Chapter 732 — Organization
and Corporate Procedures of Domestic Insurers;
Regulation of
Insurers Generally
2011 EDITION
DOMESTIC INSURERS
INSURANCE
GENERAL PROVISIONS
732.005 Application
of private corporation law; definitions
ORGANIZATION
732.015 Permit
to organize insurer required
732.025 Application
for permit to organize stock insurer; rules
732.035 Application
for permit to organize insurer without capital stock
732.045 Investigation
of applications to organize insurers
732.055 Approval
or disapproval of application for permit
732.065 Reporting
of changes in information in application
732.075 Revoking
or suspending permit to organize insurer
732.085 Incorporators
732.095 Articles
of incorporation
732.105 Filing
articles of incorporation and surety bond, letter of credit or deposit
732.115 Approval
of articles, documents and bond, letter of credit or deposit; certificate of
incorporation
732.125 Registration
of securities subsequent to issuance of organization permit and certificate of incorporation
732.135 Soliciting
subscriptions and applications
732.145 Stipulations
required in subscriptions and applications; disposition of subscribed funds
732.155 Organization
to be completed within two years; policies to be issued within one year of
certification
732.165 Liability
of directors and incorporators
732.175 Liability
for acting as corporate insurer without authority
CORPORATE PROCEDURES GENERALLY
732.205 General
powers of insurers
732.210 Assertion
of lack of capacity or power
732.215 Management
contracts prohibited
732.220 Exclusive
agency contracts
732.225 Impairment
of required capitalization prohibited; rules
732.230 Order
to cure impairment; confidentiality of order
732.235 Voluntary
dissolution of insurer
732.240 Trusts
of life insurance proceeds
732.245 Home
office; records, assets; unlawful removal; rules
732.250 Continuity
of management in event of national emergency
DIRECTORS, OFFICERS AND EMPLOYEES
732.305 Board
of directors; qualifications
732.320 Supporting
documents for expenditures
732.325 Certain
transactions and compensation between insurers and directors, trustees,
officers, agents or employees prohibited; other prohibited conduct
SHARES, SHAREHOLDERS AND MEMBERS
(General Provisions)
732.405 Authorized
shares
732.410 Right
to acquire own shares
732.415 Stock
insurer’s proxies; regulation by director; rules
(Insider Trading)
732.420 “Equity
security” defined; rules
732.425 Application
of insider trading regulation
732.430 Filing
statement of security ownership with director; rules
732.435 Suit
to recover insider profits; exempted transactions; rules
732.440 Prohibited
sales of securities
732.445 Establishing
or maintaining primary or secondary market in securities; rules
732.450 Arbitrage
transactions exempt; rules
732.455 Rules
(Shareholders and Members)
732.460 Annual
report to shareholders or members; rules
732.465 Members
of domestic mutual insurers
732.470 Voting
rights of members of mutual insurer
732.475 Members’
meetings and procedures of domestic mutual and reciprocal insurers
732.480 Copy
of bylaws of domestic mutual insurer to be provided to director; provisions of
bylaws
ACQUISITIONS AND MERGERS
732.517 Purpose
of ORS 732.517 to 732.546
732.518 Definitions
for ORS 732.517 to 732.546
732.521 Activities
that are prohibited unless specified procedures followed; exceptions
732.523 Procedure
for acquiring controlling interest of capital stock; filing of statement;
request for hearing
732.526 Hearing
on proposed activity; notice
732.528 Approval
of proposed activity; grounds for refusing approval
732.529 Procedures
following approval by director of proposed activity
732.531 Acquisition
of assets or insurance of mutual or reciprocal insurers
732.533 Statement
of acquisition
732.536 Compliance
with foreign or alien laws
732.538 Effect
of merger or consolidation
732.541 Jurisdiction
over person obtaining or attempting to obtain control
732.543 Remedies
for violation of ORS 732.517 to 732.546
732.546 Severability
INSURANCE HOLDING COMPANY REGISTRATION
732.548 Definitions
for ORS 732.517 to 732.592
732.549 Subsidiaries
732.551 Registration
of insurer members of holding company systems
732.552 Registration
statement; form; contents
732.553 Certain
information not required to be disclosed
732.554 Changes
in registration information; reports of distributions to shareholders
732.556 Requirement
that certain persons provide information to insurers
732.558 Termination
of registration by director
732.562 Consolidated
registration
732.564 Registration
for affiliated insurers
732.566 Exemption
from ORS 732.517 to 732.592 by director
732.568 Disclaimer
of affiliation; contents; subsequent duty to register; disallowance of
disclaimers by director
732.572 Rulemaking
authority for ORS 732.517 to 732.592
STANDARDS AND MANAGEMENT OF INSURER
WITHIN AN INSURANCE HOLDING COMPANY SYSTEM
732.574 Standards
for transactions within holding company; notice
732.576 Dividends
and distributions
732.578 Effect
of control of insurer subject to registration on director and officer liability
732.582 Determination
of reasonableness and adequacy of capital and surplus
EXAMINATIONS, CONFIDENTIALITY,
REGULATORY POWERS
732.584 Examinations
732.586 Confidentiality
of information; permitted disclosures
732.588 Supervision,
rehabilitation or liquidation
732.592 Recovery
from parent corporation or holding company if domestic insurer ordered into
liquidation or rehabilitation
CONVERSION OR REORGANIZATION OF DOMESTIC
MUTUAL INSURER
732.600 Definitions
for ORS 732.600 to 732.630
732.602 Intent
of ORS 732.600 to 732.630
732.604 Permissible
actions of domestic mutual insurer; rules
732.606 Plan
for conversion or reorganization; documents filed; approval by director and
members
732.608 Waiver
of requirements of ORS 732.606
732.610 Contents
of plan
732.612 Consideration
for membership interest in converting or reorganizing mutual insurer; kinds of
consideration; allocation of consideration
732.614 Effect
of conversion
732.616 Reorganization
involving organization of stock holding company; subsidiaries
732.618 Reorganization
involving organization of mutual holding company; subsidiaries
732.620 Status
of mutual holding company as corporation; status as insurer; rights and
obligations of members; voting; articles of incorporation
732.622 Restructuring
of mutual holding company
732.624 Approval
by Director of Department of Consumer and Business Services of mutual holding
company restructuring plan; approval by members; effect of restructuring
732.626 Plan
review and approval; general provisions
732.628 Limitations
on ownership of shares in companies resulting from conversion, reorganization
or restructuring
732.630 Dissenters’
rights; action challenging validity of conversion, reorganization or restructuring
PRODUCER-CONTROLLED PROPERTY AND
CASUALTY INSURERS
732.810 Definitions
for ORS 732.810 to 732.814
732.811 Application
of ORS 732.810 to 732.814
732.812 Filing
of financial statements; contract requirements; audit; reports to director
732.813 Notice
to prospective insured
732.814 Authority
of director over controlling producer and controlled insurer
INTERSTATE INSURANCE PRODUCT REGULATION
COMPACT
732.820 Interstate
Insurance Product Regulation Compact
732.825 State
member of Interstate Insurance Product Regulation Commission
GENERAL PROVISIONS
732.005 Application of private corporation
law; definitions. (1) Except where inconsistent
with the express provisions of the Insurance Code, ORS chapter 60, shall, to
the extent applicable, govern the powers, duties and relationships of domestic
insurers.
(2)
The following sections in ORS chapter 60 do not apply to insurers: ORS 60.004,
60.007 to 60.014, 60.016, 60.017 to 60.024, 60.031, 60.044, 60.051 to 60.057,
60.094 to 60.101, 60.311, 60.470 to 60.534, 60.701 to 60.717, 60.734 to 60.744,
60.787, 60.954, 60.957 to 60.967 and 60.992.
(3)
ORS 60.224, 60.774 (2)(c) and 60.777 (4) do not apply to insurers without
capital stock.
(4)
The enumeration in subsections (2) and (3) of this section of inapplicable
sections in ORS chapter 60 is not exclusive or a limitation upon subsection (1)
of this section.
(5)
To the extent applicable and not inconsistent with subsections (1) to (4) of
this section, ORS chapter 60 shall apply to insurers without capital stock as
well as to insurers with capital stock. Where applicable to insurers without
capital stock, references in ORS chapter 60 to “shareholders” shall be deemed
references to “policyholders” or “subscribers” as the case may be.
(6)
In applying ORS chapter 60 as provided in this section, unless the context
requires otherwise:
(a)
“Office of Secretary of State” or “office” means the Department of Consumer and
Business Services.
(b)
“Secretary of State” means the Director of the Department of Consumer and
Business Services.
(c)
“Corporation” and “domestic corporation” mean a domestic insurer. [1967 c.359 §146;
1985 c.728 §108; 1987 c.846 §1; 2001 c.352 §7; 2003 c.14 §446]
732.010
[Repealed by 1967 c.359 §704]
ORGANIZATION
732.015 Permit to organize insurer
required. No person shall organize or solicit or
receive any money for the organization of a domestic insurer without a
subsisting permit to organize an insurer issued by the Director of the
Department of Consumer and Business Services pursuant to ORS 732.055. The
director shall not require a fee for filing an application for such a permit in
the case of the organization of a reciprocal insurer that exchanges policies of
insurance covering only wet marine hull insurance for persons whose earned income,
in whole or in part, is derived from taking and selling food resources living
in an ocean, bay or river. [1967 c.359 §147; 1977 c.651 §4; 1989 c.413 §6; 1991
c.401 §3; 1993 c.709 §6]
732.020
[Repealed by 1967 c.359 §704]
732.025 Application for permit to organize
stock insurer; rules. Any person or persons desiring
to organize a domestic stock insurer shall, as prospective incorporators, first
file an application with the Director of the Department of Consumer and
Business Services for a permit to organize such an insurer. The applicants
shall pay the applicable fee to the director at the time the application is
filed. The application shall be on forms provided by the director, shall be
signed by the applicants and verified. The form shall specify information with
regard to the following:
(1)
The class or classes of insurance to be transacted.
(2)
The full names and addresses of each person who will own or control, directly
or indirectly, 10 percent or more of the stock.
(3)
The full name and residence address of each person associated or to be
associated in the formation, organization, operation, management, stock
underwriting or financing of the insurer.
(4)
Full disclosure of the terms of all pertinent agreements and understandings
existing or proposed among and between such persons so associated. A copy of
all such agreements and understandings shall be filed with the application.
(5)
The full name and residence address of the proposed directors and officers,
including information regarding the character, financial responsibility,
business ability and experience in the business of insurance or businesses
related thereto, of each.
(6)
The proposed capitalization, the plan of financing and for solicitation of
stock, and a summary of the plan of operation, including types of policies to
be issued.
(7)
Such additional information, including but not limited to financial data,
actuarial projections and copies of proposed policies, which the director may
by rule or otherwise require. [1967 c.359 §148; 1989 c.413 §7; 1991 c.401 §4]
732.030
[Amended by 1967 c.359 §661; renumbered 751.015]
732.035 Application for permit to organize
insurer without capital stock. Any one or
more persons desiring to organize a domestic insurer without capital stock shall,
as prospective organizers, first file an application with the Director of the
Department of Consumer and Business Services for a permit to organize such an
insurer. The provisions and requirements of ORS 732.025 shall govern such
application; in addition, the application shall be accompanied by:
(1)
A copy of each policy for which applications are proposed to be solicited,
together with a copy of the proposed application form, and application
literature to be used in such solicitation; and
(2)
A schedule of premiums or premium rates proposed to be charged in connection
with such insurance for which applications shall be solicited. [1967 c.359 §149]
732.040
[Amended by 1967 c.359 §662; renumbered 751.025]
732.045 Investigation of applications to organize
insurers. Upon receipt of an application for a
permit to organize an insurer, the Director of the Department of Consumer and
Business Services shall make such investigation of the facts and conditions as
the director deems necessary, including the holding of a public hearing on the
application if the director considers it desirable or if requested by the
applicant. [1967 c.359 §150]
732.050
[Amended by 1967 c.359 §665; renumbered 751.055]
732.055 Approval or disapproval of
application for permit. (1) Within 90 days after the
filing of the application for a permit to organize an insurer, the Director of
the Department of Consumer and Business Services shall approve or disapprove
the application.
(2)
The 90-day period referred to in subsection (1) of this section may be extended
by the director for an additional period not to exceed 30 days if the director
gives written notice within such 90-day period to the applicant that the
director needs such additional time.
(3)
The director shall approve an application for a permit to organize an insurer
only if the director finds that:
(a)
The application is complete;
(b)
The documents filed with the application are in proper form;
(c)
The proposed financial structure is adequate;
(d)
The character, reputation, financial responsibility and general fitness of the
persons named in the application or otherwise found to be associated with or
have an interest in the proposed insurer are such as to command the confidence
of the public;
(e)
The proposed directors are collectively competent to assume responsibility for
the management and general policies and procedures of an insurer proposing to
issue the class or classes of insurance specified;
(f)
The proposed management, collectively, possesses the requisite general business
ability and experience in the business of insurance of the class or classes
specified in the application; and
(g)
No fact is then known to the director which would prevent the proposed insurer
from completing its organization and receiving a certificate of authority to
transact insurance in this state. [1967 c.359 §151]
732.060
[Amended by 1961 c.178 §1; 1967 c.359 §666; renumbered 751.065]
732.065 Reporting of changes in information
in application. Any changes in the information
furnished in the application for a permit to organize an insurer shall be
reported immediately to the Director of the Department of Consumer and Business
Services by the persons to whom the permit was issued. [1967 c.359 §152]
732.070
[Repealed by 1967 c.359 §704]
732.075 Revoking or suspending permit to
organize insurer. After notice to the applicant
stating the grounds therefor, the Director of the
Department of Consumer and Business Services may revoke or suspend a permit to
organize an insurer for any ground for which the issuance of the permit could
be denied. [1967 c.359 §153]
732.080
[Repealed by 1967 c.359 §704]
732.085 Incorporators.
One or more natural persons of the age of 21 years or older or one or more
financially responsible corporations may act as incorporators of a domestic
insurer upon compliance with the provisions of the Insurance Code. [1967 c.359 §154]
732.090
[Repealed by 1967 c.359 §704]
732.095 Articles of incorporation.
(1) To the extent not otherwise inconsistent with the Insurance Code, the
articles of incorporation of a domestic insurer shall conform to ORS 60.047
and, in addition, shall contain the purpose or purposes for which the insurer
is organized and the class or classes of insurance or reinsurance to be made.
It shall be sufficient to state, either alone or with other purposes, that the
purpose of the insurer is to make insurance and reinsurance of all classes for
which an insurer may be authorized under the Insurance Code. By such statement,
all such classes shall be within the purposes of the insurer, except for
express limitations in the articles, if any.
(2)
The articles or other basic document of a mutual or reciprocal insurer shall
include the qualifications and rights of members or subscribers of the insurer.
[1967 c.359 §155; 1987 c.846 §4]
732.100
[Amended by 1967 c.359 §667; renumbered 751.075]
732.105 Filing articles of incorporation
and surety bond, letter of credit or deposit. The
incorporators shall file with the Director of the Department of Consumer and
Business Services within six months of the issuance of the organization permit
under ORS 732.055:
(1)
Duplicate originals of the articles of incorporation signed by all of the
incorporators.
(2)
A corporate surety bond payable to the director and the director’s successors,
as trustee, in the sum of $25,000, or, in lieu thereof, a like amount in an
irrevocable letter of credit issued by an insured institution as defined in ORS
706.008 or in approved securities or cash, conditioned upon the faithful accounting
to the insurer upon completion of its organization and the receipt of its
certificate of authority from the director, or to the shareholders, members,
applicants for policies and creditors, or to the trustee, receiver or assignee
of the insurer, duly appointed in any proceeding in any court or department of
competent jurisdiction in this state, in accordance with their respective
rights in case the organization of the insurer is not completed and the
certificate of authority is not procured from the director. Such bond, letter
of credit or deposit shall be in the form prescribed by the director. [1967
c.359 §156; 1991 c.331 §127; 1997 c.631 §546]
732.110
[Amended by 1967 c.359 §668; renumbered 751.085]
732.115 Approval of articles, documents and
bond, letter of credit or deposit; certificate of incorporation.
(1) If the Director of the Department of Consumer and Business Services finds
that the articles of incorporation and the bond, letter of credit or securities
filed with the director conform to law and the sureties on any bond are
acceptable, the director shall, when all fees established by the director have
been paid:
(a)
Indorse on each of such duplicate originals of the articles the word “filed,”
and the month, day and year of the filing thereof.
(b)
File one of such duplicate originals in the director’s office.
(c)
Issue a certificate of incorporation to which the director shall affix the
other duplicate original.
(d)
Return to the incorporators or their representative the certificate of
incorporation with the duplicate original.
(2)
Upon the issuance of the certificate of incorporation, the insurer’s corporate
existence shall begin and the insurer shall have all authority and power,
subject to the limitations prescribed in the Insurance Code, as may be
necessary and proper to complete its organization, obtain its initial capital
and otherwise complete the requirements to qualify for a certificate of
authority to transact the class or classes of insurance proposed in its
articles of incorporation. In the case of an insurer without capital stock, the
authority and power shall include the solicitation of applications for
insurance and receipt in advance of premium payments for any insurance for
which the proposed form of application, policies, literature and advertisements
pertaining thereto have been filed with and approved by the director. An
insurer shall not otherwise transact any business or incur any indebtedness
until its certificate of authority to transact insurance has been granted.
(3)
The issuance of the certificate of incorporation shall be conclusive evidence
that all conditions precedent required to be performed by the incorporators
have been complied with and that the insurer has been incorporated under the
laws of this state, except as against this state in a proceeding to cancel or
revoke the certification of incorporation or any certificate of authority to
transact insurance or for involuntary dissolution of the insurer. [1967 c.359 §157;
1989 c.413 §8; 1991 c.331 §128]
732.120
[Amended by 1967 c.359 §669; renumbered 751.095]
732.125 Registration of securities
subsequent to issuance of organization permit and certificate of incorporation.
If the proposed domestic insurer is to issue securities, it shall comply with
the applicable provisions of ORS 59.005 to 59.451, 59.710 to 59.830, 59.991 and
59.995. However, the Director of the Department of Consumer and Business
Services shall not allow the registration of securities of a proposed domestic
insurer unless the organizers of such insurer have been issued an organization
permit under ORS 732.055, and have received a certificate of incorporation
under ORS 732.115. [1967 c.359 §158; 1987 c.414 §162]
732.130
[Amended by 1967 c.359 §670; renumbered 751.105]
732.135 Soliciting subscriptions and
applications. No person shall solicit subscriptions
for the capital stock of, or, in the case of an insurer without capital stock,
applications for insurance in, any insurer in the process of organization
unless the insurer has filed the insurer’s name and address with the Director
of the Department of Consumer and Business Services. [1967 c.359 §159]
732.140
[Amended by 1967 c.359 §671; renumbered 751.115]
732.145 Stipulations required in
subscriptions and applications; disposition of subscribed funds.
(1) A subscription to the capital stock of an insurer in the process of
organization must contain a stipulation that no sum shall be used for
commission, promotion or organization expenses in excess of a stated percent of
the amount paid upon the subscription. This stated amount may not exceed 15
percent.
(2)
Sums paid by subscribers and applicants must be deposited under an escrow
agreement approved by the Director of the Department of Consumer and Business
Services in a bank, trust company or savings association in the state until the
insurer has procured a certificate of authority from the director.
(3)
Every subscription for stock or every application for insurance in an insurer
made prior to the insurer’s receipt of a certificate of authority must contain
a stipulation that the money, securities or evidences of debt advanced by the
subscriber or applicant must be returned to the subscriber or applicant without
deduction in case the insurer fails to complete the insurer’s organization or
procure the insurer’s certificate of authority or issue the policy applied for.
[1967 c.359 §160; 2009 c.541 §48]
732.150
[Amended by 1967 c.359 §672; renumbered 751.125]
732.155 Organization to be completed
within two years; policies to be issued within one year of certification.
(1) If the Director of the Department of Consumer and Business Services finds
that any domestic insurer has not completed its organization and qualified for
a certificate of authority within two years from the date of filing its
articles of incorporation, the director may order the application abandoned and
close the files in which event its corporate powers shall expire and the
director shall proceed as for an impaired insurer.
(2)
If any domestic insurer does not commence to issue policies within one year
from the date of receiving its certificate of authority, the director shall
proceed as for an impaired insurer. [1967 c.359 §161]
732.160
[Amended by 1967 c.359 §673; renumbered 751.135]
732.165 Liability of directors and
incorporators. The directors, incorporators, and
organizers of any insurer organized under the Insurance Code and those entitled
to participation in the profits of such insurer shall be jointly and severally
liable for all debts or liabilities of such insurer until it has received a
certificate of authority. [1967 c.359 §162]
732.175 Liability for acting as corporate insurer
without authority. Any person who assumes to act as
a corporate insurer without a permit to organize and without the issuance of a
certificate of incorporation by the Director of the Department of Consumer and
Business Services or who assumes to transact insurance business without a
certificate of authority to transact such business issued by the director shall
be jointly and severally liable for all liabilities created while so acting. [1967
c.359 §163; 1981 c.633 §80; 1987 c.846 §5]
CORPORATE PROCEDURES GENERALLY
732.205 General powers of insurers.
Except as otherwise provided in the Insurance Code or the articles of incorporation
of an insurer, a domestic insurer shall have:
(1)
The general and emergency powers granted to corporations by ORS 60.077 and
60.081;
(2)
The powers granted to insurers by the Insurance Code; and
(3)
All powers necessary or convenient to effect any or all of the purposes for
which the corporation is organized or to perform any or all of the acts
expressly or impliedly authorized or required under the Insurance Code. [1967
c.359 §164; 1987 c.846 §6]
732.210 Assertion of lack of capacity or
power. The provision of ORS 60.084 shall not
affect the right of any policyholder of a domestic insurer or the Director of
the Department of Consumer and Business Services from asserting the lack of
capacity or power of an insurer, by reason of any provision of the Insurance
Code, to do any act or make any conveyance or transfer of real or personal
property. [1967 c.359 §165; 1987 c.846 §7]
732.215 Management contracts prohibited.
No domestic insurer shall make any contract whereby any person is granted or is
to enjoy in fact the management of the insurer to the substantial exclusion of
its board of directors or other governing body. [1967 c.359 §166]
732.220 Exclusive agency contracts.
(1) No domestic insurer shall make any contract whereby any person is granted
or is to enjoy in fact the controlling or preemptive right to produce
substantially all insurance business for the insurer, unless the contract is filed with and approved by the Director of the Department
of Consumer and Business Services. The contract filed with the director shall
be accompanied by such application for approval as the director by rule may
consider reasonably appropriate to the purposes of this section. The contract
shall be deemed approved unless disapproved by the director within 20 days
after date of filing, subject to such reasonable extension of time as the
director may require by notice given within such 20 days. Notice of any
disapproval shall be delivered to the insurer in writing, stating the grounds therefor.
