Insurance Code — Part 10 | INS — United States — California law | Esheria

Insurance Code

Part 10 of 23 · provisions 1,801–2,000

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This section defines “underwriters’ corps” for this chapter. This chapter must not impair or interfere with the powers or duties of a municipality’s regular fire department. An owner of property cannot treat an underwriters’ corps act as a justification for abandoning the property. Certain domestic insurance-underwriter corporations may maintain an underwriter’s corps at their own expense if they meet the stated fire-prevention and local-business conditions. An underwriter’s corps may enter certain burning or fire-exposed buildings and may remove or protect property from fire or water damage while a fire is happening and immediately after.

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Provisions of Insurance Code

Showing 200 of 4,461

  1. 11752.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    An examined organization must pay the reasonable cost of an examination authorized by this article.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.2. The reasonable cost of any examination authorized by this article of any rating or advisory organization shall be paid by the organization examined. (Added by Stats. 1951, Ch. 1123.)
  2. 11752.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A licensed rating organization must provide requested policy information from its records to the Department of Industrial Relations, and to other governmental agencies only if the Insurance Commissioner approves the release. Requesting agencies must ask in writing and keep the information confidential.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.5. (a) Subject to subdivision (b), a licensed rating organization shall make available any policy information contained in its records to the following: (1) The Department of Industrial Relations. (2) Any other governmental agency if the Insurance Commissioner, after consultation with the licensed rating organization, approves the release of the policy information requested to the agency. (b) The Department of Industrial Relations and any other governmental agency shall specify to the licensed rating organization, in writing, the information requested, that the information requested is to be used to facilitate the agency’s performance of its constitutional or statutory duties, and that the information received will not be released to others, except in the discharge of a specific statutory or constitutional duty, or published without the prior written consent of the licensed rating organization. In addition, if the Insurance Commissioner’s approval is required for the release of the policy information requested, a written copy of the approval shall be submitted to the licensed rating organization. (c) As used in this section, “policy information” means information which is contained in a workers’ compensation policy, including, but not limited to, the identity and address of the employer, the identity of the insurer, the policy number, and the policy period. (d) Information obtained by a governmental agency pursuant to this section shall be confidential and not subject to public disclosure under any other law of this state. (e) No licensed rating organization or member thereof, or member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization, when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information to a governmental agency pursuant to this section, or for the accuracy or completeness of the information so disclosed. (f) This section shall not be construed as implying the existence of liability in circumstances not defined in this section, nor as implying a legislative recognition that, except for enactment of this section, a liability has existed or would exist in the circumstances stated in this section. (g) This section shall not be construed as limiting any authority of a licensed rating organization to disclose information contained in its records to others. (Amended by Stats. 2006, Ch. 452, Sec. 5. Effective January 1, 2007.)
  3. 11752.6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Licensed rating organizations must provide an employer insured under workers’ compensation written policyholder information on request, after notice to the insurer.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.6. (a) A licensed rating organization shall make available, in writing, to an employer insured under a workers’ compensation policy, all policyholder information contained in its records upon request of the employer and after notice to the employer’s insurer. (b) As used in this section, “policyholder information” means all information relating to the employer’s loss experience, claims, classification assignments, and policy contracts. Policyholder information also includes information relating to rating plans, rating systems, manual rules, and any other information that impacts the policyholder’s pure premium rates. (c) If a licensed rating organization rejects an employer’s request for policyholder information, the rating organization shall notify the employer in writing of the reasons for the rejection. An employer whose request has been rejected in whole or in part may appeal to the commissioner in accordance with Section 11753.1. If the commissioner finds that the reasons for the rejection are not justified, he or she may order the rating organization to furnish that information to the employer. (d) No licensed rating organization or member of the organization, or member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization, when acting within the scope of his or her employment, is liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information to an employer under this section or for the accuracy or completeness of the information disclosed. (e) This section does not imply the existence of liability in circumstances not defined in this section, nor does it imply a legislative recognition that, except for enactment of this section, a liability has existed or would exist in the circumstances stated in this section. (f) This section does not limit any authority of a licensed rating organization to disclose information contained in its records to others. (g) There shall be established in all licensed rating organizations a policyholder ombudsman. The policyholder ombudsman shall be a person with sufficient knowledge of the workers’ compensation ratemaking process to provide information and assistance to policyholders in obtaining and evaluating the information provided in Article 2 (commencing with Section 11730) and this article, and in Sections 3761 and 3762 of the Labor Code. Every rating organization licensed in this state shall provide compensation for the ombudsman and necessary staff and other necessary resources to allow the ombudsman to provide prompt and complete service to workers’ compensation policyholders of this state. The policyholder ombudsman may advise the policyholder in any dispute with insurers or the rating organization that the ombudsman serves, or on appeal to the commissioner as provided in Section 11737. (h) For all policies of insurance issued or renewed on or after January 1, 1994, the insurer shall advise the policyholder in writing of the following: (1) The policyholder’s right to request a written report containing the information set forth in this section from the licensed rating organization of which the insurer is a member, and the policyholder’s right to contact the policyholder ombudsman to assist in obtaining and evaluating information relating to rates, together with the telephone number and address of the ombudsman, as well as the policyholder’s right to contact the department to resolve a dispute with an insurer, as provided in this section and Section 11737. (2) If a participating policy, that upon payment or nonpayment of a dividend the policyholder shall be provided a written explanation, in clear and understandable language, setting forth the basis of the calculation and expressing any dividend in both dollar amount and as a percentage of earned premium under the policy. (3) The date when the insurer is required to file the first unit statistical report with the licensed rating organization designated by the commissioner. (Amended by Stats. 1995, Ch. 582, Sec. 5. Effective January 1, 1996.)
  4. 11752.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A licensed rating organization may share experience rating information with certain insurers, agents, or brokers if they send a written request and meet stated conditions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.7. (a) A licensed rating organization may make available experience rating information contained in its records to any insurer admitted to transact workers’ compensation insurance in this state or to any insurance agent or broker that is licensed to transact workers’ compensation insurance in this state, if the insurer, agent, or broker submits a written request to the licensed rating organization stating all of the following: (1) The requesting insurer is admitted to transact workers’ compensation insurance in this state or that the requesting agent or broker is licensed to transact workers’ compensation insurance in this state. (2) The information requested. (3) The information requested will be used to facilitate the transaction of workers’ compensation insurance by the insurer, agent, or broker. (4) The information received will not be released by the agent or broker to others, except to facilitate the transaction of workers’ compensation insurance by the requesting agent or broker. (b) The licensed rating organization may, but shall not be required to, verify that an insurer requesting information under this section is admitted to transact workers’ compensation insurance in this state or that an insurance agent or broker requesting information under this section is licensed to transact workers’ compensation insurance in this state. (c) For purposes of this section: (1) “Experience rating information” means information released on microfiche, at an Internet Web site or other electronic format, or in other forms or media by a licensed rating organization that identifies all experience-rated employers, and the experience ratings and classifications or experience modifications that apply or applied to those employers. (2) “Transaction,” as applied to workers’ compensation insurance, includes any of the following: (A) Solicitation. (B) Negotiations preliminary to execution of a contract of insurance. (C) Execution of a contract of insurance. (D) Resolution of matters arising out of the contract and subsequent to its execution. (d) Experience rating information made available pursuant to this section shall be confidential and shall not be used for any purpose other than to facilitate the transaction of workers’ compensation insurance by the insurer, agent, or broker receiving the information pursuant to this section. (e) Notwithstanding any other provision of law, including this section, a licensed rating organization may not enter into a contract or other agreement, including its constitution, articles of incorporation, or bylaws that prohibits information services companies in the business of publishing or providing experience rating information immediately prior to September 15, 1989, from continuing on or after September 15, 1989, to receive and provide to others experience rating information from whatever sources and in whatever forms or media. (f) No licensed rating organization, member of a licensed rating organization, member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information pursuant to this section, or to the members of those organizations, or for the accuracy or completeness of the information disclosed. (g) This section shall not be construed as implying the existence of liability in circumstances not defined in this section, nor as implying a legislative recognition that, except for the enactment of this section, a liability has existed or would exist in the circumstances stated in this section. (h) This section shall not be construed as limiting any authority of a licensed rating organization to disclose information contained in its records to others. (Amended by Stats. 2002, Ch. 879, Sec. 2. Effective January 1, 2003.)
  5. 11752.75.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A licensed rating organization must run a workers’ compensation coverage website with specific content, query, disclaimer, and update rules; the commissioner must adopt implementing regulations and later report on the site.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.75. (a) (1) Notwithstanding any other provision of law, a licensed rating organization shall, pursuant to regulations adopted by the commissioner after notice and hearing, establish and maintain an Internet Web site for the purposes of assisting any person to determine whether an employer is insured for workers’ compensation. (2) An Internet Web site developed pursuant to this section shall not include any links to a commercial, for-profit Internet Web site, other than a link to the licensed rating organization’s homepage, and shall not contain any advertising other than the name, logo, and contact information of the licensed rating organization. (b) The Internet Web site shall: (1) Permit a person to submit a query for coverage information concerning a specified employer on a specified date. The specified date shall be within five years of the date of query. (2) Permit the query to specify an employer, using the name, address, or other identifying information of the employer, or combinations of identifying information, as may be provided by regulations adopted by the commissioner. Other identifying information may include, but need not be limited to, the employer’s federal employer identification number. (3) In response to the query, provide the name of the workers’ compensation insurer or insurers for the employer on the date specified in the query according to the most recent information available to the rating organization, subject to paragraph (7), and provide a contact address for the insurer from information available to the rating organization, or by providing a hypertext link to insurer information available on the department’s Internet Web site. (4) Be accessible for inquiries without charge. However, the commissioner may, at his or her discretion, permit the rating organization to impose access restrictions as necessary to deter the use of the Internet Web site for purposes other than those for which it was intended. (5) Contain a hypertext link to the Department of Industrial Relations’ Internet Web site for the purpose of locating employers who may be self-insured. (6) Include any disclaimers that the commissioner may prescribe. (7) Be updated to reflect policy information as soon as is reasonably feasible following submission of that information by insurers to the rating organization, as the commissioner shall require. (8) Include a disclaimer stating that the search results may not reflect recent changes in information. (9) Include a disclaimer stating that the failure of an employer to appear in response to a query does not mean that the employer does not have insurance or is operating in violation of California law. (10) Include the date that the Internet Web site was last updated. (c) A rating organization shall not be required to disclose on the Internet Web site any policy numbers, inception or expiration dates, or confidential information, as defined by the commissioner. (d) The Internet Web site specified in this section shall become operative no later than one year after the effective date of regulations adopted by the commissioner implementing this section. (e) The commissioner shall adopt regulations to implement this section no later than January 1, 2011. These regulations shall specify a method by which an employer may dispute through the rating organization or the employer’s insurance company the accuracy of the information displayed on the Internet Web site. (f) No rating organization, member of a rating organization, or member of a committee of a rating organization when acting within his or her capacity as a member of the committee, or officer or employee of a rating organization when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused, or alleged to have been caused, either directly or indirectly, by the good faith disclosure of information pursuant to this section, or for the accuracy or completeness of any information disclosed in good faith. (g) This section shall not be construed to create liability except as provided in this section, nor as a legislative recognition that, except for the enactment of this section, a liability would exist. (h) Nothing in this section shall be construed as limiting the authority of a rating organization to disclose information contained in its records to others. (i) The commissioner shall conduct a review and evaluation of the establishment and operation of the Internet Web site and an assessment of whether it is achieving its intended purpose and provide a written report on his or her findings no later than July 1, 2013. The report shall include, to the extent possible, statistics on usage, error rates, user complaints, and efforts undertaken by the commissioner to improve the operation of the Internet Web site. The commissioner shall present a copy of the report to the office of the President pro Tempore of the Senate, the Speaker of the Assembly, the Senate Committee on Banking, Finance and Insurance, the Assembly Committee on Insurance, the Department of Finance, and the Department of Industrial Relations and shall make it available on the Internet Web site of the Department of Insurance. (Added by Stats. 2009, Ch. 241, Sec. 1. (AB 483) Effective January 1, 2010.)
  6. 11752.8.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Insurers must give policyholders an approved notice explaining workers’ compensation rating laws for certain policies, and may combine that notice with another required notice.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.8. (a) For all policies of insurance issued, or renewed for the first time on or after January 1, 1995, the insurer shall provide a notice, approved by the commissioner, to the policyholder, explaining in easily understandable language the workers’ compensation rating laws. For policies issued or renewed between January 1, 1994, and January 1, 1995, inclusive, the insurer shall include a notice to the policyholder, in easily understandable language, containing a summary of the changes in the rating laws enacted during the 1993–94 Regular Session of the Legislature. (b) The notice required by this section may be combined with the notice required by subdivision (h) of Section 11752.6. (Amended (as added by Stats. 1993, Ch. 121) by Stats. 1993, Ch. 1242, Sec. 12. Effective January 1, 1994.)
  7. 11752.9.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A rating organization must give the policyholder written notice when it changes the policyholder’s classification assignment, and it must send that notice to the insurer at the same time.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11752.9. Notwithstanding subdivision (d) of Section 11750.3, a rating organization shall provide a policyholder with written notification if it imposes a change in the classification assignment of the policyholder. The written notification shall be provided to the policyholder at the same time that it is provided to the insurer. A rating organization may satisfy this requirement by furnishing the policyholder with a copy of the notice that it provides to the insurer regarding the change in classification assignment. (Added by Stats. 2003, Ch. 121, Sec. 1. Effective January 1, 2004.)
