Relating to insurance; creating new provisions; and amending ORS 59.840, 83.580, 86.720, 86.790, 433.045, 646.605, 657.085, 658.415, 696.523, 702.005, 703.411, 708A.005, 708A.120, 715.075, 716.594, 716.610, 731.028, 731.062, 731.146, 731.284, 731.288, 731.300, 731.365, 731.422, 731.426, 731.438, 731.484, 731.590, 731.737, 731.804, 731.812, 731.820, 731.840, 731.841, 731.854, 731.988, 732.810, 732.812, 733.635, 734.240, 734.370, 734.890, 735.055, 735.065, 735.210, 735.235, 735.315, 735.335, 735.350, 735.405, 735.425, 735.435, 735.450, 735.455, 735.460, 735.470, 735.480, 735.490, 735.610, 735.702, 737.350, 737.602, 742.009, 742.158, 742.200, 742.560, 742.700, 742.706, 743.013, 743.411, 743.420, 743.492, 743.655, 743.684, 743.730, 743.737, 743.745, 743.760, 743.769, 744.001, 744.013, 744.052, 744.053, 744.056, 744.058, 744.059, 744.061, 744.062, 744.063, 744.064, 744.067, 744.068, 744.072, 744.073, 744.074, 744.076, 744.077, 744.078, 744.079, 744.081, 744.082, 744.083, 744.084, 744.086, 744.087, 744.089, 744.300, 744.306, 744.313, 744.515, 744.609, 744.619, 744.621, 744.650, 744.702, 744.704, 744.710, 744.724, 744.730, 744.800, 744.802, 744.804, 744.806, 744.808, 744.810, 744.812, 744.814, 744.816, 744.818, 744.820, 744.856, 746.005, 746.015, 746.045, 746.065, 746.085, 746.100, 746.140, 746.147, 746.180, 746.182, 746.191, 746.195, 746.310, 746.405, 746.425, 746.475, 746.505, 746.515, 746.600, 746.605, 746.610, 746.615, 746.620, 746.625, 746.630, 746.635, 746.640, 746.645, 746.650, 746.655, 746.660, 746.670, 746.680, 746.685, 746.690, 748.181, 750.055, 750.333, 750.545, 806.180 and 806.190 and section 1, chapter 336, Oregon Laws 1995, and section 13, chapter 898, Oregon Laws 2001.

 
 
 
     72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
 
 
                            Enrolled
 
                         Senate Bill 253
 
Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (at the request of Governor Theodore R.
  Kulongoski for Department of Consumer and Business Services)
 
 
                     CHAPTER ................
 
 
                             AN ACT
 
 
Relating to insurance; creating new provisions; and amending ORS
  59.840, 83.580, 86.720, 86.790, 433.045, 646.605, 657.085,
  658.415, 696.523, 702.005, 703.411, 708A.005, 708A.120,
  715.075, 716.594, 716.610, 731.028, 731.062, 731.146, 731.284,
  731.288, 731.300, 731.365, 731.422, 731.426, 731.438, 731.484,
  731.590, 731.737, 731.804, 731.812, 731.820, 731.840, 731.841,
  731.854, 731.988, 732.810, 732.812, 733.635, 734.240, 734.370,
  734.890, 735.055, 735.065, 735.210, 735.235, 735.315, 735.335,
  735.350, 735.405, 735.425, 735.435, 735.450, 735.455, 735.460,
  735.470, 735.480, 735.490, 735.610, 735.702, 737.350, 737.602,
  742.009, 742.158, 742.200, 742.560, 742.700, 742.706, 743.013,
  743.411, 743.420, 743.492, 743.655, 743.684, 743.730, 743.737,
  743.745, 743.760, 743.769, 744.001, 744.013, 744.052, 744.053,
  744.056, 744.058, 744.059, 744.061, 744.062, 744.063, 744.064,
  744.067, 744.068, 744.072, 744.073, 744.074, 744.076, 744.077,
  744.078, 744.079, 744.081, 744.082, 744.083, 744.084, 744.086,
  744.087, 744.089, 744.300, 744.306, 744.313, 744.515, 744.609,
  744.619, 744.621, 744.650, 744.702, 744.704, 744.710, 744.724,
  744.730, 744.800, 744.802, 744.804, 744.806, 744.808, 744.810,
  744.812, 744.814, 744.816, 744.818, 744.820, 744.856, 746.005,
  746.015, 746.045, 746.065, 746.085, 746.100, 746.140, 746.147,
  746.180, 746.182, 746.191, 746.195, 746.310, 746.405, 746.425,
  746.475, 746.505, 746.515, 746.600, 746.605, 746.610, 746.615,
  746.620, 746.625, 746.630, 746.635, 746.640, 746.645, 746.650,
  746.655, 746.660, 746.670, 746.680, 746.685, 746.690, 748.181,
  750.055, 750.333, 750.545, 806.180 and 806.190 and section 1,
  chapter 336, Oregon Laws 1995, and section 13, chapter 898,
  Oregon Laws 2001.
 
Be It Enacted by the People of the State of Oregon:
 
 
                               { +
PRODUCER LICENSING + }
 
  SECTION 1. ORS 731.062 is amended to read:
  731.062.   { -  ' Agent' - }   { +  ' Insurance producer' + }
means a person required to be licensed under the laws of this
state to sell, solicit or negotiate insurance. For purposes of
this definition:
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 1
 
 
 
  (1) 'Negotiate' means to confer directly with or to offer
advice directly to a purchaser or prospective purchaser of a
particular policy of insurance concerning any of the substantive
benefits, terms or conditions of the policy, if the person
engaged in that act { + :
  (a)  + }Sells insurance { + ; or
  (b) Obtains insurance from insurers for purchasers + }.
  (2) 'Sell' means to exchange a policy of insurance by any
means, for money or its equivalent, on behalf of an insurer.
  (3) 'Solicit' means to attempt to sell a policy of insurance or
to ask or urge a person to apply for a particular kind of
insurance from a particular insurer.
  SECTION 2. ORS 744.052 is amended to read:
  744.052. As used in ORS 744.052 to 744.089:
  (1) 'Business entity' has the meaning given that term in ORS
731.116.
  (2) 'Home state' means any state, district or territory of the
United States, in which an insurance producer maintains the
insurance producer's principal place of residence or principal
place of business and is licensed to act as an insurance
producer.
    { - (3) 'Insurance producer' means a person required to be
licensed under the laws of another state to sell, solicit or
negotiate insurance. - }
    { - (4) - }   { + (3) + } 'Limited class credit insurance'
includes  { + but is not limited to + } credit life, credit
disability, credit property, credit unemployment, involuntary
unemployment, mortgage life, mortgage guaranty, mortgage
disability, and guaranteed automobile protection insurance, and
any other form of insurance offered in connection with an
extension of credit that is limited to partially or wholly
extinguishing the credit obligation that the Director of the
Department of Consumer and Business Services determines should be
designated a form of limited class credit insurance.
    { - (5) - }   { + (4) + } 'Limited class credit insurance
 { - agent' and ' limited class credit insurance - }  producer'
 { - mean - }   { + means + } a person required to be licensed to
sell, solicit or negotiate one or more forms of limited class
credit insurance coverage to individuals through a master,
corporate, group or individual policy.
    { - (6) - }   { + (5) + } 'Limited class insurance' includes
 { + but is not limited to + } credit, mortgage, automobile
dealer guaranteed automobile protection and any other form of
insurance designated by the director as a form of limited class
insurance.
    { - (7) - }   { + (6) + } 'Limited class insurance
 { - agent' and 'limited class insurance - }  producer'
 { - mean - }   { + means + } a person required to be licensed to
sell, solicit or negotiate one or more forms of limited class
insurance coverage to individuals through a master, corporate,
group or individual policy.
    { - (8) - }   { + (7) + } 'Negotiate,' 'sell' and 'solicit'
have the meanings given those terms in ORS 731.062  { - , except
that for an insurance producer, 'negotiate' applies to a person
engaged in negotiation who obtains insurance from insurers for
purchasers as well as to a person engaged in negotiation who
sells insurance - } .
    { - (9) - }   { + (8) + } 'Terminate' means to cancel the
relationship between an insurance   { - agent - }
 { + producer + } and the insurer or to
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 2
 
 
 
  { - cancel an agent's - }   { + revoke an insurance
producer's + } authority to sell, solicit or negotiate insurance.
    { - (10) - }   { + (9) + } 'Uniform Application' means the
current version of the Uniform Application for resident and
nonresident insurance producer licensing, produced by the
National Association of Insurance Commissioners.
    { - (11) - }   { + (10) + } 'Uniform Business Entity
Application' means the current version of the Uniform Business
Entity Application for resident and nonresident business
entities, produced by the National Association of Insurance
Commissioners.
  SECTION 3. ORS 744.053 is amended to read:
  744.053. A person   { - shall - }   { + may + } not sell,
solicit or negotiate insurance in this state for any class or
classes of insurance unless the person is licensed as an
 { - agent - }   { + insurance producer + } for that class or
those classes in accordance with ORS 744.052 to 744.089.
  SECTION 4. ORS 744.056 is amended to read:
  744.056. (1) ORS 744.052 to 744.089 do not require an insurer
to obtain a license as an   { - agent - }   { + insurance
producer + } as required by ORS 744.053. For purposes of this
section, the term 'insurer ' does not include an insurer's
officers, directors, employees, subsidiaries or affiliates.
  (2) A license as an   { - agent - }   { + insurance
producer + }   { - shall - }   { + is + } not be required of any
of the following:
  (a) An officer, director or employee of an insurer  { - , an
agent - }  or an insurance producer, if the officer, director or
employee does not receive any commission on or fee for policies
written or sold to insure risks residing, located or to be
performed in this state and:
  (A) The officer's, director's or employee's activities are
executive, administrative, managerial, clerical or a combination
of these, and are only indirectly related to the sale,
solicitation or negotiation of insurance;
  (B) The officer's, director's or employee's function relates to
underwriting, loss control, inspection or the processing,
adjusting, investigating or settling of a claim on a contract of
insurance; or
  (C) The officer, director or employee is acting in the capacity
of an agency supervisor assisting   { - licensed agents or - }
insurance producers when the person's activities are limited to
providing technical advice and assistance to   { - licensed
agents or - } insurance producers and do not include the sale,
solicitation or negotiation of insurance.
  (b) A person who does either of the following, when the person
does not receive any commission or fee for the service:
  (A) Secures and furnishes information for the purpose of group
life insurance, group property and casualty insurance, group
annuities or group or blanket health insurance or for the purpose
of enrolling individuals under plans, issuing certificates under
plans or otherwise assisting in administrative plans; or
  (B) Performs administrative services related to mass-marketed
property and casualty insurance.
  (c) An employer or an association of employers or its officers,
directors or employees, or the trustees of an employee trust
plan:
  (A) To the extent that the employers, associations, directors,
officers, employees or trustees are engaged in the administration
or operation of a program of employee benefits for the employer's
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 3
 
 
 
or association's own employees or the employees of its
subsidiaries or affiliates;
  (B) To the extent that the program of employee benefits
involves the use of insurance issued by an insurer; and
  (C) As long as the employers, associations, officers,
directors, employees or trustees are not in any manner
compensated, directly or indirectly, by the insurer issuing the
insurance.
  (d) An employee of an insurer or an organization employed by
insurers who is engaging in the inspection, rating or
classification of risks, or in the supervision of the training of
  { - agents or - }  insurance producers and who is not
individually engaged in the sale, solicitation or negotiation of
insurance.
  (e) A person whose activities in this state are limited to
advertising without the intent to solicit insurance in this state
through communications in printed publications or electronic mass
media, the distribution of which is not limited to residents of
this state, but only if the person does not sell, solicit or
negotiate insurance that would insure risks residing, located or
to be performed in this state.
  (f) A person who is not a resident of this state who sells,
solicits or negotiates a policy of insurance for commercial
property and casualty risks to an insured with risks located in
more than one state insured under that policy, but only if the
person is otherwise licensed as an insurance producer to sell,
solicit or negotiate that insurance in the state where the
insured maintains its principal place of business and the
contract of insurance insures risks located in that state.
  (g) A salaried full-time employee who counsels or advises the
employer of the employee relative to the insurance interests of
the employer or of the subsidiaries or business affiliates of the
employer, but only if the employee does not sell or solicit
insurance or receive any commission.
  (h) An attorney in fact of an authorized reciprocal insurer, or
the salaried representative of the insurer or attorney who does
not receive any commission.
  (i) A person engaging in the lawful transaction of reinsurance.
  (j) Salaried employees of title insurance   { - agents - }
 { + producers + } or insurers, except for the individual or
individuals designated as exercising the powers conferred by a
title insurance   { - agent's - }  { + producer's + } license.
  (k) Any agent or representative of persons exempt from the
Insurance Code under ORS 731.032 or 731.036, with respect to the
exempted transactions.
  (L) Any agent or representative of a fraternal benefit society
who devotes, or intends to devote, less than 50 percent of the
agent's or representative's time to the solicitation and
procurement of insurance policies for that society. Any person
who in the preceding calendar year has solicited and procured
life insurance policies on behalf of any fraternal benefit
society for an amount of insurance in excess of $50,000 or, in
the case of any other class or classes of insurance that the
society might write, on the persons of more than 25 individuals,
and who has received or will receive a commission or other
compensation therefor, shall be presumed to be devoting, or
intending to devote, 50 percent or more of the person's time to
the solicitation and procurement of insurance policies for that
society.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 4
 
 
 
  (m) A person engaging in the lawful transaction of home
protection insurance if the person is a real estate licensee as
defined in ORS 696.010, and if the transaction of such insurance
by the person is subject to a written contract, to which the
insurer is a party, governing the person's activities in the
transaction.
  (n) Salaried employees of a financial institution or trust
company, as those terms are defined in ORS 706.008, who, in the
regular course of business with the customers of the financial
institution or trust company, present the customers with written
information about savings account annuities issued by an
authorized insurer. Any person who purchases such an annuity may
rescind the transaction within 10 days after the issuance of the
contract. For purposes of this paragraph, 'savings account
annuities' means annuities purchased with the proceeds of a
savings account, certificate or share in a financial institution
or trust company.
  (3) A person who provides general insurance advice in
connection with providing other professional services such as
legal services, trust services, tax and accounting services,
financial planning or investment advisory services is not
considered to be soliciting the sale of insurance for the purpose
of the definition of   { -  ' agent' - }   { +  ' insurance
producer' + } in ORS 731.062.
    { - (4) Except as provided in ORS 735.450, 744.063 and
744.064, the provisions of this chapter relating to agents do not
apply to a surplus lines agent authorized pursuant to ORS
735.450. - }
  SECTION 5. ORS 744.058 is amended to read:
  744.058. (1) An individual applying for a resident
 { - agent - }  { + insurance producer + } license must pass a
written examination unless the individual is exempt from the
prelicensing education and examination requirement as provided in
ORS 744.067. The examination must test the knowledge of the
individual concerning the class or classes of insurance for which
application is made, the duties and responsibilities of an
 { - agent - }   { + insurance producer + } and the insurance
statutes and rules of this state. Except as provided in
subsection (2) of this section, the examination required by this
section shall be developed and conducted by the Director of the
Department of Consumer and Business Services. An individual may
apply for a resident   { - agent - }   { + insurance producer + }
license only if the individual has established in this state a
residence or a place of business for acting as an   { - agent - }
 { +  insurance producer + }.
  (2) The director may make arrangements, including contracting
with a private testing service, for developing and administering
the examination and collecting applicable fees.
  (3) Each individual applying to take an examination shall pay
fees as established by the director.
  (4) An individual who fails to appear for the examination as
scheduled or fails to pass the examination may reapply to take
the examination according to requirements and procedures
established by the director by rule.
  SECTION 6. ORS 744.059 is amended to read:
  744.059. (1) An individual applying for a resident
 { - agent - }  { + insurance producer + } license shall apply to
the Director of the Department of Consumer and Business Services
on the Uniform Application and shall declare that the statements
made in the application are true, correct and complete to the
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 5
 
 
 
best of the individual's knowledge and belief. Before approving
the application, the director must find that the individual:
  (a) Is at least 18 years of age;
  (b) Has not committed an act that is a ground for action on a
license set forth in ORS 744.074;
  (c) When required by the director, has completed a prelicensing
course of study for the lines of authority for which the person
has applied;
  (d) Has paid all applicable fees; and
  (e) Has successfully passed the examination for the lines of
authority for which the person has applied.
  (2) A business entity acting as an   { - agent - }
 { + insurance producer + } is required to obtain an
 { - agent - }   { + insurance producer + } license.  Application
shall be made on the Uniform Business Entity Application. Before
approving the application, the director must find that:
  (a) The business entity has paid all applicable fees; and
  (b) The business entity has designated a licensed
 { - agent - }  { +  insurance producer + } responsible for the
business entity's compliance with the insurance laws and rules of
this state.
  (3) The director may require any documents necessary to verify
the information contained in an application.
  (4) Each insurer that sells, solicits or negotiates any form of
limited class credit insurance shall provide to each limited
class credit insurance   { - agent - }   { + producer + } a
program of instruction, which is subject to review and approval
by the director.
  SECTION 7. ORS 744.061 is amended to read:
  744.061. Nothing in the Insurance Code shall be construed to
limit or prohibit the licensing of a banking institution, as
defined in ORS 706.008, a corporation owned in whole or part by a
banking institution under ORS 708A.120, 716.588 or 716.594, or a
corporation owned in whole or part by a financial holding company
or a bank holding company, as defined in ORS 706.008, as an
  { - agent - }   { + insurance producer + } to transact one or
more of the classes of insurance described in ORS 744.062, except
for title insurance.
  SECTION 8. ORS 744.062 is amended to read:
  744.062. (1) Unless the Director of the Department of Consumer
and Business Services refuses to issue or renew a license
pursuant to ORS 744.074, a person who has met the requirements of
ORS 744.058 and 744.059, or ORS 744.063, shall be issued an
  { - agent - }   { + insurance producer + } license. An
 { - agent - }   { + insurance producer + } may receive
qualification for a license in one or more of the following
classes of insurance:
  (a) Life insurance as defined in ORS 731.170.
  (b) Health insurance as defined in ORS 731.162.
  (c) Property insurance as defined in ORS 731.182.
  (d) Casualty insurance as defined in ORS 731.158.
  (e) Variable life insurance, including variable annuities.
  (f) Property and casualty insurance coverage sold to
individuals and families for primarily noncommercial purposes.
  (g) Limited class credit insurance.
  (h) Any form of insurance designated by the director as a form
of limited class insurance.
  (i) Title insurance as defined in ORS 731.190. A license for
the class of title insurance may be issued only to a resident
  { - agent - }  { +  insurance producer + }.
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 6
 
 
 
  (j) Any other class of insurance permitted under the Insurance
Code or rules adopted thereunder.
  (2) For assistance in performance of the director's duties, the
director may participate with the National Association of
Insurance Commissioners, or any affiliate or subsidiary that the
National Association of Insurance Commissioners oversees, in a
centralized producer licensing registry in which insurance
 { - agent and - }  producer licenses and appointments are
centrally or simultaneously effected for all states that require
an insurance producer license. The director may adopt by rule any
uniform standards and procedures as are necessary to participate
in the registry, including the centralized collection of fees for
licenses or appointments that are processed through the registry.
  (3) An   { - agent - }   { + insurance producer + } may apply
to amend a license for the purpose of adding or deleting a class
of insurance on the license in the manner prescribed for license
application in ORS 744.059 or 744.063, or as otherwise prescribed
by the director.
  SECTION 9. ORS 744.063 is amended to read:
  744.063. (1) Unless the Director of the Department of Consumer
and Business Services refuses to issue or renew a license
pursuant to ORS 744.074, a nonresident person shall receive a
nonresident   { - agent - }   { + insurance producer + } license
if:
  (a) The person is currently licensed as a resident insurance
producer and is in good standing in the person's home state;
  (b) The person has submitted the proper request for a
nonresident   { - agent - }   { + insurance producer + } license
and has paid the applicable fees;
  (c) The person has submitted or transmitted to the director the
resident insurance producer license application that the person
submitted to the person's home state, or in lieu of that
application, a completed Uniform Application; { +  and + }
    { - (d) The person has filed with the director, in writing,
an appointment of the director to be the attorney of the person
upon whom all legal process in any action or proceeding against
the person may be served. In the appointment, the person must
agree that any lawful process against the person that is served
upon the director shall be of the same legal force and validity
as if served upon the applicant, and that the authority shall
continue in force so long as any liability remains outstanding in
this state. An appointment under this paragraph becomes effective
on the date that the director issues the nonresident agent
license to the applicant; and - }
    { - (e) - }   { + (d) + } The person's home state grants
nonresident insurance producer licenses to residents of this
state on the same basis.
  (2) The director may verify the insurance producer's licensing
status through the Producer Database maintained by the National
Association of Insurance Commissioners, its affiliates or
subsidiaries.
  (3) A nonresident   { - agent - }   { + insurance producer + }
licensed in this state who moves from one state to another state
or a resident
  { - agent - }   { + insurance producer + } who moves from this
state to another state shall file with the director a change of
address and provide certification from the new resident state not
later than the 30th day after the change of legal residence. No
fee or license application is required under this subsection.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 7
 
 
 
  (4) A person licensed as a surplus lines insurance producer in
the person's home state shall receive a nonresident surplus lines
 { - agent - }   { + insurance producer + } license pursuant to
subsection (1) of this section. Except as provided in subsection
(1) of this section, nothing in this section supersedes any
provision of ORS 735.400 to 735.495.
  (5) Notwithstanding any other provision of ORS 744.052 to
744.089, the director shall issue a nonresident limited class
insurance   { - agent - }   { + producer + } license pursuant to
subsection (1) of this section to a person who is licensed as a
limited class credit insurance producer or as another type of
limited class insurance producer under the laws of the person's
home state that restrict the authority of the license to less
than the authority prescribed in ORS 744.062 for the classes of
life insurance, health insurance, property insurance or casualty
insurance.
  (6) A license for the class of title insurance may not be
issued to a nonresident   { - agent - }  { +  insurance
producer + }.
   { +  (7) The director is the attorney in fact of a person to
whom a license is issued under this section, and upon whom all
legal process in any action or proceeding against the person may
be served. Any legal process against the person that is served
upon the director has the same legal force and validity as if
served upon the person. The authority of the director under this
subsection continues as long as any liability remains outstanding
in this state. The director becomes the attorney in fact of the
person on the date that the director issues the nonresident
insurance producer license to the person. + }
  SECTION 10. ORS 744.064 is amended to read:
  744.064. (1) Unless denied a license pursuant to ORS 744.074, a
person who is currently licensed as a resident insurance producer
in a Canadian province, in Mexico or in a state that does not
grant nonresident  { + insurance + } producer licenses to
residents of this state on the same basis that this state grants
nonresident
  { - agent - }   { + insurance producer + } licenses under ORS
744.063 shall receive a nonresident   { - agent - }
 { + insurance producer + } license if { + :
  (a) The Director of the Department of Consumer and Business
Services determines that + } the insurance regulator in the
person's place of residence grants nonresident insurance producer
licenses to residents of this state on the same basis  { + that
the director grants nonresident insurance producer licenses to
residents of the other jurisdiction or on the same basis that the
insurance regulator grants insurance producer licenses to
residents of the other jurisdiction, or on another basis that is
reasonable and fair to licensees of this state; + } and
 { - if - }
   { +  (b) + } The person meets all of the following
requirements:
    { - (a) - }   { + (A) + } The person is in good standing as a
resident
  { - agent - }   { + insurance producer + } in the person's
place of residence in Canada, Mexico or the person's state of
residence.
    { - (b) - }   { + (B) + } The person has submitted the proper
request for a nonresident   { - agent - }   { + insurance
producer + } license and has paid the applicable fees.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 8
 
 
 
    { - (c) - }   { + (C) + } The person has submitted or
transmitted to the Director of the Department of Consumer and
Business Services the resident   { - agent - }   { + insurance
producer + } license application that the person submitted to the
insurance regulator in the person's place of residence, or in
lieu of that application, a completed Uniform Application.
    { - (d) - }   { + (D) + } The person has taken and passed a
written examination specified by the director under this section
with respect to the authority to transact the class or classes of
insurance for which the applicant has applied. The requirement of
an examination does not apply to an applicant that is a business
entity.
    { - (e) The person has submitted or transmitted to the
director an appointment of the director to be the attorney of the
person upon whom all legal process in any action or proceeding
against the person may be served. In the appointment, the person
must agree that any lawful process against the person that is
served upon the director shall be of the same legal force and
validity as if served upon the person, and that the authority
shall continue in force so long as any liability remains
outstanding in this state. An appointment under this paragraph
becomes effective on the date that the director issues the
nonresident agent license to the person. - }
    { - (f) - }   { + (E) + } The person has satisfied any other
qualifications established by the director by rule or has
satisfied qualifications that the director establishes by rule in
lieu of the qualifications established in this subsection.
  (2) A person who is licensed by this state to sell, solicit or
negotiate insurance as a nonresident   { - agent - }
 { + insurance producer + } under this section may sell, solicit
or negotiate any policy of insurance upon domestic risks to the
same extent and upon the same terms as provided by the insurance
regulator in the person's place of residence for residents of
this state transacting a like business in a province of Canada,
in Mexico or in the person's state of residence.
  (3) The examination requirement under subsection (1) of this
section is subject to waiver if { + :
  (a) + } The director   { - has entered into a reciprocal
agreement as provided in subsection (4) of this section with the
insurance regulator in the person's place of residence. - }  { +
determines that a written examination or other comparable
requirement acceptable to the director is required of applicants
for a resident insurance producer license in the other
jurisdiction; + }
    { - (4) The director may enter into a reciprocal agreement
with the appropriate insurance regulator in a province of Canada
or in Mexico that waives any or all of the requirements for
issuance of a license under this section if: - }
    { - (a) A written examination is required of applicants for a
resident agent license in the jurisdiction of the insurance
regulator; - }
  (b) The insurance regulator of the other jurisdiction certifies
that the applicant holds a valid license as a resident insurance
producer in the other jurisdiction and either passed the written
examination { + , + }   { - or - }  was the holder of a resident
insurance producer license prior to the time the written
examination was first required { +  or meets the other comparable
requirement acceptable to the director + }; and
  (c) In the other jurisdiction, a resident of this state is
privileged to procure an insurance producer license upon
 
 
Enrolled Senate Bill 253 (SB 253-B)                        Page 9
 
 
 
conditions   { - no less favorable than the conditions stated in
this section - }  { +  that the director determines to be
reasonable and fair to licensees of this state + }.
    { - (5) - }   { + (4) + } The director shall establish the
form of the nonresident   { - agent - }   { + insurance
producer + } license issued under this section.
   { +  (5) A person licensed as a surplus lines insurance
producer in the person's home state is eligible for a nonresident
surplus lines insurance producer license in the manner provided
for nonresident insurance producer licenses in subsection (1) of
this section. A person to whom a nonresident surplus lines
insurance producer license is issued under this section is
subject to ORS 735.400 to 735.495.
  (6) The director is the attorney in fact of a person to whom a
license is issued under this section, and upon whom all legal
process in any action or proceeding against the person may be
served. Any legal process against the person that is served upon
the director has the same legal force and validity as if served
upon the person. The authority of the director under this
subsection continues as long as any liability remains outstanding
in this state. The director becomes the attorney in fact of the
person on the date that the director issues the nonresident
insurance producer license to the person. This subsection does
not apply to a person to whom a nonresident surplus lines
insurance producer license is issued. + }
  SECTION 11. ORS 744.067 is amended to read:
  744.067. (1) An individual who applies for a resident
 { - agent - }  { + insurance producer + } license in this state
who is or was previously licensed as an insurance producer for
the same lines of authority in another state is not required to
complete any prelicensing education or examination. The exemption
under this subsection is available only if the individual is
currently licensed in the other state or if the application is
received by the Director of the Department of Consumer and
Business Services not later than the 90th day after the
applicant's previous license was terminated and if the other
state issues a certification that, at the time of termination,
the applicant was in good standing in that state or the state's
Producer Database maintained by the National Association of
Insurance Commissioners, its affiliates or subsidiaries indicate
that the applicant is or was licensed in good standing for the
class of insurance requested.
  (2) A person licensed as an insurance producer in another state
who moves to this state must apply for a resident   { - agent - }
 { + insurance producer + } license not later than the 90th day
after the date on which the person established legal residence in
order to qualify for a resident   { - agent - }   { + insurance
producer + } license pursuant to ORS 744.059. Neither
prelicensing education nor an examination is required of a person
to whom this subsection applies in order to obtain a license in a
class of insurance described in ORS 744.062 if the person held a
license in that class in the other state, except when the
director has determined otherwise by rule.
  (3) An individual who holds an industry designation described
in this subsection is not required to complete prelicensing
education or the examination required in ORS 744.058 if the
director is satisfied, by examination or otherwise, that the
applicant is knowledgeable in the particulars of the applicable
provisions of the Insurance Code. This subsection applies to:
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 10
 
 
 
  (a) An applicant for a license authorizing the applicant to
transact property or casualty insurance or both, upon whom the
American Institute for Chartered Property Casualty Underwriters
has conferred the Chartered Property Casualty Underwriter
(C.P.C.U.) designation.
  (b) An applicant for a license authorizing the applicant to
transact life or health insurance, or both, upon whom the
American College has conferred the Chartered Life Underwriter
(C.L.U.)  designation.
  (4) The director may recognize one or more industry
designations as exempting an applicant from the prelicensing
education requirement or the examination required in ORS 744.058
or both. For each industry designation that the director
recognizes and for the extent of the exemption to be given, the
director shall consider the content, quality and scope of the
educational program required for the designation as well as other
factors determined by the director to be relevant.
  (5) An individual is not required to complete prelicensing
education or the examination required in ORS 744.058 or 744.064
for the following licenses:
  (a) A license authorizing the individual to transact a type of
limited class insurance, except as the director otherwise
provides by rule.
  (b) A license authorizing the individual to transact title
insurance.
  SECTION 12. ORS 744.068 is amended to read:
  744.068. (1) An   { - agent - }   { + insurance producer + }
shall notify the Director of the Department of Consumer and
Business Services prior to transacting business under the
 { - agent - }   { + insurance producer + } license under any
name other than the   { - agent's - }   { + insurance
producer's + } legal name and prior to changing, deleting or
adding an assumed business name in connection with the
 { - agent's - }   { + insurance producer's + } business under
the   { - agent - }   { + insurance producer + } license.
  (2) A resident   { - agent - }   { + insurance producer + }
shall keep at the principal place of business of the
 { - agent - }   { + insurance producer + } the usual and
customary records pertaining to the business under the resident
 { - agent - }   { + insurance producer + } license. All such
records shall be kept available and open to the inspection of the
director during business hours. A resident   { - agent - }
 { + insurance producer + } shall keep records of insurance
transacted by the   { - agent - }   { + insurance producer + }
under the license for three years following expiration of the
policy unless the director designates another period.
  (3) A nonresident   { - agent - }   { + insurance producer + }
shall keep at the principal place of business of the
 { - agent - }   { + insurance producer + } the usual and
customary records pertaining to the business under the
nonresident   { - agent - }   { + insurance producer + } license.
All such records shall be kept available and open to the
inspection of the director during business hours. For the purpose
of this subsection, if a nonresident   { - agent - }
 { + insurance producer + } has a place of transacting insurance
in this state, that place shall be the principal place of
business for the nonresident   { - agent - }  { + insurance
producer + }. A nonresident   { - agent - }   { + insurance
producer + } shall keep records of insurance transacted by the
 { - agent - }   { + insurance producer + } under the nonresident
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 11
 
 
 
 { - agent - }   { + insurance producer + } license for three
years following expiration of the policy unless the director
designates another period.
  (4) An   { - agent - }   { + insurance producer + } shall
notify the director of any of the following changes not later
than the 30th day after the date of the change:
  (a) A change of address or telephone number of the principal
place of business or any location at which the   { - agent - }
 { + insurance producer + } transacts business under the license
in this state.
  (b) The opening or closing of a location at which the
 { - agent - }  { + insurance producer + } transacts business
under the license in this state.
  (c) A change of residence. This paragraph applies only to a
resident   { - agent - }   { + insurance producer + }.
  (5) Not later than the 30th day after the authority of an
individual   { - agent - }   { + insurance producer + } to act
for an   { - agent - }  { + insurance producer + } that is a
business entity has commenced or terminated, the business entity
shall notify the director of the commencement or termination. The
director may establish by rule a different period within which
the business entity must notify the director under this
subsection.
  SECTION 13. ORS 744.072 is amended to read:
  744.072. (1) An   { - agent - }   { + insurance producer + }
license remains in effect unless revoked or suspended as long as
all applicable fees are paid by the due date and, if the licensee
is a resident individual   { - agent - }  { +  insurance
producer + }, as long as the licensee has met applicable
continuing education requirements for resident individual
 { - agents - }   { + insurance producers + } under subsection
(4) of this section by the due date. The renewal fee is due on
the last day of the month in which the second anniversary of the
initial issuance date of the license occurs and on the second
anniversary following each renewal. The Director of the
Department of Consumer and Business Services may establish
another renewal period for the purpose of coordination with any
national registration or licensing system.
  (2) As a condition for or in connection with the renewal of an
 { - agent - }   { + insurance producer + } license the director
may require the
  { - agent - }   { + insurance producer + } to file information
with the director regarding use made of the license during the
previous year or two years, and especially showing whether the
license has been used principally for the writing of personal or
controlled insurance, as defined in ORS 746.065.
  (3) The director may require an   { - agent - }  { +  insurance
producer + }, as a condition for renewal of the   { - agent - }
 { + insurance producer + } license, to fulfill any or all of the
requirements then applicable to the original issuance of the
license.
  (4) The director by rule may establish requirements for
continuing education that each resident individual
 { - agent - }  { + insurance producer + } must satisfy as a
condition for renewing the resident   { - agent - }  { +
insurance producer + } license. The hours of education so
required shall not exceed 45 hours annually during the first five
years an individual is licensed, 24 hours annually during the
next five years an individual is licensed, and 12 hours annually
for individuals licensed for more than 10 years or for
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 12
 
 
 
individuals who have received the designation C.P.C.U., C.L.U. or
comparable designation recognized by the director. Continuing
education shall not be required for:
  (a) Any person to whom a license is issued without examination
pursuant to ORS 744.067   { - (4) - }  { +  (5) + };
  (b) Any retired person who is authorized to transact life
insurance only, if the person is 58 years of age or more, has 10
years' experience as a licensed   { - agent - }   { + insurance
producer + }, will be servicing existing policies only and
requests an exemption from the requirement; or
  (c) Any person whose license is indorsed to authorize the
person to act as   { - an - }   { + a reinsurance + }
intermediary broker or  { +  reinsurance + } intermediary
manager, or both, as described in ORS 744.800, but the exemption
applies solely for the purpose of maintaining the indorsement and
does not affect any continuing education requirement that
otherwise applies.
  (5) In connection with establishing continuing education
requirements under subsection (4) of this section, the director
may make arrangements, including contracting with a private
service, for establishing and operating a program and standards
for approving and registering continuing education programs and
their providers.
  (6) An individual   { - agent - }   { + insurance producer + }
who allows the
  { - agent - }   { + insurance producer + } license to lapse may
 { + apply to the director to + } reinstate the same license
within   { - 24 - }   { + 12 + } months from the due date for
renewal without having to take and pass a written examination,
but the   { - agent - }   { + insurance producer + } must pay an
amount  { +  for the reinstatement that is + } equal to double
the unpaid renewal fee for any renewal fee paid after the due
date and must complete any continuing education requirements not
satisfied to date { + , including the period for which the
license was lapsed. A license reinstated under this subsection is
effective upon the date that the director grants the
reinstatement + }.
  (7) An individual   { - agent - }   { + insurance producer + }
who is unable to comply with license renewal procedures due to
military service or another extenuating circumstance such as a
long term medical disability may request a waiver from compliance
with those procedures. The   { - agent - }   { + insurance
producer + } may also request a waiver of any examination
requirement or any penalty imposed for failure to comply with
renewal procedures.
  SECTION 14. ORS 744.073 is amended to read:
  744.073. (1) The Director of the Department of Consumer and
Business Services may issue a temporary   { - agent - }
 { + insurance producer + } license for a period not to exceed
180 days without requiring a written examination if the director
determines that the temporary license is necessary for the
servicing of an insurance business in the following cases:
  (a) To the surviving spouse or court-appointed personal
representative of a licensed   { - agent - }   { + insurance
producer + } who dies or becomes mentally or physically disabled
to allow adequate time for the sale of the insurance business
owned by the   { - agent - }  { + insurance producer + }, for the
recovery or return of the   { - agent - }  { + insurance
producer + } to the business, or to provide for the training and
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 13
 
 
 
licensing of new personnel to operate the   { - agent's - }
 { + insurance producer's + } business;
  (b) To a member or employee of a business entity licensed as an
 { - agent - }   { + insurance producer + }, upon the death or
disability of the individual designated in the business entity
application or the license;
  (c) To the designee of a licensed   { - agent - }
 { + insurance producer + } entering active service in the Armed
Forces of the United States; or
  (d) In any other circumstance in which the director determines
that the public interest will best be served by the issuance of
the license.
  (2) The director may by order limit the authority of any
temporary licensee in any way that the director determines to be
necessary to protect insureds and the public. The director may
require the temporary licensee to have a suitable sponsor who is
a licensed   { - agent - }   { + insurance producer + } or
insurer and who assumes responsibility for all acts of the
temporary licensee and may impose other similar requirements
designed to protect insureds and the public. The director may
revoke a temporary license if the interest of insureds or the
public is endangered. A temporary license may not continue after
the owner or the personal representative disposes of the
business.
  SECTION 15. ORS 744.074 is amended to read:
  744.074. (1) The Director of the Department of Consumer and
Business Services may place a licensee on probation or suspend,
revoke or refuse to issue or renew an   { - agent - }
 { + insurance producer + } license and may take other actions
authorized by the Insurance Code in lieu thereof or in addition
thereto, for any one or more of the following causes:
  (a) Providing incorrect, misleading, incomplete or materially
untrue information in the license application.
  (b) Violating any insurance laws, or violating any rule,
subpoena or order of the director or of the insurance
commissioner of another state or Mexico or Canada.
  (c) Obtaining or attempting to obtain a license through
misrepresentation or fraud.
  (d) Improperly withholding, misappropriating or converting any
moneys or properties received in the course of doing insurance
business.
  (e) Intentionally misrepresenting the terms of an actual or
proposed insurance contract or application for insurance.
  (f) Having been convicted of a felony, of a misdemeanor
involving dishonesty or breach of trust, or of an offense
punishable by death or imprisonment under the laws of the United
States. The record of the conviction shall be conclusive evidence
of the conviction.
  (g) Having admitted or been found to have committed any unfair
trade practice or fraud related to insurance.
  (h) Using fraudulent, coercive or dishonest practices, or
demonstrating incompetence, untrustworthiness or financial
irresponsibility in the conduct of business in this state or
elsewhere.
  (i) Cancellation, revocation, suspension or refusal to renew by
any state of a license or other evidence of authority to act as
an adjuster or an insurance producer or consultant. The record of
the cancellation, revocation, suspension or refusal to renew
shall be conclusive evidence of the action taken.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 14
 
 
 
  (j) Cancellation, revocation, suspension or refusal to renew by
any state or federal agency, by a Canadian province or by the
government of Mexico of the authority to practice law or to
practice under any other regulatory authority if the
cancellation, revocation, suspension or refusal to renew was
related to the business of an adjuster or an insurance producer
or consultant, or if dishonesty, fraud or deception was involved.
The record of the cancellation, revocation, suspension or refusal
to renew shall be conclusive evidence of the action taken.
  (k) Forging another person's name to an application for
insurance or to any document related to an insurance transaction.
  (L) Improperly using notes or any other reference material to
complete an examination for an insurance license.
  (m) Knowingly accepting insurance business from an individual
who is not licensed.
  (n) Error by the director in issuing or renewing a license.
  (o) Failing to pay a civil penalty assessed by the director
that has become final by operation of law or upon appeal.
  (p) Failing to pay any fee or charge to the director.
  (q) Failing to comply with continuing education requirements
applicable to the license or any class of insurance authorized
under the license, unless the director has waived the
requirements.
  (2) If the director refuses to issue or renew an
 { - agent - }  { + insurance producer + } license, the director
shall notify the applicant or licensee and inform the applicant
or licensee in writing of the reason for the refusal to issue or
renew and of the applicant's or licensee's rights under ORS
183.310 to 183.550.
  (3) The director may suspend, revoke or refuse to issue or
renew the   { - agent - }   { + insurance producer + } license of
a business entity if the director determines that an individual
licensee's violation was known or should have been known by one
or more of the partners, officers or managers acting on behalf of
the partnership or corporation but the violation was not reported
to the director and corrective action was not taken.
  SECTION 16. ORS 744.076 is amended to read:
  744.076. (1) An insurer or   { - agent - }   { + insurance
producer + } may not pay a commission, service fee, brokerage or
other valuable consideration to a person for selling, soliciting
or negotiating insurance in this state if that person is required
to be licensed as an   { - agent - }   { + insurance producer + }
and is not so licensed.
  (2) A person shall not accept a commission, service fee,
brokerage or other valuable consideration for selling, soliciting
or negotiating insurance in this state if that person is required
to be licensed as an   { - agent - }   { + insurance producer + }
and is not so licensed.
  (3) Renewal or other deferred commissions may be paid to a
person for selling, soliciting or negotiating insurance in this
state if the person was required to be licensed as an
 { - agent - }  { + insurance producer + } at the time of the
sale, solicitation or negotiation and was then so licensed.
  (4) An insurer or   { - agent - }   { + insurance producer + }
may pay or assign commissions, service fees, brokerages or other
valuable consideration to an insurance agency or to persons who
do not sell, solicit or negotiate insurance in this state, except
when the payment or assignment would violate ORS 746.045 or
746.055.
  SECTION 17. ORS 744.077 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 15
 
 
 
  744.077. (1) The Director of the Department of Consumer and
Business Services shall establish by rule the conditions under
which a person who is licensed as an   { - agent - }
 { + insurance producer + } and as an insurance consultant may
accept a commission or a fee, or both, in a transaction or in
related transactions. The director may establish different
conditions for such products as employee benefit plans, insurance
for personal, family or household purposes and insurance for
commercial purposes, and for any other insurance product as
determined appropriate by the director. In developing rules under
this subsection, the director shall take into account the
requirements and characteristics of the different insurance
products and the varying degrees of trade practice regulation
needed.
  (2) Except as otherwise provided by rule, an   { - agent - }
 { + insurance producer + } who is not licensed as an insurance
consultant may receive only commission.
  SECTION 17a.  { + Section 17b of this 2003 Act is added to and
made a part of ORS chapter 744. + }
  SECTION 17b.  { + (1) An insurer or insurance producer may
charge a commission, a service fee or a combination of the two
when transacting insurance in other than the following categories
of insurance:
  (a) Insurance that covers an individual's person, property or
liability;
  (b) Life or health insurance for groups of fewer than 51 lives;
or
  (c) Insurance on a commercial or public entity paying combined
annual premiums of less than $100,000 for the insurance.
  (2) An insurer or insurance producer may charge a commission or
service fee other than the commission or fee filed in accordance
with ORS 737.205 only if the insurer or insurance producer has a
written agreement with the prospective insured prior to the
binding or issuance of an insurance policy. The Director of the
Department of Consumer and Business Services may establish by
rule minimum conditions for written agreements entered into under
this subsection. An insurer or insurance producer who enters into
a written agreement as provided in this subsection is not in
violation of ORS 746.035 or 746.045. + }
  SECTION 18. ORS 744.078 is amended to read:
  744.078. (1) An   { - agent - }   { + insurance producer + }
shall not act as an agent of an insurer unless { + :
  (a) + } The   { - agent - }   { + insurance producer + } is an
appointed agent of that insurer { + ; or
  (b) The insurance producer transacts insurance on behalf of
another insurance producer who is an appointed agent of that
insurer according to conditions and limitations established by
the Director of the Department of Consumer and Business Services
by rule + }.
  (2)   { - To appoint an agent, the appointing insurer shall
file, in a manner approved by the Director of the Department of
Consumer and Business Services, a notice of appointment not later
than the 15th day after the date the agency contract is executed
or after the agent submits the first insurance application to the
insurer.  An insurer may also choose to appoint an agent to all
or some insurers within the insurer's holding company system or
group by the filing of a single notice of appointment. - }
 { + Each insurer shall maintain a current list of insurance
producers contractually authorized to accept applications on
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 16
 
 
 
behalf of the insurer. Each insurer shall make the list available
to the director upon request. + }
  (3) An   { - agent - }   { + insurance producer + } may
represent as agent under one  { + insurance producer + } license
as many insurers as may appoint the   { - agent - }
 { + insurance producer + } in accordance with this section.
  (4) Except as provided in a group contract of insurance under
subsection (5) of this section, any person who solicits or
procures an application for insurance  { + as an agent of the
insurer + } shall in all matters relating to the application for
insurance and the policy issued in consequence of the application
be regarded as the agent of the insurer issuing the policy and
not the agent of the insured. Any provision in the application
and policy to the contrary is invalid and of no effect.
  (5) A group contract of insurance and the individual
certificate issued pursuant to the group contract may contain
provisions stating whether the group policyholder acts as the
agent of the individual insured or as the agent of the insurer.
  SECTION 19. ORS 744.079 is amended to read:
  744.079. (1) An insurer or authorized representative of the
insurer who terminates the appointment, employment, contract or
other insurance business relationship with an   { - agent - }
 { + insurance producer + } shall notify the Director of the
Department of Consumer and Business Services not later than the
30th day after the effective date of the termination, in the
manner prescribed by the director, if the reason for termination
is one of the reasons set forth in ORS 744.074 or if the insurer
has knowledge that the
  { - agent - }   { + insurance producer + } was found by a
court, government body or self-regulatory organization authorized
by law to have engaged in any of the activities set forth in ORS
744.074. Upon the written request of the director, the insurer
shall provide additional information, documents, records or other
data pertaining to the termination or activity of the
 { - agent - }   { + insurance producer + }.
    { - (2) An insurer or authorized representative of the
insurer who terminates the appointment, employment, contract or
other insurance business relationship with an agent for any
reason not set forth in ORS 744.074 shall notify the director not
later than the 30th day after the effective date of the
termination, in the manner prescribed by the director. Upon the
written request of the director, the insurer shall provide
additional information, documents, records or other data
pertaining to the termination or activity of the agent. - }
    { - (3) - }   { + (2) + } An insurer or the authorized
representative of the insurer shall promptly notify the director
in a manner acceptable to the director if, upon further review or
investigation, the insurer discovers additional information that
would have been reportable to the director in accordance with
subsection (1) of this section if the insurer had then known of
its existence.
    { - (4) - }   { + (3) + } Not later than the 15th day after
making a notification required by subsection (1)  { - , - }  { +
or + } (2)   { - or (3) - }  of this section, the insurer shall
mail a copy of the notification to the
  { - agent - }   { + insurance producer + } at the
 { - agent's - }   { + insurance producer's + } last known
business address. If the   { - agent - }   { + insurance
producer + } is terminated for cause for any of the reasons
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 17
 
