Chapter 735 — Alternative Insurance

 

2017 EDITION

 

 

ALTERNATIVE INSURANCE

 

INSURANCE

 

ESSENTIAL PROPERTY INSURANCE

 

735.005     Definitions for ORS 735.005 to 735.145

 

735.015     Purpose

 

735.025     Construction

 

735.035     Application

 

735.045     Oregon FAIR Plan Association; insurers required to be members; plan of operation

 

735.055     Association board of directors; appointment; compensation, expenses of members; quorum

 

735.065     Required association functions; assessments

 

735.075     Discretionary association functions

 

735.085     Plan of operation; submission to director; approval of plan; compliance with plan; rules

 

735.095     Contents of plan of operation

 

735.105     Regulation of association as insurer; financial report to director

 

735.115     Exemption of association from fees and taxes

 

735.145     Immunity from legal action in carrying out duties

 

CAPTIVE INSURERS

 

735.150     Definitions for ORS 735.150 to 735.190

 

735.152     Application of laws

 

735.154     Rules

 

735.156     Confidentiality of documents and materials; public disclosure

 

735.158     Certificate of authority; restriction on types of insurance; requirements for certification; requirements for corporations; fees; expiration and renewal of certificate

 

735.160     Business name

 

735.162     Capital and surplus requirements; form permitted; security for branch captive insurers; dividends and distributions

 

735.164     Incorporation of pure captive insurer and association captive insurer; application; fee; approval; alien captive insurer; application of corporation laws

 

735.166     Investment requirements for association captive insurer

 

735.168     Allowable risks for captive insurer; risk distribution pool; annual actuarial opinion; rules

 

735.170     Rating organization

 

735.172     Reporting; contents; filing date; waiver of annual statement for alien captive insurer; rules

 

735.174     Examination; frequency; scope; payment of expenses

 

735.176     Compliance with sound actuarial principles

 

735.178     Suspension or revocation of certificate of authority

 

735.180     Branch captive insurer as pure captive insurer; rules

 

735.182     Examination of branch captive insurer and alien captive insurer; payment of charges and expenses

 

735.184     Requirements for foreign captive insurer to provide insurance in this state

 

735.186     Management of assets of captive reinsurer

 

735.188     Application of captive reinsurer for certificate of authority

 

735.190     Incorporation of captive reinsurer

 

MARKET ASSISTANCE PLANS; JOINT UNDERWRITING ASSOCIATIONS

 

735.200     Legislative findings; purpose

 

735.205     Definitions for ORS 735.200 to 735.260

 

735.210     Formation of market assistance plans; rules

 

735.215     Findings prior to formation of joint underwriting association; hearing

 

735.220     Formation of joint underwriting association; funds

 

735.225     Membership in joint underwriting association

 

735.230     Rates; approval

 

735.235     Board of directors

 

735.240     Annual statement

 

735.245     Conditions for policyholder surcharge

 

735.250     Exemption from liability

 

735.255     State not liable to pay debts of association

 

735.260     Rules

 

735.265     Liquor liability insurance risk and rate classifications; rules

 

LIABILITY RISK RETENTION LAW

 

735.300     Purpose of ORS 735.300 to 735.365

 

735.305     Definitions for ORS 735.300 to 735.365

 

735.310     Qualifications for risk retention group; plan of operation; application; notification to National Association of Insurance Commissioners

 

735.315     Foreign risk retention groups; conditions of doing business in Oregon; prohibited acts

 

735.320     Relationship to insurance guaranty fund and joint underwriting association

 

735.325     Exemption of purchasing groups from certain laws

 

735.330     Purchasing groups; notice of intent to do business; registration; exceptions

 

735.335     Purchase of insurance by purchasing group

 

735.340     Insurance Code enforcement authority subject to federal law

 

735.345     Violation of ORS 735.300 to 735.365; penalties

 

735.350     Agent or broker; license

 

735.355     Court orders enforceable in Oregon

 

735.360     Rules

 

735.365     Short title

 

SURPLUS LINES LAW

 

735.400     Purposes of ORS 735.400 to 735.495

 

735.405     Definitions for ORS 735.400 to 735.495

 

735.406     Cost of living adjustment to net worth, revenues and expenses of exempt commercial purchasers

 

735.410     Conditions for procuring insurance through nonadmitted insurer; rules

 

735.415     Qualifications for placement of coverage with nonadmitted insurer

 

735.417     Insured required to report and pay taxes on independently procured insurance covering Oregon home state risks

 

735.418     Director authorized to enter into interstate compact for premium tax allocation

 

735.420     Declaration of ineligibility of surplus lines insurer

 

735.425     Filing by licensee after placement of surplus lines insurance

 

735.430     Surplus Line Association of Oregon; fees

 

735.435     Evidence of insurance; contents; change; penalty; notice regarding Insurance Guaranty Association; rules

 

735.440     Validity of contracts

 

735.445     Effect of payment of premium to surplus lines licensee

 

735.450     Requirements for license as surplus lines insurance licensee

 

735.455     Authority of licensee; rules

 

735.460     Records of licensee; examination

 

735.465     Monthly reports; rules

 

735.470     Premium tax; collection; payment; refund; rules

 

735.475     Suit to recover unpaid tax

 

735.480     Suspension or revocation of license; refusal to renew; grounds

 

735.485     Actions against surplus lines insurer

 

735.490     Jurisdiction in action against insurer; service of summons and complaint; response

 

735.492     Application of certain Insurance Code provisions to surplus lines insurers

 

735.495     Short title; severability

 

RETAINER MEDICAL PRACTICE

 

735.500     Requirements for certification as retainer medical practice; disclosures; rules

 

735.510     Notice to department of specified changes to practice

 

DENTAL SERVICES CONTRACTS

 

735.515     Charges for services not covered by contract

 

PHARMACY BENEFIT MANAGERS

 

735.530     Definitions for ORS 735.530 to 735.552

 

735.532     Registration of pharmacy benefit managers; fees; rules

 

735.533     Denial, suspension or revocation of registration as pharmacy benefit manager; basis; complaint; rules

 

735.534     Claim reimbursement; maximum allowable costs

 

735.540     Definitions for ORS 735.540 to 735.552

 

735.542     Pharmacy claims audits; requirements

 

735.544     Pharmacy claims audits; standards for review of claims

 

735.546     Pharmacy claims audits; auditors

 

735.548     Pharmacy claims audits; validation of claims

 

735.550     Pharmacy claims audits; reports of findings; opportunity to resubmit claim and to contest finding

 

735.552     Pharmacy claims audits; exception for fraud

 

COMPACT OF FREE ASSOCIATION PREMIUM ASSISTANCE PROGRAM

 

735.601     Purpose of Compact of Free Association Premium Assistance Program

 

735.604     Definitions

 

735.608     Eligibility for program; payment for plan and out-of-pocket costs; disenrollment; application, enrollment and renewal procedures; education and outreach

 

735.611     Advisory committee

 

735.617     COFA Premium Assistance Program Fund

 

 

ESSENTIAL PROPERTY INSURANCE

 

      735.005 Definitions for ORS 735.005 to 735.145. As used in ORS 735.005 to 735.145, unless the context requires otherwise:

      (1) “Association” means the Oregon FAIR Plan Association created by ORS 735.045.

      (2) “Board” means the board of directors of the association.

      (3) “Essential property insurance” means insurance against direct loss to property as defined and limited in standard fire policies and extended coverage indorsements thereon, as approved by the Director of the Department of Consumer and Business Services, and insurance against the perils of vandalism and malicious mischief. “Essential property insurance” does not include automobile insurance or insurance on such types of manufacturing risks as may be excluded by the director.

      (4) “Inspection bureau” means the person or persons designated by the association with the approval of the director to make inspections as required under ORS 731.418, 733.010 and 735.005 to 735.145 and to perform such other duties as may be authorized by the association.

      (5) “Service insurer” means any insurer designated as such by the board.

      (6) “Member insurer” means an insurer authorized to transact insurance in this state that writes any kind of essential property insurance.

      (7) “Net direct written premiums” means direct gross premiums written in this state on insurance policies to which ORS 735.005 to 735.145 apply, less return premiums thereon and dividends paid or credited to policyholders on such direct business. “Net direct written premiums” does not include premiums on contracts between insurers or reinsurers.

      (8) “Plan” means the plan of operation of the association established pursuant to ORS 735.085. [1971 c.321 §5; 1979 c.818 §2]

 

      735.015 Purpose. The purpose of ORS 735.005 to 735.145 is:

      (1) To assure stability in the property insurance market for certain property located in this state.

      (2) To assure the availability of essential property insurance to the owners of insurable property.

      (3) To encourage maximum use, in obtaining essential property insurance, of the normal insurance market provided by authorized insurers.

      (4) To provide for the equitable distribution among authorized insurers of the responsibility for insuring certain insurable property for which essential property insurance cannot be obtained through the normal insurance market by the establishment of the Oregon FAIR Plan Association. [1971 c.321 §2]

 

      735.025 Construction. ORS 735.005 to 735.145 shall be liberally construed to effect the purpose provided in ORS 735.015. [1971 c.321 §3]

 

      735.035 Application. ORS 735.005 to 735.145 apply only to essential property insurance on domestic risks. [1971 c.321 §4]

 

      735.045 Oregon FAIR Plan Association; insurers required to be members; plan of operation. There is hereby created the Oregon FAIR Plan Association. Each insurer that is a member insurer shall become and remain a member of the association as a condition of its authority to transact insurance in this state. The association shall perform its functions in accordance with a plan of operation established pursuant to ORS 735.085, and shall exercise its powers through its board of directors. [1971 c.321 §6]

 

      735.055 Association board of directors; appointment; compensation, expenses of members; quorum. (1) The board of directors of the Oregon FAIR Plan Association shall consist of five members selected by the member insurers, subject to the approval of the Director of the Department of Consumer and Business Services, and four persons selected by the Governor, one of whom shall be an insurance producer holding an appointment as an Oregon insurance producer of a member insurer. Of the other three persons appointed by the Governor, one shall be a resident of a county of over 400,000 population and none shall have been an employee or insurance producer of a member insurer. The term of each member shall be as specified in the plan, but in no event for longer than four years. A vacancy on the board shall be filled for the remainder of the unexpired term in the same manner as for the initial selection.

      (2) In making or approving selections to the board, the Director of the Department of Consumer and Business Services shall consider among other things whether member insurers are fairly represented.

      (3) A member of the board shall receive no compensation for services as a member. However, a member shall be reimbursed from the assets of the association for actual and necessary travel and other expenses incurred by the member in the performance of duties.

      (4) A majority of the members of the board constitutes a quorum for the transaction of business. [1971 c.321 §7; 1979 c.818 §2a; 2003 c.364 §88]

 

      735.065 Required association functions; assessments. (1) The Oregon FAIR Plan Association shall:

      (a) Have authority on behalf of its members to arrange for the issuance of property insurance policies by service insurers and to reinsure any of those policies in whole or in part and to cede such reinsurance, subject to the plan.

      (b) Assess member insurers the amounts necessary to pay the expenses incurred by the association in meeting its obligations and exercising its duties and powers under ORS 735.005 to 735.145.

      (2) Except as provided in subsection (3)(a) and (b) of this section, the assessment of each member insurer for a particular calendar year shall be in the proportion that the net direct written premiums of the member insurer for the second preceding calendar year bears to the net direct written premiums of all member insurers for the second preceding calendar year. Each member insurer shall be notified of an assessment not later than the 30th day before the day it is due. If the funds of the association do not provide in any one year an amount sufficient to pay the expenses of the association, the funds available shall be prorated among the expenses and the unpaid portion shall be paid as soon thereafter as funds become available. If an assessment would cause a member insurer’s financial statement to reflect an amount of surplus less than the minimum amount required for a certificate of authority by any jurisdiction in which the member insured is authorized to transact insurance, the association may, in whole or in part, exempt the member insurer from payment of the assessment or defer payments.

      (3)(a) The maximum assessment of a member insurer for any calendar year shall be two percent of the insurer’s net direct written premiums for the second preceding calendar year.

      (b) The minimum assessment of a member insurer for any calendar year shall be $50.

      (4) Reimburse inspection bureaus, service insurers and employees of the association for expenses incurred in the inspection or insuring of property on behalf of the association, and pay all other expenses the association incurs in carrying out the provisions of ORS 735.005 to 735.145.

      (5) Undertake a continuing public education program in cooperation with member insurers and insurance producers to assure that the plan receives adequate attention.

      (6) Undertake a continuing education program to advise the public of the steps which may be taken to make property more insurable against crime, personal liability and the perils named in ORS 735.005 (3). [1971 c.321 §8; 1979 c.818 §3; 2003 c.364 §89]

 

      735.075 Discretionary association functions. The Oregon FAIR Plan Association may:

      (1) With the approval of the Director of the Department of Consumer and Business Services, employ or retain such persons and designate such inspection bureaus and service insurers as are necessary to handle applications, inspect and insure property and perform the other duties of the association.

      (2) Borrow funds as necessary to carry out ORS 735.005 to 735.145 in such manner as may be specified in the plan.

      (3) Sue or be sued.

      (4) Negotiate and become a party to such contracts as are necessary to carry out ORS 735.005 to 735.145.

      (5) At the end of any calendar year, refund to member insurers, in proportion to each insurer’s payments to the association, the amount by which the board of directors finds that the funds of the association exceed its current liabilities plus the liabilities estimated for the coming year.

      (6) Perform such other acts as are necessary or proper to carry out ORS 735.005 to 735.145. [1971 c.321 §9]

 

      735.085 Plan of operation; submission to director; approval of plan; compliance with plan; rules. (1) The Oregon FAIR Plan Association shall submit to the Director of the Department of Consumer and Business Services, not later than September 7, 1971, a plan of operation, and may thereafter submit such amendments thereto as will provide for the reasonable and equitable exercise of the duties and powers of the association. The plan of operation, and any amendments thereto, shall become effective upon approval in writing by the director.

      (2) If the association fails to submit a plan that receives the approval of the director as provided in subsection (1) of this section, or if the association after such approval fails to maintain a plan satisfactory to the director, the director shall by rule prescribe a plan of operation that meets the standards provided in subsection (1) of this section. A plan prescribed by the director shall remain in effect until the director by rule provides otherwise.

      (3) No member insurer shall fail to comply with the currently effective plan. [1971 c.321 §10]

 

      735.095 Contents of plan of operation. The plan shall:

      (1) Establish procedures for the submission and processing of applications for insurance and the payment of claims for losses.

      (2) Establish procedures for record keeping, payment of other expenses and administration of all other financial affairs of the Oregon FAIR Plan Association.

      (3) Establish times and places for meetings of the board.

      (4) Establish procedures for selection of members of the board and for approval of such selections by the Director of the Department of Consumer and Business Services.

      (5) Establish a procedure for appeal to the director of final actions or decisions of the association.

      (6) Establish such other procedures as may be necessary or proper to carry out the duties and powers of the association.

      (7) Provide that the association shall file periodically with the director statements of the insurance provided through the association and estimates of anticipated claims against the association. [1971 c.321 §11; 1979 c.818 §4]

 

      735.105 Regulation of association as insurer; financial report to director. The Oregon FAIR Plan Association is subject to regulation by the Director of the Department of Consumer and Business Services in the same manner as an insurer, to the extent determined by the director to be necessary to carry out the purpose of ORS 735.005 to 735.145. Not later than March 30 of each year the board shall submit to the director, in a form approved by the director, a financial report for the preceding calendar year. [1971 c.321 §12]

 

      735.115 Exemption of association from fees and taxes. Except for taxes levied on real or personal property, the Oregon FAIR Plan Association shall be exempt from the payment of all fees and taxes levied by this state or by any city, county, district or other political subdivision of this state. [1971 c.321 §13]

 

      735.125 [1971 c.321 §14; repealed by 1979 c.818 §5]

 

      735.135 [1971 c.321 §15; repealed by 1979 c.818 §5]

 

      735.145 Immunity from legal action in carrying out duties. No person shall have a cause of action against the Oregon FAIR Plan Association or its employees or servicing facilities, any member of the board, or the Director of the Department of Consumer and Business Services or the employees of the director for any action taken by them in carrying out ORS 735.005 to 735.145. [1971 c.321 §16]

 

CAPTIVE INSURERS

 

      735.150 Definitions for ORS 735.150 to 735.190. As used in ORS 735.150 to 735.190:

      (1)(a) “Affiliate” means a business entity that, because of common ownership, common control, common operation or common management, is in the same corporate system as a parent or a member organization.

