chapter 15

Filing with any supervisory or other public official any false statement of financial condition of an insurer with intent to deceive.

False Financial Statements

LASLI

List of Approved Surplus Lines Insurers

In addition to any penalty assessed for the commission of misdemeanors, a person violating these provisions may be fined $(?), together with $(?) for each month the violation is continued.

$500 $100

One year after cancellation or expiration of a policy, pertinent records may be stored off premises so long as they are retrievable within ? business days.

2 business days

(Aiding a Non-Admitted Insurer to Transact) A penalty of $(?) along with a fine of $(?) per month for each month the violation continues will be assessed those found in violation.

500 100

Failure of the licensee to comply with the order within the time specified will be grounds for the suspension or revocation of the license or licenses of the licensee.

Noncompliance

Most E&O policies are issued on a "?" basis,

claims made

It is a misdemeanor to refuse to deliver books, records, or assets to the Commissioner after an order to seize has been issued in an insolvency proceeding. This is punishable by a fine of up to (?) and/or imprisonment for up to (?) year. ( Summary seizure)

$1,000 1 year

Any insurer who knowingly violates these practices will be assessed a civil penalty in the amount of (?)plus any court costs. (Discriminatory Practices)

$1,000-$5,000,

A Life and Disability Analyst cannot be employed or paid by the insurer and must:

- Be a resident of the state of California and at least age 18 - Have worked as a life licensee or employee of a licensee for 5 years - Pass a written examination prepared by the Commissioner

(California Insurance Guarantee Association) - Workers' Compensation claims are payable in (?) and without limitations. -All other claims are payable up to the limits allowed under the Code (claims other than Workers' Compensation payable by the CIGA are generally limited to the policy's limit of liability or (?) , whichever is less).

- full - $500,000

California Annuity Suitability Education Requirements A life-only agent who sells annuity products to individual consumers must complete an initial ?)-hour training course prior to soliciting for sales. Agents must complete (?)-hours of subsequent training every (?) years prior to license renewal.

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The purpose of the association is to provide insolvency insurance for each member insurer.

California Insurance Guarantee Association

E&O

Errors and Omissions (E&O) Insurance

Annual Statement

Every insurer authorized to transact business in this state must file a financial report with the Commissioner annually.

Defamation

Making or disseminating before the public in any newspaper, publication, or advertising device, any statement containing any assertion, representation, or statement with respect to the business of insurance, or with respect to any person in the conduct of insurance business, which is untrue, deceptive, or misleading.

The following records must be kept by agents, brokers, surplus lines and special line surplus lines broker for every insurance transaction for at least 5 years after expiration or cancellation date. All records are to be maintained at the principal office in California of the resident agent or broker:

Name of insured Name of insurer Policy number Effective date, termination date, and mid-term cancellation date of coverage Amount of gross premium Amount of net premium Amount of commission and basis on which computed

Entering into any agreement that would result in an unreasonable restraint of, or monopoly in the business of insurance.

Boycott, Coercion or Intimidation

No application for insurance used in determining the insurability of the applicant can require the applicant's race, color, national origin, ancestry or sexual orientation. The applicant's birthplace can be used only for purposes

of identifying the applicant and not to discriminate against the applicant.

A licensed life agent (life-only and accident and health agent) may present a proposal for insurance to a prospective policyholder on behalf of a life insurer for which the life agent is not specifically appointed. If the insurer issues the policy, the insurer has (?) days from when the application for life insurance was submitted to file a Notice of Appointment with the Commissioner.

14 days

An individual licensed as a life-only or accident and health agent or as a property or casualty broker-agent, or an individual licensed as a property or casualty broker/agent must complete a minimum of (?) hours of instruction (including (?) hours of ethics) prior to renewal of the license every (?) years.

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Any licensed agent who has committed any offense denounced by the Code may have his/her license suspended or revoked by the Commissioner. A license may be suspended for up to ? years. A license suspended for more than ? years will require the agent to retake the prelicensing course and pass the qualifying exam. A license which has been revoked may not be reinstated within ? year of revocation.

3 2 1

Property and Casualty and Personal Lines agent-brokers who intend to transact Homeowners insurance must complete a mandatory (?)-hour Homeowners valuation course before transacting this insurance

3 HOURS Mandatory training courses are not in addition to the regular CE requirements.

In the event that an organizational license terminates, the organization may continue to transact insurance under the former license if a new application for an organizational license is submitted within (?) days.

30 days

Within (?) days of placing the coverage with a non-admitted insurer, the broker must file a report with the Commissioner detailing the efforts made in trying to place the coverage with an admitted insurer.