(2)
Any such contract shall provide that any such producer of an insurer’s business
shall within 90 days after expiration of each calendar year furnish the insurer’s
board of directors or other governing body a written statement of:
(a)
Amounts received under or on account of the contract and amounts expended thereunder during such calendar year, including the
emoluments received therefrom by the respective
directors, trustees, officers, and other principal management personnel of the
producer;
(b)
Amounts paid by the producer during such calendar year, for any purpose, to any
director, trustee, officer, agent or employee of the insurer or to any person
who is directly or indirectly the beneficial owner of more than 10 percent of
any class of any equity security of the insurer; and
(c)
Such classification of items and further detail as the insurer’s board of
directors or other governing body may reasonably require.
(3)
The director shall disapprove any such contract if, taking into account the
customary and prevailing practices of the insurance business and such
opportunities for abuse as may be apparent in any conflicts of interest
revealed by the contract or application, the director finds that such contract:
(a)
Subjects the insurer to charges that are disproportionate to those that the
insurer might reasonably be expected to incur under alternative arrangements
for the production of the insurer’s business;
(b)
Is to extend for an unreasonable length of time, taking into account the
incentives reasonably necessary to induce the producer to undertake the
contract, the prospect of changes which are reasonably likely to render the
contract unfavorable to the insurer and such other factors as the director
reasonably considers appropriate;
(c)
Does not contain fair and adequate standards of performance; or
(d)
Contains other inequitable provision or provisions which impair the proper
interests of stockholders, policyholders, members or subscribers of the
insurer.
(4)
The director may, after a hearing held thereon, withdraw approval of any such
contract theretofore approved by the director, if the director finds that the
bases of the original approval no longer exist, or that the contract has, in
actual operation, shown itself to be subject to disapproval on any of the grounds
referred to in subsection (3) of this section.
(5)
This section does not apply as to any contract entered into prior to June 8,
1967, nor to any extension or amendment to such contract to the extent that
such extension or amendment may be effected merely by notice and without
further consideration. [1967 c.359 §167]
732.225 Impairment of required
capitalization prohibited; rules. No domestic
insurer shall reduce its combined capital and surplus by partial distribution
of its assets, by payment in the form of a dividend to stockholders or
otherwise, below:
(1)
Its required capitalization; or
(2)
A greater amount which the Director of the Department of Consumer and Business
Services, by rule or by order after hearing upon the motion of the director or
the petition of any interested person, finds necessary to avoid injury or
prejudice to the interest of policyholders or creditors. [1967 c.359 §168]
732.230 Order to cure impairment;
confidentiality of order. (1) Whenever the Director of the
Department of Consumer and Business Services determines from any showing or
statement made to the director or from any examination made by the director
that the assets of a domestic insurer are less than its liabilities plus
required capitalization, the director may proceed immediately under the
provisions of ORS chapter 734 or the director may allow the insurer a period of
time, not to exceed 90 days, in which to make good the amount of the impairment
with cash or authorized investments.
(2)
If the amount of any such impairment is not made good within the time
prescribed by the director under subsection (1) of this section, the director
shall proceed under the provisions of ORS chapter 734.
(3)
An order directing an insurer to cure an impairment is confidential as provided
in ORS 705.137, for such time as the director considers proper but not
exceeding the time prescribed by the director for making the amount of the
impairment good. If the director determines that the public interest in
disclosure outweighs the public interest in protecting or salvaging the
solvency of the insurer, the director may make the order available for public
inspection. [1967 c.359 §169; 1991 c.401 §5; 2001 c.377 §9]
732.235 Voluntary dissolution of insurer.
(1) No insurer may be dissolved voluntarily until the Director of the
Department of Consumer and Business Services has approved a plan for
liquidation of the insurer’s assets and obligations. The preparation and
approval of such plan shall follow the provisions of ORS 732.517 to 732.546.
(2)
The plan of dissolution must provide for reinsurance of substantially all
insurance in force of the insurer in accordance with the provisions of ORS
731.512.
(3)
The director shall require that the plan of dissolution provide adequate
reserves in trust or otherwise for satisfaction of all obligations of the
insurer. [1967 c.359 §170; 1993 c.447 §107]
732.240 Trusts of life insurance proceeds.
(1) Any domestic insurer may hold in trust the proceeds of any life insurance
policy issued by it. Such a trust shall be upon such terms and subject to such
limitations as to revocation by the policyholder and control by the beneficiary
thereunder as are agreed to in writing by the insurer
and the policyholder.
(2)
Trust provisions authorized by this section shall in no manner subject the
insurer to any of the provisions of the laws of this state relating to banks or
trust companies.
(3)
The forms of such trust agreements shall be first submitted to and approved by
the Director of the Department of Consumer and Business Services. [Formerly
739.410]
732.245 Home office; records, assets;
unlawful removal; rules. (1) Every domestic insurer shall
have and maintain its principal place of business and home office in this
state, and shall keep therein accurate and complete accounts and records of its
assets, transactions, and affairs in accordance with the provisions of the
Insurance Code.
(2)
Every domestic insurer shall have and maintain its assets in this state, except
as to:
(a)
Real property and personal property appurtenant thereto lawfully owned by the
insurer and located outside this state, and
(b)
Such property of the insurer as may be customary, necessary and convenient to
enable and facilitate the operation of its branch offices and regional home
offices located outside this state as referred to in subsection (4) of this
section.
(3)
Removal or attempted removal of all or a material part of the records or assets
of a domestic insurer from this state except pursuant to a merger approved by
the Director of the Department of Consumer and Business Services under ORS
732.517 to 732.546, or for such reasonable purposes and periods of time as may
be approved by the director in writing in advance of such removal, or
concealment or attempted concealment of such records or assets or such material
part thereof from the director, is prohibited. Upon violation of this section,
the director may institute delinquency proceedings against the insurer as
provided in ORS 734.150.
(4)
This section shall not prohibit an insurer from:
(a)
Establishing and maintaining branch offices or regional home offices in other
states where necessary or convenient to the transaction of its business, and
keeping therein the detailed records and assets customary and necessary for the
servicing of its insurance in force and affairs in the territory served by such
an office, as long as such records and assets are made readily available at
such office for examination by the director at the director’s request;
(b)
Having, depositing or transmitting funds and assets of the insurer in or to
jurisdictions outside of this state required by the law of such jurisdiction or
as reasonably and customarily required in the regular course of its business;
or
(c)
Using custodial arrangements for the holding of securities owned by the
insurer, either in or outside of this state, and either segregated from or
commingled with securities owned by others, if the arrangements conform to
rules adopted by the director for safeguarding the assets and facilitating the
director’s examination of insurers using such custodial arrangements. [1967
c.359 §172; 1979 c.846 §3; 1993 c.447 §108]
732.250 Continuity of management in event
of national emergency. (1) The specific purpose of this
section is to facilitate the continued operation of all domestic insurers in
the event a national emergency makes it impossible or impracticable for an
insurer to conduct its business in strict accordance with applicable provisions
of law, its bylaws or its charter.
(2)
The board of directors of any domestic insurer may at any time adopt emergency
bylaws, subject to repeal or change by action of those having power to adopt
regular bylaws for the insurer, which shall be operative during such a national
emergency and which may, notwithstanding any different provisions of the
regular bylaws, or of the applicable statutes or of the insurer’s charter, make
any provision that may be reasonably necessary for the operation of the insurer
during the period of such emergency.
(3)
In the event the board of directors of a domestic insurer has not adopted
emergency bylaws, the following provisions shall become effective upon the
occurrence of such a national emergency:
(a)
Three directors shall constitute a quorum for the transaction of business at
all meetings of the board; and
(b)
Any vacancy in the board may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director.
(4)
If there are no surviving directors, but at least three vice presidents of the
insurer survive, the three vice presidents with the longest term of service
shall be the directors and shall possess all of the powers of the previous
board of directors and such powers as are granted by this section. By majority
vote such emergency board of directors may elect other directors. If there are
not at least three surviving vice presidents, the Director of the Department of
Consumer and Business Services shall appoint three persons as directors who
shall possess all of the powers of the previous board of directors and such
powers as are granted by this section, and these persons by majority vote may
elect other directors.
(5)
At any time the board of directors of a domestic insurer may, by resolution,
provide that in the event of such a national emergency and in the event of the
death or incapacity of the president, the secretary or the treasurer of the
insurer, such officers or any of them shall be succeeded in the office by the
person named or described in a succession list adopted by the board of
directors. Such list may be on the basis of named persons or position titles,
shall establish the order of priority and may prescribe the conditions under
which the powers of the office shall be exercised.
(6)
At any time the board of directors of a domestic insurer may, by resolution,
provide that in the event of such a national emergency the home office or
principal place of business of the insurer shall be at such location as is
named or described in the resolution. Such resolution may provide for alternate
locations and establish an order of preference. [1967 c.359 §173]
DIRECTORS, OFFICERS AND EMPLOYEES
732.305 Board of directors;
qualifications. A domestic insurer may not have
fewer than five directors. A director need not be a shareholder or member of
the insurer unless the articles of incorporation so require, but a director
must be 21 years of age or older. At least five or one-quarter of the
directors, whichever is fewer, must be residents of this state. A majority of
directors must be persons who are not salaried officers of the insurer. [1967
c.359 §174; 1997 c.771 §18; 2007 c.433 §1]
732.310 [1967
c.359 §175; repealed by 1987 c.846 §19]
732.315
[Formerly 738.200; repealed by 1983 c.24 §1]
732.320 Supporting documents for
expenditures. No domestic insurer shall make any
disbursement of $100 or more unless the sum is evidenced by:
(1)
A voucher signed by or on behalf of the person receiving the money or, if a
voucher cannot be obtained, by an affidavit stating the reason for not obtaining
the voucher;
(2)
A bill, invoice, statement or similar document commonly in business use
submitted on account of goods supplied or services rendered or both;
(3)
An authorization of the board of directors, or a committee thereof or officer
duly delegated by the board with authority to so authorize, in regard to
compensation of officers, employees and agents; or
(4)
Satisfactory proof of claim, accepted and approved in the manner prescribed by
the insurer, based upon provisions of a policy issued by the insurer. [Formerly
738.420]
732.325 Certain transactions and
compensation between insurers and directors, trustees, officers, agents or
employees prohibited; other prohibited conduct.
(1) Except as set forth in a statement of acquisition described in ORS 732.523
and, in the case of the issuance or sale of the insurer’s securities, as
approved by a majority of the board of directors having no interest therein
except as shareholders or directors or failing such majority by the
shareholders, a director, trustee, officer, agent or employee, or spouse or
relative thereof, shall not receive any fee, commission, compensation or other
valuable consideration whatsoever, directly or indirectly, for aiding,
promoting or assisting:
(a)
The planning, preparing or executing of an activity described in ORS 732.521
(1); or
(b)
The planning, preparing or executing of any plan for the issuance, sale or
acquisition of shares or other securities of the insurer for any purpose.
(2)
Except as provided in subsections (4) and (5) of this section, a director,
trustee or officer of an insurer shall not:
(a)
Accept any money or thing of value for negotiating, procuring, recommending or
aiding in:
(A)
The purchase or sale of property by the insurer; or
(B)
The making of a loan to or from the insurer.
(b)
Have a pecuniary interest, whether as principal, agent or beneficiary, in a
purchase, sale or loan under paragraph (a) of this subsection.
(3)
Except as provided in subsections (4) and (5) of this section, an insurer shall
not do any of the following:
(a)
Pay any money or thing of value to a director, trustee or officer of the
insurer for negotiating, procuring, recommending or aiding in:
(A)
The purchase or sale of property by the insurer; or
(B)
The making of a loan to or from the insurer.
(b)
Make a loan to a director, trustee or officer of the insurer.
(c)
Make any advances to a director, trustee or officer of the insurer for future
services to be performed.
(d)
Guarantee any financial obligations of a director, trustee or officer of the
insurer. The prohibition under this paragraph does not apply to any guarantee
of payments to be made upon death of a person insured under a credit life
insurance policy.
(4)
An insurer may contract, or otherwise enter into a transaction, for the
provision of goods or services to the insurer in the normal course of business
with a director, trustee or officer, or a partnership or corporation in which a
director, trustee or officer has, directly or indirectly, a proprietary
interest in excess of five percent, if the interest of the director, trustee or
officer is fully disclosed to the board of directors of the insurer and the
board thereafter approves and authorizes the contract or transaction by a vote
sufficient for the purpose without counting the vote of the interested person.
(5)
The prohibitions set forth in this section shall not apply to or affect:
(a)
The payment to any director, officer or trustee of reasonable compensation,
whether based in whole or in part upon commission or otherwise;
(b)
The payment of a fee to any approved person for legal or other specialized or
professional services rendered to the insurer and approved by the board of
directors;
(c)
The making of loans or advances to agents or other employees of an insurer as
required or as is expedient in the conduct of its business;
(d)
The exercising of any rights under any policy of insurance;
(e)
The issuance of a debt obligation by an insurer to a director, officer or
trustee of the insurer; and
(f)
The advance of expenses to a director, officer or trustee for travel or other
related business activities of the insurer. [1967 c.359 §178; 1971 c.231 §17;
1983 c.498 §20; 1989 c.425 §1; 1993 c.447 §109]
SHARES, SHAREHOLDERS AND MEMBERS
(General Provisions)
732.405 Authorized shares.
No domestic insurer shall issue or have outstanding more than one class of
shares, whether with or without par value. [1967 c.359 §179]
732.410 Right to acquire own shares.
A domestic insurer shall have the right to purchase or otherwise acquire, hold,
pledge, transfer or dispose of its own issued shares. An insurer may acquire
any such shares by purchase, exchange or disposition of its assets only from
earned surplus as defined by rule, that is not otherwise restricted or, with the
prior written approval of the Director of the Department of Consumer and
Business Services, from other of its surplus. [1967 c.359 §180; 1987 c.846 §8]
732.415 Stock insurer’s proxies; regulation
by director; rules. (1) A proxy may be authorized in
writing to vote the shares of any stockholder, or where authorized of a
policyholder, of a domestic stock insurer at any regular or special
stockholders’ meeting.
(2)
Such stockholders and policyholders shall be provided with adequate and
accurate information with respect to the affairs of the insurer, the interests
of those involved in the solicitation of proxies or consents, and the matters
regarding which the proxies or consents are solicited.
(3)
Every form of proxy or consent and soliciting material to be used in connection
therewith shall be filed with the Director of the Department of Consumer and
Business Services in advance of any circulation or other use by at least 10
days, or such shorter period as the director may authorize. Circulation or use
of a filed document may be made when such 10-day or shorter period has expired,
unless or until the director has disapproved the filing by written notice
showing wherein the document does not comply with this section or the pertinent
rules. Any proxy or consent obtained in violation of this section shall be
void.
(4)
The director may issue rules to carry out the purposes of this section and to
prevent fraud or deception in connection with proxies and consents. Such rules
may differ as to different types of insurers, and may include, but not by way
of limitation, provisions as to:
(a)
Exemption from the requirements of this section for insurers subject to similar
provisions of federal law, or with less than a prescribed number of
stockholders;
(b)
Disclosure of equivalent information when no proxies or consents are solicited;
(c)
Form and content of proxies, consents and solicitation materials, and filing
procedures therefor;
(d)
Procedure for presentation of stockholder proposals; and
(e)
Election contests. [Formerly 738.190]
(Insider Trading)
732.420 “Equity security” defined; rules.
As used in ORS 732.220 and 732.420 to 732.455, “equity security” means:
(1)
Any stock or similar security;
(2)
Any security convertible, with or without consideration, into such a security,
or carrying any warrant or right to subscribe to or purchase such a security;
(3)
Any such warrant or right; or
(4)
Any other security which the Director of the Department of Consumer and
Business Services shall consider to be of similar nature and consider necessary
or appropriate, by such rules as the director may prescribe in the public
interest or for the protection of investors, to treat as an equity security. [Formerly
738.710]
732.425 Application of insider trading
regulation. The provisions of ORS 732.430, 732.435
and 732.440 do not apply to equity securities of a domestic stock insurer if:
(1)
Such securities are registered, or are required to be registered, pursuant to
section 12 of the Securities Exchange Act of 1934, as amended; or
(2)
Such insurer does not have any class of its equity securities held of record by
100 or more persons on the last business day of the year next preceding the
year in which equity securities of the insurer would be subject to the
provisions of ORS 732.430, 732.435 and 732.440 except for the provisions of
this subsection. [Formerly 738.720]
732.430 Filing statement of security
ownership with director; rules. Every person
who is directly or indirectly the beneficial owner of more than 10 percent of
any class of any equity security of a domestic stock insurer, or who is a
director or an officer of the insurer, shall file with the Director of the
Department of Consumer and Business Services within 10 days after the person
becomes a beneficial owner, director or officer, a statement, on a form
prescribed by the director, of the amount of all equity securities of the
insurer of which the person is the beneficial owner. If there is a change in
the ownership by a person to whom this section applies, the person shall file
with the director a statement, on a form prescribed by the director, indicating
the person’s ownership and the changes in the person’s ownership. The person
shall file the statement of change in ownership before the end of the second business
day following the day on which the transaction was executed. If it is not
feasible for the person to file the statement by the end of the second business
day, the person shall file the statement according to rules adopted by the
director. [Formerly 738.730; 2005 c.185 §9]
732.435 Suit to recover insider profits;
exempted transactions; rules. (1) For the
purpose of preventing the unfair use of information which may have been
obtained by a beneficial owner, director or officer as described in ORS 732.430
by reason of the beneficial owner, director or officer’s relationship to such
insurer, any profit realized by the beneficial owner, director or officer from
any purchase and sale, or any sale and purchase, of any equity security of such
insurer within any period of less than six months, unless such security was
acquired in good faith in connection with a debt previously contracted, shall
inure to and be recoverable by the insurer, irrespective of any intention on
the part of such beneficial owner, director or officer in entering into such
transaction of holding the security purchased or of not repurchasing the
security sold for a period exceeding six months. An action to recover such
profit may be instituted at law or in equity in any court of competent
jurisdiction by the insurer, or by the owner of any security of the insurer in
the name and in behalf of the insurer if the insurer shall fail or refuse to
bring such action within 60 days after request or shall fail diligently to
prosecute the same thereafter; but no such action shall be brought more than
two years after the date such profit was realized.
(2)
This section shall not be construed to cover any transaction where such
beneficial owner was not such both at the time of the purchase and sale, or the
sale and purchase, of the security involved, or any transaction or transactions
that the Director of the Department of Consumer and Business Services by rules
may exempt as not comprehended within the purpose of this section. [Formerly
738.740]
732.440 Prohibited sales of securities.
(1) No beneficial owner, director or officer, as described in ORS 732.430
directly or indirectly, shall sell any equity security of such insurer if the
person selling the security or the person’s principal:
(a)
Does not own the security sold; or
(b)
If owning the security, does not deliver it against such sale within 20 days
thereafter, or does not within five days after such sale deposit it in the
mails or other usual channels of transportation.
(2)
No person shall be deemed to have violated this section if the person proves
that notwithstanding the exercise of good faith the person was unable to make
such delivery or deposit within such time, or that to do so would cause undue
inconvenience or expense. [Formerly 738.750]
732.445 Establishing or maintaining
primary or secondary market in securities; rules.
(1) The provisions of ORS 732.435 do not apply to any purchase and sale, or
sale and purchase, and the provisions of ORS 732.440 do not apply to any sale,
of an equity security of a domestic stock insurer not then or theretofore held
by the insurer in an investment account, by a security dealer in the ordinary
course of the insurer’s business and incident to the establishment or
maintenance by the insurer of a primary or secondary market (otherwise than on
an exchange as defined in the Securities Exchange Act of 1934) for such
security.
(2)
The Director of the Department of Consumer and Business Services may, by such
rules as the director considers necessary or appropriate in the public
interest, define and prescribe terms and conditions with respect to securities
held in an investment account and transactions made in the ordinary course of
business and incident to the establishment or maintenance of a primary or secondary
market. [Formerly 738.760]
732.450 Arbitrage transactions exempt;
rules. The provisions of ORS 732.430, 732.435
and 732.440 do not apply to foreign or domestic arbitrage transactions unless
made in contravention of such rules as the Director of the Department of
Consumer and Business Services may adopt in order to carry out the purposes of
ORS 732.420 to 732.455. [Formerly 738.770]
732.455 Rules.
The Director of the Department of Consumer and Business Services shall have the
power to make such rules as may be necessary for the execution of the functions
vested in the director by ORS 732.420 to 732.455, and may for such purpose
classify domestic stock insurers, securities, and other persons or matters
within the director’s jurisdiction. No provision of ORS 732.430, 732.435 and
732.440 imposing any liability shall apply to any act done or omitted in good
faith in conformity with any rule of the director, notwithstanding that such
rule may, after such act or omission, be amended or rescinded or determined by
judicial or other authority to be invalid for any reason. [Formerly 738.780]
(Shareholders and Members)
732.460 Annual report to shareholders or
members; rules. Every domestic stock insurer
shall send to each shareholder within 90 days after the end of each fiscal year
of such insurer and every domestic insurer without capital stock shall make
available at its annual meeting an annual report of the organization, operation
and activities of such insurer, its parent if any and its subsidiaries and affiliates
if any, and financial statements showing the financial condition of the insurer
at the end of such fiscal year and the results of its operations for such
fiscal year. The annual report shall contain such other information and
financial statements and shall be in such form as the Director of the
Department of Consumer and Business Services may by rule prescribe. [1967 c.359
§190]
732.465 Members of domestic mutual
insurers. (1) A domestic mutual insurer shall be
owned by and operated in the interest of its members.
