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Oregon Surplus Lines study materials
Oregon Surplus Lines study resources

Oregon Surplus Lines practice questions

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Question 1Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Under Oregon law, which official administers the Insurance Code and adopts rules governing surplus lines insurance?

  1. The DCBS Director Correct answer.
  2. The Secretary of State
  3. The State Treasurer
  4. The Attorney General

Explanation

The Director of the Department of Consumer and Business Services heads the agency that administers the Oregon Insurance Code. The Director adopts administrative rules and enforces insurance laws, including surplus lines requirements, through the Division of Financial Regulation.

Question 2Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

A producer wants to negotiate and place surplus lines coverage for an Oregon commercial insured. Which Oregon authority must the producer hold?

  1. A standard producer license
  2. A reinsurance intermediary license
  3. An insurer certificate of authority
  4. A surplus lines broker license Correct answer.

Explanation

Oregon requires a separate surplus lines broker license for negotiating and placing surplus lines coverage. A regular producer license or an insurer certificate does not authorize those placements; the Director issues the surplus lines license.

Question 3Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Before an Oregon surplus lines broker delivers a policy from an eligible surplus lines insurer, what written disclosure must the broker give the insured?

  1. Notice that the insurer is admitted in Oregon
  2. Notice that the Director approved the form
  3. Notice that the policy is backed by OIGA
  4. Notice that OIGA does not cover the insurer Correct answer.

Explanation

Surplus lines insurers are not members of the Oregon Insurance Guaranty Association, so the insured lacks guaranty-fund protection. Oregon requires the surplus lines broker to disclose that fact in writing before the policy is delivered.

Question 4Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

An Oregon surplus lines broker cannot find an authorized insurer willing to write a difficult commercial risk. Before placing it with a nonadmitted insurer, what must the broker do?

  1. Document a diligent search of admitted insurers Correct answer.
  2. Obtain a surety bond equal to the policy limit
  3. Obtain the Director's prior written approval
  4. Publish notice of the placement in a newspaper

Explanation

Oregon law requires a diligent effort to place coverage with authorized insurers before a surplus lines placement. The broker must document that search, including the authorized insurers approached and their declinations, so the file shows why the surplus lines market was used.

Question 5Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

An Oregon surplus lines broker is offered a policy from an unauthorized insurer that does not appear on the Director's list of eligible surplus lines insurers. What does Oregon law permit?

  1. The broker may place it after notifying the Director
  2. The broker may place it if the premium exceeds a threshold
  3. The broker may place it if the insured signs a waiver
  4. The broker may not place the coverage Correct answer.

Explanation

Oregon permits surplus lines placements only with insurers that appear on the Director's eligible surplus lines insurer list. A waiver, premium threshold, or notice to the Director does not authorize placement with an ineligible unauthorized insurer.

Question 6Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Who is responsible for paying the Oregon surplus lines premium tax on a surplus lines policy procured for an Oregon insured?

  1. The insured, by direct payment to the Department of Revenue
  2. The Oregon Insurance Guaranty Association
  3. The surplus lines broker, who remits it to the state Correct answer.
  4. The eligible surplus lines insurer, through its Oregon agent

Explanation

Oregon imposes the surplus lines premium tax collection and remittance duty on the surplus lines broker. The broker reports the premiums and pays the tax to the state; the insured does not pay it directly to the Department of Revenue.

Question 7Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

The Oregon Division of Financial Regulation opens a market conduct examination of a surplus lines broker. What is the broker's obligation regarding its surplus lines records?

  1. Make the records available to the Director for examination Correct answer.
  2. Destroy records older than one year to protect client privacy
  3. Send records only to the insurer's home-state regulator
  4. File the records with the Oregon Insurance Guaranty Association

Explanation

Surplus lines brokers must keep records of their placements and make them available to the Director for examination. Market conduct examinations use those records to verify diligent search, eligibility, and tax compliance.

Question 8Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

A commercial insured has operations in several states, and Oregon is its home state under the Nonadmitted and Reinsurance Reform Act. For a surplus lines placement covering that insured, which state's surplus lines premium tax and regulatory requirements generally apply?