 
 
listed in ORS 744.074, the insurer shall provide a copy of the
notification to the
  { - agent - }   { + insurance producer + } at the
 { - agent's - }   { + insurance producer's + } last known
business address by certified mail, return receipt requested,
postage prepaid or by overnight delivery using a nationally
recognized carrier.
    { - (5) - }   { + (4) + } Not later than the 30th day after
the   { - agent - }  { + insurance producer + } has received a
notification under subsection
  { - (4) - }   { + (3) + } of this section, the   { - agent - }
 { + insurance producer + } may file with the director written
comments concerning the substance of the notification. The
 { - agent - }   { + insurance producer + } shall, by the same
means, simultaneously send a copy of the comments to the
reporting insurer. The comments shall become a part of the
director's file and shall accompany every copy of a report
distributed or disclosed for any reason about the   { - agent - }
 { + insurance producer + } as allowed under subsection
 { - (6) - }   { + (5) + } of this section.
    { - (6) - }   { + (5) + } In the absence of actual malice, an
insurer, the authorized representative of the insurer, an
 { - agent - }   { + insurance producer + }, the director or an
organization of which the director is a member and that compiles
the information and makes it available to other insurance
regulators or regulatory or law enforcement agencies shall not be
subject to civil liability. In the absence of actual malice, a
civil cause of action shall not arise against any such entity or
its agents or employees as a result of any statement or
information required by or provided pursuant to this section, or
any information relating to any statement that may be requested
in writing by the director from an insurer or   { - agent - }
 { + insurance producer + }, or relating to a statement by a
terminating insurer or   { - agent - }   { + insurance
producer + } to an insurer or   { - agent - }  { + insurance
producer + }, that is limited exclusively to whether a
termination for cause under subsection (1) of this section was
reported to the director. Immunity under this subsection is
available only if the propriety of any termination for cause
under subsection (1) of this section is certified in writing by
an officer or authorized representative of the insurer
terminating the relationship.
    { - (7) - }   { + (6) + } In any action brought against a
person who may have immunity under subsection   { - (6) - }
 { + (5) + } of this section for making any statement required by
this section or providing any information relating to any
statement that may be requested in writing by the director, the
party bringing the action must plead specifically in any
allegation that subsection   { - (6) - }   { + (5) + } of this
section does not apply because the person making the statement or
providing the information did so with actual malice.
    { - (8) - }   { + (7) + } Subsections  { + (5) and + } (6)
 { - and (7) - }  of this section do not abrogate or modify any
existing statutory or common law privileges or immunities.
    { - (9) - }   { + (8) + } The director may take any
administrative action authorized by the Insurance Code, including
suspension or revocation of a license or certificate of
authority, against an insurer, the authorized representative of
an insurer or an   { - agent - }  { +  insurance producer + } who
fails to file notice as required by this section or who is found
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 18
 
 
 
by a court of competent jurisdiction to have filed notice with
actual malice.
    { - (10) - }   { + (9) + } Any information, documents,
records or other data in the control or possession of the
director that are furnished by an insurer or an   { - agent - }
 { +  insurance producer + }, or an employee or agent thereof
acting on behalf of the insurer or   { - agent - }  { +
insurance producer + }, or that are obtained by the director in
an investigation pursuant to this section shall be confidential,
shall not be subject to subpoena and shall not be subject to
discovery nor admissible in evidence in any private civil action.
The director, however, may use the confidential information,
documents, records or other data in administering this section
and in the furtherance of any other regulatory or legal action
brought as a part of the director's duties. The information,
documents, records or other data referred to in this subsection
are subject to the public officer privilege described in ORS
40.270.
  SECTION 20. ORS 744.081 is amended to read:
  744.081. (1) An insurer may terminate an agency appointment at
any time as provided in this section. Termination shall be
without prejudice to the contract rights, if any, of the
 { - agent - }  { + insurance producer + } so terminated. The
insurer shall give written notice of the termination and the date
thereof to the   { - agent - }  { + insurance producer + } at
least 90 days prior to the effective date of the termination. The
notice must specify the reasons for the termination. The insurer
shall deliver the notice either in person or by mail at the
address last provided by the   { - agent - }   { + insurance
producer + } to the insurer. The   { - agent - }   { + insurance
producer + } shall not have a cause of action against the insurer
as a result of any statement in the notice unless the statement
is false and the insurer knew the statement was false when made.
  (2) An insurer may terminate an agency appointment without
giving the notice required by subsection (1) of this section on
any of the grounds specified in this subsection. The following
are grounds for termination under this subsection:
  (a) The   { - agent's - }   { + insurance producer's + }
insurance license is denied, restricted, revoked, suspended or
canceled by any public authority;
  (b) The   { - agent's - }   { + insurance producer's + }
business is sold, transferred or merged and the insurer has not
appointed the successor;
  (c) The   { - agent - }   { + insurance producer + } is
insolvent or fails to remit balances to the insurer in accordance
with the agreement;
  (d) The   { - agent - }   { + insurance producer + } commits
fraud or engages in intentional misconduct;
  (e) The insurer amends its certificate of authority in order to
discontinue a class of insurance;
  (f) The insurer ceases selling insurance in this state; or
  (g) The insurer and   { - agent - }   { + insurance
producer + } mutually agree to terminate the agency appointment.
  (3) An   { - agent - }   { + insurance producer + } may
terminate an agency appointment at any time, but the termination
shall be without prejudice to the contract rights, if any, of the
appointing insurer. The   { - agent - }   { + insurance
producer + } shall give written notice of the termination and the
date thereof to the director not later than the 30th day after
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 19
 
 
 
the effective date of the termination, and to the insurer. The
director may require reasonable proof from the
  { - agent - }   { + insurance producer + } that the
 { - agent - }   { + insurance producer + } has given such notice
to the insurer.
  SECTION 21. ORS 744.082 is amended to read:
  744.082. The Director of the Department of Consumer and
Business Services shall waive any requirement for a nonresident
  { - agent - }   { + insurance producer + } license applicant
with a valid resident insurance producer license from the
applicant's home state, except the requirements imposed by ORS
744.063, if the applicant's home state grants nonresident
insurance producer licenses to residents of this state on the
same basis.
  SECTION 22. ORS 744.083 is amended to read:
  744.083. (1) All premium funds received by a resident
 { - agent - }  { + insurance producer + } shall be accounted for
and maintained in a trust account separate from all other
business and personal funds.
  (2) Except as provided in subsection (3) of this section, a
resident   { - agent - }   { + insurance producer + }
 { - shall - }   { + may + } not commingle or otherwise combine
premiums with any other moneys.
  (3) A resident   { - agent - }   { + insurance producer + } may
commingle with premium funds in the trust account required by
subsection (1) of this section any additional funds the
 { - agent - }   { + insurance producer + } deems prudent for the
purpose of advancing premiums, establishing reserves for the
paying of return premiums, or for any contingencies that may
arise in the course of receiving and transmitting premium or
return premium funds.
  (4) This section does not apply to:
  (a) Any financial institution or trust company, as those terms
are defined in ORS 706.008, or any entity licensed under ORS
chapter 725 or 726.
  (b) Any class of   { - agents - }   { + insurance producers + }
that the Director of the Department of Consumer and Business
Services designates by rule. The director may exempt a class of
 { - agent - }  { + insurance producer + } from this section if
the director determines that the requirements of this section are
unduly burdensome to the
  { - agents - }   { + insurance producers + } in relation to the
public good served.
  SECTION 23. ORS 744.084 is amended to read:
  744.084. (1) In lieu of the trust account required by ORS
744.083, a resident   { - agent - }   { + insurance producer + }
may keep a certificate of deposit from an institution insured by
the federal government or an instrumentality thereof if the
resident   { - agent - }  { + insurance producer + } has an
average monthly balance of premium funds received and held for
the last 12 months of at least $2 million. A resident
 { - agent - }   { + insurance producer + } who keeps a
certificate of deposit shall have satisfactory evidence of the
certificate available at all times for inspection by the Director
of the Department of Consumer and Business Services.
  (2) A certificate of deposit authorized under subsection (1) of
this section shall be for an amount at least equal to the average
monthly balance of premium funds received and held by the
resident   { - agent - }   { + insurance producer + } for the
last 12 months.  Nothing in this subsection requires that the
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 20
 
 
 
required amount of the certificate of deposit be calculated, or
the amount changed, more often than once a month.
  (3) The director may adopt rules specifying what constitutes
satisfactory evidence for purposes of subsection (1) of this
section.
  (4) Authorization to use a certificate of deposit may be
revoked by the director at any time upon a determination that the
resident   { - agent - }   { + insurance producer + } has failed
to comply with the provisions of this section or rules adopted
under subsection (3) of this section. Upon revocation, the
resident   { - agent - }   { + insurance producer + } shall
comply immediately with the provisions of ORS 744.083.
  SECTION 24. ORS 744.086 is amended to read:
  744.086. The Legislative Assembly finds that it is in the
interest of the insurance-buying public that   { - agents - }
 { + insurance producers + } authorized to transact title
insurance be subject to the Insurance Code. It is declared to be
the intent of the Legislative Assembly that the Insurance Code
shall apply to such   { - agents - }  { + insurance producer + }
only to the extent necessary for the regulation of title
insurance ratemaking and unfair trade practices.
  SECTION 25. ORS 744.087 is amended to read:
  744.087. The Director of the Department of Consumer and
Business Services may require the filing by an insurer of any
compensation agreements for   { - agents - }   { + insurance
producers who are appointed by the insurer as agents of the
insurer under ORS 744.078 + }. No such filing shall be deemed a
'public record' as defined in ORS 192.410.
  SECTION 26. ORS 744.089 is amended to read:
  744.089. (1) An   { - agent - }   { + insurance producer + }
shall report to the Director of the Department of Consumer and
Business Services any administrative action taken against the
 { - agent - }   { + insurance producer + } in another
jurisdiction or by another governmental agency in this state not
later than the 30th day after the date of the final disposition
of the matter. This report shall include a copy of the order,
consent to order and other relevant legal documents.
  (2) Not later than the 30th day after the initial pretrial
hearing date, an   { - agent - }   { + insurance producer + }
shall report to the director any criminal prosecution of the
 { - agent - }   { + insurance producer + } taken in any
jurisdiction. The report shall include a copy of the initial
complaint filed, the order resulting from the hearing and any
other relevant legal documents.
  SECTION 26a.  { + Section 26b of this 2003 Act is added to and
made a part of ORS chapter 744. + }
  SECTION 26b.  { + (1) As used in this section:
  (a) 'Retail insurance producer' means an insurance producer who
directly solicits or sells an insurance policy to a prospective
insured or directly negotiates an insurance policy with a
prospective insured.
  (b) 'Wholesale insurance producer' means an insurance producer
who solicits or sells an insurance policy to a prospective
insured through a retail insurance producer or negotiates an
insurance policy for a prospective insured with a retail
insurance producer and does not solicit or sell directly to or
negotiate directly with a prospective insured.
  (2) A wholesale insurance producer who sells, solicits or
negotiates a policy directly with a retail insurance producer and
not on behalf of a prospective insured may charge the retail
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 21
 
 
 
insurance producer a fee or a combination of a fee and a
commission if the wholesale insurance producer has a written
agreement with the retail insurance producer prior to the binding
or issuance of the insurance policy. The charge must be
commensurate with the services provided by the wholesale
insurance producer.
  (3) A retail insurance producer may charge a fee to a
prospective insured when the retail insurance producer pays a fee
or a combination of a fee and a commission to a wholesale
insurance producer under subsection (2) of this section if the
retail insurance producer has a written agreement with the
prospective insured prior to the binding or issuance of the
insurance policy. The fee may not exceed the amount of
compensation paid by the retail insurance producer to the
wholesale insurance producer.
  (4) For the purpose of determining the charge under subsection
(2) of this section, the retail insurance producer and wholesale
insurance producer may agree to any allocation of the fee that
the retail insurance producer charges the consumer under this
section. 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. + }
 
                               { +
REINSURANCE INTERMEDIARIES + }
 
  SECTION 27. ORS 744.800 is amended to read:
  744.800. (1) For purposes of   { - this section - }  { +  ORS
744.800 to 744.818 + }:
  (a)   { - An - }   { + A reinsurance + } intermediary broker is
a person who solicits, negotiates or places reinsurance cessions
or retrocessions on behalf of a ceding insurer without   { - the
authority or power to bind reinsurance - }   { + acting as a
reinsurance intermediary manager + } on behalf of the insurer.
  (b)   { - An - }   { + A reinsurance + } intermediary manager
is a person who has authority to bind a reinsurer or who manages
all or part of the assumed reinsurance business of a reinsurer,
including the management of a separate division, department or
underwriting office, and acts as an   { - agent - }
 { + insurance producer + } for the reinsurer, regardless of the
title or designation of the person.
   { +  (c) A reinsurance intermediary means a reinsurance
intermediary broker or a reinsurance intermediary manager. + }
    { - (c) - }   { + (d) + } 'Business entity' has the meaning
given that term in ORS 731.116.
  (2) A person may act as   { - an - }   { + a reinsurance + }
intermediary broker in this state only as follows:
  (a)   { - If a - }   { + The + } person maintains an office in
this state either   { - in the person's own name or in the name
of an agent that is a business entity, the person must meet
either of the following requirements: - }  { +  directly or as a
member or employee of a firm or association, or an officer,
director or employee of a corporation, and the person is a
licensed insurance producer or reinsurance intermediary in this
state; or
  (b) The person maintains an office in another state either
directly or as a member or employee of a firm or association, or
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 22
 
 
 
an officer, director or employee of a corporation, and the person
is a licensed insurance producer or reinsurance intermediary in
this state or another state having laws substantially similar to
ORS 744.800 to 744.818. + }
    { - (A) If the person is an individual or a business entity,
the person must hold a license issued under this chapter
authorizing the person to act as an agent and indorsed with the
designation of intermediary broker. - }
    { - (B) If the person is an individual, the person must be
authorized to act as an intermediary broker as provided in
subsection (4) of this section under a license issued under this
chapter to an agent that is a business entity and holds a license
as an intermediary broker. - }
    { - (b) If a person maintains an office in another state
either in the person's own name or in the name of an agent that
is a business entity, the person must meet one of the following
requirements: - }
    { - (A) If the person is an individual or a business entity,
the person must hold a license issued under this chapter
authorizing the person to act as an agent and indorsed with the
designation of intermediary broker. - }
    { - (B) If the person is an individual, the person must be
authorized to act as an intermediary broker as provided in
subsection (4) of this section under a license issued under this
chapter to an agent that is a business entity and holds a license
as an intermediary broker. - }
    { - (C) If the person is an individual or a business entity,
the person must hold a license as an intermediary broker or
intermediary manager issued by another state having a law
substantially similar to the requirements of this chapter that
apply to intermediary brokers and intermediary managers. - }
  (3) A person may act as   { - an - }   { + a reinsurance + }
intermediary manager only as follows:
  (a) A person may act as   { - an - }   { + a reinsurance + }
intermediary manager for a reinsurer domiciled in this state if
the person
  { - meets either of the following requirements: - }  { +  is a
licensed insurance producer or reinsurance intermediary in this
state.
  (b) A person may act as a reinsurance intermediary manager in
this state if the person maintains an office in this state either
directly or as a member or employee of a firm or association, or
as an officer, director or employee of a corporation, if the
person is a licensed insurance producer or reinsurance
intermediary in this state. + }
    { - (A) If the person is an individual or a business entity,
the person must hold a license issued under this chapter
authorizing the person to act as an agent and indorsed with the
designation of intermediary manager. - }
    { - (B) If the person is an individual, the person must be
authorized to act as an intermediary manager as provided in
subsection (4) of this section under a license issued under this
chapter to an agent that is a business entity and holds a license
as an intermediary manager. - }
    { - (b) A person may act as an intermediary manager in this
state, when the person maintains an office in this state either
in the person's own name or in the name of an agent that is a
business entity, if the person meets either of the following
requirements: - }
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 23
 
 
 
    { - (A) If the person is an individual or a business entity,
the person holds a license issued under this chapter authorizing
the person to act as an agent and indorsed with the designation
of intermediary manager. - }
    { - (B) If the person is an individual, the person is
authorized to act as an intermediary manager as provided in
subsection (4) of this section under a license issued under this
chapter to an agent that is a business entity and holds a license
as an intermediary manager. - }
    { - (c) A person may act as an intermediary manager in
another state for an authorized foreign or alien insurer
transacting insurance in this state if the person meets one of
the following requirements: - }
    { - (A) If the person is an individual or a business entity,
the person must hold a license issued under this chapter
authorizing the person to act as an agent and indorsed with the
designation of intermediary manager. - }
    { - (B) The person, if an individual, is authorized to act as
an intermediary manager as provided in subsection (4) of this
section under a license issued under this chapter to an agent
that is a business entity and holds a license as an intermediary
manager. - }
    { - (C) If the person is an individual or a business entity,
the person must hold a license as an intermediary broker or
intermediary manager issued by another state having a law
substantially similar to the requirements of this chapter that
apply to intermediary brokers and intermediary managers. - }
   { +  (4) The Director of the Department of Consumer and
Business Services may issue a reinsurance intermediary license to
any person that has complied with the requirements of this
section. A license issued to a firm or association authorizes all
of the members of the firm or association and any designated
employees of the firm or association to act as reinsurance
intermediaries under the license. All such persons must be named
in the license application and any supplements to the
application. A license issued to a corporation authorizes all of
the officers and any designated employees and directors of the
corporation to act as reinsurance intermediaries on behalf of the
corporation. All such persons must be named in the license
application and any supplements to the application.
  (5) The director shall issue a resident reinsurance
intermediary license to a person if the person holds an insurance
producer license issued under ORS 744.062 and indorsed with the
designation of reinsurance intermediary.
  (6) The director shall issue a nonresident reinsurance
intermediary license to a person if:
  (a) The person is currently licensed in the person's home state
as a resident reinsurance intermediary or insurance producer and
is in good standing in the person's home state;
  (b) The person has submitted the proper request for a license
and has paid the applicable fees;
  (c) The person has submitted or transmitted to the director the
license application that the person submitted to the person's
home state or, in lieu of that application, a completed
application acceptable to the director; and
  (d) The person's home state awards nonresident reinsurance
intermediary licenses to residents of this state on the same
basis.
  (7) The director may refuse to issue a reinsurance intermediary
license if, in the director's judgment:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 24
 
 
 
  (a) The application, anyone named in the application or any
member, principal, officer, director or controlling person of the
applicant is not trustworthy; or
  (b) Any person described in paragraph (a) of this subsection
has given cause for revocation or suspension of the license or
has failed to comply with any requirement for issuance of the
license. + }
    { - (4) An individual may act as an intermediary broker or an
intermediary manager under the authority of the license of an
agent that is a business entity, whether or not the individual
holds a license as an agent, if the license of the agent that is
a business entity is indorsed to authorize the agent that is a
business entity to act as an intermediary broker or intermediary
manager and if: - }
    { - (a) The individual is a member, employee, officer or
director of the business entity; and - }
    { - (b) The individual is designated by the agent that is a
business entity on its license application or an amendatory form
or supplementary form thereto as authorized to act as an
intermediary broker or intermediary manager under the authority
of the license of the agent that is a business entity. - }
    { - (5) - }   { + (8) + } In order to obtain and maintain the
indorsement of  { +  reinsurance + } intermediary manager, a
 { - person - }   { + resident reinsurance intermediary + } must
satisfy the requirements of ORS 744.818 regarding errors and
omissions insurance.
    { - (6) A person may obtain a license to act as a nonresident
agent authorized to act in this state as an intermediary broker
or intermediary manager, or both as provided in ORS 744.063. - }
    { - (7) For purposes of ORS 744.078: - }
    { - (a) An intermediary broker is an agent of the ceding
insurer on whose behalf the intermediary broker acts, and not an
agent of the reinsurer. - }
    { - (b) An intermediary manager is an agent of the
reinsurer. - }
  SECTION 28. ORS 744.802 is amended to read:
  744.802. (1) An officer or employee of a ceding insurer is not
subject to the requirements of   { - this chapter - }   { + ORS
744.800 to 744.818 + } that apply to  { + reinsurance + }
intermediary brokers, with respect to the ceding insurer.
  (2) When engaged in a relationship described in this
subsection, the following persons are not subject, with respect
to the reinsurer in the relationship, to the requirements of
 { - this chapter - }   { + ORS 744.800 to 744.818 + } that apply
to  { + reinsurance + } intermediary managers:
  (a) An employee of the reinsurer.
  (b) A United States manager of the United States branch of an
alien reinsurer.
  (c) An underwriting manager who, pursuant to contract, manages
all of the reinsurance operations of the reinsurer, is under
common control with the reinsurer and subject to ORS 732.517 to
732.592, and whose compensation is not based on the volume of
premiums written.
  (d) The manager of a group, association, pool or organization
of insurers who engage in joint underwriting or joint reinsurance
and who are subject to examination by the insurance regulatory
official of the state in which the manager's principal business
office is located.
  (3) An attorney-at-law rendering services in the performance of
duties of an attorney-at-law is not subject to the requirements
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 25
 
 
 
of   { - this chapter - }   { + ORS 744.800 to 744.818 + } that
apply to  { + reinsurance + } intermediary brokers or
 { + reinsurance + } intermediary managers.
  SECTION 29. ORS 744.804 is amended to read:
  744.804.   { - An - }   { + A reinsurance + } intermediary
broker and the insurer it represents in the capacity of
 { - an - }   { + a reinsurance + } intermediary broker may enter
one or more transactions between them only pursuant to a written
authorization that specifies the responsibilities of each party.
The authorization must at least provide that:
  (1) The insurer may terminate the authority of the  { +
reinsurance + } intermediary broker at any time.
  (2) The  { + reinsurance + } intermediary broker must render to
the insurer accounts accurately detailing all material
transactions, including information necessary to support all
commissions, charges and other fees received by or owing to the
 { + reinsurance + } intermediary broker, and remit all funds due
to the insurer not later than the 30th day following the date of
receipt.
  (3) All funds collected for the account of the insurer must be
held by the  { + reinsurance + } intermediary broker in a
fiduciary capacity in a qualified United States financial
institution. For purposes of this subsection, a 'qualified United
States financial institution' is an institution that:
  (a) Is organized, or, in the case of a United States office of
a foreign banking organization, is licensed, under the laws of
the United States or any state thereof;
  (b) Is regulated, supervised and examined by authorities of the
United States or of any state thereof having regulatory authority
over banks and trust companies; and
  (c) Has been determined by the Director of the Department of
Consumer and Business Services to meet standards of financial
condition and standing that are necessary and appropriate for
regulating the quality of financial institutions whose letters of
credit will be acceptable to the director. The director may
consider standards and classifications of institutions
established by the Securities Valuation Office of the National
Association of Insurance Commissioners for the purpose of making
determinations under this paragraph.
  (4) The  { + reinsurance + } intermediary broker must comply
with ORS 744.806.
  (5) The  { + reinsurance + } intermediary broker must comply
with the written standards established by the insurer for the
cession or retrocession of all risks.
  (6) The  { + reinsurance + } intermediary broker must disclose
to the insurer any relationship with any reinsurer to which
business will be ceded or retroceded.
  SECTION 30. ORS 744.806 is amended to read:
  744.806. (1)   { - An - }   { + A reinsurance + } intermediary
broker must keep a complete record for each transaction of a
contract of reinsurance as provided in this subsection. For each
contract of reinsurance transacted by the  { + reinsurance + }
intermediary broker that is limited to first party property
coverages, the  { + reinsurance + } intermediary broker must keep
the record for not less than five years after expiration of the
contract of reinsurance. For all other contracts of reinsurance
transacted by the  { + reinsurance + } intermediary broker, the
 { + reinsurance + } intermediary broker must keep the record for
not less than 10 years after expiration of each contract of
reinsurance. The record must show all of the following:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 26
 
 
 
  (a) The type of contract, limits, underwriting restrictions,
classes or risks and territory.
  (b) The period of coverage, including effective and expiration
dates, cancellation provisions and notice required of
cancellation.
  (c) Reporting and settlement requirements of balances.
  (d) The rate used to compute the reinsurance premium.
  (e) Names and addresses of assuming reinsurers.
  (f) Rates of all reinsurance commissions, including the
commissions on any retrocessions handled by the
 { + reinsurance + } intermediary broker.
  (g) Related correspondence and memoranda.
  (h) Proof of placement.
  (i) Details regarding retrocessions handled by the  { +
reinsurance + } intermediary broker, including the identity of
retrocessionaires and percentage of each contract assumed or
ceded.
  (j) Financial records, including premium and loss accounts.
  (k) The following written evidence, when the
 { + reinsurance + } intermediary broker procures a reinsurance
contract on behalf of an authorized ceding insurer:
  (A) When the contract is procured directly from any assuming
reinsurer, written evidence that the assuming reinsurer has
agreed to assume the risk.
  (B) When the contract is placed through a representative of the
assuming reinsurer other than an employee, written evidence that
the reinsurer has delegated binding authority to the
representative.
  (2) The insurer must have access to and the right to copy and
audit all accounts and records maintained by the
 { + reinsurance + } intermediary broker and related to its
business. The  { + reinsurance + } intermediary broker must
maintain the accounts and records in a form usable by the
insurer.
  SECTION 31. ORS 744.808 is amended to read:
  744.808. (1) An insurer may not engage the services of any
person to act as   { - an - }   { + a reinsurance + }
intermediary broker on its behalf unless the person is licensed
as   { - an - }   { + a reinsurance + } intermediary broker as
required by ORS 744.800.
  (2) An insurer may not employ an individual who is employed by
 { - an - }   { + a reinsurance + } intermediary broker with
which it transacts business unless the  { + reinsurance + }
intermediary broker is under common control with the insurer and
subject to ORS 732.517 to 732.592.
  (3) The insurer must annually obtain a copy of statements of
the financial condition of each  { + reinsurance + } intermediary
broker with which it transacts business.
  SECTION 32. ORS 744.810 is amended to read:
  744.810.   { - An - }   { + A reinsurance + } intermediary
manager and the reinsurer it represents in that capacity may
enter a transaction only pursuant to a written contract that
specifies the responsibilities of each party and otherwise
satisfies the requirements of this section. The contract must be
approved by the board of directors of the reinsurer. Not later
than the 30th day before the reinsurer assumes or cedes business
through the  { +  reinsurance + } intermediary manager, a true
copy of the approved contract must be filed with the Director of
the Department of Consumer and Business Services for approval.
The contract must at least provide that:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 27
 
 
 
  (1) The reinsurer may terminate the contract for cause upon
written notice to the  { + reinsurance + } intermediary manager,
and the reinsurer may immediately suspend the authority of the
 { + reinsurance + } intermediary manager to assume or cede
business during the pendency of any dispute regarding the cause
for termination.
  (2) The  { + reinsurance + } intermediary manager must render
accounts to the reinsurer, accurately detailing all material
transactions and including information necessary to support all
commissions, charges and other fees received by or owing to the
 { + reinsurance + } intermediary manager and remit all funds due
under the contract to the reinsurer on not less than a monthly
basis.
  (3) All funds collected for the account of the reinsurer must
be held by the  { + reinsurance + } intermediary manager in a
fiduciary capacity in a qualified United States financial
institution as that term is described in ORS 744.804. The
 { + reinsurance + } intermediary manager may retain not more
than three months' estimated claims payments and allocated loss
adjustment expenses.  The  { + reinsurance + } intermediary
manager must maintain a separate bank account for each reinsurer
that it represents.
  (4)   { - An - }   { + A reinsurance + } intermediary manager
must keep a complete record for each transaction of a contract of
reinsurance as provided in this subsection. For each contract of
reinsurance transacted by the  { + reinsurance + } intermediary
manager that is limited to first party property coverages, the
 { + reinsurance + } intermediary manager must keep the record
for not less than five years after expiration of the contract of
reinsurance. For all other contracts of reinsurance transacted by
the  { + reinsurance + } intermediary manager, the
 { + reinsurance + } intermediary manager must keep the record
for not less than 10 years after expiration of each contract of
reinsurance. The record must show all of the following:
  (a) The type of contract, limits, underwriting restrictions,
classes or risks and territory.
  (b) The period of coverage, including effective and expiration
dates, cancellation provisions and notice required of
cancellation, and disposition of outstanding reserves on covered
risks.
  (c) Reporting and settlement requirements of balances.
  (d) The rate used to compute the reinsurance premium.
  (e) Names and addresses of reinsurers.
  (f) The rates of all reinsurance commissions, including the
commissions on any retrocessions handled by the
 { + reinsurance + } intermediary manager.
  (g) Related correspondence and memoranda.
  (h) Proof of placement.
  (i) Specific information regarding retrocessions handled by the
 { + reinsurance + } intermediary manager, including the identity
of retrocessionaires and percentage of each contract assumed or
ceded.
  (j) Financial records, including premium and loss accounts.
  (k) The following written evidence, when the
 { + reinsurance + } intermediary manager places a reinsurance
contract on behalf of a ceding insurer:
  (A) When the contract is procured directly from any assuming
reinsurer, written evidence that the assuming reinsurer has
agreed to assume the risk; or
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 28
 
 
 
  (B) When the contract is placed through a representative of the
assuming reinsurer, other than an employee, written evidence that
the reinsurer has delegated binding authority to the
representative.
  (5) The reinsurer must have access to and the right to copy all
accounts and records maintained by the  { + reinsurance + }
intermediary manager that are related to its business. The  { +
reinsurance + } intermediary manager must maintain the accounts
and records in a form usable by the reinsurer.
  (6) The contract cannot be assigned in whole or in part by the
 { + reinsurance + } intermediary manager.
  (7) The  { + reinsurance + } intermediary manager must comply
with the written underwriting and rating standards established by
the insurer for the acceptance, rejection or cession of all
risks.
  (8) The contract must set forth the rates, terms and purposes
of commissions, charges and other fees that the
 { + reinsurance + } intermediary manager may levy against the
reinsurer.
  (9) If the contract permits the  { + reinsurance + }
intermediary manager to settle claims on behalf of the reinsurer,
all of the following provisions must apply:
  (a) All claims must be reported to the reinsurer in a timely
manner.
  (b) A copy of the claim file must be sent to the reinsurer at
its request or as soon as it becomes known that the claim:
  (A) Has the potential of exceeding the lesser of an amount
determined by the director or the limit set by the reinsurer;
  (B) Involves a coverage dispute;
  (C) May exceed the claims settlement authority of the  { +
reinsurance + } intermediary manager;
  (D) Is open for more than six months; or
  (E) Is closed by payment of the lesser of an amount set by the
director or an amount set by the reinsurer.
  (c) All claim files must be the joint property of the reinsurer
and the  { + reinsurance + } intermediary manager. However, upon
an order of liquidation of the reinsurer, the files
 { - shall - }  become the sole property of the reinsurer or its
estate but the  { +  reinsurance + } intermediary manager shall
have reasonable access to and the right to copy the files on a
timely basis.
  (d) Any settlement authority granted to the
 { + reinsurance + } intermediary manager may be terminated for
cause upon written notice by the reinsurer to the
 { + reinsurance + } intermediary manager or upon the termination
of the contract. The reinsurer may suspend the settlement
authority during the pendency of the dispute regarding the cause
of termination.
  (10) If the contract provides for a sharing of interim profits
by the  { + reinsurance + } intermediary manager, the interim
profits must not be paid until one year after the end of each
underwriting period for property business and five years after
the end of each underwriting period for casualty business, or a
later period set by the director for specified lines of
insurance, and not until the adequacy of loss reserves on
remaining claims has been attested to by an actuary pursuant to
ORS 744.814.
  (11) The  { + reinsurance + } intermediary manager must
annually provide the reinsurer with a statement of its financial
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 29
 
 
 
condition that is prepared by an independent certified public
accountant.
  (12) Periodically, but not less frequently than semiannually,
the reinsurer shall conduct an on-site review of the underwriting
and claims processing operations of the  { + reinsurance + }
intermediary manager.
  (13) The  { + reinsurance + } intermediary manager must
disclose to the reinsurer any relationship it has with any
insurer prior to ceding or assuming any business with such
insurer pursuant to the contract.
  (14) Within the scope of the actual or apparent authority of
the  { + reinsurance + } intermediary manager, the acts of the
 { + reinsurance + } intermediary manager are considered to be
the acts of the reinsurer on whose behalf it is acting.
  SECTION 33. ORS 744.812 is amended to read:
  744.812.   { - An - }   { + A reinsurance + } intermediary
manager   { - shall - }   { + may + } not do any of the
following:
  (1) Cede retrocessions on behalf of the reinsurer that the
 { +  reinsurance + } intermediary manager represents, except
that the  { +  reinsurance + } intermediary manager may cede
facultative retrocessions pursuant to obligatory facultative
agreements if the contract with the reinsurer contains
reinsurance underwriting guidelines for the retrocessions. The
guidelines must include:
  (a) A list of reinsurers with which the automatic agreements
are in effect;
  (b) For each such reinsurer, the coverages and amounts or
percentages that may be reinsured; and
  (c) For each such reinsurer, the commission schedules.
  (2) Commit the reinsurer to participate in reinsurance
syndicates.
  (3) Appoint an   { - agent - }  { +  insurance producer + },
 { + reinsurance + } intermediary broker or  { + reinsurance + }
intermediary manager without assuring that the   { - agent - }
 { +  insurance producer + },  { + reinsurance + } intermediary
broker or  { + reinsurance + } intermediary manager is lawfully
licensed to transact the type of reinsurance for which the
appointment is made.
  (4) Without prior approval of the reinsurer, pay or commit the
reinsurer to pay a claim, net of retrocessions, that exceeds the
lesser of an amount specified by the reinsurer or one percent of
the combined capital and surplus of the reinsurer as of December
31 of the last complete calendar year.
  (5) Collect any payment from a retrocessionaire or commit the
reinsurer to any claim settlement with a retrocessionaire,
without prior approval of the reinsurer. If prior approval is
given, the  { +  reinsurance + } intermediary manager must
promptly forward a report to the reinsurer.
  (6) Jointly employ an individual who is employed by the
reinsurer, unless the  { + reinsurance + } intermediary manager
is under common control with the reinsurer subject to ORS 732.517
to 732.592.
  (7) Appoint a  { + reinsurance + } subintermediary manager.
  SECTION 34. ORS 744.814 is amended to read:
  744.814. (1) A reinsurer may not engage the services of any
person to act as   { - an - }   { + a reinsurance + }
intermediary manager on its behalf unless the person is licensed
to act as   { - an - }   { + a reinsurance + } intermediary
manager as required by ORS 744.800.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 30
 
 
 
  (2) A reinsurer shall annually obtain a copy of statements of
the financial condition of each  { + reinsurance + } intermediary
manager that the reinsurer has engaged. Each statement must be
prepared by an independent certified public accountant in a form
acceptable to the Director of the Department of Consumer and
Business Services.
  (3) If   { - an - }   { + a reinsurance + } intermediary
manager establishes loss reserves, the reinsurer shall annually
obtain the opinion of an actuary who is in good standing of the
American Academy of Actuaries, attesting to the adequacy of loss
reserves established for losses incurred and outstanding on
business produced by the  { +  reinsurance + } intermediary
manager. The opinion must be in addition to any other required
loss reserve certification.
  (4) Binding authority for all retrocessional contracts or
participation in reinsurance syndicates must rest with an officer
of the reinsurer who is not affiliated with the
 { + reinsurance + } intermediary manager.
  (5) Not later than the 30th day after termination of a contract
with   { - an - }   { + a reinsurance + } intermediary manager,
the reinsurer shall provide written notification of the
termination to the director.
  (6) A reinsurer may not appoint to its board of directors any
officer, director, employee, controlling shareholder or
subproducer of its  { + reinsurance + } intermediary manager.
This subsection does not apply to relationships governed by ORS
732.517 to 732.592.
  SECTION 35. ORS 744.816 is amended to read:
  744.816. (1) The Director of the Department of Consumer and
Business Services may examine any  { + reinsurance + }
intermediary broker and any  { + reinsurance + } intermediary
manager. The director shall have access to all books, bank
accounts and records of   { - an - }   { + a reinsurance + }
intermediary broker or  { + reinsurance + } intermediary manager
being examined. All such books, bank accounts and records must be
maintained in a form usable to the director.
  (2)   { - An - }   { + A reinsurance + } intermediary manager
may be examined as if the  { + reinsurance + } intermediary
manager were the reinsurer.
  SECTION 36. ORS 744.818 is amended to read:
  744.818. (1)   { - In addition to the requirements for
licensure of an agent, an - }   { + A resident reinsurance
intermediary acting as a reinsurance + } intermediary manager
shall maintain with the Director of the Department of Consumer
and Business Services a current certificate of errors and
omissions insurance in an amount established by the director by
rule from an insurer authorized to do business in this state or
from any other insurer acceptable to the director according to
standards established by rule.
  (2) If the director determines that errors and omissions
insurance required under this section is not generally available
at a reasonable cost, the director by rule may suspend the
requirement of insurance, but must reimpose the requirement when
the insurance becomes available once again.
  SECTION 37. ORS 744.820 is amended to read:
  744.820. If the Director of the Department of Consumer and
Business Services finds that   { - an - }   { + a reinsurance + }
intermediary broker or   { - an - }   { + a reinsurance + }
intermediary manager has violated any provision of ORS 744.800 to
744.818, the director may order the  { +  reinsurance + }
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 31
 
 
 
intermediary broker or  { + reinsurance + } intermediary manager
to reimburse the insurer, reinsurer, rehabilitator or liquidator
for losses incurred by the insurer or reinsurer because of the
violation. The director may take action under this section in
addition to or instead of any other action that the director may
take under the Insurance Code.
 
                               { +
SURPLUS LINES + }
 
  SECTION 38. 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) 'Capital' means funds paid in for stock or other evidence
of ownership.
  (3) 'Eligible surplus lines insurer' means a nonadmitted
insurer with which a surplus lines licensee may place surplus
lines insurance.
  (4) 'Export' means to place surplus lines insurance with a
nonadmitted insurer.
    { - (5) 'Insurance producer' has the meaning given that term
in ORS 744.052. - }
    { - (6) - }   { + (5) + } 'Kind of insurance' means one of
the types of insurance required to be reported in the annual
statement which must be filed with the Director of the Department
of Consumer and Business Services by authorized insurers.
    { - (7) - }   { + (6) + } 'Nonadmitted insurer' means an
insurer not authorized to do an insurance business in this state.
This definition shall include insurance exchanges as authorized
under the laws of various states.
    { - (8) - }   { + (7) + } 'Producing   { - agent - }  { +
insurance producer + } ' means the individual   { - agent - }
 { + insurance producer + } dealing directly with the party
seeking insurance.
    { - (9) - }   { + (8) + } 'Surplus' means funds over and
above liabilities and capital of the insurer for the protection
of policyholders.
    { - (10) - }   { + (9) + } 'Surplus lines licensee' means an
 { - agent - }  { + 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.
  SECTION 39. ORS 735.425 is amended to read:
  735.425. (1) Within 90 days after the placing of any surplus
lines insurance in this state, each surplus lines licensee shall
file with the Director of the Department of Consumer and Business
Services:
  (a) An affidavit 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
 { - agent - }  { + insurance producer + } to place the coverage
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 32
 
 
 
with admitted insurers and the results thereof. The statement
shall be signed by the producing   { - agent - }   { + 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) The director may direct that filings required under
subsection (1) of this section be made to the Surplus Lines
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) A nonresident surplus lines licensee 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.
  SECTION 40. ORS 735.435 is amended to read:
  735.435. (1) Upon placing surplus lines insurance, the surplus
lines licensee shall promptly deliver to the insured or the
producing   { - agent - }   { + 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   { - or other evidence of
insurance - } . The certificate, as described in subsection (4)
of this section, cover note  { - , - }   { + or + } binder
 { - or other evidence of insurance - }  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 surplus lines licensee shall issue or deliver any
  { - evidence of - }  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   { - any such evidence of
insurance - }  { +  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   { - evidence of - } insurance { +
policy + }, or in any other material as to the insurance coverage
 { - so evidenced - } , the surplus lines licensee shall promptly
issue and deliver to the insured or the original producing
 { - agent - }  { + insurance producer + } an appropriate
substitute for, or indorsement of the original document,
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 33
 
 
 
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   { - agent - }   { + insurance
producer + } to replace   { - any evidence of insurance - }
 { + 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.
  (6)   { - Every evidence of insurance - }   { + Each insurance
policy or certificate of insurance + } negotiated, placed or
procured under the provisions of ORS 735.400 to 735.495
 { - issued - }  by the surplus lines licensee shall bear the
name of the licensee and the following legend in bold type: 'This
 { - is evidence of - }  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
  { - evidence of - }  insurance.  '
  (7) The Director of the Department of Consumer and Business
Services by rule may establish requirements relating to
 { - evidence of - }  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.
  SECTION 41. ORS 735.450 is amended to read:
  735.450. (1) A person shall not procure any contract of surplus
lines insurance with any nonadmitted insurer unless the person is
licensed under ORS chapter 744   { - as an agent authorized to
transact property insurance, casualty insurance or both and is
further authorized under the license - }  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   { - this subsection - }
 { + 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.
    { - (2) The Director of the Department of Consumer and
Business Services may amend the license of an agent authorized to
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 34
 
 
 
transact property insurance, casualty insurance or both to
authorize the agent to transact insurance as a surplus lines
agent if the agent has applied under ORS 744.063 to have the
class of surplus lines insurance added to the agent license and
has satisfied all requirements therefor under ORS 744.052 to
744.089. This subsection applies to resident and nonresident
agents. - }
  SECTION 42. ORS 735.455 is amended to read:
  735.455.  { + (1) + } A surplus lines licensee may originate
surplus lines insurance or accept such insurance from any other
 { - agent - }  { + insurance producer + } duly licensed as to
the kinds of insurance involved, and the surplus lines licensee
may compensate   { - such agent - }   { + 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 43. 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 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;
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 35
 
 
 
  (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   { - agent - }  { +  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 44. ORS 735.470 is amended to read:
  735.470. (1) The surplus lines licensee shall pay the Director
of the Department of Consumer and Business Services an amount
equal to the tax which would have been imposed under ORS 731.816
(1993 Edition) if that section were in effect and operative, and
the tax which is imposed by ORS 731.820, on authorized insurers
for the premiums shown in the report required by ORS 735.465. The
tax shall be collected by the surplus lines licensee as specified
by the director, in addition to the full amount of the gross
premium charged by the insurer for the insurance. The tax 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   { - agent - }  { +  insurance
producer + }, if any. The surplus lines licensee is prohibited
from absorbing such tax and from rebating for any reason, any
part of such tax.
  (2) The surplus lines tax is due quarterly on the 45th day
following the calendar quarter in which the premium is collected.
The tax 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 lines association.
  (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.
  SECTION 45. ORS 735.480 is amended to read:
  735.480. 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   { - agent - }  { +
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;
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 36
 
 
 
  (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.
  SECTION 46. ORS 735.490 is amended to read:
  735.490. (1) An insurer transacting insurance 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
 { - agent - }  { + insurance producer + } who registered or
delivered   { - such - }   { + the + } policy resides or
transacts business, by the service of summons and complaint made
upon   { - such agent - }   { + the insurance producer + } for
 { - such - }  { + the + } insurer.
  (2) Any   { - such agent - }   { + 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   { - such agent - }   { + the
insurance producer + } in which to plead, answer or defend any
such cause.
  (4) Upon service of summons and complaint upon   { - such
agent - }  { + the insurance producer + } for   { - such - }
 { + 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.
 