      (b) For purposes of this subsection, “common ownership, common control, common operation or common management” means that two or more business entities are owned, controlled, operated or managed by the same person or group of persons with:

      (A) Direct or indirect ownership of 80 percent or more of the outstanding voting stock of the stock corporation for a captive insurer that is a stock corporation;

      (B) Direct or indirect ownership of 80 percent or more of the surplus and the voting power of the mutual corporation for a captive insurer that is a mutual corporation; or

      (C) Direct or indirect ownership by the same member or members of 80 percent or more of the membership interests in the limited liability company for a captive insurer that is a limited liability company.

      (2) “Alien captive insurer” means an insurer:

      (a) Formed to transact insurance for a parent or affiliate of the insurer; and

      (b) Licensed under the laws of a nation other than the United States that imposes statutory or regulatory standards:

      (A) On a business entity transacting insurance in the other nation; and

      (B) In a form acceptable to the Director of the Department of Consumer and Business Services.

      (3) “Association” means a legal association of two or more persons that has been in continuous existence for at least one year if the association or its member organizations:

      (a) Own, control, or hold with power to vote, all of the outstanding voting securities of an association captive insurer incorporated as a stock insurer;

      (b) Have complete voting control over an association captive insurer incorporated as a mutual insurer; or

      (c) Have complete voting control over an association captive insurer formed as a limited liability company.

      (4) “Association captive insurer” means a business entity that insures the risks of:

      (a) A member organization of the association;

      (b) An affiliate of a member organization of the association; or

      (c) The association.

      (5) “Branch captive insurer” means an alien captive insurer that holds a certificate of authority from the Director of the Department of Consumer and Business Services to transact insurance in this state through a business division with a principal place of business in this state.

      (6) “Branch operation” means a business operation of a branch captive insurer in this state.

      (7) “Captive insurer” means any of the following that is formed or holds a certificate of authority issued under ORS 735.150 to 735.190:

      (a) A pure captive insurer;

      (b) A branch captive insurer;

      (c) An association captive insurer; or

      (d) A captive reinsurer.

      (8) “Captive reinsurer” means a reinsurer that is:

      (a) Formed or holds a certificate of authority under ORS 735.150 to 735.190;

      (b) Wholly owned by a qualifying reinsurer parent company; and

      (c) A stock corporation.

      (9) “Controlled unaffiliated business” means a business entity:

      (a) That is not in the same corporate system as a parent or the parent’s affiliate but has a contractual relationship with a parent or affiliate; and

      (b) Whose risks are managed by a pure captive insurer in accordance with rules adopted by the Director of the Department of Consumer and Business Services under ORS 735.154.

      (10) “Foreign captive insurer” means an insurer:

      (a) Formed to transact insurance for a parent or affiliate of the insurer; and

      (b) Licensed under the laws of another state that imposes statutory or regulatory standards:

      (A) On a business entity transacting insurance in the other state or jurisdiction; and

      (B) In a form acceptable to the Director of the Department of Consumer and Business Services.

      (11) “Member organization” means a person that belongs to an association.

      (12) “Parent” means a person that directly or indirectly owns, controls, or holds with power to vote, more than 50 percent of:

      (a) The outstanding voting securities of a pure captive insurer; or

      (b) The pure captive insurer, if the pure captive insurer is formed as a limited liability company.

      (13) “Pure captive insurer” means a business entity that insures risks of a parent or affiliate of the business entity.

      (14)(a) “Qualifying reinsurer parent company” means an accredited reinsurer in this state that has:

      (A) A consolidated GAAP net worth of not less than $500 million; and

      (B) Complies with the consolidated debt to total capital ratio established by rule by the Director of the Department of Consumer and Business Services.

      (b) For purposes of this subsection “consolidated GAAP net worth” means the consolidated shareholders’ equity determined in accordance with generally accepted accounting principles for reporting to the United States Securities and Exchange Commission. [2012 c.84 §2]

 

      Note: 735.150 to 735.190 were added to and made a part of the Insurance Code by legislative action but were not added to ORS chapter 735 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

 

      735.152 Application of laws. (1) The provisions of the Insurance Code cited in ORS 735.150 to 735.190 apply to captive insurers. In addition, the provisions of the Insurance Code set forth in ORS chapter 731 relating to administration of the insurance laws apply to captive insurers to the extent not inconsistent with the express provisions of ORS 735.150 to 735.190.

      (2) In addition to the provisions of the Insurance Code set forth in subsection (1) of this section, ORS 705.137 and 705.139 apply to captive insurers. [2012 c.84 §3]

 

      Note: See note under 735.150.

 

      735.154 Rules. The Director of the Department of Consumer and Business Services may adopt rules for the administration of ORS 735.150 to 735.190. [2012 c.84 §4]

 

      Note: See note under 735.150.

 

      735.156 Confidentiality of documents and materials; public disclosure. All documents, materials and other information in the possession of the Department of Consumer and Business Services under ORS 735.150 to 735.190 are confidential and subject to public disclosure only as provided in ORS 705.137. [2012 c.84 §5]

 

      Note: See note under 735.150.

 

      735.158 Certificate of authority; restriction on types of insurance; requirements for certification; requirements for corporations; fees; expiration and renewal of certificate. (1)(a) When permitted by its articles of incorporation or its charter and bylaws, a captive insurer may apply to the Director of the Department of Consumer and Business Services for a certificate of authority to transact any class of insurance.

      (b) Notwithstanding paragraph (a) of this subsection:

      (A) A pure captive insurer may not insure a risk other than a risk of its parent or affiliate or a controlled unaffiliated business.

      (B) An association captive insurer may not insure a risk other than a risk of:

      (i) An affiliate;

      (ii) A member organization of its association; or

      (iii) An affiliate of a member organization of its association.

      (C) A captive insurer may not provide workers’ compensation insurance, life insurance, health insurance or any personal property or personal casualty line of insurance, including but not limited to personal motor vehicle insurance coverage and homeowner’s insurance, and any component of such coverage.

      (D) A captive insurer may not accept or cede reinsurance except as provided in ORS 735.168.

      (2) To transact insurance in this state, a captive insurer must:

      (a) Obtain from the director a certificate of authority that authorizes the captive insurer to transact insurance in this state;

      (b) Appoint a resident registered agent to accept service of process and to otherwise act on behalf of the captive insurer in this state; and

      (c)(A) Hold at least once each year in this state a board of directors meeting; and

      (B) Maintain in this state:

      (i) The principal place of business of the captive insurer; or

      (ii) In the case of a branch captive insurer, the principal place of business for the branch operations of the branch captive insurer.

      (3) In the case of a captive insurer formed as a corporation, if the registered agent cannot be found with reasonable diligence at the registered office of the captive insurer, the director is the agent of the captive insurer upon whom process, notice or demand may be served.

      (4)(a) An applicant captive insurer formed as a corporation shall file with the director:

      (A) Certified copies of the articles of incorporation or the charter and bylaws of the corporation;

      (B) A statement under oath of the president and secretary of the corporation showing the financial condition of the corporation; and

      (C) Any other statement or document required by the director as adopted by rule.

      (b) In addition to the other information required by this subsection, an applicant captive insurer shall file with the director evidence of:

      (A) The amount and liquidity of the assets of the applicant captive insurer relative to the risks to be assumed by the applicant captive insurer;

      (B) The adequacy of the expertise, experience and character of the individual who will manage the applicant captive insurer;

      (C) The overall soundness of the plan of operation of the applicant captive insurer;

      (D) The adequacy of the loss prevention programs for any parent or member organization of the applicant captive insurer; and

      (E) Any other factor the director adopts by rule and considers relevant in ascertaining whether the applicant captive insurer is able to meet the policy obligations of the applicant captive insurer.

      (5)(a) A captive insurer shall pay to the department nonrefundable fees established by the director by rule for:

      (A) Examining, investigating and processing the captive insurer’s application for issuance of a certificate of authority;

      (B) Obtaining a certificate of authority for the year the director issues a certificate of authority to the captive insurer in an amount not less than $5,000; and

      (C) Renewing a certificate of authority in an amount not less than $5,000.

      (b) The fees a captive insurer pays to the Department of Consumer and Business Services for obtaining or renewing a certificate of authority are in lieu of any payment of premium assessment on receipt of premium by the captive insurer. Fees for obtaining or renewing a certificate of authority may be increased by the department by rule and may be scaled on the basis of premiums the captive insurer collects in any given year.

      (c) The director may retain legal, financial and examination services from outside the department to perform any functions described in ORS 735.150 to 735.190 and may charge the applicant captive insurer the reasonable cost of services performed.

      (6) If the director is satisfied that the documents and statements filed by the applicant captive insurer meet the requirements of ORS 735.150 to 735.190, the director may issue a certificate of authority that authorizes the captive insurer to transact insurance in this state.

      (7) A certificate of authority issued under this section expires annually and must be renewed by December 31 of each year beginning with the year following the year that the original certificate was issued.

      (8) Upon approval of the director, a foreign or alien captive insurer may become a domestic captive insurer by complying with all of the requirements of the Insurance Code relative to the organization and licensing of a domestic captive insurer of the same or equivalent type in this state and by filing with the director certified copies of the insurer’s articles of association, charter or other organizational document, together with any appropriate amendments adopted in accordance with the laws of this state bringing those articles of association, charter or other organizational document into compliance with the laws of this state. After complying with these requirements, the captive insurer is entitled to the necessary or appropriate certificates and licenses to continue transacting insurance in this state and is subject to the authority and jurisdiction of this state. In connection with this redomestication, the director may waive any requirements for public hearings. It is not necessary for a captive insurer redomesticating into this state to merge, consolidate, transfer assets or otherwise engage in any other reorganization, other than as specified in this section. [2012 c.84 §6]

 

      Note: See note under 735.150.

 

      735.160 Business name. A captive insurer may assume a business name only if consistent with the provisions of ORS 731.430. [2012 c.84 §7]

 

      Note: See note under 735.150.

 

      735.162 Capital and surplus requirements; form permitted; security for branch captive insurers; dividends and distributions. (1) To qualify for authority to transact insurance in this state, a captive insurer shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than:

      (a) $250,000 for a pure captive insurer.

      (b) $750,000 for an association captive insurer incorporated as a stock insurer or as a mutual insurer.

      (c) $300,000,000 for a captive reinsurer.

      (2) In accordance with ORS 731.554 (6), for the protection of the public, the Director of the Department of Consumer and Business Services may require a captive insurer to possess and maintain capital or surplus, or any combination thereof, in excess of the amount otherwise required under this section.

      (3) The capital and surplus required under subsections (1) and (2) of this section may be in the form of:

      (a) Cash or cash equivalent; or

      (b) An irrevocable letter of credit issued by an insured institution, as described in ORS 731.510, and approved by the director.

      (4)(a) Except as provided in paragraph (d) of this subsection, a branch captive insurer, as security for the payment of liabilities attributable to branch operations, must establish and maintain, through its branch operations, a trust fund funded by an irrevocable letter of credit or other asset approved by the director.

      (b) The trust fund established under this subsection shall be for the benefit of United States policyholders and United States ceding insurers under insurance policies issued or reinsurance contracts issued or assumed.

      (c) The amount of the security required under this subsection must be equal to or greater than:

      (A) The capital and surplus required under this section applicable to the line of business written by the captive insurer; and

      (B) The net reserves on the insurance policies or reinsurance contracts described in this subsection, including:

      (i) Case basis loss and allocated loss adjustment expense reserves;

      (ii) Losses and allocated loss adjustment expense amounts incurred but not reported; and

      (iii) Unearned premiums with regard to insurance transacted by branch operations.

      (d) In accordance with ORS 731.510, the director may permit a branch captive insurer that is required to post security for loss reserves on insurance transacted by its reinsurer to reduce the funds in the trust fund established under this section by the same amount as the security posted if the security remains posted with the reinsurer.

      (5) A captive insurer may pay dividends or make distributions if all the following requirements are met:

      (a) Submission of a report to the director listing all dividends and distributions within five business days following the declaration, and not less than 10 business days prior to payment, of the dividends and distributions, commencing from the date of receipt of the report by the director.

      (b) The report required under paragraph (a) of this subsection must demonstrate that the combined capital and surplus of the captive insurer following any dividend or distribution is reasonable in relation to the captive insurer’s outstanding liabilities and adequate to the captive insurer’s financial needs.

      (c) A captive insurer may pay dividends or distributions only from earned surplus unless the director gives prior approval for payment from another source. [2012 c.84 §8]

 

      Note: See note under 735.150.

 

      735.164 Incorporation of pure captive insurer and association captive insurer; application; fee; approval; alien captive insurer; application of corporation laws. (1) A pure captive insurer must be incorporated as a stock insurer with the capital of the pure captive insurer divided into shares and held by the shareholders of the pure captive insurer.

      (2) An association captive insurer may be:

      (a) Incorporated as a stock insurer with the capital of the association captive insurer divided into shares and held by the shareholders of the association captive insurer; or

      (b) Incorporated as a mutual insurer without capital stock, with a governing body elected by the member organizations of the association captive insurer.

      (3) The requirements of ORS 732.085 apply to the incorporators of a captive insurer.

      (4) Any person desiring to organize a captive insurer must first file an application with the Director of the Department of Consumer and Business Services for a permit to organize the captive insurer. The applicant shall pay the applicable fee to the director at the time the application is filed. The application shall be on forms provided by the director and shall be signed by the applicants and verified. The form shall specify information about the following:

      (a) The character, reputation, financial responsibility and purposes of the proposed incorporators;

      (b) The character, reputation, financial responsibility, insurance experience and business qualifications of the proposed officers and directors and the proposed managers;

      (c) Any information provided to the Department of Consumer and Business Services in the application for a certificate of authority or that is maintained in the department’s files; and

      (d) Other aspects the director considers advisable.

      (5) The director shall approve an application for a permit to organize a captive insurer only if the director finds that:

      (a) The application is complete;

      (b) The documents filed with the application are in the proper form;

      (c) The proposed financial structure is adequate;

      (d) The character, reputation, financial responsibility and general fitness of the persons named in the application or otherwise found to be associated with or have an interest in the proposed insurer are such as to command the confidence of the public;

      (e) The proposed directors are collectively competent to assume responsibility for the management and general policies and procedures of the captive insurer;

      (f) The proposed management, collectively, possess the requisite general business ability and experience in the business of insurance of the class or classes specified in the application; and

      (g) No fact is then known to the director that would prevent the proposed insurer from completing its organization and receiving a certificate of authority to transact insurance as a captive insurer.

      (6) To the extent not otherwise inconsistent with the provisions of ORS 735.150 to 735.190, ORS 732.095, 732.105 and 732.115 apply for the filing of the articles of incorporation of a captive insurer.

      (7)(a) An alien captive insurer applying to the director for a certificate of authority to act as a branch captive insurer shall obtain from the director a certificate finding that:

      (A) The nation of an alien captive insurer imposes statutory or regulatory standards, in a form acceptable to the director, on captive insurers transacting insurance in that nation; and

      (B) After considering the character, reputation, financial responsibility, insurance experience and business qualifications of the officers and directors of the alien captive insurer, and other relevant information, the establishment and maintenance of the branch operations will promote the general good of this state.

      (b) After the director issues a certificate under paragraph (a) of this subsection, the alien captive insurer may register with the department to do business in this state as a branch captive insurer.

      (8) The capital stock of a captive insurer incorporated as a stock insurer may not be issued at less than par value.

      (9) At least one-quarter of the members of the board of directors of a captive insurer formed as a corporation shall be residents of this state.

      (10)(a) A captive insurer formed as a corporation under ORS 735.150 to 735.190 has the privileges of and is subject to ORS 735.150 to 735.190 and ORS chapters 60 and 732.

      (b) If a conflict exists between a provision of ORS chapters 60 and 732 and a provision of ORS 735.150 to 735.190, ORS 735.150 to 735.190 shall control.

      (c) Except as provided in paragraph (d) of this subsection, the provisions of ORS 735.150 to 735.190 pertaining to a merger, consolidation, conversion, mutualization and redomestication apply in determining the procedures to be followed by a captive insurer in carrying out any of the transactions described in those provisions.

      (d) The director may waive or modify the requirements of this subsection.

      (11) The articles of incorporation or bylaws of a captive insurer may not authorize a quorum of a board of directors to consist of less than one-third of the fixed or prescribed number of directors as provided in rules adopted by the director. [2012 c.84 §9]

 

      Note: See note under 735.150.

 

      735.166 Investment requirements for association captive insurer. (1)(a) An association captive insurer must comply with the investment requirements of ORS 733.510 to 733.780.

      (b) Notwithstanding paragraph (a) of this subsection, the Director of the Department of Consumer and Business Services may by rule approve the use of alternative reliable methods of valuation and rating for an association captive insurer.

