71st OREGON LEGISLATIVE ASSEMBLY--2001 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 4256
 
                           A-Engrossed
 
                         House Bill 3980
                   Ordered by the House May 16
             Including House Amendments dated May 16
 
Sponsored by Representative BATES; Representative GARDNER
 
 
                             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.
 
  Establishes Examination and Accountability Commission to review
Industrial Accident Fund.   { - Directs transfer of moneys from
Industrial Accident Fund to Workers' Benefit Fund and to
Examination and Accountability Commission Fund. Creates
Examination and Accountability Commission Fund. - }  Provides
that expenses of commission be paid from moneys appropriated for
expenses of State Treasurer.  { + Provides that State Treasurer
shall be reimbursed from Industrial Accident Fund.
  Sunsets commission January 2, 2008 + }
  Declares emergency, effective on passage.
 
                        A BILL FOR AN ACT
Relating to the Industrial Accident Fund; creating new
  provisions; amending ORS 656.526 and 656.632; and declaring an
  emergency.
  Whereas the Legislative Assembly finds that the Industrial
Accident Fund is a trust fund that, subject to constitutional
constraints, may be used in a manner most beneficial to all
citizens of Oregon; and
  Whereas a recently released analysis of the financial
incentives in Oregon's workers' compensation insurance market
raises significant concerns about the competitiveness of the
Oregon workers' compensation market; now, therefore,
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + (1) The Examination and Accountability
Commission is established.
  (2) The commission shall consist of seven members, as follows:
  (a) The State Treasurer, who shall be the chairperson of the
commission.
  (b) The Secretary of State.
  (c) The Director of the Department of Consumer and Business
Services, who shall be a nonvoting member of the commission.
  (d) The chairperson of the board of directors of the State
Accident Insurance Fund Corporation.
  (e) Three public members appointed by the Governor. The
appointment of the public members shall be subject to
confirmation by the Senate in the manner prescribed in ORS
171.562 and 171.565.  One public member must represent the
interests of subject workers.  One public member must represent
the interests of subject employers. One public member must be a
certified public accountant with actuarial experience. A person
is not eligible to serve as a public member of the commission if
the person has been an officer or director of the State Accident
Insurance Fund Corporation or of a private insurer within four
years prior to the date of appointment to the commission.
  (3) The public members of the commission shall serve for terms
of four years. A member is eligible for reappointment.
  (4) A public member of the commission is entitled to
compensation and expenses as provided in ORS 292.495.
  (5) Administrative expenses of the commission shall be paid by
the State Treasurer from moneys appropriated for administrative
expenses of the treasurer. + }
  SECTION 2.  { + Notwithstanding the term of office specified in
section 1 of this 2001 Act, of the public members first appointed
to the Examination and Accountability Commission under section 1
of this 2001 Act:
  (1) One member shall serve for a term of one year;
  (2) One member shall serve for a term of two years; and
  (3) One member shall serve for a term of three years. + }
  SECTION 3.  { + The board of directors of the State Accident
Insurance Fund Corporation shall determine and report to the
Examination and Accountability Commission by March 1 of each
year:
  (1) The total amount of assets in the Industrial Accident Fund
as of December 31 of the prior year;
  (2) The reserves and surplus that are actuarially necessary
according to recognized insurance principles as described in ORS
656.634 (2);
  (3) Any surplus subject to legislative disposition as described
in ORS 656.634 (2); and
  (4) The total amount of investment gain generated by the
Industrial Accident Fund during the prior year ending on December
31. + }
  SECTION 4.  { + (1)(a) The Examination and Accountability
Commission shall provide for an annual review of the Industrial
Accident Fund by a qualified independent actuarial firm and shall
require a report from the firm.
  (b) The independent actuarial firm conducting the review
required by paragraph (a) of this subsection shall be familiar
with the accounting standards applicable to the reserves under
review, shall meet all appropriate standards of practice
established by the Casualty Actuarial Society, shall employ a
staff that includes no fewer than three people who have attained
fellowship in the Casualty Actuarial Society and shall maintain
limits of errors and omission insurance as prescribed by the
commission.
  (c) The commission shall determine the scope of the review
required by paragraph (a) of this subsection, which shall
include, but is not limited to:
  (A) A review of the sources and uses of the moneys in the
Industrial Accident Fund;
  (B) A reconciliation of changes in actuarial assumptions and
reserve values from the prior year;
  (C) An examination of the development of claim reserve
inadequacies or redundancies over time;
  (D) An assessment of the future financial viability of the
Industrial Accident Fund; and
  (E) An evaluation of losses and loss adjustment expense
reserves discounted by a rate determined by the Director of the
Department of Consumer and Business Services, in consultation
with the commission, that is consistent with discount rates
generally applied by insurers authorized to underwrite workers'
compensation insurance in Oregon.
 
