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The Oregon Administrative Rules contain OARs filed through March 15, 2014
 
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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,
INSURANCE DIVISION

 

DIVISION 42

RATES AND RATEMAKING

836-042-0001

Statutory Authority; Purpose and Effective Date

(1) OAR 836-042-0001 to 836-042-0035 are adopted pursuant to the general rulemaking authority of the Director in ORS 731.244.

(2) The purpose and applicability of OAR 836-042-0001 to 836-042-0035 is to effectuate orderly administration of the 1981 amendments to ORS 737.205, 737.225, 737.265 and 737.320 requiring insurers to file their own workers' compensation insurance rates, rating plans, and rating systems and prohibiting rating organizations from filing workers' compensation insurance rating provisions for expenses, taxes, or profit.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.205(1) - (2), 737.225(1), 737.265, 737.310(1) & 737.320(3)
Hist.: IC 4-1982, f. 1-27-82, ef. 7-1-82; ID 19-2006, f. & cert. ef. 9-26-06

836-042-0005

Definitions

As used in OAR 836-042-0001 to 836-042-0035, unless the context requires otherwise:

(1) "Anniversary rating date" means the month and day that rates, rating plans and rating systems are initially applied to a policy in effect and each annual anniversary thereafter, unless a different date is established by the rating organization of which the insurer is a member.

(2) "Classification" means a grouping of insurance risks according to a classification system used by an insurer.

(3) "Classification System" means a schedule of classifications and a rule or set of rules used by an insurer for determining the classifications applicable to an insured.

(4) "Insurer" means any insurer authorized to write workers' compensation insurance or the State Accident Insurance Fund Corporation.

(5) "Loss Cost" means a provision for claim payment

(6) "Premium" means the contractual consideration charged to an insured for insurance for a specified period of time regardless of the timing of actual charges.

(7) "Provision for Claim Payment" means an estimate expressed per unit of exposure basis for the monetary amount ultimately to be needed to pay workers' compensation insurance claims, excluding all loss adjustment or claim management expenses, other operating expenses, assessments, taxes, and profit or contingency allowances.

(8) "Rate" means a monetary amount applied to the units of exposure basis assigned to a classification and used by an insurer to determine the premium for an insured.

(9) "Rating Plan" means a rule or set of rules used by an insurer to calculate premium for an insured, and the parameter values used in such calculation, after application of classification premium rates to units of exposure.

(10) "Rating System" means a collection of rating plans to be used by an insurer, rules for determining which rating plans are applicable to an insured, a classification system, and other rules used by an insurer for determining contractual consideration for an insured.

(11) "Standard Premium at Company Rates" means Oregon premium determined on the basis of premium rates approved for an insurer and any applicable experience rating modification but does not include expense constants or additional premium charged to achieve minimum premium

(12) "Workers' Compensation Insurance" means insurance providing coverage for the obligations of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapter 656, similar laws of the United States, or agreements between states.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737.205(1) - ORS 737.205(2), ORS 737.225(1), ORS 737.265 & ORS 737.320(3)
Hist.: IC 4-1982, f. 1-27-82, ef. 7-1-82; ID 15-1992, f. & cert. ef. 11-16-92

836-042-0015

Workers' Compensation Filings -- Procedural Rules for Insurers and Rating Organizations

(1) Every workers' compensation insurer shall file with the Director copies of the workers' compensation insurance premium rates to be used by it. An insurer may satisfy this requirement by authorizing the Director to accept on its behalf the provisions for claims payment filed by a rating organization in accordance with section (4) of this rule, to the extent the insurer uses the classification system of the rating organization, and by specifying the factors by which every such provision shall be multiplied to make allowances for expenses, taxes or profit and a rule for rounding each such provision after multiplication.

(2) Workers' compensation insurance premium rates based on loss costs of a licensed rating organization filed by an insurer must each be accompanied by transmittal letters of the forms prescribed in Exhibits 1 and 2 or must be accompanied by the NAIC Loss Cost Data Entry Document and the NAIC Loss Cost Filing Document for Workers' Compensation.

(3) Every filing of workers' compensation insurance premium rates, rating plans or rating systems by an insurer and every filing of workers' compensation insurance rating plans, rating systems or provisions for claim payment by a rating organization must be submitted to the Director for review prior to becoming effective.

(4) The effective date of a workers' compensation insurance filing required by section (3) of this rule to be submitted to the Director for review shall be the date specified therein but not earlier than the 30th day after the date the filing is received by the Director, or the 30th day after the date of receipt of supporting information, whichever is later. If the Director has reviewed the filing prior to expiration of the waiting period, the Director may authorize an effective date prior to the expiration of the waiting period but not earlier than the date such written application and any required supporting information is received. The 30 day period may be extended to 60 days if the Director gives written notice within such waiting period to the insurer or rating organization which made the filing that the extended period is needed for consideration of such filing. A filing subject to this section shall be deemed to meet the requirements of ORS Chapter 737 unless disapproved by the Director within the waiting period or extension thereof.

(5) An insurer may authorize the Director to accept on its behalf the workers' compensation insurance rating plans or rating systems filed by a licensed rating organization of which it is a member when such filings have been approved by the Director and to the extent such plans or systems are complete and usable without addition of allowances for expenses, taxes or profit. When such plans and systems are not complete and usable, an insurer may file for review by the Director supplementary systems or values providing allowances for expenses, taxes or profit to be used in conjunction with such workers' compensation insurance rating plans and rating systems. An insurer may so adopt the rating plans and rating systems of a rating organization on part of the classifications of risks insured by it and may make its own filings as to other classifications.

(6)(a) Nothing in this rule should be construed to require any insurer to adopt any rating plan or rating system filed by a rating organization and approved by the Director nor to prohibit any insurer from filing any workers' compensation insurance rating plan or rating system which supplements or differs from any rating plans or rating systems filed by a rating organization; and

(b) Notwithstanding subsection (a) of this section, workers' compensation insurers shall adopt the experience rating plan established by the rating organization, or an alternative plan designed to promote worker safety approved by the Director, to be applied on a uniform basis.

(7) A licensed rating organization may assist any member with filing workers' compensation insurance premium rates, rating plans or rating systems following instructions from such member as to the provisions for expenses, taxes and profit appropriate for its use.

(8) Every workers' compensation insurance filing submission to the Director by an insurer shall also be simultaneously submitted to the rating organization of which the insurer is a member.

(9) Workers' compensation insurance policies shall be reviewed by the rating organization of which the insurer is a member to determine compliance with the insurer's filings. The rating organization shall review workers' compensation insurance policies issued by their members for compliance with ORS chapter 737 and OAR 836-042-0035.

(10) Section (6) of this rule, as amended effective July 28, 1998, applies to actions taken by insurers under that section on and after June 24, 1998.

[ED. NOTE: Exhibits referenced are available from the agency.]

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737.205(1)& (2), 737.225(1), 737.265(2) & 737.320(2) & (3)
Hist.: IC 4-1982, f. 1-27-82, ef. 7-1-82; ID 15-1992, f. & cert. ef. 11-16-92; ID 19-1997(Temp), f. 12-23-97, cert. ef. 1-1-98 thru 6-22-98; ID 9-1998, f. & cert. ef. 7-28-98; ID 10-2006, f. & cert. ef. 6-9-06

836-042-0020

Insurers Must Demonstrate Statistical Reporting Ability

(1) Any insurer filing a workers' compensation insurance exposure base, classification or classification system, must demonstrate how statistical experience data will be converted for purposes of statistical reporting in accordance with the uniform statistical plan prescribed by OAR 836-042-0045.

