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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,
INSURANCE DIVISION
DIVISION 85
PRACTICES INJURIOUS TO PUBLIC OR FREE COMPETITION
Midterm Cancellation, Midterm Premium Increases, and Nonrenewal Notice
836-085-0001
Statutory Authority; Purpose; Applicability
(1) OAR 836-085-0001 to 836-085-0050
are adopted pursuant to the general rulemaking authority of the Director of the
Department of Consumer and Business Services in ORS 731.244 to aid in implementing
ORS 737.330, 746.160 and 746.240.
(2) The purpose of OAR 836-085-0001
to 836-085-0050 is to protect the insurance-buying public in insurance transactions
involving termination, renewal or nonrenewal, or premium increases on contracts
of insurance by:
(a) Regulating the grounds
for midterm cancellation of an insurance policy;
(b) Prohibiting midterm increases
in premium;
(c) Increasing the opportunity
for policyholders to shop for replacement or substitute insurance;
(d) Reducing the opportunity
for breach of policy bargain, misrepresentation by omission or untimely disclosure,
and unfair discrimination among insureds; and
(e) Increasing the opportunity
for insurance producers to freely compete.
(3) OAR 836-085-0001 to 836-085-0050
shall apply to all forms of commercial insurance that are subject to filing under
ORS 737.330 on risks or operations in this state, except for:
(a) Commercial liability
insurance as defined in ORS 731.074, and comprehensive or package policies that
include commercial liability insurance coverage;
(b) Reinsurance;
(c) Wet marine and transportation
insurance;
(d) Marine and transportation
insurance;
(e) Health Insurance;
(f) Life Insurance;
(g) FAIR plans and automobile
assigned risk insurance;
(h) Workers' Compensation
and employers' liability insurance;
(i) Nuclear liability insurance;
(j) Fidelity and surety insurance;
(k) Hazardous waste and environmental
impairment insurance;
(l) Aviation insurance;
(m) Commercial automobile
liability insurance;
(n) Any commercial insurance
policy that has not been previously renewed if the policy has been effect less than
60 days at the time notice of cancellation is mailed or otherwise delivered;
(o) Any policy issued by
a surplus lines insurer.
(4) OAR 836-085-0001 to 836-085-0050
are not exclusive. The director may also consider other provisions of the Insurance
Code to be applicable to the circumstances or situations addressed herein. Policies
may provide terms more favorable to policyholders than are required by these rules.
The rights provided by these rules are in addition to, and do not prejudice any
other rights the policyholder may have under, common law, statute or other Oregon
Administrative Rules.
Stat. Auth.: ORS 731.244, 737 &
746.240
Stats. Implemented: ORS 737.330,
742.005(3)–(4), 746.160(3) & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & ef. 12-1-87;
ID 21-1988, f. & cert. ef. 12-16-88; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05;
ID 12-2013, f. 12-31-13, cert. ef. 1-1-14
836-085-0005
Definitions
As used in OAR 836-085-0001 to 836-085-0050:
(1) "Cancellation" means
termination of a policy at a date other than its expiration date.
(2) "Expiration date" means
the date upon which coverage under a policy ends. For a policy written for a term
longer than one year or with no fixed expiration date, "expiration date" means the
annual anniversary date of the policy.
(3) “Nonpayment of
premium” means the failure of the named insured to discharge any obligation
in connection with the payment of premium on a policy of commercial insurance whether
the payments are payable directly to the insurer or an insurance producer or indirectly
payable under a premium finance plan or extension of credit.
(4) "Premium" means the contractual
consideration charged to an insured for insurance for a specified period of time
regardless of the timing of actual charges.
((5) "Renewal" or "Renew"
means the issuance of, or the offer to issue by an insurer, a policy succeeding
a policy previously issued and delivered by the same insurer or the issuance of
a certificate or notice extending the terms of an existing policy for a specified
period beyond its expiration date.
