Amended in Senate August 15, 2016

Amended in Senate August 1, 2016

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 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, 14050, 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, 14079, and 14090.3 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, continuing education and reporting 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 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. 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 tobegin delete $120.end deletebegin insert $80.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:

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
P4    1may secure a license of the type held by him or her on his or her
2entry into military service upon the filing of an application and
3paying the fee therefor without the necessity of taking any
4examination or paying any penalty.

5

SEC. 2.  

Section 1751.5 of the Insurance Code is amended to
6read:

7

1751.5.  

The fees required by this chapter and by Chapter 6
8(commencing with Section 1760), Chapter 7 (commencing with
9Section 1800), and Chapter 8 (commencing with Section 1831) of
10this part and by Chapter 1 (commencing with Section 14000) of
11Division 5 are filing fees, no portion of which shall be refunded
12whether or not the application is acted upon or the examination is
13taken.

14

SEC. 3.  

Section 14000 of the Insurance Code is amended to
15read:

16

14000.  

This chapter may be cited as the Independent Insurance
17Adjuster Act.

18

SEC. 4.  

Section 14001 of the Insurance Code is amended to
19read:

20

14001.  

As used in this chapter, the following terms have the
21following meanings:

22(a) “Catastrophe” means an event that results in a large number
23of deaths or injuries, causes extensive damage or destruction of
24facilities that provide and sustain human needs, produces an
25overwhelming demand on state and local response resources and
26mechanisms, causes a severe long-term effect on general economic
27activity, or severely affects state, local, and private sector
28capabilities to begin and sustain response activities.

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

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

31(d) “Fingerprints” means an impression of the lines on the finger
32taken for the purposes of identification.

33(e) “Home state” means the District of Columbia and any state
34or territory of the United States in which an independent insurance
35adjuster maintains his, her, or its principal place of residence or
36business and is licensed to act as a resident independent insurance
37adjuster. If the resident state does not license independent insurance
38adjusters for the line of authority sought, the independent insurance
39adjuster shall designate as his, her, or its home state either
40California or any state in which the independent insurance adjuster
P5    1is licensed following an examination, provided that the independent
2insurance adjuster is licensed and in good standing in that state.

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

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

5(h) “Manager” means the individual under whose direction,
6control, charge, or management the business of a licensee is
7operated.

8(i) “Nonresident” means a person who is not a resident of
9California at the time of the performance of the act referred to in
10Section 14071.

11(j) “Person” includes any individual, firm, company, association,
12organization, partnership, limited liability company, and
13corporation.

14

SEC. 5.  

Section 14010 of the Insurance Code is repealed.

15

SEC. 6.  

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

16

14010.  

The commissioner shall administer and enforce the
17provisions of this chapter.

18

SEC. 7.  

Section 14020 of the Insurance Code is amended to
19read:

20

14020.  

(a) A person shall not engage in a business regulated
21by this chapter, or act or assume to act as, or represent himself or
22herself to be, a licensee unless he or she is licensed as an
23independent insurance adjuster in accordance with this chapter.

24(b) A person shall not falsely represent that he or she is
25employed by a licensee.

26

SEC. 8.  

Section 14021 of the Insurance Code is repealed.

27

SEC. 9.  

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

28

14021.  

An independent insurance adjuster, for purposes of this
29chapter, isbegin delete all of the following:end deletebegin insert to meet all of the following
30requirements:end insert

31(a) begin deleteAn end deletebegin insertHe or she is anend insertbegin insert end insertindividual, a business entity, an
32independent contractor, or an employee of a contractor, who
33contracts for compensation with insurers.

34(b) begin deleteA end deletebegin insertHe or she is aend insertbegin insert end insertperson whose tax treatment by the insurers
35is consistent with that of an independent contractor rather than an
36employee, as defined in Section 3121 of Title 26 of the United
37States Code.

38(c) begin deleteA end deletebegin insertHe or she is aend insertbegin insert end insertperson who investigates, negotiates, or
39settles property and casualty claims for insurers.

P6    1

SEC. 10.  

Section 14022 of the Insurance Code is amended to
2read:

3

14022.  

This chapter does not apply to any of the following:

4(a) A person employed exclusively and regularly by one
5employer in connection with the affairs of that employer only and
6where there exists an employer-employee relationship. This
7subdivision shall become inoperative on January 1, 2018.

8(b) An officer or employee of the United States of America, or
9of this state or a political subdivision thereof, while that officer or
10employee is engaged in the performance of his or her official
11duties.

12(c) A person engaged exclusively in the business of obtaining
13and furnishing information as to the financial rating of persons.

14(d) A charitable philanthropic society or association duly
15incorporated under the laws of this state, which is organized and
16maintained for the public good and not for private profit.

17(e) An attorney at law admitted to practice in California, when
18acting in his or her professional capacity as an attorney.

19(f) A licensed collection agency or an employee thereof while
20acting within the scope of his or her employment, while making
21an investigation incidental to the business of the agency, including
22an investigation of the location of a debtor or his or her property
23where the contract with an assignor creditor is for the collection
24of claims owed or due or asserted to be owed or due or the
25equivalent thereof.

26(g) An officer, director, manager, or employee of an authorized
27insurer, surplus line insurer, a risk retention group, or an
28attorney-in-fact of a reciprocal insurer.

29(h) A licensed insurance agent or broker or managing general
30agent of the insurer to whom claim authority has been granted by
31the insurer.

32(i) The legal owner of personal property that has been sold under
33a conditional sales agreement or a mortgagee under the terms of
34a chattel mortgage.

