BILL NUMBER: AB 1416 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 15, 2011
INTRODUCED BY Committee on Insurance (Assembly Members Solorio
(Chair), Hagman (Vice Chair), Carter, Feuer, Skinner, Torres, and
Wieckowski)
MARCH 21, 2011
An act to amend Sections 33.5, 137, 713, 769.55,
769.82, 778.4, 827.8, 1071, 1073, 1625, 1625.5,
1625.55, 1627, 1635, 1649.5, 1661, 1662, 1665, 1675, 1676, 1679,
1686, 1693, 1704, 1705, 1707.51, 1707.7, 1712.5, 1725, 1728, 1729.5,
1730.5, 1730.6, 1735, 1735.5, 1747, 1749, 1749.2, 1749.33, 1749.4,
1749.8, 1749.85, 1750, 1750.5, 1751, 1751.3, 1755, 1757.2, 1758.2,
1758.3, 1758.87, 1758.98, 1765.3, 10236.1, 10785, 11623,
11691, 12815, and 12938 of, and to repeal Sections 1074 and
Section 1680 of, the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1416, as amended, Committee on Insurance. Insurance omnibus.
(1) Existing law defines the fire and casualty broker-agent
license as 2 insurance license types: property broker-agent licenses,
for insurance coverage on the direct or consequential loss or damage
to property of every kind, and casualty broker-agent licenses, for
insurance coverage against legal liability, including for death,
injury, disability, or damage to real or personal property.
This bill would remove references to fire and casualty
broker-agent and substitute the terms property broker-agent and
casualty broker-agent in order to make conforming changes.
(2) Existing law requires the Insurance Commissioner to publish
certain information with regard to insurers admitted to do business
in this state by means of newspapers, as provided.
This bill would instead require the commissioner to publish that
information on the department's Internet Web site for 7 days.
(2) Existing law requires insurers to file certain documents with
the Insurance Commissioner. Existing law also requires a copy of the
instrument or record of the action making any changes to those
documents, proved by certificates of custodian of the original, or by
affidavit, be filed with the commissioner.
This bill would make the above requirements regarding changes in
the filed documents applicable to domestic insurers, and would make
those requirements applicable to a foreign or alien insurer upon
request.
(3) Existing law requires an insurer, in order to be admitted in
this state to transact specified workers' compensation transactions,
among other things, to deposit cash instruments or approved
interest-bearing securities or approved stocks readily convertible
into cash, investment certificates, or share accounts issued by a
savings and loan association doing business in this state and insured
by the Federal Deposit Insurance Corporation, certificates of
deposit, or savings deposits in a bank licensed to do business in
this state.
This bill would include as an authorized workers' compensation
depository a bank that is either domiciled in and with its principal
place of business in this state or is a national banking association
with a trust office located in this state.
(4) Existing law, subject to certain exceptions, requires a
nonresident applicant for an organizational insurance license to name
at least one person from their home state who may exercise the power
and perform the duties under their license. Additional persons
endorsed to that license may be residents of another state, but may
not be residents of California.
This bill would instead require a nonresident applicant for an
organizational insurance license to name at least one person from a
state other than California who may exercise the power and perform
the duties under their license. The bill would also require that
additional persons endorsed to that license may be residents of other
states, including California.
(5) Existing law authorizes certain broker-agents to act as
insurance solicitors.
This bill would include personal lines broker-agents and limited
lines automobile insurance agents as those persons who can act as
insurance solicitors, as provided.
(6) Existing law requires the Department of Insurance to make
available for public inspection and publish on its Internet Web site,
among other things, every adopted report of an examination of unfair
or deceptive business practices that is adopted as filed, or as
modified or corrected, by the commissioner, as provided. Existing law
provides for transmittal of the adopted report by certified mail, a
10-day insurer comment period, and a 10-business day publication
requirement, after the transmittal.
This bill would clarify that the published document would be a
market conduct examination. The bill would authorize electronic
transmittal of the adopted report, as provided, provide for a 20-day
insurer comment period, and require publication 20 business days
after the transmittal.
(7) Existing law creates a 15-member advisory committee to assist
the commissioner in carrying out the assigned risk plan that offers
automobile insurance coverage, as provided, to applicants who are in
good faith entitled to coverage but are unable to procure it. All
insurer representatives on the advisory committee are required to be
salaried employees.
This bill would instead require that each insurer representative
serving be either a salaried employee or officer of the named insurer
or a salaried employee or officer of another insurer from a group of
insurance companies under the same management as the named insurer.
The bill would also authorize a salaried employee or officer of the
holding company of the named insurer to be designated as the
representative.
(7)
(8) This bill would make technical, conforming, and
related changes and delete obsolete provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 33.5 of the Insurance Code is amended to read:
33.5. (a) "Casualty broker-agent" means a person licensed
pursuant to Section 1625.
(b) "Property broker-agent" means a person licensed pursuant to
Section 1625.
SEC. 2. Section 137 of the Insurance Code is amended to read:
137. (a) No person, firm, association, or corporation shall act
or aid in any manner in soliciting, negotiating, or procuring
liability insurance in this state from a risk retention group unless
that person, firm, association, or corporation is licensed as a
property broker-agent or a casualty broker-agent in accordance with
Chapter 5 (commencing with Section 1621) of Part 2 and is authorized
to act as an insurance broker; except salaried employees or officers
of a risk retention group, provided no part of the compensation of
such that person is on a commission
basis or otherwise based on production of business.
(b) No person, firm, association, or corporation shall act or aid
in any manner in soliciting, negotiating, or procuring liability
insurance from an insurer not authorized to do business in this state
on behalf of a purchasing group located in this state unless that
person, firm, association, or corporation is licensed as a surplus
line broker in accordance with Chapter 6 (commencing with Section
1760) of Part 2. A nonresident person may be licensed as a surplus
lines broker for purposes of placing insurance on behalf of a
purchasing group.
(c) Any person, firm, association, or corporation licensed
pursuant to Chapter 5 (commencing with Section 1621) of Part 2, on
business placed with risk retention groups or written through a
purchasing group, shall inform each prospective insured of the
provisions of the notice required by subdivision (g) of Section 132
in the case of a risk retention group and subdivision (b) of Section
135 in the case of a purchasing group.
SEC. 3. Section 713 of the Insurance
Code is amended to read:
713. (a) A copy of the instrument or record
of the action making any change in any of the documents filed with
the commissioner pursuant to this article by a domestic insurer
, proved by certificates of custodian of the original, or by
affidavit, shall be filed with the commissioner.
(b) Upon request, a foreign or alien insurer shall file any change
proved by certificates of custodian of the original, or by
affidavit.
SEC. 3. SEC. 4. Section 769.55 of
the Insurance Code is amended to read:
769.55. (a) Notwithstanding any other provision of this code, for
the purposes of Chapter 6 (commencing with Section 520) through
Chapter 11 (commencing with Section 675), inclusive of Part 1 of
Division 1, the obligation of an insurer to furnish any notice to its
insured required by law may be carried out by an insurer's general
agent, provided, however, that an insurer's delegation of a notice
obligation to a general agent shall not limit or negate the insurer's
responsibility or liability if the general agent fails to provide
the required notice.
(b) As used in this section, "general agent" means a licensed
property broker-agent or a licensed casualty broker-agent who,
pursuant to a written contract with an admitted insurer manages the
transaction of one or more classes of insurance written by the
insurer and has the power to (1) appoint, supervise, and terminate
local agents, (2) accept or decline risks, and (3) collect premium
moneys from producing broker-agents.
(c) Nothing in this section shall provide an exemption from
Article 5.4 (commencing with Section 769.80) to any property
broker-agent or any casualty broker-agent who is otherwise subject to
that article.
SEC. 4. SEC. 5. Section 769.82 of the
Insurance Code is amended to read:
769.82. (a) No producer shall act in the capacity of an MGA with
respect to risks located in this state for an insurer that holds a
certificate of authority unless that producer is licensed as a
property broker-agent, casualty broker-agent, or as a life agent in
this state.
(b) No producer shall act in the capacity of an MGA representing
an insurer domiciled in this state with respect to risks located
outside this state unless that producer is licensed as a property
broker-agent, casualty broker-agent, or as a life agent in this
state.
(c) The commissioner may require a fidelity bond in an amount
acceptable to him or her for the protection of the insurer.
(d) The commissioner may require the MGA to maintain an errors and
omissions policy. If a policy is not generally available at a
reasonable cost, the commissioner may, by rule, suspend the
requirement of this subdivision until that coverage becomes generally
available at a reasonable cost.
SEC. 5. SEC. 6. Section 778.4 of the
Insurance Code is amended to read:
778.4. (a) Every property broker-agent and every casualty
broker-agent shall, prior to arranging premium financing for any new
or renewal policy of insurance specified in Section 660, do all of
the following:
(1) Provide the applicant or prospective insured with any
information that is required by the federal Truth in Lending Act (15
U.S.C. Sec. 1601 et seq.).
(2) Obtain the signature of the applicant or prospective insured
on the following disclosure, which shall be in 10-point bold face
type on a separate form or sheet of paper:
Some insurance companies and the California Automobile Assigned
Risk Plan (CAARP) provide the opportunity to make payments on
insurance premiums. Your agent or broker is required to disclose
these options, if any are available for the insurance you are
purchasing. If you choose to enter into a contract that provides for
premium financing, your agent is required by law to make certain
disclosures concerning interest, fees, or other charges. If your
insurance has been financed by any person or business other than your
insurance company, and your insurance is canceled for any reason,
your loan may be subject to continued interest charges, or other
charges that may result from delays by your insurance company in
repaying the premium finance company. You should understand all of
the charges associated with your financing plan. If you are uncertain
about how the financing plan works, you should ask your insurance
agent or broker.
(b) Every property broker-agent and every casualty agent-broker
shall comply with the requirements of the Consumer Contract Awareness
Act of 1990 (Title 1.86 (commencing with Section 1799.200) of Part 4
of Division 3 of the Civil Code) to the extent that its provisions
are applicable to any transaction subject to this section.
(c) If a transaction subject to subdivision (a) is conducted over
the telephone, the property-broker agent and the casualty
broker-agent shall be deemed to have complied with the requirements
of subdivision (a) if, within 72 hours after transacting the contract
or agreement, the disclosure form and other information required by
subdivision (a) is mailed to the applicant or insured at the address
provided by the applicant or insured. Proof of mailing shall be
established by the method described in Section 38.
SEC. 6. SEC. 7. Section 827.8 of the
Insurance Code is amended to read:
827.8. An offer or sale of voting common stock or preferred stock
of and by a foreign or alien insurer to property broker-agents or
casualty broker-agents, as defined in Section 33.5, shall be exempt
from the requirements of this article if all of the following
requirements are met:
(a) The sale shall not be made to more than 35 property
broker-agents and casualty broker-agents in the State of California.