                               { +
RELATED AMENDMENTS + }
 
  SECTION 47. ORS 59.840 is amended to read:
  59.840. As used in ORS 59.840 to 59.980:
  (1) 'Director' means the Director of the Department of Consumer
and Business Services.
  (2) 'Fraud,' 'deceit' and 'defraud' are not limited to
common-law deceit.
  (3) 'License' means a license issued to a mortgage banker or
mortgage broker under ORS 59.840 to 59.980.
  (4)(a) 'Loan originator' means an individual employed by or
purporting to act as an agent or independent contractor for a
mortgage banker or mortgage broker that is required to be
licensed under ORS 59.840 to 59.980, with the expectation by the
individual of compensation or gain that is determined by the
amount borrowed or the terms and conditions agreed to by the
mortgage loan borrower, and having primary job responsibilities
that include negotiating with a borrower or potential borrower
for the purpose of establishing the terms and conditions of a
mortgage loan.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 37
 
 
 
  (b) 'Loan originator' includes a person employed at a location
outside this state whose primary job responsibilities include
contacting or attempting to contact a borrower or potential
borrower within this state through any medium or mode of
communication for purposes of providing a mortgage loan within
this state.
  (c) 'Loan originator' does not include an individual whose
responsibilities are clerical or administrative functions,
including but not limited to gathering information, requesting
information, word processing, soliciting general interest in
mortgage loans, sending correspondence and assembling files.
  (d) 'Loan originator' does not include an employee of a
mortgage banker that is rated as good or better under the federal
rating system in effect on May 1, 2001, for seller-servicers of
Federal Housing Administration, Federal Home Loan Mortgage
Corporation or Federal National Mortgage Association loans and
that has an office within this state at which the mortgage banker
maintains complete and current copies of all employment records
and other records as required by the Director of the Department
of Consumer and Business Services by order or rule, in a format
acceptable to the director.
  (e) 'Loan originator' does not include an insurance
 { - agent - }  { + producer licensed under ORS 744.052 to
744.089 + } or insurance consultant licensed under ORS 744.002.
  (f) 'Loan originator' does not include a person or group of
persons exempted by rule or order of the director.
  (5) 'Mortgage banker':
  (a) Means any person who for compensation or in the expectation
of compensation:
  (A) Either directly or indirectly makes, negotiates or offers
to make or negotiate a mortgage banking loan or a mortgage loan;
and
  (B) Services or sells a mortgage banking loan.
  (b) Does not include:
  (A) A financial institution, as defined in ORS 706.008.
  (B) A financial holding company or a bank holding company, as
defined in ORS 706.008, holding an institution described in
subparagraph (A) of this paragraph; a savings and loan holding
company as defined in section 408 of the National Housing Act, 12
U.S.C. 1730a (1982), holding an association described in
subparagraph (A) of this paragraph; the subsidiaries and
affiliates of the financial holding company, bank holding company
or savings and loan holding company; or subsidiaries and
affiliates of institutions described in subparagraph (A) of this
paragraph, provided that the appropriate statutory regulatory
authority is exercising control over or is regulating or
supervising the persons listed in this subparagraph in their
mortgage banking activities in accordance with the purposes of
ORS 59.840 to 59.980.
  (C) A person who makes a loan secured by an interest in real
estate with the person's own moneys, for the person's own
investment and who is not engaged in the business of making loans
secured by an interest in real estate.
  (D) An attorney licensed in this state who negotiates mortgage
banking loans or mortgage loans in the ordinary course of
business, unless the business of negotiating mortgage banking
loans or mortgage loans constitutes substantially all of the
attorney's professional activity.
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 38
 
 
 
  (E) A person who, as seller of real property, receives one or
more mortgages or deeds of trust as security for a separate money
obligation.
  (F) An agency of any state or of the United States.
  (G) A person who receives a mortgage or deed of trust on real
property as security for an obligation payable on an installment
or deferred payment basis and arising out of materials furnished
or services rendered in the improvement of that real property or
any lien created without the consent of the owner of the real
property.
  (H) A person who funds a mortgage banking loan or mortgage loan
which has been originated and processed by a licensee or by an
exempt person and who does not maintain a place of business in
this state in connection with funding mortgage banking loans or
mortgage loans, does not directly or indirectly solicit borrowers
in this state for the purpose of making mortgage banking loans or
mortgage loans and does not participate in the negotiation of
mortgage banking loans or mortgage loans. For the purpose of this
subparagraph, 'negotiation of mortgage banking loans or mortgage
loans' does not include setting the terms under which a person
may buy or fund a mortgage banking loan or a mortgage loan
originated by a licensee or exempt person.
  (I) A nonprofit federally tax exempt corporation certified by
the United States Small Business Administration and organized to
promote economic development within this state whose primary
activity consists of providing financing for business expansion.
  (J) A licensee licensed under ORS chapter 725 or a mortgage
broker.
  (K) A retirement or pension fund.
  (L) An insurer as defined in ORS 731.106.
  (M) A court appointed fiduciary.
  (N) Any other person designated by rule or order of the
director.
  (6) 'Mortgage banking loan' means a loan, extension of credit
or a retail sales contract that is funded exclusively from the
mortgage banker's own resources, which is directly or indirectly
secured by a mortgage or deed of trust or any lien interest on
real estate and which is created with the consent of the owner of
the real property. For purposes of this subsection, ' own
resources' means any of the following:
  (a) Cash, corporate capital, warehouse credit lines at
financial institutions defined in ORS 706.008 or other sources
that are liability items of the mortgage banker's financial
statements for which its assets are pledged;
  (b) Correspondent contracts between the mortgage banker and a
bank, savings bank, trust company, savings and loan association,
credit union, profit sharing or pension trust, a licensee under
ORS chapter 725 or an insurance company; or
  (c) The mortgage banker's affiliates' cash, corporate capital,
warehouse credit lines at financial institutions defined in ORS
706.008 or other sources that are liability items on the
affiliates' financial statements for which the affiliates' assets
are pledged. As used in this paragraph, 'affiliates' means
entities that, directly or indirectly, through one or more
intermediaries controls, are controlled by or are under common
control with the entity specified.
  (7) 'Mortgage broker':
  (a) Means a person who:
  (A) Engages all or part of the time, for the account of others
or for the person's own account, in the business of selling real
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 39
 
 
 
estate paper whether as issuer, agent or principal to persons
other than persons enumerated in ORS 59.035 (4);
  (B) Engages all or part of the time, for the account of others
or for the person's own account, in the business of accepting
funds from one or more persons other than persons enumerated in
ORS 59.035 (4) for investment in real estate paper; or
  (C) For compensation, or in the expectation of compensation,
either directly or indirectly makes, negotiates or offers to make
or negotiate a mortgage loan.
  (b) Does not include:
  (A) A financial institution, as defined in ORS 706.008.
  (B) A financial holding company or a bank holding company, as
defined in ORS 706.008, holding an institution described in
subparagraph (A) of this paragraph; a savings and loan holding
company as defined in section 408 of the National Housing Act, 12
U.S.C. 1730a (1982), holding an association described in
subparagraph (A) of this paragraph; the subsidiaries and
affiliates of the financial holding company, bank holding company
or savings and loan holding company; or subsidiaries and
affiliates of institutions described in subparagraph (A) of this
paragraph, provided that the appropriate statutory regulatory
authority is exercising control over or is regulating or
supervising the persons listed in this subparagraph in their
mortgage brokering activities in accordance with the purposes of
ORS 59.840 to 59.980.
  (C) A person who purchases real property and issues an
obligation to finance the transaction to the seller incidentally
to the sale.
  (D) A real estate licensee as defined in ORS 696.010 who
performs services solely incidental to the practice of
professional real estate activity as defined in ORS 696.010,
unless the real estate licensee performs the functions of a
mortgage banker or a mortgage broker as defined in this section.
  (E) A person licensed under the provisions of ORS chapter 725
or a mortgage banker.
  (F) A person who makes a loan secured by an interest in real
estate with the person's own moneys, for the person's own
investment and who is not engaged in the business of making loans
secured by an interest in real estate.
  (G) An attorney licensed in this state who negotiates mortgage
loans in the ordinary course of business, unless the business of
negotiating mortgage loans constitutes substantially all of the
attorney's professional activity.
  (H) A person who, as seller of real property, receives one or
more mortgages or deeds of trust as security for a separate money
obligation.
  (I) An agency of any state or of the United States.
  (J) A person who receives a mortgage or deed of trust on real
property as security for an obligation payable on an installment
or deferred payment basis and arising out of materials furnished
or services rendered in the improvement of that real property or
any lien created without the consent of the owner of the real
property.
  (K) A person who funds a mortgage loan which has been
originated and processed by a licensee or by an exempt person and
who does not maintain a place of business in this state in
connection with funding mortgage loans, does not directly or
indirectly solicit borrowers in this state for the purpose of
making mortgage loans and does not participate in the negotiation
of mortgage loans. For the purpose of this subparagraph, '
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 40
 
 
 
negotiation of mortgage loans' does not include setting the terms
under which a person may buy or fund a mortgage loan originated
by a licensee or exempt person.
  (L) A nonprofit federally tax exempt corporation certified by
the United States Small Business Administration and organized to
promote economic development within this state whose primary
activity consists of providing financing for business expansion.
  (M) A person licensed under ORS 822.020 who provides services
customarily associated with the retail sales of manufactured
dwellings, including communication of generally available
information regarding mortgage loans, unless:
  (i) The person receives from a purchaser a fee or commission as
a mortgage broker or mortgage banker that is disclosed in the
sales contract, purchase agreement or applicable federal
documents;
  (ii) For the benefit of a potential purchaser, the person
completes a loan application form or other document that is part
of a mortgage banking loan and completes a good faith estimate
under the federal Real Estate Settlement Procedures Act (12
U.S.C.  2601 et seq.);
  (iii) The person solicits or receives credit information from a
prospective purchaser for the purpose of making credit decisions;
or
  (iv) The person negotiates with a potential purchaser the terms
of a mortgage loan including but not limited to points, interest
rates, length of loan or other loan conditions.
  (N) Any other person designated by rule or order of the
director.
  (8) 'Mortgage loan' means a loan, extension of credit or retail
sales contract, other than a mortgage banking loan, secured by a
mortgage or deed of trust or any lien interest on real estate
that is created with the consent of the owner of the real estate.
  (9) 'Residential mortgage transaction' means a transaction in
which a mortgage, deed of trust, purchase money security interest
arising under an installment sales contract, or equivalent
consensual security interest is created or retained in property
upon which four or fewer residential dwelling units are planned
or situated, including but not limited to individual units or
condominiums and cooperatives. As used in this subsection, '
residential dwelling unit' means an improvement designed for
residential occupancy.
  SECTION 48. ORS 83.580 is amended to read:
  83.580. (1) The amount, if any, included for automobile
insurance, shall not exceed the premiums chargeable in accordance
with rate filings made by the insurer with the Director of the
Department of Consumer and Business Services for such insurance.
  (2) The amount, if any, included for life, health and accident
or other insurance, other than automobile insurance, shall not
exceed the premiums charged by the insurer.
  (3) Except as provided in ORS 743.377, the motor vehicle dealer
or financing agency, if an amount for automobile or other
insurance on the motor vehicle is included in a retail
installment contract, shall within 30 days after execution of the
retail installment contract send or cause to be sent to the buyer
a policy or policies or certificate of insurance, written by an
insurance company authorized to do business in this state,
clearly setting forth the amount of the premium, the kind or
kinds of insurance and the scope of the coverage and all the
terms, exceptions, limitations, restrictions and conditions of
the contract or contracts of insurance. The buyer of a motor
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 41
 
 
 
vehicle under a retail installment contract shall have the
privilege of purchasing such insurance from an   { - agent - }
 { + insurance producer + } of the selection of the buyer and of
selecting an insurance company acceptable to the motor vehicle
dealer; provided, however, that the inclusion of the insurance
premium in the retail installment contract when the buyer selects
the   { - agent - }   { + insurance producer + } or company,
shall be optional with the motor vehicle dealer and in such case
the motor vehicle dealer or financing agency shall have no
obligation to send, or cause to be sent, to the buyer the policy
or certificate of insurance.
  (4) If an insurance policy or certificate that was obtained for
an amount included in the retail installment contract is
canceled, the unearned insurance premium refund received by the
holder of the contract shall be credited to the last maturing
installments of the retail installment contract except to the
extent applied toward payment for similar insurance protecting
the interests of the buyer or of the buyer and the holder of the
contract.
  SECTION 49. ORS 86.720 is amended to read:
  86.720. (1) Within 30 days after performance of the obligation
secured by the trust deed, the beneficiary shall deliver a
written request to the trustee to reconvey the estate of real
property described in the trust deed to the grantor. Within 30
days after the beneficiary delivers the written request to
reconvey to the trustee, the trustee shall reconvey the estate of
real property described in the trust deed to the grantor. In the
event the obligation is performed and the beneficiary refuses to
request reconveyance or the trustee refuses to reconvey the
property, the beneficiary or trustee so refusing shall be liable
as provided by ORS 86.140 in the case of refusal to execute a
discharge or satisfaction of a mortgage on real property. The
trustee may charge a reasonable fee for all services involved in
the preparation, execution and recordation of any reconveyance
executed pursuant to this section.
  (2) If a full reconveyance of a trust deed has not been
executed and recorded pursuant to the provisions of subsection
(1) of this section within 60 calendar days of the date the
obligation secured by the trust deed was fully satisfied, then:
  (a) If the obligation was satisfied by a title insurance
company or   { - agent - }   { + insurance producer + } or by
payment through an escrow transacted by a title insurance company
or   { - agent - }  { + insurance producer + }, upon the written
request of the grantor or the grantor's successor in interest,
the tender of reasonable charges and the compliance with the
notice requirements of subsection (3) of this section, the title
insurance company or   { - agent - }   { + insurance producer + }
shall prepare, execute and record a release of trust deed.
  (b) Upon compliance with the notice requirements of subsection
(3) of this section, any title insurance company or
  { - agent - }   { + insurance producer + } may prepare, execute
and record a release of trust deed.
  (3) Prior to the issuance and recording of a release pursuant
to this section, the title insurance company or   { - agent - }
 { + insurance producer + } shall give notice of the intention to
record a release of trust deed to the beneficiary of record and,
if different, the party to whom the full satisfaction payment was
made. The notice shall:
  (a) Provide that the parties to whom the notice is sent shall
have a period of 30 days from the date of mailing to send to the
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 42
 
 
 
title insurance company or   { - agent - }   { + insurance
producer + } their written objections to the execution and
recording of the release of trust deed;
  (b) Be sent by first class mail with postage prepaid, addressed
to the named interested parties at their last-known addresses;
and
  (c) Identify the trust deed by the name of the original grantor
and any successor in interest on whose behalf payment was made
and by the recording reference.
  (4) The release of trust deed shall recite on the first page
that it has been executed and recorded pursuant to the provisions
of this section. The release shall be properly acknowledged and
shall set forth:
  (a) The name of the beneficiary to whom the payment was made;
  (b) The name of the original grantor of the trust deed and any
successor in interest on whose behalf payment was made;
  (c) The recording reference to the trust deed that is to be
released;
  (d) A recital that the obligation secured by the trust deed has
been paid in full;
  (e) The date and amount of payment;
  (f) The date of mailing of notice required by this section; and
  (g) A recital that no written objections were received by the
title insurance company or   { - agent - }  { +  insurance
producer + }.
  (5) The release of trust deed executed pursuant to this section
shall be entitled to recordation and, when recorded, shall be
deemed to be the equivalent of a reconveyance of a trust deed.
  (6) The title insurance company or   { - agent - }
 { + insurance producer + } shall not record or cause to be
recorded a release of trust deed when any of the following
circumstances exist:
  (a) The 30-day period following notice given under this section
has not expired; or
  (b) Written objection to such recordation has been received by
the title insurance company or   { - agent - }   { + insurance
producer + } from any of the parties to whom notice was sent.
  (7) The trustee, title insurance company or   { - agent - }
 { + insurance producer + } may charge a reasonable fee for all
services involved in the preparation, execution, recordation and
compliance with this section, to effect the release of trust
deed.
  (8) Subsection (2) of this section does not excuse the
beneficiary or trustee from compliance with subsection (1) of
this section.
  (9) In addition to any other remedy provided by law, a title
insurance company or   { - agent - }   { + insurance producer + }
preparing, executing or recording a release of trust deed shall
be liable to any party for damages that the party sustains by
reason of the negligence or willful misconduct of the title
insurance company or
  { - agent - }   { + insurance producer + } in connection with
the issuance, execution or recording of the release pursuant to
this section.  Except as provided in subsection (10) of this
section, the court may award reasonable attorney fees to the
prevailing party in an action under this section.
  (10) The court may not award attorney fees to a prevailing
defendant under the provisions of subsection (9) of this section
if the action under this section is maintained as a class action
pursuant to ORCP 32.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 43
 
 
 
  (11) As used in this section,   { -  ' agent' - }   { +  '
insurance producer' + } means an authorized issuer of title
insurance policies of a title insurance company who is licensed
as an   { - agent - }  { + insurance producer + } for that
purpose pursuant to ORS chapter 744.
  (12) Subsections (2) to (11) of this section shall be
applicable only to full reconveyances of the property described
in the trust deed and not to reconveyances of parts or portions
of the property.
  (13) Subsections (1) to (12) of this section are applicable to
all trust deeds, whether executed before, on or after November 4,
1993.
  (14) A title insurance company or agent is not required to
prepare, execute and record a release of trust deed under
subsections (2) to (12) of this section if the obligation secured
by the trust deed was satisfied prior to November 4, 1993.
  SECTION 50. ORS 86.790 is amended to read:
  86.790. (1) The trustee of a trust deed under ORS 86.705 to
86.795 shall not be required to comply with the provisions of ORS
chapters 707 and 709 and shall be:
  (a) Any attorney who is an active member of the Oregon State
Bar;
  (b) A financial institution or trust company, as defined in ORS
706.008, that is authorized to do business under the laws of
Oregon or the United States;
  (c) A title insurance company authorized to insure title to
real property in this state, its subsidiaries, affiliates,
  { - agents - }   { + insurance producers + } or branches;
  (d) The United States or any agency thereof; or
  (e) Escrow agents licensed under ORS 696.505 to 696.590.
  (2) An attorney who is a trustee under subsection (1)(a) of
this section may represent the beneficiary in addition to
performing the duties of trustee.
  (3) At any time after the trust deed is executed, the
beneficiary may appoint in writing another qualified trustee. If
the appointment of the successor trustee is recorded in the
mortgage records of the county or counties in which the trust
deed is recorded, the successor trustee shall be vested with all
the powers of the original trustee.
  (4) A trustee or successor trustee is a necessary and proper
party to any proceeding to determine the validity of or enjoin
any private or judicial proceeding to foreclose a trust deed, but
a trustee or successor trustee is neither a necessary nor a
proper party to any proceeding to determine title to the property
subject to the trust deed, or to any proceeding to impose,
enforce or foreclose any other lien on the subject property.
  (5) Nothing in ORS 86.705 to 86.795 imposes a duty on the
trustee or successor trustee to notify any person of any
proceeding with respect to such person, except a proceeding
initiated by the trustee or successor trustee.
  (6) A trustee or the attorney for the trustee or any agent
designated by the trustee or the attorney may announce and accept
a bid from the beneficiary whether or not the beneficiary is
present at the sale.
  (7) The trustee or successor trustee shall have no fiduciary
duty or fiduciary obligation to the grantor or other persons
having an interest in the property subject to the trust deed. The
trustee or successor trustee shall not be relieved of the duty to
reconvey the property subject to the trust deed to the grantor
upon request for reconveyance by the beneficiary.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 44
 
 
 
  SECTION 51. ORS 433.045 is amended to read:
  433.045. (1) Except as provided in ORS 433.080, no person shall
subject the blood of an individual to an HIV test without first
obtaining informed consent as described in subsection (2) or (7)
of this section.
  (2) A physician licensed under ORS chapter 677 shall comply
with the requirement of subsection (1) of this section through
the procedure in ORS 677.097. Any other licensed health care
provider or facility shall comply with the requirement of
subsection (1) of this section through a procedure substantially
similar to that specified in ORS 677.097. Any other person shall
comply with this requirement through use of such forms,
procedures and educational materials as the Department of Human
Services shall specify.
  (3) Regardless of the manner of receipt or the source of the
information, including information received from the tested
individual, no person shall disclose or be compelled to disclose
the identity of any individual upon whom an HIV-related test is
performed, or the results of such a test in a manner which
permits identification of the subject of the test, except as
required or permitted by federal law, the law of this state or
any rule, including any Department of Human Services rule
considered necessary for public health or health care purposes,
or as authorized by the individual whose blood is tested.
  (4) Any person who complies with the requirements of this
section shall not be subject to an action for civil damages.
  (5) An HIV test shall be considered diagnosis of venereal
disease for purposes of ORS 109.610.
  (6) As used in this section:
  (a) 'HIV test' means a test of an individual for the presence
of human immunodeficiency virus (HIV), or for antibodies or
antigens that result from HIV infection, or for any other
substance specifically indicating infection with HIV.
  (b) 'Person' includes but is not limited to any health care
provider, health care facility, clinical laboratory, blood or
sperm bank, insurer, insurance   { - agent - }  { +
producer + }, insurance-support organization, as defined in ORS
746.600, government agency, employer, research organization or
agent of any of them. For purposes of subsection (3) of this
section, 'person' does not include an individual acting in a
private capacity and not in an employment, occupational or
professional capacity.
  (7) Whenever an insurer, insurance   { - agent - }
 { + producer + } or insurance support organization asks an
applicant for insurance to take an HIV test in connection with an
application for insurance, the use of such a test must be
revealed to the applicant and the written consent thereof
obtained. The consent form shall disclose the purpose of the test
and the persons to whom the results may be disclosed.
  SECTION 52. ORS 646.605 is amended to read:
  646.605. As used in ORS 646.605 to 646.652:
  (1) 'Appropriate court' means the circuit court of a county:
  (a) Where one or more of the defendants reside;
  (b) Where one or more of the defendants maintain a principal
place of business;
  (c) Where one or more of the defendants are alleged to have
committed an act prohibited by ORS 646.605 to 646.652; or
  (d) With the defendant's consent, where the prosecuting
attorney maintains an office.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 45
 
 
 
  (2) 'Documentary material' means the original or a copy of any
book, record, report, memorandum, paper, communication,
tabulation, map, chart, photograph, mechanical transcription, or
other tangible document or recording, wherever situate.
  (3) 'Examination' of documentary material shall include
inspection, study, or copying of any such material, and taking
testimony under oath or acknowledgment in respect of any such
documentary material or copy thereof.
  (4) 'Person' means natural persons, corporations, trusts,
partnerships, incorporated or unincorporated associations, and
any other legal entity except bodies or officers acting under
statutory authority of this state or the United States.
  (5) 'Prosecuting attorney' means the Attorney General or the
district attorney of any county in which a violation of ORS
646.605 to 646.652 is alleged to have occurred.
  (6) 'Real estate, goods or services' means those which are or
may be obtained primarily for personal, family or household
purposes, or which are or may be obtained for any purposes as a
result of a telephone solicitation, and includes franchises,
distributorships and other similar business opportunities, but
does not include insurance. Real estate does not cover conduct
covered by ORS chapter 90.
  (7) 'Telephone solicitation' means a solicitation where a
person, in the course of the person's business, vocation or
occupation, uses a telephone or an automatic dialing-announcing
device to initiate telephonic contact with a potential customer
and the person is not one of the following:
  (a) A person who is a broker-dealer or salesperson licensed
under ORS 59.175, or a mortgage banker or mortgage broker
licensed under ORS 59.850 when the solicitation is for a security
qualified for sale pursuant to ORS 59.055;
  (b) A person who is licensed or is otherwise authorized to
engage in professional real estate activity pursuant to ORS
chapter 696, when the solicitation involves professional real
estate activity;
  (c) A person licensed or exempt from licensure as a builder
pursuant to ORS chapter 701, when the solicitation involves the
construction, alteration, repair, improvement or demolition of a
structure;
  (d) A person licensed or otherwise authorized to sell insurance
as an   { - agent - }   { + insurance producer + } pursuant to
ORS chapter 744, when the solicitation involves insurance;
  (e) A person soliciting the sale of a newspaper of general
circulation, a magazine or membership in a book or record club
who complies with ORS 646.611, when the solicitation involves
newspapers, magazines or membership in a book or record club;
  (f) A person soliciting without the intent to complete and who
does not complete the sales presentation during the telephone
solicitation and who only completes the sales presentation at a
later face-to-face meeting between the solicitor and the
prospective purchaser;
  (g) A supervised financial institution or parent, subsidiary or
affiliate thereof. As used in this paragraph, 'supervised
financial institution' means any financial institution or trust
company, as those terms are defined in ORS 706.008, or any
personal property broker, consumer finance lender, commercial
finance lender or insurer that is subject to regulation by an
official or agency of this state or of the United States;
  (h) A person who is authorized to conduct prearrangement or
preconstruction funeral or cemetery sales, pursuant to ORS
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 46
 
 
 
chapter 692, when the solicitation involves prearrangement or
preconstruction funeral or cemetery plans;
  (i) A person who solicits the services provided by a cable
television system licensed or franchised pursuant to state, local
or federal law, when the solicitation involves cable television
services;
  (j) A person or affiliate of a person whose business is
regulated by the Public Utility Commission of Oregon;
  (k) A person who sells farm products as defined by ORS chapter
576 if the solicitation neither intends to nor actually results
in a sale that costs the purchaser in excess of $100;
  (L) An issuer or subsidiary of an issuer that has a class of
securities that is subject to section 12 of the Securities
Exchange Act of 1934 and that is either registered or exempt from
registration under paragraph (A), (B), (C), (E), (F), (G) or (H)
or subsection (g) of that section;
  (m) A person soliciting exclusively the sale of telephone
answering services to be provided by that person or that person's
employer when the solicitation involves answering services; or
  (n) A telecommunications utility with access lines of 15,000 or
less or a cooperative telephone association when the solicitation
involves regulated goods or services.
  (8) 'Trade' and 'commerce' mean advertising, offering or
distributing, whether by sale, rental or otherwise, any real
estate, goods or services, and includes any trade or commerce
directly or indirectly affecting the people of this state.
  (9) 'Unconscionable tactics' include, but are not limited to,
actions by which a person:
  (a) Knowingly takes advantage of a customer's physical
infirmity, ignorance, illiteracy or inability to understand the
language of the agreement;
  (b) Knowingly permits a customer to enter into a transaction
from which the customer will derive no material benefit; or
  (c) Permits a customer to enter into a transaction with
knowledge that there is no reasonable probability of payment of
the attendant financial obligation in full by the customer when
due.
  (10) A willful violation occurs when the person committing the
violation knew or should have known that the conduct of the
person was a violation.
  (11) A loan is made 'in close connection with the sale of a
manufactured dwelling' if:
  (a) The lender directly or indirectly controls, is controlled
by or is under common control with the seller, unless the
relationship is remote and is not a factor in the transaction;
  (b) The lender gives a commission, rebate or credit in any form
to a seller who refers the borrower to the lender, other than
payment of the proceeds of the loan jointly to the seller and the
borrower;
  (c) The lender is related to the seller by blood or marriage;
  (d) The seller directly and materially assists the borrower in
obtaining the loan;
  (e) The seller prepares documents that are given to the lender
and used in connection with the loan; or
  (f) The lender supplies documents to the seller used by the
borrower in obtaining the loan.
  SECTION 53. ORS 657.085 is amended to read:
  657.085. 'Employment' does not include service performed by any
person as a newspaper advertising salesperson, real estate
broker, principal real estate broker, insurance   { - agent,
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 47
 
 
 
insurance solicitor - }   { + producer + } or securities
salesperson or agent to the extent that the person is compensated
by commission.
  SECTION 54. ORS 658.415 is amended to read:
  658.415. (1) No person shall act as a farm labor contractor
unless the person has first been licensed by the Commissioner of
the Bureau of Labor and Industries under ORS 658.405 to 658.503.
Any person may file an application for a license to act as a farm
labor contractor at any office of the Bureau of Labor and
Industries. The application shall be sworn to by the applicant
and shall be written on a form prescribed by the commissioner.
The form shall include, but not be limited to, questions asking:
  (a) The applicant's name, Oregon address and all other
temporary and permanent addresses the applicant uses or knows
will be used in the future.
  (b) Information on all motor vehicles to be used by the
applicant in operations as a farm labor contractor including
license number and state of licensure, vehicle number and the
name and address of vehicle owner for all vehicles used.
  (c) Whether or not the applicant was ever denied a license
under ORS 658.405 to 658.503 within the preceding three years, or
in this or any other jurisdiction had such a license denied,
revoked or suspended within the preceding three years.
  (d) The names and addresses of all persons financially
interested, whether as partners, shareholders, associates or
profit-sharers, in the applicant's proposed operations as a farm
labor contractor, together with the amount of their respective
interests, and whether or not, to the best of the applicant's
knowledge, any of these persons was ever denied a license under
ORS 658.405 to 658.503 within the preceding three years, or had
such a license denied, revoked or suspended within the preceding
three years in this or any other jurisdiction.
  (2) Each applicant shall furnish satisfactory proof with the
application of the existence of a policy of insurance in an
amount adequate under rules issued by the commissioner for
vehicles to be used to transport workers. For the purpose of this
subsection the certificate of an insurance   { - agent - }
 { + producer + } licensed in Oregon is satisfactory evidence of
adequate insurance.
  (3) Each applicant shall submit with the application and shall
continually maintain thereafter, until excused, proof of
financial ability to promptly pay the wages of employees and
other obligations specified in this section. The proof required
in this subsection shall be in the form of a corporate surety
bond of a company licensed to do such business in Oregon, a cash
deposit or a deposit the equivalent of cash. For the purposes of
this subsection it shall be deemed sufficient compliance if the
farm labor contractor procures a savings account at a bank or
savings and loan institution in the name of the commissioner as
trustee for the employees of the farm labor contractor and others
as their interests may appear and delivers the evidence of the
account and the ability to withdraw the funds to the commissioner
under the terms of a bond approved by the commissioner. The
amount of the bond and the security behind the bond, or the cash
deposit, shall be based on the maximum number of employees the
contractor employs at any time during the year. The bond or cash
deposit shall be:
  (a) $10,000 if the contractor employs no more than 20
employees; or
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 48
 
 
 
  (b) $30,000, or such lesser sum as may be authorized by the
commissioner under ORS 658.416, if the contractor employs 21 or
more employees.
  (4) In the event that a single business entity licensed as a
farm labor contractor has more than one natural person who, as an
owner or employee of the business entity, engages in activities
that require the persons to be licensed individually as farm
labor contractors, and each such person engages in such
activities solely for that business entity, the commissioner may
provide by rule for lower aggregate bonding requirements for the
business entity and its owners and employees. If there is an
unsatisfied final judgment of a court or decision of an
administrative agency against a license applicant, the subject of
which is any matter that would be covered by the bond or deposit
referred to in subsection (3) of this section, the commissioner
shall not issue a license to the applicant until the judgment or
decision is satisfied. As a condition of licensing any such
applicant, the commissioner may require the applicant to submit
proof of financial ability required by subsection (3) of this
section in an amount up to three times that ordinarily required
of a license applicant.
  (5) All corporate surety bonds filed under this section or ORS
658.419 shall be executed to cover liability for the period for
which the license is issued. During the period for which it is
executed, no bond may be canceled or otherwise terminated.
  (6) Each application must be accompanied by the fee established
under ORS 658.413.
  (7) Any person who uses the services of a farm labor contractor
who has failed to comply with any of the provisions of this
section or ORS 658.419 shall:
  (a) Be personally and jointly and severally liable to any
employee so far as such employee has not been paid wages in full
for the work done for that person.
  (b) Be personally liable for all penalty wages that have
occurred under ORS 652.150 for the wages due under this section.
  (8) Any person who suffers any loss of wages from the employer
of the person or any other loss specified in subsection (16) of
this section shall have a right of action in the name of the
person against the surety upon the bond or against the deposit
with the commissioner. The right of action:
  (a) Is assignable and must be included with an assignment of a
wage claim, of any other appropriate claim, or of a judgment
thereon.
  (b) Shall not be included in any suit or action against the
farm labor contractor but must be exercised independently after
first procuring a judgment, decree, or other form of adequate
proof of liability established by rule and procedure under
subsection (14) of this section establishing the farm labor
contractor's liability for the claim.
  (9) The surety company or the commissioner shall make prompt
and periodic payments on the farm labor contractor's liability up
to the extent of the total sum of the bond or deposit. Payments
shall be made in the following manner:
  (a) Payment shall be made based upon priority of wage claims
over advances made by the grower or producer of agricultural
commodities or the owner or lessee of land intended to be used
for the production of timber, for advances made to or on behalf
of the farm labor contractor.
  (b) Payment in full of all sums due to each person who presents
adequate proof of the claim.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 49
 
 
 
  (c) If there are insufficient funds to pay in full the person
next entitled to payment in full, such person shall be paid in
part.
  (10) A person may not bring any suit or action against the
surety company or the commissioner on the bond or against the
commissioner as the trustee for the beneficiaries of the farm
labor contractor under any deposit made pursuant to this section
or ORS 658.419 unless the person has first exhausted the
procedures contained in subsections (8) and (12) of this section
or in ORS 658.419 and contends that the surety company or the
commissioner still has funds that are applicable to the person's
judgment or acknowledgment.
  (11) The commissioner may not be prevented from accepting
assignments of wage claims and enforcing liability against the
surety on the bond or from applying the deposit to just wage
claims filed with the commissioner.
  (12) All claims against the bond or deposit shall be
unenforceable unless request for payment of a judgment or other
form of adequate proof of liability or a notice of the claim has
been made by certified mail to the surety or the commissioner
within six months from the end of the period for which the bond
or deposit was executed and made.
  (13) If the commissioner has received no notice as provided in
subsection (12) of this section within six months after a farm
labor contractor is no longer required to provide and maintain a
surety bond or deposit, the commissioner shall terminate and
surrender any bond or any deposit under the control of the
commissioner to the person who is entitled thereto upon receiving
appropriate proof of such entitlement.
  (14) The commissioner shall adopt rules reasonably necessary
for administration and enforcement of the provisions of this
section and ORS 658.419.
  (15) Every farm labor contractor required by this section or
ORS 658.419 to furnish a surety bond or make a deposit in lieu
thereof shall keep conspicuously posted upon the premises where
employees working under the contractor are employed a notice, in
both English and any other language used by the farm labor
contractor to communicate with workers, specifying the
contractor's compliance with the requirements of this section and
ORS 658.419 and specifying the name and Oregon address of the
surety on the bond or a notice that a deposit in lieu of the bond
has been made with the commissioner together with the address of
the commissioner.
  (16) The bond or deposit referred to in subsection (3) of this
section shall be payable to the commissioner and shall be
conditioned upon:
  (a) Payment in full of all sums due on wage claims of
employees.
  (b) Payment by the farm labor contractor of all sums due to the
grower or producer of agricultural commodities or the owner or
lessee of land intended to be used for the production of timber
for advances made to or on behalf of the farm labor contractor.
  (17) No license shall be issued until the applicant executes a
written statement that shall be subscribed and sworn to and that
shall contain the following declaration:
_________________________________________________________________
 
  With regards to any action filed against me concerning my
activities as a farm labor contractor, I appoint the Commissioner
of the Bureau of Labor and Industries as my lawful agent to
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 50
 
 
 
accept service of summons when I am not present in the
jurisdiction in which such action is commenced or have in any
other way become unavailable to accept service.
_________________________________________________________________
 
  (18) A person who cosigns with a farm labor contractor for a
bond required by subsection (3) of this section or by ORS 658.419
is not personally or jointly and severally liable for unpaid
wages above the amount of the bond solely because the person
cosigned for the bond.
  (19) The court may award reasonable attorney fees to the
prevailing party in any action to enforce the provisions of this
section or ORS 658.419.
  SECTION 55. ORS 696.523 is amended to read:
  696.523. The provisions of ORS 696.505 to 696.590 apply to
those escrow activities of a title insurance company, or an
  { - agent - }   { + insurance producer + } of a title insurance
company which prepares abstracts or makes searches of title which
are used as a basis for the insurance of titles by a title
insurance company.
  SECTION 56. ORS 702.005 is amended to read:
  702.005. As used in ORS 702.005 to 702.063 and 702.991:
  (1) 'Agent contract' means a contract or agreement pursuant to
which a person authorizes or empowers an athlete agent to
negotiate or solicit on behalf of a person with one or more
professional sports teams or organizations for the employment of
the person:
  (a) By one or more professional sports teams or organizations;
or
  (b) As a professional athlete.
  (2)(a) 'Athlete agent' means any person or an employee or
representative of a person who:
  (A) Directly or indirectly, recruits or solicits a student
athlete to enter into an agent contract, endorsement contract or
professional sports services contract; or
  (B) For compensation offers, promises, attempts or negotiates
to obtain employment or procures employment for a student athlete
with a professional sports team or organization or as a
professional athlete.
  (b) 'Athlete agent' does not include:
  (A) A person licensed as an attorney or a dealer in securities,
financial planner, insurance   { - agent - }  { +  producer + },
real estate broker, principal real estate broker, sales agent,
tax consultant or any other professional person when the person
offers or provides the type of services customarily provided by
that profession, except to the extent that the person acts as an
athlete agent as defined in paragraph (a) of this subsection;
  (B) A person acting solely on behalf of a professional sports
team or organization; or
  (C) Parents who act as athlete agents for their children.
  (3) 'Educational institution' means any elementary school,
secondary school, college, university or other educational
institution.
  (4) 'Endorsement contract' means a contract or agreement
pursuant to which a person is employed or receives remuneration
for any value or utility that the person may have because of
publicity, reputation, fame or following obtained because of
athletic ability or performance.
  (5) 'Professional sports services contract' means any contract
or agreement pursuant to which a person is employed or agrees to
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 51
 
 
 
render services as a player for a professional sports team or
organization or as a professional athlete.
  (6)(a) 'Student athlete' means an individual admitted to or
enrolled in an educational institution who participates, or has
informed the institution of an intention to participate, in a
sports program that includes competition with other educational
institutions. 'Student athlete' includes a student who has
entered into one or more valid agent contracts, endorsement
contracts or professional sports services contracts that allow
athlete agent representation for a specific sport, as long as
that student is eligible to participate in other sports for which
the student has no athlete agent representation.
  (b) 'Student athlete' does not include:
  (A) A person who has entered into a valid agent contract,
endorsement contract or professional sports services contract
that covers all sports in which the student is eligible to
participate; or
  (B) A student of a college or university whose eligibility to
participate in an intercollegiate sport has terminated.
  SECTION 57. ORS 703.411 is amended to read:
  703.411. ORS 703.401 to 703.490, 703.993 and 703.995 do not
apply to:
  (1) A person employed exclusively by one employer in connection
with the affairs of that employer only;
  (2) An officer or employee of the United States, or of this
state, or a political subdivision of either, while the officer or
employee is engaged in the performance of official duties;
  (3) A person acting as a private security officer as defined in
ORS 181.870;
  (4) A person who is employed full-time as a peace officer, as
defined in ORS 161.015, who receives compensation for private
employment as an investigator, provided that services are
performed for no more than one person or one client;
  (5) A person that provides secured transportation and
protection, from one place or point to another place or point, of
money, currency, coins, bullion, securities, bonds, jewelry or
other valuables;
  (6) A person that places, leases, rents or sells an animal for
the purpose of protecting property, or any person that is
contracted to train an animal for the purpose of protecting
property;
  (7) A person engaged in the business of obtaining and
furnishing information regarding the financial rating of persons;
  (8) An attorney admitted to practice law in this state
performing his or her duties as an attorney;
  (9) A legal assistant or paralegal engaged in activity for
which the person is employed by an attorney admitted to practice
law in this state;
  (10) Insurers, insurance adjusters  { - , insurance agents and
insurance brokers - }   { + and insurance producers + } licensed
in this state and performing duties in connection with insurance
transacted by them;
  (11) Any secured creditor engaged in the repossession of the
creditor's collateral and any lessor engaged in the repossession
of leased property in which it claims an interest;
  (12) An employee of a cattle association who is engaged in
inspection of brands of livestock under the authority granted to
that cattle association by the Packers and Stockyards Division of
the United States Department of Agriculture;
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 52
 
 
 
  (13) Common carriers by rail engaged in interstate commerce and
regulated by state and federal authorities and transporting
commodities essential to the national defense or to the general
welfare and safety of the community;
  (14) Any news media and the employees thereof when engaged in
obtaining information for the purpose of disseminating news to
the public;
  (15) A legal process service company attempting to serve legal
process; or
  (16) A landlord or an agent of a landlord performing duties in
connection with rental property transactions.
  SECTION 58. ORS 708A.005 is amended to read:
  708A.005. (1) Except as otherwise limited in the Bank Act or
the articles of incorporation of an institution, an institution
shall have:
  (a) Perpetual duration and succession in its corporate name,
unless a limited period of duration is stated in its articles of
incorporation;
  (b) The power to do all things necessary or convenient to carry
out its business and affairs including, without limitation, the
power to:
  (A) Sue and be sued and complain and defend in its corporate
name;
  (B) Have a corporate seal, which may be altered at will, and
use it or a facsimile thereof by impressing, affixing or
reproducing it in any other manner;
  (C) Make contracts, incur liabilities, borrow money, issue its
notes, bonds and other obligations that may be convertible into
other securities of the institution or include the option to
purchase other securities of the institution;
  (D) Conduct its business, locate offices and exercise the
powers granted by the Bank Act within or without this state;
  (E) Elect or appoint directors, officers, employees and agents
of the institution;
  (F) Make and amend bylaws not inconsistent with its articles of
incorporation or with the laws of this state for managing the
business and regulating the affairs of the institution;
  (G) Make donations for the public welfare or for charitable,
scientific or educational purposes;
  (H) Transact any business permitted by the Bank Act; and
  (I) Pay pensions and establish pension plans, and share option
plans and benefit or incentive plans for any or all of its
current or former directors, officers, employees and agents;
  (c) The powers granted to institutions by the Bank Act;
  (d) The power to be licensed as an   { - agent - }
 { + insurance producer + } as required by ORS 744.053 to
transact one or more of the classes of insurance described in ORS
744.062 except for title insurance; and
  (e) All powers necessary or convenient to effect any or all of
the purposes for which the institution is organized or to perform
any or all of the acts expressly or impliedly authorized or
required under the Bank Act.
  (2) With respect to any exercise of the power granted under
subsection (1)(d) of this section, other than the licensing of
the institution to transact types of limited class insurance, as
that term is defined in ORS 744.052, designated by the Director
of the Department of Consumer and Business Services:
  (a) The conduct by the institution of insurance
 { - agency - }  { + producer + } activities shall be subject to
the approval of the director. The director shall base
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 53
 
 
 
consideration for approval on the condition of the institution,
the adequacy of a formal business plan for the insurance
activities and the existence of satisfactory management for the
insurance activity.
  (b) The director may revoke or restrict the ongoing authority
of the institution to engage in the insurance   { - agency - }
 { + producer + } activity if the condition of the institution
substantially deteriorates or if the insurance activities are
adversely affecting the institution.
  (c) If the insurance   { - agency - }  { +  producer + }
activity is conducted in a branch or office in which the
institution carries on its banking business, the insurance
 { - agency - }   { + producer + } activity shall be physically
separated from those parts of the premises in which the
institution carries on the banking business.
  (d) No person who acts on behalf of the institution as an
  { - agent - }  { +  insurance producer + }, as that term is
defined in ORS 731.062, other than to transact such types of
limited class insurance, shall in any manner engage on behalf of
the institution in any activities relating to the making of loans
or to the granting of other credits to the customers of the
institution, including but not limited to serving as a loan
officer or as a member of a loan committee or other group charged
with approval of loans and other credits.
  (e) Prior to selling any policy of insurance, the institution
shall give substantially the following notice in writing to the
purchaser in at least 10-point boldfaced type:
_________________________________________________________________
 
                             NOTICE
  ______ (Name of institution) is a licensed insurance
 { - agent - }  { + producer + } under Oregon law. You are not
required to purchase any insurance from it as a condition of
obtaining any service from or engaging in any other transaction
with it. Before committing to purchase any policy of insurance,
you should shop for the coverage by carefully comparing
information obtained from two or more
  { - agents - }   { + insurance producers + } on prices,
benefits, services, terms of renewal and other policy features.
You hereby acknowledge receipt of a copy of this notice.
 
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
________
                    ____
Customer's signatureDate
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
 
  (f) The institution shall file a written report with the
director no later than March 31 of each year disclosing the
insurance activities of the institution. The required contents of
the report shall be established by the director by rule. Reports
filed with the director under this paragraph shall be available
for public inspection in the office of the director.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 54
 
 
 
  (3) An institution licensed as an   { - agent - }  { +
insurance producer + }, as that term is defined in ORS 731.062,
shall not in any manner use customer information obtained from
another insurance   { - agent - }  { + producer + } to promote,
develop or solicit insurance business for the institution unless
the other insurance   { - agent - }   { + producer + } consents
to such use of the customer information.
  SECTION 58a.  { + If Senate Bill 235 becomes law, section 58 of
this 2003 Act (amending ORS 708A.005) is repealed and ORS
708A.005, as amended by section 6, chapter ___, Oregon Laws 2003
(Enrolled Senate Bill 235), is amended to read: + }
  708A.005. (1) Except as otherwise limited in the Bank Act or
the articles of incorporation of an institution, an institution
shall have:
  (a) Perpetual duration and succession in its corporate name,
unless a limited period of duration is stated in its articles of
incorporation;
  (b) The power to do all things necessary or convenient to carry
out its business and affairs including, without limitation, the
power to:
  (A) Sue and be sued and complain and defend in its corporate
name;
  (B) Have a corporate seal, which may be altered at will, and
use it or a facsimile thereof by impressing, affixing or
reproducing it in any other manner;
  (C) Make contracts, incur liabilities, borrow money, issue its
notes, bonds and other obligations that may be convertible into
other securities of the institution or include the option to
purchase other securities of the institution;
  (D) Conduct its business, locate offices and exercise the
powers granted by the Bank Act within or without this state;
  (E) Elect or appoint directors, officers, employees and agents
of the institution;
  (F) Make and amend bylaws not inconsistent with its articles of
incorporation or with the laws of this state for managing the
business and regulating the affairs of the institution;
  (G) Make donations for the public welfare or for charitable,
scientific or educational purposes;
  (H) Transact any business permitted by the Bank Act; and
  (I) Pay pensions and establish pension plans, and share option
plans and benefit or incentive plans for any or all of its
current or former directors, officers, employees and agents;
  (c) The powers granted to institutions by the Bank Act;
  (d) The power to be licensed as an   { - agent - }
 { + insurance producer + } as required by ORS 744.053 to
transact one or more of the classes of insurance described in ORS
744.062 except for title insurance; and
  (e) All powers necessary or convenient to effect any or all of
the purposes for which the institution is organized or to perform
any or all of the acts expressly or impliedly authorized or
required under the Bank Act.
  (2) With respect to any exercise of the power granted under
subsection (1)(d) of this section, other than the licensing of
the institution to transact types of limited class insurance, as
that term is defined in ORS 744.052, designated by the Director
of the Department of Consumer and Business Services:
  (a) The conduct by the institution of insurance
 { - agency - }  { + producer + } activities shall be subject to
the approval of the director. The director shall base
consideration for approval on the condition of the institution,
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 55
 
 
 
the adequacy of a formal business plan for the insurance
activities and the existence of satisfactory management for the
insurance activity.
  (b) The director may revoke or restrict the ongoing authority
of the institution to engage in the insurance   { - agency - }
 { + producer + } activity if the condition of the institution
substantially deteriorates or if the insurance activities are
adversely affecting the institution.
  (c) The institution shall file a written report with the
director no later than March 31 of each year disclosing the
insurance activities of the institution. The required contents of
the report shall be established by the director by rule. Reports
filed with the director under this paragraph shall be available
for public inspection in the office of the director.
  (3) An institution licensed as an   { - agent - }  { +
insurance producer + }, as that term is defined in ORS 731.062,
shall not in any manner use customer information obtained from
another insurance   { - agent - }  { + producer + } to promote,
develop or solicit insurance business for the institution unless
the other insurance   { - agent - }   { + producer + } consents
to such use of the customer information.
  SECTION 59. ORS 708A.120 is amended to read:
  708A.120. (1) An institution shall not invest any of its assets
in the capital stock of any other corporation, except:
  (a) In the capital stock of the Federal Reserve Bank.
  (b) In stock acquired or purchased to save a loss on a
preexisting debt. The stock shall be sold within two years of the
date acquired or purchased. The Director of the Department of
Consumer and Business Services may extend the time if the
director finds that an extension will not be detrimental to the
public interest and will not contravene any other law.
  (c) In the capital stock of any safe deposit company doing an
exclusive safe deposit business on premises owned or leased by
the institution upon 30 days' advance notice to the director
subject to the same limitations applicable to a national bank.
  (d) In the capital stock of agricultural and livestock finance
companies, subject to the same limitations applicable to national
banks and to the approval of the director.
  (e) In the capital stock, eligible for purchase by national
banks, of small business investment companies, but the aggregate
investment in the stock shall not exceed two percent of the
capital of the institution.
  (f) In the common stock of any federally chartered corporation
that is chartered for the purpose of providing secondary markets
for the sale of mortgages by institutions.
  (g) In the stock of the Federal Home Loan Bank.
  (h) In the capital stock of a corporation exclusively engaged
in a trust business or a banker's bank, subject to the same
limitations applicable to national banks.
  (i) In the capital stock of bank service corporations as
provided in ORS 708A.130 to 708A.145.
  (j) In the capital stock of a community development corporation
as provided in ORS 708A.150.
  (k) If a trust company is not engaged in a banking business and
if the investment is first approved by the director, the trust
company may invest an amount not to exceed 20 percent of the
capital of the trust company:
  (A) In the capital stock of a subsidiary investment company
defined in the Investment Company Act of 1940, as amended; or
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 56
 
 
 
  (B) In a company one of the purposes of which is to act as a
federal covered investment adviser or a state investment adviser,
as defined in ORS 59.015, with all the powers customarily
exercised by a federal covered investment adviser or a state
investment adviser.
  (L) In adjustable rate preferred stock of the Student Loan
Marketing Association established in 20 U.S.C. 1087-2, but the
aggregate investment in the stock shall not exceed 15 percent of
the capital of the institution.
  (m) In the capital stock of a company acquired for the purpose
of strengthening the institution's capital structure or the
elimination of undesirable assets as provided in ORS 708A.125.
  (n) In the capital stock of banks and corporations engaged in
international or foreign banking or foreign banking in a
dependency or insular possession of the United States, as
provided in ORS 708A.155.
  (o) In the capital stock of a corporation created to establish
ATMs as provided in ORS 708A.160.
  (2) An institution may invest its assets in shares of any
mutual fund, the assets of which are invested solely in
obligations of the type described in and limited under ORS
708A.115.
  (3) An institution may, subject to the approval of the
director, acquire or continue to hold the fully paid stock of a
corporation, one of the purposes of which is to assist the
institution in handling real estate, claims, judgments or other
assets or in holding title to the assets.
  (4) An institution may acquire or continue to hold the fully
paid stock of a corporation the purpose of which is to permit the
institution to engage in any business in which a financial
holding company, a bank holding company or a nonbank subsidiary
of a financial holding company or a bank holding company is
authorized to engage. This subsection does not apply unless the
institution is the owner of at least 80 percent of the common
stock of the subsidiary corporation, except qualifying shares of
directors.
  (5) An institution may, subject to the approval of the director
and to rules promulgated by the director, acquire and continue to
hold at least 80 percent of the fully paid stock of a corporation
engaged in any business in which an institution is authorized to
engage. Except as otherwise permitted by statute or rule, the
investment limitations applicable to the institution apply to the
subsidiary.
  (6) An institution may, subject to the approval of the director
and under rules promulgated by the director, acquire and continue
to hold all the fully paid stock of a subsidiary corporation
engaged in the business of purchasing the stock of the
institution for purposes of holding that stock and making a
market for that stock, if not more than 20 percent of the net
profit of the banking institution is disbursed to the subsidiary
in any one fiscal year. Except as otherwise permitted by statute
or rule, the investment limitations applicable to the institution
apply to the subsidiary. Acquisitions under this subsection shall
not exceed 15 percent of the capital of the institution.
  (7) An institution may acquire and hold all or part of the
stock of a corporation that is or may thereafter be licensed as
an
  { - agent - }   { + insurance producer + } as required by ORS
744.053 to transact one or more of the classes of insurance
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 57
 
 
 
described in ORS 744.062, except for title insurance, subject to
the following requirements:
  (a) The acquisition and holding of such stock shall be subject
to the approval of the director. The director shall base
consideration for approval on the condition of the institution,
the adequacy of a formal business plan for the insurance
activities, and the existence of satisfactory management for the
corporation.
  (b) The director may revoke or restrict the ongoing authority
of the institution to hold stock in the corporation if the
condition of the institution substantially deteriorates or if the
insurance activities are adversely affecting the institution.
  (c) If the corporation conducts the insurance   { - agency - }
 { + producer + } activity in a branch or office in which the
institution carries on its banking business, the insurance
 { - agency - }   { + producer + } activity shall be physically
separated from those parts of the premises in which the
institution carries on the banking business.
  (d) No person who acts on behalf of the corporation as an
  { - agent - }  { +  insurance producer + }, as that term is
defined in ORS 731.062, shall while employed by the corporation
engage on behalf of the corporation in any activities relating to
the making of loans or to the granting of other credits to the
customers of the corporation, including but not limited to
serving as a loan officer or as a member of a loan committee or
other group charged with approval of loans and other credits.
  (e) The name of the corporation and any assumed business name
used by it shall not be identical to that of the institution.
  (f) Prior to selling any policy of insurance, the corporation
shall give substantially the following notice in writing to the
purchaser in at least 10-point boldfaced type:
_________________________________________________________________
 
                             NOTICE
  ______ (Name of corporation licensed as an   { - agent - }
 { + insurance producer + }) is owned by ______ (Name of
institution). You are not required to purchase any insurance from
it as a condition of obtaining any service from or engaging in
any transaction with the institution. Before committing to
purchase any policy of insurance, you should shop for the
coverage by carefully comparing information obtained from two or
more   { - agents - }   { + insurance producers + } on prices,
benefits, services, terms of renewal and other policy features.
You hereby acknowledge receipt of a copy of this notice.
 