(2) Any filing by an insurer of a workers' compensation insurance exposure base, classification or classification system which does not meet the requirements of section (1) of this rule shall be determined not to satisfy the requirements of ORS Chapter 737 and shall be disapproved.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.325(1) - ORS 737.325(2), ORS 737.325(4) & ORS 737.230
Hist.: IC 4-1982, f. 1-27-82, ef. 7-1-82

836-042-0025

Workers' Compensation Filings Standards for Unfair Discrimination

(1) Except for revisions solely attributable to legislative enactments, changes in administrative rules or orders, or approved by the Director to prevent an impairment, or applying to state agencies, workers' compensation insurance rates, rating plans, rating systems or provisions for claim payment are unfairly discriminatory if either:

(a) Revision of a rate, rating plan or rating system is filed to become effective within six months of the effective date of a corresponding rate, rating plan or rating system previously established pursuant to OAR 836-042-0015 by the filing insurer; or

(b) The rating system does not contain rules specifying that a revision of a rate, rating plan or system shall not apply to an insured until an anniversary rating date at least 11 months and 16 days subsequent to the earlier of the preceding anniversary rating date or the preceding policy effective date established for an insured unless approved by the Director to apply to all policies in force on a common date; or

(c) Premium rates are based on provisions for claim payment filed by a licensed rating organization which are not the provisions most recently approved or premium rates are determined by multiplying superseded provisions by a factor; or

(d) Provisions for claim payment to be used by an insurer as a basis for premium rates are revised to be effective on a date other than the date of a revision approved for a licensed rating organization.

(2) Workers' compensation insurance rating plans or rating systems are presumed to be unfairly discriminatory, unless demonstrated otherwise, if either:

(a) A rating plan or rating system which produces only credit modifications to an insured's premiums is offered at the option of the insurer;

(b) The modification of the premium or premium rates applicable to an insured cannot be quantitatively determined by the Commissioner except for the uncertainty of estimated exposures; or

(c) An insurer has filed two or more schedules of premium rates without providing a clear rule for deciding which schedule is to be applied to an insured.

(3) Premiums are unfairly discriminatory if differentials between insureds fail to reasonably reflect the differences in expected losses and expenses to the insurer attributable to the insureds. Workers' compensation insurance rates, rating plans or rating systems are not unfairly discriminatory when different premiums result or different rates apply to insureds if:

(a) Differences in loss exposures, expense factors or investment income opportunity to an insurer can be attributed to the insureds; and

(b) The differences are reasonably reflected by the rates, rating plan or rating system.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737.310
Hist.: IC 4-1982, f. 1-27-82, ef. 7-1-82; IC 12-1982(Temp), f. 6-29-82, ef. 7-1-82; IC 14-1982, f. 12-17-82, ef. 12-29-82; ID 15-1992, f. & cert. ef. 11-16-92; ID 15-1996, f. & cert. ef. 11-12-96

836-042-0035

Workers' Compensation Policy Forms Filings by Insurers

Workers' compensation insurance must be written using policy forms filed by the rating organization of which the insurer is a member except that if the insurer files a rating plan or rating system requiring a policy provision or endorsement for which the rating organization has made no usable filing then the insurer may file its own policy forms needed to implement its rating plans or systems. Such policy form filings are subject to ORS Chapter 743.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.265(2) & ORS 737.320(3)
Hist.: IC 4-1982, f. 1-27-82, ef. 7-1-82

836-042-0040

Statutory Authority; Purpose and Effective Date

Statutory Authority; Purpose and Effective Date

(1) OAR 836-042-0040 through 836-042-0045 are adopted by the director pursuant to the requirements of ORS 737.225(4).

(2) The purpose and applicability of these rules is to prescribe a uniform statistical plan for workers' compensation insurance statistics as required by ORS 737.225(4).

(3) OAR 836-042-0040 through 836-042-0045 apply to all reporting of workers' compensation insurance statistics, as therein defined and prescribed provided that nothing contained herein shall restrict the reporting of statistical, financial, or accounting data necessary to fulfill the requirements of ORS Chapter 737.

Stat. Auth.: ORS 731.244 & 737.225
Stats. Implemented: ORS 737.225
Hist.: IC 3-1982, f. 1-27-82, ef. 7-1-82; ID 15-2012, f. 8-9-12, cert. ef. 1-1-13

836-042-0043

Definition

As used in OAR 836-042-0040 through 836-042-0045, unless the context requires otherwise: "Workers' compensation insurance" means insurance providing coverage for the obligations of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapter 656, similar laws of the United States, or agreements between states.

Stat. Auth.: ORS 731.244 & 737.225
Stats. Implemented: ORS 737.225
Hist.: IC 3-1982, f. 1-27-82, ef. 7-1-82; ID 15-2012, f. 8-9-12, cert. ef. 1-1-13

836-042-0045

Workers’ Compensation Statistical Plan

(1) The Statistical Plan for Workers Compensation and Employers Liability Insurance, 2008 Edition, filed by the National Council on Compensation Insurance and approved by the director to become effective January 1, 2009, and revisions approved by the director to become effective January 1, 2013, is prescribed as the statistical plan for workers’ compensation and employers liability insurance.

(2) Manuals or guides referenced within the statistical plan designated in section (1) of this rule are not prescribed by this rule.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.225
Stats. Implemented: ORS 737.225
Hist.: IC 3-1982, f. 1-27-82, ef. 7-1-82; IC 10-1982, f. 6-23-82, ef. 7-1-82; IC 2-1983, f. 3-16-83, ef. 4-1-83; IC 5-1983, f. 6-30-83, ef. 7-1-83; IC 4-1984, f. 9-28-84, ef. 10-1-84; ID 2-1998, f. & cert. ef. 2-6-98; ID 15-2001, f, 12-19-01, cert. ef. 1-1-02; ID 7-2003, f. 12-3-03 cert. ef. 1-1-04; ID 5-2005, f. & cert. ef. 4-7-05; ID 10-2006, f. & cert. ef. 6-9-06; ID 3-2008, f. & cert. ef. 4-7-08; ID 13-2008(Temp), f. 8-14-08, cert. ef. 9-1-08 thru 1-1-09; ID 20-2008, f. 12-30-08, cert. ef. 1-1-09; ID 15-2012, f. 8-9-12, cert. ef. 1-1-13

836-042-0050

Statutory Authority; Purpose and Applicability

(1) OAR 836-042-0050 to 836-042-0060 are adopted pursuant to the general rulemaking authority of the Director in ORS 731.244 and the specific authority of 737.310, which authorizes the Director to prescribe by rule the conditions under which a division of payroll between different classifications is permitted for purposes of calculating workers' compensation insurance premiums.

(2) The purpose and applicability of OAR 836-042-0050 to 836-042-0060 is to improve parity in the workers' compensation insurance market by prescribing a uniform set of rules for division of a single employee's payroll between assigned classifications and a necessary clarification of the definition of payroll to effectuate these rules.

(3) OAR 836-042-0050 to 836-042-0060 apply to all workers' compensation insurance policies written by any insurer.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737.310
Hist.: IC 1-1981(Temp), f. & ef. 11-2-81; IC 2-1982, f. & ef. 1-15-82; ID 15-1996, f. & cert. ef. 11-12-96; ID 12-1998, f. & cert. ef. 9-14-98

836-042-0055

Definitions, Payroll Inclusions and Exclusions

(1) As used in OAR 836-042-0050 to 836-042-0060, unless the context requires otherwise:

(a) "Classification" means a grouping of insurance risks according to a classification system used by an insurer.

(b) "Classification System" means a schedule of classifications and a rule or set of rules used by an insurer for determining the classification applicable to risks insured by it.

(c) "Insurer" means any insurer authorized to write workers' compensation insurance, and the State Accident Insurance Fund Corporation.

(d) "Interchange of labor" means an employee or employees who at different times perform duties described by two or more classifications assigned to an employer according to the classification system used by the insurer.