(b) Each property-broker agent and each casualty broker-agent to
whom an offer is made is an "accredited investor" as defined in
Regulation D under the Federal Securities Act of 1933, as amended.
(c) Each property-broker agent and each casualty broker-agent to
whom an offer is made meets all of the following requirements:
(1) The broker-agent shall have been appointed by the admitted
insurer for a period of at least one year and that admitted insurer
shall meet all of the following requirements:
(A) Be authorized to transact property and casualty insurance. For
purposes of this section, property and casualty insurance means
insurance falling within classes 2, 3, 7, 8, 10, 11, 12, 14, 15, 16,
18, and 20 under Section 100 except home protection contracts, as
defined in Section 12740.
(B) Have at least four hundred million dollars ($400,000,000) of
statutory capital and surplus.
(C) Hold a certificate of authority in good standing with this
state and have no regulatory action relating to financial hazard or
fraud against the company in the last three years from states,
including this state, where the insurer is authorized as an admitted
insurer to do business.
(D) Is currently reinsuring or has definite plans to reinsure
business produced by that broker-agent with the same foreign or alien
insurer offering securities to the broker-agent.
(2) The broker-agent generates five million dollars ($5,000,000)
in premiums per year and plans on transferring or writing at least
one million dollars ($1,000,000) per year with the admitted insurer.
(3) The broker-agent shall pay at least fifty thousand dollars
($50,000) for the securities purchased in the transaction but not in
excess of five hundred thousand dollars ($500,000).
(4) The broker-agent shall have a net worth of at least five
million dollars ($5,000,000).
(d) The offer and sale of stock is accompanied by the prospectus,
private placement memorandum, together with any other information
required pursuant to Regulation D of the Federal Securities Act of
1933.
(e) The consideration received by the issuer for the stock to be
issued consists solely of cash.
(f) No promotional consideration or selling expenses have been
given, paid, or incurred in connection with the issuance of stock,
and the offer and sale of stock is not accompanied by the publication
of any advertisement.
(g) All stock issued shall be evidenced by a certificate that
shall have a notice printed prominently on its face restricting the
transfer of the stock solely to the issuer or investors who have been
shareholders of the issuer for at least three years and who are
approved by at least 51 percent of the members of the board of
directors of the issuer.
(h) The issuer of both the common and preferred stock shall be all
of the following:
(1) A foreign or alien insurer that does not transact insurance
directly in California, but is solely a reinsurer.
(2) A reinsurer that only reinsures commercial lines property and
casualty insurance, as specified in subparagraph (A) of paragraph (1)
of subdivision (c).
SEC. 7. Section 1071 of the Insurance Code is
amended to read:
1071. The commissioner shall publish an application for
withdrawal on the department's Internet Web site for a period of
seven days.
SEC. 8. Section 1073 of the Insurance Code is
amended to read:
1073. Whenever any insurer withdraws from business in this state,
and whenever for any reason the commissioner revokes or cancels the
certificate of authority admitting any insurer, the commissioner
shall publish the withdrawal, revocation, or cancellation on the
department's Internet Web site for a period of seven days.
SEC. 9. Section 1074 of the Insurance Code is
repealed.
SEC. 10. SEC. 8. Section 1625 of the
Insurance Code is amended to read:
1625. (a) A property licensee or a casualty licensee is a person
authorized to act as an insurance agent, broker, or solicitor, and a
property broker-agent license or a casualty broker-agent license is a
license so to act.
(b) Licenses to act as a property broker-agent under this chapter
shall
entitle the licensee to transact insurance coverage on the direct
or consequential loss or damage to property of every kind.
(c) Licenses to act as a casualty broker-agent shall entitle the
licensee to transact insurance coverage against legal liability,
including that for death, injury, disability, or damage to real or
personal property.
SEC. 11. SEC. 9. Section 1625.5 of
the Insurance Code is amended to read:
1625.5. (a) A personal lines licensee is a person authorized to
transact automobile insurance, as defined in Section 660, including
insurance for recreational vehicles used for noncommercial purposes,
personal watercraft insurance, residential property insurance, as
defined in Section 10087, including earthquake and flood insurance,
inland marine insurance covering personal property, and umbrella or
excess liability insurance providing coverage when written over one
or more underlying automobile or residential property insurance
policies, and a personal lines broker-agent license is a license to
so act.
(b) A license under this section shall be applied for and renewed,
following successful completion of a qualifying examination on this
code, ethics, and products sold under the license, in the same manner
as is provided in this chapter for a license to act as a property
broker-agent or a casualty broker-agent, except as provided in
subdivision (c) or where provided otherwise.
(c) A person licensed as a personal lines agent who makes an
application to the commissioner to become a property broker-agent or
a casualty broker-agent pursuant to Section 1625 shall do all of the
following:
(1) Submit an application on a form provided by the commissioner.
(2) Complete prelicensing education as specified in Section 1749.
(3) Take and pass a qualifying examination pursuant to Section
1676.
(d) Notwithstanding any other provision of law, for a personal
lines license:
(1) "License term" for a personal lines license means all of that
two-year period beginning as described in either subdivision (a) or
(b) of Section 1629, as applicable, and ending the second succeeding
year on the last calendar day of the month in which the initial
license was issued.
(2) "License year" for a personal lines license shall be
determined for each entity as follows:
(A) Upon initial licensing, the license year starts on the date
the license is issued.
(B) Subsequently, each license year starts the first day of the
month following the month in which the initial license was issued.
(C) A license year ends the following calendar year on the last
calendar day of the month in which the initial license was issued.
SEC. 12. SEC. 10. Section 1625.55 of
the Insurance Code is amended to read:
1625.55. (a) A limited lines automobile insurance agent is a
person authorized to transact automobile insurance, as defined in
Section 660. A limited lines automobile insurance agent license is a
license to so act.
(b) A license under this section shall be applied for and renewed,
following successful completion of a qualifying examination on this
code, ethics, and products sold under the license, in the same manner
as provided in this chapter for a license to act as a property
broker-agent or a casualty broker-agent.
(c) The commissioner shall require in advance a fee for filing any
applications, renewals thereof, or changes in outstanding licenses,
or for the filing of other required documents at an amount designated
in this chapter for a personal lines licensee, and for filing any
notice of appointment or notice of termination at an amount specified
in Section 1751.3.
(d) A person licensed as a limited lines automobile insurance
agent who makes an application to the commissioner to become a
property broker-agent or a casualty broker-agent pursuant to Section
1625 or a personal lines agent pursuant to Section 1625.5 shall do
all of the following:
(1) Submit an application on a form provided by the commissioner.
(2) Complete prelicensing education as specified in Section 1749.
(3) Take and pass a qualifying examination pursuant to Section
1676.
SEC. 13. SEC. 11. Section 1627 of
the Insurance Code is amended to read:
1627. A license is a permit to act in the capacity specified
therein. A person licensed is the holder of the license. In case of a
license to act as a life agent,, property broker-agent, or casualty
broker-agent issued to an organization, the organization is the
holder thereof, but the natural person or persons named thereon are
thereby permitted to exercise the agency or brokerage powers of the
organization in accordance with and subject to the provisions of this
chapter and other applicable law. As used in this chapter, the term
"license" includes a certificate of convenience and a permanent
license, and the term "persons who are licensed" includes the holders
of any such certificate or the license, but these definitions and
the use of those terms in this chapter shall not confer upon a
certificate of convenience or any holder thereof any property right
in or to the certificate, the certificate being and remaining only a
temporary permit, issued as a matter of convenience, allowing the
transaction of insurance without a permanent license, but within the
limits, and subject to the conditions of the certificate of
convenience issued and the laws applicable thereto.
SEC. 14. SEC. 12. Section 1635 of
the Insurance Code is amended to read:
1635. No license is required under the provisions of this chapter
for a person to act in the following capacities or to engage in the
following activities, providing no commission is paid or allowed,
directly or indirectly, by the insurer, creditor, retailer, or other
person for acting in those capacities or engaging in those
activities:
(a) The business of examining, certifying , or
abstracting titles to real property.
(b) The solicitation for membership in a fraternal benefit society
and other activities to the extent and as described in Sections
11013 and 11102 of this code.
(c) As a salaried representative of a reciprocal or interinsurance
exchange or of its attorney in fact.
(d) Employment which that does not
include the solicitation, negotiation, or effecting of contracts of
insurance and the signing of policies or other evidences of
insurance.
(e) As an officer of an insurer or a salaried traveling employee
of the type commonly known as a special agent or as an agency
supervisor, while performing duties and exercising functions that are
commonly performed by a special agent or agency supervisor, if the
person engaging in the activity does not do either of the following:
(1) Effect insurance.
(2) Solicit or negotiate insurance except as a part of and in
connection with the business of a property broker-agent, casualty
broker-agent, or life agent licensed under this chapter.
(f) As an officer or salaried representative of a life insurer if
his or her activities are limited to direct technical advice and
assistance to a properly licensed person and his or her activities do
not include effecting, soliciting, or negotiating insurance except
as a part of and in connection with the business of a property
broker-agent, casualty broker-agent, or life agent licensed under
this chapter.
(g) Employment by an insurer at its home or branch office
which that does not include the solicitation,
negotiation, or effecting of contracts of insurance, and
which that may as part thereof include the
signing of policies or other evidences of insurance.
(h) The completion or delivery of a declaration or certificate of
coverage under a running inland marine insurance contract evidencing
coverage thereunder and including only those negotiations as are
necessary to the completion or delivery if the person performing
those acts or his or her employer has an insurable interest in the
risk covered by the certificate or declaration.
(i) As an employee of a licensed property broker-agent or casualty
broker-agent, whose employment is one or more of the following:
(1) That of a regularly salaried administrative or clerical
employee whose activities do not include the solicitation,
negotiation, or effecting of contracts of insurance from the insuring
public.
(2) That of a salesperson who devotes substantially all of his or
her activities to selling merchandise and whose solicitation of
insurance is limited only to the quoting of a premium for insurance
to be included in the purchase price covering the interest retained
in the merchandise by the seller.
(j) The solicitation, negotiation , or effectuation of
home protection contracts by a person licensed pursuant to Part 1
(commencing with Section 10000) of Division 4 of the Business and
Professions Code in connection with his or her licensed function
authorized by Section 10131 or 10131.6 of the Business and
Professions Code. The receipt of a payment permitted by Section 12760
shall not disqualify the recipient from the licensing exemption
provided by this chapter.
(k) Employees of an insurer whose duties are the inspection,
processing, adjusting, investigation, settling of claims, conducting
safety inspections, or accepting or rejecting business from licensed
insurance agents or brokers.
