BUDGET NARRATIVE Insurance Division
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
Activities and Programs complaints against insurance companies and producers through the
Consumer Advocacy Unit. The section also includes the Market
The Insurance Division ensures the financial soundness of insurers, the Surveillance Unit, which investigates alleged violations of Oregon
fair treatment of consumers, and the affordability and availability of insurance law, performs market conduct exams of companies,
insurance products by: develops policy recommendations and administrative actions, and
provides broad surveillance of the insurance marketplace.
• Licensing insurance companies, producers (agents), adjusters, and
consultants. The Financial Regulation Section is responsible for financial and
• Reviewing insurance products and premium rates and monitoring corporate oversight of Oregon insurers, which includes licensing
insurer solvency. insurers, conducing financial analysis and examinations, and collecting
• Monitoring insurers and producers to enforce insurance laws and and auditing insurance taxes.
issuing penalties for violations as appropriate.
• Helping resolve consumer complaints, advocating reforms to
address common consumer problems, and educating the public 2007-09 Accomplishments
about insurance issues.
Insurance Division
• Analyzing and examining insurers to ensure they meet their
obligations to policyholders. 1. Consumer protection and outreach
The Senior Health Benefits Assistance (SHIBA) program recruits, • Helped consumers resolve 3,956 complaints in 2007, recovering
trains, and monitors a network of community volunteers that provide nearly $1.8 million in benefits.
assistance to Oregonians with Medicare. • Provided advice and education to consumers, responding to
15,481 phone inquiries in 2007.
Program Background • Protected consumers from companies and producers that violate
the law by closing 502 investigations of insurance producers and
Insurance is regulated at the state level because important regulatory companies during 2008 and taking 74 enforcement actions,
issues involve consumer-protection concerns that vary by state. The which resulted in $1.4 million in civil penalties to be deposited
Insurance Division is organized into two sections: Market Regulation into the General Fund.
and Financial Regulation. • Worked with the DCBS Workers’ Compensation Division to
investigate and levy a $5 million fine against the American
The Market Regulation Section reviews applications for producers, Insurance Group (AIG), resulting in substantial claims-
firms, and corporations licensed to sell insurance in Oregon and processing improvements for injured workers insured by AIG.
reviews rate and form filings to ensure they comply with Oregon law
and are fair for consumers. The section helps consumers resolve
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
• Provided better protection to consumers who buy medical 3. Increased information available about health care costs
discount cards and vehicle theft protection products and services • Collaborated with the Oregon Office for Health Policy and
by creating two new registration programs. Research on a Web site that allows consumers and other health
• Partnered with the Department of Human Services to enable care purchasers to compare medical procedure costs at Oregon
Oregonians to purchase a new kind of long-term care insurance hospitals.
policy that allows them to protect their assets if they ever need to • Made health insurance rate filings available to the public on the
apply for Medicaid. The policies were made available in Oregon Insurance Division Web site as a result of legislation passed
by a bill passed by the 2007 Legislature. during the 2007 session.
• Provided information to Oregon’s senior citizens to help them • Provided information and assistance to the Oregon Health Fund
make financial decisions and avoid insurance and financial abuse Board and other statewide efforts to broaden access to affordable
by joining other DCBS divisions on a new outreach program. and available health insurance for all Oregonians.
• Ensured that no Oregonians lost insurance coverage because of
the December 2007 storms affecting the coast by issuing an 4. Senior Health Insurance Benefits Assistance (SHIBA)
emergency order which allowed the postponement of premium • Provided free counseling to more than 15,000 Oregon Medicare
payments of certain types of property insurance. The division beneficiaries since the start of the biennium.
also visited the affected areas to meet with consumers and • Educated more than 2 million people about Medicare by
provide them information about insurance coverage. conducting 593 public and media outreach activities statewide.
• Significantly increased annual contract funding to local county
2. Streamlined regulations for licensees SHIBA Sponsors, resulting in retention of local SHIBA
• Continued to expand electronic filing options for customers. The counseling programs, recruitment of new volunteers and
division processed more than 95 percent of nonresident producer maintaining beneficiary access to local one-on-one Medicare
applications (13,391) and received nearly 70 percent of product counseling services.
filings electronically. These percentages continue to increase • Established new sponsors to assist Medicare beneficiaries and
monthly. In addition, the division received 47 percent of their families in Lane and Malheur counties.
consumer complaints electronically and conducted most market • Increased counselor base to a total of 220 SHIBA counselors.
and financial examinations electronically. • Joined a community coalition of health care-oriented
• Joined other states in implementing birth-date renewal deadlines organizations in Florence, to foster development of a local
for insurance producer licenses to make it easier for those who SHIBA counseling presence.
are licensed in more than one state.
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
Insurance Division Statistics
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
• Make producer licensing and rates and form filing faster and easier
2009-2011 Expected Results for customers through expanded electronic processes and
Insurance Division redesigned procedures.
