text:
(a) Upon the effective date of a plan of conversion in accordance with Section 1560.10, the domestic reciprocal insurer immediately becomes a stock corporation, the interests and rights in surplus of its subscribers are extinguished, the subscribers of the insurer immediately become members of the reciprocal holding company, and are granted rights in surplus in the reciprocal holding company equivalent to those rights in surplus previously held in the converted company, all of the voting stock initially issued by the converted insurer is owned by the stock holding company, and all of the voting stock initially issued by the stock holding company is owned by the reciprocal holding company. Except for the subscribership interests in the reciprocal insurer, which becomes membership interests in the reciprocal holding company, nothing herein is intended to, nor shall eliminate, curtail or otherwise diminish the contract rights of policyholders of a converted company. The stock holding company may thereafter, subject to compliance with Article 8 (commencing with Section 820) of Chapter 1, issue securities to other persons. After the effective date, owners of policies that are issued by a stock insurer that has been converted from a domestic reciprocal insurer pursuant to proceedings under this article shall become members of the reciprocal holding company immediately upon issuance of the policies, except that an owner solely of a reporting endorsement to a claims-made policy shall not be members of the reciprocal holding company.

(b) The converted insurer shall be a continuation of the original reciprocal insurer, and the conversion shall in no way annul, modify, or change any of the original reciprocal insurer’s existing suits, rights, contracts, or liabilities except as provided in the approved plan. The converted insurer shall exercise all the rights and powers and perform all the duties conferred or imposed by law upon insurers writing the classes of insurance written by it, and shall retain the rights and contracts existing prior to conversion subject to the effect of the plan.

(c) From the effective date, the reciprocal holding company shall hold at least 51 percent of the issued and outstanding voting stock of the stock holding company and the stock holding company thereafter shall at all times hold all of the issued and outstanding voting stock of the converted insurer. The stock holding company may issue additional voting stock to the reciprocal holding company and, in addition, to other persons an amount of voting stock and securities convertible into voting stock, if in the aggregate, the issued and outstanding voting stock of the stock holding company held by the reciprocal holding company is not less than 51 percent of the issued and outstanding voting stock of the stock holding company. For purposes of the 51 percent limitation, any issued and outstanding securities of the stock holding company that are convertible into voting stock are considered issued and outstanding voting stock, provided that securities having voting power only because of the occurrence of a contingency shall not be considered securities convertible into voting stock where the contingency has not occurred.

From the effective date, the reciprocal holding company’s equity interest in the stock holding company shall not be less than 51 percent of the total stockholders’ equity in the stock holding company. For purposes of the 51 percent limitation, any issued and outstanding securities of the stock holding company that are convertible into equity securities, whether voting or nonvoting, shall be considered stockholders’ equity. Debt securities that include a default contingency conversion interest shall not be considered stockholders’ equity for compliance with the foregoing limitation.

(d) The commissioner shall retain jurisdiction over the reciprocal holding company organized pursuant to this article. Except as provided in this code, a reciprocal holding company is subject to the provisions of the General Corporation Law in like manner with other corporations. However, provisions of that law referring to shareholders or subscribers shall be applied as though those provisions referred to the members of a reciprocal holding company. For purposes of Section 1215.5, the reciprocal holding company shall be considered as if it were an insurance company. The commissioner shall retain jurisdiction over the issuance of debt securities in accordance with the protections provided in Article 8 (commencing with Section 820) of Chapter 1.

(e) If any proceedings under Article 14 (commencing with Section 1010), Article 14.3 (commencing with Section 1064.1), Article 14.5 (commencing with Section 1065.1), or Article 15.5 (commencing with Section 1077), of Chapter 1, are brought naming as a party a stock insurer created as a result of proceedings authorized by this article, the reciprocal holding company formed as part of the conversion automatically becomes a party to the proceedings. All of the assets of the reciprocal holding company, including, but not limited to, its interest in the stock holding company formed pursuant to this article, are deemed assets of the estate of this stock insurer to the extent necessary to satisfy claims of persons against the stock insurer who have claims falling within the priorities established in paragraphs (1) to (5), inclusive, of subdivision (a) of Section 1033. Claims of persons in their capacity as members of the reciprocal holding company shall be claims falling within the priority established in paragraph (6) of subdivision (a) of Section 1033. A reciprocal holding company may not dissolve, liquidate, or wind up and dissolve without the prior written approval of the commissioner or the court pursuant to proceedings brought pursuant to Article 15 (commencing with Section 1070) of Chapter 1.

(f) With respect to the management, records, and affairs of a reciprocal holding company and except as otherwise provided in this article, a member of a reciprocal holding company has the same character of rights and relationship as a stockholder has toward a domestic stock life insurer subject to the provisions of this code.

(g) Each member of a reciprocal holding company is entitled to one vote on each matter coming to a vote at any meeting of members, regardless of the number of policies that the member holds.

(h) Notice of all meetings of members of a reciprocal holding company, whether annual or special, shall be given in writing to the members entitled to vote. The notice shall be given by the secretary, assistant secretary, or other persons charged with that duty. If there is no officer so charged, or if he or she neglects or refuses this duty, notice may be given by any director. At the option of the converted insurer, the notice may be imprinted on premium notices or receipts or on both. A notice may be given to any member either personally, or by mail, or other means of written communication, charges prepaid, addressed to the member at his or her address appearing on the books of the insurer, or given by the member to the converted insurer for the purpose of notice. If a member gives no address, and if there is no address on the books of the insurer, notice shall be deemed to have been given the member if sent by mail or other means of written communication addressed to the place where the principal office of the converted insurer is situated, or if published at least once in a newspaper of general circulation in the county in which the office is located and in the newspaper that has the largest daily circulation in this state. Notice of any meeting of members shall be sent to each member entitled to notice not less than 14 days before a meeting. Notice of any meeting of members shall specify the place, the day, and the hour of the meeting and the general nature of the business to be transacted.

For any member who gives no address and has no address on the books of the insurer, notice of an annual meeting to be held at the time and place specified is deemed adequate if published at least once in each of four successive weeks in a newspaper of general circulation in the county in which the principal office of the converted insurer is located and in the newspaper that has the largest daily circulation in this state. If the notice is so published, no other notice of the meeting is required.

(i) The presence in person or by proxy of 5 percent of the members of a reciprocal holding company entitled to vote at any meeting constitutes a quorum for the transaction of all business of the reciprocal holding company, including, but not limited to, the amendment of the articles of incorporation or bylaws of the reciprocal holding company.

(j) Any required member approval shall be by the affirmative vote of a majority of the members who vote, or a higher percentage of the members as may be required by law or the articles of incorporation, a quorum being present.

(k) The governing body of the reciprocal holding company shall be comprised of not less than 6 nor more than 18 directors. A majority of the reciprocal holding company directors shall be policyholders of the converted insurer. Unless the plan provides that at least a majority of the directors of the boards of the stock holding company and the converted insurer are also directors of the reciprocal holding company, the commissioner shall determine whether the proposed composition of the boards of directors of each of the constituent corporations of the reciprocal holding company system, as provided in the articles of incorporation and bylaws, facilitate the control of the converted insurer by the reciprocal holding company. No term shall continue longer than six years. In the absence of such provisions, each director shall be elected for a term of one year. All directors shall hold office for the term for which they are elected and until their successors are elected and qualified. The bylaws of the reciprocal holding company shall set forth a procedure for establishing reciprocal holding company independent directors in the event that the stock holding company issues securities. Not less than one of every six directors of the reciprocal holding company shall be so designated. A director may, but need not, be a member of the reciprocal holding company of which he or she is acting as director. Vacancies in the board of directors may be filled by a majority of the remaining directors, though less than a quorum. Each director so elected shall hold office until the next annual meeting.

(l) Member interests in a reciprocal holding company are exempt from Article 8 (commencing with Section 820) of Chapter 1. A description of the member interests and related factual disclosure shall not be considered to be an inducement to buy insurance in violation of Section 10430. Any promise of returns, profits, or distributions, or representations with regard to the benefits of membership, made as an inducement in connection with the issuance and delivery of a policy is subject to Section 10430 and the remedy provided in Section 10433.


kind: section

code: INS

text:
(a) Prior to, and for a period of five years following, the effective date of the plan of conversion, no person or group of persons acting in concert shall directly or indirectly offer to acquire or acquire in any manner the beneficial ownership of 5 percent or more of any class of voting securities of a converted insurer or of a person that controls, as defined by subdivision (c) of Section 1215, the converted insurer, without the prior consent of the commissioner. Any application for that approval shall contain information as the commissioner may require and shall be accompanied by a filing fee in an amount equal to the filing fee specified in Section 1215.2.

