producer that places wet marine and transportation insurance with a nonadmitted insurer shall collect taxes on the insurance in addition to the gross amount of premiums the insurance producer and other intermediaries charge. If an insurance producer collects taxes under this subsection, the insurance producer shall return directly to the policyholder the taxes that the state credited to the licensee on any portion of the premium that is unearned at the termination of the insurance. The insurance producer may not absorb the taxes or rebate any part of the taxes for any reason.

(2) Each producer of nonadmitted wet marine and transportation insurance shall file with the Director of the Department of Consumer and Business Services, in accordance with the director’s prescription, a verified report of any Oregon home state risk nonadmitted wet marine and transportation insurance the producer transacted during the previous 90 days and shall accompany the report with payment of the tax due on each transaction. The report need not show transacted insurance that the producer filed in an earlier report. The report must show:

(a) Gross amount of premiums or return premium; and

(b) The amount of the tax.

(3) The director may require insurance producers to file the report described in subsection (2) of this section on a form the director specifies or on a form that the Surplus Line Association of Oregon prescribes. If the director specifies that a producer must file the report on a Surplus Line Association of Oregon form, the association shall file the report with the director. The director may also permit electronic filing and may exempt a licensee from the requirement to file for good cause shown.

(4) Notwithstanding subsection (2) of this section, if an insurance producer’s license is terminated or not renewed for any reason, the taxes described in this section are due on the 30th day after the termination or nonrenewal.

(5) The director by rule may establish requirements for filing reports on nonadmitted wet marine and transportation insurance transacted outside this state on Oregon home state risks for the purpose of collecting taxes on insurance that covers Oregon home state risks that is placed outside this state.

(6) The director may collect taxes on 100 percent of the gross amount of premiums on Oregon home state risks for the purposes of carrying out the Nonadmitted and Reinsurance Reform Act of 2010 (P.L. 111-203, Title V, Subtitle B). If the director enters into a compact or otherwise establishes procedures with other states under ORS 735.418, the director by rule shall establish procedures to facilitate reporting, collecting, paying, allocating and disbursing premium taxes on Oregon home state risks that also include risks that are allocable to other states.

(7) If an insurance producer does not pay within the prescribed time a tax the producer must collect under this section, the director may bring an action against the insurance producer to recover the amount of the unpaid tax. [2019 c.493 §8]

731.836 Limitation on enforcement of insurer’s tax obligations. The Director of the Department of Consumer and Business Services shall commence an action for the recovery of taxes payable under ORS 731.820, 731.824, 731.828 and 731.859 not later than the later of the following:

(1) Five years after the date such taxes were payable to the director under such sections; or

(2) Three years after the date on which the report of examination by the domiciliary state of the insurer, disclosing that such taxes were owing by the insurer under such sections, was filed with the director. [1967 c.359 §139; 1969 c.158 §4; 1989 c.700 §8]

731.840 Retaliatory or corporate excise tax in lieu of certain taxes and assessments; certain local taxes prohibited. (1) The retaliatory tax imposed upon a foreign or alien insurer under ORS 731.854 and 731.859, or the corporate excise tax imposed upon a foreign or alien insurer under ORS chapter 317, is in lieu of all other state taxes upon premiums, taxes upon income, franchise or other taxes measured by income that might otherwise be imposed upon the foreign or alien insurer except the fire insurance premiums tax imposed under ORS 731.820, the tax imposed upon wet marine and transportation insurers under ORS 731.824 and 731.828 and the assessment imposed under section 5, chapter 538, Oregon Laws 2017. However, all real and personal property, if any, of the insurer shall be listed, assessed and taxed the same as real and personal property of like character of noninsurers. Nothing in this subsection shall be construed to preclude the imposition of the assessments imposed under ORS 656.612 upon a foreign or alien insurer.

(2) Subsection (1) of this section applies to a reciprocal insurer and its attorney in its capacity as such.

(3) Subsection (1) of this section applies to foreign or alien title insurers and to foreign or alien wet marine and transportation insurers issuing policies and subject to taxes referred to in ORS 731.824 and 731.828.

