Oregon Statutes 732.578 – Liability of officers and directors of insurer that is subject to registration; allowance for common management; qualifications of directors; exemptions; waiver
(1) A person‘s control of a domestic insurer that is subject to registration does not relieve the officers and directors of the insurer of any obligation or liability to which the officers and directors would otherwise be subject by law. The domestic insurer must be managed so as to assure the insurer’s separate operating identity in accordance with the Insurance Code.
Terms Used In Oregon Statutes 732.578
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies. See Oregon Statutes 174.100
- Quorum: The number of legislators that must be present to do business.
(2) This section does not preclude a domestic insurer from having or sharing a common management, or from using personnel, property or services jointly or cooperatively, with another person under an arrangement that meets the standards set forth in ORS § 732.574.
(3)(a) At least one-third of a domestic insurer’s directors and at least one-third of the members of each committee of the insurer’s board of directors must be persons who are not:
(A) Officers or employees of the insurer or of any entity that controls, is controlled by or is under common control with the insurer; or
(B) Beneficial owners of a controlling interest in the voting securities of the insurer or of an entity that controls, is controlled by or is under common control with the insurer.
(b) A quorum for transacting business at a meeting of the insurer’s board of directors or any committee of the board of directors must include at least one person with the qualifications described in paragraph (a) of this subsection.
(4) A domestic insurer’s board of directors shall establish at least one committee of which the entire membership consists of persons who have the qualifications described in subsection (3)(a) of this section. The board of directors shall give the committee the board establishes under this subsection responsibility for:
(a) Recommending independent certified public accountants for the board to select;
(b) Reviewing the insurer’s financial condition and the scope and results of any independent or internal audit;
(c) Nominating candidates for election to the board of directors;
(d) Recommending principal officers for selection and the compensation for the principal officers; and
(e) Evaluating the principal officers’ performance.
(5) Subsections (3) and (4) of this section do not apply to a domestic insurer if the person that controls the domestic insurer has a board of directors, and committees of the person’s board of directors, that meet the requirements set forth in subsections (3) and (4) of this section.
(6)(a) The Director of the Department of Consumer and Business Services may waive the requirements set forth in subsections (3) and (4) of this section if an insurer applies for a waiver and:
(A) The insurer has less than $300 million in annual direct written and assumed premium, excluding premium reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program; or
(B) Unique circumstances justify the director’s waiver.
(b) In determining whether to grant the waiver, the director may consider what type of business entity the insurer is, the volume of insurance the insurer transacts, whether the insurer has qualified board members, the insurer’s ownership or organizational structure and any other factor the director deems relevant. [1993 c.447 § 49; 2013 c.370 § 28]
[1983 c.498 § 16; 1993 c.447 § 35; renumbered 732.541 in 1993]