1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 HOUSE BILL 3091 By: Tedford
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6 AS INTRODUCED
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7 An Act relating to insurance; amending 36 O.S. 2021,
7 Section 902, which relates to excessive, inadequate,
8 or unfairly discriminatory rates; modifying certain
8 compliance burden; amending 36 O.S. 2021, Section
9 908, which relates to penalties; clarifying
9 applicability to rules and orders; modifying penalty;
10 stipulating no penalty without hearing; amending 36
10 O.S. 2021, Section 1106.1, as amended by Section 1,
11 Chapter 154, O.S.L. 2022 (36 O.S. Supp. 2023, Section
11 1106.1), which relates to exemption from due
12 diligence search; modifying conditions requiring a
12 due diligence search; amending 36 O.S. 2021, Section
13 1107, which relates to required application and
13 informational filings; requiring certain filings;
14 clarifying method of filing; amending 36 O.S. 2021,
14 Section 1114, which relates to surplus lines
15 licensee's or broker's annual statement; clarifying
15 method for filing; amending 36 O.S. 2021, Section
16 1250.9, which relates to Unfair Claims Settlement
16 Practices Act; modifying required information;
17 amending 36 O.S. 2021, Section 1450, as amended by
17 Section 1, Chapter 149, O.S.L. 2023 (36 O.S. Supp.
18 2023, Section 1450), which relates to third-party
18 administrator licensure; modifying licensing
19 procedures; permitting Insurance Commissioner to deny
19 or refuse to renew license in certain circumstances;
20 amending 36 O.S. 2021, Section 1682, which relates to
20 the Insurance Business Transfer Act; modifying
21 district court approval; amending 36 O.S. 2021,
21 Section 2122, which relates to domestic mutual and
22 stock insurers; modifying definition; amending 36
22 O.S. 2021, Section 6060.4, as amended by Section 2,
23 Chapter 199, O.S.L. 2022 (36 O.S. Supp. 2023, Section
23 6060.4), which relates to coverage for child
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 1 immunization; modifying definition; and providing an
1 effective date.
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4 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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5 SECTION 1. AMENDATORY 36 O.S. 2021, Section 902, is
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6 amended to read as follows:
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7 Section 902. A. The Insurance Commissioner shall not approve
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8 rates for insurance which are excessive, inadequate, or unfairly
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9 discriminatory.
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10 1. An excessive rate is one which:
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11 a. is unreasonably high for the insurance provided, or
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12 b. is unreasonable because (1) a reasonable degree of
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13 competition does not exist in the area with respect to
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14 the classification to which such rate is applicable
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15 and (2) the rate is unreasonably high for the
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16 insurance provided.
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17 2. An inadequate rate is one which:
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18 a. is (1) unreasonably low for the insurance provided and
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19 (2) the continued use of such rate endangers, or if
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20 continued would endanger, the solvency of the insurer,
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21 or
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22 b. is (1) unreasonably low for the insurance provided and
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23 (2) the continued use of such rate by the insurer has,
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 1 or if continued would have, the effect of destroying
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2 competition or creating a monopoly, or
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3 c. is insufficient to cover projected losses, expenses
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4 and a reasonable margin for profit for the line of
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5 insurance coverage to be offered in this state by the
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6 filer.
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7 3. A rate shall not be unfairly discriminatory.
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8 a. A rate is not unfairly discriminatory because it is
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9 based in part upon the establishment or modification
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10 of classifications of risks based upon:
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11 (1) the size of the risk,
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12 (2) the expense or difficulty in management of the
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13 risk,
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14 (3) the individual experience of the risk,
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15 (4) the location or dispersion of the risk, or
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16 (5) any other reasonable consideration attributable
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17 to the risk.
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18 b. A rate is not unfairly discriminatory in relation to
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19 another in the same class of business if it reflects
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20 equitably the differences in expected losses and
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21 expenses. Rates are not unfairly discriminatory
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22 because different premiums result for policyholders
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23 with like loss exposures but different expense
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24 factors, or with like expense factors but different
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 1 loss exposures, if the rates reflect the differences
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2 with reasonable accuracy.
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3 c. A rate shall be deemed unfairly discriminatory as to a
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4 risk or group of risks if the application of premium
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5 discounts, credits, or surcharges among such risks
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6 does not bear a reasonable relationship to the
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7 expected loss and expense experience among the various
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8 risks.
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9 d. A rate shall never be based upon race, color, creed or
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10 national origin.
