Chapter 15

The penalty for unlawfully acting as an insurer without a Certificate of Authority is imprisonment (state or county jail) not to exceed 1 year, and/or a fine not to exceed __________

$100,000

Restricted License

As a disciplinary measure when a violation of the Insurance Code would justify suspension, revocation or denial of license, the Commissioner may issue a restricted license

Annual Statement

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

Display of License

Every license to act as a property and casualty broker-agent must be prominently displayed in the licensee's office.

License Number Required on Documents

Every licensee shall prominently affix, type, or have printed on business cards, price quotations and printed advertisements in this state, his/her license number in type the same size as that indicated for address or telephone number.

Office Location

Every resident property and casualty broker/agent must maintain a principal office in this state for the transaction of business. The

Liquidation

If it is not prudent to proceed as a conservator, the Commissioner may apply to the court and after a full hearing the court may order the winding up and liquidation with the Commissioner as liquidator.

Investments

Insurance regulations require that all investments be approved by the insurer's Board of Directors.

Rescission

the termination of a contract from the beginning as if it had never existed. An insurer is entitled by law to rescind a policy in the case of: • Material Concealment • An intentional and fraudulent omission of matters proving the falsity of a warranty • Material misrepresentation • Violation of a warranty

The Commissioner has continuing authority to act against a former agent whose license has been surrendered or expired for up to __________

5 years.

Pretext Interviews

A pretext interview involves an attempt to obtain personal, non-public information through deception, leading the person to believe the "interviewer" is someone other than a licensed agent or insurance company representative acting in an authorized capacity.

Sexual Orientation and Underwriting

And insured 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

Suspension or Revocation

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 3 years.

Person

Any person (individual or natural person), association, organization, partnership, business trust, limited liability company, or corporation.

Shall/May

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

Appointments

Before a licensed agent may transact insurance, the agent must first be appointed by an admitted insurer or a licensed agency which has a marketing agreement with one or more insurers. The appointment becomes effective the date the notice is signed.

Failure or Refusal to Accept an

No admitted insurer can fail to accept an application or cancel insurance under conditions less favorable to the insured, except for reasons that apply to all persons of the same marital status, gender, race, color, religion, national origin or sexual orientation.

Examination of Insurers

The Commissioner conducts examinations on every domestic insurer in this state not less frequently than every 5 years.

Insurer/Insured

The person who undertakes to indemnify another by insurance is the insurer, and the person indemnified is the insured. • Any person capable of making a contract may be an insurer, subject to the restrictions imposed by this Code • Any person, except a public enemy, may be insured

Representations

a statement (written or oral) made based on a person's knowledge and best belief. It may be accepted as true, but it is not guaranteed to be true.

Nonresident Agent

A person who does not reside in California but is licensed to represent an admitted insurer in this state.

Resident Agent

A person who resides in California and is licensed to represent an admitted insurer in this state.

Insurance Agent

A person authorized, by and on behalf of an insurer, to transact all classes of insurance other than life, disability, or health insurance, on behalf of an admitted insurance company.

Certificate of Authority

A person cannot transact any class of insurance business in this state without first being admitted or authorized by securing a Certificate of Authority from the Commissioner.

False Financial Statements

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

Life Licensees

are authorized to transact life and health insurance under one of the following: • A Life-only agent is a person authorized to transact insurance coverage on human lives including endowments and annuities. • An Accident and Health agent is a person authorized to transact coverage for sickness and bodily injury, including disability income.

Unfair Trade Practices

defines unfair and deceptive acts and unfair methods of competition.

Insurance Services Office (ISO)

develops the standard insurance forms used in California.

Termination of License

A licensee may terminate his/her license by surrendering it to the Commissioner.

Military Service Exemption

A licensee who is unable to pay renewal fees or complete continuing education due to military service will be allowed to complete the renewal requirements upon termination of military service and will not have to pay a renewal penalty.

Natural Person

A living human being (as opposed to a business entity).

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.

Internet Advertisements

All Internet advertisements directed to California insurance consumers must include the agent's California insurance license number in addition to the agent's principal place of business.Nonresident agents must clearly indicate their state of resident licensing.

License Renewal

All licenses renew every 2 years on the last day of the month in which the license was originally issued.

Expired License

An application for renewal of an expired license without retesting may be filed after the expiration date until the same month and day of the next succeeding year, providing the delinquent fee for that year is paid.

Original License Appointment

An insurer filing a notice of appointment for an agent declares that the applicant is of good reputation and worthy of the license.

Proof of Claim

Any evidence or documentation the insurer has obtained providing any evidence of the claim and reasonably supports the magnitude or the amount of the claimed loss.

Penalties

Any insurer who knowingly violates these practices will be assessed a civil penalty in the amount of $1,000-$5,000, plus any court costs.

Mailing as Proof of Notice

Any notice required to be given to an insured may be mailed, postage paid, and addressed to the policyowner, insured, claimant, or beneficiary to be notified at his/her last known address of record.

Claimant

Any person who asserts a right of recovery under a surety bond or insurance policy.

File and Record Documentation

Claims files are required to contain all documents, notes and work papers, including copies of all correspondence, which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed, and the licensee's actions pertaining to the claim can be determined.

Boycott, Coercion or Intimidation

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

Fraud Protection

Insurers are required to notify the Fraud Division within 60 days of uncovering an incident of actual or suspected fraud.

False Entries

Making any false entry in any book, report, or statement of any insurer with intent to deceive any public official to whom the insurer is required by law to report, or who has authority by law to examine its condition or into any of its affairs, or omitting to make a true entry of any material fact pertaining to the business of the insurer in any book, report, or statement of the insurer.

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.

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

Unfair Discrimination

Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or life annuity, in the dividends or other benefits payable, or in any other of the terms and conditions of the contract.

Misrepresentation

Making, issuing, or circulating any estimate, illustration, circular, or statement misrepresenting the terms of any policy issued

Concealment

Neglecting to communicate information that a party knows and ought to communicate, whether intentional or not. A material concealment omitted prior to the formation of the contract permits rescission of the contract.

Identification of Applicant's Race or Birthplace

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.

Notice of Legal Action

Notice of an action begun against the insurer with respect to a claim, or against the insured by the insurer, or against the principal under a bond, and includes any proceeding arbitration.

Rehabilitation and Liquidation

When insurers become insolvent, the Commissioner will step in and attempt to help the insurer become solvent again through the process of rehabilitation, which may include selling off some of the insurer's book of business

Agent

a person authorized on behalf on an insurer to transact all classes of insurance other than life, disability, and health insurance.

A property/casualty broker-agent

authorized to transact insurance coverage.

Solicitors

employed to aid a property and casualty broker-agent acting as an insurance agent or insurance broker in transacting insurance other than life, disability, or health.

Fraudulent Claims

enables the Commissioner and Department of Insurance to more effectively investigate and discover insurance fraud and to halt fraudulent activities.

Life Settlement Broker

exclusively the representative of the policyowner who seeks to sell his interest in the policy.

Life Agent Solicitation Prior to Appointment

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.

Broker

someone who for compensation transacts insurance on behalf of another person, but not an insurer. There are no brokers for life or health insurance in California.