Amended in Senate June 13, 2016

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 Bill No. 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 begin delete 14025.1 and 14079 end delete begin insert 14025.1, 14079, and 14090.3 end insert to, to add and repeal Section 14097.5 of, 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, begin insert continuing education and reporting requirements, end insert 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. begin insert The bill would require a person who fails to meet continuing education and reporting requirements, and who has not been granted an extension of time by the commissioner to comply, to have his or her license placed on inactive status, as specified, and would prohibit a licensee on inactive status from performing specified activities. end insert 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 begin delete $170. end delete begin insert $120. end insert 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. The bill would impose a 3-year reporting requirement on the Department of Insurance. 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:

SECTION 1.  

Section 1722 of the Insurance Code is amended
to read:

1722.  

If a natural person while licensed pursuant to the
provisions of this chapter or Chapter 6 (commencing with Section
1760), Chapter 7 (commencing with Section 1800), or Chapter 8
(commencing with Section 1831) of this part, Part 5 (commencing
with Section 12140) of Division 2, or Chapter 1 (commencing
with Section 14000) of Division 5 enters the military service of
the United States and is in that service at a time prescribed for the
filing of a renewal application, the filing of that application is
waived, and the license held by that licensee at the time of his or
her entry into military service shall remain in force during the
period of that military service and until the end of the license year
in which he or she is released from that service but not for less
than six months after that release. During that period, that person
may secure a license of the type held by him or her on his or her
entry into military service upon the filing of an application and
paying the fee therefor without the necessity of taking any
examination or paying any penalty.

SEC. 2.  

Section 1751.5 of the Insurance Code is amended to
read:

1751.5.  

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

SEC. 3.  

Section 14000 of the Insurance Code is amended to
read:

14000.  

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

SEC. 4.  

Section 14001 of the Insurance Code is amended to
read:

14001.  

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

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

(b) “Commissioner” means the Insurance Commissioner.

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

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

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

(f) “Individual” means a natural person.

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

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

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

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

SEC. 5.  

Section 14010 of the Insurance Code is repealed.

SEC. 6.  

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

14010.  

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

SEC. 7.  

Section 14020 of the Insurance Code is amended to
read:

14020.  

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

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

SEC. 8.  

Section 14021 of the Insurance Code is repealed.

SEC. 9.  

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

14021.  

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

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

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

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

SEC. 10.  

Section 14022 of the Insurance Code is amended to
read:

14022.  

This chapter does not apply to any of the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

(n) 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.

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

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

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

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

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

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

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

SEC. 11.  

Section 14022.5 of the Insurance Code is amended
to read:

14022.5.  

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

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

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

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

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

SEC. 12.  

Section 14024 of the Insurance Code is amended to
read:

14024.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 13.  

Section 14025 of the Insurance Code is amended to
read:

14025.  

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

(a) Be at least 18 years of age.

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

(c) Shall have had either of the following:

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

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

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

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

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

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

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

SEC. 14.  

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

14025.1.  

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

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

(1) Is at least 18 years of age.

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

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

(4) Has not committed any act that is a ground for suspension,
revocation, or denial of licensure as set forth in Sections 1668,
1668.1, and 1669.

(5) Has paid the fees set forth in subdivision (h) of Section
14097.

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

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

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

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

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

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

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

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

SEC. 15.  

Section 14026 of the Insurance Code is repealed.

SEC. 16.  

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

14026.  

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

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

(2) An applicant applying for an examination shall remit a
nonrefundable fee as prescribed by the commissioner in Section
14097.

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

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

SEC. 17.  

Section 14027 of the Insurance Code is repealed.

SEC. 18.  

Section 14028 of the Insurance Code is amended to
read:

14028.  

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

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

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

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

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

SEC. 19.  

Section 14029 of the Insurance Code is amended to
read:

14029.  

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

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

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

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

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

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

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

SEC. 20.  

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

14029.  

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

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

SEC. 21.  

Section 14030 of the Insurance Code is amended to
read:

14030.  

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

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

SEC. 22.  

Section 14031 of the Insurance Code is amended to
read:

14031.  

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

SEC. 23.  

Section 14032 of the Insurance Code is amended to
read:

14032.  

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

SEC. 24.  

Section 14037 of the Insurance Code is amended to
read:

14037.  

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

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

SEC. 25.  

Section 14038 of the Insurance Code is amended to
read:

14038.  

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

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

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

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

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

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

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

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

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

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

SEC. 26.  

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

14038.  

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

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

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

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

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

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

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

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

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

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

SEC. 27.  