35(j) Any bank subject to the jurisdiction of the Commissioner of
36Business Oversight under Division 1 (commencing with Section
3799) of the Financial Code or the Comptroller of the Currency of
38the United States.

P7    1(k) A person employed solely to obtain facts surrounding a
2claim or to furnish technical assistance to a licensed independent
3insurance adjuster.

4(l) Any building contractor, engineer, technical expert, or other
5person who is engaged by an insurer or licensed independent
6insurance adjuster to provide an expert or professional evaluation
7of the extent, cause, or origin of damage to the insured property,
8but who does not otherwise participate in the process of adjusting
9claims.

10(m) An individual who is employed to investigate suspected
11fraudulent insurance claims but who does not adjust losses or
12determine claims payments.

13(n) A person who solely performs administrative or clerical
14duties, or any combination thereof, and who does not investigate,
15negotiate, or settle claims with policyholders, claimants, or their
16legal representative.

17(o) A licensed health care provider or its employees who provide
18 managed care if the services do not include the determination of
19compensability.

20(p) A managed care organization or any of its employees who
21provide managed care services if the services do not include the
22determination of compensability.

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

24(r) A United States manager of the United States branch of an
25alien insurer.

26(s) An individual employee, under a self-insured arrangement,
27who adjusts claims on behalf of his or her employer.

28(t) An individual or business entity that investigates, negotiates,
29or settles workers’ compensation claims.

30(u) An individual who, in regards to portable electronics
31insurance claims, collects claims information from, or furnishes
32claims information to, insureds or claimants, and who conducts
33data entry, including entering data into an automated claims
34adjudication system, provided that the individual is an employee
35of a licensed independent insurance adjuster or its affiliate where
36no more than 25 of those persons are under the supervision of one
37licensed independent insurance adjuster or licensed producer.

38

SEC. 11.  

Section 14022.5 of the Insurance Code is amended
39to read:

P8    1

14022.5.  

(a) In the event of an emergency situation as declared
2by the commissioner, claims arising out of the emergency,
3catastrophe, disaster, or other similar occurrence may be adjusted
4by a nonlicensed independent insurance adjuster upon registration
5with the commissioner if all of the following requirements are met:

6(1) The work performed by the nonlicensed independent
7insurance adjuster is under the active direction, control, charge,
8or management of a licensed independent insurance adjuster or an
9insurer authorized to do business in this state.

10(2) Registration with the commissioner is accomplished within
11five working days from the date on which the nonlicensed
12 independent insurance adjuster commences the claims adjusting
13activity in connection with the emergency situation.

14(b) “Registration,” within the meaning of this section, means a
15written letter to the commissioner, submitted by the supervising
16licensed independent insurance adjuster or admitted insurer, naming
17the nonlicensed independent insurance adjusters, identifying their
18independent insurance adjuster licenses held in other jurisdictions,
19and stating when their claims adjusting activity commenced.

20(c) Registration under this section is valid for a period of 180
21days from the date of the registration letter. Before the lapse of
22that period, the commissioner may grant further 180-day extensions
23as he or she deems appropriate upon written request from the
24supervising licensed independent insurance adjuster or the admitted
25insurer.

26

SEC. 12.  

Section 14024 of the Insurance Code is amended to
27read:

28

14024.  

(a) An individual application shall be verified and shall
29include all of the following:

30(1) The full legal name and business, residence, and mailing
31addresses of the applicant.

32(2) The name under which the applicant intends to do business.

33(3) The applicant’s birth date and social security number.

34(4) The application fees set forth in Section 14097.

35(5) A statement as to the classifications under which the
36applicant desires to be qualified.

37(6) Two photographs, no more than six months old, of the
38applicant, of a type prescribed by the commissioner, and one
39classifiable set of his or her fingerprints submittedbegin delete in a manner
40acceptable to the Department of Insurance.end delete
begin insert with a live scan
P9    1fingerprinting service provider certified by the Department of
2Justice.end insert

3(7) A verified statement of his or her experience qualifications,
4unless applying for an apprentice independent insurance adjuster
5license.

6(8) Other information, evidence, statements, or documents as
7may be required by the commissioner.

8(b) A business entity application shall be verified and shall
9include all of the following:

10(1) The full legal name and residence address of each of its
11partners, officers, and directors, and its manager.

12(2) The name under which the applicant intends to do business.

13(3) That the applicant paid the fees set forth in Section 14097.

14(4) A statement as to the classifications under which the
15applicant desires to be qualified.

16(5) Other information, evidence, statements, or documents as
17may be required by the commissioner.

18

SEC. 13.  

Section 14025 of the Insurance Code is amended to
19read:

20

14025.  

Before a license is granted, the applicant shall meet all
21of the following requirements:

22(a) Be at least 18 years of age.

23(b) Not have committed acts or crimes constituting grounds for
24denial of licensure under Sections 1668 and 1669.

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

26(1) At least two years of experience in adjusting insurance claims
27in any state or the equivalent thereof as determined by the
28commissioner, unless applying for an apprentice independent
29insurance adjuster license.

30(2) One year as a licensed apprentice independent insurance
31adjuster, which is considered the equivalent of two years of
32experience in adjusting claims.

33(d) (1) Completed a 20-hour prelicensing education course of
34study.

35(2) A nonresident applicant currently licensed as a home state
36independent insurance adjuster in another state who has met that
37state’s prelicensing education requirements is exempt from
38completing the prelicensing education requirement.

39(3) A resident applicant currently listed under a licensed
40independent insurance adjuster’s license as an unlicensed employee
P10   1is exempt from completing the prelicensing education requirement.
2This exemption shall be in effect only until January 1, 2019.