  1. The state where the policy is physically delivered
  2. Oregon, because it is the insured's home state Correct answer.
  3. Each state in proportion to its share of the risk
  4. The state with the largest insured property value

Explanation

Under the Nonadmitted and Reinsurance Reform Act, the insured's home state generally has exclusive authority to tax and regulate a surplus lines placement. If Oregon is the home state, Oregon's premium tax and surplus lines rules apply even when the risk spans other states.

Question 9Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Oregon requires an eligible surplus lines insurer to appoint the Director as its agent for service of process. What is the purpose of that appointment?

  1. To allow legal process to be served on the insurer in Oregon disputes Correct answer.
  2. To authorize the Director to set the insurer's rates
  3. To require the insurer to write all Oregon commercial risks
  4. To make the insurer a member of the Oregon Insurance Guaranty Association

Explanation

An eligible surplus lines insurer is not admitted in Oregon, so it must appoint the Director as its agent for service of process. That appointment allows legal process in Oregon disputes to be served on the insurer through the Director.

Question 10Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Oregon Administrative Rules that implement the Insurance Code, including surplus lines requirements, are adopted by the Director under which framework and compiled in which chapter?

  1. Under the Oregon Administrative Procedures Act, OAR chapter 836 Correct answer.
  2. Under the federal Administrative Procedure Act, in CFR Title 45
  3. Under the Oregon Criminal Code, in OAR chapter 150
  4. Under the Oregon Constitution, in ORS chapter 735

Explanation

The Director adopts insurance rules under the Oregon Administrative Procedures Act, and those rules are compiled in OAR chapter 836. ORS chapter 735 contains the surplus lines statutes, while the OAR contains the implementing regulations.

Question 11Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

A producer is researching Oregon's surplus lines placement requirements. In which chapter of the Oregon Revised Statutes are those provisions primarily codified?

  1. Chapter 731
  2. Chapter 656
  3. Chapter 735 Correct answer.
  4. Chapter 659A

Explanation

Oregon's Surplus Lines Law is codified in ORS 735.400-735.495, within Chapter 735, and contains the substantive surplus lines placement provisions. Chapter 744 addresses insurance producer licensing generally. Chapters 731, 656, and 659A concern general insurance provisions, workers' compensation, and civil rights, respectively.

Question 12Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

The Oregon Division of Financial Regulation, which licenses and examines surplus lines brokers, operates within which state department?

  1. The Department of Revenue
  2. The Secretary of State's office
  3. The Department of Justice
  4. The Department of Consumer and Business Services Correct answer.

Explanation

The Division of Financial Regulation is part of the Department of Consumer and Business Services, and the DCBS Director serves as Oregon's insurance regulator with rulemaking authority under the Insurance Code. The Secretary of State, Department of Revenue, and Department of Justice do not house the insurance regulatory division.

Question 13Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Which Oregon license specifically authorizes a person to negotiate and place surplus lines insurance?

  1. A general lines producer license
  2. A surplus lines broker license Correct answer.
  3. A reinsurance intermediary license
  4. A managing general agent license

Explanation

Oregon requires a separate surplus lines broker license for placing coverage with eligible unauthorized insurers; a general producer license alone does not authorize surplus lines placements. The license is issued by the Director through the Division of Financial Regulation.

Question 14Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

An Oregon surplus lines broker wants to place a commercial property risk with an eligible surplus lines insurer. What must the broker establish about authorized insurers before the placement?

  1. At least five authorized insurers formally quoted the risk
  2. The insured signed a waiver of all authorized-insurer coverage
  3. A documented diligent effort to obtain authorized-insurer coverage Correct answer.
  4. The Director approved the individual placement in writing

Explanation

Oregon requires the surplus lines broker to make and document a diligent effort to obtain coverage from authorized insurers before placing the risk with an eligible surplus lines insurer. No fixed number of quotes applies, and the Director does not approve each individual surplus lines placement.

Question 15Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

An Oregon surplus lines broker receives premium from an insured for a policy placed with an eligible surplus lines insurer. How does Oregon law characterize those funds while they are in the broker's possession?

