Oregon Life & Health Insurance Guaranty Association

Covered Contracts

§734.790(2) Except as limited by ORS 734.750 to 734.890 , the association shall provide coverage to the persons specified in subsection (1) of this section for direct nongroup life or health insurance policies or annuity contracts, for certificates under direct group policies or contracts, and for supplemental contracts to any of these, in each case issued by member insurers. Amended effective 5/27/2011.

Non-Covered Contracts

§734.790(3)(a) That portion of any policy or contract not guaranteed by the member insurer or under which the risk is borne by the policyholder or contract owner. (b) Any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued. (c) Any policy or contract issued by a health care service contractor complying with ORS 750.005 to 750.095. (d) Any policy or contract issued by a fraternal benefit society. (e) Any portion of a policy or contract to the extent that the interest rate on which the policy or contract is based , or to the extent that the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract for the purpose of calculating returns or changes in value: (A) Exceeds, when averaged over the period of four years prior to the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, a rate of interest determined by subtracting four percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurred first; and (B) Exceeds, on and after the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, the rate of interest determined by subtracting three percentage points from Moody's Corporate Bond Yield Average as most recently available. (f) Any portion of a policy or contract issued to a plan or program of an employer, association or similar entity to provide life insurance health insurance or annuity benefits to its employees or members to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association or similar entity under any of the following: (A) A multiple employer welfare arrangement as defined in section 3(40)(29 U.S.C. 1002(40)) of the Employee Retirement Income Security Act of 1974, as amended. (B) A minimum premium group insurance plan. (C) A stop-loss group insurance plan. (D) An administrative services only contract. (g) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits or voting rights, or provides that any fees or allowances be paid to any person, including the policyholder or contract owner, in connection with the service to or administration of the policy or contract. (h) Any policy or contract issued in this state by a member insurer at a time that it the insurer did not have a certificate of authority to issue the policy or contract in this state. (i) Any unallocated annuity contract issued to or in connection with an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation , regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan. (j) Any portion of any unallocated annuity contract that is not issued to or in connection with a government retirement plan referred to in subsection (1) of this section, or a government lottery. (k) Any coverage issued by the Oregon Medical Insurance Pool. (l) Any portion of a policy or contract to the extent that the assessments required by ORS 734.815 with respect to the policy or contract are preempted by federal or state law. (m) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the policyholder or contract owner, including but not limited to: (A) Claims based on marketing materials; (B) Claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable policy or contract form filing or approval requirements; (C) Misrepresentations of, or regarding, policy or contract benefits; (D) Extracontractual claims, including but not limited to claims related to bad faith in the payment of claims, punitive or exemplary damages or attorney fees or costs; or (E) A claim for penalties or consequential or incidental damages. (n) A contractual agreement that establishes the member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee that in either case is not an affiliate of the member insurer. (o) Any portion of a policy or contract to the extent that portion provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but the changes in value have not been credited to the policy or contract, or as to which the policyholder's or contract owner's rights are subject to forfeiture, as of the date on which the member insurer becomes either an impaired or insolvent insurer, whichever occurs first. If the interest or changes in value in a policy or contract are credited less frequently than annually, for purposes of determining the values that have been credited and are not subject to forfeiture under this paragraph, the interest or change in value that is determined by using the procedures specified in the policy or contract shall be credited as if the contractual date of crediting interest or changing value was the date of the impairment or insolvency, whichever is earlier, and may not be subject to forfeiture. (p) Any policy or contract providing any hospital, medical, prescription drug or other health care benefits under Part C or Part D of subchapter XVIII, chapter 7, Title 42 of the United States Code, or any regulations issued under those provisions. Amended effective 5/27/2011.

Non-Resident Coverage

§734.790(1)(b). Yes. Covers nonresidents only if the following conditions are met: (A) The insurer that issued the policy or contract must be a member insurer. (B) The state in which the person resides must have an association similar to the Oregon Life and Health Insurance Guaranty Association. (C) The person must not be eligible for coverage by an association in the state in which the person resides, as described in subparagraph (B) of this paragraph , due to the fact that the insurer was not authorized to transact insurance or licensed in that state at the time specified in the state's guaranty association law. Amended effective 5/27/2011.

