Several Ore. P/C Measures Signed Into Law

Oregon Governor Ted Kulongoski recently signed several pieces of significant property/casualty insurance legislation, including measures dealing with credit reports, taxes, auto insurance coverage and
environmental liability issues. The 2003 legislative session ended Aug. 27.

“Insurance companies and consumers are fortunate that burdensome legislative proposals were scaled back or rejected,” said Sam Sorich, vice president and western regional manager of the National Association of Independent Insurers (NAII). “Many of these proposals would have restricted the competitive market in Oregon, resulting in fewer choices and higher prices for consumers.”

Credit

Last year, the Oregon Insurance Division adopted regulations governing insurers’ use of credit information, which took effect in June 2003. Despite the regulations, lawmakers made credit one of the hottest issues during the 2003 session. The bill ultimately passed by the Legislature and signed into law is more restrictive than the National Council of Insurance Legislators (NCOIL) Model Act but still allows insurers to use credit history to rate and underwrite policies. In particular, SB 260 imposes limitations on the use of credit information to re-rate policies that are renewed.

“The final version of the bill, while not perfect, is not nearly as restrictive and extreme as the original ban on insurers’ use of credit,” Sorich said. Originally, SB 260 would have prohibited insurance carriers from using credit information for underwriting and rating policies for both auto and homeowners insurance policies.

Environmental Liability

SB 297 expands the coverage of liability policies to cover environmental claims. The bill has two components: it forces an insurer that provided a general liability insurance policy to a policyholder to pay the policyholder’s environmental claims, even though other insurance may provide coverage for the same claims; and it also establishes a procedure for determining coverage for environmental claims when insurance policies are lost.

“NAII opposed SB 297 because it unfairly expands insurers’ obligations to cover costs outside the insurance contract terms, overrides judicial determinations in pending cases, and unjustly enriches policyholders by giving them more coverage than they paid for in their insurance agreements,” Sorich said. “An insurer will now have the burden of seeking contributions from other insurers that covered the risk in these situations.”

PIP Benefits

HB 3668 increases the required coverage for personal injury protection (PIP) benefits from $10,000 to $15,000; the bill also subjects PIP benefits to the workers’ compensation medical fee schedule and the fees charged to the general public.

SB 260, SB 297, and HB 3668 all take effect January 1.

Other bills recently signed into law include measures that address mileage-based auto insurance premiums and guaranty association
assessments. HB 2043 gives insurance companies a tax credit if they use a rating plan for automobile insurance that bases 70 percent of the premium on miles driven. The bill does not impose mandates on insurers. HB 3051 eliminates the existing offsets to the corporate excise tax and the fire insurance gross premium tax. The bill directs insurers to collect a premium surcharge to recover guaranty association assessments.

Among the legislative victories for insurers and consumers during the 2003 session includes the failure to pass HB 2836, which would have imposed a surcharge on automobile liability insurance policies, Sorich said.