Bill Text: OR HB2679 | 2011 | Regular Session | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to insurance; and providing for revenue raising that requires approval by a three-fifths majority.
Spectrum: Unknown
Status: (Passed) 2011-08-02 - Chapter 660, (2011 Laws): Effective date January 1, 2012. [HB2679 Detail]
Download: Oregon-2011-HB2679-Engrossed.html
Bill Title: Relating to insurance; and providing for revenue raising that requires approval by a three-fifths majority.
Spectrum: Unknown
Status: (Passed) 2011-08-02 - Chapter 660, (2011 Laws): Effective date January 1, 2012. [HB2679 Detail]
Download: Oregon-2011-HB2679-Engrossed.html
76th OREGON LEGISLATIVE ASSEMBLY--2011 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 445
A-Engrossed
House Bill 2679
Ordered by the House May 17
Including House Amendments dated May 17
Introduced and printed pursuant to House Rule 12.00. Presession
filed (at the request of House Interim Committee on Judiciary
for Surplus Line Association of Oregon)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
{ + Authorizes Director of Department of Consumer and
Business Services to enter compact with other states to allocate
among states premium taxes paid to insured's home state. + }
Imposes surplus lines insurance tax and reporting requirements on
independently procured insurance policyholders. { + Authorizes
director to collect taxes on premiums for home state risks. + }
Revises calculation of surplus lines premium tax paid by surplus
lines licensee. Changes calculation of fire insurance premium tax
paid by surplus lines licensee. { - Allows Director of
Department of Consumer and Business Services to waive or modify
diligent search requirements for surplus lines insurance by rule
under certain circumstances. - } Waives diligent search
requirements for surplus lines insurance for insureds who meet
certain qualifications. { + Modifies requirements for
nonadmitted insurer receiving coverage placed by surplus lines
licensee. Authorizes Surplus Line Association of Oregon to
collect reports and taxes from insureds obtaining independently
procured insurance. + }
A BILL FOR AN ACT
Relating to insurance; creating new provisions; amending ORS
731.144, 735.405, 735.410, 735.415, 735.425, 735.430, 735.435,
735.450, 735.455, 735.460, 735.465, 735.470, 735.485 and
735.490; and providing for revenue raising that requires
approval by a three-fifths majority.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Section 2 of this 2011 Act is added to and made
a part of ORS chapter 731. + }
SECTION 2. { + ' Independently procured insurance' means
insurance procured directly by an insured from a nonadmitted
insurer as defined in ORS 735.405. + }
SECTION 3. { + Sections 4, 5 and 7 of this 2011 Act are added
to and made a part of ORS 735.400 to 735.495. + }
SECTION 4. { + For purposes of carrying out the Nonadmitted
and Reinsurance Reform Act of 2010 (P.L. 111-203, Title V,
Subtitle B), 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. + }
SECTION 5. { + (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. + }
SECTION 6. ORS 735.405 is amended to read:
735.405. 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. + }
{ - (2) - } { + (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. + }
{ - (3) - } { + (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 section 7 of this 2011
Act.
(B) The person generates annual revenues in excess of $20
million, as such amount is adjusted pursuant to section 7 of this
2011 Act.
(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 section 7 of this
2011 Act.
(E) The person is a municipality with a population in excess of
50,000 individuals. + }
{ - (4) - } { + (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. + }
{ - (5) - } { + (9) + } 'Kind of insurance' means one of
the types of insurance required to be reported in the annual
statement { - which - } { + that + } must be filed with the
Director of the Department of Consumer and Business Services by
authorized insurers.
{ - (6) - } { + (10) + } 'Nonadmitted insurer' means an
insurer not authorized to do an insurance business in this state.
{ - This definition shall include - } { + '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. + }
{ - (7) - } { + (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. + }
{ - (8) - } { + (14) + } 'Surplus' means funds over and
above liabilities and capital of the insurer for the protection
of policyholders.
{ - (9) - } { + (15) + } 'Surplus lines licensee' means an
insurance producer licensed under ORS chapter 744 to place
insurance on
{ - risks resident, located or to be performed in this state
with nonadmitted insurers eligible to accept such insurance - }
{ + Oregon home state risks with nonadmitted insurers + }.
