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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
ENGROSSED SENATE
BILL NO. 1627 By: Seifried of the Senate
and
Cantrell of the House
An Act relating to insurance; amending 36 O.S. 2021,
Section 3639, which relates to cancellation
requirements; providing for electronic delivery;
updating statutory language; amending 85A O.S. 2021,
Section 42, which relates to cancellation
requirements; conforming language; updating statutory
references; and providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2021, Section 3639, is
amended to read as follows:
Section 3639. A. The provisions of this section apply to
commercial marine policies, commercial automobile policies,
commercial property insurance policies, commerci al casualty
insurance policies, and commercial fire insurance policies.
B. As used in this section:
1. “Renewal” or “to renew” means the issuance or offer of
issuance by an insurer of a policy succeeding a policy previously
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issued and delivered by the sa me insurer or an insurer within the
same group of insurers, or the issuance of a certificate or notice
extending the term of an existing policy for a s pecified period
beyond its expiration date;
2. “Nonpayment of premium ” means the failure or inability of
the named insured to discharge any obligation in connection with the
payment of premiums on a policy of insurance subject to this
section, whether suc h payments are payable dire ctly to the insurer
or its agent or indirectly payable under a premium finance plan or
extension of credit;
3. “Cancellation” means termination of a policy at a date other
than its expiration date;
4. “Expiration date” means the date upon which coverage under a
policy ends. It also means, for a policy written for a term longer
than one (1) year or with no fixed expiration date, each annual
anniversary date of such policy; and
5. “Nonrenewal” or “refusal to renew” means termination of a
policy at its expiration date.
C. After coverage has been in effect for more than forty -five
(45) business days or after the effective date of the renewal of a
commercial marine, commercial automobile, commercial property,
commercial casualty or commercial fire insurance policy, a notice of
cancellation shall not be issued by any licensed insurer o r surplus
or excess lines insurer unless it is based on at least one of the
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following reasons with at least ten (10) days days’ notice to the
insured:
1. Nonpayment of premium;
2. Discovery of fraud or material misrepresentation in the
procurement of the insurance or with respect to any claims submitted
thereunder;
3. Discovery of willful or reckless acts or omissions on the
part of the named insured which increase any hazard insured against;
4. The occurrence of a change in the risk which substantially
increases any hazard insured against after insurance coverage has
been issued or renewed;
5. A violation of any local fire, health, safety, building, or
construction regulation or ordinance with respect to any insured
property or the occupancy thereof wh ich substantially increases any
hazard insured against;
6. A determination by the Commissioner that the continuation of
the policy would place the ins urer in violation of the insurance
laws of this state;
7. Conviction of the named insured of a crime hav ing as one of
its necessary elements an act increasing any hazard insured against;
or
8. Loss of or substantial changes in applicable reinsurance.
D. An insurer may refuse to r enew a policy if the insurer gives
to the first-named insured at the address s hown on the policy
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written notice that the insurer will not renew the policy. Such
notice shall be given at least forty -five (45) days before the
expiration date. Notice may be sent by electronic means if the
recipient consents to such method of delivery and the insurer is in
compliance with the provisions of the Uniform Electronic
Transactions Act. Electronic delivery is considered to be
equivalent to any delivery method requi red by law, including first-
class mail, postage prepaid, certified mail, certi ficate of mail, or
certificate of mailing. If notice is given by mail or sent by
electronic means, said such notice shall be deemed to have been
given on the day said the notice is mailed or sent electronically .
If the notice is mailed or sent electronically less than forty-five
(45) days before expiration, coverage shall remain in effect until
forty-five (45) days after notice is mailed or sent electronically.
Earned premium for any period of coverage that extends beyond the
expiration date shall be con sidered pro rata based upon the previous
year’s rate. For purposes of this section, the transfer of a
policyholder between companies within the same i nsurance group is
not a refusal to renew. In addition, changing deductibles, changes
in premium, changes in the amount of insurance, or reductions in
policy limits or coverage are not refusals to renew.
Notice of nonrenewal shall not be required if the in surer or a
company within the same insurance group has offered to issue a
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renewal policy, or, if the named insured has obtained replacement
coverage or has agreed in writing to obtain replacement coverage.
If an insurer provides the notice required by this subsection
and thereafter the insurer extends the policy for ninety (90) days
or less, an additional not ice of nonrenewal is not required with
respect to the extension.
E. An insurer shall give to the named insured at the mailing
address shown on the pol icy, written notice of prem ium increase,
change in deductible, reduction in limits or coverage at least
forty-five (45) days prior to the expiration date of the policy. If
the insurer fails to provide such notice, the premium, deductible,
limits and coverage provided to the named insured prior to the
change shall remain in effect until notice is given or unt il the
effective date of replacement coverage obtained by the named
insured, whichever first occurs. If notice is given by mail, said
such notice shall be deemed to have been gi ven on the day said the
notice is mailed. If the insured elects not to renew, any earned
premium for the period of extension of the terminated policy shall
be calculated pro rata at the lower of the current or previous
year’s rate. If the insured accepts the renewal, the premium
increase, if any, and other changes shall be effecti ve the day
following the prior policy ’s expiration or anniversary date.
