AB 1391, as amended, Committee on Insurance. Insurance: omnibus.
(1) Existing law requires an entity seeking to be licensed as a risk retention group to be organized under California law and licensed as a liability insurance company. A risk retention group is a corporation, public entity, or other limited liability association that meets certain criteria, including that its primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group members. Existing law also exempts risk retention groups from the Business Transacted with Producer Controlled Insurer Act, which regulates controlled insurers, as prescribed.
This bill would require, on and after January 1, 2015, a risk retention group to comply with specified corporate governance requirements at the time of licensure, including that the board of directors have a majority of independent directors, as defined, that the term of any material service provider contract with a risk retention group not exceed 5 years, and that the risk retention group have an audit committee composed of at least 3 independent board members. The bill would also delete the risk retention group exemption from the Business Transacted with Producer Controlled Insurer Act.
(2) 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.
(3) 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.
(4) Existing law provides for continuing education requirements, prior to license renewals, for specified insurance agents and broker-agents, including personal lines broker-agents and limited lines automobile insurance agents.
This bill would require that those continuing education requirements include 3 hours of ethics.
(5) 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.
(6) 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 to 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.
(7) 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.
(8) 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.
(9) 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.
(10) Existing law regulates the sale of portable electronics insurance policies and requires all portable electronics vendors offering that insurance to be licensed, as specified.
This bill would authorize an insurer to terminate or otherwise change the terms and conditions of a policy of portable electronics insurance, as provided.
(11) Existing law requires the commissioner, after a public hearing held in accordance with the rulemaking provisions of the Administrative Procedure Act, to approve or issue a reasonable plan, or reasonable amendments to the plan, for the equitable apportionment, among insurers admitted to transact liability insurance, of those applicants for automobile bodily injury and property damage liability insurance who are in good faith entitled to, but are unable to procure, that insurance through ordinary methods. Existing law provides for judicial review of the proceedings held to revise automobile insurance rates.
This bill would additionally require that the reasonable amendments to the plan be approved by the plan’s advisory committee. The bill would delete the requirement that the public hearings be held in accordance with the rulemaking provisions of the Administrative Procedure Act, and provide, with exceptions, that the plan and any amendments not be subject to those provisions. The bill would instead require the commissioner to provide 45 days’ notice of a public hearing by publishing the notice in the California Regulatory Notice Register, mailing the notice to the parties on the Department of Insurance’s regulations mailing list, and posting the notice on the department’s public Internet Web site. The bill would authorize interested parties to make oral or written comments and require the commissioner to consider all comments received before adopting any amendments to the plan, as provided. The bill would also provide for judicial review of a change to the plan.
(12) Existing law authorizes an underwritten title company to engage in the business of preparing title searches, title reports, title examinations, or certificates or abstracts of title, upon the basis of which a title insurer writes title policies. Existing law authorizes any insurer, upon payment of the fees and costs and surrender to the commissioner of its certificate of authority, to apply to withdraw from this state, as provided.
This bill would authorize underwritten title companies to apply to withdraw from the California insurance market.
(13) 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:
Section 131 of the Insurance Code is amended
(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.
7(b) An entity that has not completed its chartering and licensing
8as a risk retention group in its domiciliary state is subject to the
9requirements of Article 8 (commencing with Section 820) of
10Chapter 1 of Part 2.
11(c) In addition to the requirements of Article 3 (commencing
12with Section 699) of Chapter 1 of Part 2, a risk retention group
13licensed in this state shall submit to the commissioner a feasibility
14study or plan of operations and all other documentation required
15by the federal Liability Risk Retention Act of 1986 (15 U.S.C.
16Sec. 3901 et seq.) to be submitted by a risk retention group to a
18(d) In addition to the requirements of Article 3 (commencing
19with Section 699) of Chapter 1 of Part 2, a risk retention group
P6 1licensed in this state shall comply with all of the following at the
2time of licensure, and thereafter:
3(1) (A) The “board of directors” or “board,” as used in this
4section, means the governing body of the risk retention group
5elected by the shareholders or members to establish policy, elect
6or appoint officers and committees, and make other governing
8(B) “Director,” as used in this section, means a natural person
9designated in the articles of the risk retention group, or designated,
10elected, or appointed by any other manner, name, or title to act as
12(2) (A) The board of directors of the risk retention group shall
13have a majority of independent directors. If the risk retention group
14is a reciprocal risk retention group, the attorney-in-fact shall be
15required to adhere to the same standards regarding independence
16of operation and governance as imposed on the risk retention
17group’s board of directors and subscribers’ advisory committee
18under these standards, and, to the extent permissible under this
19state’s laws, service providers of a reciprocal risk retention group
20shall contract with the risk retention group and not the
22(B) No director qualifies as “independent” unless the board of
23directors affirmatively determines that the director has no “material
24relationship” with the risk retention group. Each risk retention
25group shall disclose these determinations to its domestic regulator,
26at least annually. For this purpose, any person that is a direct or
27indirect owner of, or subscriber in, the risk retention group, or is
28an officer, director, or employee, or all three, of an owner and
29insured, as contemplated by 15 U.S.C. Section 3901(a)(4)(E)(ii)
30of the federal Liability Risk Retention Act of 1986, is considered
31to be “independent,” unless some other position of that officer,
32director, or employee constitutes a “material relationship.”
relationship” of a person with the risk retention
34group includes, but is not limited to, any of the following:
35(i) The receipt in any one 12-month period of compensation or
36payment of any other item of value by that person, a member of
37that person’s immediate family, or any business with which that
38person is affiliated from the risk retention group or a consultant
39or service provider to the risk retention group that is greater than,
40or equal to, 5 percent of the risk retention group’s gross written
P7 1premium for that 12-month period or 2 percent of its surplus,
2whichever is greater, as measured at the end of any fiscal quarter
3falling in a 12-month period. The person or immediate family
4member of that person is not independent until one year after his
5or her compensation from the risk retention group falls below the
7(ii) A relationship with an auditor as follows: a director or an
8immediate family member of a director who is affiliated with, or
9employed in, a professional capacity by a present or former internal
10or external auditor of the risk retention group is not independent
11until one year after the end of the affiliation, employment, or
13(iii) A relationship with a related entity as follows: a director
14or immediate family member of a director who is employed as an
15executive officer of another company where any of the risk
16retention group’s present executives serve on that other company’s
17board of directors is not independent until one year after the end
18of that service or the employment relationship.
term of any material service provider contract with the
20risk retention group shall not exceed five years. Any contract, or
21its renewal, shall require the approval of the majority of the risk
22retention group’s independent directors. The risk retention group’s
23board of directors shall have the right to terminate any service
24provider, audit, or actuarial contracts at any time for cause after
25providing adequate notice as defined in the contract. The service
26provider contract is deemed material if the amount to be paid for
27that contract is greater than, or equal to, 5 percent of the risk
28retention group’s annual gross written premium or 2 percent of its
29surplus, whichever is greater.
30(A) For purposes of this standard, “service providers” shall
31include captive managers, auditors, accountants, actuaries,
32investment advisers, attorneys, and managing general underwriters
33or any other party responsible for underwriting, determination of
34rates, collection of premium, adjusting and settling claims, or the
35preparation of financial statements. Any reference to “attorneys”
36does not include defense counsel retained by the risk retention
37group to defend claims, unless the amount of fees paid to those
38attorneys are “material” as referenced in this paragraph.