(l) Officers, directors, or employees of an insurer or producer
whose executive, administrative, managerial, or clerical activities
are only indirectly related to solicitation, negotiation, or
effecting the sale of insurance, provided those persons do not have
direct contact with consumers in a sales or service capacity except
as otherwise provided by this section.
(m) Employees whose activities are limited to making clerical
changes in existing policies or providing indirect marketing and
servicing support for the purpose of determining general interest in
insurance products.
SEC. 15. SEC. 13. Section 1649.5 of
the Insurance Code is amended to read:
1649.5. Notwithstanding Section 1642, an insurer may own or
control, whether directly or indirectly, a separate entity licensed
under this chapter as a property broker-agent, casualty broker-agent,
or life agent as defined in Section 1621, 1622, or 1623,
respectively. Insurance transacted by a property broker-agent or a
casualty broker-agent with and on behalf of the owning or controlling
insurer shall be in its capacity as an insurance agent.
SEC. 16. SEC. 14. Section 1661 of the
Insurance Code is amended to read:
1661. Whenever an organization licensed as a life agent, property
broker-agent, casualty broker-agent, personal lines broker-agent, or
limited lines automobile insurance agent desires to change, remove,
or add to the natural person or persons who are to transact insurance
under authority of its license, it shall immediately file an
application or notice on a form prescribed by the commissioner with
the commissioner for an endorsement changing its license accordingly.
The form shall be submitted by a means of electronic service
approved by the commissioner. The commissioner shall require that the
prelicensing education standards set forth in Section 1749 be met
and that the qualifying examination provided by this code be taken by
any natural person named by the organization to exercise its agency
or brokerage powers who would be required to take and pass the
qualifying examination. That natural person or persons and the
organization are in all other respects subject to the provisions of
this chapter and the insurance laws.
SEC. 17. SEC. 15. Section 1662 of
the Insurance Code is amended to read:
1662. A property broker-agent and a casualty broker-agent shall,
prior to acting in the capacity of an insurance broker, file and
continuously maintain in force the bond required by this article. Any
authority to act as broker shall automatically terminate immediately
upon there being no bond in force.
SEC. 18. SEC. 16. Section 1665 of
the Insurance Code is amended to read:
1665. The bond of a property broker-agent and a casualty
broker-agent shall be in the amount of ten thousand dollars
($10,000). The bond shall be contingent on the accounting by the
property broker-agent or the casualty broker-agent to any person
requesting insurance, for moneys or premiums collected by the
property broker-agent or the casualty broker-agent when acting as a
broker for insurance other than life.
SEC. 19. SEC. 17. Section 1675 of
the Insurance Code is amended to read:
1675. Except as provided in Section 1680, the following
applicants who have theretofore been licensed under this code are
exempt from the requirements of this article:
(a) An applicant for a license to act as a property broker-agent
or a casualty broker-agent who has been licensed as a property
broker-agent, casualty broker-agent, or surplus line broker during
any part of the license year in which the application is filed or the
immediately preceding license year.
(b) An applicant for a license to act as a life-only agent who has
been licensed as a life-only agent during any part of the license
year in which the application is filed or the immediately preceding
license year.
(c) An applicant for a license to act as an accident and health
agent who has been licensed as an accident and health agent during
any part of the license year in which the application is filed or the
immediately preceding license year.
(d) An applicant for a license to act as a travel insurance agent.
(e) An applicant specifically exempted from the particular
qualifying examination requirement by other provisions of this code.
(f) A nonresident licensee who applies for a property
broker-agent, casualty broker-agent, personal lines broker-agent, or
life agent resident license in this state, and who is currently
licensed for the same lines of authority in the state of his or her
current resident license, shall not be required to complete an
examination. The application shall be received within 90 days of the
cancellation of the applicant's resident license and the producer
database records, maintained by the National Association of Insurance
Commissioners, shall indicate that the producer is licensed in good
standing for the line of authority requested.
SEC. 20. SEC. 18. Section 1676 of
the Insurance Code is amended to read:
1676. (a) Except as set forth in Sections 1675 and 1679, the
commissioner shall not issue a permanent license pursuant to this
chapter to an applicant therefor unless the applicant has within the
12-month period next preceding the date of issue of the license taken
and passed the qualifying examination for that license. This section
shall not apply to a person licensed as a property broker-agent or
as a casualty broker-agent who applies for a license as a personal
lines broker- agent.
(b) An application for both the life-only and accident and health
license types shall meet the requirement in subdivision (a) by
passing one examination covering subjects pertaining to both license
types. These applicants shall pay the fee for a life agent, as
specified in subparagraph (2) of subdivision (a) of Section 1751.
(c) An applicant for a life-only license pursuant to Section 1626
or a life-only license limited to the payment of funeral and burial
expenses who is limited by the terms of a written agreement with an
insurer which has filed on that life-only agent's behalf a notice of
appointment with the commissioner to transact only specific life
insurance policies or annuities having an initial face amount of
fifteen thousand dollars ($15,000) or less that are designated by the
purchaser for the payment of funeral and burial expenses, shall not
be required to take the full life agent examination to obtain a
license. The applicant shall be required to take an examination
developed to test their knowledge of topics relevant to the type of
policies that they are restricted to sell.
SEC. 21. SEC. 19. Section 1679 of
the Insurance Code is amended to read:
1679. (a) A nonresident applicant for a license shall be subject
to the same qualifying examination as is required of a resident
applicant. The examination may be administered to an eligible
nonresident applicant through the insurance authority of the state,
territory of the United States, or province of Canada of his or her
residence; provided, however, that the commissioner may, in his or
her discretion, enter into a reciprocal arrangement with the officer
having supervision of the insurance business in any other state,
territory of the United States, or province of Canada whose
qualification standards for the applicant to be examined are
substantially the same as or in excess of those of this state, to
accept, in lieu of the examination of an applicant residing therein,
a certificate of the officer to the effect that the applicant is
licensed in that state, territory of the United States, or province
of Canada in a capacity similar to that for which a license is sought
in this state and has complied with its qualification standards in
respect to all of the following:
(1) Experience or training.
(2) Reasonable familiarity with the broad principles of insurance
licensing and regulatory laws and with the provisions, terms ,
and conditions of the insurance which the applicant proposes to
transact.
(3) A fair and general understanding of the obligations and duties
of a holder of the license sought.
(b) The provisions of this section shall not apply to a
nonresident applicant who maintains a license in a jurisdiction that
grants reciprocity to California residents in accordance with Section
1638.5.
(c) A nonresident applicant for an organizational license shall
name at least one person from a state other than California who may
exercise the power and perform the duties under their license.
Additional persons endorsed to that license may be residents of other
states, including California.
SEC. 22. SEC. 20. Section 1680 of
the Insurance Code is repealed.
SEC. 23. SEC. 21. Section 1686 of
the Insurance Code is amended to read:
1686. To be eligible for an estate certificate of convenience, a
person shall be one of the following:
(a) The executor or administrator of the estate of a deceased
property broker-agent, casualty broker-agent, or life agent.
(b) If no executor or administrator has been appointed, the
surviving spouse or heir otherwise entitled to conduct the business
of the deceased property broker-agent, casualty broker-agent, or life
agent.
(c) The conservator of the estate of a property broker-agent,
casualty broker-agent, or life agent.
SEC. 24. SEC. 22. Section 1693 of
the Insurance Code is amended to read:
1693. An estate certificate of convenience expires upon the
happening of any of the following events, whichever occurs first:
(a) Upon the filing with the commissioner of a certified copy of
an order appointing an executor or administrator, if the certificate
of convenience has been issued to a person other than the person so
appointed executor or administrator.
(b) Upon the filing with the commissioner of a certified copy of
an order appointing a new conservator of the estate of a property
broker-agent, casualty broker-agent, or life agent.
(c) Upon the disposal of the business of the property
broker-agent, casualty broker-agent, or life agent who is deceased or
for whom a conservator of the estate has been appointed.
(d) Upon the expiration of one year after the death of the
deceased property broker-agent, casualty broker-agent, or life agent;
provided, however, that if during the said year the holder of the
certificate of convenience files an application for a license to act
as a property broker-agent, casualty broker-agent, or life agent in
his or her individual capacity, then the certificate of convenience
may remain in force until the holder thereof has been given an
opportunity to take the qualifying examination for the license.
(e) Upon the termination of the conservatorship of the estate of
the property broker-agent, casualty broker-agent, or life agent.
SEC. 25. SEC. 23. Section 1704 of
the Insurance Code is amended to read:
1704. (a) Any person acting as a licensee under this chapter
shall not act as an agent of an insurer unless the insurer has filed
with the commissioner a notice of appointment, executed by the
insurer, appointing the licensee as the insurer's agent. Every
property broker-agent, casualty broker-agent, personal lines
broker-agent, or limited lines automobile insurance agent acting in
the capacity of an insurance solicitor shall have filed on his or her
behalf with the commissioner a notice executed by an insurance agent
or insurance broker appointing and agreeing to employ the solicitor
as an employee within this state. Additional notices of appointment
may be filed by other insurers before the license is issued and
thereafter as long as the license remains in force. The authority to
transact insurance given to a licensee by an insurer, property
broker-agent, casualty broker-agent, personal lines broker-agent, or
limited lines automobile insurance agent, as the case may be, by
appointment shall be effective as of the date the notice of
appointment is signed. That authority to transact shall apply to
transactions occurring after that date and for the purpose of
determining the insurer's, property broker-agent's, casualty
broker-agent's, personal lines broker-agent's, or limited lines
automobile insurance agent's liability for acts of the appointed
licensee. No notice of appointment of a life agent, property
broker-agent, casualty broker-agent, personal lines broker-agent,
limited lines automobile insurance agent, or travel insurance agent
shall be filed under this subdivision unless the licensee being
appointed has consented to that filing. Each appointment made under
this subdivision shall by its terms continue in force until:
(1) The cancellation or expiration of the license applied for or
held at the time the appointment was filed.
(2) The filing of a notice of termination by the insurer or
employing property broker-agent or casualty broker-agent, or by the
appointed life agent, property broker-agent, casualty broker-agent,
travel insurance agent, or insurance solicitor.
(b) Upon the termination of all appointments, or all endorsements
naming the licensee on the license of an organization licensee, and
the cancellation of the bond required pursuant to Section 1662 if
acting as a broker, the permanent license shall not be canceled, but
shall become inactive. It may be renewed pursuant to Section 1718. It
may be reactivated at any time prior to its expiration by the filing
of a new appointment pursuant to this section, Section 1707, and
Section 1751.3, or the filing of a new bond pursuant to Section 1662.
An inactive license shall not permit its holder to transact any
insurance for which a valid, active license is required.