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
________
                    ____
Customer's signatureDate
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
 
  (g) For each calendar year during which an institution owns all
or part of any corporation licensed as an   { - agent - }
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 58
 
 
 
 { + insurance producer + } as required by ORS 744.053, the
institution shall file a written report with the director. The
report shall be filed no later than March 31 of the following
year and shall disclose the insurance activities of the
corporation. The required contents of the report shall be
established by the director by rule. The reports filed with the
director under this paragraph shall be available for public
inspection in the office of the director.
  (h) The corporation shall not in any manner use customer
information obtained by the institution from another insurance
  { - agent - }   { + producer + } to promote, develop or solicit
insurance business for the corporation unless the other insurance
 { - agent - }   { + producer + } consents to such use of the
customer information.
  (i) The corporation shall be subject to the limitations
applicable to lending institutions under ORS 746.180 and 746.185
to 746.211. For the purpose of this paragraph, the term 'lending
institution' has the meaning set forth in ORS 746.185.
  (8) An institution may invest up to 15 percent of its capital
in the stock of the Oregon Capital Corporation authorized to be
created under ORS 284.750 to 284.795, 315.504, 317.084, 317.267
and 318.031.
  SECTION 59a.  { + If Senate Bill 235 becomes law, section 59 of
this 2003 Act (amending ORS 708A.120) is repealed and ORS
708A.120, as amended by section 7, chapter ___, Oregon Laws 2003
(Enrolled Senate Bill 235), is amended to read: + }
  708A.120. (1) An institution shall not invest any of its assets
in the capital stock of any other corporation, except:
  (a) In the capital stock of the Federal Reserve Bank.
  (b) In stock acquired or purchased to save a loss on a
preexisting debt. The stock shall be sold within two years of the
date acquired or purchased. The Director of the Department of
Consumer and Business Services may extend the time if the
director finds that an extension will not be detrimental to the
public interest and will not contravene any other law.
  (c) In the capital stock of any safe deposit company doing an
exclusive safe deposit business on premises owned or leased by
the institution upon 30 days' advance notice to the director
subject to the same limitations applicable to a national bank.
  (d) In the capital stock of agricultural and livestock finance
companies, subject to the same limitations applicable to national
banks and to the approval of the director.
  (e) In the capital stock, eligible for purchase by national
banks, of small business investment companies, but the aggregate
investment in the stock shall not exceed two percent of the
capital of the institution.
  (f) In the common stock of any federally chartered corporation
that is chartered for the purpose of providing secondary markets
for the sale of mortgages by institutions.
  (g) In the stock of the Federal Home Loan Bank.
  (h) In the capital stock of a corporation exclusively engaged
in a trust business or a banker's bank, subject to the same
limitations applicable to national banks.
  (i) In the capital stock of bank service corporations as
provided in ORS 708A.130 to 708A.145.
  (j) In the capital stock of a community development corporation
as provided in ORS 708A.150.
  (k) If a trust company is not engaged in a banking business and
if the investment is first approved by the director, the trust
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 59
 
 
 
company may invest an amount not to exceed 20 percent of the
capital of the trust company:
  (A) In the capital stock of a subsidiary investment company
defined in the Investment Company Act of 1940, as amended; or
  (B) In a company one of the purposes of which is to act as a
federal covered investment adviser or a state investment adviser,
as defined in ORS 59.015, with all the powers customarily
exercised by a federal covered investment adviser or a state
investment adviser.
  (L) In adjustable rate preferred stock of the Student Loan
Marketing Association established in 20 U.S.C. 1087-2, but the
aggregate investment in the stock shall not exceed 15 percent of
the capital of the institution.
  (m) In the capital stock of a company acquired for the purpose
of strengthening the institution's capital structure or the
elimination of undesirable assets as provided in ORS 708A.125.
  (n) In the capital stock of banks and corporations engaged in
international or foreign banking or foreign banking in a
dependency or insular possession of the United States, as
provided in ORS 708A.155.
  (o) In the capital stock of a corporation created to establish
ATMs as provided in ORS 708A.160.
  (2) An institution may invest its assets in shares of any
mutual fund, the assets of which are invested solely in
obligations of the type described in and limited under ORS
708A.115.
  (3) An institution may, subject to the approval of the
director, acquire or continue to hold the fully paid stock of a
corporation, one of the purposes of which is to assist the
institution in handling real estate, claims, judgments or other
assets or in holding title to the assets.
  (4) An institution may acquire or continue to hold the fully
paid stock of a corporation the purpose of which is to permit the
institution to engage in any business in which a financial
holding company, a bank holding company or a nonbank subsidiary
of a financial holding company or a bank holding company is
authorized to engage. This subsection does not apply unless the
institution is the owner of at least 80 percent of the common
stock of the subsidiary corporation, except qualifying shares of
directors.
  (5) An institution may, subject to the approval of the director
and to rules promulgated by the director, acquire and continue to
hold at least 80 percent of the fully paid stock of a corporation
engaged in any business in which an institution is authorized to
engage. Except as otherwise permitted by statute or rule, the
investment limitations applicable to the institution apply to the
subsidiary.
  (6) An institution may, subject to the approval of the director
and under rules promulgated by the director, acquire and continue
to hold all the fully paid stock of a subsidiary corporation
engaged in the business of purchasing the stock of the
institution for purposes of holding that stock and making a
market for that stock, if not more than 20 percent of the net
profit of the banking institution is disbursed to the subsidiary
in any one fiscal year. Except as otherwise permitted by statute
or rule, the investment limitations applicable to the institution
apply to the subsidiary. Acquisitions under this subsection shall
not exceed 15 percent of the capital of the institution.
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 60
 
 
 
  (7) An institution may acquire and hold all or part of the
stock of a corporation that is or may thereafter be licensed as
an
  { - agent - }   { + insurance producer + } as required by ORS
744.053 to transact one or more of the classes of insurance
described in ORS 744.062, except for title insurance, subject to
the following requirements:
  (a) The acquisition and holding of such stock shall be subject
to the approval of the director. The director shall base
consideration for approval on the condition of the institution,
the adequacy of a formal business plan for the insurance
activities, and the existence of satisfactory management for the
corporation.
  (b) The director may revoke or restrict the ongoing authority
of the institution to hold stock in the corporation if the
condition of the institution substantially deteriorates or if the
insurance activities are adversely affecting the institution.
  (c) For each calendar year during which an institution owns all
or part of any corporation licensed as an   { - agent - }
 { + insurance producer + } as required by ORS 744.053, the
institution shall file a written report with the director. The
report shall be filed no later than March 31 of the following
year and shall disclose the insurance activities of the
corporation. The required contents of the report shall be
established by the director by rule. The reports filed with the
director under this paragraph shall be available for public
inspection in the office of the director.
  (d) The corporation shall not in any manner use customer
information obtained by the institution from another insurance
  { - agent - }   { + producer + } to promote, develop or solicit
insurance business for the corporation unless the other insurance
 { - agent - }   { + producer + } consents to such use of the
customer information.
  (e) The corporation shall be subject to the limitations
applicable to depository institutions under sections 2 to 5 { + ,
chapter ___, Oregon Laws 2003 (Enrolled Senate Bill 235) + }
 { - of this 2003 Act - } . For the purpose of this paragraph,
'depository institution' has the meaning given that term in
section 2 { + , chapter ___, Oregon Laws 2003 (Enrolled Senate
Bill 235) + }   { - of this 2003 Act - } .
  (8) An institution may invest up to 15 percent of its capital
in the stock of the Oregon Capital Corporation authorized to be
created under ORS 284.750 to 284.795, 315.504, 317.084, 317.267
and 318.031.
  SECTION 60. ORS 715.075 is amended to read:
  715.075. A financial holding company or a bank holding company
may acquire and hold all or part of the stock of a corporation
that is or may thereafter be licensed as an   { - agent - }
 { + insurance producer + } as required by ORS 744.053 to
transact one or more of the classes of insurance described in ORS
744.062 except for title insurance, subject to the following
requirements:
  (1) The acquisition and holding of such stock shall be subject
to the approval of the Director of the Department of Consumer and
Business Services. The director shall base consideration for
approval on the condition of the financial holding company or the
bank holding company, the adequacy of a formal business plan for
the insurance activities and the existence of satisfactory
management for the corporation.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 61
 
 
 
  (2) The director may revoke or restrict the ongoing authority
of the financial holding company or the bank holding company to
hold stock in the corporation if the condition of the financial
holding company or the bank holding company or of any bank owned
by it substantially deteriorates or if the insurance activities
are adversely affecting the financial holding company or the bank
holding company or any bank owned by it.
  (3) If the corporation conducts the insurance   { - agency - }
 { + producer + } activity in any branch or office in which any
bank owned by the financial holding company or the bank holding
company carries on its banking business, the insurance
 { - agency - }   { + producer + } activity shall be physically
separated from those parts of the premises in which the bank
carries on the banking business.
  (4) No person who acts on behalf of the corporation as an
  { - agent - }  { +  insurance producer + }, as that term is
defined in ORS 731.062, shall while employed by the corporation
engage on behalf of the financial holding company or the bank
holding company or any bank owned by it in any activities
relating to the making of loans or the granting of other credits
to the customers of any bank owned by the financial holding
company or the bank holding company, including but not limited to
serving as a loan officer or as a member of a loan committee or
any other group charged with approval of loans and other credits.
  (5) The name of the corporation and any assumed business name
used by it shall not be identical to that of any bank owned by
the financial holding company or the bank holding company.
  (6) Prior to selling any policy of insurance, the corporation
shall give substantially the following notice in writing to the
purchaser in at least 10-point boldfaced type:
_________________________________________________________________
 
                             NOTICE
  ______ (Name of corporation licensed as an   { - agent - }
 { + insurance producer + }) is owned by ______ (Name of
financial holding company or bank holding company) which also
owns ________ (Name of institution or savings bank). You are not
required to purchase any insurance from it as a condition of
obtaining any service from or engaging in any transaction with
the institution, savings bank, financial holding company or bank
holding company. Before committing to purchase any policy of
insurance, you should shop for the coverage by carefully
comparing information obtained from two or more   { - agents - }
 { + insurance producers + } on prices, benefits, services, terms
of renewal and other policy features. You hereby acknowledge
receipt of a copy of this notice.
 
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
________
                    ____
Customer's signatureDate
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 62
 
 
 
  (7) For each calendar year during which a financial holding
company or a bank holding company owns all or part of any
corporation licensed as an   { - agent - }   { + insurance
producer + } as required by ORS 744.053, the financial holding
company or the bank holding company shall file a written report
with the director. The report shall be filed no later than March
31 of the following year and shall disclose the insurance
activities of the corporation. The required contents of the
report shall be established by the director by rule. The reports
filed with the director under this paragraph shall be available
for public inspection in the office of the director.
  (8) The corporation shall not in any manner use customer
information obtained by the institution from another insurance
  { - agent - }   { + producer + } to promote, develop or solicit
insurance business for the corporation unless the other insurance
 { - agent - }   { + producer + } consents to such use of the
customer information.
  (9) The corporation shall be subject to the limitations
applicable to lending institutions under ORS 746.180 and 746.185
to 746.211. For the purpose of this subsection, the term 'lending
institution' has the meaning set forth in ORS 746.185.
  SECTION 60a.  { + If Senate Bill 235 becomes law, section 60 of
this 2003 Act (amending ORS 715.075) is repealed and ORS 715.075,
as amended by section 9, chapter ___, Oregon Laws 2003 (Enrolled
Senate Bill 235), is amended to read: + }
  715.075. A financial holding company or a bank holding company
may acquire and hold all or part of the stock of a corporation
that is or may thereafter be licensed as an   { - agent - }
 { + insurance producer + } as required by ORS 744.053 to
transact one or more of the classes of insurance described in ORS
744.062 except for title insurance, subject to the following
requirements:
  (1) The acquisition and holding of such stock shall be subject
to the approval of the Director of the Department of Consumer and
Business Services. The director shall base consideration for
approval on the condition of the financial holding company or the
bank holding company, the adequacy of a formal business plan for
the insurance activities and the existence of satisfactory
management for the corporation.
  (2) The director may revoke or restrict the ongoing authority
of the financial holding company or the bank holding company to
hold stock in the corporation if the condition of the financial
holding company or the bank holding company or of any bank owned
by it substantially deteriorates or if the insurance activities
are adversely affecting the financial holding company or the bank
holding company or any bank owned by it.
  (3) For each calendar year during which a financial holding
company or a bank holding company owns all or part of any
corporation licensed as an   { - agent - }   { + insurance
producer + } as required by ORS 744.053, the financial holding
company or the bank holding company shall file a written report
with the director. The report shall be filed no later than March
31 of the following year and shall disclose the insurance
activities of the corporation. The required contents of the
report shall be established by the director by rule. The reports
filed with the director under this subsection shall be available
for public inspection in the office of the director.
  (4) The corporation shall not in any manner use customer
information obtained by the institution from another insurance
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 63
 
 
 
  { - agent - }   { + producer + } to promote, develop or solicit
insurance business for the corporation unless the other insurance
 { - agent - }   { + producer + } consents to such use of the
customer information.
  (5) The corporation shall be subject to the limitations
applicable to depository institutions under sections 2 to 5 { + ,
chapter ___, Oregon Laws 2003 (Enrolled Senate Bill 235) + }
 { - of this 2003 Act - } . For the purpose of this subsection,
'depository institution' has the meaning given that term in
section 2 { + , chapter ___, Oregon Laws 2003 (Enrolled Senate
Bill 235) + }   { - of this 2003 Act - } .
  SECTION 61. ORS 716.594 is amended to read:
  716.594. An Oregon savings bank may acquire and hold all or
part of the stock of a corporation that is or may thereafter be
licensed as an   { - agent - }   { + insurance producer + } as
required by ORS 744.053 to transact one or more of the classes of
insurance described in ORS 744.062 except for title insurance,
subject to the following requirements:
  (1) The acquisition and holding of such stock shall be subject
to the approval of the Director of the Department of Consumer and
Business Services. The director shall base consideration for
approval on the condition of the Oregon savings bank, the
adequacy of a formal business plan for the insurance activities
and the existence of satisfactory management for the corporation.
  (2) The director may revoke or restrict the ongoing authority
of the Oregon savings bank to hold stock in the corporation if
the condition of the Oregon savings bank substantially
deteriorates or if the insurance activities are adversely
affecting the Oregon savings bank.
  (3) If the corporation conducts the insurance   { - agency - }
 { + producer + } activity in a branch or office in which the
Oregon savings bank carries on its banking business, the
insurance
  { - agency - }   { + producer + } activity shall be physically
separated from those parts of the premises in which the Oregon
savings bank carries on the banking business.
  (4) No person who acts on behalf of the corporation as an
  { - agent - }  { +  insurance producer + }, as that term is
defined in ORS 731.062, shall while employed by the corporation
engage on behalf of the corporation in any activities relating to
the making of loans or to the granting of other credits to the
customers of the corporation, including but not limited to
serving as a loan officer or as a member of a loan committee or
other group charged with approval of loans and other credits.
  (5) The name of the corporation and any assumed business name
used by it shall not be identical to that of the Oregon savings
bank.
  (6) Prior to selling any policy of insurance, the corporation
shall give substantially the following notice in writing to the
purchaser in at least 10-point boldfaced type:
_________________________________________________________________
 
                             NOTICE
  ______ (Name of corporation licensed as an   { - agent - }
 { + insurance producer + }) is owned by ______ (Name of Oregon
savings bank). You are not required to purchase any insurance
from it as a condition of obtaining any service from or engaging
in any transaction with the Oregon savings bank. Before
committing to purchase any policy of insurance, you should shop
for the coverage by carefully comparing information obtained from
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 64
 
 
 
two or more   { - agents - }   { + insurance producers + } on
prices, benefits, services, terms of renewal and other policy
features. You hereby acknowledge receipt of a copy of this
notice.
 
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
________
                    ____
Customer's signatureDate
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
 
  (7) For each calendar year during which an Oregon savings bank
owns all or part of any corporation licensed as an
 { - agent - }  { + insurance producer + } as required by ORS
744.053, the Oregon savings bank shall file a written report with
the director. The report shall be filed no later than March 31 of
the following year and shall disclose the insurance activities of
the corporation. The required contents of the report shall be
established by the director by rule. The reports filed with the
director under this subsection shall be available for public
inspection in the office of the director.
  (8) The corporation shall not in any manner use customer
information obtained by the Oregon savings bank from another
insurance   { - agent - }   { + producer + } to promote, develop
or solicit insurance business for the corporation unless the
other insurance
  { - agent - }   { + producer + } consents to such use of the
customer information.
  (9) The corporation shall be subject to the limitations
applicable to lending institutions under ORS 746.180 and 746.185
to 746.211. For the purpose of this subsection, the term 'lending
institution' has the meaning set forth in ORS 746.185.
  SECTION 61a.  { + If Senate Bill 235 becomes law, section 61 of
this 2003 Act (amending ORS 716.594) is repealed and ORS 716.594,
as amended by section 10, chapter ___, Oregon Laws 2003 (Enrolled
Senate Bill 235), is amended to read: + }
  716.594. An Oregon savings bank may acquire and hold all or
part of the stock of a corporation that is or may thereafter be
licensed as an   { - agent - }   { + insurance producer + } as
required by ORS 744.053 to transact one or more of the classes of
insurance described in ORS 744.062 except for title insurance,
subject to the following requirements:
  (1) The acquisition and holding of such stock shall be subject
to the approval of the Director of the Department of Consumer and
Business Services. The director shall base consideration for
approval on the condition of the Oregon savings bank, the
adequacy of a formal business plan for the insurance activities
and the existence of satisfactory management for the corporation.
  (2) The director may revoke or restrict the ongoing authority
of the Oregon savings bank to hold stock in the corporation if
the condition of the Oregon savings bank substantially
deteriorates or if the insurance activities are adversely
affecting the Oregon savings bank.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 65
 
 
 
  (3) For each calendar year during which an Oregon savings bank
owns all or part of any corporation licensed as an
 { - agent - }  { + insurance producer + } as required by ORS
744.053, the Oregon savings bank shall file a written report with
the director. The report shall be filed no later than March 31 of
the following year and shall disclose the insurance activities of
the corporation. The required contents of the report shall be
established by the director by rule. The reports filed with the
director under this subsection shall be available for public
inspection in the office of the director.
  (4) The corporation shall not in any manner use customer
information obtained by the Oregon savings bank from another
insurance   { - agent - }   { + producer + } to promote, develop
or solicit insurance business for the corporation unless the
other insurance
  { - agent - }   { + producer + } consents to such use of the
customer information.
  (5) The corporation shall be subject to the limitations
applicable to depository institutions under sections 2 to 5 { + ,
chapter ___, Oregon Laws 2003 (Enrolled Senate Bill 235) + }
 { - of this 2003 Act - } . For the purpose of this subsection,
'depository institution' has the meaning given that term in
section 2 { + , chapter ___, Oregon Laws 2003 (Enrolled Senate
Bill 235) + }   { - of this 2003 Act - } .
  SECTION 62. ORS 716.610 is amended to read:
  716.610. A savings bank, subject to the restrictions and
limitations contained in this chapter, may:
  (1) Receive time deposits and demand deposits of money without
restriction.
  (2) Offer time and savings accounts and other kinds of deposit
accounts, including but not limited to automatic savings to
checking transfer accounts and negotiable order of withdrawal
accounts, to individuals and nonprofit corporations.
  (3) Exercise by its board of directors or authorized officers
or agents, subject to law, all powers necessary to carry on the
business of savings banks.
  (4) Pay depositors when requested by them, by drafts upon
deposits to the credit of the savings bank in any city in the
United States, and charge current rates of exchange for the
drafts.
  (5) Borrow money, and pledge securities to secure the money
borrowed, but any amount borrowed in excess of 20 percent of
deposits shall first be approved in writing by the Director of
the Department of Consumer and Business Services. The failure to
obtain the approval of the director shall not make an excess loan
invalid as to the lender.
  (6) Collect or protest promissory notes or bills of exchange
owned by the savings bank or held by it as collateral, and charge
the usual fees for the collection or protest.
  (7) Sell gold or silver received in payment of interest or
principal of obligations owned by the savings bank, or from
depositors in the ordinary course of business.
  (8) Become a member of the Federal Reserve Bank or the Federal
Home Loan Bank of the district in which the savings bank is
located.
  (9) Conduct a trust business and exercise all the powers of a
trust company as defined by ORS 709.150 upon compliance with the
laws of this state relating to the regulations of a trust
business.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 66
 
 
 
  (10) Be licensed as an   { - agent - }   { + insurance
producer + } as required by ORS 744.053 to transact one or more
of the classes of insurance described in ORS 744.062 except for
title insurance. With respect to the exercise of the power
granted under this subsection, other than the maintenance of any
insurance license granted to a savings bank prior to September
27, 1987, or the licensing of the savings bank to transact types
of limited class insurance, as that term is defined in ORS
744.052, designated by the Director of the Department of Consumer
and Business Services:
  (a) The conduct by the savings bank of insurance
 { - agency - }  { + producer + } activities shall be subject to
the approval of the director. The director shall base
consideration for approval on the condition of the savings bank,
the adequacy of a formal business plan for the insurance
activities and the existence of satisfactory management for the
insurance activity.
  (b) The director may revoke or restrict the ongoing authority
of the savings bank to engage in the insurance   { - agency - }
 { + producer + } activity if the condition of the savings bank
substantially deteriorates or if the insurance activities are
adversely affecting the savings bank.
  (c) If the insurance   { - agency - }   { + producer + }
activity is conducted in a branch or office in which the savings
bank carries on its banking business, the insurance
 { - agency - }   { + producer  + }activity shall be physically
separated from those parts of the premises in which the savings
bank carries on the banking business.
  (d) No person who acts on behalf of the savings bank as an
  { - agent - }  { +  insurance producer + }, as that term is
defined in ORS 731.062, other than to transact such types of
limited class insurance, or under a license granted to the
savings bank prior to September 27, 1987, shall in any manner
engage on behalf of the savings bank in any activities relating
to the making of loans or to the granting of other credits to the
customers of the savings bank, including but not limited to
serving as a loan officer or as a member of a loan committee or
other group charged with approval of loans and other credits.
  (e) Prior to selling any policy of insurance, the savings bank
shall give substantially the following notice in writing to the
purchaser in at least 10-point boldfaced type:
_________________________________________________________________
 
                             NOTICE
  ______ (Name of savings bank) is a licensed insurance
 { - agent - }  { + insurance producer + } under Oregon law. You
are not required to purchase any insurance from it as a condition
of obtaining any service from or engaging in any other
transaction with it. Before committing to purchase any policy of
insurance, you should shop for the coverage by carefully
comparing information obtained from two or more   { - agents - }
 { + insurance producers + } on prices, benefits, services, terms
of renewal and other policy features. You hereby acknowledge
receipt of a copy of this notice.
 
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 67
 
 
 
________
                    ____
Customer's signatureDate
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
 
 
  (f) The savings bank shall file a written report with the
director no later than March 31 each year disclosing the
insurance activities of the savings bank. The required contents
of the report shall be established by the director by rule. The
reports filed with the director under this paragraph shall be
available for public inspection in the office of the director.
  (g) The savings bank shall not in any manner use customer
information obtained from another insurance   { - agent - }
 { + producer + } to promote, develop or solicit insurance
business for the savings bank unless the other insurance
 { - agent - }   { + producer + } consents to such use of the
customer information.
  SECTION 62a.  { + If Senate Bill 235 becomes law, section 62 of
this 2003 Act (amending ORS 716.610) is repealed and ORS 716.610,
as amended by section 11, chapter ___, Oregon Laws 2003 (Enrolled
Senate Bill 235), is amended to read: + }
  716.610. A savings bank, subject to the restrictions and
limitations contained in this chapter, may:
  (1) Receive time deposits and demand deposits of money without
restriction.
  (2) Offer time and savings accounts and other kinds of deposit
accounts, including but not limited to automatic savings to
checking transfer accounts and negotiable order of withdrawal
accounts, to individuals and nonprofit corporations.
  (3) Exercise by its board of directors or authorized officers
or agents, subject to law, all powers necessary to carry on the
business of savings banks.
  (4) Pay depositors when requested by them, by drafts upon
deposits to the credit of the savings bank in any city in the
United States, and charge current rates of exchange for the
drafts.
  (5) Borrow money, and pledge securities to secure the money
borrowed, but any amount borrowed in excess of 20 percent of
deposits shall first be approved in writing by the Director of
the Department of Consumer and Business Services. The failure to
obtain the approval of the director shall not make an excess loan
invalid as to the lender.
  (6) Collect or protest promissory notes or bills of exchange
owned by the savings bank or held by it as collateral, and charge
the usual fees for the collection or protest.
  (7) Sell gold or silver received in payment of interest or
principal of obligations owned by the savings bank, or from
depositors in the ordinary course of business.
  (8) Become a member of the Federal Reserve Bank or the Federal
Home Loan Bank of the district in which the savings bank is
located.
  (9) Conduct a trust business and exercise all the powers of a
trust company as defined by ORS 709.150 upon compliance with the
laws of this state relating to the regulations of a trust
business.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 68
 
 
 
  (10) Be licensed as an   { - agent - }   { + insurance
producer + } as required by ORS 744.053 to transact one or more
of the classes of insurance described in ORS 744.062 except for
title insurance. With respect to the exercise of the power
granted under this subsection, other than the maintenance of any
insurance license granted to a savings bank prior to September
27, 1987, or the licensing of the savings bank to transact types
of limited class insurance, as that term is defined in ORS
744.052, designated by the Director of the Department of Consumer
and Business Services:
  (a) The conduct by the savings bank of insurance
 { - agency - }  { + producer + } activities shall be subject to
the approval of the director. The director shall base
consideration for approval on the condition of the savings bank,
the adequacy of a formal business plan for the insurance
activities and the existence of satisfactory management for the
insurance activity.
  (b) The director may revoke or restrict the ongoing authority
of the savings bank to engage in the insurance   { - agency - }
 { + producer + } activity if the condition of the savings bank
substantially deteriorates or if the insurance activities are
adversely affecting the savings bank.
  (c) The savings bank shall file a written report with the
director no later than March 31 each year disclosing the
insurance activities of the savings bank. The required contents
of the report shall be established by the director by rule. The
reports filed with the director under this paragraph shall be
available for public inspection in the office of the director.
  (d) The savings bank shall not in any manner use customer
information obtained from another insurance   { - agent - }
 { + producer + } to promote, develop or solicit insurance
business for the savings bank unless the other insurance
 { - agent - }   { + producer + } consents to such use of the
customer information.
  SECTION 63. ORS 731.028 is amended to read:
  731.028. The State Accident Insurance Fund Corporation is
subject as a domestic insurer to ORS 731.248, 731.252, 731.256,
731.258, 731.260, 731.296 to 731.316, 731.488, 731.574, 731.592,
731.594, 731.730, 731.731, 731.735, 731.737, 731.988, 731.992,
733.010 to 733.060, 733.140 to 733.170, 733.210, 737.205,
737.215, 737.225, 737.235 to 737.340, 737.505, 737.560, ORS
chapters 742, 743 and 744, ORS 746.015, 746.075, 746.110, 746.145
to 746.155, 746.230 and 746.240 to the extent that such
provisions are not inconsistent with the express provisions of
ORS chapter 656.  However:
  (1) The requirements of the Director of the Department of
Consumer and Business Services under ORS 733.010 to 733.060,
733.140 to 733.170 and 733.210 govern in the case of a conflict
between those requirements and the requirements of any accounting
system prescribed by the Oregon Department of Administrative
Services.
  (2) The filing requirements of ORS 737.205 to 737.340, 737.505
and 737.560 are in lieu of any similar filing requirements
prescribed by any other law of this state.
  (3) The requirements of ORS chapter 743 are applicable only
with respect to excess workers' compensation insurance furnished
by the corporation.
  (4) The provisions of ORS chapter 744 apply only with respect
to the regulation of   { - agents - }   { + insurance
producers + }.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 69
 
 
 
  (5) For each year that the Secretary of State conducts an audit
of the State Accident Insurance Fund Corporation under ORS
297.210, the director may accept the audit and a copy of the
Secretary of State's audit report in lieu of the requirements of
ORS 731.488 if the director determines that the purposes of ORS
731.488 are adequately served by the Secretary of State's audit
and report. The Secretary of State shall file a copy of its audit
report of the State Accident Insurance Fund Corporation with the
director.
  SECTION 64. ORS 731.146 is amended to read:
  731.146. (1) 'Transact insurance' means one or more of the
following acts effected by mail or otherwise:
  (a) Making or proposing to make an insurance contract.
  (b) Taking or receiving any application for insurance.
  (c) Receiving or collecting any premium, commission, membership
fee, assessment, due or other consideration for any insurance or
any part thereof.
  (d) Issuing or delivering policies of insurance.
  (e) Directly or indirectly acting as an   { - agent - }
 { + insurance producer + } for, or otherwise representing or
aiding on behalf of another, any person in the solicitation,
negotiation, procurement or effectuation of insurance or renewals
thereof, the dissemination of information as to coverage or
rates, the forwarding of applications, the delivering of
policies, the inspection of risks, the fixing of rates, the
investigation or adjustment of claims or losses, the transaction
of matters subsequent to effectuation of the policy and arising
out of it, or in any other manner representing or assisting a
person with respect to insurance.
  (f) Advertising locally or circularizing therein without regard
for the source of such circularization, whenever such advertising
or circularization is for the purpose of solicitation of
insurance business.
  (g) Doing any other kind of business specifically recognized as
constituting the doing of an insurance business within the
meaning of the Insurance Code.
  (h) Doing or proposing to do any insurance business in
substance equivalent to any of paragraphs (a) to (g) of this
subsection in a manner designed to evade the provisions of the
Insurance Code.
  (2) Subsection (1) of this section does not include, apply to
or affect the following:
  (a) Making investments within a state by an insurer not
admitted or authorized to do business within such state.
  (b) Except as provided in ORS 743.015, doing or proposing to do
any insurance business arising out of a policy of group life
insurance or group health insurance, or both, or a policy of
blanket health insurance, if the master policy was validly issued
to cover a group organized primarily for purposes other than the
procurement of insurance and was delivered in and pursuant to the
laws of another state in which:
  (A) The insurer was authorized to do an insurance business;
  (B) The policyholder is domiciled or otherwise has a bona fide
situs; and
  (C) With respect to a policy of blanket health insurance, the
policy was approved by the director of such state.
  (c) Investigating, settling, or litigating claims under
policies lawfully written within a state, or liquidating assets
and liabilities, all resulting from the insurer's former
authorized operations within such state.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 70
 
 
 
  (d) Transactions within a state under a policy subsequent to
its issuance if the policy was lawfully solicited, written and
delivered outside the state and did not cover a subject of
insurance resident, located or to be performed in the state when
issued.
  (e) The continuation and servicing of life or health insurance
policies remaining in force on residents of a state if the
insurer has withdrawn from such state and is not transacting new
insurance therein.
  (3) If mail is used, an act shall be deemed to take place at
the point where the matter transmitted by mail is delivered and
takes effect.
  SECTION 65. ORS 731.284 is amended to read:
  731.284. Copies of the insurance laws in pamphlet form may be
sold by the Director of the Department of Consumer and Business
Services at a reasonable price. The director may distribute free
of charge one copy of such pamphlet to each of the following:
  (1) Authorized insurers and licensed rating organizations;
    { - (2) State representatives, and general agents domiciled
in this state, of authorized insurers; - }
    { - (3) - }   { + (2) + } Insurance departments of other
states; and
    { - (4) - }   { + (3) + } Public agencies. However, the
director may distribute such quantities to public agencies as the
director determines.
  SECTION 66. ORS 731.288 is amended to read:
  731.288. Each written and signed complaint received by the
Department of Consumer and Business Services shall be recorded by
the department, including the subsequent disposition thereof, and
maintained for a period of not less than seven years. The records
of such complaints shall be indexed whenever applicable both by
the name of the insurer and by the name of the   { - agent - }
 { + insurance producer + } involved. The Director of the
Department of Consumer and Business Services shall consider such
complaints before issuing or continuing any certificate of
authority or license of an insurer or   { - agent - }
 { + insurance producer + } named in such complaints.
  SECTION 67. ORS 731.300 is amended to read:
  731.300. (1) The Director of the Department of Consumer and
Business Services shall examine every authorized insurer,
including an audit of the financial affairs of such insurer, as
often as the director determines an examination to be necessary
but at least once each five years. An examination shall be
conducted for the purpose of determining the financial condition
of the insurer, its ability to fulfill its obligations and its
manner of fulfillment, the nature of its operations and its
compliance with the Insurance Code. The director may also make
such an examination of any surplus   { - line agent - }
 { + lines insurance producer + } or any person holding the
capital stock of an authorized insurer or surplus lines
 { - agent - }   { + insurance producer + } for the purpose of
controlling the management thereof as a voting trustee or
otherwise, or both.
  (2) Instead of conducting an examination of an authorized
foreign or alien insurer, the director may accept an examination
report on the insurer that is prepared by the insurance
department for the state of domicile or state of entry of the
insurer if:
  (a) At the time of the examination the insurance department of
the state was accredited under the Financial Regulation Standards
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 71
 
 
 
and Accreditation Program or successor program of the National
Association of Insurance Commissioners; or
  (b) The examination was performed under the supervision of an
accredited insurance department or with the participation of one
or more examiners who are employed by such an accredited
insurance department and who, after a review of the examination
work papers and report, state under oath that the examination was
performed in a manner consistent with the standards and
procedures required by their insurance department.
  (3) Examination of an alien insurer shall be limited to its
insurance transactions, assets, trust deposits and affairs in the
United States except as otherwise required by the director.
  SECTION 68. ORS 731.365 is amended to read:
  731.365. (1) The certificate of authority,   { - agent - }
 { + insurance producer + } appointments and licenses, rates and
other items allowed by the Director of the Department of Consumer
and Business Services pursuant to the discretion of the director
that are in existence at the time an authorized insurer transfers
its domicile to this or any other state as provided in ORS
731.363 or 731.367 or by merger, consolidation or any other
lawful method shall continue in full force and effect upon the
transfer if the insurer remains authorized to transact insurance
in this state.
  (2) All outstanding policies of a transferring insurer shall
remain in full force and effect and need not be indorsed as to
the new name of the insurer or its new location unless so ordered
by the director. A transferring insurer shall file new policy
forms with the director on or before the effective date of the
transfer but may use existing policy forms with appropriate
indorsements if allowed by the director, according to any
conditions established by the director.
  (3) Each transferring insurer shall notify the director of the
details of the proposed transfer and shall file promptly any
resulting amendments to corporate or other organizational
documents filed or required to be filed with the director.
  (4) This section applies to a domestic insurer that transfers
its domicile to another state and to an authorized foreign
insurer that transfers its domicile either to this state or to
another state.
  SECTION 69. ORS 731.422 is amended to read:
  731.422. (1) All suspensions or revocations of, or refusals to
continue, an insurer's certificate of authority shall be by order
of the Director of the Department of Consumer and Business
Services order.
  (2) Upon suspending, revoking or refusing to continue the
insurer's certificate of authority, the director forthwith shall
give notice thereof to the insurer's   { - agents - }
 { + insurance producers + } in this state of record in the
Department of Consumer and Business Services, and likewise shall
suspend or revoke the authority of such   { - agents - }
 { + insurance producers + } to represent the insurer. The
director also shall give notice to the insurance supervisory
authority in jurisdictions in which the insurer is authorized, if
a domestic insurer, or in its domicile if a foreign or alien
insurer.
  (3) In the discretion of the director, the director may publish
notice of such suspension, revocation or refusal in one or more
newspapers of general circulation in this state.
  SECTION 70. ORS 731.426 is amended to read:
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 72
 
 
 
  731.426. (1) In an order suspending the certificate of
authority of an insurer, the Director of the Department of
Consumer and Business Services may provide that the suspension
expires at the end of a specified period or when the director
determines that the cause or causes of the suspension have
terminated. During the suspension the director may rescind or
shorten the suspension by further order.
  (2) During the suspension period the insurer shall not solicit
or write any new business in this state, but shall file its
annual statement and pay fees, licenses and taxes as required
under the Insurance Code, and may service its business already in
force in this state, as if the certificate of authority had
continued in full force.
  (3) Upon expiration of a specific suspension period, if within
such period the certificate of authority has not terminated, the
insurer's certificate of authority automatically shall reinstate
unless the director finds that the cause or causes of the
suspension have not terminated, or that the insurer is otherwise
not in compliance with the requirements of the Insurance Code,
and of which the director shall give the insurer notice not less
than 30 days in advance of the expiration of the suspension
period.
  (4) When the director determines that a suspension should
expire because the cause or causes have terminated, the director
shall reinstate the certificate of authority of the insurer
unless the certificate of authority has expired within the
suspension period.
  (5) Upon reinstatement of the insurer's certificate of
authority, the authority of its   { - agents - }   { + insurance
producers + } in this state to represent the insurer shall
likewise reinstate. The director promptly shall notify the
insurer and its   { - agents - }  { + insurance producers + } in
this state of record in the Department of Consumer and Business
Services, of such reinstatement. If pursuant to ORS 731.422 the
director has published notice of suspension, in like manner the
director shall publish notice of the reinstatement.
  SECTION 71. ORS 731.438 is amended to read:
  731.438. (1) A title insurer, in order to receive and maintain
a certificate of authority, shall own and maintain at all times a
title plant covering a period of at least the immediately
preceding 50 years except years before 1960 and consisting of a
general index, adequate maps and currently posted tract or
geographic indexes for all the lands in the county in which title
insurance policies or other title services are to be issued or
provided. Either directly or through its   { - agent - }
 { + insurance producer + }, a title insurer also shall own and
maintain for each additional county in which it shall be
authorized to transact a title insurance business a comparable
title plant or obtain from a person having a comparable title
plant for such additional county or counties title insurance
showing the status of the title.
  (2) The means by which tract or geographic indexes may be
currently posted for purposes of subsection (1) of this section
include but are not limited to maintenance of the information on
ledger sheets, separate cards or sheets of film, whether bound in
books or contained in envelopes or storage files, or maintenance
of the information on punch cards, computer tape, disc or similar
machine compatible form. All title services by a title insurer
must be provided in this state. The information upon which the
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 73
 
 
 
title services are based must be maintained and must be capable
of reproduction in this state at all times.
  (3) Every title insurance transaction by a title insurer or
  { - agent - }   { + insurance producer + } involving the status
of title of an Oregon title risk shall be based on one or more
title plants which:
  (a) Cover the location of the risk;
  (b) Meet the requirements of this section; and
  (c) Are owned and maintained by one or more title insurers or
  { - agents - }   { + insurance producers + } as provided in
subsections (4), (5) and (6) of this section.
  (4) For any county with a population of 500,000 or more, or any
county with a population of 200,000 or more that is contiguous to
a county with a population of 500,000 or more, ownership and
maintenance of a title plant shall be as provided in this
subsection:
  (a) The title plant referred to in subsection (1) of this
section may be owned and maintained on an exclusive basis or on a
joint basis as provided in paragraph (b) of this subsection.
  (b) A title plant is owned and maintained on a joint basis
under this subsection if two or more persons own and maintain a
portion of the title plant as joint venturers, partners,
shareholders or participants in another form of joint, several or
common property ownership recognized under the laws of this
state.  If ownership of a title plant is held by fewer than four
title insurers or   { - agents - }   { + insurance producers + },
each share of ownership shall be at least 25 percent. If
ownership of a title plant is held by four or more insurers or
 { - agents - }   { + insurance producers + }, all shares shall
be equal.
  (5) A title insurer authorized to transact title insurance in
this state and every   { - agent - }   { + insurance producer + }
of such an authorized title insurer shall own and maintain a
title plant.
  (6) In any county not described in subsection (4) of this
section, a title insurer or its   { - agents - }   { + insurance
producers + } transacting title insurance business shall solely
own a title plant for that county in conformance with subsections
(1) and (2) of this section and shall maintain a title plant for
that county on an exclusive basis or a joint basis in conformance
with subsections (1) and (2) of this section. A title plant for a
county is maintained on a joint basis under this subsection if a
title insurer or   { - agent - }   { + insurance producer + }
obtains current posting information for its tract or geographic
indexes from one or more other title insurers or   { - agents - }
 { + insurance producers + } or from a provider that is wholly
owned in equal shares by the title insurers or   { - agents - }
 { + insurance producers + } utilizing the provider's services.
  SECTION 72. ORS 731.484 is amended to read:
  731.484. (1) No insurer or   { - agent - }   { + insurance
producer + } selling a policy of group life insurance or group
health insurance subject to the exemption in ORS 731.146 (2)(b)
is authorized to sell membership in a group for the purpose of
qualifying an applicant who is an individual for the insurance.
  (2) No insurer or   { - agent - }   { + insurance producer + }
selling membership in a group is authorized to offer a policy of
group life insurance or group health insurance subject to the
exemption in ORS 731.146 (2)(b) for the purpose of selling
membership in the group.
  SECTION 73. ORS 731.590 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 74
 
 
 
  731.590. As used in ORS 731.592 and 731.594, 'insurer '
  { - means - }   { + includes + }, but is not limited to:
  (1) An insurer, as defined in ORS 731.106.
  (2) A health care service contractor, as defined in ORS
750.005, including, but not limited to, a health maintenance
organization.
  (3) A multiple employer welfare arrangement, as defined in ORS
750.301.
  (4) A legal entity that is self-insured and provides insurance
services to its employees.
  (5) A guaranty contract insurer, as defined in ORS 656.005.
  (6) An employer authorized under ORS chapter 656 to self-insure
its workers' compensation risk.
  (7) A fraternal benefit society, as described in ORS 748.106.
  (8) An   { - agent - }   { + insurance producer + }, as defined
in ORS 731.062.
  SECTION 74. ORS 731.737 is amended to read:
  731.737. (1) A person or other entity described in this
subsection acting without malice, fraudulent intent or bad faith
is not subject to civil liability, and no cause of action of any
nature may exist against such a person or entity, when the person
is performing authorized functions, including publication or
dissemination of information, regarding any activity described in
subsection (3) of this section. This subsection applies to the
following persons and entities:
  (a) Law enforcement officials and their agents and employees.
  (b) The National Association of Insurance Commissioners, the
Department of Consumer and Business Services, a federal or state
governmental agency established to detect and prevent activities
described in subsection (3) of this section and any other
organization established for the same purpose, and agents,
employees or designees of any such person or entity.
  (2) A person acting without malice, fraudulent intent or bad
faith is not subject to liability by virtue of filing reports or
furnishing information regarding any activity described in
subsection (3) of this section with or to any person or other
entity described in subsection (1) of this section.
  (3) The activities referred to in subsections (1) and (2) of
this section include but are not limited to the following,
whether any activity is suspected or anticipated or has occurred:
  (a) Acts or omissions by a person who presents a statement
described in this paragraph to or by an insurer or an
 { - agent - }  { + insurance producer + }, causes such a
statement to be presented to or by an insurer or an
 { - agent - }   { + insurance producer + }, or prepares such a
statement with knowledge or belief that it will be presented to
or by an insurer or an   { - agent - }   { + insurance
producer + }. This paragraph applies to any statement that the
person knows to contain false information as part of, in support
of or concerning any fact relating to the following, or conceals
relevant information relating to the following:
  (A) An application for the issuance of insurance.
  (B) The rating of insurance.
  (C) A claim for payment or benefit pursuant to any insurance.
  (D) Premiums paid on insurance.
  (E) Payments made in accordance with the terms of insurance
coverage.
  (F) An application for a certificate of authority.
  (G) The financial condition of an insurer.
  (H) The acquisition of any insurer.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 75
 
 
 
  (b) Solicitation or an attempt to solicit new or renewal
insurance by or for an insolvent insurer or other person subject
to regulation under the Insurance Code.
  (c) Removal or an attempt to remove assets or any record of
assets, transactions and affairs from the home office or other
place of business of the insurer or other person subject to
regulation under the Insurance Code, or from the place of
safekeeping of such a person, or who conceals or attempts to
conceal the assets or record from the Director of the Department
of Consumer and Business Services.
  (d) Diversion, an attempt to divert or a conspiracy to divert
funds of an insurer or other person subject to regulation under
the Insurance Code, or of any other person, in connection with:
  (A) The transaction of insurance.
  (B) The conduct of business activities by an insurer or other
person subject to regulation under the Insurance Code.
  (C) The formation, acquisition or dissolution of an insurer or
other person subject to regulation under the Insurance Code.
  (4) This section does not abrogate or modify in any way any
common law or statutory privilege or immunity otherwise enjoyed
by a person or entity made immune from liability under this
section.
  (5) The court may award reasonable attorney fees to the
prevailing party in any tort action against a person who claims
immunity under the provisions of this section.
  SECTION 75. ORS 731.804 is amended to read:
  731.804. (1) Except as otherwise provided in this section, each
authorized insurer doing business in this state shall pay
assessments that the Director of the Department of Consumer and
Business Services determines necessary to support the
legislatively authorized budget of the Department of Consumer and
Business Services with respect to functions of the department
under the Insurance Code. The director shall determine the
assessments according to one or more percentage rates established
by the director by rule. The director shall specify in the rule
when assessments shall be made and payments shall be due. The
premium-weighted average of the percentage rates shall not exceed
nine-hundredths of one percent of the gross amount of premiums
received by an insurer or its   { - agents - }   { + insurance
producers + } from and under its policies covering direct
domestic risks, after deducting the amount of return premiums
paid and the amount of dividend payments made to policyholders
with respect to such policies. In the case of reciprocal
insurers, the amount of savings paid or credited to the accounts
of subscribers shall be deducted from the gross amount of
premiums. In establishing the percentage rate or rates, the
director shall use the most recent premium data approved by the
director. In establishing the amounts to be collected under this
subsection, the director shall take into consideration the
expenses of the department for administering the Insurance Code
and the fees collected under subsection (2) of this section. When
the director establishes two or more percentage rates:
  (a) Each rate shall be based on such expenses of the department
ascribed by the director to the line of insurance for which the
rate is established.
  (b) Each rate shall be applied to the gross amount of premium
received by an insurer or its   { - agents - }   { + insurance
producers + } for the applicable line of insurance as provided in
this subsection.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 76
 
 
 
  (2) The director may collect fees for specific services
provided by the department under the Insurance Code according to
a schedule of fees established by the director by rule. The
director may collect such fees in advance. In establishing the
schedule for fees, the director shall take into consideration the
cost of each service for which a fee is imposed.
  (3) Establishment and amendment of the schedule of fees under
subsection (2) of this section are subject to prior approval of
the Oregon Department of Administrative Services and a report to
the Emergency Board prior to adopting the fees and shall be
within the budget authorized by the Legislative Assembly as that
budget may be modified by the Emergency Board.
  (4) The director   { - shall - }   { + may + } not collect an
assessment under subsection (1) of this section from any of the
following persons:
  (a) A fraternal benefit society complying with ORS chapter 748.
  (b) An educational institution or nonprofit corporation issuing
annuity policies in compliance with ORS 731.704 to 731.724.
  (c) Any person or class of persons designated by the director
by rule.
  (5) The director   { - shall - }  { +  may + } not collect an
assessment under subsection (1) of this section with respect to
premiums received from any of the following policies:
  (a) Workers' compensation insurance policies.
  (b) Annuity policies, whether fixed or variable in nature.
  (c) Wet marine and transportation insurance policies.
  (d) Any category of policies designated by the director by
rule.
  SECTION 76. ORS 731.812 is amended to read:
  731.812. Every foreign or alien insurer, in its annual
statement to the Director of the Department of Consumer and
Business Services, shall set forth the gross amount of premiums
received by it or its   { - agents - }   { + insurance
producers + }, return premiums paid, dividend payments made to
policyholders, savings paid or credited to the accounts of
subscribers in the case of a reciprocal insurer, and insurance
benefit payments to policyholders, from and under its policies
covering direct domestic risks in the preceding calendar year.
  SECTION 77. ORS 731.820 is amended to read:
  731.820. (1)(a) For the purpose of maintaining the office of
State Fire Marshal and paying the expenses incident thereto,
every insurer transacting insurance covering the peril of fire
shall pay a tax to the Director of the Department of Consumer and
Business Services, on or before April 1 of each year, equal to
one percent of the gross amount of premiums received by it or its
 { - agents - }  { + insurance producers + } from such business,
from and under its policies covering direct domestic risks in the
preceding calendar year after deducting the amount of return
premiums paid and the amount of dividend payments made to
policyholders or, in the case of a reciprocal insurer, the amount
of savings paid or credited to the accounts of subscribers, with
respect to such policies.
  (b) For the purpose of paragraph (a) of this subsection the
following portions of the amounts required to be reported by line
of business in the annual financial statement required by ORS
731.574 shall be considered premiums for insurance covering the
peril of fire:
  (A) Fire, 100 percent.
  (B) Homeowners and farm owners multiple peril, 65 percent.
  (C) Commercial multiple peril, 50 percent.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 77
 