39(B) A service provider contract meeting the definition of
40“material relationship” pursuant to paragraph (2) shall not be
P8 1entered into unless the risk retention group has notified the
2commissioner in writing of its intention to enter into the transaction
3at least 30 days prior thereto, and the commissioner has not
4disapproved the transaction within that period.
5(4) The risk
retention group’s board of directors shall adopt a
6written policy in the plan of operation as approved by the board
7that requires the board to do all of the following:
8(A) Ensure that all owners or insureds, or both, of the risk
9retention group receive evidence of ownership interest.
10(B) Develop a set of governance standards applicable to the risk
12(C) Oversee the evaluation of the risk retention group’s
13management, including, but not limited to, the performance of the
14captive manager, managing general underwriter, or other parties
15responsible for underwriting, determination of rates, collection of
16premium, adjusting or settling claims, or the preparation of
18(D) Review and approve the amount to be paid for all material
20(E) Review and approve, at least annually, all of the following:
21(i) The risk retention group’s goals and objectives relevant to
22the compensation of officers and service providers.
23(ii) The officers’ and service providers’ performance in light of
24those goals and objectives.
25(iii) The continued engagement of the officers and material
27(5) The risk retention group shall have an audit committee
28composed of at least three independent board members as defined
29in paragraph (2). A nonindependent board member may participate
30in the activities of the audit committee, if invited by the members,
31but cannot be a member of that committee.
32(A) The audit committee shall have a written charter that defines
33the committee’s purpose, which, at a minimum, shall be to do all
34of the following:
35(i) Assist in board oversight of the integrity of the financial
36statements, the compliance with legal and regulatory requirements,
37and the qualifications, independence, and performance of the
38independent auditor and actuary.
39(ii) Discuss the annual audited financial statements and quarterly
40financial statements with management.
P9 1(iii) Discuss
the annual audited financial statements with its
2independent auditor and, if advisable, discuss its quarterly financial
3statements with its independent auditor.
4(iv) Discuss policies with respect to risk assessment and risk
6(v) Meet separately and periodically, either directly or through
7a designated representative of the committee, with management
8and independent auditors.
9(vi) Review with the independent auditor any audit problems
10or difficulties and management’s response.
11(vii) Set clear hiring policies of the risk retention group as to
12the hiring of employees or former employees of the independent
14(viii) Require the external auditor to rotate the lead or
15coordinating audit partner having primary responsibility for the
16risk retention group’s audit as well as the audit partner responsible
17for reviewing that audit, so that neither individual performs audit
18services for more than five consecutive fiscal years.
19(ix) Report regularly to the board of directors.
20(B) If an audit committee is not designated by the insurer, the
21insurer’s entire board of directors shall constitute the audit
23(6) The board of directors shall adopt and disclose governance
24standards by making the information available through electronic
25means, such as posting the information on the risk retention group’s
26Internet Web site, or other means, and providing that information
27to members and insureds upon request. The information shall
28include all of the following:
29(A) A process by which the directors are elected by the owners,
30insureds, or both.
31(B) Director qualification standards.
32(C) Director responsibilities.
33(D) Director access to management and, as necessary and
34appropriate, independent advisers.
35(E) Director compensation.
36(F) Director orientation and continuing education.
37(G) The policies and procedures that are followed for
39(H) The policies and procedures that are followed for the annual
40performance evaluation of the board.
P10 1(7) The board of directors shall adopt and disclose a code of
2business conduct and ethics for directors, officers, and employees
3and promptly disclose to the board of directors any waivers of the
4code for directors or executive officers, including all of the
6(A) Conflicts of interest.
7(B) Matters covered under the corporate opportunity doctrine
8under the state of domicile.
10(D) Fair dealing.
11(E) Protection and proper use of risk retention group assets.
12(F) Compliance with all applicable laws, rules, and regulations.
13(G) Requiring the reporting of any illegal or unethical behavior
14that affects the operation of the risk retention group.
15(8) The captive manager, president, or chief executive officer
16of the risk retention group shall promptly notify the domestic
17regulator, in writing, if he or she becomes aware of any material
18noncompliance with any of these governance standards.
19(e) Domestic risk retention groups, licensed as of December 31,
202013, shall be governed by subdivision (d) on and after January
Section 662 of the Insurance Code is amended to read:
(a) A notice of cancellation of a policy shall not be
24effective unless mailed or delivered by the insurer to the named
25insured, lienholder, or additional interest at least 20 days prior to
26the effective date of cancellation; provided, however, that where
27cancellation is for nonpayment of premium, at least 10 days’ notice
28of cancellation accompanied by the reason for the cancellation
29shall be given. Unless the reason accompanies or is included in
30the notice of cancellation, the notice of cancellation shall state or
31be accompanied by a statement that upon written request of the
32named insured, mailed or delivered to the insurer not less than 15
33days prior to the effective date of cancellation, the insurer will
34specify the reason for the cancellation.
35(b) This section shall not apply to nonrenewal.
36(c) Notices made to lienholders pursuant to this section may be
37done 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
3(a) “Adjusted RBC Report” means a Risk-Based Capital (RBC)
4report that has been adjusted by the commissioner in accordance
5with subdivision (b) or (c) of Section 739.2.
6(b) “Corrective Order” means an order issued by the
7commissioner specifying corrective actions that the commissioner
8has determined are required.
9(c) “Domestic insurer” means any life or health insurer or
10property and casualty insurer organized in this state.
11(d) “Foreign insurer” means any life or health insurer or property
12and casualty insurer that is licensed to do business in this state but
13is not domiciled in this state.
14(e) “Life or health insurer” means any admitted insurer issuing
15insurance subject to Part 2 (commencing with Section 10110) of
16Division 2, or a licensed property and casualty insurer writing only
18(f) “NAIC” means the National Association of Insurance
20(g) “Negative trend” means, with respect to a life or health
21insurer, a negative trend over a period of time, as determined in
22accordance with the “Trend Test Calculation” included in the RBC
23Instructions defined in subdivision (i).
24(h) “Property and casualty insurer” means any admitted insurer
25writing insurance as described in Section 102, 103, 105, 107, 108,
26 109, 110, 111, 112, 113, 114, 115, 116, 118, 119.5, 119.6, or 120,
27but does not include monoline mortgage guaranty insurers,
28financial guaranty insurers, or title insurers.
29(i) “RBC Instructions” means the RBC Report, including
30risk-based capital instructions adopted by the NAIC, and as the
31RBC Instructions may be amended by the NAIC from time to time
32in accordance with the procedures adopted by the NAIC.
33(j) “RBC Level” means an insurer’s Company Action Level
34RBC, Regulatory Action Level RBC, Authorized Control Level
35RBC, or Mandatory Control Level RBC where:
36(1) “Company Action Level RBC” means, with respect to any
37insurer, the product of 2.0 and its Authorized Control Level RBC.
38(2) “Regulatory Action Level RBC” means the product of 1.5
39and its Authorized Control Level RBC.