(b) In the event of any violation of this section, or of any action that, if consummated, would constitute a violation, all voting securities of the converted insurer or of the person acquired by any person in excess of the maximum amount permitted to be acquired by the person pursuant to this subdivision shall be deemed to be nonvoting securities of the converted insurer or of that person. The violation or action may be enforced or enjoined by an appropriate proceeding commenced by the converted insurer, a person, the commissioner, any policyholder or stockholder of the converted insurer, or the person on behalf of the converted insurer or the person in the superior court in the judicial district in which the converted insurer has its home office or in any other court having jurisdiction. The court may issue any order it finds necessary to cure the violation or to prevent the proposed action. In addition to the foregoing, whenever it appears to the commissioner that any person has committed a violation of this section, the commissioner may proceed as provided in Article 14 (commencing with Section 1010) of Chapter 1 to take possession of the property of the converted insurer and to conduct the business thereof.

(c) For the purposes of this section, “beneficial ownership,” with respect to voting securities, means the sole or shared power to vote, or direct the voting of, voting securities or the sole or shared power to dispose, or direct the disposition, of voting securities.

(d) For the purposes of this section, “voting security” includes voting stock as defined in Section 1560.02, any preorganization certificate or subscription, including subscription rights issued pursuant to a plan of conversion, or any security convertible, with or without consideration, into voting security, or carrying any warrant or right to subscribe for, or purchase any, voting security, or any such warrant or right.

(e) For the purposes of this section, “offer” includes an offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of a security or interest in a security for value.

history: (History: Amended by Stats. 2017, Ch. 417, Sec. 10. (AB 1696) Effective January 1, 2018.)

division: 1. GENERAL RULES GOVERNING INSURANCE

part: 2. THE BUSINESS OF INSURANCE

chapter: 3. Reciprocal Insurers

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 3. Reciprocal Insurers > 17. Conversion of Certain Reciprocal Insurers to Incorporated Stock Insurers


text: Unless otherwise provided in the plan of conversion, the governing body and officers of the domestic reciprocal insurer shall serve as directors and officers of the converted insurer until new directors and officers have been duly elected and qualified pursuant to the articles of incorporation and bylaws of the stock company.

history: (History: Added by Stats. 1998, Ch. 421, Sec. 2. Effective January 1, 1999.)

article: 17. Conversion of Certain Reciprocal Insurers to Incorporated Stock Insurers


text:
(a) Notwithstanding any other provision of law and except as otherwise provided in subdivision (b), actions concerning any plan of conversion, proposed plan of conversion, plan amendment, or proposed plan amendment under this article or any acts taken or proposed to be taken under this article shall be commenced within one year after the plan of conversion or plan amendment is filed in the office of the commissioner pursuant to subdivision (d) of Section 1560.03 or Section 1560.10, or six months from the effective date of the plan of conversion, whichever is later. If the plan of conversion is withdrawn, the actions or acts shall be commenced within six months from the date the governing body approves a resolution to withdraw the plan. If an action concerns or arises out of a plan amendment or proposed plan amendment made under Section 1560.09, the applicable time period is measured from the filing, effective date, or approval of withdrawal of the plan amendment, whichever is later.

(b) Judicial review of any act of the commissioner or any other governmental body or officer concerning or arising out of any plan of conversion, proposed plan of conversion, plan amendment, or proposed plan amendment under this article may only be had by filing a petition for a writ of mandate within 30 days of the date of the act. However, any petition seeking judicial review shall be filed no later than 30 days from the effective date of the plan of conversion or plan amendment, whichever is the subject of the petition.


text: The offer or sale of securities issued pursuant to the plan of conversion developed and approved in accordance with the provisions of this article, shall be exempt from Article 8 (commencing with Section 820) of Chapter 1.


text: The commissioner shall have the authority from time to time, to make, amend, and rescind any rules and regulations necessary to carry out the provisions of this article. The commissioner shall also have the authority to charge and collect from the insurer for the actual amount of expenses reasonably incurred by the state in discharge of the commissioner’s duties hereunder.


text: Upon completion of the act of conversion and issuance of the certificate of authority under Section 1560.10, the Secretary of State shall accept for filing a verified copy of the articles of incorporation of the converted insurer.


text:
(a) The articles of incorporation of a converted insurer that have been adopted pursuant to a plan of conversion and filed with the Secretary of State in accordance with Section 1560.10 may be further amended after the effective date pursuant to applicable law. The plan of conversion may be amended in other respects after the effective date of the plan as specified in this section. An amendment of the plan of conversion shall take effect upon filing with the Secretary of State after compliance with the following:

(1) Approval by a resolution of at least two-thirds of the board of directors of the converted insurer. The resolution shall specify the reasons for and the purposes of the proposed amendment.

(2) Submission to the commissioner for consent in writing, subject to the provisions of Section 1560.05.

(3) Approval by at least two-thirds of those members of the corporation who were subscribers of the converting insurer and entitled to vote on the original plan of conversion approved pursuant to subdivision (c) of Section 1560.03 and who vote at a meeting called for that purpose.

(4) Filed in the office of the commissioner after having been consented to and approved as contemplated by paragraphs (2) and (3).

(b) If an amendment proposed under subdivision (a) would adversely affect the rights of one or more classes of subscribers, but not all of those subscribers, then only the subscribers of each class whose rights would be adversely affected by the proposed amendment are entitled to vote on the proposed plan amendment.

(c) A subscriber meeting prescribed by paragraph (3) of subdivision (a) shall be called by the board of directors, the chairperson of the board, or the president of the converted insurer. Notice of the meeting shall be given to subscribers entitled to vote at the meeting by mail at least 45 days prior to the date set for the meeting. Voting shall be by ballot, in person, or by proxy. A quorum consists of 10 percent of the subscribers of the converted insurer entitled to vote at the meeting.

(d) At any time before the plan amendment becomes effective, the converted insurer may, by resolution of at least two-thirds of the board of directors, amend the plan amendment or withdraw its plan amendment. For an amendment to a plan amendment, all references in this section to the plan amendment shall be deemed to refer to the plan amendment as amended. Any amendment of the plan amendment shall require the written consent of the commissioner. No amendment shall be deemed to change the date of adoption of the plan amendment. No amendment made after approval by the subscribers as provided in paragraph (3) of subdivision (a) may change the plan amendment in a manner that the commissioner determines is materially disadvantageous to any of the affected subscribers unless the plan amendment as amended is submitted for reconsideration under the procedures prescribed for the original plan amendment, subscriber approval.


text: If the name of a domestic reciprocal insurer converting to a stock insurer pursuant to this article includes the word “reciprocal,” the new stock insurer may continue to use the word “reciprocal” in its name if the name includes a word or words that identify the new stock insurer as a stock insurer and the commissioner finds that the continued use of the word “reciprocal” in its name is not likely to mislead or deceive the public.


citation: INS § 1561

text:
Any law or ruling of any state of the United States or any foreign country which shall attempt to assume jurisdiction over, or to authorize regulation or supervision of, a noninsurance affiliate of a domestic insurer, where such attempt is based solely upon the domestic insurer applying for or holding a certificate of authority to do business in such state or foreign country, whether such attempt be by registration or through disclosure, reports, examinations, or other devices imposed on either the insurer or its noninsurance affiliate, directly or indirectly, shall be deemed to be an unreasonable law. Upon finding that such unreasonable law has been applied to a domestic insurer or its noninsurance affiliate by such state or foreign country, the commissioner may refuse to grant an initial certificate of authority, but not a renewal of an existing certificate of authority, to an insurer organized under the laws of such state or foreign country thereafter applying to him for authority to do business in this state.

As used in this section, “affiliate” means a person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the domestic insurer.

history: (History: Added by Stats. 1969, Ch. 867.)

chapter: 4. Foreign Insurers

article: 1. Conditions of Doing Business

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 4. Foreign Insurers > 1. Conditions of Doing Business


citation: INS § 1580

text: As used in this article, the term “alien insurer” means a foreign insurer organized under the laws of any jurisdiction other than a State of the United States.

history: (History: Repealed and added by Stats. 1941, Ch. 51.)

article: 2. Alien Insurers

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 4. Foreign Insurers > 2. Alien Insurers


citation: INS § 1581

text: Except as otherwise expressly provided for particular insurers, an alien insurer shall not transact any insurance in this State without first making the deposit required by this article nor, subject to the exception specified in Section 1582, without first complying with all other provisions of this article.

article: 2. Alien Insurers


citation: INS § 1582

text: The amount of such deposit shall be equal to the minimum amount of the paid-in capital required for admission of incorporated insurers issuing policies on a reserve basis and transacting the same classes of insurance which such alien insurer is transacting in the United States, but the commissioner may accept such deposit in excess of such amount. Such deposit may be treated as a part of the assets of the depositing insurer. For the purpose of computing the amount of the deposit, the value of the securities shall not be estimated in excess of the par value nor of the market value thereof.

history: (History: Amended by Stats. 1951, Ch. 542.)

article: 2. Alien Insurers


citation: INS § 1583

text:
The deposit required by Section 1581

(a) Shall be continuously maintained so long as any obligation arising out of any insurance transacted by such alien insurer in the United States remains in existence for any purpose whatever;

(b) Shall consist of securities authorized for investment of the assets of domestic incorporated insurers;