  1. As fiduciary funds held for the insured and insurer Correct answer.
  2. As funds that may be commingled with personal funds
  3. As state funds until premium tax is paid
  4. As the broker's general operating revenue

Explanation

Oregon treats premiums held by producers and surplus lines brokers as fiduciary funds that must be accounted for and remitted promptly to the insurer or returned to the insured. Commingling those funds with the broker's own operating or personal funds is prohibited.

Question 16Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

When the Director of the Department of Consumer and Business Services adopts a new administrative rule affecting Oregon surplus lines brokers, which process generally applies?

  1. Review and approval by the Oregon Insurance Guaranty Association
  2. Approval by a majority vote of the Legislative Assembly
  3. Publication in the Oregon Bulletin without prior notice
  4. Notice, public comment, and adoption under the Administrative Procedures Act Correct answer.

Explanation

Oregon agencies adopt administrative rules under the state Administrative Procedures Act, which generally requires notice of the proposed rule, an opportunity for public comment, and filing of the adopted rule. The Legislature does not vote on individual agency rules, and the guaranty association has no rulemaking role.

Question 17Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

A producer who holds a surplus lines broker license in another state applies for an Oregon nonresident surplus lines broker license. What does Oregon generally allow?

  1. Reciprocal licensing based on the home-state license if application requirements are met Correct answer.
  2. Licensing only after passing the Oregon resident surplus lines examination
  3. No licensing because Oregon does not license nonresidents
  4. Licensing only if the producer maintains an Oregon office

Explanation

Oregon generally issues nonresident surplus lines broker licenses based on the applicant's home-state license and reciprocity principles, provided the application and fees are complete. A separate Oregon examination and a physical Oregon office are not generally required for nonresident licensure.

Question 18Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

A commercial insured qualifies as an exempt commercial purchaser under the federal Nonadmitted and Reinsurance Reform Act. What does Oregon law generally permit an Oregon surplus lines broker to do for that insured?

  1. Place the risk with an authorized insurer only
  2. Place the risk without a diligent search if the required disclosure is made Correct answer.
  3. Place the risk without holding a surplus lines license
  4. Obtain the Director's written approval before any placement

Explanation

For an exempt commercial purchaser, Oregon follows the NRRA exception that allows placement with a nonadmitted insurer without a diligent search when the statutory criteria and disclosure requirements are satisfied. The broker must still hold the required Oregon surplus lines license and comply with other applicable surplus lines requirements.

Question 19Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

The Director proposes to revoke an Oregon surplus lines broker's license for alleged violations. What procedural protection does Oregon law provide before a final revocation order?

  1. Notice and an opportunity for a contested case hearing Correct answer.
  2. Approval of the revocation by the insurer
  3. Immediate revocation without any hearing
  4. A jury trial in Oregon circuit court

Explanation

Agency licensing actions are contested cases under the Oregon Administrative Procedures Act, so the licensee receives notice and an opportunity to be heard before the Director issues a final order. The administrative hearing process is separate from a jury trial in circuit court.

Question 20Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Oregon rules require a surplus lines broker to keep records of surplus lines transactions available to the Division of Financial Regulation. How long must those records generally be retained?

  1. One year after the policy is issued
  2. At least five years after the policy expires Correct answer.
  3. Ten years after the broker retires
  4. Until the next market conduct examination

Explanation

Oregon's surplus lines recordkeeping requirements generally call for complete transaction records to be retained for at least five years after the policy expires. The records must remain available for examination by the Director and the Division of Financial Regulation.

Question 21Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

What is the rate of the Oregon surplus lines premium tax that applies to surplus lines premiums written for Oregon insureds?

  1. Three percent of earned premiums
  2. One percent of net premiums
  3. Two percent of gross premiums Correct answer.
  4. Five percent of written premiums

Explanation

Oregon imposes a surplus lines premium tax equal to two percent of gross premiums. The surplus lines broker collects the tax and remits it to the state. The base is gross premiums, not net, earned, or return premiums.

Question 22Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

How long must an Oregon surplus lines broker retain records of surplus lines transactions for inspection by the Division of Financial Regulation?

