Oregon Insurance Division Bulletin INS 2010-03
TO: All Insurers
RE: Use of a Fraud or Misstatement Warning
This Bulletin replaces INS 98-5
The Rates and Forms Section of the Division receives form filings that include a wide variety
of fraud or misstatement warnings. While the Oregon Insurance Code does not specifically address
insurance fraud, the Division supports anti-fraud efforts generally and fraud or misstatement
warnings specifically. This Bulletin is intended to provide guidance on acceptable fraud or misstatement
Warning statements may be included on insurance applications, claim forms and claim payments.
They may appear in policies and declaration pages only if the statement is part
of the application for insurance.
The Insurance Division reviews statements according to the following guidelines:
- For remedies other than denial of a claim (e.g. rescission or cancellation, depending upon
statute), fraud or misstatement warnings must assert that misstatements, misrepresentations,
omissions or concealments on the part of the insured must either be fraudulent or material to
the interests of the insurer in order for the insurer to assert a right to remedy.
- Fraud or misstatement warnings must clarify that in order for an insurer to deny a claim
on the basis of misstatements, misrepresentations, omissions or concealments on the part of the
insured, the insurer must show that the misinformation is material to the content of the contract,
that the insurer relied upon the misinformation and that the information was either material
to the risk assumed by the insurer or that the misinformation was provided fraudulently (ORS
- Depending on the type of contract, fraud or misstatement warnings may need to include an acknowledgment
that material misrepresentations must be willful or intentional in order to trigger the right
to remedy (e.g. fire insurance, ORS 742.208).
- Fraud or misstatement warnings must acknowledge that misstatements, misrepresentations, omissions
or concealments on the part of the insured are not fraudulent unless they are made with intent
to knowingly defraud.
- Fraud or misstatement warnings using the term "deceptive" must clearly relate the
term to activities that are material to the risk at issue or to the claim.
- Fraud or misstatement warnings that connect fraud statements with criminal penalties must
be phrased to avoid definite statements of guilt. Phrases such as, "may be
guilty of insurance fraud," or "may be subject to prosecution for
insurance fraud" are acceptable.
- Fraud or misstatement warnings on life insurance policies must not conflict with the applicable
two-year limit on contestability under Oregon law.
- Fraud or misstatement warnings on health insurance policies must not conflict with the applicable
two-year limit on contestability under Oregon law, except that they must disclose that there
is no time limit on contestability in the event of fraud on the part of the insured.
This bulletin becomes effective immediately.
This bulletin is dated this 24th day of June, 2010, at Salem, Oregon.
Teresa D. Miller, Administrator
State of Oregon Insurance Division
Department of Consumer and Business Services