This subsection shall not apply to:
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1. Changes in a rate or plan filed with or approved by the
Insurance Commissioner or filed pursuant to the Property and
Casualty Competitive Loss C ost Rating Act and applicable to an
entire class of business; or
2. Changes based upon the altered nature of extent of the risk
insured; or
3. Changes in policy forms filed with or approved by the
Insurance Commissioner and applicable to an entire class of
business.
F. Proof of mailing of notice of cancellation, or of nonrenewal
or of premium or coverage changes, to the named insured at the
address shown in the policy, shall be sufficient proof of notice.
SECTION 2. AMENDATORY 8 5A O.S. 2021, Section 42, is
amended to read as follows:
Section 42. A. Contents. Every policy or contract of
insurance issued by a carrier to an em ployer to secure the payment
of compensation under this act the Administrative Workers’
Compensation Act shall contain:
1. a. Provisions that identify the insured employer and
either identify each covered employee or describe
covered employees by class or type of labor performed
and the estimated number of employees of each such
class or type.
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b. No single policy of workers’ compensation insurance
may be issued to any group of employers who are
unaffiliated with one another in terms of ownership,
control, or right to participate in the profits of the
affiliated enterprises;
2. Provisions that insolvency or ba nkruptcy of the employer or
discharge therein shall not relieve the carrier from payment of
compensation for compensable injuries sustained by an emplo yee
during the term of the policy or contract;
3. a. The agreement of the carrier that it shall promptly
pay to the person entitled to compensation every
installment of compensation that may be awarded or
agreed on and that this obligation shall not be
affected by any default of the employer or by any
default in the giving of any notice required by the
policy or otherwise.
b. The agreement shall be construed to be a direct
obligation by the carrier to the person entitled to
compensation, enforceable in that person’s name; and
4. Such other provisions as the Insurance Department allows or
requires carriers to include in workers’ compensation policies.
B. Cancellation.
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1. An employer may cancel coverage with a carrier by giving the
carrier at least thirty ( 30) days’ notice, unless a shorter period
is permitted under subparagraph b of this paragraph.
a. Cancellation of coverage is effective at 12:01 a.m.
thirty (30) days after the date the cancellation
notice is received by the carrier, unless a later date
is specified in the notice to the carrier.
b. (1) An employer may cancel coverage effective less
than thirty (30) days after written notice is
received by the carrier where the employer
obtains other coverage or becomes a self -insurer.
Notice may be sent by electronic means if the
recipient consents to such method of delivery and
the insurer is in compliance w ith the provisions
of the Uniform Electronic Transaction s Act.
Electronic delivery is considered to be
equivalent to any delivery method required by
law, including first-class mail, postage prepaid,
certified mail, certificate of mail, or
certificate of mailing.
(2) A cancellation under this subsection is effective
immediately on the effective date of the other
coverage or on authorization as a self -insurer.
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2. a. A notice of cancellation from the carrier shall state
the hour and date that cancellation is effective.
b. A carrier shall not cancel coverage issued to an
employer under this act the Administrative Workers’
Compensation Act before the date specified for
expiration in the policy or contract or until at least
thirty (30) days have elapsed after a n otice of
cancellation has been mailed or sent electronically to
the Commission and to the employer, or until ten (10)
days have elapsed after the notic e has been mailed or
sent electronically to the employer and to the
Commission if the cancellation is for nonpayment of
premium.
c. If the employer procures other insurance within the
notice period, the effective date of the new policy
shall be the cancell ation date of the old polic y.
3. Cancellation of coverage by an employer or a carrier shall
in no way limit liability that was incurred under the policy or
contract before the effective date of cancellation.
C. Coverage.
1. No policy or contract of insu rance shall be issued against
liability under this act the Administrative Workers’ Compensation
Act unless the policy or contract covers the entire liability of the
employer. Split coverage whereby some employees of an employer are
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insured by one carrier and other employees are ins ured by another
carrier, or a plan of self -insurance, is expressly prohibited except
for a policy issued covering the liability of an employer or of
multiple employers as to specific jobs, ventures, contracts, or
undertakings, but only if the policy meets with the reasonable
satisfaction and approval of the Insurance Commissioner th at the
policy is in the best interest of the employers and the employees
concerned and does not unduly or improperly affect the continuity of
workers’ compensation coverage by se riously and negatively affecting
other carriers and agents with outstanding po licies issued to any of
the employers in issue.
2. The terms of the policy or contract shall govern any
questions of liability between the employer an d the carrier.
D. Under such rules as may be adopted by the Insurance
Commissioner, and notwithstanding other provisions of this act the
Administrative Workers’ Compensation Act , he or she may certify five
or more employers as an insurance group which sha ll be considered an
employer for the purposes of this act the Administrative Workers’
Compensation Act.
SECTION 3. This act shall become effective November 1, 2024.
COMMITTEE REPORT BY: COMMITTEE ON RULES, dated 04/09/2024 - DO PASS.