(c) Shall be in addition to any deposits required by law for purposes other than those specified in Section 1586;

(d) May be made with the insurance authority, or with the auditor, controller or general fiscal officer of any State of the United States in which such alien insurer is authorized to transact insurance, or otherwise held in trust as provided by the laws of the State of deposit, for the purposes specified in Section 1586.

article: 2. Alien Insurers


citation: INS § 1585

text: If such deposit is not so maintained in this State, it shall be deemed to be in existence as required by this article only when a certificate, issued by the proper authority of the State of deposit and showing in detail the constituent securities thereof and the purpose thereof, is delivered to the commissioner at least annually and at such other times as may be required by the commissioner.

article: 2. Alien Insurers


citation: INS § 1586

text: Such deposit, if maintained in this State, shall be for the benefit and security of all the policyholders and creditors of such alien insurer in the United States, and if maintained in another State, for the benefit and security of all the policyholders, or of all the policyholders and creditors, of such alien insurer in the United States.

article: 2. Alien Insurers


citation: INS § 1587

text: Securities deposited with the commissioner pursuant to this article shall be specially deposited by him in the State Treasury, in packages marked with the name of the insurer from whom the securities were received.

article: 2. Alien Insurers


citation: INS § 1588

text: As long as the depositing insurer is solvent and the deposited securities are sufficient under this article, it may collect the income on the deposited securities. From time to time it may withdraw such securities if it deposits other securities, of the character and value specified in this article in the stead of those to be withdrawn, but deposited securities shall not be withdrawn from the State Treasury except upon the written order of the depositing insurer, indorsed by the commissioner or, if such indorsement is refused, under the authority of some court of competent jurisdiction.

article: 2. Alien Insurers


citation: INS § 1589

text:
Whenever a deposit is made with the commissioner, he or she shall issue to the depositing insurer a certificate under his or her official seal stating the items and amount of securities so deposited, and their value, to the best of his or her knowledge. In case of withdrawal and substitution, he or she shall issue a supplemental certificate of similar nature.

The commissioner shall require the payment of seventy-two dollars ($72), in advance, as a fee for issuing the first certificate provided for in this article to each insurer, and twenty-five dollars ($25) for each additional certificate or each supplemental certificate evidencing any withdrawal, substitution, or other change in the securities deposited. There shall be no other or additional fee for attaching the commissioner’s seal to a securities deposit schedule in those instances. The fees prescribed herein are separate from and not cumulative upon those prescribed by Article 11 (commencing with Section 939), Chapter 1.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 31. (AB 1699) Effective January 1, 2018.)

article: 2. Alien Insurers


citation: INS § 1590

text: The commissioner shall require the payment of forty-four dollars ($44), in advance, as a fee for filing a certificate of deposit of securities under this article.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 32. (AB 1699) Effective January 1, 2018.)

article: 2. Alien Insurers


citation: INS § 1591

text:
In addition to complying with all other applicable requirements of this code, every admitted alien insurer shall on or before the first day of March in each year after the year 1941, file with the commissioner a statement on a form prescribed by him, showing as of the 31st day of December then next preceding, the following information:

(a) All of its assets within the United States on deposit with officers of any state thereof for the benefit and security of all the policyholders, or of all the policyholders and creditors, of such alien insurer within the United States. Such assets so deposited are designated “general state deposits.”

(b) All of its assets within the United States, other than general state deposits, on deposit with officers of any state thereof for the benefit and security of all the policyholders, or policyholders and creditors, of such alien insurer within the state of deposit or of certain classes of policyholders, or policyholders and creditors, either within the state of deposit or within the United States. Such assets so deposited are designated “special state deposits.” The value to be allowed in such statement for any special state deposit shall not exceed the liability secured thereby.

(c) All of its assets within the United States, other than general state deposits and special state deposits, held by any trustee for the benefit and security of all the policyholders or of all the policyholders and creditors, of such alien insurer within the United States. Such assets so held are designated “trusteed assets.”

(d) The amount of interest receivable, accrued at the date of such statement on the general state deposits, the special state deposits, and the trusteed assets of such alien insurer, if such interest is collectible by the State or trustee.

(e) All of the reserves and other liabilities arising out of policies or obligations issued, assumed or incurred by such alien insurer in the United States. Said reserves and other liabilities are designated as “liabilities in the United States.”

For the purpose of determining the liabilities in the United States of such alien insurer there may be deducted:

(1) From the amount of such liabilities for unpaid losses, the amount, included therein, of reinsurance recoverable thereon from insurers authorized to do business in any state of the United States, subject to the same limitations as are contained in Sections 922.2 to 922.4, inclusive, and in Sections 922.6 and 922.8.

(2) From the amount of such liabilities for unearned premiums, first, the unearned portion, included in such amount, of premiums receivable by such alien insurer from its agents or policyholders under policies issued by it in the United States and not more than 90 days past due on the date of such statement, and second, subject to the same limitations as are contained in Section 922.4, the unearned portion, included in such amount of reinsurance premiums receivable by such alien insurer from other insurers authorized to do business in any state of the United States.

(3) The ratable portion, included in such liabilities, of the gross liabilities and reserves on risks reinsured, in whole or in part, by an alien insurer which complies with this article and includes in the statements required thereby all reserves and liabilities arising out of such reinsurance, or, subject to the same limitations as are contained in Sections 922.2 to 922.8, inclusive, by another insurer which is authorized to transact insurance in any state of the United States, except in the case of excess loss and catastrophe reinsurance where the deduction shall be on the basis of the actual reinsurance premiums and the actual reinsurance terms.

(4) Those liabilities in the United States, pertaining to any asset in the United States of such alien insurer, other than the assets described in subdivisions (a), (b), (c), and (d), but such deduction shall in no case exceed that portion of the value of such asset which is applicable to the liability pertaining thereto.

(5) If such alien insurer is a life insurer, the amount of the unpaid principal and interest of any loan made by it to the holder of, and solely on the security of, any policy of life insurance or annuity contract issued or assumed by it, on the life of or to any person in the United States. Such amount shall in no case exceed the amount of the reserve required to be maintained on such policy or annuity contract by such insurer. Such amount is designated as “policy loans in the United States.”

(f) Such further information required by the commissioner, as he deems necessary to apply the provisions of this article.

history: (History: Amended by Stats. 1963, Ch. 271.)

article: 2. Alien Insurers


citation: INS § 1592

text:
The statement required by Section 1591 shall be verified in the manner prescribed in Sections 903 and 903.5 and the certificate of each trustee in the United States holding trusteed assets of the alien insurer shall be filed, showing the description and amount of the trusteed assets and the purpose for which they are held. The statement shall be filed in quadruplicate by the alien insurer with the office of the department in Los Angeles. Upon receipt of the four copies, the commissioner shall ensure that one copy is maintained at the department’s office in Los Angeles, one copy at the department’s office in the San Francisco Bay area, and one copy at the department’s office in Sacramento.

The commissioner may at other times require an admitted alien insurer to file similar statements, showing the information specified in Section 1591 with respect to another date prescribed by the commissioner.

history: (History: Amended by Stats. 2020, Ch. 184, Sec. 6. (SB 1255) Effective January 1, 2021.)

article: 2. Alien Insurers


citation: INS § 1593

text: The excess of the sum of those items in such statement, which are described in subdivision (a), (b), (c) and (d) of Section 1591, over the liabilities in the United States of such alien insurer is designated the “trusteed surplus in the United States” of such alien insurer.

history: (History: Added by Stats. 1941, Ch. 51.)

article: 2. Alien Insurers


citation: INS § 1594

text:
Whenever it appears to the commissioner that the trusteed surplus in the United States of an alien insurer is less than an amount equal to the minimum amount of the capital paid in or available cash assets required by this code for the classes of insurance transacted by such alien insurer in the United States, he shall determine the amount of such deficiency and make requisition upon such alien insurer in writing, addressed to its attorney in the United States or to its United States manager, to repair such deficiency within such time, not less than 60 nor more than 90 days from the service of such requisition, as he may therein designate. The commissioner may revoke or suspend the certificate of authority of such alien insurer or order it to cease issuing new policies in the United States, while such deficiency exists.

