AB 1391, as amended, Committee on Insurance. Insurance: omnibus.
Existing law provides that no cancellation of a motor vehicle insurance policy, not subject to certain cancellation protections because it has been in effect less than 60 days, is effective unless a notice of cancellation, subject to certain notice provisions, is mailed or delivered by the insurer to the named insured not later than the 59th day following the effective date and at least 10 days prior to the effective date of cancellation. Existing law also provides no notice of cancellation of a motor vehicle insurance policy, where the cancellation is based on, among other things, nonpayment of premium, is effective unless mailed or delivered by the insurer to the named insured, lienholder, or additional interest at least 20 days prior to the effective date of cancellation, except as specified.
This bill would delete the requirements for cancellation of a motor vehicle insurance policy less than 60 days old, and would apply the requirements regarding notice of cancellation for nonpayment of premiums, and other specified reasons, to all cancellation circumstances.
Existing law defines the term “Adjusted RBC Report” as a Risk-Based Capital (RBC) report that has been adjusted by the Insurance Commissioner in accordance with specified provisions governing the determination of a property and casualty insurer’s RBC.
This bill would revise that definition to also include an RBC report that has been adjusted by the commissioner in accordance with specified provisions governing the determination of a life or health insurer’s RBC.
Existing law requires every life agent who sells annuities to satisfactorily complete 8 hours of training prior to soliciting individual consumers, and requires every life agent who sells annuities to satisfactorily complete 4 hours of training prior to each license renewal.
This bill would clarify the completion of an 8-hour training requirement to initially procure a license to sell annuities does not satisfy the requirement to complete a 4-hour training course in order to renew the annuity license.
Existing law prohibits the Insurance Commissioner from granting 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.
This bill would make clear that the life agent or applicant is required furnish proof that he or she is registered to sell securities in California in accordance with the rules of the United States Securities and Exchange Commission or the Financial Industry Regulatory Authority.
Existing law requires an individual holding an insurance adjuster license, not otherwise exempt, to complete a minimum of 24 hours of continuing education courses, as specified.
This bill would authorize an exemption from the continuing education requirements for an individual licensed as an insurance adjuster and as a property or casualty broker-agent who has met other specified continuing education requirements.
Existing law defines an insurance solicitor as a natural person employed to aid an insurance agent or insurance broker in transacting insurance other than life.
This bill would redefine an insurance solicitor to mean a natural person employed to aid a property and casualty broker-agent acting as an insurance agent or insurance broker in transacting insurance other than life, disability, or health.
Existing law provides that 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, is not required to complete an examination. The application for examination is required to 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, are required to indicate that the producer is licensed in good standing for the line of authority requested.
This bill would provide that upon issuance of the California resident license, the examination waiver also applies to adding additional lines of authority to the California resident license provided that the individual was previously licensed in good standing for the requested additional lines of authority, and the application is received within 12 months of the cancellation of the applicant’s previous resident license in another state.
This bill would make technical, conforming, and clarifying 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:
(a) An entity seeking to be licensed in this state as a risk
4retention group shall be organized under the laws of this state and
5licensed as a liability insurance company pursuant to Article 3
6(commencing with Section 699) of Chapter 1 of Part 2.
P5 1(b) An entity that has not completed its chartering and licensing
2as a risk retention group in its domiciliary state is subject to the
3requirements of Article 8 (commencing with Section 820) of
4Chapter 1 of Part 2.
5(c) In addition to the requirements of Article 3 (commencing
6with Section 699) of Chapter 1 of Part 2, a risk retention group
7licensed in this state shall submit to the commissioner a feasibility
8study or plan of operations and all other documentation required
9by the federal Liability Risk Retention Act of 1986 (15
begin delete U. S.C. 3901 et seq.) to be submitted by a risk retention
11group to a nonchartering state.
Section 662 of the Insurance Code is amended to read:
(a) A notice of cancellation of a policy shall not be
39effective unless mailed or delivered by the insurer to the named
40insured, lienholder, or additional interest at least 20 days prior to
P10 1the effective date of cancellation; provided, however, that where
2cancellation is for nonpayment of premium, at least 10 days’ notice
3of cancellation accompanied by the reason for the cancellation
4shall be given. Unless the reason accompanies or is included in
5the notice of cancellation, the notice of cancellation shall state or
6be accompanied by a statement that upon written request of the
7named insured, mailed or delivered to the insurer not less than 15
8days prior to the effective date of cancellation, the insurer will
9specify the reason for the cancellation.
10(b) This section shall not apply to nonrenewal.
11(c) Notices made to lienholders pursuant to this section may be
12done electronically with the consent of the lienholder.
Section 668.5 of the Insurance Code is repealed.
Section 739 of the Insurance Code is amended to read:
As used in this article, these terms shall have the following
19(a) “Adjusted RBC Report” means a Risk-Based Capital (RBC)
20report that has been adjusted by the commissioner in accordance
21with subdivision (b) or (c) of Section 739.2.
22(b) “Corrective Order” means an order issued by the
23commissioner specifying corrective actions that the commissioner
24has determined are required.
25(c) “Domestic insurer” means any life or health insurer or
26property and casualty insurer organized in this state.
27(d) “Foreign insurer” means any life or health insurer or
28and casualty insurer that is licensed to do business in this state but
29is not domiciled in this state.
