Credit, Environmental Liability Tops Ore. Issues in 2003 Session

As the legislative session continues to roll forward in Oregon, Senate bills that would unfairly expand environmental insurance coverage and restrict insurers’ use of credit information are stirring controversy, according to the National Association of Independent Insurers (NAII).

NAII is opposed to SB 297, which has passed the Senate and the House and is being referred to a conference committee, because it would impose unfair coverage obligations on insurers for environmental liability claims.

SB 297 would require an insurer to pay not only costs of environmental claims during a policy period, but also costs attributable for periods when other insurance provided coverage and unfairly expanding an insurers’ obligations beyond the contract terms. Also, the bill would create a new procedure for reconstructing lost policies. Under the bill, a policyholder could establish that the policy is missing by a preponderance of evidence, rather than by the stricter standard of clear and convincing evidence.

“This measure unfairly expands insurers’ obligations, overrides judicial
determinations in pending cases, and unjustly enriches policyholders by giving them more coverage than they paid for in their insurance agreements,” said Sam Sorich, NAII vice president and western regional manager. “It would adversely impact the affordability of environmental insurance coverage in Oregon, and remove incentives for Oregon policyholders to avoid environmental harm, contrary to the public policy objectives of this state.”

Another bill winding its way through the legislature, SB 260, would restrict insurers’ use of credit information for personal lines underwriting and rating. The legislation is now being considered by the Oregon House Rules Committee.

“Much progress has been made in amending SB 260 and reaching a fair compromise,” Sorich said. “It is our hope that the bill will soon advance from the committee and reach the governor’s desk for his signature.”

A bill that would have imposed a surcharge on automobile liability insurance policies died after failing to gain committee approval before the deadline for committee action. The surcharges detailed in HB 2836 would have been used to help fund the patrol services of the State Police. Essentially, this bill would have created a sales tax on auto insurance policies, with the potential of increasing the number of under-insured drivers on Oregon’s roads since may consumers may have tried avoiding the tax by reducing their insurance limits to the minimum legal levels, Sorich said. Even though this measure failed to pass, revenue issues are still very prominent this session, he added.

Gov. Ted Kulongoski has signed two noteworthy property/casualty insurance bills into law. HB 2043 gives tax credits to automobile insurers whose policies are at least 70 percent based on a mile-based rating plan or a time-driven-based rating plan. Eligibility for the law’s tax credits will begin in 2005. HB 2043 does not require insurers to adopt a mile-based or time-based auto rating plan.

HB 3051, the guaranty fund recoupment bill, was signed into law on July 14. Existing law allows an insurer to offset assessments that the insurer pays to the Oregon Insurance Guaranty Association against the corporate excise tax and the fire insurance gross premium tax that are charged to the insurer. HB 3051 eliminates the existing offset against taxes. The bill directs insurers to recoup guaranty fund assessments through a surcharge imposed on written premiums. The new law will go into effect 91 days after the end of this year’s regular legislative session. The date for the end of this year’s session has yet to be determined.