  8. 11753.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Advisory organizations must file specified organizational documents with the commissioner before operating in the state, keep the commissioner updated on changes, and avoid unfair or unreasonable practices.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11753. No advisory organization shall conduct its operations in this State unless and until it has filed with the commissioner: a. A copy of its constitution, articles of incorporation, agreement of association, and of its by-laws, rules and regulations governing its activities, all duly certified by the custodian of the originals thereof. b. A list of its members and subscribers. c. The name and address of a resident of this State upon whom notices or orders of the commissioner or process may be served. Every such advisory organization shall notify the commissioner promptly of every change in its constitution, its articles of incorporation, agreement of association, and of its by-laws, rules and regulations governing the conduct of its business; its list of members and subscribers; and the name and address of the resident of this State designated by it upon whom notices or orders of the commissioner or process affecting such organizations may be served. No such advisory organization shall engage in any unfair or unreasonable practice with respect to its activities. (Added by Stats. 1951, Ch. 1123.)
  9. 11753.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    People affected by a rating organization’s decision can ask the organization to reconsider, and may appeal to the commissioner if reconsideration is rejected or ignored for 30 days.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11753.1. (a) Any person aggrieved by any decision, action, or omission to act of a rating organization may request that the rating organization reconsider the decision, action, or omission. If the request for reconsideration is rejected or is not acted upon within 30 days by the rating organization, the person requesting reconsideration may, within a reasonable time, appeal from the decision, action, or omission of the rating organization. The appeal shall be made to the commissioner by filing a written complaint and request for a hearing specifying the grounds relied upon. If the commissioner has information on the subject appealed from and believes that probable cause for the appeal does not exist or that the appeal is not made in good faith, the commissioner may deny the appeal without a hearing. The commissioner shall otherwise hold a hearing to consider and determine the matter presented by the appeal. (b) Any insurer adopting a change in the classification assignment of an employer that results in an increased premium shall notify the employer in writing, or if the insurance was transacted through an insurance agent or broker, the insurer shall notify the agent or broker who shall notify the employer in writing of the change and the reasons for the change. Any employer receiving this notice shall have the right to request reconsideration and appeal the reclassification pursuant to this section. The notice required by this section shall inform the employer of his or her rights pursuant to this section. No notification shall be required when the change is a result of a regulation adopted by the Department of Insurance or other action by or under the authority of the commissioner. An insurer shall provide written notification of the revised classification assignment to an employer within 30 days after adoption. (Amended by Stats. 2002, Ch. 873, Sec. 6. Effective January 1, 2003.)
  10. 11753.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    This section sets when revised workers’ compensation classification assignments take effect after an erroneous classification, depending on whether the premium goes down or up, and sets a civil penalty for insurers that violate the section.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11753.2. (a) If a change in a classification assignment on a workers’ compensation insurance policy is due to an erroneous classification and results in a decreased premium, the classification change shall become effective as of the inception date of a policy in effect on the date the revised classification assignment is published by an insurer or, if the classification is assigned by the designated rating organization, when the insurer and insured are notified in writing by the designated rating organization that the erroneous classification assignment is under review. The revised classification assignment shall be applied as of the inception date of a policy that expired no more than 12 months prior to the date the revised classification assignment was published or the insurer and insured were notified in writing by the designated rating organization that assigned the classification that the erroneous classification assignment was under review, provided that the erroneous classification assignment was applicable to that policy. (b) If a change in a classification assignment on a workers’ compensation insurance policy is due to an erroneous classification and results in an increased premium, the classification change shall become effective on the effective date of the erroneous classification assignment provided any of the following conditions occur: (1) The revised classification assignment is published within three months of the effective date or publication date of the erroneous assignment. (2) The insurer or, where applicable, the designated rating organization, was notified in writing within three months of the effective date or publication date of the erroneous classification assignment of a possible error. (3) The designated rating organization notified the insurer in writing within three months of the effective date or publication date of the erroneous classification assignment that the erroneous classification assignment was under review. If one or more of the conditions set forth in paragraphs (1), (2), and (3) do not occur, the revised classification assignment shall become effective as of the date it is published unless the publication date is less than three months prior to the expiration date of the outstanding policy, in which case the revised classification assignment shall become effective as of the inception date of the policy that replaced the outstanding policy. (c) If a change in a classification assignment on a workers’ compensation policy is due to an insured’s change of operations, any resulting increase or decrease in premium shall become effective on the date of the change of operations. (d) Any insurer that violates this section shall be subject to civil penalties in an amount of up to five thousand dollars ($5,000) per violation. (Amended by Stats. 1995, Ch. 375, Sec. 3. Effective January 1, 1996.)
  11. 11753.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A licensed workers’ compensation insurance rating organization that does not make certain Longshore and Harbor Workers’ Compensation Act rates or rating plans is exempt from some additional licensing/registration requirements and may perform specified information-sharing and compliance activities.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11753.3. Notwithstanding Section 1851.1, a workers’ compensation insurance rating organization licensed pursuant to the provisions of this article which does not make rates, rating plans or rating systems for insurance covering employers against their liability for compensation or damages under the United States Longshoremen’s and Harbor Workers’ Compensation Act (33 U.S.C. 901, et seq.) shall not be required to be licensed as a rating organization or registered as an advisory organization pursuant to the provisions of Chapter 9 (commencing with Section 1850) of Part 2 of Division 1, and shall have authority under its license as a workers’ compensation insurance rating organization issued pursuant to this article to: (a) Collect and tabulate loss and expense experience statistics and other information and data relating to insurance covering employers against their liability for compensation under the United States Longshoremen’s and Harbor Workers’ Compensation Act. (b) Furnish or exhange such information and experience data to or with rating organizations, advisory organizations and insurers in this and other states. (c) Adopt and enforce compliance by its insurer members with reasonable rules and statistical plans to be used in the recording and reporting by insurer members of their California longshoremen and harbor workers’ insurance loss and expense experience in order that such experience of all of its insurer members shall be available in such form and detail as will be of aid to the commissioner in the enforcement of and to its insurer members in complying with the provisions of Chapter 9 (commencing with Section 1850) of Part 2 of Division 1. (d) Engage in the same activities and carry out the same functions with respect to insurance covering the liability of employers for compensation or damages under the United States Longshoremen’s and Harbor Workers’ Compensation Act that it is authorized to engage in or carry out with respect to California workers’ compensation insurance generally under the provisions of this article other than the making of rates, rating plans and rating systems. (Added by Stats. 1978, Ch. 813.)
  12. 11754.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    The commissioner must give written notice of alleged noncompliance to a rating or advisory organization or insurer, unless there is good cause to believe the noncompliance is wilful.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11754. If the commissioner has good cause to believe that a rating or advisory organization or an insurer does not comply with the requirements of this article applicable to it, he shall, unless he has good cause to believe that such noncompliance is wilful, give notice in writing to such organization or insurer, stating therein in what manner and to what extent such noncompliance is alleged to exist and specifying therein a reasonable time, not less than 10 days thereafter, in which such noncompliance may be corrected. Notices under this section shall be confidential as between the commissioner and the organization or insurer unless a hearing is held under Section 11754.1. (Added by Stats. 1951, Ch. 1123.)
  13. 11754.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    The commissioner may hold a public hearing about noncompliance, but must give written notice at least 10 days before the hearing and limit the hearing to the matters stated in the notice.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11754.1. If the commissioner has good cause to believe such noncompliance to be wilful, or if within the period prescribed by the commissioner in the notice required by Section 11754 the organization or insurer does not make such change as may be necessary to correct the noncompliance specified by the commissioner or establish to the satisfaction of the commissioner that such noncompliance does not exist, then the commissioner may hold a public hearing in connection therewith, provided that within a reasonable period of time, which shall not be less than 10 days before the date of such hearing, he shall mail written notice specifying the matters to be considered at such hearing to such organization or insurer. Such notice shall conform to the requirements for an accusation as prescribed by Section 11503 of the Government Code. If no notice has been given as provided in Section 11754 such notice shall state therein in what manner and to what extent noncompliance is alleged to exist. The hearing shall not include any additional subjects not specified in the notices required by Section 11754 or this section. (Added by Stats. 1951, Ch. 1123.)
  14. 11754.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    After a hearing, the commissioner may order a rating organization, advisory organization, insurer, or similar organization to fix a violation or license condition, and may suspend or revoke a license if the problem is not corrected or if fraudulent or dishonest conduct is found.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11754.2. If, after a hearing pursuant to Section 11754.1, the commissioner finds: a. That any rating or advisory organization or other organization authorized by this article or any insurer has violated the provisions of this article applicable to it, he may issue an order to such organization or insurer which has been the subject of the hearing, specifying in what respect such violation exists and stating when, within a reasonable period of time, the violation shall cease. b. That any conditions prerequisite to the granting of a license to a rating organization no longer exist, he may issue an order to such organization which has been the subject of the hearing specifying the condition which has ceased to exist and stating when within a reasonable time the condition shall be complied with. If the condition is not complied with within the time specified the commissioner may suspend or revoke the license of such organization, in addition to any other penalty provided in this article. c. That any rating organization has wilfully engaged in any fraudulent, dishonest act or practice, he may suspend or revoke the license of such organization, in addition to any other penalty provided for in this article. (Added by Stats. 1951, Ch. 1123.)
  15. 11754.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    The commissioner may suspend or revoke a rating organization’s or insurer’s license if it does not comply on time with a lawful commissioner order under Sections 11754.1 and 11754.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11754.3. In addition to other penalties provided in this code the commissioner may suspend or revoke the license of any rating organization or insurer which fails to comply within the time limited by such order or extension thereof which the commissioner may grant, with an order of the commissioner lawfully made by him pursuant to Section 11754.1 and effective pursuant to Section 11754.5. (Added by Stats. 1951, Ch. 1123.)
  16. 11754.4.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    License proceedings under this article must generally follow the referenced Government Code procedures, and the commissioner has the powers granted by that code.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11754.4. Except as otherwise provided in this article, all proceedings in connection with the denial, suspension or revocation of a license of a rating organization or insurer under this article shall be conducted in accordance with the provisions of Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code and the commissioner shall have all the powers granted to him therein. (Added by Stats. 1951, Ch. 1123.)
  17. 11754.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Commissioner decisions under this article or Article 2 can be reviewed by state courts under Code of Civil Procedure Section 1094.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11754.5. Any finding, determination, rule, ruling, or order made by the commissioner under this article or Article 2 (commencing with Section 11730) shall be subject to review by the courts of the state pursuant to Section 1094.5 of the Code of Civil Procedure. (Amended by Stats. 1995, Ch. 582, Sec. 6. Effective January 1, 1996.)
  18. 11755.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Certain persons and organizations must not withhold or give false or misleading information to the commissioner or a rating organization when it could affect workers’ compensation and related employer’s liability insurance rates or premiums.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11755. No person, insurer, rating or advisory organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner or to any rating organization, which will affect the rates, rating systems or premiums for workers’ compensation insurance and employer’s liability insurance incidental thereto and written in connection therewith. In the event of the refusal by any insured employer to permit an audit or an examination provided for in subdivision (f) of Section 11750.3, the commissioner shall, upon the verified petition of the rating organization concerned, take such action as the commissioner may be authorized to take pursuant to and subject to the provisions of this code and of the Government Code. (Amended by Stats. 1981, Ch. 714, Sec. 303.)
  19. 11756.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    If a person, insurer, or organization does not comply with a final order of the commissioner under this article, they can be fined; a willful failure can bring a much larger penalty and a misdemeanor. The commissioner must collect the money and may sue to enforce collection.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11756. (a) Any person, insurer, or organization, who fails to comply with a final order of the commissioner under this article shall be liable to the state in an amount not exceeding fifty dollars ($50), but if the failure is willful, he, she, or it shall be liable to the state in an amount not exceeding five thousand dollars ($5,000) for the failure. The commissioner shall collect the amount so payable and may bring an action in the name of the people of the state of California to enforce collection. These penalties may be in addition to any other penalties provided by law. (b) A willful violation of the provisions of this article by any person is a misdemeanor. (Amended by Stats. 1982, Ch. 454, Sec. 122.)
  20. 11757.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    This section says it should not be read to prohibit or regulate certain insurer payments, and that a plan for those payments is not a rating plan or system.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11757. Nothing in this article shall be construed to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers. A plan for the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers shall not be deemed a rating plan or system. (Added by Stats. 1951, Ch. 1123.)
  21. 11758.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Acts, actions, or agreements made under this article’s authority are not violations and cannot be used for prosecution or civil proceedings under other state laws that do not specifically refer to insurance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11758. No act done, action taken or agreement made pursuant to the authority conferred by this article shall constitute a violation of or grounds for prosecution or civil proceedings under any other law of this State heretofore or hereafter enacted which does not specifically refer to insurance. (Added by Stats. 1951, Ch. 1123.)
  22. 11758.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    This section says Article 3 does not apply to workers’ compensation insurance covering employees defined in Labor Code Section 3351(d).