60

Misrepresentation

Making, issuing, or circulating any estimate, illustration, circular, or statement misrepresenting the terms of any policy issued; using any name or title misrepresenting the true nature of any policy or class of policies; misrepresenting the financial condition of any insurer; or making any misrepresentation to a policyholder insured by any company for the purpose of inducing the policyholder to lapse, forfeit, or surrender a policy.

If the charges are justified, a civil penalty not to exceed (?) for each act will be assessed.

$5,000

This organization serves insurers by providing research and documented information on which insurers may base its coverages.

Insurance Services Office (ISO)

Before a licensed agent may transact insurance, the agent must first be (?) by an admitted insurer or a licensed agency which has a marketing agreement with one or more insurers.

appointed

The law requires insurers to be sufficiently (?)

capitalized.

Workers' Compensation fraud is punishable by a fine of up to $(?) or (?) the amount of the fraud, if greater. If the violator has a prior felony conviction of the same offense, there will be an additional (?)-year sentence for each prior conviction.

$150,000 twice 2 year

Committing any act considered an unfair method of competition or an unfair act or practice recognized by the Code may result in an administrative fine of (?) for each such act, up to (?) per act when determined to be a "willful" violation or committed with such frequency that it may be considered a "general business practice" of the person. Following issuance of a cease and desist order, a willful violation is punishable by a fine of (?).

$5,000 $10,000 $55,000

Transacting Without a License Any person who acts, offers to act, or assumes to act in a capacity for which a license is required without holding a license is guilty of a misdemeanor, punishable by a fine of up to

$50,000 and/or 1 year in jail.

Violation of a cease and desist order imposes a penalty of up to $(?) per violation or a maximum penalty of $(?) if the violation is willful

$5000 $55,000

The general purpose of the Code is defined by the four broad "powers" conferred on the Commissioner and the Department of Insurance:

- Prevent insurer insolvency and fraud in the conduct of the insurance business or by individuals - Insure that policies are reasonably priced and widely available in most lines of insurance -Establish procedures that guide the operation of insurance companies and the activities of agents, brokers, and other licensees -Provide the authority needed by the Insurance Commissioner to oversee insurance agents and companies

Any agent or broker who receives compensation for premium financing must keep records for (?) years of any compensation received

3 years

The insured must sign the claim form under penalty of perjury in the presence of the agent, broker, adjuster or claims representative who will verify the driver's license number. The signature must be notarized. The insurer must retain copies of all auto theft settlement checks, the original claim form, and a legible copy of the police report for (?) years.

3 years

When the insurer approves the claim, in whole or in part, and when necessary, upon receipt of a properly executed release, the insurer is required to make payment to the claimant or an assignee, or take action to perform its claim obligation within(?) days

30 days

Deceptive Advertising

Advertising insurance that an insurer will not sell. An intentional violation is considered a misdemeanor punishable by a fine of up to $10,000

Insurance Claims Analysis Bureau The insurance claims analysis bureau performs the following functions:

Collects and compiles information and data from members or subscribers concerning insurance claims Disseminates information to members or subscribers relating to insurance claims for the purpose of preventing and suppressing insurance fraud Promotes training and education to further insurer investigation, suppression, and prosecution of insurance fraud Provides to the Commissioner all California data and information contained in the records of the insurance claims analysis bureau to further the prevention and prosecution of insurance fraud

Ethical Conduct The essential principles of the insurance Code of Ethics are:

Place the customer's interest first Know your job and continue to increase your level of competence Identify customers' needs and recommend products and services that meet those needs Accurately and truthfully represent products and services Use simple language that the layman can understand Stay in touch with customers and conduct periodic coverage reviews Protect your confidential relationship with your client Keep informed of and obey all insurance laws and regulations Provide exemplary service to your clients Avoid unfair or inaccurate remarks about the competition

The (?) Information Reporting System permits insurers, law enforcement agencies, fire investigative agencies, and district attorneys to deposit arson case information in a common database within the Department of Justice. The purpose of the database is to identify patterns by claimants engaged in arson and to prevent insurance fraud by (?).

Arson

All licensees and applicants for licenses issued by the CDI Producer Licensing Bureau are required to report any administrative actions or criminal convictions to CDI within (?) days of the final disposition of the matter.

30 dasy

The following records are to be maintained by every agent or broker at the office servicing the insured in a file pertaining to a particular insured for a period of 18 months after the transaction described by such records:

Identity of each person who transacted the insurance, renewals, and any change in coverage Records of all binders, whether oral or written, showing the names of insured and insurer, nature of coverage, effective and termination dates, and premium for the binder or policy to be issued Copy of the application or memorandum of request for insurance Correspondence received, copies of correspondence sent, memoranda, notes of conversation, or another record necessary to describe the transaction

The penalty for unlawfully acting as an insurer without a Certificate of Authority is imprisonment (state or county jail) not to exceed (?) year, and/or a fine not to exceed (?)