If at the expiration of the period designated in such requisition such alien insurer has failed to repair such deficiency, the commissioner may proceed against it under the provisions of Article 14, Chapter 1, Part 2, Division 1 as against an insurer whose condition is such that its further transaction of business will be hazardous to its policyholders, or creditors, or to the public.

article: 2. Alien Insurers


citation: INS § 1595

text: Whenever an admitted alien insurer is required or permitted to deposit assets with a trustee for the benefit and security of its policyholders, or of its policyholders and creditors, in the United States, the trustee of any such trust hereafter created shall be a solvent bank or trust company in the United States acceptable to the commissioner and authorized to act as such trustee by the laws of any State or of the United States. All trusteed assets shall be continuously kept within the United States. Any such trust heretofore created and now existing and any such trust hereafter created and existing when such alien insurer seeks to be admitted, shall be continued in accordance with the terms of the instrument creating it, unless inconsistent with the provisions of this article, in which case said instrument shall, after reasonable notice to and hearing of the alien insurer by the commissioner, be amended to conform to the requirements of this article. No amendment of any deed of trust, whether heretofore or hereafter created, shall be effective unless approved in writing by the commissioner. If the trustees of any such trust heretofore created are natural persons, and if the number of such trustees is reduced, by death, resignation, or from any other cause, to less than three, then the commissioner shall require the substitution for such trustees of a solvent bank or trust company in the United States acceptable to him and authorized to act as such trustee by the laws of any State or of the United States. The commissioner may from time to time approve modifications of, or variations in, any deed of trust, which in his judgment are not prejudicial to the interests of the people of this State.

article: 2. Alien Insurers


citation: INS § 1596

text:
To satisfy the purposes of this article, any alien insurer admitted or seeking to be admitted is hereby authorized to make and execute a deed of trust by virtue of which any assets of an alien admitted insurer are held by a trustee as trusteed assets within the meaning of subdivision (c) of Section 1591. Such deed of trust shall:

(a) Vest the legal title to the trusteed assets in the trustee and its successors lawfully appointed, in trust for the benefit and security of all the policyholders, or of all the policyholders and creditors, of such alien insurer within the United States;

(b) Provide for the substitution of a new trustee in the event of a vacancy by death, resignation or from any other cause, subject to the approval of the commissioner;

(c) Require that the trusteed assets shall at all times be maintained within the United States as a trust fund separate and distinct from all other assets, and that the trustee shall continuously maintain a record at all times sufficient to identify such fund;

(d) Prescribe the conditions, satisfactory to the commissioner and not inconsistent with the purposes of this article, under which any or all income, earnings, dividends or interest accumulations of such fund may be paid over to the United States manager of such alien insurer;

(e) Prohibit the withdrawal, other than as provided in accordance with subdivision (d), of any trusteed assets from such fund without the written approval of the commissioner, except as follows:

1. For the purpose of making general State deposits required by law in any State.

2. For the purpose of paying obligations due from such alien insurer to policyholders and creditors in the United States, and for the purpose of making special State deposits required by law in any State, if such payments and deposits do not impair the trusteed surplus in the United States of such alien insurer to an amount less than the minimum amount specified in Section 1594, and such fact is certified to the trustee by the insurer or its United States manager duly authorized for that purpose.

3. For the purpose of substituting other assets permitted by law and at least equal in value to those to be withdrawn, upon the specific written direction of the United States manager or an assistant United States manager or other representative in the United States of such alien insurer when duly empowered and acting pursuant to either general or specific written authority previously given or delegated by the board of directors thereof, except as provided in the paragraph numbered 5 of this subdivision.

4. For the purpose of transferring such assets to an official conservator, rehabilitator, or liquidator pursuant to an order of a court of competent jurisdiction.

5. In the case of an alien life insurer organized under the laws of the Dominion of Canada or of any province thereof, the provisions of this section applicable to the United States manager or an assistant United States manager or other representative in the United States of such alien insurer shall be deemed to refer to the president, vice president, secretary or treasurer of such insurer at its principal place of business in said Dominion or province thereof, when duly authorized for such purpose.

article: 2. Alien Insurers


text: Trusteed assets may be held by a trustee in the name of a nominee of the trustee, when permitted by and in accordance with the law authorizing the trustee to act as trustee. For the purposes of this article, the trustee is deemed to have legal title to trusteed assets so held.

history: (History: Added by Stats. 1947, Ch. 162.)

article: 2. Alien Insurers


citation: INS § 1597

text: In respect of the appointment or substitution of a trustee in another state in which an admitted alien insurer is authorized to transact insurance, in respect of withdrawal of trusteed assets held in the other state (except withdrawals as provided in Section 1596), and in respect of the amendment of such deed of trust not affecting the interests or security of the beneficiaries thereof, written approval under any provision in the deed of trust which requires such written approval by the official of such other state, supervising insurance therein, shall be deemed compliance with any applicable approval requirements of Sections 1595 and 1596. Where an alien insurer organized under the laws of the Dominion of Canada or of any province thereof maintains trusteed assets in another state and under the deed of trust written approval is required by an official supervising insurance in any state in which such insurer is authorized to transact insurance and in which it heretofore maintained and hereafter continues to maintain a general state deposit at least equal in amount to the deposit required by Section 1582, written approval by such official in respect of the appointment or substitution of a trustee thereunder, in respect of withdrawal of such trusteed assets (except withdrawals as provided in Section 1596), and in respect of the amendment of such deed of trust not affecting the interests or security of the beneficiaries thereof, shall also be deemed compliance with any applicable approval requirements of Sections 1595 and 1596. The alien insurer shall furnish proof of approvals authorized by this section to and notify the commissioner in writing of such appointment or substitution, of the nature and extent of such withdrawal, and of the text of such amendment.

history: (History: Amended by Stats. 1981, Ch. 714, Sec. 265.)

article: 2. Alien Insurers


citation: INS § 1598

text: The commissioner may from time to time examine the trusteed assets of any alien admitted insurer pursuant to Section 736, and may from time to time require the trustee holding trusteed assets of an alien admitted insurer to file with the commissioner a statement, in such form as he may prescribe, certifying such trusteed assets and the amounts thereof. Refusal or neglect on the part of such trustee to comply with such requirement shall be ground for the revocation of such alien insurer’s certificate of authority or for proceedings against it under the provisions of Article 14, Chapter 1, Part 2, Division 1.

article: 2. Alien Insurers


citation: INS § 1599

text: The commissioner shall require the payment of twenty-nine dollars ($29), in advance, as a fee for filing each certificate of a trustee required to be filed by Section 1592.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 33. (AB 1699) Effective January 1, 2018.)

article: 2. Alien Insurers


citation: INS § 1600

text: The commissioner shall require every foreign insurer, as a condition precedent to receiving and holding a certificate of authority, to file and maintain in the commissioner’s office a writing designating an agent for service of process. The agent designated may be any person residing in this state, including, but not limited to, any corporate officer of the insurer. The writing shall state the name of the agent and his or her place of business in this state with sufficient particularity so that he or she can readily be found by peace officers or process servers. Appointment of an agent reasonably available for service of papers, notice, proof of loss, summons or other process during business hours shall be continuously maintained by every admitted insurer subject to this article while it holds a valid and unrevoked certificate of authority.

history: (History: Amended by Stats. 1999, Ch. 808, Sec. 1. Effective January 1, 2000.)

article: 3. Agent for Service of Process

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 4. Foreign Insurers > 3. Agent for Service of Process


text: An agent designated by a foreign insurer as provided in this article may file with the insurance commissioner a written statement of resignation as such agent which shall be signed and execution thereof shall be duly acknowledged by the agent. Thereupon, the authority of the agent to act in such capacity shall cease and the commissioner shall forthwith give written notice of such resignation by mail to the insurer addressed to its principal office as shown by his records. If an agent who has been appointed by a foreign corporation as provided in this article dies or resigns or removes his residence from the State of California, the insurer shall forthwith file with the commissioner an appointment of a new agent on a form provided by the commissioner for such purpose and pay the filing fee therefor, and such filing shall be deemed to revoke any prior designation of agent.

history: (History: Added by Stats. 1963, Ch. 1917.)

article: 3. Agent for Service of Process


citation: INS § 1601

text:
(a) A fee shall not be charged, except as included in the application for certificate of authority fee provided by Article 3 (commencing with Section 699) of Chapter 1, for filing the initial appointment of an agent for service of process under this article by an applicant for admission.

(b) Thereafter, the commissioner shall require the payment of seventy-two dollars ($72), in advance, as a fee for filing the appointment of an agent for service of process, or stipulation, or both by every admitted foreign or alien insurer pursuant to this article.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 34. (AB 1699) Effective January 1, 2018.)

article: 3. Agent for Service of Process


citation: INS § 1602

text: Any notice provided by law or by a policy, and any proof of loss, summons or other process may be served on such agent in any action or other legal proceeding against the insurer, and such service gives jurisdiction over the person of such insurer.

history: (History: Enacted by Stats. 1935, Ch. 145.)

article: 3. Agent for Service of Process


citation: INS § 1603

text: The person appointed and designated pursuant to Section 1600 shall be deemed in law a general agent, and shall for service of process be the principal agent of the insurer in this state.

history: (History: Amended by Stats. 1999, Ch. 808, Sec. 2. Effective January 1, 2000.)

article: 3. Agent for Service of Process


citation: INS § 1604

text:
Every foreign insurer, as a further condition precedent to admission and in consideration thereof, shall file with the commissioner an agreement or stipulation, executed by the proper authorities of such insurer, in form and substance as follows:

“The (giving name of insurer) does hereby stipulate and agree, in consideration of the permission granted by the State of California to it to transact insurance business in this State, that if at any time it leaves this State, ceases to transact business in this State or is without an agent for service of process in this State, then in any case where such agent could be served, service may be made upon the Insurance Commissioner, and such service upon the commissioner shall have the same force and effect as if made upon the insurer.”