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11758.1. The provisions of this article shall not apply to the workers’ compensation insurance covering those persons defined as employees by subdivision (d) of Section 3351 of the Labor Code. (Added by Stats. 1977, Ch. 17.)
  23. 11759.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    Licensed rating organizations and certain associated persons are not liable for injury, death, or other damage tied to inspection failures or inspection-related comments for workers’ compensation rating purposes.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11759. The Legislature hereby finds and declares as follows: The Legislature pursuant to its plenary power over workers’ compensation granted by Section 4 of Article XIV of the California Constitution has authorized classification of risks and premium rates and systems of merit rating for workers’ compensation insurance. The selective and discretionary inspection of locations, plants and operations of employers for classification and rating purposes, the gathering and compiling of experience statistics and other data by rating organizations licensed by the Insurance Commissioner, and the application of standards predicated upon the reliability of such classifications and merit rating data are essential to the proper functioning of the classifications of risks and premium rates and systems of merit rating which are regulated by the Insurance Commissioner as authorized by the Legislature. In order to implement and facilitate the proper and adequate administration of such classifications of risks and rates and systems of rating by such licensed rating organizations and the Insurance Commissioner, it is important and in the public interest that licensed rating organizations and their officers and employees shall not be liable for injury or death or other damage caused or alleged to have been caused by their failure to inspect, or negligent or incomplete inspection of, an employer’s location, plant or operation for classification or rating purposes. No licensed rating organization or member thereof in its character as a member, or officer or employee of such licensed rating organization when acting within the scope of his employment, shall be liable for injury or death or other damage proximately caused by a failure to inspect, or the manner or extent of inspection of, an employer’s locations, plants or operations for classification or rating purposes, or by such person’s comment, or failure to comment, on the subject matter or object of such inspection. This section shall not be construed as implying the existence of liability in circumstances not defined in this section; nor as implying a legislative recognition that, except for the enactment of this section, a liability has existed or would exist in circumstances stated in this section. (Amended by Stats. 1977, Ch. 579.)
  24. 11759.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A rating organization must notify the Governor and the Legislature by June 1 each year that a requested report on prior-year losses and expenses is available.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11759.1. A rating organization shall, no later than June 1 of each year, notify the Governor and the Legislature that a report containing an analysis of all losses and expenses for the prior year by all insurers who are members of the organization is available on request. The first report shall be due June 1, 1996. The report shall include, but not be limited to, the following: (a) An analysis of all medical costs identifying separately the amounts paid for medical treatment to hospitals and physicians, and the amounts paid for medical-legal expenses. The amounts paid for medical treatment to physicians shall also identify the amounts paid for each specialty authorized to provide medical services pursuant to Sections 3209.3, 3209.5, and 3209.8 of the Labor Code. The amounts paid for medical-legal evaluations shall also be subcategorized by specialty and shall identify average costs paid per claim. (b) An analysis of indemnity benefits paid for temporary disability, permanent total disability, permanent partial disability, life pensions, death benefits, and funeral expenses. The permanent partial disability benefits also shall be reported according to the degree of impairment in the following categories: .25 to 24.75 percent, 25 to 69.75 percent, and 70 to 99.75 percent. (c) An analysis of amounts paid for vocational rehabilitation subcategorized by amounts paid for maintenance allowance, evaluation, education and training. (d) An analysis of expenses of insurers categorized by loss adjustment, acquisition, general expenses, profit, and taxes. Amounts spent for defense attorneys’ expense shall be separately identified. (e) An analysis of attorney’s fees paid to applicant attorneys. (f) An analysis of workers’ compensation costs by the type of injury or illness generally following the injury classification in the Annual Redesigned Occupational Safety and Health Statistical Program used by the Department of Industrial Relations in its annual report on California work injuries and illnesses. (Amended by Stats. 1995, Ch. 556, Sec. 2. Effective January 1, 1996.)
  25. 11759.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. )

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    A designated licensed rating organization must prepare and submit reports about possible underreporting of workers’ compensation exposure in the taxicab industry.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 3. Rating and Other Organizations [11750 - 11759.2] ( Article 3 added by Stats. 1951, Ch. 1123. ) ## 11759.2. (a) A licensed rating organization designated as the Insurance Commissioner’s statistical agent shall prepare a report to be submitted to the Insurance Commissioner by April 1, 2003, on the potential underreporting of workers’ compensation exposure in the taxicab industry. The report shall include an analysis of workers’ compensation exposure, loss, and premium in the taxicab industry. The licensed rating organization shall submit a report to the Governor, the Legislature, and the commissioner by May 1, 2003, that describes its findings. (b) A licensed rating organization designated as the insurance commissioner’s statistical agent may confer with state agencies, including, but not limited to, the Employment Development Department, in the preparation of the study. The state agencies shall provide all necessary statistical or other information requested by the licensed rating organization designated as the Insurance Commissioner’s statistical agent. (Added by Stats. 2002, Ch. 893, Sec. 1. Effective January 1, 2003.)
  26. 1176.5.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    Certain insurers may make, invest in, or purchase loans guaranteed by the United States or a federal agency under the specified veterans’ loan law or related federal amendments.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1176.5. Such insurers may make, invest in or purchase loans which are guaranteed by the United States or any agency thereof pursuant to the provisions of the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof. (Added by Stats. 1945, Ch. 26.)
  27. 1176.6.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    Insurance Code loan limits and security rules do not apply to certain federally guaranteed loans.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1176.6. None of the provisions of the Insurance Code limiting or restricting loans by insurers or prescribing the security therefor shall apply to any loans which are fully guaranteed by the United States or any agency thereof pursuant to the provisions of the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof; and in any case in which payment of a portion of any loan is guaranteed by the United States or any agency thereof pursuant to the provisions of the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof, the guaranteed portion of such loan shall not be deemed a part of said loan for the purposes of any provision of the Insurance Code limiting the amount which may be loaned by an insurer upon the security of real property or improvements thereon shall be applicable to such loan. (Added by Stats. 1945, Ch. 26.)
  28. 11760.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 4. Penalties for Misrepresentation [11760 - 11760.1] ( Article 4 added by Stats. 1991, Ch. 116, Sec. 20. )

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    It is unlawful to knowingly make or cause a false or fraudulent statement about facts that affect workers’ compensation insurance premiums, rates, or costs when the purpose is to reduce the insurance cost.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 4. Penalties for Misrepresentation [11760 - 11760.1] ( Article 4 added by Stats. 1991, Ch. 116, Sec. 20. ) ## 11760. (a) It is unlawful to make or cause to be made any knowingly false or fraudulent statement, whether made orally or in writing, of any fact material to the determination of the premium, rate, or cost of any policy of workers’ compensation insurance, for the purpose of reducing the premium, rate, or cost of the insurance. Any person convicted of violating this subdivision shall be punished by imprisonment in a county jail for one year, or pursuant to subdivision (h) of Section 1170 of the Penal Code for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), or double the value of the fraud, whichever is greater, or by both that imprisonment and fine. (b) Any person who violates subdivision (a) and who has a prior felony conviction of the offense set forth in that subdivision shall receive a two-year enhancement for each prior conviction in addition to the sentence provided in subdivision (a). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. (Amended by Stats. 2011, Ch. 15, Sec. 217. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
  29. 11760.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 4. Penalties for Misrepresentation [11760 - 11760.1] ( Article 4 added by Stats. 1991, Ch. 116, Sec. 20. )

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    If an employer does not give the insurer access to records for an audit, the employer may owe a premium equal to three times the insurer’s annual estimate, plus audit costs.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 4. Penalties for Misrepresentation [11760 - 11760.1] ( Article 4 added by Stats. 1991, Ch. 116, Sec. 20. ) ## 11760.1. (a) If an employer fails to provide for access by the insurer or its authorized representative to its records, to enable the insurer to perform an audit to determine the remuneration earned by the employer’s employees and by any of its uninsured subcontractors and the employees of any of its uninsured subcontractors during the policy period, the employer shall be liable to pay to the insurer a total premium for the policy equal to three times the insurer’s then-current estimate of the annual premium on the expiration date of the policy. The employer shall also be liable, in addition to the premium, for costs incurred by the insurer in its attempts to perform an audit, after the insured has failed upon the insurer’s third request during at least a 90-day period to provide access, and the insured has provided no compelling business reason for the failure. This section shall only apply if the insurer elects to comply with the conditions set forth in subdivision (d). (b) “Access” shall mean access at any time during regular business hours during the policy period and within three years after the policy period ends. “Access” may also include any other time mutually agreed upon by the employer and insurer. (c) The insurer shall have and follow regular and reasonable rules and procedures to notify employers of their duty to provide for access to records, and to contact employers to make appointments during regular business hours for that purpose. (d) Upon the employer’s failure to provide access after the insurer’s third request during at least a 90-day period, the insurer may notify the employer through its mailing of a certified, return-receipt, document of the increased premium and the total amount of the costs incurred by the insurer for its attempts to perform an audit as described under subdivision (a). Upon the expiration of 30 days after the delivery of the notice, collection by the insurer of the amount of premium and costs described under subdivision (a), less all premiums previously paid by the employer for the policy, shall be fully enforceable and executable. (e) If the employer provides for access to its records after having received the notice described in subdivision (d), and if the insurer then succeeds in performing the audit to its satisfaction, the insurer shall revise the total premium and costs payable for the policy by the employer to reflect the results of its audit. (Added by Stats. 2007, Ch. 615, Sec. 1. Effective January 1, 2008.)
  30. 11761.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 5. Standards Applicable to Claims Adjusters [11761- 11761.] ( Article 5 added by Stats. 2003, Ch. 637, Sec. 1. )