 
 
  (D) Inland marine, 20 percent.
  (E) Automobile physical damage, eight percent.
  (F) Aircraft physical damage, eight percent.
  (2) If an insurer ceases to do business or collect premiums on
direct domestic risks, it thereupon shall make a report to the
director of its premiums subject to taxation as provided in
subsection (1) of this section and collected or due as of the
date when it ceased to do business or collect premiums on direct
domestic risks, and not theretofore reported, and shall forthwith
pay to the director the tax thereon.
  (3) If the director, during the period in which the director
under ORS 731.836 may collect taxes owing under this section,
finds the amount of such taxes paid by an insurer to have been
incorrect, the director shall charge or credit the insurer with
the difference between the correct amount of tax and the amount
actually paid.
  SECTION 78. ORS 731.840 is amended to read:
  731.840. (1) The retaliatory tax imposed upon a foreign or
alien insurer under ORS 731.854 and 731.859, or the corporate
excise tax imposed upon a foreign or alien insurer under ORS
chapter 317, is in lieu of all other state taxes upon premiums,
taxes upon income, franchise or other taxes measured by income
that might otherwise be imposed upon the foreign or alien insurer
except the fire insurance premiums tax imposed under ORS 731.820
and the tax imposed upon wet marine and transportation insurers
under ORS 731.824 and 731.828. However, all real and personal
property, if any, of the insurer shall be listed, assessed and
taxed the same as real and personal property of like character of
noninsurers. Nothing in this subsection shall be construed to
preclude the imposition of the assessments imposed under ORS
656.612 upon a foreign or alien insurer.
  (2) Subsection (1) of this section applies to a reciprocal
insurer and its attorney in its capacity as such.
  (3) Subsection (1) of this section applies to foreign or alien
title insurers and to foreign or alien wet marine and
transportation insurers issuing policies and subject to taxes
referred to in ORS 731.824 and 731.828.
  (4) The State of Oregon hereby preempts the field of regulating
or of imposing excise, privilege, franchise, income, license,
permit, registration, and similar taxes, licenses and fees upon
insurers and their   { - agents - }   { + insurance producers + }
and other representatives as such, and:
  (a) No county, city, district, or other political subdivision
or agency in this state shall so regulate, or shall levy upon
insurers, or upon their   { - agents - }   { + insurance
producers + } and representatives as such, any such tax, license
or fee; except that whenever a county, city, district or other
political subdivision levies or imposes generally on a
nondiscriminatory basis throughout the jurisdiction of the taxing
authority a payroll, excise or income tax, as otherwise provided
by law, such tax may be levied or imposed upon domestic insurers;
and
  (b) No county, city, district, political subdivision or agency
in this state shall require of any insurer,   { - agent - }
 { + insurance producer + } or representative, duly authorized or
licensed as such under the Insurance Code, any additional
authorization, license, or permit of any kind for conducting
therein transactions otherwise lawful under the authority or
license granted under this code.
  SECTION 79. ORS 731.841 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 78
 
 
 
  731.841. If, on account of the provisions of section 2, chapter
786, Oregon Laws 1995, and the amendments to ORS 731.840 by
section 6, chapter 786, Oregon Laws 1995, the amendments to ORS
750.329 by section 11, chapter 786, Oregon Laws 1995, the
amendments to ORS 317.010 by section 12, chapter 786, Oregon Laws
1995, and the amendments to ORS 317.080 by section 13, chapter
786, Oregon Laws 1995, any insurer authorized to transact
business in Oregon on January 1, 1997, is subject to the local
taxes, licenses and fees described in ORS 731.840 (4)(a) as of
January 1, 1997, and was not so subject before January 1, 1997,
the authority of the local government to impose those taxes is
preempted by the State of Oregon and no county, city, district or
other political subdivision or agency in this state shall levy or
impose upon such insurer, or upon its   { - agents - }
 { + insurance producers + } or representatives, any excise,
privilege, franchise, income, license, permit, registration or
similar tax, license or fee.
  SECTION 80. ORS 731.854 is amended to read:
  731.854. (1) When by or pursuant to the laws of any other state
or foreign country any taxes, licenses and other fees, in the
aggregate, and any fines, penalties, deposit requirements or
other material obligations, prohibitions or restrictions are or
would be imposed upon insurers domiciled in this state, or upon
the   { - agents - }   { + insurance producers + } or
representatives of such insurers, which are in excess of such
taxes, licenses and other fees, in the aggregate, or which are in
excess of the fines, penalties, deposit requirements or other
obligations, prohibitions, or restrictions directly imposed upon
similar insurers, or upon the   { - agents - }   { + insurance
producers + } or representatives of such insurers, of such other
state or country under the statutes of this state, so long as
such laws of such other state or country continue in force or are
so applied, the same taxes, licenses and other fees, in the
aggregate, or fines, penalties or deposit requirements or other
material obligations, prohibitions, or restrictions of whatever
kind shall be imposed by the Director of the Department of
Consumer and Business Services upon the insurers, or upon the
 { - agents - }   { + insurance producers + } or representatives
of such insurers, of such other state or country doing business
or seeking to do business in this state. Any tax, license or
other fee or other obligation imposed by any city, county, or
other political subdivision or agency of such other state or
country on insurers domiciled in this state or their
  { - agents - }   { + insurance producers + } or representatives
shall be deemed to be imposed by such state or country within the
meaning of this subsection.
  (2) Foreign reciprocal or interinsurance exchanges filing a
consolidated return for purposes of ORS chapter 317 shall prepare
and file a separate individual retaliatory tax calculation. The
excise tax for the consolidated group shall be allocated for
retaliatory tax purposes among the individual foreign insurers
writing Oregon premiums. The allocation, after excluding the
domestic share as determined by the Director of the Department of
Consumer and Business Services by rule, shall be in the
proportion that the premiums written in Oregon by a foreign
insurer of the group bears to the total premiums written in
Oregon by all foreign insurers in the group writing premiums in
Oregon.
  (3) This section does not apply as to personal income taxes,
nor as to local ad valorem taxes on real or personal property nor
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 79
 
 
 
as to special purpose obligations or assessments heretofore
imposed by another state in connection with particular classes of
insurance, other than property insurance; except that deductions,
from premium taxes or other taxes otherwise payable, allowed on
account of real estate or personal property taxes paid shall be
taken into consideration by the director in determining the
propriety and extent of retaliatory action under this section.
  (4) For the purpose of applying this section to an alien
insurer, its domicile shall be determined in accordance with ORS
731.092 and 731.096.
  (5) For the purpose of applying this section to foreign and
alien insurers, the following specifically shall be treated as
taxes imposed by this state:
  (a) The corporate excise tax imposed under ORS chapter 317.
  (b) The assessments imposed under ORS 731.804 made to support
the legislatively authorized budget of the Department of Consumer
and Business Services with respect to the functions of the
department under the Insurance Code.
  (c) The assessments paid by insurers on behalf of their
insureds under ORS 656.612.
  SECTION 81. ORS 731.988 is amended to read:
  731.988. (1) Any person who violates any provision of the
Insurance Code, any lawful rule or final order of the Director of
the Department of Consumer and Business Services or any final
judgment or decree made by any court upon application of the
director, shall forfeit and pay to the General Fund of the State
Treasury a civil penalty in an amount determined by the director
of not more than $10,000 for each offense. In the case of
individual   { - agents - }  { +  insurance producers + },
adjusters or insurance consultants, the civil penalty shall be
not more than $1,000 for each offense. Each violation shall be
deemed a separate offense.
  (2) In addition to the civil penalty set forth in subsection
(1) of this section, any person who violates any provision of the
Insurance Code, any lawful rule or final order of the director or
any final judgment or decree made by any court upon application
of the director, may be required to forfeit and pay to the
General Fund of the State Treasury a civil penalty in an amount
determined by the director but not to exceed the amount by which
such person profited in any transaction which violates any such
provision, rule, order, judgment or decree.
  (3) In addition to the civil penalties set forth in subsections
(1) and (2) of this section, any insurer that is required to make
a report under ORS 742.400 and that fails to do so within the
specified time may be required to pay to the General Fund of the
State Treasury a civil penalty in an amount determined by the
director but not to exceed $10,000.
  (4) A civil penalty imposed under this section may be recovered
either as provided in subsection (5) of this section or in an
action brought in the name of the State of Oregon in any court of
appropriate jurisdiction.
  (5) Civil penalties under this section shall be imposed in the
manner provided by ORS 183.090. If a civil penalty is not paid
within 10 days after an order assessing the penalty becomes final
by operation of law or on appeal, the order may be recorded with
the county clerk in any county of this state. The clerk shall
record the name of the person incurring the penalty and the
amount of the penalty in the County Clerk Lien Record. The
penalty provided in the order so recorded shall become a lien
upon any interest in property of the person against whom the
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 80
 
 
 
order is entered in the county where the order is recorded.
Execution may be issued from the circuit court for the county in
which the order is first recorded in the same manner as execution
upon a judgment entered in the register and docketed in the
judgment docket of that court.
  (6) The provisions of this section are in addition to and not
in lieu of any other enforcement provisions contained in the
Insurance Code.
  SECTION 82. ORS 732.810 is amended to read:
  732.810. As used in ORS 732.810 to 732.814:
  (1) 'Control' and 'controlled' have the meanings given those
terms in ORS 732.548.
  (2) 'Controlled insurer' means an authorized insurer that is
controlled directly or indirectly by   { - a - }   { + an
insurance + } producer.
  (3) 'Controlling producer' means   { - a - }   { + an
insurance + } producer who directly or indirectly controls an
insurer.
  (4) '  { +  Insurance + } producer'   { - means: - }  { +  has
the meaning given that term in ORS 731.062, but excludes a person
who sells, solicits or negotiates an insurance contract on behalf
of the insurance producer. + }
    { - (a) An agent or any other person who in any manner
solicits, negotiates or procures the making of an insurance
contract for any compensation, commission or other thing of
value, other than on behalf of the agent or other person. - }
    { - (b) A person acting in another state as an insurance
broker under the laws of the other state when, for any
compensation, commission or other thing of value, the person
solicits, negotiates or procures the making of an insurance
contract on behalf of an insured other than the person. - }
  SECTION 83. ORS 732.812 is amended to read:
  732.812. (1) A controlled insurer shall file quarterly
financial statements with the Director of the Department of
Consumer and Business Services.
  (2) Subsections (4) to (7) of this section apply to a
controlled insurer and a controlling producer if, in any calendar
year, the aggregate amount of gross written premium on insurance
placed with a controlled insurer by a controlling producer is
equal to or greater than five percent of the allowed assets of
the controlled insurer, as reported in the quarterly financial
statement of the controlled insurer filed as of September 30 of
the prior year.
  (3) Subsections (4) to (7) of this section do not apply to a
controlled insurer and a controlling producer if:
  (a) The controlling producer places insurance only with the
controlled insurer or only with the controlled insurer and a
member or members of the holding company system of the controlled
insurer or the parent, affiliate or subsidiary of the controlled
insurer, and receives no compensation based upon the amount of
premiums written in connection with the insurance, and accepts
insurance placements only from nonaffiliated subproducers and not
directly from insureds; and
  (b) The controlled insurer, except for insurance written
through a residual market facility, accepts insurance placements
only from a controlling producer,   { - a - }   { + an
insurance + } producer controlled by the controlled insurer or
 { - a - }   { + an insurance + } producer that is a subsidiary
of the controlled insurer.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 81
 
 
 
  (4) A controlled insurer shall not accept insurance placements
from a controlling producer, and a controlling producer shall not
place insurance with a controlled insurer, unless there is a
written contract between the controlling producer and the insurer
that complies with the requirements of this subsection.  The
contract must be approved by the board of directors of the
insurer before it becomes effective. The contract must specify
the responsibilities of each party and contain the following
minimum provisions:
  (a) A provision authorizing the controlled insurer to terminate
the contract for cause, upon written notice to the controlling
producer, and requiring the controlled insurer to suspend the
authority of the controlling producer to write insurance during
the pendency of any dispute regarding the cause for the
termination.
  (b) A provision requiring the controlling producer to render
accounts to the controlled insurer detailing all material
transactions, including information necessary to support all
commissions, charges and other fees received by or owing to the
controlling producer.
  (c) A provision requiring the controlling producer to remit all
funds due under the terms of the contract to the controlled
insurer on at least a monthly basis. The due date must be fixed
so that premiums or installments thereof collected are remitted
not later than the 90th day after the effective date of any
policy placed with the controlled insurer under the contract.
  (d) A provision requiring that all funds collected for the
controlled insurer's account be held by the controlling producer
in a fiduciary capacity, in one or more appropriately identified
trust accounts in accordance with ORS 744.083. ORS 744.084 does
not apply for purposes of this paragraph. If a controlling
producer is not required to be licensed in this state, the
contract must require that the funds of the controlling producer
be maintained in compliance with the requirements of the
domiciliary jurisdiction of the controlling producer.
  (e) A provision requiring the controlling producer to maintain
separately identifiable records of insurance written for the
controlled insurer.
  (f) A provision prohibiting the contract from being assigned in
whole or in part by the controlling producer.
  (g) A provision requiring the controlled insurer to provide the
controlling producer with its underwriting standards, rules and
procedures, manuals setting forth the rates to be charged and the
conditions for the acceptance or rejection of risks. The
provision under this paragraph must also require the controlling
producer to adhere to the standards, rules, procedures, rates and
conditions, and must require the standards, rules, procedures,
rates and conditions to be the same as those applicable to
comparable business placed with the controlled insurer by
 { - a - }  { +  an insurance + } producer other than the
controlling producer.
  (h) A provision establishing the rates and terms of the
controlling producer's commissions, charges or other fees and the
purposes for those charges or fees. The rates of the commissions,
charges and other fees must not be greater than those applicable
to comparable business placed with the controlled insurer by
 { +  insurance + } producers other than controlling producers.
For purposes of this paragraph and paragraph (g) of this
subsection, examples of comparable business include the same
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 82
 
 
 
lines of insurance, same kinds of insurance, same kinds of risks,
similar policy limits and similar quality of business.
  (i) If the contract provides that the controlling producer, on
insurance placed with the insurer, is to be compensated
contingent upon the insurer's profits on that insurance, a
provision that the compensation must not be determined and paid
until at least five years after the premiums on casualty
insurance are earned and at least one year after the premiums are
earned on any other insurance. The provision under this paragraph
must also require that the commissions not be paid until the
adequacy of the controlled insurer's reserves on remaining claims
has been independently verified pursuant to subsection (6) of
this section.
  (j) A provision establishing a limit on insurance written by
the controlling producer in relation to the surplus and total
insurance transacted by the controlled insurer. The insurer may
establish a different limit for each line or subline of
insurance.  The provision under this paragraph:
  (A) Must require the controlled insurer to notify the
controlling producer when the applicable limit is approached and
prohibit the controlled insurer from accepting insurance from the
controlling producer if the limit is reached.
  (B) Must prohibit the controlling producer from placing
insurance with the controlled insurer if it has been notified by
the controlled insurer that the limit has been reached.
  (k) A provision that the controlling producer may negotiate but
shall not bind reinsurance on behalf of the controlled insurer on
insurance the controlling producer places with the controlled
insurer, except that the controlling producer may bind
facultative reinsurance contracts pursuant to obligatory
facultative agreements if the contract with the controlled
insurer contains underwriting guidelines including, for
reinsurance assumed and for reinsurance ceded, a list of
reinsurers with which such automatic agreements are in effect,
the coverages and amounts or percentages that may be reinsured
and commission schedules.
  (5) A controlled insurer must have an audit committee of the
board of directors composed of independent directors. The audit
committee shall meet annually with management, the independent
certified public accountants of the insurer and an independent
casualty actuary or other independent loss reserve specialist
acceptable to the director to review the adequacy of the loss
reserves of the insurer.
  (6) In addition to any other required loss reserve
certification, on April 1 of each year, a controlled insurer
shall file with the director an opinion of an independent
casualty actuary, or an independent loss reserve specialist that
is acceptable to the director, reporting loss ratios for each
line of insurance written and attesting to the adequacy of loss
reserves established for losses incurred and outstanding as of
year end, including losses incurred but not reported, on
insurance placed by the  { + insurance + } producer.
  (7) A controlled insurer shall annually report to the director
the amount of commissions paid to the  { + insurance + }
producer, the percentage such amount represents of the net
premiums written and comparable amounts and percentage paid to
noncontrolling producers for placements of the same kinds of
insurance.
  SECTION 84. ORS 733.635 is amended to read:
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 83
 
 
 
  733.635. Investments authorized by ORS 733.630 may be made in
corporations engaged, or which will be engaged, in one or more of
the following insurance or ancillary businesses:
  (1) Any kind of insurance business authorized by the
jurisdiction in which it is incorporated.
  (2) Any kind of business primarily related to the insurance
business carried on by the parent.
  (3) Acting as an insurance   { - agent - }   { + producer + }
for its parent or for any of its parent's insurer subsidiaries or
intermediate insurer subsidiaries.
  (4) Investing, reinvesting or trading in securities for its own
account, that of its parent, any subsidiary of its parent, or any
affiliate or subsidiary.
  (5) Management of any investment company subject to or
registered pursuant to the Federal Investment Company Act of
1940, as amended, including related sales and services.
  (6) Acting as a broker-dealer subject to or registered pursuant
to the Securities Exchange Act of 1934, as amended.
  (7) Rendering investment advice to governments, government
agencies, corporations or other organizations or groups.
  (8) Rendering other services related to the operations of an
insurance business including, but not limited to, actuarial, loss
prevention, safety engineering, data processing, accounting,
claims, appraisal and collection services.
  (9) Ownership and management of assets or property which the
parent could itself own and manage.
  (10) Acting as administrative agent for a government
instrumentality which is performing an insurance function.
  (11) Financing of insurance premiums.
  (12) Owning a corporation or corporations engaged or organized
to engage exclusively in one or more of the businesses specified
in subsections (1) to (11) of this section.
  SECTION 85. ORS 734.240 is amended to read:
  734.240. (1) Whenever under this chapter an ancillary receiver
is to be appointed in delinquency proceedings for an insurer not
domiciled in this state, the court shall appoint the Director of
the Department of Consumer and Business Services as ancillary
receiver. The director shall file a petition requesting the
appointment:
  (a) If the director finds that there are sufficient assets of
such insurer located in this state to justify the appointment of
an ancillary receiver; or
  (b) If 10 or more persons resident in this state having claims
against such insurer file a petition with the director requesting
the appointment of such ancillary receiver.
  (2) The domiciliary receiver of an insurer domiciled in a
reciprocal state, shall be vested by operation of law with the
title to all the property, contracts and rights of action, and
all the books and records of the insurer located in this state,
and the domiciliary receiver shall have the immediate right to
recover balances due from local   { - agents - }   { + insurance
producers + } and to obtain possession of any books and records
of the insurer found in this state. The domiciliary receiver
shall also be entitled to recover the other assets of the insurer
located in this state except that upon the appointment of an
ancillary receiver in this state, the ancillary receiver shall
during the ancillary receivership proceedings have the sole right
to recover such other assets. The ancillary receiver shall, as
soon as practicable, liquidate from their respective securities
those special deposit claims and secured claims which are proved
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 84
 
 
 
and allowed in the ancillary proceedings in this state, and shall
pay the necessary expenses of the proceedings. All remaining
assets the ancillary receiver shall promptly transfer to the
domiciliary receiver. Subject to the provisions of this section
the ancillary receiver and the deputies of the ancillary receiver
shall have the same powers and be subject to the same duties with
respect to the administration of such assets, as a receiver of an
insurer domiciled in this state.
  SECTION 86. ORS 734.370 is amended to read:
  734.370. No offsets shall be allowed in cases of mutual debts
or mutual credits between the insurer and another person in
connection with any domestic delinquency proceeding under this
chapter, except for cases of policy loans and cases of
reinsurance and except for   { - agents' - }   { + insurance
producers' + } balances, excluding unearned return commissions.
  SECTION 87. ORS 734.890 is amended to read:
  734.890. No insurer or   { - agent - }   { + insurance
producer + } shall make, publish, disseminate, circulate or place
before the public, or cause directly or indirectly, to be made,
published, disseminated, circulated or placed before the public,
in any newspaper, magazine or other publication, or in the form
of a notice, circular, pamphlet, letter or poster, or over any
radio station or television station, or in any other way, any
advertisement, announcement or statement which uses the existence
of the Oregon Life and Health Insurance Guaranty Association for
the purpose of sales, solicitation or inducement to purchase any
form of insurance covered by the Oregon Life and Health Insurance
Guaranty Association Act. This section shall not apply however to
the Oregon Life and Health Insurance Guaranty Association or any
other entity which does not sell or solicit insurance or to
public service institutional advertisements by individual
insurers.
  SECTION 88. ORS 735.055 is amended to read:
  735.055. (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
  { - agent - }   { + producer + } holding an appointment as an
Oregon   { - agent - }  { + 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
  { - agent - }   { + 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.
  SECTION 89. ORS 735.065 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 85
 
 
 
  735.065. (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   { - agents - }
 { + 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).
  SECTION 90. ORS 735.210 is amended to read:
  735.210. (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   { - agents - }  { +  insurance producers + }, and
approved by the director.
  SECTION 91. ORS 735.235 is amended to read:
  735.235. The joint underwriting association formed under ORS
735.220 shall be under the administrative control of a seven
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 86
 
 
 
person board of directors appointed by the Governor. Two
directors shall represent insurance carriers participating in the
association; one director shall represent insurance
 { - agents - }  { + 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.
  SECTION 92. ORS 735.315 is amended to read:
  735.315. 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   { - agents or brokers - }   { + insurance
producers + } are used, they shall report and pay the taxes for
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 87
 
 
 
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   { - agents or brokers - }   { + 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.
  SECTION 93. ORS 735.335 is amended to read:
  735.335. 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
 { - agent or broker - }   { + insurance producer + } acting
pursuant to the surplus lines laws and regulations of that state.
  SECTION 94. ORS 735.350 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 88
 
 
 
  735.350. Any person acting or offering to act as an   { - agent
or broker - }   { + 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
 { - agent - }   { + insurance producer + } from the director
under ORS chapter 744.
  SECTION 95. ORS 735.610 is amended to read:
  735.610. (1) There is created in the Department of Consumer and
Business Services the Oregon Medical Insurance Pool Board. The
board shall establish the Oregon Medical Insurance Pool and
otherwise carry out the responsibilities of the board under ORS
735.600 to 735.650.
  (2) The board shall consist of nine individuals, eight of whom
shall be appointed by the Director of the Department of Consumer
and Business Services. The Director of the Department of Consumer
and Business Services or the director's designee shall be a
member of the board. The chair of the board shall be elected from
among the members of the board. The board shall at all times, to
the extent possible, include at least one representative of a
domestic insurance company licensed to transact health insurance,
one representative of a domestic not-for-profit health care
service contractor, one representative of a health maintenance
organization, one representative of reinsurers and two members of
the general public who are not associated with the medical
profession, a hospital or an insurer.
  (3) The director may fill any vacancy on the board by
appointment.
  (4) The board shall have the general powers and authority
granted under the laws of this state to insurance companies with
a certificate of authority to transact health insurance and the
specific authority to:
  (a) Enter into such contracts as are necessary or proper to
carry out the provisions and purposes of ORS 735.600 to 735.650
including the authority to enter into contracts with similar
pools of other states for the joint performance of common
administrative functions, or with persons or other organizations
for the performance of administrative functions;
  (b) Recover any assessments for, on behalf of, or against
insurers;
  (c) Take such legal action as is necessary to avoid the payment
of improper claims against the pool or the coverage provided by
or through the pool;
  (d) Establish appropriate rates, rate schedules, rate
adjustments, expense allowances,   { - agents' - }
 { + insurance producers' + } referral fees, claim reserves or
formulas and perform any other actuarial function appropriate to
the operation of the pool. Rates may not be unreasonable in
relation to the coverage provided, the risk experience and
expenses of providing the coverage. Rates and rate schedules may
be adjusted for appropriate risk factors such as age and area
variation in claim costs and shall take into consideration
appropriate risk factors in accordance with established actuarial
and underwriting practices;
  (e) Issue policies of insurance in accordance with the
requirements of ORS 735.600 to 735.650;
  (f) Appoint from among insurers appropriate actuarial and other
committees as necessary to provide technical assistance in the
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 89
 
 
 
operation of the pool, policy and other contract design, and any
other function within the authority of the board;
  (g) Seek advances to effect the purposes of the pool; and
  (h) Establish rules, conditions and procedures for reinsuring
risks under ORS 735.600 to 735.650.
  (5) Each member of the board is entitled to compensation and
expenses as provided in ORS 292.495.
  (6) The Director of the Department of Consumer and Business
Services shall adopt rules, as provided under ORS 183.310 to
183.550, implementing policies recommended by the board for the
purpose of carrying out ORS 735.600 to 735.650.
  (7) In consultation with the board, the director shall employ
such staff and consultants as may be necessary for the purpose of
carrying out responsibilities under ORS 735.600 to 735.650.
  SECTION 96. ORS 735.702 is amended to read:
  735.702. It is the intent of the Legislative Assembly by
enactment of ORS 735.700 to 735.740 to increase access to health
insurance and health care by providing:
  (1) Information about health benefit plans and the premiums
charged for those plans to self-employed individuals and small
employers in Oregon;
  (2) Direct assistance to health insurance   { - agents - }
 { + producers + } and health insurance consumers regarding
health benefit plans;
  (3) A central source for information about resources for health
care and health insurance; and
  (4) Health benefit plans for small employers that have not
provided a group health benefit plan for eligible employees for a
period of at least one year.
  SECTION 97. ORS 737.350 is amended to read:
  737.350. No rating organization shall conduct its operations in
this state without first filing with the Director of the
Department of Consumer and Business Services a written
application for a license as a rating organization for such
classes of insurance, or subdivision or class of risk or a part
or combination thereof as are specified in its application and
shall file therewith:
  (1) A copy of its constitution, its articles of agreement or
association or its certificate of incorporation, and of its
bylaws, rules and regulations governing the conduct of its
business.
  (2) A list of its members and subscribers.
  (3) The name and address of a resident of this state upon whom
notices or orders of the director or process affecting such
rating organization may be served.
  (4) A statement of its qualifications as a rating organization.
This statement shall be on forms prescribed and furnished by the
director and shall include:
  (a) In the case of a fire insurance rating organization, a
showing as to its facilities for inspecting and surveying the
various municipalities and fire risks in this state and for
inspecting and surveying in this state the facilities for the
preventing, confining and extinguishing of fires and such other
information as the director may require; and
  (b) In the case of a title insurance rating organization, a
showing that adequate representation, as determined by the
director, is provided for title insurance   { - agents - }
 { + producers + }.
  SECTION 98. ORS 737.602 is amended to read:
  737.602. (1) As used in this section:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 90
 
 
 
  (a) 'Project' means a construction project, a plant expansion
or improvements within Oregon with an aggregate construction
value in excess of $90 million that is to be completed within a
defined period. The average construction value during the defined
period of the project must be at least $18 million per year.
'Project' does not mean a series of unrelated construction
projects artificially aggregated to satisfy the $90 million
requirement.
  (b) 'Project sponsor' means public bodies, utilities,
corporations and firms undertaking to construct a project in
excess of $90 million and conducting business in the State of
Oregon.
  (c) 'Public body' has the meaning given the term in ORS 30.260.
  (2) Notwithstanding ORS 279.320, 656.126, 737.600 or 746.160,
an insurer approved to transact insurance in this state,
including the State Accident Insurance Fund Corporation or a
guaranty contract insurer as defined in ORS 656.005, may issue
with the prior approval of the Director of the Department of
Consumer and Business Services a policy of insurance or a
guaranty contract covering and insuring the project sponsor, the
prime contractor under a contract for the construction of the
project, any contractors or subcontractors with whom the prime
contractor may enter into contracts for the purpose of fulfilling
its contractual obligations in construction of the project and
any other contractors engaged by a project sponsor to provide
architectural or other design services, engineering services,
construction management services, other consulting services
relating to the design and construction of the project or any
combination thereof.
  (3) The following provisions apply to premiums under a policy
of insurance or guaranty contract described in subsection (2) of
this section:
  (a) A project sponsor or a prime contractor may not charge a
premium for coverage under a policy of insurance or a guaranty
contract to a contractor or subcontractor with whom the project
sponsor or prime contractor enters into a contract or engages for
services described in subsection (2) of this section.
  (b) A prime contractor may not charge a project sponsor a
premium for coverage under a policy of insurance or a guaranty
contract other than a premium approved by the director under ORS
chapter 737 prior to or at the same time as the director approves
the project to which the policy or guaranty contract applies.
  (c) Charging a premium prohibited by this subsection
constitutes the unlawful transaction of insurance in violation of
ORS 731.354.
  (4) The director, upon application of any insurer, shall
approve the issuance of a policy of insurance or a guaranty
contract to any grouping of the persons described in subsection
(2) of this section if:
  (a) The grouping was formed for the purpose of performing a
contract or a series of related contracts for the design and
construction of a project for the project sponsor;
  (b) The project sponsor can reasonably demonstrate that the
formation and operation of the grouping will substantially
improve accident prevention and claims handling to the benefit of
the project sponsor and the contractors and workers employed by
the project sponsor on construction related projects;
  (c) The established rating and auditing standards required by
authorized advisory organizations and rating organizations are
adhered to;
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 91
 
 
 
  (d) The insurer for the grouping guarantees adequate protection
to any other insurance   { - agency or agent - }
 { + producer + } that demonstrates that without such protection
the   { - agency or agent - }  { + producer + } will suffer
losses that will constitute a threat to the continuation of the
business of the   { - agency or agent - }  { +  producer + };
  (e) The insurer for the grouping guarantees insurance coverage
of the classes of insurance issued to the grouping to any
contractor who, because of participation in the group, has been
unable to maintain the contractor's normal coverage. The
insurer's obligation under this paragraph shall continue until 12
months after substantial completion of the contractor's work;
  (f) By permitting this grouping for a project sponsor, greater
opportunities will be made available for historically
underutilized businesses to bid on the project;
  (g) The project insurers agree to provide not less than 90
days' notice to all insured parties of the cancellation or any
material reduction in coverage for the project;
  (h) The insurance coverage for the grouping contains a
severability of interest clause with respect to liability claims
between individuals insured under the group policy and includes
contractual liability coverage that applies to the various
contracts and subcontracts entered into in connection with the
project; and
  (i) The insurer places with the Department of Consumer and
Business Services a special deposit of $25,000 per $100 million
of construction project value, or an amount prescribed by rule of
the director, whichever is greater.
  SECTION 99. Section 1, chapter 336, Oregon Laws 1995, as
amended by section 11, chapter 196, Oregon Laws 1999, is amended
to read:
   { +  Sec. 1. + } (1) As used in this section, 'project' means
the group of projects that make up the combined sewer overflow
program.
  (2) Notwithstanding ORS 279.320, 656.126,   { - 737.346 - }
 { + 737.600 + } or 746.160, an insurer approved to transact
insurance in the State of Oregon, including a guaranty contract
insurer as defined in ORS 656.005, may issue with the prior
approval of the Director of the Department of Consumer and
Business Services a policy of insurance or a guaranty contract
covering and insuring the City of Portland, the prime contractor
under contract for the construction of the project, any
contractors or subcontractors with whom the prime contractor may
enter into contracts for the purpose of fulfilling its
contractual obligations in construction of the project and any
other contractors engaged by the City of Portland to provide
architectural or other design services, engineering services,
construction management service or other consulting services
relating to the design and construction of the projects or any
combination thereof.
  (3) The director, upon application of any insurer, shall
approve the issuance of a policy of insurance or a guaranty
contract to any grouping of the persons described in subsection
(2) of this section if:
  (a) The grouping was formed for the purpose of performing a
contract or a series of related contracts for the design and
construction of the project;
  (b) The combined total estimated cost of the project exceeds
$100 million;
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 92
 
 
 
  (c) The City of Portland can reasonably demonstrate that the
formation and operation of the grouping will substantially
improve accident prevention and claims handling to the benefit of
the City of Portland and the contractors and workers employed in
the project;
  (d) The established rating and auditing standards required by
authorized advisory organizations and rating organizations are
adhered to;
  (e) Adequate protection is guaranteed by the insurer for the
grouping to any other insurance   { - agency or agent - }
 { + producer + } that demonstrates that without such protection
the insurance   { - agency or agent - }   { + producer + } will
suffer losses which will constitute a threat to the continuation
of the insurance business of the   { - agency or agent - }  { +
producer + };
  (f) The City of Portland can reasonably demonstrate that a
substantial savings will result from the formation of the
grouping;
  (g) The insurer for the grouping will guarantee insurance
coverage of the classes of insurance issued to the grouping to
any contractor who, because of participation in the group, has
been unable to maintain the contractor's normal coverage. The
insurer's obligation under this paragraph shall continue 12
months after substantial completion of the contractor's work on
the project;
  (h) Monoline workers' compensation insurers domiciled in the
State of Oregon had the opportunity to propose a policy of
insurance or a guaranty contract covering persons referred to in
subsection (2) of this section; and
  (i) The insurer places with the Department of Consumer and
Business Services a special deposit of $25,000 per $100 million
of construction project value per project phase, or an amount
prescribed by rule of the director, whichever is greater.
  SECTION 100. ORS 742.009 is amended to read:
  742.009. (1) The Director of the Department of Consumer and
Business Services, if the director considers it necessary, may
require the filing by an insurer or   { - agent - }
 { + insurance producer + } of any sales presentation material
for use in the sale or the presentation for sale of any policy.
The director, within 60 days after the filing of the sales
presentation material, shall disapprove any such sales
presentation material if the director finds that, in whole or in
part, it is false, deceptive or misleading. Upon disapproval,
such sales presentation material shall not be made, issued,
circulated, displayed or given other use by the insurer or
 { - its agents - }  { +  by insurance producers + }.
  (2) The director, by rule, shall require any   { - agent - }
 { + insurance producer + } who sells or attempts to sell
insurance to provide to each prospective insured such information
as the director considers necessary to adequately inform the
prospective insured regarding the insurance transaction.
  SECTION 101. ORS 742.158 is amended to read:
  742.158. (1) A policyholder or certificate holder described in
ORS 742.156 may reject the transfer and novation of the policy
under an assumption reinsurance agreement to which ORS 742.150
applies. A policyholder or certificate holder electing to reject
the assumption transaction must give notice of rejection
according to the manner of response established by rule.
  (2) If the premium notice sent by an assuming insurer to a
policyholder or a certificate holder described in ORS 742.156
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 93
 
 
 
satisfies the requirements of this subsection, payment of any
premium to the assuming insurer during the 12-month period after
the notice is received constitutes the policyholder's acceptance
of the transfer to the assuming insurer. Upon such a payment, a
novation is effected. The premium notice must state that payment
of the premium to the assuming insurer constitutes acceptance of
the transfer and must provide a method for the policyholder to
pay the premium while reserving the right to reject the transfer.
This subsection does not apply to a policy for which premiums are
collected on a weekly or monthly basis by  { + an insurance
producer who is + } an agent of the insurer nor to any other
insurance not using premium notices.
  (3) After not less than 12 months from the mailing of the first
notice of transfer required under ORS 742.156, if the
transferring insurer has not received the consent to or rejection
of the transfer and assumption from a policyholder or consent by
the policyholder has not occurred under subsection (2) of this
section, the transferring insurer shall send to the policyholder
a second and final notice of transfer. The notice must conform to
the requirements established under ORS 742.156 and must also
state that the policyholder must accept or reject the transfer
not later than the 30th day after the postmark date. Failure by
the policyholder to accept or reject the transfer during that
period constitutes consent by the policyholder and novation of
the contract will be effected. For a policy for which premiums
are collected on a weekly or monthly basis by  { + an insurance
producer who is + } an agent of the insurer or for any other
insurance not using premium notices, the 12-month period and the
30-day period shall be measured from the date of delivery of the
notice of transfer provided under ORS 742.156.
  (4) If a policyholder responds to the notice of transfer by
mail, receipt of the response by the transferring insurer occurs
on the date the response is postmarked. If a policyholder
responds to the notice of transfer by facsimile or other
electronic transmission or by registered mail, express delivery
or courier service, receipt of the response by the transferring
insurer occurs on the date of actual receipt by the transferring
insurer.
  (5) If the notice of transfer for a policy for which premiums
are collected on a weekly or monthly basis by  { + an insurance
producer who is + } an agent of the insurer or for any other
insurance not using premium notices satisfies the requirements of
this subsection, payment of any premium to the assuming insurer
during the 12-month period after the notice is received
constitutes the policyholder's acceptance of the transfer to the
assuming insurer.  Upon such a payment, a novation is effected.
The notice of transfer must state that payment of the premium to
the assuming insurer constitutes acceptance of the transfer and
must provide a method for the policyholder to pay the premium
while reserving the right to reject the transfer.
  SECTION 102. ORS 742.200 is amended to read:
  742.200. (1) No insurer,   { - agent - }   { + insurance
producer + } or insured shall knowingly issue or procure any fire
insurance policy upon property within this state for an amount
which with any existing insurance exceeds the fair value of the
risk insured or of the interest of the insured therein.
  (2) This section does not apply to insurance on stocks of
merchandise or property of fluctuating values where the reduced
rate percentage value clause is made a part of the policy.
  SECTION 103. ORS 742.560 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 94
 
 
 
  742.560. As used in ORS 742.560 to 742.572:
  (1) 'Policy' means any insurance policy which provides
automobile liability coverage, uninsured motorist coverage,
automobile medical payments coverage or automobile physical
damage coverage on individually owned private passenger vehicles
including pickup and panel trucks and station wagons, which are
not used as a public or livery conveyance for passengers, nor
rented to others; provided, however, that ORS 742.560 to 742.572
shall not apply to any policy:
  (a) Issued under an automobile assigned risk plan;
  (b) Insuring more than four automobiles;
  (c) Covering garage, automobile sales agency, repair shop,
service station or public parking place operation hazards; or
  (d) Issued principally to cover personal or premises liability
of an insured even though such insurance may also provide some
incidental coverage for liability arising out of the ownership,
maintenance or use of a motor vehicle on the premises of such
insured or on the ways immediately adjoining such premises.
  (2) 'Renewal' or 'to renew' means to continue coverage for an
additional policy period upon expiration of the current policy
period of a policy. Any policy with a policy period or term of
less than six months shall for the purpose of ORS 742.560 to
742.572 be considered as if written for a policy period or term
of six months. Any policy written for a term longer than one year
or any policy with no fixed expiration date shall for the purpose
of ORS 742.560 to 742.572 be considered as if written for
successive policy periods or terms of one year but not extending
beyond the actual term for which the policy was written.
  (3) 'Nonpayment of premium' means failure of the named insured
to discharge when due any of the insured's obligations in
connection with the payment of premiums on the policy, or any
installment of such premium, whether the premium is payable
directly to the insurer or  { + an insurance producer who is + }
its agent or indirectly under any premium finance plan or
extension of credit.
  (4) 'Cancellation' means termination of coverage by an insurer,
other than termination at the request of the insured, during a
policy period.
  (5) 'Nonrenewal' means a notice by an insurer to the named
insured that the insurer is unwilling to renew a policy.
  (6) 'Expiration' means termination of coverage by reason of the
policy having reached the end of the term for which it was issued
or the end of the period for which a premium has been paid.
  SECTION 104. ORS 742.700 is amended to read:
  742.700. As used in ORS 742.700 to 742.710:
  (1) 'Cancellation' means termination of a policy at a date
other than its expiration date.
  (2) 'Expiration date' means the date upon which coverage under
a policy ends. For a policy written for a term longer than one
year or with no fixed expiration date, 'expiration date ' means
the annual anniversary date of the policy.
  (3) 'Nonpayment of premium' means the failure or inability of
the named insured to discharge any obligation in connection with
the payment of premium on a policy of insurance subject to ORS
742.700 to 742.710, whether the payments are payable directly to
the insurer or  { + an insurance producer who is + } its agent or
indirectly payable under a premium finance plan or extension of
credit.
  (4) 'Nonrenewal' means the refusal of an insurer to renew a
policy at its expiration date.
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 95
 
 
 
  (5) 'Renewal' or 'renew' means the issuance of, or the offer to
issue by an insurer, a policy succeeding a policy previously
issued and delivered by the same insurer or the issuance of a
certificate or notice extending the terms of an existing policy
for a specified period beyond its expiration date.
  SECTION 105. ORS 742.706 is amended to read:
  742.706. (1) If an insurer offers or purports to renew a
commercial liability policy, but on terms less favorable to the
insured or at higher rates, the new terms or rates may take
effect on the renewal date, if the insurer provides the insured,
and the
  { - agent - }   { + insurance producer + } if any, 30 days'
written notice. If the insurer does not provide such notice, the
insured may cancel the renewal policy within 30 days after
receipt of the notice or delivery of the renewal policy. Earned
premium for the period of time the renewal policy was in force
shall be calculated pro rata at the lower of the current or
previous year's rate. If the insured accepts the renewal, any
premium increase or changes in terms shall be effective
immediately following the prior policy's expiration date.
  (2) Nonrenewal of a commercial liability policy shall not be
effective until at least 30 days after the insured receives a
written notice of nonrenewal. If, after an insurer provides a
notice of nonrenewal as described in this subsection, the insurer
extends the policy 90 days or less, an additional notice of
nonrenewal is not required with respect to the extension.
  (3) Subsection (1) of this section does not apply:
  (a) If the change is a rate, form or plan filed with the
Director of the Department of Consumer and Business Services and
applicable to the entire line of insurance or class of business
to which the policy belongs; or
  (b) To a premium increase based on the altered nature or extent
of the risk insured against.
  (4) If a commercial liability policy is issued for a term
longer than one year, and for additional consideration a premium
is guaranteed, the insurer may not refuse to renew the policy or
increase the premium for the term of that policy.
  SECTION 106. ORS 743.013 is amended to read:
  743.013. (1) The Director of the Department of Consumer and
Business Services shall adopt by rule requirements for disclosure
by group and individual health insurers to individual and group
health insurance policyholders the difference between coverage
under the existing policy and coverage being offered to replace
that coverage.
  (2) The provisions of this section do not apply to disability
income insurance.
  (3) The director shall adopt by rule requirements for
nonduplication and replacement of major medical, Medicare
supplement, long term care and special illness policies for
applicants 65 years of age and older. The   { - agent - }
 { + insurance producer + } shall offer to compare for any
applicants 65 years of age and older the applicant's existing
policy or policies and coverage being offered to replace or
supplement the applicant's existing coverage.
  SECTION 107. ORS 743.411 is amended to read:
  743.411. A health insurance policy shall contain a provision as
follows: 'ENTIRE CONTRACT; CHANGES: This policy, including the
indorsements and the attached papers, if any, constitutes the
entire contract of insurance. No change in this policy shall be
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 96
 
 
 
valid until approved by an executive officer of the insurer and
unless such approval be indorsed hereon or attached hereto. No
  { - agent - }   { + insurance producer + } has authority to
change this policy or to waive any of its provisions. '
  SECTION 108. ORS 743.420 is amended to read:
  743.420. (1) A health insurance policy shall contain a
provision as follows: 'REINSTATEMENT: If any renewal premium is
not paid within the grace period, a subsequent acceptance of
premium by the insurer or by any   { - agent - }   { + insurance
producer + } duly authorized by the insurer to accept such
premium, without requiring in connection therewith an application
for reinstatement, shall reinstate the policy; provided, however,
that if the insurer or such   { - agent - }   { + insurance
producer + } requires an application for reinstatement and issues
a conditional receipt for the premium tendered, the policy will
be reinstated upon approval of such application by the insurer
or, lacking such approval, upon the 45th day following the date
of such conditional receipt unless the insurer has previously
notified the insured in writing of its disapproval of such
application. The reinstated policy shall cover only loss
resulting from such accidental injury as may be sustained after
the date of reinstatement and loss due to such sickness as may
begin more than 10 days after such date. In all other respects
the insured and insurer shall have the same rights thereunder as
they had under the policy immediately before the due date of the
defaulted premium, subject to any provisions indorsed hereon or
attached hereto in connection with the reinstatement.  Any
premium accepted in connection with a reinstatement shall be
applied to a period for which premium has not been previously
paid, but not to any period more than 60 days prior to the date
of reinstatement. '
  (2) The last sentence of the provision set forth in subsection
(1) of this section may be omitted from any policy which the
insured has the right to continue in force subject to its terms
by the timely payment of premiums until at least age 50 or, in
the case of a policy issued after age 44, for at least five years
from its date of issue.
  SECTION 109. ORS 743.492 is amended to read:
  743.492. Every health insurance policy except single premium
nonrenewable policies shall have printed on its face or attached
thereto a notice stating in substance that the person to whom the
policy is issued shall be permitted to return the policy within
10 days of its delivery to the purchaser and to have the premium
paid refunded if, after examination of the policy, the purchaser
is not satisfied with it for any reason. If a policyholder or
purchaser pursuant to such notice returns the policy to the
insurer at its home or branch office or to the   { - agent - }
 { + insurance producer + } through whom it was purchased, it
shall be void from the beginning and the parties shall be in the
same position as if no policy had been issued.
  SECTION 110. ORS 743.655 is amended to read:
  743.655. (1)(a) The Director of the Department of Consumer and
Business Services shall adopt rules that include standards for
full and fair disclosure setting forth the manner, content and
required disclosures for the sale of long term care insurance
policies, terms of renewability, initial and subsequent
conditions of eligibility, nonduplication of coverage provisions,
coverage of dependents, preexisting conditions, termination of
insurance, program for public understanding, continuation or
conversion, probationary periods, limitations, exceptions,
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 97
 
 
 
reductions, elimination periods, underwriting at time of
application, requirements for replacement, recurrent conditions
and definitions of terms. The director shall adopt rules
establishing standards for loss ratios and reserves, provided
that a specific reference to long term care insurance is
contained in the rules.
  (b) In adopting rules setting standards under this section, the
director shall give timely notice to, and shall consider
recommendations from the Director of Human Services.
  (2) No long term care insurance policy shall:
  (a) Be canceled, nonrenewed or otherwise terminated on the
grounds of the age or the deterioration of the mental or physical
health of the insured individual or certificate holder;
  (b) Contain a provision establishing a new waiting period in
the event existing coverage is converted to or replaced by a new
or other form within the same company, except with respect to an
increase in benefits voluntarily selected by the insured
individual or group policyholder;
  (c) Provide coverage for skilled nursing care only or provide
significantly more coverage for skilled care in a facility than
coverage for lower levels of care. This evaluation of the amount
of coverage provided shall be based on aggregate days of care
covered for lower levels of care, when compared to days of care
covered for skilled care;
  (d) Exclude coverage for Alzheimer's disease and related
dementias;
  (e) Be nonrenewed or otherwise terminated for nonpayment of
premiums until 31 days overdue and then only after notice of
nonpayment is given the policyholder prior to expiration of the
31 days; or
  (f) Be sold after December 31, 1989, to provide less than 24
months' coverage.
  (3)(a) No long term care insurance policy or certificate other
than a policy or certificate issued to a group, as defined in ORS
743.652 (6)(a), (b) or (c), shall use a definition of '
preexisting condition' which is more restrictive than the
following: 'Preexisting condition' means the existence of
symptoms which would cause an ordinarily prudent person to seek
diagnosis, care or treatment, or a condition for which medical
advice or treatment was recommended by, or received from a
provider of health care services, within six months preceding the
effective date of coverage of an insured person.
  (b) No long term care insurance policy or certificate other
than a policy or certificate thereunder issued to a group as
defined in ORS 743.652 (6)(a), (b) or (c) may exclude coverage
for a loss or confinement which is the result of a preexisting
condition unless such loss or confinement begins within six
months following the effective date of coverage of an insured
person.
  (c) The director may extend the limitation periods set forth in
paragraphs (a) and (b) of this subsection as to specific age
group categories or specific policy forms upon findings that the
extension is in the best interest of the public.
  (d) The definition of preexisting condition does not prohibit
an insurer from using an application form designed to elicit the
complete health history of an applicant, over the 10 years
immediately prior to the date of application, and, on the basis
of the answers on the application, from underwriting in
accordance with that insurer's established underwriting
standards. Unless otherwise provided in the policy or
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 98
 
