Amended in Assembly May 31, 2016

Amended in Assembly May 9, 2016

Amended in Assembly April 18, 2016

Amended in Assembly March 30, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2588


Introduced by Assembly Member Chu

February 19, 2016


An act to amend Sections 1722, 1751.5, 14000, 14001, 14020, 14022, 14022.5, 14024, 14025, 14028, 14031, 14032, 14039, 14042, 14080, 14090.1, 14097, and 14099 of, to amend and repeal Sections 14030 and 14037 of, to amend, repeal, and add Sections 14029, 14038, 14040, 14061, 14063, and 14064 of, to add Sections 14025.1 and 14079 to,begin insert to add and repeal Section 14097.5 of,end insert to repeal Section 14027 of, and to repeal and add Sections 14010, 14021, 14026, and 14078 of, the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 2588, as amended, Chu. Independent insurance adjusters.

Existing law, the Insurance Adjuster Act, sets forth various requirements with respect to operation as an insurance adjuster in this state, including, but not limited to, that the person be licensed, licensing qualifications and application requirements, codes of conduct, disciplinary actions, and nonresident and emergency licenses. The act defines the term, “insurance adjuster,” to include a person, other than a private investigator, who, for any consideration whatsoever, engages in business or accepts employment to furnish, or agrees to make, or makes, any investigation for the purpose of obtaining, information in the course of adjusting or otherwise participating in the disposal of, any claim under or in connection with a policy of insurance on behalf of an insurer or engages in soliciting insurance adjustment business. Any person who knowingly falsifies the fingerprints or photographs submitted as part of the application process is guilty of a felony, and any person who violates any other provision governing insurance adjusters is guilty of a misdemeanor punishable by a fine not to exceed $500, or by imprisonment in the county jail not to exceed one year, or by both that fine and imprisonment. Existing law prescribes a schedule for various insurance adjuster application, license, and license renewal fees.

This bill would revise and recast the above provisions by, among other things, changing the name of the act to the Independent Insurance Adjuster Act and redefining an “independent insurance adjuster” to mean an individual, a business entity, an independent contractor, or an employee of a contractor, who contracts for compensation with insurers, a person whose tax treatment by the insurers is consistent with that of an independent contractor rather than as an employee, and a person who investigates, negotiates, or settles property and casualty claims for insurers. The bill would expand the categories of persons exempt from the act to include, among others, an individual who is employed to investigate suspected fraudulent insurance claims but who does not adjust losses or determine claims payments, and a person who solely performs administrative or clerical duties, or any combination thereof, and who does not investigate, negotiate, or settle claims with policyholders, claimants, or their legal representative. The bill would impose additional information and educational requirements on applicants and would impose additional administrative and code of conduct requirements on licensees. The bill would revise the provisions relating to nonresident and emergency licenses with regards to qualifying for those licenses. The bill would also create an apprentice independent insurance adjuster license to facilitate the experience, education, and training necessary to ensure reasonable competency in the responsibilities and duties of an independent insurance adjuster and would set forth the various terms and conditions of the license, including an application fee to be fixed at up to $170. The bill would make an apprentice independent insurance adjuster subject to a felony conviction if he or she knowingly falsifies the fingerprints or photograph submitted as part of his or her application for a license.begin insert The bill would impose a 3-year reporting requirement on the Department of Insurance.end insert The bill would also make conforming changes. Because the bill would create a new crime, it would impose a state-mandated local program. The bill would also change various independent insurance adjuster application, license, and renewal fees, as prescribed.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

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

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

P3    1

SECTION 1.  

Section 1722 of the Insurance Code is amended
2to read:

3

1722.  

If a natural person while licensed pursuant to the
4provisions of this chapter or Chapter 6 (commencing with Section
51760), Chapter 7 (commencing with Section 1800), or Chapter 8
6(commencing with Section 1831) of this part, Part 5 (commencing
7with Section 12140) of Division 2, or Chapter 1 (commencing
8with Section 14000) of Division 5 enters the military service of
9the United States and is in that service at a time prescribed for the
10filing of a renewal application, the filing of that application is
11waived, and the license held by that licensee at the time of his or
12her entry into military service shall remain in force during the
13period of that military service and until the end of the license year
14in which he or she is released from that service but not for less
15than six months after that release. During that period, that person
16may secure a license of the type held by him or her on his or her
17entry into military service upon the filing of an application and
18paying the fee therefor without the necessity of taking any
19examination or paying any penalty.

20

SEC. 2.  

Section 1751.5 of the Insurance Code is amended to
21read:

22

1751.5.  

The fees required by this chapter and by Chapter 6
23(commencing with Section 1760), Chapter 7 (commencing with
24Section 1800), and Chapter 8 (commencing with Section 1831) of
25this part and by Chapter 1 (commencing with Section 14000) of
P4    1Division 5 are filing fees, no portion of which shall be refunded
2whether or not the application is acted upon or the examination is
3taken.

4

SEC. 3.  

Section 14000 of the Insurance Code is amended to
5read:

6

14000.  

This chapter may be cited as the Independent Insurance
7Adjuster Act.

8

SEC. 4.  

Section 14001 of the Insurance Code is amended to
9read:

10

14001.  

As used in this chapter, the following terms have the
11following meanings:

12(a) “Catastrophe” means an event that results in a large number
13of deaths or injuries, causes extensive damage or destruction of
14facilities that provide and sustain human needs, produces an
15overwhelming demand on state and local response resources and
16mechanisms, causes a severe long-term effect on general economic
17activity, or severely affects state, local, and private sector
18capabilities to begin and sustain response activities.

19(b) “Commissioner” means the Insurance Commissioner.

20(c) “Department” means the Department of Insurance.

21(d) “Fingerprints” means an impression of the lines on the finger
22taken for the purposes of identification.