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    The commissioner must adopt regulations setting minimum training, experience, and skill standards for workers’ compensation claims adjusters, and every insurer must certify that relevant personnel meet those standards.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 3. Regulation of Business of Workers’ Compensation Insurance [11690 - 11761] ( Heading of Chapter 3 amended by Stats. 1979, Ch. 373. ) ## ARTICLE 5. Standards Applicable to Claims Adjusters [11761- 11761.] ( Article 5 added by Stats. 2003, Ch. 637, Sec. 1. ) ## 11761. (a) The commissioner shall adopt regulations setting forth the minimum standards of training, experience, and skill that workers’ compensation claims adjusters must possess to perform their duties with regard to workers’ compensation claims. The regulations adopted pursuant to this section shall, to the greatest extent possible, encourage the use of existing private and public education, training, and certification programs. (b) Every insurer shall certify to the commissioner that the personnel employed by the insurer to adjust workers’ compensation claims, or employed for that purpose by any medical billing entity with which the insurer contracts, meet the minimum standards adopted by the commissioner pursuant to subdivision (a). (c) For the purposes of this section, “medical billing entity” means a third party that reviews or adjusts workers’ compensation medical bills for insurers. (d) For the purposes of this section, “insurer” means an insurer admitted to transact workers’ compensation insurance in this state, the State Compensation Insurance Fund, an employer that has secured a certificate of consent to self-insure pursuant to subdivision (b) or (c) of Section 3700 of the Labor Code, or a third-party administrator that has secured a certificate of consent pursuant to Section 3702.1 of the Labor Code. (Added by Stats. 2003, Ch. 637, Sec. 1. Effective January 1, 2004.)
  31. 1177.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    Insurers may invest in certain mortgage-backed notes, bonds, and mortgage participation certificates.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1177. Such insurers may invest in notes or bonds secured by mortgage guaranteed as to payment by a policy of mortgage insurance, and mortgage participation certificates issued by a mortgage insurer in accordance with the provisions of this code. (Enacted by Stats. 1935, Ch. 145.)
  32. 11770.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    This section keeps the State Compensation Insurance Fund in existence and sets rules for its board, including appointments, qualifications, training, compensation, quorum, conflict limits, and required committees.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11770. (a) The State Compensation Insurance Fund is continued in existence, to be administered by its board of directors for the purpose of transacting workers’ compensation insurance, and insurance against the expense of defending any suit for serious and willful misconduct, against an employer or his or her agent, and insurance to employees and other persons of the compensation fixed by the workers’ compensation laws for employees and their dependents. Any appropriation made therefrom or thereto before the effective date of this code shall continue to be available for the purposes for which it was made. (b) (1) The Board of Directors of the State Compensation Insurance Fund is composed of 11 members, nine of whom shall be appointed by the Governor. The Governor shall appoint the chairperson. One of the members appointed by the Governor shall be from organized labor. The members appointed by the Governor, other than the labor member, shall have substantial experience in positions involving workers’ compensation, legal, investment, financial, corporate governance and management, accounting, or auditing responsibilities with entities of sufficient size as to make their qualifications relevant to an enterprise of the financial and operational size of the State Compensation Insurance Fund. At all times the board shall have a member with auditing background for the purposes of fulfilling the responsibility of the chair of the audit committee. A quorum is a majority of those appointed, provided that at no time shall a quorum be established with fewer than five members. (2) The Speaker of the Assembly shall appoint one member who shall represent organized labor, and the Senate Committee on Rules shall appoint one member who shall have been a policyholder of the State Compensation Insurance Fund, or an officer or employee of a policyholder, for one year immediately preceding the appointment, and must continue in this status during the period of his or her membership. (3) The Director of Industrial Relations shall be an ex officio, nonvoting member of the board, and shall not be counted as members of the board for quorum purposes or any other purpose. (4) Notwithstanding subdivision (c), the initial term of the members of the board added in the 2008 portion of the 2007–08 Regular Session shall be as follows: (A) One of the members appointed by the Governor shall serve an initial term of two years, one shall serve an initial term of four years, and two shall serve an initial term of five years. (B) The member appointed by the Senate Committee on Rules shall serve an initial term of four years. (C) The member appointed by the Speaker of the Assembly shall serve an initial term of three years. (c) The term of office of the members of the board, other than that of the director, shall be five years and they shall hold office until the appointment and qualification of their successors. (d) (1) Each member of the board shall receive his or her actual and necessary traveling expenses incurred in the performance of his or her duties as a member and, with the exception of the ex officio members, one hundred dollars ($100) for each day of his or her actual attendance at meetings of the board. (2) (A) Each member of the board appointed pursuant to paragraphs (1) and (2) of subdivision (b) shall receive the compensation fixed pursuant to subparagraph (B). (B) Each board member described in subparagraph (A) shall be paid an annual compensation of fifty thousand dollars ($50,000), to be automatically adjusted beginning January 1, 2010, by multiplying the compensation in effect the prior June 30 by the percentage of inflation that occurred during the previous year, adding this amount to the annual compensation from the previous year, and rounding off the result to the nearest dollar. “Percentage of inflation” means the percentage of inflation specified in the Consumer Price Index for All Urban Consumers, as published by the Department of Industrial Relations, or its successor index. (e) Each member of the board of directors shall attend training approved by the board of directors that covers topics, including, but not limited to, the duties and obligations of members of a board of directors, corporate governance, ethics, board of director legal issues, insurance, finance and investment, and information technology. The training shall be conducted by persons or entities not affiliated with the State Compensation Insurance Fund. (f) No person who has had a direct or indirect interest in any transaction with the State Compensation Insurance Fund since the beginning of the last fiscal year of the fund, or who has a direct or indirect material interest in any proposed transaction with the fund, where the amount involved in the transaction exceeds one hundred twenty thousand dollars ($120,000) shall be eligible for appointment as a member of the board of directors of the fund. Once appointed, no member of the board of directors shall have a financial conflict of interest, as defined in Chapter 7 of Title 9 (commencing with Section 87100) of the Government Code, and every member shall be subject to Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code, provided that the existence of a contract of insurance between the State Compensation Insurance Fund and the policyholder member appointed by the Senate Committee on Rules shall not constitute a conflict of interest pursuant to this subdivision. For purposes of board actions affecting generally applicable rates, a member of the board of directors shall not be deemed to have a financial interest, as defined in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of, or pursuant to Chapter 7 (commencing with Section 87100) of Title 9 of, the Government Code, in a contract of insurance between the State Compensation Insurance Fund and an organization of which any member of the board of directors is an owner, officer, or employee. (g) The appointing authority of a member of the board may remove the member and make an appointment replacing the member for the duration of the term if the member ceases to discharge the duties of his or her office for the period of three consecutive board meetings. (h) The board of the State Compensation Insurance Fund shall create, at a minimum, an audit committee, an investment committee, a corporate governance committee, and other committees as the board determines are necessary. (Amended by Stats. 2012, Ch. 46, Sec. 76. (SB 1038) Effective June 27, 2012.)
  33. 11771.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    The State is not liable beyond the assets of the State Compensation Insurance Fund for related obligations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11771. The State shall not be liable beyond the assets of the State Compensation Insurance Fund for any obligations in connection therewith. (Enacted by Stats. 1935, Ch. 145.)
  34. 11771.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    Any advertising for the State Compensation Insurance Fund must include a specific disclaimer.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11771.5. Any advertising of the State Compensation Insurance Fund shall include the following disclaimer: “The State Compensation Insurance Fund is not a branch of the State of California.” (Added by Stats. 2002, Ch. 6, Sec. 8. Effective January 1, 2003.)
  35. 11772.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    Board members, officers, and employees of the fund are protected from private-capacity liability for official acts if they act in good faith and without intent to defraud.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11772. There shall not be any liability in a private capacity on the part of the board of directors or any member thereof, or any officer or employee of the fund for or on account of any act performed or obligation entered into in an official capacity, when done in good faith, without intent to defraud and in connection with the administration, management or conduct of the fund or affairs relating thereto. (Amended by Stats. 1945, Ch. 1431.)
  36. 11773.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    The fund must be organized as a public enterprise fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11773. The fund shall be organized as a public enterprise fund. (Amended by Stats. 1979, Ch. 738.)
  37. 11774.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    The fund’s assets must be used to pay insurance losses and the salaries and other expenses charged to the fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11774. The assets of the fund shall be applicable to the payment of losses sustained on account of insurance and to the payment of the salaries and other expenses charged against it in accordance with the provisions of this chapter. (Enacted by Stats. 1935, Ch. 145.)
  38. 11775.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund must become competitive with other insurers after a reasonable time and is intended to become self-supporting.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11775. The fund shall, after a reasonable time during which it may establish a business, be fairly competitive with other insurers, and it is the intent of the Legislature that the fund shall ultimately become neither more nor less than self-supporting. For that purpose loss experience and expense shall be ascertained and dividends or credits may be made as provided in this article. (Enacted by Stats. 1935, Ch. 145.)
  39. 11776.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund must determine its actual loss experience and expenses each year around January 1. If the fund shows enough excess assets and surplus after liabilities and reserves, it may declare a cash dividend or credit renewal premiums for insured employers.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11776. The actual loss experience and expense of the fund shall be ascertained on or about the first of January in each year for the year preceding. If it is then shown that there exists an excess of assets over liabilities, necessary reserves, and a reasonable surplus for the catastrophe hazard, then a cash dividend may be declared to, or a credit allowed on the renewal premium of, each employer who has been insured with the fund. (Enacted by Stats. 1935, Ch. 145.)
  40. 11777.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The board of directors decides, in its discretion, the amount of any cash dividend or credit, based on the employer’s proportion of divisible surplus.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11777. Such cash dividend or credit is to be in an amount which the board of directors in its discretion considers to be the employer’s proportion of divisible surplus. (Amended by Stats. 1947, Ch. 520.)
  41. 11778.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund may write workers’ compensation insurance and is subject to the commissioner’s powers like other insurers, unless specifically exempted by reference.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11778. The fund may transact workers’ compensation insurance required or authorized by law of this state to the same extent as any other insurer. The fund shall be subject to the powers and authority of the commissioner to the same extent as any other insurer transacting workers’ compensation insurance, except where specifically exempted by reference. For purposes of Section 700, the fund shall be deemed admitted to transact this class of insurance. (Amended by Stats. 2006, Ch. 740, Sec. 13.1. Effective January 1, 2007.)
  42. 11779.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund may insure California employers for liability related to injury or death under certain federal or maritime laws.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11779. The fund may insure California employers against their liability for compensation or damages for injury or death under the United States Longshoremen’s and Harbor Workers’ Compensation Act, or other federal or maritime laws, as fully as any private insurer. (Repealed and added by Stats. 1978, Ch. 507.)
  43. 1178.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Certain insurers may invest in collateral trust bonds or notes if the required collateral and market-value cushions are met.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1178. Such insurers may invest in collateral trust bonds or notes, secured by any of the following: (a) A deposit of obligations authorized for investment by this article or Articles 4, 5, or 6 of this chapter having a market value at least fifteen per cent in excess of the par value of the collateral trust bonds or notes issued. (b) A deposit of obligations authorized for investment by this article or Articles 4, 5, or 6 of this chapter, together with other securities, the combined market value of the deposit being at least twenty per cent in excess of the par value of the collateral trust bonds or notes issued, with the par value of the collateral trust bonds or notes not exceeding the market value of the deposited obligations which are authorized for investment by this article or Articles 4, 5, or 6 of this chapter. (c) A deposit of obligations authorized for investment by this article, or Articles 4, 5, or 6 of this chapter, together with other securities, and conforming to the following requirements: (1) The combined market value of the deposit is at least thirty per cent in excess of the par value of the collateral trust bonds or notes issued. (2) The par value of such collateral trust bonds or notes issued does not exceed the market value of deposited obligations authorized for investment by this article. (3) The deposited collateral consists of obligations authorized for investment by this article, or Articles 4, 5, or 6 of this chapter, having a market value of at least seventy-five per cent of the par value of such collateral trust bonds or notes issued. (Amended by Stats. 1937, Ch. 738.)
  44. 11780.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund may insure an employer against liability for damages tied to employees’ bodily injury or death in California, but only if the fund also provides workers’ compensation insurance to that employer.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11780. The fund may also insure an employer against his or her liability for damages under the laws of the State of California arising out of bodily injury to or death of the employer’s employees occurring within the State of California if the fund also issues workers’ compensation insurance to the employer as to his or her employees. (Amended by Stats. 1981, Ch. 714, Sec. 306.)