(c) Upon the termination of all appointments of a person licensed
under a certificate of convenience, that certificate shall be
canceled and shall be returned by its lawful custodian to the
commissioner.
(d) A property broker-agent or a casualty broker-agent appointing
an insurance solicitor pursuant to this section, if a natural person,
shall be the holder of a permanent license to act as a such
such a broker-agent or the holder of a
certificate of convenience so to act issued pursuant to either
subdivision (a) or (b) of Section 1685. If the property broker-agent
or the casualty broker-agent is an organization, it shall be the
holder of a permanent license.
(e) The filing of an incomplete or deficient action notice with
the department shall require the filing of an amended, complete
action notice, together with the payment of the fee therefor
specified in subdivision (m) of Section 1751.
(f) A notice of appointment appointing a solicitor may be filed by
a second or subsequent property broker-agent or casualty
broker-agent. The broker-agent seeking to appoint the solicitor shall
enter into an agreement with all other property broker-agents and
casualty broker-agents with whom the insurance solicitor has an
existing appointment. The agreement shall govern how the
broker-agents will determine on which property broker-agent's or
casualty broker-agent's behalf the solicitor is working when dealing
with individuals who are customers of none of the property
broker-agents and casualty broker-agents with whom the solicitor has
an appointment. If the agreement does not identify which broker-agent
or broker-agents are liable for the act of the solicitor, all
property broker-agents and casualty broker-agents with whom the
solicitor is appointed at the time of the act shall be jointly and
severally liable for that act.
SEC. 26. SEC. 24. Section 1705 of
the Insurance Code is amended to read:
1705. An insurer, or employing property broker-agent or casualty
broker-agent, by filing a notice of appointment on behalf of an
applicant for an original license pursuant to Section 1704, and who
is not then licensed pursuant to this chapter or Chapter 6
(commencing with Section 1760), Chapter 7 (commencing with Section
1800), shall be deemed by that act to have declared that:
(a) The applicant is of good reputation.
(b) The applicant is worthy of the license sought.
An insurer, property broker-agent, or casualty broker-agent, by
filing a notice of appointment on behalf of an applicant for an
original license to act as a life agent, property broker-agent,
casualty broker-agent, or insurance solicitor, where the applicant
for any reason will not be issued a certificate of convenience
pending examination under Article 8 (commencing with Section 1685),
shall be deemed to have declared that the applicant has had
experience or instruction in classes of insurance, the transaction of
which is authorized by the license sought, or will be given the
necessary instruction within 30 days after the issuance of the
license.
Should the applicant for a life agent's, property broker-agent's,
or casualty broker-agent's license be a copartnership, corporation,
or association, the insurer filing the appointment shall be deemed to
have made the declarations set forth in subdivisions (a) and (b) of
this section as regards both the business organization and each
natural person whose name appears in the application as one to
exercise the agency powers of the license sought. The insurer shall
be deemed to have made the declaration in the preceding paragraph
only as regards the natural person or persons to be named on the
organization's license initially.
Whenever a copartnership, corporation , or association
licensed as a life agent, property broker-agent, or casualty
broker-agent files to add to any such license the name of a natural
person to exercise the agency powers thereunder, the business
organization shall be deemed to have made the appropriate
declarations regarding the natural person, as set forth in this
section, as are required of an insurer filing a notice of appointment
on behalf of an applicant for an original license.
SEC. 27. SEC. 25. Section 1707.51 of
the Insurance Code is amended to read:
1707.51. (a) Notwithstanding any other provision of law,
qualified applicants who applied in proper form and requested an
examination date for a property, casualty, or life insurance license
prior to December 1, 1991, shall be provided the opportunity to
qualify for licensure under statutory licensure provisions in effect
on December 31, 1991.
(b) The department may require the applicant to execute a sworn
statement subject to a penalty of perjury and denial of license
declaring that they meet the qualifications set forth in subdivision
(a). The department shall provide public notice as to the
availability of these tests and as to the procedure and requirements
necessary to qualify for the test. The tests shall be administered
within 90 days of enactment of this section.
SEC. 28. SEC. 26. Section 1707.7 of
the Insurance Code is amended to read:
1707.7. As part of the report required under Section 12922, the
commissioner shall provide the following information for the previous
calendar year ending December 31 for five years after the operative
date of this section:
(a) The total number of applications filed for a fire and casualty
broker-agent license, a property broker-agent license, a casualty
broker-agent license, a personal lines broker-agent license, a
limited lines auto-only agent license, a life-only agent license, and
an accident and health agent license.
(b) The total number of licensees issued a fire and casualty
license, a property broker-agent license, a casualty broker-agent
license, a personal lines license, a limited lines automobile
license, a life-only license, and an accident and health license.
(c) The total number of licensees with both a life-only agent
license and an accident and health agent license.
(d) The total justified complaints against the licensees
enumerated in subdivision (b) annually for five years.
(e) At the end of five years following the issuance of auto-only
agent, life-only agent, and accident and health agent licenses, a
cumulative summary of the data required by this section compared to
the licenses issued for fire and casualty broker-agent, property
broker-agent, casualty broker-agent, personal lines broker-agent, and
life agent for the year immediately preceding the creation of this
section.
SEC. 29. SEC. 27. Section 1712.5 of
the Insurance Code is amended to read:
1712.5. (a) The license of an organization licensed as a property
broker-agent, casualty broker-agent, or life agent shall become
inoperative upon the removal or termination of the last natural
person named thereon.
(b) Unless the license is reactivated by the correction of all
deficiencies including, if necessary, the adding of a natural person
to transact insurance under the authority of the organization's
license pursuant to Section 1661, the license shall not be renewed.
SEC. 30. SEC. 28. Section 1725 of
the Insurance Code is amended to read:
1725. Every license to act as a property broker-agent and every
license to act as a casualty broker-agent shall be prominently
displayed by the holder thereof in his or her office in a manner
whereby anyone may readily inspect it and ascertain both its currency
and the capacity in which its holder is licensed to act.
SEC. 31. SEC. 29. Section 1728 of
the Insurance Code is amended to read:
1728. Every resident insurance property broker-agent and every
resident insurance casualty broker-agent shall maintain a principal
office in this state for the transaction of business. The address of
the office shall, pursuant to Section 1658, be specified on all
applications for license and renewal applications.
SEC. 32. SEC. 30. Section 1729.5 of
the Insurance Code is amended to read:
1729.5. A property broker-agent, casualty broker-agent, or life
agent who has a service contract with a corporation licensed under
this code or who is a stockholder or member of any incorporated
association or corporation organized under the Corporations Code for
the purpose of providing services to property broker-agents, casualty
broker-agents, or life agents may use the name of such a
that corporation or association on any
stationery or advertisements and other written or printed matter used
to identify the business of the property broker-agent, casualty
broker-agent, or life agent provided that the name of the property
broker-agent, casualty broker-agent, or life agent is clearly
identified as bearing only that relationship to the corporation or
association in one of the following ways:
"Representing ____;"
"A stockholder of ____;"
"Placing business through ____;"
"Using services of ____."
The use of the corporation or association name in the manner
provided in this section shall not constitute such use as would
mislead the public within the meaning of Section 1724.5.
SEC. 33. SEC. 31. Section 1730.5 of
the Insurance Code is amended to read:
1730.5. A life agent, a property broker-agent, and a casualty
broker-agent shall provide to all insureds or applicants at the time
of application or receipt of premium moneys the effective date of
coverage, if known, or the circumstances under which coverage will be
effective if there exists conditions precedent to coverage. This
section shall apply only to coverage for personal lines of insurance,
such as private passenger automobile, homeowner and renter
insurance, personal liability, and individual disability and health
insurance.
SEC. 34. SEC. 32. Section 1730.6 of
the Insurance Code is amended to read:
1730.6. (a) Every property broker-agent and every casualty
broker-agent shall, prior to arranging premium financing or
transacting any agreement for the periodic payment of premium for any
new or renewal policy of insurance specified in Section 660,
disclose to any applicant or prospective insured any options for
premium financing or the periodic payment of premium from the insurer
or, if applicable, the California Automobile Assigned Risk Plan,
that are available for the insurance being purchased. This disclosure
may be in the form of a written document. In the event the applicant
or prospective insured elects to enter into an agreement for premium
financing, the property broker-agent and casualty broker-agent shall
comply with the requirements of Section 778.4.
(b) For purposes of this section and Section 778.4:
(1) "Periodic payment of premium" means the payment plan provided
by the California Automobile Assigned Risk Plan, or a payment plan
provided by the insurer that allows the total premium to be paid in
more than one installment.
(2) "Arrange premium financing" means assisting an applicant or
prospective insured to arrange for payment of the premium through a
premium finance agreement as defined in Section 778.1.
SEC. 35. SEC. 33. Section 1735 of
the Insurance Code is amended to read:
1735. (a) As used in this section, a managing general agent is a
licensed property broker-agent, casualty broker-agent, or a life
agent to whom all of the following apply:
(1) Has a written management contract and an appointment on file
with the commissioner in accordance with Section 1704, which
appointment is then in force, with one or more admitted insurers
covering business transacted by the insurer in a substantial portion
of the State of California.
(2) Under the contract specified in paragraph (1), manages the
transaction of either all or one or more of the classes of insurance
written by those insurers in that territory or the transactions
therein by those insurers under a specified fictitious underwriter's
name.
(3) Has the power to appoint, supervise, and terminate the
appointment of local agents in that territory.
(4) Has the power to accept or decline risks.
(5) Collects premium moneys from producing broker-agents and
remits those moneys to those insurers pursuant to the account current
system.
(b) The managing general agent shall, with respect to any
principals for whom fiduciary funds are held, comply with Section
1734.
SEC. 36. SEC. 34. Section 1735.5 of
the Insurance Code is amended to read:
1735.5. A property broker-agent, casualty broker-agent, or
surplus line broker may offset funds due an insured for return
premiums on any policy against amounts due him or her from the same
insured for unpaid premiums on the same or any other policy. Any
insurer may pay return premiums to any property broker-agent or any
casualty broker-agent for that purpose. This section shall not
invalidate an assignment of return premium made concurrently with
policy issuance as security for financing that premium, nor the right
of the assignee, or his or her assign, to enforce the assignment as
a prior claim.
SEC. 37. SEC. 35. Section 1747 of the
Insurance Code is amended to read:
1747. Whenever the commissioner may determine or have good cause
to believe that any property broker-agent or casualty broker-agent
has failed to keep or maintain the records required by Section 1727,
in connection with or in lieu of any other disciplinary action
against the license of the licensee, the commissioner may issue his
or her order requiring the licensee to establish and currently
complete those records within 60 days from the date of the order.