      (2)(a) A pure captive insurer is not subject to any restrictions on allowable investments under ORS 733.510 to 733.780.

      (b) The director may prohibit or limit an investment that threatens the solvency or liquidity of a pure captive insurer.

      (3) A captive insurer may not make loans to the parent of the captive insurer or an affiliate of the captive insurer. [2012 c.84 §10]

 

      Note: See note under 735.150.

 

      735.168 Allowable risks for captive insurer; risk distribution pool; annual actuarial opinion; rules. (1) A captive insurer may provide reinsurance on risks ceded by an affiliate of the insurer or a controlled unaffiliated business.

      (2) A captive insurer may take credit for reserves on risks or portions of risks ceded to reinsurers if the credit is acceptable to the Director of the Department of Consumer and Business Services.

      (3) Subject to the prior written approval of the director, a captive insurer may participate in a pool for the purpose of risk distribution sharing. However, a captive insurer may not join or contribute financially to a plan, pool, association or guaranty or insolvency fund in this state, and a captive insurer, or its insured or its parent or any affiliated company or any member organization of its association, may not receive a benefit from a plan, pool, association or guaranty or insolvency fund for claims arising out of the operations of the captive insurer.

      (4) A captive reinsurer must annually file with the department an actuarial opinion provided by a qualified actuary on loss and loss adjustment expense reserves. The qualified actuary providing the actuarial opinion must be independent and may not be an employee of the captive reinsurer or an affiliate of the captive reinsurer for which the actuarial opinion is filed.

      (5) A captive reinsurer may discount its loss and loss adjustment expense reserves only as allowed in rules adopted by the director.

      (6) The director may disallow the discounting of loss and loss adjustment reserves of a captive reinsurer if the captive reinsurer violates any provision of ORS 735.150 to 735.190. [2012 c.84 §11]

 

      Note: See note under 735.150.

 

      735.170 Rating organization. A captive insurer is not required to join a rating organization. [2012 c.84 §12]

 

      Note: See note under 735.150.

 

      735.172 Reporting; contents; filing date; waiver of annual statement for alien captive insurer; rules. (1) A captive insurer is not required to make a report except as specified in this section.

      (2)(a) Before March 1 of each year, or in accordance with rules adopted under subsection (6) of this section, a captive insurer shall submit to the Director of the Department of Consumer and Business Services a report of the financial condition of the captive insurer, verified by oath of two of the executive officers of the captive insurer.

      (b) A captive insurer shall report:

      (A) Using generally accepted accounting principles, except to the extent that the director requires, approves or accepts the use of statutory accounting principles;

      (B) Using a useful or necessary modification or adaptation to an accounting principle that is required, approved or accepted by the director for the type of insurance and kind of insurer to be reported upon; and

      (C) Supplemental or additional information required by the director.

      (c) Except as otherwise provided in ORS 735.150 to 735.190, an association captive insurer shall file the financial statement required by ORS 731.574.

      (d) For the purposes of this subsection, “statutory accounting” means a method of accounting using rules that insurance companies must follow in filing an annual financial statement with the Department of Consumer and Business Services.

      (3)(a) A pure captive insurer may make a written request to file the required report on a fiscal year end that is consistent with the fiscal year of the parent company of the pure captive insurer.

      (b) If the director grants an alternative reporting date for a pure captive insurer as described under paragraph (a) of this subsection, the annual report is due 60 days after the fiscal year end.

      (4)(a) Not later than 60 days after the fiscal year end, an alien captive insurer operating as a branch captive insurer in this state shall file with the director a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurer is formed, verified by oath by two of the alien captive insurer’s executive officers.

      (b) If the director is satisfied that the annual report filed by the alien captive insurer in the jurisdiction in which the alien captive insurer is formed provides adequate information concerning the financial condition of the alien captive insurer, the director may waive the requirement for completion of the annual statement required for a captive insurer under this section with respect to business written in the alien jurisdiction.

      (c) A waiver granted by the director under paragraph (b) of this subsection shall be in writing and is subject to public inspection.

      (5) All captive insurers transacting insurance in this state shall engage a qualified actuary with knowledge of this state for purposes of determining and setting premiums to be charged by the captive insurer.

      (6) The director may establish by rule criteria to waive or modify the requirements of this section relating to the frequency of reporting and the contents of the report. [2012 c.84 §13]

 

      Note: See note under 735.150.

 

      735.174 Examination; frequency; scope; payment of expenses. (1)(a) The Director of the Department of Consumer and Business Services shall examine the affairs of each captive insurer once in each three-year period.

      (b) The three-year period described in paragraph (a) of this subsection is determined on the basis of three full annual accounting periods of operation.

      (c) The examination is to be made as of December 31 of the full three-year period or as of the last day of the month of an annual accounting period authorized for a captive insurer under this section.

      (d) In addition to an examination required under this subsection, the director may examine a captive insurer whenever the director determines it to be prudent.

      (2) During an examination under this section, the director shall thoroughly examine the affairs of the captive insurer to ascertain:

      (a) The financial condition of the captive insurer;

      (b) The ability of the captive insurer to fulfill the obligations of the captive insurer; and

      (c) Whether the captive insurer meets the requirements of ORS 735.150 to 735.190.

      (3) The director may expand the three-year period described in subsection (1) of this section to five years if during that period a captive insurer is subject to a comprehensive annual audit:

      (a) Of a scope satisfactory to the director; and

      (b) Performed by independent auditors approved by the director.

      (4) The director may accept a comprehensive annual independent audit in lieu of an examination if the scope of the examination is satisfactory to the director and the examination is performed by a qualified independent auditor.

      (5) A captive insurer that is examined under this section shall pay the expenses and charges of the examination. [2012 c.84 §14]

 

      Note: See note under 735.150.

 

      735.176 Compliance with sound actuarial principles. Notwithstanding the limits of risk set forth in ORS 731.504, any captive insurer for which the Director of the Department of Consumer and Business Services issues a certificate of authority under ORS 735.150 to 735.190 must comply with sound actuarial principles as determined by the director and must submit reports demonstrating such compliance to the director. [2012 c.84 §15]

 

      Note: See note under 735.150.

 

      735.178 Suspension or revocation of certificate of authority. (1) The Director of the Department of Consumer and Business Services may suspend or revoke the certificate of authority issued to a captive insurer to transact insurance in this state if the captive insurer:

      (a) Is insolvent or impaired as defined in ORS 734.014;

      (b) Fails to meet the requirements of ORS 735.150 to 735.190;

      (c) Refuses or fails to submit an annual report required by ORS 735.172 or any other report or statement required by law or by order of the director;

      (d) Fails to comply with the charter, bylaws or other organizational document of the captive insurer;

      (e) Fails to submit to an examination under ORS 735.174 or 735.182 or any legal obligation relative to an examination under ORS 735.174 or 735.182;

      (f) Refuses or fails to pay the cost of examination under ORS 735.174 or 735.182;

      (g) Uses methods that, although not otherwise specifically prohibited by law, render:

      (A) The operation of the captive insurer detrimental to the public or the policyholders of the captive insurer according to standards adopted by the director by rule; or

      (B) The condition of the captive insurer unsound with respect to the public or to the policyholders of the captive insurer; or

      (h) Otherwise fails to comply with laws of this state.

      (2) If the director finds, upon examination, hearing or other evidence that a captive insurer has committed any of the acts specified in subsection (1) of this section, the director may suspend or revoke the certificate of authority issued to the captive insurer if the director considers it in the best interest of the public and the policyholders of the captive insurer. [2012 c.84 §16]

 

      Note: See note under 735.150.

 

      735.180 Branch captive insurer as pure captive insurer; rules. Except as otherwise provided in ORS 735.150 to 735.190, a branch captive insurer must be a pure captive insurer with respect to business operations in this state, unless otherwise permitted by rule of the Director of the Department of Consumer and Business Services. [2012 c.84 §17]

 

      Note: See note under 735.150.

 

      735.182 Examination of branch captive insurer and alien captive insurer; payment of charges and expenses. (1) The Director of the Department of Consumer and Business Services shall examine only the branch operations of, and the insurance transacted by, a branch captive insurer in this state if the branch captive insurer:

      (a) Provides annually to the director a certificate of compliance, or an equivalent, issued by or filed with the licensing authority of the jurisdiction in which the branch captive insurer is formed; and

      (b) Demonstrates to the satisfaction of the director that the branch captive insurer is operating in sound financial condition in accordance with ORS 735.150 to 735.190 and all applicable laws and regulations of the jurisdiction in which the branch captive insurer is formed.

      (2) As a condition of its authority as a branch captive insurer, an alien captive insurer must authorize the director to examine the affairs of the alien captive insurer in the jurisdiction in which the alien captive insurer is formed.

      (3) An alien captive insurer that is examined under this section shall pay the expenses and charges of the examination. [2012 c.84 §18]

 

      Note: See note under 735.150.

 

      735.184 Requirements for foreign captive insurer to provide insurance in this state. Notwithstanding ORS 731.022, a foreign captive insurer may provide insurance in this state if the foreign captive insurer meets both of the following conditions:

      (1) The foreign captive insurer is domiciled in a state that regulates the foreign captive insurer as a captive insurer and the captive insurer is in good standing in that state.

      (2) All activities related to the placement of the insurance occurs in the domicile state and the insurance otherwise complies with the laws of the domicile state, including the proposal to make an insurance contract, taking or receiving an application for insurance, collecting a premium or other consideration for the insurance and issuing or delivering policies of insurance. [2012 c.84 §19]

 

      Note: See note under 735.150.

 

      735.186 Management of assets of captive reinsurer. At least 35 percent of the assets of a captive reinsurer must be managed by an asset manager domiciled in this state. [2012 c.84 §20]

 

      Note: See note under 735.150.

 

      735.188 Application of captive reinsurer for certificate of authority. If permitted by its articles of incorporation or charter, and in accordance with ORS 735.158 and 735.190, a captive reinsurer may apply to the Director of the Department of Consumer and Business Services for a certificate of authority to transact reinsurance. [2012 c.84 §21]

 

      Note: See note under 735.150.

 

      735.190 Incorporation of captive reinsurer. (1) A captive reinsurer must be incorporated as a stock insurer with its capital divided into shares and held by the captive reinsurer’s shareholders. In incorporating, a captive reinsurer must comply with the requirements of ORS 735.164.

      (2) The capital stock of a captive reinsurer must be issued at par value or greater.

      (3) At least one member of the board of directors of a captive reinsurer incorporated in this state must be a resident of this state. [2012 c.84 §22]

 

      Note: See note under 735.150.

 

MARKET ASSISTANCE PLANS; JOINT UNDERWRITING ASSOCIATIONS

 

      735.200 Legislative findings; purpose. (1) The Legislative Assembly finds that:

      (a) Some businesses and service providers in Oregon have experienced major problems in both the availability and affordability of commercial liability insurance. Premiums for such insurance policies have recently grown as much as 500 percent and the availability of such insurance in Oregon markets has greatly diminished.

      (b) These businesses and service providers are essential to achieve goals such as increased workforce productivity, family self-sufficiency and the maintenance and improvement of the health of the citizens of Oregon. The lack of adequate commercial liability insurance threatens these businesses and services.

      (2) The Legislative Assembly therefore declares it is the purpose of ORS 735.200 to 735.260 to remedy the problem of unavailable commercial liability insurance for these businesses and service providers by authorizing the Director of the Department of Consumer and Business Services to assist in the establishment of a market assistance plan for providing commercial liability insurance for these businesses and service providers, or, if necessary, by requiring all insurers authorized to write commercial liability insurance in Oregon to be members of one or more joint underwriting associations created to provide commercial liability insurance for these businesses and service providers. [1987 c.774 §73]

 

      735.205 Definitions for ORS 735.200 to 735.260. As used in ORS 735.200 to 735.260:

      (1) “Joint underwriting association” means a mechanism requiring casualty insurers doing business in Oregon to provide commercial liability insurance to certain businesses and service providers on either an assigned risk basis or through a joint underwriting pool underwritten to standards adopted under the Insurance Code.

      (2) “Market assistance plan” means a mechanism through which admitted casualty insurers in this state provide commercial liability insurance for classes of risks designated by the Director of the Department of Consumer and Business Services. [1987 c.774 §74]

 

      735.210 Formation of market assistance plans; rules. (1) After a public hearing, the Director of the Department of Consumer and Business Services may by rule require insurers authorized to write and writing commercial liability insurance in this state to form a market assistance plan to assist businesses and service providers unable to purchase specified classes of commercial liability insurance in adequate amounts from either the admitted or nonadmitted market.

      (2) The market assistance plan shall operate under a plan of operations prepared by admitted insurers, eligible surplus line insurers and insurance producers, and approved by the director. [1987 c.774 §75; 2003 c.364 §90]

 

      735.215 Findings prior to formation of joint underwriting association; hearing. (1) The Director of the Department of Consumer and Business Services may mandate the formation of a joint underwriting association under ORS 735.220 if after directing the formation of a market assistance plan and allowing it a reasonable time to alleviate insurance availability problems, the director finds that:

      (a) There exist in Oregon certain businesses or service providers for which no commercial liability insurance is available; and

      (b) There is a need in Oregon for the goods or services provided by these businesses or service providers and the lack of available commercial liability insurance will cause a substantial number of the entities to cease operations within the state.

      (2) Notwithstanding subsection (1) of this section, if the lack of availability of insurance is due to legitimate insurance underwriting considerations, including past claims experience, licensing noncompliance or inadequate risk management, formation of a joint underwriting association shall not be appropriate.

      (3) The director may make the findings required under subsection (1) of this section only after conducting a public hearing according to the applicable provisions of ORS chapter 183. The director must specify the specific classes of business or lines of insurance determined to be unavailable.

      (4) At least once each year, the director shall hold a public hearing to determine if the classes of business or lines of insurance offered by the joint underwriting association are still unavailable in the voluntary insurance market. If any class or line is found to be available, the joint underwriting association shall cease to underwrite such class of business or line of insurance. [1987 c.774 §76]

 

      735.220 Formation of joint underwriting association; funds. After finding under ORS 735.215 that there is a need in Oregon for a joint underwriting association, the Director of the Department of Consumer and Business Services may form and put into operation a temporary, nonprofit, nonexclusive joint underwriting association constituting a legal entity separate and distinct from its members for commercial liability insurance subject to the conditions and limitations contained in the Insurance Code. All funds and reserves of the association shall be separately held and invested. [1987 c.774 §77]

 

      735.225 Membership in joint underwriting association. The joint underwriting association established under ORS 735.220 shall be comprised of all insurers authorized to write and who are writing commercial liability insurance within this state on a direct basis, including the commercial liability portions of multiperil policies. Every such insurer shall remain a member of the association as a condition of its authority to continue to transact insurance in this state. [1987 c.774 §78]

 

      735.230 Rates; approval. The board of directors of the joint underwriting association shall engage the services of an independent actuarial firm to develop and recommend actuarially sound rates, rating plans, rating rules and classifications. The Director of the Department of Consumer and Business Services shall approve rates filed by the joint underwriting association in accordance with ORS 737.310. All rates approved for the joint underwriting association shall be actuarially sound and calculated to be self-supporting. [1987 c.774 §79]

 

      735.235 Board of directors. The joint underwriting association formed under ORS 735.220 shall be under the administrative control of a seven person board of directors appointed by the Governor. Two directors shall represent insurance carriers participating in the association; one director shall represent insurance producers; three directors shall represent the affected classes of insureds; and one director shall be a public member with no ties to the insurance industry. The board shall elect one of its members as chairperson. [1987 c.774 §80; 2003 c.364 §91]

 

      735.240 Annual statement. The joint underwriting association shall file an annual statement prepared by an independent certified public accountant containing a financial statement, a summary of its transactions and operations for the prior year and other information as prescribed by the Director of the Department of Consumer and Business Services by rule. [1987 c.774 §81]

 

      735.245 Conditions for policyholder surcharge. (1) Upon a determination of the board of directors that the joint underwriting association will be unable to pay its outstanding lawful obligations as they mature, the board shall certify the existence of this condition to the Director of the Department of Consumer and Business Services. A schedule for policyholder surcharges shall be submitted by the board at the time of certification.

      (2) The surcharge schedule shall become final 30 days after certification unless the director finds, after a public hearing, that the surcharge amounts are unreasonable or unjustifiable. Such surcharges may be adjusted to take into consideration the past and prospective loss and expense experience in different geographical areas within the state. Such surcharges shall be in addition to and not in lieu of the premiums charged for the coverages provided.

      (3) Moneys collected in accordance with subsection (2) of this section shall be held in a fund separate from other joint underwriting association funds. Such funds shall be invested in accordance with applicable law governing publicly held trust funds. The association shall file an annual financial statement covering such funds.