3(e) Successfully passed the examination for the independent
4insurance adjuster license, unless he or she qualifies for an
5exemption in Section 14026.

6(f) Comply with those other qualifications that the commissioner
7may require by regulation.

8

SEC. 14.  

Section 14025.1 is added to the Insurance Code, to
9read:

10

14025.1.  

(a) The apprentice independent insurance adjuster
11license is a license to facilitate the experience, education, and
12training necessary to ensure reasonable competency in the
13responsibilities and duties of an independent insurance adjuster.

14(b) An individual applying for an apprentice independent
15insurance adjuster license shall submit an application in a format
16prescribed by the commissioner and shall declare under penalty
17of suspension, revocation, or refusal of the license that the
18statements made in the application are true, correct, and complete
19to the best of the individual’s knowledge and belief. Before
20approving the application, the commissioner shall determine that
21the individual meets all of the following:

22(1) Is at least 18 years of age.

23(2) Is a resident of California or is a resident of another state
24and has designated California as his or her home state.

25(3) Has a business or mailing address in California for the
26acceptance of service of process.

27(4) Has not committed any act that is a ground for suspension,
28revocation, or denial of licensure as set forth in Sections 1668,
291668.1, and 1669.

30(5) Has paid the fees set forth in subdivision (h) of Section
3114097.

32(c) The apprentice independent insurance adjuster license shall
33be subject to the following terms and conditions:

34(1) The applicant shall submit, with the apprentice independent
35insurance adjuster application, an attestation from a licensed
36independent insurance adjuster certifying that the apprentice will
37be subject to training, direction, and control by the licensed
38independent insurance adjuster and further certifying that the
39licensed independent insurance adjuster assumes responsibility
P11   1for the actions of the apprentice in the apprentice’s capacity as an
2apprentice independent insurance adjuster.

3(2) The apprentice independent insurance adjuster is only
4authorized to adjust claims in California.

5(3) The apprentice independent insurance adjuster is restricted
6to participation in the investigation, settlement, and negotiation of
7claims subject to the review and final determination of the claim
8by a supervising licensed independent insurance adjuster.

9(4) The apprentice independent insurance adjuster shall not be
10required to take and successfully complete the independent
11insurance adjuster examination to adjust claims as an apprentice
12independent insurance adjuster. At any time during the
13apprenticeship, the apprentice independent insurance adjuster may
14choose to take the examination. If the individual takes and
15successfully completes the independent insurance adjuster exam,
16the apprentice independent insurance adjuster license shall
17automatically terminate and an independent insurance adjuster
18license shall be issued to that individual in its place.

19(5) The apprentice independent insurance adjuster license is
20valid for a period not to exceed 12 months and is nonrenewable.

21(6) The licensee shall be subject to suspension, revocation, or
22denial pursuant to Sections 1668, 1668.1, and 1669.

23(7) The applicant shall submit two photographs, no more than
24six months old, of the applicant, of a type prescribed by the
25commissioner, and one classifiable set of his or her fingerprints
26submittedbegin delete in a manner acceptable to the Department of Insurance.end delete
27
begin insert with a live scan fingerprinting service provider certified by the
28Department of Justice.end insert

29

SEC. 15.  

Section 14026 of the Insurance Code is repealed.

30

SEC. 16.  

Section 14026 is added to the Insurance Code, to
31read:

32

14026.  

(a) An applicant for an independent insurance adjuster
33license, unless applying for an apprentice independent insurance
34adjuster license or crop insurance adjuster license, shall pass a
35written examination.

36(1) The examination shall test the knowledge of the applicant
37concerning the duties and responsibilities of an independent
38insurance adjuster and this code.

P12   1(2) An applicant applying for an examination shall remit a
2nonrefundable fee as prescribed by the commissioner in Section
314097.

4(b) An individual who applies for an independent insurance
5adjuster license in California who holds a home state license in
6another state as an independent insurance adjuster shall not be
7required to complete the examination if he or she successfully
8passed an examination as a condition of receiving an independent
9insurance adjuster license in his or her home state. This exemption
10applies to individuals who are currently licensed in their home
11state or if the home state license expired and the application is
12received by the commissioner within 90 days of expiration.

13(c) An individual who applies for an apprentice independent
14insurance adjuster license pursuant to Section 14025.1, and who
15adjusts claims in that capacity, shall not be required to take and
16successfully complete the independent insurance adjuster
17examination.

18

SEC. 17.  

Section 14027 of the Insurance Code is repealed.

19

SEC. 18.  

Section 14028 of the Insurance Code is amended to
20read:

21

14028.  

After a hearing, the commissioner may deny a license
22unless the application makes a showing satisfactory to the
23commissioner that the applicant, if an individual, has not, or if the
24applicant is a person other than an individual, that its manager and
25each of its officers and partners have not done any of the following:

26(a) Been refused a license under this chapter or had a license
27revoked.

28(b) Been an officer, partner, or manager of any person who has
29been refused a license under this chapter or whose license has been
30revoked.

31(c) While unlicensed committed, or aided and abetted the
32commission of, any act for which a license is required by this
33chapter.

34(d) Committed any act or crime constituting grounds for denial
35of licensure under Section 1668.

36

SEC. 19.  

Section 14029 of the Insurance Code is amended to
37read:

38

14029.  

(a) The business of each licensee shall be operated
39under the active direction, control, charge, or management of the
P13   1licensee, if the licensee is qualified, or the person who has qualified
2to act as the licensee’s manager, if the licensee is not qualified.