30(e) “Life or health insurer” means any admitted insurer issuing
31insurance subject to Part 2 (commencing with Section 10110) of
32Division 2, or a licensed property and casualty insurer writing only
34(f) “NAIC” means the National Association of Insurance
36(g) “Negative trend” means, with respect to a life or health
37insurer, a negative trend over a period of time, as determined in
38accordance with the “Trend Test Calculation” included in the RBC
39Instructions defined in subdivision (i).
P11 1(h) “Property and casualty insurer” means any admitted insurer
2writing insurance as described in Section 102, 103, 105, 107, 108,
3 109, 110, 111, 112, 113, 114, 115, 116, 118, 119.5, 119.6, or 120,
4but does not include monoline mortgage guaranty insurers,
5financial guaranty insurers, or title insurers.
6(i) “RBC Instructions” means the RBC Report, including
7risk-based capital instructions adopted by the NAIC, and as the
8RBC Instructions may be amended by the NAIC from time to time
9in accordance with the procedures adopted by the NAIC.
10(j) “RBC Level” means an insurer’s Company Action Level
11RBC, Regulatory Action Level RBC, Authorized Control Level
12RBC, or Mandatory Control Level RBC where:
13(1) “Company Action Level RBC” means, with respect to any
14insurer, the product of 2.0 and its Authorized Control Level RBC.
15(2) “Regulatory Action Level RBC” means the product of 1.5
16and its Authorized Control Level RBC.
17(3) “Authorized Control Level RBC” means the number
18determined under the risk-based capital formula in accordance
19with the RBC Instructions.
20(4) “Mandatory Control Level RBC” means the product of .70
21and the Authorized Control Level RBC.
22(k) “RBC Plan” means a comprehensive financial plan
23containing the elements specified in subdivision (b) of Section
24739.3. If the commissioner rejects the RBC Plan, and it is revised
25by the insurer, with or without the commissioner’s
26recommendation, the plan shall be called the “Revised RBC Plan.”
27(l) “RBC Report” means the report required in Section 739.2.
28(m) “Total Adjusted Capital” means the sum of:
29(1) An insurer’s statutory capital and surplus.
30(2) Other items, if any, that the RBC Instructions may provide.
Section 739.3 of the Insurance Code is amended to
(a) “Company Action Level Event” means any of the
36(1) The filing of an RBC Report by an insurer that indicates any
37of the following:
38(A) The insurer’s Total Adjusted Capital is greater than or equal
39to its Regulatory Action Level RBC but less than its Company
40Action Level RBC.
P12 1(B) If a life or health insurer, the insurer has Total Adjusted
2Capital that is greater than or equal to its Company Action Level
3RBC but less than the product of its Authorized Control Level
4RBC and 2.5, and has a negative trend.
5(C) If a
property and casualty insurer, the insurer has Total
6Adjusted Capital that is greater than or equal to its Company Action
7Level RBC but less than the product of its Authorized Control
8Level RBC and 3.0, and triggers the trend test determined in
9accordance with the trend test calculation included in the Property
10and Casualty RBC instructions.
11(2) The notification by the commissioner to the insurer of an
12Adjusted RBC Report that indicates the event in paragraph (1),
13provided that the insurer does not challenge the Adjusted RBC
14Report under Section 739.7.
15(3) If the insurer challenges, under Section 739.7, an Adjusted
16RBC Report that indicates the event in paragraph (1), the
17notification by the commissioner to the insurer that the
18commissioner has, after a hearing, rejected the insurer’s challenge.
19(b) In the event of a
Company Action Level Event, the insurer
20shall prepare and submit to the commissioner a comprehensive
21financial plan that shall do all of the following:
22(1) Identify the conditions in the insurer that contribute to the
23Company Action Level Event.
24(2) Contain proposals of corrective actions that the insurer
25intends to take and would be expected to result in the elimination
26of the Company Action Level Event.
27(3) Provide projections of the insurer’s financial results in the
28current year and at least the four succeeding years, both in the
29absence of proposed corrective actions and giving effect to the
30proposed corrective actions, including projections of statutory
31operating income, net income, capital, or surplus, or a combination.
32The projections for both new and renewal business may include
33separate projections for each major line of business and separately
34identify each significant income, expense, and benefit component.
35(4) Identify the key assumptions impacting the insurer’s
36projections and the sensitivity of the projections to the assumptions.
37(5) Identify the quality of, and problems associated with, the
38insurer’s business, including, but not limited to, its assets,
39anticipated business growth and associated surplus strain,
P13 1extraordinary exposure to risk, mix of business, and use of
2reinsurance in each case, if any.
3(c) The RBC Plan shall be submitted as follows:
4(1) Within 45 days of the Company Action Level Event.
5(2) If the insurer challenges an Adjusted RBC Report pursuant
6to Section 739.7, within 45 days after notification to the insurer
7that the commissioner has, after a hearing, rejected the insurer’s
9(d) Within 60 days after the submission by an insurer of an RBC
10Plan to the commissioner, the commissioner shall notify the insurer
11whether the RBC Plan shall be implemented or is, in the judgment
12of the commissioner, unsatisfactory. If the commissioner
13determines that the RBC Plan is unsatisfactory, the notification to
14the insurer shall set forth the reasons for the determination, and
15may set forth proposed revisions that will render the RBC Plan
16satisfactory, in the judgment of the commissioner. Upon
17notification from the commissioner, the insurer shall prepare a
18Revised RBC Plan, which may incorporate by reference revisions
19proposed by the commissioner, and shall submit the Revised RBC
20Plan to the commissioner as follows:
21(1) Within 45 days after the notification from the commissioner.