- 1 year - $100,000

The Paid-in Capital requirements are as follows:

- For foreign mutual insurers without outstanding capital stock, the value of its assets that is in excess of all expenses, taxes, indebtedness and reinsurance as provided by law. The paid-in capital of available cash assets must amount to at least $200,000. - For domestic insurers, the value of its assets which are in excess of the sum of its liabilities for losses reported, expenses, taxes, and all other indebtedness or the aggregate par value of its issued shares of stock, including treasury shares, whichever is lower.

Insurers are required to maintain claim data so that it is accessible, legible, and retrievable for examination, and must be able to provide the claim number, line of coverage, date of loss, date of acceptance, date of payment, date of denial or closing without payment. This data must be available for all open and closed files for the current year, and the (?) preceding years.

4 year

Most administrative sanctions can only be issued following a public hearing into the conduct of the agent. A notice of hearing must be provided to the agent not less than (?) days in advance of the scheduled hearing, and must be accompanied by a pleading that informs the agent of the violations alleged, as well as the possible sanctions that may be applied.

45 days

Examination of Insurers : The Commissioner conducts examinations on every domestic insurer in this state not less frequently than every (?) years.

5 years

The Commissioner has continuing authority to act against a former agent whose license has been surrendered or expired for up to (?) years.

5 years

The Commissioner's regulations are first proposed and published in draft form, then undergo a series of public hearings, and following final adoption, are reviewed by the ? (OAL). After passing review by the OAL, the regulations are passed on to the Secretary of State, who is responsible for maintaining the CCRs.

Office of Administrative Law

The Insurance Department's Fraud Division enforces the provisions prohibiting fraudulent claims. Every admitted insurer must maintain a Fraud Unit for the purpose of detecting and investigating fraudulent claims. Insurers are required to notify the Fraud Division within (?) days of uncovering an incident of actual or suspected fraud.

60 days

The Commissioner does not have the authority to change the Insurance Code; only the state (?) has the authority to write or amend the Insurance Code.

legislature

The appointment becomes effective the date the

notice is signed.

The notice provides information concerning: (pretext interview) The notice may be delivered in person, by mail, fax, or email. Producers must retain a copy of such notices in their files for a minimum of (?) years.

-The products that will be discussed - Who will be attending the meeting, and the insurance license numbers of those persons - Alerts the consumer to the fact that they may have any other persons (family members or advisers) of their choosing at the meeting, and that they have the right to terminate the meeting at any time - 5 years

When insurers become insolvent, the Commissioner will step in and attempt to help the insurer become solvent again through the process of (?), which may include selling off some of the insurer's book of business. In the event (?) is not successful, the Commissioner will take action to (?) the insurance company in an effort to protect claimants.

-rehabilitation -liquidate

In the case of business transacted on a direct billing basis (where the insurer directly bills and receives premium from the insured), the agent or broker transacting the insurance must maintain for 5 years, the following records:

A policy record card or sheet, or declarations page Copies of premium payment receipts or premiums when collected by the agent or broker Records of premium payments if made by the agent or broker Monthly or other periodic statements from the insurer showing premium receipts on the agent's or broker's business Copy of any cancellation notice

Persons who transact insurance without being appropriately licensed may be issued a cease and desist order, carrying administrative penalties of up to (?) per day for each day a violation occurred, as well as a fine of up to (?) times the amount of money received by the unlicensed person for acting in a capacity that requires a license.

$5,000 5

There are also civil penalties enumerated for persons who furnish false information to the Commissioner not to exceed (?) per violation, as well as a $(?) penalty for every 30-day period during which the person fails to comply with a request, or up to $(?) if the person willfully refuses to deliver requested information, up to a maximum of (?)

- $100,000 - $5000 -$10,000 - $100,000.

No insurer or agent may participate in any plan to offer or effect any kind of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property, real or personal or mixed, or services, without any separate charge to the insured for such insurance, nor can any agent, broker, or solicitor arrange the sale of any such insurance. The Commissioner may suspend or revoke a license or certificate of authority of anyone willfully violating this provision not to exceed 1 year.

free insurance

If it is believed the person has violated a trade practice, the Commissioner will issue a statement of charges, a statement of potential liability for civil penalties, a show cause order as to why a cease and desist should not be issued, and a (?) notice of hearing

30 days

Upon receiving a request for records, insurers and/or agents must deliver the records to the Commissioner within (?)

30 days.

If the requested files cannot be immediately furnished, on request the agent will be given an additional (?) days to provide the information.

