1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 SENATE BILL 1627 By: Seifried
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6 AS INTRODUCED
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7 An Act relating to insurance; amending 36 O.S. 2021,
7 Section 3639, which relates to cancellation
8 requirements; providing for electronic delivery;
8 updating statutory language; amending 85A O.S. 2021,
9 Section 42, which relates to cancellation
9 requirements; conforming language; updating sta
10 updating statutory references; and providing an
10 effective date.
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13 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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14 SECTION 1. AMENDATORY 36 O.S. 2021, Section 3639, is
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15 amended to read as follows:
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16 Section 3639. A. The provisions of this section apply to
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17 commercial marine policies, commercial automobile policies,
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18 commercial property insurance policies, commercial casualty
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19 insurance policies, and commercial fire insurance policies.
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20 B. As used in this section:
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21 1. “Renewal” or “to renew” means the issuance or offer of
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22 issuance by an insurer of a policy succeeding a policy previously
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23 issued and delivered by the same insurer or an insurer within the
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24 same group of insurers, or the issuance of a certificate or notice
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 1 extending the term of an existing policy for a specified period
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2 beyond its expiration date;
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3 2. “Nonpayment of premium” means the failure or inability of
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4 the named insured to discharge any obligation in connection with the
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5 payment of premiums on a policy of insurance subject to this
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6 section, whether such payments are payable directly to the insurer
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7 or its agent or indirectly payable under a premium finance plan or
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8 extension of credit;
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9 3. “Cancellation” means termination of a policy at a date other
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10 than its expiration date;
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11 4. “Expiration date” means the date upon which coverage under a
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12 policy ends. It also means, for a policy written for a term longer
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13 than one (1) year or with no fixed expiration date, each annual
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14 anniversary date of such policy; and
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15 5. “Nonrenewal” or “refusal to renew” means termination of a
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16 policy at its expiration date.
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17 C. After coverage has been in effect for more than forty-five
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18 (45) business days or after the effective date of the renewal of a
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19 commercial marine, commercial automobile, commercial property,
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20 commercial casualty or commercial fire insurance policy, a notice of
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21 cancellation shall not be issued by any licensed insurer or surplus
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22 or excess lines insurer unless it is based on at least one of the
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23 following reasons with at least ten (10) days days’ notice to the
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24 insured:
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 1 1. Nonpayment of premium;
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2 2. Discovery of fraud or material misrepresentation in the
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3 procurement of the insurance or with respect to any claims submitted
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4 thereunder;
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5 3. Discovery of willful or reckless acts or omissions on the
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6 part of the named insured which increase any hazard insured against;
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7 4. The occurrence of a change in the risk which substantially
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8 increases any hazard insured against after insurance coverage has
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9 been issued or renewed;
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10 5. A violation of any local fire, health, safety, building, or
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11 construction regulation or ordinance with respect to any insured
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12 property or the occupancy thereof which substantially increases any
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13 hazard insured against;
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14 6. A determination by the Commissioner that the continuation of
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15 the policy would place the insurer in violation of the insurance
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16 laws of this state;
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17 7. Conviction of the named insured of a crime having as one of
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18 its necessary elements an act increasing any hazard insured against;
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19 or
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20 8. Loss of or substantial changes in applicable reinsurance.
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21 D. An insurer may refuse to renew a policy if the insurer gives
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22 to the first-named insured at the address shown on the policy
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23 written notice that the insurer will not renew the policy. Such
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24 notice shall be given at least forty-five (45) days before the
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 1 expiration date. Notice may be sent by electronic means if the
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2 recipient consents to such method of delivery and the insurer is in
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3 compliance with the provisions of the Uniform Electronic
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4 Transactions Act. Electronic delivery is considered to be
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5 equivalent to any delivery method required by law, including first-
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6 class mail, postage prepaid, certified mail, certificate of mail, or
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7 certificate of mailing. If notice is given by mail or sent by
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8 electronic means, said such notice shall be deemed to have been
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9 given on the day said the notice is mailed or sent electronically.