 
 
certificate, a preexisting condition, regardless of whether it is
disclosed on the application, need not be covered until the
waiting period described in paragraph (b) of this subsection
expires. No long term care insurance policy or certificate may
exclude or use waivers or riders of any kind to exclude, limit or
reduce coverage or benefits for specifically named or described
preexisting diseases or physical conditions beyond the waiting
period described in paragraph (b) of this subsection, unless such
waiver or rider has been specifically approved by the director.
  (4) No long term care insurance policy shall be delivered or
issued for delivery in this state if the policy:
  (a) Conditions eligibility for any benefits on a prior
hospitalization requirement; or
  (b) Conditions eligibility for benefits provided in an
institutional care setting on the receipt of a higher level of
institutional care.
  (5)(a) Individual long term care insurance policyholders shall
have the right to return the policy within 30 days of its
delivery and to have the premium refunded if, after examination
of the policy, the policyholder is not satisfied for any reason.
Individual long term care insurance policies shall have a notice
prominently printed on the first page of the policy or attached
thereto stating in substance that the policyholder shall have the
right to return the policy within 30 days of its delivery and to
have the premium refunded if, after examination of the policy,
the policyholder is not satisfied for any reason.
  (b) A person insured under a long term care insurance policy or
certificate issued in this state or any other state to a group
described in ORS 743.652 (6)(b), (c) or (d) shall have the right
to return the policy within 30 days of its delivery and to have
the premium refunded if, after examination, the insured person is
not satisfied for any reason. Long term care insurance policies
shall have a notice prominently printed in 10 point type on the
first page or attached thereto stating in substance that the
insured person shall have the right to return the policy within
30 days of its delivery and to have the premium refunded if after
examination the insured person is not satisfied for any reason.
  (6)(a) An outline of coverage shall be delivered to a
prospective applicant for long term care insurance at the time of
initial solicitation through means which prominently direct the
attention of the recipient to the document and its purpose.
  (A) The director shall prescribe a standard format including
style, arrangement and overall appearance and the content of an
outline of coverage.
  (B) In the case of   { - agent - }  solicitations { +  by an
insurance producer + },   { - an agent - }   { + the insurance
producer + } must deliver the outline of coverage prior to the
presentation of an application or enrollment form.
  (C) In the case of direct response solicitations, the outline
of coverage must be presented in conjunction with any application
or enrollment form.
  (b) The outline of coverage shall include:
  (A) A description of the principal benefits and coverage
provided in the policy;
  (B) A statement of the principal exclusions, reductions and
limitations contained in the policy;
  (C) A statement of the terms under which the policy or
certificate, or both, may be continued in force or discontinued,
including any reservation in the policy of a right to change
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                       Page 99
 
 
 
premium. Continuation or conversion provisions of group coverage
shall be specifically described;
  (D) A statement that the outline of coverage is a summary only,
not a contract of insurance, and that the policy or group master
policy contains governing contractual provisions;
  (E) A description of the terms under which the policy or
certificate may be returned and premium refunded; and
  (F) A brief description of the relationship of cost of care and
benefits.
  (7) A certificate issued pursuant to a group long term care
insurance policy if the policy is delivered or issued for
delivery in this state shall include:
  (a) A description of the principal benefits and coverage
provided in the policy;
  (b) A statement of the principal exclusions, reductions and
limitations contained in the policy; and
  (c) A statement that the group master policy determines
governing contractual provisions.
  (8) No policy may be advertised, marketed or offered as long
term care or nursing home insurance unless it complies with the
provisions of ORS 743.650 to 743.656, 748.603 and 750.055.
  (9) ORS 743.414 applies to long term care insurance regulated
under ORS 743.650 to 743.656, 748.603 and 750.055.
  (10) Rules adopted pursuant to ORS 743.650 to 743.656, 748.603
and 750.055 shall be in accordance with the provisions of ORS
183.310 to 183.550.
  SECTION 111. ORS 743.684 is amended to read:
  743.684. (1) Every insurer providing group Medicare supplement
insurance benefits to a resident of this state pursuant to ORS
743.682 shall file a copy of the master policy and any
certificate used in this state in accordance with the filing
requirements and procedures applicable to group Medicare
supplement policies issued in this state. However, no insurer
shall be required to make a filing earlier than 30 days after
insurance was provided to a resident of this state under a master
policy issued for delivery outside this state.
  (2) Medicare supplement policies shall return benefits which
are reasonable in relation to the premium charged. The Director
of the Department of Consumer and Business Services shall adopt
by rule minimum standards for loss ratios of Medicare supplement
policies on the basis of incurred claims experience, or incurred
health care expenses where coverage is provided by a health
maintenance organization on a service rather than reimbursement
basis, and earned premiums in accordance with accepted actuarial
principles and practices. Every entity providing Medicare
supplement policies or certificates in this state shall file
annually its rates, rating schedule and supporting documentation
demonstrating that it is in compliance with the applicable loss
ratio standards of this state. All filings of rates and rating
schedules shall demonstrate that the actual and expected losses
in relation to premiums comply with the requirements of ORS
743.680 to 743.689.
  (3) No entity shall provide compensation to   { - its agents or
other - }   { + insurance + } producers which is greater than the
renewal compensation which would have been paid on an existing
policy if the existing policy is replaced by another policy with
the same company where the new policy benefits are substantially
similar to the benefits under the old policy and the old policy
was issued by the same insurer or insurer group.
  SECTION 112. ORS 743.730 is amended to read:
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 100
 
 
 
  743.730. As used in ORS 743.730 to 743.773:
  (1) 'Actuarial certification' means a written statement by a
member of the American Academy of Actuaries or other individual
acceptable to the Director of the Department of Consumer and
Business Services that a carrier is in compliance with the
provisions of ORS 743.736, 743.760 or 743.761, based upon the
person's examination, including a review of the appropriate
records and of the actuarial assumptions and methods used by the
carrier in establishing premium rates for small employer and
portability health benefit plans.
  (2) 'Affiliate' of, or person 'affiliated' with, a specified
person means any carrier who, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under
common control with a specified person. For purposes of this
definition, 'control' has the meaning given that term in ORS
732.548.
  (3) 'Affiliation period' means, under the terms of a group
health benefit plan issued by a health care service contractor, a
period:
  (a) That is applied uniformly and without regard to any health
status related factors to an enrollee or late enrollee in lieu of
a preexisting conditions provision;
  (b) That must expire before any coverage becomes effective
under the plan for the enrollee or late enrollee;
  (c) During which no premium shall be charged to the enrollee or
late enrollee; and
  (d) That begins on the enrollee's or late enrollee's first date
of eligibility for coverage and runs concurrently with any
eligibility waiting period under the plan.
  (4) 'Basic health benefit plan' means a health benefit plan for
small employers that is required to be offered by all small
employer carriers and approved by the Director of the Department
of Consumer and Business Services in accordance with ORS 743.736.
  (5) 'Bona fide association' means an association that meets the
requirements of 42 U.S.C. 300gg-11 as amended and in effect on
July 1, 1997.
  (6) 'Carrier' means any person who provides health benefit
plans in this state, including a licensed insurance company, a
health care service contractor, a health maintenance
organization, an association or group of employers that provides
benefits by means of a multiple employer welfare arrangement or
any other person or corporation responsible for the payment of
benefits or provision of services.
  (7) 'Committee' means the Health Insurance Reform Advisory
Committee created under ORS 743.745.
  (8) 'Creditable coverage' means prior health care coverage as
defined in 42 U.S.C. 300gg as amended and in effect on July 1,
1997, and includes coverage remaining in force at the time the
enrollee obtains new coverage.
  (9) 'Department' means the Department of Consumer and Business
Services.
  (10) 'Dependent' means the spouse or child of an eligible
employee, subject to applicable terms of the health benefit plan
covering the employee.
  (11) 'Director' means the Director of the Department of
Consumer and Business Services.
  (12) 'Eligible employee' means an employee of a small employer
who works on a regularly scheduled basis, with a normal work week
of 17.5 or more hours. The employer may determine hours worked
for eligibility between 17.5 and 40 hours per week subject to
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 101
 
 
 
rules of the carrier. 'Eligible employee' includes sole
proprietors, partners of a partnership, leased workers as defined
in ORS 743.522 or independent contractors if they are included as
employees under a health benefit plan of a small employer but
does not include employees who work on a temporary, seasonal or
substitute basis. Employees who have been employed by the small
employer for fewer than 90 days are not eligible employees unless
the small employer so allows.
  (13) 'Enrollee' means an employee, dependent of the employee or
an individual otherwise eligible for a group, individual or
portability health benefit plan who has enrolled for coverage
under the terms of the plan.
  (14) 'Exclusion period' means a period during which specified
treatments or services are excluded from coverage.
  (15) 'Financially impaired' means a member that is not
insolvent and is:
  (a) Considered by the Director of the Department of Consumer
and Business Services to be potentially unable to fulfill its
contractual obligations; or
  (b) Placed under an order of rehabilitation or conservation by
a court of competent jurisdiction.
  (16)(a) 'Geographic average rate' means the arithmetical
average of the lowest premium and the corresponding highest
premium to be charged by a carrier in a geographic area
established by the director for the carrier's:
  (A) Small employer group health benefit plans;
  (B) Individual health benefit plans; or
  (C) Portability health benefit plans.
  (b) 'Geographic average rate' does not include premium
differences that are due to differences in benefit design or
family composition.
  (17) 'Group eligibility waiting period' means, with respect to
a group health benefit plan, the period of employment or
membership with the group that a prospective enrollee must
complete before plan coverage begins.
  (18)(a) 'Health benefit plan' means any hospital expense,
medical expense or hospital or medical expense policy or
certificate, health care service contractor or health maintenance
organization subscriber contract, any plan provided by a multiple
employer welfare arrangement or by another benefit arrangement
defined in the federal Employee Retirement Income Security Act of
1974, as amended.
  (b) 'Health benefit plan' does not include coverage for
accident only, specific disease or condition only, credit,
disability income, coverage of Medicare services pursuant to
contracts with the federal government, Medicare supplement
insurance policies, coverage of CHAMPUS services pursuant to
contracts with the federal government, benefits delivered through
a flexible spending arrangement established pursuant to section
125 of the Internal Revenue Code of 1986, as amended, when the
benefits are provided in addition to a group health benefit plan,
long term care insurance, hospital indemnity only, short term
health insurance policies (the duration of which does not exceed
six months including renewals), student accident and health
insurance policies, dental only, vision only, a policy of
stop-loss coverage that meets the requirements of ORS 742.065,
coverage issued as a supplement to liability insurance, insurance
arising out of a workers' compensation or similar law, automobile
medical payment insurance or insurance under which benefits are
payable with or without regard to fault and that is statutorily
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 102
 
 
 
required to be contained in any liability insurance policy or
equivalent self-insurance.
  (c) Nothing in this subsection shall be construed to regulate
any employee welfare benefit plan that is exempt from state
regulation because of the federal Employee Retirement Income
Security Act of 1974, as amended.
  (19) 'Health statement' means any information that is intended
to inform the carrier or   { - agent - }   { + insurance
producer + } of the health status of an enrollee or prospective
enrollee in a health benefit plan. 'Health statement' includes
the standard health statement developed by the Health Insurance
Reform Advisory Committee.
  (20) 'Implementation of chapter 836, Oregon Laws 1989 ' means
that the Health Services Commission has prepared a priority list,
the Legislative Assembly has enacted funding of the list and all
necessary federal approval, including waivers, has been obtained.
  (21) 'Individual coverage waiting period' means a period in an
individual health benefit plan during which no premiums may be
collected and health benefit plan coverage issued is not
effective.
  (22) 'Initial enrollment period' means a period of at least 30
days following commencement of the first eligibility period for
an individual.
  (23) 'Insurance Pool Governing Board' means the Insurance Pool
Governing Board established by ORS 735.704.
  (24) 'Late enrollee' means an individual who enrolls in a group
health benefit plan subsequent to the initial enrollment period
during which the individual was eligible for coverage but
declined to enroll. However, an eligible individual shall not be
considered a late enrollee if:
  (a) The individual qualifies for a special enrollment period in
accordance with 42 U.S.C. 300gg as amended and in effect on July
1, 1997;
  (b) The individual applies for coverage during an open
enrollment period;
  (c) A court has ordered that coverage be provided for a spouse
or minor child under a covered employee's health benefit plan and
request for enrollment is made within 30 days after issuance of
the court order;
  (d) The individual is employed by an employer who offers
multiple health benefit plans and the individual elects a
different health benefit plan during an open enrollment period;
or
  (e) The individual's coverage under Medicaid, Medicare,
CHAMPUS, Indian Health Service or a publicly sponsored or
subsidized health plan, including but not limited to the Oregon
Health Plan, has been involuntarily terminated within 63 days of
applying for coverage in a group health benefit plan.
  (25) 'Multiple employer welfare arrangement' means a multiple
employer welfare arrangement as defined in section 3 of the
federal Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. 1002, that is subject to ORS 750.301 to
750.341.
  (26) 'Oregon Medical Insurance Pool' means the pool created
under ORS 735.610.
  (27) 'Preexisting conditions provision' means a health benefit
plan provision applicable to an enrollee or late enrollee that
excludes coverage for services, charges or expenses incurred
during a specified period immediately following enrollment for a
condition for which medical advice, diagnosis, care or treatment
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 103
 
 
 
was recommended or received during a specified period immediately
preceding enrollment. For purposes of ORS 743.730 to 743.773:
  (a) Pregnancy does not constitute a preexisting condition
except as provided in ORS 743.766;
  (b) Genetic information does not constitute a preexisting
condition in the absence of a diagnosis of the condition related
to such information; and
  (c) A preexisting conditions provision shall not be applied to
a newborn child or adopted child who obtains coverage in
accordance with ORS 743.707.
  (28) 'Premium' includes insurance premiums or other fees
charged for a health benefit plan, including the costs of
benefits paid or reimbursements made to or on behalf of enrollees
covered by the plan.
  (29) 'Rating period' means the 12-month calendar period for
which premium rates established by a carrier are in effect, as
determined by the carrier.
  (30) 'Small employer' means any person, firm, corporation,
partnership or association actively engaged in business that, on
at least 50 percent of its working days during the preceding
year, employed no more than 25 eligible employees and no fewer
than two eligible employees, the majority of whom are employed
within this state, and in which a bona fide partnership,
independent contractor or employer-employee relationship exists.
'Small employer' includes companies that are eligible to file a
consolidated tax return pursuant to ORS 317.715.
  (31) 'Small employer carrier' means any carrier that offers
health benefit plans covering eligible employees of one or more
small employers. A fully insured multiple employer welfare
arrangement otherwise exempt under ORS 750.303 (4) may elect to
be a small employer carrier governed by the provisions of ORS
743.733 to 743.737.
  SECTION 113. ORS 743.737 is amended to read:
  743.737. Health benefit plans covering small employers shall be
subject to the following provisions:
  (1) A preexisting conditions provision in a small employer
health benefit plan shall apply only to a condition for which
medical advice, diagnosis, care or treatment was recommended or
received during the six-month period immediately preceding the
enrollment date of an enrollee or late enrollee. As used in this
section, the enrollment date of an enrollee shall be the earlier
of the effective date of coverage or the first day of any
required group eligibility waiting period and the enrollment date
of a late enrollee shall be the effective date of coverage.
  (2) A preexisting conditions provision in a small employer
health benefit plan shall terminate its effect as follows:
  (a) For an enrollee, not later than the first of the following
dates:
  (A) Six months following the enrollee's effective date of
coverage; or
  (B) Ten months following the start of any required group
eligibility waiting period.
  (b) For a late enrollee, not later than 12 months following the
late enrollee's effective date of coverage.
  (3) In applying a preexisting conditions provision to an
enrollee or late enrollee, except as provided in this subsection,
all small employer health benefit plans shall reduce the duration
of the provision by an amount equal to the enrollee's or late
enrollee's aggregate periods of creditable coverage if the most
recent period of creditable coverage is ongoing or ended within
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 104
 
 
 
63 days of the enrollment date in the new small employer health
benefit plan. The crediting of prior coverage in accordance with
this subsection shall be applied without regard to the specific
benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan,
application of:
  (a) An affiliation period that does not exceed two months for
an enrollee or three months for a late enrollee; or
  (b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee,
applicable to all individuals enrolling for the first time in the
small employer health benefit plan.
  (4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision
for up to 12 months. If both an exclusion from coverage period
and a preexisting conditions provision are applicable to a late
enrollee, the combined period shall not exceed 12 months.
  (5) Each small employer health benefit plan shall be renewable
with respect to all eligible enrollees at the option of the
policyholder, small employer or contract holder except:
  (a) For nonpayment of the required premiums by the
policyholder, small employer or contract holder.
  (b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of
individual enrollees, the enrollees or their representatives.
  (c) When the number of enrollees covered under the plan is less
than the number or percentage of enrollees required by
participation requirements under the plan.
  (d) For noncompliance with the small employer carrier's
employer contribution requirements under the health benefit plan.
  (e) When the carrier discontinues offering or renewing, or
offering and renewing, all of its small employer health benefit
plans in this state or in a specified service area within this
state. In order to discontinue plans under this paragraph, the
carrier:
  (A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all
policyholders covered by the plans;
  (B) May not cancel coverage under the plans for 180 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in the entire state or,
except as provided in subparagraph (C) of this paragraph, in a
specified service area;
  (C) May not cancel coverage under the plans for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in a specified service area
because of an inability to reach an agreement with the health
care providers or organization of health care providers to
provide services under the plans within the service area; and
  (D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the
small employer market in this state or in the specified service
area.
  (f) When the carrier discontinues offering and renewing a small
employer health benefit plan in a specified service area within
this state because of an inability to reach an agreement with the
health care providers or organization of health care providers to
provide services under the plan within the service area. In order
to discontinue a plan under this paragraph, the carrier:
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 105
 
 
 
  (A) Must give notice to the director and to all policyholders
covered by the plan;
  (B) May not cancel coverage under the plan for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph; and
  (C) Must offer in writing to each small employer covered by the
plan, all other small employer health benefit plans that the
carrier offers in the specified service area. The carrier shall
issue any such plans pursuant to the provisions of ORS 743.733 to
743.737. The carrier shall offer the plans at least 90 days prior
to discontinuation.
  (g) When the carrier discontinues offering or renewing, or
offering and renewing, a health benefit plan for all small
employers in this state or in a specified service area within
this state, other than a plan discontinued under paragraph (f) of
this subsection. With respect to plans that are being
discontinued, the carrier must:
  (A) Offer in writing to each small employer covered by the
plan, all health benefit plans that the carrier offers in the
specified service area.
  (B) Issue any such plans pursuant to the provisions of ORS
743.733 to 743.737.
  (C) Offer the plans at least 90 days prior to discontinuation.
  (D) Act uniformly without regard to the claims experience of
the affected policyholders or the health status of any current or
prospective enrollee.
  (h) When the director orders the carrier to discontinue
coverage in accordance with procedures specified or approved by
the director upon finding that the continuation of the coverage
would:
  (A) Not be in the best interests of the enrollees; or
  (B) Impair the carrier's ability to meet contractual
obligations.
  (i) When, in the case of a small employer health benefit plan
that delivers covered services through a specified network of
health care providers, there is no longer any enrollee who lives,
resides or works in the service area of the provider network.
  (j) When, in the case of a health benefit plan that is offered
in the small employer market only through one or more bona fide
associations, the membership of an employer in the association
ceases and the termination of coverage is not related to the
health status of any enrollee.
  (k) For misuse of a provider network provision. As used in this
paragraph, 'misuse of a provider network provision' means a
disruptive, unruly or abusive action taken by an enrollee that
threatens the physical health or well-being of health care staff
and seriously impairs the ability of the carrier or its
participating providers to provide services to an enrollee. An
enrollee under this paragraph retains the rights of an enrollee
under ORS 743.804.
  (L) A small employer carrier may modify a small employer health
benefit plan at the time of coverage renewal. The modification is
not a discontinuation of the plan under paragraphs (e) and (g) of
this subsection.
  (6) Notwithstanding any provision of subsection (5) of this
section to the contrary, any small employer carrier health
benefit plan subject to the provisions of ORS 743.733 to 743.737
may be rescinded by a small employer carrier for fraud, material
misrepresentation or concealment by a small employer and the
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 106
 
 
 
coverage of an enrollee may be rescinded for fraud, material
misrepresentation or concealment by the enrollee.
  (7) A small employer carrier may continue to enforce reasonable
employer participation and contribution requirements on small
employers applying for coverage. However, participation and
contribution requirements shall be applied uniformly among all
small employer groups with the same number of eligible employees
applying for coverage or receiving coverage from the small
employer carrier. In determining minimum participation
requirements, a carrier shall count only those employees who are
not covered by an existing group health benefit plan, Medicaid,
Medicare, CHAMPUS, Indian Health Service or a publicly sponsored
or subsidized health plan, including but not limited to the
Oregon Health Plan.
  (8) Premium rates for small employer health benefit plans
subject to ORS 743.733 to 743.737 shall be subject to the
following provisions:
  (a) Each small employer carrier issuing health benefit plans to
small employers must file its geographic average rate for a
rating period with the director on or before March 15 of each
year.
  (b)(A) The premium rates charged during a rating period for
health benefit plans issued to small employers shall not vary
from the geographic average rate by more than the following:
  (i) 50 percent on October 1, 1996; and
  (ii) 33 percent on October 1, 1999.
  (B) The variations in premium rates described in subparagraph
(A) of this paragraph shall be based solely on differences in the
ages of participating employees, except that the premium rate may
be adjusted to reflect the provision of benefits not required to
be covered by the basic health benefit plan and differences in
family composition. In addition:
  (i) A small employer carrier shall apply uniformly the
carrier's schedule of age adjustments for small employer groups
as approved by the director; and
  (ii) Except as otherwise provided in this section, the premium
rate established for a health benefit plan by a small employer
carrier shall apply uniformly to all employees of the small
employer enrolled in that plan.
  (c) The variation in premium rates between different small
employer health benefit plans offered by a small employer carrier
must be based solely on objective differences in plan design or
coverage and must not include differences based on the risk
characteristics of groups assumed to select a particular health
benefit plan.
  (d) A small employer carrier may not increase the rates of a
health benefit plan issued to a small employer more than once in
a 12-month period. Annual rate increases shall be effective on
the plan anniversary date of the health benefit plan issued to a
small employer. The percentage increase in the premium rate
charged to a small employer for a new rating period may not
exceed the sum of the following:
  (A) The percentage change in the geographic average rate
measured from the first day of the prior rating period to the
first day of the new period; and
  (B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of
benefits not required to be covered by the basic health benefit
plan and differences in family composition.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 107
 
 
 
  (e) Premium rates for health benefit plans shall comply with
the requirements of this section.
  (9) In connection with the offering for sale of any health
benefit plan to a small employer, each small employer carrier
shall make a reasonable disclosure as part of its solicitation
and sales materials of:
  (a) The full array of health benefit plans that are offered to
small employers by the carrier;
  (b) The authority of the carrier to adjust rates, and the
extent to which the carrier will consider age, family composition
and geographic factors in establishing and adjusting rates;
  (c) Provisions relating to renewability of policies and
contracts; and
  (d) Provisions affecting any preexisting conditions provision.
  (10)(a) Each small employer carrier shall maintain at its
principal place of business a complete and detailed description
of its rating practices and renewal underwriting practices,
including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted
actuarial practices and are in accordance with sound actuarial
principles.
  (b) Each small employer carrier shall file with the director
annually on or before March 15 an actuarial certification that
the carrier is in compliance with ORS 743.733 to 743.737 and that
the rating methods of the small employer carrier are actuarially
sound. Each such certification shall be in a uniform form and
manner and shall contain such information as specified by the
director. A copy of such certification shall be retained by the
small employer carrier at its principal place of business.
  (c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection
available to the director upon request. Except in cases of
violations of ORS 743.733 to 743.737, the information shall be
considered proprietary and trade secret information and shall not
be subject to disclosure by the director to persons outside the
Department of Consumer and Business Services except as agreed to
by the small employer carrier or as ordered by a court of
competent jurisdiction.
  (11) A small employer carrier shall not provide any financial
or other incentive to any   { - agent - }   { + insurance
producer + } that would encourage   { - such agent - }   { + the
insurance producer + } to market and sell health benefit plans of
the carrier to small employer groups based on a small employer
group's anticipated claims experience.
  (12) For purposes of this section, the date a small employer
health benefit plan is continued shall be the anniversary date of
the first issuance of the health benefit plan.
  (13) A small employer carrier must include a provision that
offers coverage to all eligible employees and to all dependents
to the extent the employer chooses to offer coverage to
dependents.
  (14) All small employer health benefit plans shall contain
special enrollment periods during which eligible employees and
dependents may enroll for coverage, as provided in 42 U.S.C.
300gg as amended and in effect on July 1, 1997.
  (15) All small employer health benefit plans must include the
benefit provisions of the federal Women's Health and Cancer
Rights Act of 1998, P.L. 105-277.
  SECTION 114. ORS 743.745 is amended to read:
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 108
 
 
 
  743.745. The Director of the Department of Consumer and
Business Services shall appoint a Health Insurance Reform
Advisory Committee. This committee shall consist of at least one
insurance
  { - agent - }  { +  producer + }, one representative of a
health maintenance organization, one representative of a health
care service contractor, one representative of a domestic
insurer, one representative of a labor organization and one
representative of consumer interests and shall have
representation from the broad range of interests involved in the
small employer and individual market and shall include members
with the technical expertise necessary to carry out the following
duties:
  (1)(a) Subject to approval by the director, the committee shall
recommend the form and level of coverages under the basic health
benefit plans pursuant to ORS 743.736 to be made available by
small employer carriers and the portability health benefit plans
to be made available pursuant to ORS 743.760 or 743.761. The
committee shall take into consideration the levels of health
benefit plans provided in Oregon and the appropriate medical and
economic factors and shall establish benefit levels, cost
sharing, exclusions and limitations. The health benefit plans
described in this section may include cost containment features
including, but not limited to:
  (A) Preferred provider provisions;
  (B) Utilization review of health care services including review
of medical necessity of hospital and physician services;
  (C) Case management benefit alternatives;
  (D) Other managed care provisions;
  (E) Selective contracting with hospitals, physicians and other
health care providers; and
  (F) Reasonable benefit differentials applicable to
participating and nonparticipating providers.
  (b) The committee shall submit the basic and portability health
benefit plans and other recommendations to the director within
the time period established by the director. The health benefit
plans and other recommendations shall be deemed approved unless
expressly disapproved by the director within 30 days after the
date the director receives the plans.
  (2) In order to ensure the broadest availability of small
employer and individual health benefit plans, the committee shall
recommend for approval by the director market conduct and other
requirements for carriers and   { - agents - }  { +  insurance
producers + }, including requirements developed as a result of a
request by the director, relating to the following:
  (a) Registration by each carrier with the Department of
Consumer and Business Services of its intention to be a small
employer carrier under ORS 743.733 to 743.737 or a carrier
offering individual health benefit plans, or both.
  (b) Publication by the Department of Consumer and Business
Services or the committee of a list of all small employer
carriers and carriers offering individual health benefit plans,
including a potential requirement applicable to   { - agents - }
 { + insurance producers + } and carriers that no health benefit
plan be sold to a small employer or individual by a carrier not
so identified as a small employer carrier or carrier offering
individual health benefit plans.
  (c) To the extent deemed necessary by the committee to ensure
the fair distribution of high-risk individuals and groups among
carriers, periodic reports by carriers and   { - agents - }
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 109
 
 
 
 { + insurance producers + } concerning small employer,
portability and individual health benefit plans issued, provided
that reporting requirements shall be limited to information
concerning case characteristics and numbers of health benefit
plans in various categories marketed or issued, or both, to small
employers and individuals.
  (d) Methods concerning periodic demonstration by small employer
carriers, carriers offering individual health benefit plans and
 { - agents - }   { + insurance producers + } that the small
employer and individual carriers are marketing or issuing, or
both, health benefit plans to small employers or individuals in
fulfillment of the purposes of ORS 743.730 to 743.773.
  (3) Subject to the approval of the Director of the Department
of Consumer and Business Services, the committee shall develop a
standard health statement to be used for all late enrollees and
by all carriers offering individual policies of health insurance.
  (4) Subject to the approval of the director, the committee
shall develop a list of the specified services for small employer
and portability plans for which carriers may impose an exclusion
period, the duration of the allowable exclusion period for each
specified service and the manner in which credit will be given
for exclusion periods imposed pursuant to prior health insurance
coverage.
  SECTION 115. ORS 743.760 is amended to read:
  743.760. (1) As used in this section:
  (a) 'Carrier' means an insurer authorized to issue a policy of
health insurance in this state. 'Carrier' does not include a
multiple employer welfare arrangement.
  (b)(A) 'Eligible individual' means an individual who:
  (i) Has left coverage that was continuously in effect for a
period of 180 days or more under one or more Oregon group health
benefit plans, has applied for portability coverage not later
than the 63rd day after termination of group coverage issued by
an Oregon carrier and is an Oregon resident at the time of such
application; or
  (ii) On or after January 1, 1998, meets the eligibility
requirements of 42 U.S.C. 300gg-41, as amended and in effect on
January 1, 1998, has applied for portability coverage not later
than the 63rd day after termination of group coverage issued by
an Oregon carrier and is an Oregon resident at the time of such
application.
  (B) Except as provided in subsection (12) of this section, '
eligible individual' does not include an individual who remains
eligible for the individual's prior group coverage or would
remain eligible for prior group coverage in a plan under the
federal Employee Retirement Income Security Act of 1974, as
amended, were it not for action by the plan sponsor relating to
the actual or expected health condition of the individual, or who
is covered under another health benefit plan at the time that
portability coverage would commence or is eligible for the
federal Medicare program.
  (c) 'Portability health benefit plans' and 'portability plans'
mean health benefit plans for eligible individuals that are
required to be offered by all carriers offering group health
benefit plans and that have been approved by the Director of the
Department of Consumer and Business Services in accordance with
this section.
  (2)(a) In order to improve the availability and affordability
of health benefit plans for individuals leaving coverage under
group health benefit plans, the Health Insurance Reform Advisory
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 110
 
 
 
Committee created under ORS 743.745 shall submit to the director
two portability health benefit plans pursuant to ORS 743.745. One
plan shall be in the form of insurance and the second plan shall
be consistent with the type of coverage provided by health
maintenance organizations. For each type of portability plan, the
committee shall design and submit to the director:
  (A) A prevailing benefit plan, which shall reflect the benefit
coverages that are prevalent in the group health insurance
market; and
  (B) A low cost benefit plan, which shall emphasize
affordability for eligible individuals.
  (b) Except as provided in ORS 743.730 to 743.773, no law
requiring the coverage or the offer of coverage of a health care
service or benefit shall apply to portability health benefit
plans.
  (3) The director shall approve the portability health benefit
plans if the director determines that the plans provide for
appropriate accessibility and affordability of needed health care
services and comply with all other provisions of this section.
  (4) After the director's approval of the portability plans
submitted by the committee under this section, each carrier
offering group health benefit plans shall submit to the director
the policy form or forms containing at least one low cost benefit
and one prevailing benefit portability plan offered by the
carrier that meets the required standards. Each policy form must
be submitted as prescribed by the director and is subject to
review and approval pursuant to ORS 742.003.
  (5) Within 180 days after approval by the director of the
portability plans submitted by the committee, as a condition of
transacting group health insurance in this state, each carrier
offering group health benefit plans shall make available to
eligible individuals the prevailing benefit and low cost benefit
portability plans that have been submitted by the carrier and
approved by the director under subsection (4) of this section.
  (6) A carrier offering group health benefit plans shall issue
to an eligible individual who is leaving or has left group
coverage provided by that carrier any portability plan offered by
the carrier if the eligible individual applies for the plan
within 63 days of termination of prior coverage and agrees to
make the required premium payments and to satisfy the other
provisions of the portability plan.
  (7) Premium rates for portability plans shall be subject to the
following provisions:
  (a) Each carrier must file the geographic average rate for each
of its portability health benefit plans for a rating period with
the director on or before March 15 of each year.
  (b) The premium rates charged during the rating period for each
portability health benefit plan shall not vary from the
geographic average rate, except that the premium rate may be
adjusted to reflect differences in benefit design, family
composition and age. Adjustments for age shall comply with the
following:
  (A) For each plan, the variation between the lowest premium
rate and the highest premium rate shall not exceed 100 percent of
the lowest premium rate.
  (B) Premium variations shall be determined by applying
uniformly the carrier's schedule of age adjustments for
portability plans as approved by the director.
  (c) Premium variations between the portability plans and the
rest of the carrier's group plans must be based solely on
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 111
 
 
 
objective differences in plan design or coverage and must not
include differences based on the actual or expected health status
of individuals who select portability health benefit plans. For
purposes of determining the premium variations under this
paragraph, a carrier may:
  (A) Pool all portability plans with all group health benefit
plans; or
  (B) Pool all portability plans for eligible individuals leaving
small employer group health benefit plan coverage with all plans
offered to small employers and pool all portability plans for
eligible individuals leaving other group health benefit plan
coverage with all health benefit plans offered to such other
groups.
  (d) A carrier may not increase the rates of a portability plan
issued to an enrollee more than once in any 12-month period.
Annual rate increases shall be effective on the anniversary date
of the plan issued to the enrollee. The percentage increase in
the premium rate charged to an enrollee for a new rating period
may not exceed the average increase in the rest of the carrier's
applicable group health benefit plans plus an adjustment for age.
  (8) No portability plans under this section may contain
preexisting conditions provisions, exclusion periods, waiting
periods or other similar limitations on coverage.
  (9) Portability health benefit plans shall be renewable with
respect to all enrollees at the option of the enrollee, except:
  (a) For nonpayment of the required premiums by the
policyholder;
  (b) For fraud or misrepresentation by the policyholder;
  (c) When the carrier elects to discontinue offering all of its
group health benefit plans in accordance with ORS 743.737 and
743.754; or
  (d) When the director orders the carrier to discontinue
coverage in accordance with procedures specified or approved by
the director upon finding that the continuation of the coverage
would:
  (A) Not be in the best interests of the enrollees; or
  (B) Impair the carrier's ability to meet its contractual
obligations.
  (10)(a) Each carrier offering group health benefit plans shall
maintain at its principal place of business a complete and
detailed description of its rating practices and renewal
underwriting practices relating to its portability plans,
including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted
actuarial practices and are in accordance with sound actuarial
principles.
  (b) Each such carrier shall file with the director annually on
or before March 15 an actuarial certification that the carrier is
in compliance with this section and that its rating methods are
actuarially sound. Each such certification shall be in a form and
manner and shall contain such information as specified by the
director. A copy of such certification shall be retained by the
carrier at its principal place of business.
  (c) Each such carrier shall make the information and
documentation described in paragraph (a) of this subsection
available to the director upon request. Except in cases of
violations of the Insurance Code, the information is proprietary
and trade secret information and shall not be subject to
disclosure by the director to persons outside the Department of
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 112
 
 
 
Consumer and Business Services except as agreed to by the carrier
or as ordered by a court of competent jurisdiction.
  (11) A carrier offering group health benefit plans shall not
provide any financial or other incentive to any   { - agent - }
 { + insurance producer + } that would encourage the
 { - agent - }   { + insurance producer + } to market and sell
portability plans of the carrier on the basis of an eligible
individual's anticipated claims experience.
  (12) An individual who is eligible to obtain a portability plan
in accordance with this section may obtain such a plan regardless
of whether the eligible individual qualifies for a period of
continuation coverage under federal law or under ORS 743.600 or
743.610. However, an individual who has elected such continuation
coverage is not eligible to obtain a portability plan until the
continuation coverage has been discontinued by the individual or
has been exhausted.
  SECTION 116. ORS 743.769 is amended to read:
  743.769. (1) Each carrier shall actively market all individual
health benefit plans sold by the carrier.
  (2) Except as provided in subsection (3) of this section, no
carrier or   { - agent - }   { + insurance producer + } shall,
directly or indirectly, discourage an individual from filing an
application for coverage because of the health status, claims
experience, occupation or geographic location of the individual.
  (3) Subsection (2) of this section shall not apply with respect
to information provided by a carrier to an individual regarding
the established geographic service area or a restricted network
provision of a carrier.
  (4) Rejection by a carrier of an application for coverage shall
be in writing and shall state the reason or reasons for the
rejection.
  (5) The Director of the Department of Consumer and Business
Services may establish by rule additional standards to provide
for the fair marketing and broad availability of individual
health benefit plans.
  (6) A carrier that elects to discontinue offering all of its
individual health benefit plans under ORS 743.766 (5)(c) or to
discontinue offering and renewing all such plans is prohibited
from offering and renewing health benefit plans in the individual
market in this state for a period of five years from the date of
notice to the director pursuant to ORS 743.766 (5)(c) or, if such
notice is not provided, from the date on which the director
provides notice to the carrier that the director has determined
that the carrier has effectively discontinued offering individual
health benefit plans in this state. This subsection does not
apply with respect to a health benefit plan discontinued in a
specified service area by a carrier that covers services provided
only by a particular organization of health care providers or
only by health care providers who are under contract with the
carrier.
  SECTION 117. ORS 744.001 is amended to read:
  744.001. (1) ORS 744.001 to 744.009, 744.011, 744.013, 744.014,
744.018, 744.022 to 744.033 and 744.037 govern the licensing of
adjusters and insurance consultants.
  (2) An applicant for a license as an adjuster or an insurance
consultant shall apply for the license to the Director of the
Department of Consumer and Business Services. The applicant shall
include the following information:
  (a) The applicant's name, business address, residence address,
present occupation, occupation for the last 12 months, the
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 113
 
 
 
portion of time to be devoted to the insurance business, previous
insurance experience and the names of employers during the
preceding five years. The applicant shall include the business
address of the principal place of business and the business
address of each additional location at which the applicant will
transact business under the license.
  (b) All assumed business names and other names under which the
applicant will engage in business under the license.
  (c) Whether the applicant has ever been convicted of or is
under indictment for a crime, whether the applicant has ever had
a judgment entered against the applicant for fraud, whether any
insurer or   { - agent - }   { + insurance producer + } claims
the applicant is indebted to it and the details of any such
indebtedness, and whether any license of the applicant to act in
any occupational or professional capacity has ever been refused,
revoked or suspended in this or any other state.
  (d) The applicant's fingerprints, if the applicant is applying
for a resident license. An applicant applying for a nonresident
license shall provide the applicant's fingerprints only if the
director so requests.
  (e) The class or classes of insurance to be transacted under
the license.
  (f) Any other information that the director requires by rule.
  (3) If the applicant for a license under this section is a firm
or corporation, the application shall show, in addition, the
names of all members, officers and directors. If the application
is a corporation, the application shall state the names of all
stockholders who own, directly or indirectly, more than 10
percent of any class of any equity security of the corporation,
and shall designate each individual who is to exercise the powers
to be conferred by the license upon the firm or corporation.
  (4) Each application shall be accompanied by the applicable
fees established by the director.
  SECTION 118. ORS 744.013 is amended to read:
  744.013. (1) If the Director of the Department of Consumer and
Business Services finds with respect to an adjuster or insurance
consultant or an applicant for an adjuster or insurance
consultant license that one or more of the grounds set forth in
subsection (2) of this section exist, the director may take the
following disciplinary actions:
  (a) The director may refuse to renew or may suspend or revoke a
license issued under ORS 744.002 or the authority under a license
to engage in any category of insurance business or any class of
insurance.
  (b) The director may refuse to issue a license under ORS
744.002 or refuse to grant authority under a license to engage in
any category of insurance business or any class of insurance.
  (2) The director may take any disciplinary action under
subsection (1) of this section on one or more of the following
grounds:
  (a) Incompetence or untrustworthiness of the applicant or
adjuster or insurance consultant.
  (b) Falsification by the applicant or adjuster or insurance
consultant of the application for the license or an amendment
thereto, or engagement in any dishonest act in relation to the
application or examination therefor.
  (c) Violation of or noncompliance with any applicable provision
of the Insurance Code or any rule or order of the director.
  (d) Misappropriation or conversion to the adjuster's or
insurance consultant's own use, or illegal withholding, of money
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 114
 
 
 
or property belonging to policyholders, insurers, beneficiaries
or others, and received by the adjuster or insurance consultant
in the conduct of business under the license.
  (e) Conviction, by final judgment, in any jurisdiction, of an
offense which if committed in this state, constitutes a felony, a
misdemeanor involving dishonesty or breach of trust, or an
offense punishable by death or imprisonment under the laws of the
United States. The record of the conviction shall be conclusive
evidence of the conviction.
  (f) Material misrepresentation of the terms of any insurance
policy or proposed insurance policy.
  (g) Use of a fraudulent or dishonest practice by the adjuster
or insurance consultant in the conduct of business under the
license, or demonstration therein that the adjuster or insurance
consultant is incompetent, untrustworthy or a source of injury
and loss to the public or others.
  (h) Error by the director in issuing or renewing a license.
  (i) Failure to pay a civil penalty assessed by the director
that has become final by operation of law or upon appeal.
  (j) Failure to pay any fee or charge to the director.
  (k) Use of the license principally to effect insurance on
property or against liability of the applicant or adjuster or
insurance consultant, or to evade the provisions of ORS chapter
746.
  (L) Cancellation, revocation, suspension or refusal to renew by
any state of a license or other evidence of authority to act as
an   { - agent - }  { +  insurance producer + }, adjuster or
insurance consultant.  The record of the cancellation,
revocation, suspension or refusal to renew shall be conclusive
evidence of the action taken.
  (m) Cancellation, revocation, suspension or refusal to renew by
any state or federal agency of the authority to practice law or
to practice under any other regulatory authority if the
cancellation, revocation, suspension or refusal to renew was
related to the business of an   { - agent - }  { +  insurance
producer + }, adjuster or insurance consultant or if dishonesty,
fraud or deception was involved. The record of the cancellation,
revocation, suspension or refusal to renew shall be conclusive
evidence of the action taken.
  (n) Failure to comply with continuing education requirements
applicable to the license or any category of insurance authorized
under the license, unless the director has waived the
requirements.
  (o) Dishonesty, fraud or misrepresentation not related to the
business of an   { - agent - }  { +  insurance producer + },
adjuster or insurance consultant.
  (3) The director may refuse to issue or renew or may revoke or
suspend the license of a firm or corporation or may take any such
action with respect to any authority applied for by or granted to
the firm or corporation to engage under the license in any
category of insurance business or class of insurance if the
director finds that any ground set forth in subsection (2) of
this section exists:
  (a) With respect to any individual adjuster or insurance
consultant employed by or under contract with the firm or
corporation.
  (b) With respect to a director or officer of the firm or
corporation.
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 115
 
 
 
  (c) With respect to any person who directly or indirectly has
the power to direct or cause to be directed the management,
control or activities of the adjuster or insurance consultant.
  SECTION 119. ORS 744.300 is amended to read:
  744.300. (1) A person shall not act as a managing general agent
with respect to risks located in this state for an authorized
insurer unless the person holds a license issued under ORS
744.062 authorizing the person to act as an   { - agent - }
 { + insurance producer + } and indorsed to authorize the person
to act as a managing general agent.
  (2) A person shall not act as a managing general agent
representing a domestic insurer with respect to risks located
outside this state unless the person holds a license issued under
ORS 744.062 authorizing the person to act as an   { - agent - }
 { + insurance producer + } and indorsed to authorize the person
to act as a managing general agent.
  (3) For purposes of ORS 744.300 to 744.316, a person acts as a
managing general agent when the person:
  (a) Negotiates and binds ceding reinsurance contracts on behalf
of an authorized insurer or manages all or part of the insurance
business of an authorized insurer, including the management of a
separate division, department or underwriting office, and acts as
an   { - agent - }   { + insurance producer + } for the insurer,
whether the person is known as a managing general agent, manager
or other similar term; and
  (b) With or without the authority, either separately or
together with affiliates, produces, directly or indirectly, and
underwrites an amount of gross direct written premium equal to or
more than five percent of the policyholder surplus as reported in
the last annual statement of the insurer in any one quarter or
year, together with either or both of the following activities:
  (A) Adjusting or paying claims in excess of an amount
determined by the Director of the Department of Consumer and
Business Services.
  (B) Negotiating reinsurance on behalf of the insurer.
  (4) The provisions of ORS 744.062 governing application for
amendment of a license apply to the indorsement of the license of
an   { - agent - }   { + insurance producer + } for authority to
act as a managing general agent, except that an examination is
not required for the indorsement.
  (5) The provisions of this section are subject to exemptions
stated in ORS 744.301.
  SECTION 120. ORS 744.306 is amended to read:
  744.306. A person acting as a managing general agent shall not
place business with an insurer unless a written contract is in
force between the parties. The following requirements apply to
such a contract:
  (1) The contract must set forth the responsibilities of each
party.
  (2) The contract must specify the division of responsibility
for a particular function, when both parties share responsibility
for the function.
  (3) The contract must include at least the following
provisions:
  (a) That the insurer may terminate the contract for cause upon
written notice to the managing general agent, and may suspend the
underwriting authority of the managing general agent while any
dispute regarding the cause for termination is pending.
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 116
 
 
 
  (b) That at least monthly, the managing general agent shall
report all transactions and remit all funds due under the
contract to the insurer.
  (c) That with respect to all funds collected by a managing
general agent for the account of an insurer, the managing general
agent must comply with ORS 744.083 { +  or 744.084 + }, except
that the managing general agent may retain in the account an
amount not exceeding three months' estimated claims payments and
allocated loss adjustment expenses.
  (d) That the managing general agent shall maintain separate
records of business written by the managing general agent.
Further, that the managing general agent shall allow the insurer
access to all accounts and records related to its business, shall
keep all such accounts and records in a form usable by the
insurer and shall allow the insurer to copy all such accounts and
records.
  (e) That the managing general agent shall not assign the
contract either in whole or part.
  (f) Appropriate underwriting guidelines, including:
  (A) The maximum annual premium volume;
  (B) The basis of the rates to be charged;
  (C) The types of risks that may be written;
  (D) Maximum limits of liability;
  (E) Applicable exclusions;
  (F) Territorial limitations;
  (G) Policy cancellation provisions; and
  (H) The maximum policy period.
  (g) That the insurer may cancel or nonrenew any policy of
insurance, subject to applicable statutes and rules governing
cancellation and non-renewal of insurance policies.
  (h) Provisions addressing the timely transmission of the data,
when electronic claims files exist.
  (i) That if the contract provides for a sharing of interim
profits of the managing general agent and if the managing general
agent has the authority to determine the amount of the interim
profits by establishing loss reserves or controlling claim
payments, or in any other manner, interim profits shall not be
paid to the managing general agent until one year after they are
earned for property or surety insurance business and five years
after they are earned on casualty business and not until the
profits have been verified pursuant to ORS 744.313.
  (j) That a managing general agent shall not do any of the
following:
  (A) Bind reinsurance or retrocessions on behalf of the insurer,
except that the managing general agent may bind facultative
reinsurance contracts pursuant to obligatory facultative
agreements if the contract with the insurer contains reinsurance
underwriting guidelines that include, for both reinsurance
assumed and ceded, a list of reinsurers with which the automatic
agreements are in effect, the coverage and amounts or percentages
that may be reinsured and commission schedules.
  (B) Commit the insurer to participate in insurance or
reinsurance syndicates.
  (C) Appoint any   { - agent - }   { + insurance producer + }
without assuring that the   { - agent - }   { + insurance
producer + } is licensed in this state to transact the type of
insurance for which the   { - agent - }   { + insurance
producer + } is appointed.
  (D) Collect any payment from a reinsurer or commit the insurer
to any claim settlement with a reinsurer without prior approval
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 117
 