When the order is given in lieu of other disciplinary action, notice
of the order may be given by certified mail addressed to the office
of the licensee. Failure of the licensee to comply with the order
within the time specified therein shall be grounds for the suspension
or revocation of the license or licenses of the licensee, and the
proceeding shall be conducted in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code.
SEC. 38. SEC. 36. Section 1749 of
the Insurance Code is amended to read:
1749. The department shall require all new applicants for license
as a property broker-agent, casualty broker-agent, limited lines
automobile insurance agent, personal lines broker-agent, life-only
agent, or accident and health agent to meet prelicensing education
standards as follows:
(a) Require a minimum of 20 hours of prelicensing study as a
prerequisite to qualification for a property broker-agent license.
The curriculum for satisfying this requirement shall be approved by
the curriculum board and submitted to the commissioner for final
approval. Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to Section
1749.1 and certified by the department.
(b) Require a minimum of 20 hours of prelicensing study as a
prerequisite to qualification for a casualty broker-agent license.
The curriculum for satisfying this requirement shall be approved by
the curriculum board and submitted to the commissioner for final
approval. Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to Section
1749.1 and certified by the department.
(c) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for a personal lines broker-agent
license. The curriculum for satisfying this requirement shall be
approved by the curriculum board and submitted to the commissioner
for final approval. Any additions to the minimum requirements
provided by this section shall be approved by the curriculum board
pursuant to Section 1749.1 and certified by the department.
(d) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for a life-only agent license. The
curriculum for satisfying this requirement shall be approved by the
curriculum board and submitted to the commissioner for final
approval. Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to Section
1749.1 and certified by the department.
(e) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for a limited lines automobile
insurance agent license. The curriculum for satisfying this
requirement shall be approved by the curriculum board and submitted
to the commissioner for final approval. Any additions to the minimum
requirements under this section shall be approved by the curriculum
board pursuant to Section 1749.1 and certified by the department.
(f) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for an accident and health insurance
agent license. The curriculum for satisfying this requirement shall
be approved by the curriculum board and submitted to the commissioner
for final approval. Any additions to the minimum requirements under
this section shall be approved by the curriculum board pursuant to
Section 1749.1 and certified by the department. This curriculum shall
also include instruction in workers' compensation and general
principles of employers' liability.
(g) In addition to the 20 hours of prelicensing education required
to qualify for a license as a property broker-agent, casualty
broker-agent, personal lines broker-agent, a life-only agent, or an
accident and health agent, or the 20 hours of prelicensing education
required to qualify for a license as a limited lines automobile
insurance agent, the department shall require 12 hours of study on
ethics and this code. Where an applicant seeks a license for more
than one of the following license types: a property broker-agent, a
casualty broker-agent license, a personal lines broker-agent license,
a life-only license, or an accident and health license, the
applicant shall only be required to complete one 12-hour course on
ethics and this code. The curriculum for satisfying this requirement
shall be approved by the curriculum board and submitted to the
commissioner for final approval.
(h) An applicant for a life-only agent license, an accident and
health license, a personal lines broker-agent license, or a limited
lines automobile insurance agent license, who is currently licensed
as a nonresident in this state shall be required to complete only the
course of study on ethics and this code, as required by this
section. Additionally, any applicant for that license holding one or
more of the designations specified in subdivisions (a) to (p),
inclusive, of Section 1749.4 shall be exempted from
any requirement for courses in general
insurance that would otherwise be a condition of issuance of the
license.
(i) An applicant for a property broker-agent or casualty
broker-agent license who is currently licensed as a nonresident in
this state shall be required to complete only the course of study on
ethics and this code, as required by subdivision (g). Additionally,
any applicant for a license holding one or more of the designations
specified in subdivisions (a) to (p), inclusive, of Section 1749.4,
shall be exempted from any requirement for courses in general
insurance that would otherwise be a condition of issuance of a
license.
(j) An applicant for a property broker-agent or casualty
broker-agent license or both who is licensed as a personal lines
agent shall complete a minimum of 20 hours of prelicensing study as a
prerequisite for each of these licenses. The curriculum for
satisfying this requirement shall be approved by the curriculum board
and submitted to the commissioner for final approval. The applicant
shall not be required to repeat any prelicensing requirements
completed as a prerequisite to being licensed as a personal lines
agent.
(k) Review and approval of prelicensing courses not conducted in a
classroom, as referenced in subdivisions (a) to (j), inclusive,
shall include an evaluation of the safeguards in place to ensure that
the student completing the course is the person enrolled in the
course, methods used to monitor the student's attendance are
adequate, methods for the student to interact with the entity
providing the training exist, and methods used to record the times
spent completing the course are adequate.
(l) Prelicensing certificates of completion expire three years
from the completion date of the course, whether or not a license is
issued.
SEC. 39. SEC. 37. Section 1749.2 of
the Insurance Code is amended to read:
1749.2. The purpose of Sections 1749.3 to 1749.6, inclusive, is
to establish requirements and standards for continuing education
programs for persons licensed as property broker-agents, casualty
broker-agents, and life agents.
Sections 1749.3 to 1749.6, inclusive, shall not apply to either
(a) those persons holding resident licenses for any kind or kinds of
insurance for which an examination is not required by the law of this
state, nor shall it apply to any such limited or restricted license
as the commissioner may exempt or (b) licensed nonresident agents or
brokers who comply with the continuing education requirements of
their state of residence.
SEC. 40. SEC. 38. Section 1749.33 of
the Insurance Code is amended to read:
1749.33. (a) A life-only agent licensee shall satisfactorily
complete 24 hours of instruction prior to renewal of the license.
These hours of instruction may be completed at any time prior to
renewal of the license.
(b) An accident and health agent licensee shall satisfactorily
complete 24 hours of instruction prior to renewal of the license.
These hours of instruction may be completed at any time prior to
renewal of the license.
(c) An agent licensed as both a life-only agent and as an accident
and health agent shall satisfactorily complete a total of 24 hours
of instruction prior to renewal of the license. These hours of
instruction may be completed at any time prior to renewal of the
license.
(d) Any accident and health agent who wishes to sell 24-hour care
coverage, as defined in Section 1749.02, shall complete a course,
program of instruction, or seminar of an approved continuing
education provider on workers' compensation and general principles of
employer liability, which shall be completed by examination approved
by the commissioner as part of the continuing education course,
program of instruction, or seminar prior to selling this coverage.
The required number of instruction hours shall be equal to but no
greater than that required by the curriculum board for the
prelicensing requirements of a property broker-agent or a casualty
broker-agent on these subjects. For resident licensees, this
requirement shall count toward the licensee's continuing education
requirement, but may still result in completing more than the minimum
number of continuing education hours set forth in this section.
Nothing in this section shall be deemed to allow an accident and
health agent to satisfy the obligations set forth in this section by
other than a proctored examination administered or approved by the
department.
SEC. 41. SEC. 39. Section 1749.4 of
the Insurance Code is amended to read:
1749.4. The courses or programs of instruction successfully
completed that shall be deemed to meet the standards for continuing
educational requirements, and the number of classroom hours for which
they are equivalent, are as follows:
(a) Any part of the Life Underwriter Training Council Fellow
(LUTCF) program totaling 30 hours for the life-only license and the
accident and health license.
(b) Any part of the Chartered Life Underwriter (CLU) curriculum
totaling 30 hours for the life-only license and the accident and
health license.
(c) Any part of the Accredited Advisor in Insurance (AAI) program
totaling 25 hours for the property broker-agent license or the
casualty broker-agent license.
(d) Any part of the Chartered Property Casualty Underwriter (CPCU)
program totaling 30 hours for the property broker-agent license or
the casualty broker-agent license.
(e) Any part of the Certified Insurance Counselor (CIC) program
totaling 25 hours for the life-only or accident health agent license
and the property broker-agent license or the casualty broker-agent
license.
(f) Any part of the Certified Employee Benefit Specialists (CEBS)
program totaling 25 hours for the life-only license and the accident
and health license.
(g) Any part of the Chartered Financial Consultant (ChFC) program
totaling 30 hours for the life-only license.
(h) Any part of the Certified Financial Planner (CFP) program
totaling 30 hours for the life-only license.
(i) Any part of the Fellow, Life Management Institute (FLMI)
program totaling 30 hours for the life-only license and the accident
and health license.
(j) Any part of the Health Insurance Associate (HIA) program
totaling 25 hours for the accident and health license.
(k) Any part of the Registered Employee Benefits Consultant (REBC)
program totaling 30 hours for the accident and health license.
(l) Any part of the Registered Health Underwriter (RHU) program
totaling 30 hours for the accident and health license.
(m) Any part of the Associate in Risk Management (ARM) program
totaling 30 hours for the property broker-agent license or the
casualty broker-agent license.
(n) Any insurance-related course approved by the curriculum board
and the commissioner taught by an accredited college or university
per credit hour granted totaling 15 hours.
(o) Any course or program of instruction or seminar developed or
sponsored by an authorized insurer, recognized agents' association,
or insurance trade association, or any independent program of
instruction shall, if approved by the curriculum board and the
commissioner, qualify for the equivalency of the number of classroom
hours assigned thereto by the curriculum board and the commissioner.
(p) Any correspondence course approved by the curriculum board and
the commissioner shall qualify for the equivalency of the number of
classroom hours assigned thereto by the commissioner.
SEC. 42. SEC. 40. Section 1749.8 of
the Insurance Code is amended to read:
1749.8. (a) Every life agent who sells annuities shall
satisfactorily complete eight hours of training prior to soliciting
individual consumers in order to sell annuities.
(b) Every life agent who sells annuities shall satisfactorily
complete four hours of training prior to each license renewal. For
resident licensees, this requirement shall count toward the licensee'
s continuing education requirement, but may still result in
completing more than the minimum number of continuing education hours
set forth in this section.
(c) The training required by this section shall be approved by the
commissioner and shall consist of topics related to annuities, and
California law, regulations, and requirements related to annuities,
prohibited sales practices, the recognition of indicators that a
prospective insured may lack the short-term memory or judgment to
knowingly purchase an insurance product, and fraudulent and unfair
trade practices. Subject matter determined by the commissioner to be
primarily intended to promote the sale or marketing of annuities
shall not qualify for credit towards the training requirement. Any
course or seminar that is disapproved under the provisions of this
section shall be presumed invalid for credit towards the training
requirement of this section unless it is approved in writing by the
commissioner.
(d) The training requirements set forth in this section shall not
apply to nonresident agents representing an insurer that is a direct
response provider.
For the purposes of this section, "direct response provider" means
an insurer that meets each of the following criteria:
(1) The insurer does not initiate telephone contact with insureds
or prospective insureds.
(2) Agents of the insurer speak with insureds and prospective
insureds only by telephone, and at the request of the insureds or
prospective insureds.
