Oregon Legislature Wraps Up 2001 Session

Oregon’s legislature adjourned last weekend having once again considered a staggering number of bills during its biennial session, including dozens of insurance-related bills. Michael Harrold, Northwest regional manager for the National Association of Independent Insurers (NAII), noted that, after a session filled with its share of high drama overall, the insurance industry fared pretty well this time out.

Highlights of the 2001 session include the passage of Gramm-Leach-Bliley Act (GLBA) — inspired producer licensing and privacy measures, legislation that fixed problems created by the infamous Fleming v. USAA decision, red-light camera and self-evaluative privilege bills, and language that allows the Division of Insurance to pursue speed-to-market reforms for commercial lines policy forms.

Workers’ compensation issues also produced sparks all session, highlighted by efforts to bring more accountability to the State Accident Insurance Fund and the passage of a comprehensive “reform” bill that emerged from the state’s management/labor advisory process.

Bills already signed into law by the governor include:

* SB 268, the Division of Insurance’s producer licensing bill, which was not as controversial as in some other states as NAII did not push for a service employee exemption in Oregon. The state’s current regulation regarding allowable and prohibited practices is viewed favorably by NAII and it will be re-promulgated to reference the revised statutes once the bill becomes law.

* SB 269, the Division’s privacy bill. Oregon already had a version of the 1982 NAIC privacy model on its books, so the issue generated less heat than in some other states.

* SB 440, an insurance industry bill that addresses the problems created by the 1999 Oregon Supreme Court ruling in Fleming v. USAA. In Fleming, the court held that a dwelling policy’s pollution exclusion provision did not bar claims caused by a tenant’s illegal drug lab due to a technical flaw in a state-approved policy form. The “Fleming fix” essentially restores previous state practice regarding the requirements for exclusions in multi-peril policies, thus sparing insurers from having to add exclusionary language to virtually every heading in all insurance policies.

* HB 2380, a red-light camera bill that authorizes the use of red light cameras in cities with populations over 30,000. As amended, the bill places limitations on the number of intersections at which the red light cameras may operate. It also states that photographs may be submitted into evidence only to prove or disprove the failure to obey a traffic control device.

* SB 609, a self-evaluative privilege bill, which was amended to add mitigation language concerning what the Division may do with an audit. Language also was added that tightens up the potential discoverability of an audit document regarding third parties.

NAIC and industry-inspired speed-to-market reforms also saw positive movement this session. After meeting with members of the insurance industry, the Division of Insurance concluded that it had existing statutory authority to move to informational filing for most commercial lines rates but that legislation would be required to add flexibility for form filings.

A last-minute amendment to HB 3126 (which primarily deals with health and life insurance issues) gives the Director the authority to promulgate regulations that will allow commercial form filings to move from a prior approval system to one in which policy forms may be used if they meet specific requirements established by rule. The Division also has agreed to establish a study group over the interim that will examine personal lines modernization issues.

Workers’ comp legislation created a number of sparks this session. SB 485, which modified provisions for the payment of workers comp benefits and which was the product of the Governor-appointed Management/Labor Advisory Committee (MLAC), ultimately made its way to final passage. The bill appeared to be in jeopardy after the Oregon Supreme Court ruled in Smothers v. Gresham Transfer that Oregon’s exclusive remedy provisions of the state’s workers comp act violated the remedy clause of the Oregon Constitution. Despite the court’s ruling, which put the underpinnings of the state’s workers comp system in doubt, and consequently a number of provisions in SB 485, outgoing Senate President Gene Derfler delivered on his promise to pass the MLAC measure.

According to the NAII, perhaps the most drawn-out political battle of the session was the effort to rein in the State Accident Insurance Fund (SAIF) which was using its huge surplus to engage in predatory pricing. SB 3797, an initial attempt to get at SAIF by diverting its surplus to an Economic Security Fund/Rainy Day Fund, was considered too severe by legislators. SB 3980, a scaled-back approach that creates an oversight board chaired by the State Treasurer to examine the state fund, proved to be an acceptable compromise that was signed by the Governor.

On the electronic commerce front, HB 2112, UETA legislation, was signed into law, while UCITA legislation, HB 3910, never made it past an informational hearing.

Several bills that threatened the use of credit by insurers in homeowners and motor vehicle liability insurance were bottled up in committee and thus killed during the 2001 session. The defeated measures included:

* HB 2974, which would have prohibited insurers from conducting credit checks of persons applying for homeowner or motor vehicle liability insurance;

* HB 3427, which would have prohibited the use of credit for motor vehicle liability insurance; and

* SB 90, which would have prohibited insurers from canceling or refusing to issue or renew motor vehicle liability insurance solely on the basis of bankruptcy proceedings.

The credit issue is not yet over, however. The Division of Insurance is expected to address the use of credit in an administrative rule later this year. It is expected the Division will require disclosure of the use of credit and uniformity and consistency in the application of its use.

Also killed this session was HB 3218, which would have increased Oregon’s mandatory motor vehicle liability insurance limits from 25/50/10 to 50/100/25. A similar fate befell HB 2526, which would have prohibited property/casualty insurers from charging a fee for sending a monthly bill.

Topics Trends Auto Legislation Workers' Compensation Market Oregon