23(e) “Home state” means the District of Columbia and any state
24or territory of the United States in which an independent insurance
25adjuster maintains his, her, or its principal place of residence or
26business and is licensed to act as a resident independent insurance
27adjuster. If the resident state does not license independent insurance
28adjusters for the line of authority sought, the independent insurance
29adjuster shall designate as his, her, or its home state either
30California or any state in which the independent insurance adjuster
31is licensed following an examination, provided that the independent
32insurance adjuster is licensed and in good standing in that state.

33(f) “Individual” means a natural person.

34(g) “Licensee” means a person licensed under this chapter.

35(h) “Manager” means the individual under whose direction,
36control, charge, or management the business of a licensee is
37operated.

38(i) “Nonresident” means a person who is not a resident of
39California at the time of the performance of the act referred to in
40Section 14071.

P5    1(j) “Person” includes any individual, firm, company, association,
2organization, partnership, limited liability company, and
3corporation.

4

SEC. 5.  

Section 14010 of the Insurance Code is repealed.

5

SEC. 6.  

Section 14010 is added to the Insurance Code, to read:

6

14010.  

The commissioner shall administer and enforce the
7provisions of this chapter.

8

SEC. 7.  

Section 14020 of the Insurance Code is amended to
9read:

10

14020.  

(a) A person shall not engage in a business regulated
11by this chapter, or act or assume to act as, or represent himself or
12herself to be, a licensee unless he or she is licensed as an
13independent insurance adjuster in accordance with this chapter.

14(b) A person shall not falsely represent that he or she is
15employed by a licensee.

16

SEC. 8.  

Section 14021 of the Insurance Code is repealed.

17

SEC. 9.  

Section 14021 is added to the Insurance Code, to read:

18

14021.  

An independent insurance adjuster, for purposes of this
19chapter, is all of the following:

20(a) An individual, a business entity, an independent contractor,
21or an employee of a contractor, who contracts for compensation
22with insurers.

23(b) A person whose tax treatment by the insurers is consistent
24with that of an independent contractor rather than an employee,
25as defined in Section 3121 of Title 26 of the United States Code.

26(c) A person who investigates, negotiates, or settles property
27and casualty claims for insurers.

28

SEC. 10.  

Section 14022 of the Insurance Code is amended to
29read:

30

14022.  

This chapter does not apply to any of the following:

31(a) A person employed exclusively and regularly by one
32employer in connection with the affairs of that employer only and
33where there exists an employer-employee relationship. This
34subdivision shall become inoperative on January 1, 2018.

35(b) An officer or employee of the United States of America, or
36of this state or a political subdivision thereof, while that officer or
37employee is engaged in the performance of his or her official
38duties.

39(c) A person engaged exclusively in the business of obtaining
40and furnishing information as to the financial rating of persons.

P6    1(d) A charitable philanthropic society or association duly
2incorporated under the laws of this state, which is organized and
3maintained for the public good and not for private profit.

4(e) An attorney at law admitted to practice in California, when
5acting in his or her professional capacity as an attorney.

6(f) A licensed collection agency or an employee thereof while
7acting within the scope of his or her employment, while making
8an investigation incidental to the business of the agency, including
9an investigation of the location of a debtor or his or her property
10where the contract with an assignor creditor is for the collection
11of claims owed or due or asserted to be owed or due or the
12 equivalent thereof.

13(g)  An officer, director, manager, or employee of an authorized
14insurer, surplus line insurer, a risk retention group, or an
15attorney-in-fact of a reciprocal insurer.

16(h) A licensed insurance agent or broker or managing general
17agent of the insurer to whom claim authority has been granted by
18the insurer.

19(i) The legal owner of personal property that has been sold under
20a conditional sales agreement or a mortgagee under the terms of
21a chattel mortgage.

22(j) Any bank subject to the jurisdiction of the Commissioner of
23Business Oversight under Division 1 (commencing with Section
2499) of the Financial Code or the Comptroller of the Currency of
25the United States.

26(k) A person employed solely to obtain facts surrounding a
27claim or to furnish technical assistance to a licensed independent
28insurance adjuster.

29(l) Any building contractor, engineer, technical expert, or other
30person who is engaged by an insurer or licensed independent
31insurance adjuster to provide an expert or professional evaluation
32of the extent, cause, or origin of damage to the insured property,
33but who does not otherwise participate in the process of adjusting
34claims.

35(m) An individual who is employed to investigate suspected
36fraudulent insurance claims but who does not adjust losses or
37determine claims payments.

38(n) A person who solely performs administrative or clerical
39duties, or any combination thereof, and who does not investigate,
P7    1 negotiate, or settle claims with policyholders, claimants, or their
2legal representative.

3(o) A licensed health care provider or its employees who provide
4managed care if the services do not include the determination of
5compensability.

6(p) A managed care organization or any of its employees who
7provide managed care services if the services do not include the
8determination of compensability.

9(q) A person who settles only reinsurance or subrogation claims.

10(r) A United States manager of the United States branch of an
11alien insurer.

12(s) An individual employee, under a self-insured arrangement,
13who adjusts claims on behalf of his or her employer.

14(t) An individual or business entity that investigates, negotiates,
15or settles workers’ compensation claims.

16(u) An individual who, in regards to portable electronics
17insurance claims, collects claims information from, or furnishes
18claims information to, insureds or claimants, and who conducts
19data entry, including entering data into an automated claims
20adjudication system, provided that the individual is an employee
21of a licensed independent insurance adjuster or its affiliate where
22no more than 25 of those persons are under the supervision of one
23licensed independent insurance adjuster or licensed producer.

24

SEC. 11.  

Section 14022.5 of the Insurance Code is amended
25to read:

26

14022.5.  

(a) In the event of an emergency situation as declared
27by the commissioner, claims arising out of the emergency,
28catastrophe, disaster, or other similar occurrence may be adjusted
29by a nonlicensed independent insurance adjuster upon registration
30with the commissioner if all of the following requirements are met:

31(1) The work performed by the nonlicensed independent
32insurance adjuster is under the active direction, control, charge,
33or management of a licensed independent insurance adjuster or an
34insurer authorized to do business in this state.