3(b) No person shall act as a manager of a licensee until he or
4she has complied with each of the following:

5(1) Demonstrated his or her qualifications by a written or oral
6examination, or a combination of both, if required by the
7commissioner.

8(2) Made a satisfactory showing to the commissioner that he or
9she has the qualifications prescribed by Section 14025 and that
10none of the facts stated in Section 14028 or 14028.5 exist as to
11him or her.

12(c) If the manager, who has qualified as provided in this section,
13ceases for any reason whatsoever to be connected with the licensee
14to whom the license is issued, the licensee shall notify the
15commissioner in writing 30 days from the cessation. If notice is
16given, the license shall remain in force for a reasonable length of
17time to be determined by the rules of the commissioner pending
18the qualifications, as provided in this chapter, of another manager.
19If the licensee fails to notify the commissioner within the 30-day
20period, his or her license shall be subject to suspension or
21revocation and may be reinstated only upon the filing of an
22application for reinstatement, payment of the reinstatement fee, if
23any is due, and the qualification of a manager as provided herein.

24(d) Every manager shall renew his or her authority by satisfying
25the requirements of Article 8 (commencing with Section 14090).

26(e) This section shall remain in effect only until January 1, 2018,
27and as of that date is repealed, unless a later enacted statute, that
28is enacted before January 1, 2018, deletes or extends that date.

29

SEC. 20.  

Section 14029 is added to the Insurance Code, to
30read:

31

14029.  

(a) Each organization licensed under this chapter shall
32designate an individual also licensed as an independent insurance
33adjuster to be responsible for the organization’s compliance with
34state law.

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

36

SEC. 21.  

Section 14030 of the Insurance Code is amended to
37read:

38

14030.  

(a) Whenever the individual on the basis of whose
39qualifications a license under this chapter has been obtained ceases
40to be connected with the licensee for any reason whatever, the
P14   1business may be carried on for a temporary period and under the
2terms and conditions as the commissioner shall provide by
3regulation.

4(b) This section shall remain in effect only until January 1, 2018,
5and as of that date is repealed, unless a later enacted statute, that
6is enacted before January 1, 2018, deletes or extends that date.

7

SEC. 22.  

Section 14031 of the Insurance Code is amended to
8read:

9

14031.  

A hearing held under this chapter to determine whether
10an application for a license should be granted shall be conducted
11in accordance with Chapter 5 (commencing with Section 11501)
12of Part 1 of Division 3 of Title 2 of the Government Code, and the
13commissioner shall have all of the powers granted therein.

14

SEC. 23.  

Section 14032 of the Insurance Code is amended to
15read:

16

14032.  

The form and content of the license shall be determined
17by the commissioner.

18

SEC. 24.  

Section 14037 of the Insurance Code is amended to
19read:

20

14037.  

(a) A licensee shall at all times be legally responsible
21for the good conduct in the business of each of his or her employees
22or agents, including his or her manager.

23(b) 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. 25.  

Section 14038 of the Insurance Code is amended to
27read:

28

14038.  

(a) Any licensee or officer, director, partner, or manager
29of a licensee 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. However, he or she shall
32not divulge to any other person any information acquired by him
33or her, except as he or she may be required by law to do so or as
34is necessary to effectuate or enforce a transaction, except at the
35direction of the employer or client for whom the information was
36obtained and only if authorized by the insured.

37(b) A licensee or officer, director, partner, manager, or employee
38of a licensee shall not knowingly make any false report to his or
39her employer or client for whom information was being obtained.

P15   1(c) A written report shall not be submitted to a client except by
2the licensee, qualifying manager, or a person authorized by one
3or either of them, and the person submitting the report shall
4exercise diligence in ascertaining whether or not the facts and
5information in that report are true and correct.

6(d) A licensee or officer, director, partner, manager, or employee
7of a licensee shall not use a badge in connection with the official
8activities of the licensee’s business.

9(e) A licensee or officer, director, partner, manager, or employee
10of a licensee, shall not use a title, wear a uniform, use an insignia,
11or use an identification card, or make any statement with the intent
12to give an impression that he or she is connected in any way with
13the federal government, a state government, or any political
14subdivision of a state government.

15(f) A licensee or officer, director, partner, manager, or employee
16of a licensee, shall not enter any private building or portion thereof
17without the consent of the owner or of the person in legal
18possession thereof.

19(g) A licensee shall not appear as an assignee party in any
20proceeding involving claim and delivery, replevin, or other
21possessory action, action to foreclose a chattel mortgage,
22mechanic’s lien, materialman’s lien, or any other lien.

23(h) A licensee shall not permit an employee or agent in his or
24her own name to advertise, engage clients, furnish reports, or
25present bills to clients, or in any manner whatever to conduct
26business for which a license is required under this chapter. All
27business of the licensee shall be conducted in either the name of
28and under the control of the licensee or the licensee’s employer,
29who is a licensed independent insurance adjuster who meets the
30bond requirement described in Section 14050.

31(i) A licensee acting as an independent automobile damage
32appraiser or adjuster or as an automobile insurance claims adjuster,
33appraiser, or representative shall not receive any financial benefit
34from an automobile repair facility. “Financial benefit” means the
35receiving of any commission or gratuity, discount on repair costs,
36free repairs, employment by a repair facility, or possession of more
37than 3 percent direct ownership in an automobile repair facility
38located in this state.

P16   1(j) This section shall remain in effect only until January 1, 2018,
2and as of that date is repealed, unless a later enacted statute, that
3is enacted before January 1, 2018, deletes or extends that date.

