71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
Senate Bill 831
Sponsored by COMMITTEE ON BUSINESS, LABOR, AND ECONOMIC
DEVELOPMENT (at the request of Oregon Mutual Insurance Company,
Sublimity Insurance Company, Northwest Physicians Mutual
Insurance Company)
CHAPTER ................
AN ACT
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
Enrolled Senate Bill 831 (SB 831-INTRO) Page 1
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
Enrolled Senate Bill 831 (SB 831-INTRO) Page 2
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
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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
Enrolled Senate Bill 831 (SB 831-INTRO) Page 4
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.
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Passed by Senate March 28, 2001
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House May 21, 2001
...........................................................
Speaker of House
Enrolled Senate Bill 831 (SB 831-INTRO) Page 5
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
...........................................................
Secretary of State
Enrolled Senate Bill 831 (SB 831-INTRO) Page 6