22(2) If the insurer challenges the notification from the
23commissioner under Section 739.7, within 45 days after a
24notification to the insurer that the commissioner has, after a
25hearing, rejected the insurer’s challenge.
26(e) In the event of a notification by the commissioner to an
27insurer that the insurer’s RBC Plan or Revised RBC Plan is
28unsatisfactory, the commissioner may, at his or her discretion,
29subject to the insurer’s right to a hearing under Section 739.7,
30specify in the notification that the notification constitutes a
31Regulatory Action Level Event.
32(f) Every domestic insurer that files an RBC Plan or Revised
33RBC Plan with the commissioner shall file a copy of the RBC Plan
34or Revised RBC Plan with the insurance commissioner in any state
35in which the insurer is authorized to do business if both of the
37(1) That state has an RBC provision substantially similar to
38subdivision (a) of Section 739.8.
39(2) The insurance commissioner of that state has notified the
40insurer of its request for the filing in writing, in which case the
P14 1insurer shall file a copy of the RBC Plan or Revised RBC Plan in
2that state no later than the later of:
3(A) Fifteen days after the receipt of notice to file a copy of its
4RBC Plan or Revised RBC Plan with the state.
5(B) The date on which the RBC Plan or Revised RBC Plan is
6filed under subdivision (c) of Section 739.7.
Section 985 of the Insurance Code is amended to read:
(a) On or after January 1, 1970, as used in this article and
10in subdivision (i) of Section 1011, “insolvency” means either of
12(1) Any impairment of minimum “paid-in capital” or “capital
13paid in,” as defined in Section 36, required in the aggregate of an
14insurer by the provisions of this code for the class, or classes, of
15insurance that it transacts anywhere.
16(2) An inability of the insurer to meet its financial obligations
17when they are due.
18(b) On or after January 1, 1970, an insurer cannot escape the
19condition of insolvency by being able to provide for all its liabilities
20and for reinsurance of all outstanding risks. An insurer must also
21be possessed of additional assets equivalent to the aggregate
22“paid-in capital” or “capital paid in” required by this code after
23making provision for all those liabilities and for that reinsurance.
24(c) On or after October 1, 1967, as used in this code provision
25for reinsurance of all outstanding risks and “gross premiums
26without any deduction, received and receivable upon all unexpired
27risks” means the greater of: (1) the aggregate amount of actual
28unearned premiums, or (2) the amount reasonably estimated as
29being required to reinsure in a solvent admitted insurer the
30unexpired terms of the risks represented by all outstanding policies.
31(d) On or after October 1, 1967, an insurer shall make provision
32for reinsurance of the outstanding risk on policies that provide
33premiums that are fully earned at inception and on policies that
34for any other reason do not provide for a return premium to the
35insured on cancellation prior to expiration.
36(e) On or after October 1, 1967, the commissioner shall prescribe
37standards for reasonably estimating the amount required to reinsure
38that will provide adequate safeguards for the policyholders,
39creditors, and the public.
P15 1(f) On or after October 1, 1967, this section shall not be
2applicable to life, title, mortgage, or mortgage guaranty insurers.
3(g) In the application of this section to disability insurance, as
4defined in Section 106, reserves for unearned premiums and
5amounts reasonably estimated as required to reinsure outstanding
6risks shall be determined in accordance with the provisions of
Section 1011 of the Insurance Code is amended to
The superior court of the county in which the principal
12office of a person described in Section 1010 is located, upon the
13filing by the commissioner of the verified application showing any
14of the conditions in this subdivision exist, or a filing by the Federal
15Deposit Insurance Corporation of the verified application showing
16that the conditions enumerated in subdivision (j) exist and the
17conditions set forth in Section 5383(e)(3) of Title 12 of the United
18States Code having been satisfied, shall issue its order vesting title
19to all of the assets of that person, wheresoever situated, in the
20commissioner or his or her successor in office, in his or her official
21capacity, and direct the commissioner forthwith to take possession
22of all of its books, records, property, real and personal, and assets,
23and to conduct, as conservator, the business of the person, or so
24much thereof as to the commissioner may seem appropriate, and
25enjoining the person and its officers, directors, agents, servants,
26and employees from the transaction of its business or disposition
27of its property until any of the following further order of the court:
28(a) That the person has refused to submit its books, papers,
29accounts, or affairs to the reasonable inspection of the
30commissioner or his or her deputy or examiner.
31(b) That the person has neglected or refused to observe an order
32of the commissioner to make good within the time prescribed by
33law any deficiency in its capital if it is a stock corporation, or in
34its reserve if it is a mutual insurer.
35(c) That the person, without first obtaining the consent in writing
36of the commissioner, has transferred, or attempted to transfer,
37substantially its entire property or business or, without consent,
38has entered into any transaction the effect of which is to merge,
39consolidate, or reinsure substantially its entire property or business
40in or with the property or business of any other person.
P16 1(d) That the person is found, after an examination, to be in a
2condition that makes its further transaction of business
begin deletewill beend delete
3 hazardous to its policyholders, or creditors, or to the public.
4(e) That the person has violated its charter or any law of the
6(f) That any officer of the person refuses to be examined under
7oath, touching its affairs.
8(g) That any officer or attorney in fact of the person has
9embezzled, sequestered, or wrongfully diverted any of the assets
10of the person.
11(h) That a domestic insurer does not comply with the
12requirements for the issuance to it of a certificate of authority, or
13that its certificate of authority has been revoked.