4

SEC. 26.  

Section 14038 is added to the Insurance Code, to
5read:

6

14038.  

(a) Any licensee or officer, director, or partner of a
7licensee may divulge to any law enforcement officer or district
8attorney, or to his or her representative, any information he or she
9may acquire as to any criminal offense. However, he or she shall
10not divulge to any other person any information acquired by him
11or her, except as he or she may be required by law to do so or as
12is necessary to effectuate or enforce a transaction, except at the
13direction of the employer or client for whom the information was
14obtained and only if authorized by the insured.

15(b) A licensee or officer, director, or partner of a licensee shall
16not knowingly make any false report to his or her employer or
17client for whom information was being obtained.

18(c) A written report shall not be submitted to a client except by
19the licenseebegin delete whoend deletebegin insert or his or her designee. The licenseeend insert shall exercise
20diligence in ascertaining whether or not the facts and information
21in that report are true and correct.

22(d) A licensee or officer, director, or partner of a licensee shall
23not use a badge in connection with the official activities of the
24licensee’s business.

25(e) A licensee or officer, director, or partner of a licensee shall
26not use a title, wear a uniform, use an insignia, use an identification
27card, or make any statement with the intent to give an impression
28that he or she is connected in any way with the federal government,
29a state government, or any political subdivision of a state
30government.

31(f) A licensee or officer, director, or partner of a licensee shall
32not enter any private building or portion thereof without the consent
33of the owner or of the person in legal possession thereof.

34(g) A licensee shall not appear as an assignee party in any
35proceeding involving claim and delivery, replevin, or other
36possessory action, action to foreclose a chattel mortgage,
37mechanic’s lien, materialman’s lien, or any other lien.

38(h) A licensee shall not permit an agent in his or her own name
39to advertise, engage clients, furnish reports, or present bills to
40clients, or in any manner whatever to conduct business for which
P17   1a license is required under this chapter. All business of the licensee
2shall be conducted in either the name of and under the control of
3the licensee or the licensee’s employer, who is a licensed
4independent insurance adjuster who meets the bond requirement
5described in Section 14050.

6(i) A licensee acting as an independent automobile damage
7appraiser or adjuster or as an automobile insurance claims adjuster,
8appraiser, or representative shall not receive any financial benefit
9from an automobile repair facility. “Financial benefit” means the
10receiving of any commission or gratuity, discount on repair costs,
11free repairs, employment by a repair facility, or possession of more
12than 3 percent direct ownership in an automobile repair facility
13located in this state.

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

15

SEC. 27.  

Section 14039 of the Insurance Code is amended to
16read:

17

14039.  

A person licensed as an independent insurance adjuster
18shall not do any of the following:

19(a) Fail to disclose his or her full financial interest in a contract
20or agreement executed by him or her for the adjustment of a claim
21prior to the execution thereof.

22(b) Use any misrepresentation to solicit a contract or agreement
23to adjust a claim.

24(c) Solicit or accept remuneration from, or have a financial
25interest exceeding 3 percent in, any salvage, repair, or other firm
26that obtains business in connection with any claim that he or she
27has a contract or agreement to adjust.

28

SEC. 28.  

Section 14040 of the Insurance Code is amended to
29read:

30

14040.  

(a) Any badge or cap insignia worn by a person who
31is a licensee, officer, director, partner, manager, or employee of a
32licensee shall be of a design approved by the commissioner, and
33shall bear on its face a distinctive word indicating the name of the
34licensee and an employee number by which the person may be
35identified by the licensee.

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

39

SEC. 29.  

Section 14040 is added to the Insurance Code, to
40read:

P18   1

14040.  

(a) Any badge or cap insignia worn by a person who
2is a licensee, officer, director, or partner of a licensee shall be of
3a design approved by the commissioner, and shall bear on its face
4a distinctive word indicating the name of either the licensee or the
5adjusting firm the licensee represents.

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

7

SEC. 30.  

Section 14042 of the Insurance Code is amended to
8read:

9

14042.  

(a) A licensee shall not conduct a business under a
10fictitious or other business name unless and until he or she has
11obtained the written authorization of the commissioner to do so.

12(b) The commissioner shall not authorize the use of a fictitious
13or other business name that is so similar to that of a public officer
14or agency or of that used by another licensee that the public may
15be confused or misled thereby.

16(c) The authorization shall require, as a condition precedent to
17the use of any fictitious name, that the licensee comply with Section
181724.5.

19(d) A licensee desiring to conduct his or her business under
20more than one fictitious business name shall obtain the
21authorization of the commissioner in the manner prescribed in this
22section for the use of that name.

23(e) The licensee shall pay a fee of ten dollars ($10) for each
24authorization to use an additional fictitious business name and for
25each change in the use of a fictitious business name. If the original
26license is issued in a nonfictitious name and authorization is
27requested to have the license reissued in a fictitious business name,
28the licensee shall pay a fee of twelve dollars ($12) for that
29authorization.

30

SEC. 31.  

Section 14050 of the Insurance Code is amended to
31read:

32

14050.  

(a) A license shall not be issued under this chapter
33unless the applicant files with the commissioner a surety bond
34executed by a surety company authorized to do business in the
35state in the sum of two thousand dollars ($2,000) conditioned for
36the faithful and honest conduct of business by that applicant. The
37bond as to its form, execution, and sufficiency of the sureties shall
38be approved by the commissioner.