35(2) Registration with the commissioner is accomplished within
36five working days from the date on which the nonlicensed
37independent insurance adjuster commences the claims adjusting
38activity in connection with the emergency situation.

39(b) “Registration,” within the meaning of this section, means a
40written letter to the commissioner, submitted by the supervising
P8    1licensed independent insurance adjuster or admitted insurer, naming
2the nonlicensed independent insurance adjusters, identifying their
3independent insurance adjuster licenses held in other jurisdictions,
4and stating when their claims adjusting activity commenced.

5(c) Registration under this section is valid for a period of 180
6days from the date of the registration letter. Before the lapse of
7that period, the commissioner may grant further 180-day extensions
8as he or she deems appropriate upon written request from the
9supervising licensed independent insurance adjuster or the admitted
10insurer.

11

SEC. 12.  

Section 14024 of the Insurance Code is amended to
12read:

13

14024.  

(a)  An individual application shall be verified and
14shall include all of the following:

15(1) The full legal name and business, residence, and mailing
16addresses of the applicant.

17(2) The name under which the applicant intends to do business.

18(3) The applicant’s birth date and social security number.

19(4) The application fees set forth in Section 14097.

20(5) A statement as to the general nature of the business in which
21the applicant intends to engage.

22(6) A statement as to the classifications under which the
23applicant desires to be qualified.

24(7) Two photographs, no more than six months old, of the
25applicant, of a type prescribed by the commissioner, and one
26classifiable set of his or her fingerprints, to be sent to a live scan
27fingerprint provider as directed by the department, if fingerprints
28are not submitted in person with a live scan fingerprinting service
29provider certified by the Department of Justice.

30(8) A verified statement of his or her experience qualifications,
31unless applying for an apprentice independent insurance adjuster
32license.

33(9) Other information, evidence,begin delete statement, or documentend delete
34begin insert statements, or documentsend insert as may be required by the commissioner.

35(b) A business entity application shall be verified and shall
36include all of the following:

37(1) The full legal name and residence address of each of its
38partners, officers, and directors, and its manager.

39(2) The name under which the applicant intends to do business.

40(3) That the applicant paid the fees set forth in Section 14097.

P9    1(4) A statement as to the general nature of the business in which
2the applicant intends to engage.

3(5) A statement as to the classifications under which the
4applicant desires to be qualified.

5(6) Other information, evidence, statements, or documents as
6may be required by the commissioner.

7

SEC. 13.  

Section 14025 of the Insurance Code is amended to
8read:

9

14025.  

Before a license is granted, the applicant shall meet all
10of the following requirements:

11(a) Be at least 18 years of age.

12(b) Not have committed acts or crimes constituting grounds for
13denial of licensure under Sections 1668 and 1669.

14(c) Shall have had either of the following:

15(1) At least two years of experience in adjusting insurance claims
16or the equivalent thereof as determined by the commissioner, unless
17applying for an apprentice independent insurance adjuster license.

18(2) One year as a licensed apprentice independent insurance
19adjuster, which is considered the equivalent of two years of
20experience in adjusting claims.

21(d) (1) Completed a 20-hour prelicensing education course of
22study.

23(2) A nonresident applicant currently licensed as a home state
24independent insurance adjuster in another state who has met that
25state’s prelicensing education requirements is exempt from
26completing the prelicensing education requirement.

27(3) A resident applicant currently listed under a licensed
28independent insurance adjuster’s license as an unlicensed employee
29is exempt from completing the prelicensing education requirement.
30This exemption shall be in effect only until January 1, 2019.

31(e) Successfully passed the examination for the independent
32insurance adjuster license, unless he or she qualifies for an
33exemption in Section 14026.

34(f) Comply with those other qualifications that the commissioner
35may require by regulation.

36

SEC. 14.  

Section 14025.1 is added to the Insurance Code, to
37read:

38

14025.1.  

(a) The apprentice independent insurance adjuster
39license is a license to facilitate the experience, education, and
P10   1training necessary to ensure reasonable competency in the
2responsibilities and duties of an independent insurance adjuster.

3(b) An individual applying for an apprentice independent
4insurance adjuster license shall submit an application in a format
5prescribed by the commissioner and shall declare under penalty
6of suspension, revocation, or refusal of the license that the
7statements made in the application are true, correct, and complete
8to the best of the individual’s knowledge and belief. Before
9approving the application, the commissioner shall determine that
10the individual meets all of the following:

11(1) Is at least 18 years of age.

12(2) Is a resident of California or is a resident of another state
13and has designated California as his or her home state.

14(3) Has a business or mailing address in California for the
15acceptance of service of process.

16(4) Has not committed any act that is a ground for suspension,
17revocation, or denial of licensure as set forth in Sections 1668,
181668.1, and 1669.

19(5) Has paid the fees set forth in subdivision (h) of Section
2014097.

21(c) The apprentice independent insurance adjuster license shall
22be subject to the following terms and conditions:

23(1) The applicant shall submit, with the apprentice independent
24insurance adjuster application, an attestation from a licensed
25independent insurance adjuster certifying that the apprentice will
26be subject to training, direction, and control by the licensed
27independent insurance adjuster and further certifying that the
28licensed independent insurance adjuster assumes responsibility
29for the actions of the apprentice in the apprentice’s capacity as an
30apprentice independent insurance adjuster.

31(2) The apprentice independent insurance adjuster is only
32authorized to adjust claims in California.

33(3) The apprentice independent insurance adjuster is restricted
34to participation in the investigation, settlement, and negotiation of
35claims subject to the review and final determination of the claim
36by a supervising licensed independent insurance adjuster.

37(4) The apprentice independent insurance adjuster shall not be
38required to take and successfully complete the independent
39insurance adjuster examination to adjust claims as an apprentice
40independent insurance adjuster. At any time during the
P11   1apprenticeship, the apprentice independent insurance adjuster may
2choose to take the examination. If the individual takes and
3successfully completes the independent insurance adjuster exam,
4the apprentice independent insurance adjuster license shall
5automatically terminate and an independent insurance adjuster
6license shall be issued to that individual in its place.