  (d) The State Accident Insurance Fund Corporation shall
cooperate with the actuarial firm in all respects and shall
permit the firm full access to all information the firm deems
necessary for a true and complete review. Information provided to
the actuarial firm conducting the annual review is subject to the
same limitations on public inspections as required for the
records of the State Accident Insurance Fund Corporation by ORS
656.702.
  (2) The Examination and Accountability Commission shall issue
an annual report to the Governor and to the Legislative Assembly
on the status of the Industrial Accident Fund, including the
results of the review. Notwithstanding any other provision of
law, the records of the commission and the report of the
independent actuarial firm shall be available for public
inspection. + }
  SECTION 5. ORS 656.526 is amended to read:
  656.526. (1) Periodically, the State Accident Insurance Fund
Corporation shall determine the total liability existing against
the Industrial Accident Fund.
  (2) If, after the determination required by subsection (1) of
this section, the State Accident Insurance Fund Corporation finds
the Industrial Accident Fund, aside from the reserves  { + and
surplus + } deemed actuarially necessary according to recognized
insurance principles, contains   { - a - }   { + an
additional + } surplus { +  subject to legislative disposition as
described in ORS 656.634 (2) + }, the State Accident Insurance
Fund Corporation in its discretion may, after providing for any
payments to the state, taxes or other dispositions of surplus
provided by law, declare a dividend  { + from such additional
surplus + } to be paid to, or credited to the accounts of,
employers who were insured by the State Accident Insurance Fund
Corporation during all or part of the period for which the
dividend is declared. Any dividend so declared shall give due
consideration to the solvency of the Industrial Accident Fund,
not be unfairly discriminatory and not be promised in advance of
such declaration.
  (3) An employer in default when the dividend is declared shall
not be eligible to receive payment or the credit provided by
subsection (2) of this section.
  SECTION 6. ORS 656.526, as amended by section 5 of this 2001
Act, is amended to read:
  656.526. (1) Periodically, the State Accident Insurance Fund
Corporation shall determine the total liability existing against
the Industrial Accident Fund.
  (2) If, after the determination required by subsection (1) of
this section, the State Accident Insurance Fund Corporation finds
the Industrial Accident Fund, aside from the reserves   { - and
surplus - }  deemed actuarially necessary according to recognized
insurance principles, contains   { - an additional - }  { +
a + } surplus { +   + }  { - subject to legislative disposition
as described in ORS 656.634 (2) - } , the State Accident
Insurance Fund Corporation in its discretion may, after providing
for any payments to the state, taxes or other dispositions of
surplus provided by law, declare a dividend   { - from such
additional surplus - }  to be paid to, or credited to the
accounts of, employers who were insured by the State Accident
Insurance Fund Corporation during all or part of the period for
which the dividend is declared. Any dividend so declared shall
give due consideration to the solvency of the Industrial Accident
Fund, not be unfairly discriminatory and not be promised in
advance of such declaration.
  (3) An employer in default when the dividend is declared shall
not be eligible to receive payment or the credit provided by
subsection (2) of this section.
  SECTION 7. ORS 656.632 is amended to read:
 
  656.632. (1) The Industrial Accident Fund is continued. This
fund shall be held by the State Treasurer and by the State
Treasurer deposited in such banks as are authorized to receive
deposits of general funds of the state.
  (2) All moneys received by the State Accident Insurance Fund
Corporation under this chapter, shall be paid forthwith to the
State Treasurer and shall become a part of the Industrial
Accident Fund. However, any assessments collected for the
Director of the Department of Consumer and Business Services
under this chapter and deposited in the Industrial Accident Fund
may thereafter be transferred to the director and deposited in
the Consumer and Business Services Fund.
  (3) All payments authorized to be made by the State Accident
Insurance Fund Corporation by this chapter, including all
salaries, clerk hire and all other expenses, shall be made from
the Industrial Accident Fund.
   { +  (4) The State Treasurer shall be reimbursed from the
Industrial Accident Fund for all actual and necessary expenses of
the Examination and Accountability Commission paid by the State
Treasurer as required under section 1 of this 2001 Act. + }
  SECTION 8. ORS 656.632, as amended by section 7 of this 2001
Act, is amended to read:
  656.632. (1) The Industrial Accident Fund is continued. This
fund shall be held by the State Treasurer and by the State
Treasurer deposited in such banks as are authorized to receive
deposits of general funds of the state.
  (2) All moneys received by the State Accident Insurance Fund
Corporation under this chapter, shall be paid forthwith to the
State Treasurer and shall become a part of the Industrial
Accident Fund. However, any assessments collected for the
Director of the Department of Consumer and Business Services
under this chapter and deposited in the Industrial Accident Fund
may thereafter be transferred to the director and deposited in
the Consumer and Business Services Fund.
  (3) All payments authorized to be made by the State Accident
Insurance Fund Corporation by this chapter, including all
salaries, clerk hire and all other expenses, shall be made from
the Industrial Accident Fund.
    { - (4) The State Treasurer shall be reimbursed from the
Industrial Accident Fund for all actual and necessary expenses of
the Examination and Accountability Commission paid by the State
Treasurer as required under section 1 of this 2001 Act. - }
  SECTION 9.  { + The amendments to ORS 656.526 and 656.632 by
sections 6 and 8 of this 2001 Act become operative January 2,
2008. + }
  SECTION 10.  { + Sections 1, 2, 3 and 4 of this 2001 Act are
repealed on January 2, 2008. + }
  SECTION 11.  { + Sections 1 to 4 of this 2001 Act are added to
and made a part of ORS chapter 656. + }
  SECTION 12.  { + This 2001 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2001 Act takes effect on
its passage. + }
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