(e) "Overtime Work", unless more extensively defined within the rating system used by the insurer, means work beyond the time worked on a regular basis in a day or a week and work on days not worked on a regular basis such as Sundays or holidays but does not include time or days worked on a regular basis according to the contract of employment, whether or not any increased rate of pay is applied.

(f) "Payroll" means money or substitutes for money that are payable to workers for their services and that are specified or defined by the rating system used by the insurer, except that payroll may not include vacation pay, incremental pay recorded for overtime work, and payments excluded as provided in section (2) of this rule.

(g) "Workers' compensation insurance" means insurance providing coverage for the obligations of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapter 656, similar laws of the United States, or agreements between states.

(2) An insurer shall include a payment in or exclude a payment from the workers' compensation premium basis of an employer as follows:

(a) An unanticipated bonus payment to an individual employee shall be excluded. A bonus payment is otherwise subject to inclusion in the premium basis if the payment is anticipated. A bonus payment is unanticipated or anticipated as follows:

(A) A bonus payment is unanticipated if all of the following conditions are met:

(i) The payment is paid as an arbitrary and gratuitous disbursement; and

(ii) The payment is not part of an oral or written employment agreement.

(B) A bonus payment is anticipated if made under one or more of the following circumstances:

(i) The payment is made to any one employee more frequently than twice in a policy period;

(ii) The payment is made to offset a pay cut or reduction in wages;

(iii) The payment is made in lieu of a raise in wages;

(iv) The payment is made to corporate officers who are directors with a substantial ownership in the corporation, as "substantial ownership" is defined in OAR 436-050-0050(2)(g);

(v) The payment is made to limited liability company members who have a substantial ownership interest in the company;

(vi) The payment is related to meeting or exceeding preestablished production goals; or

(vii) The payment is related to absenteeism or attendance.

(b) A safety bonus shall be excluded from or included in the premium basis as follows:

(A) A safety bonus shall be excluded if all of the following conditions apply with respect to the payment:

(i) The payment is anticipated;

(ii) The payment is distributed in accordance with a written plan; and

(iii) The payment is tied strictly to safe working practices.

(B) A safety bonus shall be included if the safety bonus is paid to offset pay cuts or a reduction of wages.

(c) A profit sharing payment shall be excluded from the premium basis if all of the following conditions apply with respect to the payment:

(A) The payment is anticipated;

(B) The payment is distributed from net realized profits; and

(C) The payment is distributed in accordance with a written plan that creates a legal obligation for the employer to disburse funds in accordance with the plan.

Stat. Auth.: ORS 731.244 & ORS 737.310
Stats. Implemented: ORS 737.310
Hist.: IC 1-1981(Temp), f. & ef. 11-2-81; IC 2-1982, f. & ef. 1-15-82; ID 17-1996, f. & cert. ef. 12-16-1996; ID 12-1998, f. & cert. ef. 9-14-98

836-042-0060

Conditions for Division of Payroll of Individual Employees

(1) When there is an interchange of labor, the payroll of an individual employee shall be divided and allocated among the classification or classifications that may be properly assigned to the employer, provided verifiable payroll records maintained by the employer disclose a specific allocation for each such individual employee, in accordance with the standards for rebilling set forth in OAR 836-043-0190 and this rule.

(2)This rule does not apply to a single employee whose duties vary within exposure areas normally anticipated by the scope of a single classification or who spends only a limited amount of time, on an infrequent or irregular basis, in a classification exposure that is not a normal job function for that employee. As used in this section, "infrequent or irregular" means that the time spent in the classification exposure is limited, is not anticipated in the normal duties of the employee and occurs only randomly.

(3) When verifiable payroll records are required with respect to a single employee and the employer does not maintain them as required in this rule, the entire payroll of the employee shall be assigned to the highest rated classification exposure in accordance with the standards for rebilling set forth in OAR 836-043-0190.

(4) For purposes of this rule, payroll records of an employee are verifiable if they have the following characteristics:

(a) The records must establish a time basis, and the time basis must be hourly or a part thereof, daily or part thereof, weekly or part thereof, monthly or part thereof or yearly or part thereof;

(b) For each salaried employee, the records must also include time records in which the salary is converted to an hourly, daily, weekly, monthly or yearly rate and then multiplied by the time spent by the employee in each classification exposure;

(c) The records must include a description of duties performed by the employee, to enable the insurer to determine correct classification assignment. Records requiring additional explanation or interpretation are not considered to be verifiable; and

(d) The records must be supported by original entries from other records, including but not limited to time cards, calendars, planners or daily logs prepared by the employee or the employee's direct supervisor or manager. Estimated ratios or percentages do not comply with the requirement of this subsection and are not acceptable for verification. Verifiable records must be summarized in the insured employer's accounting records.

(5) The payroll of any individual employee used by an insurer to compute workers' compensation insurance premium must be determined in a manner consistent with the definition of "overtime work" and "payroll" in sections (5) and (6) of OAR 836-042-0055.

(6) The amendments to this rule that are effective July 27, 1995, apply to policies issued on or after July 1, 1991, except that the amendments do not apply with respect to any policy that is or has been subject to judicial review on the issue of division of payroll.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737.310(10)
Hist.: IC 1-1981(Temp), f. & ef. 11-2-81; IC 2-1982, f. & ef. 1-15-82; ID 5-1995(Temp), f. 7-26-95, cert. ef. 7-27-95; ID 2-1996, f. & cert. ef. 1-26-96; ID 1-1999, f. & cert. ef. 2-19-99

Workers' Compensation Large Deductible Provisions

836-042-0070

Statutory Authority and Purpose

OAR 836-042-0070 to 836-042-0090 are adopted pursuant to the general rulemaking authority of the Director of the Department of Consumer and Business Services in ORS 731.244 to specify for insurers offering large deductible provisions of workers' compensation insurance policies requirements for rates, rating plans, and rating systems which may be approved according to ORS Chapter 737.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737, ORS 737.310 & ORS 741.001 - ORS 742.007
Hist.: ID 4-1995, f. 7-21-95, cert. ef. 10-1-95

836-042-0075

Definitions

As used in OAR 836-042-0070 to 836-042-0090:

(a) "Insurer" means any insurer authorized to write workers' compensation insurance and includes the State Accident Insurance Fund Corporation.

(2) "Director" means the Director of the Department of Consumer and Business Services.

(3) "Large Deductible" means a provision in a workers' compensation policy, or added by endorsement thereto, which allows a policy holder to be financially responsible for claims incurred under the policy up to a percentage of premium, a stated amount per claim, or other limit specified in the provision in exchange for a prospective premium reduction.

(4) "Workers' Compensation Insurance" means insurance providing coverage for the obligations of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapters 654 and 656, similar laws of the United States, or agreements between states.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737, ORS 737.310 & ORS 741.001 - ORS 742.007
Hist.: ID 4-1995, f. 7-21-95, cert. ef. 10-1-95

836-042-0080

Rate Filing Requirements and Standards

An insurer that issues a policy for worker's compensation insurance including a large deductible provision must use a provision which satisfies requirements of OAR 836-054-0210 and has been approved by the Director and must file rating plans for determining premium credits or rating modifications with the Director according to ORS 737.320 and OAR 836-042-0001 to 836-042-0045 and which satisfy these additional requirements:

(1) Such rating plans must be based on actuarial assumptions and methods similar to and not circumventing the design of retrospective rating plans approved by the Director.

(2) A deductible credit or rating modification must be the final rating step so that the insurer may distinguish the amount of credit or modification premium and the policy premium prior to the credit or modification. An insurer may compute premium discounts based on premium amounts after deductible credits if the insurer can demonstrate that greater premium equity is achieved and that data distinguishing the various premium elements will be maintained.

(3) Such rating plans may not contain provisions which cannot be approved under the unfair discrimination provisions of OAR 836-042-0025.