7(5) The apprentice independent insurance adjuster license is
8valid for a period not to exceed 12 months and is nonrenewable.

9(6) The licensee shall be subject to suspension, revocation, or
10denial pursuant to Sections 1668, 1668.1, and 1669.

11(7) The applicant shall submit two photographs, no more than
12six months old, of the applicant, of a type prescribed by the
13commissioner, and one classifiable set of his or her fingerprints,
14to be sent to a live scan fingerprint provider as directed by the
15department, if fingerprints are not submitted in person with a live
16scan fingerprinting service provider certified by the Department
17of Justice.

18

SEC. 15.  

Section 14026 of the Insurance Code is repealed.

19

SEC. 16.  

Section 14026 is added to the Insurance Code, to
20read:

21

14026.  

(a) An applicant for an independent insurance adjuster
22license, unless applying for an apprentice independent insurance
23adjuster license or crop insurance adjuster license, shall pass a
24written examination.

25(1) The examination shall test the knowledge of the applicant
26concerning the duties and responsibilities of an independent
27insurance adjuster and this code.

28(2) An applicant applying for an examination shall remit a
29nonrefundable fee as prescribed by the commissioner in Section
3014097.

31(b) An individual who applies for an independent insurance
32adjuster license in California who holds a home state license in
33 another state as an independent insurance adjuster shall not be
34required to complete the examination if he or she successfully
35passed an examination as a condition of receiving an independent
36insurance adjuster license in his or her home state. This exemption
37applies to individuals who are currently licensed in their home
38state or if the home state license expired and the application is
39received by the commissioner within 90 days of expiration.

P12   1(c) An individual who applies for an apprentice independent
2insurance adjuster license pursuant to Section 14025.1, and who
3adjusts claims in that capacity, shall not be required to take and
4successfully complete the independent insurance adjuster
5examination.

6

SEC. 17.  

Section 14027 of the Insurance Code is repealed.

7

SEC. 18.  

Section 14028 of the Insurance Code is amended to
8read:

9

14028.  

After a hearing, the commissioner may deny a license
10unless the application makes a showing satisfactory to the
11commissioner that the applicant, if an individual, has not, or if the
12applicant is a person other than an individual, that its manager and
13each of its officers and partners have not done any of the following:

14(a) Been refused a license under this chapter or had a license
15revoked.

16(b) Been an officer, partner, or manager of any person who has
17been refused a license under this chapter or whose license has been
18revoked.

19(c) While unlicensed committed, or aided and abetted the
20commission of, any act for which a license is required by this
21chapter.

22(d) Committed any act or crime constituting grounds for denial
23of licensure under Section 1668.

24

SEC. 19.  

Section 14029 of the Insurance Code is amended to
25read:

26

14029.  

(a) The business of each licensee shall be operated
27under the active direction, control, charge, or management of the
28licensee, if the licensee is qualified, or the person who has qualified
29to act as the licensee’s manager, if the licensee is not qualified.

30(b) No person shall act as a manager of a licensee until he or
31she has complied with each of the following:

32(1) Demonstrated his or her qualifications by a written or oral
33examination, or a combination of both, if required by the
34commissioner.

35(2) Made a satisfactory showing to the commissioner that he or
36she has the qualifications prescribed by Section 14025 and that
37none of the facts stated in Section 14028 or 14028.5 exist as to
38him or her.

39(c) If the manager, who has qualified as provided in this section,
40ceases for any reason whatsoever to be connected with the licensee
P13   1to whom the license is issued, the licensee shall notify the
2commissioner in writing 30 days from the cessation. If notice is
3given, the license shall remain in force for a reasonable length of
4time to be determined by the rules of the commissioner pending
5the qualifications, as provided in this chapter, of another manager.
6If the licensee fails to notify the commissioner within the 30-day
7period, his or her license shall be subject to suspension or
8revocation and may be reinstated only upon the filing of an
9application for reinstatement, payment of the reinstatement fee, if
10any is due, and the qualification of a manager as provided herein.

11(d) Every manager shall renew his or her authority by satisfying
12the requirements of Article 8 (commencing with Section 14090).

13(e) This section shall remain in effect only until January 1, 2018,
14and as of that date is repealed, unless a later enacted statute, that
15is enacted before January 1, 2018, deletes or extends that date.

16

SEC. 20.  

Section 14029 is added to the Insurance Code, to
17read:

18

14029.  

(a) Each organization licensed under this chapter shall
19designate an individual also licensed as an independent insurance
20adjuster to be responsible for the organization’s compliance with
21state law.

22(b) This section shall become operative on January 1, 2018.

23

SEC. 21.  

Section 14030 of the Insurance Code is amended to
24read:

25

14030.  

(a) Whenever the individual on the basis of whose
26qualifications a license under this chapter has been obtained ceases
27to be connected with the licensee for any reason whatever, the
28business may be carried on for a temporary period and under the
29terms and conditions as the commissioner shall provide by
30regulation.

31(b) This section shall remain in effect only until January 1, 2018,
32and as of that date is repealed, unless a later enacted statute, that
33is enacted before January 1, 2018, deletes or extends that date.

34

SEC. 22.  

Section 14031 of the Insurance Code is amended to
35read:

36

14031.  

A hearing held under this chapter to determine whether
37an application for a license should be granted shall be conducted
38in accordance with Chapter 5 (commencing with Section 11501)
39of Part 1 of Division 3 of Title 2 of the Government Code, and the
40commissioner shall have all of the powers granted therein.

P14   1

SEC. 23.  

Section 14032 of the Insurance Code is amended to
2read:

3

14032.  

The form and content of the license shall be determined
4by the commissioner.

5

SEC. 24.  

Section 14037 of the Insurance Code is amended to
6read:

7

14037.  

(a) A licensee shall at all times be legally responsible
8for the good conduct in the business of each of his or her employees
9or agents, including his or her manager.