14(i) That the last report of examination of any person to whom
15the provisions of this article apply shows the person to be insolvent
16within the meaning of Article 13 (commencing with Section 980)
17of Chapter 1 of Part 2 of Division 1; or if a reciprocal or
18interinsurance exchange, within the applicable provisions of
19Section 1370.2, 1370.4, 1371, or 1372; or if a life insurer, within
20the applicable provisions of Sections 10510 and 10511.
21(j) Notification is given by the United States Secretary of the
22Treasury that a determination has been made by the secretary, in
23accordance with and satisfying the provisions of Section 5383(b)
24of Title 12 of the United States Code, as to a person described in
25Section 1010 that is an insurance company as defined in Section
265381(a)(13) of Title 12 of the United States Code, and one of the
28(1) The board of directors, or body performing similar functions,
29of the person acquiesces or consents to the appointment of a
30receiver as provided for in Section 5832(a)(1)(A)(i) of Title 12 of
31the United States Code, with that consent to be considered to be
32consent to issuance of an order under this section.
33(2) The United States District Court for the District of Columbia
34issued an order for the appointment of a receiver of the person as
35provided for in Section 5382(a)(1)(A)(iv)(I) of Title 12 of the
36United States Code, without regard to whether an appeal of the
37order is pending.
38(3) A petition by the United States Secretary of the Treasury
39for appointment of a receiver was made to the United States District
40Court for the District of Columbia and was granted by operation
P17 1of the law as provided for in Section 5382(a)(1)(A)(v) of Title 12
2of the United States Code, without regard to whether an appeal of
3the order is pending.
Section 1011.1 of the Insurance Code is amended to
If a verified application is filed pursuant to Section
81011 that shows that the conditions set forth in subdivision (j) of
9Section 1011 exist and upon a showing that notice was provided
10to the person that is the subject of the verification application, all
11of the following apply:
12(a) A superior court hearing shall be held in which the person
13may oppose the verified application solely on the grounds that the
14conditions set forth in subdivision (j) of Section 1101 do not exist.
15The hearing shall be completed within 24 hours after the verified
16application is filed with the court.
17(b) The superior court shall issue an order as provided for in
18Section 1011 within 24 hours after the verified application was
19filed with the court.
20(c) If the superior court does not issue an order within 24 hours
21as provided for in subdivision (b), then an order described in
22Section 1011 shall be deemed granted by operation of law upon
23expiration of the 24-hour period, without further notice.
24(d) An order entered by the superior court pursuant to
25subdivision (b) or entered by operation of law pursuant to
26subdivision (c) shall not be subject to any stay or injunction
Section 1012 of the Insurance Code is amended to
Except in the case of an order issued based on a verified
32application showing the conditions in subdivision (j) of Section
331011 to exist, the order shall continue in force and effect until, on
34the application either of the commissioner or of that person, it
35shall, after a full hearing, appear to the court that the ground for
36the order directing the commissioner to take title and possession
37does not exist or has been removed and that the person can properly
38resume title and possession of its property and the conduct of its
Section 1016 of the Insurance Code is amended to
(a) If at any time after the issuance of an order under
5Section 1011, or if at the time of instituting any proceeding under
6this article, including under Section 1011, it shall appear to the
7commissioner that it would be futile to proceed as conservator
8with the conduct of the business of that person, he or she may
9apply to the court for an order to liquidate and wind up the business
10of the person. Upon a full hearing of that application, the court
11may make an order directing the winding up and liquidation of the
12business of that person by the commissioner, as liquidator, for the
13purpose of carrying out the order to liquidate and wind up the
14business of that person.
15(b) Notwithstanding subdivision (a), the court may issue an
16order to liquidate and wind up the business of a person as to whom
17a verified application is filed pursuant to subdivision (j) of Section
181011 based solely on the verified application and hearing as
19provided for in subdivision (a) of Section 1011.1, without further
20hearing, or may issue an order to liquidate and wind up the business
21of the person upon application by the commissioner after the
22issuance of an order under Section 1011. The court’s order may
23direct the winding up and liquidation of the business of the person
24by the commissioner, as liquidator, for the purpose of carrying out
25the order to liquidate and wind up the business of the person.
Section 1070.6 of the Insurance Code is amended to
The withdrawal procedure and fees prescribed by this
30article shall not be required of a nonsurviving admitted constituent
31to a merger or consolidation into another admitted insurer in
32accordance with the applicable statutes and the commissioner’s
33prior written consent given pursuant to subdivision (c) of Section
341011, provided the commissioner is satisfied by documents,
35authenticated so as to be admissible in evidence over objection,
36filed with him or her, that:
37(a) The constituent has discharged all of its liabilities to residents
38of this state in the manner provided by Section 1071.5;
39(b) There will be an admitted insurer directly available to the
40constituent’s policyholders: (1) to obtain policy changes and
P19 1 endorsements, (2) to receive payment of premiums and refund
2unearned premiums, (3) to serve notice of claim, proof of loss,
3summons, process, and other papers, and (4) for purposes of suit;
4(c) The constituent shall timely file with the commissioner
5appropriate financial statements reporting its insurance business
6done in this state during the calendar year of the merger or
7consolidation and all appropriate tax returns required by law for
8the period, and shall timely pay all taxes found to be due on account
9of the business; and
10(d) The constituent has surrendered its current California
11certificate of authority to the commissioner for cancellation as of
12the effective date of the merger.