(4) A deductible credit or rating modification must recognize expenses which vary with net earned premium after such credits or modifications

(5) Prospective experience rating plans based on prior claims experience must use losses valued on a gross basis prior to deductible provisions.

(6) Large deductible rating plans may not be applied to rating groups approved under OAR 836-042-0201 to 836-042-0225.

(7) Minimum eligibility for a large deductible provision must be not less than $500,000 estimated country-wide annual premium prior to large deductible credits or premium credits based on premium size. The minimum deductible limit per claim for each injury or illness may not be less than $75,000. An aggregate limit for deductible amounts for all claims may be specified but may not be less than the deductible limit per claim.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737, 737.310 & 742.001 - 742.007
Hist.: ID 4-1995, f. 7-21-95, cert. ef. 10-1-95; ID 11-2010, f. 5-4-10, cert. ef. 7-1-10

836-042-0085

Statistical Data Maintenance and Reporting Requirements

An insurer that issues a policy for worker's compensation insurance including a large deductible provision must:

(1) Maintain policy premium data distinguishing credit or modification premium for large deductible provisions;

(2) Report policy unit statistical data with losses valued on a gross basis prior to deductible provisions; and

(3) Separately report financial experience data to a licensed rating organization including premium prior to credits or modifications for large deductible provisions and loss valued on a gross basis prior to deductible provisions.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737, 737.310 & 741.001 - 742.007
Hist.: ID 4-1995, f. 7-21-95, cert. ef. 10-1-95; ID 5-2005, f. & cert. ef. 4-7-05; ID 10-2009, f. & cert. ef. 11-13-09

836-042-0090

Trade Practices Found Injurious to the Insurance-Buying Public

(1) Failure of an insurer to comply with OAR 836-042-0080, 836-042-0085 or 836-054-0210 constitutes an unfair trade practice under ORS 746.240.

(2) Failure of an insurer to delete a large deductible provision following discovery that an insured employer has on three or more occasions during the policy period known of a workers' compensation insurance claim for five (5) days or longer but has not reported the claim to the insurer or has on any occasion within the policy period made direct payment of claim costs constitutes an unfair trade practice under ORS 746.240.

(3) Failure of an insurer to include amounts of premium credits or modifications for large deductible provisions in the base for the assessment imposed by the Director pursuant to ORS 656.612 and to pay the assessment on those amounts constitutes an unfair trade practice under ORS 746.240.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 746.240
Hist.: ID 4-1995, f. 7-21-95, cert. ef. 10-1-95

Workers’ Compensation Large Risk Alternative Rating Plans

836-042-0100

Statutory Authority and Purpose

OAR 836-042-0100 to 836-042-0115 are adopted under the Director’s authority in ORS 737.325(1) to modify filing requirements for insurers offering to classes of risks Large Risk Alternative Rating Plans which include workers’ compensation.

Stat. Auth.: ORS 731.244 & 737.325(1)
Stats. Implemented: ORS 737, 737.310, 737.320 & 737.325(1)
Hist.: ID 11-2010, f. 5-4-10, cert. ef. 7-1-10

836-042-0105

Definitions

As used in OAR 836-042-0100 to 836-042-0115:

(1) “Affiliate Insurer” means an insurer that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the insurer specified where control is defined by ORS 732.548(2).

(2) “Director” means the Director of the Department of Consumer and Business Services.

(3) “Eligible Employer” means:

(a) An employer defined by ORS 656.005(13) with:

(A) An insurer estimated annual countrywide Workers’ Compensation standard premium in excess of $500,000; or

(B) An insurer estimated annual countrywide premium in excess of $750,000 in combination with General Liability, Automobile Liability, Hospital Professional Liability, Crime and Glass, and Workers’ Compensation provided Workers’ Compensation countrywide standard premium is in excess of $500,000.

(b) Eligible Employer does not include:

(A) Rating groups approved under OAR 836-042-0201 to 836-042-0225; and

(B) Employers obtaining Workers’ Compensation insurance from the Oregon Workers’ Compensation Insurance Plan under OAR 836-043-0001 to 836-043-0091.

(4) “Insurer” means the State Accident Insurance Fund Corporation or an insurer authorized under ORS Chapter 731 to transact workers’ compensation insurance in this state. “Insurer” includes affiliate insurers for General Liability, Automobile Liability, Hospital Professional Liability, Crime and Glass.

(5) “Large Risk Alternative Rating Plan” means optional retrospective or large deductible rating as mutually agreed upon by insurer and eligible employer.

(6) “Rating Plan” means a rule or set of rules used by an insurer to calculate premium for an eligible employer.

(7) “Workers’ Compensation Standard Premium” means premium determined by authorized rates including any experience rating modification, any applicable schedule rating, employer’s liability increased limits, waiver premium, claim and merit rating, supplemental disease, atomic energy exposure, nonratable catastrophe loadings, aircraft seat surcharge, loss constants and minimum premiums, but does not include premium discounts, coal mine disease charge, employee leasing client processing fees, expense constant, USL&H expense constant, terrorism premiums, catastrophe premiums, and large deductible credits.

Stat. Auth.: ORS 731.244 & 737.325(1)
Stats. Implemented: ORS 737, 737.310, 737.320 &737.325(1)
Hist.: ID 11-2010, f. 5-4-10, cert. ef. 7-1-10

836-042-0110

Rate Filing Requirements

The Director may approve retrospective rating plans and large deductible rating plans as mutually agreed upon between insurer and eligible employer under the following conditions:

(1) The rating plan is filed with director according to ORS 737.205, 737.310, and 737.320 containing rules indicating the manner in which the rate is promulgated and how the resultant premium is derived;

(2) The rating plans which include large deductible options must comply with OAR 836-042-0070 to 836-042-0090 and 836-054-0201 to 836-054-0210;

(3) The insurer demonstrates rating plan compliance with all workers’ compensation financial and statistical reporting as required by OAR 836-042-0040 to 836-042-0045;

(4) The use of the Large Risk Alternative Rating Plans is an independent option and is not a substitute for, nor incompatible with, Manual Rating, Experience Rating, Loss Rating, rating under Loss Reimbursement or Deductible Plans, or any individual-risk rating rule permitted by Oregon law; and

(5) The insurer maintains documentation supporting the eligible employer’s Large Risk Alternative Rating Plan sufficient for examination under ORS 737.235.

Stat. Auth.: ORS 731.244 & 737.325(1)
Stats. Implemented: ORS 737, 737.205, 737.310, 737.320 & 737.325(1)
Hist.: ID 11-2010, f. 5-4-10, cert. ef. 7-1-10

836-042-0115

Trade Practices Found Injurious to the Insurance Buying Public

Failure of an insurer to comply with OAR 836-042-0110 constitutes an unfair claims practice under ORS 746.240.

Stat. Auth.: ORS 731.244 & 737.325(1)
Stats. Implemented: ORS 746.240
Hist.: ID 11-2010, f. 5-4-10, cert. ef. 7-1-10

836-042-0201

Statutory Authority; Purpose; Effective Date

(1) OAR 836-042-0201 to 836-042-0225 are adopted under the general rulemaking authority of the Insurance Commissioner in ORS 731.244 and the specific authority relating to workers' compensation insurance rating groups in ORS 737.316.

(2) The purpose of OAR 836-042-0201 to 836-042-0225 is to provide an orderly procedure for insurers to combine the workers' compensation insurance experience of a group of employers for rating purposes.

(3) OAR 836-042-0201 to 836-042-0225 become effective October 14, 1983.