P12 1(3) “Authorized Control Level RBC” means the number
2determined under the risk-based capital formula in accordance
3with the RBC Instructions.
4(4) “Mandatory Control Level RBC” means the product of .70
5and the Authorized Control Level RBC.
6(k) “RBC Plan” means a comprehensive financial plan
7containing the elements specified in subdivision (b) of Section
8739.3. If the commissioner rejects the RBC Plan, and it is revised
9by the insurer, with or without the commissioner’s
10recommendation, the plan shall be called the “Revised RBC Plan.”
11(l) “RBC Report” means the report required in Section 739.2.
12(m) “Total Adjusted Capital” means the sum of:
13(1) An insurer’s statutory capital and surplus.
14(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
19(1) The filing of an RBC Report by an insurer that indicates any
20of the following:
21(A) The insurer’s Total Adjusted Capital is greater than or equal
22to its Regulatory Action Level RBC but less than its Company
23Action Level RBC.
24(B) If a life or health insurer, the insurer has Total Adjusted
25Capital that is greater than or equal to its Company Action Level
26RBC but less than the product of its Authorized Control Level
27RBC and 2.5, and has a negative trend.
28(C) If a property and casualty insurer, the insurer has Total
29Adjusted Capital that is greater than or equal to its Company Action
30Level RBC but less than the product of its Authorized Control
31Level RBC and 3.0, and triggers the trend test determined in
32accordance with the trend test calculation included in the Property
33and Casualty RBC instructions.
34(2) The notification by the commissioner to the insurer of an
35Adjusted RBC Report that indicates the event in paragraph (1),
36provided that the insurer does not challenge the Adjusted RBC
37Report under Section 739.7.
38(3) If the insurer challenges, under Section 739.7, an Adjusted
39RBC Report that indicates the event in paragraph (1), the
P13 1notification by the commissioner to the insurer that the
2commissioner has, after a hearing, rejected the insurer’s challenge.
3(b) In the event of a Company Action Level Event, the insurer
4shall prepare and submit to the commissioner a comprehensive
5financial plan that shall do all of the following:
6(1) Identify the conditions in the insurer that contribute to the
7Company Action Level Event.
8(2) Contain proposals of corrective actions that the insurer
9intends to take and would be expected to result in the elimination
10of the Company Action Level Event.
11(3) Provide projections of the insurer’s financial results in the
12current year and at least the four succeeding years, both in the
13absence of proposed corrective actions and giving effect to the
14proposed corrective actions, including projections of statutory
15operating income, net income, capital, or surplus, or a combination.
16The projections for both new and renewal business may include
17separate projections for each major line of business and separately
18identify each significant income, expense, and benefit component.
19(4) Identify the key assumptions impacting the insurer’s
20projections and the sensitivity of the projections to the assumptions.
21(5) Identify the quality of, and problems associated with, the
22insurer’s business, including, but not limited to, its assets,
23anticipated business growth and associated surplus strain,
24extraordinary exposure to risk, mix of business, and use of
25reinsurance in each case, if any.
26(c) The RBC Plan shall be submitted as follows:
27(1) Within 45 days of the Company Action Level Event.
28(2) If the insurer challenges an Adjusted RBC Report pursuant
29to Section 739.7, within 45 days after notification to the insurer
30that the commissioner has, after a hearing, rejected the insurer’s
32(d) Within 60 days after the submission by an insurer of an RBC
33Plan to the commissioner, the commissioner shall notify the insurer
34whether the RBC Plan shall be implemented or is, in the judgment
35of the commissioner, unsatisfactory. If the commissioner
36determines that the RBC Plan is unsatisfactory, the notification to
37the insurer shall set forth the reasons for the determination, and
38may set forth proposed revisions that will render the RBC Plan
39satisfactory, in the judgment of the commissioner. Upon
40notification from the commissioner, the insurer shall prepare a
P14 1Revised RBC Plan, which may incorporate by reference revisions
2proposed by the commissioner, and shall submit the Revised RBC
3Plan to the commissioner as follows:
4(1) Within 45 days after the notification from the commissioner.
5(2) If the insurer challenges the notification from the
6commissioner under Section 739.7, within 45 days after a
7notification to the insurer that the commissioner has, after a
8hearing, rejected the insurer’s challenge.
9(e) In the event of a notification by the commissioner to an
10insurer that the insurer’s RBC Plan or Revised RBC Plan is
11unsatisfactory, the commissioner may, at his or her discretion,
12subject to the insurer’s right to a hearing under Section 739.7,
13specify in the notification that the notification constitutes a
14Regulatory Action Level Event.
15(f) Every domestic insurer that files an RBC Plan or Revised
16RBC Plan with the commissioner shall file a copy of the RBC Plan
17or Revised RBC Plan with the insurance commissioner in any state
18in which the insurer is authorized to do business if both of the
20(1) That state has an RBC provision substantially similar to
21subdivision (a) of Section 739.8.
22(2) The insurance commissioner of that state has notified the
23insurer of its request for the filing in writing, in which case the
24insurer shall file a copy of the RBC Plan or Revised RBC Plan in
25that state no later than the later of:
26(A) Fifteen days after the receipt of notice to file a copy of its
27RBC Plan or Revised RBC Plan with the state.
28(B) The date on which the RBC Plan or Revised RBC Plan is
29filed 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
32in subdivision (i) of Section 1011, “insolvency” means either of
34(1) Any impairment of minimum “paid-in capital” or “capital
35paid in,” as defined in Section 36, required in the aggregate of an
36insurer by the provisions of this code for the class, or classes, of
37insurance that it transacts anywhere.
38(2) An inability of the insurer to meet its financial obligations
39when they are due.
P15 1(b) On or after January 1, 1970, an insurer cannot escape the
2condition of insolvency by being able to provide for all its liabilities
3and for reinsurance of all outstanding risks. An insurer must also
4be possessed of additional assets equivalent to the aggregate
5“paid-in capital” or “capital paid in” required by this code after
6making provision for all those liabilities and for that reinsurance.
7(c) On or after October 1, 1967, as used in this code provision
8for reinsurance of all outstanding risks and “gross premiums
9without any deduction, received and receivable upon all unexpired
10risks” means the greater of: (1) the aggregate amount of actual
11unearned premiums, or (2) the amount reasonably estimated as
12being required to reinsure in a solvent admitted insurer the
13unexpired terms of the risks represented by all outstanding policies.
14(d) On or after October 1, 1967, an insurer shall make
15for reinsurance of the outstanding risk on policies that provide
16premiums that are fully earned at inception and on policies that
17for any other reason do not provide for a return premium to the
18insured on cancellation prior to expiration.
19(e) On or after October 1, 1967, the commissioner shall prescribe
20standards for reasonably estimating the amount required to reinsure
21that will provide adequate safeguards for the policyholders,
22creditors, and the public.
23(f) On or after October 1, 1967, this section shall not be
24applicable to life, title, mortgage, or mortgage guaranty insurers.