10(b) This section shall remain in effect only until January 1, 2018,
11and as of that date is repealed, unless a later enacted statute, that
12is enacted before January 1, 2018, deletes or extends that date.

13

SEC. 25.  

Section 14038 of the Insurance Code is amended to
14read:

15

14038.  

(a) Any licensee or officer, director, partner, or manager
16of a licensee may divulge to any law enforcement officer or district
17attorney, or to his or her representative, any information he or she
18may acquire as to any criminal offense, but he or she shall not
19divulge to any other person, except as he or she may be required
20by law to do so, any information acquired by him or her except at
21the direction of the employer or client for whom the information
22was obtained.

23(b) A licensee or officer, director, partner, manager, or employee
24of a licensee shall not knowingly make any false report to his or
25her employer or client for whom information was being obtained.

26(c) A written report shall not be submitted to a client except by
27the licensee, qualifying manager, or a person authorized by one
28or either of them, and the person submitting the report shall
29exercise diligence in ascertaining whether or not the facts and
30information in that report are true and correct.

31(d) A licensee or officer, director, partner, manager, or employee
32of a licensee shall not use a badge in connection with the official
33activities of the licensee’s business.

34(e) A licensee or officer, director, partner, manager, or employee
35of a licensee, shall not use a title, wear a uniform, use an insignia,
36or use an identification card, or make any statement with the intent
37to give an impression that he or she is connected in any way with
38the federal government, a state government, or any political
39subdivision of a state government.

P15   1(f) A licensee or officer, director, partner, manager, or employee
2of a licensee, shall not enter any private building or portion thereof
3without the consent of the owner or of the person in legal
4possession thereof.

5(g) A licensee shall not appear as an assignee party in any
6proceeding involving claim and delivery, replevin, or other
7possessory action, action to foreclose a chattel mortgage,
8mechanic’s lien, materialman’s lien, or any other lien.

9(h) A licensee shall not permit an employee or agent in his or
10her own name to advertise, engage clients, furnish reports, or
11present bills to clients, or in any manner whatever to conduct
12business for which a license is required under this chapter. All
13business of the licensee shall be conducted in the name of and
14under the control of the licensee.

15(i) A licensee acting as an independent automobile damage
16appraiser or adjuster or as an automobile insurance claims adjuster,
17appraiser, or representative shall not receive any financial benefit
18from an automobile repair facility. “Financial benefit” means the
19receiving of any commission or gratuity, discount on repair costs,
20free repairs, employment by a repair facility, or possession of more
21than 3 percent direct ownership in an automobile repair facility
22located in this state.

23(j) This section shall remain in effect only until January 1, 2018,
24and as of that date is repealed, unless a later enacted statute, that
25is enacted before January 1, 2018, deletes or extends that date.

26

SEC. 26.  

Section 14038 is added to the Insurance Code, to
27read:

28

14038.  

(a) Any licensee or officer, director, or partner of a
29licensee may divulge to any law enforcement officer or district
30attorney, or to his or her representative, any information he or she
31may acquire as to any criminal offense, but he or she shall not
32divulge to any other person, except as he or she may be required
33by law to do so, any information acquired by him or her except at
34the direction of the employer or client for whom the information
35was obtained.

36(b) A licensee or officer, director, or partner of a licensee shall
37not knowingly make any false report to his or her employer or
38client for whom information was being obtained.

P16   1(c) A written report shall not be submitted to a client except by
2the licensee who shall exercise diligence in ascertaining whether
3or not the facts and information in that report are true and correct.

4(d) A licensee or officer, director, or partner of a licensee shall
5not use a badge in connection with the official activities of the
6licensee’s business.

7(e) A licensee or officer, director, or partner of a licensee shall
8not use a title, wear a uniform, use an insignia, use an identification
9card, or make any statement with the intent to give an impression
10that he or she is connected in any way with the federal government,
11a state government, or any political subdivision of a state
12government.

13(f) A licensee or officer, director, or partner of a licensee shall
14not enter any private building or portion thereof without the consent
15of the owner or of the person in legal possession thereof.

16(g) A licensee shall not appear as an assignee party in any
17proceeding involving claim and delivery, replevin, or other
18possessory action, action to foreclose a chattel mortgage,
19mechanic’s lien, materialman’s lien, or any other lien.

20(h) A licensee shall not permit an agent in his or her own name
21to advertise, engage clients, furnish reports, or present bills to
22clients, or in any manner whatever to conduct business for which
23a license is required under this chapter. All business of the licensee
24shall be conducted in the name of and under the control of the
25licensee.

26(i) A licensee acting as an independent automobile damage
27appraiser or adjuster or as an automobile insurance claims adjuster,
28appraiser, or representative shall not receive any financial benefit
29from an automobile repair facility. “Financial benefit” means the
30receiving of any commission or gratuity, discount on repair costs,
31free repairs, employment by a repair facility, or possession of more
32than 3 percent direct ownership in an automobile repair facility
33located in this state.

34(j) This section shall become operative on January 1, 2018.

35

SEC. 27.  

Section 14039 of the Insurance Code is amended to
36read:

37

14039.  

A person licensed as an independent insurance adjuster
38shall not do any of the following:

P17   1(a) Fail to disclose his or her full financial interest in a contract
2or agreement executed by him or her for the adjustment of a claim
3prior to the execution thereof.

4(b) Use any misrepresentation to solicit a contract or agreement
5to adjust a claim.

6(c) Solicit or accept remuneration from, or have a financial
7interest exceeding 3 percent in, any salvage, repair, or other firm
8that obtains business in connection with any claim that he or she
9has a contract or agreement to adjust.

10

SEC. 28.  

Section 14040 of the Insurance Code is amended to
11read:

12

14040.  

(a) Any badge or cap insignia worn by a person who
13is a licensee, officer, director, partner, manager, or employee of a
14licensee shall be of a design approved by the commissioner, and
15shall bear on its face a distinctive word indicating the name of the
16licensee and an employee number by which the person may be
17identified by the licensee.