(2)
Each owner of one or more valid and existing policies of insurance issued by a
domestic mutual insurer, other than a policy of reinsurance, is a member of
such insurer possessing the rights and obligations of such membership. However,
two or more persons who qualify as owners under a single policy of insurance
collectively shall be considered to be one member.
(3)
An owner is the person given the rights of ownership or the power to make
transactions with the insurer under terms of the policy, including an assignee,
other than the insurer which issued the policy, who has received an assignment
absolute on its face subject to any reasonable minimum requirements relating to
assignments found in the policy or in the bylaws of the insurer. In a policy of
group life or health insurance the person contracting with the insurer and to
whom the master contract is issued is the member; the lives insured and
individuals holding certificates thereunder are not
policyholders or members.
(4)
A person who, because of the death of the life insured in a policy of insurance
or the death of the life referred to in an annuity policy, has obtained rights
as a beneficiary to death benefits or settlement payments is not a policyholder
or member. [Formerly 739.165; 2001 c.352 §5]
732.470 Voting rights of members of mutual
insurer. (1) Each member of a domestic mutual
insurer is entitled to one vote on each matter coming before a meeting of the
members and for each director to be elected regardless of the number of
policies or amount of insurance and benefits held by such member.
(2)
The member under a group policy shall have but one vote regardless of the
number of individuals insured or benefited thereunder.
(3)
Two or more persons who qualify as policyholders under a single policy shall be
deemed one policyholder and member for purposes of voting and collectively
shall be entitled to one vote.
(4)
Fractional voting may not be permitted.
(5)
When a member is a minor, the vote shall be vested in the parent or legal
guardian of the minor.
(6)
Cumulative voting for directors may not be permitted unless expressly provided
for in the insurer’s articles of incorporation.
(7)
The right to vote shall be subject to such reasonable minimum requirements as
to duration of membership as may be made in the articles of incorporation and
bylaws of the insurer.
(8)
A member may in every case vote in person or by proxy. The right to vote by
proxy shall be subject to reasonable provisions pertaining thereto, including
the duration of proxies, contained in the articles of incorporation or bylaws
of the insurer. [Formerly 739.170; 2001 c.352 §6; 2003 c.14 §447]
732.475 Members’ meetings and procedures
of domestic mutual and reciprocal insurers. The
following provisions shall apply to and govern meetings of members of a
domestic mutual insurer and, to the extent applicable, meetings of subscribers
of a domestic reciprocal insurer:
(1)
Unless the notice of the meeting is by personal mail or delivery to the
members, or as provided in subsection (5) of this section, the annual meeting,
and all special meetings of members shall be held at or in the immediate
vicinity of the home office of the insurer.
(2)
In lieu of personal notice mailed or delivered to members, notice of the annual
meeting or of a special meeting of members may be given by publishing a notice
thereof once a week for two consecutive weeks in the newspaper with the largest
general circulation in this state and, if the home office is located outside
the city of such newspaper, then also in the newspaper with the largest general
circulation published at or nearest the home office city of the insurer. The
published notice shall state the time and place of the meeting and the matters
to be presented and considered and, if a special meeting, shall also state the
purpose for which it is called. The date of the first publication thereof shall
be not less than 20 nor more than 50 days prior to the meeting date.
(3)
A copy of the meeting notice mailed, delivered or published shall be mailed or
delivered to the Director of the Department of Consumer and Business Services
at least 20 days prior to the meeting date. The director may attend any such
meeting.
(4)
The date and time of the annual meeting shall be set forth in the bylaws. Such
date and time and location of the home office of the insurer shall be set forth
in the policy issued to the member or in a notice forwarded to the policyholder
within 30 days after the issuance of the policy. If the date or time of such meeting
is changed by amendment to the bylaws, which amendment may be adopted in the
same manner as any other amendment to the bylaws, there shall be mailed or
delivered to each member not less than 30 days before the date of the annual
meeting, the date or time of which has been changed, a notice of the change
thereof. Such a notice may be given by policy or policy indorsement
or by a separate notice document.
(5)
Notwithstanding the provisions of subsections (1) to (4) of this section, if
the director finds, after inquiry and investigation, that the operations of an
insurer are not financially sound or that its management is not acting in a
sound and prudent manner for the benefit of the members or that certain
practices and procedures of or involving the insurer’s operations or management
ought to be presented to the members, the director may direct that the insurer
call a special meeting for such purpose or that such matters be put on the
agenda at an annual meeting. In such case, the director may further direct that
notice of such meeting be given in the manner prescribed in ORS 60.214. The
notice shall also state that the special meeting is called, or that the
particular matters are included on the agenda of the regular meeting, at the
direction of the director.
(6)
The members present in person or represented by proxy shall constitute a quorum
at a duly called meeting of members. The affirmative vote of a majority of
members voting on any matter presented at such meeting shall constitute the act
of the members unless the voting of a greater number is required by law or the
insurer’s articles of incorporation or bylaws. [1967 c.359 §193; 1971 c.231 §43;
1987 c.846 §9]
732.480 Copy of bylaws of domestic mutual
insurer to be provided to director; provisions of bylaws.
A copy of the bylaws of a domestic mutual insurer, including any amendments,
shall be provided to the Director of the Department of Consumer and Business
Services. The bylaws of a mutual insurer may contain any provision for managing
the business and regulating the affairs of the insurer that is not inconsistent
with law or the articles of incorporation. The bylaws shall contain a provision
that governs the involvement of the mutual insurer in a member’s communication
with other members regarding the business and affairs of the insurer. The
bylaws may contain a provision eliminating or limiting the personal liability
of a member of the board of directors to the mutual insurer or its members for
monetary damages for conduct as a director, provided that no such provision may
eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective and no such
provision may eliminate or limit the liability of a director for:
(1)
Any breach of the director’s duty of loyalty to the mutual insurer or its
members;
(2)
Acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law;
(3)
Any unlawful distribution; or
(4)
Any transaction from which the director derived an improper personal benefit. [2001
c.352 §4]
732.505
[Formerly 738.610; 1969 c.336 §7; 1983 c.498 §1; repealed by 1993 c.447 §122]
732.510 [1967
c.359 §195; 1969 c.336 §8; 1983 c.498 §2; repealed by 1993 c.447 §122]
732.515 [1967
c.359 §196; 1983 c.498 §3; repealed by 1993 c.447 §122]
ACQUISITIONS AND MERGERS
732.517 Purpose of ORS 732.517 to 732.546.
The purpose of ORS 732.517 to 732.546 is that of regulating the control or
ownership of an insurer or of an insurance holding company system. A further
purpose of ORS 732.517 to 732.546 is that of promoting the public interest and
the interests of policyholders and shareholders by facilitating, consistent
with those interests, better use of management skills and services, diversification
through acquisitions, free access to capital markets, sound tax planning and
open competition. [1983 c.498 §5; 1993 c.447 §25]
732.518 Definitions for ORS 732.517 to
732.546. As used in ORS 732.517 to 732.546:
(1)
“Acquiring party” means each person by whom or on whose behalf an acquisition
of control referred to in ORS 732.521 (1)(a), a merger or other acquisition of
control referred to in ORS 732.521 (1)(b) or an activity referred to in ORS
732.521 (1)(c) is to be effected. The term includes any intermediary or
subsidiary corporation or insurer who acquires or holds, directly or
indirectly, the assets or voting securities or assumes the liabilities of an
insurer or other corporation.
(2)
A “domestic insurer” includes any person controlling a domestic insurer.
(3)
“Person” does not include any securities broker holding, in the usual and
customary broker’s function, less than 20 percent of the voting securities of
an insurer or of any person that controls an insurer.
(4)
“A significant portion” means, when acquired in one transaction or in a related
or integrated series of transactions, within any 12 consecutive month period,
10 percent or more of the following:
(a)
The assets of the insurer; or
(b)
The insurance or a major class of insurance in force of the insurer. [1993
c.447 §26]
732.520 [1967
c.359 §197; repealed by 1993 c.447 §122]
732.521 Activities that are prohibited
unless specified procedures followed; exceptions.
(1) Unless the provisions of ORS 732.517 to 732.546 are first satisfied, a
person shall not engage in any of the activities described in this subsection
as follows:
(a)
A person other than the issuer of voting securities of a domestic insurer shall
not acquire or attempt to acquire control of the domestic insurer. For purposes
of this paragraph, a person acquires or attempts to acquire control of a
domestic insurer when the person engages in any of the actions described in
this paragraph, in the open market or otherwise, and if after consummation
thereof the person would directly or indirectly, or by conversion or by
exercise of any right to acquire, be in control of the domestic insurer. The
actions are as follows:
(A)
Making a tender offer for or a request or invitation for tenders of any voting
security of the domestic insurer;
(B)
Entering into any agreement to exchange securities for any voting security of
the domestic insurer; or
(C)
Acquiring or seeking to acquire any voting security of the domestic insurer.
(b)
A person shall not enter into an agreement to merge with or otherwise acquire
control of a domestic insurer.
(c)
A person shall not engage or attempt to engage in any of the following
activities:
(A)
Acquiring, directly or indirectly, ownership of all or a significant portion of
the assets of a domestic insurer. For purposes of this subparagraph, such an
acquisition includes an offer, a request or invitation for offers, an
acquisition or series of acquisitions in the open market, an exchange offer or
agreement, an agreement providing an option to purchase, or a purchase of or
offer to purchase securities convertible into voting securities.
(B)
Bulk reinsurance by one insurer of all or a significant portion of the
insurance, or a major class of such insurance, in force with another insurer or
related or affiliated group of insurers. The provisions of this subparagraph do
not apply to ordinary or customary reinsurance, or reinsurance pursuant to a
treaty or treaties approved by the director.
(C)
Any other arrangement that brings together under common ownership, control or
responsibility all or a significant portion of the assets, liabilities or
insurance in force of two or more persons, at least one of which is a domestic
insurer.
(2)
The provisions of subsection (1) of this section do not apply to any offer, request,
invitation, agreement or acquisition exempted by the Director of the Department
of Consumer and Business Services by order as:
(a)
Not having been made or entered into for the purpose and not having the effect
of changing or influencing the control or ownership of a domestic insurer; or
(b)
Otherwise not comprehended within the purposes of subsection (1) of this
section.
(3)
Subject to the requirements of ORS 732.517 to 732.546, a domestic stock
insurer, domestic mutual insurer, domestic reciprocal insurer or domestic
health care service contractor that is a corporation for profit may merge or
consolidate with a stock insurer, mutual insurer, reciprocal insurer or health
care service contractor that is a corporation for profit. [1993 c.447 §§27,28;
1997 c.771 §19; 1999 c.362 §65]
732.522 [1983
c.498 §6; repealed by 1993 c.447 §122]
732.523 Procedure for acquiring
controlling interest of capital stock; filing of statement; request for
hearing. (1) An acquiring party:
(a)
Must file with the Director of the Department of Consumer and Business Services
for approval a statement containing the information required in this section.
If more than one acquiring party is required to file a statement under this
paragraph, any or all such parties acting in concert may file a joint
statement.
(b)
Must deliver or mail to the domestic insurer to which the activity described in
ORS 732.521 (1) applies, concurrently with filing the statement under paragraph
(a) of this subsection, a statement containing the information required by this
section. A statement mailed under this paragraph shall be sent by certified
mail, return receipt requested. If a joint statement is filed under paragraph
(a) of this subsection, the joint statement shall be the statement mailed or delivered
under this paragraph.
(2)
The statement to be filed with the director under this section shall be made
under oath or affirmation and shall contain the following information:
(a)
The name and address of the domestic insurer involved and each acquiring party
required to file the statement, and additional biographical and business
information about each acquiring party required to file the statement, business
plans and information regarding persons who will serve as or perform functions
of directors or officers, as required by the director.
(b)
The source, nature and amount of the consideration used or to be used in
effecting the activity, a description of any transaction in which funds were or
are to be obtained for the activity and the identity of persons furnishing the
consideration. However, when a source of consideration is a loan made in the
lender’s ordinary course of business, the identity of the lender shall remain
confidential as provided in ORS 705.137, if the acquiring party filing the statement
so requests.
(c)
Fully audited financial information as to the earnings and financial condition
of each acquiring party for the preceding five fiscal years of the acquiring
party, or for such lesser period as the acquiring party and any predecessors of
the acquiring party have been in existence, and similar unaudited information
as of a date not earlier than 90 days prior to the filing of the statement.
(d)
Any plan or proposals of each acquiring party required to file a statement to
liquidate the insurer, to sell its assets or merge or consolidate it with any
person, or to make any other material change in its business or corporate
structure or management.
(e)
As required by the director, information regarding shares to be acquired by an
acquiring party in connection with the activity, information regarding related
offers or agreements, information regarding classes of security to be acquired
and related contracts, arrangements or understandings, and information
regarding related purchases of securities and recommendations to purchase.
(f)
Any additional information required by the director.
(3)
All requests or invitations for tenders or advertisements making a tender offer
or requesting or inviting tenders of securities for control of a domestic
insurer made by or on behalf of any acquiring party required to file the
statement under this section shall contain such information specified in
subsection (2) of this section as the director may prescribe. Copies of the
materials shall be filed with the director at least 10 days prior to the time
the materials are first published or sent or given to security holders. Any
additional materials soliciting or requesting the tenders subsequent to the
initial solicitation or request shall contain such information as the director
may prescribe. Copies of the additional materials shall be filed with the
director at least 10 days prior to the time the materials are first published
or sent or given to security holders.
(4)
If any acquiring party required to file the statement under this section is a
partnership, limited partnership, syndicate or other group, the director may
require that the information called for by subsection (2) of this section be
given with respect to each partner of the partnership or limited partnership,
each member of the syndicate or group and each person who controls the partner
or member. If any such partner, member or person is a corporation or if the
acquiring party is a corporation, the director may require that the information
called for by subsection (2) of this section be given with respect to the
corporation and each officer and director of the corporation and each person
who is directly or indirectly the beneficial owner of more than 10 percent of
the outstanding securities of the corporation.
(5)
If any material change occurs in the facts set forth in the statement filed
under this section, the party who filed the statement must file with the
director and send to the insurer, within two business days after the party
learns of the change, an amendment setting forth the change together with
copies of all documents and other material relevant to the change.
(6)
If an offer, request, invitation, agreement or acquisition referred to in ORS
732.521 (1) is proposed to be made by means of a registration statement under
the Securities Act of 1933 or in circumstances requiring the disclosure of
similar information under the Securities Exchange Act of 1934, or under a state
law requiring similar registration or disclosure, the party or parties required
to file the statement under this section may use such documents in furnishing
the information called for by that statement.
(7)
Any acquiring party may file with the completed statement or within 10 days
thereafter a written request for a hearing on the acquisition. The insurer to
be acquired may file with the director a written request for a hearing on the
acquisition within 10 days after the filing of the completed statement. [1983
c.498 §9; 1993 c.447 §29; 1995 c.79 §359; 2001 c.377 §10]
732.525 [1967
c.359 §198; 1983 c.498 §7; repealed by 1993 c.447 §122]
732.526 Hearing on proposed activity;
notice. (1) If a written request for a hearing
has been duly filed or if, within 10 days after the filing of a completed
statement, the Director of the Department of Consumer and Business Services
considers it necessary or advisable to hold a hearing, the director shall
direct that a hearing be held.
(2)
The hearing shall be held within 30 days after the filing of the written
request for hearing or within 30 days after the director’s order directing that
a hearing be held, at a time and place designated by the director. One or more
of the insurers or other parties to the proposed activity shall give notice as
required by the director to parties designated by the director. The acquiring
party shall bear the expense of providing the notice and, as security for the
payment of the expense, shall file with the director a bond or other deposit in
a form and amount acceptable to the director. [Formerly 732.535]
732.528 Approval of proposed activity;
grounds for refusing approval. (1) The
Director of the Department of Consumer and Business Services shall approve the
proposed activity described in ORS 732.521 (1) not later than the 60th day
before the effective date of the activity unless the director finds that any of
the grounds specified in this subsection apply to the proposed activity. The
grounds upon which the director may refuse to approve a proposed activity are
as follows:
(a)
The activity is contrary to law or would result in a prohibited combination of
risks or classes of insurance.
(b)
The activity is inequitable or unfair to the policyholders or shareholders of
any insurer involved or to any other person affected by the proposed activity.
However, in connection with an acquisition of the voting securities of an
insurer from the shareholders of the insurer, the director shall evaluate the
fairness of the proposed acquisition to the shareholders of the insurer to be
acquired only with respect to any shareholders remaining after consummation of
the acquisition who are unaffiliated with the acquiring party or parties.
(c)
The activity would substantially reduce the security of and service to be
rendered to policyholders of any domestic insurer involved, or would otherwise
prejudice the interests of such policyholders in this state or elsewhere.
(d)
The activity provides for a foreign or alien insurer to be an acquiring party,
and the director further finds that the insurer cannot satisfy the requirements
of this state for transacting an insurance business involving the classes of
insurance affected by the activity.
(e)
The activity or its consummation would substantially lessen competition in
insurance in this state or tend to create a monopoly.
(f)
After the change of control or ownership, the domestic insurer to which the
activity described in ORS 732.521 (1) applies would not be able to satisfy the
requirements for the issuance of a certificate of authority to transact the
line or lines of insurance for which it is currently authorized.
(g)
The financial condition of any acquiring party might jeopardize the financial
stability of the insurer.
(h)
The plans or proposals that the acquiring party has to liquidate the insurer,
sell its assets or consolidate or merge it with any person, or to make any
other material change in its business or corporate structure or management, are
unfair and unreasonable to policyholders of the insurer and not in the public
interest.
(i) The competence, experience and integrity of those
persons who would control the operation of the insurer are such that it would
not be in the interest of policyholders of the insurer and of the public to
permit the activity or its consummation.
(j)
The activity or its consummation is likely to be hazardous or prejudicial to
the insurance-buying public.
(k)
The activity is subject to other material and reasonable objections.
(2)
If the director does not approve the proposed activity, the director shall
promptly notify each insurer and each acquiring party to the proposed activity
in writing, specifying the bases, factors and reasons for the disapproval and
giving each insurer and each acquiring party who filed the statement relating
to the proposed activity an opportunity to amend the statement, if possible, to
obviate the director’s objections.
(3)
Any amendment to the statement filed under ORS 732.523 pursuant to the director’s
objection shall be filed by the acquiring party or parties filing the statement
and, if a hearing was held on the proposed activity, shall be resubmitted at a
hearing held pursuant to this section unless the director finds that such a
hearing is not necessary for the protection of the policyholders, shareholders
or any other person affected by the proposed activity.
(4)
The director may retain at the acquiring person’s expense any actuaries,
accountants and other experts not otherwise a part of the director’s staff as
may be reasonably necessary to assist the director in reviewing the proposed
activity.
(5)
The director may establish the effective date of an activity to which ORS
732.521 (1) applies in the order approving the activity.
(6)
Any insurer or other party to a proposed activity, including the insurer
proposed to be acquired, within 60 days after receipt of a notice of approval
or disapproval, may appeal the final order of the director as provided in ORS
chapter 183. For purposes of the judicial review the specifications required to
be set forth in the written notice from the director shall be deemed the
findings of fact and conclusions of law of the department.
(7)
On petition to the court, the court’s power shall extend to affirming the order
of the director, modifying all or any part of the director’s objections, adding
additional objections, approving the proposed activity as submitted or subject
to such modifications or changes as the court may find proper, and requiring
resubmission to the boards of directors or other governing bodies or for
hearing as provided in ORS 732.526. [Formerly 732.540; 2001 c.377 §37; 2003
c.802 §169]
732.529 Procedures following approval by
director of proposed activity. (1) Following
approval of a proposed activity by the Director of the Department of Consumer
and Business Services or pursuant to a court order or judgment, the proposed
activity shall be submitted for approval to the members of a domestic mutual
insurer, the subscribers of a domestic reciprocal insurer or the shareholders
of a domestic stock insurer.
(2)
A notice of the meeting at which the proposed activity will be submitted for
approval shall set forth the time, place and purpose of the meeting. The
notice, the procedure to be followed at the meeting, quorum requirements and
voting at the meeting shall be governed by the provisions in the Insurance Code
and the articles of incorporation and bylaws of the insurer applicable to
annual or special meetings of members, subscribers or shareholders. The notice
of the meeting must contain or be accompanied by a copy or summary of the
statement filed under ORS 732.523.
(3)(a)
Unless the articles of incorporation require a greater number of affirmative
votes, the proposed activity is approved:
(A)
By the subscribers of a domestic reciprocal insurer or the shareholders of a
domestic stock insurer entitled to vote at a meeting duly called and held if
the votes cast in favor of the proposed activity exceed the votes cast opposing
the proposed activity; or
(B)
By the members of a domestic mutual insurer entitled to vote at a meeting duly
called and held if the proposed activity is approved by two-thirds or more of
the members voting on the proposed activity.
(b)
If provided in the statement filed under ORS 732.523 and approved by the
director, voting on the proposed activity by the members of a domestic mutual
insurer may be limited to eligible members determined in accordance with ORS
732.531 (2), and voting on the proposed activity by the subscribers of a
domestic reciprocal insurer may be limited to eligible subscribers determined
in accordance with ORS 732.531 (2).
(c)
The board of directors of a domestic mutual insurer may condition its
submission of the proposed activity to the members on any legal basis.
(4)
If the proposed activity is approved by the members, subscribers or
shareholders in accordance with this section and the activity is consummated,
the activity shall bind all members of a domestic mutual insurer, all
subscribers of a domestic reciprocal insurer and all shareholders of a domestic
stock insurer.
(5)
Dissenters’ rights provided in ORS 60.551 to 60.594 are not available to any
member of a domestic mutual insurer or any subscriber of a domestic reciprocal
insurer with respect to an activity that is subject to the approval of the
director.