 
 
of the insurer. The contract must also provide that if prior
approval is given, the managing general agent must forward a
report to the insurer promptly.
  (E) Appoint a submanaging general agent.
  (k) Provisions establishing which disputes, if any, arising
under the contract shall be decided by arbitration, mediation or
other means of dispute resolution.
  (L) If the managing general agent will calculate the loss
reserves or a portion thereof, provisions:
  (A) That the insurer is ultimately responsible for reporting
the loss reserves; and
  (B) That the insurer shall annually obtain the opinion of an
actuary attesting to the adequacy of loss reserves calculated for
losses incurred and outstanding on business produced by the
managing general agent, in addition to any other required loss
reserve actuarial opinion, as provided in ORS 744.313.
  (4) In addition to the requirements of subsection (3) of this
section, if the contract permits the managing general agent to
settle claims on behalf of the insurer, the contract must also
include at least the following provisions:
  (a) The time requirements within which the managing general
agent must report claims to the insurer.
  (b) A requirement that the managing general agent must send a
copy of the claim file or report of claim to the insurer at its
request or as soon as it becomes known to the managing general
agent that the claim:
  (A) Has the potential of exceeding an amount determined by the
Director of the Department of Consumer and Business Services or
the limit set by the insurer, whichever is less;
  (B) Involves a coverage dispute;
  (C) May exceed the claim settlement authority of the managing
general agent; or
  (D) Is of a serious nature as predetermined by the insurer by
written guidelines.
  (c) A provision establishing the settlement authority granted
the managing general agent for claims in general and specific
guidelines for handling claims that exceed the amount established
by the director or the insurer, whichever is less.
  (d) A provision that all claim files are the joint property of
the insurer and managing general agent, except upon an order of
liquidation of the insurer, and that in the event of such an
order:
  (A) The files become the sole property of the insurer or its
estate; and
  (B) The managing general agent shall have reasonable access to
and the right to copy the files on a timely basis.
  (e) A provision that the insurer may terminate for cause any
settlement authority granted to the managing general agent upon
written notice by the insurer to the managing general agent or
upon the termination of the contract, and that the insurer may
suspend the settlement authority during the pendency of any
dispute regarding the cause for termination.
  (5) The contract must provide that the insurer may not allow
the managing general agent to pay or commit the insurer to pay a
claim in excess of a specified amount, net of reinsurance,
without approval by the insurer. The amount shall not exceed the
amount established in ORS 744.308.
  SECTION 121. ORS 744.313 is amended to read:
  744.313. (1) An insurer shall have on file an independently
performed financial examination of each managing general agent
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 118
 
 
 
with which it has done business, in a form prescribed by the
Director of the Department of Consumer and Business Services.
  (2) An insurer is ultimately responsible for reporting the loss
reserves. If a managing general agent calculates the loss
reserves or a portion thereof, the insurer shall annually obtain
the opinion of an actuary attesting to the adequacy of loss
reserves calculated for losses incurred and outstanding on
business produced by the managing general agent. The requirement
under this subsection is in addition to any other required loss
reserve actuarial opinion. The actuary must be a member in good
standing of an association of actuaries determined by the
director to have established adequate professional standards for
membership.
  (3) Periodically, but not less frequently than annually, an
insurer shall conduct an on-site review of the underwriting and
claims processing operations of the managing general agent.
  (4) Binding authority for all reinsurance contracts or
participation in insurance or reinsurance syndicates shall rest
with an officer of the insurer. The officer must not be
affiliated with the managing general agent.
  (5) Not later than the 30th day after entering into a contract
with a managing general agent, and not later than the 30th day
after terminating such a contract, an insurer shall provide
written notification of the appointment or termination to the
director. A notice of appointment shall include any information
required by the director.
  (6) An insurer shall review its books and records each calendar
quarter to determine if any   { - agent - }   { + insurance
producer + } who previously had not produced and underwritten
sufficient gross direct written premium to meet the description
of a managing general agent in ORS 744.300 has become a managing
general agent subject to ORS 744.300 to 744.316. When an insurer
determines that an   { - agent - }   { + insurance producer + }
has become a managing general agent:
  (a) The insurer shall promptly notify the   { - agent - }
 { + insurance producer + } and the director of its
determination.
  (b) The insurer and   { - agent - }   { + insurance
producer + } must fully comply with ORS 744.300 to 744.316 not
later than the 60th day after the date of notification under
paragraph (a) of this subsection.
  (7) An insurer shall not appoint to its board of directors an
officer, director, employee, subproducer or controlling
shareholder of any of its managing general agents. This
subsection does not apply to relationships governed by ORS
732.517 to 732.592.
  (8) The acts of a managing general agent shall be regarded as
the acts of the insurer on whose behalf the managing general
agent is acting. The director may examine a managing general
agent as if it were the insurer.
  SECTION 122. ORS 744.515 is amended to read:
  744.515. (1) A licensed resident   { - agent - }
 { + insurance producer + } or salaried employee or officer of an
authorized insurer may adjust and settle losses for the insurer
that the   { - agent - }  { + insurance producer + }, employee or
officer represents, without obtaining an adjuster's license.
  (2) A person may make one adjustment before obtaining an
adjuster's license if the person applies for the license within
two days after entering upon the adjustment, and in all other
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 119
 
 
 
respects complies with the provisions of this chapter governing
adjusters.
  (3) A person holding a temporary permit under ORS 744.555 may
perform acts authorized under ORS 744.555 without obtaining an
adjuster's license.
  (4) Any average adjuster or adjuster of maritime losses may
adjust maritime losses without obtaining an adjuster's license.
  (5) A person may perform or provide repair or replacement
service under home protection insurance without obtaining an
adjuster's license.
  SECTION 123. ORS 744.609 is amended to read:
  744.609. The following persons are not insurance consultants
for the purposes of this chapter, and the prohibition in ORS
744.605 does not apply to them:
  (1) Any attorney-at-law rendering services in the performance
of duties of an attorney-at-law.
  (2) Any certified public accountant or public accountant
rendering services in the performance of the duties of a
certified public accountant or public accountant, as authorized
by law.
  (3) Any person who, while conducting an educational seminar,
performs any of the activities described in ORS 744.605 (1)(b).
  (4) Any financial institution, as defined in ORS 706.008, or
consumer finance licensee under ORS chapter 725.
  (5) Any actuary who is a member of an organization determined
by the Director of the Department of Consumer and Business
Services as establishing standards for the actuarial profession.
  (6) A person who provides or offers or purports to provide any
of the services described in ORS 744.605 only to an
 { - agent - }  { + insurance producer + } or an authorized
insurer.
  SECTION 124. ORS 744.619 is amended to read:
  744.619. An applicant for a license as a resident insurance
consultant shall apply for the license as provided in ORS 744.001
and must meet the following requirements:
  (1) The applicant must provide satisfactory evidence to the
Director of the Department of Consumer and Business Services that
the insurance required under ORS 744.635 has been procured and is
in effect.
  (2) The applicant, if an individual, must establish a residence
or place of transacting insurance business in this state prior to
filing an application. If the application is a firm or
corporation, the applicant must establish an office in this state
that is managed by an individual licensed as an insurance
consultant.
  (3) The applicant, if an individual, must have had at least
five years' experience in the insurance business relating to the
class or classes of insurance for which the applicant is applying
to be an insurance consultant or have equivalent educational
qualifications as prescribed by the director.
  (4) The applicant, if an individual, must pass a written
examination given by the director. The examination requirement
does not apply to an applicant who is licensed as a resident
  { - agent - }   { + insurance producer + } to transact the
class or classes of insurance for which the applicant is applying
to be an insurance consultant.
  (5) The applicant must satisfy any other requirements
established by the director by rule.
  SECTION 125. ORS 744.621 is amended to read:
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 120
 
 
 
  744.621. (1) A person who resides in another state or province
of Canada and is licensed in that state or province as an
insurance consultant or is registered under a regulatory program
of the other state or province similar to the regulatory program
for insurance consultants under this chapter, as determined by
the Director of the Department of Consumer and Business Services,
may be licensed to act as a nonresident insurance consultant in
this state as provided in this section if the state or province
in which the person resides gives the same privilege to a
resident insurance consultant of this state.
  (2) An applicant for a license to act as a nonresident
insurance consultant shall apply for the license as provided in
ORS 744.001 and must meet the following requirements:
  (a) The applicant must provide satisfactory evidence to the
director that the insurance required under ORS 744.635 has been
procured and is in effect.
  (b) If the applicant is an individual, the applicant must have
had at least five years' experience in the insurance business
relating to the class or classes of insurance for which the
applicant is applying to be an insurance consultant or have
equivalent educational qualifications as prescribed by the
director.
  (c) If the applicant is an individual, the applicant must take
and pass a written examination given by the director, unless the
state or province in which the applicant resides licenses or
registers insurance consultants of this state without
examination.  The examination requirement does not apply to an
applicant who is licensed as a nonresident   { - agent - }
 { + insurance producer + } to transact the class or classes of
insurance for which the applicant is applying to be an insurance
consultant.
  (d) The applicant must satisfy any other requirements
established by the director by rule.
  SECTION 126. ORS 744.650 is amended to read:
  744.650. (1) An insurance consultant shall furnish to each
client and prospective client a written disclosure statement
containing the following information:
  (a) A description of the nature of the work to be performed by
the insurance consultant.
  (b) The applicable occupational and educational background of
the insurance consultant.
  (c) The area or areas of insurance in which the insurance
consultant has particular expertise.
  (d) The fee schedule and any other expenses that the insurance
consultant charges, and whether fees may be negotiated.
  (e) The name of any person, other than clients, that the
insurance consultant represents.
  (f) Whether the insurance consultant will receive any
commission or obtain any other compensation for services provided
the client in addition to fees and other expenses paid by the
client.
  (g) Any other information required by the Director of the
Department of Consumer and Business Services by rule.
  (2) An insurance consultant shall disclose information required
under this subsection to each client in the course of providing
insurance consultant services to the client and before the
insurance consultant makes any final insurance recommendation to
the client. The insurance consultant shall disclose at least the
following information as applicable to the line of insurance for
which the insurance consultant is providing services:
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 121
 
 
 
  (a) Other business activities of the insurance consultant
relating to financial planning.
  (b) The method of investment analysis and comparison used.
  (c) Assumptions contributing to insurance recommendations for
the client.
  (d) Any other information required by the director by rule.
  (3) The director may establish additional disclosure
requirements for licensees who are licensed both as
 { - agents - }  { + insurance producers + } and insurance
consultants.
  (4) The director may design the form of disclosure statement to
be used under subsection (1) of this section.
  SECTION 127. ORS 744.702 is amended to read:
  744.702. (1) Subject to ORS 744.704, a person shall not
transact business or purport or offer to transact business as a
third party administrator in this state   { - on and after
January 1, 1992, - }  unless the person holds a third party
administrator license issued by the Director of the Department of
Consumer and Business Services.
  (2) For purposes of ORS 744.700 to 744.740, a person transacts
or purports or offers to transact business as a third party
administrator when the person directly or indirectly solicits or
effects coverage of, underwrites, collects charges or premiums
from, or adjusts or settles claims on, residents of this state or
residents of another state from offices in this state, in
connection with life insurance or health insurance coverage.
  (3) Nothing in ORS 744.700 to 744.740 exempts a third party
administrator from any other applicable licensing requirement
when the third party administrator performs the functions of an
 { - agent - }  { + insurance producer + }, adjuster or insurance
consultant.
  SECTION 128. ORS 744.704 is amended to read:
  744.704. (1) The following persons are exempt from the
licensing requirement for third party administrators in ORS
744.702 and from all other provisions of ORS 744.700 to 744.740
applicable to third party administrators:
  (a) A person licensed under ORS 744.002 as an adjuster, whose
activities are limited to adjustment of claims and whose
activities do not include the activities of a third party
administrator.
  (b) A person licensed as an   { - agent - }   { + insurance
producer + } as required by ORS 744.053 and authorized to
transact life or health insurance in this state, whose activities
are limited exclusively to the sale of insurance and whose
activities do not include the activities of a third party
administrator.
  (c) An employer acting as a third party administrator on behalf
of:
  (A) Its employees;
  (B) The employees of one or more subsidiary or affiliated
corporations of the employer; or
  (C) The employees of one or more persons with a dealership,
franchise, distributorship or other similar arrangement with the
employers.
  (d) A union, or an affiliate thereof, acting as a third party
administrator on behalf of its members.
  (e) An insurer that is authorized to transact insurance in this
state with respect to a policy issued and delivered in and
pursuant to the laws of this state or another state.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 122
 
 
 
  (f) A creditor acting on behalf of its debtors with respect to
insurance covering a debt between the creditor and its debtors.
  (g) A trust and the trustees, agents and employees of the
trust, when acting pursuant to the trust, if the trust is
established in conformity with 29 U.S.C. 186.
  (h) A trust exempt from taxation under section 501(a) of the
Internal Revenue Code, its trustees and employees acting pursuant
to the trust, or a voluntary employees beneficiary association
described in section 501(c) of the Internal Revenue Code, its
agents and employees and a custodian and the custodian's agents
and employees acting pursuant to a custodian account meeting the
requirements of section 401(f) of the Internal Revenue Code.
  (i) A financial institution that is subject to supervision or
examination by federal or state financial institution regulatory
authorities, or a mortgage lender, to the extent the financial
institution or mortgage lender collects and remits premiums to
licensed   { - agents - }   { + insurance producers + } or
authorized insurers in connection with loan payments.
  (j) A company that issues credit cards and advances for and
collects premiums or charges from its credit card holders who
have authorized collection. The exemption under this paragraph
applies only if the company does not adjust or settle claims.
  (k) A person who adjusts or settles claims in the normal course
of practice or employment as an attorney at law. The exemption
under this subsection applies only if the person does not collect
charges or premiums in connection with life insurance or health
insurance coverage.
  (L) A person who acts solely as an administrator of one or more
bona fide employee benefit plans established by an employer or an
employee organization, or both, for which the Insurance Code is
preempted pursuant to the Employee Retirement Income Security Act
of 1974. A person to whom this paragraph applies must comply with
the requirements of ORS 744.714.
  (m) The Oregon Medical Insurance Pool Board, established under
ORS 735.600 to 735.650, and the administering insurer or insurers
for the board, for services provided pursuant to ORS 735.600 to
735.650.
  (n) An entity or association owned by or composed of like
employers who administer partially or fully self-insured plans
for employees of the employers or association members.
  (o) A trust established by a cooperative body formed between
cities, counties, districts or other political subdivisions of
this state, or between any combination of such entities, and the
trustees, agents and employees acting pursuant to the trust.
  (p) Any person designated by the Director of the Department of
Consumer and Business Services by rule.
  (2) A third party administrator is not required to be licensed
as a third party administrator in this state if the following
conditions are met:
  (a) The third party administrator has its principal place of
business in another state;
  (b) The third party administrator is not soliciting business as
a third party administrator in this state; and
  (c) In the case of any group policy or plan of insurance
serviced by the third party administrator, the lesser of five
percent or 100 certificate holders reside in this state.
  SECTION 129. ORS 744.710 is amended to read:
  744.710. (1) If the Director of the Department of Consumer and
Business Services determines that an applicant has satisfied all
requirements for a license as a third party administrator, the
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 123
 
 
 
director shall issue the license to the applicant. The director
shall not issue a license if the director determines that the
third party administrator, or any individual responsible for the
conduct of affairs of the third party administrator, as required
to be set forth in the application for the license, is not
competent, trustworthy, financially responsible or of good
personal and business reputation, or has had a license or other
document of authority to transact insurance as an insurer,
 { - agent - }  { + insurance producer + } or third party
administrator denied or revoked for cause by any state.
  (2) If the director denies an application, the director shall
so inform the applicant, stating the grounds for the denial.
  SECTION 130. ORS 744.724 is amended to read:
  744.724. (1) Except as provided in subsection (4) of this
section, a third party administrator shall maintain and make
available to the insurer complete books and records of each
transaction performed on behalf of the insurer. The books and
records shall be maintained in accordance with prudent standards
of insurance recordkeeping and must be maintained for a period of
not less than five years from the date of their creation.
  (2) The Director of the Department of Consumer and Business
Services shall have access to the books and records maintained
under subsection (1) of this section for the purpose of
examination, audit and inspection. Any document, material or
other information in the possession or control of the director
that is furnished by a third party administrator, an insurer, an
agent or an employee or an agent acting on behalf of the third
party administrator, insurer or   { - agent - }  { +  insurance
producer + }, or that is obtained by the director in an
investigation, shall be confidential as provided in ORS 705.137.
  (3) An insurer that has entered into an agreement with a third
party administrator shall own the records generated by the third
party administrator pertaining to the insurer. However, the third
party administrator has the right to continuing access to the
books and records to permit the third party administrator to
fulfill all of its contractual obligations to insured parties,
claimants and the insurer.
  (4) If an insurer and third party administrator cancel their
agreement, the third party administrator may agree in writing
with the insurer to transfer all records to a successor third
party administrator. If the agreement includes provisions to
transfer the records, the third party administrator is no longer
responsible for retaining the records for the five-year period.
The successor third party administrator shall acknowledge in
writing as part of its agreement with the insurer that it is
responsible for retaining the records of the prior third party
administrator as required in subsection (1) of this section.
  SECTION 131. ORS 744.730 is amended to read:
  744.730. (1) A third party administrator shall hold in a
fiduciary capacity all insurance charges or premiums collected by
the third party administrator on behalf of or for an insurer, and
all return premiums received from the insurer. The third party
administrator shall immediately remit all charges, premiums or
return premiums to the person entitled to them or shall deposit
them promptly in a fiduciary account established and maintained
by the third party administrator in a federally or state insured
financial institution. The fiduciary account may be used only for
deposits authorized under this subsection.
  (2) If the charges or premiums deposited in a fiduciary account
have been collected on behalf of or for one or more insurers, a
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 124
 
 
 
third party administrator shall keep records clearly recording
the deposits in and withdrawals from the account on behalf of
each insurer. The third party administrator shall keep copies of
all such records and, upon request of an insurer, shall furnish
the insurer with copies of the records pertaining to such
deposits and withdrawals.
  (3) A third party administrator shall not pay any claim by
withdrawals from a fiduciary account in which premiums or charges
are deposited.
  (4) All claims by a third party administrator from funds
collected on behalf of the insurer shall be paid only on drafts
of and as authorized by the insurer.
  (5) A third party administrator that is an   { - agent - }
 { + insurance producer + } licensed under this chapter need not
comply with this section if the third party administrator is in
compliance with ORS 744.083  { + or 744.084 + } with respect to
the premiums, charges and return premiums referred to in this
section.
  SECTION 132. ORS 744.856 is amended to read:
  744.856. (1) A rental company issued a limited license under
ORS 744.852 may not issue insurance pursuant to ORS 744.854
unless:
  (a) The rental agreement is for a period of 90 consecutive days
or less.
  (b) At every location where rental agreements are executed,
there is written material available to prospective renters that:
  (A) Summarizes clearly and correctly the material terms of the
coverage offered and identifies the insurer;
  (B) Discloses that the coverage offered by the rental company
may duplicate coverage already provided by a renter's personal
motor vehicle liability insurance policy, personal liability
insurance policy or other source of coverage;
  (C) States that the purchase of the coverage offered is not
required in order to rent a vehicle; and
  (D) Describes the process for filing a claim.
  (c) The written material referred to in paragraph (b) of this
subsection has been filed with and approved by the Director of
the Department of Consumer and Business Services.
  (d) The rental agreement separately discloses the price for the
coverage purchased.
  (2) A rental company issued a limited license under ORS 744.852
must conduct a training program for employees concerning kinds of
coverage offered by the company. The syllabus for the training
program shall be filed annually with the Director of the
Department of Consumer and Business Services by the rental
company and is subject to approval by the director. The rental
company shall certify annually to the director that all employees
involved in the sale or offer of coverage to members of the
public have completed or will complete the training program prior
to conducting such sales or offers. The rental company shall also
certify annually to the director that all such employees will
receive continuing education on a regular basis concerning the
topics covered in the training program. The rental company's
compliance with its certification to the director and with the
filed training program syllabus is subject to audit by the
Department of Consumer and Business Services.
  (3) A rental company issued a limited license under ORS 744.852
may not advertise, represent or otherwise hold itself or its
employees out as licensed insurers  { - , insurance agents - }
or insurance   { - brokers - }   { + producers + }.
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 125
 
 
 
  (4) A rental company issued a limited license under ORS 744.852
may offer and sell insurance only in connection with and
incidental to the rental of vehicles.
  (5) A rental company issued a limited license under ORS 744.852
shall designate an executive as the statewide filing officer for
the rental company.
  SECTION 133. ORS 746.005 is amended to read:
  746.005. Nothing in this chapter shall apply to wet marine and
transportation insurance or prohibit any of the following
practices:
  (1) In the case of life insurance policies, paying bonuses to
policyholders or otherwise abating their premiums in whole or in
part out of surplus accumulated from nonparticipating insurance,
provided that any such bonuses or abatement of premiums shall be
fair and equitable to policyholders and for the best interests of
the insurer and its policyholders;
  (2) In the case of industrial life insurance policies, making
allowance to policyholders who have continuously for a specified
period made premium payments directly to an office of the
insurer, in an amount which fairly represents the saving in
collection expense;
  (3) Readjustment of the rate of premium for a group life or
health insurance policy based on the loss or expense experience
thereunder, at the end of the first or any subsequent policy
year, which may be made retroactive only for such policy year;
  (4) Extension of credit for payment of premiums without any
service charge or interest by the insurer or   { - agent - }
 { + insurance producer + } for a period of not more than 90 days
after the end of the month in which the policy becomes effective;
  (5) Practices authorized pursuant to ORS 733.220 and 733.230;
  (6) The issuing of life or health insurance policies on a
salary savings, bank draft, preauthorized check or payroll
deduction plan or similar plan at a reduced rate reasonably
related to the savings made by use of such plan; or
  (7) The issuing of life or health insurance policies at rates
less than the usual premium rates for such policies, or using
modifications of premium rates based on amount of insurance, if
such issuance or modification does not result in reduction in
premium rates in excess of savings in administration and issuance
expenses reasonably attributable to such policies.
  SECTION 134. ORS 746.015 is amended to read:
  746.015. (1) No person shall make or permit any unfair
discrimination between individuals of the same class and equal
expectation of life, or between risks of essentially the same
degree of hazard, in the availability of insurance, in the
application of rates for insurance, in the dividends or other
benefits payable under insurance policies, or in any other terms
or conditions of insurance policies.
  (2) Discrimination by an insurer in the application of its
underwriting standards or rates based solely on an individual's
physical handicap is prohibited, unless such action is based on
sound actuarial principles or is related to actual or reasonably
anticipated experience. For purposes of this subsection, '
physical handicap' shall include, but not be limited to,
blindness, deafness, hearing or speaking impairment or loss, or
partial loss, of function of one or more of the upper or lower
extremities.
  (3) Discrimination by an insurer in the application of its
underwriting standards or rates based solely upon an insured's or
applicant's attaining or exceeding 65 years of age is prohibited,
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 126
 
 
 
unless such discrimination is clearly based on sound actuarial
principles or is related to actual or reasonably anticipated
experience.
  (4)(a) No insurer, on the basis of the status of an insured or
prospective insured as a victim of domestic violence, shall do
any of the following:
  (A) Deny, cancel or refuse to issue or renew an insurance
policy;
  (B) Demand or require a greater premium or payment;
  (C) Designate domestic violence as a preexisting condition for
which coverage will be denied or reduced;
  (D) Exclude or limit coverage for losses or deny a claim; or
  (E) Fix any lower rate for or discriminate in the fees or
commissions of an   { - agent - }   { + insurance producer + }
for writing or renewing a policy.
  (b) The fact that an insured or prospective insured is or has
been a victim of domestic violence shall not be considered a
permitted underwriting or rating criterion.
  (c) Nothing in this subsection prohibits an insurer from taking
an action described in paragraph (a) of this subsection if the
action is otherwise permissible by law and is taken in the same
manner and to the same extent with respect to all insureds and
prospective insureds without regard to whether the insured or
prospective insured is a victim of domestic violence.
  (d) An insurer that complies in good faith with the
requirements of this subsection shall not be subject to civil
liability due to such compliance.
  (e) For purposes of this subsection, 'domestic violence ' means
the occurrence of one or more of the following acts between
family or household members:
  (A) Attempting to cause or intentionally or knowingly causing
physical injury;
  (B) Intentionally or knowingly placing another in fear of
imminent serious physical injury; or
  (C) Committing sexual abuse in any degree as defined in ORS
163.415, 163.425 and 163.427.
  (5) If the Director of the Department of Consumer and Business
Services has reason to believe that an insurer in the application
of its underwriting standards or rates is not complying with the
requirements of this section, the director shall, unless the
director has reason to believe the noncompliance is willful, give
notice in writing to the insurer stating in what manner such
noncompliance is alleged to exist and specifying a reasonable
time, not less than 10 days after the date of mailing, in which
the noncompliance may be corrected.
  (6)(a) If the director has reason to believe that noncompliance
by an insurer with the requirements of this section is willful,
or if, within the period prescribed by the director in the notice
required by subsection (5) of this section, the insurer does not
make the changes necessary to correct the noncompliance specified
by the director or establish to the satisfaction of the director
that such specified noncompliance does not exist, the director
may hold a hearing in connection therewith. Not less than 10 days
before the date of such hearing the director shall mail to the
insurer written notice of the hearing, specifying the matters to
be considered.
  (b) If, after the hearing, the director finds that the
insurer's application of its underwriting standards or rates
violates the requirements of this section, the director may issue
an order specifying in what respects such violation exists and
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 127
 
 
 
stating when, within a reasonable period of time, further such
application shall be prohibited. If the director finds that the
violation was willful, the director may suspend or revoke the
certificate of authority of the insurer.
  (7) Affiliated workers' compensation insurers having
reinsurance agreements which result in one carrier ceding 80
percent or more of its workers' compensation premium to the
other, while utilizing different workers' compensation rate
levels without objective evidence to support such differences,
shall be presumed to be engaging in unfair discrimination.
  SECTION 135. ORS 746.045 is amended to read:
  746.045. No person shall personally or otherwise offer,
promise, allow, give, set off, pay or receive, directly or
indirectly, any rebate of or rebate of part of the premium
payable on an insurance policy or the   { - agent's - }
 { + insurance producer's + } commission thereon, or earnings,
profit, dividends or other benefit founded, arising, accruing or
to accrue on or from the policy, or any other valuable
consideration or inducement to or for insurance on any domestic
risk, which is not specified in the policy.
  SECTION 136. ORS 746.065 is amended to read:
  746.065. (1) As used in this section, 'personal or controlled
insurance' means insurance covering an insurance
  { - agent - }   { + producer + } or:
  (a) The spouse of the insurance   { - agent - }  { +
producer + }, the employer of the insurance   { - agent - }
 { + producer + } or the employer's spouse, or any group of
employees under a group policy issued to the employer of the
insurance   { - agent - }  { +  producer + };
  (b) Any person related to the insurance   { - agent - }  { +
producer + }, to the spouse of the insurance   { - agent - }
 { +  producer + }, to the employer of the insurance
 { - agent - }   { + producer + } or to the employer's spouse
within the second degree by blood or marriage;
  (c) If the employer of the insurance   { - agent - }
 { + producer + } is a corporation, any person directly or
indirectly owning or controlling a majority of the voting stock
or controlling interest in such corporation;
  (d) If the employer of the insurance   { - agent - }
 { + producer + } is a partnership or association, any person
owning any interest in such partnership or association;
  (e) If the   { - agent - }   { + insurance producer + } is a
corporation, any person directly or indirectly owning or
controlling a majority of the voting stock or controlling
interest in the   { - agent - }  { +  insurance producer + }, and
any corporation which is likewise directly or indirectly
controlled by the person who so directly or indirectly controls
the   { - agent - }  { +  insurance producer + }; or
  (f) If the   { - agent - }   { + insurance producer + } is a
corporation, any corporation making consolidated returns for
United States income tax purposes with any corporation described
in paragraph (e) of this subsection.
  (2) If premiums on personal or controlled insurance transacted
by an   { - agent - }   { + insurance producer + } payable in one
calendar year exceed the premiums or with respect to life and
health insurance twice the premiums, on other insurance
transacted by the   { - agent - }   { + insurance producer + }
payable in the same year, the receipt of commissions upon the
excess is an unlawful rebate.
  (3) This section shall not apply to an individual licensee who:
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 128
 
 
 
  (a) Is licensed during all of such calendar year individually
as an   { - agent - }  { +  insurance producer + };
  (b) During such calendar year conducts an individual
 { - agency - }  { +  insurance producer + } business, not being
designated to exercise the powers conferred by an
 { - agent's - }   { + insurance producer's + } license issued to
any firm or corporation nor owning any interest in any firm or
corporation transacting an insurance   { - agency or
brokerage - }  { + producer + } business;
  (c) Has been continuously licensed in some manner as an
insurance   { - agent, broker or solicitor - }  { +
producer + }, and has been active as such, for at least 25 years;
and
  (d) Is at least 65 years of age at the beginning of such
calendar year.
  (4) This section does not apply to the writing, issuing or
soliciting by a seller of personal property of insurance covering
the personal property sold by the seller on an installment
contract whereunder the title to the property is reserved by the
seller.
  (5) This section shall not apply to an   { - agent - }  { +
insurance producer + }, whether an individual, firm or
corporation, if:
  (a) The   { - agent - }   { + insurance producer + } is
controlled or owned by a nonprofit professional association and
offers professional liability and related business and personal
umbrella or excess liability insurance exclusively to members of
the association; and
  (b) The primary function of the association is other than
marketing insurance.
  SECTION 137. ORS 746.085 is amended to read:
  746.085. In addition to all other powers of the Director of the
Department of Consumer and Business Services with respect
thereto, the director may issue rules:
  (1) Requiring persons who replace, or offer or propose to
replace, existing life insurance, to leave with the policyholder
written, signed and dated statements which fully and correctly
compare the terms, conditions and benefits of an existing policy
with the proposed policy; and
  (2) Limiting the commission or compensation payable to an
  { - agent - }   { + insurance producer + } on account of a life
insurance policy that provides a nonforfeiture value sold to
replace an existing life insurance policy that provides a
nonforfeiture value to the commission or compensation the
 { - agent - }   { + insurance producer + } would have received
if both the replaced and the replacement insurance policies had
been carried by the insurer which issues the replacement policy.
  SECTION 138. ORS 746.100 is amended to read:
  746.100. No person shall make a false or fraudulent statement
or representation on or relative to an application for insurance,
or for the purpose of obtaining a fee, commission, money or
benefit from an insurer or   { - agent - }  { +  insurance
producer + }.
  SECTION 139. ORS 746.140 is amended to read:
  746.140. (1) Every insurer or   { - agent - }   { + insurance
producer + } soliciting an offer to buy or selling life insurance
in correlation with the sale of securities shall furnish the
prospect with a clear and unambiguous written proposal prior to
the signing of the application by the applicant.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 129
 
 
 
  (2) The written proposal shall be dated and signed by the
insurance   { - agent - }  { +  producer + }, or by the insurer
if no   { - agent - }  { + insurance producer + } is involved,
and left with the prospect. The written proposal shall be on a
form which has been filed with the Director of the Department of
Consumer and Business Services. If a sale is made of both life
insurance and securities, a duplicate copy of the written
proposal left with the buyer shall be retained by the insurer for
a period of not less than three years.
  (3) Each such proposal shall:
  (a) State the name of the insurer in which the life insurance
is to be written;
  (b) State that the prospect has the right to purchase the life
insurance only, the securities only or both the life insurance
and the securities;
  (c) Contain no misrepresentations or false, deceptive or
misleading words, figures or statements;
  (d) State all material facts without which the proposal would
have the capacity or tendency to mislead or deceive; and
  (e) Set forth all matters pertaining to life insurance,
including premium charges, separately from matters not pertaining
to life insurance.
  (4) This section shall not be construed to affect the
application of any other provision of law concerning or
regulating securities.
  SECTION 140. ORS 746.147 is amended to read:
  746.147. An insurer or   { - agent - }   { + insurance
producer + } offering workers' compensation insurance in Oregon
shall not quote projected net insurance premiums based upon
figures that are discretionary or terms that are not guaranteed
in the workers' compensation insurance policy.
  SECTION 141. ORS 746.180 is amended to read:
  746.180. It is the policy of this state that its citizens have
the right of free choice in the procurement of insurance and
that, accordingly, no lender shall designate an insurer or
insurance   { - agent - }   { + producer + } from which a
borrower may procure the insurance required by the loan or sales
agreement on the property securing the indebtedness.
  SECTION 141a.  { + If Senate Bill 235 becomes law, section 141
of this 2003 Act (amending ORS 746.180) is repealed. + }
  SECTION 142. ORS 746.182 is amended to read:
  746.182. (1) Prior to selling any policy of insurance, other
than a policy for a class of insurance referred to in subsection
(2) of this section:
  (a) Any   { - agent - }   { + insurance producer + } that is an
institution as defined in ORS 706.008, shall give the purchaser
the notice required under ORS 708A.005 (2)(e);
  (b) Any   { - agent - }   { + insurance producer + } that is a
corporation, all or part of the stock of which is held by an
institution, shall give the purchaser the notice required under
ORS 708A.120 (7)(f);
  (c) Any   { - agent - }   { + insurance producer + } that is a
corporation, all or part of the stock of which is held by a
financial holding company or a bank holding company as defined in
ORS 706.008, shall give the purchaser the notice required under
ORS 715.075 (6);
  (d) Any   { - agent - }   { + insurance producer + } that is a
corporation, all or part of the stock of which is held by a
savings bank, as defined by ORS 706.008, shall give the purchaser
the notice required under ORS 716.594 (6); and
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 130
 
 
 
  (e) Any   { - agent - }   { + insurance producer + } that is a
savings bank, as defined in ORS 706.008, shall give the purchaser
the notice required under ORS 716.610 (10)(e).
  (2) The requirement under subsection (1) of this section does
not apply to any policy for types of limited class insurance, as
that term is defined in ORS 744.052, designated by the Director
of the Department of Consumer and Business Services.
  SECTION 142a.  { + If Senate Bill 235 becomes law, section 142
of this 2003 Act (amending ORS 746.182) is repealed. + }
  SECTION 143. ORS 746.191 is amended to read:
  746.191. A lending institution which solicits insurance on real
or personal property must explain to the borrower in prominently
displayed writing that insurance related to a loan or credit
extension may be purchased from an insurer or   { - agent - }
 { + insurance producer + } of the borrower's choice, subject
only to the lending institution's right to reject a given
insurance policy or insurer as provided in ORS 746.195 (2).
Compliance with the notice provided for in section 106 of the
Truth in Lending Act (15 U.S.C.) shall be considered compliance
with this section.
  SECTION 143a.  { + If Senate Bill 235 becomes law, section 143
of this 2003 Act (amending ORS 746.191) is repealed. + }
  SECTION 144. ORS 746.195 is amended to read:
  746.195. A lending institution shall not:
  (1) Solicit the sale of insurance for the protection of real or
personal property after a person indicates interest in securing a
loan or credit extension, until the lending institution has
agreed to make the loan or credit extension;
  (2) Unreasonably reject an insurance policy furnished by the
borrower for the protection of the property securing the loan or
credit. A rejection shall not be considered unreasonable when it
is based on reasonable standards, uniformly applied, relating to
the extent of coverage required and the financial soundness and
the services of an insurer. The standards shall not discriminate
against any particular type of insurer, nor shall the standards
call for rejection of an insurance policy because the policy
contains coverage in addition to that required in the credit
transaction;
  (3) Require that any borrower, mortgagor, purchaser, insurer or
 { - agent - }   { + insurance producer + } pay a separate charge
in connection with the handling of any insurance policy required
as security for a loan or credit extension, or pay a separate
charge to substitute the insurance policy of one insurer for that
of another. This subsection does not apply to the interest that
may be charged on premium loans or premium advancements under the
terms of the loan or credit document;
  (4) Require any procedures or conditions of an insurer or
  { - agent - }   { + insurance producer + } not customarily
required of insurers or
  { - agents - }   { + insurance producers + } that are
affiliated or in any other way connected with the lending
institution;
  (5) Refuse to accept a written binder issued by an
 { - agent - }  { + insurance producer + } as proof that
temporary insurance exists covering the real or personal property
that is the subject matter of, or security for, a loan or
extension of credit, and that a policy of insurance will be
issued covering that property. A written binder issued by an
 { - agent - }   { + insurance producer + } or insurer covering
real or personal property that is the subject matter of, or
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 131
 
 
 
security for, a loan or extension of credit shall be effective
until a policy of insurance is issued in lieu thereof, including
within its terms the identical insurance bound under the binder
and the premium therefor, or until notice of the cancellation of
the binder is received by the borrower and the lending
institution extending credit or offering the loan. When a lending
institution closes on a binder under ORS 742.043, the
 { - agent - }   { + insurance producer + } or insurer issuing
the binder shall be bound to provide a policy of insurance,
equivalent in coverage to the coverage set forth in the binder,
within 60 days from the date of the binder.  The provisions of
this subsection do not apply when prohibited by federal or state
statute or regulations; or
  (6) Use or disclose to any other insurance   { - agent - }
 { +  producer + }, other than the original   { - agent - }  { +
insurance producer + }, the information relating to a policy of
insurance furnished by a borrower unless the original
 { - agent - }   { + insurance producer + } fails to deliver a
policy of insurance within 60 days prior to expiration to the
lending institution without first procuring the written consent
of the borrower.
  SECTION 144a.  { + If Senate Bill 235 becomes law, section 144
of this 2003 Act (amending ORS 746.195) is repealed and ORS
746.195, as amended by section 12, chapter ___, Oregon Laws 2003
(Enrolled Senate Bill 235), is amended to read: + }
  746.195. (1) A depository institution may not:
  (a) Solicit the sale of insurance for the protection of real or
personal property after a person indicates interest in securing a
loan or credit extension, until the depository institution has
agreed to make the loan or credit extension;
  (b) Refuse to accept a written binder issued by an
 { - agent - }  { + insurance producer + } as proof that
temporary insurance exists covering the real or personal property
that is the subject matter of, or security for, a loan or
extension of credit, and that a policy of insurance will be
issued covering that property. A written binder issued by an
 { - agent - }   { + insurance producer + } or insurer covering
real or personal property that is the subject matter of, or
security for, a loan or extension of credit shall be effective
until a policy of insurance is issued in lieu thereof, including
within its terms the identical insurance bound under the binder
and the premium therefor, or until notice of the cancellation of
the binder is received by the borrower and the depository
institution extending credit or offering the loan. When a
depository institution closes on a binder under ORS 742.043, the
  { - agent - }   { + insurance producer + } or insurer issuing
the binder shall be bound to provide a policy of insurance,
equivalent in coverage to the coverage set forth in the binder,
within 60 days from the date of the binder. The provisions of
this paragraph do not apply when prohibited by federal or state
statute or regulations; or
  (c) Use or disclose to any other insurance   { - agent - }
 { +  producer + }, other than the original   { - agent - }  { +
insurance producer + }, the information relating to a policy of
insurance furnished by a borrower unless the original
 { - agent - }   { + insurance producer + } fails to deliver a
policy of insurance within 60 days prior to expiration to the
depository institution without first procuring the written
consent of the borrower.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 132
 
 
 
  (2) As used in this section, 'depository institution' means a
financial institution as that term is defined in ORS 706.008.
  SECTION 145. ORS 746.310 is amended to read:
  746.310. (1) No person shall in this state directly or
indirectly with respect to domestic risks act as   { - agent - }
 { + insurance producer + } for or otherwise transact insurance
for any insurer not then authorized to transact such insurance in
this state.
  (2) In the event of failure of any unauthorized insurer to pay
any claim or loss within the provisions of such insurance policy,
any insurance   { - agent - }   { + producer + } who assisted or
in any manner aided in the procurement of such insurance policy
knowing it to be procured through an unauthorized insurer shall
be liable to the insured for the full amount of the claim or
loss.
  (3) This section does not apply to:
  (a) Matters authorized to be done by the Director of the
Department of Consumer and Business Services under ORS 746.320 to
746.360.
  (b) Insurance written under a surplus line license in
compliance with ORS 735.400 to 735.495.
  (c) Any transaction with respect to reinsurance when transacted
by an insurer duly authorized by its state of domicile to
transact the class of insurance involved.
  (d) A licensed adjuster or attorney at law representing such an
insurer from time to time in such occupational or professional
capacity.
  SECTION 146. ORS 746.405 is amended to read:
  746.405. As used in ORS 746.405 to 746.530, unless the context
requires otherwise:
  (1) 'Premium finance agreement' means an agreement by which an
insured or prospective insured promises to pay to a premium
finance company or to its assignee the amount advanced or to be
advanced under the agreement to an insurer or to an insurance
  { - agent or broker - }   { + producer + } in payment of
premiums on an insurance policy together with a service charge.
No mortgage, conditional sale contract or other security
agreement covering property which authorizes the lienholder to
pay or advance premiums for insurance with respect thereto shall
be deemed to be a premium finance agreement.
  (2) 'Premium finance company' means a person engaged in the
business of entering into premium finance agreements with
insureds or of acquiring such premium finance agreements from
insurance
  { - agents, brokers - }   { + producers + } or other premium
finance companies.
  SECTION 147. ORS 746.425 is amended to read:
  746.425. ORS 746.405 to 746.530 do not apply to:
  (1) Any insurer authorized to transact business in this state
who finances insurance premiums on domestic risks with a service
charge no greater than that provided in ORS 746.485 and 746.495;
  (2) Any bank, trust company, savings and loan association,
credit union or other lending institution authorized to transact
business in this state that does not possess or acquire any
right, title or interest with respect to the insurance policy for
which the premiums are financed other than in the proceeds
thereof in the event of loss;
  (3) The inclusion of a charge for insurance in connection with
an installment sale in accordance with ORS 83.010 to 83.820 and
83.990; or
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 133
 
 
 
  (4)   { - Agents - }   { + Insurance producers + } financing
only their own accounts and whose aggregate charge for financing
does not exceed one and one-half percent per month on the
outstanding balance.
  SECTION 148. ORS 746.475 is amended to read:
  746.475. (1) A premium finance agreement shall:
  (a) Be dated, signed by the insured or by any person authorized
in writing to act in behalf of the insured, and the printed
portion thereof shall be in at least eight-point type;
  (b) Contain the name and place of business of the insurance
  { - agent - }   { + producer + } negotiating the related
insurance policy, the name and residence or the place of business
of the insured as specified by the insured, the name and place of
business of the premium finance company to which payments are to
be made, a description of the insurance policies involved and the
amount of the premium therefor; and
  (c) Set forth the following items where applicable:
  (A) The total amount of the premiums.
  (B) The amount of the down payment.
  (C) The principal balance (the difference between items (A) and
(B)).
  (D) The amount of the service charge.
  (E) The balance payable by the insured (sum of items (C) and
(D)).
  (F) The number of payments required, the amount of each payment
expressed in dollars, and the due date or period thereof.
  (2) The items set out in subsection (1)(c) of this section need
not be stated in the sequence or order in which they appear in
such paragraph, and additional items may be included to explain
the computations made in determining the amount to be paid by the
insured.
  (3) The premium finance company or the insurance
 { - agent - }  { + producer + } shall deliver to the insured, or
mail to the insured at the address shown in the agreement, a
complete copy of the agreement.
  (4) A premium finance company shall give notice of its
financing to the insurer not later than the 30th day after the
date the premium financing agreement is received by the premium
finance company. A notice given under this subsection shall be
effective whether or not the insured's policy number is set forth
in the notice.
  SECTION 149. ORS 746.505 is amended to read:
  746.505. (1) When a premium finance agreement contains a power
of attorney enabling the premium finance company to cancel any
insurance policy or policies listed in the agreement, the
insurance policy or policies shall not be canceled by the premium
finance company unless such cancellation is effectuated in
accordance with this section.
  (2) Not less than 10 days' written notice shall be mailed to
the insured of the intent of the premium finance company to
cancel the insurance policy unless the default is cured within
such 10-day period. A copy of such notice shall also be mailed to
the insurance   { - agent - }   { + producer + } indicated on the
premium finance agreement.
  (3) After expiration of such 10-day period, the premium finance
company may thereafter in the name of the insured cancel such
insurance policy or policies by mailing to the insurer a notice
of cancellation, and the insurance policy shall be canceled as if
such notice of cancellation had been submitted by the insured,
but without requiring the return of the insurance policy or
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 134
 
 
 
policies. The premium finance company shall also mail a notice of
cancellation to the insured at the last-known address of the
insured and to the insurance   { - agent - }   { + producer + }
indicated on the premium finance agreement.
  (4) All statutory, regulatory and contractual restrictions
providing that the insurance policy may not be canceled unless
notice is given to a governmental agency, mortgagee, or other
third party shall apply where cancellation is effected under the
provisions of this section. The insurer shall give the prescribed
notice on behalf of itself or the insured to any governmental
agency, mortgagee, or other third party on or before the second
business day after the day it receives the notice of cancellation
from the premium finance company and shall determine the
effective date of cancellation taking into consideration the
number of days' notice required to complete the cancellation.
  SECTION 150. ORS 746.515 is amended to read:
  746.515. (1) Whenever a financed insurance policy is canceled,
the insurer who has been notified as provided in ORS 746.475 (4)
shall return whatever gross unearned premiums are due under the
insurance policy to the premium finance company for the account
of the insured or insureds not later than the 30th day after the
date of cancellation. If the insurer elects to return the premium
through the   { - agent - }  { +  insurance producer + }, the
 { - agent - }  { + insurance producer + } shall transmit the
unearned premium to the premium finance company within the 30-day
period. The insurer, on written notice of any failure of the
 { - agent - }   { + insurance producer + } to transmit the
premium and not later than the 30th day after the notice, shall
pay the amount of return premium directly to the premium finance
company.
  (2) In calculating the gross unearned premium due under a
financed insurance policy, the insurer shall use the prorate
method of calculation.
  (3) In the event that the crediting of return premiums to the
account of the insured results in a surplus over the amount due
from the insured, the premium finance company shall refund such
excess to the insured provided that no such refund shall be
required if it amounts to less than $1.
  SECTION 151. ORS 746.600 is amended to read:
  746.600. As used in ORS 746.600 to 746.690 and 750.055:
  (1) 'Adverse underwriting decision' means, except as provided
in subsection (2) of this section, any of the following actions
with respect to insurance transactions involving insurance
coverage which is individually underwritten:
  (a) A declination of insurance coverage.
  (b) A termination of insurance coverage.
  (c) Failure of an   { - agent - }   { + insurance producer + }
to apply for insurance coverage with a specific insurer which the
 { - agent - }  { + insurance producer + } represents and which
is requested by an applicant.
  (d) In the case of life or health insurance coverage, an offer
to insure at higher than standard rates.
  (e) In the case of other kinds of insurance coverage:
  (A) Placement by an insurer or   { - agent - }   { + insurance
producer + } of a risk with a residual market mechanism, an
unauthorized insurer or an insurer which specializes in
substandard risks.
  (B) The charging of a higher rate on the basis of information
which differs from that which the applicant or policyholder
furnished.
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 135
 
 
 
  (2) 'Adverse underwriting decision' does not include the
following actions, but the insurer or   { - agent - }
 { + insurance producer + } responsible for the occurrence of the
action shall nevertheless provide the applicant or policyholder
with the specific reason or reasons for the occurrence:
  (a) The termination of an individual policy form on a class or
statewide basis.
  (b) A declination of insurance coverage solely because the
coverage is not available on a class or statewide basis.
  (c) The rescission of a policy.
  (3) 'Affiliate of' a specified person or 'person affiliated
with' a specified person means a person who directly, or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person
specified.
    { - (4) 'Agent' means a person licensed by the Director of
the Department of Consumer and Business Services as a resident or
nonresident insurance agent. - }
    { - (5) - }   { + (4) + } 'Applicant' means a person who
seeks to contract for insurance coverage, other than a person
seeking group insurance coverage which is not individually
underwritten.
    { - (6) - }   { + (5) + } 'Consumer report' means any
written, oral or other communication of information bearing on a
natural person's creditworthiness, credit standing, credit
capacity, character, general reputation, personal characteristics
or mode of living which is used or expected to be used in
connection with an insurance transaction.
    { - (7) - }   { + (6) + } 'Consumer reporting agency' means a
person who:
  (a) Regularly engages, in whole or in part, in assembling or
preparing consumer reports for a monetary fee;
  (b) Obtains information primarily from sources other than
insurers; and
  (c) Furnishes consumer reports to other persons.
    { - (8) - }   { + (7) + } 'Control' means, and the terms
'controlled by ' or 'under common control with' refer to, 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 securities, by contract
other than a commercial contract for goods or nonmanagement
services, or otherwise, unless the power of the person is the
result of a corporate office held in, or an official position
held with, the controlled person.
    { - (9) - }   { + (8) + } 'Declination of insurance coverage'
means a denial, in whole or in part, by an insurer or
 { - agent - }   { + insurance producer + } of requested
insurance coverage.
    { - (10) - }   { + (9) + } 'Individual':
  (a) Means, for purposes of ORS 746.600 to 746.690 and 750.055,
except as provided in paragraph (b) of this subsection, a natural
person who:
  (A) In the case of life or health insurance, is a past, present
or proposed principal insured or certificate holder;
  (B) In the case of other kinds of insurance, is a past, present
or proposed named insured or certificate holder;
  (C) Is a past, present or proposed policyowner;
  (D) Is a past or present applicant;
  (E) Is a past or present claimant; or
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 136
 