13The withdrawal procedure and fees prescribed by this article
14shall not be required of an insurer that has been liquidated by a
15final order of a court of record of this or any sister state provided
16a certified copy of the order reciting the fact of liquidation and
17discharge of all obligations has been filed with the commissioner.
As used in this article, the following terms have the
22(a) “Accredited state” means a state in which the insurance
23department or regulatory agency having jurisdiction over the
24business of insurance has qualified as meeting the minimum
25financial regulatory standards promulgated and established from
26time to time by the National Association of Insurance
27Commissioners’ (NAIC) Financial Regulation Standards and
29(b) “Control” or “controlled” has the meaning ascribed in
31(c) “Controlled insurer” means an admitted insurer which is
32controlled, directly or indirectly, by a producer.
33(d) “Controlling producer” means a producer who, directly or
34indirectly, controls an insurer.
35(e) “Admitted insurer” or “insurer” means any person, firm,
36association, or corporation admitted to transact any property or
37casualty insurance business in this state. The following are not
begin delete to insurers for the purposes of this article:
38be construed to beend delete
39(1) All risk retention groups as defined in the Superfund
40Amendments Reauthorization Act of 1986 (P.L. 99-499), the Risk
P20 1Retention Act (15 U.S.C. Sec. 3901 et seq.), and the California
2Risk Retention Act of 1990 (Chapter 1.5 (commencing with Section
3125) of Part 1 of Division 1).
5 All residual market pools and joint underwriting authorities
8 All captive insurers.
For the purposes of this article, captive insurers
14are either insurance companies which are owned by another
15organization and whose exclusive purpose is to insure risks of the
16parent organization and affiliated companies, or in the case of
17groups and associations, insurance organizations which are owned
18by the insureds and whose exclusive purpose is to insure risks of
19member organizations and group or association members and their
21(f) “Producer” means a fire and casualty licensee or licensees
22or any other person, firm, association, or corporation, when, for
23any compensation, commission, or other thing of value, the person,
24firm, association, or corporation acts or aids in any manner in
25soliciting, negotiating or procuring the making of any insurance
26contract on behalf of an insured other than the person, firm,
27association, or corporation.
Section 1624 of the Insurance Code is amended to
“Insurance solicitor” means a natural person employed
32to aid a property and casualty broker-agent acting as an insurance
33agent or insurance broker in transacting insurance other than life,
34disability, or health.
Section 1675 of the Insurance Code is amended to
The following applicants who have theretofore been
39licensed under this code are exempt from the requirements of this
P21 1(a) An applicant for a license to act as a property broker-agent
2or a casualty broker-agent who has been licensed as a property
3broker-agent, casualty broker-agent, or surplus line broker during
4any part of the license year in which the application is filed or the
5immediately preceding license year.
6(b) An applicant for a license to act as a life-only agent who has
7been licensed as a life-only agent during any part of the license
8year in which the application is filed or the immediately preceding
10(c) An applicant for a
license to act as an accident and health
11agent who has been licensed as an accident and health agent during
12any part of the license year in which the application is filed or the
13immediately preceding license year.
14(d) An applicant for a license to act as a travel insurance agent.
15(e) An applicant specifically exempted from the particular
16qualifying examination requirement by other provisions of this
18(f) (1) A nonresident licensee who applies for a property
19broker-agent, casualty broker-agent, personal lines broker-agent,
20or life agent resident license in this state, and who is currently
21licensed for the same lines of authority in the state of his or her
22current resident license, shall not be required to complete an
23examination. The application shall be received within 90 days of
24the cancellation of the applicant’s resident license and the producer
25database records, maintained by the National Association of
26Insurance Commissioners, shall indicate that the producer is
27licensed in good standing for the line of authority requested.
28(2) Upon issuance of the California resident license, the
29examination waiver also applies to adding additional lines of
30authority to the California resident license provided that the
31individual was previously licensed in good standing for the
32requested additional lines of authority, and the application is
33received within 12 months of the cancellation of the applicant’s
34previous resident license in another state.
An individual licensed as a life-only agent or an
38accident and health agent and also licensed as a property or casualty
39broker-agent, or an individual only licensed as a property or
40casualty broker-agent, shall complete those courses, programs of
P22 1instruction, or seminars approved by the commissioner for the type
2of license held. Completion of specified product training required
3in subdivision (d) of Section 1749.33, subdivision (b) of Section
41749.8, and paragraph (4) of subdivision (a) of Section 10234.93
5may result in the completion of more than the minimum of required
6continuing education hours. The minimum number of hours
7required is as follows:
8(a) Any licensee, as specified in this section, shall satisfactorily
9complete 24 hours of instruction prior to renewal of the license. These hours of instruction
11may be completed at any time prior to renewal of the license.
12(b) An individual licensed as a property broker-agent or casualty
13broker-agent and as a life-only agent or an accident and health
14agent shall satisfy the requirements of this section by demonstrating
15completion of the courses, programs of instruction, or seminars
16approved by the commissioner for any of the license types listed
17in this section.
18(c) A licensee shall not be required to comply with the
19requirements of this article if the licensee submits proof satisfactory
20to the commissioner that he or she has been a licensee in good
21standing for 30 continuous years in this state and is 70 years of
22age or older. This exemption shall not apply to those individuals
23licensed for the first time on or after January 1, 2010.
(a) An individual licensed as a personal lines
27broker-agent shall complete required continuing education courses,
28programs of instruction, or seminars approved by the
29commissioner. The personal lines broker-agent shall complete 24
30hours during each two-year
31license term as defined in subdivision (d) of Section 1625.5.
