Chapter 656
AN ACT
HB 2783
Relating to termination of workers’ compensation coverage; creating new
provisions; and amending ORS 656.427.
Be It Enacted by the People of
the State of
SECTION 1. ORS 656.427 is amended to read:
656.427. (1) An insurer
that issues a guaranty contract or a surety bond to an employer under this
chapter may terminate liability on its contract or bond, as the case may be, by
giving the employer and the Director of the Department of Consumer and Business
Services notice of termination in accordance with rules adopted by the
director. A notice of termination shall state the effective date of
termination.
(2) An insurer may
terminate liability under this section as follows:
(a) If the termination
of a guaranty contract is for reasons other than those set forth in [paragraph (b)] paragraphs (b) and (c)
of this subsection, it is effective at 12 midnight not less than [30] 45 days after the date the
notice is mailed to the employer.
(b) If the termination of
a guaranty contract is based on the insurer’s decision not to offer insurance
to employers within a specific premium category, it is effective not sooner
than 90 days after the date the notice is mailed to the employer.
(c) If the
termination of a guaranty contract is based on nonpayment of premium, the
termination is effective not sooner than 10 days after the date the notice is
mailed to the employer.
[(c)] (d) The termination of a
surety bond is effective at 12 midnight not less than 30 days after the date
the notice is received by the director.
(3) Notice to the
employer under this section shall be given by mail, addressed to the employer
at the last-known address of the employer. If the employer is a partnership,
notice may be given to any of the partners. If the employer is a limited
liability company, notice may be given to any manager, or in a member managed
limited liability company, to any of the members. If
the employer is a corporation, notice may be given to any agent or officer of
the corporation under whom legal process may be served.
(4) Termination shall in
no way limit liability that was incurred under the guaranty contract or surety
bond prior to the effective date of the termination.
(5) If, before the
effective date of a termination under this section, the employer gives notice
to the insurer that it has not obtained coverage from another insurer and
intends to become insured under the assigned risk plan established under ORS
656.730, the insurer shall insure that continuing coverage is provided to the
employer under the plan without further application by the employer,
transferring the risk to the plan as of the effective date of termination. If
the insurer is a servicing carrier under the plan, it shall continue to provide
coverage for the employer as a servicing carrier, at least until another
servicing carrier is provided for the employer in the normal course of
administering the plan. If the insurer is not a servicing carrier, it shall
apply to the plan for coverage on the employer’s behalf. Nothing in this
section is intended to limit the authority of administrators of the plan to
require the employer to provide deposits or to make payments consistent with
plan requirements. However, the rules of the plan shall allow any deposit requirements
imposed by the plan to be deferred for as long as one year.
SECTION 2. If Senate Bill 559 becomes law, ORS 656.427, as
amended by section 1 of this 2007 Act, is amended to read:
656.427. (1) An insurer
that issues [a guaranty contract or a surety
bond] a workers’ compensation insurance policy or surety bond to an
employer under this chapter may [terminate
liability on its contract or bond, as the case may be,] cancel the
policy or surety bond prior to the expiration date of the policy or surety bond
by giving the employer and the Director of the Department of Consumer and
Business Services notice of [termination]
cancellation in accordance with rules adopted by the director. [A notice of termination shall state the
effective date of termination.] Notice required under this section must
be provided to the director within 10 calendar days after the effective date of
the cancellation provided in the notice given to the employer.
(2) An insurer may [terminate liability] cancel a workers’
compensation insurance policy or surety bond under this section as follows:
(a) If the [termination of a guaranty contract] cancellation
of a workers’ compensation insurance policy is for reasons other than those
set forth in paragraphs (b) and (c) of this subsection, it is effective at 12
midnight not less than 45 days after the date the notice is mailed to the
employer.
(b) If the [termination of a guaranty contract] cancellation
of a workers’ compensation insurance policy is based on the insurer’s
decision not to offer insurance to employers within a specific premium
category, it is effective not sooner than 90 days after the date the notice is
mailed to the employer.
(c) If the [termination of a guaranty contract] cancellation
of a workers’ compensation insurance policy is based on nonpayment of
premium, the [termination]
cancellation is effective not sooner than 10 days after the date the notice
is mailed to the employer.
(d) The [termination] cancellation of a
surety bond is effective at 12 midnight not less than 30 days after the date
the notice is received by the director.
(3) An insurer may
nonrenew a workers’ compensation insurance policy by providing notice in the
manner provided for in subsection (2) of this section.
[(3)] (4) Notice to the employer under this section shall be
given by mail, addressed to the employer at the last-known address of the
employer. If the employer is a partnership, notice may be given to any of the
partners. If the employer is a limited liability company, notice may be given
to any manager, or in a member managed limited liability company,
to any of the members. If the employer is a corporation, notice may be given to
any agent or officer of the corporation under whom legal process may be served.
[(4)] (5) [Termination]
Cancellation of a workers’ compensation insurance policy or surety bond
shall in no way limit liability that was incurred under the [guaranty contract or surety bond] policy
or surety bond prior to the effective date of the [termination] cancellation.
