Oregon Surplus Lines flashcards

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Oregon surplus lines statute

ORS 735.400 through 735.495 governs surplus lines insurance in Oregon, covering licensing, diligent search, eligible insurers, premium tax, and filing; the Director of the Department of Consumer and Business Services administers these provisions.

Director of DCBS

The Director of the Oregon Department of Consumer and Business Services administers the Insurance Code, adopts administrative rules, conducts market conduct examinations, and may impose civil penalties for violations.

Market conduct examination

The Oregon Insurance Division examines insurers and producers for compliance with sales, underwriting, rating, claims, and recordkeeping laws; examination findings can lead to orders, fines, or license action.

Surplus lines license

An Oregon surplus lines license authorizes a property and casualty producer to place coverage with eligible nonadmitted insurers; it requires a separate application, examination, surety bond, and fees.

Producer appointment

An insurer must appoint an Oregon producer before the producer acts on its behalf; the insurer files the appointment with the Insurance Division and must report termination.

Oregon CE requirement

Oregon resident producers must complete 24 credit hours every two years, including at least three hours of ethics, to renew their license.

Surety bond requirement

Oregon surplus lines licensees must file a surety bond with the Director, conditioned on faithful compliance with surplus lines law and on payment of premiums and taxes.

Diligent search

Before surplus lines placement, the producer must document that the full coverage cannot be obtained from authorized insurers, typically through written declinations from authorized insurers.

Eligible surplus lines insurer

A nonadmitted insurer that is authorized in its domicile, meets Oregon capital and surplus standards, and appears on the Director's eligible list or the NAIC IID list for alien insurers.

Placement through licensed producer

Oregon requires surplus lines insurance to be placed through a producer holding an Oregon surplus lines license, who represents the insured and is responsible for search, disclosure, filing, and tax.

Unauthorized insurer prohibition

Placing insurance with an insurer that is not authorized or eligible in Oregon, or aiding such an insurer, is prohibited and can result in license revocation and civil penalties.

Export list

Oregon's export list identifies commercial coverages that may be placed with eligible surplus lines insurers without individual declinations; the Director adopts the list by rule.

Commercial insured threshold

Export-list eligibility generally requires the insured to meet size standards set by rule, such as net worth, revenue, or employee counts, which the producer must document.

Export list conditions

Even for export-list placements, the producer must use an eligible insurer, provide the required disclosures, file the transaction, pay premium tax, and retain records.

Surplus lines premium tax

Oregon imposes a 2 percent tax on gross surplus lines premiums; the surplus lines producer collects the tax from the insured and remits it with the transaction filing.

Tax liability

If the producer fails to collect the Oregon surplus lines tax from the insured, the producer remains personally liable for remitting the tax to the state.

Premium tax filing

Oregon surplus lines tax is reported and paid through the stamping office filing process; late payment can result in penalties and interest.

Gross premium

The 2 percent Oregon surplus lines tax applies to the policy premium, not to separately stated producer fees unless those fees are part of the premium.

Surplus Line Association of Oregon

SLAO is Oregon's designated surplus lines stamping office; it receives transaction filings, reviews them for completeness, and supports premium tax collection.

Stamping office filing

Each Oregon surplus lines transaction must be filed with SLAO, including policy declarations, the disclosure acknowledgment, diligent search documentation, and the tax payment.

Stamping is not approval

A stamp from the Surplus Line Association of Oregon confirms that the filing was received; it does not mean the policy rates or forms are approved by the Oregon Insurance Division.

Five-year record retention

Oregon surplus lines producers must keep transaction records for at least five years, including declinations, disclosures, policies, filings, and tax records.

Records open to examination

The Director may inspect Oregon surplus lines records at any time; records must be retrievable and produced promptly during a market conduct examination.

Records after license termination

Recordkeeping duties continue after an Oregon surplus lines license is terminated or surrendered, for the full retention period required by law.

Surplus lines disclosure

Before placement, the producer must give written notice that the insurer is not admitted in Oregon, is not regulated by the state, and is not protected by the guaranty fund.

Guaranty fund notice

Oregon's Insurance Guaranty Association does not cover claims against surplus lines insurers; the insured must be told this in writing and acknowledge it.

Signed acknowledgment

The surplus lines producer must obtain the insured's signed acknowledgment of the required disclosure; if the insured refuses, the producer documents the refusal.

Unregulated rates and forms

Surplus lines insurers are not required to file rates or forms with Oregon, so the insured must be told that policy terms and pricing are not state-approved.

Unauthorized insurance

Selling or placing insurance for an insurer that is not authorized or eligible in Oregon is prohibited; the Director may issue cease-and-desist orders and impose civil penalties.

Prohibited acts

Oregon prohibits misrepresentation, rebating, false records, premium theft, and aiding unauthorized insurers; these violations can lead to license suspension or revocation.

Enforcement penalties

The Director may impose civil penalties per violation, order restitution, suspend or revoke a license, and refer willful violations for criminal prosecution.

Producer ethical duties

Surplus lines producers must act in good faith, disclose material information, remit premiums promptly, avoid conflicts of interest, and maintain accurate records.