25(g) In the application of this section to disability insurance, as
26defined in Section 106, reserves for unearned premiums and
27amounts reasonably estimated as required to reinsure outstanding
28risks 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
33office of a person described in Section 1010 is located, upon the
34filing by the commissioner of the verified application showing any
35of the conditions in this subdivision exist, or a filing by the Federal
36Deposit Insurance Corporation of the verified application showing
37that the conditions enumerated in subdivision (j) exist and the
38conditions set forth in Section 5383(e)(3) of Title 12 of the United
39States Code having been satisfied, shall issue its order vesting title
40to all of the assets of that person, wheresoever situated, in the
P16 1commissioner or his or her successor in office, in his or her official
2capacity, and direct the commissioner forthwith to take possession
3of all of its books, records, property, real and personal, and assets,
4and to conduct, as conservator, the business of the person, or so
5much thereof as to the commissioner may seem appropriate, and
6enjoining the person and its officers, directors, agents, servants,
7and employees from the transaction of its business or disposition
8of its property until any of the following further order of the court:
9(a) That the person has refused to submit its books, papers,
10accounts, or affairs to the reasonable inspection of the
11commissioner or his or her deputy or examiner.
12(b) That the person has neglected or refused to observe an order
13of the commissioner to make good within the time prescribed by
14law any deficiency in its capital if it is a stock corporation, or in
15its reserve if it is a mutual insurer.
16(c) That the person, without first obtaining the consent in writing
17of the commissioner, has transferred, or attempted to transfer,
18substantially its entire property or business or, without consent,
19has entered into any transaction the effect of which is to merge,
20consolidate, or reinsure substantially its entire property or business
21in or with the property or business of any other person.
22(d) That the person is found, after an examination, to be in a
23condition that makes its further transaction of business hazardous
24to its policyholders, or creditors, or to the public.
25(e) That the person has violated its charter or any law of the
27(f) That any officer of
the person refuses to be examined under
28oath, touching its affairs.
29(g) That any officer or attorney in fact of the person has
30embezzled, sequestered, or wrongfully diverted any of the assets
31of the person.
32(h) That a domestic insurer does not comply with the
33requirements for the issuance to it of a certificate of authority, or
34that its certificate of authority has been revoked.
35(i) That the last report of examination of any person to whom
36the provisions of this article apply shows the person to be insolvent
37within the meaning of Article 13 (commencing with Section 980)
38of Chapter 1 of Part 2 of Division 1; or if a reciprocal or
39interinsurance exchange, within the applicable provisions of
P17 1Section 1370.2, 1370.4, 1371, or 1372; or if a life insurer, within
2the applicable provisions of Sections 10510 and 10511.
3(j) Notification is given by the United States Secretary of the
4Treasury that a determination has been made by the secretary, in
5accordance with and satisfying the provisions of Section 5383(b)
6of Title 12 of the United States Code, as to a person described in
7Section 1010 that is an insurance company as defined in Section
85381(a)(13) of Title 12 of the United States Code, and one of the
10(1) The board of directors, or body performing similar functions,
11of the person acquiesces or consents to the appointment of a
12receiver as provided for in Section 5832(a)(1)(A)(i) of Title 12 of
13the United States Code, with that consent to be considered to be
14consent to issuance of an order under this section.
15(2) The United States District Court for the District of Columbia
16issued an order for the appointment of a receiver of the person as
17provided for in Section 5382(a)(1)(A)(iv)(I) of Title 12 of the
18United States Code, without regard to whether an appeal of the
19order is pending.
20(3) A petition by the United States Secretary of the Treasury
21for appointment of a receiver was made to the United States District
22Court for the District of Columbia and was granted by operation
23of the law as provided for in Section 5382(a)(1)(A)(v) of Title 12
24of the United States Code, without regard to whether an appeal of
25the order is pending.
Section 1011.1 of the Insurance Code is amended to
If a verified application is filed pursuant to Section
291011 that shows that the conditions set forth in subdivision (j) of
30Section 1011 exist and upon a showing that notice was provided
31to the person that is the subject of the verification application, all
32of the following apply:
33(a) A superior court hearing shall be held in which the person
34may oppose the verified application solely on the grounds that the
35conditions set forth in subdivision (j) of Section 1101 do not exist.
36The hearing shall be completed within 24 hours after the verified
37application is filed with the court.
38(b) The superior court shall issue an order as provided for in
39Section 1011 within 24 hours after the verified application was
40filed with the court.
P18 1(c) If the superior court does not issue an order within 24 hours
2as provided for in subdivision (b), then an order described in
3Section 1011 shall be deemed granted by operation of law upon
4expiration of the 24-hour period, without further notice.
5(d) An order entered by the superior court pursuant to
6subdivision (b) or entered by operation of law pursuant to
7subdivision (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
12application showing the conditions in subdivision (j) of Section
131011 to exist, the order shall continue in force and effect until, on
14the application either of the commissioner or of that person, it
15shall, after a full hearing, appear to the court that the ground for
16the order directing the commissioner to take title and possession
17does not exist or has been removed and that the person can properly
18resume 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
23Section 1011, or if at the time of instituting any proceeding under
24this article, including under Section 1011, it shall appear to the
25commissioner that it would be futile to proceed as conservator
26with the conduct of the business of that person, he or she may
27apply to the court for an order to liquidate and wind up the business
28of the person. Upon a full hearing of that application, the court
29may make an order directing the winding up and liquidation of the
30business of that person by the commissioner, as liquidator, for the
31purpose of carrying out the order to liquidate and wind up the
32business of that person.
33(b) Notwithstanding subdivision (a), the court may issue an
34order to liquidate and wind up the business of a person as to whom
35a verified application is filed pursuant to subdivision (j) of Section
361011 based solely on the verified application and hearing as
37provided for in subdivision (a) of Section 1011.1, without further
38hearing, or may issue an order to liquidate and wind up the business
39of the person upon application by the commissioner after the
40issuance of an order under Section 1011. The court’s order may
P19 1direct the winding up and liquidation of the business of the person
2by the commissioner, as liquidator, for the purpose of carrying out
3the 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
7article shall not be required of a nonsurviving admitted constituent
8to a merger or consolidation into another admitted insurer in
9accordance with the applicable statutes and the commissioner’s
10prior written consent given pursuant to subdivision (c) of Section
111011, provided the commissioner is satisfied by documents,
12authenticated so as to be admissible in evidence over objection,
13filed with him or her, that:
14(a) The constituent has discharged all of its liabilities to residents
15of this state in the manner provided by Section 1071.5;
16(b) There will be an admitted insurer directly available to the
17constituent’s policyholders: (1) to obtain policy changes and
18 endorsements, (2) to receive payment of premiums and refund
19unearned premiums, (3) to serve notice of claim, proof of loss,
20summons, process, and other papers, and (4) for purposes of suit;
21(c) The constituent shall timely file with the commissioner
22appropriate financial statements reporting its insurance business
23done in this state during the calendar year of the merger or
24consolidation and all appropriate tax returns required by law for
25the period, and shall timely pay all taxes found to be due on account
26of the business; and
27(d) The constituent has surrendered its current California
28certificate of authority to the commissioner for cancellation as of
29the effective date of the merger.
30The withdrawal procedure and fees
prescribed by this article
31shall not be required of an insurer that has been liquidated by a
32final order of a court of record of this or any sister state provided
33a certified copy of the order reciting the fact of liquidation and
34discharge of all obligations has been filed with the commissioner.