[(5)] (6) If, before the effective date of a [termination] cancellation under
this section, the employer gives notice to the insurer that it has not obtained
coverage from another insurer and intends to become insured under the assigned
risk plan established under ORS 656.730, the insurer shall [insure] ensure that continuing
coverage is provided to the employer under the plan without further application
by the employer, transferring the risk to the plan as of the effective date of
[termination] cancellation. If
the insurer is a servicing carrier under the plan, it shall continue
to provide coverage for the employer as a servicing carrier, at least until
another servicing carrier is provided for the employer in the normal course of
administering the plan. If the insurer is not a servicing carrier, it shall
apply to the plan for coverage on the employer’s behalf. Nothing in this
section is intended to limit the authority of administrators of the plan to
require the employer to provide deposits or to make payments consistent with
plan requirements. However, the rules of the plan shall allow any deposit
requirements imposed by the plan to be deferred for as long as one year.
(7) The cancellation
of a workers’ compensation insurance policy under this section is effective on
the earliest of:
(a) The expiration of
the term of the policy;
(b) The effective date
of a cancellation under subsection (2) of this section; or
(c) The effective date
of a policy for which another insurer makes a proof of coverage filing on behalf
of the employer.
SECTION 3. If Senate Bill 559 becomes law, ORS 656.427, as
amended by section 3, chapter 241, Oregon Laws 2007 (Enrolled Senate Bill 559),
is amended to read:
656.427. (1) An insurer
that issues a workers’ compensation insurance policy or surety bond to an
employer under this chapter may cancel the policy or surety bond prior to the
expiration date of the policy or surety bond by giving the employer and the
Director of the Department of Consumer and Business Services notice of cancellation
in accordance with rules adopted by the director. Notice required under this
section must be provided to the director within 10 calendar days after the
effective date of the cancellation provided in the notice given to the
employer.
(2) An insurer may
cancel a workers’ compensation insurance policy or surety bond under this
section as follows:
(a) If the cancellation of
a workers’ compensation insurance policy is for reasons other than those
set forth in [paragraph (b)]
paragraphs (b) and (c) of this subsection, it is effective at 12 midnight
not less than [30] 45 days
after the date the notice is mailed to the employer.
(b) If the cancellation of
a workers’ compensation insurance policy is based on the insurer’s decision
not to offer insurance to employers within a specific premium category, it is
effective not sooner than 90 days after the date the notice is mailed to the
employer.
(c) If the
cancellation of a workers’ compensation insurance policy is based on nonpayment
of premium, the cancellation is effective not sooner than 10 days after the
date the notice is mailed to the employer.
[(c)] (d) The [termination] cancellation of a surety bond is effective at
12 midnight not less than 30 days after the date the notice is received by the
director.
(3) An insurer may
nonrenew a workers’ compensation insurance policy by providing notice in the
manner provided for in subsection (2) of this section.
(4) Notice to the
employer under this section shall be given by mail, addressed to the employer
at the last-known address of the employer. If the employer is a partnership,
notice may be given to any of the partners. If the employer is a limited
liability company, notice may be given to any manager, or in a member managed
limited liability company, to any of the members. If
the employer is a corporation, notice may be given to any agent or officer of
the corporation under whom legal process may be served.
(5) Cancellation of a
workers’ compensation insurance policy or surety bond shall in no way limit
liability that was incurred under the policy or surety bond prior to the
effective date of the cancellation.
(6) If, before the
effective date of a cancellation under this section, the employer gives notice
to the insurer that it has not obtained coverage from another insurer and
intends to become insured under the assigned risk plan established under ORS
656.730, the insurer shall ensure that continuing coverage is provided to the
employer under the plan without further application by the employer, transferring
the risk to the plan as of the effective date of cancellation. If the insurer
is a servicing carrier under the plan, it shall continue to provide coverage
for the employer as a servicing carrier, at least until another servicing
carrier is provided for the employer in the normal course of administering the
plan. If the insurer is not a servicing carrier, it shall apply to the plan for
coverage on the employer’s behalf. Nothing in this section is intended to limit
the authority of administrators of the plan to require the employer to provide
deposits or to make payments consistent with plan requirements. However, the
rules of the plan shall allow any deposit requirements imposed by the plan to
be deferred for as long as one year.
(7) The cancellation of
a workers’ compensation insurance policy under this section is effective on the
earliest of:
(a) The expiration of
the term of the policy;
(b) The effective date
of a cancellation under subsection (2) of this section; or
(c) The effective date
of a policy for which another insurer makes a proof of coverage filing on
behalf of the employer.
SECTION 4. If Senate Bill 559 becomes law, the
amendments to ORS 656.427 by sections 2 and 3 of this 2007 Act become operative
on July 1, 2009.
Approved by the Governor June 27, 2007
Filed in the office of Secretary of State June 27, 2007
Effective date January 1, 2008
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