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10 If the notice is mailed or sent electronically less than forty-five
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11 (45) days before expiration, coverage shall remain in effect until
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12 forty-five (45) days after notice is mailed or sent electronically.
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13 Earned premium for any period of coverage that extends beyond the
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14 expiration date shall be considered pro rata based upon the previous
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15 year’s rate. For purposes of this section, the transfer of a
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16 policyholder between companies within the same insurance group is
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17 not a refusal to renew. In addition, changing deductibles, changes
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18 in premium, changes in the amount of insurance, or reductions in
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19 policy limits or coverage are not refusals to renew.
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20 Notice of nonrenewal shall not be required if the insurer or a
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21 company within the same insurance group has offered to issue a
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22 renewal policy, or, if the named insured has obtained replacement
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23 coverage or has agreed in writing to obtain replacement coverage.
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 1 If an insurer provides the notice required by this subsection
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2 and thereafter the insurer extends the policy for ninety (90) days
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3 or less, an additional notice of nonrenewal is not required with
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4 respect to the extension.
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5 E. An insurer shall give to the named insured at the mailing
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6 address shown on the policy, written notice of premium increase,
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7 change in deductible, reduction in limits or coverage at least
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8 forty-five (45) days prior to the expiration date of the policy. If
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9 the insurer fails to provide such notice, the premium, deductible,
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10 limits and coverage provided to the named insured prior to the
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11 change shall remain in effect until notice is given or until the
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12 effective date of replacement coverage obtained by the named
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13 insured, whichever first occurs. If notice is given by mail, said
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14 such notice shall be deemed to have been given on the day said the
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15 notice is mailed. If the insured elects not to renew, any earned
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16 premium for the period of extension of the terminated policy shall
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17 be calculated pro rata at the lower of the current or previous
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18 year’s rate. If the insured accepts the renewal, the premium
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19 increase, if any, and other changes shall be effective the day
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20 following the prior policy’s expiration or anniversary date.
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21 This subsection shall not apply to:
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22 1. Changes in a rate or plan filed with or approved by the
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23 Insurance Commissioner or filed pursuant to the Property and
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 1 Casualty Competitive Loss Cost Rating Act and applicable to an
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2 entire class of business; or
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3 2. Changes based upon the altered nature of extent of the risk
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4 insured; or
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5 3. Changes in policy forms filed with or approved by the
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6 Insurance Commissioner and applicable to an entire class of
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7 business.
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8 F. Proof of mailing of notice of cancellation, or of nonrenewal
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9 or of premium or coverage changes, to the named insured at the
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10 address shown in the policy, shall be sufficient proof of notice.
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11 SECTION 2. AMENDATORY 85A O.S. 2021, Section 42, is
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12 amended to read as follows:
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13 Section 42. A. Contents. Every policy or contract of
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14 insurance issued by a carrier to an employer to secure the payment
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15 of compensation under this act the Administrative Workers’
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16 Compensation Act shall contain:
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17 1. a. Provisions that identify the insured employer and
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18 either identify each covered employee or describe
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19 covered employees by class or type of labor performed
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20 and the estimated number of employees of each such
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21 class or type.
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22 b. No single policy of workers’ compensation insurance
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23 may be issued to any group of employers who are
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24 unaffiliated with one another in terms of ownership,
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 1 control, or right to participate in the profits of the
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2 affiliated enterprises;
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3 2. Provisions that insolvency or bankruptcy of the employer or
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4 discharge therein shall not relieve the carrier from payment of
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5 compensation for compensable injuries sustained by an employee
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6 during the term of the policy or contract;
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7 3. a. The agreement of the carrier that it shall promptly
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8 pay to the person entitled to compensation every
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9 installment of compensation that may be awarded or
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10 agreed on and that this obligation shall not be
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11 affected by any default of the employer or by any
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12 default in the giving of any notice required by the
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13 policy or otherwise.