(6)
An insurer, other than a domestic insurer, or another corporation that is a
party to a proposed activity described in a statement filed under ORS 732.523
is subject to the laws of its domiciliary jurisdiction governing approval of
its members, subscribers or shareholders. [1997 c.771 §22; 2001 c.352 §1; 2003
c.576 §554]
732.530 [1967
c.359 §199; repealed by 1993 c.447 §122]
732.531 Acquisition of assets or insurance
of mutual or reciprocal insurers. (1) If a
statement filed under ORS 732.523 will result in the acquisition by a stock
insurer of all or a significant portion of the assets of a domestic mutual
insurer or domestic reciprocal insurer, or reinsurance in a stock insurer of
all or a significant portion of the insurance in force of a domestic mutual
insurer or domestic reciprocal insurer, the plan must provide for consideration
to each eligible member of the domestic mutual insurer or each eligible
subscriber of the domestic reciprocal insurer as provided in this section.
(2)
A member of a domestic mutual insurer or a subscriber of a domestic reciprocal
insurer shall be an eligible member or eligible subscriber if the policy of the
member or subscriber is in force as of the record date, which is the date that
the board of directors of the domestic mutual insurer or the domestic
reciprocal insurer approves the proposed activity or some other date specified
as the record date in the statement and approved by the Director of the
Department of Consumer and Business Services.
(3)
Any consideration to be received by the eligible members or eligible subscribers
shall be described in the statement. The consideration shall be allocated among
the eligible members or eligible subscribers in the manner described in ORS
732.612 (6) if the domestic mutual insurer or domestic reciprocal insurer
transacts primarily life or health insurance, or both. The consideration shall
be allocated among the eligible members or eligible subscribers in the manner
described in ORS 732.612 (7) if the domestic mutual insurer or domestic
reciprocal insurer transacts primarily property or casualty insurance, or both.
The allocation of the consideration among the eligible members or eligible
subscribers shall be approved by the director.
(4)
If the proposed activity described in the statement is primarily a plan to
convert the domestic mutual insurer or domestic reciprocal insurer to a stock
insurer, the director may require that the proposed activity be governed by ORS
732.600 to 732.630. [Formerly 732.550; 1997 c.771 §20]
732.533 Statement of acquisition.
Not later than the 30th day after consummation of an activity described in ORS
732.521 (1), the acquiring party shall submit to the Director of the Department
of Consumer and Business Services a statement that the activity has been
consummated. The statement must be made under the oath of the presiding officer
of the board of directors of the acquiring party. [1993 c.447 §33]
732.535 [1967
c.359 §200; 1983 c.498 §10; 1993 c.447 §30; renumbered 732.526 in 1993]
732.536 Compliance with foreign or alien
laws. (1) The action taken by any foreign or
alien insurer or other party to the proposed activity described in ORS 732.521
(1) must be authorized by the laws of the state, country or province under
which it is incorporated or organized, and each foreign or alien insurer or
other party must satisfy and comply with any applicable laws thereof and with
the provisions of its articles of incorporation and bylaws.
(2)
If a foreign or alien insurer or other party to the proposed activity is to be
the acquiring, surviving, resulting or continuing insurer, it must qualify for
and receive a certificate of authority to transact insurance in this state. [Formerly
732.560]
732.538 Effect of merger or consolidation.
(1) When a merger or consolidation becomes effective, the effect on the
insurers and other parties to the merger or consolidation is as follows:
(a)
The several insurers and other parties to the plan of merger or consolidation
shall be a single insurer or other corporation, which, in the case of a merger,
shall be that insurer or other corporation designated in the plan of merger as
the surviving insurer or corporation, and, in the case of a consolidation,
shall be the new insurer or other corporation provided for in the plan of
consolidation.
(b)
The separate existence of all insurers and other corporations party to the plan
of merger or consolidation, except the surviving or new insurer or other
corporation, shall cease.
(c)
The surviving or new insurer or other corporation shall have all the rights,
privileges, immunities and powers and shall be subject to all the duties and
liabilities of an insurer organized under this chapter. If the surviving
corporation is a health care service contractor, the corporation shall be
subject to all the duties and liabilities of a health care service contractor
under the Insurance Code.
(d)
The surviving or new insurer or other corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and franchises, as
well of a public as of a private nature, of each of the merging or
consolidating insurers and other corporations. All property, real, personal and
mixed, and all debts due on whatever account, including subscriptions to
shares, and all other choses in action, and all and
every other interest, of or belonging to or due to each of the insurers and
other corporations so merged or consolidated, shall be taken and deemed to be
transferred to and vested in the single insurer or corporation without further
act or deed. The title to any real estate, or any interest therein, vested in
any of such insurers and other corporations shall not revert or be in any way
impaired by reason of the merger or consolidation.
(e)
The surviving or new insurer or other corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
insurers and other corporations so merged or consolidated. Any claim existing
or action or proceeding pending by or against any of such insurers or other
corporations may be prosecuted as if the merger or consolidation had not taken
place, or such surviving or new insurer or other corporation may be substituted
in its place. Neither the rights of creditors nor any liens upon the property
of any such insurer or other corporation shall be impaired by such merger or
consolidation.
(f)
In the case of a merger, the articles of incorporation of the surviving insurer
or other corporation shall be deemed to be amended to the extent, if any, that
changes in its articles of incorporation are stated in the plan of merger. In
the case of a consolidation, the statements set forth in the articles of
consolidation that are required or permitted to be set forth in the articles of
incorporation of corporations organized under ORS chapter 60 shall be deemed to
be the original articles of incorporation of the new corporation.
(2)
Subject to any shareholder rights under ORS 60.554 and 60.557, when a merger or
consolidation becomes effective, in the case of an insurer or other corporation
that has ceased to exist because of a merger or consolidation, the shares of
that insurer or other corporation that are to be converted under the plan of
merger or consolidation are void.
(3)
As of the date on which a merger or consolidation becomes effective, the
holders of converted shares are entitled only to the shares, obligations, other
securities, cash or other property into which the shares have been converted in
accordance with the plan of merger or consolidation.
(4)
In the event of reinsurance pursuant to the plan, the applicable provisions of
the Insurance Code shall govern the effects thereof. [Formerly 732.570; 1999
c.362 §66]
732.540 [1967
c.359 §201; 1979 c.562 §32; 1983 c.498 §11; 1993 c.447 §31; renumbered 732.528
in 1993]
732.541 Jurisdiction over person obtaining
or attempting to obtain control. The courts of
this state are vested with jurisdiction over every person not resident,
domiciled or authorized to do business in this state who is required to file a
statement with the Director of the Department of Consumer and Business Services
under ORS 732.523 and over all actions involving such a person arising out of
violations of ORS 732.517 to 732.546. Each such person shall be considered to
have appointed the director for the purpose of service of process. [Formerly
732.580]
732.543 Remedies for violation of ORS
732.517 to 732.546. (1) Whenever it appears to the
Director of the Department of Consumer and Business Services that any person
has committed or is about to commit a violation of any provision of ORS 732.517
to 732.546 or of any rule or order issued by the director under ORS 732.517 to
732.546, the director may apply to the Circuit Court for Marion County for an
order enjoining the person, and any director, officer, employee or agent of the
person, from the violation, and for such other equitable relief as the nature
of the case and the interests of the policyholders, creditors and shareholders
of any insurer or the public may require.
(2)
No security that is the subject of any agreement or arrangement regarding
acquisition, or that is acquired or to be acquired, in contravention of ORS
732.517 to 732.546 or of any rule or order issued by the director under ORS
732.517 to 732.546, may be voted at any shareholder’s meeting, or may be
counted for quorum purposes, and any action of shareholders requiring the
affirmative vote of a percentage of shares may be taken as though such
securities were not issued and outstanding. However, no action taken at any
such meeting shall be invalidated by the voting of such securities unless the
action would materially affect control of the insurer or unless the courts of
this state have so ordered. If an insurer or the director has reason to believe
that any security of the insurer has been or is about to be acquired in
contravention of ORS 732.517 to 732.546 or any rule or order issued by the
director under ORS 732.517 to 732.546, the insurer or the director may apply to
the Circuit Court for Marion County, or to the circuit court for the county in
which the insurer has its principal place of business in this state, if any, to
enjoin the violation, to enjoin the voting of any security so acquired, to void
any vote of such security already cast at any meeting of shareholders, and for
such other equitable relief as the nature of the case and the interests of the
insurer’s policyholders, creditors and shareholders or the public may require.
(3)
In any case in which a person has acquired or is proposing to acquire any
voting securities of an insurer in violation of ORS 732.517 to 732.546 or any
rule or order issued by the director under ORS 732.517 to 732.546, the Circuit
Court for Marion County, or the circuit court for the county in which the
insurer has its principal place of business in this state, if any, upon the
application of the insurer or the director and on such notice as the court
deems appropriate, may seize or sequester any voting securities of the insurer
owned directly or indirectly by the person, and issue any order with respect to
the voting securities as may be appropriate to effect the provisions of ORS
732.517 to 732.546. Notwithstanding any other provision of law, for the
purposes of this section, the situs of the ownership
of the securities of domestic insurers is located in this state.
(4)
The director may exercise remedies available under this section in addition to
or in lieu of any other remedy or administrative action available to the
director under the Insurance Code. [Formerly 732.590]
732.545 [1967
c.359 §202; 1973 c.515 §2; 1981 c.633 §81; 1983 c.498 §12; 1987 c.846 §10;
repealed by 1993 c.447 §122]
732.546 Severability.
If any provision of ORS 732.517 to 732.546 or the application thereof to any
person or circumstance is held invalid, such invalidity shall not affect other
provisions or applications of ORS 732.517 to 732.546 which can be given effect
without the invalid provision or application, and to this end the provisions of
ORS 732.517 to 732.546 are declared to be severable. [Formerly 732.595]
INSURANCE HOLDING COMPANY REGISTRATION
732.548 Definitions for ORS 732.517 to 732.592.
As used in ORS 732.517 to 732.592:
(1)
“Affiliate” of, or person “affiliated” with, a specified person means a person
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, the person specified.
(2)
“Control,” including its use in the terms “controlling,” “controlled,” “controlled
by” and “under common control with,” means the possession, direct or indirect,
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 is the result of an official position
with or corporate office held by the person. Control shall be presumed to exist
if any person, directly or indirectly, owns, controls, holds with the power to
vote, or holds proxies representing, 10 percent or more of the voting
securities of any other person. This presumption may be rebutted by a showing
made in the manner provided by ORS 732.568 that control does not exist in fact.
The Director of the Department of Consumer and Business Services may determine,
after furnishing all persons in interest notice and opportunity to be heard and
making specific findings of fact to support such determination, that control
exists in fact, notwithstanding the absence of a presumption to that effect.
(3)
“Insurance holding company system” means two or more affiliated persons, one or
more of which is an insurer, and includes a financial holding company as
referred to in section 103 of the federal Gramm-Leach-Bliley Act (P.L.
106-102).
(4)
A “subsidiary” of a specified person is an affiliate controlled by the
specified person directly or indirectly through one or more intermediaries.
(5)
A “voting security” includes any security convertible into a voting security or
evidencing a right to acquire a voting security. [Formerly 732.605; 2001 c.377 §38]
732.549 Subsidiaries.
(1) A domestic insurer, either by itself or in cooperation with one or more
persons, may organize or acquire one or more subsidiaries engaged only in one
or more of the kinds of business described in ORS 733.635.
(2)
If an insurer ceases to control a subsidiary, the insurer must dispose of any
investment in the subsidiary made pursuant to this section within three years
after the time of the cessation of control or within such further time as the
Director of the Department of Consumer and Business Services may prescribe,
unless at any time after the investment was made, the investment meets the
requirements for investment under any other provision of the Insurance Code and
the insurer has notified the director of that fact. [1993 c.447 §24]
732.550 [1967
c.359 §203; 1993 c.447 §32; renumbered 732.531 in 1993]
732.551 Registration of insurer members of
holding company systems. (1) Every authorized insurer
that is a member of an insurance holding company system shall register with the
Director of the Department of Consumer and Business Services as provided in
this section. A foreign insurer need not register if the foreign insurer is
subject to registration requirements and standards adopted by statute or rule
in the jurisdiction of its domicile that are substantially similar to those
contained in:
(a)
This section, ORS 732.552, 732.553 and 732.554;
(b)
ORS 732.574 (1), 732.576 and 732.582; and
(c)
ORS 732.574 (2) or a provision that requires each registered insurer to keep
current the information required to be disclosed in its registration statement
by reporting all material changes or additions not later than 15 days after the
end of the month in which it learns of each such change or addition.
(2)
An insurer that is subject to registration under this section shall register not
later than 15 days after the date the insurer becomes subject to registration,
and annually thereafter on or before April 30 for the previous calendar year,
unless the director for good cause shown extends the time for registration, and
then within such extended time. The director may require any authorized insurer
that is a member of a holding company system and is not subject to registration
under this section to furnish a copy of the registration statement, the summary
required in ORS 732.552 or other information filed by the insurer with the
insurance regulatory authority of its domiciliary jurisdiction. [Formerly
732.615]
732.552 Registration statement; form;
contents. (1) Every insurer subject to the
registration requirements of ORS 732.551 shall file a registration statement on
a form prescribed by the Director of the Department of Consumer and Business
Services. For purposes of the form, the director shall consider and may
prescribe the registration statement form prescribed by the National Association
of Insurance Commissioners. The registration statement shall contain current
information about:
(a)
The capital structure, general financial condition, ownership and management of
the insurer and any person controlling the insurer.
(b)
The identity and relationship of every member of the insurance holding company
system.
(c)
The following agreements in force and transactions currently outstanding or
that have occurred during the last calendar year between such insurer and its
affiliates:
(A)
Loans, other investments, or purchases, sales or exchanges of securities of the
affiliates by the insurer or of the insurer by its affiliates;
(B)
Purchases, sales or exchanges of assets;
(C)
Transactions not in the ordinary course of business;
(D)
Guarantees or undertakings for the benefit of an affiliate that result in an
actual contingent exposure of the insurer’s assets to liability, other than
insurance contracts entered into in the ordinary course of the insurer’s
business;
(E)
All management agreements, service contracts and all cost-sharing arrangements;
(F)
Reinsurance agreements;
(G)
Dividends and other distributions to shareholders; and
(H)
Consolidated tax allocation agreements.
(d)
Any pledge of the stock of the insurer, including stock of any subsidiary or
controlling affiliate, for a loan made to any member of the insurance holding
company system.
(e)
Other matters concerning transactions between registered insurers and any
affiliates as may be included from time to time in any registration forms
prescribed by the director.
(2)
Each registration statement must contain a summary outlining all items in the
current registration statement representing changes from the prior registration
statement. [Formerly 732.625]
732.553 Certain information not required
to be disclosed. Information that is not material
for the purposes of registration under ORS 732.517 to 732.592 need not be
disclosed on the registration statement filed pursuant to ORS 732.552. Unless
the Director of the Department of Consumer and Business Services by rule or
order provides otherwise, sales, purchases, exchanges, loans or extensions of
credit, investments or guarantees involving one-half of one percent or less of
an insurer’s admitted assets as of the December 31 next preceding the date of
the registration statement or amendment shall not be deemed material for
purposes of registration under ORS 732.517 to 732.592. [Formerly 732.635]
732.554 Changes in registration
information; reports of distributions to shareholders.
Each registered insurer shall keep current the information required to be
disclosed on its registration statement by reporting all material changes or
additions on amendment forms prescribed by the Director of the Department of
Consumer and Business Services within 15 days after the end of the month in
which the insurer learns of each such change or addition. However, except as
provided in ORS 732.576, each registered insurer shall so report all dividends
and other distributions to shareholders within five business days following the
declaration thereof and not less than 10 business days prior to payment of the
dividends and distributions, commencing from the date of receipt of the report
by the director. [Formerly 732.645]
732.555 [1967
c.359 §204; repealed by 1993 c.447 §122]
732.556 Requirement that certain persons
provide information to insurers. Any person
within an insurance holding company system subject to registration shall
provide complete and accurate information to an insurer when such information
is necessary to enable the insurer to comply with the registration requirements
of ORS 732.517 to 732.592. [1993 c.447 §41]
732.558 Termination of registration by
director. The Director of the Department of
Consumer and Business Services shall terminate the registration of any insurer
which demonstrates that it no longer is a member of an insurance holding
company system. [Formerly 732.655]
732.560 [1967
c.359 §205; 1983 c.498 §13; 1993 c.447 §34; renumbered 732.536 in 1993]
732.562 Consolidated registration.
The Director of the Department of Consumer and Business Services may require or
allow two or more affiliated insurers subject to registration to file a
consolidated registration statement. [Formerly 732.665]
732.564 Registration for affiliated insurers.
The Director of the Department of Consumer and Business Services may allow an
authorized insurer that is part of an insurance holding company system to
register on behalf of an affiliated insurer that is required to register under
ORS 732.551 and to file all information and material required to be filed under
the registration requirements of ORS 732.517 to 732.592. [Formerly 732.675]
732.565 [1967
c.359 §206; repealed by 1993 c.447 §122]
732.566 Exemption from ORS 732.517 to
732.592 by director. The registration requirements of
ORS 732.517 to 732.592 do not apply to any insurer, information or transaction
exempted by the Director of the Department of Consumer and Business Services by
rule or order. [Formerly 732.685]
732.568 Disclaimer of affiliation;
contents; subsequent duty to register; disallowance of disclaimers by director.
Any person may file with the Director of the Department of Consumer and
Business Services a disclaimer of affiliation with any authorized insurer, or
such a disclaimer may be filed by any insurer or any member of an insurance
holding company system. The disclaimer must fully disclose all material
relationships and bases for affiliation between the person and the insurer as
well as the basis for disclaiming the affiliation. After a disclaimer has been
filed, the insurer shall be relieved of any duty to register or report under
ORS 732.517 to 732.592 that may arise out of the insurer’s relationship with
such person unless the director disallows such a disclaimer. The director may
disallow such a disclaimer only after furnishing all parties in interest with
notice and opportunity to be heard and after making specific findings of fact
to support the disallowance. [Formerly 732.695]
732.570 [1967
c.359 §207; 1987 c.846 §11; renumbered 732.538 in 1993]
732.572 Rulemaking authority for ORS
732.517 to 732.592. The Director of the Department
of Consumer and Business Services may adopt rules to carry out ORS 732.517 to
732.592. [Formerly 732.705]
STANDARDS AND MANAGEMENT OF INSURER
WITHIN AN INSURANCE HOLDING COMPANY SYSTEM
732.574 Standards for transactions within
holding company; notice. (1) A transaction within an
insurance holding company system to which an insurer subject to registration is
a party is subject to the following standards:
(a)
The terms must be fair and reasonable.
(b)
Charges or fees for services performed must be reasonable.
(c)
Expenses incurred and payment received must be allocated to the insurer in
conformity with customary insurance accounting practices consistently applied.
(d)
The books, accounts and records of each party to the transaction must be so
maintained as to disclose clearly and accurately the nature and details of the
transaction, including accounting information necessary to support the
reasonableness of the charges or fees to the respective parties.
(e)
The combined capital and surplus of the insurer following any transaction with
an affiliate or any shareholder dividend must be reasonable in relation to the
insurer’s outstanding liabilities and adequate to its financial needs.
(2)
A transaction described in this subsection that involves a domestic insurer and
any person in its insurance holding company system may be entered into only if
the insurer has notified the Director of the Department of Consumer and
Business Services in writing not later than the 30th day before the
transaction, or a shorter period allowed by the director, of its intention to
enter into the transaction and if the director has not disapproved the
transaction within the period. This subsection does not authorize or permit any
transaction that, in the case of an insurer not a member of the same insurance
holding company system, would be otherwise contrary to law. This subsection
applies to the following transactions:
(a)
Sales, purchases, exchanges, loans or extensions of credit, guarantees or
investments, when the transactions equal or exceed the following:
(A)
With respect to insurers not authorized to transact life insurance, the lesser
of three percent of the insurer’s allowed assets or 25 percent of the insurer’s
combined capital and surplus, each as of the 31st day of December immediately
preceding.
(B)
With respect to insurers authorized to transact life insurance, three percent
of the insurer’s allowed assets, as of the 31st day of December immediately
preceding.
(b)
Loans or extensions of credit to any person who is not an affiliate, when the
insurer makes the loans or extensions of credit with the agreement or
understanding that the proceeds of the transactions, in whole or in substantial
part, are to be used to make loans or extensions of credit to, to purchase
assets of, or to make investments in any affiliate of the insurer making such
loans or extensions of credit. This paragraph applies to such transactions that
equal or exceed the following:
(A)
With respect to insurers not authorized to transact life insurance, the lesser
of three percent of the insurer’s allowed assets or 25 percent of the insurer’s
combined capital and surplus, each as of the 31st day of December immediately
preceding.
(B)
With respect to insurers authorized to transact life insurance, three percent
of the insurer’s allowed assets, as of the 31st day of December immediately
preceding.
(c)
Reinsurance agreements or modifications thereto in which the reinsurance
premium or a change in the liabilities of the insurer equals or exceeds five
percent of the insurer’s combined capital and surplus, as of the 31st day of
December immediately preceding, including those agreements that may require as
consideration the transfer of assets from an insurer to a nonaffiliate
if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be
transferred to one or more affiliates of the insurer.
(d)
All management agreements, service contracts and all cost-sharing arrangements.
(e)
Any material transactions, as specified by rule, that the director determines
may adversely affect the interests of the policyholders of the insurer.
(3)
A domestic insurer may not enter into one or more transactions during any
12-month period that are part of a plan or series of like transactions with
persons within the insurance holding company system if the purpose of those
separate transactions is to avoid the statutory threshold amount and thus avoid
the review that would occur otherwise.
(4)
In reviewing a transaction pursuant to subsection (2) of this section, the
director must consider whether the transaction complies with the standards set
forth in subsection (1) of this section and whether the transaction may
adversely affect the interests of policyholders.
(5)
A domestic insurer shall notify the director not later than the 30th day after
any investment of the domestic insurer in any one corporation if the total
investment in the corporation by the insurance holding company system exceeds
10 percent of the voting securities of the corporation. [1993 c.447 §47]
732.575 [1983
c.498 §15; repealed by 1993 c.447 §122]
732.576 Dividends and distributions.
The following provisions of this section apply to dividends and other
distributions within an insurance holding company system:
(1)
A domestic insurer subject to registration shall not pay any extraordinary
dividend or make any other extraordinary distribution to its shareholders
either until 30 days after the Director of the Department of Consumer and
Business Services has received notice of the declaration thereof if the
director has not disapproved the payment within the 30-day period, or until the
date on which the director approves the payment if approval occurs within the
30-day period.