18(b) This section shall remain in effect only until January 1, 2018,
19and as of that date is repealed, unless a later enacted statute, that
20is enacted before January 1, 2018, deletes or extends that date.

21

SEC. 29.  

Section 14040 is added to the Insurance Code, to
22read:

23

14040.  

(a) Any badge or cap insignia worn by a person who
24is a licensee, officer, director, or partner of a licensee shall be of
25a design approved by the commissioner, and shall bear on its face
26a distinctive word indicating the name of either the licensee or the
27adjusting firm the licensee represents.

28(b) This section shall become operative on January 1, 2018.

29

SEC. 30.  

Section 14042 of the Insurance Code is amended to
30read:

31

14042.  

(a) A licensee shall not conduct a business under a
32fictitious or other business name unless and until he or she has
33obtained the written authorization of the commissioner to do so.

34(b) The commissioner shall not authorize the use of a fictitious
35or other business name that is so similar to that of a public officer
36or agency or of that used by another licensee that the public may
37be confused or misled thereby.

38(c) The authorization shall require, as a condition precedent to
39the use of any fictitious name, that the licensee comply with Section
401724.5.

P18   1(d) A licensee desiring to conduct his or her business under
2more than one fictitious business name shall obtain the
3authorization of the commissioner in the manner prescribed in this
4section for the use of that name.

5(e) The licensee shall pay a fee of ten dollars ($10) for each
6authorization to use an additional fictitious business name and for
7each change in the use of a fictitious business name. If the original
8license is issued in a nonfictitious name and authorization is
9requested to have the license reissued in a fictitious business name,
10the licensee shall pay a fee of twelve dollars ($12) for that
11authorization.

12

SEC. 31.  

Section 14061 of the Insurance Code is amended to
13read:

14

14061.  

(a) The commissioner may suspend or revoke a license
15issued under this chapter or may issue a restricted license in
16accordance with Section 14026.5 if he or she determines that the
17licensee, or his or her manager, if an individual, or if the licensee
18is a person other than an individual, that any of its officers,
19directors, partners, or its manager has done any of the following:

20(1) Made any false statement or given any false information in
21connection with an application for a license or a renewal or
22reinstatement of a license.

23(2) Violated any provisions of this chapter.

24(3) Violated any rule of the commissioner adopted pursuant to
25the authority contained in this chapter.

26(4) Been convicted of any crime substantially related to the
27qualifications, functions, and duties of the holder of the registration
28or license in question.

29(5) Impersonated, or permitted or aided and abetted an employee
30to impersonate, a law enforcement officer or employee of the
31United States, or of any state or political subdivision thereof.

32(6) Committed or permitted any employee to commit any act,
33while the license was expired that would be cause for the
34suspension or revocation of a license, or grounds for the denial of
35an application for a license.

36(7) Willfully failed or refused to render to a client services or
37a report as agreed between the parties and for which compensation
38has been paid or tendered in accordance with the agreement of the
39parties.

P19   1(8) Committed assault, battery, or kidnapping, or used force or
2violence on any person, without proper justification.

3(9) Knowingly violated or advised, encouraged, or assisted the
4violation of any court order or injunction in the course of business
5as a licensee.

6(10) Acted as a runner or capper for any attorney.

7(11) Committed any act that is a ground for denial of an
8application for license under this chapter.

9(12) Purchased, possessed, or transported any tear gas weapon
10except as authorized by law. A violation of this paragraph may be
11punished by the suspension of a license for a period to be
12determined by the commissioner.

13(b) This section shall remain in effect only until January 1, 2018,
14and as of that date is repealed, unless a later enacted statute, that
15is enacted before January 1, 2018, deletes or extends that date.

16

SEC. 32.  

Section 14061 is added to the Insurance Code, to
17read:

18

14061.  

(a) The commissioner may suspend or revoke a license
19issued under this chapter or may issue a restricted license in
20accordance with Section 14026.5 if he or she determines that the
21licensee or if the licensee is a person other than an individual, that
22any of its officers, directors, partners, or its designated responsible
23person has done any of the following:

24(1) Made any false statement or given any false information in
25connection with an application for a license or a renewal or
26reinstatement of a license.

27(2) Violated any provisions of this chapter.

28(3) Violated any rule of the commissioner adopted pursuant to
29 the authority contained in this chapter.

30(4) Been convicted of any crime substantially related to the
31qualifications, functions, and duties of the holder of the registration
32or license in question.

33(5) Impersonated, or permitted or aided and abetted an employee
34to impersonate, a law enforcement officer or employee of the
35United States, or of any state or political subdivision thereof.

36(6) Committed or permitted any employee to commit any act,
37while the license was expired that would be cause for the
38suspension or revocation of a license, or grounds for the denial of
39an application for a license.

P20   1(7) Willfully failed or refused to render to a client services or
2a report as agreed between the parties and for which compensation
3has been paid or tendered in accordance with the agreement of the
4parties.

5(8) Committed assault, battery, or kidnapping, or used force or
6violence on any person, without proper justification.

7(9) Knowingly violated or advised, encouraged, or assisted the
8violation of any court order or injunction in the course of business
9as a licensee.

10(10) Acted as a runner or capper for any attorney.

11(11) Committed any act that is a ground for denial of an
12application for license under this chapter.

13(12) Purchased, possessed, or transported any tear gas weapon
14except as authorized by law. A violation of this paragraph may be
15punished by the suspension of a license for a period to be
16determined by the commissioner.

17(b) This section shall become operative on January 1, 2018.

18

SEC. 33.  

Section 14063 of the Insurance Code is amended to
19read:

20

14063.  

(a) The commissioner may suspend or revoke a license
21issued under this chapter or may issue a restricted license in
22accordance with Section 14026.5 if the commissioner determines
23that the licensee, or his or her manager, if an individual, or if the
24licensee is a person other than an individual, that any of its officers,
25directors, partners, or its manager has done any of the following:

26(1) Used any letterhead, advertisement, or other printed matter,
27or in any matter whatever represented that he or she is an
28instrumentality of the federal government, or of a state or any
29political subdivision thereof.