SECTION 7. { + 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. + }
SECTION 8. ORS 735.470 is amended to read:
735.470. (1) { + (a) + } The surplus lines licensee shall pay
the Director of the Department of Consumer and Business Services
{ - an amount equal to the tax that would have been imposed
under ORS 731.816 (1993 Edition) if that section were in effect
and operative, and the tax that is imposed by ORS 731.820, on
authorized insurers for the premiums shown in the report required
by ORS 735.465. - } { + 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 { - tax - } { + taxes + } shall be
collected by the surplus lines licensee as specified by the
director, in addition to the { - full amount of the gross
premium - } { + gross amount of premiums + } charged by the
insurer { + or the insurer's insurance producer and other
intermediaries + } for the insurance. The { - tax - } { +
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
{ - such tax - } { + the taxes, + } and from rebating for any
reason, any part of { - such tax - } { + the taxes + }.
(2) The surplus lines { - tax is - } { + taxes are + } due
quarterly on the 45th day following the calendar quarter in which
the premium is collected. The { - tax - } { + 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) In applying ORS 731.816 (1993 Edition) for purposes
of this section, the rate shall be two percent rather than two
and one-quarter percent. - }
{ - (5) The director by rule shall establish procedures for
payment of taxes on the Oregon portion of risks covered by
surplus lines insurance policies transacted outside this state
that cover risks with exposures both in this state and outside
this state. - }
{ + (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 section 4 of this 2011 Act, 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. + }
SECTION 9. ORS 735.410 is amended to read:
735.410. (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) of this section does not apply to a
placement of surplus lines insurance outside this state by a
nonresident surplus lines licensee or by a nonresident surplus
lines insurance producer who is not licensed to transact surplus
lines insurance in this state when the insurance covers a risk
with exposures both in this state and outside this state, if both
of the following conditions are met: - }
{ - (a) If the nonresident surplus lines licensee or
insurance producer is licensed in the state as an insurance
producer to transact surplus lines policies in the state in which
the insurance is placed and is in good standing in that state;
and - }
{ - (b) If the surplus lines policy complies with all of the
requirements for placement of nonadmitted insurance in the state
in which the insurance is placed. - }
{ + (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 { - outside this state - }
{ + on Oregon home state risks + } by a nonresident surplus
lines licensee { + . + }
{ - or by a nonresident surplus lines insurance producer who is
not licensed in this state, when the insurance covers a risk with
exposures both in this state and outside this state. The rules
may include such matters as the procurement of surplus lines
insurance, eligibility of the insurer, the conditions under which
surplus lines insurance may be obtained, the necessary evidence
of insurance, filing requirements and other matters necessary for
regulation of surplus lines insurance transactions that affect
risk exposures in this state. - } 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) + }.
SECTION 10. ORS 735.415 is amended to read:
735.415. (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) Established satisfactory evidence of good repute and
financial integrity. - }
{ + (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 { - under
the laws of this state - } { + of its domiciliary
jurisdiction + } or { - $5 - } { + $15 + } million, except
that the requirements of this { - paragraph - }
{ + subparagraph + } may be satisfied by an insurer possessing
less than { - $5 million - } { + 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 { - surplus lines - } { +
nonadmitted + } insurer's capital and surplus is less than
{ - $3 - } { + $4.5 + } million.
(B) { - Except as otherwise provided in subparagraph (C) of
this paragraph, - } 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 { - $1.5 - } { +
$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
{ - $50 - } { + $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
{ - shall - } { + 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 { - $15 - }
{ + $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 { - $1.5 - } { + $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 { - on the most current list of alien insurers
approved by - } { + 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 { - or
nonresident surplus lines insurance producer who is not licensed
to transact surplus lines insurance in this state - } places
surplus lines insurance outside this state that covers { - a
risk with exposures both in this state and outside this state - }
{ + an Oregon home state risk + }, the licensee or insurance
producer is { - not - } subject to the requirements of
subsection (1) of this section { + . + } { - if the nonadmitted
insurer with which the coverage is placed: - }
{ - (a) Meets the requirements for nonadmitted placement of
insurance in the state in which the insurance is placed; or - }
{ - (b) Is an authorized or admitted insurer in the state in
which the insurance is placed. - }
SECTION 11. ORS 735.425 is amended to read:
735.425. (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). + }
{ - (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.