Stat. Auth.: ORS 731.244
& 746.240
Stats. Implemented: ORS 746.045, 746.055,
746.160(3) & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & ef. 12-14-87;
ID 12-2013, f. 12-31-13, cert. ef. 1-1-14
836-085-0010
Midterm Cancellation
(1) A policy of commercial insurance
may not be cancelled by the insurer prior to the expiration date of the policy,
except on one or more of the following grounds:
(a) Nonpayment of premium;
(b) Fraud or material misrepresentation
made by or with the knowledge of the named insured in obtaining the policy, continuing
the policy or in presenting a claim under the policy;
(c) Substantial increase
in the risk of loss after insurance coverage has been issued or renewed, including
but not limited to an increase in exposure due to rules, legislation or court decision;
(d) Failure to comply with
reasonable loss control recommendations;
(e) Substantial breach of
contractual duties, conditions or warranties;
(f) Determination by the
Director of the Department of Consumer and Business Services that the continuation
of a line of insurance or class of business to which the policy belongs will jeopardize
a company's solvency or will place the insurer in violation of the insurance laws
of Oregon or any other state; or
(g) Loss or decrease in reinsurance
covering the risk.
(2) Cancellation of a commercial
policy that includes provisions of the standard fire insurance policy under ORS
742.206 to 742.242 and is written as a single coverage shall not be effective until
at least 30 days after the insured receives a written notice of cancellation. Cancellation
of a commercial policy that does not include provisions of the standard fire insurance
policy shall not be effective until at least 10 working days after the insured receives
a written notice of cancellation. The notice in either case shall state the effective
date of and the reason for cancellation and shall inform the insured of the hearing
rights established by OAR 836-085-0011.
Stat. Auth.: ORS 731.244 & 746.240
Stats. Implemented: ORS 737.330,
742.005, 746.160 & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & cert.
ef. 12-14-87; ID 21-1988, f. & cert. ef. 12-16-88; ID 8-1990, f. & cert.
ef. 5-4-90; ID 15-1996, f. & cert. ef. 11-12-96; ID 8-2005, f. 5-18-05, cert.
ef. 8-1-05; ID 12-2013, f. 12-31-13, cert. ef. 1-1-14
836-085-0011
Hearing on Cancellation
Within 30 days after receiving a notice of cancellation under OAR 836-085-0010, an insured may request a hearing before the Director. The purpose of this hearing shall be limited to establishing the existence of the proof or evidence given by the insurer in its notice of cancellation. The burden of proving the reason for cancellation shall be upon the insurer.
Stat. Auth.: ORS 731
Stats. Implemented: ORS 746.045, ORS 746.055, ORS 746.160(3) & ORS 746.240
Hist.: ID 8-1987, f. & cert. ef. 12-14-87
836-085-0015
Longterm Cancellation
If a policy is issued for a term longer than one year, and for additional consideration a premium is guaranteed, the insurer may not refuse to renew the policy or increase the premium for the term of that policy.
Stat. Auth.: ORS 731, ORS 737 & ORS 746
Stats. Implemented: ORS 746.045, ORS 746.055, ORS 746.160(3) & ORS 746.240
Hist.: IC 2-1985(Temp), f. 5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & cert. ef. 12-14-87; ID 21-1988, f. & cert. ef. 12-16-88
836-085-0025
Renewal With Altered Terms
(1) If an insurer offers or purports
to renew a policy of insurance on terms less favorable to the insured or at higher
rates, the new terms or rates may take effect on the renewal date if the insurer
provides 30 days' written notice to the insured and to the insurance producer, if
any. If the insurer does not provide such notice, the insured may cancel the renewal
policy within 30 days after receipt of such notice. Earned premium for period of
coverage, if any, shall be calculated pro rata at the lower of the current or previous
year's rate. If the insured accepts the renewal, any premium increase or changes
in terms shall be effective immediately following the prior policy's expiration
date.
(2) Nonrenewal of a policy
shall not be effective until at least 30 days after the insured receives a written
notice of nonrenewal. If, after an insurer provides a notice of nonrenewal as described
in this section, the insurer extends the policy 90 days or less, additional notice
of nonrenewal is not required with respect to the extension. For purposes of this
section, "nonrenewal" means the refusal of an insurer to renew a policy at its expiration
date.
(3) Section (1) of this rule
does not apply:
(a) If the change is a form,
rate or plan filed with the Director of the Department of Consumer and Business
Services and applicable to the entire line of insurance or class of business to
which the policy belongs; or
(b) To a premium increase
based on the altered nature or extent of the risk insured against.
Stat. Auth.: ORS 731.244 & 746.240
Stats. Implemented: ORS 746.045,
746.055, 746.160(3) & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; IC 6-1985, f. 11-29-85, ef.
12-1-85; ID 8-1988, f. & cert. ef. 12-14-87; ID 21-1988, f. & cert. ef.