Section 1216.1 of the Insurance Code is amended to
As used in this article, the following terms have the
39(a) “Accredited state” means a state in which the insurance
40department or regulatory agency having jurisdiction over the
P20 1business of insurance has qualified as meeting the minimum
2financial regulatory standards promulgated and established from
3time to time by the National Association of Insurance
4Commissioners’ (NAIC) Financial Regulation Standards and
6(b) “Control” or “controlled” has the meaning ascribed in
insurer” means an admitted insurer which is
9controlled, directly or indirectly, by a producer.
10(d) “Controlling producer” means a producer who, directly or
11indirectly, controls an insurer.
12(e) “Admitted insurer” or “insurer” means any person, firm,
13association, or corporation admitted to transact any property or
14casualty insurance business in this state. The following are not
15insurers for the purposes of this article:
16(1) All residual market pools and joint underwriting authorities
18(2) All captive insurers, other than risk retention groups as
19defined in the federal Superfund Amendments Reauthorization
20Act of 1986 (42 U.S.C. Sec. 9671), the federal Liability Risk
21Retention Act of 1986 (15 U.S.C. Sec. 3901 et seq.), and the
22California Risk Retention Act of 1991 (Chapter 1.5 (commencing
23with Section 125) of Part 1). For the purposes of this article, captive
24insurers are either insurance companies which are owned by
25another organization and whose exclusive purpose is to insure
26risks of the parent organization and affiliated companies, or in the
27case of groups and associations, insurance organizations which
28are owned by the insureds and whose exclusive purpose is to insure
29risks of member organizations and group or association members
30and their affiliates.
31(f) “Producer” means a fire and casualty licensee or licensees
32or any other person, firm, association, or corporation, when, for
33any compensation, commission, or other thing of value, the person,
34firm, association, or corporation acts or aids in any manner in
35soliciting, negotiating or procuring the making of any insurance
36contract on behalf of an insured other than the person, firm,
37association, or corporation.
Section 1624 of the Insurance Code is amended to
“Insurance solicitor” means a natural person employed
2to aid a property and casualty broker-agent acting as an insurance
3agent or insurance broker in transacting insurance other than life,
4disability, or health.
Section 1675 of the Insurance Code is amended to
The following applicants who have theretofore been
8licensed under this code are exempt from the requirements of this
10(a) An applicant for a license to act as a property broker-agent
11or a casualty broker-agent who has been licensed as a property
12broker-agent, casualty broker-agent, or surplus line broker during
13any part of the license year in which the application is filed or the
14immediately preceding license year.
15(b) An applicant for a license to act as a life-only agent who has
16been licensed as a life-only agent during any part of the license
17year in which the application is filed or the immediately preceding
19(c) An applicant for a license to act as an accident and health
20agent who has been licensed as an accident and health agent during
21any part of the license year in which the application is filed or the
22immediately preceding license year.
23(d) An applicant for a license to act as a travel insurance agent.
24(e) An applicant specifically exempted from the particular
25qualifying examination requirement by other provisions of this
27(f) (1) A nonresident licensee who applies for a property
28broker-agent, casualty broker-agent, personal lines broker-agent,
29or life agent resident license in this state, and who is currently
30licensed for the same lines of authority in the state of his or her
31current resident license, shall not be required to complete an
32examination. The application shall be received within 90 days of
33the cancellation of the applicant’s resident license and the producer
34database records, maintained by the National Association of
35Insurance Commissioners, shall indicate that the producer is
36licensed in good standing for the line of authority requested.
37(2) Upon issuance of the California resident license, the
38examination waiver also applies to adding additional lines of
39authority to the California resident license provided that the
40individual was previously licensed in good standing for the
P22 1requested additional lines of authority, and the application is
2received within 12 months of the cancellation of the applicant’s
3previous resident license in another state.
Section 1749.3 of the Insurance Code is amended to
An individual licensed as a life-only agent or an
7accident and health agent and also licensed as a property or casualty
8broker-agent, or an individual only licensed as a property or
9casualty broker-agent, shall complete those courses, programs of
10instruction, or seminars approved by the commissioner for the type
11of license held. Completion of specified product training required
12in subdivision (d) of Section 1749.33, subdivision (b) of Section
131749.8, and paragraph (4) of subdivision (a) of Section 10234.93
14may result in the completion of more than the minimum of required
15continuing education hours. The minimum number of hours
16required is as follows:
17(a) Any licensee, as specified in this section, shall
18complete 24 hours of instruction, of which three hours shall be in
19ethics, prior to renewal of the license. These hours of instruction
20may be completed at any time prior to renewal of the license.
21(b) An individual licensed as a property broker-agent or casualty
22broker-agent and as a life-only agent or an accident and health
23agent shall satisfy the requirements of this section by demonstrating
24completion of the courses, programs of instruction, or seminars
25approved by the commissioner for any of the license types listed
26in this section.
27(c) A licensee shall not be required to comply with the
28requirements of this article if the licensee submits proof satisfactory
29to the commissioner that he or she has been a licensee in good
30standing for 30 continuous years in this state and is 70 years of
31age or older. This exemption shall not apply to those individuals
32licensed for the first time on or after January 1, 2010.
Section 1749.31 of the Insurance Code is amended
(a) An individual licensed as a personal lines
36broker-agent shall complete required continuing education courses,
37programs of instruction, or seminars approved by the
38commissioner. The personal lines broker-agent shall complete 24
39hours, of which three hours shall be in ethics, during each two-year
40license term as defined in subdivision (d) of Section 1625.5.
P23 1(b) An individual licensed as a personal lines broker-agent and
2as a life-only agent or accident and health agent shall satisfy the
3requirements of this section by satisfactorily completing 24 hours
4of instruction prior to renewal of the license.
Section 1749.32 of the Insurance Code is amended
(a) An individual licensed as a limited lines
8automobile insurance agent shall complete required continuing
9education courses, programs of instruction, or seminars approved
10by the commissioner. The minimum number of hours required is
1120 hours, of which three hours shall be in ethics, per license term
12prior to the renewal of the license.
13(b) An individual licensed as a limited automobile insurance
14agent and as a life-only agent or accident and health agent shall
15satisfy the requirements of this section by satisfactorily completing
1624 hours of instruction prior to renewal of the license.
Section 1749.33 of the Insurance Code is amended
(a) A life-only agent licensee shall satisfactorily
20complete 24 hours of instruction, of which three hours shall be in
21ethics, prior to renewal of the license. These hours of instruction
22may be completed at any time prior to renewal of the license.
23(b) An accident and health agent licensee shall satisfactorily
24complete 24 hours of instruction, of which three hours shall be in
25ethics, prior to renewal of the license. These hours of instruction
26may be completed at any time prior to renewal of the license.
27(c) An agent licensed as both a life-only agent and as an accident
28and health agent shall satisfactorily complete a total of 24 hours
29of instruction, of which three hours shall be in ethics, prior to
30renewal of the license. These hours of instruction may be
31completed at any time prior to renewal of the license.