      (4) Surcharge funds shall be subject to the control of the board of directors and may be used to satisfy the legal obligations of the joint underwriting association.

      (5) No part of the profit or loss of the joint underwriting association shall inure to the benefit of any member insurer or be an obligation of any member insurer. [1987 c.774 §82]

 

      735.250 Exemption from liability. There shall be no liability or cause of action against any member insurer, self-insurer, or its agents or employees, the joint underwriting association or its agents or employees, members of the board of directors, the Department of Consumer and Business Services or its representatives for any action taken by or statement made by them in performance of their powers and duties under ORS 735.210 to 735.260. [1987 c.774 §83]

 

      735.255 State not liable to pay debts of association. The state is not liable to pay any debts or obligations of any association formed under ORS 735.220 and no person may assert any claim against the state or any of its agencies for any act or omission of the association. [1987 c.774 §84]

 

      735.260 Rules. The Director of the Department of Consumer and Business Services may adopt all rules necessary to insure the efficient, equitable operation of the market assistance plan or the joint underwriting association, including but not limited to rules requiring or limiting certain policy provisions. [1987 c.774 §85]

 

      735.265 Liquor liability insurance risk and rate classifications; rules. If a market assistance plan is formed under ORS 735.210, or a joint underwriting association is formed under ORS 735.220, the Director of the Department of Consumer and Business Services shall by rule establish such liquor liability insurance risk and rate classifications as may be necessary to facilitate the availability and affordability of this commercial insurance product. Risk and rate classifications shall be established for all facets of the liquor industry including those who sell at wholesale or retail and the State of Oregon, as allowed by law. Risk classifications and rating plans shall be developed upon considerations including, but not limited to, the following factors:

      (1) Past loss experience and prospective loss experience of different license types.

      (2) Past loss experience and prospective loss experience in different geographic areas.

      (3) Prior claims experience of the individual licensee.

      (4) Prior compliance with public safety and alcoholic beverage laws, rules and ordinances pertaining to the sale and service of alcoholic beverages.

      (5) Evidence of responsible management policies including, but not limited to, procedures and actions which:

      (a) Encourage persons not to become intoxicated if they consume alcoholic beverages on the licensee’s premises;

      (b) Promote availability of nonalcoholic beverages and food;

      (c) Promote safe transportation alternatives to driving while intoxicated;

      (d) Prohibit employees and agents of the licensee from consuming alcoholic beverages while acting in their capacity as employee or agent;

      (e) Establish promotions and marketing efforts which publicize responsible business practices to the licensee’s customers and community;

      (f) Implement comprehensive training procedures; and

      (g) Maintain an adequate, trained number of employees and agents for the type and size of licensee’s business. [1987 c.774 §88]

 

LIABILITY RISK RETENTION LAW

 

      735.300 Purpose of ORS 735.300 to 735.365. The purpose of ORS 735.300 to 735.365 is to regulate the formation and operation of risk retention groups and purchasing groups in this state formed pursuant to the provisions of the federal Liability Risk Retention Act of 1986 (P.L. 99-563). [1987 c.774 §98; 1989 c.700 §10]

 

      735.305 Definitions for ORS 735.300 to 735.365. As used in ORS 735.300 to 735.365:

      (1) “Director” means the Director of the Department of Consumer and Business Services of this state or the commissioner, director or superintendent of insurance in any other state.

      (2) “Completed operations liability” means liability arising out of the installation, maintenance or repair of any product at a site that is not owned or controlled by any person who performs that work or by any person who hires an independent contractor to perform that work. The term also includes liability for activities that are completed or abandoned before the date of the occurrence giving rise to the liability.

      (3) “Domicile,” for purposes of determining the state in which a purchasing group is domiciled, means:

      (a) For a corporation, the state in which the purchasing group is incorporated; and

      (b) For an unincorporated entity, the state of its principal place of business.

      (4) “Hazardous financial condition” means that a risk retention group, based on its present or reasonably anticipated financial conditions, although not yet financially impaired or insolvent, is unlikely to be able:

      (a) To meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or

      (b) To pay other obligations in the normal course of business.

      (5) “Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance and any other arrangement for shifting and distributing risk that is determined to be insurance under the laws of this state.

      (6) “Liability”:

      (a) Means legal liability for damages, including costs of defense, legal costs and fees and other claims expenses, because of injuries to other persons, damage to their property or other damage or loss to such other persons resulting from or arising out of:

      (A) Any business that is for-profit or not-for-profit, or any trade, product, premises, operations or services, including professional services; or

      (B) Any activity of any state or local government, or any agency or political subdivision thereof.

      (b) Does not include personal risk liability and an employer’s liability with respect to its employees other than legal liability under the Federal Employers’ Liability Act (45 U.S.C. 51 et seq.).

      (7) “Personal risk liability” means liability for damages because of injury to any person, damage to property or other loss or damage resulting from any personal, familial or household responsibilities or activities, rather than from responsibilities or activities referred to in subsection (6) of this section.

      (8) “Plan of operation or a feasibility study” means an analysis that presents the expected activities and results of a risk retention group, and includes at a minimum:

      (a) The coverages, deductibles, coverage limits, rates and rating classification systems for each line of insurance the group intends to offer;

      (b) Historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available;

      (c) Pro forma financial statements and projections;

      (d) Appropriate opinions by a qualified independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and prevent a hazardous financial condition;

      (e) Identification of management, underwriting procedures, managerial oversight methods and investment policies; and

      (f) Other matters that the director requires for liability insurance companies authorized by the insurance laws of the state in which the risk retention group is chartered.

      (9) “Product liability” means liability for damages because of any personal injury, death, emotional harm, consequential economic damage or property damage, including damages resulting from the loss of use of property, arising out the manufacture, design, importation, distribution, packaging, labeling, lease or sale of a product. The term does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.

      (10) “Purchasing group” means any group that:

      (a) Has as one of its purposes the purchase of liability insurance on a group basis;

      (b) Purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in paragraph (c) of this subsection;

      (c) Is composed of members whose business or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations; and

      (d) Is domiciled in any state.

      (11) “Risk retention group” means any corporation or other limited liability association formed under the laws of any state:

      (a) Whose primary activity consists of assuming and spreading all, or any portion of, the liability exposure of its group members;

      (b) That is organized for the primary purpose of conducting the activity described in paragraph (a) of this subsection;

      (c) That:

      (A) Is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or

      (B) Before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before that date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of that state. However, any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since that date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as such terms were defined in the federal Product Liability Risk Retention Act of 1981, as amended by the Risk Retention Amendments of 1986, before the date of the enactment of the federal Liability Risk Retention Act of 1986 (P.L. 99-563);

      (d) That does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;

      (e) That:

      (A) Has as its members only persons who have an ownership interest in the group and has as its owners only persons who are members that are provided insurance by the risk retention group; or

      (B) Has as its sole member and sole owner an organization that is owned by persons who are provided insurance by the risk retention group;

      (f) Whose members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations;

      (g) Whose activities do not include the provision of insurance other than:

      (A) Liability insurance for assuming and spreading all or any portion of the liability of its group members; and

      (B) Reinsurance with respect to the liability of any other risk retention group, or any members of such other group, that is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (f) of this subsection for membership in the risk retention group that provides such reinsurance; and

      (h) The name of which includes “Risk Retention Group.”

      (12) “State” means any state of the United States or the District of Columbia. [1987 c.774 §99; 1993 c.744 §29]

 

      735.310 Qualifications for risk retention group; plan of operation; application; notification to National Association of Insurance Commissioners. (1) A risk retention group seeking to be organized in this state:

      (a) Must be organized as a liability insurer in this state and authorized by a subsisting certificate of authority issued by the director to transact liability insurance in this state, as provided in ORS chapter 732; and

      (b) Except as otherwise provided in ORS 735.300 to 735.365, must comply with all laws, rules and other requirements applicable to such insurers authorized to transact insurance in this state and with ORS 735.315 to the extent the requirements under ORS 735.315 are not a limitation on other laws, rules or requirements of this state.

      (2) Before a risk retention group may offer insurance in any state, the risk retention group shall submit for approval to the director of this state a plan of operation or a feasibility study and revisions of such plan or study if the group intends to offer any additional lines of liability insurance.

      (3) Immediately upon receipt of an application for organization, the director shall provide summary information concerning the filing to the National Association of Insurance Commissioners, including the name of the risk retention group, the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded and the states in which the group intends to operate. Providing notification to the National Association of Insurance Commissioners is in addition to and shall not be sufficient to satisfy the requirements of ORS 735.300 to 735.365. [1987 c.774 §100]

 

      735.315 Foreign risk retention groups; conditions of doing business in Oregon; prohibited acts. Risk retention groups chartered in states other than this state and seeking to do business as a risk retention group in this state must observe and abide by the laws of this state as follows:

      (1) Before transacting insurance in this state, a risk retention group shall submit to the director:

      (a) A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, its date of chartering, its principal place of business and such information, including information on its membership, as the director may require to verify that the risk retention group is qualified under ORS 735.305 (11);

      (b) A copy of its plan of operation or a feasibility study and revisions of such plan or study submitted to its state of domicile. The requirement of the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance that:

      (A) Was defined in the federal Product Liability Risk Retention Act of 1981, as amended by the Risk Retention Amendments of 1986, before October 27, 1986; and

      (B) Was offered before October 27, 1986, by any risk retention group that had been chartered and operating for not less than three years before October 27, 1986; and

      (c) A statement of registration that designates the director as its agent for the purpose of receiving service of legal documents or process.

      (2) A risk retention group doing business in this state shall submit to the director:

      (a) A copy of the group’s financial statement submitted to its state of domicile, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist, under criteria established by the National Association of Insurance Commissioners;

      (b) A copy of each examination of the risk retention group as certified by the director or public official conducting the examination;

      (c) Upon request by the director, a copy of any audit performed with respect to the risk retention group; and

      (d) Such information as may be required to verify its continuing qualification as a risk retention group under ORS 735.305 (11).

      (3) A risk retention group is subject to taxation in this state as follows:

      (a) All premiums paid for coverage within this state to risk retention groups shall be subject to taxation at the rate applicable to foreign admitted insurers and the taxes owing shall be subject to the same interest, fines and penalties for nonpayment as those applicable to foreign admitted insurers.

      (b) To the extent insurance producers are used, they shall report and pay the taxes for the premiums for the risks that they have placed with or on behalf of a risk retention group not organized in this state.

      (c) To the extent insurance producers are not used or fail to pay the tax, each risk retention group shall pay the tax for risks insured within the state. Further, each risk retention group shall report all premiums paid to it for risks insured within the state.

      (4) A risk retention group and its agents and representatives shall comply with ORS 746.230 and 746.240. If the director seeks an injunction regarding such conduct, the injunction must be obtained from a court of competent jurisdiction.

      (5) A risk retention group must submit to an examination by the director to determine its financial condition if the director of the jurisdiction in which the group is chartered has not initiated an examination or does not initiate an examination within 60 days after a request by the director of this state. Any such examination shall be coordinated to avoid unjustified repetition. Examinations may be conducted in accordance with the examiner handbook of the National Association of Insurance Commissioners.

      (6) A policy issued by a risk retention group shall contain in 10 point type on the front page and the declaration page, the following notice:

______________________________________________________________________________

 

Notice

      This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and rules of your state. State insurance insolvency guaranty funds are not available for your risk retention group.

______________________________________________________________________________

 

      (7) The following acts by a risk retention group are prohibited:

      (a) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and

      (b) The solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.

      (8) No risk retention group shall be allowed to do business in this state if an insurer is directly or indirectly a member or owner of the risk retention group, other than in the case of a risk retention group all of whose members are insurers.

      (9) No risk retention group may offer insurance policy coverage prohibited by the Insurance Code.

      (10) A risk retention group not organized in this state and doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by the insurance commissioner of any state if there has been a finding of financial impairment after an examination under subsection (5) of this section. [1987 c.774 §101; 2003 c.364 §92]

 

      735.320 Relationship to insurance guaranty fund and joint underwriting association. (1) No risk retention group shall be permitted to join or contribute financially to any insurance insolvency guaranty fund, or similar mechanism, in this state. No risk retention group, or its insureds, shall receive any benefit from any such fund for claims arising out of the operations of the risk retention group.

      (2) A risk retention group shall participate in this state’s joint underwriting associations and mandatory liability pools as provided by the Insurance Code. [1987 c.774 §102]

 

      735.325 Exemption of purchasing groups from certain laws. Any purchasing group meeting the criteria established under the provisions of the federal Liability Risk Retention Act of 1986 (P.L. 99-563), shall be exempt from any law of this state relating to the creation of groups for the purchase of insurance or the prohibition of group purchasing, or any law that would discriminate against a purchasing group or its members. In addition, an insurer shall be exempt from any law of this state that prohibits providing or offering to provide advantages to a purchasing group or its members based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages or other matters. A purchasing group shall be subject to all other applicable laws of this state. [1987 c.774 §103]

 

      735.330 Purchasing groups; notice of intent to do business; registration; exceptions. (1) A purchasing group that intends to do business in this state shall furnish notice to the director, which shall:

      (a) Identify the state in which the group is domiciled;

      (b) Specify the lines and classifications of liability insurance that the purchasing group intends to purchase;

      (c) Identify the insurer from which the group intends to purchase its insurance and the domicile of the insurer;

      (d) Identify the principal place of business of the group; and

      (e) Provide such other information as may be required by the director to verify that the purchasing group is qualified under ORS 735.305 (10).

      (2) The purchasing group shall register with the director and designate the director as its agent solely for the purpose of receiving service of legal documents or process, except that such requirements shall not apply in the case of a purchasing group that meets the following qualifications:

      (a) That:

      (A) Was domiciled before April 1, 1986, in any state; and

      (B) Is domiciled on and after October 27, 1986, in any state;

      (b) That:

      (A) Before October 27, 1986, purchased insurance from an insurance carrier licensed in any state; and

      (B) On and after October 27, 1986, purchased insurance from an insurance carrier licensed in any state;

      (c) That was a purchasing group under the requirements of the federal Product Liability Risk Retention Act of 1981, as amended by the Risk Retention Amendments of 1986, before October 27, 1986; and

      (d) That does not purchase insurance that was not authorized for purposes of an exemption under the federal Product Liability Risk Retention Act of 1981, as in effect before October 27, 1986. [1987 c.774 §104]

 

      735.335 Purchase of insurance by purchasing group. A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed insurance producer acting pursuant to the surplus lines laws and regulations of that state. [1987 c.774 §105; 2003 c.364 §93]

 

      735.340 Insurance Code enforcement authority subject to federal law. The director is authorized to make use of any of the powers established under the Insurance Code to enforce the laws of this state so long as those powers are not specifically preempted by the federal Product Liability Risk Retention Act of 1981, as amended by the Risk Retention Amendments of 1986. This includes, but is not limited to, the director’s administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders and impose penalties. With regard to any investigation, administrative proceedings or litigation, the director may rely on the procedural law and rules of the state. The injunctive authority of the director in regard to risk retention groups is restricted by the requirement that any injunction be issued by a court of competent jurisdiction. [1987 c.774 §106]

 

      735.345 Violation of 735.300 to 735.365; penalties. A risk retention group that violates any provision of ORS 735.300 to 735.365 is subject to criminal and civil penalties applicable to insurers generally, and to suspension or revocation of its certificate of authority to transact insurance. [1987 c.774 §107]

 

      735.350 Agent or broker; license. Any person acting or offering to act as an insurance producer for a risk retention group or purchasing group that solicits members, sells insurance coverage, purchases coverage for its members located within this state or otherwise does business in this state shall, before commencing any such activity, obtain a license as an insurance producer from the director under ORS chapter 744. [1987 c.774 §108; 1989 c.701 §71; 2003 c.364 §94]

 

      735.355 Court orders enforceable in Oregon. An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance or operating in any state or in all states or in any territory or possession of the United States, upon a finding that such a group is in a hazardous financial condition shall be enforceable in the courts of this state. [1987 c.774 §109]

 

      735.360 Rules. The director may adopt rules that the director determines are necessary for carrying out ORS 735.300 to 735.365. [1987 c.774 §110; 1989 c.700 §11]

 

      735.365 Short title. ORS 735.300 to 735.365 shall be known and may be cited as the Oregon Liability Risk Retention Law. [1987 c.774 §98a]

 

SURPLUS LINES LAW

 

      735.400 Purposes of ORS 735.400 to 735.495. ORS 735.400 to 735.495 shall be liberally construed and applied to promote its underlying purposes which include:

      (1) Protecting persons seeking insurance in this state;

      (2) Permitting surplus lines insurance to be placed with reputable and financially sound nonadmitted insurers and exported from this state pursuant to ORS 735.400 to 735.495;

      (3) Establishing a system of regulation which will permit orderly access to surplus lines insurance in this state and encourage admitted insurers to provide new and innovative types of insurance available to consumers in this state; and

      (4) Protecting revenues of this state. [1987 c.774 §117]

 

      735.405 Definitions for ORS 735.400 to 735.495. As used in ORS 735.400 to 735.495:

      (1) “Admitted insurer” means an insurer authorized to do an insurance business in this state.