30(2) Used a name different from that under which he or she is
31currently licensed in any advertisement, solicitation, or contract
32for business.

33(b) This section shall remain in effect only until January 1, 2018,
34and as of that date is repealed, unless a later enacted statute, that
35is enacted before January 1, 2018, deletes or extends that date.

36

SEC. 34.  

Section 14063 is added to the Insurance Code, to
37read:

38

14063.  

(a) The commissioner may suspend or revoke a license
39issued under this chapter or may issue a restricted license in
40accordance with Section 14026.5 if the commissioner determines
P21   1that the licensee, if an individual, or if the licensee is a person other
2than an individual, that any of its officers, directors, or partners
3has done any of the following:

4(1) Used any letterhead, advertisement, or other printed matter,
5or in any matter whatever represented that he or she is an
6instrumentality of the federal government, or of a state or any
7political subdivision thereof.

8(2) Used a name different from that under which he or she is
9currently licensed in any advertisement, solicitation, or contract
10for business.

11(b) The section shall become operative on January 1, 2018.

12

SEC. 35.  

Section 14064 of the Insurance Code is amended to
13read:

14

14064.  

(a) The commissioner may suspend or revoke a license
15issued under this chapter or may issue a restricted license in
16accordance with Section 14026.5 if the commissioner determines
17that the licensee, or his or her manager, if an individual, or if the
18licensee is a person other than an individual, that any of its officers,
19directors, partners, or its manager, has committed any act in the
20course of the licensee’s business constituting dishonesty or fraud.

21(b) “Dishonesty or fraud” as used in this section includes, in
22addition to other acts not specifically enumerated herein, all of the
23following:

24(1) Knowingly making a false statement relating to evidence or
25information obtained in the course of employment, or knowingly
26publishing a slander or a libel in the course of business.

27(2) Using illegal means in the collection or attempted collection
28of a debt or obligation.

29(3) Manufacture of evidence.

30(4) Acceptance of employment adverse to a client or former
31client relating to a matter with respect to which the licensee has
32obtained confidential information by reason of or in the course of
33his or her employment by that client or former client.

34(5) Impersonating, or permitting or aiding and abetting an
35employee to impersonate, a law enforcement officer or employee
36 of the United States, or of any state or political subdivision thereof.

37(c) This section shall remain in effect only until January 1, 2018,
38and as of that date is repealed, unless a later enacted statute, that
39is enacted before January 1, 2018, deletes or extends that date.

P22   1

SEC. 36.  

Section 14064 is added to the Insurance Code, to
2read:

3

14064.  

(a) The commissioner may suspend or revoke a license
4issued under this chapter or may issue a restricted license in
5accordance with Section 14026.5 if the commissioner determines
6that the licensee, if an individual, or if the licensee is a person other
7than an individual, that any of its officers, directors, partners, or
8its designated responsible person has committed any act in the
9course of the licensee’s business constituting dishonesty or fraud.

10(b) “Dishonesty or fraud” as used in this section includes, in
11addition to other acts not specifically enumerated herein, all of the
12following:

13(1) Knowingly making a false statement relating to evidence or
14information obtained in the course of employment, or knowingly
15publishing a slander or a libel in the course of business.

16(2) Using illegal means in the collection or attempted collection
17of a debt or obligation.

18(3) Manufacture of evidence.

19(4) Acceptance of employment adverse to a client or former
20client relating to a matter with respect to which the licensee has
21obtained confidential information by reasonbegin delete ofend deletebegin insert of,end insert or in the course
22begin delete ofend deletebegin insert of,end insert his or her employment by that client or former client.

23(5) Impersonating, or permitting or aiding and abetting an
24employee to impersonate, a law enforcement officer or employee
25of the United States, or of any state or political subdivision thereof.

26(c) This section shall become operative on January 1, 2018.

27

SEC. 37.  

Section 14078 of the Insurance Code is repealed.

28

SEC. 38.  

Section 14078 is added to the Insurance Code, to
29read:

30

14078.  

(a) Unless refused licensure pursuant to Sections 14060
31to 14065, inclusive, a nonresident person shall receive a
32nonresident independent insurance adjuster license if all of the
33following apply:

34(1) The applicant is currently licensed in good standing as an
35independent insurance adjuster in his, her, or its resident or home
36state.

37(2) The applicant paid the fees required by Section 14097.

38(3) The applicant submitted to the commissioner the completed
39application for licensure.

P23   1(4) The applicant’s home state issues nonresident independent
2insurance adjuster licenses to residents of California on the same
3basis.

4(b) The commissioner may verify the independent insurance
5adjuster’s licensing status through any appropriate database,
6including the Producer Database maintained by the National
7Association of Insurance Commissioners, its affiliates or
8subsidiaries, or may request certification of good standing.

9(c) As a condition to the continuation of a nonresident
10independent insurance adjuster license, the licensee shall maintain
11a resident independent insurance adjuster license in his, her, or its
12home state.

13(1) The nonresident independent insurance adjuster license
14issued under this chapter shall terminate and be surrendered
15immediately to the commissioner if the resident independent
16insurance adjuster license terminates for any reason, unless the
17termination is due to the independent insurance adjuster being
18issued a new resident independent insurance adjuster license in
19his, her, or its new home state.

20(2) The nonresident independent insurance adjuster license shall
21terminate if the person’s home state does not issue nonresident
22independent insurance adjuster licenses to residents of California
23on the same basis.

24(3) (A) The licensee is required to give notice of resident
25independent insurance adjuster license termination to any state
26that issued a nonresident independent insurance adjuster license.

27(B) The notice is required to be given within 30 days of the
28termination date. If the resident independent insurance adjuster
29license was terminated for change in resident home state, then the
30notice is required to include both the previous and current
31 addresses.

32(4) Maintaining a resident independent insurance adjuster license
33is required for the nonresident independent insurance adjuster
34license to remain valid.