(2)
For purposes of this section, an extraordinary dividend or distribution
includes any dividend or distribution of cash or other property whose fair
market value, together with that of other dividends or distributions made
within the period of 12 consecutive months ending on the date on which the
proposed dividend or other distribution is scheduled to be paid or made,
exceeds the greater of:
(a)
Ten percent of the combined capital and surplus of the insurer as of the 31st
day of December immediately preceding; or
(b)
The net gain from operations of the insurer after dividends to policyholders
and federal income taxes and before realized capital gains or losses, if the
insurer is authorized to transact life insurance, or the net income, if the
insurer is not authorized to transact life insurance, for the 12-month period
ending the 31st day of December immediately preceding.
(3)
An extraordinary dividend or distribution does not include pro rata
distributions of any class of the insurer’s own securities.
(4)
Except as provided in this subsection, a domestic insurer may declare or pay
dividends to shareholders only from earned surplus. A domestic insurer may
declare a dividend from other than earned surplus only if the director approves
the declaration prior to payment of the dividend.
(5)
For purposes of this section, earned surplus does not include surplus arising
from unrealized capital gains or revaluation of assets.
(6)
An insurer may declare an extraordinary dividend or distribution that is
conditional upon the director’s approval thereof. Such a declaration confers no
rights upon shareholders until the date on which the director approves the
payment of such a dividend or distribution or until 30 days after the director
received notice of the declaration thereof under subsection (1) of this section
if the director does not disapprove the payment within the 30-day period. [1993
c.447 §48]
732.578 Effect of control of insurer
subject to registration on director and officer liability.
Control by any person of a domestic insurer subject to registration does not
relieve the officers and directors of the insurer of any obligation or
liability to which they would otherwise be subject by law. The insurer must be
managed so as to assure its separate operating identity in accordance with the
Insurance Code. [1993 c.447 §49]
732.580 [1983
c.498 §16; 1993 c.447 §35; renumbered 732.541 in 1993]
732.582 Determination of reasonableness
and adequacy of capital and surplus. For purposes
of ORS 732.517 to 732.592, in order to determine whether the combined capital
and surplus is reasonable in relation to the outstanding liabilities of the
insurer and adequate to its financial needs, the Director of the Department of
Consumer and Business Services must consider at least the applicable factors
stated in ORS 731.554 for determining the reasonableness and adequacy of the
insurer’s capital and surplus. [1993 c.447 §50]
EXAMINATIONS, CONFIDENTIALITY,
REGULATORY POWERS
732.584 Examinations.
(1) In addition to other powers of the Director of the Department of Consumer
and Business Services under the Insurance Code relating to the examination and
investigation of insurers, the director may also order any insurer registered
under ORS 732.517 to 732.592 to produce such books, records, accounts, papers,
documents and computer and other recordings in the possession of the insurer or
its affiliates as are necessary to ascertain the financial condition of the
insurer or to determine compliance with the Insurance Code. If the insurer
fails to comply with such an order, the director may examine the affiliates to
obtain such information.
(2)
An insurer shall pay the costs of an examination of the insurer under this
section as provided in ORS 731.316. [1993 c.447 §51]
732.585 [1983
c.498 §17; repealed by 1993 c.447 §122]
732.586 Confidentiality of information;
permitted disclosures. (1) All information, documents
and copies thereof obtained by or disclosed to the Director of the Department
of Consumer and Business Services or any other person in the course of an
examination or investigation made pursuant to ORS 732.584 are subject to the
provisions of ORS 731.312.
(2)
All information reported pursuant to ORS 732.552, 732.554, 732.574 and 732.576
is confidential and may not be made public except as provided in this
subsection. The director may disclose reported information only as provided in
ORS 705.137. Otherwise, the director may disclose such reported information
only as follows:
(a)
If the director obtains the prior written consent of the insurer to which the
reported information pertains; or
(b)
If the director, after giving the insurer and its affiliates who would be
affected thereby notice and opportunity to be heard, determines that the
interest of policyholders, shareholders or the public will be served by the
publication thereof. If the director determines that one or more of such
interests will be so served, the director may publish all or any part thereof
in any manner that the director determines to be appropriate. [1993 c.447 §52;
2001 c.377 §11]
732.588 Supervision, rehabilitation or
liquidation. If the Director of the Department of
Consumer and Business Services determines that a violation by any person of any
provision of ORS 732.517 to 732.592 so impairs the financial condition of a
domestic insurer as to threaten insolvency or make the further transaction of
business by it hazardous to its policyholders, creditors, shareholders or the
public, the director may place the insurer under supervision or in
rehabilitation or liquidation as provided in ORS chapter 734. [1993 c.447 §53]
732.590 [1983
c.498 §18; 1993 c.447 §36; renumbered 732.543 in 1993]
732.592 Recovery from parent corporation
or holding company if domestic insurer ordered into liquidation or
rehabilitation. (1) If an order for liquidation
or rehabilitation of a domestic insurer has been entered, the receiver
appointed under the order may recover, on behalf of the insurer, from any
parent corporation or holding company or person or affiliate who otherwise
controlled the insurer, the amount of distributions, other than distributions
of shares of the same class of stock, paid by the insurer on its capital stock,
or any payment in the form of a bonus, termination settlement or extraordinary
lump sum salary adjustment made by the insurer or its subsidiary to a director,
officer or employee, when such a distribution or payment is made at any time
during the 12 calendar months preceding the petition for liquidation,
conservation or rehabilitation, as the case may be, subject to the limitations
of subsections (2), (3) and (4) of this section.
(2)
A distribution to which subsection (1) of this section applies is not
recoverable if the parent or affiliate shows that the distribution was lawful
and reasonable when paid and that the insurer did not know and could not
reasonably have known that the distribution might adversely affect the ability
of the insurer to fulfill its contractual obligations.
(3)
Any person who was a parent corporation or holding company or a person who
otherwise controlled the insurer or affiliate at the time a distribution to
which subsection (1) of this section applies was paid shall be liable in an
amount that is not more than the amount of distributions or payments received
by the person under subsection (1) of this section. Any person who otherwise
controlled the insurer at the time such distributions were declared shall be
liable up to the amount of distributions the person would have received if the
distributions had been paid immediately. If two or more persons are liable with
respect to the same distributions, they shall be jointly and severally liable.
(4)
The maximum amount recoverable under this section is the amount needed in
excess of all other available assets of the impaired or insolvent insurer to
pay the contractual obligations of the impaired or insolvent insurer and to
reimburse any guaranty funds.
(5)
To the extent that any person liable under subsection (3) of this section is
insolvent or otherwise fails to pay claims due from the person pursuant to
subsection (3) of this section, its parent corporation or holding company or
other person who otherwise controlled the person liable under subsection (3) of
this section when the distribution was paid shall be jointly and severally
liable for any resulting deficiency in the amount recovered from the parent
corporation or holding company or person who otherwise controlled it. [1993
c.447 §54; 1995 c.638 §6]
732.595 [1983
c.498 §19; renumbered 732.546 in 1993]
732.597 [1985
c.327 §2; 1993 c.447 §110; repealed by 1997 c.771 §28]
732.598 [1985
c.327 §3; repealed by 1997 c.771 §28]
732.599 [1985
c.327 §4; 1993 c.447 §111; repealed by 1997 c.771 §28]
CONVERSION OR REORGANIZATION OF DOMESTIC
MUTUAL INSURER
732.600 Definitions for ORS 732.600 to
732.630. As used in ORS 732.600 to 732.630:
(1)
“Conversion” means the process by which a domestic mutual insurer is converted
to a domestic stock insurer in accordance with ORS 732.600 to 732.630.
(2)
“Converted stock insurer” means the domestic stock insurer to which the
domestic mutual insurer is converted in accordance with ORS 732.600 to 732.630.
(3)
“Converting mutual insurer” means the domestic mutual insurer that is converted
to a domestic stock insurer in accordance with ORS 732.600 to 732.630.
(4)
“Effective date” means, with respect to a plan, the date on which the plan
becomes effective as set forth in an order of the Director of the Department of
Consumer and Business Services. If the plan establishes different effective
dates for separate parts of the plan, the effective date for a part of a plan
is the date on which that part becomes effective as set forth in an order of
the director.
(5)
“Intermediate stock holding company” means a corporation that owns, either
directly or through a wholly owned subsidiary, all of the outstanding shares of
capital stock of the converted stock insurer and:
(a)
A majority of whose outstanding shares of voting capital stock are owned by a
mutual holding company; and
(b)
A majority in total value of whose outstanding shares of capital stock are
owned by a mutual holding company.
(6)
“Issuer” means any of the following, and in addition, any other corporation approved
by the director:
(a)
With respect to a conversion in which there is no reorganization, the converted
stock insurer.
(b)
With respect to a reorganization involving the organization of a stock holding
company, the stock holding company.
(c)
With respect to a restructuring, the restructured stock holding company.
(7)
“Member” means:
(a)
With respect to a domestic mutual insurer, any owner of one or more policies of
insurance, other than a policy of reinsurance, issued by the mutual insurer.
For purposes of this definition, “owner” has the meaning given that term in ORS
732.465 (3). A member is an eligible member of a domestic mutual insurer for
purposes of ORS 732.600 to 732.630 if the policy of the member is in force as
of the record date for the plan of conversion or reorganization, which is the
date the board of directors of the mutual insurer adopts the plan or some other
date specified as the record date in the plan and approved by the director.
(b)
With respect to a mutual holding company, any owner of one or more policies of
insurance, other than a policy of reinsurance, issued by the stock insurer
resulting from a reorganization involving the organization of a mutual holding
company and, if set forth in an order of the director, any owner of one or more
policies of insurance, other than a policy of reinsurance, issued by any other
insurer that is a direct or indirect subsidiary of the mutual holding company.
For purposes of this definition, “owner” has the meaning given that term in ORS
732.465 (3). A member is an eligible member of a mutual holding company for
purposes of ORS 732.622 and 732.624 if the policy of the member is in force as
of the record date for the plan of restructuring, which is the date the board
of directors of the mutual holding company adopts the plan or some other date
specified as the record date in the plan and approved by the director.
(8)
“Membership interest” means:
(a)
With respect to a domestic mutual insurer, any right that a member of the
mutual insurer may hold by virtue of membership in the mutual insurer.
(b)
With respect to a mutual holding company, any right that a member of the mutual
holding company may hold by virtue of membership in the mutual holding company.
(9)
“Mutual holding company” means a corporation organized under the laws of this
state in accordance with ORS 732.620.
(10)
“Plan” means a plan of conversion, reorganization or restructuring.
(11)
“Reorganization” means the process by which a domestic mutual insurer is
converted to a domestic stock insurer and either a stock holding company or a
mutual holding company is organized in accordance with ORS 732.600 to 732.630.
(12)
“Restructured stock holding company” means the stock holding company resulting
from the restructuring of a mutual holding company.
(13)
“Restructuring” means the process by which a mutual holding company is
restructured to a stock holding company in accordance with ORS 732.622 and
732.624.
(14)
“Restructuring mutual holding company” means the mutual holding company that is
restructured to a stock holding company.
(15)
“Stock holding company” means a corporation that:
(a)
Owns, either directly or through one or more subsidiaries, all or part of the
outstanding shares of capital stock of the converted stock insurer;
(b)
Is organized either as a result of a reorganization or as a result of a
restructuring; and
(c)
Immediately after the effective date of the reorganization or restructuring, is
not controlled by any other person, as “controlled” is defined in ORS 732.548,
unless the control by such person is set forth in the plan and approved by the
director.
(16)
“Voting capital stock” means capital stock whose holder has the right to vote
in the election of directors. Voting capital stock does not include capital
stock as to which the right to vote in the election of directors is conditional
upon the occurrence or nonoccurrence of a specified event. [1997 c.771 §2]
732.602 Intent of ORS 732.600 to 732.630.
ORS 732.600 to 732.630 are intended to enable a domestic mutual insurer, to the
extent consistent with the interests of its members and the insurance buying
public, to:
(1)
Adopt any other type of organizational structure, including a stock insurer,
stock holding company or mutual holding company, that enhances its financial
strength and flexibility; and
(2)
Support long-term growth through creative internal strategies, mergers and
acquisitions. [1997 c.771 §17]
732.604 Permissible actions of domestic
mutual insurer; rules. (1) A domestic mutual insurer
may engage in either of the following actions:
(a)
A conversion to a domestic stock insurer; or
(b)
A reorganization in which the domestic mutual insurer is converted to a
domestic stock insurer; and
(A)
A mutual holding company is organized; or
(B)
A stock holding company is organized.
(2)
A mutual holding company may restructure into a stock holding company, as
provided in ORS 732.622 and 732.624.
(3)
A reorganization involving the organization of a mutual holding company also
may include the organization of an intermediate stock holding company and any
other corporation that is permitted to be organized under ORS 732.600 to
732.630. A reorganization involving the organization of a stock holding company
also may include the organization of any other corporation that is permitted to
be organized under ORS 732.600 to 732.630.
(4)
The Director of the Department of Consumer and Business Services may adopt
rules for any of the following purposes:
(a)
Implementing ORS 732.600 to 732.630.
(b)
Ensuring full and proper review of any action described in ORS 732.600 to
732.630.
(c)
Protecting the rights of policyholders, members and the insurance-buying public
with respect to a conversion, reorganization or restructuring. [1997 c.771 §3]
732.605 [1971
c.373 §2; 1993 c.447 §23; renumbered 732.548 in 1993]
732.606 Plan for conversion or
reorganization; documents filed; approval by director and members.
(1) In order for a domestic mutual insurer to engage in a conversion or
reorganization as provided in ORS 732.604, the board of directors of the mutual
insurer must adopt a plan that meets the requirements of ORS 732.610.
(2)
After the board of directors of a mutual insurer has adopted a plan and before
the board of directors seeks approval of the plan by the eligible members of
the mutual insurer, the mutual insurer shall file the following documents with
the Director of the Department of Consumer and Business Services:
(a)
The plan of conversion or reorganization.
(b)
The form of notice of the meeting at which the eligible members vote on the
plan.
(c)
The form of any proxies to be solicited from the eligible members. Proxies must
offer the eligible members the option of voting in favor or voting against the
plan or abstaining.
(d)
Information required by ORS 732.523.
(e)
Other information or documentation required by the director.
(3)
The director shall approve, conditionally approve or disapprove a plan and
other documents submitted under subsection (2) of this section, according to
the standards established in ORS 732.626. The director must take such action
not later than the 60th day after the director has received a completed filing
of the plan and all information requested by the director or not later than the
30th day after the completion of a hearing on the plan, whichever date is
later.
(4)
At any time before approval of a plan by the director, the board of directors
of the mutual insurer may amend or withdraw the plan.
(5)
After approval by the director, the plan must be approved by the eligible
members of the mutual insurer. Approval by the eligible members is subject to
the following requirements:
(a)
All eligible members must be given notice of the plan and of their opportunity
to vote on the plan. A copy of the plan or a summary of the plan must accompany
the notice. The notice shall be mailed to the last known address of each
eligible member, as shown on the records of the mutual insurer, not later than
the 45th day after approval of the plan by the director. The meeting of the
eligible members at which a vote on the plan will occur shall be set for a date
that is not earlier than the 30th day after the date on which the mutual
insurer mailed the notice of the meeting. If the mutual insurer complies
substantially and in good faith with the notice requirements of this section,
the mutual insurer’s failure to give any member or members any required notice
does not impair the validity of any action taken under this section.
(b)
The vote required for approval must be conducted as provided in ORS 732.470 and
732.475, except as follows:
(A)
Only eligible members may vote on the plan.
(B)
An eligible member may vote in person or by proxy at the meeting at which the
plan is voted upon.
(C)
The plan is approved by the eligible members upon the affirmative vote of
two-thirds or more of the eligible members voting on the plan, unless the
articles of incorporation require a greater number of affirmative votes.
(6)
The plan shall be carried out in accordance with its terms on the effective
date of the conversion or reorganization. [1997 c.771 §4; 2001 c.352 §2]
732.608 Waiver of requirements of ORS 732.606.
The Director of the Department of Consumer and Business Services may waive the
requirements of ORS 732.606 if:
(1)
The director determines that a domestic mutual insurer is in hazardous
financial condition according to standards established under ORS 731.385 or if
a rehabilitation or liquidation proceeding or an administrative supervision
proceeding has been instituted against the insurer; and
(2)
The director determines that the transfer of the policies is in the best
interests of the policyholders. [1997 c.771 §16]
732.610 Contents of plan.
A plan of conversion or reorganization of a domestic mutual insurer must
include the following:
(1)
A statement of the reasons for the proposed action.
(2)
A description of how the plan will be carried out, including, but not limited
to, any merger, transfer, assumption, exchange, acquisition, contribution or
other transaction included within the plan and a description of any stock
holding company, mutual holding company, intermediate stock holding company or
other corporation organized pursuant to the plan.
(3)
A description of all significant terms of the conversion or reorganization.
(4)
A description of the overall effect of the plan on policies issued by the
converting mutual insurer. The description must show that policyholder
interests collectively are properly preserved and protected and that the plan
is fair and equitable to the policyholders.
(5)
A statement of the manner and method by which membership interests in the
converting mutual insurer will be extinguished and consideration will be
provided to the eligible members in accordance with ORS 732.612.
(6)
The record date for determining whether a member of the converting mutual
insurer is an eligible member.
(7)
The proposed effective date of the conversion or reorganization or the manner
in which the proposed effective date of the conversion or reorganization is
established.
(8)
The proposed amendments to or restatement of the articles of incorporation and
bylaws of the converting mutual insurer and the proposed articles of
incorporation and bylaws of any stock holding company, mutual holding company,
intermediate stock holding company or other corporation organized pursuant to
the plan.
(9)
Except as otherwise provided in ORS 732.612, the valuation of the converting
mutual insurer immediately before the effective date of the conversion.
(10)
A description of the significant terms of any offering of shares of capital
stock or other securities of an issuer.
(11)
The intention, if any, that a director or officer of the converting mutual
insurer or converted stock insurer or any stock holding company, mutual holding
company, intermediate stock holding company or other corporation organized
pursuant to the plan may, within the six-month period following the effective
date of the conversion or reorganization, purchase or acquire shares of capital
stock or other securities of an issuer to be issued pursuant to the plan.
(12)
A provision that all policies in force on the effective date of the conversion
or reorganization will remain in force under the terms of those policies. The
plan also must provide that on the effective date of the conversion or
reorganization, any voting rights of the members provided for under the
policies or under the Insurance Code are extinguished. Except for individual
policies of life insurance, guaranteed renewable health insurance and noncancelable health insurance issued by the converting
mutual insurer, the plan may authorize the converted stock insurer to issue
nonparticipating policies as a substitute for participating policies upon the
renewal dates of the participating policies.
(13)
If applicable, a provision establishing a closed block of individual policies
of life insurance, guaranteed renewable health insurance and noncancelable health insurance issued by the converting
mutual insurer that are participating policies and in force on the effective
date of the conversion or reorganization and for which the converting mutual
insurer has an experience-based dividend scale payable in the year in which the
plan is adopted by the board of directors of the converting mutual insurer. The
plan may provide for conditions under which the converted stock insurer may
cease to maintain the closed block and its allocated assets. Regardless of such
a cessation, the obligations under the individual policies constituting the
closed block business remain the obligations of the converted stock insurer.
Dividends on those policies must be apportioned by the board of directors of
the converted stock insurer in accordance with the terms of the policies.
Assets of the insurer must be allocated to the closed block in an amount
producing cash flows that, together with anticipated revenues from the closed
block business, are expected to be sufficient to support the closed block
business, including payment of claims and those expenses and taxes specified in
the plan, and provide for continuation of dividend scales in effect on the
effective date if the experience underlying the dividend scales continues. The
provision establishing the closed block must provide for appropriate
adjustments in the dividend scales if the experience changes. [1997 c.771 §5]
732.612 Consideration for membership
interest in converting or reorganizing mutual insurer; kinds of consideration;
allocation of consideration. (1) In the
case of a conversion or in the case of a reorganization involving the
organization of a stock holding company, consideration for the membership
interests of the eligible members of a converting mutual insurer shall consist
of one or any combination of the following:
(a)
Nontransferable subscription rights to purchase shares of capital stock of the
issuer as described in subsection (2) of this section;
(b)
Shares of capital stock of the issuer as described in subsection (3) of this
section;
(c)
Cash;
(d)
Premium credits;
(e)
In the case of a converting mutual insurer transacting primarily property or casualty
insurance, or both, certificates of contribution that bear interest as
established in the plan, that are repayable within 10 years or, if approved by
the Director of the Department of Consumer and Business Services, within a
longer period and that are repayable on terms set forth in the plan;
(f)
In the case of individual policies of life insurance, credits to policy account
values or other enhancements in policy benefits; and
(g)
Any other form of consideration described in the plan and approved by the
director.
(2)
A plan may provide for allocation to eligible members, without payment, of
nontransferable subscription rights to purchase shares of capital stock of the
issuer, and the plan shall contain the following provisions:
(a)
The plan must allocate the subscription rights in whole shares among the
eligible members. In the case of a converting mutual insurer transacting
primarily life or health insurance, or both, the subscription rights shall be
allocated in accordance with subsection (6) of this section. In the case of a
converting mutual insurer transacting primarily property or casualty insurance,
or both, the subscription rights shall be allocated in accordance with
subsection (7) of this section.
(b)
The plan must specify the expiration date of the subscription rights or
authorize the board of directors of the converting mutual insurer to establish
the expiration date. The subscription rights may be exercised, in whole or in
part, by an eligible member in the manner described in the plan including, but
not limited to, the payment of the subscription exercise price for the shares
purchased. The plan may require an eligible member who exercises subscription
rights to purchase a minimum number of shares unless the director determines
that such minimum purchase requirement is unreasonable based on the interests
of the eligible members, the converted stock insurer and the issuer. The
proposed subscription exercise price per share shall be set forth in the plan
and shall be less than the price at which shares of capital stock of the issuer
will be first offered in accordance with paragraph (e) of this subsection. The
proposed subscription exercise price per share shall be determined by the
boards of directors of the converting mutual insurer and the issuer and shall
be approved by the director based on the interests of the eligible members, the
policyholders, the converted stock insurer and the issuer.