§ 734.810(11)(b) With respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance. (B) $100,000 in health insurance benefits other than basic hospital, medical and surgical insurance, major medical insurance, disability insurance or long term care insurance, including any net cash surrender and net cash withdrawal values. (C) $300,000 in disability insurance benefits. (D) $300,000 in long term care insurance benefits. (E) $500,000 in basic hospital, medical and surgical insurance or major medical insurance. (F) $250,000 in the present value of annuity benefits, including any net cash surrender and net cash withdrawal values; (c) With respect to each payee of a structured settlement annuity or the beneficiary of the payee if deceased, $250,000 in the present value of annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values; or (d) $250,000 in the present value of annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values, with respect to each individual participating in a governmental retirement plan established under section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased. (12) The association may not be liable for more than: (a) $300,000 in benefits, in the aggregate, with respect to any one life under subsection (11)(b), (c) and (d) of this section, with the exception of benefits under subsection (11)(b)(E) of this section, in which case the aggregate liability of the association may not exceed $500,000 with respect to any one life. (b) With respect to one policyholder of multiple nongroup policies of life insurance, regardless of whether the policyholder is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, $5 million in benefits, regardless of the number of policies and contracts held by the policyholder. Amended effective 5/27/2011.

Discretionary Triggers

§734.810(1) If a domestic member insurer is an impaired insurer. Amended effective 5/27/2011.

Mandatory Triggers

§734.810(2) If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

"Impaired Insurer"

§734.760(6) “Impaired insurer” means a member insurer that is subject to an order of rehabilitation under ORS 734.063 or an order of conservation under ORS 734.200 after September 13, 1975. “Impaired insurer” does not include an insolvent insurer. Amended effective 5/27/2011.

"Insolvent Insurer"

§734.760(7) “Insolvent insurer” means a member insurer that, after September 13, 1975, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 5/27/2011.

"Member Insurer"

§ 734.760(9)(a) “Member insurer” means any insurer currently authorized to transact in this state any kind of insurance to which ORS 734.750 to 734.890 apply , regardless of whether the insurer's authorization to transact insurance was, in the past, suspended, revoked, not renewed or voluntarily withdrawn. (b) “Member insurer” does not include: (A) A hospital or medical service organization, whether for-profit or nonprofit; (B) A health maintenance organization; (C) A fraternal benefit society; (D) A mandatory state pooling plan; (E) A mutual assessment company or other person that operates on an assessment basis; (F) An insurance exchange; or (G) An organization that has a certificate of authority limited to the issuance of charitable gift annuities under ORS 731.038. Amended effective 5/27/2011.

§734.800(1) (a) The health insurance account, composed of the following subaccounts: (A) The disability insurance subaccount; (B) The long term care insurance subaccount; and (C) The major medical and all other health insurance subaccount; (b) The life insurance account; and (c) The annuity account. Amended effective 5/27/2011.

Assessment Limits

§734.815(5). Two percent (2%) of premiums in state for policies covered by each account.

Assessment Classes

§734.815(2). Two classes of assessments: Class A for administrative costs, legal costs and other general expenses whether or not related to a particular impaired or insolvent insurer; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

§734.790(3)(e) Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the interest rate on which the policy or contract is based , or to the extent that the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract for the purpose of calculating returns or changes in value: (A) Exceeds, when averaged over the period of four years prior to the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, a rate of interest determined by subtracting four percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurred first; and (B) Exceeds, on and after the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, the rate of interest determined by subtracting three percentage points from Moody's Corporate Bond Yield Average as most recently available. Amended effective 5/27/2011.

§734.835(1). Yes. Up to 20% of assessment amount may be offset for next 5 years; covers all but administrative expenses. **NOTE** In 2015, Oregon legislature passed bill extending sunset provision for the tax offset to 1.1.2022.

§ 734.760(10) “Premiums” means direct gross insurance, including annuity, premiums written on covered policies, less return premiums thereon and dividends paid or credited to policyholders on such direct business. “Premiums” does not include premiums on contracts between insurers and reinsurers or any premiums on policies or contracts excluded under ORS 734.790.

734.890 “Association not to be used in sales or solicitation” No insurer or insurance producer shall make, publish, disseminate, circulate or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement which uses the existence of the Oregon Life and Health Insurance Guaranty Association for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Oregon Life and Health Insurance Guaranty Association Act. This § shall not apply however to the Oregon Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or to public service institutional advertisements by individual insurers.