Oregon State Regulations & NAIC Insurance Law

Licensing

Purpose. Oregon licenses insurance producers to protect the public. A person may not sell, solicit or negotiate insurance in Oregon unless licensed as a producer for that class of insurance (ORS 744.053). To be licensed, a person must meet the state’s qualifications and pass its examination, and the Director may refuse, suspend or revoke a license of a person found incompetent or untrustworthy (ORS 744.074).

Qualifications for a resident producer license (ORS 744.059)

Before the Director of the Department of Consumer and Business Services approves an application for a resident insurance producer license, the Director must find that the applicant:

• Is at least 18 years old
• Has not committed an act that is grounds for action against a license under ORS 744.074
• Has completed any required prelicensing course of study for the lines applied for
• Has paid the applicable fees
• Has passed the licensing examination for the lines applied for

A person may not sell, solicit or negotiate insurance in Oregon for any class of insurance without a producer license for that class (ORS 744.053).

Required pre-licensing course and exam (OAR 836-071-0180, 836-071-0127)

An applicant qualifies to sit for the examination in one of two ways:

• Prelicensing education of at least 20 hours for each line (life, health, property, casualty, personal lines), covering the basic principles of that line, the duties of a producer and Oregon law. It may be taken in a classroom or as a verifiable online self-study program. Casualty training also covers personal lines.
• Qualifying experience, such as three years of verifiable experience in the line as unlicensed insurance personnel, three years as a licensed producer in another state, or an industry designation the rule recognizes

The passing score on an Oregon producer examination is 70 percent.

Fingerprints and background check (OAR 836-071-0110, 836-071-0118)

Every applicant furnishes fingerprints to the examination administrator, which submits them for Oregon or nationwide criminal history checks. Before submitting a license application, the applicant must have completed the pre-examination requirements, submitted fingerprints, passed the examination and completed the criminal history check.

An application that has not resulted in a license by the last day of the ninth month after it was filed is invalid (OAR 836-071-0125).

Controlled business (ORS 746.065)

Personal or controlled insurance is insurance covering the producer, the producer’s spouse or employer, relatives within the second degree, or businesses the producer or employer controls. Oregon does not forbid writing it, but it limits it: if the premiums on a producer’s personal or controlled insurance in a calendar year exceed the premiums on the producer’s other business (for life and health insurance, exceed twice the other premiums), receiving commission on the excess is an unlawful rebate. At renewal, the Director may ask a producer to show whether the license has been used principally to write personal or controlled insurance (ORS 744.072(2)).

Nonresident license (ORS 744.063)

A nonresident receives an Oregon nonresident producer license if the person:

• Is currently licensed as a resident producer and in good standing in the home state
• Has requested the license and paid the fees
• Has submitted the home-state resident application or a completed Uniform Application
• Lives in a home state that grants nonresident licenses to Oregon residents on the same basis (reciprocity)

A producer who moves from one state to another files a change of address, with certification from the new home state, within 30 days of the move.

Temporary license (ORS 744.073)

The Director may issue a temporary producer license, without an examination, for up to 180 days when it is needed to service an insurance business, for example:

• To the surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell or staff the business
• To a member or employee of a business entity producer on the death or disability of its designated producer
• To the designee of a producer entering active military service
• In any other case where the Director finds it serves the public interest

The Director may limit the temporary licensee’s authority and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

Military service and other extenuating circumstances (ORS 744.072(7); OAR 836-071-0148)

A producer who cannot meet renewal requirements because of military service, or another extenuating circumstance such as a long-term medical disability, may request a waiver. A producer ordered to active duty may have the license’s expiration date extended. The number of days served on active duty is added to the date of release from duty if the license would have expired during that service, or to the normal expiration date if it would have expired afterward. The new expiration date is the last day of the month in which the added days end. The extension applies only to service ending under honorable conditions, and not to routine reservist training.

Renewal (ORS 744.072; OAR 836-071-0146)

A resident producer license remains in effect as long as the renewal fee is paid and continuing education is completed on time. An individual producer’s license expires every two years in the month of the producer’s birthday.

A producer who lets the license lapse may reinstate it within 12 months of the renewal due date without retaking the examination, by paying double the unpaid renewal fee and completing any continuing education still owed. After 12 months, reinstatement is no longer available and the person must apply for a new license, meeting the requirements for original issuance.