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14 b. The agreement shall be construed to be a direct
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15 obligation by the carrier to the person entitled to
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16 compensation, enforceable in that person’s name; and
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17 4. Such other provisions as the Insurance Department allows or
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18 requires carriers to include in workers’ compensation policies.
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19 B. Cancellation.
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20 1. An employer may cancel coverage with a carrier by giving the
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21 carrier at least thirty (30) days’ notice, unless a shorter period
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22 is permitted under subparagraph b of this paragraph.
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23 a. Cancellation of coverage is effective at 12:01 a.m.
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24 thirty (30) days after the date the cancellation
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 1 notice is received by the carrier, unless a later date
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2 is specified in the notice to the carrier.
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3 b. (1) An employer may cancel coverage effective less
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4 than thirty (30) days after written notice is
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5 received by the carrier where the employer
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6 obtains other coverage or becomes a self-insurer.
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7 Notice may be sent by electronic means if the
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8 recipient consents to such method of delivery and
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9 the insurer is in compliance with the provisions
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10 of the Uniform Electronic Transactions Act.
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11 Electronic delivery is considered to be
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12 equivalent to any delivery method required by
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13 law, including first-class mail, postage prepaid,
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14 certified mail, certificate of mail, or
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15 certificate of mailing.
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16 (2) A cancellation under this subsection is effective
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17 immediately on the effective date of the other
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18 coverage or on authorization as a self-insurer.
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19 2. a. A notice of cancellation from the carrier shall state
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20 the hour and date that cancellation is effective.
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21 b. A carrier shall not cancel coverage issued to an
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22 employer under this act the Administrative Workers’
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23 Compensation Act before the date specified for
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24 expiration in the policy or contract or until at least
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 1 thirty (30) days have elapsed after a notice of
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2 cancellation has been mailed or sent electronically to
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3 the Commission and to the employer, or until ten (10)
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4 days have elapsed after the notice has been mailed or
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5 sent electronically to the employer and to the
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6 Commission if the cancellation is for nonpayment of
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7 premium.
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8 c. If the employer procures other insurance within the
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9 notice period, the effective date of the new policy
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10 shall be the cancellation date of the old policy.
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11 3. Cancellation of coverage by an employer or a carrier shall
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12 in no way limit liability that was incurred under the policy or
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13 contract before the effective date of cancellation.
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14 C. Coverage.
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15 1. No policy or contract of insurance shall be issued against
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16 liability under this act the Administrative Workers’ Compensation
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17 Act unless the policy or contract covers the entire liability of the
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18 employer. Split coverage whereby some employees of an employer are
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19 insured by one carrier and other employees are insured by another
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20 carrier, or a plan of self-insurance, is expressly prohibited except
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21 for a policy issued covering the liability of an employer or of
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22 multiple employers as to specific jobs, ventures, contracts, or
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23 undertakings, but only if the policy meets with the reasonable
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24 satisfaction and approval of the Insurance Commissioner that the
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 1 policy is in the best interest of the employers and the employees
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2 concerned and does not unduly or improperly affect the continuity of
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3 workers’ compensation coverage by seriously and negatively affecting
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4 other carriers and agents with outstanding policies issued to any of
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5 the employers in issue.
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6 2. The terms of the policy or contract shall govern any
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7 questions of liability between the employer and the carrier.
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8 D. Under such rules as may be adopted by the Insurance
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9 Commissioner, and notwithstanding other provisions of this act the
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10 Administrative Workers’ Compensation Act, he or she may certify five
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11 or more employers as an insurance group which shall be considered an
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12 employer for the purposes of this act the Administrative Workers’
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13 Compensation Act.
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14 SECTION 3. This act shall become effective November 1, 2024.
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16 59-2-2761 RD 1/12/2024 3:45:45 PM
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