  45. 11780.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund may insure certain California employers for out-of-state workers’ compensation liability, but only under listed conditions, and it must not use paid advertising to promote that ability.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11780.5. (a) The fund may also insure a California employer against his or her liability for workers’ compensation benefits, under the law of any other state, for California employees temporarily working outside of California on a specific assignment if the fund insures the employer’s other employees who work within California. (b) (1) The fund is only authorized under this subdivision to insure an employer whose principal place of business is in California, provided the majority of the employer’s operations and employees are located within California, against his or her liability for workers’ compensation benefits, under the law of any other state, if the fund insures the employer’s employees who work within California. (2) The fund is only authorized pursuant to this subdivision to contract as a reinsurer with a ceding insurer that has responded to a request for proposal from the fund and is admitted to transact workers’ compensation insurance in California and in the out-of-state jurisdiction where the non-California employees are located. The fund may only contract for purposes of this subdivision if the ceding insurer meets all of the following criteria: (A) The insurer has an A minus (A-) rating or better from A.M. Best Company. (B) The insurer has substantial prior experience in transacting workers’ compensation business on another insurer’s behalf. (C) The insurer has a minimum surplus of one hundred million dollars ($100,000,000). (c) The fund shall not initiate paid advertising or solicit sponsorship of advertising campaigns to market or promote to prospective insureds the ability to insure qualified employers under the law of any other state. (Amended by Stats. 2016, Ch. 206, Sec. 1. (AB 2887) Effective January 1, 2017.)
  46. 11781.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The board of directors has full power and authority over the State Compensation Insurance Fund and may do whatever is necessary or convenient to exercise that power.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11781. The board of directors is hereby vested with full power, authority and jurisdiction over the State Compensation Insurance Fund. The board of directors may perform all acts necessary or convenient in the exercise of any power, authority or jurisdiction over the fund, either in the administration thereof or in connection with the insurance business to be carried on by it under the provisions of this chapter, as fully and completely as the governing body of a private insurance carrier. The principal office for the transaction of the business of the State Compensation Insurance Fund is located in the City and County of San Francisco. (Amended by Stats. 1945, Ch. 1431.)
  47. 11781.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Compensation Insurance Fund may acquire and own real property for a branch office in Los Angeles, and may build on it if necessary, when the board of directors determines it should.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11781.5. The State Compensation Insurance Fund may acquire and own real property for a branch office in the City of Los Angeles when so determined by the board of directors, and may, if necessary, construct suitable buildings thereon in accordance with law. (Added by Stats. 1946, 1st Ex. Sess., Ch. 54.)
  48. 11782.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund’s business must be conducted under the name State Compensation Insurance Fund, and the board of directors may act only in that name.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11782. All business and affairs of the fund shall be conducted in the name of the State Compensation Insurance Fund, and in that name, without any other name or title, the board of directors may perform the acts authorized by this chapter. (Amended by Stats. 1945, Ch. 1431.)
  49. 11783.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Compensation Insurance Fund may sue and be sued, make authorized contracts and obligations, invest its money as allowed by this chapter, conduct its business and affairs, and commission a study on the feasibility of issuing bonds or securities.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11783. The State Compensation Insurance Fund may: (a) Sue and be sued in all actions arising out of any act or omission in connection with its business or affairs. (b) Enter into any contracts or obligations relating to the State Compensation Insurance Fund which are authorized or permitted by law. (c) Invest and reinvest the moneys belonging to the fund as provided by this chapter. (d) Conduct all business and affairs and perform all acts relating to the fund whether or not specifically designated in this chapter. (e) Commission an independent study, with the assistance of an investment banking firm, to determine the feasibility of the State Compensation Insurance Fund issuing bonds or securities. The study may include, among other things, the purpose for issuing bonds and any potential adverse consequences that may arise from that issuance. (Amended by Stats. 2002, Ch. 6, Sec. 9. Effective January 1, 2003.)
  50. 11784.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The president of the State Compensation Insurance Fund may perform several listed business and claims-management actions, but may not refuse to insure a workers’ compensation risk that is tendered with the premium unless the stated safety requirements are not met or the risk is beyond the fund’s safe carrying capacity.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11784. In conducting the business and affairs of the fund, the president of the fund may do any of the following: (a) Enter into contracts of workers’ compensation insurance. (b) Sell annuities covering compensation benefits. (c) Decline to insure any risk in which the minimum requirements of the industrial accident prevention authorities with regard to construction, equipment, and operation are not complied with, or which is beyond the safe carrying of the fund. Otherwise, he or she shall not refuse to insure any workers’ compensation risk under state law, tendered with the premium therefor. (d) Reinsure any risk or any part thereof. (e) Cause to be inspected and audited the payrolls of employers applying to the fund for insurance. (f) Make rules for the settlement of claims against the fund and determine to whom and through whom the payments of compensation are to be made. (g) Contract with physicians and surgeons, and hospitals, for medical and surgical treatment and the care and nursing of injured persons entitled to benefits from the fund. (Amended by Stats. 2002, Ch. 6, Sec. 10. Effective January 1, 2003.)
  51. 11785.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The board of directors must appoint specified officers, set their salaries, submit salary-setting criteria to Human Resources, and report compensation information to the Legislature on a set schedule. The president manages the fund under the board’s direction.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11785. (a) The board of directors shall appoint a president, a chief financial officer, a chief operating officer, a chief information technology officer, a chief investment officer, a chief risk officer, a general counsel, a chief medical officer, a chief actuarial officer, a chief claims operations officer, and a chief of internal affairs. The board may appoint a chief underwriting officer, a senior vice president of insurance services, an executive vice president of corporate claims, an executive vice president of strategic planning, and a pricing actuary. The board of directors shall set the salary for each position in amounts that are reasonably necessary to attract and retain individuals of superior qualifications. The board shall submit its salary-setting criteria, including salary surveys, to the Department of Human Resources. These positions shall not be subject to otherwise applicable provisions of the Government Code and the Public Contract Code, and for those purposes the fund shall not be considered a state agency or other public entity. The president shall manage and conduct the business and affairs of the fund under the general direction and subject to the approval of the board of directors, and shall perform other duties as the board of directors prescribes. (b) Section 87406 of the Government Code, the Milton Marks Postgovernment Employment Restrictions Act of 1990, shall apply to the fund. Members of the board, a person who held a position designated in subdivision (a), and any other person designated by the fund shall be deemed to be designated employees for the purpose of that act. (c) Both the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) shall apply to the fund. (d) (1) The board shall, by September 1, 2018, and subsequently on a biennial basis, make a report to the Legislature and to the committees of the Senate and Assembly having jurisdiction over insurance that provides any salary-setting criteria and salary surveys submitted to the Department of Human Resources pursuant to subdivision (a), and the salary and total compensation of each position appointed pursuant to subdivision (a), for the previous two fiscal years. (2) A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code. (Amended by Stats. 2021, Ch. 615, Sec. 314. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)
  52. 11785.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Former directors and certain officers of the State Compensation Insurance Fund may not lobby the fund for two years after leaving, and former directors or officers need board approval for consulting work for the fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11785.5. (a) Notwithstanding any other provision of law to the contrary, the members of the Board of Directors of the State Compensation Insurance Fund and officers of the fund appointed by the board of directors, including, but not limited to, the president, chief financial officer, chief operating officer, chief information technology officer, chief investment officer, chief risk officer, and general counsel, are prohibited from lobbying the fund for two years after leaving employment with the fund. (b) Notwithstanding any other provision of law to the contrary, any consulting for the fund by former members of the Board of Directors of the State Compensation Insurance Fund and former officers of the fund appointed by the board of directors, including, but not limited to, the president, chief financial officer, chief operating officer, chief information technology officer, chief investment officer, chief risk officer, and general counsel, shall be approved by the board of directors. (Added by Stats. 2011, Ch. 53, Sec. 2. (AB 1263) Effective January 1, 2012.)
  53. 11786.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Before the president can start office duties, they must post a $50,000 official bond, get it approved by the board of directors, take an official oath, and file the bond with the Secretary of State.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11786. Before entering on the duties of his or her office, the president shall qualify by giving an official bond approved by the board of directors in the sum of fifty thousand dollars ($50,000) and by taking and subscribing to an official oath. The approval of the board shall be by written endorsement on the bond. The bond shall be filed in the office of the Secretary of State. (Amended by Stats. 2002, Ch. 6, Sec. 12. Effective January 1, 2003.)
  54. 11787.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The board of directors may delegate powers, functions, or duties to the fund’s president under rules and conditions it sets. The president may then exercise them with the same effect as the board, but only with the board’s approval.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11787. The board of directors may delegate to the president of the fund, under those rules and regulations and subject to those conditions as it from time to time prescribes, any power, function, or duty conferred by law on the board of directors in connection with the fund or in connection with the administration, management, and conduct of the business and affairs of the fund. The president may exercise those powers and functions and perform those duties with the same force and effect as the board of directors, but subject to its approval. (Amended by Stats. 2002, Ch. 6, Sec. 13. Effective January 1, 2003.)
  55. 11788.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Treasurer must keep the State Compensation Insurance Fund’s securities, except where this chapter says otherwise, and is liable on the official bond for their safe keeping.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11788. The State Treasurer shall be custodian of all securities belonging to the State Compensation Insurance Fund, except as otherwise provided in this chapter. He or she shall be liable on his or her official bond for the safe keeping thereof. (Amended by Stats. 2011, Ch. 426, Sec. 9. (SB 712) Effective January 1, 2012.)
  56. 1179.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Insurers may invest in certain farm-related bonds and debentures issued under specified federal farm credit laws.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1179. Such insurers may invest in farm loan bonds, consolidated farm loan bonds, collateral trust debentures, consolidated debentures, or other obligations issued under the Federal Farm Loan Act, approved July 17, 1916, as amended (Title 12 U.S.C. Sections 636 to 1012 inclusive, and Sections 1021 to 1129 inclusive), and the Farm Credit Act of 1933, as amended (Title 12 U.S.C. Sections 1131 to 1138f inclusive), and the Farm Credit Act of 1971 (Title 12 U.S.C. Sections 2001 to 2259 inclusive). Under this section such insurers may invest in farm loan bonds and consolidated farm loan bonds issued by federal land banks, consolidated collateral trust debentures and all other debentures issued by federal intermediate credit banks, debentures issued by the Central Bank for Cooperatives and consolidated debentures issued by banks for cooperatives. (Amended by Stats. 1973, Ch. 138.)
  57. 11790.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Securities belonging to the fund must be delivered to the State Treasurer, who must hold them and then credit them to the fund when they are delivered into the Treasurer’s custody.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11790. All securities belonging to the fund shall be delivered to the State Treasurer and held by him or her until otherwise disposed of as provided in this chapter. Upon delivery of those securities into the custody of the State Treasurer, the securities shall be credited by the State Treasurer to the fund. (Amended by Stats. 2011, Ch. 426, Sec. 10. (SB 712) Effective January 1, 2012.)
  58. 11793.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Expenditures made by the State Compensation Insurance Fund are exempt from a specified Government Code provision.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11793. Expenditures made by the State Compensation Insurance Fund are exempted from the provisions of Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code. (Amended by Stats. 1979, Ch. 738.)