Stat. Auth.: ORS 731.244 & ORS 737.316
Stats. Implemented: ORS 737.316
Hist.: IC 2-1984, f. 1-18-84, ef. 2-1-84; ID 18-1992(Temp), f. 12-21-92, cert. ef. 1-2-93; Suspended by ID 2-1993(Temp), f. & cert. ef. 4-1-93; ID 10-1993, f. 10-1-93, cert. ef. 10-2-93; ID 15-1996, f. & cert. ef. 11-12-96

836-042-0205

Definitions

As used in OAR 836-042-0201 to 836-042-0225 unless the context requires otherwise:

(1) "Anniversary Rating Date" means the month and day that a rating plan is initially applied to a policy and each annual anniversary thereafter, unless a different date is established by the rating organization to which the insurer belongs.

(2) "Combined Experience" means the sum of workers' compensation insurance premium, claims, and payroll or other exposure measures used by an insurer to rate individual members of a group of employers. Data from all members of the group are included in the sum without further modification or adjustment.

(3) "Experience Rating" means any prospective modification of workers' compensation insurance premium based on previous workers' compensation experience data for an individual employer or a group of employers.

(4) "Group Anniversary Rating Date" means the month and day the combined experience of a group of employers is initially used to rate individual members of the group and each annual anniversary thereafter, unless a different date is established with the approval of the Insurance Commissioner.

(5) "Insurer" means any person authorized to write workers' compensation insurance in this state and includes the State Accident Insurance Fund Corporation.

(6) "Modification Factor" means the numerical result of an experience rating calculation. Insurance premiums are multiplied by this number to adjust for past experience of an employer or a group of employers.

(7) "Premium" means the contractual amount charged to an insured for insurance for a specific period of time, regardless of the timing of actual charges.

(8) "Premium Discounting" means the modification of workers' compensation insurance premium according to a rating plan used by an insurer based solely upon a gradation of expense provisions according to the amount of premium.

(9) "Rating Plan" means any set of rules and values filed with the Insurance Commissioner and used by an insurer to calculate premiums.

(10) "Retrospective Rating" means adjustment of workers' compensation insurance premium for the policies of a group of employers after the policies have expired using the combined experience from those policies according to the insurer's rating plan.

(11) "Workers' Compensation Insurance" means insurance covering the obligations of an employer arising from workers' illness or injury, whether an obligation is imposed by ORS Chapter 656, similar laws of the United States, or agreements between states.

Stat. Auth.: ORS 731.244 & ORS 737.316
Stats. Implemented: ORS 737.316
Hist.: IC 2-1984, f. 1-18-84, ef. 2-1-84; ID 18-1992(Temp), f. 12-21-92, cert. ef. 1-2-93; ID 10-1993, f. 10-1-93, cert. ef. 10-2-93

836-042-0210

Rating Plans for Which Employers May be Combined; Retrospective Rating Deposit Required; When Group Rating May be Applied

(1) An insurer may use the combined experience of a group of employers for experience rating, retrospective rating, or premium discounting of workers' compensation insurance premiums for the employers in the group. An insurer may also apply other factors approved by the Insurance Commissioner which are not adequately reflected in experience rating, retrospective rating, or premium discounting and which satisfy the requirements of section (6) of this rule.

(2) If the combined experience of a group of employers is used for experience rating, a modification factor to supplement the modification factors of individual employers shall be calculated and distributed by a licensed rating organization according to the Experience Rating Plan of the National Council on Compensation Insurance filed with the Insurance Commissioner. Limitations or other data adjustments shall be applied only to the experience data of individual group members. The rating organization shall provide such service to an insurer upon request and may charge a reasonable fee.

(3) The premiums of a group of employers may be combined for premium discounting if the group can reasonably justify the combination by showing savings in acquisition, premium collection, policy issuance or other insurance administrative expenses or insurance services provided by an organization of which employers in the group are members.

(4) The premiums of a group of employers may be combined for retrospective rating either to enhance volume and reduce insurance charges or to realize expense savings as would be allowed for premium discounting.

(5) Rating modifications based on the combined experience of a group of employers shall apply to individual members of the group as of the individual member's first anniversary rating date on or after the group anniversary rating date.

(6) An insurer may file a group rating plan for applying factors not adequately recognized and reflected by experience rating, retrospective rating, or premium discounting. The effective date of a proposed plan shall be the date specified in the filing, but not sooner than 30 days after the filing is received by the Insurance Commissioner. The Commissioner may approve an earlier effective date not preceding the date the filing was received. If, within the 30-day period, the Commissioner finds the proposal does not meet the standards and requirements of ORS Chapter 737 and this section, the Commissioner shall notify the insurer that the proposal has been disapproved, stating the basis for such action, and the proposal shall not become effective. If, following the 30-day period, the commissioner finds the proposal does not satisfy the requirements and standards of ORS Chapter 737, the commissioner may proceed according to ORS 737.336(2), 737.215, and 737.045 to disapprove the plan. The Commissioner shall not approve a plan for applying rating factors unless:

(a) All factors can be objectively evaluated and are consistently and uniformly applied and evidence thereof maintained by the insurer;

(b) Premium modifications for each factor are supported by actuarial evidence;

(c) The insurer captures and maintains statistical data demonstrating the rating equity of applying premium modifications; and

(d) The application of a rating factor does not inappropriately duplicate the recognition of experience used in other rating factors.

Stat. Auth.: ORS 731.244 & ORS 737.316
Stats. Implemented: ORS 737.316
Hist.: IC 2-1984, f. 1-18-84, ef. 2-1-84; ID 18-1992(Temp), f. 12-21-92, cert. ef. 1-2-93; Suspended by ID 2-1993(Temp), f. & cert. ef. 4-1-93; ID 10-1993, f. 10-1-93, cert. ef. 10-2-93

Employer Rating Groups

836-042-0215

Consent to Group Rating Required Before Policy Issuance; Provision Required in Consent Form; Contents of Consent Form

(1) An insurer intending to combine the experience of a group of employers for rating purposes may not issue a policy to a member of the group unless it has secured a signed consent to group rating from each group member.

(2) The form used by the insurer to secure consent to group rating must be approved by the Director. The form must include the following wording, or substantially equivalent wording approved by the Director: "The premium you must pay for this insurance will be determined in part by the consolidated experience of all members of the group in which you participate."

(3) The consent to group rating form must include the following:

(a) Name and address of the group member;

(b) Name, title and signature of the person giving consent;

(c) Name and nature of the organization to which employers in the group belong;

(d) Specific description of how the combined experience of the group will be used for rating the group member; and

(e) The period covered by policies to be used for deriving the combined experience of group members.

Stat. Auth.: ORS 731.244 & 737.316
Stats. Implemented: ORS 737.316
Hist.: IC 2-1984, f. 1-18-84, ef. 2-1-84; ID 18-1992(Temp), f. 12-21-92, cert. ef. 1-2-93; Suspended by ID 2-1993(Temp), f. & cert. ef. 4-1-93; ID 10-1993, f. 10-1-93, cert. ef. 10-2-93; ID 3-1999, f. & cert. ef. 3-25-99

836-042-0220

Filing Requirements and Procedural Rules

(1) Before issuing any policies to group members that are to be rated by the combined experience of the group:

(a) The insurer must file the following with the Director for each group:

(A) The name and nature of the organization to which employers in the group belong;

(B) A copy of documentation forming the organization;

(C) The number of employers in the organization;

(D) The number of covered workers employed by employers that have signed consent-to-group-rating forms;

(E) An explanation of how the grouping of employers is likely to improve accident prevention and claims handling and reduce expenses;

(F) A specific description of how the combined experience of the group will be used for rating group members; and

(G) The initial group anniversary rating date; and

(b) The insurer must maintain a listing of employers in the organization that have signed consent-to-group-rating forms and make the listing available to the Director upon request.

(2) If the combined experience of a group of employers is used for experience rating, the following standards govern a group established under this rule:

(a) The supplemental modification factor shall be calculated 90 days in advance of the group anniversary rating date using the experience of employers that participated in the group during the experience rating base period. The experience to be combined is the experience of the individual employers for the policy year or years that they participated in the group plan. The employers participating in the group during the base period that also are participating at the time of the supplemental rating calculation must be at least 50 percent of the current participants.