(4) The State of Oregon hereby preempts the field of regulating or of imposing excise, privilege, franchise, income, license, permit, registration, and similar taxes, licenses and fees upon insurers and their insurance producers and other representatives as such, and:

(a) No county, city, district, or other political subdivision or agency in this state shall so regulate, or shall levy upon insurers, or upon their insurance producers and representatives as such, any such tax, license or fee; except that whenever a county, city, district or other political subdivision levies or imposes generally on a nondiscriminatory basis throughout the jurisdiction of the taxing authority a payroll, excise or income tax, as otherwise provided by law, such tax may be levied or imposed upon domestic insurers; and

(b) No county, city, district, political subdivision or agency in this state shall require of any insurer, insurance producer or representative, duly authorized or licensed as such under the Insurance Code, any additional authorization, license, or permit of any kind for conducting therein transactions otherwise lawful under the authority or license granted under this code. [1967 c.359 §140; 1969 c.600 §12; 1973 c.515 §1; 1973 c.583 §2; 1995 c.786 §6; 2003 c.364 §78; 2009 c.867 §25; 2015 c.70 §22; 2017 c.538 §14]

731.841 Conditions under which local authority to tax insurer is preempted. If, on account of the provisions of section 2, chapter 786, Oregon Laws 1995, and the amendments to ORS 731.840 by section 6, chapter 786, Oregon Laws 1995, the amendments to ORS 750.329 by section 11, chapter 786, Oregon Laws 1995, the amendments to ORS 317.010 by section 12, chapter 786, Oregon Laws 1995, and the amendments to ORS 317.080 by section 13, chapter 786, Oregon Laws 1995, any insurer authorized to transact business in Oregon on January 1, 1997, is subject to the local taxes, licenses and fees described in ORS 731.840 (4)(a) as of January 1, 1997, and was not so subject before January 1, 1997, the authority of the local government to impose those taxes is preempted by the State of Oregon and no county, city, district or other political subdivision or agency in this state shall levy or impose upon such insurer, or upon its insurance producers or representatives, any excise, privilege, franchise, income, license, permit, registration or similar tax, license or fee. [1995 c.786 §20; 2003 c.364 §79]

731.842 Adjustment of amount to be prepaid for taxes; extension of time for payment; interest; penalty for late payment. (1) The Director of the Department of Consumer and Business Services may grant, for good cause shown, a request for an adjustment of the amount of the prepayment due under ORS 731.822 or an extension of time for payment of taxes under ORS 731.808 to 731.834 and 731.859. The extension shall be requested no later than the due date and may not exceed 30 days or one month, whichever is longer, except that an extension of time for payments under ORS 731.822 may not exceed 10 days.

(2) Interest at the rate of two-thirds of one percent per month or fraction of a month shall accrue on any such tax payment not made by the due date (determined without regard to extensions).

(3) A penalty of 10 percent of the tax amount shall be imposed upon any late payment of any such tax, except for a payment made within an extension period as provided in subsection (1) of this section or when the director believes extenuating circumstances justify waiver of the penalty. [1975 c.230 §2; 1980 c.10 §4; 1995 c.786 §7]

731.844 No personal liability for paying invalid tax. No personal liability shall arise against any director, trustee, officer or agent of any insurer on account of any taxes or fees paid pursuant to any statute, law or ordinance, even though such statute, law or ordinance is subsequently declared or held to be invalid. [1967 c.359 §141]

RETALIATORY PROVISIONS

731.854 Retaliatory tax. (1) When by or pursuant to the laws of any other state or foreign country any taxes, licenses and other fees, in the aggregate, and any fines, penalties, deposit requirements or other material obligations, prohibitions or restrictions are or would be imposed upon insurers domiciled in this state, or upon the insurance producers or representatives of such insurers, which are in excess of such taxes, licenses and other fees, in the aggregate, or which are in excess of the fines, penalties, deposit requirements or other obligations, prohibitions, or restrictions directly imposed upon similar insurers, or upon the insurance producers or representatives of such insurers, of such other state or country under the statutes of this state, so long as such laws of such other state or country continue in force or are so applied, the same taxes, licenses and other fees, in the aggregate, or fines, penalties or deposit requirements or other material obligations, prohibitions, or restrictions of whatever kind shall be imposed by the Director of the Department of Consumer and Business Services upon the insurers, or upon the insurance producers or representatives of such insurers, of such other state or country doing business or seeking to do business in this state. Any tax, license or other fee or other obligation imposed by any city, county, or other political subdivision or agency of such other state or country on insurers domiciled in this state or their insurance producers or representatives shall be deemed to be imposed by such state or country within the meaning of this subsection.