(3) Agents of the insurer are assigned to speak with insureds or
prospective insureds on a random basis, when contacted.
(4) Agents of the insurer are salaried and do not receive
commissions for sales or referrals.
SEC. 43. SEC. 41. Section 1749.85 of
the Insurance Code is amended to read:
1749.85. (a) The curriculum committee shall, in 2006, make
recommendations to the commissioner to instruct property
broker-agents, casualty broker-agents, and personal lines
broker-agents and applicants for property broker-agent, casualty
broker-agent, and personal lines broker-agent licenses in proper
methods of estimating the replacement value of structures, and of
explaining various levels of coverage under a homeowners' insurance
policy. Each provider of courses based upon this curriculum shall
submit its course content to the commissioner for approval.
(b) A person who is not an insurer underwriter or actuary or other
person identified by the insurer, or a licensed property
broker-agent, casualty broker-agent, personal lines broker-agent,
contractor, or architect shall not estimate the replacement value of
a structure, or explain various levels of coverage under a homeowners'
insurance policy.
(c) This section shall not be construed to preclude licensed
appraisers, contractors , and architects from estimating
replacement value of a structure.
(d) However, if the Department of Insurance, by adopting a
regulation, establishes standards for the calculation of estimates of
replacement value of a structure by appraisers, then on and after
the effective date of the regulation a real estate appraiser's
estimate of replacement value shall be calculated in accordance with
the regulation.
SEC. 44. SEC. 42. Section 1750 of
the Insurance Code is amended to read:
1750. The commissioner shall require in advance as a fee for
filing application for the hereinafter designated licenses, renewals
thereof, or changes in outstanding licenses, an amount calculated as
set forth herein. The fee is determined by multiplying the number of
license years in the period of the license applied for or the
remaining period of an existing license counting any initial
fractional license year of that period as one year for that purpose,
as follows:
(a) Casualty broker-agent, fifty-six dollars ($56).
(b) Property broker-agent, fifty-six dollars ($56).
(c) Personal lines broker-agent, resident, fifty-six dollars
($56).
(d) Life agent, resident, fifty-six dollars ($56).
(e) Life agent, nonresident, fifty-six dollars ($56).
(f) Surplus line broker who is an individual transacting only on
behalf of a surplus line broker organization, two hundred fifty
dollars ($250).
(g) Surplus line broker not described in subdivision (e), five
hundred dollars ($500).
SEC. 45. SEC. 43. Section 1750.5 of
the Insurance Code is amended to read:
1750.5. (a) The fee for filing an application for a nonresident
license described in Section 1639, and renewal thereof or changes in
outstanding licenses, shall be the same amount that is established in
this code for a resident license of the same type. If the applicant'
s state, territory of the United States, commonwealth, or Canadian
province of residence has fees for any nonresident insurance license
greater than for a like resident license, the commissioner may charge
a fee equal to the amount a California resident would be required to
pay to obtain a like license for a like term in the applicant's
state, territory of the United States, commonwealth, or Canadian
province of residence.
(b) The fee for filing an application for a nonresident limited
lines license described in Section 1639, and renewal thereof or
changes in outstanding licenses, shall be the same amount that is
established in this code for a resident property broker-agent license
or a resident casualty broker-agent license. This section shall not
be construed to require a countersignature on a policy or contract,
or the payment of a countersignature fee.
SEC. 46. SEC. 44. Section 1751 of
the Insurance Code is amended to read:
1751. The commissioner shall require, in advance, a fee for
filing the following documents:
(a) Application for registration of change in membership of a
copartnership licensed as any of the following:
(1) Casualty broker-agent, fifty-six dollars ($56).
(2) Property broker-agent, fifty-six dollars ($56).
(3) Life agent, resident, forty-eight dollars ($48).
(4) Life agent, nonresident, fifty-three dollars ($53).
(5) Personal lines broker-agent, fifty-six dollars ($56).
(b) Notice for adding or removing from any life agent's, property
broker-agent's, casualty broker-agent's, or personal lines
broker-agent's license issued to an organization the name of any
natural person named thereon, sixteen dollars ($16).
(c) First amendment to an application, eight dollars ($8); a
second and each subsequent amendment to an application, sixteen
dollars ($16).
(d) Original application to be given the qualifying examination
for a license of a property, casualty, or personal lines licensee,
twenty-seven dollars ($27) for each person to be examined.
(e) Original application to be given the qualifying examination
for a license of a life licensee, twenty-seven dollars ($27) for each
person to be examined.
(f) Application for reexamination for any of the licenses
mentioned in this section, twenty-seven dollars ($27) for each person
to be reexamined.
(g) Application which includes a request for a certificate of
convenience pursuant to Article 8 (commencing with Section 1685),
twenty dollars ($20) in addition to, and not in lieu of, fees
otherwise required.
(h) Application or request for approval of a true or fictitious
name pursuant to Section 1724.5, thirty dollars ($30), except that
there shall be no fee when the name is contained in an original
application.
(i) "A ratification of appointments of agents" whereby the
surviving insurer in a merger or consolidation assumes responsibility
for all agents then lawfully appointed for one of the constituent
insurers and makes each its agent, one hundred three dollars ($103).
(j) An application or request for approval of:
(1) A training course pursuant to Section 1691, except when filed
by a degree-conferring college or university, a public educational
institution, or by a private nonprofit educational institution, one
hundred three dollars ($103).
(2) An arrangement whereby an insurer may qualify certificate of
convenience holders pursuant to Section 1691 by means of an approved
course given on the insurer's behalf by a school or organization
other than itself, fifty-five dollars ($55).
(k) A bond, pursuant to Article 5 (commencing with Section 1662)
or Section 1760.5 or 1765, except when the bond constitutes part of
an original application filing, sixteen dollars ($16).
(l) An application or request for clearance and cancellation
notice of a current licensee of record, sixteen dollars ($16).
(m) An amended action notice pursuant to subdivision (e) of
Section 1704, five dollars ($5).
SEC. 47. SEC. 45. Section 1751.3 of
the Insurance Code is amended to read:
1751.3. The commissioner shall require sixteen dollars ($16) in
advance as a fee for filing each notice of appointment or each notice
of termination pursuant to Section 1707 of any of the following:
(a) A casualty broker-agent to act as an insurance agent.
(b) A property broker-agent to act as an insurance agent.
(c) A life agent.
(d) A travel insurance agent.
(e) A casualty broker-agent to act as an insurance solicitor.
(f) A property broker-agent to act as an insurance solicitor.
SEC. 48. SEC. 46. Section 1755 of
the Insurance Code is amended to read:
1755. That license shall be applied for and renewed in the same
manner as is provided in this chapter for a licensee to act as a
property broker-agent or a casualty broker-agent, except that an
applicant for a limited license as a travel insurance agent need not
pass a qualifying examination, and that the fee for filing an
application shall be sixteen dollars ($16) for each year or fraction
thereof in the term of the license applied for.
SEC. 49. SEC. 47. Section 1757.2 of
the Insurance Code is amended to read:
1757.2. A limited license shall be applied for and renewed in the
same manner as is provided in this chapter for a licensee to act as
a property broker-agent or a casualty broker-agent, except that an
applicant for a limited license as a cargo shipper's agent need not
pass a qualifying examination and is exempt from the prelicensing and
continuing education requirements. The fee for filing an application
shall be nineteen dollars ($19) for each year or fraction thereof of
the term of the license applied for.
SEC. 50. SEC. 48. Section 1758.2 of
the Insurance Code is amended to read:
1758.2. Any authority granted pursuant to the provisions of this
article shall be effective only while a permanent underlying life
agent's license and registration in accordance with the rules of the
United States Securities and Exchange Commission or the Financial
Industry Regulatory Authority remains in full force and effect. The
provisions of subdivision (b) of Section 1704 relating to the
inactivation and reactivation of the underlying life agent's license,
and the renewal thereof, shall apply to any authority issued
pursuant to this article, except that references to agency
appointments and terminations shall relate only to the underlying
life agent's license. Such The
authority may be revoked, suspended, or otherwise affected for the
same reasons and by the same procedures as a life agent's license.
SEC. 51. SEC. 49. Section 1758.3 of
the Insurance Code is amended to read:
1758.3. The commissioner shall not grant authority to transact
variable contracts unless the life agent or applicant furnishes proof
that he or she is registered to sell securities in accordance with
the rules of the United States Securities and Exchange Commission or
the Financial Industry Regulatory Authority. Any authority granted to
a life agent to transact variable contracts shall immediately
terminate upon the life agent no longer being registered to sell
securities in accordance with the rules of the United States
Securities and Exchange Commission or the Financial Industry
Regulatory Authority.
SEC. 52. SEC. 50. Section 1758.87 of
the Insurance Code is amended to read:
1758.87. A rental car agent shall not do any of the following:
(a) Offer to sell insurance except in conjunction with, and
incidental to, authorized rental agreements.
(b) Advertise, represent, or otherwise portray itself or its
employees or endorsees as licensed insurers, life agents, property
broker-agents, or casualty broker-agents.
(c) Pay an endorsee any compensation, fee, or commission dependent
on the placement of insurance under the agent's license. Nothing in
this code shall prohibit the payment of a "performance-related
incentive." For the purposes of this subdivision, a
"performance-related incentive" is not a commission as otherwise
defined. A "performance-related incentive" is money or other tangible
or intangible items of value paid or given to any endorsee of the
licensee which is not based solely on the offering or selling of the
insurance products listed in Section 1758.85.
SEC. 53. SEC. 51. Section 1758.98 of
the Insurance Code is amended to read:
1758.98. Under the authority of the credit insurance agent
license, a credit insurance agent shall not do any of the following:
(a) Offer to sell insurance except in conjunction with, and
incidental to, a loan or extension of credit.
(b) Advertise, represent, or otherwise portray itself or its
employees, agents, or endorsees as licensed insurers, life agents,
property broker-agent broker-agents ,
or casualty broker-agents.
(c) Pay any unlicensed person any compensation, fee, or commission
dependent on the placement of insurance under the agent's license.
Nothing in this subdivision shall prohibit production payments or
incentive payments to an endorsee.
SEC. 54. SEC. 52. Section 1765.3 of
the Insurance Code is amended to read:
1765.3. Any natural person applying for a license to act as a
surplus line broker shall prove his or her competency by showing he
or she holds an existing license to act as a property broker-agent or
casualty broker-agent, which requires passing the qualifying
examination for such an that insurance
broker's license.
SEC. 55. SEC. 53. Section 10236.1 of
the Insurance Code is amended to read:
10236.1. (a) Benefits under individual long-term care insurance
policies issued before new premium rate schedules are approved under
Section 10236.11 shall be deemed reasonable in relation to premiums
if the expected loss ratio is at least 60 percent, calculated in a
manner that provides for adequate reserving of the long-term care
insurance risk.