      (2) “Affiliated group” means any group of entities that, with respect to an insured, exercise control over the insured, are under the control of the insured, or are under common control with the insured.

      (3) “Capital” means funds paid in for stock or other evidence of ownership.

      (4) “Control” means a situation where a controlling entity:

      (a) Directly, or acting through one or more other persons, owns or has the power to vote 25 percent or more of any class of voting securities of the controlled entity; or

      (b) Directs in any manner the election of a majority of directors or trustees of the controlled entity.

      (5) “Eligible surplus lines insurer” means a nonadmitted insurer with which a surplus lines licensee may place surplus lines insurance.

      (6) “Exempt commercial purchaser” means any person purchasing commercial insurance that, at the time of placement:

      (a) Employs or retains a qualified risk manager to negotiate insurance coverage;

      (b) Has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months; and

      (c) Meets at least one of the following criteria:

      (A) The person possesses a net worth in excess of $10 million, as such amount is adjusted pursuant to ORS 735.406.

      (B) The person generates annual revenues in excess of $20 million, as such amount is adjusted pursuant to ORS 735.406.

      (C) The person employs more than 50 full-time or full-time equivalent employees for each insured or is a member of an affiliated group employing more than 100 employees in the aggregate.

      (D) The person is a not-for-profit organization or public entity generating annual budgeted expenses of at least $30 million, as such amount is adjusted pursuant to ORS 735.406.

      (E) The person is a municipality with a population in excess of 50,000 individuals.

      (7) “Export” means to place surplus lines insurance with a nonadmitted insurer.

      (8) “Home state” means, with respect to an insured:

      (a) The state in which an insured maintains the insured’s principal place of business or, in the case of an individual, the individual’s principal residence;

      (b) If 100 percent of the insured risk is located out of the state described in paragraph (a) of this subsection, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated; or

      (c) If two or more insureds from an affiliated group are named as insureds on a single nonadmitted insurance contract, the state, as determined pursuant to paragraph (a) or (b) of this subsection, of the member of the affiliated group that has the greatest percentage of premium attributed to it under the insurance contract.

      (9) “Kind of insurance” means one of the types of insurance required to be reported in the annual statement that must be filed with the Director of the Department of Consumer and Business Services by authorized insurers.

      (10) “Nonadmitted insurer” means an insurer not authorized to do an insurance business in this state. “Nonadmitted insurer” includes insurance exchanges as authorized under the laws of various states. “Nonadmitted insurer” does not include a risk retention group as defined in ORS 735.305.

      (11) “Premium tax” means any tax, assessment or other charge imposed by this state directly or indirectly based upon any payment made as consideration for insurance in an insurance contract.

      (12) “Producing insurance producer” means the individual insurance producer dealing directly with the party seeking insurance.

      (13) “Qualified risk manager” means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:

      (a) The person is an employee of, or third party consultant retained by, the commercial policyholder.

      (b) The person provides skilled services in:

      (A) Loss prevention;

      (B) Loss reduction; or

      (C) Risk and insurance coverage analysis and purchase of insurance.

      (c) The person has:

      (A) A bachelor’s degree, from an accredited college or university, in risk management, business administration, finance, economics or any other field determined by an insurance commissioner or other regulatory official of this or any other state to demonstrate minimum competence in risk management, and has:

      (i) Three years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or

      (ii) Any designation, certification or license issued by a national insurance certification organization that is determined by the Director of the Department of Consumer and Business Services to demonstrate minimum competency in risk management;

      (B) At least seven years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance, and has a designation, certification or license specified in subparagraph (A)(ii) of this paragraph;

      (C) At least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis or purchasing commercial lines of insurance; or

      (D) A graduate degree, from an accredited college or university, in risk management, business administration, finance, economics or any other field determined by the director to demonstrate minimum competence in risk management.

      (14) “Surplus” means funds over and above liabilities and capital of the insurer for the protection of policyholders.

      (15) “Surplus lines licensee” means an insurance producer licensed under ORS chapter 744 to place insurance on Oregon home state risks with nonadmitted insurers. [1987 c.774 §118; 1991 c.810 §25; 2001 c.191 §44a; 2003 c.364 §38; 2011 c.660 §6]

 

      735.406 Cost of living adjustment to net worth, revenues and expenses of exempt commercial purchasers. Beginning on January 1, 2015, and each fifth January 1 occurring thereafter, the amounts in ORS 735.405 (6)(c)(A), (B) and (D) shall be adjusted to reflect the percentage change for such five-year period in the Portland-Salem, OR-WA, Consumer Price Index for All Urban Consumers for All Items as published by the Bureau of Labor Statistics of the United States Department of Labor. [2011 c.660 §7]

 

      735.410 Conditions for procuring insurance through nonadmitted insurer; rules. (1) Insurance may be procured through a surplus lines licensee from a nonadmitted insurer if:

      (a) The insurer is an eligible surplus lines insurer;

      (b) A diligent search has first been made among the insurers who are authorized to transact and are actually writing the particular kind and class of insurance in this state, and it is determined that the full amount or kind of insurance cannot be obtained from those insurers; and

      (c) All other requirements of ORS 735.400 to 735.495 are met.

      (2) Subsection (1)(b) of this section does not apply to a surplus lines licensee seeking to procure or place nonadmitted insurance in this state for an exempt commercial purchaser if:

      (a) The surplus lines licensee procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and

      (b) The exempt commercial purchaser has subsequently requested in writing that the surplus lines licensee procure or place such insurance from a nonadmitted insurer.

      (3) The Director of the Department of Consumer and Business Services by rule may establish requirements applicable to the placement of surplus lines insurance on Oregon home state risks by a nonresident surplus lines licensee. The rules may not interfere with or hinder implementation of the federal Gramm-Leach-Bliley Act (P.L. 106-102) with respect to licensing reciprocity among the states, or the Nonadmitted and Reinsurance Reform Act of 2010 (P.L. 111-203, Title V, Subtitle B). [1987 c.774 §119; 2001 c.191 §44b; 2011 c.660 §9]

 

      735.415 Qualifications for placement of coverage with nonadmitted insurer. (1) A surplus lines licensee may not place any coverage with a nonadmitted insurer unless at the time of placement the nonadmitted insurer has done all of the following:

      (a) Obtained authorization to write the kind of insurance to be placed by the surplus lines licensee by the insurance supervisory official in the insurer’s domiciliary jurisdiction.

      (b) Qualified under one of the following subparagraphs:

      (A) Has capital and surplus or its equivalent under the laws of its domiciliary jurisdiction that equals the greater of either the minimum capital and surplus requirements of its domiciliary jurisdiction or $15 million, except that the requirements of this subparagraph may be satisfied by an insurer possessing less than the minimum capital and surplus upon an affirmative finding of acceptability by the Director of the Department of Consumer and Business Services. The finding shall be based upon such factors as quality of management, capital and surplus of any parent company, company underwriting profit and investment income trends, market availability and company record and reputation within the industry. In no event shall the director make an affirmative finding of acceptability when the nonadmitted insurer’s capital and surplus is less than $4.5 million.

      (B) In the case of an alien insurer, in addition to the requirements in subparagraph (A) of this paragraph, maintains in the United States an irrevocable trust fund in either a national bank or a member of the Federal Reserve System, in an amount not less than $5.4 million for the protection of all its policyholders in the United States and such trust fund consists of cash, securities, irrevocable letters of credit, or of investments of substantially the same character and quality as those which are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state. Such trust fund, which shall be included in any calculation of capital and surplus or its equivalent, shall have an expiration date which at no time shall be less than five years.

      (C) In the case of a group of insurers that includes incorporated and individual unincorporated underwriters that are not listed in accordance with subparagraph (E) of this paragraph, maintains a trust fund of not less than $100 million as security to the full amount thereof for all policyholders and creditors in the United States of each member of the group, and such trust shall likewise comply with the terms and conditions established in subparagraph (B) of this paragraph for alien insurers, except that the incorporated members of the group may not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group’s domiciliary regulators as are the unincorporated members.

      (D) In the case of an insurance exchange created by the laws of individual states, maintains capital and surplus, or the substantial equivalent thereof, of not less than $75 million in the aggregate. For insurance exchanges that maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus, or the substantial equivalent thereof, of not less than $5 million. In the event the insurance exchange does not maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall meet the minimum capital and surplus requirements of subparagraph (A) of this paragraph.

      (E) Is listed on the NAIC Quarterly Listing of Alien Insurers maintained by the National Association of Insurance Commissioners and meets additional requirements regarding the use of the list established by rule of the director.

      (c) Unless qualified under paragraph (b)(E) of this subsection, provided to the director no more than six months after the close of the period reported upon a certified copy of its current annual statement that is:

      (A) Filed with and approved by the regulatory authority in the domicile of the nonadmitted insurer;

      (B) Certified by an accounting or auditing firm licensed in the jurisdiction of the insurer’s domicile; or

      (C) In the case of an insurance exchange, an aggregate combined statement of all underwriting syndicates operating during the period reported.

      (2) When a nonresident surplus lines licensee places surplus lines insurance outside this state that covers an Oregon home state risk, the licensee or insurance producer is subject to the requirements of subsection (1) of this section. [1987 c.774 §120; 1995 c.99 §2; 2001 c.191 §44c; 2005 c.185 §11; 2011 c.660 §10]

 

      735.417 Insured required to report and pay taxes on independently procured insurance covering Oregon home state risks. (1) Each insured in this state who obtains independently procured insurance, or continues or renews independently procured insurance on Oregon home state risks, other than insurance procured through a surplus lines licensee, shall file, within 30 days after the date the insurance was procured, continued or renewed, a written report with the Director of the Department of Consumer and Business Services showing:

      (a) The name and address of the insurer;

      (b) The subject of the insurance;

      (c) The amount of premium currently charged; and

      (d) Additional pertinent information reasonably requested by the director.

      (2) The insured filing a report under subsection (1) of this section shall pay, at the time of filing the report, the director an amount equal to the taxes imposed under ORS 735.470 for the premium reported under subsection (1)(c) of this section. The filing of the report and payment of the taxes may be made by a person authorized by the insured to act on the insured’s behalf.

      (3)(a) The director may require that reports filed under subsection (1) of this section be filed with the Surplus Line Association of Oregon. The director may require that such filings be made electronically, but may allow an exemption to this requirement for good cause shown.

      (b) The director may require that amounts to be paid to the director under subsection (2) of this section be paid to the Surplus Line Association of Oregon. [2011 c.660 §5]

 

      735.418 Director authorized to enter into interstate compact for premium tax allocation. For purposes of carrying out the Nonadmitted and Reinsurance Reform Act of 2010 (P.L. 111-203, Title V, Subtitle B), after receiving express legislative approval, the Director of the Department of Consumer and Business Services is authorized to enter into a compact or to otherwise establish procedures with other states to allocate among the states the premium taxes paid to an insured’s home state. [2011 c.660 §4]

 

      735.420 Declaration of ineligibility of surplus lines insurer. (1) The Director of the Department of Consumer and Business Services may declare a surplus lines insurer described in ORS 735.415 (1) ineligible if the director has reason to believe that the surplus lines insurer:

      (a) Is in unsound financial condition;

      (b) Is no longer eligible under ORS 735.415;

      (c) Has willfully violated the laws of this state; or

      (d) Does not make reasonably prompt payment of just losses and claims in this state or elsewhere.

      (2) The director shall promptly mail notice of all such declarations to each surplus lines licensee. [1987 c.774 §121; 2001 c.191 §44d]

 

      735.425 Filing by licensee after placement of surplus lines insurance. (1) Within 90 days after the placing of any surplus lines insurance in this state on an Oregon home state risk, each surplus lines licensee shall file with the Director of the Department of Consumer and Business Services:

      (a) A statement signed by the licensee regarding the insurance, which shall be kept confidential as provided in ORS 705.137, including the following:

      (A) The name and address of the insured;

      (B) The identity of the insurer or insurers;

      (C) A description of the subject and location of the risk;

      (D) The amount of premium charged for the insurance; and

      (E) Such other pertinent information as the director may reasonably require.

      (b) A statement on a standardized form furnished by the director, as to the diligent efforts by the producing insurance producer to place the coverage with admitted insurers and the results thereof. The statement shall be signed by the producing insurance producer and shall affirm that the insured was expressly advised prior to placement of the insurance that:

      (A) The surplus lines insurer with whom the insurance was to be placed is not licensed in this state and is not subject to its supervision; and

      (B) In the event of the insolvency of the surplus lines insurer, losses will not be paid by the state insurance guaranty fund.

      (2) A surplus lines licensee placing nonadmitted insurance in this state for an exempt commercial purchaser satisfies the requirements of subsection (1)(b) of this section if the surplus lines licensee provides proof of compliance with ORS 735.410 (2).

      (3) The director may direct that filings required under subsection (1) of this section be made to the Surplus Line Association of Oregon. The director may also require that such filings be made electronically but may exempt a licensee from the requirement for good cause shown.

      (4) A nonresident surplus lines licensee who places a surplus lines policy on an Oregon home state risk shall satisfy the requirements in ORS 735.410 and the filing requirements in subsections (1) and (2) of this section.

      (5) Facsimile signatures and electronic signatures subject to ORS 84.001 to 84.061 are acceptable and have the same force as original signatures. [1987 c.774 §122; 1993 c.182 §1; 2001 c.377 §§13,13a; 2003 c.364 §39; 2005 c.185 §12; 2011 c.660 §11]

 

      735.430 Surplus Line Association of Oregon; fees. (1) The Surplus Line Association of Oregon shall be the advisory organization of surplus lines licensees to:

      (a) Facilitate and encourage compliance by resident and nonresident surplus lines licensees with the laws of this state and the rules of the Director of the Department of Consumer and Business Services relative to surplus lines insurance;

      (b) Provide means for the examination, which shall remain confidential as provided in ORS 705.137, of all surplus lines coverage written by resident and nonresident surplus lines licensees to determine whether the coverages comply with the Oregon Surplus Lines Law;

      (c) Communicate with organizations of admitted insurers with respect to the proper use of the surplus lines market;

      (d) Receive and disseminate to resident and nonresident surplus lines licensees information relative to surplus lines coverages; and

      (e) At the request of the director, receive and collect on behalf of the state and remit to the state premium receipts taxes for surplus lines insurance pursuant to ORS 735.417 or 735.470.

      (2) The Surplus Line Association of Oregon shall file with the director:

      (a) A copy of its constitution, articles of agreement or association or certificate of incorporation;

      (b) A copy of its bylaws and rules governing its activities;

      (c) A current list of members;

      (d) The name and address of a resident of this state upon whom notices or orders of the director or processes issued at the direction of the director may be served;

      (e) An agreement that the director may examine the Surplus Line Association of Oregon in accordance with the provisions of this section; and

      (f) A schedule of fees and charges.

      (3) The director may make or cause to be made an examination of the Surplus Line Association of Oregon. The reasonable cost of any such examination shall be paid by the association upon presentation to it by the director of a detailed account of each cost. The officers, managers, agents and employees of the association may be examined at any time, under oath, and shall exhibit all books, records, accounts, documents or agreements governing its method of operation. The director shall furnish two copies of the examination report to the association and shall notify the association that it may, within 20 days thereof, request a hearing on the report or on any facts or recommendations therein. If the director finds the association or any member thereof to be in violation of ORS 735.400 to 735.495, the director may issue an order requiring the discontinuance of such violation.

      (4)(a) The Surplus Line Association of Oregon may charge resident and nonresident surplus lines licensees and nonresident producing insurance producers a fee for reviewing surplus lines policies and for collecting, on behalf of the state, taxes imposed under ORS 735.470.

      (b) The association may charge insureds a fee for collecting, on behalf of the state, reports required and taxes imposed under ORS 735.417.