(b) A group must meet at least one of the following conditions at the time of the supplemental rating calculation:

(A) Total annual standard premium prior to the supplemental modification of $250,000 or greater; or

(B) At least 50 participating employers.

(c) The insurer of an organization or another insurer may request approval from the Director under section (1) of this rule to form a new group that will be experience-rated if the organization is composed of a group of employers that satisfies all requirements of ORS 737.316, if the employers are participants in an existing group that is experience-rated based on the combined experience of participants in the existing group and if the employers have signed consent to group rating forms for the formation of a new group. Formation of a group under this subsection is subject to the requirements of subsection (e) of this section.

(d) An insurer may request approval from the Director under section (1) of this rule to form a new group that will be experience-rated if the organization to which the members of the new group belong is composed of a group of employers that satisfies all requirements of ORS 737.316, if the organization has been in existence for one or more years, if more than 50 percent of the members have been members of the organization for one or more years, and if the employers have signed forms giving consent to group rating for the formation of a new group. Formation of a group under this subsection is subject to the requirements of subsection (e) of this section.

(e) The requirements for formation of a new group as provided in subsection (c) or (d) of this section include the following:

(A) The group experience rating supplemental modification factors shall be calculated as follows:

(i) The supplemental modification factor that applies on the new group's initial anniversary rating date shall use all the experience during the experience rating base period of each employer who has signed a consent to group rating form for the formation of the new group.

(ii) The supplemental modification factor that applies on the new group's second anniversary rating date shall use all the experience during the experience rating base period of each employer who has signed a consent to group rating form for the formation of the new group and each employer who began participating in the group effective prior to the time of the second supplemental modification factor calculation.

(iii) The supplemental modification factors that apply on the new group's third and fourth anniversary rating dates shall use all the experience during the experience rating base period of the employers participating in the group at the time of the supplemental modification factor calculation and the experience for the policy years during the experience rating base period that each employer participated in the new group for those employers who previously participated in the group but are not participants at the time of the calculation.

(B) The supplemental modification factor shall be calculated 90 days in advance of the group anniversary rating date, and for the second and subsequent supplemental rating calculations the employers participating in the group during the base period which also are participating at the time of the supplemental rating calculation must be at least 50 percent of the current participants.

(C) Notwithstanding paragraphs (A) and (B) of this subsection, for a new group formed in accordance with subsection (c) or (d) of this section, the supplemental modification factors effective on the new group's initial anniversary rating date and on the new group's second anniversary rating date shall not be less than the simple average of the current supplemental modification factors for all approved experience rating groups as verified by the licensed rating organization during the previous four calendar quarters.

(f) From one group rating anniversary to the next, a supplemental experience modification factor for a group shall not increase by more than the greater of 0.01 or 50 percent of the difference between the factor and 1.00, or decrease by more than the greater of 0.05 or 50 percent of the difference between the factor and 1.00. This limitation does not apply if the supplemental modification factor calculated for a group before this limitation is 1.00 or greater for three consecutive group rating anniversaries or if supplemental experience rating factors are not applied to a group for a period of one or more years.

(3) If the combined experience of a group of employers is used for premium discounting, the discount must be determined from the actual premium of all participating employers.

(4) The effective date of a proposal by an insurer to combine the experience of a group of employers shall be the date specified in the filing required under section (1) of this rule, but not sooner than 30 days after the filing is received by the Director. The Director may approve an earlier effective date, upon written request by the insurer, but the date shall not precede the date the filing was received. If, within the 30-day period, the Director finds the proposal does not meet the standards and requirements of ORS Chapter 737, the Director shall notify the insurer that the proposal has been disapproved, stating the basis for such action, and the proposal shall not become effective. If, following the 30-day period, the Director finds the grouping proposal does not satisfy the requirements and standards of ORS Chapter 737, the Director may proceed according to 737.336(2), 737.215, and 737.045 to disapprove the group rating.

(5) Forty-five days before each group anniversary rating date after the initial effective date:

(a) The insurer must file with the Director for review according to the preceding paragraph the following information for each grouping of employers:

(A) The number of employers in the organization;

(B) The number of covered workers employed by employers participating in the group; and

(C) A specific description of how the combined experience of the group will be used for rating group members; and

(b) The insurer must maintain a listing of employers participating in the group and make the list available to the Director upon request.

Stat. Auth.: ORS 731.244 & 737.316
Stats. Implemented: ORS 737.316
Hist.: IC 2-1984, f. 1-18-84, ef. 2-1-84; ID 15-1990(Temp), f. & cert. ef. 7-3-90; ID 3-1991, f. & cert. ef. 4-18-91; ID 18-1992(Temp), f. 12-21-92, cert. ef. 1-2-93; Suspended by ID 2-1993(Temp), f. & cert. ef. 4-1-93; ID 10-1993, f. 10-1-93, cert. ef. 10-2-93; ID 3-1999, f. & cert. ef. 3-25-99; ID 10-2009, f. & cert. ef. 11-13-09

836-042-0225

Criteria for Grouping; Criteria for Substantially Similar Occupations Within Organization; Open Enrollment Required

An insurer may combine for rating purposes the experience of a group of employers which it covers for workers' compensation insurance only if:

(1) All employers in the group are members with full rights and privileges of the organization;

(2) The group satisfies all requirements of ORS 737.316.

Stat. Auth.: ORS 731.244 & ORS 737.316
Stats. Implemented: ORS 737.316
Hist.: IC 2-1984, f. 1-18-84, ef. 2-1-84; ID 15-1990(Temp), f. & cert. ef. 7-3-90; ID 3-1991, f. & cert. ef. 4-18-91

836-042-0300

Statutory Authority; Purpose; Applicability; Effective Date

(1) OAR 836-42-300 to 836-042-0322 are adopted under the specific authority of the Insurance Commissioner in ORS 737.346, to make rules needed to allow mass marketing plans in personal lines casualty and property insurance.

(2) The purpose of these rules is to prevent abuses in connection with the sale of personal lines property-casualty insurance in this state under mass marketing plans, while preserving for consumers the potential benefits of this form of marketing. The rules also are to provide for an orderly procedure to carry out the provisions of ORS 737.346.

(3) OAR 836-042-0300 to 836-042-0322 apply only to insurance policies issued or renewed in this state after October 14, 1983, and is in addition to, and not instead of, other applicable requirements of the Insurance Code and Division rules. The requirements of 836-042-0300 to 836-042-0322 do not apply to methods of marketing other than mass marketing plans.

(4) OAR 836-042-0300 to 836-042-0322 becomes effective October 14, 1983.

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 731.244 & ORS 737.346
Stats. Implemented: ORS 737.346
Hist.: IC 8-1983, f. & ef. 11-10-83; ID 15-1996, f. & cert. ef. 11-12-96

836-042-0302

Definitions

As used in OAR 836-042-0300 to 836-042-0322 unless the context requires otherwise:

(1) "Mass marketing plan" means a method of selling property-casualty personal lines insurance to members of a particular association which has agreed to or otherwise endorsed the sale of the insurance to its members.

(2) "Personal lines" means property and casualty insurance policies for personal, family or household purposes, and not for commercial or business purposes.

(3) "Property-casualty insurance" means insurance to which ORS 731.158 and 731.182 apply.

Stat. Auth.: ORS 731.244 & ORS 737.346
Stats. Implemented: ORS 737.346
Hist.: IC 8-1983, f. & ef. 11-10-83; ID 15-1996, f. & cert. ef. 11-12-96

836-042-0304

Fictitious Arrangement Prohibited

(1) No insurer shall sell insurance under a mass marketing plan to members of any association without the approval of the Commissioner.