39(b) A surety bond is not required for an individual licensed as
40an independent insurance adjuster who adjusts only on behalf of
P19   1his or her employer,begin delete who is aend deletebegin insert provided that the employer is anotherend insert
2 licensed independent insurance adjuster who meets the bond
3requirement.

4

SEC. 32.  

Section 14061 of the Insurance Code is amended to
5read:

6

14061.  

(a) The commissioner may suspend or revoke a license
7issued under this chapter or may issue a restricted license in
8accordance with Section 14026.5 if he or she determines that the
9licensee, or his or her manager, if an individual, or if the licensee
10is a person other than an individual, that any of its officers,
11directors, partners, or its manager has done any of the following:

12(1) Made any false statement or given any false information in
13connection with an application for a license or a renewal or
14reinstatement of a license.

15(2) Violated any provisions of this chapter.

16(3) Violated any rule of the commissioner adopted pursuant to
17the authority contained in this chapter.

18(4) Been convicted of any crime substantially related to the
19qualifications, functions, and duties of the holder of the registration
20or license in question.

21(5) Impersonated, or permitted or aided and abetted an employee
22to impersonate, a law enforcement officer or employee of the
23United States, or of any state or political subdivision thereof.

24(6) Committed or permitted any employee to commit any act,
25while the license was expired that would be cause for the
26suspension or revocation of a license, or grounds for the denial of
27an application for a license.

28(7) Willfully failed or refused to render to a client services or
29a report as agreed between the parties and for which compensation
30has been paid or tendered in accordance with the agreement of the
31parties.

32(8) Committed assault, battery, or kidnapping, or used force or
33violence on any person, without proper justification.

34(9) Knowingly violated or advised, encouraged, or assisted the
35violation of any court order or injunction in the course of business
36as a licensee.

37(10) Acted as a runner or capper for any attorney.

38(11) Committed any act that is a ground for denial of an
39application for license under this chapter.

P20   1(12) Purchased, possessed, or transported any tear gas weapon
2except as authorized by law. A violation of this paragraph may be
3punished by the suspension of a license for a period to be
4 determined by the commissioner.

5(b) This section shall remain in effect only until January 1, 2018,
6and as of that date is repealed, unless a later enacted statute, that
7is enacted before January 1, 2018, deletes or extends that date.

8

SEC. 33.  

Section 14061 is added to the Insurance Code, to
9read:

10

14061.  

(a) The commissioner may suspend or revoke a license
11issued under this chapter or may issue a restricted license in
12accordance with Section 14026.5 if he or she determines that the
13licensee or if the licensee is a person other than an individual, that
14any of its officers, directors, partners, or its designated responsible
15person has done any of the following:

16(1) Made any false statement or given any false information in
17connection with an application for a license or a renewal or
18reinstatement of a license.

19(2) Violated any provisions of this chapter.

20(3) Violated any rule of the commissioner adopted pursuant to
21the authority contained in this chapter.

22(4) Been convicted of any crime substantially related to the
23qualifications, functions, and duties of the holder of the registration
24or license in question.

25(5) Impersonated, or permitted or aided and abetted an employee
26to impersonate, a law enforcement officer or employee of the
27United States, or of any state or political subdivision thereof.

28(6) Committed or permitted any employee to commit any act,
29while the license was expired that would be cause for the
30suspension or revocation of a license, or grounds for the denial of
31an application for a license.

32(7) Willfully failed or refused to render to a client services or
33a report as agreed between the parties and for which compensation
34has been paid or tendered in accordance with the agreement of the
35parties.

36(8) Committed assault, battery, or kidnapping, or used force or
37violence on any person, without proper justification.

38(9) Knowingly violated or advised, encouraged, or assisted the
39violation of any court order or injunction in the course of business
40as a licensee.

P21   1(10) Acted as a runner or capper for any attorney.

2(11) Committed any act that is a ground for denial of an
3application for license under this chapter.

4(12) Purchased, possessed, or transported any tear gas weapon
5except as authorized by law. A violation of this paragraph may be
6punished by the suspension of a license for a period to be
7determined by the commissioner.

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

9

SEC. 34.  

Section 14063 of the Insurance Code is amended to
10read:

11

14063.  

(a) The commissioner may suspend or revoke a license
12issued under this chapter or may issue a restricted license in
13accordance with Section 14026.5 if the commissioner determines
14that the licensee, or his or her manager, if an individual, or if the
15licensee is a person other than an individual, that any of its officers,
16directors, partners, or its manager has done any of the following:

17(1) Used any letterhead, advertisement, or other printed matter,
18or in any matter whatever represented that he or she is an
19instrumentality of the federal government, or of a state or any
20political subdivision thereof.

21(2) Used a name different from that under which he or she is
22 currently licensed in any advertisement, solicitation, or contract
23for business.

24(b) This section shall remain in effect only until January 1, 2018,
25and as of that date is repealed, unless a later enacted statute, that
26is enacted before January 1, 2018, deletes or extends that date.

27

SEC. 35.  

Section 14063 is added to the Insurance Code, to
28read:

29

14063.  

(a) The commissioner may suspend or revoke a license
30issued under this chapter or may issue a restricted license in
31accordance with Section 14026.5 if the commissioner determines
32that the licensee, if an individual, or if the licensee is a person other
33than an individual, that any of its officers, directors, or partners
34has done any of the following:

35(1) Used any letterhead, advertisement, or other printed matter,
36or in any matter whatever represented that he or she is an
37instrumentality of the federal government, or of a state or any
38political subdivision thereof.

P22   1(2) Used a name different from that under which he or she is
2currently licensed in any advertisement, solicitation, or contract
3for business.

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

5

SEC. 36.  

