Senate Bill No. 136

Introduced by Senator Gaines

January 28, 2013

An act to amend Section 1704 of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 136, as introduced, Gaines. Insurance: brokers and agents: notice of appointment.

Existing law prohibits any person acting as a licensee from acting as an agent of an insurer unless the insurer has filed with the Insurance Commissioner a notice of appointment, as specified. Existing law also requires that specified agents acting in the capacity of an insurance solicitor have filed on his or her behalf with the commissioner a notice of appointment, as specified. Existing law requires that each appointment, by its terms, continue in force until the occurrence of a specified event.

This bill would make technical, nonsubstantive changes to that provision.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1704 of the Insurance Code is amended
to read:

1704.  

(a)  begin delete Any end delete begin insert A end insert person acting as a licensee under this chapter
shall not act as an agent of an insurer unless the insurer has filed
with the commissioner a notice of appointment, executed by the
insurer, appointing the licensee as the insurer’s agent. Every
property broker-agent, casualty broker-agent, personal lines
broker-agent, or limited lines automobile insurance agent acting
in the capacity of an insurance solicitor shall have filed on his or
her behalf with the commissioner a notice executed by an insurance
agent or insurance broker appointing and agreeing to employ the
solicitor as an employee within this state. Additional notices of
appointment may be filed by other insurers before the license is
issued and thereafter as long as the license remains in force. The
authority to transact insurance given to a licensee by an insurer,
property broker-agent, casualty broker-agent, personal lines
broker-agent, or limited lines automobile insurance agent, as the
case may be, by appointment shall be effective as of the date the
notice of appointment is signed. That authority to transact shall
apply to transactions occurring after that date and for the purpose
of determining the insurer’s, property broker-agent’s, casualty
broker-agent’s, personal lines broker-agent’s, or limited lines
automobile insurance agent’s liability for acts of the appointed
licensee. No notice of appointment of a life agent, property
broker-agent, casualty broker-agent, personal lines broker-agent,
limited lines automobile insurance agent, or travel insurance agent
shall be filed under this subdivision unless the licensee being
appointed has consented to that filing. Each appointment made
under this subdivision shall begin insert , end insert by its terms begin insert , end insert continue in force until:

(1) The cancellation or expiration of the license applied for or
held at the time the appointment was filed.

(2) The filing of a notice of termination by the insurer or
employing property broker-agent or casualty broker-agent, or by
the appointed life agent, property broker-agent, casualty
broker-agent, travel insurance agent, or insurance solicitor.

(b) Upon the termination of all appointments, or all
endorsements naming the licensee on the license of an organization
licensee, and the cancellation of the bond required pursuant to
Section 1662 if acting as a broker, the permanent license shall not
be canceled, but shall become inactive. It may be renewed pursuant
to Section 1718. It may be reactivated at any time prior to its
expiration by the filing of a new appointment pursuant to this
section, Section 1707, and Section 1751.3, or the filing of a new
bond pursuant to Section 1662. An inactive license shall not permit
its holder to transact any insurance for which a valid, active license
is required.

(c) Upon the termination of all appointments of a person licensed
under a certificate of convenience, that certificate shall be canceled
and shall be returned by its lawful custodian to the commissioner.

(d) A property broker-agent or a casualty broker-agent
appointing an insurance solicitor pursuant to this section, if a
natural person, shall be the holder of a permanent license to act as
such a broker-agent or the holder of a certificate of convenience
so to act issued pursuant to either subdivision (a) or (b) of Section
1685. If the property broker-agent or the casualty broker-agent is
an organization, it shall be the holder of a permanent license.

(e) The filing of an incomplete or deficient action notice with
the department shall require the filing of an amended, complete
action notice, together with the payment of the fee therefor
specified in subdivision (l) of Section 1751.

(f) A notice of appointment appointing a solicitor may be filed
by a second or subsequent property broker-agent or casualty
broker-agent. The broker-agent seeking to appoint the solicitor
shall enter into an agreement with all other property broker-agents
and casualty broker-agents with whom the insurance solicitor has
an existing appointment. The agreement shall govern how the
broker-agents will determine on which property broker-agent’s or
casualty broker-agent’s behalf the solicitor is working when dealing
with individuals who are customers of none of the property
broker-agents and casualty broker-agents with whom the solicitor
has an appointment. If the agreement does not identify which
broker-agent or broker-agents are liable for the act of the solicitor,
all property broker-agents and casualty broker-agents with whom
the solicitor is appointed at the time of the act shall be jointly and
severally liable for that act.