Section 14039 of the Insurance Code is amended to
read:

14039.  

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

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

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

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

SEC. 28.  

Section 14040 of the Insurance Code is amended to
read:

14040.  

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

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

SEC. 29.  

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

14040.  

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

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

SEC. 30.  

Section 14042 of the Insurance Code is amended to
read:

14042.  

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

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

(c) The authorization shall require, as a condition precedent to
the use of any fictitious name, that the licensee comply with Section
1724.5.

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

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

SEC. 31.  

Section 14061 of the Insurance Code is amended to
read:

14061.  

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

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

(2) Violated any provisions of this chapter.

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

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

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

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

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

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

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

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

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

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

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

SEC. 32.  

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

14061.  

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

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

(2) Violated any provisions of this chapter.

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

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

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

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

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

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

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

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

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

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

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

SEC. 33.  

Section 14063 of the Insurance Code is amended to
read:

14063.  

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

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

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

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

SEC. 34.  

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

14063.  

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

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

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

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

SEC. 35.  

Section 14064 of the Insurance Code is amended to
read:

14064.  

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

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

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

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

(3) Manufacture of evidence.

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

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

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

SEC. 36.  

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

14064.  

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

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

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

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

(3) Manufacture of evidence.

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

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

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

SEC. 37.  

Section 14078 of the Insurance Code is repealed.

SEC. 38.  

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

14078.  

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 39.  

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

14079.  

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

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

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

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

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

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

SEC. 40.  

Section 14080 of the Insurance Code is amended to
read:

14080.  

Any person who knowingly falsifies the fingerprints
or photographs submitted under paragraph (7) of subdivision (a)
of Section 14024 or paragraph (7) of subdivision (c) of Section
14025.1 is guilty of a felony. Any person who violates any of the
other provisions of this chapter is guilty of a misdemeanor
punishable by fine not to exceed five hundred dollars ($500), or
by imprisonment in the county jail not to exceed one year, or by
both the fine and imprisonment.

SEC. 41.  

Section 14090.1 of the Insurance Code is amended
to read:

14090.1.  

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

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

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

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

(3) An individual licensed as an independent insurance adjuster
and as a property or casualty broker-agent, pursuant to Section
1625, who has met the continuing education requirements specified
in Section 1749.3.

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

begin insert

begin insert SEC. 42. end insert   

end insert

begin insert Section 14090.3 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 14090.3. end insert   

A person who fails to meet the requirements imposed
by Section 14090.1, and who has not been granted an extension
of time by the commissioner within which to comply, shall have
his or her license placed on inactive status until he or she
demonstrates to the satisfaction of the commissioner that he or
she has complied with all of the requirements of this article and
all other applicable laws. A licensee placed on inactive status may
not perform the activities described in Section 1631. If a person
cannot perform the requirements of this article due to a disability
or inactivity due to special circumstances, the commissioner shall
provide a procedure for the person to place his or her license on
inactive status until the person demonstrates to the satisfaction of
the commissioner that he or she has complied with all of the
requirements of this article for the period of disability or inactivity.

end insert

begin delete SEC. 42. end delete

begin insert SEC. 43. end insert   

Section 14097 of the Insurance Code is amended to
read:

14097.  

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

(a) The application fee for the qualifying examination for an
original license is begin delete seventy-two dollars ($72). end delete begin insert fifty dollars ($50). end insert

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

(c) The fee for an original license application is up to one
hundred begin delete seventy dollars ($170). end delete begin insert twenty dollars ($120). end insert If the license
will expire less than one year after its issuance, then the fee is an
amount equal to 50 percent of the renewal fee in effect on the last
regular renewal date before the date on which the license is issued.
The commissioner may, by appropriate regulation, provide for the
waiver or refund of the initial license fee where the license is issued
less than 45 days before the date on which it will expire.

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

(1) For a license as an independent insurance adjuster, not more
than one hundred begin delete seventy dollars ($170). end delete begin insert twenty dollars ($120). end insert

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

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

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

(g) The fee for reexamination of an applicant is begin delete twenty-nine
dollars ($29). end delete begin insert fifty dollars ($50). end insert

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

begin insert twenty dollars ($120). end insert

begin delete SEC. 43. end delete

begin insert SEC. 44. end insert   

Section 14097.5 is added to the Insurance Code, to
read:

14097.5.  

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

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

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

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

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

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

begin delete SEC. 44. end delete

begin insert SEC. 45. end insert   

Section 14099 of the Insurance Code is amended to
read:

14099.  

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

begin delete SEC. 45. end delete

begin insert SEC. 46. end insert   

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