32(d) Any accident and health agent who wishes to sell 24-hour
33care coverage, as defined in Section 1749.02, shall complete a
34course, program of instruction, or seminar of an approved
35continuing education provider on workers’ compensation and
36general principles of employer liability, which shall be completed
37by examination approved by the commissioner as part of the
38continuing education course, program of instruction, or seminar
39prior to selling this coverage. The required number of instruction
40hours shall be equal to but no greater than that required by the
P24 1curriculum board for the prelicensing requirements of a property
2broker-agent or a casualty broker-agent on these subjects. For
3resident licensees, this requirement shall count toward the
4licensee’s continuing education requirement, but may still result
5in completing more than the minimum number of continuing
6education hours set forth in this section. Nothing in this section
7shall be deemed to allow an accident and health agent to satisfy
8the obligations set forth in this section by other than a proctored
9examination administered or approved by the department.
Section 1749.8 of the Insurance Code is amended to
(a) Every life agent who sells annuities shall
13satisfactorily complete eight hours of training prior to soliciting
14individual consumers in order to sell annuities.
15(b) Every life agent who sells annuities shall satisfactorily
16complete four hours of training prior to each license renewal.
17Completion of the eight-hour annuity training required by
18subdivision (a) does not satisfy the four-hour annuity training
19required by this subdivision. For resident licensees, this
20requirement shall count toward the licensee’s continuing education
21requirement, but may still result in completing more than the
22minimum number of continuing education hours set forth in this
24(c) The training required by this section shall be approved by
25the commissioner and shall consist of topics related to annuities,
26and California law, regulations, and requirements related to
27annuities, prohibited sales practices, the recognition of indicators
28that a prospective insured may lack the short-term memory or
29judgment to knowingly purchase an insurance product, and
30fraudulent and unfair trade practices. Subject matter determined
31by the commissioner to be primarily intended to promote the sale
32or marketing of annuities shall not qualify for credit toward the
33training requirement. Any course or seminar that is disapproved
34under the provisions of this section shall be presumed invalid for
35credit toward the training requirement of this section unless it is
36approved in writing by the commissioner.
37(d) The training requirements set forth in this section shall not
38apply to nonresident agents representing an insurer that is a direct
P25 1For the purposes of this section, “direct response provider” means
2an insurer that meets each of the following criteria:
3(1) The insurer does not initiate telephone contact with insureds
4or prospective insureds.
5(2) Agents of the insurer speak with insureds and prospective
6insureds only by telephone, and at the request of the insureds or
8(3) Agents of the insurer are assigned to speak with insureds or
9prospective insureds on a random basis, when contacted.
10(4) Agents of the insurer are salaried and do not receive
11commissions for sales or referrals.
Section 1758.3 of the Insurance Code is amended to
The commissioner shall not grant authority to transact
15variable contracts unless the life agent or applicant furnishes proof
16that he or she is registered to sell securities in California in
17accordance with the rules of the United States Securities and
18Exchange Commission or the Financial Industry Regulatory
19Authority. Any authority granted to a life agent to transact variable
20contracts shall immediately terminate upon the life agent no longer
21being registered to sell securities in accordance with the rules of
22the United States Securities and Exchange Commission or the
23Financial Industry Regulatory Authority.
Section 1758.681 is added to the Insurance Code, to
Notwithstanding any other law:
27(a) As used in this section, “portable electronics vendor
28policyholder” means a portable electronics insurance agent licensee
29pursuant to subdivision (f) of Section 1758.69.
30(b) An insurer may terminate a portable electronics insurance
31policy or otherwise change the terms and conditions of a portable
32electronics insurance policy only upon providing the portable
33electronics vendor policyholder and enrolled customers with at
34least 30 calendar days’ written notice.
35(c) If the insurer changes the terms and conditions of a policy
36of portable electronics insurance, the insurer shall provide the
37portable electronics vendor policyholder with a revised policy or
38endorsement and each enrolled customer with a revised certificate,
39endorsement, updated brochure, or other evidence indicating that
P26 1a change in the terms and conditions has occurred and a summary
2of those changes.
3(d) Notwithstanding subdivision (b), an insurer may terminate
4an enrolled customer’s enrollment under a portable electronics
5insurance policy upon 15 calendar days’ notice for discovery of
6fraud or material misrepresentation in obtaining coverage or in the
7presentation of a claim under the policy.
8(e) Notwithstanding subdivision (b), an insurer may immediately
9terminate an enrolled customer’s enrollment under a portable
10electronics insurance policy without prior notice for any of the
12(1) For nonpayment of premium.
13(2) If the enrolled customer ceases to have an active service
14with the vendor of portable electronics.
15(3) If the enrolled customer exhausts the aggregate limit of
16liability, if any, under the terms of the portable electronics
17insurance policy and the insurer sends notice of termination to the
18enrolled customer within 30 calendar days after exhaustion of the
19limit. However, if notice is not sent within 30 calendar days,
20enrollment shall continue notwithstanding the aggregate limit of
21liability until 30 calendar days from the date the insurer sends
22notice of termination to the enrolled customer.
23(f) If a portable electronics insurance policy is terminated by a
24portable electronics vendor policyholder, the portable electronics
25vendor policyholder shall mail or deliver a written notice to each
26enrolled customer advising the enrolled customer of the termination
27of the policy and the effective date of termination. The written
28notice shall be mailed or delivered by the portable electronics
29vendor policyholder to the enrolled customer at least 30 days prior
30to the termination. However, if the notice is not sent within 30
31calendar days, enrollment shall continue until 30 calendar days
32from the date the portable electronics vendor policyholder sends
33notice of termination to the enrolled customer or until a new
34portable electronics insurance policy is in effect.
35(g) Whenever notice or correspondence with respect to a policy
36of portable electronics insurance is required pursuant to this section,
37it shall be in writing and sent within the notice period required
38pursuant to this section. Notices and correspondence shall be sent
39to the portable electronics vendor policyholder at the portable
40electronics vendor policyholder’s mailing address specified for
P27 1that purpose and to its affected enrolled customers’ last known
2mailing addresses on file with the insurer or the portable electronics
3vendor policyholder. The insurer or portable electronics vendor
4policyholder shall maintain proof that the notice or correspondence
5was sent for not less than three years after that notice or
6correspondence was sent.
Section 1872.87 of the Insurance Code is amended
(a) Each insurer required to pay special purpose
10assessments pursuant to Sections 1872.8, 1872.81, 1872.85, 1874.8,
11or subdivision (a) of Section 1872.86 may, over a reasonable length
12of time, but in no event later than the calendar year in which the
13assessment is paid, recoup the special purpose assessments by way
14of a surcharge on premiums charged for the insurance policies to
15which those sections apply or by including the assessments within
16the insurer’s rates. Amounts recouped shall not be considered
17premiums for any purpose, including the computation of gross
18premium tax or agents’ commission.
19(b) The amount of the surcharge shall be separately stated on
20either a billing or policy declaration sent to an insured.
Section 10234.93 of the Insurance Code is amended
(a) Every insurer of long-term care in California
25(1) Establish marketing procedures to assure that any comparison
26of policies by its agents or other producers will be fair and accurate.
27(2) Establish marketing procedures to assure excessive insurance
28is not sold or issued.