60 days

The Insurance Code also requires all producers who meet with prospective clients age (?) and older in their homes for the purpose of transacting life insurance, annuities, or disability insurance products to first provide a written notice of the first meeting at least (?) hours in advance.

65 24

An insurer cannot consider sexual orientation or gender identity in its underwriting criteria or use marital status, living arrangements, occupation, sex, beneficiary designation or Zip Code to determine whether to require a test for the presence of (?).

HIV

Advertising of California Insurance Guarantee Association

Making or disseminating in any publication or other advertising device a statement that a named insured or specified insurers are members of the California Insurance Guarantee Association and are insured against insolvency. All admitted insurers are required to be covered under the association, therefore, advertising membership is not permitted.

The Unfair Trade Practices Act defines

unfair and deceptive acts and unfair methods of competition.

Insolvency means any impairment of minimum "?" or "?" required of an insurer for the classes of insurance, which it transacts. This means that there is an inability for a company to meet its financial obligations when they are due.

-paid-in capital -capital paid-in

A person acting as an analyst without a proper license or after such license has been revoked is guilty of a misdemeanor and is subject to a maximum fine of $(?)and imprisonment of up to (?) year or both. ( Life and Disability Insurance Analyst Licenses)

1 $1000

An individual license will automatically terminate:

1. Immediately upon the death of the licensee 2. If the license has not been renewed within 12 months following its expiration

Insurers (and other licensees) must respond in writing to an insured's or claimant's notice of loss within (?) days of receiving that notice orally or in writing.

15

Unless the insurer requires additional information to determine liability for a loss, the insurer is generally expected to either affirm or deny a claim within (?) days of notice of the loss. When a claim cannot be resolved within 40 days, the claimant must be notified of this fact and, as discussed previously, the insurer must continue to communicate the status of the claim no less often than every (?) days.

40 days 30 days

A licensee who has applied to renew a license will be entitled to continue operating under the existing license for (?) days after its specified expiration date, or until notified by the Department that the renewal application is deficient, whichever comes first.

60days

Upon receiving any written or oral inquiry from the Department of Insurance concerning a claim, every licensee must respond to the Commissioner immediately within (?) calendar days of the receipt of the inquiry, furnishing a complete written response based on the facts as then known to the licensee.

21

Violators may be subject to imprisonment in the county jail for (?) year, or state prison for (?), (?), or (?) years and/or a fine of up to $(?) for fraudulent claims other than workers' compensation.

1 2 3 5 $50,000

Applicants for a life-only agent, accident and health only agent, property-only or casualty only broker/agent each require (?) hours of approved instruction and (?) hours of Ethics and Code

20 HOURS 12 HOURS

he Insurance Commissioner is elected by the people and may serve up to two (?) terms.

4-year

CCRs

California code of regulations

Some risks can be placed only with non-admitted insurers. Such risks include:

Shipowner interest, international maritime transportation Marine builder's risks, drydocks Aircraft or spacecraft insurance Property or operations of railroads engaged in interstate commerce

As used in this Code the word "?" is mandatory and the word "?" is permissive, unless otherwise apparent from the context.

As used in this Code the word "shall" is mandatory and the word "may" is permissive, unless otherwise apparent from the context.

E&O insurance

is used for the purpose of protecting an agent from this legal liability and provides coverage for legal defense and settlement costs up to a limit. Errors and Omissions insurance is usually offered with a minimum limit of liability of $1 million. Policies usually include a significant retention (or deductible) of $2,500 or $5,000.

If the violation is willful, the maximum penalty is (?) for each act.

$10,000

An (?) is any person who collects any charges or premium from, or who adjusts or settles claims on, residents of this state in connection with life, health or annuity insurance coverage and must hold a Certificate of Registration as an administrator issued by the Commissioner. An administrator must have a written agreement with an insurer. A copy of the agreement must be kept for ?) years after the agreement has ended.

- administrator - 5 years

Under California law, a Life Settlement Broker is exclusively the representative of the policyowner who seeks to sell his interest in the policy. The Life Settlement Broker must be a licensed Life Only agent for more than (?) year or have completed a (?)-hour course in life settlements. A Life Settlement Broker must file an application and post a $*(?) surety bond.

-1 -15 -$10,000

As long as a claim remains in process, and until it has been resolved by denying or affirming the claim, the insurer must communicate with the claimant no less often than every (?) days.

30 days

Disability income insurance claims payments must be made at least once every (?) days until the insurer's obligation to pay claims has ended.

30 days

Applicants for a life and health agent or a property and casualty broker/agent license must complete (?) hours of approved instruction and (?) hours of Ethics and Code

40 12

Newly licensed accident and health agents who intend to market Long-Term Care insurance must complete an (?)-hour course in Long-Term Care insurance in each of their first (?) years of licensing (two terms).

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