  1. Five years Correct answer.
  2. Ten years
  3. Seven years
  4. Three years

Explanation

Oregon requires surplus lines brokers to retain transaction records for at least five years. The records must remain available to the Division of Financial Regulation for examination. Three, seven, and ten years do not match the Oregon retention standard.

Question 23Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Which statement describes Oregon's treatment of rates and policy forms used by eligible surplus lines insurers?

  1. Both rates and forms are exempt from filing Correct answer.
  2. Both rates and forms require filing before use
  3. Forms require approval, but rates are exempt from filing
  4. Rates require approval, but forms are exempt from filing

Explanation

Eligible surplus lines insurers are not authorized in Oregon, so Oregon's rate and form filing system does not apply to their policies. They may use their own rates and forms without prior approval. The broker must still follow surplus lines placement, disclosure, and tax rules.

Question 24Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

An Oregon surplus lines broker places a commercial risk with an eligible surplus lines insurer. Which record best shows that the broker completed the required diligent search?

  1. The broker's continuing education completion report
  2. The surplus lines insurer's certificate of authority from its domicile
  3. A copy of the insured's most recent financial statement
  4. A log of declinations from authorized insurers asked to write the risk Correct answer.

Explanation

A diligent search requires the broker to document efforts to place the risk with authorized insurers. A log of declinations shows which authorized insurers declined and supports the need for surplus lines placement. Financial statements, the insurer's domicile certificate, and education records do not demonstrate a diligent search.

Question 25Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Oregon's surplus lines premium tax is calculated on which premium amount?

  1. Net premiums after commissions
  2. Gross premiums written Correct answer.
  3. Earned premiums only
  4. Return premiums only

Explanation

The Oregon surplus lines premium tax is based on gross premiums written for the surplus lines policy. Commissions and other deductions are not subtracted before the tax is computed. Earned premiums and return premiums are not the statutory base.

Question 26Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

How does an eligible surplus lines insurer differ from an authorized insurer in Oregon?

  1. It may write only personal lines and not commercial risks
  2. It is a state residual market insurer created by statute
  3. It holds Oregon authorization but lacks domicile authorization
  4. It is not Oregon-authorized but is on the eligible list Correct answer.

Explanation

An eligible surplus lines insurer is not authorized to transact insurance in Oregon. It is placed on the Director's eligible list after meeting standards, including authorization in its domicile. Authorized insurers, by contrast, hold an Oregon certificate of authority.

Question 27Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Which situation describes a surplus lines insurance transaction under Oregon law?

  1. An authorized insurer writes a commercial policy after filing its rates
  2. An insured buys a policy directly from an authorized insurer
  3. A producer places coverage with an insurer holding an Oregon certificate of authority
  4. An eligible surplus lines insurer writes a risk that authorized insurers declined Correct answer.

Explanation

A surplus lines transaction occurs when coverage is placed with an eligible surplus lines insurer because the risk cannot be placed with authorized insurers. The insurer is not authorized in Oregon, and the broker must document the diligent search. Placements with authorized insurers are not surplus lines.

Question 28Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Which requirement must an insurer meet to be placed on Oregon's eligible surplus lines insurer list?

  1. It must be a member of the Oregon Insurance Guaranty Association
  2. It must hold an Oregon certificate of authority for the same line
  3. It must file all policy forms with the Division of Financial Regulation
  4. It must be authorized in its domicile for that line Correct answer.

Explanation

Oregon's eligible list includes insurers that are not authorized in Oregon but are authorized in their domicile to write the relevant line. They must also meet other financial and regulatory standards set by the Director. An Oregon certificate of authority, guaranty association membership, and Oregon form filing are not requirements for eligible surplus lines insurers.

Question 29Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

Who appoints the Director of the Oregon Department of Consumer and Business Services, the official who administers the Insurance Code?

  1. The Secretary of State
  2. The Oregon Legislature
  3. The Insurance Commissioner
  4. The Governor Correct answer.

Explanation

The Director of the Department of Consumer and Business Services is appointed by the Governor. The Director oversees the department, including the Division of Financial Regulation. The Insurance Commissioner, Legislature, and Secretary of State do not appoint the Director.