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11 B. The systems of expense provisions included in the rates for
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12 use by any insurer or group of insurers may differ from those of
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13 other insurers or groups of insurers to reflect the requirements of
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14 the operating methods of any such insurer or group with respect to
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15 any kind of insurance or subdivision or combination thereof for
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16 which subdivision or combination separate expense provisions are
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17 applicable.
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18 C. Nothing in this act shall be construed to require uniformity
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19 in insurance rates, classifications, rating plans, or practices.
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20 D. Nothing in this act shall abridge or restrict the freedom of
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21 contract of insurers, agents, brokers or employees with reference to
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22 the commissions, compensation, or salaries to be paid to such
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23 agents, brokers, or employees by insurers.
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 1 E. The burden of compliance with the provisions of this act
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2 shall rest upon the insurer or rating organization in all matters
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3 involving a filing made pursuant to Section 6821 of this title.
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4 SECTION 2. AMENDATORY 36 O.S. 2021, Section 908, is
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5 amended to read as follows:
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6 Section 908. The Insurance Commissioner may, if the
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7 Commissioner finds that any person or organization has violated the
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8 provisions of any statute, rule, or order for which the Commissioner
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9 has jurisdiction, impose a penalty of not less than One Hundred
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10 Dollars ($100.00) nor more than Five Thousand Dollars ($5,000.00)
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11 for each such violation. Such penalties may be in addition to any
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12 other penalty provided by law.
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13 No penalty shall be imposed except upon a written order of the
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14 Commissioner or the appointed independent hearing examiner, stating
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15 the findings of the Commissioner made after a hearing held not less
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16 than ten (10) days after written notice to a person or organization
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17 alleged to have violated any statute for which the Commissioner has
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18 jurisdiction specifying the alleged violation or the appointed
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19 independent hearing examiner after notice and opportunity for a
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20 hearing in accordance with Article II of the Administrative
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21 Procedures Act.
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22 SECTION 3. AMENDATORY 36 O.S. 2021, Section 1106.1, as
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23 amended by Section 1, Chapter 154, O.S.L. 2022 (36 O.S. Supp. 2023,
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24 Section 1106.1), is amended to read as follows:
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 1 Section 1106.1 A. A surplus lines licensee or broker is not
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2 required to make a due diligence search to determine whether the
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3 full amount or type of insurance can be obtained from admitted
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4 insurers when the surplus lines licensee or broker is seeking to
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5 procure or place nonadmitted insurance for an exempt commercial
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6 purchaser, provided unless the :
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7 1. The licensee or broker procuring or placing the surplus
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8 lines insurance has disclosed to the exempt commercial purchaser
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9 that such insurance may or may not be available from the admitted
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10 market that may provide greater protection with more regulatory
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11 oversight; and
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12 2. The exempt commercial purchaser has subsequently requested
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13 in writing for the surplus lines broker to procure or place such
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14 insurance from a nonadmitted insurer.
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15 B. For purposes of this section, the term "exempt commercial
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16 purchaser" means any person purchasing commercial insurance that, at
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17 the time of placement, meets the following requirements:
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18 1. The person employs or retains a qualified risk manager to
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19 negotiate insurance coverage;
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20 2. The person has paid aggregate nationwide commercial property
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21 and casualty insurance premiums in excess of One Hundred Thousand
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22 Dollars ($100,000.00) in the immediately preceding twelve (12)
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23 months;
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24 3. The person meets at least one of the following criteria:
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 1 a. the person possesses a net worth in excess of Twenty-
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2 Four Million Dollars ($24,000,000.00), as such amount
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3 is adjusted pursuant to paragraph 4 of this
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4 subsection,
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5 b. the person generates annual revenues in excess of
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6 Sixty Million Dollars ($60,000,000.00), as such amount
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7 is adjusted pursuant to paragraph 4 of this
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8 subsection,
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9 c. the person employs more than five hundred full-time-
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10 equivalent employees per individual insured or is a
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11 member of an affiliated group employing more than one
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12 thousand employees in the aggregate,
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13 d. the person is a not-for-profit organization or public
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14 entity generating annual budgeted expenditures of at
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15 least Thirty-Six Million Dollars ($36,000,000.00), as
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16 such amount is adjusted pursuant to paragraph 4 of
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17 this subsection, or
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18 e. the person is a municipality with a population in
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19 excess of fifty thousand (50,000) persons; and
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20 4. Effective on January 1, 2015, and every five (5) years
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21 thereafter, the amounts in subparagraphs a, b and d of paragraph 3
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22 of this subsection shall be adjusted to reflect the percentage
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23 change for such five-year period in the Consumer Price Index of All
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 1 Urban Consumers published by the Bureau of Labor Statistics of the
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2 U.S. Department of Labor.