Continuing education (ORS 744.072(4); OAR 836-071-0215)

A resident producer must complete 24 hours of continuing education in each two-year renewal period (12 hours a year), including at least:

• 3 hours on Oregon statutes and administrative rules
• 3 hours of professional ethics
• 2 hours on flood insurance, for a producer who sells it

Failing to complete required continuing education is itself grounds for discipline (ORS 744.074(1)(q)).

Notice of change of address (ORS 744.068)

A producer notifies the Director not later than 30 days after:

• A change of address or telephone number of the principal place of business, or of any Oregon business location
• Opening or closing a business location in Oregon
• A change of residence (resident producers)

A producer must notify the Director before doing business under any name other than the producer’s legal name.

Reporting of actions (ORS 744.089)

A producer reports to the Director, within 30 days:

• Any administrative action taken against the producer in another jurisdiction, or by another Oregon agency, measured from the final disposition
• Any criminal prosecution of the producer in any jurisdiction, measured from the initial pretrial hearing date

Company regulation

Certificate of authority (ORS 731.354)

No person may act as an insurer, and no insurer may transact insurance in Oregon, except under a certificate of authority issued by the Director. To keep the certificate, an insurer must maintain the minimum capital or surplus Oregon law requires.

Producer’s place of business and records (ORS 744.068)

A resident producer keeps the usual and customary records of the business at the producer’s principal place of business, open to the Director’s inspection during business hours, for three years following expiration of the policy unless the Director designates another period.

Policy forms (ORS 742.003)

Oregon is a prior approval state for policy forms. A basic policy form, an application form that becomes part of the policy, or a rider, endorsement or renewal certificate may not be delivered or issued for delivery in Oregon until it has been filed with and approved by the Director. The Director approves or disapproves a form within 30 days of filing, and may extend that by up to 30 more days with written notice. Forms written for a unique risk, and negotiated group life or health policies, are among the exceptions.

The Director and enforcement

The Director and the Insurance Commissioner (ORS 705.105)

Oregon’s insurance laws are administered by the Director of the Department of Consumer and Business Services (DCBS), appointed by the Governor and confirmed by the Senate. Insurance regulation is carried out through the department’s Division of Financial Regulation. For insurance purposes, the Director may use the title Insurance Commissioner, or may appoint a person to serve as Insurance Commissioner under the Director’s supervision and control.

The Director’s insurance duties include licensing producers and insurers, approving policy forms, examining insurers, investigating complaints, and enforcing the Insurance Code.

Director’s enforcement authority (ORS 731.256, 731.296)

• The Director may bring actions or proceedings to enforce the Insurance Code, and may seek restitution for consumers harmed by an insurer’s violation
• Where a violation warrants criminal prosecution, the Director gives the information to the Attorney General or district attorney, who brings the case
• The Director may address inquiries to any insurer or licensee about its activities or condition, and the person must reply promptly and truthfully

Sidenote

Know this...

The Director enforces the Insurance Code administratively: licenses, orders, civil penalties. The Director does not arrest anyone or impose criminal sentences. Criminal cases go to the Attorney General or a district attorney, and to the courts.

License probation, suspension, revocation or refusal to issue or renew (ORS 744.074)

The Director may place a licensee on probation, or suspend, revoke or refuse to issue or renew a producer license, for causes including:

• Incorrect, misleading, incomplete or materially untrue information in the license application
• Violating insurance laws, rules, subpoenas or orders
• Obtaining or trying to obtain a license through misrepresentation or fraud
• Improperly withholding, misappropriating or converting money received in the insurance business
• Intentionally misrepresenting the terms of an actual or proposed insurance contract or application
• A felony conviction, or a misdemeanor involving dishonesty or breach of trust
• Having committed an unfair trade practice or fraud
• Fraudulent, coercive or dishonest practices, or incompetence, untrustworthiness or financial irresponsibility
• Having a producer, adjuster or consultant license revoked, suspended or refused in another state
• Forging another person’s name to an application or insurance document
• Improperly using notes or other reference material during a licensing examination
• Knowingly accepting insurance business from an unlicensed person
• Failing to pay a final civil penalty or a fee
• Failing to complete required continuing education

Cease and desist orders and hearings (ORS 731.252)

When the Director believes a person has violated, is violating or is about to violate the Insurance Code, the Director may issue a cease and desist order. The order states the specific charges and that the person may request a hearing within 20 days of the date it was mailed. If a hearing is requested, it is held within 30 days of the request, with at least 7 days’ written notice of the date. A cease and desist order does not by itself suspend or revoke a license, and it is in addition to the Director’s other powers.