• Reform regulation of insurers’ total-loss settlements on motor Senior Health Insurance Benefits Assistance (SHIBA)
vehicles – when the cost of repair and related expenses is more
than the value of the vehicle – to make the process more • Increase locally based counseling services so every Oregon county
transparent to consumers. has a local SHIBA counseling site.
• Increase the total statewide number of SHIBA volunteers to 300.
• Encourage insurers to bring “green” insurance products to the • Outreach to Oregon health care providers, hospitals, clinics, and
Oregon market. These policies ensure that when claims are made, pharmacies to ensure they are knowledgeable of the SHIBA state
structures are rebuilt in an enviromentally friendly manner. program and the availability of local SHIBA counseling and
• Implement insurance-related health reform proposals resulting advocacy services throughout Oregon.
from the work of the Oregon Health Fund Board. • Focus outreach efforts on counties that have the highest number of
• Achieve broader transparency about health care costs by expanding estimated remaining beneficiaries eligible, but not enrolled in, the
the Compare Hospital Costs Web site and implementing a bill Part D Low Income Subsidy.
requiring insurance companies to provide consumers with out-of-
pocket cost estimates for medical procedures.
• Continue to use market analysis tools to identify areas with the Revenue Sources
most significant consumer protection problems, such as claims The Insurance Division is financed from Other Funds, primarily fees
handling and marketing practices. and assessments paid by insurance companies and producers, as
• Continue to implement risk-based financial regulation, in which follows:
analysts focus their examinations on areas of greater risk to be
more efficient while still ensuring insurance companies remain • Insurance premium assessments
solvent and have the financial resources to pay future claims. • License fees and charges for services
• Enhance outreach so consumers throughout the state – particularly • Company examination fees
in underserved areas – are better protected from insurance fraud • Investment income
and are more informed about their rights. • Workers’ compensation premium assessment
• Give consumers, via enhanced technology, better access to division Although the Insurance Division does not receive a General Fund
services, such as consumer complaint filing, health insurance rate appropriation, it does collect retaliatory taxes from out-of-state
filings, and general information about insurance. insurance companies, which it transfers to the state General Fund for
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
general government purposes. The retaliatory tax is collected from There were no Emergency Board actions that required an adjustment
insurance companies based on the tax rate in each company’s domestic to the base budget.
state. Premium taxes on surplus lines and fines assessed on insurers
and producers are also transferred to the General Fund.
Essential Packages
The SHIBA program is funded by a continuous federal grant from the Essential Package No. 010 - Non-PICS Service Adjustment
Centers for Medicare and Medicaid Services, which is transferred as Agency Request $139,163
General Funds from the Department of Human Services. Governor’s Recommended $139,163
Legislatively Adopted Budget $139,163
Proposed Legislation Vacancy factor adjustment $85,716 and non-PICS adjustments for
pension obligation bond contribution $53,447, unemployment,
Motor Vehicle Insurance – Total Loss. HB 2190. Proposes reforms overtime temporaries, and mass transit taxes.
to regulation of insurers’ total-loss settlements on motor vehicles –
when the cost of repair and related expenses is more than the value of This package includes an increase for the pension bond contribution. It
the vehicle. This concept will make the determination of the value of also includes an adjustment for mass transit taxes and vacancy savings.
the motor vehicle more transparent.
Essential Package No. 021 - Program Adjustments
Life Insurance Producer Continuing Education. HB 2198. To
Agency Request $0
conform to standards in other states, eliminates exemption from
Governor’s Recommended $0
continuing education requirements for retired insurance producers
Legislatively Adopted Budget 0
(agents) servicing existing life insurance policies. Those currently
exempt would be grandfathered. Cost of phased-in or phased-out programs, less any adjustment for
one-time costs.
Base Budget Essential Package No. 022 - Phased-out Programs and One-time
Agency Request $19,852,067 - 92.50 FTE Costs
Governor’s Recommended $19,654,024 – 92.50 FTE Agency Request $0
Legislatively Adopted Budget $19,654,024 – 92.50 FTE Governor’s Recommended $0
Legislatively Adopted Budget $0
The base budget request is the 2007-09 Legislatively Adopted Budget
and administrative changes approved by the Department of
Administrative Services through April 2008 and roll-up of salary costs.
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
Essential Package No. 031 - Cost adjustment for inflation and Essential Package No. 060 - Technical Adjustments
price list items. Agency Request $0
Agency Request $476,209 Governor’s Recommended $0
Governor’s Recommended $392,922 Legislatively Adopted Budget $0
Legislatively Adopted Budget $392,922
No technical adjustments are requested.
The cost of goods and services increase totals $177,956. This is based Essential Budget Level (EBL) Budget
on the price list’s general inflation factor of 2.8 percent for the Agency Request $20,467,439 - 92.50 FTE
2009-11 biennium. The change/shift in state government service Governor’s Recommended $20,186,109 – 92.50
charges from the current biennium is $214,966. Legislatively Adopted Budget $20,186,109 – 92.50 FTE
This package includes standard inflationary increases for Services and
Supplies and Capital Outlay and adjustments to State Government The Board’s EBL budget is the total of the base budget request plus
Service Charges based on the Department of Administrative Services essential packages. Approval of the EBL continues current operations
price list. through the 2009-11 biennium.