      (c) The association shall adopt bylaws implementing paragraphs (a) and (b) of this subsection. [1987 c.774 §123; 2001 c.377 §14; 2005 c.185 §13; 2007 c.71 §235; 2011 c.660 §12]

 

      735.435 Evidence of insurance; contents; change; penalty; notice regarding Insurance Guaranty Association; rules. (1) Upon placing surplus lines insurance on an Oregon home state risk, the surplus lines licensee shall promptly deliver to the insured or the producing insurance producer the policy, or if such policy is not then available, a certificate as described in subsection (4) of this section, cover note or binder. The certificate, as described in subsection (4) of this section, cover note or binder shall be executed by the surplus lines licensee and shall show the description and location of the subject of the insurance, coverages including any material limitations other than those in standard forms, a general description of the coverages of the insurance, the premium and rate charged and taxes to be collected from the insured, and the name and address of the insured and surplus lines insurer or insurers and proportion of the entire risk assumed by each, and the name of the surplus lines licensee and the licensee’s license number.

      (2) A surplus lines licensee may not issue or deliver any insurance policy or certificate of insurance or represent that insurance will be or has been written by any eligible surplus lines insurer, unless the licensee has authority from the insurer to cause the risk to be insured, or has received information from the insurer in the regular course of business that such insurance has been granted.

      (3) If, after delivery of an insurance policy or certificate of insurance, there is any change in the identity of the insurers, or the proportion of the risk assumed by any insurer, or any other material change in coverage as stated in the surplus lines licensee’s original insurance policy, or in any other material as to the insurance coverage, the surplus lines licensee shall promptly issue and deliver to the insured or the original producing insurance producer an appropriate substitute for, or indorsement of the original document, accurately showing the current status of the coverage and the insurers responsible thereunder.

      (4) As soon as reasonably possible after the placement of any such insurance the surplus lines licensee shall deliver a copy of the policy or, if not available, a certificate of insurance to the insured or producing insurance producer to replace an insurance policy or certificate of insurance theretofore issued. Each certificate or policy of insurance shall contain or have attached thereto a complete record of all policy insuring agreements, conditions, exclusions, clauses, indorsements or any other material facts that would regularly be included in the policy.

      (5) Any surplus lines licensee who fails to comply with the requirements of this section shall be subject to the penalties provided in ORS 731.988.

      (6) Each insurance policy or certificate of insurance negotiated, placed or procured under the provisions of ORS 735.400 to 735.495 by the surplus lines licensee shall bear the name of the licensee and the following legend in bold type: “This insurance was procured and developed under the Oregon surplus lines laws. It is NOT covered by the provisions of ORS 734.510 to 734.710 relating to the Oregon Insurance Guaranty Association. If the insurer issuing this insurance becomes insolvent, the Oregon Insurance Guaranty Association has no obligation to pay claims under this insurance.”

      (7) The Director of the Department of Consumer and Business Services by rule may establish requirements relating to insurance policies and certificates of insurance and other applicable requirements governing placement of insurance by a nonresident surplus lines licensee outside this state that covers an Oregon home state risk. [1987 c.774 §124; 2001 c.191 §45a; 2003 c.364 §40; 2011 c.660 §13]

 

      735.440 Validity of contracts. Insurance contracts procured under ORS 735.400 to 735.495 shall be valid and enforceable as to all parties. [1987 c.774 §125]

 

      735.445 Effect of payment of premium to surplus lines licensee. A payment of premium to a surplus lines licensee acting for a person other than the surplus lines licensee in negotiating, continuing or renewing any policy of insurance under ORS 735.400 to 735.495 shall be deemed to be payment to the insurer, whatever conditions or stipulations may be inserted in the policy or contract notwithstanding. [1987 c.774 §126]

 

      735.450 Requirements for license as surplus lines insurance licensee. A person may not procure any contract of surplus lines insurance with any nonadmitted insurer for an Oregon home state risk unless the person is licensed under ORS chapter 744 to transact surplus lines insurance. A person may obtain a license to transact surplus lines insurance only if the person is licensed as an insurance producer under ORS chapter 744 to transact property and casualty insurance. [1987 c.774 §127; 1989 c.288 §1; 1991 c.810 §26; 1995 c.639 §14; 2001 c.191 §46; 2003 c.364 §41; 2011 c.660 §14]

 

      735.455 Authority of licensee; rules. (1) A surplus lines licensee may originate surplus lines insurance on an Oregon home state risk or accept such insurance from any other insurance producer duly licensed as to the kinds of insurance involved on an Oregon home state risk, and the surplus lines licensee may compensate the insurance producer therefor.

      (2) A surplus lines licensee may charge a producing insurance producer a fee or a combination of a fee and a commission when transacting surplus lines for the producing insurance producer if the surplus lines licensee has a written agreement with the producing insurance producer prior to the binding or issuance of a surplus lines insurance policy. When a surplus lines licensee transacts surplus lines insurance directly for a prospective insured, the surplus lines licensee may charge the prospective insured a fee or a combination of a fee and a commission if the surplus lines licensee has a written agreement with the prospective insured prior to the binding or issuance of a surplus lines insurance policy.

      (3) A producing insurance producer may charge a fee to a prospective insured when the producing insurance producer pays a fee or a combination of a fee and a commission to a surplus lines licensee under subsection (2) of this section if the producing insurance producer has a written agreement with the prospective insured prior to the binding or issuance of the surplus lines insurance policy. The fee may not exceed the amount of compensation paid by the producing insurance producer to the surplus lines licensee.

      (4) For the purpose of determining the charge under subsection (2) of this section, the producing insurance producer and the surplus lines licensee may agree to any allocation of the fee that the producing insurance producer charges the prospective insured under this section.

      (5) The fee or the fee and commission charged by a surplus lines licensee under subsection (2) of this section must be commensurate with the services provided by the surplus lines licensee. The Director of the Department of Consumer and Business Services may establish by rule minimum conditions for written agreements entered into under this section. An insurer or insurance producer who enters into a written agreement as provided in this section is not in violation of ORS 746.035 or 746.045. [1987 c.774 §128; 2003 c.364 §42; 2011 c.660 §15]

 

      735.460 Records of licensee; examination. (1) Each surplus lines licensee shall keep a full and true record of each surplus lines insurance contract placed on an Oregon home state risk by or through the licensee as required by ORS 744.068, including a copy of the policy, certificate, cover note or other evidence of insurance showing any of the following items that are applicable:

      (a) Amount of the insurance and perils insured;

      (b) Brief description of the property insured and its location;

      (c) Gross premium charged;

      (d) Any return premium paid;

      (e) Rate of premium charged upon the several items of property;

      (f) Effective date of the contract and the terms thereof;

      (g) Name and address of the insured;

      (h) Name and address of the insurer;

      (i) Amount of tax and other sums to be collected from the insured; and

      (j) Identity of the producing insurance producer, any confirming correspondence from the insurer or its representative and the application.

      (2) The record of each contract shall be kept open at all reasonable times to examination by the Director of the Department of Consumer and Business Services without notice for a period not less than five years following termination of the contract. [1987 c.774 §129; 2001 c.191 §47; 2003 c.364 §43; 2011 c.660 §16]

 

      735.465 Monthly reports; rules. (1) On or before the end of each month, each surplus lines licensee shall file with the Director of the Department of Consumer and Business Services, as prescribed by the director, a verified report of all surplus lines insurance transacted on Oregon home state risks during the preceding 90 days. The report need not show transacted surplus lines insurance that was reported in an earlier report. The report shall show:

      (a) Aggregate gross premiums written;

      (b) Aggregate return premiums; and

      (c) Amount of aggregate tax.

      (2) The director may direct that reports required under subsection (1) of this section be made to the Surplus Line Association of Oregon and that the Surplus Line Association of Oregon file a combined report thereof with the director. The director may also require that reports required under subsection (1) of this section be made electronically but may exempt a licensee from the requirement for good cause shown.

      (3) For the purpose of collecting taxes on insurance covering Oregon home state risks when the insurance is placed outside this state, the director may establish by rule requirements for filing reports on surplus lines insurance transacted outside this state on Oregon home state risks. [1987 c.774 §130; 2001 c.191 §48; 2007 c.71 §236; 2011 c.660 §17]

 

      735.470 Premium tax; collection; payment; refund; rules. (1)(a) The surplus lines licensee shall pay the Director of the Department of Consumer and Business Services a surplus lines premium tax equal to two percent of the gross amount of premiums received on Oregon home state risks as shown in the report required by ORS 735.465.

      (b) Notwithstanding ORS 731.820, the surplus lines licensee shall also pay to the director a tax equal to 0.3 percent of the premium or fees charged by the insurer or the insurer’s insurance producer and other intermediaries for the insurance, for the purpose of maintaining the office of the State Fire Marshal and paying the expenses incident thereto.

      (c) The taxes shall be collected by the surplus lines licensee as specified by the director, in addition to the gross amount of premiums charged by the insurer or the insurer’s insurance producer and other intermediaries for the insurance. The taxes on any portion of the premium unearned at termination of insurance having been credited by the state to the licensee shall be returned to the policyholder directly by the surplus lines licensee or through the producing insurance producer, if any. The surplus lines licensee is prohibited from absorbing the taxes, and from rebating for any reason, any part of the taxes.

      (2) The surplus lines taxes are due quarterly on the 45th day following the calendar quarter in which the premium is collected. The taxes shall be paid to and reported on forms prescribed by the director or upon the director’s order paid to and reported on forms prescribed by the Surplus Line Association of Oregon.

      (3) Notwithstanding subsection (2) of this section, if a surplus lines license is terminated or nonrenewed for any reason, the taxes described in this section are due on the 30th day after the termination or nonrenewal.

      (4) For the purposes of carrying out the Nonadmitted and Reinsurance Reform Act of 2010 (P.L. 111-203, Title V, Subtitle B), the director may collect taxes on 100 percent of the gross amount of premiums on Oregon home state risks. If the director enters into a compact or otherwise establishes procedures with other states pursuant to ORS 735.418, the director by rule shall establish procedures to facilitate the reporting, collection, payment, allocation and disbursement of premium taxes on Oregon home state risks that also include risks allocable to other states.

      (5) As used in this section, “gross amount of premiums” has the meaning given that term in ORS 731.808. [1987 c.774 §131; 1989 c.288 §2; 1995 c.786 §10; 2001 c.191 §48a; 2003 c.364 §44; 2007 c.71 §237; 2011 c.660 §8]

 

      735.475 Suit to recover unpaid tax. If the tax collectible by a surplus lines licensee under ORS 735.400 to 735.495 is not paid within the time prescribed, the same shall be recoverable in a suit brought by the Director of the Department of Consumer and Business Services against the surplus lines licensee. [1987 c.774 §132; 1989 c.288 §3; 2001 c.191 §48b]

 

      735.480 Suspension or revocation of license; refusal to renew; grounds. The Director of the Department of Consumer and Business Services may suspend, revoke or refuse to renew the license of a surplus lines licensee after notice and hearing as provided under the applicable provision of this state’s laws upon any one or more of the following grounds:

      (1) Removal of the surplus lines licensee’s office from this state, if the licensee is a resident insurance producer;

      (2) Removal of the surplus lines licensee’s office accounts and records from the principal place of business of the licensee under ORS 744.068 during the period during which such accounts and records are required to be maintained under ORS 735.460;

      (3) Closing of the surplus lines licensee’s office for a period of more than 30 business days, unless permission is granted by the director;

      (4) Failure to make and file required reports;

      (5) Failure to transmit required tax on surplus lines premiums;

      (6) Violation of any provision of ORS 735.400 to 735.495; or

      (7) For any cause for which an insurance license could be denied, revoked, suspended or renewal refused under ORS 744.074. [1987 c.774 §133; 1989 c.288 §4; 2001 c.191 §49; 2003 c.364 §45]

 

      735.485 Actions against surplus lines insurer. (1) A surplus lines insurer may be sued upon any cause of action arising in this state under any surplus lines insurance contract on an Oregon home state risk made by it or evidence of insurance issued or delivered by the surplus lines licensee pursuant to the procedure provided in ORS 735.490. Any surplus lines policy issued by the surplus lines licensee shall contain a provision stating the substance of this section and designating the person to whom process shall be delivered.

      (2) Each surplus lines insurer assuming surplus lines insurance shall be considered thereby to have subjected itself to ORS 735.400 to 735.495.

      (3) The remedies provided in this section are in addition to any other methods provided by law for service of process upon insurers.

      (4) When a nonresident surplus lines insurance producer transacts outside this state a surplus lines insurance contract covering an Oregon home state risk, the producer and the surplus lines insurer of the contract are subject to this section and to ORS 735.490 or to rules adopted by the director in lieu thereof. [1987 c.774 §134; 1989 c.288 §5; 2001 c.191 §49a; 2011 c.660 §18]

 

      735.490 Jurisdiction in action against insurer; service of summons and complaint; response. (1) An insurer transacting insurance on an Oregon home state risk under the provisions of ORS 735.400 to 735.495 may be sued upon any cause of action, arising under any policy of insurance so issued and delivered by it, in the courts for the county where the insurance producer who registered or delivered the policy resides or transacts business, by the service of summons and complaint made upon the insurance producer for the insurer.

      (2) Any insurance producer served with summons and complaint in any such cause shall forthwith mail the summons and complaint, or a true and complete copy thereof, by registered or certified mail with proper postage affixed and properly addressed, to the insurer being sued.

      (3) The insurer shall have 40 days from the date of the service of the summons and complaint upon the insurance producer in which to plead, answer or defend any such cause.

      (4) Upon service of summons and complaint upon the insurance producer for the insurer, the court in which the action is begun shall be deemed to have duly acquired personal jurisdiction of the defendant insurer so served.

      (5) An insurer and policyholder may agree to waive the provisions of subsections (1) to (4) of this section governing service and venue with respect to a surplus lines insurance contract for commercial property and casualty risk if the waiver is specifically referred to in the contract or in an indorsement attached to the contract. [1987 c.774 §137; 2001 c.191 §49b; 2003 c.364 §46; 2011 c.660 §19]

 

      735.492 Application of certain Insurance Code provisions to surplus lines insurers. ORS 731.324, 731.328, 731.512 and 731.624 do not apply to surplus lines insurers. [2005 c.185 §17]

 

      735.495 Short title; severability. (1) ORS 735.400 to 735.495 shall be known and may be cited as “The Oregon Surplus Lines Law.”

      (2) If any provisions of ORS 735.400 to 735.495, or the application of such provision to any person or circumstance, is held invalid, the remainder of ORS 735.400 to 735.495 and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected. [1987 c.774 §§116,136]

 

RETAINER MEDICAL PRACTICE

 

      735.500 Requirements for certification as retainer medical practice; disclosures; rules. (1) As used in this section and ORS 735.510:

      (a) “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract or otherwise. A person who is the owner of 10 percent or more ownership interest in a retainer medical practice or applicant for a certificate to operate a retainer medical practice is presumed to have control.

      (b) “Primary care” means outpatient, nonspecialty medical services or the coordination of health care for the purpose of:

      (A) Promoting or maintaining mental and physical health and wellness; and

      (B) Diagnosis, treatment or management of acute or chronic conditions caused by disease, injury or illness.

      (c) “Provider” means a health care professional licensed or certified under ORS chapter 677, 678, 684 or 685 who provides primary care in the ordinary course of business or practice of a profession.

      (d) “Retainer medical agreement” means a written agreement between a retainer medical practice and a patient or a legal representative or guardian of a patient specifying a defined and predetermined set of primary care services to be provided in consideration for a retainer medical fee.

      (e) “Retainer medical fee” means any fee paid to a retainer medical practice pursuant to a medical retainer agreement.

      (f) “Retainer medical practice” means a provider, a group of providers or a person that employs or contracts with a provider or a group of providers to provide services under the terms of a retainer medical agreement.

      (2) A retainer medical practice must be certified by the Department of Consumer and Business Services. To qualify to become a certified retainer medical practice or to renew a certificate, the practice:

      (a) May not have or have ever had a certificate of authority to transact insurance in this state.

      (b) May not be or have ever been licensed, certified or otherwise authorized in this state or any other state to act as an insurer, managed care organization, health care service contractor or similar entity.

      (c) May not be controlled by an entity described in paragraph (a) or (b) of this subsection.

      (3) A certified retainer medical practice:

      (a) Must provide only primary care and must limit the scope of services provided or the number of patients served to an amount that is within the capacity of the practice to provide in a timely manner;

      (b) May not bill an insurer, a self-insured plan or the state medical assistance program for a service provided by the practice to a patient pursuant to a retainer medical agreement;

      (c) Must be financially responsible and have the necessary business experience or expertise to operate the practice;

      (d) Must give the written disclosures described in subsection (4) of this section;

      (e) May not use or disseminate misleading, deceptive or false statements in marketing, advertising, promotional, sales or informational materials regarding the practice or in communications with patients or prospective patients;

      (f) May not engage in dishonest, fraudulent or illegal conduct in any business or profession; and

      (g) May not discriminate based on race, religion, gender, sexual identity, sexual preference or health status.