32(b) An individual licensed as a personal lines broker-agent and
33as a life-only agent or accident and health agent shall satisfy the
34requirements of this section by satisfactorily completing 24 hours
35of instruction prior to renewal of the license.
(a) An individual licensed as a limited lines
39automobile insurance agent shall complete required continuing
40education courses, programs of instruction, or seminars approved
P23 1by the commissioner. The minimum number of hours required is
220 hours per license term
3prior to the renewal of the license.
4(b) An individual licensed as a limited automobile insurance
5agent and as a life-only agent or accident and health agent shall
6satisfy the requirements of this section by satisfactorily completing
724 hours of instruction prior to renewal of the license.
(a) A life-only agent licensee shall satisfactorily
11complete 24 hours of instruction prior to renewal of the license. These hours of instruction
13may be completed at any time prior to renewal of the license.
14(b) An accident and health agent licensee shall satisfactorily
15complete 24 hours of instruction prior to renewal of the license. These hours of instruction
17may be completed at any time prior to renewal of the license.
18(c) An agent licensed as both a life-only agent and as an accident
19and health agent shall satisfactorily complete a total of 24 hours
20of instruction prior to
21renewal of the license. These hours of instruction may be
22completed at any time prior to renewal of the license.
23(d) Any accident and health agent who wishes to sell 24-hour
24care coverage, as defined in Section 1749.02, shall complete a
25course, program of instruction, or seminar of an approved
26continuing education provider on workers’ compensation and
27general principles of employer liability, which shall be completed
28by examination approved by the commissioner as part of the
29continuing education course, program of instruction, or seminar
30prior to selling this coverage. The required number of instruction
31hours shall be equal to but no greater than that required by the
32curriculum board for the prelicensing requirements of a property
33broker-agent or a casualty broker-agent on these subjects. For
34resident licensees, this requirement shall count toward the
35licensee’s continuing education requirement, but may still result
36in completing more than the minimum number of continuing
37education hours set forth in this section. Nothing in this section
38shall be deemed to allow an accident and health agent to satisfy
39the obligations set forth in this section by other than a proctored
40examination administered or approved by the department.
Section 1749.8 of the Insurance Code is amended to
(a) Every life agent who sells annuities shall
5satisfactorily complete eight hours of training prior to soliciting
6individual consumers in order to sell annuities.
7(b) Every life agent who sells annuities shall satisfactorily
8complete four hours of training prior to each license renewal.
9Completion of the eight-hour annuity training required by
10subdivision (a) does not satisfy the four-hour annuity training
11required by this subdivision. For resident licensees, this
12requirement shall count toward the licensee’s continuing education
13requirement, but may still result in completing more than the
14minimum number of continuing education hours set forth in this
16(c) The training required by this
section shall be approved by
17the commissioner and shall consist of topics related to annuities,
18and California law, regulations, and requirements related to
19annuities, prohibited sales practices, the recognition of indicators
20that a prospective insured may lack the short-term memory or
21judgment to knowingly purchase an insurance product, and
22fraudulent and unfair trade practices. Subject matter determined
23by the commissioner to be primarily intended to promote the sale
24or marketing of annuities shall not qualify for credit
begin delete towardsend delete
25 the training requirement. Any course or seminar that is disapproved
26under the provisions of this section shall be presumed invalid for
begin delete towardsend delete the training requirement of this section
28unless it is approved in writing by the commissioner.
29(d) The training requirements set forth in this section shall not
30apply to nonresident agents representing an insurer that is a direct
32For the purposes of this section, “direct response provider” means
33an insurer that meets each of the following criteria:
34(1) The insurer does not initiate telephone contact with insureds
35or prospective insureds.
36(2) Agents of the insurer speak with insureds and prospective
37insureds only by telephone, and at the request of the insureds or
39(3) Agents of the insurer are assigned to speak with insureds or
40prospective insureds on a random basis, when contacted.
P25 1(4) Agents of the insurer are salaried and do not receive
2commissions for sales or referrals.
Section 1758.3 of the Insurance Code is amended to
The commissioner shall not grant authority to transact
7variable contracts unless the life agent or applicant furnishes proof
8that he or she is registered to sell securities in California in
9accordance with the rules of the United States Securities and
10Exchange Commission or the Financial Industry Regulatory
11Authority. Any authority granted to a life agent to transact variable
12contracts shall immediately terminate upon the life agent no longer
13being registered to sell securities in accordance with the rules of
14the United States Securities and Exchange Commission or the
15Financial Industry Regulatory Authority.
Section 1872.87 of the Insurance Code is amended
(a) Each insurer required to pay special purpose
2assessments pursuant to Sections 1872.8, 1872.81, 1872.85, 1874.8,
3or subdivision (a) of Section 1872.86 may, over a reasonable length
4of time, but in no event later than the calendar year in which the
5assessment is paid, recoup the special purpose assessments by way
6of a surcharge on premiums charged for the insurance policies to
7which those sections apply or by including the assessments within
8the insurer’s rates. Amounts recouped shall not be considered
9premiums for any purpose, including the computation of gross
10premium tax or agents’ commission.
11(b) The amount of the surcharge shall be separately stated on
12either a billing or policy declaration sent to an insured.
(a) Every insurer of long-term care in California
17(1) Establish marketing procedures to assure that any comparison
18of policies by its agents or other producers will be fair and accurate.
19(2) Establish marketing procedures to assure excessive insurance
20is not sold or issued.