(2) The Commissioner will not approve any mass marketing plan unless it meets the requirements of ORS 737.346(3)(d).

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0306

Premium Rates

Premium rates under a mass marketing plan shall comply with the standards in the Insurance Code and shall not be excessive, inadequate, or unfairly discriminatory. Rates will not be deemed unfairly discriminatory when premiums differ between policy holders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as the rates reflect the differences with reasonable accuracy. Rates will not be deemed unfairly discriminatory if they are averaged broadly among persons insured under a mass marketing plan.

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0308

Statistics

An insurer selling insurance under mass marketing plans shall maintain separate relevant statistics as to loss and expense experience.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0310

Producers

A person shall not act as an insurance producer in connection with a mass marketing plan for any kind of insurance unless such person is licensed as an insurance producer to transact casualty insurance.

Stat. Auth.: ORS 731 & 744
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83; ID 3-1990, f. & cert. ef. 1-19-90; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05

836-042-0312

Compulsory Participation Prohibited

No insurer shall sell insurance under a mass marketing plan if purchase under the plan is a condition of employment or of membership in any association, or if any employee or member would be subject to any penalty for non-participation.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0314

Tie-In Sales Prohibited

No insurer shall sell insurance under a mass marketing plan if:

(1) The purchase of insurance under the plan is contingent upon the purchase of any other insurance, product, or service; or

(2) The purchase or price of any other insurance, product, or service is contingent upon the purchase of insurance available under the plan. This provision does not prohibit the reasonable requirement of safety devices, such as heat detectors, lightning rods, theft prevention equipment and the like.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0316

Disclosure Required

Every insurer or insurance producer selling insurance under a mass marketing plan shall make full and fair disclosure to prospective insureds prior to sale of all features of the plan, whether favorable or unfavorable, including but not limited to premium rates, benefits, duration of coverage, policyholder services, conversion privileges available, and the financial interests in the plan, if any, of the association.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05

836-042-0318

Underwriting Standards

No insurer shall use substantially more restrictive underwriting standards for individual risk selection in a mass marketing plan than the standards used by the insurer for individual risk selection in the sale in this state of the same kind of insurance under other plans. If the insurer does not sell the same kind of insurance in this state under other plans, its underwriting standards for individual risk selection in mass marketing plans shall not be substantially more restrictive than those standards used by its principal affiliate, if any.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0320

Cancellation and Non-Renewal

(1) For purposes of Sections 743.905 and 743.916 of the Insurance Code, limiting the cancellation and non-renewal of insurance policies, the failure of an association, to remit premiums when due for any reason (including but not limited to interruption or termination of employment or membership) shall not be regarded as "non-payment of premium" by any insured under a plan providing for remittance of premium by such association, unless the insured has been given written notice of the failure to remit and has not paid the premium by ten days after such notice, or the due date of the premium remittance under the mass marketing plan, whichever is later.

(2) Every mass marketing plan shall provide that an insured may maintain the policy in force in the same amount, for 60 days after termination of employment or membership or discontinuance of the plan. The member would pay the premium applicable to the class of risk to which the member would belong as an individual. The option to maintain the insurance in force must be exercised within 30 days following the date of termination. Any notice of cancellation or non-renewal of a policy under a mass marketing plan shall include a notice to the insured member that the insurer will allow the association, a reasonable opportunity to consult with the insurer and to present facts in opposition to cancellation or non-renewal.

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83

836-042-0322

Compulsory Facilities

An insurer or insurance producer selling insurance under a mass marketing plan shall help any members who apply for but are denied insurance under the plan to obtain insurance through some other appropriate insurance plan, such as the assigned risk plan or the FAIR Plan.

Stat. Auth.: ORS 731
Stats. Implemented: ORS 737.346(3)(d)
Hist.: IC 8-1983, f. & ef. 11-10-83; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05

836-042-0400

Statutory Authority; Purpose; Applicability; Effective Date

(1) OAR 836-042-0400 to 836-042-0430 are adopted under the authority of ORS 737.346.

(2) OAR 836-042-0430 is adopted to enable the Department to:

(a) Regulate the sale of casualty insurance in this state on commercial risks under group policies as authorized under ORS 737.346(3)(f); and

(b) Regulate the sale of all forms of insurance subject to ORS 737.035 to day care facilities under group policies as authorized under 737.346 (3)(g).

(3) OAR 836-042-0400 to 836-042-0430 become effective on adoption.

Stat. Auth.: ORS 731 & 737
Stats. Implemented: ORS 737.346
Hist.: ID 7-1987, f. & ef. 12-11-87; ID 19-2006, f. & cert. ef. 9-26-06

836-042-0405

Definitions

As used in OAR 836-042-0400 to 836-042-0430:

(1) "Casualty Insurance" as defined in ORS 731.158 and as used in 836-042-0400 to 836-042-0430 means liability or casualty insurance as used in 737.346(3)(f).

(2) "Rating System" means a collection of rating plans to be used by an insurer, rules for determining which rating plans are applicable to an insured, a classification system and other rules used by an insurer for determining contractual consideration for an insured.

Stat. Auth.: ORS 731 & 737
Stats. Implemented: ORS 737.346(3)(f)-(g)
Hist.: ID 7-1987, f. & ef. 12-11-87

836-042-0410

Commercial Risks; Prohibition; Requirements; Filing

(1) An insurer may not sell casualty insurance on commercial risks under a group policy to members of a group unless:

(a) The insurer has satisfied the filing requirements of this rule with respect to that policy; and

(b) The Director has approved the policy as meeting the requirements of ORS 737.346(3)(f).

(2) An insurer shall file the following with the Director with respect to each group policy of casualty insurance that the insurer proposes to sell:

(a) The name of the group and the common element among its members;

(b) The name of each member;

(c) A copy or a specific explanation of the risk management plan for the group;

(d) A specific explanation of the means by which the policy provides for reduced or returned premiums for members of the group;

(e) A specific description of the rating system to be used for rating group members.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.346(3)(f)
Hist.: ID 7-1987, f. & ef. 12-11-87

836-042-0415

Day Care Facilities; Prohibition; Requirements; Filing

(1) An insurer may not sell insurance under a group policy to members of a group of day care facilities unless:

(a) The insurer has satisfied the filing requirements of this rule with respect to that policy; and

(b) The Director has approved the policy as meeting the requirements of OAR 836-042-0400 to 836-042-0430.

(2) An insurer shall file the following with the Director with respect to each group policy for day care facilities that the insurer proposes to sell:

(a) The name of the group;

(b) The name of each day care facility in the group;

(c) A description of the kind or class of insurance provided to the group;

(d) A copy or a specific explanation of the risk management plan for the group;

(e) A specific explanation of the means by which the policy provides for reduced or returned premiums for members of the group;

(f) A specific description of the rating system to be used for rating group members.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.346(3)(g)
Hist.: ID 7-1987, f. & ef. 12-11-87

836-042-0420

Anniversary Filings

Not later than the 45th day before each anniversary of the effective date of each policy of insurance issued to a group under OAR 836-042-0400 to 836-042-0430, the insurer must file with the Director a statement whether premiums have been reduced or returned to the members in the group policy during the prior year.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.346(3)(f) - ORS 737.346(3)(g)
Hist.: ID 7-1987, f. & ef. 12-11-87

836-042-0425

Statistics

(1) An insurer selling casualty insurance on commercial risks to groups shall maintain separate relevant statistics as to loss and expense experiences of the groups insured.

(2) An insurer selling insurance under group policies to members of groups of day care facilities certified under ORS 418.805 to 418.885 shall maintain separate relevant statistics as to loss and expense experiences of the groups insured. If the insurer also sells insurance under group policies to members of groups of days are facilities not required to be certified under 418.805 to 418.885, the insurer shall maintain similar statistics for the groups of such day care facilities but shall maintain those statistics separate from the statistics for groups of certified day care facilities.