When a foreign insurer, prior to the date this code takes effect, has filed with the commissioner an agreement for service upon him pursuant to the provisions of section 616 of the Political Code as then in effect, such filing is a compliance with this section while such agreement remains in effect.

article: 3. Agent for Service of Process


citation: INS § 1605

text: Service may be made upon the commissioner under the circumstances described in the agreement or stipulation provided for by this article and in the manner provided in Article 1 (commencing with Section 12919) of Chapter 2 of Division 3.

history: (History: Amended by Stats. 1970, Ch. 949.)

article: 3. Agent for Service of Process


citation: INS § 1610

text: Any of the acts described in Section 1611, when effected in this State, by mail or otherwise, by a foreign or alien insurer which is nonadmitted at the time of the solicitation, issuance or delivery by it of contracts of insurance to residents of, or to corporations authorized to do business in, this State, is equivalent to and shall constitute an appointment by such insurer of the commissioner and his successor or successors in office to be its true and lawful attorney, upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such contracts of insurance, and any such act shall be signification of its agreement that such service of process is of the same legal force and validity as personal service of process in this State upon such insurer.

history: (History: Added by Stats. 1949, Ch. 495.)

article: 4. Actions Against Nonadmitted Insurers

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 4. Foreign Insurers > 4. Actions Against Nonadmitted Insurers


citation: INS § 1611

text:
The acts referred to in Section 1610 are:

(1) The issuance or delivery to residents of, or to corporations authorized to do business in, this State of contracts of insurance insuring (a) the lives or persons of residents of this State physically present herein at the time of such issuance or delivery or (b) property or operations located in this State.

(2) The solicitation of applications for such contracts.

(3) The collection of premiums, membership fees, assessments or other considerations for such contracts.

(4) Any other transaction of business arising out of such contracts.

article: 4. Actions Against Nonadmitted Insurers


citation: INS § 1612

text: Such service of process may be made as provided in Article 1 (commencing with Section 12919) of Chapter 2 of Division 3.

article: 4. Actions Against Nonadmitted Insurers


citation: INS § 1616

text: Before any nonadmitted foreign or alien insurer shall file or cause to be filed any pleading in any action, suit or proceeding instituted against it, the insurer shall either (1) procure a certificate of authority to transact insurance in this state; or (2) give a bond in the action, suit or proceeding in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in the action, suit, or proceeding.

history: (History: Amended by Stats. 1982, Ch. 517, Sec. 283.)

article: 4. Actions Against Nonadmitted Insurers


citation: INS § 1617

text: The court in any action, suit, or proceeding, in which service of process is effected in the manner provided in Section 1612 may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of Section 1616 and to defend such action.

article: 4. Actions Against Nonadmitted Insurers


citation: INS § 1618

text: Nothing in Section 1616 is to be construed to prevent a nonadmitted foreign or alien insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in Section 1612 on the ground that such insurer has not done any of the acts described in Section 1611.

article: 4. Actions Against Nonadmitted Insurers


citation: INS § 1619

text: In any action against a nonadmitted foreign or alien insurer upon a contract of insurance issued or delivered in this State to a resident thereof or to a corporation authorized to do business therein, if the insurer has failed for 30 days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include such fee in any judgment that may be rendered in such action. Such fee shall not exceed 1212 percent of the amount which the court or jury finds the plaintiff is entitled to recover against the insurer, but in no event shall such fee be less than twenty-five dollars ($25). Failure of an insurer to defend any such action shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause.

article: 4. Actions Against Nonadmitted Insurers


citation: INS § 1620

text:
(a) The provisions of the preceding sections of this article shall not apply to any action, suit, or proceeding against any unauthorized foreign or alien insurer arising out of any contract of insurance effected in accordance with Section 1760, 1760.5, 1763, or 1763.1, or, if the contract is governed by and complies with the laws of the state in which the contract was entered. The provisions of Section 1610 shall apply to any action, suit, or proceeding under this section unless the insurer has designated an agent in California for service of process or the contract contains a provision designating a resident of this state or any firm of which one member is a resident of this state to be its true and lawful attorney upon whom may be served all lawful process in any action, suit, or proceeding.

(b) In any action, suit, or proceeding arising out of any such contract of insurance, the court may require the insurer to file a bond, in an amount sufficient to secure the payment of any final judgment which may be rendered unless one or more of the following are applicable:

(1) The insurer makes a showing satisfactory to the court that it maintains in a state of the United States funds or securities in trust or otherwise, sufficient and available to satisfy any such final judgment and that it will pay the judgment without requiring suit to be brought thereon in the state where the securities or funds are located.

(2) At the time the insurer files any pleading in any action, suit, or proceeding instituted against it, the insurer is an eligible surplus line insurer in accordance with Section 1765.1, unless by facts presented to the court there is created a reasonable doubt as to the present ability of the insurer to satisfy any final judgment in the action, suit, or proceeding. Upon request of a party or the court, the unauthorized foreign or alien insurer or reinsurer shall provide the court and the party requesting the bond with copies of documents relating to the financial condition of the insurer, including, but not limited to, copies of the insurer’s most recent annual statement and audited financial report and, where applicable, a certified copy of the trust agreement required by subdivision (b) of Section 1765.2 and a verified copy of the most recent quarterly statement or list of assets in the trust.

(3) With respect to a contract of reinsurance issued in accordance with Section 1760.5, the reinsurer has complied with the provisions of this code necessary to permit the ceding insurer to take credit on its financial statement for the reinsurance as set forth in Section 922.4 or 922.5.

history: (History: Amended by Stats. 2011, Ch. 83, Sec. 7. (AB 315) Effective July 15, 2011. Operative July 21, 2011, by Sec. 34 of Stats. 2011, Ch. 83.)

article: 4. Actions Against Nonadmitted Insurers


text:
(a) The purpose of this article is to subject to the jurisdiction of the commissioner and to the jurisdiction of the courts of this State, insurers not authorized to transact business in this State which place in or send into this State any false advertising designed to induce residents of this State to purchase insurance from insurers not authorized to transact business in this State. The Legislature declares it is in the interest of the citizens of this State who purchase insurance from insurers which solicit insurance business in this State in the manner set forth in the preceding sentence that such insurers be subject to the provisions of this article. In furtherance of such state interest, the Legislature in this article provides a method of substituted service of process upon such insurers and declares that in so doing, it exercises its power to protect its residents and also exercises powers and privileges available to the State by virtue of Public Law 15, 79th Congress of the United States, Chapter 20, 1st Session, S. 340, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states; the authority provided in such sections to be in addition to any existing powers of this State.

(b) The provisions of this article shall be liberally construed.

history: (History: Added by Stats. 1961, Ch. 297.)

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 4. Foreign Insurers > 4.5. Unauthorized Insurers False Advertising Process Act


text:
As used in this article (commencing with Section 1620.1):

(a) “Unfair Trade Practices Act” means Article 6.5 (commencing with Section 790) of Chapter 1 of Part 2 of Division 1.

(b) “Residents” means any person defined in Section 19 who is resident within the meaning of Section 30.

article: 4.5. Unauthorized Insurers False Advertising Process Act


text: No unauthorized foreign or alien insurer shall make, issue, circulate or cause to be made, issued or circulated to residents of this State any estimate, illustration, circular, pamphlet, or letter, or cause to be made in any newspaper, magazine or other publication or over any radio or television station, any announcement or statement to such residents misrepresenting its financial condition or the terms of any contracts issued or to be issued or the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon in violation of the Unfair Trade Practice Act, and whenever the commissioner shall have reason to believe that any such insurer is engaging in unlawful advertising, it shall be his duty to give notice of such fact by registered mail to the insurer and to the insurance supervisory official of the domiciliary state of the insurer. For the purpose of this section, the domiciliary state of an alien insurer shall be deemed to be the state of entry or the state of the principal office in the United States.


text: If after 30 days following the giving of the notice mentioned in Section 1620.3 the insurer has failed to cease making, issuing, or circulating such false misrepresentations or causing the same to be made, issued or circulated in this State, and if the commissioner has reason to believe that a proceeding by him in respect to such matters would be to the interest of the public, and that the insurer is issuing or delivering contracts of insurance to residents of this State or collecting premiums on such contracts or doing any of the acts enumerated in Section 1620.5, he shall take action against the insurer under the Unfair Trade Practice Act.


text:
(a) Any of the following acts in this State, effected by mail or otherwise, by any unauthorized foreign or alien insurer: (1) the issuance or delivery of contracts of insurance to residents of this State, (2) the solicitation of applications for such contracts, (3) the collection of premiums, membership fees, assessments or other considerations for such contracts, or (4) any other transaction of insurance business, is equivalent to and shall constitute an appointment by the insurer of the commissioner and his successor or successors in office, to be its true and lawful attorney, upon whom may be served all statements of charges, notices and lawful process in any proceeding instituted in respect to the misrepresentations set forth in Section 1620.3 under the provisions of the Unfair Trade Practice Act, or in any action, suit or proceeding for the recovery of any penalty therein provided, and any such act shall be signification of its agreement that the service of statement of charges, notices or process is of the same legal force and validity as personal service of the statement of charges, notices or process in this State, upon such insurer.