Question 30Oregon insurance law and regulatory framework (Insurance Code, Director of the Department of Consumer and Business Services, rulemaking and market conduct)

If an Oregon Administrative Rule governing surplus lines conflicts with a statute in the Oregon Insurance Code, which authority controls?

  1. The administrative rule, because it is more specific
  2. The Director, who decides which authority controls
  3. The statute, because rules cannot override the Code Correct answer.
  4. The more recent of the two, regardless of source

Explanation

Oregon agencies adopt administrative rules to implement statutes, but a rule may not conflict with or exceed the statute. If a surplus lines rule conflicts with the Insurance Code, the statute prevails. The Director does not have authority to choose which one controls.

Question 31Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon producer wants to place a commercial property policy with an insurer that is not authorized to transact insurance in Oregon. Which authority must the producer hold before making that placement?

  1. Surplus lines authority Correct answer.
  2. A general lines producer license without surplus lines authority
  3. A life and health producer license
  4. A nonresident adjuster license

Explanation

Oregon limits placements with nonadmitted insurers to producers who hold surplus lines authority, which is added to a property and casualty producer license. A regular producer license or an adjuster license does not authorize surplus lines procurement.

Question 32Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

What is the surety bond requirement for an applicant for an Oregon surplus lines producer license?

  1. $100,000
  2. $50,000
  3. $5,000
  4. No surety bond is required. Correct answer.

Explanation

Oregon's current license-specific directory lists no bonding requirement for surplus lines producer applicants. Applicants therefore do not have to file a surety bond in any of the listed dollar amounts as a condition of license issuance.

Question 33Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon resident holds a surplus lines producer license. What continuing education must the producer complete for each two-year license term?

  1. 24 hours every two years, including 3 hours of ethics Correct answer.
  2. 12 hours annually, including 1 hour of ethics
  3. 16 hours every two years, including 2 hours of ethics
  4. 30 hours every two years, including 6 hours of ethics

Explanation

Oregon's standard producer continuing education requirement is 24 credit hours per two-year term, with at least 3 hours in ethics. Surplus lines authority does not replace or reduce that requirement.

Question 34Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An insurer and a licensed Oregon producer sign an agency contract on June 1. By when must the insurer file the notice of appointment with the Division of Financial Regulation?

  1. Only when the producer's license is renewed
  2. Within 30 days after the agency contract Correct answer.
  3. Within 90 days after the agency contract
  4. Within 10 days after the first policy is delivered

Explanation

Oregon places the appointment duty on the insurer and allows 30 days after the agency contract is executed to file the notice. The appointment is separate from the producer's license and must be maintained while the producer acts for the insurer.

Question 35Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

A surplus lines producer places a commercial liability policy with a nonadmitted insurer. What must the producer deliver to the insured in connection with the placement?

  1. A signed nonadmitted-insurer disclosure Correct answer.
  2. A guaranty fund certificate issued by the NAIC
  3. A certificate of authority issued by the Oregon Division of Financial Regulation
  4. A copy of the insurer's surplus lines tax return

Explanation

Oregon requires the surplus lines producer to give the insured a written disclosure, signed by the insured, that the insurer is not admitted and is not protected by the Oregon Insurance Guaranty Association. The disclosure must be retained with the transaction records.

Question 36Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

A surplus lines producer writes Oregon surplus lines business throughout 2024. When must the producer file the annual surplus lines statement and pay the premium tax?

  1. On or before March 1, 2025 Correct answer.
  2. Within 60 days after each policy is issued
  3. Quarterly, by the 15th day after each calendar quarter
  4. Only when the producer's license is renewed

Explanation

Oregon uses an annual surplus lines reporting cycle: the licensee files a statement of the prior calendar year's transactions and pays the 2% premium tax by March 1. Quarterly and per-policy filings are not the Oregon surplus lines rule.

Question 37Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

How long must an Oregon surplus lines licensee retain records of each surplus lines transaction?

