Oregon Statutes ORS 737.602 and ORS 737.604
ORS 737.602 Authorization for insurance for certain projects; premiums; qualifications.
(1) As used in this section:
(a) "Project" means a construction project, a plant expansion or
improvements within Oregon with an aggregate construction value in excess of
$90 million that is to be completed within a defined period. The average construction
value during the defined period of the project must be at least $18 million
per year. "Project" does not mean a series of unrelated construction
projects artificially aggregated to satisfy the $90 million requirement.
(b) "Project sponsor" means public bodies, utilities, corporations
and firms undertaking to construct a project in excess of $90 million and conducting
business in the State of Oregon.
(c) "Public body" has the meaning given the term in ORS 30.260.
(2) Notwithstanding ORS 279C.530, 656.126, 737.600 or 746.160, an insurer
approved to transact insurance in this state, including the State Accident Insurance
Fund Corporation or an insurer as defined in ORS 656.005, may issue with the
prior approval of the Director of the Department of Consumer and Business Services
a policy of insurance covering the project sponsor, the prime contractor under
a contract for the construction of the project, any contractors or subcontractors
with whom the prime contractor may enter into contracts for the purpose of fulfilling
its contractual obligations in construction of the project and any other contractors
engaged by a project sponsor to provide architectural or other design services,
engineering services, construction management services, other consulting services
relating to the design and construction of the project or any combination thereof.
(3) The following provisions apply to premiums under a policy of insurance
described in subsection (2) of this section:
(a) A project sponsor or a prime contractor may not charge a premium for coverage
under a policy of insurance to a contractor or subcontractor with whom the project
sponsor or prime contractor enters into a contract or engages for services described
in subsection (2) of this section.
(b) A prime contractor may not charge a project sponsor a premium for coverage
under a policy of insurance other than a premium approved by the director under
ORS chapter 737 prior to or at the same time as the director approves the project
to which the policy applies.
(c) Charging a premium prohibited by this subsection constitutes the unlawful
transaction of insurance in violation of ORS 731.354.
(4) The director, upon application of any insurer, shall approve the issuance
of a policy of insurance to any grouping of the persons described in subsection
(2) of this section if:
(a) The grouping was formed for the purpose of performing a contract or a
series of related contracts for the design and construction of a project for
the project sponsor;
(b) The project sponsor can reasonably demonstrate that the formation and
operation of the grouping will substantially improve accident prevention and
claims handling to the benefit of the project sponsor and the contractors and
workers employed by the project sponsor on construction related projects;
(c) The established rating and auditing standards required by authorized advisory
organizations and rating organizations are adhered to;
(d) The insurer for the grouping guarantees adequate protection to any other
insurance producer that demonstrates that without such protection the producer
will suffer losses that will constitute a threat to the continuation of the
business of the producer;
(e) The insurer for the grouping guarantees insurance coverage of the classes
of insurance issued to the grouping to any contractor who, because of participation
in the group, has been unable to maintain the contractor's normal coverage.
The insurer's obligation under this paragraph shall continue until 12 months
after substantial completion of the contractor's work;
(f) By permitting this grouping for a project sponsor, greater opportunities
will be made available for historically underutilized businesses to bid on the
project;
(g) The project insurers agree to provide not less than 90 days' notice to
all insured parties of the cancellation or any material reduction in coverage
for the project;
(h) The insurance coverage for the grouping contains a severability of interest
clause with respect to liability claims between individuals insured under the
group policy and includes contractual liability coverage that applies to the
various contracts and subcontracts entered into in connection with the project;
and
(i) The insurer places with the Department of Consumer and Business Services
a special deposit of $25,000 per $100 million of construction project value,
or an amount prescribed by rule of the director, whichever is greater. [1995
c.169 §2; 1999 c.196 §12; 1999 c.482 §1; 2003 c.364 §98;
2003 c.794 §326; 2007 c.241 §28]
Note: 737.602 was added to and made a part of the Insurance Code by legislative
action but was not added to ORS chapter 737 or any series therein. See Preface
to Oregon Revised Statutes for further explanation.
ORS 737.604 Rules. In addition to other rulemaking authority of the Director
of the Department of Consumer and Business Services, the director may make rules:
(1) Stating the necessary attributes that a construction project of a project
sponsor and the participants in the project must have in order to qualify for
the grouping permitted under ORS 737.602. The rules may include but are not
limited to matters regarding an appropriate trust agreement for special deposit
and adjustment of the construction project value according to an appropriate
cost index; and
(2) Establishing a process for a state agency or local contract review board
created under ORS 279A.060 to evaluate the purchase by a public body of insurance
authorized by ORS 737.602, or any agreements related thereto. [1995 c.169 §3;
2003 c.794 §327]
Note: 737.604 was added to and made a part of the Insurance Code by legislative
action but was not added to ORS chapter 737 or any series therein. See Preface
to Oregon Revised Statutes for further explanation.