(c)
The plan must provide that to the extent an eligible member does not exercise,
in whole or in part, subscription rights allocated to the eligible member, the
eligible member instead will receive one or more of the forms of consideration
described in subsection (1) of this section that are specified in the plan.
(d)
The plan must set the pro forma market value of the converted stock insurer,
which is the value that is estimated to be necessary to attract full
subscription for all shares offered by the issuer. The pro forma market value
of the converted stock insurer shall be determined by an independent valuation
by a qualified person. The price per share at which the shares of capital stock
of the issuer are first offered in accordance with paragraph (e) of this
subsection shall be equal to such pro forma market value of the converted stock
insurer divided by the number of shares that would be issued if all
subscription rights allocated to the eligible members are exercised.
(e)
The plan must further provide that any shares of capital stock of the issuer
for which subscription rights are allocated to the eligible members but which
are not purchased by the eligible members pursuant to the exercise of such
subscription rights must be sold in a public offering through an underwriter,
unless the number of shares that are not purchased by the eligible members is
so small in number so as not to warrant the expense of a public offering, in
which case the plan may provide for the sale of such shares by private
placement or through any other fair and equitable means approved by the
director. If the director finds that market conditions or other circumstances
may cause the interests of the eligible members to be adversely affected, the
director may require such offering of shares to be postponed or the terms of
such offering to be modified.
(3)
A plan may provide for the allocation to the eligible members, without payment,
of shares of capital stock of the issuer. The plan must allocate the shares of
capital stock of the issuer in whole shares among the eligible members. In the
case of a converting mutual insurer transacting primarily life or health
insurance, or both, the shares shall be allocated in accordance with subsection
(6) of this section. In the case of a converting mutual insurer transacting
primarily property or casualty insurance, or both, the shares shall be
allocated in accordance with subsection (7) of this section. If shares of
capital stock of the issuer constitute the only consideration to be received by
the eligible members and the plan does not provide for the sale of additional
shares of capital stock or other securities of the issuer, the plan does not
need to include the valuation of the converting mutual insurer. If the plan
provides for the allocation to the eligible members, without payment, of shares
of capital stock of the issuer, the plan may establish a reasonable period
within which the eligible members to whom such shares are issued may not
dispose of such shares.
(4)
If shares of capital stock of the issuer are issued in accordance with
subsection (2) or (3) of this section, the issuer must use its best efforts to
encourage and assist in the establishment of a public market for such shares
unless the director finds that such public market is not feasible or is not in
the best interests of the eligible members, the converted stock insurer and the
issuer. The director may provide that subscription rights or shares of capital
stock of the issuer do not need to be allocated under subsection (2) or (3) of
this section to eligible members residing in a foreign country or other
jurisdiction if there is a small number of eligible members residing in such
foreign country or other jurisdiction and any registration, qualification,
filing or other compliance matters under the laws of such foreign country or
other jurisdiction with respect to the shares of capital stock of the issuer
would be impracticable or unduly burdensome upon the issuer.
(5)
Regardless of the form of consideration for the membership interests of the
eligible members of a converting mutual insurer, the plan may provide for the
sale of additional shares of capital stock or other securities of the issuer to
persons other than the eligible members. The issuer shall offer such additional
shares or other securities at a price and on terms determined by the boards of
directors of the converting mutual insurer and the issuer.
(6)
For a converting mutual insurer transacting primarily life or health insurance,
or both, the consideration specified in subsection (1) of this section must be
allocated among the eligible members pursuant to a fair and equitable formula.
The formula for allocating the consideration among the eligible members must
either:
(a)
Allocate a fixed component of consideration per capita among the eligible
members and allocate a variable component of consideration among the eligible
members in proportion to the cash value of policies held by them; or
(b)
Allocate the consideration among the eligible members in any other manner
approved by the director.
(7)
For a converting mutual insurer transacting primarily property or casualty
insurance, or both, the consideration specified in subsection (1) of this
section must be allocated among the eligible members pursuant to a fair and
equitable formula. The formula for allocating the consideration among the
eligible members must do either of the following:
(a)
Allocate the consideration among the eligible members in the proportion that
the aggregate premiums earned by the converting mutual insurer on the policies
in force of the eligible member during a specified period before the record
date described in ORS 732.600 (7) bear to the aggregate premiums so earned by
the converting mutual insurer during the same period on all policies in force
of all eligible members. The specified period must be 36 months unless another
period is specified in the plan.
(b)
Allocate the consideration among the eligible members in any other manner
approved by the director.
(8)
The form of consideration to be given to a class or category of eligible
members may differ from the form of consideration to be given to another class
or category of eligible members. The choice of the form of consideration to be
given to a class or category of eligible members may take into account the type
of policy, size of policy, tax status of the eligible member and other factors
that the director determines are appropriate.
(9)
In the case of a conversion or in the case of a reorganization involving the
organization of a stock holding company, a member of the converting mutual
insurer who is not an eligible member is not entitled to receive any
consideration for the membership interest of such member.
(10)
In the case of a reorganization involving the organization of a mutual holding
company, the membership interests of the members of the converting mutual
insurer, whether or not such members are eligible members, shall be merged into
the mutual holding company, and consequently the membership interests of the
members of the converting mutual insurer shall become membership interests in
the mutual holding company. [1997 c.771 §6]
732.614 Effect of conversion.
(1) Upon the effective date of a conversion, the membership interests of all
members of the converting mutual insurer, whether or not eligible members,
shall be extinguished, and the eligible members of the converting mutual
insurer shall be entitled to receive the consideration described in ORS 732.612
in accordance with the plan.
(2)
A converting mutual insurer becomes a stock insurer on the effective date of
the conversion. The amended or restated articles of incorporation of the
converting mutual insurer shall be filed with the Director of the Department of
Consumer and Business Services and shall become effective on the effective date
of the conversion. The certificate of authority of the converting mutual
insurer shall be amended by the director on the effective date of the
conversion.
(3)
A converted stock insurer continues the corporate existence of the converting
mutual insurer. Except as provided in the plan, the conversion does not annul,
modify or change any existing license or other authority or any of the existing
civil actions, rights, contracts or liabilities of the converting mutual
insurer. All property, debts and choses in action and
every other interest belonging to the converting mutual insurer before the
conversion are retained by the converted stock insurer without further action
needed. On and after the effective date of the conversion, the converted stock
insurer shall exercise all rights and powers and perform all duties conferred
or imposed by law upon insurers writing the classes of insurance written by the
converted stock insurer, shall retain the rights and contracts of the
converting mutual insurer existing immediately before the conversion and shall
be subject to all obligations and liabilities of the converting mutual insurer
existing immediately before the conversion, subject to the terms of the plan.
(4)
Notwithstanding subsections (2) and (3) of this section, the conversion may be
carried out through any other method described in the plan and approved by the
director.
(5)
Unless otherwise specified in the plan, the directors and officers of the
converting mutual insurer shall serve as directors and officers of the
converted stock insurer until new directors and officers are elected.
(6)
The provisions of this section apply to the conversion of the converting mutual
insurer whether or not the conversion is part of a reorganization. [1997 c.771 §7]
732.615 [1971
c.373 §3; 1981 c.247 §8; 1993 c.447 §37; renumbered 732.551 in 1993]
732.616 Reorganization involving
organization of stock holding company; subsidiaries.
(1) Upon the effective date of a reorganization involving the organization of a
stock holding company, the membership interests of all members of the
converting mutual insurer, whether or not eligible members, shall be
extinguished, and the eligible members of the converting mutual insurer shall
be entitled to receive the consideration described in ORS 732.612 in accordance
with the plan.
(2)
The stock holding company and any direct or indirect subsidiary of the stock
holding company shall be organized at the time or times set forth in the plan.
(3)
As part of the plan of reorganization or in a separate transaction after the
effective date of the reorganization, a stock holding company may organize one
or more direct or indirect subsidiaries to conduct noninsurance business or
businesses. The subsidiaries may be affiliated with the converted stock insurer
or any direct or indirect parent corporation of the converted stock insurer.
(4)
Shares of capital stock or other securities of the converted stock insurer, the
stock holding company or any direct or indirect subsidiary of the stock holding
company may be issued or sold in accordance with the plan or after the effective
date of the reorganization.
(5)
Unless otherwise specified in the plan, the directors and officers of the
converting mutual insurer shall serve as directors and officers of the stock
holding company and any direct or indirect subsidiary of the stock holding
company until new directors and officers are elected.
(6)
The Director of the Department of Consumer and Business Services retains
jurisdiction over the stock holding company and any direct or indirect
subsidiary of the stock holding company as provided in this section and as
provided in ORS 732.517 to 732.592. [1997 c.771 §8]
732.618 Reorganization involving
organization of mutual holding company; subsidiaries.
(1) Upon the effective date of a reorganization involving the organization of a
mutual holding company, the membership interests of all members of the
converting mutual insurer, whether or not such members are eligible members,
shall be merged into the mutual holding company. Consequently, the members of
the converting mutual insurer shall become members of the mutual holding
company, and the membership interests of the members of the converting mutual
insurer shall become membership interests in the mutual holding company. Upon
the effective date of the reorganization, the membership interests of all
members of the converting mutual insurer shall be extinguished. Any owner of
one or more policies of insurance, other than a policy of reinsurance, issued
by the converted stock insurer after the effective date of the conversion and,
if set forth in an order of the Director of the Department of Consumer and
Business Services, any owner of one or more policies of insurance, other than a
policy of reinsurance, issued by any other insurer that is a direct or indirect
subsidiary of the mutual holding company after the effective date of the
reorganization becomes a member of the mutual holding company.
(2)
The articles of incorporation of the mutual holding company shall be filed with
the director and shall become effective at the time specified in the plan. Any
intermediate stock holding company and any subsidiary of an intermediate stock
holding company shall be organized at the time or times set forth in the plan.
(3)
Upon the effective date of a reorganization involving the organization of a
mutual holding company either:
(a)
All outstanding shares of capital stock of the converted stock insurer must be
issued to the mutual holding company; or
(b)
All outstanding shares of capital stock of the intermediate stock holding
company must be issued to the mutual holding company.
(4)
If there is no intermediate stock holding company, the mutual holding company
shall own at all times after the effective date of the reorganization a
majority of the outstanding shares of voting capital stock of the converted
stock insurer and a majority of the total value of all outstanding shares of
capital stock of the converted stock insurer. Subject to such requirement of
share ownership by the mutual holding company in this subsection, shares of
capital stock of the converted stock insurer may be issued by the converted
stock insurer or may be sold or otherwise transferred by the mutual holding
company.
(5)
If there is an intermediate stock holding company, the mutual holding company
shall own at all times after the effective date of the reorganization a
majority of the outstanding shares of voting capital stock of the intermediate
stock holding company and a majority of the total value of all outstanding
shares of capital stock of the intermediate stock holding company. At all times
after the effective date of the reorganization, the intermediate stock holding
company shall own, either directly or through a wholly owned subsidiary, all
outstanding shares of capital stock of the converted stock insurer. Subject to
such requirement of share ownership by the mutual holding company and any
intermediate stock holding company in this subsection, shares of capital stock
of the intermediate stock holding company may be issued by the intermediate
stock holding company or may be sold or otherwise transferred by the mutual
holding company.
(6)
After the effective date of the reorganization, the mutual holding company must
at all times have the direct or indirect power to cast at least a majority of
the votes for the election of directors of:
(a)
The converted stock insurer; and
(b)
The intermediate stock holding company, if any.
(7)
As part of the plan of reorganization or in a separate transaction after the
effective date of the reorganization, a mutual holding company may organize or
acquire one or more direct or indirect subsidiaries to conduct noninsurance
business or businesses. The subsidiaries may be affiliated with the converted
stock insurer or any intermediate stock holding company.
(8)
Unless otherwise specified in the plan, the directors and officers of the
converting mutual insurer shall serve as directors and officers of the mutual
holding company, any intermediate stock holding company and any subsidiary of
an intermediate stock holding company until new directors and officers are
elected. [1997 c.771 §9]
732.620 Status of mutual holding company
as corporation; status as insurer; rights and obligations of members; voting; articles
of incorporation. (1) A mutual holding company is
a corporation. To the extent not inconsistent with the provisions of the
Insurance Code or ORS 732.600 to 732.630, ORS chapter 60 governs the powers,
duties and relationships of a mutual holding company. The following sections in
ORS chapter 60 do not apply to a mutual holding company: ORS 60.004, 60.007 to
60.014, 60.016, 60.017 to 60.024, 60.027, 60.031, 60.051 to 60.057, 60.131 to
60.147, 60.154 to 60.177, 60.224, 60.227, 60.234, 60.241 to 60.265, 60.470 to
60.534, 60.551 to 60.594, 60.701 to 60.747, 60.787, 60.801 to 60.816 and 60.825
to 60.845. The enumeration in this subsection of inapplicable sections in ORS
chapter 60 is not exclusive.
(2)
In applying ORS chapter 60 as provided in this section, unless the context
requires otherwise, references to:
(a)
“Corporation” shall be deemed references to “mutual holding company.”
(b)
“Shareholders” shall be deemed references to “members.”
(c)
“Secretary of State” shall be deemed references to “Director of the Department
of Consumer and Business Services.”
(3)
A mutual holding company is not an insurer for purposes of the Insurance Code.
However, in the event a mutual holding company engages in an activity described
in ORS 732.521, then ORS 732.517 to 732.546 shall apply to the mutual holding
company and the effect of such activity shall be governed by ORS 732.517 to
732.546. A mutual holding company may merge with another corporation in
accordance with a plan of restructuring described in ORS 732.622 and 732.624.
(4)
A mutual holding company shall not dissolve or liquidate without approval by
the director or unless required by judicial order. The director retains
jurisdiction over a mutual holding company, any intermediate stock holding
company and any subsidiary of an intermediate stock holding company as provided
in this section and as provided in ORS 732.517 to 732.592.
(5)
The members of a mutual holding company have the rights and obligations set
forth in this section and in the articles of incorporation and bylaws of the
mutual holding company. No member of a mutual holding company may transfer
membership in the mutual holding company or any right arising from such
membership. Such limitation on the transfer of membership or rights arising
from membership shall not restrict the assignment of a policy that is otherwise
permissible. A member of a mutual holding company is not personally liable for
the acts, debts, liabilities or obligations of the mutual holding company
merely by reason of being a member. No assessment of any kind may be imposed
upon a member of a mutual holding company.
(6)
A membership interest in a mutual holding company shall not constitute a
security as defined in ORS 59.015.
(7)
Each member of a mutual holding company is entitled to one vote on each matter
coming before a meeting of the members and for each director to be elected
regardless of the number of policies or amount of insurance and benefits held
by such member. The voting rights of the members of a mutual holding company
shall be determined in accordance with ORS 732.470.
(8)
Meetings of the members of a mutual holding company shall be governed by ORS
732.475 in the same manner as if the mutual holding company were a domestic
mutual insurer, except for provisions governing quorum requirements, the
approval of matters by the members and the election of directors by the
members. The members present in person or represented by proxy shall constitute
a quorum at a duly called meeting of the members. If a quorum exists, action on
a matter, other than the election of directors, is approved by the members if
the votes cast in favor of the action exceed the votes cast opposing the
action, unless the articles of incorporation require a greater number of
affirmative votes. Unless otherwise provided in the articles of incorporation,
directors are elected by a plurality of the votes cast by the members entitled
to vote in the election at a meeting at which a quorum exists.
(9)
The articles of incorporation of a mutual holding company must contain the
following provisions:
(a)
The name of the mutual holding company. The name must include the words “mutual
holding company” or “mutual insurance holding company” or other words connoting
the mutual character of the mutual holding company that are approved by the
director.
(b)
A provision specifying that the mutual holding company is not authorized to
issue capital stock, whether voting or nonvoting.
(c)
A provision setting forth any rights of the members of the mutual holding
company upon dissolution or liquidation.
(10)
A mutual holding company shall automatically be a party to any rehabilitation
or liquidation proceeding involving the converted stock insurer that as a
result of a reorganization is a direct or indirect subsidiary of the mutual
holding company. In such a proceeding, the assets of the mutual holding company
shall be counted as assets of the estate of the converted stock insurer for the
purpose of satisfying the claims of the policyholders of the converted stock
insurer. [1997 c.771 §10]
732.622 Restructuring of mutual holding
company. (1) A mutual holding company may
restructure to a stock holding company in accordance with a plan of
restructuring. The restructuring may include the continuation or organization
of one or more corporations that become direct or indirect subsidiaries of the
restructured stock holding company in accordance with the plan of
restructuring.
(2)
In order to restructure a mutual holding company, the board of directors of the
mutual holding company must adopt a plan as provided in this section.
(3)
A plan of restructuring must include the following:
(a)
A statement of the reasons for the proposed action.
(b)
The proposed articles of incorporation and bylaws of the restructured stock
holding company, the proposed articles of incorporation and bylaws of any other
corporation to be organized pursuant to the plan and the proposed amendments to
or restatement of the articles of incorporation and bylaws of any other
existing corporation included in the plan.
(c)
A description of how the plan will be carried out, including, but not limited to,
any merger, transfer, assumption, exchange, acquisition, contribution or other
transaction included within the plan, and a description of the restructured
stock holding company and any other corporation organized pursuant to the plan.
(d)
A description of all significant terms of the restructuring.
(e)
A description of the overall effect of the plan on policies issued by any
insurer that is a direct or indirect subsidiary of the restructuring mutual
holding company. The description must show that policyholder interests
collectively are properly preserved and protected and that the plan is fair and
equitable to the policyholders.
(f)
A statement of the manner and method by which membership interests in the
restructuring mutual holding company will be extinguished and consideration
will be provided to the eligible members.
(g)
The record date for determining whether a member of the restructuring mutual
holding company is an eligible member.
(h)
The proposed effective date of the restructuring or the manner in which the
proposed effective date of the restructuring is established.
(i) Except as otherwise provided in ORS 732.624, the
valuation of the restructuring mutual holding company immediately before the
effective date of the restructuring.
(j)
A description of the significant terms of any offering of shares of capital
stock or other securities of an issuer.
(k)
The intention, if any, that a director or officer of the restructuring mutual
holding company, any direct or indirect subsidiary of the restructuring mutual
holding company or any other corporation organized pursuant to the plan may,
within the six-month period following the effective date of the restructuring,
purchase or acquire shares of capital stock or other securities of an issuer to
be issued pursuant to the plan.
(4)
After the board of directors of a mutual holding company has adopted a plan and
before the board of directors seeks approval of the plan by the eligible
members of the mutual holding company, the mutual holding company shall file
the following documents with the Director of the Department of Consumer and
Business Services:
(a)
The plan of restructuring.
(b)
The form of notice of the meeting at which the eligible members vote on the
plan.
(c)
The form of any proxies to be solicited from the eligible members. Proxies must
offer the eligible members the option of voting in favor or voting against the
plan or abstaining.
(d)
Information required by ORS 732.523.
(e)
Other information or documentation required by the director. [1997 c.771 §11]
732.624 Approval by Director of Department
of Consumer and Business Services of mutual holding company restructuring plan;
approval by members; effect of restructuring. (1)
The Director of the Department of Consumer and Business Services shall approve,
conditionally approve or disapprove a plan of restructuring and other documents
submitted under ORS 732.622 according to the standards established in ORS
732.626. The director must take such action not later than the 60th day after
the director has received a completed filing of the plan and all information
requested by the director or not later than the 30th day after the completion
of a hearing on the plan, whichever date is later.
(2)
At any time before approval of a plan by the director, the board of directors
of the mutual holding company may amend or withdraw the plan.
(3)
After approval by the director, the plan must be approved by the eligible
members of the mutual holding company. Approval by the eligible members is
subject to the following requirements:
(a)
All eligible members must be given notice of the plan and of their opportunity
to vote on the plan. A copy of the plan or a summary of the plan must accompany
the notice. The notice shall be mailed to the last known address of each
eligible member, as shown on the records of the mutual holding company, not
later than the 45th day after approval of the plan by the director. The meeting
of the eligible members at which a vote on the plan will occur shall be set for
a date that is not earlier than the 30th day after the date on which the mutual
holding company mailed the notice of the meeting. If the mutual holding company
complies substantially and in good faith with the notice requirements of this
section, the mutual holding company’s failure to give any member or members any
required notice does not impair the validity of any action taken under this
section.
(b)
The vote required for approval must be conducted as provided in ORS 732.620,
except as follows:
(A)
Only eligible members may vote on the plan.
(B)
An eligible member may vote in person or by proxy at the meeting at which the
plan is voted upon.
(4)
The plan shall be carried out in accordance with its terms on the effective
date of the restructuring. A restructuring may be carried out through any
method approved by the director, including, but not limited to, the
organization of an interim subsidiary of the mutual holding company and the
merger of the mutual holding company with and into such subsidiary.
(5)
The restructured stock holding company and any other corporation included in
the plan of restructuring shall be organized at the time or times set forth in
the plan.
(6)
Upon the effective date of the restructuring, the membership interests of all
members of the restructuring mutual holding company, whether or not eligible
members, shall be extinguished, and the eligible members of the restructuring
mutual holding company shall be entitled to receive any form of consideration
described in ORS 732.612 in accordance with the plan. In applying ORS 732.612
to the members of the restructuring mutual holding company, references in ORS
732.612 to the “converting mutual insurer” shall mean the restructuring mutual
holding company, and references to the policies of the eligible members shall
mean those policies of the eligible members that result in membership in the
restructuring mutual holding company. For this purpose, ORS 732.612 shall be
construed and applied so that the effect upon the eligible members of the
restructuring mutual holding company is similar to the effect upon the eligible
members of a converting mutual insurer. If the consideration for the membership
interests of the eligible members is nontransferable subscription rights to
purchase shares of capital stock of the issuer, the plan must set the pro forma
market value of the restructured stock holding company in the same manner as
the pro forma market value of the converted stock insurer is determined in
accordance with ORS 732.612. If shares of capital stock of the issuer
constitute the only consideration to be received by the eligible members of the
restructuring mutual holding company and the plan does not provide for the sale
of additional shares of capital stock or other securities of the issuer, the plan
does not need to include the valuation of the restructuring mutual holding
company.