35

SEC. 39.  

Section 14079 is added to the Insurance Code, to
36read:

37

14079.  

(a) An independent insurance adjuster shall be honest
38and fair in all communications with the insured, the insurer, and
39the public.

P24   1(b) An independent insurance adjuster shall provide
2policyholders and claimants with prompt and knowledgeable
3service and courteous, fair, and objective treatment at all times.

4(c) An independent insurance adjuster shall not give legal advice
5and shall not deal directly with any policyholder or claimant who
6is represented by legal counsel without the consent of the legal
7counsel involved.

8(d) An independent insurance adjuster shall comply with all
9local, state, and federal privacy and information security laws.

10(e) An independent insurance adjuster shall identify himself or
11herself as an independent insurance adjuster and, if applicable,
12shall identify his or her employer when dealing with any
13policyholder or claimant.

14(f) An independent insurance adjuster shall not have any
15financial interest in any adjustment or shall not acquire for himself,
16herself, or any person any interest or title in salvage, without first
17receiving written authority from the principal.

18

SEC. 40.  

Section 14080 of the Insurance Code is amended to
19read:

20

14080.  

Any person who knowingly falsifies the fingerprints
21or photographs submitted under paragraph (7) of subdivision (a)
22of Section 14024 or paragraph (7) of subdivision (c) of Section
2314025.1 is guilty of a felony. Any person who violates any of the
24other provisions of this chapter is guilty of a misdemeanor
25punishable by fine not to exceed five hundred dollars ($500), or
26by imprisonment in the county jail not to exceed one year, or by
27both the fine and imprisonment.

28

SEC. 41.  

Section 14090.1 of the Insurance Code is amended
29to read:

30

14090.1.  

(a) An individual who holds an independent insurance
31adjuster license and who is not exempt under subdivision (b) shall
32satisfactorily complete a minimum of 24 hours, of which three
33hours are to be in ethics, of continuing education courses pertinent
34to the duties and responsibilities of an independent insurance
35adjuster license and shall report the completion of this coursework
36to the insurance commissioner on a biennial basis in conjunction
37with his or her license renewal cycle.

38(b) This section does not apply to any of the following:

39(1) A licensee not licensed for one full year prior to the end of
40the applicable continuing education biennium.

P25   1(2) A licensee holding a nonresident independent insurance
2adjuster license who has met the continuing education requirements
3of his or her designated home state.

4(3) An individual licensed as an independent insurance adjuster
5and as a property or casualty broker-agent, pursuant to Section
61625, who has met the continuing education requirements specified
7in Section 1749.3.

8(4) An individual licensed as an apprentice independent
9insurance adjuster pursuant to Section 14025.1.

10

SEC. 42.  

Section 14097 of the Insurance Code is amended to
11read:

12

14097.  

The amount of fees prescribed by this chapter, unless
13otherwise fixed, is that fixed in the following schedule:

14(a) The application fee for the qualifying examination for an
15original license is seventy-two dollars ($72).

16(b) The application fee for an original branch office certificate
17is forty-seven dollars ($47).

18(c) The fee for an originalbegin delete license.end deletebegin insert licenseend insert application is up to
19one hundred seventy dollars ($170). If the license will expire less
20than one year after its issuance, then the fee is an amount equal to
2150 percent of the renewal fee in effect on the last regular renewal
22date before the date on which the license is issued. The
23commissioner may, by appropriate regulation, provide for the
24waiver or refund of the initial license fee where the license is issued
25less than 45 days before the date on which it will expire.

26(d) The renewal fee shall be fixed by the commissioner as
27follows:

28(1) For a license as an independent insurance adjuster, not more
29than one hundred seventy dollars ($170).

30(2) For a branch office certificate, not more than fifty-six dollars
31($56).

32(e) The application and license fee for classifications prescribed
33by the commissioner, in addition to those provided for in this
34chapter, and the application and license fees for a change in the
35type of business organization of a licensee, shall be in the amount
36prescribed by rule and regulation of the commissioner.

37(f) The delinquency fee shall be 50 percent of the renewal fee
38in effect on the date of expiration.

39(g) The fee for reexamination of an applicant is twenty-nine
40dollars ($29).

P26   1(h) The application fee for an apprentice independent insurance
2adjuster license shall be up to one hundred seventy dollars ($170).

3begin insert

begin insertSEC. 43.end insert  

end insert

begin insertSection 14097.5 is added to the end insertbegin insertInsurance Codeend insertbegin insert, to
4read:end insert

begin insert
5

begin insert14097.5.end insert  

(a) On or before March 1, 2019, and for a total of
6three years thereafter, the department shall report annually to the
7Legislature all of the following:

8
(1) The number of individuals licensed pursuant to this chapter.

9
(2) The implementation costs incurred and the revenues received
10by the department for licensure of independent insurance adjusters.

11
(3) The annual projected costs and revenues associated with
12ongoing licensure and enforcement activities pursuant to this
13chapter.

14
(b) (1) A report submitted pursuant to subdivision (a) shall be
15submitted in compliance with Section 9795 of the Government
16Code.

17
(2) Pursuant to Section 10231.5 of the Government Code, this
18section is repealed on March 1, 2023.

end insert
19

begin deleteSEC. 43.end delete
20
begin insertSEC. 44.end insert  

Section 14099 of the Insurance Code is amended to
21read:

22

14099.  

Application or license fees shall not be refunded
23pursuant to Section 1751.5.

24

begin deleteSEC. 44.end delete
25
begin insertSEC. 45.end insert  

No reimbursement is required by this act pursuant
26to Section 6 of Article XIII B of the California Constitution because
27the only costs that may be incurred by a local agency or school
28district will be incurred because this act creates a new crime or
29infraction, eliminates a crime or infraction, or changes the penalty
30for a crime or infraction, within the meaning of Section 17556 of
31the Government Code, or changes the definition of a crime within
32the meaning of Section 6 of Article XIII B of the California
33Constitution.



O

    95