29(3) Submit to the commissioner within six months of the
30effective date of this act, a list of all agents or other insurer
31representatives authorized to solicit individual consumers for the
32sale of long-term care insurance. These submissions shall be
33updated at least semiannually.
34(4) Provide the following training and require that each agent
35or other insurer representative authorized to solicit individual
36consumers for the sale of long-term care insurance shall
37satisfactorily complete the following training requirements that,
38for resident licensees, shall count toward the licensee’s continuing
39education requirement, but may still result in completing more
P28 1than the minimum number of continuing education hours set forth
2in this section:
3(A) For licensees issued a license after January 1, 1992, eight
4hours of training in each of the first four 12-month periods
5beginning from the date of original license issuance and thereafter
6eight hours of training prior to each license renewal.
7(B) For licensees issued a license before January 1, 1992, eight
8hours of training prior to each license renewal.
9(C) For nonresident licensees that are not otherwise subject to
10the continuing education requirements set forth in Section 1749.3,
11the evidence of training required by this section shall be filed with
12and approved by the commissioner as provided in subdivision (g)
13of Section 1749.4.
14Licensees shall complete the initial training requirements of this
15section prior to being authorized to solicit individual consumers
16for the sale of long-term care insurance.
17The training required by this section shall consist of topics related
18to long-term care services and long-term care insurance, including,
19but not limited to, California regulations and requirements,
20available long-term care services and facilities, changes or
21improvements in services or facilities, and alternatives to the
22purchase of private long-term care insurance. On or before July
231, 1998, the following additional training topics shall be required:
24differences in eligibility for benefits and tax treatment between
25policies intended to be federally qualified and those not intended
26to be federally qualified, the effect of inflation in eroding the value
27of benefits and the importance of inflation protection, and NAIC
28consumer suitability standards and guidelines.
29(5) Display prominently on page one of the policy or certificate
30and the outline of coverage: “Notice to buyer: This policy may not
31cover all of the costs associated with long-term care incurred by
32the buyer during the period of coverage. The buyer is advised to
33review carefully all policy limitations.”
34(6) Inquire and otherwise make every reasonable effort to
35identify whether a prospective applicant or enrollee for long-term
36care insurance already has accident and sickness or long-term care
37insurance and the types and amounts of any such insurance.
38(7) Every insurer or entity marketing long-term care insurance
39shall establish auditable procedures for verifying compliance with
P29 1(8) Every insurer shall provide to a prospective applicant, at the
2 time of solicitation, written notice that the Health Insurance
3Counseling and Advocacy Program (HICAP) provides health
4insurance counseling to senior California residents free of charge.
5Every agent shall provide the name, address, and telephone number
6of the local HICAP program and the statewide HICAP number,
8(9) Provide a copy of the long-term care insurance shoppers
9guide developed by the California Department of Aging to each
10prospective applicant prior to the presentation of an application or
11enrollment form for insurance.
12(10) Clearly post on its Internet Web site and provide written
13notice at the time of solicitation that a specimen individual policy
14form or group master policy and certificate form for each policy
15form offered in this state is available to a prospective applicant
16upon request. The individual specimen policy form or group master
17policy and certificate form shall be provided to a requesting party
18within 15 calendar days of receipt of a request.
19(b) In addition to other unfair trade practices, including those
20identified in this code, the following acts and practices are
22(1) Twisting. Knowingly making any misleading representation,
23incomplete, or fraudulent comparison of any insurance policies or
24insurers for the purpose of inducing, or tending to induce, any
25person to lapse, forfeit, surrender, terminate, retain, pledge, assign,
26borrow on, or convert any insurance policy or to take out a policy
27of insurance with another insurer.
28(2) High pressure tactics. Employing any method of marketing
29having the effect of or tending to induce the purchase of insurance
30through force, fright, threat, whether explicit or implied, or undue
31pressure to purchase or recommend the purchase of insurance.
32(3) Cold lead advertising. Making use directly or indirectly of
33any method of marketing that fails to disclose in a conspicuous
34manner that a purpose of the method of marketing is solicitation
35of insurance and that contact will be made by an insurance agent
36or insurance company.
Section 10785 of the Insurance Code is amended to
(a) A disability insurer that covers hospital, medical,
40or surgical expenses under an individual health benefit plan as
P30 1defined in subdivision (a) of Section 10198.6 may not, with respect
2to a federally eligible defined individual desiring to enroll in
3individual health insurance coverage, decline to offer coverage to,
4or deny enrollment of, the individual or impose any preexisting
5condition exclusion with respect to the coverage.
6(b) For purposes of this section, “federally eligible defined
7individual” means an individual who, as of the date on which the
8individual seeks coverage under this section, meets all of the
10(1) Has had 18 or more months of creditable coverage, and
11whose most recent prior creditable coverage was under a group
12health plan, a federal governmental plan maintained for federal
13employees, or a governmental plan or church plan as defined in
14the federal Employee Retirement Income Security Act of 1974
15(29 U.S.C. Sec. 1002).
16(2) Is not eligible for coverage under a group health plan,
17Medicare, or Medi-Cal, and does not have other health insurance
19(3) Was not terminated from his or her most recent creditable
20coverage due to nonpayment of premiums or fraud.
21(4) If offered continuation coverage under COBRA or
22Cal-COBRA, has elected and exhausted that coverage.
23(c) Every disability insurer that covers hospital, medical, or
24surgical expenses shall comply with applicable federal statutes
25and regulations regarding the provision of coverage to federally
26eligible defined individuals, including any relevant application
28(d) A disability insurer shall offer the following health benefit
29plans under this section that are designed for, made generally
30available to, are actively marketed to, and enroll, individuals:
31(1) either the two most popular products as defined in Section
32300gg-41(c)(2) of Title 42 of the United States Code and Section
33148.120(c)(2) of Title 45 of the Code of Federal Regulations or
34(2) the two most representative products as defined in Section
35300gg-41(c)(3) of the United States Code and Section
36148.120(c)(3) of Title 45 of the Code of Federal Regulations, as
37determined by the insurer in compliance with federal law. An
38insurer that offers only one health benefit plan to individuals,
39excluding health benefit plans offered to Medi-Cal or Medicare
40beneficiaries, shall be deemed to be in compliance with this chapter
P31 1if it offers that health benefit plan contract to federally eligible
2defined individuals in a manner consistent with this chapter.
3(e) (1) In the case of a disability insurer that offers health benefit
4plans in the individual market through a network plan, the insurer
5may do both of the following:
6(A) Limit the individuals who may be enrolled under that
7coverage to those who live, reside, or work within the service area
8for the network plan.
9(B) Within the service area covered by the health benefit plan,
10deny coverage to individuals if the insurer has demonstrated to the
11commissioner that the insured will not have the capacity to deliver
12services adequately to additional individual insureds because of
13its obligations to existing group policyholders, group
14contractholders and insureds, and individual insureds, and that the
15insurer is applying this paragraph uniformly to individuals without
16regard to any health status-related factor of the individuals and
17without regard to whether the individuals are federally eligible
19(2) A disability insurer, upon denying health insurance coverage
20in any service area in accordance with subparagraph (B) of
21paragraph (1), may not offer health benefit plans through a network
22in the individual market within that service area for a period of
23180 days after the coverage is denied.
