SECTION 260:65-1-9. Prequalification of insurance carriers, bonding companies and surety companies

(a)   Pursuant to 61 O.S., Section 204A.(11), the Department shall prequalify as good and sufficient insurance carriers, bonding companies and surety companies using the following criteria:

(1)   The insurance carrier, bonding company or surety company must be licensed to do business in the State of Oklahoma pursuant to 61 O.S., Section 134.

(2)   The insurance carrier, bonding company or surety company must have prior experience with insuring or bonding construction projects within the State of Oklahoma.

(3)   The insurance carrier, bonding company or surety company cannot have been deemed in default by the State of Oklahoma in connection with prior construction insurance or bonds on State construction projects.

(4)   The insurance carrier, bonding company or surety company shall not have a prior history of committing the following unfair claims settlement practices:

(A)   Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims or demands submitted in which liability has become reasonably clear.

(B)   Compelling claimants or obligees, without just cause, to institute suits to recover amounts due under the insurance policy, insurance contract or bond by offering substantially less than the amounts ultimately recovered in suits brought by them or refusing to make an offer, when such claimants or obligees have made claims for amounts reasonably similar to the amounts ultimately recovered.

(C)   Failing to fully disclose to claimants or obligees benefits, coverages, or other provisions of any insurance policy, insurance contract or bond, when such benefits, coverages or other provisions are pertinent to a claim.

(D)   Knowingly misrepresenting to claimants or obligees pertinent facts, policy or bond provisions relating to the coverages at issue.

(E)   Failing to adopt and implement reasonable standards for prompt investigations of claims or demands on bonds arising under its insurance policy, insurance contract or bonds.

(F)   Except where there is a time limit specified in the policy or bond, making statements, written or otherwise, which require a claimant or obligee to give written notice of loss or proof of loss within a specified time limit and which seek to relieve the company of its obligations if such a time limit is not complied with unless the failure to comply with such time limit prejudices an insurer's or bonding company's rights.

(G)   Requesting a claimant or obligee to sign a release that extends beyond the subject matter that gave rise to the claim or demand payment.

(H)   Failing to promptly pay claims that have no reasonably apparent defect or impropriety.

(I)   Failing to notify the insured or obligee in writing within 30 calendar days of receipt of claim or demand that the claim is defective and/or lacks substantiating documentation, providing the insured or obligee reasons or basis for the determination.

(J)   Issuing checks or drafts in partial settlement of a claim or demand with language which releases an insurer, surety company, or bonding company from its total liability.

(K)   Colluding in any way with other parties to a construction claim or dispute in an effort to jointly steer a decision against the State, including but not limited to sharing legal counsel with the Contractor.

(5)   An insurance carrier that has received a notice to cease and desist from the Oklahoma Insurance Department within the previous five years shall not be eligible.

(6)   A bonding company shall demonstrate an "A" rating as determined by an insurance bond rating company acceptable to the Administrator.

(b)   The Department may periodically, in its discretion, reevaluate an insurance carrier, bonding company or surety company utilizing the criteria established in this section.

(c)   The Department may adjust or revoke the prequalification status of an insurance carrier, bonding company or surety company if a reevaluation determines the company fails to meet criteria established in this section.

[Source: Added at 31 Ok Reg 1423, eff 9-12-14]