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Oregon Regulatory Actions a Reminder that Insurers are Responsible for Providing Competent Administration of Their Insurance Programs

The Oregon Department of Consumer and Business Services (“Oregon Department”) recently announced regulatory actions against four insurers for alleged violations of the Oregon Insurance Code. The regulatory actions resulted in Consent Orders with the Oregon Department pursuant to which one insurer was assessed a $30,000 penalty, another insurer was assessed a $50,000 penalty and the two remaining insurers were jointly and severally assessed a $75,000 penalty. A portion of each of these penalties was suspended pending the satisfaction of certain conditions by each insurer. 

According to the Oregon Department, all of the regulatory actions were the result of investigations which found, in part, that the insurers failed to provide, or failed to timely provide, to certain Oregon consumers annual reports for their annuity contracts and/or life insurance policies in 2015, 2016 and 2017. The Consent Orders indicate that the same unaffiliated TPA had been administering the life insurance products and annuity contracts for all four insurers during the relevant time period. The Consent Orders further indicate that, although the insurers had contracted with the TPA to provide the required annual reports, the insurers were still responsible because the obligation to provide the annual reports was on the insurers and insurers are responsible for providing competent administration of their insurance programs pursuant to ORS 744.740 (2).

These regulatory actions taken by the Oregon Department are another reminder that insurers cannot outsource their regulatory responsibilities to a third party and may be held strictly liable for alleged violations of insurance laws committed by their TPA business partners.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 196

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About this Author

Counsel

Jennifer Osborn Nix works diligently for insurance companies, third-party administrators, and other regulated entities to further their goals and help them remain compliant within the 50-state regulatory scheme. She focuses on insurance regulatory and compliance issues, with a primary emphasis on life and health insurance matters.

Jennifer works with many regulated entities, including many in the health care sector, who rely on her for research, advice, strategic counsel, and licensing.

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Justin Liby has a talent for organizing and managing large national and multi-state licensure and research projects. This knack provides him with a solid foundation for crafting and implementing sound, efficient strategies that achieve success for his clients. Justin concentrates his efforts on helping the insurance industry navigate the formidable federal and state regulatory maze to achieve the industry’s business needs. He stays current in the insurance industry's evolution, as well as the legislation and regulatory activity impacting the industry.

Justin is a former regulator for the Kansas Insurance Department and in-house counsel for a national third-party administrator.

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Jonathan Kyle  Lowder Associate Kansas City Insurance Business and Regulatory Law
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Jonathan (Kyle) Lowder has devoted his career to assisting a wide range of insurers and related entities efficiently manage the regulatory system in pursuit of their goals. He relies on a broad experience base, built from several years’ experience with matters arising throughout the insurance business life cycle, to form a comprehensive view of each issue and develop long term solutions for clients. 

Kyle represents both traditional and nontraditional insurers, re-insurers, third-party administrators, producers, adjusters, and other insurance regulated entities. He guides clients on...

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