(b) Service of a statement of charges and notices under the Unfair Trade Practice Act shall be made by any deputy or employee of the Department of Insurance delivering to and leaving with the commissioner or some person in apparent charge of his office, two copies thereof. Service of process issued by any court in any action, suit or proceeding to collect any penalty under the act provided, shall be made by delivering and leaving with the commissioner, or some person in apparent charge of his office, two copies thereof. The commissioner shall forthwith cause to be mailed by registered mail one of the copies of the statement of charges, notices or process to the defendant at its last known principal place of business, and shall keep a record of all statements of charges, notices and process so served. Such service of statement of charges, notices or process shall be sufficient provided they shall have been so mailed and the defendant’s receipt or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing the letter showing a compliance herewith are filed with the commissioner in the case of any statement of charges or notices, or with the clerk of the court in which the action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as may be allowed.

(c) Service of statement of charges, notices and process in any such proceeding, action or suit shall in addition to the manner provided in subsection (b) of this section be valid if served upon any person within this State who on behalf of such insurer is(1) Soliciting insurance, or(2) Making, issuing or delivering any contract of insurance, or(3) Collecting or receiving in this State any premium for insurance;and a copy of such statement of charges, notices or process is sent within 10 days thereafter by registered mail by or on behalf of the commissioner to the defendant at the last known principal place of business of the defendant, and the defendant’s receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter, the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing the same showing a compliance herewith, are filed with the commissioner in the case of any statement of charges or notices, or with the clerk of the court in which such action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as the court may allow.

(d) No cease or desist order or judgment by default under this section shall be entered until the expiration of 30 days from the date of the filing of the affidavit of compliance.

(e) Service of process and notice under the provisions of this article (commencing with Section 1620.1) shall be in addition to all other methods of service provided by law, and nothing in these sections shall limit or prohibit the right to serve any statement of charges, notices or process upon any insurer in any other manner now or hereafter permitted by law.


text: If any provision of this article (commencing with Section 1620.1) or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or application of this article which can be given effect without the invalid provision or application, and to this end the provisions of this article are declared to be severable.


text: This article (commencing with Section 1620.1) may be cited as the Unauthorized Insurers False Advertising Process Act.

history: (History: Amended by Stats. 1963, Ch. 313.)


citation: INS § 1621

text: An insurance agent is a person who transacts insurance, other than life, disability, or health insurance, on behalf of an admitted insurance company. The term “insurance agent” as used in this chapter does not include a life agent as defined in this article.

history: (History: Amended by Stats. 2010, Ch. 400, Sec. 6. (AB 2782) Effective January 1, 2011.)

chapter: 5. Production Agencies

article: 1. Definitions

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 5. Production Agencies > 1. Definitions


citation: INS § 1622

text:
(a) A life and accident and health or sickness licensee is a person authorized to act on behalf of a life insurer or a disability insurer to transact any of the following:

(1) Life insurance.

(2) Accident and health insurance.

(3) Life and accident and health or sickness insurance.

(b) Licenses to act as a life and accident and health or sickness agent under this chapter shall be of the types set forth in Section 1626.

history: (History: Amended by Stats. 2020, Ch. 184, Sec. 7. (SB 1255) Effective January 1, 2021.)

article: 1. Definitions


citation: INS § 1623

text:
(a) An insurance broker is a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health insurance with, but not on behalf of, an admitted insurer. It shall be presumed that the person is acting as an insurance broker if the person is licensed to act as an insurance broker, maintains the bond required by this chapter, and discloses, in a written agreement signed by the consumer, all of the following:

(1) That the person is transacting insurance on behalf of the consumer.

(2) A description of the basic services the person will perform as a broker.

(3) The amount of all broker fees being charged by the person.

(4) If applicable, the fact that the person may be entitled to receive compensation from the insurer, directly or indirectly, for the consumer’s purchase of insurance as a consequence of the transaction.

(b) If a transaction involves both a retail broker and a wholesale intermediary broker, the wholesale intermediary broker shall be deemed to have satisfied its disclosure obligations under this section if it provides written disclosure to the retail broker of the criteria set forth in paragraphs (2), (3), and (4) of subdivision (a).

(c) The presumption of broker status is rebutted as to any transaction in the admitted market in which any of the following is present:

(1) The licensee is appointed, pursuant to Section 1704, as an agent of the insurer for the particular class or type of insurance being transacted.

(2) The licensee has a written agreement with an insurer containing express terms that authorize the licensee to obligate the insurer without first obtaining notification from the insurer that the insurer has accepted, conditionally or unconditionally, the submitted risk.

(3) The licensee is authorized, pursuant to a written agreement with an insurer, to appoint other licensees as agents of the insurer, pursuant to Section 1704.

(4) The licensee is authorized, pursuant to a written agreement with an insurer, to pay claims on behalf of the insurer.

(d) In all other cases, the presumption of broker status is rebutted based on the totality of the circumstances indicating that the broker-agent is acting on behalf of the insurer.

(e) For purposes of this section, “totality of the circumstances” means evidence indicating whether a broker-agent was acting on behalf of the insurer or was acting on behalf of a third person. In determining the totality of circumstances, all relevant facts and circumstances shall be reviewed and the review is not limited to any particular fact or factors and this section does not require that any particular circumstance receive greater or lesser weight.

history: (History: Amended by Stats. 2010, Ch. 400, Sec. 7. (AB 2782) Effective January 1, 2011.)

article: 1. Definitions


citation: INS § 1624

text: “Insurance solicitor” means a natural person 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.

history: (History: Amended by Stats. 2013, Ch. 321, Sec. 13. (AB 1391) Effective January 1, 2014.)

article: 1. Definitions


citation: INS § 1625

text:
(a) A property licensee or a casualty licensee is a person authorized to act as an insurance agent, broker, or solicitor, and a property broker-agent license or a casualty broker-agent license is a license so to act.

(b) Licenses to act as a property broker-agent under this chapter shall entitle the licensee to transact insurance coverage on the direct or consequential loss or damage to property of every kind.

(c) Licenses to act as a casualty broker-agent shall entitle the licensee to transact insurance coverage against legal liability, including that for death, injury, disability, or damage to real or personal property.

history: (History: Amended by Stats. 2011, Ch. 411, Sec. 8. (AB 1416) Effective January 1, 2012.)

article: 2. Comprehensive Definitions

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 5. Production Agencies > 2. Comprehensive Definitions


text:
(a) A personal lines licensee is a person authorized to transact automobile insurance, as defined in Section 660, including insurance for recreational vehicles used for noncommercial purposes, personal watercraft insurance, residential property insurance, as defined in Section 10087, including earthquake and flood insurance, inland marine insurance covering personal property, and umbrella or excess liability insurance providing coverage when written over one or more underlying automobile or residential property insurance policies, and a personal lines broker-agent license is a license to so act.

(b) A license under this section shall be applied for and renewed, following successful completion of a qualifying examination on this code, ethics, and products sold under the license, in the same manner as is provided in this chapter for a license to act as a property broker-agent or a casualty broker-agent, except as provided in subdivision (c) or where provided otherwise.

(c) A person licensed as a personal lines agent who makes an application to the commissioner to become a property broker-agent or a casualty broker-agent pursuant to Section 1625 shall do all of the following:

(1) Submit an application on a form provided by the commissioner.

(2) Complete prelicensing education as specified in Section 1749.

(3) Take and pass a qualifying examination pursuant to Section 1676.

(d) Notwithstanding any other provision of law, for a personal lines license:

(1) “License term” for a personal lines license means all of that two-year period beginning as described in either subdivision (a) or (b) of Section 1629, as applicable, and ending the second succeeding year on the last calendar day of the month in which the initial license was issued.

(2) “License year” for a personal lines license shall be determined for each entity as follows:

(A) Upon initial licensing, the license year starts on the date the license is issued.

(B) Subsequently, each license year starts the first day of the month following the month in which the initial license was issued.

(C) A license year ends the following calendar year on the last calendar day of the month in which the initial license was issued.

history: (History: Amended by Stats. 2011, Ch. 411, Sec. 9. (AB 1416) Effective January 1, 2012.)

article: 2. Comprehensive Definitions


text:
(a) A limited lines automobile insurance agent is a person authorized to transact automobile insurance, as defined in Section 660. A limited lines automobile insurance agent license is a license to so act.

(b) A license under this section shall be applied for and renewed, following successful completion of a qualifying examination on this code, ethics, and products sold under the license, in the same manner as provided in this chapter for a license to act as a property broker-agent or a casualty broker-agent.