Stat. Auth.: ORS 731 & 737
Stats. Implemented: ORS 737.346(3)(f)-(g)
Hist.: ID 7-1987, f. & ef. 12-11-87

836-042-0430

Disclosure Required for Day Care Facilities

Every insurer selling insurance under a group policy for day care facilities shall make full and fair disclosure to prospective insureds, prior to sale, of all features of the plan, whether favorable or unfavorable, including but not limited to pricing and policyholder services.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.346(3)(g)
Hist.: ID 7-1987, f. & ef. 12-11-87

Rates and Ratemaking

836-042-0501

Statutory Authority; Purpose; Applicability; Effective Date

(1) OAR 836-042-0501 to 836-042-0520 are adopted pursuant to:

(a) The general rulemaking authority of the Director in ORS 731.244 as an aid to the effectuation of 737.320(6) which enables the Director to require that filed rates, rating plans and rating systems be submitted to the Director for review prior to becoming effective; and

(b) The specific authority of the Director under ORS 737.207 to specify the markets of commercial liability insurance in which insurers and rating organizations must submit rate filings before they become effective if the average annual rate level increase or decrease for each market exceeds 15 percent.

(2) The purpose of OAR 836-042-0501 to 836-042-0520 is to moderate the sharp cyclical swings in the availability and affordability of commercial liability insurance. Such moderation is accomplished by requiring that insurers and rating organizations submit to the Director their filings of rates, rating plans and rating systems for a specified commercial liability insurance market for review before such filings become effective, if the average annual rate level increase or decrease for that market exceeds 15 percent.

(3) OAR 836-042-0501 to 836-042-0520 apply to all commercial liability insurance filings.

Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 737.207 & ORS 737.320
Hist.: IC 4-1986(Temp), f. & ef. 4-21-86; IC 7-1986, f. 11-7-86, ef. 11-10-86; ID 4-1988(Temp), f. & cert. ef. 2-26-88; ID 14-1988, f. & cert. ef. 8-24-88; ID 15-1996, f. & cert. ef. 11-12-96

836-042-0505

Definitions

As used in OAR 836-042-0501 to 836-042-0520, unless the context requires otherwise:

(1) "Anniversary Rating Date" means the month and day that rates, rating plans and rating systems are initially applied to a policy in effect and each annual anniversary thereafter.

(2) "Annual Rate" means the total limits base rate per unit exposure.

(3) "Classification" means a grouping of insurance risks according to a classification system used by an insurer.

(4) "Classification System" means a schedule of classifications and a rule or set of rules used by an insurer for determining the classification applicable to an insured.

(5) "Commercial Liability Insurance" has the meaning set forth in ORS 731.074.

(6) "Premium" means the contracted consideration charged to an insured for insurance for a specific period of time regardless of the timing of actual charges.

(7) "Rating Plan" means a rule or set if rules used by an insurer to calculate premium for an insured, and the parameter values used in such calculation, after application of total limits base rates to units of exposure.

(8) "Rating System" means a collection of rating plans to be used by an insurer, rules for determining which rating plans are applicable to an insured, a classification system and other rules used by an insurer for determining contractual consideration for insured.

(9) "Total Limits Base Rate" means a monetary amount applied to the units of exposure basis assigned to a classification and used by an insurer to determine the total limits premium for an insured, prior to any adjustment or adjustments resulting from the application of any rating plan.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.207(2) & ORS 737.320(6)
Hist.: IC 4-1986(Temp), f. & ef. 4-21-86; IC 7-1986, f. 11-7-86, ef. 11-10-86; ID 4-1988(Temp), f. & cert. ef. 2-26-88; ID 14-1988, f. & cert. ef. 8-24-88

836-042-0510

Rates, Rating Plans System -- Prior Review

(1) An insurer or rating organization shall submit to the Director its filing of rates, rating plans and rating systems for a commercial liability insurance market specified in OAR 836-042-0512 prior to the effective date of the rates, rating plans and rating system if the average annual total limits rate level increase or decrease for such market exceeds 15 percent because of changes in any:

(a) Total limits base rates;

(b) Rating basis;

(c) Rating plans;

(d) Manual rules;

(e) Territorial definitions; or

(f) Combination of such rating system components, described in this section, or the compounding series of such changes applied at a date other than the anniversary rating date of a policy.

(2) Nothing in this rule applies to annual rate increases or decreases from:

(a) Change in hazard of the insured's operation;

(b) Change in magnitude of the exposure basis for the insured, (such as changes in payroll or sales, or other matters); or

(c) Application in parameter values provided for in a rating plan approved by the Director, including those approved prior to August 24, 1988.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.207(2) & ORS 737.320(6)
Hist.: IC 4-1986(Temp), f. & ef. 4-21-86; IC 7-1986, f. 11-7-86, ef. 11-10-86; ID 4-1988(Temp), f. & cert. ef. 2-26-88; ID 14-1988, f. & cert. ef. 8-24-88

836-042-0512

Specified Commercial Liability Markets

The conditions for a prior review in OAR 836-042-0510 apply to:

(1) Average annual rate level increases greater than 15 percent for the following commercial liability markets:

(a) Products liability;

(b) Medical professional liability;

(c) Professional liability other than medical professional liability;

(d) Liquor law liability;

(e) Child care liability;

(f) Directors and officers liability;

(g) Recreational liability;

(h) Non-profit philanthropic and civic activity liability;

(i) Commercial automobile long haul trucking liability;

(j) Municipal liability;

(k) Public official liability.

(2) Average annual rate level decreases greater than 15 percent for all commercial liability markets except for commercial automobile policies and package insurance policies (such as commercial multi-peril and business owners policies).

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.207(1) - ORS 737.207(2) & ORS 737.320(6)
Hist.: ID 4-1988(Temp), f. & cert. ef. 2-26-88; ID 14-1988, f. & cert. ef. 8-24-88

836-042-0515

Commercial Liability Filings -- Procedural Rules for Insurers and Rating Organizations

(1) Each filing of a commercial casualty insurance premium rate, rating plan or rating system that is certified by a member of the American Academy of Actuaries or by an executive officer of the entity making the filing as not being subject to OAR 836-042-0510(1) shall become effective on the date specified in the filing but not earlier than the date the filing is received by the Director.

(2) Each filing of commercial liability insurance rate, rating plan or rating system that does not satisfy the condition of section (1) of this rule and the requirements of OAR 836-042-0520 and each filing subject to 836-042-0510(1) must be submitted to the Director for review prior to becoming effective.

Stat. Auth.: ORS 731 & 737
Stats. Implemented: ORS 737.207(3) & 737.320(6)
Hist.: IC 4-1986(Temp), f. & ef. 4-21-86; IC 7-1986, f. 11-7-86, ef. 11-10-86; IC 1-1986, f. & ef. 1-21-87; ID 4-1988(Temp), f. & cert. ef. 2-26-88; ID 14-1988, f. & cert. ef. 8-24-88

836-042-0520

Supporting Data

Supporting actuarial data shall accompany every filing of a commercial liability insurance rate, rating plan and rating system. The data shall be in sufficient detail to:

(1) Demonstrate compliance with ORS 737.207; and

(2) Demonstrate the statistical significance of differences or correlations relevant to rating plan definitions and rate differentials.

Stat. Auth.: ORS 731 & ORS 737
Stats. Implemented: ORS 737.207(4) & ORS 737.320(6)
Hist.: IC 4-1986(Temp), f. & ef. 4-21-86; IC 7-1986, f. 11-7-86, ef. 11-10-86; ID 4-1988(Temp), f. & cert. ef. 2-26-88; ID 14-1988, f. & cert. ef. 8-24-88

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