(7)
Unless otherwise specified in the plan, the directors and officers of the
restructuring mutual holding company shall serve as directors and officers of
the restructured stock holding company until new directors and officers are
elected.
(8)
The director retains jurisdiction over the restructured stock holding company
and any direct or indirect subsidiary of the restructured stock holding company
as provided in this section and as provided in ORS 732.517 to 732.592.
(9)
A restructured stock holding company shall automatically be a party to any
rehabilitation or liquidation proceeding involving a converted stock insurer if
the restructuring mutual holding company would have been a party to such
proceeding under ORS 732.620. [1997 c.771 §12]
732.625 [1971
c.373 §4; 1993 c.447 §38; renumbered 732.552 in 1993]
732.626 Plan review and approval; general
provisions. (1) The Director of the Department of
Consumer and Business Services shall review a plan of conversion,
reorganization or restructuring that is submitted to the director. Upon review,
the director shall approve or conditionally approve the plan if the director
finds all of the following:
(a)
The applicable provisions of ORS 732.600 to 732.630, and other applicable
provisions of law, have been fully met.
(b)
The plan protects the rights of policyholders.
(c)
The plan will be fair and equitable to the members, and the plan will not
prejudice the interests of the members.
(d)
The allocation of consideration among the eligible members is fair and
equitable.
(e)
The converted stock insurer will have capital or surplus, or any combination
thereof, that is required of a domestic stock insurer on initial authorization
to transact like kinds of insurance, and otherwise will be able to satisfy the
requirements of this state for transacting its insurance business.
(f)
The plan will not substantially reduce the security of the policyholders and
the service to be rendered to the policyholders.
(g)
If a stock holding company or mutual holding company is organized, the
financial condition of the stock holding company, the mutual holding company or
any subsidiary thereof will not jeopardize the financial stability of the converted
stock insurer.
(h)
The financial condition of the converting mutual insurer will not be
jeopardized by the conversion or reorganization, and the conversion or
reorganization will not jeopardize the financial stability of the stock holding
company, the mutual holding company or any subsidiary thereof.
(i) The competence, experience and integrity of those
persons who will control the operation of the converted stock insurer are not
contrary to the interests of policyholders of the converted stock insurer and
of the public in allowing the plan to proceed.
(j)
Implementation of the plan will protect the interests of the insurance-buying
public.
(k)
The activity is not subject to other material and reasonable objections.
(L)
All modifications required by the director have been made.
(2)
An approval or conditional approval of a plan by the director expires if the
plan is not carried out within one year after the date of the approval or
conditional approval, unless the time period is extended by the director for
good cause, upon written application for such extension.
(3)
In connection with an approval or disapproval of a plan, when the plan must
include a valuation, the director shall separately review and approve or
disapprove the valuation stated in the plan, and shall make a specific finding
thereon in the approval or disapproval.
(4)
The director may retain, at the expense of the converting mutual insurer or
restructuring mutual holding company, qualified experts not otherwise a part of
the staff of the Department of Consumer and Business Services to assist in
reviewing the plan and supplemental documents and valuations, and in making the
finding in subsection (3) of this section.
(5)
The director may hold a hearing for the purposes of receiving comment on
whether a plan should be approved and on any other matter relating to the
conversion, reorganization or restructuring. The hearing shall be held within
60 days after the director has received a completed filing of the plan and all
information required by the director. [1997 c.771 §13]
732.628 Limitations on ownership of shares
in companies resulting from conversion, reorganization or restructuring.
(1) For a period of three years following the effective date of a conversion,
reorganization or restructuring, unless authorized by the Director of the
Department of Consumer and Business Services, the directors, officers and
employees of the converted stock insurer, any stock holding company, any mutual
holding company or any subsidiary of a stock holding company or mutual holding
company collectively shall not own, whether directly or indirectly, more than
25 percent of all outstanding shares issued by the converted stock insurer, any
stock holding company or any subsidiary of a stock holding company or mutual
holding company.
(2)
Except as otherwise provided in ORS 732.600 to 732.630, neither a person nor a
group of persons acting in concert may acquire, through public offering,
exchange or subscription rights or otherwise, more than five percent of the
shares of capital stock of the converted stock insurer, any stock holding
company or any subsidiary of a stock holding company or mutual holding company
for a period of five years from the effective date of the conversion,
reorganization or restructuring except with the approval of the director.
(3)
If the plan so provides and not otherwise, directors and officers of the
converting mutual insurer, the converted stock insurer, any stock holding
company or any subsidiary of a stock holding company or mutual holding company
may, within the six-month period following the effective date of the
conversion, reorganization or restructuring, purchase or acquire shares of
capital stock or other securities of an issuer offered pursuant to the plan. [1997
c.771 §14]
732.630 Dissenters’ rights; action
challenging validity of conversion, reorganization or restructuring.
(1) Dissenters’ rights provided in ORS 60.551 to 60.594 are not available to
any member, whether or not eligible, of a converting mutual insurer or a
restructuring mutual holding company.
(2)
An action challenging the validity of or arising from the conversion,
reorganization or restructuring or other acts taken or proposed to be taken
under the plan or ORS 732.600 to 732.630 must be commenced not later than the
60th day after the effective date of the conversion, reorganization or
restructuring or other acts so taken and may be pursued only if they are
unlawful or fraudulent. There shall be a rebuttable presumption that any act
set forth in an order of the Director of the Department of Consumer and
Business Services is lawful. [1997 c.771 §15]
732.635 [1971
c.373 §5; 1993 c.447 §39; renumbered 732.553 in 1993]
732.645 [1971
c.373 §6; 1993 c.447 §40; renumbered 732.554 in 1993]
732.655 [1971
c.373 §7; renumbered 732.558 in 1993]
732.665 [1971
c.373 §8; 1993 c.447 §42; renumbered 732.562 in 1993]
732.675 [1971
c.373 §9; 1993 c.447 §43; renumbered 732.564 in 1993]
732.685 [1971
c.373 §10; 1993 c.447 §44; renumbered 732.566 in 1993]
732.695 [1971
c.373 §11; 1993 c.447 §45; renumbered 732.568 in 1993]
732.705 [1971
c.373 §12; 1993 c.447 §46; renumbered 732.572 in 1993]
PRODUCER-CONTROLLED PROPERTY AND
CASUALTY INSURERS
732.810 Definitions for ORS 732.810 to
732.814. 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 an insurance producer.
(3)
“Controlling producer” means an insurance producer who directly or indirectly
controls an insurer.
(4)
“Insurance producer” has the meaning given that term in ORS 731.104, but
excludes a person who sells, solicits or negotiates an insurance contract on
behalf of the insurance producer. [1993 c.447 §58; 2003 c.364 §82]
Note:
732.810 to 732.814 were added to and made a part of the Insurance Code by
legislative action but were not added to ORS chapter 732 or any series therein.
See Preface to Oregon Revised Statutes for further explanation.
732.811 Application of ORS 732.810 to
732.814. (1) ORS 732.810 to 732.814 apply to an
insurer who is authorized in this state to transact property insurance or
casualty insurance, or both, and is:
(a)
Domiciled in this state; or
(b)
Domiciled in a state that is not accredited by the National Association of
Insurance Commissioners and does not have in effect a law that the Director of
the Department of Consumer and Business Services determines to be substantially
similar to ORS 732.810 to 732.814. For purposes of this paragraph, a state is
accredited if its insurance department or regulatory agency is determined by
the National Association of Insurance Commissioners to meet the minimum
financial regulatory standards promulgated and established from time to time by
the National Association of Insurance Commissioners.
(2)
ORS 732.517 to 732.592 apply to all parties within a holding company system
that is subject to ORS 732.810 to 732.814, to the extent that ORS 732.517 to
732.592 are not inconsistent with ORS 732.810 to 732.814.
(3)
ORS 732.810 to 732.814 do not apply to any of the following persons:
(a)
A risk retention group as defined in the Superfund Amendments Reauthorization
Act of 1986, P.L. 99-499, 100 Stat. 1613 (1986), the Liability Risk Retention
Act, 15 U.S.C. § 3901 et seq. or ORS 735.305.
(b)
A residual market pool or a joint underwriting authority or association.
(c)
An insurer that is owned by another organization whose exclusive purpose is to
insure risks of the parent organization and affiliated companies or, in the
case of groups and associations, an insurer that is owned by the insureds and whose exclusive purpose is to insure risks to
member organizations or group members and their affiliates, or any combination
thereof. [1993 c.447 §59]
Note: See
note under 732.810.
732.812 Filing of financial statements;
contract requirements; audit; reports to director.
(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, an
insurance producer controlled by the controlled insurer or an insurance
producer that is a subsidiary of the controlled insurer.
(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 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 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. [1993 c.447 §60; 2003 c.364 §83]
Note: See
note under 732.810.
732.813 Notice to prospective insured.
A controlling producer, prior to the effective date of a policy, shall deliver
written notice to the prospective insured disclosing the relationship between
the producer and the controlled insurer. If the insurance is placed through a subproducer who is not a controlling producer, the
controlling producer must retain in the records of the controlling producer a
signed commitment from the subproducer that the subproducer is aware of the relationship between the
insurer and the producer and that the subproducer has
or will notify the insured of the relationship. [1993 c.447 §61]
Note: See
note under 732.810.
732.814 Authority of director over
controlling producer and controlled insurer. (1) If
the Director of the Department of Consumer and Business Services believes that
the controlling producer or any other person has not complied with ORS 732.810
to 732.814 or any rule adopted or order issued thereunder,
the director may order the controlling producer to cease placing insurance with
the controlled insurer.
(2)
If the director finds that the controlled insurer or any policyholder of the
controlled insurer has suffered any loss or damage because the controlling
producer or any other person has not complied with ORS 732.810 to 732.814 or
any rule adopted or issued thereunder, the director
may maintain a civil action or intervene in an action brought by or on behalf
of the insurer or policyholder for recovery of compensatory damages for the
benefit of the insurer or policyholder or other appropriate relief.
(3)
If an order for liquidation or rehabilitation of the controlled insurer has
been entered pursuant to ORS chapter 734 and the receiver appointed under that
order believes that the controlling producer or any other person has not
complied with ORS 732.810 to 732.814 or any rule adopted or order issued thereunder, and if the insurer suffered any loss or damage
because of the noncompliance, the receiver may maintain a cause of action for
recovery of damages or other appropriate sanctions for the benefit of the
insurer.
(4)
This section does not affect the authority of the director to take any other
administrative action under the Insurance Code.
(5)
This section does not alter or affect the rights of policyholders, claimants,
creditors or other third parties. [1993 c.447 §62]
Note: See
note under 732.810.
INTERSTATE INSURANCE PRODUCT REGULATION
COMPACT
732.820 Interstate Insurance Product
Regulation Compact. The Interstate Insurance Product
Regulation Compact is enacted into law and entered into on behalf of this state
with all other jurisdictions legally joining therein in the form substantially
as follows:
______________________________________________________________________________
ARTICLE I
PURPOSE
The
purposes of this compact are, through means of joint and cooperative action
among the compacting states:
(1)
To promote and protect the interest of consumers of individual and group
annuity, life insurance, disability income and long-term care insurance
products;
(2)
To develop uniform standards for insurance products covered under the compact;
(3)
To establish a central clearinghouse to receive and provide prompt review of
insurance products covered under the compact and, in certain cases,
advertisements related to these products, submitted by insurers authorized to
do business in one or more compacting states;
(4)
To give appropriate regulatory approval to those product filings and
advertisements satisfying the applicable uniform standard;
(5)
To improve coordination of regulatory resources and expertise between state insurance
departments regarding the setting of uniform standards and review of insurance
products covered under the compact;
(6)
To create the Interstate Insurance Product Regulation Commission; and
(7)
To perform these and such other related functions as may be consistent with the
state regulation of the business of insurance.
ARTICLE II
DEFINITIONS
As
used in this compact:
(1)
“Advertisement” means any material designed to create public interest in a
product, or induce the public to purchase, increase, modify, reinstate, borrow
on, surrender, replace or retain a policy, as more specifically defined in the
rules and operating procedures of the commission.
(2)
“Bylaws” means those bylaws established by the commission for its governance,
or for directing or controlling the commission’s actions or conduct.
(3)
“Commission” means the Interstate Insurance Product Regulation Commission
established by this compact.
(4)
“Commissioner” means the chief insurance regulatory official of a state,
including, but not limited to, a commissioner, superintendent, director or
administrator.
(5)
“Compacting state” means any state that has enacted this compact legislation
and that has not withdrawn pursuant to subsection (1), Article XIV, of this
compact, or been terminated pursuant to subsection (2), Article XIV, of this
compact.
(6)
“Insurer” means any entity licensed by a state to issue contracts of insurance
for any of the lines of insurance covered by this compact.
(7)
“Member” means the person chosen by a compacting state as its representative to
the commission, or the person’s designee.
(8)
“Noncompacting state” means any state that is not at
the time a compacting state.
(9)
“Operating procedures” means procedures adopted by the commission implementing
a rule, uniform standard or a provision of this compact.
(10)
“Product” means the form of a policy or contract, including any application,
endorsement or related form that is attached to and made a part of the policy
or contract, and any evidence of coverage or certificate, for an individual or
group annuity, life insurance, disability income or long-term care insurance
product that an insurer is authorized to issue.
(11)
“Rule” means a statement of general or particular applicability and future
effect adopted by the commission, including a uniform standard developed
pursuant to Article VII of this compact, designed to implement, interpret or
prescribe law or policy or describing the organization, procedure or practice
requirements of the commission, which shall have the force and effect of law in
the compacting states.
(12)
“State” means any state, district or territory of the United States of America.
(13)
“Third-party filer” means an entity that submits a product filing to the
commission on behalf of an insurer.
(14)
“Uniform standard” means a standard adopted by the commission for a product
line, pursuant to Article VII of this compact, and shall include all of the
product requirements in aggregate. However, each uniform standard shall be
construed, whether express or implied, to prohibit the use of any inconsistent,
misleading or ambiguous provisions in a product and the form of the product
made available to the public shall not be unfair, inequitable or against public
policy as determined by the commission.
ARTICLE III
ESTABLISHMENT
OF THE COMMISSION AND VENUE
(1)
The compacting states hereby create and establish a joint public agency known
as the Interstate Insurance Product Regulation Commission. Pursuant to Article
IV of this compact, the commission shall have the power to develop uniform
standards for product lines, receive and provide prompt review of products
filed therewith and give approval to those product filings satisfying
applicable uniform standards. However, it is not intended for the commission to
be the exclusive entity for receipt and review of insurance product filings.
This subsection does not prohibit any insurer from filing its product in any
state wherein the insurer is licensed to conduct the business of insurance, and
any such filing shall be subject to the laws of the state where filed.
(2)
The commission is a body corporate and politic, and an instrumentality of the
compacting states.
(3)
The commission is solely responsible for its liabilities except as otherwise
specifically provided in this compact.
(4)
Venue is proper and judicial proceedings by or against the commission shall be
brought solely and exclusively in a court of competent jurisdiction where the
principal office of the commission is located.
ARTICLE IV
POWERS OF THE
COMMISSION
The
commission shall have all of the following powers:
(1)
To adopt rules under Article VII of this compact, which shall have the force
and effect of law and shall be binding in the compacting states to the extent
and in the manner provided in this compact.
(2)
To exercise its rulemaking authority and establish reasonable uniform standards
for products covered under the compact, and advertisement related thereto,
which shall have the force and effect of law and shall be binding in the
compacting states, but only for those products filed with the commission.
However, a compacting state shall have the right to opt out of such uniform
standard pursuant to Article VII of this compact, to the extent and in the
manner provided in this compact. Any uniform standard established by the
commission for long-term care insurance products may provide the same or
greater protections for consumers as, but shall not provide less than, those
protections set forth in the National Association of Insurance Commissioners’
Long-Term Care Insurance Model Act and Long-Term Care Insurance Model
Regulation, respectively, adopted as of 2001. The commission shall consider
whether any subsequent amendments to the National Association of Insurance
Commissioners’ Long-Term Care Insurance Model Act or Long-Term Care Insurance
Model Regulation adopted by the National Association of Insurance Commissioners
require amending of the uniform standards established by the commission for
long-term care insurance products.
(3)
To receive and review in an expeditious manner products filed with the
commission, and rate filings for disability income and long-term care insurance
products, and give approval of those products and rate filings that satisfy the
applicable uniform standard, where such approval shall have the force and
effect of law and be binding on the compacting states to the extent and in the
manner provided in the compact.
(4)
To receive and review in an expeditious manner advertisement relating to
long-term care insurance products for which uniform standards have been adopted
by the commission, and give approval to all advertisement that satisfies the
applicable uniform standard. For any product covered under this compact, other
than long-term care insurance products, the commission shall have the authority
to require an insurer to submit all or any part of its advertisement with
respect to that product for review or approval prior to use, if the commission
determines that the nature of the product is such that an advertisement of the
product could have the capacity or tendency to mislead the public. The actions
of the commission as provided in this section shall have the force and effect
of law and shall be binding in the compacting states to the extent and in the
manner provided in the compact.
(5)
To exercise its rulemaking authority and designate products and advertisement
that may be subject to a self-certification process without the need for prior
approval by the commission.
(6)
To adopt operating procedures, pursuant to Article VII of this compact, that
shall be binding in the compacting states to the extent and in the manner
provided in this compact.
(7)
To bring and prosecute legal proceedings or actions in its name as the
commission. However, the standing of any state insurance department to sue or
be sued under applicable law shall not be affected.
(8)
To issue subpoenas requiring the attendance and testimony of witnesses and the
production of evidence.
(9)
To establish and maintain offices.
(10)
To purchase and maintain insurance and bonds.
(11)
To borrow, accept or contract for services of personnel, including, but not
limited to, employees of a compacting state.
(12)
To hire employees, professionals or specialists, and elect or appoint officers,
and to fix their compensation, define their duties and give them appropriate
authority to carry out the purposes of the compact, and determine their
qualifications, and to establish the commission’s personnel policies and
programs relating to, among other things, conflicts of interest, rates of
compensation and qualifications of personnel.
(13)
To accept any and all appropriate donations and grants of money, equipment,
supplies, materials and services, and to receive, utilize and dispose of the
same. However, at all times the commission shall strive to avoid any appearance
of impropriety.
(14)
To lease, purchase, accept appropriate gifts or donations of or otherwise own,
hold, improve or use any property, real, personal or mixed. However, at all
times the commission shall strive to avoid any appearance of impropriety.
(15)
To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise
dispose of any property, real, personal or mixed.
(16)
To remit filing fees to compacting states as may be set forth in the bylaws,
rules or operating procedures.
(17)
To enforce compliance by compacting states with rules, uniform standards,
operating procedures and bylaws.
(18)
To provide for dispute resolution among compacting states.
(19)
To advise compacting states on issues relating to insurers domiciled or doing
business in noncompacting states, consistent with the
purposes of this compact.
(20)
To provide advice and training to those personnel in state insurance
departments responsible for product review, and to be a resource for state
insurance departments.
(21)
To establish a budget and make expenditures.
(22)
To borrow money.
(23)
To appoint committees, including advisory committees comprising members, state
insurance regulators, state legislators or their representatives, insurance
industry and consumer representatives, and such other interested persons as may
be designated in the bylaws.
(24)
To provide and receive information from, and to cooperate with, law enforcement
agencies.
(25)
To adopt and use a corporate seal.
(26)
To perform such other functions as may be necessary or appropriate to achieve
the purposes of this compact consistent with the state regulation of the
business of insurance.
ARTICLE V
ORGANIZATION
OF THE COMMISSION
(1)(a)
Each compacting state shall have and be limited to one member. Each member
shall be qualified to serve in that capacity pursuant to applicable law of the
compacting state. Any member may be removed or suspended from office as
provided by the law of the state from which the member shall be appointed. Any
vacancy occurring in the commission shall be filled in accordance with the laws
of the compacting state wherein the vacancy exists. Nothing herein shall be
construed to affect the manner in which a compacting state determines the
election or appointment and qualification of its own commissioner.
(b)
Each member shall be entitled to one vote and shall have an opportunity to
participate in the governance of the commission in accordance with the bylaws.
Notwithstanding any provision in this compact to the contrary, no action of the
commission with respect to the adoption of a uniform standard shall be
effective unless two-thirds of the members vote in favor thereof.
(c)
The commission shall, by a majority of the members, prescribe bylaws to govern
its conduct as may be necessary or appropriate to carry out the purposes and
exercise the powers of the compact, including but not limited to:
(A)
Establishing the fiscal year of the commission.
(B)
Providing reasonable procedures for appointing and electing members, as well as
holding meetings, of the management committee.
(C)
Providing reasonable standards and procedures for:
(i) The establishment and meetings of other committees; and
(ii)
Governing any general or specific delegation of any authority or function of
the commission.
(D)
Providing reasonable procedures for calling and conducting meetings of the
commission that consist of a majority of commission members, ensuring
reasonable advance notice of each such meeting and providing for the right of
residents to attend each such meeting with enumerated exceptions designed to
protect the public’s interest, the privacy of individuals and insurers’
proprietary information, including trade secrets. The commission may meet in
camera only after a majority of the entire membership votes to close a meeting.
As soon as practicable, the commission must make public:
(i) A copy of the vote to close the meeting revealing the
vote of each member with no proxy votes allowed; and
(ii)
Votes taken during the meeting.
(E)
Establishing the titles, duties and authority and reasonable procedures for the
election of the officers of the commission.
(F)
Providing reasonable standards and procedures for the establishment of the
personnel policies and programs of the commission. Notwithstanding any civil
service or other similar laws of any compacting state, the bylaws shall
exclusively govern the personnel policies and programs of the commission.
(G)
Promulgating a code of ethics to address permissible and prohibited activities
of commission members and employees.
(H)
Providing a mechanism for winding up the operations of the commission and the
equitable disposition of any surplus funds that may exist after the termination
of the compact after the payment or reserving of all of its debts and
obligations.
(d)
The commission shall publish its bylaws in a convenient form and file a copy
thereof and a copy of any amendment thereto, with the appropriate agency or
officer in each of the compacting states.