(c) The commissioner shall require in advance a fee for filing any applications, renewals thereof, or changes in outstanding licenses, or for the filing of other required documents at an amount designated in this chapter for a personal lines licensee, and for filing any notice of appointment or notice of termination at an amount specified in Section 1751.3.

(d) A person licensed as a limited lines automobile insurance agent who makes an application to the commissioner to become a property broker-agent or a casualty broker-agent pursuant to Section 1625 or a personal lines agent pursuant to Section 1625.5 shall do all of the following:

(1) Submit an application on a form provided by the commissioner.

(2) Take and pass a qualifying examination pursuant to Section 1676.

history: (History: Amended by Stats. 2025, Ch. 566, Sec. 2. (AB 943) Effective January 1, 2026.)

article: 2. Comprehensive Definitions


text:
“License year” for a limited lines automobile insurance agent shall be determined as follows:

(a) Upon initial licensing, the license year starts on the date the license is issued.

(b) Subsequently, each license year starts the first day of the month following the month in which the initial license was issued.

(c) A license year ends the following calendar year on the last calendar day of the month in which the initial license was issued.

history: (History: Added by Stats. 2007, Ch. 271, Sec. 2. Effective January 1, 2008.)

article: 2. Comprehensive Definitions


text: “License term” for a limited lines automobile insurance agent means all of that two-year period beginning as described in subdivision (a) or (b) of Section 1625.56, as applicable, and ending the second succeeding year on the last calendar day of the month in which the initial license was issued.

history: (History: Added by Stats. 2007, Ch. 271, Sec. 3. Effective January 1, 2008.)

article: 2. Comprehensive Definitions


citation: INS § 1626

text:
(a) A life and accident and health or sickness licensee is a person authorized to act as a life and accident and health or sickness agent. Licenses to act as a life and accident and health or sickness agent under this chapter shall be of the following types:

(1) Life, which license shall entitle the licensee to transact insurance coverage on human lives, including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income.

(2) Accident and health or sickness, which license shall entitle the licensee to transact insurance coverage for sickness, bodily injury, or accidental death and may include benefits for disability income.

(b) An accident and health or sickness agent licensee is authorized to transact 24-hour care coverage, as defined in Section 1749.02, pursuant to subdivision (d) of Section 1749.33.

history: (History: Amended by Stats. 2025, Ch. 566, Sec. 3. (AB 943) Effective January 1, 2026.)

article: 2. Comprehensive Definitions


citation: INS § 1627

text: A license is a permit to act in the capacity specified therein. A person licensed is the holder of the license. In case of a license to act as a life agent, property broker-agent, or casualty broker-agent issued to an organization, the organization is the holder thereof, but the natural person or persons named thereon are thereby permitted to exercise the agency or brokerage powers of the organization in accordance with and subject to the provisions of this chapter and other applicable law. As used in this chapter, the term “license” includes a certificate of convenience and a permanent license, and the term “persons who are licensed” includes the holders of any such certificate or the license, but these definitions and the use of those terms in this chapter shall not confer upon a certificate of convenience or any holder thereof any property right in or to the certificate, the certificate being and remaining only a temporary permit, issued as a matter of convenience, allowing the transaction of insurance without a permanent license, but within the limits, and subject to the conditions of the certificate of convenience issued and the laws applicable thereto.

history: (History: Amended by Stats. 2011, Ch. 411, Sec. 11. (AB 1416) Effective January 1, 2012.)

article: 2. Comprehensive Definitions


citation: INS § 1628

text: As used in this chapter, an “organization” means any legal entity other than a natural person. If reference is made to a natural person named on an organization license, the reference shall be to a person who is named to exercise the power and perform the duties under an organization license, pursuant to Section 1656. The natural person named on the organizational license shall meet the qualifications required for the type of license sought by the organization.

history: (History: Amended by Stats. 2017, Ch. 417, Sec. 11. (AB 1696) Effective January 1, 2018.)

article: 2. Comprehensive Definitions


citation: INS § 1629

text:
“License year” as used in this chapter shall be determined for each entity as follows:

(a) Upon initial licensing, the license year starts on the date the license is issued.

(b) Subsequently, each license year starts the first day of the month following the month in which the initial license was issued.

(c) A license year ends the following calendar year on the last calendar day of the month in which the initial license was issued.

history: (History: Repealed and added by Stats. 1985, Ch. 770, Sec. 8.5.)

article: 2. Comprehensive Definitions


citation: INS § 1630

text: “License term” as used in this chapter means all of that two-year period beginning as described in subdivision (a) or (b) of Section 1629, as applicable, and ending the second succeeding year on the last calendar day of the month in which the initial license was issued.

history: (History: Repealed and added by Stats. 1985, Ch. 770, Sec. 8.7.)

article: 2. Comprehensive Definitions


citation: INS § 1631

text: Unless exempt by the provisions of this article, a person shall not solicit, negotiate, or effect contracts of insurance, or act in any of the capacities defined in Article 1 (commencing with Section 1621) unless the person holds a valid license from the commissioner authorizing the person to act in that capacity. The issuance of a certificate of authority to an insurer does not exempt an insurer from complying with this article.

history: (History: Amended by Stats. 2000, Ch. 321, Sec. 3. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

article: 3. Licensing

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 5. Production Agencies > 3. Licensing


text: Nothing in this article shall be deemed to affect the current operations of the Healthy Families Program (Part 6.2 (commencing with Section 12693) of Division 2) or the Access for Infants and Mothers Program (Part 6.3 (commencing with Section 12695) of Division 2).

history: (History: Added by Stats. 2000, Ch. 321, Sec. 3.5. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

article: 3. Licensing


citation: INS § 1632

text: Unless prohibited in this article, a person otherwise eligible for a license may be authorized to act in one or more of the capacities specified in this chapter.

history: (History: Amended by Stats. 1990, Ch. 1420, Sec. 8. Operative January 1, 1992, by Sec. 77 of Ch. 1420.)

article: 3. Licensing


citation: INS § 1633

text: Any person who transacts insurance without a valid license so to act is guilty of a misdemeanor punishable by a fine not exceeding fifty thousand dollars ($50,000) or by imprisonment in a county jail for a period not exceeding one year, or by both that fine and imprisonment.

history: (History: Amended by Stats. 2004, Ch. 279, Sec. 1. Effective January 1, 2005.)

article: 3. Licensing


text: It is hereby declared to be the intent of the Legislature in enacting this chapter that the regulations prescribed herein be the exclusive regulations relating to the conduct of insurance business by persons licensed to act in any of the capacities defined hereunder, any local regulations or ordinances notwithstanding.

history: (History: Added by Stats. 1959, Ch. 749.)

article: 3. Licensing


citation: INS § 1634

text:
No license is required under this chapter for a person to act in any of the following capacities:

(a) As a full-time salaried employee of a title insurer, controlled escrow company or an underwritten title company.

(b) As a salaried solicitor or agent of a mortgage insurer or mortgage guaranty insurer provided no part of the compensation of the person is on a commission basis.

(c) As the attorney in fact of a reciprocal or interinsurance exchange.

(d) As a life and disability insurance analyst.

(e) As a surplus line broker or special lines surplus line broker.

(f) As a bail agent, bail solicitor or bail permittee.

(g) As an employee, not paid on a commission basis, of a home protection company, including, but not limited to, soliciting, negotiating, or effecting home protection contracts by the employee.

(h) As an employee of a creditor who secures and forwards information for the purpose of obtaining group credit life, credit disability, or involuntary unemployment insurance, or for enrolling individuals in a group credit life, credit disability, or involuntary unemployment insurance plan or issuing certificates of insurance thereunder where no commission is paid to the employee for those services.

history: (History: Amended by Stats. 2003, Ch. 439, Sec. 4. Effective January 1, 2004. Operative July 1, 2004, by Sec. 7 of Ch. 439.)

article: 3. Licensing


citation: INS § 1635

text:
A license is not required under the provisions of this chapter for a person to act in the following capacities or to engage in the following activities, providing a commission is not paid or allowed, directly or indirectly, by the insurer, creditor, retailer, or other person for acting in those capacities or engaging in those activities:

(a) The business of examining, certifying, or abstracting titles to real property.

(b) The solicitation for membership in a fraternal benefit society and other activities to the extent and as described in Sections 11013 and 11102 of this code.

(c) As a salaried representative of a reciprocal or interinsurance exchange or of its attorney-in-fact.

(d) Employment that does not include the solicitation, negotiation, or effecting of contracts of insurance and the signing of policies or other evidences of insurance.

(e) As an officer of an insurer or a salaried traveling employee of the type commonly known as a special agent or as an agency supervisor, while performing duties and exercising functions that are commonly performed by a special agent or agency supervisor, if the person engaging in the activity does not do either of the following:

(1) Effect insurance.

(2) Solicit or negotiate insurance except as a part of and in connection with the business of a property broker-agent, casualty broker-agent, or life agent licensed under this chapter.

(f) As an officer or salaried representative of a life insurer if the activities of the officer or salaried representative are limited to direct technical advice and assistance to a properly licensed person and the officer or salaried representative’s activities do not include effecting, soliciting, or negotiating insurance except as a part of and in connection with the business of a property broker-agent, casualty broker-agent, or life agent licensed under this chapter.