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3 SECTION 4. AMENDATORY 36 O.S. 2021, Section 1107, is
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4 amended to read as follows:
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5 Section 1107. A. After procuring any surplus line insurance
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6 where Oklahoma is the home state and the insurance involves a
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7 multistate risk, the surplus lines licensee and broker shall submit
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8 such information relating to the transaction as may be established
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9 by the Insurance Commissioner. The data shall be provided to the
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10 Insurance Commissioner until and unless in the exercise of his or
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11 her sole discretion and judgment, the Insurance Commissioner decides
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12 to enter or join the Nonadmitted Insurance Multi-State Agreement or
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13 any other multistate agreement or compact with the same function and
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14 purpose and other reporting requirements are thereby established.
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15 B. When Oklahoma is the home state of the insured, the surplus
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16 lines licensee or broker shall make all informational and tax
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17 filings and fee and tax payments electronically in the manner and
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18 form required or to be established by the Insurance Commissioner,
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19 along with any applicable transaction fees. When Oklahoma is the
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20 home state of the insured, the premium tax filings and premium tax
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21 payments shall be provided entirely to the Insurance Commissioner
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22 until and unless, in the exercise of his or her sole discretion and
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23 judgment, the Insurance Commissioner decides to enter or join the
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 1 Nonadmitted Insurance Multi-State Agreement or any other multistate
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2 agreement or compact with the same function and purpose.
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3 C. Failure to file the required information, any required fee
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4 payments and make the required premium tax payments in the manner
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5 established by the Insurance Commissioner pursuant to this section
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6 and Section 1115 of this title where Oklahoma is the home state of
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7 the insured shall result, after notice and hearing, in censure,
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8 suspension, or revocation of license or a fine of up to Five Hundred
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9 Dollars ($500.00) for each occurrence or by both such fine and
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10 licensure penalty.
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11 SECTION 5. AMENDATORY 36 O.S. 2021, Section 1114, is
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12 amended to read as follows:
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13 Section 1114. Each surplus lines licensee or broker licensed or
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14 transacting business in Oklahoma shall on or before April 1 of each
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15 year file electronically, along with any applicable transaction
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16 fees, with the Insurance Commissioner a verified statement of all
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17 surplus lines insurance transacted by the broker during the
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18 preceding calendar year where Oklahoma is the home state of the
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19 insured. The statement shall be on a form prescribed and furnished
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20 by the Insurance Commissioner and shall show such information
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21 required to be submitted as established by the Insurance
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22 Commissioner. The information shall be provided to the Insurance
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23 Commissioner until and unless, in the exercise of his or her sole
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24 discretion and judgment, the Insurance Commissioner decides to enter
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 1 or join the Nonadmitted Insurance Multi-State Agreement or any other
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2 multistate agreement or compact with the same function and purpose
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3 and other transaction reporting requirements are thereby
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4 established.
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5 SECTION 6. AMENDATORY 36 O.S. 2021, Section 1250.9, is
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6 amended to read as follows:
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7 Section 1250.9 A. If the Insurance Commissioner determines,
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8 based on an investigation of complaints of unfair claim settlement
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9 practices, that an insurer has engaged in unfair claim settlement
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10 practices with such frequency as to indicate a general business
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11 practice and that such insurer should be subjected to closer
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12 supervision with respect to such practices, the Commissioner may
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13 require the insurer to file a report at such periodic intervals as
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14 the Commissioner deems necessary. The Commissioner shall also
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15 devise a statistical plan for such periodic reports, which shall
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16 contain but not be limited to the following information:
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17 1. The total number of written claims filed, including the
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18 original amount filed for by the insured and the classification by
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19 line of insurance of each individual written claim, for the past
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20 twelve-month period or from the date of the insurer's last periodic
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21 report, whichever time is shorter;
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22 2. The total number of written claims denied, for the past
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23 twelve-month period or from the date of the insurer's last periodic
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24 report, whichever time is shorter;
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 1 3. The total number of written claims settled, including the
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2 original amount filed for by the insured, the settled amount, and
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3 the classification of line of insurance of each individual settled
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4 claim, for the past twelve-month period or from the date of the
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5 insurer's last periodic report, whichever time is shorter;
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6 4. The total number of written claims for which lawsuits were
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7 instituted against the insurer, including the original amount of the
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8 claim filed for by the insure