  1. Three years
  2. Ten years
  3. Five years Correct answer.
  4. Two years

Explanation

Oregon requires surplus lines licensees to keep a full record of each transaction for at least five years after the policy period. The records must support the premium reported and the diligent search.

Question 38Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon commercial client is not an exempt commercial purchaser. Before placing its coverage with a nonadmitted insurer, the producer must be able to show:

  1. The nonadmitted insurer holds a certificate of authority in another state
  2. A documented diligent search of admitted insurers Correct answer.
  3. The client has signed a waiver of all coverage disputes
  4. The client has at least $1 million in annual revenue

Explanation

For a non-exempt commercial purchaser, Oregon requires the surplus lines producer to conduct and document a diligent search among authorized insurers before using the nonadmitted market. A certificate from another state or a waiver of disputes does not satisfy that prerequisite.

Question 39Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

A surplus lines producer's resident license is suspended by another state for failing to remit collected premiums. What must the producer do under Oregon law?

  1. Surrender the Oregon surplus lines license immediately
  2. File a new $25,000 bond to cure the suspension
  3. Wait until the next Oregon license renewal to report it
  4. Notify the Division of Financial Regulation of the action within 30 days Correct answer.

Explanation

Oregon producers must report administrative actions taken by another state, and criminal prosecutions, to the Division within 30 days. Failing to report is itself a violation that can lead to separate Oregon discipline.

Question 40Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An insurer terminates a producer's appointment in Oregon. What must the insurer do?

  1. Notify only the producer and not the Division
  2. File a termination notice with the Division within 30 days Correct answer.
  3. Wait until the producer's license renewal to report it
  4. Require the producer to surrender the Oregon license

Explanation

Oregon requires the insurer to notify the Division of Financial Regulation within 30 days after terminating a producer's appointment. The termination ends the appointment, not the producer's underlying license.

Question 41Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

Oregon requires a surplus lines producer to maintain a surety bond. What is the primary regulatory purpose of that bond?

  1. To satisfy each nonadmitted insurer's appointment filing requirement in Oregon.
  2. To protect insureds and the state if the producer violates surplus lines law. Correct answer.
  3. To fund the Division of Financial Regulation's general operating budget each year.
  4. To guarantee that every nonadmitted insurer writing Oregon business remains solvent.

Explanation

The surplus lines bond is a financial guarantee tied to the producer's compliance with Oregon surplus lines requirements. It does not insure the solvency of nonadmitted insurers, fund the Division generally, or replace insurer appointment filings.

Question 42Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon producer holds only a life insurance line of authority. The producer wants to place a commercial property risk with a nonadmitted insurer. What is the producer's licensing position?

  1. The producer may place it only if the nonadmitted insurer appoints the producer.
  2. The producer may not place it without property and casualty authority and a surplus lines license. Correct answer.
  3. The producer may place it if the client signs a surplus lines disclosure.
  4. The producer may place it because surplus lines authority covers all insurance lines.

Explanation

Surplus lines authority does not expand a producer into unrelated lines of insurance. A commercial property placement requires the appropriate property and casualty authority plus a surplus lines license. A client disclosure or insurer appointment cannot cure the missing line of authority.

Question 43Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

Before an Oregon surplus lines producer submits a risk to a nonadmitted insurer, what must the producer confirm about the insurer?

  1. That the insurer has a local claims office in Oregon.
  2. That the insurer is admitted in at least one other state.
  3. That the insurer has filed a producer appointment for the producer.
  4. That the insurer is eligible to write surplus lines in Oregon and is not prohibited by the director. Correct answer.

Explanation

Oregon surplus lines placements must be made with an insurer that is eligible for surplus lines business in Oregon and not prohibited by the regulator. Admission in another state, a local claims office, or a producer appointment does not establish Oregon eligibility.

Question 44Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon surplus lines producer places a policy with a nonadmitted insurer and collects the premium. Who is responsible for remitting the Oregon surplus lines premium tax?

  1. The surplus lines producer, through the required surplus lines filing. Correct answer.
  2. The insured, because surplus lines tax is a consumer levy.
  3. The authorized insurers that declined the risk.
  4. The nonadmitted insurer, because it bears the risk.