(2) Foreign reciprocal or interinsurance exchanges filing a consolidated return for purposes of ORS chapter 317 shall prepare and file a separate individual retaliatory tax calculation. The excise tax for the consolidated group shall be allocated for retaliatory tax purposes among the individual foreign insurers writing Oregon premiums. The allocation, after excluding the domestic share as determined by the Director of the Department of Consumer and Business Services by rule, shall be in the proportion that the premiums written in Oregon by a foreign insurer of the group bears to the total premiums written in Oregon by all foreign insurers in the group writing premiums in Oregon.

(3) This section does not apply as to personal income taxes, nor as to local ad valorem taxes on real or personal property nor as to special purpose obligations or assessments heretofore imposed by another state in connection with particular classes of insurance, other than property insurance; except that deductions, from premium taxes or other taxes otherwise payable, allowed on account of real estate or personal property taxes paid shall be taken into consideration by the director in determining the propriety and extent of retaliatory action under this section.

(4) For the purpose of applying this section to an alien insurer, its domicile shall be determined in accordance with ORS 731.092 and 731.096.

(5) For the purpose of applying this section to foreign and alien insurers, the following specifically shall be treated as taxes imposed by this state:

(a) The corporate excise tax imposed under ORS chapter 317, without taking into consideration the amount of any reduction due to the credit allowed under ORS 315.533.

(b) The assessments imposed under ORS 731.804 made to support the legislatively authorized budget of the Department of Consumer and Business Services with respect to the functions of the department under the Insurance Code.

(c) The assessments paid by insurers on behalf of their insureds under ORS 656.612. [Formerly 736.237; 1995 c.786 §7a; 2003 c.364 §80; 2013 c.744 §4]

731.858 [Formerly 736.245; repealed by 1969 c.158 §2 (731.859 enacted in lieu of 731.858)]

731.859 Applicability of retaliatory provisions; disclosure of tax returns. (1) On or before April 1 of each year, each foreign or alien insurer shall:

(a) Determine and report to the Director of the Department of Consumer and Business Services whether the provisions of the laws of any state or country require the imposition of the burdens specified by ORS 731.854;

(b) Compute the amount owing under ORS 731.854; and

(2) If the director, during the period in which the director under ORS 731.836 may collect taxes owing under this section, finds the amount of such taxes paid by an insurer to have been incorrect, the director shall charge or credit the insurer with the difference between the correct amount of tax and the amount actually paid.

(3) Notwithstanding ORS 314.835 or 314.840 or any other law concerning the confidentiality of tax returns, the Department of Consumer and Business Services may disclose to the Department of Revenue, and the Department of Revenue may disclose to the Department of Consumer and Business Services, tax returns and all other information necessary to carry out the provisions of this section and ORS 731.854. [1969 c.158 §3 (enacted in lieu of 731.858); 1989 c.700 §9; 2021 c.204 §4]

MISCELLANEOUS

731.870 State of emergency; effect upon insurance policies; rules. (1) When the Governor declares a state of emergency under ORS 401.165, the Director of the Department of Consumer and Business Services may issue an order that addresses any or all of the following matters related to insurance policies issued in this state:

(a) Reporting requirements for claims;

(b) Grace periods for payment of insurance premiums and performance of other duties by insureds; and

(2) An order by the director under subsection (1) of this section may remain effective for not more than 30 days unless the director extends the termination date for the order for an additional period of not more than 30 days or for subsequent additional periods of not more than 30 days. The director may extend the order if, in the director’s judgment, the circumstances warrant an extension. The order must specify, by line of insurance:

(a) The geographic areas in which the order applies, which must be within but may be less extensive than the geographic area specified in the Governor’s proclamation of a state of emergency and must be specified according to an appropriate means of delineation, such as United States Postal Service ZIP codes or other appropriate means; and

(b) The date on which the order becomes effective and the date on which the order terminates.

