74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 3519
House Bill 2999
Sponsored by Representative HOLVEY
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Requires Director of Department of Consumer and Business
Services to adopt rule requiring temporary employment agency to
pay workers' compensation insurance premiums for workers provided
to client at rate based on client's own experience rating.
A BILL FOR AN ACT
Relating to workers' compensation insurance premium rates for
employees provided by temporary employment agency; amending ORS
737.310.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 737.310 is amended to read:
737.310. The following standards shall apply to the making and
use of rates:
(1) Rates shall not be excessive, inadequate or unfairly
discriminatory.
(2) As to all classes of insurance, other than workers'
compensation and title insurance:
(a) No rate shall be held to be excessive unless:
(A) Such rate is unreasonably high for the insurance provided;
and
(B) A reasonable degree of competition does not exist in the
area with respect to the classification to which such rate is
applicable.
(b) No rate shall be held inadequate unless such rate is
unreasonably low for the insurance provided and:
(A) Use or continued use of such rate endangers the solvency of
the insurer; or
(B) The use of such rate by the insurer has, or if continued
will have, the effect of destroying competition or creating a
monopoly.
(3) Rates for each classification of coverage shall be based on
the claims experience of insurers within Oregon on that
classification of coverage unless that experience provides an
insufficient base for actuarially sound rates.
(4) Due consideration shall be given to past and prospective
loss experience within this state, to the hazards of
conflagration and catastrophe, to a reasonable margin for profit
and to contingencies, to dividends, savings or unabsorbed premium
deposits allowed or returned by insurers to their policyholders,
members or subscribers, to past and prospective expenses
specially applicable to this state, and to all other relevant
factors, including judgment factors deemed relevant, within this
state.
(5) In addition to subsection (4) of this section, rates for
home protection insurance may include provision for unreimbursed
costs of risk inspection and for loss costs under policies which
are terminated without premium because the related home sale is
not made.
(6) In the case of fire insurance rates, consideration may be
given to the experience of the fire insurance business during the
most recent five-year period for which such experience is
available.
(7) The systems of expense provisions included in the rates for
use by any insurer or group of insurers may differ from those of
other insurers or groups of insurers to reflect the requirements
of the operating methods of any such insurer or group of insurers
with respect to any class of insurance, or with respect to any
subdivision or combination thereof for which subdivision or
combination separate expenses are applicable.
(8) Risks may be grouped by classifications for the
establishment of rates and minimum premiums. Classification rates
for casualty, surety or inland marine risks may be modified to
produce rates for individual risks in accordance with rating
plans which establish standards for measuring variations in
hazards or expense provisions or both. Such standards may measure
any differences among risks that can be demonstrated to have a
probable effect upon losses or expenses.
(9) Due consideration shall be given, in the making and use of
rates for all insurance, to investment income earned by the
insurer, to insurer profits and to accumulated reserves for
vocational rehabilitation services and for claim costs related to
orders or awards made pursuant to ORS 656.278.
(10) The Director of the Department of Consumer and Business
Services, by rule, shall prescribe the conditions under which a
division of payroll between different manual classifications is
permitted for purposes of computing workers' compensation
premiums.
(11)(a) The director shall not approve any workers'
compensation rating system that does not include a plan for
rewarding employers, however small, that have good loss
experience or programs likely to improve accident prevention.
However, this paragraph is not intended to require that all
employers be experience rated.
(b) The director shall not approve any workers' compensation
rating system that does not allow the insurer to include
potential third party recovery as one of the variables in the
claims reserving process.
(12) At the time an insurer issues a workers' compensation
insurance policy to an insured for the first time, the insurer
shall give written notice to the insured of the rating
classifications to which the insured's employees are to be
assigned and shall provide an adequate description of work
activities in each classification. In the event an insurer
recommences coverage following its termination, the notice
required under this subsection must be given only if the gap in
coverage exceeds six months.
(13) If an insurer determines the workers' compensation
insurance policy of an insured needs reclassification, the
insurer:
(a) May bill an additional premium for the revised
classification after the insurer has provided the insured at
least 60 days' written notice of the reclassification.
(b) Shall bill retroactively to policy inception or date of
change in insured's operations for any reclassification that
results in a net reduction of premium.
(c) May, notwithstanding paragraph (a) of this subsection,
retroactively bill an insured for reclassification during the
policy year without prior notice of reclassification if the
insurer shows by a preponderance of the evidence that:
(A) The insured knew that the employees were misclassified, or
the insured was adequately informed by the insurer of the proper
classification for the insured's employees;
(B) The insured provided improper or inaccurate information
concerning its operations; or
(C) The insured's operations changed after the date information
on the employees was obtained from the insured.
(14) In consultation with system participants, the director
shall analyze the rating classification system to investigate
changes that simplify the system and reduce costs for employers
and insurers while preserving rate equity and minimizing the
potential for abuse. The director shall give particular emphasis
to the method of allocating payroll to rating classifications and
to alternatives to methods that require verifiable payroll
records. Upon completion of this analysis, the director shall
implement appropriate changes to the system.
(15) { + (a) + } The director shall adopt rules to carry out
the provisions of this section and may by rule specify procedures
relating to rating and ratemaking by workers' compensation
insurers.
{ + (b) The rules adopted by the director under this
subsection shall include a provision that the workers'
compensation insurance premium for coverage of workers provided
to a client by a temporary employment agency shall be based on
the client's own experience rating, in the same manner as
required for employers insuring directly employed workers, and
not on the experience rating of the temporary employment
agency. + }
(16) A rate increase based solely upon an insured's attaining
or exceeding 65 years of age shall be presumed to be unfairly
discriminatory unless the increase is clearly based on sound
actuarial principles or is related to actual or reasonably
anticipated experience.
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