Chapter 352 Oregon Laws 2001
AN ACT
SB 831
Relating to mutual insurers;
creating new provisions; and amending ORS 732.005, 732.465, 732.470, 732.529
and 732.606.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
ORS 732.529 is amended to read:
732.529. (1) Following approval of a proposed activity by
the Director of the Department of Consumer and Business Services or pursuant to
a court order or decree, the proposed activity shall be submitted for approval
to the members of a domestic mutual insurer, the subscribers of a domestic
reciprocal insurer or the shareholders of a domestic stock insurer.
(2) A notice of the meeting at which the proposed activity
will be submitted for approval shall set forth the time, place and purpose of
the meeting. The notice, the procedure to be followed at the meeting, quorum
requirements and voting at the meeting shall be governed by the provisions in
the Insurance Code and the articles of incorporation and bylaws of the insurer
applicable to annual or special meetings of members, subscribers or
shareholders. The notice of the meeting must contain or be accompanied by a
copy or summary of the statement filed under ORS 732.523.
(3)(a) Unless
the articles of incorporation [of the
domestic insurer] require a greater number of affirmative votes, the
proposed activity is approved:
(A) By the [members,] subscribers of a domestic reciprocal insurer or the shareholders of a domestic stock insurer entitled to vote at a meeting duly
called and held if the votes cast in favor of the proposed activity exceed the
votes cast opposing the proposed activity[.]; or
(B) By the members of a
domestic mutual insurer entitled to vote at a meeting duly called and held if
the proposed activity is approved by two-thirds or more of the members voting
on the proposed activity.
(b) If provided in the
statement filed under ORS 732.523 and approved by the director, voting on the
proposed activity by the members of a domestic mutual insurer may be limited to
eligible members determined in accordance with ORS 732.531 (2), and voting on
the proposed activity by the subscribers of a domestic reciprocal insurer may
be limited to eligible subscribers determined in accordance with ORS 732.531
(2).
(c) The board of
directors of a domestic mutual insurer may condition its submission of the
proposed activity to the members on any legal basis.
(4) If the proposed activity is approved by the members,
subscribers or shareholders in accordance with this section and the activity is
consummated, the activity shall bind all members of a domestic mutual insurer,
all subscribers of a domestic reciprocal insurer and all shareholders of a
domestic stock insurer.
(5) Dissenters’ rights provided in ORS 60.551 to 60.594 are
not available to any member of a domestic mutual insurer or any subscriber of a
domestic reciprocal insurer with respect to an activity that is subject to the
approval of the director.
(6) An insurer, other than a domestic insurer, or another
corporation that is a party to a proposed activity described in a statement
filed under ORS 732.523 is subject to the laws of its domiciliary jurisdiction
governing approval of its members, subscribers or shareholders.
SECTION 2.
ORS 732.606 is amended to read:
732.606. (1) In order for a domestic mutual insurer to
engage in a conversion or reorganization as provided in ORS 732.604, the board
of directors of the mutual insurer must adopt a plan that meets the
requirements of ORS 732.610.
(2) After the board of directors of a mutual insurer has
adopted a plan and before the board of directors seeks approval of the plan by
the eligible members of the mutual insurer, the mutual insurer shall file the
following documents with the Director of the Department of Consumer and
Business Services:
(a) The plan of conversion or reorganization.
(b) The form of notice of the meeting at which the eligible
members vote on the plan.
(c) The form of any proxies to be solicited from the
eligible members. Proxies must offer the eligible members the option of voting
in favor or voting against the plan or abstaining.
(d) Information required by ORS 732.523.
(e) Other information or documentation required by the
director.
(3) The director shall approve, conditionally approve or
disapprove a plan and other documents submitted under subsection (2) of this
section, according to the standards established in ORS 732.626. The director
must take such action not later than the 60th day after the director has
received a completed filing of the plan and all information requested by the
director or not later than the 30th day after the completion of a hearing on
the plan, whichever date is later.
(4) At any time before approval of a plan by the director,
the board of directors of the mutual insurer may amend or withdraw the plan.
(5) After approval by the director, the plan must be
approved by the eligible members of the mutual insurer. Approval by the
eligible members is subject to the following requirements:
(a) All eligible members must be given notice of the plan
and of their opportunity to vote on the plan. A copy of the plan or a summary
of the plan must accompany the notice. The notice shall be mailed to the last
known address of each eligible member, as shown on the records of the mutual
insurer, not later than the 45th day after approval of the plan by the
director. The meeting of the eligible members at which a vote on the plan will
occur shall be set for a date that is not earlier than the 30th day after the
date on which the mutual insurer mailed the notice of the meeting. If the
mutual insurer complies substantially and in good faith with the notice
requirements of this section, the mutual insurer’s failure to give any member
or members any required notice does not impair the validity of any action taken
under this section.
(b) The vote required for approval must be conducted as
provided in ORS 732.470 and 732.475, except as follows:
(A) Only eligible members may vote on the plan.
(B) An eligible member may vote in person or by proxy at
the meeting at which the plan is voted upon.
(C) The plan is approved by the eligible members [if the votes cast in favor of the plan
exceed the votes cast opposing the plan, unless the articles of incorporation
require a greater number of affirmative votes.] upon the affirmative vote of two-thirds or more of the eligible
members voting on the plan, unless the articles of incorporation require a
greater number of affirmative votes.