 
 
  (F) Derived, derives or is proposed to derive insurance
coverage under an insurance policy or certificate which is
subject to ORS 746.600 to 746.690 and 750.055.
  (b) Comprises, for purposes of ORS 746.620, 746.630 and
746.665, and for purposes of terms defined in this section as
those terms are used in ORS 746.620, 746.630 and 746.665, the
following categories of natural persons:
  (A) 'Consumer,' which means an individual, or the individual's
representative, who seeks to obtain, obtains or has obtained an
insurance product or service from a licensee that is to be used
primarily for personal, family or household purposes, and about
whom the licensee has personal information.
  (B) 'Customer,' which means a consumer who has a continuing
relationship with a licensee under which the licensee provides
one or more insurance products or services to the consumer that
are to be used primarily for personal, family or household
purposes.
    { - (11) - }   { + (10) + } 'Institutional source' means a
person or governmental entity which provides information about an
individual to an insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization, other than:
  (a) An   { - agent - }  { +  insurance producer + };
  (b) The individual who is the subject of the information; or
  (c) A natural person acting in a personal capacity rather than
in a business or professional capacity.
   { +  (11) 'Insurance producer' or 'producer' means a person
licensed by the Director of the Department of Consumer and
Business Services as a resident or nonresident insurance
producer. + }
  (12) 'Insurance-support organization' means, except as provided
in subsection (13) of this section, a person who regularly
engages, in whole or in part, in assembling or collecting
information about natural persons for the primary purpose of
providing the information to an insurer or   { - agent - }
 { + insurance producer + } for insurance transactions,
including:
  (a) The furnishing of consumer reports to an insurer or
  { - agent - }   { + insurance producer + } for use in
connection with insurance transactions; and
  (b) The collection of personal information from insurers,
  { - agents - }   { + insurance producers + } or other
insurance-support organizations for the purpose of detecting or
preventing fraud, material misrepresentation or material
nondisclosure in connection with insurance underwriting or
insurance claim activity.
  (13) 'Insurance-support organization' does not include
insurers,   { - agents - }  { +  insurance producers + },
governmental institutions, medical care institutions or medical
professionals.
  (14) 'Insurance transaction' means any transaction involving
insurance primarily for personal, family or household needs
rather than business or professional needs and which entails:
  (a) The determination of an individual's eligibility for an
insurance coverage, benefit or payment; or
  (b) The servicing of an insurance application, policy or
certificate.
  (15) 'Insurer,' as defined in ORS 731.106, includes every
person engaged in the business of entering into policies of
insurance.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 137
 
 
 
  (16) 'Investigative consumer report' means a consumer report,
or portion of a consumer report, for which information about a
natural person's character, general reputation, personal
characteristics or mode of living is obtained through personal
interviews with the person's neighbors, friends, associates,
acquaintances or others who may have knowledge concerning such
items of information.
  (17) 'Licensee' means an insurer,   { - agent - }
 { + insurance producer + } or other person authorized or
required to be authorized, or licensed or required to be
licensed, pursuant to the Insurance Code.
  (18) 'Medical care institution' means a facility or institution
which is licensed to provide health care services to natural
persons, and includes but is not limited to health maintenance
organizations, home health agencies, hospitals, medical clinics,
public health agencies, rehabilitation agencies and skilled
nursing facilities.
  (19) 'Medical professional' means a person licensed or
certified to provide health care services to natural persons, and
includes but is not limited to chiropractors, clinical
dieticians, clinical psychologists, dentists, naturopaths,
nurses, occupational therapists, optometrists, pharmacists,
physical therapists, physicians, podiatrists, psychiatric social
workers and speech therapists.
  (20) 'Medical record information' means personal information
except age or gender, whether oral or recorded in any form or
medium, created by or derived from a health care provider or the
consumer that relates to:
  (a) The past, present or future physical, mental or behavioral
health or condition of an individual;
  (b) The provision of health care to an individual; or
  (c) Payment for the provision of health care to an individual.
  (21) 'Nonaffiliated third party' means any person except:
  (a) An affiliate of a licensee;
  (b) A person that is employed jointly by a licensee and by a
person that is not an affiliate of the licensee; and
  (c) As designated by the director by rule.
  (22) 'Personal information' means information which is
identifiable with an individual, which is gathered in connection
with an insurance transaction and from which information
judgments can be made about the individual's character, habits,
avocations, finances, occupations, general reputation, credit,
health or any other personal characteristics. 'Personal
information' includes an individual's name and address, an
individual's policy number or similar form of access code for the
individual's policy and ' medical record information' but does
not include 'privileged information' except for privileged
information which has been disclosed in violation of ORS 746.665.
'Personal information ' does not include information that a
licensee has a reasonable basis to believe is lawfully made
available to the general public from federal, state or local
government records, widely distributed media or disclosures to
the public that are required by federal, state or local law.
  (23) 'Policyholder' means a person who:
  (a) In the case of individual policies of life or health
insurance, is a current policyowner;
  (b) In the case of individual policies of other kinds of
insurance, is currently a named insured; or
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 138
 
 
 
  (c) In the case of group policies of insurance under which
coverage is individually underwritten, is a current certificate
holder.
  (24) 'Pretext interview' means an interview wherein the
interviewer, in an attempt to obtain information about a natural
person, does one or more of the following:
  (a) Pretends to be someone the interviewer is not.
  (b) Pretends to represent a person the interviewer is not in
fact representing.
  (c) Misrepresents the true purpose of the interview.
  (d) Refuses upon request to identify the interviewer.
  (25) 'Privileged information' means information which is
identifiable with an individual and which:
  (a) Relates to a claim for insurance benefits or a civil or
criminal proceeding involving the individual; and
  (b) Is collected in connection with or in reasonable
anticipation of a claim for insurance benefits or a civil or
criminal proceeding involving the individual.
  (26) 'Residual market mechanism' means an association,
organization or other entity involved in the insuring of risks
under ORS 735.005 to 735.145, 737.312 or other provisions of the
Insurance Code relating to insurance applicants who are unable to
procure insurance through normal insurance markets.
  (27) 'Termination of insurance coverage' or 'termination of an
insurance policy' means either a cancellation or a nonrenewal of
an insurance policy, in whole or in part, for any reason other
than the failure of a premium to be paid as required by the
policy.
  SECTION 152. ORS 746.605 is amended to read:
  746.605. The purpose of ORS 746.600 to 746.690 and 750.055 is
to:
  (1) Establish standards for the collection, use and disclosure
of information gathered in connection with insurance transactions
by insurers,   { - agents - }   { + insurance producers + } or
insurance-support organizations;
  (2) Maintain a balance between the need for information by
those conducting the business of insurance and the public's need
for fairness in insurance information practices, including the
need to minimize intrusiveness;
  (3) Establish a regulatory mechanism to enable natural persons
to ascertain what information is being or has been collected
about them in connection with insurance transactions and to have
access to this information for the purpose of verifying or
disputing its accuracy;
  (4) Limit the disclosure of information collected in connection
with insurance transactions; and
  (5) Enable insurance applicants and policyholders to obtain the
reasons for any adverse underwriting decision.
  SECTION 153. ORS 746.610 is amended to read:
  746.610. (1) The obligations imposed by ORS 746.600 to 746.690
and 750.055 apply to those insurers,   { - agents - }
 { + insurance producers + } and insurance-support organizations
which, on or after January 1, 1983:
  (a) In the case of life or health insurance:
  (A) Collect, receive or maintain information, in connection
with insurance transactions, which pertains to natural persons
who are residents of this state; or
  (B) Engage in insurance transactions with applicants,
individuals or policyholders who are residents of this state.
  (b) In the case of other kinds of insurance:
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 139
 
 
 
  (A) Collect, receive or maintain information in connection with
insurance transactions involving policies or certificates of
insurance delivered, issued for delivery or renewed in this
state; or
  (B) Engage in insurance transactions involving policies or
certificates of insurance delivered, issued for delivery or
renewed in this state.
  (2) The rights granted by ORS 746.600 to 746.690 and 750.055
extend to:
  (a) In the case of life or health insurance, the following
persons who are residents of this state:
  (A) Natural persons who are the subject of information
collected, received or maintained in connection with insurance
transactions; and
  (B) Applicants, individuals or policyholders who engage in or
seek to engage in insurance transactions.
  (b) In the case of other kinds of insurance, the following
persons:
  (A) Natural persons who are the subject of information
collected, received or maintained in connection with insurance
transactions involving policies or certificates of insurance
delivered, issued for delivery or renewed in this state; and
  (B) Applicants, individuals or policyholders who engage in or
seek to engage in insurance transactions involving policies or
certificates of insurance delivered, issued for delivery or
renewed in this state.
  (3) For purposes of this section, a person is considered a
resident of this state if the person's last-known mailing
address, as shown in the records of the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization, is
located in this state.
  (4) Notwithstanding subsections (1) and (2) of this section,
ORS 746.600 to 746.690 and 750.055 do not apply to information
collected from the public records of a governmental authority and
maintained by an insurer or its representatives for the purpose
of insuring the title to real property located in this state.
  SECTION 154. ORS 746.615 is amended to read:
  746.615. No insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization shall use or
authorize the use of pretext interviews to obtain information in
connection with an insurance transaction. However, a pretext
interview may be undertaken to obtain information from a person
or institution
  { - which - }   { + that + } does not have a generally
recognized or statutorily recognized privileged relationship with
the person about whom the information relates, for the purpose of
investigating a claim where, based upon specific information
available for review by the Director of the Department of
Consumer and Business Services, there is a reasonable basis for
suspecting criminal activity, fraud, material misrepresentation
or material nondisclosure in connection with the claim.
  SECTION 155. ORS 746.620 is amended to read:
  746.620. (1) A licensee   { - shall - }   { + must + } provide
a clear and conspicuous notice of information practices to
individuals in connection with insurance transactions under the
circumstances and at the times as follows:
  (a) Except as provided in this paragraph, to a consumer who
becomes a customer of the licensee, not later than the date that
the licensee establishes a continuing relationship under which
the licensee provides one or more insurance products or services
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 140
 
 
 
to the consumer that are to be used primarily for personal,
family or household purposes. A licensee may provide the notice
within a reasonable time after the date the licensee establishes
a customer relationship if:
  (A) Establishing the customer relationship is not at the
customer's election; or
  (B) Providing notice not later than the date that the licensee
establishes a customer relationship would substantially delay the
customer's transaction and the customer agrees to receive the
notice at a later time.
  (b) To a consumer other than as described in paragraph (a) of
this subsection, before the licensee discloses any personal
information about the consumer pursuant to the requirements of
ORS 746.665, unless the disclosure meets one or more of the
conditions specified in ORS 746.665.
  (2) A licensee shall provide a clear and conspicuous notice to
a customer that accurately reflects the privacy policies and
practices not less than annually during the continuation of the
relationship described in subsection (1)(a) of this section. For
the purpose of this subsection, a notice is given annually if it
is given at least once in any period of 12 consecutive months
during which the relationship exists. A licensee may define the
period of 12 consecutive months, but the licensee must apply the
period to the customer on a consistent basis.
  (3) The privacy notice required by subsections (1) and (2) of
this section   { - shall - }   { + must + } be in writing and
clear and conspicuous.  The notice may be provided in electronic
form if the recipient agrees. In addition to any other
information the licensee wishes to provide, the notice shall
include the following items of information that apply to the
licensee and to the individuals to whom the licensee sends the
notice:
  (a) The categories of personal information that the licensee
collects.
  (b) The categories of personal information that the licensee
discloses.
  (c) The categories of affiliates and nonaffiliated third
parties to whom the licensee discloses personal information other
than persons to whom the licensee discloses information under ORS
746.665.
  (d) The categories of personal information about former
customers of the licensee that the licensee discloses and the
categories of affiliates and nonaffiliated third parties to whom
the licensee discloses personal information about the licensee's
former customers, other than persons to whom the licensee
discloses information under ORS 746.665.
  (e) If a licensee discloses personal information to a
nonaffiliated third party under ORS 746.665, a separate
description of the categories of information the licensee
discloses and the categories of nonaffiliated third parties with
whom the licensee has contracted.
  (f) An explanation of the individual's right under ORS 746.630
to authorize disclosure of personal information, including the
methods by which the individual may exercise that right.
  (g) Any disclosure that the licensee makes under section
603(d)(2)(A)(iii) of the federal Fair Credit Reporting Act (15
U.S.C. 1681a(d)(2)(A)(iii)) regarding the ability to opt out of
disclosures of information among affiliates.
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 141
 
 
 
  (h) The policies and practices of the licensee with respect to
protecting the confidentiality and security of personal
information.
  (i) Any disclosure that the licensee makes under subsection (4)
of this section.
  (j) A description of the rights established under ORS 746.640
and 746.645 and the manner in which such rights may be exercised.
  (4) If a licensee discloses personal information as authorized
under ORS 746.665, the licensee need not list those exceptions in
the privacy notices required by this section. When describing the
categories of parties to whom disclosure is made, the licensee
must state only that the licensee makes disclosures to other
affiliated parties or nonaffiliated third parties, as applicable,
as authorized by law.
  (5) In lieu of the notice prescribed in subsection (3) of this
section, the licensee may provide to a consumer an abbreviated
notice, in writing or in electronic form if the consumer agrees,
informing the consumer that:
  (a) Personal information may be collected from persons other
than the consumer proposed for coverage;
  (b) Such information as well as other personal or privileged
information subsequently collected by the licensee may in certain
circumstances be disclosed to third parties without
authorization;
  (c) A right of access and correction exists with respect to all
personal information collected; and
  (d) The notice prescribed in subsection (3) of this section
will be furnished to the consumer upon request.
  (6) The Director of the Department of Consumer and Business
Services by rule may apply the categories of consumer and
customer as described in ORS 746.600 for the purpose of
establishing specific requirements for notice of information
practices, authorization for disclosure of personal information,
conditions for disclosure of personal information under this
section and ORS 746.630 and 746.665, and exceptions. The director
shall consider applicable definitions and terms used in the
federal Gramm-Leach-Bliley Act (P.L. 106-102), applicable
definitions and requirements used in the model 'Privacy of
Consumer Financial and Health Information Regulation' adopted by
the National Association of Insurance Commissioners and other
sources as may be needed so that the terms defined in ORS 746.600
and applicable to this section and ORS 746.630 and 746.665:
  (a) Facilitate compliance with requirements in federal law and
the laws of other states that establish protections of nonpublic
personal information; and
  (b) Establish separate and discrete requirements relating to
the privacy notice and its contents and delivery for customers
and consumers, so that the requirements provide reasonable notice
and facilitate compliance with requirements in federal law and in
the laws of other states.
  (7) The director shall determine by rule:
  (a) When a privacy notice must be provided to a certificate
holder or beneficiary of a group policy and to a third-party
claimant.
  (b) When the obligation to provide annual notice ceases.
  (c) Requirements for revision of the notice by a licensee.
  (8) An   { - agent - }   { + insurance producer + } is not
subject to the requirements of this section when the insurer on
whose behalf the
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 142
 
 
 
  { - agent - }   { + insurance producer + } acts otherwise
complies with the requirements of this section and the
 { - agent - }   { + insurance producer + } does not disclose any
personal information to any person other than the insurer or its
affiliate, or as otherwise authorized by law.
  (9) A licensee may provide a joint notice from the licensee and
one or more of its affiliates or other financial institutions, as
identified in the notice, as long as the notice is accurate with
respect to the licensee and the other institutions. A licensee
may also provide a notice on behalf of a financial institution.
  (10) The obligations imposed by this section upon a licensee
may be satisfied by another licensee authorized to act on behalf
of the first licensee.
  (11) For purposes of this section and ORS 746.630 and 746.665,
an individual is not the consumer of a licensee solely because
the individual is covered under a group life or health insurance
policy issued by the licensee or is a participant or beneficiary
of an employee benefit plan that the licensee administers or
sponsors or for which the licensee acts as a trustee, insurer or
fiduciary, if:
  (a) The licensee provides to the policyholder the initial,
annual and revised notices under this section; and
  (b) The licensee does not disclose to a nonaffiliated third
party personal information about the individual other than as
permitted by ORS 746.665.
  (12) When an individual becomes a consumer of a licensee under
subsection (11) of this section, this section and ORS 746.630 and
746.665 apply to the licensee with respect to the individual.
  SECTION 156. ORS 746.625 is amended to read:
  746.625. An insurer or   { - agent - }   { + insurance
producer + } shall clearly so identify those questions which are
designed to obtain information solely for marketing or research
purposes from an individual in connection with an insurance
transaction.
  SECTION 157. ORS 746.630 is amended to read:
  746.630. (1) Notwithstanding any other law of this state, a
licensee or insurance-support organization may not utilize as its
disclosure authorization form in connection with insurance
transactions a form or statement which authorizes the disclosure
of personal or privileged information about an individual to the
licensee or insurance-support organization unless the form or
statement is clear and conspicuous, and contains all of the
following:
  (a) The identity of the individual who is the subject of the
personal information.
  (b) A general description of the categories of personal
information to be disclosed.
  (c) General descriptions of the parties to whom the licensee
discloses personal information, the purpose of the disclosure and
how the information will be used.
  (d) The signature of the individual who is the subject of the
personal information or the individual who is legally empowered
to grant authority and the date signed.
  (e) Notice of the length of time for which the authorization is
valid, that the individual may revoke the authorization at any
time and the procedure for making a revocation.
  (2) An authorization may not remain valid for more than 24
months.
  (3) An individual who is the subject of personal information
may revoke an authorization provided pursuant to this section at
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 143
 
 
 
any time, subject to the rights of any individual who acted in
reliance on the authorization prior to notice of the revocation.
  (4) A licensee shall retain the authorization of an individual
or a copy thereof in the record of the individual who is the
subject of the personal information.
  (5) A disclosure authorization obtained by an insurer,
  { - agent - }   { + insurance producer + } or insurance-support
organization from an individual prior to January 1, 1983, shall
be considered to be in compliance with this section.
  SECTION 158. ORS 746.635 is amended to read:
  746.635. (1) No insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization may prepare or
request an investigative consumer report about an individual in
connection with an insurance transaction involving an application
for insurance, a policy renewal, a policy reinstatement or a
change in insurance benefits unless the insurer or
 { - agent - }   { + insurance producer + } informs the
individual:
  (a) That the individual may request to be interviewed in
connection with the preparation of the investigative consumer
report; and
  (b) That upon a request pursuant to ORS 746.640, the individual
is entitled to receive a copy of the investigative consumer
report.
  (2) If an investigative consumer report is to be prepared by an
insurer or   { - agent - }  { +  insurance producer + }, the
insurer or   { - agent - }  { + insurance producer + } shall
institute reasonable procedures to conduct a personal interview
requested by the individual.
  (3) If an investigative consumer report is to be prepared by an
insurance-support organization, the insurer or   { - agent - }
 { + insurance producer + } desiring the report shall inform the
insurance-support organization whether a personal interview has
been requested by the individual. The insurance-support
organization shall institute reasonable procedures to conduct
such requested interviews.
  SECTION 159. ORS 746.640 is amended to read:
  746.640. (1) If any individual, after proper identification,
submits a written request to an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization for
access to recorded personal information about the individual
which is reasonably described by the individual and reasonably
locatable and retrievable by the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization,
the insurer,   { - agent - }   { + insurance producer + } or
insurance-support organization within 30 business days from the
date the request is received shall:
  (a) Inform the individual of the nature and substance of the
recorded personal information in writing, by telephone or by
other oral communication, whichever the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization
prefers;
  (b) Permit the individual to see and copy, in person, the
recorded personal information or to obtain a copy of the recorded
personal information by mail, whichever the individual prefers,
unless the recorded personal information is in coded form, in
which case an accurate translation in plain language shall be
provided in writing;
  (c) Disclose to the individual the identity, if recorded, of
the persons to whom the insurer,   { - agent - }   { + insurance
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 144
 
 
 
producer + } or insurance-support organization has disclosed the
recorded personal information within two years prior to the
request, and if such identity is not recorded, the names of the
insurers,   { - agents - }  { + insurance producers + },
insurance-support organizations and other persons to whom such
information is normally disclosed; and
  (d) Provide the individual with a summary of the procedures by
which the individual may request correction, amendment or
deletion of recorded personal information.
  (2) Any personal information provided pursuant to this section
shall identify the source of the information if the source is an
institutional source.
  (3) Medical record information supplied by a medical care
institution or medical professional and requested under this
section, together with the identity of the medical professional
or medical care institution which provided the information, shall
be supplied either directly to the individual or to a medical
professional designated by the individual and licensed to provide
medical care with respect to the condition to which the
information relates, whichever the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization
prefers. If it elects to disclose the information to a medical
professional designated by the individual, the insurer,
 { - agent - }   { + insurance producer + } or insurance-support
organization shall notify the individual, at the time of the
disclosure, that it has provided the information to the medical
professional.
  (4) Except for personal information provided under ORS 746.650,
an insurer,   { - agent - }   { + insurance producer + } or
insurance-support organization may charge a reasonable fee to
cover the costs incurred in providing a copy of recorded personal
information to an individual.
  (5) The obligations imposed by this section upon an insurer or
 { - agent - }   { + insurance producer + } may be satisfied by
another insurer or   { - agent - }   { + insurance producer + }
authorized to act on its behalf.  With respect to the copying and
disclosure of recorded personal information pursuant to a request
under this section, an insurer,
  { - agent - }   { + insurance producer + } or insurance-support
organization may make arrangements with an insurance-support
organization or a consumer reporting agency to copy and disclose
recorded personal information on its behalf.
  (6) The rights granted to individuals by this section shall
extend to all natural persons to the extent information about
them is collected and maintained by an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization in
connection with an insurance transaction. The rights granted to
all natural persons by this subsection shall not extend to
information about them that relates to and is collected in
connection with or in reasonable anticipation of a claim or a
civil or criminal proceeding involving them.
  (7) For purposes of this section, the term ' insurance-support
organization' does not include 'consumer reporting agency. '
  SECTION 159a.  { + If House Bill 2306 becomes law, section 159
of this 2003 Act (amending ORS 746.640) is repealed and ORS
746.640, as amended by section 13, chapter ___, Oregon Laws 2003
(Enrolled House Bill 2306), is amended to read: + }
  746.640. (1) If any individual, after proper identification,
submits a written request to an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization for
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 145
 
 
 
access to recorded personal information about the individual that
is reasonably described by the individual and reasonably
locatable and retrievable by the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization,
the insurer,   { - agent - }   { + insurance producer + } or
insurance-support organization within 30 business days from the
date the request is received shall:
  (a) Inform the individual of the nature and substance of the
recorded personal information in writing, by telephone or by
other oral communication, whichever the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization
prefers;
  (b) Permit the individual to see and copy, in person, the
recorded personal information or to obtain a copy of the recorded
personal information by mail, whichever the individual prefers,
unless the recorded personal information is in coded form, in
which case an accurate translation in plain language shall be
provided in writing;
  (c) Disclose to the individual the identity, if recorded, of
the persons to whom the insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization has disclosed the
recorded personal information within two years prior to the
request, and if such identity is not recorded, the names of the
insurers,   { - agents - }  { +  insurance producers + },
insurance-support organizations and other persons to whom such
information is normally disclosed; and
  (d) Provide the individual with a summary of the procedures by
which the individual may request correction, amendment or
deletion of recorded personal information.
  (2) Any personal information provided pursuant to this section
must identify the source of the information if the source is an
institutional source.
  (3) If an individual requests individually identifiable health
information supplied by a health care provider, the insurer,
 { - agent - }   { + insurance producer + } or insurance-support
organization shall provide the information, including the
identity of the health care provider either directly to the
individual or to a health care provider designated by the
individual and licensed to provide health care with respect to
the condition to which the information relates, whichever the
insurer,   { - agent - }  { + insurance producer + } or
insurance-support organization prefers. If the insurer,
 { - agent - }   { + insurance producer + } or insurance-support
organization elects to disclose the information to a health care
provider designated by the individual, the insurer,
 { - agent - }  { + insurance producer + } or insurance-support
organization shall notify the individual, at the time of the
disclosure, that the insurer,
  { - agent - }   { + insurance producer + } or insurance-support
organization has provided the information to the health care
provider.
  (4) Except for personal information provided under ORS 746.650,
an insurer,   { - agent - }   { + insurance producer + } or
insurance-support organization may charge a reasonable fee to
cover the costs incurred in providing a copy of recorded personal
information to an individual.
  (5) The obligations imposed by this section upon an insurer or
 { - agent - }   { + insurance producer + } may be satisfied by
another insurer or   { - agent - }   { + insurance producer + }
authorized to act on its behalf.  With respect to the copying and
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 146
 
 
 
disclosure of recorded personal information pursuant to a request
under this section, an insurer,
  { - agent - }   { + insurance producer + } or insurance-support
organization may make arrangements with an insurance-support
organization or a consumer reporting agency to copy and disclose
recorded personal information on its behalf.
  (6) The rights granted to individuals by this section shall
extend to all natural persons to the extent personal information
about them is collected and maintained by an insurer,
 { - agent - }  { + insurance producer + } or insurance-support
organization in connection with an insurance transaction. The
rights granted to all natural persons by this subsection shall
not extend to personal information about them that relates to and
is collected in connection with or in reasonable anticipation of
a claim or a civil or criminal proceeding involving them.
  (7) For purposes of this section, the term ' insurance-support
organization' does not include 'consumer reporting agency. '
  SECTION 160. ORS 746.645 is amended to read:
  746.645. (1) Within 30 business days from the date of receipt
of a written request from an individual to correct, amend or
delete any recorded personal information about the individual
within its possession, an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization
shall either:
  (a) Correct, amend or delete the portion of the recorded
personal information in dispute; or
  (b) Notify the individual of:
  (A) Its refusal to make the correction, amendment or deletion;
  (B) The reasons for the refusal; and
  (C) The individual's right to file a statement as provided in
subsection (3) of this section.
  (2) If the insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization corrects, amends
or deletes recorded personal information in accordance with
subsection (1) of this section, the insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization
shall so notify the individual in writing and furnish the
correction, amendment or fact of deletion to:
  (a) Each person specifically designated by the individual who
may have, within the preceding two years, received the recorded
personal information;
  (b) Each insurance-support organization whose primary source of
personal information is insurers, if the insurance-support
organization has systematically received recorded personal
information from the insurer within the preceding seven years.
However, the correction, amendment or fact of deletion need not
be furnished if the insurance-support organization no longer
maintains recorded personal information about the individual; and
  (c) Each insurance-support organization that furnished the
recorded personal information that has been corrected, amended or
deleted.
  (3) Whenever an individual disagrees with an insurer's,
  { - agent's - }   { + insurance producer's + } or
insurance-support organization's refusal to correct, amend or
delete recorded personal information, the individual shall be
permitted to file with the insurer,
  { - agent - }   { + insurance producer + } or insurance-support
organization:
  (a) A concise statement setting forth what the individual
thinks is the correct, relevant or fair information; and
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 147
 
 
 
  (b) A concise statement of the reasons why the individual
disagrees with the insurer's,   { - agent's - }   { + insurance
producer's + } or insurance-support organization's refusal to
correct, amend or delete recorded personal information.
  (4) In the event an individual files either or both of the
statements described in subsection (3) of this section, the
insurer,   { - agent - }   { + insurance producer + } or
insurance-support organization shall:
  (a) File the statements with the disputed personal information
and provide a means by which anyone reviewing the disputed
personal information will be made aware of the individual's
statements and have access to them;
  (b) In any subsequent disclosure by the insurer,
 { - agent - }  { + insurance producer + } or insurance-support
organization of the recorded personal information that is the
subject of the disagreement, clearly identify the matter or
matters in dispute and provide the individual's statements along
with the recorded personal information being disclosed; and
  (c) Furnish the statements to the persons and in the manner
specified in subsection (2) of this section.
  (5) The rights granted to individuals by this section shall
extend to all natural persons to the extent information about
them is collected and maintained by an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization in
connection with an insurance transaction. The rights granted to
all natural persons by this subsection shall not extend to
information about them that relates to and is collected in
connection with or in reasonable anticipation of a claim or a
civil or criminal proceeding involving them.
  (6) For purposes of this section, the term ' insurance-support
organization' does not include 'consumer reporting agency. '
  SECTION 161. ORS 746.650 is amended to read:
  746.650. (1) In the event of an adverse underwriting decision
the insurer or   { - agent - }   { + insurance producer + }
responsible for the decision shall:
  (a) Either provide the applicant, policyholder or individual
proposed for coverage with the specific reason or reasons for the
adverse underwriting decision in writing or advise the person
that upon written request the person may receive the specific
reason or reasons in writing; and
  (b) Provide the applicant, policyholder or individual proposed
for coverage with a summary of the rights established under
subsection (2) of this section and ORS 746.640 and 746.645.
  (2) Upon receipt of a written request within 90 business days
from the date of the mailing of notice or other communication of
an adverse underwriting decision to an applicant, policyholder or
individual proposed for coverage, the insurer or   { - agent - }
 { + insurance producer + } shall furnish to the person within 21
business days from the date of receipt of the written request:
  (a) The specific reason or reasons for the adverse underwriting
decision, in writing, if this information was not initially
furnished in writing pursuant to subsection (1) of this section;
  (b) The specific items of personal information and privileged
information that support these reasons, subject, however, to the
following:
  (A) The insurer or   { - agent - }   { + insurance producer + }
shall not be required to furnish specific items of privileged
information if it has a reasonable suspicion, based upon specific
information available for review by the Director of the
Department of Consumer and Business Services, that the applicant,
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 148
 
 
 
policyholder or individual proposed for coverage has engaged in
criminal activity, fraud, material misrepresentation or material
nondisclosure.
  (B) Specific items of medical record information supplied by a
medical care institution or medical professional shall be
disclosed either directly to the individual about whom the
information relates or to a medical professional designated by
the individual and licensed to provide medical care with respect
to the condition to which the information relates, whichever the
insurer or   { - agent - }   { + insurance producer + } prefers;
and
  (c) The names and addresses of the institutional sources which
supplied the specific items of information described in paragraph
(b) of this subsection. However, the identity of any medical care
institution or medical professional shall be disclosed either
directly to the individual or to the designated medical
professional, whichever the insurer or   { - agent - }
 { + insurance producer + } prefers.
  (3) The obligations imposed by this section upon an insurer or
 { - agent - }   { + insurance producer + } may be satisfied by
another insurer or agent authorized to act on its behalf.
  (4) When an adverse underwriting decision results solely from
an oral request or inquiry, the explanation of reasons and
summary of rights required by subsection (1) of this section may
be given orally.
  SECTION 162. ORS 746.655 is amended to read:
  746.655. No insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization may seek
information in connection with an insurance transaction
concerning any previous adverse underwriting decision experienced
by an individual, or any previous insurance coverage obtained by
an individual through a residual market mechanism, unless the
inquiry also requests the reasons for any previous adverse
underwriting decision or the reasons why insurance coverage was
previously obtained through a residual market mechanism.
  SECTION 163. ORS 746.660 is amended to read:
  746.660. No insurer or   { - agent - }   { + insurance
producer + } may base an adverse underwriting decision in whole
or in part on:
  (1) The fact of a previous adverse underwriting decision or on
the fact that an individual previously obtained insurance
coverage through a residual market mechanism. However, an insurer
or   { - agent - }   { + insurance producer + } may base an
adverse underwriting decision on further information obtained
from an insurer or
  { - agent - }   { + insurance producer + } responsible for a
previous adverse underwriting decision.
  (2) Personal information received from an insurance-support
organization whose primary source of information is insurers.
However, an insurer or   { - agent - }   { + insurance
producer + } may base an adverse underwriting decision on further
personal information obtained as the result of information
received from such an insurance-support organization.
  SECTION 164. ORS 746.670 is amended to read:
  746.670. (1) The Director of the Department of Consumer and
Business Services shall have the power to examine and investigate
into the affairs of any insurer or   { - agent - }
 { + insurance producer + } transacting insurance in this state
to determine whether it has been or is engaged in any conduct in
violation of ORS 746.600 to 746.690 and 750.055.
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 149
 
 
 
  (2) The director shall have the power to examine and
investigate into the affairs of any insurance-support
organization acting on behalf of an insurer or   { - agent - }
 { + insurance producer + } which either transacts insurance in
this state or transacts insurance outside this state which has an
effect on a person residing in this state, in order to determine
whether the insurance-support organization has been or is engaged
in any conduct in violation of ORS 746.600 to 746.690 and
750.055.
  SECTION 165. ORS 746.680 is amended to read:
  746.680. (1) If any insurer,   { - agent - }   { + insurance
producer + } or insurance-support organization fails to comply
with ORS 746.640, 746.645 or 746.650, any person whose rights
granted under those sections are violated may apply to the
circuit court for the county in which the person resides, or any
other court of competent jurisdiction, for appropriate equitable
relief.
  (2) A licensee or insurance-support organization that discloses
information in violation of ORS 746.665 shall be liable for
damages sustained by the individual about whom the information
relates. However, no individual shall be entitled to a monetary
award that exceeds the actual damages sustained by the individual
as a result of the violation of ORS 746.665.
  (3) In any action brought pursuant to this section, the court
may award the cost of the action and reasonable attorney fees to
the prevailing party.
  (4) An action under this section must be brought within two
years from the date the alleged violation is or should have been
discovered.
  (5) Except as specifically provided in this section, there
shall be no remedy or recovery available to individuals, in law
or in equity, for occurrences constituting a violation of any
provision of ORS 746.600 to 746.690 and 750.055.
  SECTION 165a.  { + If House Bill 2306 becomes law, section 165
of this 2003 Act (amending ORS 746.680) is repealed and ORS
746.680, as amended by section 18, chapter ___, Oregon Laws 2003
(Enrolled House Bill 2306), is amended to read: + }
  746.680. (1) A person whose rights granted under ORS 746.640,
746.645 or 746.650 or section 3 (7) { + , chapter ___, Oregon
Laws 2003 (Enrolled House Bill 2306), + }   { - of this 2003
Act - }  are violated may apply to the circuit court for the
county in which the person resides, or any other court of
competent jurisdiction, for appropriate equitable relief if an
insurer,   { - agent - }   { + insurance producer + } or
insurance-support organization fails to comply with ORS 746.640,
746.645 or 746.650 or section 3 (7) { + , chapter ___, Oregon
Laws 2003 (Enrolled House Bill 2306) + }   { - of this 2003
Act - } .
  (2) A licensee or insurance-support organization that discloses
information in violation of ORS 746.665 or a health insurer that
uses or discloses information in violation of section 3 (1) or
(2) { + , chapter ___, Oregon Laws 2003 (Enrolled House Bill
2306), + }   { - of this 2003 Act - }  is liable for damages
sustained by the individual about whom the information relates.
However, an individual is not entitled to a monetary award that
exceeds the actual damages sustained by the individual as a
result of the violation of ORS 746.665 or section 3 (1) or
(2) { + , chapter ___, Oregon Laws 2003 (Enrolled House Bill
2306) + }   { - of this 2003 Act - } .
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 150
 
 
 
  (3) In any action brought pursuant to this section, the court
may award the cost of the action and reasonable attorney fees to
the prevailing party.
  (4) An action under this section must be brought within two
years from the date the alleged violation is or should have been
discovered.
  (5) Except as specifically provided in this section, there
shall be no remedy or recovery available to individuals, in law
or in equity, for occurrences constituting a violation of any
provision of ORS 746.600 to 746.690.
  SECTION 166. ORS 746.685 is amended to read:
  746.685. No cause of action in the nature of defamation,
invasion of privacy or negligence shall arise against any person
for disclosing personal or privileged information in accordance
with ORS 746.600 to 746.690 and 750.055, nor shall such a cause
of action arise against any person for furnishing personal or
privileged information to an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization.
However, this section shall provide no immunity for disclosing or
furnishing false information with malice or willful intent to
injure any person.
  SECTION 167. ORS 746.690 is amended to read:
  746.690. No person shall knowingly and willfully obtain
information about an individual from an insurer,   { - agent - }
 { + insurance producer + } or insurance-support organization
under false pretenses.
  SECTION 168. ORS 748.181 is amended to read:
  748.181.   { - Agents - }   { + Insurance producers + } of
societies shall be licensed in accordance with the provisions of
ORS chapter 744 regulating the licensing, revocation, suspension
or termination of license of resident and nonresident
 { - agents - }  { +  insurance producers + }.
  SECTION 169. ORS 750.055 is amended to read:
  750.055. (1) The following provisions of the Insurance Code
shall apply to health care service contractors to the extent so
applicable and not inconsistent with the express provisions of
ORS 750.005 to 750.095:
  (a) ORS 705.137, 705.139, 731.004 to 731.150, 731.162, 731.216
to 731.362, 731.382, 731.385, 731.386, 731.390, 731.398 to
731.430, 731.428, 731.450, 731.454, 731.488, 731.504, 731.508,
731.509, 731.510, 731.511, 731.512, 731.574 to 731.620, 731.592,
731.594, 731.640 to 731.652, 731.730, 731.731, 731.735, 731.737,
731.750, 731.752, 731.804 and 731.844 to 731.992.
  (b) ORS 732.215, 732.220, 732.230, 732.245, 732.250, 732.320,
732.325 and 732.517 to 732.592, not including ORS 732.549 and
732.574 to 732.592.
  (c)(A) ORS 733.010 to 733.050, 733.080, 733.140 to 733.170,
733.210, 733.510 to 733.620, 733.635 to 733.680 and 733.695 to
733.780 apply to not-for-profit health care service contractors.
  (B) ORS chapter 733, not including ORS 733.630, applies to
for-profit health care service contractors.
  (d) ORS chapter 734.
  (e) ORS 742.001 to 742.009, 742.013, 742.061, 742.065, 742.150
to 742.162, 742.400, 742.520 to 742.540, 743.010, 743.013,
743.018 to 743.030, 743.050, 743.100 to 743.109, 743.402,
743.412, 743.472, 743.492, 743.495, 743.498, 743.522, 743.523,
743.524, 743.526, 743.527, 743.528, 743.529, 743.549 to 743.555,
743.556, 743.560, 743.600 to 743.610, 743.650 to 743.656,
743.693, 743.694, 743.697, 743.699, 743.701, 743.706 to 743.712,
743.721, 743.722, 743.726, 743.727, 743.728, 743.729, 743.804,
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 151
 
 
 
743.807, 743.808, 743.809, 743.814 to 743.839, 743.842, 743.845,
743.847, 743.854, 743.856, 743.857, 743.858, 743.859, 743.861,
743.862, 743.863, 743.864, 743.866 and 743.868.
  (f) The provisions of ORS chapter 744 relating to the
regulation of   { - agents - }  { +  insurance producers + }.
  (g) ORS 746.005 to 746.140, 746.160, 746.180, 746.220 to
746.370 and 746.600 to 746.690.
  (h) ORS 743.714, except in the case of group practice health
maintenance organizations that are federally qualified pursuant
to Title XIII of the Public Health Service Act unless the patient
is referred by a physician associated with a group practice
health maintenance organization.
  (i) ORS 735.600 to 735.650.
  (j) ORS 743.680 to 743.689.
  (k) ORS 744.700 to 744.740.
  (L) ORS 743.730 to 743.773.
  (m) ORS 731.485, except in the case of a group practice health
maintenance organization that is federally qualified pursuant to
Title XIII of the Public Health Service Act and that wholly owns
and operates an in-house drug outlet.
  (2) For the purposes of this section only, health care service
contractors shall be deemed insurers.
  (3) Any for-profit health care service contractor organized
under the laws of any other state which is not governed by the
insurance laws of such state, will be subject to all requirements
of ORS chapter 732.
  (4) The Director of the Department of Consumer and Business
Services may, after notice and hearing, adopt reasonable rules
not inconsistent with this section and ORS 750.003, 750.005,
750.025 and 750.045 that are deemed necessary for the proper
administration of these provisions.
  SECTION 170. ORS 750.333 is amended to read:
  750.333. (1) The following provisions of the Insurance Code
apply to trusts carrying out a multiple employer welfare
arrangement:
  (a) ORS 731.004 to 731.150, 731.162, 731.216 to 731.268,
731.296 to 731.316, 731.324, 731.328, 731.378, 731.386, 731.390,
731.398, 731.406, 731.410, 731.414, 731.418 to 731.434, 731.454,
731.484, 731.486, 731.488, 731.512, 731.574 to 731.620, 731.640
to 731.652, 731.804 to 731.992.
  (b) ORS 733.010 to 733.050, 733.140 to 733.170, 733.210,
733.510 to 733.680 and 733.695 to 733.780.
  (c) ORS chapter 734.
  (d) ORS 742.001 to 742.009, 742.013, 742.061 and 742.400.
  (e) ORS 743.028, 743.053, 743.524, 743.526, 743.527, 743.528,
743.529, 743.530, 743.560, 743.562, 743.600, 743.601, 743.602,
743.610, 743.693, 743.694, 743.699, 743.727, 743.728, 743.730 to
743.773 (except 743.760 to 743.773), 743.801, 743.804, 743.807,
743.808, 743.809, 743.814 to 743.839, 743.842, 743.845, 743.847,
743.854, 743.856, 743.857, 743.858, 743.859, 743.861, 743.862,
743.863 and 743.864.
  (f) ORS 743.556, 743.701, 743.703, 743.706, 743.707, 743.709,
743.710, 743.712, 743.713, 743.714, 743.717, 743.718, 743.719,
743.721, 743.722, 743.725 and 743.726. Multiple employer welfare
arrangements to which ORS 743.730 to 743.773 apply are subject to
the sections referred to in this paragraph only as provided in
ORS 743.730 to 743.773.
  (g) Provisions of ORS chapter 744 relating to the regulation of
 { - agents - }   { + insurance producers + } and insurance
consultants, and ORS 744.700 to 744.740.
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 152
 
 
 
  (h) ORS 746.005 to 746.140, 746.160, 746.180 and 746.220 to
746.370.
  (i) ORS 731.592 and 731.594.
  (2) For the purposes of this section:
  (a) A trust carrying out a multiple employer welfare
arrangement shall be considered an insurer.
  (b) References to certificates of authority shall be considered
references to certificates of multiple employer welfare
arrangement.
  (c) Contributions shall be considered premiums.
  (3) The provision of health benefits under ORS 750.301 to
750.341 shall be considered to be the transaction of health
insurance.
  SECTION 171. ORS 750.545 is amended to read:
  750.545. (1) An applicant for a certificate of registration
shall apply to the Director of the Department of Consumer and
Business Services on a form prescribed by the director. The
application shall be accompanied by the applicable fee
established by the director.
  (2) An application shall include the following information:
  (a) The applicant's name and the address of the principal
office of the organization.
  (b) Whether the applicant or any of its directors, officers or
managers has ever been convicted of or is under indictment for a
crime, has ever had a judgment entered against it or any of them
for fraud, and whether any license to act as an insurance
 { - agent, broker or solicitor - }   { + producer + } or in any
other occupational or professional capacity has ever been
refused, revoked or suspended in this or any other state with
respect to the applicant or any of its directors, officers or
managers.
  (c) A statement of the financial condition of the applicant or
of the organization. The statement must be in a form satisfactory
to the director and verified by an official of the organization.
  (d) Any other information required by the director.
  SECTION 172. ORS 806.180 is amended to read:
  806.180. A person who is required, under ORS 803.460 or
811.725, to   { - give proof of - }   { + certify + } compliance
with financial responsibility requirements shall comply with the
following:
  (1) The person shall   { - give proof - }   { + certify + } in
a manner prescribed by the Department of Transportation.
  (2) The applicant shall provide any information that the
department requires.
  (3) If the person certified the existence of a motor vehicle
liability insurance policy described under ORS 806.080, the
person shall report at least the following information:
  (a) The name of the insurer issuing the policy; and
  (b) The policy number,   { - agent's - }   { + insurance
producer's + } binder number or any other number that identifies
the policy.
  SECTION 173. ORS 806.190 is amended to read:
  806.190. (1) Every insurance carrier or insurance
 { - agent - }  { + producer + } that issues property and
casualty insurance policies, as defined in ORS chapter 731, in
this state shall report to the Department of Transportation any
person the carrier or   { - agent - }  { + producer + } has
reason to believe is involved in an accident while the person is
operating a vehicle in violation of ORS 806.010. The carrier or
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 153
 
 
 
 { - agent - }   { + producer + } shall make the report required
by this section whether or not the accident:
  (a) Is a reportable accident under ORS 811.720; or
  (b) Occurred on a highway or on any other premises open to the
public.
  (2) No civil liability shall accrue to a carrier or
 { - agent - }  { + insurance producer + } or any of its
employees for reports made to the department under this section
when the reports are made in good faith.
  SECTION 174. Section 13, chapter 898, Oregon Laws 2001, is
amended to read:  { +  + }
   { +  Sec. 13. + } (1) The Department of Human Services shall
establish a Waiver Application Steering Committee to assist and
advise the department in the preparation of the application for
federal waivers from the Centers for Medicare and Medicaid
Services necessary to carry out   { - sections 1 to 11 of this
2001 Act - }   { + ORS 414.821 to 414.839 + }. The committee
shall ensure that the concerns and views of Oregonians interested
in the Oregon Health Plan are fully considered in the preparation
of the waiver application.
  (2) The committee shall consist of, but not be limited to, the
following:
  (a) Two members of the House of Representatives appointed by
the Speaker of the House of Representatives, one of whom shall be
a member of the Emergency Board;
  (b) Two members of the Senate appointed by the President of the
Senate, one of whom shall be a member of the Emergency Board;
  (c) A representative of a statewide association representing
hospitals and health systems;
  (d) A representative of a statewide association representing
physicians licensed under ORS chapter 677 to practice medicine in
this state;
  (e) A representative of community-based health plans with
contracts to provide health care services under the Oregon Health
Plan;
  (f) A representative of dental care organizations with
contracts to provide health care services under the Oregon Health
Plan;
  (g) A representative of commercial carriers;
  (h) A representative of safety net clinics;
  (i) Advocates for health care consumers and persons without
health insurance;
  (j) Advocates for persons with mental illness;
  (k) One representative each of small and large businesses;
  (L) A representative of insurance   { - agents - }  { +
producers + }; and
  (m) A representative of organized labor.
  (3)(a) When preparing the waiver application, the Department of
Human Services and the Waiver Application Steering Committee
shall carefully consider the connection between the coverage
provided through the state Medicaid program and coverage provided
through private insurance.
  (b) The waiver application shall set forth the circumstances
under which persons covered under the waivers may use coverage
provided through the state Medicaid program and when they may use
coverage provided by private insurance. These circumstances shall
ensure that the viability of the community-based health plans
currently with contracts to provide health care services under
the Oregon Health Plan will be maintained.
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 154
 
 
 
  (c) The department and the committee shall consider the
following factors when setting forth the circumstances described
in paragraph (b) of this subsection:
  (A) Personal choice;
  (B) The ability of a family to obtain employer-sponsored group
coverage;
  (C) The cost to a family to obtain employer-sponsored group
coverage;
  (D) The cost to the department to obtain or supplement
employer-sponsored group coverage for a person and the person's
family; and
  (E) The medical needs of the person and the person's family.
  SECTION 175.  { + The unit captions used in this 2003 Act are
provided only for the convenience of the reader and do not become
part of the statutory law of this state or express any
legislative intent in the enactment of this 2003 Act. + }
                         ----------
 
 
Passed by Senate March 13, 2003
 
Repassed by Senate May 27, 2003
 
 
      ...........................................................
                                              Secretary of Senate
 
      ...........................................................
                                              President of Senate
 
Passed by House May 19, 2003
 
 
      ...........................................................
                                                 Speaker of House
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 155
 
 
 
 
 
Received by Governor:
 
......M.,............., 2003
 
Approved:
 
......M.,............., 2003
 
 
      ...........................................................
                                                         Governor
 
Filed in Office of Secretary of State:
 
......M.,............., 2003
 
 
      ...........................................................
                                               Secretary of State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enrolled Senate Bill 253 (SB 253-B)                      Page 156