OAR 836-031-0855: Recoupment of Assessments by Oregon Insurance Guaranty Association

(1) This rule is adopted under the authority of ORS 731.244 and 734.579, for the purpose of implementing 734.579, relating to the recoupment by insurers of assessments made by the Oregon Insurance Guaranty Association under 734.570. For the purpose of this rule: (a) “OIGA assessment” means the assessment imposed on an insurer by the Oregon Insurance Guaranty Association. (b) “Recoupment assessment” means the assessment charged by the insurer to its policyholders. (2) An insurer shall recoup an OIGA assessment from its policyholders on premiums written or renewed on or after the recoupment start date as provided in section (6) of this rule. The recoupment assessment shall be imposed on a pro-rata basis of net direct written premiums. For the purpose of this section, “net direct written premiums” are gross premiums, including policy and membership fees, less return premiums and premiums on policies not taken, as reported in column 1 of the Oregon State Page, Exhibit of Premium and Losses. An insurer may state the recoupment assessment to be charged to each policyholder in terms of a rate instead of a dollar amount and shall adjust the notice in section (5) of this rule as appropriate. (3) An insurer may state the amount or rate of the recoupment assessment in the premium statement on the declaration page or other page of an insurance policy that serves as a declaration page rather than on the premium billing statement if the premium billing statement clearly informs the policyholder that the recoupment assessment is so located on the declaration page or other page. For the purpose of this section, the premium billing statement is the statement transmitted by the insurer to the policyholder that informs the policyholder of the premium due. (4) If an insurer does not issue a premium billing statement, the insurer must state the amount or rate of the recoupment assessment on the declaration page, on a balance due notice or on a rate quote. (5) An insurer shall include the following notice on or with the statement of recoupment assessment at the first time each year in which a recoupment assessment is made: Most insurers doing business in Oregon participate in the Oregon Insurance Guaranty Association. In the event an insurer fails, the Association settles unpaid claims on behalf of consumers. Oregon law requires that policies be surcharged directly to recover the costs of handling those claims. If your policy is surcharged, the term (Note: each insurer must insert here the descriptive term it uses to designate the surcharge) along with an indicated dollar amount will be displayed with the statement of your surcharge. (6) An insurer shall begin recoupment of an OIGA assessment on a date that is on or after January 1 of the year following the year in which the OIGA assessment was imposed but not later than April 1 of that year and shall continue the recoupment assessment for the 12-month period following that date. On and after the date on which an insurer’s recoupment period begins, the insurer must state the amount or rate of the recoupment billed to the policyholder. An insurer shall make a good faith effort to fully collect the OIGA assessment during that period and may adjust the amount or rate of a recoupment assessment in the course of the period as needed to make the recoupment more accurate or to add any additional recoupment assessment required by subsequent OIGA assessments against the insurer. Any such adjustment shall apply to all policies from which a recoupment assessment is collected on and after the date of the adjustment. (7) The minimum threshold below which a recoupment assessment need not be made is the amount at which the cost of recouping the OIGA assessment exceeds the amount to be recouped. When an insurer decides not to recoup an amount under this section, the insurer shall record the amount not recouped as an expense on the income statement of the insurer. An insurer may not later recoup any amount so recorded. (8) Not later than June 1 of each year in which a 12-month recoupment assessment period established by an insurer under section (6) of this section is completed, the insurer shall submit to the Director, on a form prescribed by the Director, the annual certification required by ORS 734.579, indicating the total recoupment assessed and recovered during that recoupment period. (9) If the amount of recoupment assessments collected by an insurer within the 12-month period beginning on the date on which the insurer began the recoupment exceeds the total amount of the OIGA assessment against the insurer, the insurer shall do one of the following: (a) Pay back the excess. (b) Subject to section (10) of this rule, carry over the amount of the excess to a date that is not later than June 1 of the year following the year in which the insurer submits the annual certification under section (8) of this rule for the recoupment period to which the excess applies. (10) Not later than June 1 of the year to which an insurer has carried over an amount of excess under section (9)(b) of this rule, the insurer must dispose of the excess carried over according to one of the following methods: (a) By applying the excess to reduce any new recoupment assessment arising during the carry-over period. (b) By returning the excess to its current policyholders. (c) Except as provided in this subsection, by transferring the excess to the Oregon Insurance Guaranty Association, which shall hold all amounts so received for the purpose of paying covered claims arising under subsequent insurer insolvencies. If the amount of the excess divided by the number of policies from which recoupment assessments were collected is $10 or more, the insurer instead shall dispose of the excess according to the method in subsection (a) or (b) of this section. (11) If the amount of recoupment assessments collected by an insurer within the 12-month period beginning on the date on which the insurer began the recoupment is less than the total amount of the assessment against the insurer, the insurer shall carry over the amount of the insufficiency to the next 12-month period in which the insurer imposes a new recoupment assessment. The amount carried over shall be applied to increase the new recoupment assessment. If the insurer determines, however, that the cost of recouping the remaining amount exceeds the amount of the insufficiency, the insurer need not carry over the insufficiency. The insurer instead shall record the amount not recouped as an expense on the income statement of the insurer. An insurer may not later recoup any amount so recorded. (12) An insurer may take all or any part of a recoupment charge owing from a policyholder from the first payment of premium by the policyholder.