  59. 11797.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    The board must invest excess State Compensation Insurance Fund money under the listed rules and limits, and the Fund may make certain specified investments. It must not invest in money market mutual funds that hold foreign investments.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11797. (a) The board of directors shall cause all moneys in the State Compensation Insurance Fund that are in excess of current requirements to be invested and reinvested, from time to time, in the same manner as provided for private insurance carriers pursuant to Article 3 (commencing with Section 1170) and Article 4 (commencing with Section 1190) of Chapter 2 of Part 2 of Division 1, but excluding Sections 1191, 1191.1, 1191.5, 1192.2, 1192.4, 1192.6, 1192.7, 1192.95, 1192.10, 1194.7, 1194.8, 1194.81, 1194.82, 1194.85, 1198, and 1199, and excluding Section 1192.9, except as provided in subdivision (d). Notwithstanding the foregoing, the State Compensation Insurance Fund may invest or reinvest an aggregated maximum of 20 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves in the investments allowed pursuant to Sections 1191, 1192.4, 1192.6, 1192.10, 1194.7, and 1198. (b) (1) (A) Notwithstanding any other law, the State Compensation Insurance Fund may purchase general obligation bonds or other evidence of indebtedness issued by the state, including, but not limited to, warrants issued pursuant to Part 4 (commencing with Section 17000) of Division 4 of Title 2 of the Government Code or notes issued pursuant to Part 5 (commencing with Section 17300) of Division 4 of Title 2 of the Government Code, in any amount and to enter into purchase contracts with the state for this purpose. (B) Notwithstanding any other law, the State Compensation Insurance Fund may purchase Property Assessed Clean Energy (PACE) bonds, as defined in Section 26054 of the Public Resources Code. (2) The bonds or other evidence of indebtedness specified in paragraph (1), upon delivery to the State Compensation Insurance Fund, shall, for all purposes, be valid and binding obligations of the issuer thereof, be validly issued and outstanding in accordance with their stated terms, and not be deemed to be owned by or on behalf of the issuer thereof. (c) Notwithstanding any other law, the State Compensation Insurance Fund may invest in the discretionary investments authorized pursuant to Section 1210, but those investments shall not exceed the lesser of 2.5 percent of its admitted assets or 10 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves. (d) Notwithstanding subdivision (a) or any other law, the State Compensation Insurance Fund may invest in money market mutual funds that comply with Section 1192.9, but shall not invest in a money market mutual fund that holds any assets in foreign investments, as defined in Section 1240. Investments in money market mutual funds made by the State Compensation Insurance Fund shall not exceed the lesser of 2.5 percent of its admitted assets or 10 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves. The commissioner shall retain all remedies available, including the remedies in subdivision (d) of Section 1192.9, to enforce compliance by the State Compensation Insurance Fund with the money market mutual fund investment authority granted by this subdivision. (Amended (as amended by Stats. 2021, Ch. 627, Sec. 17) by Stats. 2025, Ch. 558, Sec. 24. (AB 487) Effective January 1, 2026.)
  60. 118.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    This section defines aircraft insurance as insurance covering aircraft owners, users, dealers, or others with an insurable interest against certain aircraft-related losses.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 118. Aircraft insurance includes insurance of aircraft owners, users, dealers or others having insurable interests therein, against loss through hazards incident to ownership, maintenance, operation and use of aircraft, other than against loss resulting from accident or physical injury, fatal or nonfatal, to any natural person. (Enacted by Stats. 1935, Ch. 145.)
  61. 1180.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Certain insurers may invest in specified federal housing-related bonds, notes, debentures, and mortgage-backed or similar securities.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1180. Such insurers may invest in bonds issued under the “Home Owners’ Loan Act of 1933”; bonds, debentures and notes issued by any federal home loan bank, or consolidated federal home loan bank notes, bonds and debentures issued by the Federal Home Loan Bank Board in accordance with the provisions of the Federal Home Loan Bank Act, and mortgage, mortgage participation, pass-through or trust certificates, or obligations or other securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, pursuant to Section 305 or Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. Secs. 1454, 1455), by the Government National Mortgage Association, pursuant to Section 306 or Section 313 or Title III of the National Housing Act (12 U.S.C. Secs. 1721, 1723(e)), or by the Federal National Mortgage Association pursuant to 12 U.S.C. Sections 1717–1719. (Amended by Stats. 1980, Ch. 811, Sec. 2. Effective July 28, 1980.)
  62. 11800.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    The board of directors may deposit excess, uninvested moneys from the State Compensation Insurance Fund in authorized financial institutions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11800. All moneys in the State Compensation Insurance Fund, in excess of current requirements and not otherwise invested, may be deposited by the board of directors from time to time in financial institutions authorized by law to receive deposits of public moneys. (Amended by Stats. 1979, Ch. 738.)
  63. 11800.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    The board of directors may, with the State Treasurer’s approval, set up an account or fund in the State Treasury for the State Compensation Insurance Fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11800.1. The board of directors may, with the approval of the State Treasurer, authorize the establishment of an account or fund in the State Treasury in the name of the State Compensation Insurance Fund, but such moneys deposited with the State Treasurer are not state moneys within the intent of Section 16305.2 of the Government Code. (Added by Stats. 1979, Ch. 738.)
  64. 11800.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Controller must keep a special ledger account for the State Compensation Insurance Fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11800.2. The State Controller shall keep a special ledger account pertaining to the State Compensation Insurance Fund. In the State Controller’s general ledger this account may appear as a cash account, like other accounts of funds in the State Treasury, and only the actual cash credited or deposited to the credit of the State Compensation Insurance Fund shall be entered in the account. (Added by Stats. 1979, Ch. 738.)
  65. 11801.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund’s workers’ compensation assets and related property cannot be used, attached, or levied on to satisfy claims or liabilities tied to its Longshoremen’s and Harbor Workers’ Act insurance transactions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11801. The assets, premiums, reserves, investment income, and any and all property of whatsoever kind derived or acquired by the fund from its transaction of its workers’ compensation insurance business shall not be used, attached or levied upon in any manner whatsoever by any person to satisfy claims or any other obligations or liability incurred, arising out of, or related to, the fund’s transaction of insurance pursuant to the United States Longshoremen’s and Harbor Workers’ Act. (Repealed and added by Stats. 1978, Ch. 507.)
  66. 11802.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund must keep certain insurance-related assets in separate accounts and records.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11802. All premiums, reserves, investment income, and all property of whatsoever kind derived or acquired by the fund from its transaction of insurance pursuant to the United States Longshoremen’s and Harbor Workers’ Compensation Act shall be maintained and identified in separate accounts and records. (Repealed and added by Stats. 1978, Ch. 507.)
  67. 11803.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund must pay and charge certain insurance-related claims, costs, liabilities, expenses, and obligations only to income from its Longshoremen’s and Harbor Workers’ Compensation Act insurance business.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11803. All claims, costs of doing business, liabilities, expenses, and obligations arising out of or related to the fund’s transaction of insurance pursuant to the United States Longshoremen’s and Harbor Workers’ Compensation Act shall be paid and charged to the income of whatsoever nature derived from its United States Longshoremen’s and Harbor Workers’ Compensation Act insurance business only. (Repealed and added by Stats. 1978, Ch. 507.)
  68. 11804.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Shared office space, furniture, vehicles, equipment, supplies, and services must be charged to each class of insurance business on an equitable, proportional basis.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11804. Joint or shared use of office building space, whether owned, leased or rented, and the joint use of all furniture, automobiles, office equipment, supplies and services shall be charged to each class of insurance business on an equitable and proportional basis. (Repealed and added by Stats. 1978, Ch. 507.)
  69. 11805.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Compensation Insurance Fund must report annually to the Legislature.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Organization and Powers [11770 - 11805] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 11805. The State Compensation Insurance Fund shall report annually to the Legislature as soon after the close of the calendar year as is feasible, with respect to its experience handling United States longshoremen’s and harbor workers’ insurance pursuant to this chapter, including, but not limited to, a statement of resources and liabilities at the close of each annual period commencing December 31, 1979. (Added by Stats. 1978, Ch. 507.)
  70. 1181.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Such insurers may invest in registered warrants of this State if they are issued pursuant to law.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1181. Such insurers may also invest in registered warrants of this State, issued pursuant to law. (Added by Stats. 1937, Ch. 738.)
  71. 1182.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Domestic incorporated insurers may invest in certain deposit accounts at banks, savings and loan associations, or credit unions if the accounts are federally insured.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. General Investments [1170 - 1182] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 1182. Domestic incorporated insurers may invest in an account or accounts in one or more banks, savings and loan associations, or credit unions to the extent the account or accounts are insured by an agency or instrumentality of the federal government. As used in this section, an account may include a certificate of deposit. (Amended by Stats. 2009, Ch. 234, Sec. 8. (AB 299) Effective January 1, 2010.)
  72. 11820.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Rates [11820 - 11822] ( Article 2 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The board of directors must set the State Compensation Insurance Fund’s rates, and those rates must take account of the physical hazards of each industry, occupation, or employment.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Rates [11820 - 11822] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 11820. Subject to the provisions of Article 2 (commencing with Section 11730) of Chapter 3, the board of directors shall establish the rates to be charged by the State Compensation Insurance Fund for insurance issued by it. These rates shall be fixed with due regard to the physical hazards of each industry, occupation, or employment. (Amended by Stats. 2002, Ch. 6, Sec. 14. Effective January 1, 2003.)
  73. 11821.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Rates [11820 - 11822] ( Article 2 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Rates for each class of business insured must be set, as far as practicable, using specified risk and experience factors, and they must not consider whether employees have dependents.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Rates [11820 - 11822] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 11821. Within each class of business insured such rates shall be fixed, so far as practicable, in accordance with the following elements: (a) Bodily risk or safety, or other hazard of the plant, premises or work of each insured employer. (b) The manner in which the work is conducted. (c) A reasonable regard for the accident experience and history of each such insured. (d) A reasonable regard for the insured’s means and methods of caring for injured persons. Such rates shall take no account of the extent to which the employees in any particular establishment have or have not persons dependent upon them for support. (Enacted by Stats. 1935, Ch. 145.)
  74. 11822.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Rates [11820 - 11822] ( Article 2 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The board of directors must set rates as a payroll percentage for employers, using a reserve-based approach.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Rates [11820 - 11822] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 11822. The rates fixed by the board of directors shall be that percentage of the payroll of any employer which, in the long run and on the average, will produce a sufficient sum, when invested in a way as to realize the maximum return consistent with safe and prudent management practices: (a) To carry all claims to maturity. The rates shall be based upon the “reserve” and not upon the “assessment” plan. (b) To meet the reasonable expenses of conducting the business of the fund. (c) To produce a reasonable surplus to cover the catastrophe hazard. (Amended by Stats. 2002, Ch. 6, Sec. 15. Effective January 1, 2003.)
  75. 11840.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Compensation Insurance Fund may issue limited or unlimited policies, and it may issue them for several specified time periods. Shorter periods must have proportionately higher rates, and a minimum premium must be set on a reasonable one-person-one-day rate.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 11840. The insurance contracts or policies of the State Compensation Insurance Fund may be either limited or unlimited. The insurance contracts or policies may be issued for like periods as are allowed by law to other workers’ compensation insurers or, in the form of stamps or tickets or otherwise, for one month, for any number of months less than one year, for one day, for any number of days less than one month or during the performance of any particular work, job or contract. The rates charged shall be proportionately greater for a shorter than for a longer period and a minimum premium charge shall be fixed in accordance with a reasonable rate for insuring one person for one day. (Amended by Stats. 1981, Ch. 714, Sec. 308.)
  76. 11841.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    This section says the chapter does not stop an insurance applicant from getting temporary coverage before the application is decided, and does not stop an insured person from surrendering a policy at any time and getting back the premium difference.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 11841. Nothing in this chapter shall prevent: (a) Any applicant for insurance from being covered temporarily until the application is finally acted upon. (b) An insured from surrendering any policy at any time and having returned to him the difference between the premium paid and the premium at the customary short term for the shorter period which such policy has already run. (Enacted by Stats. 1935, Ch. 145.)
  77. 11843.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The State Compensation Insurance Fund may issue policies to covered employees, employers doing labor incidental to their occupations, and family members of those employers working in the same occupation.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 11843. The State Compensation Insurance Fund may issue policies including, with their employees, employers who perform labor incidental to their occupations, and including also members of the families of such employers engaged in the same occupation. (Enacted by Stats. 1935, Ch. 145.)
  78. 11844.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Policies covering employers must provide employers and their working family members the same compensation benefits as employees, at the same rates.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 11844. Such policies covering employers shall insure to such employers and working members of their families the same compensations provided for their employees, and at the same rates. (Enacted by Stats. 1935, Ch. 145.)
  79. 11845.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Estimates of wage values for insured employers and their family members must be reasonable, stated separately, and added to payroll valuations used to compute premiums.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 11845. The estimations of the wage values, respectively, of such insured employers and members of their families shall be reasonable and shall be separately stated in and added to the valuation of the pay rolls upon which their premium is computed. (Enacted by Stats. 1935, Ch. 145.)
  80. 11846.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Policies may be sold to self-employing persons and casual employees, and those insureds are treated as employees for workers’ compensation purposes.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Policies [11840 - 11846] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 11846. The policies may likewise be sold to self-employing persons and to casual employees. The insureds, for the purpose of the insurance, shall be deemed to be employees within the meaning of the workers’ compensation laws. (Amended by Stats. 1981, Ch. 714, Sec. 309.)
  81. 1185.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Disclosure of Material Transactions [1185 - 1187] ( Article 3.5 added by Stats. 1994, Ch. 662, Sec. 1. )