(3) The director shall adopt rules that establish general criteria for orders issued under this section and may adopt emergency rules applicable to a specific proclamation of a state of emergency by the Governor.

(4) The rulemaking authority set forth in this section does not limit or affect the rulemaking authority otherwise granted to the director by law. [2008 c.22 §2]

PENALTIES

731.988 Civil penalties. (1) A person that violates any provision of the Insurance Code, any lawful rule or final order of the Director of the Department of Consumer and Business Services or any judgment that a court makes in response to the director’s application, shall forfeit and pay to the General Fund of the State Treasury a civil penalty in an amount determined by the director that does not exceed $10,000 for each offense. The civil penalty for individual insurance producers, adjusters or insurance consultants may not exceed $1,000 for each offense. Each violation is a separate offense.

(2) In addition to the civil penalty specified in subsection (1) of this section, a person that violates any provision of the Insurance Code, any lawful rule or final order of the director or any judgment that a court makes in response to the director’s application, may be required to forfeit and pay to the General Fund of the State Treasury a civil penalty in an amount determined by the director that does not exceed the amount by which the person profited in any transaction that violates the provision, rule, order or judgment.

(3) In addition to the civil penalties specified in subsections (1) and (2) of this section, an insurer that must submit a report under ORS 742.400 and that fails to do so within the specified time may be required to pay to the General Fund of the State Treasury a civil penalty in an amount determined by the director that does not exceed $10,000.

(4) In addition to the penalties specified in subsection (1), (2), (5) and (6) of this section, a director or officer of an insurance holding company system who engages in a transaction or makes an investment that has not been properly reported under, or does not otherwise comply with, ORS 732.517 to 732.596, who knowingly participates in or assents to the transaction or investment, or who permits another officer or an agent of the insurance holding company system to engage in the transaction or make the investment, shall pay, in the director or officer’s individual capacity, a civil penalty in an amount determined by the director that does not exceed $10,000.

(5) In addition to the penalties specified in subsections (1), (2), (4) and (6) of this section, an insurer or other person that fails to make a required filing or demonstrate a good faith effort to comply with a filing requirement under ORS 732.527, 732.537, 732.539, 732.542 or 732.544 shall pay a civil penalty in an amount determined by the director that does not exceed $50,000.

(6) In addition to the penalties specified in subsections (1), (2), (4) and (5) of this section, an insurer or other person that violates a cease and desist order the director has issued under ORS 731.252 in connection with a violation of a provision of ORS 732.517 to 732.596 may be subject to a civil penalty in an amount determined by the director that does not exceed $10,000 for each day of the violation.

(7) A civil penalty imposed under this section may be recovered either as provided in subsection (8) of this section or in an action brought in the name of the State of Oregon in any court of appropriate jurisdiction.

(8) Civil penalties under this section must be imposed and enforced in accordance with ORS 183.745.

(9) The provisions of this section are in addition to and not in lieu of any other enforcement provisions specified in the Insurance Code. [1967 c.359 §144; 1971 c.231 §16; 1987 c.774 §65; 1989 c.701 §70; 1991 c.401 §2; 1991 c.734 §120; 1993 c.265 §6; 1997 c.131 §5; 2003 c.364 §81; 2003 c.576 §220; 2013 c.370 §15]

731.990 [Repealed by 1965 c.241 §3]

731.992 Criminal penalty. (1) A violation of ORS 731.260 is a Class A misdemeanor.

(2) A violation of a provision of ORS 732.517 to 732.596 is a Class C felony.

(3) An officer, director or employee of an insurance holding company system who willfully and knowingly makes, causes to be made, or subscribes to, a false statement, report or filing with the intent to deceive the Director of the Department of Consumer and Business Services in the performance of the director’s duties under ORS 732.517 to 732.596 is guilty of a Class C misdemeanor. The officer, director or employee shall pay any fines imposed under this subsection in the officer’s, director’s or employee’s individual capacity.

(4) A violation of any provision of the Insurance Code for which the Insurance Code or other applicable laws of this state do not provide a greater penalty, in addition to any applicable prescribed denial, suspension or revocation of any certificate or license or any civil forfeiture, is a Class A misdemeanor. [1967 c.359 §145; 1987 c.158 §154a; 2011 c.597 §297; 2013 c.370 §16]

_______________