Section 737.310 - Method of rate making; factors considered; effect of wildfire risk mitigation actions; rules The following standards shall apply to the making and use of rates:
(1) Rates shall not be excessive, inadequate or unfairly discriminatory.(2) As to all classes of insurance, other than workers' compensation and title insurance: (a) No rate shall be held to be excessive unless:(A) Such rate is unreasonably high for the insurance provided; and(B) A reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable.(b) No rate shall be held inadequate unless such rate is unreasonably low for the insurance provided and: (A) Use or continued use of such rate endangers the solvency of the insurer; or(B) The use of such rate by the insurer has, or if continued will have, the effect of destroying competition or creating a monopoly.(3) Rates for each classification of coverage shall be based on the claims experience of insurers within Oregon on that classification of coverage unless that experience provides an insufficient base for actuarially sound rates.(4) Due consideration shall be given to past and prospective loss experience within this state, to the hazards of conflagration and catastrophe, to a reasonable margin for profit and to contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers, to past and prospective expenses specially applicable to this state, and to all other relevant factors, including judgment factors deemed relevant, within this state.(5) In addition to subsection (4) of this section, rates for home protection insurance may include provision for unreimbursed costs of risk inspection and for loss costs under policies which are terminated without premium because the related home sale is not made.(6) In the case of fire insurance rates, consideration may be given to the experience of the fire insurance business during the most recent five-year period for which such experience is available.(7) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group of insurers with respect to any class of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expenses are applicable.(8) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates for casualty, surety or inland marine risks may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.(9) Due consideration shall be given, in the making and use of rates for all insurance, to investment income earned by the insurer, to insurer profits and to accumulated reserves for vocational rehabilitation services and for claim costs related to orders or awards made pursuant to ORS 656.278.(10) The Director of the Department of Consumer and Business Services, by rule, shall prescribe the conditions under which a division of payroll between different manual classifications is permitted for purposes of computing workers' compensation premiums.(11)(a) The director shall not approve any workers' compensation rating system that does not include a plan for rewarding employers, however small, that have good loss experience or programs likely to improve accident prevention. However, this paragraph is not intended to require that all employers be experience rated.(b) The director shall not approve any workers' compensation rating system that does not allow the insurer to include potential third party recovery as one of the variables in the claims reserving process.(12) At the time an insurer issues a workers' compensation insurance policy to an insured for the first time, the insurer shall give written notice to the insured of the rating classifications to which the insured's employees are to be assigned and shall provide an adequate description of work activities in each classification. In the event an insurer recommences coverage following its termination, the notice required under this subsection must be given only if the gap in coverage exceeds six months.(13) If an insurer determines the workers' compensation insurance policy of an insured needs reclassification, the insurer:(a) May bill an additional premium for the revised classification after the insurer has provided the insured at least 60 days' written notice of the reclassification.(b) Shall bill retroactively to policy inception or date of change in insured's operations for any reclassification that results in a net reduction of premium.(c) May, notwithstanding paragraph (a) of this subsection, retroactively bill an insured for reclassification during the policy year without prior notice of reclassification if the insurer shows by a preponderance of the evidence that:(A) The insured knew that the employees were misclassified, or the insured was adequately informed by the insurer of the proper classification for the insured's employees;(B) The insured provided improper or inaccurate information concerning its operations; or(C) The insured's operations changed after the date information on the employees was obtained from the insured.(14) In consultation with system participants, the director shall analyze the rating classification system to investigate changes that simplify the system and reduce costs for employers and insurers while preserving rate equity and minimizing the potential for abuse. The director shall give particular emphasis to the method of allocating payroll to rating classifications and to alternatives to methods that require verifiable payroll records. Upon completion of this analysis, the director shall implement appropriate changes to the system.(15) The director shall adopt rules to carry out the provisions of this section and may by rule specify procedures relating to rating and ratemaking by workers' compensation insurers.(16) A rate increase based solely upon an insured's attaining or exceeding 65 years of age shall be presumed to be unfairly discriminatory unless the increase is clearly based on sound actuarial principles or is related to actual or reasonably anticipated experience.(17) An insurer offering homeowner insurance, as defined in ORS 746.600, in this state shall: (a) Make information on whether and how wildfire risk mitigation actions, as defined in ORS 742.277, may impact the insurer's underwriting and rates publicly available on the insurer's website.(b) Reflect in the insurer's underwriting guidelines and rate plans how the insurer addresses or considers wildfire risk mitigation actions, as defined in ORS 742.277.Amended by 2023 Ch. 67,§ 2, eff. 1/1/2024.Amended by 1967 c.359 §307; 1969 c.690 §3; 1981 c.247 §15; 1981 c.535 §19; 1981 c.874 §19; 1983 c.360 §1; 1987 c.676 §1; 1987 c.774 §146; 1987 c.884 §52; 1991 c.768 §1; 1997 c.766 §1; 1997 c.768 §1