21(3) Submit to the commissioner within six months of the
22effective date of this act, a list of all agents or other insurer
23representatives authorized to solicit individual consumers for the
24sale of long-term care insurance. These submissions shall be
25updated at least semiannually.
26(4) Provide the
following training and require that each agent
27or other insurer representative authorized to solicit individual
28consumers for the sale of long-term care insurance shall
29satisfactorily complete the following training requirements that,
30for resident licensees, shall count toward the licensee’s continuing
31education requirement, but may still result in completing more
32than the minimum number of continuing education hours set forth
33in this section:
34(A) For licensees issued a license after January 1, 1992, eight
35hours of training in each of the first four 12-month periods
36beginning from the date of original license issuance and thereafter
37eight hours of training prior to each license renewal.
38(B) For licensees issued a license before January 1, 1992, eight
39hours of training prior to each license renewal.
P28 1(C) For
nonresident licensees that are not otherwise subject to
2the continuing education requirements set forth in Section 1749.3,
3the evidence of training required by this section shall be filed with
4and approved by the commissioner as provided in subdivision (g)
5of Section 1749.4.
6Licensees shall complete the initial training requirements of this
7section prior to being authorized to solicit individual consumers
8for the sale of long-term care insurance.
9The training required by this section shall consist of topics related
10to long-term care services and long-term care insurance, including,
11but not limited to, California regulations and requirements,
12available long-term care services and facilities, changes or
13improvements in services or facilities, and alternatives to the
14purchase of private long-term care insurance. On or before July
151, 1998, the following additional training topics shall be required:
16differences in eligibility for benefits and tax treatment between
17policies intended to be federally qualified and those not intended
18to be federally qualified, the effect of inflation in eroding the value
19of benefits and the importance of inflation protection, and NAIC
20consumer suitability standards and guidelines.
21(5) Display prominently on page one of the policy or certificate
22and the outline of coverage: “Notice to buyer: This policy may not
23cover all of the costs associated with long-term care incurred by
24the buyer during the period of coverage. The buyer is advised to
25review carefully all policy limitations.”
26(6) Inquire and otherwise make every reasonable effort to
27identify whether a prospective applicant or enrollee for long-term
28care insurance already has accident and sickness or long-term care
29insurance and the types and amounts of any such insurance.
30(7) Every insurer or entity marketing long-term care insurance
31shall establish auditable procedures for verifying compliance with
33(8) Every insurer shall provide to a prospective applicant, at the
34time of solicitation, written notice that the Health Insurance
35Counseling and Advocacy Program (HICAP) provides health
36insurance counseling to senior California residents free of charge.
37Every agent shall provide the name, address, and telephone number
38of the local HICAP program and the statewide HICAP number,
P29 1(9) Provide a copy of the long-term care insurance shoppers
2guide developed by the California Department of Aging to each
3prospective applicant prior to the presentation of an application or
4enrollment form for insurance.
5(10) Clearly post on its Internet Web site and provide written
6notice at the time of solicitation that a specimen individual policy
7form or group master policy and certificate form for each policy
8form offered in this state is available to a prospective applicant
9upon request. The individual specimen policy form or group master
10policy and certificate form shall be provided to a requesting party
11within 15 calendar days
begin delete orend delete
receipt of a request.
12(b) In addition to other unfair trade practices, including those
13identified in this code, the following acts and practices are
15(1) Twisting. Knowingly making any misleading representation
begin delete orend delete incomplete or fraudulent comparison of any insurance policies
17or insurers for the purpose of inducing, or tending to induce, any
18person to lapse, forfeit, surrender, terminate, retain, pledge, assign,
19borrow on, or convert any insurance policy or to take out a policy
20of insurance with another insurer.
21(2) High pressure tactics. Employing any method of marketing
22having the effect of or tending to induce the purchase of insurance
23through force, fright, threat, whether explicit or implied, or undue
24pressure to purchase or recommend the purchase of insurance.
25(3) Cold lead advertising. Making use directly or indirectly of
26any method of marketing
begin delete whichend delete fails to disclose in a
27conspicuous manner that a purpose of the method of marketing is
28solicitation of insurance and that contact will be made by an
29insurance agent or insurance company.
(a) A disability insurer that covers hospital, medical,
33or surgical expenses under an individual health benefit plan as
34defined in subdivision (a) of Section 10198.6 may not, with respect
35to a federally eligible defined individual desiring to enroll in
36individual health insurance coverage, decline to offer coverage to,
37or deny enrollment of, the individual or impose any preexisting
38condition exclusion with respect to the coverage.
39(b) For purposes of this section, “federally eligible defined
40individual” means an individual who, as of the date on which the
P30 1individual seeks coverage under this section, meets all of the
3(1) Has had 18 or more months of creditable coverage, and
4whose most recent prior creditable coverage was under a group
5health plan, a federal governmental plan maintained for federal
6employees, or a governmental plan or church plan as defined in
7the federal Employee Retirement Income Security Act of 1974
8(29 U.S.C. Sec. 1002).
9(2) Is not eligible for coverage under a group health plan,
10Medicare, or Medi-Cal, and does not have other health insurance
12(3) Was not terminated from his or her most recent creditable
13coverage due to nonpayment of premiums or fraud.
14(4) If offered continuation coverage under COBRA or
15Cal-COBRA, has elected and exhausted that coverage.