Civil penalty (ORS 731.988)

A person who violates the Insurance Code, or a rule or final order of the Director, pays a civil penalty set by the Director of up to $10,000 for each offense. For an individual producer, adjuster or insurance consultant, the penalty may not exceed $1,000 for each offense. Each violation is a separate offense. The Director may also require a violator to pay up to the amount it profited from the violating transaction.

Criminal penalty (ORS 731.992)

A violation of the Insurance Code for which no greater penalty is provided is a Class A misdemeanor, in addition to any license action or civil penalty.

Unfair claim settlement practices (ORS 746.230)

An insurer may not, among other things:

• Misrepresent facts or policy provisions in settling claims
• Fail to acknowledge and act promptly on communications about claims
• Refuse to pay claims without a reasonable investigation based on all available information
• Fail to affirm or deny coverage within a reasonable time after proof of loss is submitted
• Fail to attempt in good faith to settle promptly and fairly when liability is reasonably clear
• Compel claimants to sue by offering substantially less than they ultimately recover
• Attempt to settle a claim on the basis of an application altered without the applicant’s notice or consent
• Fail to promptly explain the basis for denying a claim

Unfair trade practices

Misrepresentation (ORS 746.075, 746.100)

No person may misrepresent the terms, benefits or dividends of a policy, misrepresent an insurer’s financial condition, or use a policy name that misrepresents its nature, in selling insurance or in inducing a policyowner to lapse, surrender, exchange or convert a life policy (ORS 746.075). No person may make a false or fraudulent statement on or about an application, or to obtain a fee, commission or benefit from an insurer or producer (ORS 746.100).

Twisting

Twisting is using misrepresentation to induce a policyowner to lapse, surrender or replace a policy to the owner’s detriment. It is misrepresentation under ORS 746.075, which applies expressly to inducing a life policyowner to lapse, forfeit, surrender, exchange or convert the policy.

False advertising (ORS 746.110)

No person may publish or circulate, by any medium, an advertisement, announcement or statement about the business of insurance, or about any person in it, that is untrue, deceptive or misleading.

Defamation, boycott, coercion and intimidation

The NAIC’s model Unfair Trade Practices Act lists defamation (false or malicious statements about an insurer’s financial condition), and boycott, coercion and intimidation aimed at restraining trade or creating a monopoly, as unfair trade practices. Oregon reaches these through its misrepresentation statute, which covers false statements about an insurer’s financial condition (ORS 746.075), and through the Director’s authority over trade practices injurious to the public (ORS 746.240).

Rebating (ORS 746.045)

A person may not offer, give or receive, directly or indirectly, any rebate of part of the premium or of the producer’s commission, or any other valuable consideration or inducement not specified in the policy, as an inducement to buy insurance.

Illegal inducement (ORS 746.035, 746.045(3))

Every agreement made as an inducement to buy insurance must be plainly expressed in the policy (ORS 746.035). The rebating statute makes one exception for promotional items: a person may give, as advertising or promotional material, prizes or merchandise with an aggregate value of not more than $100 in a calendar year. That exception does not extend to anyone who is issued health insurance or a health benefit plan.

Unfair discrimination (ORS 746.015)

No person may unfairly discriminate between individuals of the same class and equal expectation of life, or between risks of essentially the same hazard, in the availability of insurance, rates, dividends or policy terms. In addition, an insurer may not:

• Discriminate based solely on a physical disability, including blindness, deafness, or loss of use of a limb, unless the action rests on sound actuarial principles or actual or reasonably anticipated experience
• Discriminate based solely on reaching age 65, unless actuarially justified
• Deny, cancel, refuse to renew, surcharge or limit coverage because a person is a victim of domestic violence or sexual violence

Payment and sharing of commissions (ORS 744.076)

A commission may be paid to, and accepted by, only a person licensed for the insurance sold. Producers may share a commission when each is licensed for the line of business involved. Renewal commissions remain payable to a producer who was licensed when the business was written, and commissions may be paid to an agency or to persons who do not sell, solicit or negotiate insurance, so long as the payment is not a prohibited rebate.

Acting without a license (ORS 744.053)

A person who sells, solicits or negotiates insurance in Oregon, or holds out as a licensed producer in a line, without holding the license for that line violates the Insurance Code. Knowingly accepting business from an unlicensed person is a ground for discipline (ORS 744.074(1)(m)).

Errors and omissions

Errors and omissions (E&O) insurance is professional liability insurance that protects producers if they are sued for negligent performance of their duties. It covers negligence and unintentional mistakes that cause a client financial harm. It does not cover intentional misconduct, criminal acts or regulatory fines.