      (4) A certified retainer medical practice must make the following written information available to prospective patients by prominently disclosing, in the manner prescribed by the department by rule, in marketing materials and retainer medical agreements:

      (a) That the practice is not insurance;

      (b) That the practice provides only the limited scope of primary care services specified in the retainer medical agreement;

      (c) That a patient must pay for all services not specified in the retainer medical agreement; and

      (d) Any other disclosures required by the department by rule.

      (5) The department may by written order deny, suspend or revoke a retainer medical practice certificate or may refuse to renew a retainer medical practice certificate if the department finds that:

      (a) The retainer medical practice does not meet the criteria in subsections (2) to (4) of this section;

      (b) The retainer medical practice has provided false, misleading, incomplete or inaccurate information in the application for a certificate or renewal of a certificate;

      (c) The retainer medical practice provides medical services through a provider whose license to provide the medical services offered on behalf of the retainer medical practice is revoked;

      (d) The authority of the retainer medical practice to operate a retainer medical practice or similar practice in another jurisdiction is denied, suspended, revoked or not renewed;

      (e) The retainer medical practice, a person who has control over the retainer medical practice or a health care provider providing services on behalf of the retainer medical practice is charged with a felony or misdemeanor involving dishonesty; or

      (f) The retainer medical practice fails to comply with subsection (7) of this section.

      (6) With respect to a certified retainer medical practice or a retainer medical practice operating without a certificate, the department is authorized to:

      (a) Investigate;

      (b) Subpoena documents and records related to the business of the practice; and

      (c) Take any actions authorized by the Insurance Code that are necessary to administer and enforce this section.

      (7) A retainer medical practice subject to an investigation under subsection (5) of this section must:

      (a) Within five business days, respond to inquiries in the form and manner specified by the department; and

      (b) Reimburse the expenses incurred by the department in conducting the investigation.

      (8) A retainer medical practice may contest any order made under subsection (5) of this section in accordance with ORS chapter 183.

      (9) A certificate issued under subsection (2) of this section is effective for one year or for a longer period as prescribed by the department by rule.

      (10) The department may adopt rules necessary or appropriate to implement the provisions of this section. [2011 c.499 §2]

 

      Note: 735.500 and 735.510 were added to and made a part of the Insurance Code by legislative action but were not added to ORS chapter 735 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

 

      735.510 Notice to department of specified changes to practice. A certified retainer medical practice shall:

      (1) Notify the Department of Consumer and Business Services immediately whenever:

      (a) The license of a provider who has provided services on behalf of the practice is denied, suspended, revoked or not renewed in this state or in any other jurisdiction; or

      (b) The authority of the practice to operate in another jurisdiction is denied, suspended, revoked or not renewed.

      (2) Notify the department no later than 30 days after any change to the name, address or contact information that is provided in the application for certification under ORS 735.500. [2011 c.499 §3]

 

      Note: See note under 735.500.

 

DENTAL SERVICES CONTRACTS

 

      735.515 Charges for services not covered by contract. (1) As used in this section:

      (a) “Dental services contract” means a contract between an insurer and a provider or a group of providers to provide dental health services for enrollees. “Dental services contract” does not include a contract of employment or a contract creating legal entities and ownership thereof that are authorized under ORS chapter 58, 60 or 70, or other similar professional organizations permitted by statute.

      (b) “Enrollee” means a person entitled to receive dental health benefits from an insurer.

      (c) “Provider” means a person licensed or otherwise authorized by the laws of this state to administer dental health services in the ordinary course of business or practice of a profession.

      (2) A dental services contract may not restrict the price that a provider may charge for services provided to an enrollee unless the services are covered by the insurer. [2010 c.74 §2]

 

      Note: 735.515 was added to and made a part of the Insurance Code by legislative action but was not added to ORS chapter 735 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

 

PHARMACY BENEFIT MANAGERS

 

      735.530 Definitions for ORS 735.530 to 735.552. As used in ORS 735.530 to 735.552:

      (1) “Claim” means a request from a pharmacy or pharmacist to be reimbursed for the cost of filling or refilling a prescription for a drug or for providing a medical supply or service.

      (2) “Insurer” has the meaning given that term in ORS 731.106.

      (3) “Pharmacist” has the meaning given that term in ORS 689.005.

      (4) “Pharmacy” includes:

      (a) A pharmacy as defined in ORS 689.005; and

      (b) An entity that provides or oversees administrative services for two or more pharmacies.

      (5)(a) “Pharmacy benefit manager” means a person that contracts with pharmacies on behalf of an insurer, a third party administrator or the Oregon Prescription Drug Program established in ORS 414.312 to:

      (A) Process claims for prescription drugs or medical supplies or provide retail network management for pharmacies or pharmacists;

      (B) Pay pharmacies or pharmacists for prescription drugs or medical supplies; or

      (C) Negotiate rebates with manufacturers for drugs paid for or procured as described in this paragraph.

      (b) “Pharmacy benefit manager” does not include a health care service contractor as defined in ORS 750.005.

      (6) “Third party administrator” means a person licensed under ORS 744.702. [2013 c.570 §2; 2017 c.73 §5]

 

      Note: 735.530 to 735.552 were added to and made a part of the Insurance Code by legislative action but were not added to ORS chapter 735 or any series therein. See Preface to Oregon Revised Statutes for further explanation.

 

      735.532 Registration of pharmacy benefit managers; fees; rules. (1) To conduct business in this state, a pharmacy benefit manager must register with the Department of Consumer and Business Services and annually renew the registration.

      (2) To register under this section, a pharmacy benefit manager must:

      (a) Submit an application to the department on a form prescribed by the department by rule.

      (b) Pay a registration fee in an amount adopted by the department by rule.

      (3) To renew a registration under this section, a pharmacy benefit manager must pay a renewal fee in an amount adopted by the department by rule.

      (4) The department shall deposit all moneys collected under this section into the Consumer and Business Services Fund created in ORS 705.145.

      (5) Any fee adopted by the department under this section must be based on the department’s reasonable costs in administering ORS 735.530 to 735.552. [2013 c.570 §3; 2017 c.73 §3]

 

      Note: See note under 735.530.

 

      735.533 Denial, suspension or revocation of registration as pharmacy benefit manager; basis; complaint; rules. (1) In accordance with ORS chapter 183, the Department of Consumer and Business Services may deny an application for registration as a pharmacy benefit manager or an application for renewal of a registration as a pharmacy benefit manager, and may suspend or revoke a registration as a pharmacy benefit manager, if the department finds that an applicant or registrant:

      (a) Falsified an application for registration or for the renewal of a registration or engaged in any dishonest act in relation to the application;

      (b) Engaged in dishonesty, fraud or gross negligence in the conduct of business as a pharmacy benefit manager;

      (c) Engaged in conduct that resulted in a conviction of a felony under the laws of any state or of the United States, to the extent that such conduct may be considered under ORS 670.280;

      (d) Was convicted under the laws of any state or of the United States of any crime of which an essential element is dishonesty or fraud;

      (e) Had a certificate of authority or authority to conduct business as a pharmacy benefit manager denied, revoked or suspended in another state;

      (f) Failed to pay a civil penalty imposed by final order of the department or to comply with the terms of suspension set by the department;

      (g) Failed to meet the terms of a consent decree approved by a court of competent jurisdiction in this state, or a consent order made between the department and the pharmacy benefit manager;

      (h) Refused to be examined or to produce accounts, records or files for examination, including the refusal by any officer of the applicant or registrant to give information with respect to the affairs of the pharmacy benefit manager, or refused to perform any other legal obligation with respect to an examination by the department; or

      (i) Violated any rule or order of the department or any provision of the Insurance Code.

      (2) The department may prescribe by rule a procedure by which a pharmacy or an entity acting on behalf of a pharmacy may file a complaint with the department alleging that a pharmacy benefit manager has engaged in conduct described in this section. The department may restrict the right of a pharmacy or entity to file a complaint only to the extent necessary to prevent abuse of the complaint process. [2017 c.73 §2]

 

      Note: See note under 735.530.

 

      735.534 Claim reimbursement; maximum allowable costs. (1) As used in this section:

      (a) “List” means the list of drugs for which maximum allowable costs have been established.

      (b) “Maximum allowable cost” means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.

      (c) “Multiple source drug” means a therapeutically equivalent drug that is available from at least two manufacturers.

      (d) “Network pharmacy” means a retail drug outlet registered under ORS 689.305 that contracts with a pharmacy benefit manager.

      (e) “Therapeutically equivalent” has the meaning given that term in ORS 689.515.

      (2) A pharmacy benefit manager:

      (a) May not place a drug on a list unless there are at least two therapeutically equivalent, multiple source drugs, or at least one generic drug available from only one manufacturer, generally available for purchase by network pharmacies from national or regional wholesalers.

      (b) Shall ensure that all drugs on a list are generally available for purchase by pharmacies in this state from national or regional wholesalers.

      (c) Shall ensure that all drugs on a list are not obsolete.

      (d) Shall make available to each network pharmacy at the beginning of the term of a contract, and upon renewal of a contract, the sources utilized to determine the maximum allowable cost pricing of the pharmacy benefit manager.

      (e) Shall make a list available to a network pharmacy upon request in a format that is readily accessible to and usable by the network pharmacy.

      (f) Shall update each list maintained by the pharmacy benefit manager every seven business days and make the updated lists, including all changes in the price of drugs, available to network pharmacies in a readily accessible and usable format.

      (g) Shall ensure that dispensing fees are not included in the calculation of maximum allowable cost.

      (3) A pharmacy benefit manager must establish a process by which a network pharmacy may appeal its reimbursement for a drug subject to maximum allowable cost pricing. A network pharmacy may appeal a maximum allowable cost if the reimbursement for the drug is less than the net amount that the network pharmacy paid to the supplier of the drug. An appeal requested under this section must be completed within 30 calendar days of the pharmacy making the claim for which appeal has been requested.

      (4) A pharmacy benefit manager must provide as part of the appeals process established under subsection (3) of this section:

      (a) A telephone number at which a network pharmacy may contact the pharmacy benefit manager and speak with an individual who is responsible for processing appeals;

      (b) A final response to an appeal of a maximum allowable cost within seven business days; and

      (c) If the appeal is denied, the reason for the denial and the national drug code of a drug that may be purchased by similarly situated pharmacies at a price that is equal to or less than the maximum allowable cost.

      (5)(a) If an appeal is upheld under this section, the pharmacy benefit manager shall make an adjustment for the pharmacy that requested the appeal from the date of initial adjudication forward.

      (b) If the request for an adjustment has come from a critical access pharmacy, as defined by the Oregon Health Authority by rule for purposes related to the Oregon Prescription Drug Program, the adjustment approved under paragraph (a) of this subsection shall apply only to critical access pharmacies.

      (6) This section does not apply to the state medical assistance program. [2013 c.570 §11; 2013 c.570 §13]

 

      Note: See note under 735.530.

 

      735.540 Definitions for ORS 735.540 to 735.552. As used in ORS 735.540 to 735.552:

      (1) “Audit” means an on-site or remote review of the records of a pharmacy by or on behalf of an entity.

      (2) “Clerical error” means a minor error:

      (a) In the keeping, recording or transcribing of records or documents or in the handling of electronic or hard copies of correspondence;

      (b) That does not result in financial harm to an entity; and

      (c) That does not involve dispensing an incorrect dose, amount or type of medication or dispensing a prescription drug to the wrong person.

      (3) “Entity” includes:

      (a) A pharmacy benefit manager;

      (b) An insurer;

      (c) A third party administrator;

      (d) A state agency; or

      (e) A person that represents or is employed by one of the entities described in this subsection.

      (4) “Fraud” means knowingly and willfully executing or attempting to execute a scheme, in connection with the delivery of or payment for health care benefits, items or services, that uses false or misleading pretenses, representations or promises to obtain any money or property owned by or under the custody or control of any person. [2013 c.570 §4]

 

      Note: See note under 735.530.

 

      735.542 Pharmacy claims audits; requirements. An entity that audits claims or an independent third party that contracts with an entity to audit claims:

      (1) Must establish, in writing, a procedure for a pharmacy to appeal the entity’s findings with respect to a claim and must provide a pharmacy with a notice regarding the procedure, in writing or electronically, prior to conducting an audit of the pharmacy’s claims;

      (2) May not conduct an audit of a claim more than 24 months after the date the claim was adjudicated by the entity;

      (3) Must give at least 15 days’ advance written notice of an on-site audit to the pharmacy or corporate headquarters of the pharmacy;

      (4) May not conduct an on-site audit during the first five days of any month without the pharmacy’s consent;

      (5) Must conduct the audit in consultation with a pharmacist who is licensed by this or another state if the audit involves clinical or professional judgment;

      (6) May not conduct an on-site audit of more than 250 unique prescriptions of a pharmacy in any 12-month period except in cases of alleged fraud;

      (7) May not conduct more than one on-site audit of a pharmacy in any 12-month period;

      (8) Must audit each pharmacy under the same standards and parameters that the entity uses to audit other similarly situated pharmacies;

      (9) Must pay any outstanding claims of a pharmacy no more than 45 days after the earlier of the date all appeals are concluded or the date a final report is issued under ORS 735.550 (3);

      (10) May not include dispensing fees or interest in the amount of any overpayment assessed on a claim unless the overpaid claim was for a prescription that was not filled correctly;

      (11) May not recoup costs associated with:

      (a) Clerical errors; or

      (b) Other errors that do not result in financial harm to the entity or a consumer; and

      (12) May not charge a pharmacy for a denied or disputed claim until the audit and the appeals procedure established under subsection (1) of this section are final. [2013 c.570 §5]

 

      Note: See note under 735.530.

 

      735.544 Pharmacy claims audits; standards for review of claims. An entity’s finding that a claim was incorrectly presented or paid must be based on identified transactions and not based on probability sampling, extrapolation or other means that project an error using the number of patients served who have a similar diagnosis or the number of similar prescriptions or refills for similar drugs. [2013 c.570 §6]

 

      Note: See note under 735.530.

 

      735.546 Pharmacy claims audits; auditors. An entity that contracts with an independent third party to conduct audits may not:

      (1) Agree to compensate the independent third party based on a percentage of the amount of overpayments recovered; or

      (2) Disclose information obtained during an audit except to the contracting entity, the pharmacy subject to the audit or the holder of the policy or certificate of insurance that paid the claim. [2013 c.570 §7]

 

      Note: See note under 735.530.

 

      735.548 Pharmacy claims audits; validation of claims. For purposes of ORS 735.540 to 735.552, an entity, or an independent third party that contracts with an entity to conduct audits, must allow as evidence of validation of a claim:

      (1) An electronic or physical copy of a prescription that complies with ORS chapter 689 if the prescribed drug was, within 14 days of the dispensing date:

      (a) Picked up by the patient or the patient’s designee;

      (b) Delivered by the pharmacy to the patient; or

      (c) Sent by the pharmacy to the patient using the United States Postal Service or other common carrier;

      (2) Point of sale electronic register data showing purchase of the prescribed drug, medical supply or service by the patient or the patient’s designee; or

      (3) Electronic records, including electronic beneficiary signature logs, electronically scanned and stored patient records maintained at or accessible to the audited pharmacy’s central operations and any other reasonably clear and accurate electronic documentation that corresponds to a claim. [2013 c.570 §8]

 

      Note: See note under 735.530.

 

      735.550 Pharmacy claims audits; reports of findings; opportunity to resubmit claim and to contest finding. (1)(a) After conducting an audit, an entity must provide the pharmacy that is the subject of the audit with a preliminary report of the audit. The preliminary report must be received by the pharmacy no later than 45 days after the date on which the audit was completed and must be sent:

      (A) By mail or common carrier with a return receipt requested; or

      (B) Electronically with electronic receipt confirmation.

      (b) An entity shall provide a pharmacy receiving a preliminary report under this subsection no fewer than 45 days after receiving the report to contest the report or any findings in the report in accordance with the appeals procedure established under ORS 735.542 (1) and to provide additional documentation in support of the claim. The entity shall consider a reasonable request for an extension of time to submit documentation to contest the report or any findings in the report.

      (2) If an audit results in the dispute or denial of a claim, the entity conducting the audit shall allow the pharmacy to resubmit the claim using any commercially reasonable method, including facsimile, mail or electronic mail.

      (3) An entity must provide a pharmacy that is the subject of an audit with a final report of the audit no later than 60 days after the later of the date the preliminary report was received or the date the pharmacy contested the report using the appeals procedure established under ORS 735.542 (1). The final report must include a final accounting of all moneys to be recovered by the entity.