12-16-88; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05; ID 12-2013, f. 12-31-13, cert.
ef. 1-1-14
836-085-0035
Cancellation or Nonrenewal Notice
(1) If a risk sharing plan exists under
ORS Chapter 735 for the kind of coverage cancelled or nonrenewed, notice of cancellation
or nonrenewal required under OAR 836-085-0010(2) is not effective unless the notice
contains adequate instructions to the policyholder and the insurance producer, if
any, for applying for insurance through a risk sharing plan under ORS Chapter 735.
(2) Adequate instructions
under section (1) of this rule must direct the policyholder to the agent of the
notifying insurer for assistance or, if no agent exists, must provide that the insurer
will directly assist in submission of the application.
Stat. Auth.: ORS 731.244 & 746.240
Stats. Implemented: ORS 746.045,
746.055, 746.160(3) & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & ef. 12-14-87;
ID 8-2005, f. 5-18-05, cert. ef. 8-1-05; ID 12-2013, f. 12-31-13, cert. ef. 1-1-14
836-085-0040
Cancellation for Nonpayment of Premium
OAR 836-085-0035 does not apply if the
ground for cancellation or nonrenewal is nonpayment of the premium and if the notice
so states.
Stat. Auth.: ORS 731
Stats. Implemented: ORS 746.045,
746.055, 746.160(3) & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & ef. 12-14-87
836-085-0045
Unfair Trade Practices
(1) Failure of an insurer to comply
with OAR 836-085-0010 to 836-085-0050 constitutes an unfair trade practice under
ORS 746.240.
(2) A midterm premium increase
or a policy coverage reduction attempted or executed in nonconformance with ORS
737.330 or 742.003 constitutes an unfair trade practice under 746.240.
(3) Block Cancellations or
Nonrenewals of entire lines of insurance or withdrawal of classes of business are
presumed to be unfairly discriminatory and constitute an unfair trade practice under
ORS 746.240, unless prior authorization is received.
(4) Termination of an appointed
insurance producer, or an attempt to terminate an appointed insurance producer solely
to achieve block cancellation or nonrenewal of entire lines of insurance or other
such instant reunderwriting of an insurance producer book of business is presumed
to constitute an unfair trade practice under ORS 746.240 and an unfair trade practice
detrimental to free competition under 746.160.
(5) Any nonrenewal must be
for justifiable cause.
(6) Inability to substantiate
justifiable cause for nonrenewal will be subject to Insurance Division review.
(7) Unjustified nonrenewals
of such frequency as to indicate a general business practice are presumed to constitute
an unfair trade practice under ORS 746.240.
Stat. Auth.: ORS 731.244 & 746.240
Stats. Implemented: ORS 746.045,
746.055, 746.160(3) & 746.240
Hist.: IC 2-1985(Temp), f.
5-31-85, ef. 6-15-85; IC 4-1985, f. & ef. 9-19-85; ID 8-1987, f. & ef. 12-14-87;
ID 8-2005, f. 5-18-05, cert. ef. 8-1-05; ID 12-2013, f. 12-31-13, cert. ef. 1-1-14
836-085-0050
Proof of Notice
A post office certificate of mailing
to the named insured at the named insured's last-known address constitutes conclusive
proof that the named insured received the notice of cancellation or nonrenewal on
the third calendar day after the date of the certificate of mailing.
Stat. Auth.: ORS 731.244 & 746.240
Stats. Implemented: ORS 746.045,
746.055, 746.160(3) & 746.240
Hist.: ID 8-1987, f. &
ef. 12-14-87; ID 12-2013, f. 12-31-13, cert. ef. 1-1-14
836-085-0055
Cancellation of Commercial Package Policies
A commercial package policy that includes commercial liability insurance coverage is subject to ORS 742.702, governing cancellation of commercial liability insurance policies. For purposes of this rule, "commercial liability insurance" has the meaning given that term in ORS 731.074.
Stat. Auth.: ORS 731 & ORS 742
Stats. Implemented: ORS 742.702
Hist.: ID 8-1990, f. & cert. ef. 5-4-90
Practices Injurious to Public or Free Competition
836-085-0201
Statutory Authority; Purpose; Applicability
(1) OAR 836-085-0201 to 836-085-0230 are adopted pursuant to the specific authority of 737.322, and the general rulemaking authority of the Director in ORS 731.244, to carry out ORS 746.240 and the orderly administration of ORS Chapter 737 with respect to the workers' compensation experience rating system and its supporting statistical plan.