Health insurance in Oregon

Children covered as dependents (ORS 743A.090)

An individual or group health benefit plan that covers the insured’s family members must cover:

• A child of the insured from the moment of birth
• An adopted child from placement for adoption, whether or not the adoption has become final

If an additional premium is required to add the child, the plan may require notice of the birth or placement, and payment of the premium, within 31 days to continue the child’s coverage beyond that period. The coverage includes preventive care and treatment of injury or sickness, including congenital defects and birth abnormalities.

A dependent child may stay on a parent’s plan until age 26. A child 26 or older remains covered if a physician certifies an ongoing disability, which began before 26, that prevents self-sustaining employment, the child was covered by the parent’s plan for at least two years before aging out, and the child is the insured’s tax dependent, has income no more than 150 percent of the federal poverty level, or has the insured as legal guardian.

Medicare supplement (Medigap) policies

Federal law standardizes Medicare supplement policies. Insurers may offer only the standardized plans: currently A, B, C, D, F, G, K, L, M and N. Plans E, H, I and J are no longer sold, and Plans C and F are not available to anyone who first became eligible for Medicare on or after January 1, 2020.

Plan A carries the core benefits, including Part A hospital coinsurance and 365 additional hospital days after Medicare benefits are used up, Part B coinsurance or copayments, and the first 3 pints of blood. An insurer that sells any Medigap policy must offer Plan A. A Buyer’s Guide and an Outline of Coverage are delivered at the time of application.

Oregon Health Plan (OHP)

Oregon’s Medicaid program is called the Oregon Health Plan (OHP). It is a state-administered program, funded by federal and state money, providing health coverage to people with limited income.

Federal law

Gramm-Leach-Bliley Act (GLBA)

The Gramm-Leach-Bliley Act of 1999 repealed the parts of the Glass-Steagall Act of 1933 that kept banks and securities firms apart, and allowed banks, securities firms and insurers to affiliate. It also requires financial institutions, including insurers, to give customers notice of their privacy practices and limits sharing nonpublic personal information with unaffiliated third parties.

McCarran-Ferguson Act

The McCarran-Ferguson Act of 1945 declared that the business of insurance is regulated by the states, and gives insurers a limited exemption from federal antitrust law.

National Association of Insurance Commissioners (NAIC)

The NAIC is the standard-setting and regulatory support organization governed by the chief insurance regulators of the 50 states, the District of Columbia and the U.S. territories. It develops model laws and regulations. A model has no legal force in a state until that state adopts it.

Fair Credit Reporting Act (15 U.S.C. 1681)

The FCRA regulates consumer reporting agencies and the use of consumer reports, including in insurance underwriting.

• When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
• When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA and GLBA and, in Oregon, by the Insurance Information and Privacy Protection law (ORS 746.600 to 746.690). Under that law, an authorization to disclose personal information is valid for no more than 24 months (ORS 746.630).

Telemarketing and the National Do Not Call Registry

The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:

• May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
• Must disclose the caller’s identity, the company the caller represents and that the purpose is a sale

CAN-SPAM Act

A commercial email must:

• Be identified clearly as an advertisement
• Carry accurate header information and a subject line that is not deceptive
• Include the sender’s valid physical postal address
• Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Lesson summary

• A resident producer must be at least 18, complete 20 hours of prelicensing education per line (or qualifying experience), pass the exam with 70 percent, and submit fingerprints for a criminal history check.
• Licenses expire every two years in the producer’s birth month. A lapsed license can be reinstated within 12 months without re-examination, at double the renewal fee.
• Continuing education is 24 hours per two-year period, including 3 hours of Oregon law and 3 hours of ethics.
• A temporary license lasts up to 180 days and needs no exam. Military service extends a license’s expiration date.
• Address, location and residence changes, and administrative actions elsewhere, are reported within 30 days.
• Oregon is a prior approval state for policy forms (ORS 742.003).
• The Director of DCBS administers the Insurance Code and may act as, or appoint, the Insurance Commissioner (ORS 705.105).
• The civil penalty is up to $10,000 per offense, or $1,000 per offense for an individual producer (ORS 731.988). An Insurance Code violation with no greater penalty is a Class A misdemeanor.
• A cease and desist order may be challenged by requesting a hearing within 20 days.
• Promotional items worth up to $100 a year are allowed, except to health insurance customers. Any other inducement must be written into the policy.
• Discrimination between people of the same class and equal expectation of life is prohibited, as is discrimination based solely on physical disability, age 65, or status as a victim of domestic or sexual violence.