(2)(a)
A management committee comprising no more than 14 members shall be established
as follows:
(A)
One member from each of the six compacting states with the largest premium
volume for individual and group annuities, life, disability income and long-term
care insurance products, determined from the records of the National
Association of Insurance Commissioners for the prior year;
(B)
Four members from those compacting states with at least two percent of the
market based on the premium volume described above, other than the six
compacting states with the largest premium volume, selected on a rotating basis
as provided in the bylaws; and
(C)
Four members from those compacting states with less than two percent of the
market based on the premium volume described above, with one selected from each
of the four zone regions of the National Association of Insurance Commissioners
as provided in the bylaws.
(b)
The management committee shall have authority and duties as may be set forth in
the bylaws, including but not limited to:
(A)
Managing the affairs of the commission in a manner consistent with the bylaws
and purposes of the commission;
(B)
Establishing and overseeing an organizational structure within, and appropriate
procedures for, the commission to provide for the creation of uniform standards
and other rules, receipt and review of product filings, administrative and
technical support functions, review of decisions regarding the disapproval of a
product filing, and the review of elections made by a compacting state to opt
out of a uniform standard. However, a uniform standard shall not be submitted
to the compacting states for adoption unless approved by two-thirds of the
members of the management committee;
(C)
Overseeing the offices of the commission; and
(D)
Planning, implementing and coordinating communications and activities with
other state, federal and local government organizations in order to advance the
goals of the commission.
(c)
The commission shall elect annually officers from the management committee,
with each having such authority and duties as may be specified in the bylaws.
(d)
The management committee may, subject to the approval of the commission,
appoint or retain an executive director for any period, upon such terms and
conditions and for such compensation as the commission may deem appropriate.
The executive director shall serve as secretary to the commission, but shall
not be a member of the commission. The executive director shall hire and
supervise such other staff as may be authorized by the commission.
(3)(a)
A legislative committee comprising state legislators or their designees shall
be established to monitor the operations of, and make recommendations to, the
commission, including the management committee. However, the manner of
selection and term of any legislative committee member shall be as set forth in
the bylaws. Prior to the adoption by the commission of any uniform standard,
revision to the bylaws, annual budget or other significant matter as may be
provided in the bylaws, the management committee shall consult with and report
to the legislative committee.
(b)
The commission shall establish two advisory committees, one of which shall
comprise consumer representatives independent of the insurance industry, and
the other comprising insurance industry representatives.
(c)
The commission may establish additional advisory committees as its bylaws may
provide for the carrying out of its functions.
(4)
The commission shall maintain its corporate books and records in accordance
with the bylaws.
(5)(a)
The members, officers, executive director, employees and representatives of the
commission shall be immune from suit and liability, either personally or in
their official capacity, for any claim for damage to or loss of property or
personal injury or other civil liability caused by or arising out of any actual
or alleged act, error or omission that occurred, or that the person against
whom the claim is made had a reasonable basis for believing occurred within the
scope of commission employment, duties or responsibilities. However, this
paragraph does not protect any such person from suit or liability for any
damage, loss, injury or liability caused by the intentional or willful and
wanton misconduct of that person.
(b)
The commission shall defend any member, officer, executive director, employee
or representative of the commission in any civil action seeking to impose
liability arising out of any actual or alleged act, error or omission that
occurred within the scope of commission employment, duties or responsibilities,
or that the person against whom the claim is made had a reasonable basis for
believing occurred within the scope of commission employment, duties or
responsibilities. However, this paragraph does not prohibit that person from
retaining the person’s own counsel. Also, the actual or alleged act, error or
omission must not have resulted from that person’s intentional or willful and
wanton misconduct.
(c)
The commission shall indemnify and hold harmless any member, officer, executive
director, employee or representative of the commission for the amount of any
settlement or judgment obtained against that person arising out of any actual
or alleged act, error or omission that occurred within the scope of commission
employment, duties or responsibilities, or that such person had a reasonable
basis for believing occurred within the scope of commission employment, duties
or responsibilities. However, the actual or alleged act, error or omission must
not have resulted from the intentional or willful and wanton misconduct of that
person.
ARTICLE VI
MEETINGS AND
ACTS OF THE COMMISSION
(1)
The commission shall meet and take such actions as are consistent with the
provisions of this compact and the bylaws.
(2)
Each member of the commission shall have the right and power to cast a vote to
which that compacting state is entitled and to participate in the business and
affairs of the commission. A member shall vote in person or by such other means
as provided in the bylaws. The bylaws may provide for members’ participation in
meetings by telephone or other means of communication.
(3)
The commission shall meet at least once during each calendar year. Additional
meetings shall be held as set forth in the bylaws.
ARTICLE VII
RULES AND
OPERATING PROCEDURES:
RULEMAKING
FUNCTIONS OF THE COMMISSION
AND OPTING OUT
OF UNIFORM STANDARDS
(1)
The commission shall adopt reasonable rules, including uniform standards, and
operating procedures in order to effectively and efficiently achieve the
purposes of this compact. In the event the commission exercises its rulemaking
authority in a manner that is beyond the scope of the purposes of this compact,
then such an action by the commission shall be invalid and have no force and
effect.
(2)
Rules and operating procedures shall be made pursuant to a rulemaking process
that conforms to the Model State Administrative Procedure Act of 1981 as
amended, as may be appropriate to the operations of the commission. Before the
commission adopts a uniform standard, the commission shall give written notice
to the relevant state legislative committee in each compacting state
responsible for insurance issues of its intention to adopt the uniform
standard. The commission in adopting a uniform standard shall consider fully
all submitted materials and issue a concise explanation of its decision.
(3)
A uniform standard shall become effective 90 days after its adoption by the
commission or on such later date as the commission may determine. However, a
compacting state may opt out of a uniform standard as provided in this Article.
All other rules and operating procedures, and amendments thereto, shall become
effective as of the date specified in each rule, operating procedure or
amendment.
(4)(a)
A compacting state may opt out of a uniform standard either by legislation or
regulation adopted by the insurance department under the compacting state’s
Administrative Procedure Act. If a compacting state elects to opt out of a
uniform standard by regulation, the compacting state must:
(A)
Give written notice to the commission no later than 10 business days after the
uniform standard is adopted, or at the time the state becomes a compacting
state; and
(B)
Find that the uniform standard does not provide reasonable protections to the
residents of the state, given the conditions in the state.
(b)
The commissioner shall make specific findings of fact and conclusions of law,
based on a preponderance of the evidence, detailing the conditions in the state
that warrant a departure from the uniform standard and determining that the
uniform standard would not reasonably protect the residents of the state. The
commissioner must consider and balance the following factors and find that the
conditions in the state and needs of the residents of the state outweigh:
(A)
The intent of the legislature to participate in, and the benefits of, an
interstate agreement to establish national uniform consumer protections for the
products subject to this compact; and
(B)
The presumption that a uniform standard adopted by the commission provides
reasonable protections to consumers of the relevant product.
(c)
A compacting state may, at the time of its enactment of this compact,
prospectively opt out of all uniform standards involving long-term care insurance
products by expressly providing for such opt out in the enacted compact, and
such an opt out shall not be treated as a material variance in the offer or
acceptance of any state to participate in this compact. Such opt out shall be
effective at the time of enactment of this compact by the compacting state and
shall apply to all existing uniform standards involving long-term care
insurance products and those subsequently adopted.
(5)
If a compacting state elects to opt out of a uniform standard, the uniform
standard shall remain applicable in the compacting state electing to opt out
until such time the opt out legislation is enacted into law or the regulation
opting out becomes effective. Once the opt out of a uniform standard by a
compacting state becomes effective as provided under the laws of that state,
the uniform standard shall have no further force and effect in that state
unless and until the legislation or regulation implementing the opt out is
repealed or otherwise becomes ineffective under the laws of the state. If a
compacting state opts out of a uniform standard after the uniform standard has
been made effective in that state, the opt out shall have the same prospective
effect as provided under Article XIV of this compact for withdrawals.
(6)
If a compacting state has formally initiated the process of opting out of a
uniform standard by regulation, and while the regulatory opt out is pending,
the compacting state may petition the commission, at least 15 days before the
effective date of the uniform standard, to stay the effectiveness of the
uniform standard in that state. The commission may grant a stay if it
determines the regulatory opt out is being pursued in a reasonable manner and
there is a likelihood of success. If a stay is granted or extended by the
commission, the stay or extension thereof may postpone the effective date by up
to 90 days, unless affirmatively extended by the commission. However, a stay
may not be permitted to remain in effect for more than one year unless the compacting
state can show extraordinary circumstances that warrant a continuance of the
stay, including, but not limited to, the existence of a legal challenge that
prevents the compacting state from opting out. A stay may be terminated by the
commission upon notice that the rulemaking process has been terminated.
(7)
Not later than 30 days after a rule or operating procedure is adopted, any
person may file a petition for judicial review of the rule or operating
procedure. However, the filing of such a petition shall not stay or otherwise
prevent the rule or operating procedure from becoming effective unless the
court finds that the petitioner has a substantial likelihood of success. The
court shall give deference to the actions of the commission consistent with
applicable law and shall not find the rule or operating procedure to be
unlawful if the rule or operating procedure represents a reasonable exercise of
the commission’s authority.
(8)
As used in this article, “opt out” means any action by a compacting state to
decline to adopt or participate in an adopted uniform standard.
ARTICLE VIII
COMMISSION
RECORDS AND ENFORCEMENT
(1)
The commission shall adopt rules establishing conditions and procedures for
public inspection and copying of its information and official records, except
such information and records involving the privacy of individuals and insurers’
trade secrets. The commission may adopt additional rules under which it may
make available to federal and state agencies, including law enforcement agencies,
records and information otherwise exempt from disclosure, and may enter into
agreements with such agencies to receive or exchange information or records
subject to nondisclosure and confidentiality provisions.
(2)
Except as to privileged records, data and information, the laws of any
compacting state pertaining to confidentiality or nondisclosure shall not
relieve any compacting state of the duty to disclose any relevant records, data
or information to the commission. However, disclosure to the commission shall
not be deemed to waive or otherwise affect any confidentiality requirement.
Except as otherwise expressly provided in this compact, the commission shall
not be subject to the compacting state’s laws pertaining to confidentiality and
nondisclosure with respect to records, data and information in its possession.
Confidential information of the commission shall remain confidential after such
information is provided to any commissioner.
(3)
The commission shall monitor compacting states for compliance with duly adopted
bylaws, rules, including uniform standards, and operating procedures. The
commission shall notify any noncomplying compacting
state in writing of its noncompliance with commission bylaws, rules or
operating procedures. If a noncomplying compacting
state fails to remedy its noncompliance within the time specified in the notice
of noncompliance, the compacting state shall be deemed to be in default as set
forth in Article XIV of this compact.
(4)
Any commissioner of a compacting state in which an insurer is authorized to do
business, or is conducting the business of insurance, shall continue to
exercise the state’s authority to oversee the market regulation of the
activities of the insurer in accordance with the provisions of the state’s law.
The commissioner’s enforcement of compliance with the compact is governed by
the following provisions:
(a)
With respect to the commissioner’s market regulation of a product or
advertisement that is approved or certified to the commission, the content of
the product or advertisement shall not constitute a violation of the
provisions, standards or requirements of the compact except upon a final order
of the commission, issued at the request of a commissioner after prior notice
to the insurer and an opportunity for hearing before the commission.
(b)
Before a commissioner may bring an action for violation of any provision,
standard or requirement of the compact relating to the content of an
advertisement not approved or certified to the commission, the commission, or
an authorized commission officer or employee, must authorize the action.
However, authorization under this paragraph does not require notice to the
insurer, opportunity for hearing or disclosure of requests for authorization or
records of the commission’s action on such requests.
ARTICLE IX
DISPUTE
RESOLUTION
The
commission shall attempt, upon the request of a member, to resolve any disputes
or other issues that are subject to this compact and that may arise among two
or more compacting states, or between compacting states and noncompacting
states. The commission shall adopt an operating procedure providing for
resolution of such disputes.
ARTICLE X
PRODUCT FILING
AND APPROVAL
(1)
Insurers and third-party filers seeking to have a product approved by the
commission shall file the product with, and pay applicable filing fees to, the
commission. Nothing in this compact shall be construed to restrict or otherwise
prevent an insurer from filing its product with the insurance department in any
state wherein the insurer is licensed to conduct the business of insurance, and
such filing shall be subject to the laws of the states where filed.
(2)
The commission shall establish appropriate filing and review processes and
procedures pursuant to commission rules and operating procedures. The
commission shall adopt rules to establish conditions and procedures under which
the commission will provide public access to product filing information. In
establishing such rules, the commission shall consider the interests of the
public in having access to such information, as well as protection of personal
medical and financial information and trade secrets, that may be contained in a
product filing or supporting information.
(3)
Any product approved by the commission may be sold or otherwise issued in those
compacting states for which the insurer is legally authorized to do business.
ARTICLE XI
REVIEW OF
COMMISSION DECISIONS REGARDING FILINGS
(1)
Not later than 30 days after the commission has given notice of a disapproved
product or advertisement filed with the commission, the insurer or third-party
filer whose filing was disapproved may appeal the determination to a review
panel appointed by the commission. The commission shall adopt rules to
establish procedures for appointing such review panels and provide for notice
and hearing. An allegation that the commission, in disapproving a product or
advertisement filed with the commission, acted arbitrarily, capriciously or in
a manner that is an abuse of discretion or otherwise not in accordance with the
law is subject to judicial review in accordance with subsection (4) of Article
III of this compact.
(2)
The commission shall have authority to monitor, review and reconsider products
and advertisement subsequent to their filing or approval upon a finding that
the product does not meet the relevant uniform standard. Where appropriate, the
commission may withdraw or modify its approval after proper notice and hearing,
subject to the appeal process in subsection (1) of this Article.
ARTICLE XII
FINANCE
(1)
The commission shall pay or provide for the payment of the reasonable expenses
of its establishment and organization. To fund the cost of its initial
operations, the commission may accept contributions and other forms of funding
from the National Association of Insurance Commissioners, compacting states and
other sources. Contributions and other forms of funding from other sources
shall be of such a nature that the independence of the commission concerning
the performance of its duties is not compromised.
(2)
The commission shall collect a filing fee from each insurer and third-party
filer filing a product with the commission to cover the cost of the operations
and activities of the commission and its staff in a total amount sufficient to
cover the commission’s annual budget.
(3)
The commission’s budget for a fiscal year may not be approved until it has been
subject to notice and comment as set forth in Article VII of this compact.
(4)
The commission shall be exempt from all taxation in and by the compacting
states.
(5)
The commission may not pledge the credit of any compacting state, except by and
with the appropriate legal authority of that compacting state.
(6)
The commission shall keep complete and accurate accounts of all its internal
receipts, including grants and donations, and disbursements of all funds under
its control. The internal financial accounts of the commission shall be subject
to the accounting procedures established under its bylaws. The financial
accounts and reports including the system of internal controls and procedures
of the commission shall be audited annually by an independent certified public
accountant. Upon the determination of the commission, but no less frequently
than every three years, the review of the independent auditor shall include a
management and performance audit of the commission. The commission shall make
an annual report to the governor and legislature of the compacting states,
which shall include a report of the independent audit. The commission’s
internal accounts shall not be confidential and such materials may be shared
with the commissioner of any compacting state upon request. However, any work
papers related to any internal or independent audit and any information regarding
the privacy of individuals and insurers’ proprietary information, including
trade secrets, shall remain confidential.
(7)
A compacting state does not have any claim to or ownership of any property held
by or vested in the commission or to any commission funds held under the
provisions of this compact.
ARTICLE XIII
COMPACTING
STATES, EFFECTIVE DATE AND AMENDMENT
(1)
Any state is eligible to become a compacting state.
(2)
The compact shall become effective and binding upon legislative enactment of
the compact into law by two compacting states. However, the commission shall
become effective for purposes of adopting uniform standards for, reviewing and
giving approval or disapproval of products filed with the commission that
satisfy applicable uniform standards only after 26 states are compacting states
or, alternatively, states representing greater than 40 percent of the premium
volume for life insurance, annuity, disability income and long-term care
insurance products, based on records of the National Association of Insurance
Commissioners for the prior year, are compacting states. Thereafter, the
compact becomes effective and binding as to any other compacting state upon
enactment of the compact into law by that state.
(3)
Amendments to the compact may be proposed by the commission for enactment by
the compacting states. An amendment does not become effective and binding upon
the commission and the compacting states unless and until all compacting states
enact the amendment into law.
ARTICLE XIV
WITHDRAWAL,
DEFAULT AND TERMINATION
(1)(a)
Once effective, the compact shall continue in force and remain binding upon
each and every compacting state. However, a compacting state may withdraw from
the compact by enacting a statute specifically repealing the statute that
enacted the compact into law.
(b)
The effective date of withdrawal is the effective date of the repealing
statute. However, the withdrawal shall not apply to any product filings
approved or self-certified, or any advertisement of such products, on the date
the repealing statute becomes effective, except by mutual agreement of the
commission and the withdrawing state unless the approval is rescinded by the
withdrawing state as provided in paragraph (e) of this subsection.
(c)
The commissioner of a withdrawing state shall immediately notify the management
committee in writing upon the introduction of legislation repealing this
compact in the withdrawing state.
(d)
The commission shall notify the other compacting states of the introduction of
such legislation within 10 days after its receipt of notice thereof.
(e)
The withdrawing state is responsible for all obligations, duties and
liabilities incurred through the effective date of withdrawal, including any
obligations, the performance of which extend beyond the effective date of
withdrawal, except to the extent those obligations may have been released or
relinquished by mutual agreement of the commission and the withdrawing state.
The commission’s approval of products and advertisement prior to the effective
date of withdrawal shall continue to be effective and be given full force and
effect in the withdrawing state, unless formally rescinded by the withdrawing
state in the same manner as provided by the laws of the withdrawing state for the
prospective disapproval of products or advertisement previously approved under
state law.
(f)
Reinstatement following withdrawal of any compacting state shall occur upon the
effective date of the withdrawing state reenacting the compact.
(2)(a)
If the commission determines that any compacting state has at any time
defaulted in the performance of any of its obligations or responsibilities
under this compact, the bylaws or adopted rules or operating procedures, then
the commission may suspend, after notice and hearing as set forth in the
bylaws, all rights, privileges and benefits conferred by this compact on the
defaulting state from the effective date of default as fixed by the commission.
The grounds for default include, but are not limited to, failure of a
compacting state to perform its obligations or responsibilities, and any other
grounds designated in commission rules. The commission shall immediately notify
the defaulting state in writing of the defaulting state’s suspension pending a
cure of the default. The commission shall stipulate the conditions and the time
period within which the defaulting state must cure its default. If the
defaulting state fails to cure the default within the time period specified by
the commission, the defaulting state shall be terminated from the compact and
all rights, privileges and benefits conferred by this compact shall be
terminated from the effective date of termination.
(b)
Product approvals by the commission or product self-certifications, or any
advertisement in connection with such product, that are in force on the
effective date of termination shall remain in force in the defaulting state in
the same manner as if the defaulting state had withdrawn voluntarily pursuant
to subsection (1) of this Article.
(c)
Reinstatement following termination of any compacting state requires a
reenactment of the compact.
(3)(a)
Dissolution of the compact is effective upon the date of the withdrawal or
default of the compacting state that reduces membership in the compact to one
compacting state.
(b)
Upon the dissolution of this compact, the compact becomes null and void and
shall be of no further force or effect, and the business and affairs of the
commission shall be wound up and any surplus funds shall be distributed in accordance
with the bylaws.
ARTICLE XV
SEVERABILITY
AND CONSTRUCTION
(1)
The provisions of this compact shall be severable, and if any phrase, clause,
sentence or provision is deemed unenforceable, the remaining provisions of the
compact shall be enforceable.
(2)
The provisions of this compact shall be liberally construed.
ARTICLE XVI
BINDING EFFECT
OF COMPACT AND OTHER LAWS
(1)(a)
This compact does not prevent the enforcement of any other law of a compacting
state, except as provided in paragraph (b) of this subsection.
(b)
For any product approved or certified to the commission, the rules, uniform
standards and any other requirements of the commission shall constitute the
exclusive provisions applicable to the content, approval and certification of
such products. For advertisement that is subject to the commission’s authority,
any rule, uniform standard or other requirement of the commission that governs
the content of the advertisement shall constitute the exclusive provision that
a commissioner may apply to the content of the advertisement. However, no
action taken by the commission shall abrogate or restrict:
(A)
The access of any person to state courts;
(B)
Remedies available under state law related to breach of contract, tort or other
laws not specifically directed to the content of the product;
(C)
State law relating to the construction of insurance contracts; or
(D)
The authority of the attorney general of the state, including but not limited
to maintaining any actions or proceedings, as authorized by law.
(c)
All insurance products filed with individual states shall be subject to the
laws of those states.
(2)(a)
All lawful actions of the commission, including all rules and operating
procedures adopted by the commission, are binding upon the compacting states.
(b)
All agreements between the commission and the compacting states are binding in
accordance with their terms.
(c)
Upon the request of a party to a conflict over the meaning or interpretation of
commission actions, and upon a majority vote of the compacting states, the
commission may issue advisory opinions regarding the meaning or interpretation
in dispute.
(d)
In the event any provision of this compact exceeds the constitutional limits
imposed on the legislature of any compacting state, the obligations, duties,
powers or jurisdiction sought to be conferred by that provision upon the
commission shall be ineffective as to that compacting state, and those
obligations, duties, powers or jurisdiction shall remain in the compacting
state and shall be exercised by the agency thereof to which those obligations,
duties, powers or jurisdiction are delegated by law in effect at the time this
compact becomes effective.
______________________________________________________________________________
[2011 c.520 §2]
Note:
732.820 and 732.825 were added to and made a part of the Insurance Code by
legislative action but were not added to ORS chapter 732 or any series therein.
See Preface to Oregon Revised Statutes for further explanation.
732.825 State member of Interstate
Insurance Product Regulation Commission. The Director
of the Department of Consumer and Business Services or a designee of the
director shall serve as this state’s member of the Interstate Insurance Product
Regulation Commission established under the Interstate Insurance Product
Regulation Compact set forth in ORS 732.820. [2011 c.520 §3]
Note: See
note under 732.820.
732.990
[Repealed by 1967 c.359 §704]
_______________