      (4) Recoupment of disputed funds from a pharmacy by an entity or repayment of funds to an entity by a pharmacy, unless otherwise agreed to by the entity and the pharmacy, shall occur after the audit and the appeals procedure established under ORS 735.542 (1) are final. If the identified discrepancy for an individual audit exceeds $40,000, any future payments to the pharmacy may be withheld by the entity until the audit and the appeals procedure established under ORS 735.542 (1) are final. [2013 c.570 §9]

 

      Note: See note under 735.530.

 

      735.552 Pharmacy claims audits; exception for fraud. ORS 735.540 to 735.552 do not:

      (1) Preclude an entity from instituting an action for fraud against a pharmacy;

      (2) Apply to an audit of pharmacy records when fraud or other intentional and willful misrepresentation is evidenced by physical review, review of claims data or statements or other investigative methods; or

      (3) Apply to a state agency that is conducting audits or a person that has contracted with a state agency to conduct audits of pharmacy records for prescription drugs paid for by the state medical assistance program. [2013 c.570 §10]

 

      Note: See note under 735.530.

 

      735.600 [1987 c.838 §2; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

COMPACT OF FREE ASSOCIATION

PREMIUM ASSISTANCE PROGRAM

 

      735.601 Purpose of Compact of Free Association Premium Assistance Program. ORS 735.601 to 735.617 establish the COFA Premium Assistance Program to be administered by the Department of Consumer and Business Services. The purpose of the program is to provide financial assistance to enable low-income citizens of the island nations in the Compact of Free Association who are residing in Oregon to purchase qualified health plan coverage through the health insurance exchange and to pay out-of-pocket costs associated with the coverage. [2016 c.94 §1]

 

      Note: 735.601 to 735.617 were enacted into law by the Legislative Assembly but were not added to or made a part of ORS chapter 735 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

 

      735.604 Definitions. As used in ORS 735.601 to 735.617:

      (1) “Advance premium tax credit” means the premium assistance amount determined in accordance with 26 U.S.C. 36B.

      (2) “COFA citizen” means an individual who is a citizen of:

      (a) The Republic of the Marshall Islands;

      (b) The Federated States of Micronesia; or

      (c) The Republic of Palau.

      (3) “Health insurance exchange” or “exchange” has the meaning given that term in ORS 741.300.

      (4) “Income” means the modified adjusted gross income that is attributed to an individual in determining the individual’s eligibility for advance premium tax credits.

      (5) “In-network provider” means a health care provider or group of providers that directly contract with an insurer to provide health benefits covered by a health benefit plan offered by the insurer.

      (6) “Open enrollment period” means the period during which a person may enroll in a qualified health plan.

      (7) “Out-of-pocket costs” means copayments, coinsurance, deductibles and other cost-sharing requirements imposed under a qualified health plan for services, pharmaceuticals, devices and other health benefits that are covered by the plan and that are rendered by in-network providers.

      (8) “Premium cost” means an individual’s premium for a qualified health plan less the amount of the individual’s advance premium tax credit.

      (9) “Qualified health plan” means a health benefit plan, as defined in ORS 743B.005, offered through the health insurance exchange.

      (10) “Resident” means a person who is domiciled in this state.

      (11) “Special enrollment period” means a period during which a person who has not done so during the open enrollment period may enroll in a qualified health plan through the exchange if the person meets specified requirements. [2016 c.94 §2]

 

      Note: See note under 735.601.

 

      735.605 [1987 c.838 §3; 1989 c.838 §6; 2003 c.33 §4; 2005 c.634 §4; 2009 c.695 §1; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.608 Eligibility for program; payment for plan and out-of-pocket costs; disenrollment; application, enrollment and renewal procedures; education and outreach. (1) An individual is eligible for the COFA Premium Assistance Program if the individual:

      (a) Is a resident;

      (b) Is a COFA citizen;

      (c) Enrolls in a qualified health plan;

      (d) Has income that is less than 138 percent of the federal poverty guidelines; and

      (e) Qualifies for an advance premium tax credit toward the cost of the individual’s qualified health plan.

      (2) Within the limits of moneys in the COFA Premium Assistance Program Fund, the Department of Consumer and Business Services shall pay the premium cost for a qualified health plan and the out-of-pocket costs for the coverage provided by the plan for an individual who meets the criteria in subsection (1) of this section.

      (3) The department may disenroll a participant from the program if the participant:

      (a) No longer meets the eligibility criteria specified in subsection (1) of this section;

      (b) Fails, without good cause, to comply with procedural or documentation requirements established by the department in accordance with subsection (4) of this section;

      (c) Fails, without good cause, to notify the department of a change of address in a timely manner;

      (d) Withdraws the participant’s application or requests termination of coverage; or

      (e) Performs an act, practice or omission that constitutes fraud and, as a result, an insurer rescinds the participant’s policy for the qualified health plan.

      (4) The department shall establish:

      (a) Application, enrollment and renewal processes for the COFA Premium Assistance Program;

      (b) The qualified health plans that are eligible for reimbursement under the program;

      (c) Procedural requirements for continued participation in the program, including participant documentation requirements that are necessary for the department to administer the program;

      (d) Open enrollment periods and special enrollment periods consistent with the enrollment periods for the health insurance exchange; and

      (e) A comprehensive community education and outreach campaign, working with stakeholder and community organizations, to facilitate applications for, and enrollment in, the program. [2016 c.94 §3]

 

      Note: See note under 735.601.

 

      735.610 [1987 c.838 §4; 1989 c.838 §7; 1993 c.744 §190; 1995 c.79 §361; 2001 c.356 §1; 2003 c.364 §95; 2009 c.595 §1118; 2009 c.828 §71; 2011 c.70 §19; 2013 c.698 §6; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.611 Advisory committee. (1) The Department of Consumer and Business Services shall appoint an advisory committee that includes, but is not limited to, insurers and representatives of communities of residents from the island nations in the Compact of Free Association. The committee shall advise the department in the development, implementation and operation of the COFA Premium Assistance Program as described in ORS 735.608.

      (2) Members of the advisory committee are not entitled to compensation, but may be reimbursed, in the manner and amounts provided for in ORS 292.495, for actual and necessary travel and other expenses incurred by them in the performance of their official duties. Claims for expenses incurred in performing functions of the committee shall be paid out of funds appropriated to the department for administering the COFA Premium Assistance Program. [2016 c.94 §4]

 

      Note: See note under 735.601.

 

      735.612 [1989 c.838 §§2,3; 1993 c.744 §191; 2009 c.595 §1119; 2013 c.698 §14; 2014 c.80 §1; 2017 c.477 §5; repealed by 2017 c.477 §6]

 

      735.614 [1989 c.838 §4; 1991 c.333 §1; 1995 c.603 §28; 2005 c.304 §1; 2005 c.635 §1; 2009 c.595 §1120; 2009 c.695 §3; 2011 c.131 §1; repealed by 2013 c.698 §42 and 2013 c.640 §20]

 

      735.615 [1987 c.838 §5; 1989 c.838 §11; 1993 c.130 §1; 1993 c.212 §1; 1999 c.754 §1; 2005 c.305 §§1,3; 2005 c.634 §1; 2005 c.635 §§2,3; 2009 c.695 §4; 2011 c.70 §20; 2011 c.602 §57; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.616 [Formerly 743.763; 1999 c.987 §1; 2001 c.356 §2; 2009 c.695 §5; 2013 c.698 §15; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.617 COFA Premium Assistance Program Fund. The COFA Premium Assistance Program Fund is established in the State Treasury, separate and distinct from the General Fund. Moneys in the COFA Premium Assistance Program Fund are continuously appropriated to the Department of Consumer and Business Services for the payment of premium costs and out-of-pocket costs through the COFA Premium Assistance Program and the costs of the department in administering the program. Interest earned by the fund shall be credited to the fund. [2016 c.94 §5]

 

      Note: See note under 735.601.

 

      Note: Sections 6 and 7, chapter 94, Oregon Laws 2016, provide:

      Sec. 6. No later than December 31, 2017, the Department of Consumer and Business Services shall report to the interim committees of the Legislative Assembly related to health care on the implementation of the COFA Premium Assistance Program established under sections 1 to 5 of this 2016 Act [735.601 to 735.617], including, but not limited to:

      (1) The number of individuals participating in the program;

      (2) The actual costs of the program compared to predicted costs;

      (3) The results of the community education and outreach campaign;

      (4) The amount remaining in the COFA Premium Assistance Program Fund; and

      (5) The amount of moneys needed to continue the program through the end of the 2015-2017 biennium. [2016 c.94 §6]

      Sec. 7. (1) The community education and outreach campaign conducted by the Department of Consumer and Business Services in accordance with section 3 of this 2016 Act [735.608] shall begin no later than September 1, 2016.

      (2) The first open enrollment period for the COFA Premium Assistance Program established under sections 1 to 5 of this 2016 Act [735.601 to 735.617] shall begin no later than November 1, 2016. [2016 c.94 §7]

 

      Note: Sections 1 and 2, chapter 243, Oregon Laws 2017, provide:

      Sec. 1. (1) As used in this section:

      (a) “COFA islander” means an individual who legally entered the United States under a Compact of Free Association treaty between the United States and any of the following countries:

      (A) The Republic of Palau.

      (B) The Republic of the Marshall Islands.

      (C) The Federated States of Micronesia.

      (b) “Health insurance exchange” has the meaning given that term in ORS 741.300.

      (c) “Premium assistance” means the payment or reimbursement of the costs of:

      (A) Premiums for a commercial or publicly funded plan that reimburses the costs of oral health care; and

      (B) The deductibles, copayments or other out-of-pocket expenses incurred by enrollees in order to access the care.

      (2) The Department of Consumer and Business Services shall develop recommendations for the creation of a program to reimburse the costs of oral health care for low-income COFA islanders residing in this state.

      (3) The recommendations must include, but are not limited to:

      (a) Whether the program should be structured to provide premium assistance to cover the cost of coverage:

      (A) Through a dental plan offered in the health insurance exchange or by a commercial vendor;

      (B) Provided in the state medical assistance program; or

      (C) Through an alternative means;

      (b) Eligibility requirements;

      (c) The amount of any premium assistance to be provided;

      (d) How premium assistance should be distributed among eligible individuals; and

      (e) The cost and financing of the premium assistance program, including whether federal funds or other sources of funding may be available.

      (4) The department shall convene an advisory group that includes COFA islanders from each of the affected communities and other stakeholders to assist and advise the department in developing the recommendations.

      (5) The department shall report its recommendations to the Legislative Assembly and to the interim committees of the Legislative Assembly related to health, in the manner provided in ORS 192.245, no later than September 15, 2017. [2017 c.243 §1]

      Sec. 2. Section 1 of this 2017 Act is repealed on January 2, 2020. [2017 c.243 §2]

 

      735.620 [1987 c.838 §6; 1989 c.838 §12; 2005 c.635 §4; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.625 [1987 c.838 §8; 1989 c.838 §13; 1993 c.130 §2; 1995 c.603 §27; 1999 c.987 §2; 2001 c.356 §3; 2003 c.684 §5; 2005 c.634 §2; 2005 c.635 §5a; 2009 c.595 §1120a; 2013 c.688 §93; 2013 c.698 §16; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.630 [1987 c.838 §9; 1989 c.838 §14; 2009 c.595 §1121; 2013 c.698 §7; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.635 [1987 c.838 §10; 1989 c.838 §15; 2013 c.698 §8; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.640 [1987 c.838 §12; 1989 c.838 §16; repealed by 2013 c.698 §42 and 2013 c.640 §20]

 

      735.645 [1987 c.838 §13; 1989 c.838 §17; 1993 c.130 §3; 2005 c.22 §489; 2005 c.634 §3; 2013 c.698 §17; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.650 [1987 c.838 §14; 1989 c.701 §72; 1989 c.838 §18; 1999 c.987 §3; 2001 c.356 §4; 2003 c.87 §20; 2013 c.698 §18; repealed by 2013 c.698 §42, 2013 c.640 §20 and 2017 c.477 §4]

 

      735.700 [Formerly 653.705; 2003 c.742 §§1,6; 2005 c.238 §§1,2; 2005 c.262 §§1,2; 2005 c.727 §§1,2; 2005 c.744 §§14,15; 2011 c.70 §23; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.701 [2005 c.744 §2; 2009 c.595 §1123; 2009 c.867 §49; 2013 c.365 §5; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.702 [Formerly 653.715; 2003 c.364 §96; 2003 c.742 §§2,7; 2005 c.744 §§16,17; 2011 c.70 §24; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.703 [2005 c.744 §3; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.704 [Formerly 653.725; repealed by 2005 c.744 §41]

 

      735.705 [2005 c.744 §4; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.706 [2001 c.716 §16; 2005 c.744 §18; 2009 c.595 §1124; repealed by 2009 c.595 §1204]

 

      735.707 [2005 c.744 §5; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.708 [Formerly 653.735; repealed by 2005 c.744 §41]

 

      735.709 [2005 c.744 §10; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.710 [Formerly 653.745; 2003 c.742 §§3,8; 2005 c.238 §§3,4; 2005 c.262 §§3,4; 2005 c.727 §§3,4; 2005 c.744 §§19,20; 2011 c.70 §25; 2013 c.365 §6; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.711 [2007 c.619 §3; repealed by 2011 c.720 §228]

 

      735.712 [Formerly 653.747; 2005 c.744 §21; repealed by 2013 c.681 §65 and 2013 c.640 §21]

 

      735.714 [2003 c.742 §12; 2005 c.744 §22; repealed by 2011 c.70 §26]

 

      735.720 [Formerly 653.800; 2003 c.684 §8; 2005 c.727 §§5,5a; 2005 c.744 §§23d,23e,23g; 2007 c.70 §317; renumbered 414.841 in 2009]

 

      735.721 [2009 c.470 §1; 2013 c.69 §1; 2015 c.318 §43; repealed by 2017 c.101 §50 and 2017 c.384 §13]

 

      735.722 [Formerly 653.805; 2003 c.128 §1; 2003 c.683 §4; 2003 c.784 §12; 2005 c.238 §6; 2005 c.262 §6; 2005 c.727 §6; 2005 c.744 §24a; 2009 c.595 §1125; renumbered 414.842 in 2009]

 

      735.723 [2009 c.470 §2; 2013 c.69 §2; 2015 c.318 §44; repealed by 2017 c.101 §50 and 2017 c.384 §13]

 

      735.724 [Formerly 653.810; 2003 c.128 §2; 2003 c.683 §1; 2005 c.238 §7; 2005 c.262 §7; 2005 c.727 §7; 2005 c.744 §25; renumbered 414.844 in 2009]

 

      735.725 [2009 c.470 §3; repealed by 2017 c.101 §50 and 2017 c.384 §13]

 

      735.726 [Formerly 653.815; 2005 c.744 §26; renumbered 414.846 in 2009]

 

      735.727 [2009 c.470 §4; 2015 c.318 §45; repealed by 2017 c.101 §50 and 2017 c.384 §13]

 

      735.728 [Formerly 653.820; 2005 c.744 §27; renumbered 414.848 in 2009]

 

      735.730 [Formerly 653.825; 2005 c.744 §28; renumbered 414.851 in 2009]

 

      735.731 [2003 c.683 §3; 2003 c.735 §12; 2005 c.744 §29; renumbered 414.852 in 2009]

 

      735.732 [Formerly 653.830; 2005 c.744 §30; renumbered 414.854 in 2009]

 

      735.733 [2003 c.684 §11; 2005 c.744 §31; renumbered 414.856 in 2009]

 

      735.734 [Formerly 653.835; 2005 c.744 §32; 2009 c.595 §1126; renumbered 414.858 in 2009]

 

      735.736 [Formerly 653.840; 2005 c.744 §33; renumbered 414.861 in 2009]

 

      735.738 [Formerly 653.845; 2005 c.238 §8; 2005 c.727 §8; renumbered 414.862 in 2009]

 

      735.740 [Formerly 653.850; 2003 c.684 §9; 2005 c.744 §34; 2007 c.71 §238; renumbered 414.864 in 2009]

 

      735.750 [2003 c.684 §1; 2005 c.744 §35; renumbered 414.866 in 2009]

 

      735.752 [2003 c.684 §2; renumbered 414.868 in 2009]

 

      735.754 [2003 c.684 §3; 2005 c.744 §36; 2009 c.595 §1127; renumbered 414.870 in 2009]

 

      735.756 [2003 c.684 §4; 2009 c.595 §1128; renumbered 414.872 in 2009]

 

      735.990 [1987 c.774 §135; repealed by 1991 c.810 §29]

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