Section 14064 of the Insurance Code is amended to
6read:

7

14064.  

(a) The commissioner may suspend or revoke a license
8issued under this chapter or may issue a restricted license in
9accordance with Section 14026.5 if the commissioner determines
10that the licensee, or his or her manager, if an individual, or if the
11licensee is a person other than an individual, that any of its officers,
12directors, partners, or its manager, has committed any act in the
13course of the licensee’s business constituting dishonesty or fraud.

14(b) “Dishonesty or fraud” as used in this section includes, in
15addition to other acts not specifically enumerated herein, all of the
16following:

17(1) Knowingly making a false statement relating to evidence or
18 information obtained in the course of employment, or knowingly
19publishing a slander or a libel in the course of business.

20(2) Using illegal means in the collection or attempted collection
21of a debt or obligation.

22(3) Manufacture of evidence.

23(4) Acceptance of employment adverse to a client or former
24client relating to a matter with respect to which the licensee has
25obtained confidential information by reason of or in the course of
26his or her employment by that client or former client.

27(5) Impersonating, or permitting or aiding and abetting an
28employee to impersonate, a law enforcement officer or employee
29of the United States, or of any state or political subdivision thereof.

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

33

SEC. 37.  

Section 14064 is added to the Insurance Code, to
34read:

35

14064.  

(a) The commissioner may suspend or revoke a license
36issued under this chapter or may issue a restricted license in
37accordance with Section 14026.5 if the commissioner determines
38that the licensee, if an individual, or if the licensee is a person other
39than an individual, that any of its officers, directors, partners, or
P23   1its designated responsible person has committed any act in the
2course of the licensee’s business constituting dishonesty or fraud.

3(b) “Dishonesty or fraud” as used in this section includes, in
4addition to other acts not specifically enumerated herein, all of the
5following:

6(1) Knowingly making a false statement relating to evidence or
7information obtained in the course of employment, or knowingly
8publishing a slander or a libel in the course of business.

9(2) Using illegal means in the collection or attempted collection
10of a debt or obligation.

11(3) Manufacture of evidence.

12(4) Acceptance of employment adverse to a client or former
13client relating to a matter with respect to which the licensee has
14obtained confidential information by reason of, or in the course
15of, his or her employment by that client or former client.

16(5) Impersonating, or permitting or aiding and abetting an
17employee to impersonate, a law enforcement officer or employee
18of the United States, or of any state or political subdivision thereof.

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

20

SEC. 38.  

Section 14078 of the Insurance Code is repealed.

21

SEC. 39.  

Section 14078 is added to the Insurance Code, to
22read:

23

14078.  

(a) Unless refused licensure pursuant to Sections 14060
24to 14065, inclusive, a nonresident person shall receive a
25nonresident independent insurance adjuster license if all of the
26following apply:

27(1) The applicant is currently licensed in good standing as an
28independent insurance adjuster in his, her, or its resident or home
29state.

30(2) The applicant paid the fees required by Section 14097.

31(3) The applicant submitted to the commissioner the completed
32application for licensure.

33(4) The applicant’s home state issues nonresident independent
34insurance adjuster licenses to residents of California on the same
35basis.

36(b) The commissioner may verify the independent insurance
37adjuster’s licensing status through any appropriate database,
38including the Producer Database maintained by the National
39Association of Insurance Commissioners, its affiliates or
40subsidiaries, or may request certification of good standing.

P24   1(c) As a condition to the continuation of a nonresident
2independent insurance adjuster license, the licensee shall maintain
3a resident independent insurance adjuster license in his, her, or its
4home state.

5(1) The nonresident independent insurance adjuster license
6issued under this chapter shall terminate and be surrendered
7immediately to the commissioner if the resident independent
8insurance adjuster license terminates for any reason, unless the
9termination is due to the independent insurance adjuster being
10issued a new resident independent insurance adjuster license in
11his, her, or its new home state.

12(2) The nonresident independent insurance adjuster license shall
13terminate if the person’s home state does not issue nonresident
14independent insurance adjuster licenses to residents of California
15on the same basis.

16(3) (A) The licensee is required to give notice of resident
17independent insurance adjuster license termination to any state
18that issued a nonresident independent insurance adjuster license.

19(B) The notice is required to be given within 30 days of the
20termination date. If the resident independent insurance adjuster
21license was terminated for change in resident home state, then the
22notice is required to include both the previous and current
23 addresses.

24(4) Maintaining a resident independent insurance adjuster license
25is required for the nonresident independent insurance adjuster
26license to remain valid.

27

SEC. 40.  

Section 14079 is added to the Insurance Code, to
28read:

29

14079.  

(a) An independent insurance adjuster shall be honest
30and fair in all communications with the insured, the insurer, and
31the public.

32(b) An independent insurance adjuster shall provide
33policyholders and claimants with prompt and knowledgeable
34service and courteous, fair, and objective treatment at all times.

35(c) An independent insurance adjuster shall not give legal advice
36and shall not deal directly with any policyholder or claimant who
37is represented by legal counsel without the consent of the legal
38counsel involved.

39(d) An independent insurance adjuster shall comply with all
40local, state, and federal privacy and information security laws.

P25   1(e) An independent insurance adjuster shall identify himself or
2herself as an independent insurance adjuster and, if applicable,
3shall identify his or her employer when dealing with any
4policyholder or claimant.

5(f) An independent insurance adjuster shall not have any
6financial interest in any adjustment or shall not acquire for himself,
7herself, or any person any interest or title in salvage, without first
8receiving written authority from the principal.

