Oregon Assumed Business Name and Producer Fees

Assumed business name and producer fees

Two producer obligations sit alongside the licensing and appointment rules covered earlier in this chapter: the name a producer may transact business under, and what a producer may charge a client on top of — or instead of — a commission.

Assumed business name (ORS 744.068)

An Oregon producer may transact business under a name other than their own legal name, but the Director has to know about it first.

A producer must notify the Director before:

• Transacting business under the insurance producer license under any name other than the producer’s legal name, and
• Changing, deleting or adding an assumed business name in connection with business under the license

Note the timing, because it differs from the other notifications in the same statute. The assumed business name notice is a before obligation. The routine change notices are after obligations, given not later than the 30th day after the change:

• A change of address or telephone number of the principal place of business, or of any location where the producer transacts business in Oregon
• The opening or closing of a location where the producer transacts business in Oregon
• A change of residence — resident producers only

Separately, where a producer is a business entity, the entity must notify the Director not later than the 30th day after an individual producer’s authority to act for the entity has commenced or terminated.

The same statute carries the records requirement: a resident producer keeps the usual and customary records at the principal place of business, available and open to the Director’s inspection during business hours, and keeps records of insurance transacted under the license for three years following expiration of the policy unless the Director designates another period.

Sidenote

Know this...

You may see ORS 744.028 cited for the assumed business name requirement. That section was repealed in 2019 — the live provision is ORS 744.068(1), which is where all of the producer notification duties now live.

Fees (ORS 744.076, ORS 744.077, ORS 744.091)

Start from the default. A producer who is not licensed as an insurance consultant may receive only commission, except as otherwise provided by rule (ORS 744.077). Where a person is licensed as both a producer and an insurance consultant, the Director establishes by rule the conditions under which that person may accept a commission, a fee, or both — and may set different conditions for different products, including employee benefit plans.

Oregon then draws a hard line around who may be paid at all (ORS 744.076):

• An insurer or producer may not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in Oregon if that person is required to be licensed as a producer and is not
• A person may not accept such a payment in the same circumstances
• Renewal and other deferred commissions may still be paid to a person who was required to be licensed at the time of the sale and was then licensed. A producer who later lets a license lapse does not forfeit trailing commissions on business written while licensed
• Commissions may be paid or assigned to an insurance agency, or to persons who do not sell, solicit or negotiate insurance, unless the payment would amount to a prohibited rebate (ORS 746.045)

When a fee may be charged in addition to a commission

Under ORS 744.091(1), an insurer or producer may charge a commission, a service fee, or a combination of the two when transacting insurance outside three categories:

• Insurance that covers an individual’s person, property or liability
• Life or health insurance for groups of fewer than 51 lives
• Insurance on a commercial or public entity paying combined annual premiums of less than $100,000

This is a permission, not a ban. Inside the three categories the ordinary rules apply: a producer is paid by commission (ORS 744.077), and any service fee must meet the Director’s service fee rules. Those rules bar a service fee on an individual’s coverage, apart from small incidental charges (OAR 836-071-0274, 836-071-0267), and allow one on other coverage, a small employer group included, only where the producer has provided service beyond what producers usually provide and gives the person charged a written explanation of the fee (OAR 836-071-0277). For a health producer, then, an individual health policy carries commission only, a small employer group may carry a service fee for that additional service, and a large group may be priced by commission, fee or both.

Where a commission or service fee other than the one filed with the state is charged, the producer must have a written agreement with the prospective insured before the policy is bound or issued (ORS 744.091(2)).

Service fees (OAR 836-071-0260 to 836-071-0277)

Oregon’s service fee rules cover health insurance as well as property and casualty lines. They do not apply to life, mortgage or title insurance (OAR 836-071-0272).

A service fee is a charge a producer makes, with respect to an insurance transaction, to a party other than the insurer, where the charge is not part of the insurer’s filed rate. It does not include premium finance charges.

• A service fee may not be charged with respect to the transaction of insurance covering an individual’s person, property or liability, apart from the specific incidental charges for customer services the rules allow after written notice to the customer (OAR 836-071-0267). Coverage of several individuals as members of the same family or household still counts as individual coverage for this purpose (OAR 836-071-0274)
• A service fee may be charged with respect to insurance covering other than an individual’s person, property or liability — but only where the producer has provided service additional to the usual and customary practice of producers in similar circumstances, and the producer gives the person charged a written explanation of the charge and the reason for it (OAR 836-071-0277)
• A service fee may never be charged with respect to arranging the financing of premium payments

Disclosing compensation from both sides (OAR 836-071-0260)

A producer who receives compensation from the client and from the insurer on the same placement must disclose that before the client buys. Prior to the prospective insured’s purchase, the producer must have:

• Obtained the prospective insured’s documented acknowledgment that the producer or an affiliate will receive the compensation
• Disclosed the amount of the compensation from the insurer or other third party — or, if the amount is not known at the time, the specific method for calculating it and, if possible, a reasonable estimate
• Disclosed the nature of the work the producer or affiliate will perform on behalf of the prospective insured

Where the producer charges the client but receives no compensation from the insurer, the documented acknowledgment and the description of the work are still required.

“Compensation from an insurer or other third party” is defined broadly: payments, commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes or any other form of valuable consideration, whether or not payable under a written agreement.

A person is not a prospective insured for these rules if they are merely a participant or beneficiary of an employee benefit plan, or merely covered by a group or blanket policy the producer sold.

Lesson summary

• A producer must notify the Director before transacting under any name other than their legal name, and before adding, changing or deleting an assumed business name (ORS 744.068(1)). Address, telephone, location and residence changes are reported within 30 days.
• A resident producer keeps records at the principal place of business for three years following policy expiration.
• A producer who is not also licensed as an insurance consultant may receive only commission (ORS 744.077).
• Commissions may not be paid to, or accepted by, an unlicensed person who was required to be licensed. Renewal and deferred commissions survive a later lapse if the producer was licensed at the time of the sale (ORS 744.076).
• A commission, a service fee or both may be charged on insurance outside three categories: an individual’s coverage, life or health groups of fewer than 51 lives, and a commercial or public entity paying under $100,000 a year (ORS 744.091). Inside those categories, a producer is paid by commission; a service fee is barred on an individual’s coverage but allowed on a small employer group for additional service, with a written explanation (OAR 836-071-0274, 0277). A commission or fee other than the filed one needs a written agreement before binding.
• Service fees are prohibited on an individual’s coverage and allowed on other coverage only for service beyond the usual and customary, with a written explanation — never for arranging premium financing (OAR 836-071-0274, -0277).
• Taking compensation from both the client and the insurer requires documented acknowledgment, disclosure of the amount or its calculation method, and disclosure of the nature of the work, all before purchase (OAR 836-071-0260).