Chapter 482 Oregon Laws 1999

Session Law

AN ACT

SB 787

Relating to certain construction projects; amending section 2, chapter 169, Oregon Laws 1995; and repealing section 4, chapter 169, Oregon Laws 1995.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Section 2, chapter 169, Oregon Laws 1995, is amended to read:

Sec. 2. (1) As used in this section:

(a) "Project" means a construction project, a plant expansion or improvements within Oregon with an aggregate construction value in excess of [$100 million] $90 million that is to be completed within [any five-year] 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 [$100 million] $90 million requirement.

(b) "Project sponsor" means public bodies, utilities, corporations and firms undertaking to construct a project in excess of [$100 million] $90 million and conducting business in the State of Oregon.

(2) Notwithstanding ORS 279.320, 656.126, 737.346 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.

[(3)] (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;

(d) The insurer for the grouping guarantees adequate protection to any other insurance agency or agent that demonstrates that without such protection the agency or agent will suffer losses that will constitute a threat to the continuation of the business of the agency or agent;

(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) Monoline workers' compensation insurers domiciled in the State of Oregon had the opportunity to propose a policy of insurance or a guaranty contract covering the project sponsor and other persons referred to in subsection (2) of this section;]

[(h)] (g) The project insurers agree to provide not less than [60] 90 days' notice to all insured parties of the cancellation or any material reduction in coverage for the project;

[(i)] (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

[(j)] (i) The insurer places with the State Treasurer 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 2. Section 4, chapter 169, Oregon Laws 1995, is repealed.

Approved by the Governor July 6, 1999

Filed in the office of Secretary of State July 6, 1999

Effective date October 23, 1999

__________