(b) For individual long-term care insurance policies issued before
new premium rate schedules are approved under Section 10236.11, and
for which rate revisions are filed on or after January 1, 2010,
benefits shall be deemed reasonable in relation to the premium if the
premium rate schedules have a lifetime expected loss ratio of at
least 60 percent of the premium scale in effect on December 31, 2009,
plus 70 percent of premium increases filed on or after January 1,
2010, calculated in a manner that provides for adequate reserving of
the long-term care insurance risk.
(c) In evaluating the expected loss ratio, due consideration shall
be given to all relevant factors, including the following:
(1) Statistical credibility of incurred claims experience and
earned premiums.
(2) The period for which rates are computed to provide coverage.
(3) Experienced and projected trends.
(4) Concentration of experience within early policy duration.
(5) Expected claim fluctuation.
(6) Experience refunds, adjustments, or dividends.
(7) Renewability features.
(8) All appropriate expense factors.
(9) Interest.
(10) Experimental nature of the coverage.
(11) Policy reserves.
(12) Mix of business by risk classification.
(13) Product features, such as long elimination periods, high
deductibles, and high maximum limits.
(d) Notwithstanding any other provision of this section, for rate
revisions filed on or after January 1, 2010, the commissioner may
approve an application for a rate revision based on less than a 70
percent loss ratio, but not less than a 60 percent loss ratio, for
the portion attributable to the rate increase if an insurer can
demonstrate that the rates are necessary to protect the financial
condition of the insurer, including avoidance of further reductions
in capital and surplus.
SEC. 56. SEC. 54. Section 10785 of
the Insurance Code is amended to read:
10785. (a) A disability insurer that covers hospital, medical, or
surgical expenses under an individual health benefit plan as defined
in subdivision (a) of Section 10198.6 may not, with respect to a
federally eligible defined individual desiring to enroll in
individual health insurance coverage, decline to offer coverage to,
or deny enrollment of, the individual or impose any preexisting
condition exclusion with respect to the coverage.
(b) For purposes of this section, "federally eligible defined
individual" means an individual who, as of the date on which the
individual seeks coverage under this section, meets all of the
following conditions:
(1) Has had 18 or more months of creditable coverage, and whose
most recent prior creditable coverage was under a group health plan,
a federal governmental plan maintained for federal employees, or a
governmental plan or church plan as defined in the federal Employee
Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1002).
(2) Is not eligible for coverage under a group health plan,
Medicare, or Medi-Cal, and does not have other health insurance
coverage.
(3) Was not terminated from his or her most recent creditable
coverage due to nonpayment of premiums or fraud.
(4) If offered continuation coverage under COBRA or Cal-COBRA, has
elected and exhausted that coverage.
(c) Every disability insurer that covers hospital, medical, or
surgical expenses shall comply with applicable federal statutes and
regulations regarding the provision of coverage to federally eligible
defined individuals, including any relevant application periods.
(d) A disability insurer shall offer the following health benefit
plans under this section that are designed for, made generally
available to, are actively marketed to, and enroll, individuals: (1)
either the two most popular products as defined in Section 300gg-41
(c)(2) of Title 42 of the United States Code and Section 148.120(c)
(2) of Title 45 of the Code of Federal Regulations or (2) the two
most representative products as defined in Section 300gg-41(c)(3) of
the United States Code and Section 148.120(c)(3) of Title 45 of the
Code of Federal Regulations, as determined by the insurer in
compliance with federal law. An insurer that offers only one health
benefit plan to individuals, excluding health benefit plans offered
to Medi- Cal or Medicare
beneficiaries, shall be deemed to be in compliance with this chapter
if it offers that health benefit plan contract to federally eligible
defined individuals in a manner consistent with this chapter.
(e) (1) In the case of a disability insurer that offers health
benefit plans in the individual market through a network plan, the
insurer may do both of the following:
(A) Limit the individuals who may be enrolled under that coverage
to those who live, reside, or work within the service area for the
network plan.
(B) Within the service area covered by the health benefit plan,
deny coverage to individuals if the insurer has demonstrated to the
commissioner that the insured will not have the capacity to deliver
services adequately to additional individual insureds because of its
obligations to existing group policyholders, group contractholders
and insureds, and individual insureds, and that the insurer is
applying this paragraph uniformly to individuals without regard to
any health status-related factor of the individuals and without
regard to whether the individuals are federally eligible defined
individuals.
(2) A disability insurer, upon denying health insurance coverage
in any service area in accordance with subparagraph (B) of paragraph
(1), may not offer health benefit plans through a network in the
individual market within that service area for a period of 180 days
after the coverage is denied.
(f) (1) A disability insurer may deny health insurance coverage in
the individual market to a federally eligible defined individual if
the insurer has demonstrated to the commissioner both of the
following:
(A) The insurer does not have the financial reserves necessary to
underwrite additional coverage.
(B) The insurer is applying this subdivision uniformly to all
individuals in the individual market and without regard to any health
status-related factor of the individuals and without regard to
whether the individuals are federally eligible defined individuals.
(2) A disability insurer, upon denying individual health insurance
coverage in any service area in accordance with paragraph (1), may
not offer that coverage in the individual market within that service
area for a period of 180 days after the date the coverage is denied
or until the insurer has demonstrated to the commissioner that the
insurer has sufficient financial reserves to underwrite additional
coverage, whichever is later.
(g) The requirement pursuant to federal law to furnish a
certificate of creditable coverage shall apply to health benefits
plans offered by a disability insurer in the individual market in the
same manner as it applies to an insurer in connection with a group
health benefit plan policy or group health benefit plan contract.
(h) A disability insurer shall compensate a life agent, property
broker-agent, or casualty broker-agent whose activities result in the
enrollment of federally eligible defined individuals in the same
manner and consistent with the renewal commission amounts as the
insurer compensates life agents, property broker-agents, or casualty
broker-agents for other enrollees who are not federally eligible
defined individuals and who are purchasing the same individual health
benefit plan.
(i) Every disability insurer shall disclose as part of its COBRA
or Cal-COBRA disclosure and enrollment documents, an explanation of
the availability of guaranteed access to coverage under the Health
Insurance Portability and Accountability Act of 1996, including the
necessity to enroll in and exhaust COBRA or Cal-COBRA benefits in
order to become a federally eligible defined individual.
(j) No disability insurer may request documentation as to whether
or not a person is a federally eligible defined individual other than
is permitted under applicable federal law or regulations.
(k) This section shall not apply to coverage defined as excepted
benefits pursuant to Section 300gg(c) of Title 42 of the United
States Code.
( l ) This section shall apply to policies or contracts
offered, delivered, amended, or renewed on or after January 1, 2001.
SEC. 55. Section 11623 of the Insurance
Code is amended to read:
11623. (a) (1) To assist the commissioner
in carrying out the purposes of this article, an advisory committee
composed of 15 members is created. The commissioner shall administer
and operate the plan as authorized by law. The commissioner shall
consult with the advisory committee on a regular basis on policy
matters affecting the operation of the plan.
Eight
(2) Eight members representing
subscribing insurers shall be elected annually by subscribing
insurers. The commissioner shall appoint the noninsurer members. Four
members shall represent the public. Two members shall represent
producers. The remaining member is the commissioner or his or her
designee.
All insurer representatives shall be salaried employees.
(3) Each insurer representative serving
shall be either (A) a salaried employee or officer of the named
insurer or (B) a salaried employee or officer of another
insurer from a group of insurance companies under the same management
as the named insurer. A salaried employee or officer of the holding
company of the named insurer may also be designated as the
representative. At least two insurer representatives shall be
employed by insurers having their principal headquarters located in
California. At least two insurer representatives shall represent
companies who have average annual automobile liability premiums in
California below one hundred million dollars ($100,000,000) in the
prior three years. At least one insurer representative shall
represent an insurer with average annual automobile liability
premiums in California exceeding one hundred million dollars
($100,000,000) in the prior three years. At least one insurer
representative shall represent an insurer with average annual
automobile liability premiums in California exceeding seven hundred
million dollars ($700,000,000) in the prior three years.
Public
(4) Public members shall be paid
two hundred fifty dollars ($250) per meeting and shall be reimbursed
all reasonable expenses incurred.
The
(5) The commissioner shall remove
members for nonattendance. Unless satisfactory excuse is made in
writing to the commissioner in a timely manner, nonattendance shall
mean the failure to appear at more than two regularly scheduled
meetings in a 12-month period. Should the member who is removed
represent a company or agency, another representative from the
company or agency may not be appointed for a period of not less than
two years.
The
(6) The advisory committee with
the approval of the commissioner shall appoint a manager to carry out
the purposes of this article, employ sufficient personnel to provide
services necessary to the operation of the plan, and contract for
the provision of statistical and actuarial services.
The
(7) The cost of the plan,
including any personnel and contracting costs, shall be fairly
apportioned among the subscribing insurers to whom assignments may be
made. The costs associated shall be directly attributable to the
management of the plan and directly related to its programs. In
consultation with the advisory committee, the commissioner shall
develop, issue, and adopt regulations to carry out the purposes of
this article.
(b) Notwithstanding this act, which changes the status of the
governing committee to that of an advisory committee, the committee
shall have the right to retain counsel of its choice pursuant to a
selection process adopted by the committee and the right and
necessary standing to bring and defend actions in judicial and
administrative proceedings related to the plan in the name of the
plan, with all powers attendant thereto including the right to retain
consultants, counsel, and expert witnesses of its choice.
