75th OREGON LEGISLATIVE ASSEMBLY--2010 Special 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 29
 
                        Senate Bill 1002
 
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 Senate Interim Committee on
  Consumer Protection and Public Affairs)
 
 
                             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.
 
  Increases annuity coverage by Oregon Life and Health Insurance
Guaranty Association from $100,000 to $250,000.
  Declares emergency, effective upon passage.
 
                        A BILL FOR AN ACT
Relating to annuities; amending ORS 734.810; and declaring an
  emergency.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 734.810 is amended to read:
  734.810. In addition to the other powers and duties enumerated
in ORS 734.750 to 734.890:
  (1) If a domestic insurer is an impaired insurer, the Oregon
Life and Health Insurance Guaranty Association may, subject to
any conditions imposed by the association and approved by the
impaired insurer and the Director of the Department of Consumer
and Business Services, other than those which impair the
contractual obligations of the impaired insurer:
  (a) Guarantee or reinsure, or cause to be guaranteed, assumed,
or reinsured, any or all of the covered policies of the impaired
insurer.
  (b) Provide such money, pledges, notes, guarantees or other
means as are proper to implement paragraph (a) of this subsection
and assure payment of the contractual obligations of the impaired
insurer pending action under paragraph (a) of this subsection.
  (c) Loan money to the impaired insurer.
  (2) If a member insurer is an insolvent insurer, the
association shall, subject to the approval of the director:
  (a) Guarantee, assume, or reinsure, or cause to be guaranteed,
assumed, or reinsured, the covered policies of the insolvent
insurer;
  (b) Assure payment of the contractual obligations of the
insolvent insurer; and
  (c) Provide such money, pledges, notes, guarantees or other
means as are reasonably necessary to discharge such duties.
  (3)(a) In carrying out its duties under subsection (2) of this
section,  { + the association may impose + } permanent policy
liens or contract liens   { - may be imposed - }  in connection
with any guaranteed, assumption or reinsurance agreement, if the
court  { + considering the lien + } finds that the amounts which
can be assessed under ORS 734.750 to 734.890 are less than the
amounts needed to assure full and prompt performance of the
insolvent insurer's contractual obligations or that the economic
or financial conditions affecting member insurers are
sufficiently adverse to render the imposition of policy or
contract liens to be in the public interest, and approves the
specific policy liens or contract liens to be used.
  (b) Before being obligated under subsection (2) of this section
the association may request that there be imposed temporary
moratoriums or liens on payments of cash values and policy loans,
in addition to any contractual provisions for deferral of cash or
policy loan values, and such temporary moratoriums and liens may
be imposed if they are approved by the court.
  (4) If the association fails to act as required in subsection
(2) of this section within a reasonable time, the director shall
have the powers and duties of the association under ORS 734.750
to 734.890 with respect to insolvent insurers.
  (5) The association may render assistance and advice to the
director, upon request of the director, concerning
rehabilitation, payment of claims, continuance of coverage or the
performance of other contractual obligations of any impaired or
insolvent insurer.
  (6) The association shall have standing to appear before any
court in this state having jurisdiction over an impaired or
insolvent insurer concerning which the association is or may
become obligated under ORS 734.750 to 734.890. Such standing
shall extend to all matters germane to the powers and duties of
the association including, but not limited to, proposals for
reinsuring or guaranteeing the covered policies of the impaired
or insolvent insurer and the determination of the covered
policies and contractual obligations. The association may also
appear or intervene before a court in another state with
jurisdiction over an impaired or insolvent insurer for which the
association is or may become obligated or with jurisdiction over
a third party against whom the association may have rights
through subrogation of the policyholders of the insurer.
  (7)(a) Any person receiving benefits under ORS 734.750 to
734.890 shall be considered to have assigned the rights under,
and any causes of action relating to, the covered policy to the
association to the extent of the benefits received because of ORS
734.750 to 734.890, whether the benefits are payments of or on
account of contractual obligations or continuation of coverage.
The association may require an assignment to it of such rights by
any payee, policy or contract owner, beneficiary, insured or
annuitant as a condition precedent to the receipt of any rights
or benefits conferred by ORS 734.750 to 734.890 upon such person.
The association shall be subrogated to these rights against the
assets of any insolvent insurer.
  (b) The subrogation rights of the association under this
subsection shall have the same priority against the assets of the
insolvent insurer as that possessed by the person entitled to
receive benefits under ORS 734.750 to 734.890.
  (8) The contractual obligations of the insolvent insurer for
which the association becomes or may become liable shall not
exceed the lesser of:
  (a) The contractual obligations for which the insurer is liable
or would have been liable if it were not an insolvent insurer,
unless such obligations are reduced as permitted by subsection
(3) of this section; or
  (b) The applicable following benefits, subject to subsection
(9) of this section:
  (A) $300,000 in life insurance death benefits, but not more
than $100,000 in net cash surrender and net cash withdrawal
 
values for life insurance, with respect to any one life,
regardless of the number of policies or contracts.
  (B) $100,000 in health insurance benefits, including any net
cash surrender and net cash withdrawal values, with respect to
any one life, regardless of the number of policies or contracts.
  (C)   { - $100,000 - }   { + $250,000 + } in the present value
of annuity benefits, including net cash surrender and net cash
withdrawal values, with respect to any one life, regardless of
the number of policies or contracts.
  (D)   { - $100,000 - }  { +  $250,000 + } in present value
annuity benefits, in the aggregate, including net cash surrender
and net cash withdrawal values, with respect to each individual
participating in a governmental retirement plan established under
section 401, 403(b) or 457 of the United States Internal Revenue
Code covered by an unallocated annuity contract or the
beneficiaries of each such individual if deceased.
  (9) The association shall not be liable for more than $300,000
in the aggregate with respect to any one individual under
subsection (8)(b) of this section.
  (10) Subject to the applicable limitation with respect to any
one individual under subsections (8) and (9) of this section, the
benefits for which the association may become liable with respect
to any one owner of policies or contracts other than an
unallocated annuity contract to which subsection (8)(b)(D) of
this section applies, whether the owner is an individual,
corporation or other person, shall not exceed $5 million in
benefits in the aggregate for all persons covered by such
policies or contracts, regardless of the number of the policies
and contracts held by the owner.
  (11) The association may:
  (a) Enter into such contracts as are necessary or proper to
carry out the provisions and purposes of ORS 734.750 to 734.890.
  (b) Sue or be sued, including taking any legal actions
necessary or proper for recovery of any unpaid assessments under
ORS 734.815.
  (c) Borrow money to effect the purposes of ORS 734.750 to
734.890. Any notes or other evidence of indebtedness of the
association not in default shall be legal investments for
domestic insurers and may be carried as admitted assets.
  (d) Employ or retain such persons as are necessary to handle
the financial transactions of the association, and to perform
such other functions as become necessary or proper under ORS
734.750 to 734.890.
  (e) Negotiate and contract with any liquidator, rehabilitator,
conservator or ancillary receiver to carry out the powers and
duties of the association.
  (f) Take such legal action as may be necessary to avoid payment
of improper claims.
  (g) Exercise, for the purposes of ORS 734.750 to 734.890 and to
the extent approved by the director, the powers of a domestic
life or health insurer, but in no case may the association issue
policies other than those issued to perform the contractual
obligations of the impaired or insolvent insurer.
  SECTION 2.  { + This 2010 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2010 Act takes effect on its
passage. + }
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