16(c) Every disability insurer that covers hospital, medical, or
17surgical expenses shall comply with applicable federal statutes
18and regulations regarding the provision of coverage to federally
19eligible defined individuals, including any relevant application
21(d) A disability insurer shall offer the following health benefit
22plans under this section that are designed for, made generally
23available to, are actively marketed to, and enroll, individuals:
24(1) either the two most popular products as defined in Section
25300gg-41(c)(2) of Title 42 of the United States Code and Section
26148.120(c)(2) of Title 45 of the Code of Federal Regulations or
27(2) the two most representative products as defined in Section
28300gg-41(c)(3) of the United States Code and Section
29148.120(c)(3) of Title 45 of the Code of Federal Regulations, as
30determined by the insurer in compliance with federal law. An
31insurer that offers only one health benefit plan to individuals,
32excluding health benefit plans offered to Medi-Cal or Medicare
33beneficiaries, shall be deemed to be in compliance with this chapter
34if it offers that health benefit plan contract to federally eligible
35defined individuals in a manner consistent with this chapter.
36(e) (1) In the case of a disability insurer that offers health benefit
37plans in the individual market through a network plan, the insurer
38may do both of the following:
P31 1(A) Limit the individuals who may be enrolled under that
2coverage to those who live, reside, or work within the service area
3for the network plan.
4(B) Within the service area covered by the health benefit plan,
5deny coverage to individuals if the insurer has demonstrated to the
6commissioner that the insured will not have the capacity to deliver
7services adequately to additional individual insureds because of
8its obligations to existing group policyholders, group
9contractholders and insureds, and individual insureds, and that the
10insurer is applying this paragraph uniformly to individuals without
11regard to any health status-related factor of the individuals and
12without regard to whether the individuals are federally eligible
14(2) A disability insurer, upon denying health insurance coverage
15in any service area in accordance with subparagraph (B) of
16paragraph (1), may not offer health benefit plans through a network
17in the individual market within that service area for a period of
18180 days after the coverage is denied.
19(f) (1) A disability insurer may deny health insurance coverage
20in the individual market to a federally eligible defined individual
21if the insurer has demonstrated to the commissioner both of the
23(A) The insurer does not have the
financial reserves necessary
24to underwrite additional coverage.
25(B) The insurer is applying this subdivision uniformly to all
26individuals in the individual market and without regard to any
27health status-related factor of the individuals and without regard
28to whether the individuals are federally eligible defined individuals.
29(2) A disability insurer, upon denying individual health
30insurance coverage in any service area in accordance with
31paragraph (1), may not offer that coverage in the individual market
32within that service area for a period of 180 days after the date the
33coverage is denied or until the insurer has demonstrated to the
34commissioner that the insurer has sufficient financial reserves to
35underwrite additional coverage, whichever is later.
36(g) The requirement pursuant to federal law to furnish a
37 certificate of creditable coverage shall apply to health benefits
38plans offered by a disability insurer in the individual market in the
39same manner as it applies to an insurer in connection with a group
40health benefit plan policy or group health benefit plan contract.
P32 1(h) A disability insurer shall compensate
begin delete a life agent, property
2broker-agent, or casualty broker-agentend delete
4result in the enrollment of federally eligible defined individuals
5in the same manner and consistent with the renewal commission
6amounts as the insurer compensates
begin delete life agents, property for other enrollees who are
7broker-agents, or casualty broker-agentsend delete
9not federally eligible defined individuals and who are purchasing
10the same individual health benefit plan.
11(i) Every disability insurer shall disclose as part of its COBRA
12or Cal-COBRA disclosure and enrollment documents, an
13explanation of the availability of guaranteed access to coverage
14under the Health Insurance Portability and Accountability
15Act of 1996, including the necessity to enroll in and exhaust
16COBRA or Cal-COBRA benefits in order to become a federally
17eligible defined individual.
18(j) No disability insurer may request documentation as to
19whether or not a person is a federally eligible defined individual
20other than is permitted under applicable federal law or regulations.
21(k) This section shall not apply to coverage defined as excepted
22benefits pursuant to Section 300gg(c) of Title 42 of the United
24(l) This section shall apply to policies or contracts offered,
25delivered, amended, or renewed on or after January 1, 2001.
(a) Any person, title insurer, underwritten title
6company, or controlled escrow company who fails to comply with
7a final order of the commissioner under this chapter shall be liable
8to the state in an amount not exceeding one hundred dollars ($100),
begin delete suchend delete failure is willful he or it shall be liable to the
10state in an amount not exceeding five thousand dollars ($5,000)
begin delete suchend delete failure. The commissioner shall collect the amount
12so payable and may bring an action in the name of the people of
13the State of California to enforce collection.
begin delete Suchend delete penalties
14may be in addition to any other penalties provided by law.
15(b) A willful violation of the provisions of this chapter is a
Section 14090.1 of the Insurance Code is amended
(a) An individual who holds an insurance adjuster
22license and who is not exempt under subdivision (b) shall
23satisfactorily complete a minimum of 24 hours, of which three
24hours are to be in ethics, of continuing education courses pertinent
25to the duties and responsibilities of an insurance adjuster license
26reported to the insurance commissioner on a biennial basis in
27conjunction with his or her license renewal cycle.
28(b) This section does not apply to any of the following:
29(1) A licensee not licensed for one full year prior to the end of
30the applicable continuing education biennium.
31(2) A licensee holding a nonresident insurance adjuster
32who has met the continuing education requirements of his or her
33designated resident state.
34(3) An individual licensed as an insurance adjuster and as a
35property or casualty broker-agent, pursuant to Section 1625, who
36has met the continuing education requirements specified in Section