    Verify source ↗

    Domestic incorporated insurers must file a report with the commissioner about certain material transactions, usually within 15 days after the end of the month in which they occur.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Disclosure of Material Transactions [1185 - 1187] ( Article 3.5 added by Stats. 1994, Ch. 662, Sec. 1. ) ## 1185. (a) Every domestic incorporated insurer shall file a report with the commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements unless the acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements have been submitted to the commissioner for review, approval, or information purposes pursuant to other provisions of this code, laws, regulations, or other requirements. (b) The report shall be filed within 15 days after the end of the calendar month in which any of the foregoing transactions occur. (c) One complete copy of the report, including any exhibits or other attachments filed as part thereof, shall be filed with the department and the National Association of Insurance Commissioners. (d) All reports obtained by, or disclosed to the commissioner pursuant to this article, shall be given confidential treatment and shall not be subject to subpoena and shall not be made public by the commissioner, the National Association of Insurance Commissioners, or any other person, except to insurance departments of other states, without the prior written consent of the insurer to which it pertains unless the commissioner, after giving the insurer who would be affected thereby, notice and an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication thereof, in which event the commissioner may publish all or any part thereof in such manner as he or she may deem appropriate. (Added by Stats. 1994, Ch. 662, Sec. 1. Effective January 1, 1995.)
  82. 1186.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Disclosure of Material Transactions [1185 - 1187] ( Article 3.5 added by Stats. 1994, Ch. 662, Sec. 1. )

    Verify source ↗

    Insurers must report material asset acquisitions and dispositions, but not non-material ones.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Disclosure of Material Transactions [1185 - 1187] ( Article 3.5 added by Stats. 1994, Ch. 662, Sec. 1. ) ## 1186. (a) No acquisitions or dispositions of assets shall be reported pursuant to Section 1185 if the acquisitions or dispositions are not material. For purposes of this article, a material acquisition (or the aggregate of any series of related acquisitions during any 30-day period) or disposition (or the aggregate of any series of related dispositions during any 30-day period) is one that is nonrecurring and not in the ordinary course of business and involves more than 5 percent of the reporting insurer’s total admitted assets as reported in its most recent statutory statement filed with the insurance department of the insurer’s state of domicile. (b) Asset acquisitions subject to this article include every purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for that purpose. Asset dispositions also include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction, or other disposition. (c) The following information is required to be disclosed in any report of a material acquisition or disposition of assets: (1) Date of the transaction. (2) Manner of acquisition or disposition. (3) Description of the assets involved. (4) Nature and amount of the consideration given or received. (5) Purpose of, or reason for, the transaction. (6) Manner by which the amount of consideration was determined. (7) Gain or loss recognized or realized as a result of the transaction. (8) Name of the person from whom the assets were acquired or to whom they were disposed. (d) Insurers shall report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and that insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars ($1,000,000) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5 percent of the insurer’s capital and surplus. (Added by Stats. 1994, Ch. 662, Sec. 1. Effective January 1, 1995.)
  83. 11860.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Reports and Statements [11860- 11860.] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    The president of the State Compensation Insurance Fund must file quarterly reports with the Governor, and the fund must arrange annual audits and publish a summary in at least two state newspapers. The president must also give the commissioner any reports the law requires insurers to provide.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Reports and Statements [11860- 11860.] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 11860. Each quarter the president of the State Compensation Insurance Fund shall make a report to the Governor of the business done by the State Compensation Insurance Fund during the previous quarter and a statement of the fund’s resources and liabilities at the close of that previous quarter. The State Compensation Insurance Fund shall, at its own expense, hire a recognized firm of certified public accountants to audit annually the books and records of the State Compensation Insurance Fund and cause an abstract summary thereof to be published one or more times in at least two newspapers of general circulation in the state. The president of the fund shall additionally provide the commissioner with all reports required by law to be made to him or her by other insurers. (Amended by Stats. 2002, Ch. 6, Sec. 17. Effective January 1, 2003.)
  84. 1187.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Disclosure of Material Transactions [1185 - 1187] ( Article 3.5 added by Stats. 1994, Ch. 662, Sec. 1. )

    Verify source ↗

    Insurers must report material nonrenewals, cancellations, or revisions of ceded reinsurance agreements, and the report must include specified details.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Disclosure of Material Transactions [1185 - 1187] ( Article 3.5 added by Stats. 1994, Ch. 662, Sec. 1. ) ## 1187. (a) No nonrenewals, cancellations, or revisions of ceded reinsurance agreements shall be reported pursuant to Section 1185 if the nonrenewals, cancellations, or revisions are not material. For purposes of this article, a material nonrenewal, cancellation, or revision is one that affects for property and casualty business, including accident and health business when written as such, more than 50 percent of an insurer’s ceded written premium, or for life, annuity, and accident and health business, more than 50 percent of the total reserve credit taken for business ceded, on an annualized basis as indicated in the insurer’s most recently filed statutory statement; provided, however, that no filing is required if the insurer’s ceded written premium or the total reserve credit taken for business ceded represents, on an annualized basis, less than 10 percent of direct plus assumed written premium or 10 percent of the statutory reserve requirement prior to any cession, respectively. (b) Subject to the criteria specified in subdivision (a), a report is to be filed without regard to which party has initiated the nonrenewal, cancellation, or revision of ceded reinsurance whenever one or more of the following conditions exist: (1) The entire cession has been canceled, nonrenewed, or revised and ceded indemnity and loss adjustment expense reserves after any nonrenewal, cancellation, or revision represent less than 50 percent of the comparable reserves that would have been ceded had the nonrenewal, cancellation, or revision not occurred. (2) An authorized or accredited reinsurer has been replaced on an existing cession by an unauthorized reinsurer. (3) Collateral requirements previously established for unauthorized reinsurers have been reduced; for example, the requirement to collateralize incurred but not reported (IBNR) claim reserves has been waived with respect to one or more unauthorized reinsurers newly participating in an existing cession. (4) Subject to the materiality criteria, for purposes of paragraphs (2) and (3), a report shall be filed if the result of the revision affects more than 10 percent of the cession. (c) The following information is required to be disclosed in any report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements: (1) Effective date of the nonrenewal, cancellation, or revision. (2) The description of the transaction with an identification of the initiator thereof. (3) Purpose of, or reason for, the transaction. (4) If applicable, the identity of the replacement reinsurers. (d) Insurers shall report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars ($1,000,000) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5 percent of the insurer’s capital and surplus. (Added by Stats. 1994, Ch. 662, Sec. 1. Effective January 1, 1995.)
  85. 11870.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    Public entities may insure their compensation liability with the State Compensation Insurance Fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 11870. The state, any agency, department, division, commission, board, bureau, officer or other authority thereof, and each county, city and county, city, school district, irrigation district, any other district established by law, or other public corporation or quasi public corporation within the state, including any public utility operated by a private corporation may insure against its liability for compensation with the State Compensation Insurance Fund. Where the state or any agency, department, division, commission, board, bureau, officer or authority thereof is the insured, the premium for that insurance shall be a proper charge against any moneys appropriated for the support of or expenditure by the insured, except that in the case of an insured supported by or authorized to expend moneys appropriated out of more than one fund, the insured, with the approval of the Director of Finance, may determine the proportion of the premium to be paid out of each fund. In that case the insured, with the approval of the Director of Finance, may pay the entire premium out of any of those funds and thereafter the funds used for payment shall be reimbursed in proper proportion out of the other funds. In case a county, city and county, city, school district, irrigation district, or other district established by law, or other public corporation or quasi public corporation within the state is the insured, the premium therefor shall be a proper charge against the general fund of the insured. (Amended by Stats. 1994, Ch. 373, Sec. 1. Effective January 1, 1995.)
  86. 11871.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    The State Compensation Insurance Fund may make a master agreement with the Department of Human Resources to handle workers’ compensation claims for certain uninsured state agencies, and the agreement must require reimbursement and a uniform service rate, with an exception for the California Highway Patrol rate.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 11871. The State Compensation Insurance Fund may enter into a master agreement with the Department of Human Resources to render services in the adjustment and disposition of claims for workers’ compensation to any state agencies, including any officer, department, division, bureau, commission, board or authority, not insured with the fund. The master agreement shall provide for rendition of services at a uniform rate to all agencies, except that the rate for the Department of the California Highway Patrol may be fixed independently of the uniform rate. The fund may, in accordance with the agreement, adjust and dispose of claims for workers’ compensation made by an officer or employee of any state agency not insured with the fund. The fund may make all expenditures, including payment to claimants for medical care or for adjustment or settlement of claims, necessary to the adjustment and final disposition of claims. The agreement shall provide that the state agency whose officer or employee is a claimant shall reimburse the fund for the expenditures and for the actual cost of services rendered. The fund may in its own name, or in the name of the state agency for which the services are performed, do any and all things necessary to recover on behalf of the state agency for which it renders service any and all amounts which an employer might recover from third persons under Chapter 5 (commencing with Section 3850) of Part 1 of Division 4 of the Labor Code, or which an insurer might recover pursuant to Section 11662 including the right to commence and prosecute actions, to file, pursuant to Chapter 5 (commencing with Section 3850) of Part 1 of Division 4 of the Labor Code, liens for whatever sums would be recoverable by suit against a third person, to intervene in other court proceedings, and to compromise claims and actions before or after commencement of suit or after entry of judgment when in the opinion of the fund full collection cannot be enforced. (Amended by Stats. 2012, Ch. 665, Sec. 173. (SB 1308) Effective January 1, 2013.)
  87. 11872.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    The fund may make annual service agreements with state agencies, and if the parties cannot agree on the service cost, the Department of General Services is requested to settle it equitably.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 11872. The fund may annually enter into agreements with state agencies for service to be rendered to the fund. These state agencies include, but shall not be limited to: the Department of Finance, Department of General Services, State Personnel Board, and the Public Employees’ Retirement System. If these agencies and the fund cannot agree upon the cost of services provided by the agreements, the Department of General Services shall be requested to arrive at an equitable settlement. (Amended by Stats. 2016, Ch. 31, Sec. 177. (SB 836) Effective June 27, 2016.)
  88. 11873.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    The State Compensation Insurance Fund is generally outside Government Code rules for state agencies, except where a section specifically names it or subdivision (b) applies. Certain fund positions are also exempt from hiring freezes and staff cutbacks during specified periods, and fund employees are subject to state employee compensation reductions during those periods.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 11873. (a) Except as provided by subdivision (b), the fund shall not be subject to the provisions of the Government Code made applicable to state agencies generally or collectively, unless the section specifically names the fund as an agency to which the provision applies. (b) The fund shall be subject to the provisions of Chapter 10.3 (commencing with Section 3512) of Division 4 of Title 1 of, Division 10 (commencing with Section 7920.000) of Title 1 of, Chapter 6.5 (commencing with Section 8543) of Division 1 of Title 2 of, Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of, the Government Code, and Division 5 (commencing with Section 18000) of Title 2 of the Government Code, with the exception of all of the following provisions of that division: (1) Article 1 (commencing with Section 19820) and Article 2 (commencing with Section 19823) of Chapter 2 of Part 2.6 of Division 5. (2) Sections 19849.2, 19849.3, 19849.4, and 19849.5. (3) Chapter 4.5 (commencing with Section 19993.1) of Part 2.6 of Division 5. (c) Except as provided in subdivisions (d) and (e) for the period from July 1, 2012, to June 30, 2013, inclusive, and for the period from July 1, 2020, to June 30, 2021, inclusive, and notwithstanding any provision of the Government Code or any other provision of law, the positions funded by the State Compensation Insurance Fund are exempt from any hiring freezes and staff cutbacks otherwise required by law. This subdivision is declaratory of existing law. (d) Notwithstanding any other law, employees of the fund shall, without limitation, be subject to any and all reductions in state employee compensation imposed by the Legislature on other state employees for the period from July 1, 2012, to June 30, 2013, inclusive, and for the period from July 1, 2020, to June 30, 2021, inclusive, regardless of the means adopted to effect those reductions. (e) With the exception of the reductions authorized in subdivision (d), if any provision of this section, or any practice or procedure adopted pursuant to this section, is in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5 of the Government Code, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act. (Amended by Stats. 2021, Ch. 615, Sec. 315. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)
  89. 11874.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    On the act’s effective date, the Controller must draw a warrant for the State Compensation Insurance Fund, and the Treasurer must pay it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Coverage of Public Employers [11870 - 11874] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 11874. On the effective date of this act the Controller shall draw his or her warrant in favor of the State Compensation Insurance Fund for the total amount of the funds in the custody of the Treasurer belonging to the State Compensation Insurance Fund, and the Treasurer shall pay that warrant. (Amended by Stats. 2011, Ch. 426, Sec. 11. (SB 712) Effective January 1, 2012.)
  90. 11880.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Penalties [11880 - 11881] ( Article 6 enacted by Stats. 1935, Ch. 145. )

