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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
Senate Bill 340
Sponsored by Senator SMITH DB (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced. The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: Tells an insurer in some cases not to raise the price of a policy of fire insurance by more
than three percent each year or cancel the policy. The cases are if the policy holder lives near wild
land or works at farming, logging, mining or similar work. (Flesch Readability Score: 62.6).
Prohibits an insurer from canceling fire insurance policies, or raising policy premiums by more
than three percent, if an insured’s property is located within the wildland-urban interface or the
insured’s primary employment or economic or business activity is farming or resource extraction.
Specifies exceptions. Requires the Department of Consumer and Business Services to determine by
rule how to measure employment or economic or business activity for the purposes of qualifying for
limitations on cancellations and policy increases.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to fire insurance that covers properties at particular risk of wildfires; creating new pro-
visions; amending ORS 737.310 and 742.224; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
ORS 737.310 is amended to read:
737.310. 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 classi-
fication 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) Except as provided in subsection (6)(b) of this section, rates for each classification of
coverage [ shall] must be based on the claims experience of insurers within Oregon on that classi-
fication 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 contin-
gencies, 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.
NOTE: Matter in boldfaced type in an amended section is new; matter [ italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 1546
SB 340
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(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 ter-
minated without premium because the related home sale is not made.
(6)(a) 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 avail-
able.
(b) Notwithstanding paragraph (a) of this subsection, an insurer may not increase an
insured’s premium for fire insurance more than three percent in each year in which the fire
insurance policy is in effect for the insured if the fire insurance covers:
(A) Property located in the wildland-urban interface, as defined in ORS 477.015; or
(B) Property of an insured that is engaged in farming or resource extraction as the
insured’s primary employment or economic or business activity. The Department of Con-
sumer and Business Services by rule shall determine how and by what measure an insured’s
employment or economic or business activity would qualify the insured for the limitation on
premium increases set forth in this paragraph.
(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 in-
surance, or with respect to any subdivision or combination thereof for which subdivision or combi-
nation separate expenses are applicable.
(8) Risks may be grouped by classifications for the establishment of rates and minimum premi-
ums. 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 in-
vestment 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 permit-
ted 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 termi-
nation, the notice required under this subsection must be given only if the gap in coverage exceeds
six months.
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SB 340
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(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 re-
classification 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 in-
formed 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 partic-
ular 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.
SECTION 2.
ORS 742.224 is amended to read:
742.224. (1) A fire insurance policy shall contain a provision as follows: “This policy shall be
canceled at any time at the request of the insured, in which case this company shall, upon demand
and surrender of this policy, refund the excess of paid premium above the customary short rates for
the expired time.”
(2) The fire insurance policy also shall provide:
(a) That , except as provided in subsections (3) and (4) of this section, the insurer may can-
cel the policy at any time by giving 10 days’ written notice of cancellation to the insured in the
event of nonpayment of premium or 30 days’ written notice for any other reason. However, when fire
insurance coverage is part of a package policy including commercial liability insurance, cancellation
of the policy is governed by the provisions of ORS 742.702.
(b) That cancellation by the insurer may be made with or without tender of the excess of paid
premium above the pro rata premium for the expired time, and that the excess, if not tendered with
the cancellation, will be refunded on demand.
(3) Notwithstanding ORS 742.202, an insurer may not cancel a fire insurance policy
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without the consent of the insured unless within the previous three years the insurer has
received a claim from the insured for which the insurer paid out more than 75 percent of the
coverage limit for the policy and:
(a) The insured’s covered property is located in the wildland-urban interface, as defined
in ORS 477.015; or
(b) The insured is engaged in farming or resource extraction as the insured’s primary
employment or economic or business activity. The Department of Consumer and Business
Services by rule shall determine how and by what measure an insured’s employment or
economic or business activity would qualify the insured for the limitation on cancellation set
forth in this subsection.
(4) Notwithstanding ORS 742.202, an insurer may not cancel a fire insurance policy
without the consent of the insured if the reason for the cancellation is the insurer’s claims
experience with other insureds within the municipality, county or region of this state where
the insured’s covered property is located and:
(a) The insured’s covered property is located in the wildland-urban interface, as defined
in ORS 477.015; or
(b) The insured is engaged in farming or resource extraction as the insured’s primary
employment or economic or business activity. The department by rule shall determine how
and by what measure an insured’s employment or economic or business activity would
qualify the insured for the limitation on cancellation set forth in this subsection.
[(3)] (5) When an insurer gives notice of cancellation, the notice shall state that the excess of
paid premium above the pro rata premium for the expired time, if not tendered with the notice, will
be refunded on demand.
SECTION 3.
The amendments to ORS 737.310 and 742.224 by sections 1 and 2 of this 2025
Act apply to contracts of insurance that an insurer issues or renews on or after the opera-
tive date set forth in section 4 of this 2025 Act.
SECTION 4. (1) The amendments to ORS 737.310 and 742.224 by sections 1 and 2 of this
2025 Act become operative on January 1, 2026.
(2) The Department of Consumer and Business Services may adopt rules and take any
other action before the operative date specified in subsection (1) of this section that is nec-
essary to enable the department, on and after the operative date specified in subsection (1)
of this section, to undertake and exercise the duties, functions and powers conferred on the
department by the amendments to ORS 737.310 and 742.224 by sections 1 and 2 of this 2025
Act.
SECTION 5. This 2025 Act takes effect on the 91st day after the date on which the 2025
regular session of the Eighty-third Legislative Assembly adjourns sine die.
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