Explanation

The surplus lines producer is the licensee responsible for accounting for and remitting Oregon surplus lines premium tax through the required filing process. The tax may be collected from the insured as part of the transaction, but the producer remains responsible for remittance.

Question 45Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An eligible nonadmitted insurer agrees to accept Oregon surplus lines business from a licensed surplus lines producer. Must the insurer file a producer appointment with Oregon before the producer submits the risk?

  1. Yes, because every insurer-producer relationship requires an appointment.
  2. Yes, but only if the policy premium exceeds the surplus lines threshold.
  3. No, because appointment rules apply to admitted insurers, not nonadmitted placements. Correct answer.
  4. No, because surplus lines producers are exempt from all Oregon producer licensing.

Explanation

Oregon appointment requirements are built around admitted insurers and their producer relationships. A nonadmitted insurer used in a surplus lines placement does not file the standard producer appointment before the risk is submitted. The producer must still hold the required Oregon surplus lines license.

Question 46Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

What is the standard term of an Oregon individual insurance producer license, including a surplus lines line of authority?

  1. One year, expiring on December 31.
  2. Three years, expiring on the licensee's birthday.
  3. Four years, renewed with the insurer appointment cycle.
  4. Two years, renewed on a biennial schedule. Correct answer.

Explanation

Oregon individual producer licenses are issued on a biennial term. The surplus lines line of authority follows the same renewal cycle rather than a one-year, three-year, or four-year term.

Question 47Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon surplus lines producer changes the business address listed on the license. Within what period must the producer notify the Division of Financial Regulation?

  1. Within 30 days of the change. Correct answer.
  2. Only at the next license renewal.
  3. Within 60 days of the change.
  4. Within 10 days of the change.

Explanation

Oregon producers must keep license information current and notify the Division of Financial Regulation of an address change within 30 days. Waiting until renewal or using a longer 60-day period does not meet the reporting requirement.

Question 48Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

A surety notifies an Oregon surplus lines producer that its required bond will be canceled in 30 days. The producer does not obtain a replacement bond. What is the regulatory consequence?

  1. The producer may substitute an errors and omissions policy for the bond.
  2. The producer may continue only if each client signs a bond waiver.
  3. The producer's surplus lines authority may be suspended or terminated for failing the bond requirement. Correct answer.
  4. The producer may continue placing new surplus lines business until the license expires.

Explanation

A surplus lines producer must maintain the required bond as a condition of licensure. If the bond is canceled and not replaced, the producer no longer meets that condition and the surplus lines authority may be suspended or terminated. Client waivers or an errors and omissions policy do not replace the statutory bond.

Question 49Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

An Oregon surplus lines producer places a single policy covering commercial property in Oregon and Washington. How should the producer determine the premium subject to Oregon surplus lines premium tax?

  1. Tax the entire premium because the policy was issued to an Oregon client.
  2. Tax no premium because the risk is multistate.
  3. Tax the entire premium only if the insurer is not eligible in Washington.
  4. Tax the portion of the premium allocated to the Oregon risk. Correct answer.

Explanation

Oregon surplus lines premium tax applies to the Oregon portion of a multistate risk, based on the premium allocated to Oregon. The producer does not tax the entire policy merely because the client is in Oregon, and multistate status does not eliminate Oregon tax on the Oregon exposure.

Question 50Producer licensing, appointment, and the surplus lines line of authority (qualifications, bond and filing obligations, continuing education, renewal, termination)

Which continuing education course may satisfy an Oregon surplus lines producer's CE requirement?

  1. A self-study course that has not been approved by the Division.
  2. A course approved only by another state and not accepted by Oregon.
  3. A prelicensing exam-preparation course taken before initial licensing.
  4. An Oregon-approved course on surplus lines law and compliance. Correct answer.

Explanation

Continuing education credit in Oregon must come from courses that meet Oregon approval requirements. A surplus lines law and compliance course approved by Oregon can qualify, while prelicensing exam preparation, unapproved self-study, and out-of-state-only approvals generally do not.