(g) Employment by an insurer at its home or branch office that does not include the solicitation, negotiation, or effecting of contracts of insurance, and that may as part thereof include the signing of policies or other evidences of insurance.

(h) The completion or delivery of a declaration or certificate of coverage under a running inland marine insurance contract evidencing coverage thereunder and including only those negotiations as are necessary to the completion or delivery if the person performing those acts or the person’s employer has an insurable interest in the risk covered by the certificate or declaration.

(i) As an employee of a licensed property broker-agent or casualty broker-agent, whose employment is one or more of the following:

(1) That of a regularly salaried administrative or clerical employee whose activities do not include the solicitation, negotiation, or effecting of contracts of insurance from the insuring public.

(2) That of a salesperson who devotes substantially all of that salesperson’s activities to selling merchandise and whose solicitation of insurance is limited only to the quoting of a premium for insurance to be included in the purchase price covering the interest retained in the merchandise by the seller.

(j) The solicitation, negotiation, or effectuation of home protection contracts by a person licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code in connection with the person’s licensed function authorized by Section 10131 or 10131.6 of the Business and Professions Code. The receipt of a payment permitted by Section 12760 shall not disqualify the recipient from the licensing exemption provided by this chapter.

(k) Employees of an insurer whose duties are the inspection, processing, adjusting, investigation, settling of claims, conducting safety inspections, or accepting or rejecting business from licensed insurance agents or brokers.

(l) Officers, directors, or employees of an insurer or producer whose executive, administrative, managerial, or clerical activities are only indirectly related to solicitation, negotiation, or effecting the sale of insurance, provided those persons do not have direct contact with consumers in a sales or service capacity except as otherwise provided by this section.

(m) Employees whose activities are limited to making clerical changes in existing policies or providing indirect marketing and servicing support for the purpose of determining general interest in insurance products.

history: (History: Amended by Stats. 2021, Ch. 133, Sec. 1. (SB 272) Effective July 23, 2021.)

article: 3. Licensing


citation: INS § 1637

text:
An organization may hold any license or licenses necessary to act in the following capacities under this chapter and no others:

(a) A license to act as a life agent.

(b) A license to act as an accident and health or sickness agent.

(c) A license to act as a property broker-agent.

(d) A license to act as a casualty broker-agent.

(e) A license to act as a cargo shipper’s agent.

(f) A license to act as a personal lines licensee.

(g) A license to act as a credit insurance agent.

(h) A license to act as a car rental agent.

(i) A nonresident license to act as a limited lines licensee pursuant to subdivision (i) of Section 1639.

(j) A license to act as a self-service storage agent.

(k) A license to act as a limited lines automobile insurance agent.

history: (History: Amended by Stats. 2020, Ch. 184, Sec. 9. (SB 1255) Effective January 1, 2021.)

article: 3. Licensing


citation: INS § 1638

text:
(a) A nonresident license is a license issued to a person not a resident of this state.

A person is a resident of this state if either of the following applies:

(1) A person occupies a dwelling in this state and intends this state to be that person’s domicile.

(2) A person maintains that person’s principal place of business in this state.

(b) A person licensed under this chapter may designate only one state as that person’s resident state.

history: (History: Amended by Stats. 2021, Ch. 133, Sec. 2. (SB 272) Effective July 23, 2021.)

article: 3. Licensing


text:
Unless denied licensure pursuant to Article 6 (commencing with Section 1666), a nonresident person shall receive a production agency license if that nonresident person meets the following requirements:

(a) The person is currently licensed and in good standing in the state, territory of the United States, or province of Canada in which the person is licensed as a resident producer.

(b) The person has submitted the proper request for licensure and has paid the fees required by Section 1750.5.

(c) The person has submitted or transmitted to the Insurance Commissioner the application for licensure that the person submitted to the state, territory of the United States, or province of Canada in which the person is licensed as a resident, or submitted or transmitted to the commissioner, a completed National Association of Insurance Commissioners (NAIC) Uniform Nonresident Application.

(d) The state, territory of the United States, or province of Canada in which the person holds a resident producer license awards nonresident producer licenses to residents of this state on the same basis.

history: (History: Amended by Stats. 2021, Ch. 133, Sec. 3. (SB 272) Effective July 23, 2021.)

article: 3. Licensing


citation: INS § 1639

text:
The following types of licenses under this chapter may be issued to nonresidents:

(a) A property broker-agent or a casualty broker-agent if the nonresident is duly licensed to transact those lines of insurance described in Section 1625, under the laws of the state, territory of the United States, or province of Canada where the resident license is maintained.

(b) A personal lines broker-agent if the nonresident is duly licensed to transact those lines of insurance described in Section 1625.5, under the laws of the state, territory of the United States, or province of Canada where the resident license is maintained.

(c) A life agent or an accident and health or sickness agent if the nonresident possesses a resident license in another state, territory of the United States, or province of Canada to transact life insurance or disability insurance.

(d) A nonresident may be granted authority to transact variable life and variable annuity contracts if the person has been granted that authority by the state where the resident license is maintained. To qualify for this authority, the nonresident is required to also be licensed as a life agent in the state where the resident license is maintained.

(e) A surplus line broker and a special lines surplus broker if the nonresident holds that type of license in the state or territory of the United States where the resident license is maintained.

(f) A credit insurance agent if the nonresident holds that type of license in the state, territory of the United States, or province of Canada where the resident license is maintained.

(g) A car rental agent if the nonresident holds that type of license in the state, territory of the United States, or province of Canada where the resident license is maintained.

(h) A cargo shipper’s agent if the nonresident holds that type of license in the state, territory of the United States, or province of Canada where the resident license is maintained.

(i) A limited lines license if the nonresident holds that type of license in the state, territory of the United States, or province of Canada where the resident license is maintained. As used in this section, “limited lines license” means any authority granted by the resident state that restricts the authority of the license to less than the total authority granted by any of the types of licenses identified in this section.

(j) A self-service storage agent if the nonresident holds that type of license in the state, territory of the United States, or province of Canada where the resident license is maintained.

history: (History: Amended by Stats. 2020, Ch. 184, Sec. 10. (SB 1255) Effective January 1, 2021.)

article: 3. Licensing


text:
(a) The class or classes of insurance which a nonresident person is licensed to transact under that nonresident person’s resident license shall be determined according to the definitions of classes of insurance in Sections 101 to 120, inclusive. A certificate from the insurance regulatory authority of the nonresident’s home state may be accepted as evidence of the applicant’s license status and the capacity or capacities in which that nonresident person is licensed. The Insurance Commissioner may also verify the producer’s licensing status through the Producer Database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries.

(b) A nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state shall file a change of address and provide certification from the new resident state within 30 days of the change of legal residence. No fee or license application is required.

(c) The license authority granted to the nonresident shall not exceed the class or classes of insurance granted by the license issued under the laws of the state, territory of the United States, or province of Canada where the resident license is maintained.

history: (History: Amended by Stats. 2021, Ch. 133, Sec. 4. (SB 272) Effective July 23, 2021.)

article: 3. Licensing


citation: INS § 1640

text: A person authorized to act as an insurance solicitor is not eligible at the same time to act as an insurance agent or broker, and a person authorized to act as either an insurance agent or broker is not eligible at the same time to act as an insurance solicitor.

history: (History: Amended by Stats. 1990, Ch. 1420, Sec. 12. Operative January 1, 1992, by Sec. 77 of Ch. 1420.)

article: 3. Licensing


citation: INS § 1642

text: An insurer or reciprocal or interinsurance exchange is not eligible for any license under this chapter; but a corporation rendering sales services in connection with a separate account may be licensed irrespective of the extent of ownership of the corporation by an insurer. Nothing herein shall be interpreted to prohibit an insurer or reciprocal or interinsurance exchange from licensing its employees who solicit, negotiate, or effect contracts of insurance pursuant to this article.

history: (History: Amended by Stats. 2000, Ch. 321, Sec. 4.7. Effective January 1, 2001. Operative January 1, 2002, by Sec. 9 of Ch. 321.)

article: 3. Licensing


citation: INS § 1644

text: A person under 18 years of age is not eligible to apply for a license pursuant to this chapter, Chapter 5A (commencing with Section 1759), Chapter 6 (commencing with Section 1760), and Chapter 7 (commencing with Section 1800) of Part 2 of Division 1, and Chapter 1 (commencing with Section 14000) and Chapter 2 (commencing with Section 15000) of Division 5.

history: (History: Amended by Stats. 2009, Ch. 254, Sec. 1. (AB 800) Effective January 1, 2010.)

article: 3. Licensing


citation: INS § 1646

text: An organization is not eligible for a license under this chapter if its articles of incorporation or association or agreement of copartnership forbid it to act in the capacity for which a license is sought.

history: (History: Repealed and added by Stats. 1959, Ch. 4.)

article: 3. Licensing