9

SEC. 41.  

Section 14080 of the Insurance Code is amended to
10read:

11

14080.  

Any person who knowingly falsifies the fingerprints
12or photographs submitted under paragraph (6) of subdivision (a)
13of Section 14024 or paragraph (7) of subdivision (c) of Section
1414025.1 is guilty of a felony. Any person who violates any of the
15other provisions of this chapter is guilty of a misdemeanor
16punishable by fine not to exceed five hundred dollars ($500), or
17by imprisonment in the county jail not to exceed one year, or by
18both the fine and imprisonment.

19

SEC. 42.  

Section 14090.1 of the Insurance Code is amended
20to read:

21

14090.1.  

(a) An individual who holds an independent insurance
22adjuster license and who is not exempt under subdivision (b) shall
23satisfactorily complete a minimum of 24 hours, of which three
24hours are to be in ethics, of continuing education courses pertinent
25to the duties and responsibilities of an independent insurance
26adjuster license and shall report the completion of this coursework
27to the insurance commissioner on a biennial basis in conjunction
28with his or her license renewal cycle.

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

30(1) A licensee not licensed for one full year prior to the end of
31the applicable continuing education biennium.

32(2) A licensee holding a nonresident independent insurance
33adjuster license who has met the continuing education requirements
34of his or her designated home state.

35(3) An individual licensed as an independent insurance adjuster
36and as a property or casualty broker-agent, pursuant to Section
371625, who has met the continuing education requirements specified
38in Section 1749.3.

39(4) An individual licensed as an apprentice independent
40insurance adjuster pursuant to Section 14025.1.

P26   1

SEC. 43.  

Section 14090.3 is added to the Insurance Code, to
2read:

3

14090.3.  

A person who fails to meet the requirements imposed
4by Section 14090.1, and who has not been granted an extension
5of time by the commissioner within which to comply, shall have
6his or her license placed on inactive status until he or she
7demonstrates to the satisfaction of the commissioner that he or she
8has complied with all of the requirements of this article and all
9other applicable laws. A licensee placed on inactive status may
10not perform the activities described in Section 1631. If a person
11cannot perform the requirements of this article due to a disability
12or inactivity due to special circumstances, the commissioner shall
13provide a procedure for the person to place his or her license on
14inactive status until the person demonstrates to the satisfaction of
15the commissioner that he or she has complied with all of the
16 requirements of this article for the period of disability or inactivity.

17

SEC. 44.  

Section 14097 of the Insurance Code is amended to
18read:

19

14097.  

The amount of fees prescribed by this chapter, unless
20otherwise fixed, is that fixed in the following schedule:

21(a) The application fee for the qualifying examination for an
22original license is fifty dollars ($50).

23(b) The application fee for an original branch office certificate
24is forty-seven dollars ($47).

25(c) The fee for an original license application is up tobegin delete one
26hundred twenty dollars ($120).end delete
begin insert eighty dollars ($80).end insert If the license
27will expire less than one year after its issuance, then the fee is an
28amount equal to 50 percent of the renewal fee in effect on the last
29regular renewal date before the date on which the license is issued.
30The commissioner may, by appropriate regulation, provide for the
31waiver or refund of the initial license fee where the license is issued
32less than 45 days before the date on which it will expire.

33(d) The renewal fee shall be fixed by the commissioner as
34follows:

35(1) For a license as an independent insurance adjuster, not more
36thanbegin delete one hundred twenty dollars ($120).end deletebegin insert eighty dollars ($80).end insert

37(2) For a branch office certificate, not more than fifty-six dollars
38($56).

39(e) The application and license fee for classifications prescribed
40by the commissioner, in addition to those provided for in this
P27   1chapter, and the application and license fees for a change in the
2type of business organization of a licensee, shall be in the amount
3prescribed by rule and regulation of the commissioner.

4(f) The delinquency fee shall be 50 percent of the renewal fee
5in effect on the date of expiration.

6(g) The fee for reexamination of an applicant is fifty dollars
7($50).

8(h) The application fee for an apprentice independent insurance
9adjuster license shall be up tobegin delete one hundred twenty dollars ($120).end delete
10
begin insert eighty dollars ($80).end insert

11

SEC. 45.  

Section 14097.5 is added to the Insurance Code, to
12read:

13

14097.5.  

(a) On or before March 1, 2019, and for a total of
14three years thereafter, the department shall report annually to the
15Legislature all of the following:

16(1) The number of individuals licensed pursuant to this chapter.

17(2) The implementation costs incurred and the revenues received
18by the department for licensure of independent insurance adjusters.

19(3) The annual projected costs and revenues associated with
20ongoing licensure and enforcement activities pursuant to this
21chapter.

22(b) (1) A report submitted pursuant to subdivision (a) shall be
23submitted in compliance with Section 9795 of the Government
24Code.

25(2) Pursuant to Section 10231.5 of the Government Code, this
26section is repealed on March 1, 2023.

27

SEC. 46.  

Section 14099 of the Insurance Code is amended to
28read:

29

14099.  

Application or license fees shall not be refunded
30pursuant to Section 1751.5.

31

SEC. 47.  

No reimbursement is required by this act pursuant to
32Section 6 of Article XIII B of the California Constitution because
33the only costs that may be incurred by a local agency or school
34district will be incurred because this act creates a new crime or
35infraction, eliminates a crime or infraction, or changes the penalty
36for a crime or infraction, within the meaning of Section 17556 of
37the Government Code, or changes the definition of a crime within
P28   1the meaning of Section 6 of Article XIII B of the California
2Constitution.



O

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