(2) The purpose of OAR 836-085-0201 to 836-085-0230 is to amend the authorized workers' compensation experience rating system for timely apprising insured employers of their premium modification factors so the employers can make necessary adjustments in the cost of goods or services sold.
(3) OAR 836-085-0201 to 836-085-0230 apply to all workers' compensation policies delivered or issued for delivery to employers in this state.
Stat. Auth.: ORS 731 & 737
Stats. Implemented: ORS 737.322(2) & 746.240
Hist.: ID 3-1988, f. & cert. ef. 1-20-88; ID 6-2005, f. & cert. ef. 4-7-05
836-085-0205
Definitions
As used in OAR 836-085-0201 to 836-085-0230, unless the context requires otherwise:
(1) "Experience Rating" means the prospective modification of a workers' compensation insurance premium according to the Experience Rating Plan Manual of the National Council on Compensation Insurance filed with the Director, or an alternative plan otherwise authorized pursuant to OAR 836-042-0015(6)(b).
(2) "Insurer" means any person authorized to write workers' compensation insurance in this state and includes the State Accident Insurance Fund Corporation.
(3) "Modification Factor" means the numerical result of an experience rating calculation.
(4) "Normal Anniversary Rating Date" means the date the rates and experience rating modification for an individual employer changes, as established by the rating organization.
(5) "Premium" means the contractual amount charged to an insured for insurance for a specified period of time, regardless of the timing of actual charges.
(6) "Rating Plan" means any set of rules and values filed with the Director of the Department of Insurance and Finance and used by an insurer to calculate premiums.
(7) "Statistical Plan" means the uniform statistical plan for workers' compensation insurance statistics as prescribed by OAR 836-042-0045.
(8) "Tentative Experience Modification Endorsement" is the form of prior notice to the employer of the tentative modification factor calculation by the insurer for use in policy issuance.
(9) "Workers' Compensation Insurance" means insurance providing coverage for the obligation of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapter 656 of this state, similar laws of the United States or agreements between states.
[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]
Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.322(2)
Hist.: ID 3-1988, f. & cert. ef. 1-20-88
836-085-0210
Adjustment for Experience of Employer; Calculation of Tentative Modification Factors
For purposes of OAR 836-085-0201 to 836-085-0230:
(1) An insurer shall adjust for experience of an employer by multiplying the insurance premium by the modification factor.
(2) An insurer shall calculate tentative modification factors in accordance with experience data known or discoverable by the insurer and in accordance with the provisions and formulas of the experience rating plan authorized by OAR 836-042-0015(6).
Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.322(2)
Hist.: ID 3-1988, f. & cert. ef. 1-20-88
836-085-0215
Insurer Implementation of Employer Experience Rating Modifications
(1) An insurer may apply to a policy for an individual employer as of the policy inception date, or as of the normal anniversary rating date, if different, the experience rating modification factors for the employer received by the insurer from the rating organization within 90 days from the inception of the policy or normal anniversary rating date, if the insurer has provided a tentative experience modification endorsement in compliance with OAR 836-085-0210, or normal anniversary rating endorsement, to the insured at policy issuance.
(2) An insurer shall not apply to a policy for an individual employer the individual employer experience rating modification factors received by the insurer from the rating organization or produced by an insurer that produces its individual employer experience rating modification factors pursuant to OAR 836-042-0015 after 90 days from the inception of the policy, or normal anniversary rating date, if different, until a date at least 30 days after the insurer has provided notice to the individual employer of the experience rating modification factor by endorsement. Prior to that date, the insurer may apply to the policy a tentative experience rating endorsement issued in compliance with 836-085-0210.
(3) An insurer shall not apply to a policy of an individual employer the employer experience rating modification factors received by the insurer from the rating organization or produced by an insurer that produces its individual employer experience rating modification factors pursuant to OAR 836-042-0015 if application of the procedures in sections (1) and (2) of this rule will result in implementation of the factors less than 90 days before the expiration date or subsequent anniversary rating date of the policy. However, the insurer shall provide written notice of the inapplicable experience rating modification to the employer.
(4) Notwithstanding sections (1), (2) and (3) of this rule, any employer experience rating modification factors received by the insurer from the rating organization or produced by an insurer that produces its individual employer experience rating modification factors pursuant to OAR 836-042-0015 prior to policy or rating period expiration that results in a premium reduction to that employer shall be applied to the policy as of the inception date of that policy or the applicable anniversary rating date.