SEC. 57. SEC. 56. Section 11691 of
the Insurance Code is amended to read:
11691. (a) (1) In order to provide protection to the workers of
this state in the event that the insurers issuing workers'
compensation insurance to employers fail to pay compensable workers'
compensation claims when due, except in the case of the State
Compensation Insurance Fund, every insurer desiring admission to
transact workers' compensation insurance, or workers' compensation
reinsurance business, or desiring to reinsure the injury,
disablement, or death portions of policies of workers' compensation
insurance under the class of disability insurance shall, as a
prerequisite to admission, or ability to reinsure the injury,
disablement, or death portion of policies of workers' compensation
insurance under the class of disability insurance, deposit cash
instruments or approved interest-bearing securities or approved
stocks readily convertible into cash, investment certificates, or
share accounts issued by a savings and loan association doing
business in this state and insured by the Federal Deposit Insurance
Corporation, certificates of deposit, or savings deposits in a bank
licensed to do business in this state, or is either domiciled in and
has a principal place of business in this state, or is a national
bank association with a trust office located in this state, or
approved letters of credit that perform in material respects as any
other security allowable as a form of deposit for purposes of a
workers' compensation deposit and that meet the standard set forth in
Section 922.5, or approved securities registered with a qualified
depository located in a reciprocal state as defined in Section
1104.9, with that deposit to be in an amount and subject to any
exceptions as set forth in this article. The deposit shall be made
from time to time as demanded by the commissioner and may be made
with the Treasurer, or a bank or savings and loan association
authorized to engage in the trust business pursuant to Division 1
(commencing with Section 99) or Division 2 (commencing with Section
5000) of the Financial Code, or a trust company. A deposit of
securities registered with a qualified depository located in a
reciprocal state as defined in Section 1104.9 may only be made in a
bank or savings and loan association authorized to engage in the
trust business pursuant to Division 1 (commencing with Section 99) or
Division 2 (commencing with Section 5000) of the Financial Code, or
a trust company, licensed to do business and located in this state
that is a qualified custodian as defined in paragraph (1) of
subdivision (a) of Section 1104.9 and that maintains deposits of at
least seven hundred fifty million dollars ($750,000,000). The deposit
shall be made subject to the approval of the commissioner under
those rules and regulations that he or she shall promulgate. The
deposit shall be maintained at a deposit value specified by the
commissioner, but in any event no less than one hundred thousand
dollars ($100,000), nor less than the reserves required of the
insurer to be maintained under any of the provisions of Article 1
(commencing with Section 11550) of Chapter 1, relating to loss
reserves on workers' compensation business of the insurer in this
state, nor less than the sum of the amounts specified in subdivision
(a) of Section 11693, whichever is greater. The deposit shall be for
the purpose of paying compensable workers' compensation claims under
policies issued by the insurer or reinsured by the admitted reinsurer
and expenses as provided in Section 11698.02, in the event the
insurer or reinsurer fails to pay those claims when they come due. If
the insurer providing the deposit is domiciled in a state where a
state statute, regulation, or court decision provides that, with
respect to covered claims within the deductible amount that are paid
by a guarantee association after the entry of an order of liquidation
under large deductible workers' compensation policies, any part of
the reimbursement proceeds, other than the reasonable expenses of the
receiver related to treatment of deductible policy arrangements of
insurance companies in liquidation, owed by insureds on those
deductible amounts, whether paid directly or through a draw of
collateral, are general assets of the estate, then the amount of the
insurer's deposit pursuant to this article shall be calculated based
on the gross amount of that insurer's liabilities for loss and loss
adjustment expenses under those policies without regard to the
deductible, and those reserves shall not be reduced by any collateral
or reimbursement obligations insureds were required to provide under
those policies.
(2) Nothing in this section shall require that the deposit be
calculated based on gross amounts of liabilities described above if
the domiciliary state does not have an existing statute, regulation,
or court decision providing that the reimbursement proceeds described
above are general assets of the estate.
(b) Each insurer or reinsurer desiring to have the ability to
reinsure the injury, disablement, or death portions of policies of
workers' compensation under the class of disability insurance shall
provide prior notice to the commissioner, in the manner and form
prescribed by the commissioner of its intent to reinsure that
insurance. In the event of late notice, a late filing fee shall be
imposed on the reinsurer pursuant to Section 924 for failure to
notify the commissioner of its intent to reinsure workers'
compensation insurance.
(c) If the deposit required by this section is not made with the
Treasurer, then the depositor shall execute a trust agreement in a
form approved by the commissioner between the insurer, the
institution in which the deposit is made or, where applicable, the
qualified custodian of the deposit, and the commissioner, that grants
to the commissioner the authority to withdraw the deposit as set
forth in Sections 11691.2, 11696, 11698, and 11698.3. The insurer
shall also execute and deliver in duplicate to the commissioner a
power of attorney in favor of the commissioner for the purposes
specified herein, supported by a resolution of the depositor's board
of directors. The power of attorney and director's resolution shall
be on forms approved by the commissioner, shall provide that the
power of attorney cannot be revoked or withdrawn without the consent
of the commissioner, and shall be acknowledged as required by law.
(d) (1) The commissioner shall require payment in advance of fees
for the initial filing of a trust agreement with a bank, savings and
loan association, or trust company on deposits made pursuant to
subdivision (a); for each amendment, supplement, or other change to
the deposit agreement; for receiving and processing deposit schedules
pursuant to this section; and for each withdrawal, substitution, or
any other change in the deposit. The fees shall be set forth in the
department's Schedule of Fees and Charges.
(2) The commissioner shall require payment in advance of a fee for
the initial filing of each letter of credit utilized pursuant to
subdivision (a). In addition, the commissioner shall require payment
in advance of a fee for each amendment of a letter of credit. The
fees shall be set forth in the department's Schedule of Fees and
Charges.
(e) Any workers' compensation insurer that deposits cash or cash
equivalents pursuant to this section shall be entitled to a prompt
refund of those deposits in excess of the amount determined by the
commissioner pursuant to subdivision (a). The commissioner shall
cause to be refunded any deposits determined by the commissioner to
be in excess of the amount required by subdivision (a) within 30 days
of that determination. In the alternative, an insurer may use any
excess deposit funds to offset a demand by the commissioner to
increase its deposit due to the failure of a reinsurer to make a
deposit pursuant to this section.
(f) (1) An admitted insurer reinsuring business covered in this
article (hereafter referred to as reinsurer) shall identify to the
commissioner, in a form prescribed by the commissioner, amounts
deposited for credit in the name of each ceding insurer.
(2) All reinsurance agreements covering claims and obligations
under business covered by this article, and allowable for purposes of
granting a ceding carrier a deposit credit, shall include a
provision granting the commissioner, in the event of a delinquency
proceeding, receivership, or insolvency of a ceding insurer, any sums
from a reinsurer's deposit that are necessary for the commissioner
to pay those reinsured claims and obligations, or to ensure their
payment by the California Insurance Guarantee Association, deemed by
the commissioner due under the reinsurance agreement, upon failure of
the reinsurer for any reason to make payments under the policy of
reinsurance. The commissioner shall give 30 days' notice prior to
drawing upon these funds of an intent to do so. Notwithstanding the
commissioner's right to draw on these funds, the reinsurer shall
otherwise retain its right to determine the validity of those claims
and obligations and to contest their payment under the reinsurance
agreement. Prior to a reinsurer's deposit being drawn upon, in whole
or in part, by the department, the department shall provide a
reinsurer with an explanation of procedures that a reinsurer may use
to explain to the department why the use of the reinsurer's deposit
may not be appropriate under the reinsurance agreement.
(3) No reinsurer entering into a contract identified in paragraph
(2), beginning on or after January 1, 2005, may cede claims or
obligations assumed from a ceding insurer unless the deposit securing
the ceded claims or obligations is governed by paragraph (2) or,
upon approval of the commissioner, would secure the ceded claims or
obligations in all material respects and in the same manner as a
deposit identified in paragraph (2) above.
(4) All sums received from the reinsurer by the commissioner for
those claims paid by the California Insurance Guarantee Association
shall be held separate and apart from and not included in the general
assets of the insolvent insurer, and shall be transferred to the
California Insurance Guarantee Association upon receipt by the
commissioner. In the event of a final judgment or settlement adverse
to the drawing of funds by the commissioner pursuant to paragraph (2)
or (3), the California Insurance Guarantee Association shall repay
funds it obtained to pay covered claims and shall, if necessary,
either levy a surcharge as needed or seek legislative approval to
levy the surcharge if the California Insurance Guarantee Association
is already levying the maximum surcharge permissible under law.
(g) If a reinsurer has not maintained deposits as required by
subdivision (a) in amounts equal to the amounts of deposit credits
claimed by its ceding insurers, the commissioner, after notifying the
reinsurer and its ceding insurers of the deposit shortfall and
allowing 15 days from the date of the notice for the deposit
shortfall to be corrected, may disallow all or a portion of the
reserve credits claimed by the ceding insurers. A ceding insurer
disallowed a reserve credit pursuant to this provision shall
immediately make the deposit required by this section.
(h) For interest-bearing securities that are debt securities and
include principal payment features prior to maturity that are
utilized pursuant to subdivision (a), all principal payments received
shall be retained as part of the deposit.
(i) Withdrawal of any amount of the deposit required under
subdivision (a) that results in a reduction of the required amount of
the deposit may only occur with the prior written consent of the
commissioner.
SEC. 58. SEC. 57. Section 12815 of
the Insurance Code is amended to read:
12815. (a) An obligor who is not a seller shall possess a vehicle
service contract provider license. A vehicle service contract
provider license shall be applied for and maintained, and its holder
shall be subject to disciplinary action, as if it were a property
broker-agent or casualty broker-agent license, with the following
exceptions:
(1) An applicant for a vehicle service contract provider license
is exempt from having to satisfy prelicensing and continuing
education requirements, and from having to pass a qualifying exam.
(2) The fee to obtain or renew a vehicle service contract provider
license shall be the same as that to obtain or renew a certificate
of authority to operate a motor club.
(b) A service contract administrator shall be licensed as a
property broker-agent or casualty broker-agent.
SEC. 59. SEC. 58. Section 12938 of
the Insurance Code is amended to read:
12938. Notwithstanding any other provision of law, the department
shall make available for public inspection and publish on its
Internet Web site all of the information described in subdivisions
(a) and (b). This information shall be maintained in a current,
up-to-date condition. All identifying and privileged information
regarding individual policyholders shall be redacted from documents
available for public inspection and on the Internet Web site.
(a) All fully executed stipulations, orders, decisions,
settlements, or other forms of agreement resolving market conduct
examinations, whether the examinations were finalized, terminated, or
suspended, that pertain to unfair or deceptive practices in the
business of insurance as defined in Section 790.03.
(b) (1) Every adopted report of a market conduct examination of
unfair or deceptive practices in the business of insurance as defined
in Section 790.03 that is adopted as filed, or as modified or
corrected, by the commissioner pursuant to Section 734.1.
(2) The commissioner upon adopting the report shall transmit a
copy of the report, either electronically or by certified United
States mail, to a representative that the examined insurer designated
by that insurer to receive the report, or in the case of an
examination of more than one insurer in an insurer group, to a single
representative of the group designated to receive the report on
behalf of all examined insurers. Within 20 business days after the
transmittal, the examined insurer may submit comments to the
commissioner relating to the adopted report. The comments shall be in
a form and length as provided by regulation.
(3) Twenty business days after the transmittal the commissioner
shall publish on the department's Internet Web site the adopted
report and any comments submitted by the examined insurer unless a
court of competent jurisdiction has stayed the publication of the
report.
(c) This section may not be construed to require the disclosure of
company workpapers or other company documents discovered during the
course of an examination or any preliminary report of the
examination, except as otherwise permitted by law.