(6) The plan shall be carried out in accordance with its
terms on the effective date of the conversion or reorganization.
SECTION 3.
Section 4 of this 2001 Act is added to and made a part of ORS chapter 732.
SECTION 4.
A copy of the bylaws of a domestic
mutual insurer, including any amendments, shall be provided to the Director of
the Department of Consumer and Business Services. The bylaws of a mutual
insurer may contain any provision for managing the business and regulating the
affairs of the insurer that is not inconsistent with law or the articles of
incorporation. The bylaws shall contain a provision that governs the
involvement of the mutual insurer in a member’s communication with other
members regarding the business and affairs of the insurer. The bylaws may
contain a provision eliminating or limiting the personal liability of a member
of the board of directors to the mutual insurer or its members for monetary
damages for conduct as a director, provided that no such provision may
eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective and no such
provision may eliminate or limit the liability of a director for:
(1) Any breach of the
director’s duty of loyalty to the mutual insurer or its members;
(2) Acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law;
(3) Any unlawful
distribution; or
(4) Any transaction from
which the director derived an improper personal benefit.
SECTION 5.
ORS 732.465 is amended to read:
732.465. (1) A domestic mutual insurer shall be owned by
and operated in the interest of its members.
(2) Each owner of one or more valid and existing policies
of insurance issued by a domestic mutual insurer, other than a policy of
reinsurance, is a member of such insurer possessing the rights and obligations of
such membership. However, two or more
persons who qualify as owners under a single policy of insurance collectively
shall be considered to be one member.
(3) An owner is the person given the rights of ownership or
the power to make transactions with the insurer under terms of the policy,
including an assignee, other than the insurer which issued the policy, who has
received an assignment absolute on its face subject to any reasonable minimum
requirements relating to assignments found in the policy or in the bylaws of
the insurer. In a policy of group life or health insurance the person
contracting with the insurer and to whom the master contract is issued is the
member; the lives insured and individuals holding certificates thereunder are
not policyholders or members.
(4) A person who, because of the death of the life insured
in a policy of insurance or the death of the life referred to in an annuity
policy, has obtained rights as a beneficiary to death benefits or settlement
payments is not a policyholder or member.
SECTION 6.
ORS 732.470 is amended to read:
732.470. (1) Each member of a domestic mutual insurer is
entitled to one vote on each matter coming before a meeting of the members and
for each director to be elected regardless of the number of policies or amount
of insurance and benefits held by such member.
(2) The member under a group policy shall have but one vote
regardless of the number of individuals insured or benefited thereunder.
(3) Two or more persons who qualify as policyholders under
a single policy shall be deemed one policyholder and member for purposes of
voting and collectively shall be entitled to one vote.
(4) Fractional voting [shall]
may not be permitted.
(5) Where a member is a minor, the vote shall be vested in
the parent or legal guardian of such minor.
(6) Cumulative voting for directors [shall] may not be
permitted unless expressly provided for in the insurer’s articles of
incorporation.
(7) The right to vote shall be subject to such reasonable
minimum requirements as to duration of membership as may be made in the
articles of incorporation and bylaws of the insurer.
(8) A member may in every case vote in person or by proxy;
the right to vote by proxy shall be subject to reasonable provisions pertaining
thereto, including the duration of
proxies, contained in the articles of incorporation [and] or bylaws of the
insurer.
SECTION 7.
ORS 732.005 is amended to read:
732.005. (1) Except where inconsistent with the express
provisions of the Insurance Code, ORS chapter 60, shall, to the extent
applicable, govern the powers, duties and relationships of domestic insurers.
(2) The following sections in ORS chapter 60 [shall] may not apply to insurers: ORS 60.004, 60.007 to 60.014, 60.016,
60.017 to 60.024, 60.031, 60.044, 60.051 to 60.057, 60.094 to 60.101, 60.311,
60.470 to 60.534, 60.701 to 60.717, 60.734 to 60.744, 60.787, 60.954, 60.957 to
60.967 and 60.992.
(3) ORS 60.224,
60.774 (2)(c) and 60.777 (4) [shall]
may not apply to insurers without
capital stock.
(4) The enumeration in subsections (2) and (3) of this
section of inapplicable sections in ORS chapter 60 [shall] may not be deemed
exclusive or a limitation upon subsection (1) of this section.
(5) To the extent applicable and not inconsistent with
subsections (1) to (4) of this section, ORS chapter 60 shall apply to insurers
without capital stock as well as to insurers with capital stock. Where
applicable to insurers without capital stock, references in ORS chapter 60 to
“shareholders” shall be deemed references to “policyholders” or “subscribers”
as the case may be.
(6) In applying ORS chapter 60 as provided in this section,
unless the context requires otherwise:
(a) “Office of Secretary of State” or “office” means the
Department of Consumer and Business Services.
(b) “Secretary of State” means the Director of the
Department of Consumer and Business Services.
(c) “Corporation” and “domestic corporation” mean a
domestic insurer.
Approved by the Governor
June 8, 2001
Filed in the office of
Secretary of State June 8, 2001
Effective date January 1,
2002
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