Essential Package No. 040 - Mandated Caseload & Costs Modified Essential Budget Level
Agency Request $0
Governor’s Recommended $0 Policy Packages
Legislatively Adopted Budget $0 Policy Package 141: Oregon Health Fund Board Initiatives
This policy package was approved in HB 5054
The Board has no mandated caseload programs or related costs within
the Essential Budget Level (EBL) budget. Agency Request: $308,956 - 2 positions, 2.00 FTE
Governor’s Recommended $305,311 – 2 positions, 2.00 FTE
Essential Package No. 050 - Fund Shifts/Revenue Reductions Legislatively Adopted Budget $344,070 – 3 positions, 3.00 FTE
Agency Request $0
Governor’s Recommended $0 Purpose
Legislatively Adopted Budget $0 To support legislation proposed by the Oregon Health Fund Board.
House Bill 2130 requires that all health plans in the state report
The Board has no fund shifts or revenue reductions within its EBL additional data to the Insurance Division, and it requires reporting by
budget. additional types of entities not already reporting to the Division. The
concept also authorizes DCBS to consider administrative costs in
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
approving health insurance rates and to develop standards for certain level is sufficient for the current version of the legislation, but may
administrative processes. This policy package is a companion to the change depending on the final content of the bill.
Department of Human Services, Oregon Health Policy and Research
(OHPR) program’s policy package. Quantifying Results
The collection and aggregation of data into annual reports will provide
How Achieved a basis for the state to make more informed decisions relating to health
Price and quality transparency has been a foundation for the work of care policy. Standardizing administrative functions and considering
the Health Fund Board and is an essential first step toward a more administrative costs when approving rate increases will reduce overall
accountable and responsive health care delivery system. Although the health care plan costs.
details and final impact of the Health Fund Board’s plan are still under
discussion, the current version of the legislation adds the following Revenue Source
reporting functions and associated duties to the department: The revenue to support this package is primarily fees and assessments
• Require insurers offering health benefit plans and third- paid by insurance companies and producers. The Department of
party administrators to report their respective membership Human Services anticipates transferring $150,000 (received as Other
by line of business and ZIP code. Funds by DCBS) to fund financial analysis provided by the Insurance
Examiner position.
• Require insurers to include in their rate filings a statement
of administrative expenses and an explanation of the basis Policy Package No: 142: SHIBA Expenditure Reduction
for any proposed increases or decreases. The department Governor’s Recommended Removes Transfer of $825,346 from DHS
may not approve increases in administrative expenses that Legislatively Adopted Budget $(825,346)
exceed CPI without sufficient justification.
• Develop standards applicable to all regulated health Purpose
insurers relating to the formats and processes for The Department of Consumer and Business Services’ 2007-2009
determining eligibility, claims processing, payment legislatively approved budget included a transfer of $825,346 from the
transactions, and other administrative functions in an effort Department of Human Services to enhance the Senior Health
to streamline and standardize administrative processes. Insurance Benefits Assistance (SHIBA) program, which provides
information about Medicare to Oregon seniors and their families.
Staffing Impact
Establish one Insurance Examiner, C5748 (1.00 FTE) and one limited The Governor’s Recommended Budget does not include this funding,
duration Administrative Specialist 1, C0107, (1.00 FTE). This staffing due to reduced revenue projections in the General Fund. The reduction
will impact the level of resources SHIBA can provide to its
community sponsors, which provide counseling to local seniors.
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
Policy Package No. 505: Healthy Kids Program
This package was approved in HB 2009
Governor’s Recommended collects $212,251,384 insurer premium tax
to pay for Governor’s Healthy Kids initiative
Legislatively Adopted Budget $89,775,432
Purpose
The Governor’s Recommended Budget includes a plan to ensure that
all children in Oregon under 19 have access to affordable health care.
The funding for the program would be provided by a provider tax on
health insurers in Oregon. The Insurance Division would collect this
tax and send it to the fund designated to provide financing for the
Healthy Kids Program.
Policy Package No. 804: Roll-up 2007-09 Reductions
Legislatively Adopted Budget $(23,273)
This package makes a reduction of $23,273 Other Funds. This package
continues cost savings measure that DCCB instituted during the 2007-
09 biennium to handle revenue decreases caused by the economic
downturn.
Policy Package No. 805: Budget Recon Adjustments (HB 5054)
Legislatively Adopted Budget $(836,104)
This package (HB 5054) makes a reduction of $836,104 Other Funds
to reflect reductions in authorized appropriations and expenditure
limitation.
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
Revenues
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page
BUDGET NARRATIVE Insurance Division
Budget Request
2009-11 Agency Request Governor’s Recommended Budget X Legislatively Adopted Budget Page