{ - (3) - } { + (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. + } { - or nonresident producing insurance producer
not licensed to transact surplus lines insurance in this state
who places a surplus lines policy on a risk with exposures
located both in this state and outside this state shall satisfy
filing requirements established by the director by rule. The
director shall ensure that the rules facilitate interstate
regulation of surplus lines insurance transactions. - }
{ - (4) - } { + (5) + } Facsimile signatures and electronic
signatures subject to ORS 84.001 to 84.061 are acceptable and
have the same force as original signatures.
SECTION 12. ORS 735.430 is amended to read:
735.430. (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 { - tax - } { + taxes + } for surplus lines
insurance { + pursuant to ORS 735.470 or section 5 of this 2011
Act + }.
(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 section 5 of this 2011 Act.
(c) + } The association shall adopt bylaws implementing { +
paragraphs (a) and (b) of + } this subsection.
SECTION 13. ORS 735.435 is amended to read:
735.435. (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) { - No - } { + A + } surplus lines licensee
{ - shall - } { + 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 { - a
risk with exposures located both in this state and outside this
state - } { + an Oregon home state risk + }.
SECTION 14. ORS 735.450 is amended to read:
735.450. { - (1) - } A person { - shall - } { + 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.
{ - (2) The prohibition in subsection (1) of this section
does not apply to a nonresident surplus lines licensee or to a
nonresident surplus lines insurance producer who is not a
licensee in this state if: - }
{ - (a) The insurance contract covers a risk with exposures
both in this state and outside this state; - }
{ - (b) Procurement of the insurance contract described in
paragraph (a) of this subsection did not occur in this state;
and - }
{ - (c) The licensee or insurance producer is licensed to
transact surplus lines insurance in the state in which the
insurance contract described in paragraph (a) of this subsection
was procured. - }
SECTION 15. ORS 735.455 is amended to read:
735.455. (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.
SECTION 16. ORS 735.460 is amended to read:
735.460. (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
{ - on each risk resident in this state - } 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.
SECTION 17. ORS 735.465 is amended to read:
735.465. (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
{ - risks resident in this state - } { + 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
{ - the - } Oregon { + home state + } { - portion of - }
risks when the insurance is placed outside this state { - and
covers a risk with exposures located both in this state and
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
{ - with exposures located both in this state and outside this
state - } .
SECTION 18. ORS 735.485 is amended to read:
735.485. (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) A surplus lines insurance contract covering risks
with exposures both in this state and outside this state that is
placed outside this state by a nonresident surplus lines
licensee, and the surplus lines insurer of the contract, are not
subject to the provisions of subsection (2) of this section or
ORS 735.490: - }
{ - (a) If the nonresident surplus lines licensee is
currently licensed as an insurance producer authorized to
transact surplus lines insurance contracts in the state in which
the surplus lines insurance contract is placed and is in good
standing in that state; and - }
{ - (b) If the surplus lines insurance contract complies with
all of the requirements for placement of nonadmitted insurance in
the state in which the surplus lines insurance contract is
placed. - }
{ - (5) - } { + (4) + } When a nonresident surplus lines
insurance producer
{ - who is not a surplus lines licensee in this state - }
transacts outside this state a surplus lines insurance contract
covering
{ - risks with exposures both in this state and outside this
state - } { + 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 { + . + }
{ - unless: - }
{ - (a) The producer is currently licensed to transact
surplus lines policies in the state in which the surplus lines
insurance contract is placed and is in good standing in that
state; and - }
{ - (b) The surplus lines insurance contract complies with
all of the requirements for placement of nonadmitted insurance in
the state in which the surplus lines insurance contract is
placed. - }
SECTION 19. ORS 735.490 is amended to read:
735.490. (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.
SECTION 20. ORS 731.144 is amended to read:
731.144. 'Surplus lines insurance' means any insurance { + on
an Oregon home state risk + } { - in this state of risks
resident, located or to be performed in this state - } ,
permitted to be placed through a surplus lines licensee with a
nonadmitted insurer eligible to accept such insurance, other than
reinsurance, wet marine and transportation insurance,
independently procured insurance { + , + } { - and - } life
{ + insurance + } and health insurance and annuities. { + For
purposes of this section, 'home state' has the meaning given that
term in ORS 735.405. + }
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