(5) This rule applies to intrastate and interstate experience rating modification factors.
(6) This rule does not apply to experience rating modification factors that result from changes in the ownership of the insured operation.
(7) If an employer is a client of a worker leasing company, as established under ORS 656.850, the provisions of this rule are modified as follows:
(a) Sections (1), (2) and (3) of this rule apply if the leasing company has filed a worker leasing notice naming the client with the Workers' Compensation Division and the insurer within 30 days of the date leased workers were first provided to the client;
(b) When the leasing company files the worker leasing notice with its insurer for an experience rated client 31 or more days after the date leased workers were first provided to the client, an insurer may apply an experience rating modification factor to a client's premium as of the date the leased workers were first provided, if the insurer receives such factors from the rating organization within 90 days of the date the worker leasing notice is received by the insurer. Prior to the receipt of the experience rating modification factor, the insurer may apply a tentative factor to the client's premium in compliance with OAR 836-085-0210 and by giving written notice to the leasing company;
(c) An insurer may not apply an experience rating modification factor to a client's premium from the date leased workers were first provided if the factor is received from the rating organization more than 90 days after the insurer's receipt of the client's worker leasing notice, until a date at least 30 days after the insurer has provided notice to the leasing company; and
(d) Notwithstanding subsections (a), (b) and (c) of this section, any client experience rating modification factors received by the insurer for a client that results in a premium reduction to that client shall be applied as of the date leased workers were first provided by the leasing company to the client.
Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.322(2) & ORS 746.240
Hist.: ID 3-1988, f. & cert. ef. 1-20-88; ID 13-1989, f. 12-6-89, cert. ef. 1-1-90; ID 10-1996, f. 6-27-96, cert. ef. 7-1-96; ID 19-1997(Temp), f. 12-23-97, cert. ef. 1-1-98 thru 6-22-98; ID 9-1998, f. & cert. ef. 7-28-98
836-085-0217
Employer Failure to Cooperate; Appeal
(1) As provided in this rule, sections (2) and (3) of OAR 836-085-0215 do not apply if the rating organization is unable to calculate the modification factor for an insured employer because the employer has failed to cooperate in audits or because of other material fault attributable to the employer or an agent of the employer.
(2) An employer may appeal application of experience modification factors under section (1) of this rule by applying to the Administrator of the Insurance Division for a hearing not later than the 30th day after the insurer notifies the employer that the insure intends to apply the factors because of the employer's noncooperation or other material fault. The Administrator shall hold a hearing on the appeal as provided in ORS 737.505, and may affirm or deny the appeal.
(3) An appeal under section (2) of this rule shall stay the application of the experience modification factors under section (1) of this rule.
Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.322(2) & ORS 746.240
Hist.: ID 3-1988, f. & cert. ef. 1-20-88
836-085-0225
Unfair Trade Practices
(1) Retroactive application of experience rating modification factors in any manner other than provided for in OAR 836-085-0215 constitutes an unfair trade practice under ORS 746.240.
(2) Failure of an insurer or rating organization to comply with the statistical reporting requirements of OAR 836-042-0045 constitutes an unfair trade practice under ORS 746.240.
Stat. Auth.: ORS 731 & 737
Stats. Implemented: ORS 737.322(2) & 746.240
Hist.: ID 3-1988, f. & cert. ef. 1-20-88; ID 6-2005, f. & cert. ef. 4-7-05
836-085-0230
Penalties for Late Submission of Rating Data
(1) When the Director imposes a civil penalty for violation of OAR 836-042-0045, the civil penalty shall be not less than $100 for each failure by the insurer to submit the data on the date that the submission of data is due. The Director may increase the civil penalty by $100 with respect to each such failure for each 30-day period following the due date in which the insurer continues the failure to submit the data.
(2) With respect to each calendar month in which an insurer has failed to submit data, for all failures by the insurer to submit data during that month, including continuing failures, the Director shall not impose civil penalties under section (1) of this rule that exceed $10,000 in the aggregate.
(3) Failure by an insurer to submit data for an individual employer after imposition of civil penalty under section (1) of this rule may result in suspension of the insurer's certificate of authority.
Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.322(2)
Hist.: ID 3-1988, f. & cert. ef. 1-20-88; ID 7-1989, f. & cert. ef. 7-28-89
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