Unauthorized Insurance, Prohibited Acts, Enforcement, and Ethics
Unauthorized insurance
Oregon prohibits transacting insurance for an unauthorized insurer except under the surplus lines law. Prohibited conduct includes soliciting, negotiating, or effecting unauthorized insurance, acting as an agent for an unauthorized insurer, aiding another person’s unauthorized transaction, and misrepresenting admitted status.
Enforcement and ethics
The Director may issue cease-and-desist orders, impose civil penalties, suspend or revoke licenses, and refer criminal conduct. Producers owe fiduciary duties: remit premiums promptly, keep funds separate, avoid rebating and false records, and disclose compensation when required.
Worked example
A producer places a commercial policy with a nonadmitted insurer but never files with OSLA, never collects tax, and tells the insured it is admitted. Reasoning: each step violates the surplus lines framework-unauthorized placement, tax failure, and misrepresentation. The producer faces license action and civil penalties.
Traps that cost marks
Do not assume a nonadmitted insurer’s home-state license authorizes Oregon business. Do not use another person’s license to file. Do not treat tax collection as optional. Do not misstate the insurer’s admitted status to close a sale.