Insurers Face Many Battles in Oregon

California’s $38 billion budget deficit garners lots of headlines and attention these days, but the State of Oregon is facing similar gridlock over how to solve their fiscal woes.

Oregon’s political environment is entirely split. Democrat Ted Kulongoski, a former insurance regulator, is the state’s new governor who is working hard to put together his first state budget. The House of Representatives is controlled by the Republican majority (35 to 25) and the State Senate is evenly split between Republicans and Democrats (15 to 15).

Like most states around the country, Oregon is facing budget problems. Democrats are proposing a $12.5 billion spending plan while Republicans are proposing an $11.5 billion spending plan. Governor Kulongoski is trying to find a compromise in the middle. Oregon usually has their legislative work done by mid-July, however wrangling over the budget could keep legislators in the State Capitol until August or September.

Given the difference between the proposed spending plans and available revenue, taxes have become a significant issue. Insurers were faced with HB 2836, which would assess a premium tax on all auto insurance policyholders. The proposal was designed to generate approximately $90 million in new revenue for the state’s coffers. The bill is currently being held in the House Judiciary Committee which has now adjourned for the year. However, the issue could still be voted upon in another measure. The question remains: is there enough support to get this new tax bill down to the governor’s office? Recent polling of Oregon voters shows overwhelming opposition to this tax on motorists.

HB 3051 allows an insurer to recoup their Oregon Insurance Guaranty Association assessment through a surcharge on property and casualty insurance policies. The bill ensures sufficient resources are made available to the Office of the State Fire Marshall. The Fire Marshall enforces the fire code, investigates fires and promotes fire prevention education and outreach.

Like many other states, the Oregon Legislature is considering limitations on insurers’ use of credit-based insurance scores. SB 260 originally banned the use of credit by insurers. Now the measure has been amended to limit the use of credit based information. The measure is currently being held in the House of Representatives Rules Committee. The bill allows, in combination with other underwriting factors, credit based information to be used to underwrite new applications but prohibits its use for cancellations or nonrenewals. At this point it is likely that this bill will move to Governor Kulongoski’s desk.

Jeanne Cain is the vice president of state affairs for the American Insurance Association (AIA). Learn more about AIA by logging onto www.aiadc.org.

Editor’s Note: Read the full text of Jeanne Cain’s Parting Shots in the July 21st issue of Insurance Journal.