24(f) (1) A disability insurer may deny health insurance coverage
25in the individual market to a federally eligible defined individual
26if the insurer has demonstrated to the commissioner both of the
28(A) The insurer does not have the financial reserves necessary
29to underwrite additional coverage.
30(B) The insurer is applying this subdivision uniformly to all
31individuals in the individual market and without regard to any
32health status-related factor of the individuals and without regard
33to whether the individuals are federally eligible defined individuals.
34(2) A disability insurer, upon denying individual health
35insurance coverage in any service area in accordance with
36paragraph (1), may not offer that coverage in the individual market
37within that service area for a period of 180 days after the date the
38coverage is denied or until the insurer has demonstrated to the
39commissioner that the insurer has sufficient financial reserves to
40underwrite additional coverage, whichever is later.
P32 1(g) The requirement pursuant to federal law to furnish a
2 certificate of creditable coverage shall apply to health benefits
3plans offered by a disability insurer in the individual market in the
4same manner as it applies to an insurer in connection with a group
5health benefit plan policy or group health benefit plan contract.
6(h) A disability insurer shall compensate an accident and health
7agent or a life and accident and health agent whose activities result
8in the enrollment of federally eligible defined individuals in the
9same manner and consistent with the renewal commission amounts
10as the insurer compensates accident and health agents or life and
11accident and health agents for other enrollees who are not federally
12eligible defined individuals and who are purchasing the same
13individual health benefit plan.
14(i) Every disability
insurer shall disclose as part of its COBRA
15or Cal-COBRA disclosure and enrollment documents, an
16explanation of the availability of guaranteed access to coverage
17under the federal Health Insurance Portability and Accountability
18Act of 1996, including the necessity to enroll in and exhaust
19COBRA or Cal-COBRA benefits in order to become a federally
20eligible defined individual.
21(j) No disability insurer may request documentation as to
22whether or not a person is a federally eligible defined individual
23other than is permitted under applicable federal law or regulations.
24(k) This section shall not apply to coverage defined as excepted
25benefits pursuant to Section 300gg(c) of Title 42 of the United
27(l) This section shall apply to policies or contracts offered,
28delivered, amended, or renewed on or after January 1, 2001.
(a) A disability insurer that covers hospital, medical,
32or surgical expenses under an individual health benefit plan as
33defined in subdivision (a) of Section 10198.6 may not, with respect
34to a federally eligible defined individual desiring to enroll in
35individual health insurance coverage, decline to offer coverage to,
36or deny enrollment of, the individual or impose any preexisting
37condition exclusion with respect to the coverage.
38(b) For purposes of this section, “federally eligible defined
39individual” means an individual who, as of the date on which the
P33 1individual seeks coverage under this section, meets all of the
3(1) Has had 18 or more months of creditable coverage, and
4 whose 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:
P34 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.
P35 1(h) A disability insurer shall compensate
begin delete a life agent, property whose activities
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
6 amounts 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.
Section 11620 of the Insurance Code is amended to
(a) The commissioner, after a public hearing, shall
9approve or issue a reasonable plan for the equitable apportionment,
10among insurers admitted to transact liability insurance, of those
11applicants for automobile bodily injury and property damage
12liability insurance who are in good faith entitled to but are unable
13to procure that insurance through ordinary methods. The
14commissioner shall require the payment of five hundred ninety
15dollars ($590), in advance, as a fee for the filing of amendments
16to the plan with the commissioner. The commissioner may approve
17or issue reasonable amendments to the plan that are approved by
18the plan’s advisory committee, if he or she first holds a public
19hearing to determine whether the amendments are in keeping with
20the intent and purpose of this section. All those insurers shall
21subscribe to the plan and its amendments and participate in the
23(b) Judicial review of a change to the plan, including rate
24revision proceedings, shall be in accordance with Section 1858.6.
25(c) The adoption of the plan referenced in subdivision (a), and
26any amendments thereto, is not subject to the requirements of the
27Administrative Procedure Act (Chapter 3.5 (commencing with
28Section 11340) of Part 1 of Division 3 of Title 2 of the Government
29Code), unless written or oral comments submitted pursuant to
30subdivision (e) raise regulatory standards set forth in subdivisions
31(a), (b), (c), (d), (e), and (f) of Section 11349 of the Government
33(d) The commissioner shall provide notice of any hearing
34pursuant to subdivision (a) by doing all of the following at least
3545 days prior to the hearing:
36(1) Publishing the notice in the California Regulatory Notice
38(2) Mailing the notice to the parties on the department’s
39regulations mailing list.
P37 1(3) Posting the notice on the department’s public Internet Web
3(e) Interested parties may present written or oral comments at
4the hearing, or may submit written comments to the contact person
5identified in the hearing notice by the date and time posted in the
6notice. Before adopting any amendments to the plan, the
7commissioner shall consider all comments received on or before
8the day of the hearing.
Section 12389.7 is added to the Insurance Code, to
(a) Sections 1070, 1070.5, 1070.6, 1071.5, 1072, and
121076 shall be applicable to underwritten title companies.
13(b) The following terms from Sections 1070, 1070.5, 1070.6,
141071.5, 1072, and 1076 shall be applicable to underwritten title
15companies as follows:
16(1) “Certificate of Authority” shall mean an underwritten title
18(2) “Insurer” shall mean an underwritten title company.
19(3) “Reinsurer” shall mean a title underwriter or another
20underwritten title company.
21(c) For the purposes of this section, Sections 1070, 1070.5,
221070.6, 1071.5, 1072, and 1076 shall be construed in accordance
23with the nature of underwritten title companies and the business
24of title insurance.
Section 12414.25 of the Insurance Code is amended
(a) Any person, title insurer, underwritten title
28company, or controlled escrow company who fails to comply with
29a final order of the commissioner under this chapter shall be liable
30to the state in an amount not exceeding one hundred dollars ($100),
31but if that failure is willful he, she, or it shall be liable to the state
32in an amount not exceeding five thousand dollars ($5,000) for that
33failure. The commissioner shall collect the amount so payable and
34may bring an action in the name of the people of the State of
35California to enforce collection. Those penalties may be in addition
36to any other penalties provided by law.
37(b) (1) A willful violation of the provisions of this chapter is a
39(2) This subdivision is not applicable to Section 12389.7.
Section 14090.1 of the Insurance Code is amended
(a) An individual who holds an insurance adjuster
4license and who is not exempt under subdivision (b) shall
5satisfactorily complete a minimum of 24 hours, of which three
6hours are to be in ethics, of continuing education courses pertinent
7to the duties and responsibilities of an insurance adjuster license
8reported to the insurance commissioner on a biennial basis in
9conjunction with his or her license renewal cycle.
10(b) This section does not apply to any of the following:
11(1) A licensee not licensed for one full year prior to the end of
12the applicable continuing education biennium.
13(2) A licensee holding a nonresident insurance adjuster license
14who has met the continuing education requirements of his or her
15designated resident state.
16(3) An individual licensed as an insurance adjuster and as a
17property or casualty broker-agent, pursuant to Section 1625, who
18has met the continuing education requirements specified in Section