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    It is unlawful to knowingly make or cause a false or fraudulent statement about a workers’ compensation insurance policy’s premium, rate, or cost when the policy is issued or administered by the State Compensation Insurance Fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Penalties [11880 - 11881] ( Article 6 enacted by Stats. 1935, Ch. 145. ) ## 11880. (a) It is unlawful to make or cause to be made any knowingly false or fraudulent statement, whether made orally or in writing, of any fact material to the determination of the premium, rate, or cost of any policy of workers’ compensation insurance issued or administered by the State Compensation Insurance Fund for the purpose of reducing the premium, rate, or cost of the insurance. Any person convicted of violating this subdivision shall be punished by imprisonment in a county jail for one year, or pursuant to subdivision (h) of Section 1170 of the Penal Code for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), or double the value of the fraud, whichever is greater, or by both that imprisonment and fine. (b) Any person who violates subdivision (a) and who has a prior felony conviction of the offense set forth in that subdivision shall receive a two-year enhancement for each prior conviction in addition to the sentence provided in subdivision (a). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury. (Amended by Stats. 2011, Ch. 15, Sec. 218. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
  91. 11881.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Penalties [11880 - 11881] ( Article 6 enacted by Stats. 1935, Ch. 145. )

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    This section says several terms in Chapter 4 generally mean the Board of Directors of the State Compensation Insurance Fund, unless that meaning would conflict with the chapter’s intent and context.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Penalties [11880 - 11881] ( Article 6 enacted by Stats. 1935, Ch. 145. ) ## 11881. Whenever in Chapter 4, Part 3, Division 2 of the Insurance Code the term “State Industrial Accident Commission” or “Industrial Accident Commission” or “commission” or “director” or similar designation occurs, it means the Board of Directors of the State Compensation Insurance Fund except when such meaning is inconsistent with the intent and context of said chapter. (Added by Stats. 1945, Ch. 1431.)
  92. 11885.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    The Director of Finance may act for the state to sell or otherwise realize value from State Compensation Insurance Fund assets and liabilities, subject to board concurrence and a required transaction process.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11885. (a) The Director of Finance is hereby authorized to act as agent for the state and, in that capacity, to sell a portion of, or otherwise obtain value for, the State Compensation Insurance Fund’s assets and liabilities. That authorized sale or other disposition shall be transacted with an entity that the director, in consultation with the State Treasurer, determines will provide the best combination of each of the following: (1) The highest price for the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities or the best value to the General Fund, or both. (2) The greatest security for the payment of the purchase price. (3) Demonstrated competence and professional qualifications for the continued satisfactory performance of the workers’ compensation insurance services offered for sale or other disposition. (b) Prior to releasing any Notice of Request for Qualifications, a majority of the State Compensation Insurance Fund Board of Directors shall concur that the assets and liabilities that are identified by the Director of Finance, in consultation with the State Treasurer, in subdivision (a) are appropriate for sale or other disposition. (c) Notwithstanding any other law, the process for sale or other disposition shall include the steps the director, in consultation with the State Treasurer, deems necessary or convenient to achieve the ends set forth in this section. The process shall include, but not necessarily be limited to, all of the following: (1) The satisfaction of criteria established by the director, in consultation with the State Treasurer, consistent with achieving the best price or other value for those workers’ compensation insurance assets and liabilities. These criteria shall include any pertinent requirements of the State Compensation Insurance Fund Board of Directors. (2) A Notice of Request for Qualifications sent by the Director of Finance to each firm currently providing workers’ compensation insurance coverage to California employers and any entity proposed by the State Compensation Insurance Fund Board of Directors. In addition, it shall be advertised in the State Contracts Register pursuant to Sections 14827.1 and 14827.2 of the Government Code. This notice shall include a description of the workers’ compensation insurance program, a summary description of the workers’ compensation insurance assets and liabilities offered for sale or other disposition, and a description of the due diligence review process to provide potential purchasers with further information regarding the workers’ compensation insurance assets and liabilities offered for sale or other disposition, the selection criteria on which the transaction will be based, the submission requirements and deadlines, and a Department of Finance contact name and telephone number for more information. A copy of the Notice of Request for Qualifications shall be provided to the Joint Legislative Budget Committee within seven days of its release. (3) The evaluation by the director, in consultation with the State Treasurer, of all statements timely submitted in response to the Notice of Request for Qualifications sent pursuant to paragraph (2), using the criteria contained in the notice, and, based on those statements, the establishment of a qualified participant list. (4) For purposes of Section 11772, any action by the board of directors related to any transaction contemplated by this article, including, but not limited to, any approvals of such transactions, shall be deemed to be in good faith. (5) The Director of Finance shall notify the Joint Legislative Budget Committee in writing within seven days of completing a sale pursuant to subdivision (a). (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  93. 11885.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    The State Compensation Insurance Fund, its board of directors, and the Director of Finance must work in good faith in carrying out this article.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11885.3. In order to accomplish the purpose of this article, the State Compensation Insurance Fund and its board of directors shall participate fully in good faith with the Director of Finance, and the Director of Finance shall act in good faith in carrying out the duties prescribed by this article. (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  94. 11885.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    Approval from the Attorney General, the Insurance Commissioner, or the Director of General Services is not required for certain sales, dispositions, or other agreements under this article.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11885.5. Notwithstanding any other law, the approval of neither the Attorney General, nor the Insurance Commissioner, nor the Director of General Services is required for execution and implementation of the sale or other disposition of the assets and liabilities of the State Compensation Insurance Fund or any other agreement authorized by this article. (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  95. 11885.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    The Director of Finance must deposit the net proceeds from certain sales or other dispositions of the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities into the General Fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11885.7. (a) The Director of Finance shall deposit all proceeds of any sale of, or any funds achieved through any other disposition of, the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities under this article, less any costs related to that transaction, into the General Fund. (b) The proceeds of any sale of, or any funds achieved through any other disposition of, the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities are not “proceeds of taxes” as that term is used in subdivision (c) of Section 8 of Article XIII B of the California Constitution. The disbursement of these proceeds is not subject to the limitations imposed by that article. (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  96. 11885.9.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    The Director of Finance may hire advisers and enter legal services agreements for transactions under this article, and some contracting and professional-services rules do not apply.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11885.9. (a) Notwithstanding any other law, the Director of Finance is authorized to enter into agreements with firms or individuals to act as advisers to the state in the transactions contemplated by this article. Section 14838 of the Government Code and Article 4 (commencing with Section 10335) of Chapter 2 of Part 2 of Division 2 of the Public Contract Code do not apply to any agreement entered into by the director with advisers pursuant to this section. (b) Notwithstanding any other law, the Director of Finance is also authorized to enter into legal services agreements to obtain specialized legal advice related to the transactions contemplated by this article. Section 11040 of the Government Code and Section 6072 of the Business and Professions Code shall not apply to the legal services agreements entered into by the director pursuant to this section. (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  97. 11886.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    The Director of Finance must use a qualifications-based process to choose advisory service providers, publish the request for qualifications, review and rank responses, and notify the Joint Legislative Budget Committee after publication and after any contract is signed.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11886. (a) The Director of Finance, in consultation with the State Treasurer, shall select firms or individuals to provide advisory services based on demonstrated competence and professional qualifications necessary for the satisfactory performance of the services required and in the manner described in this section. (b) The Director of Finance, in consultation with the State Treasurer, shall establish selection criteria for selecting advisers. The criteria may include, but are not necessarily limited to, factors such as professional excellence, demonstrated competence, specialized experience in performing similar services, education and experience of key personnel to be assigned, staff capability, ability to meet schedules, nature and quality of similar completed work of the firm or individual, reliability and continuity of the firm or individual, and other considerations deemed by the director, in consultation with the State Treasurer, to be relevant and necessary to the performance of advisory services. (c) In order to select advisers, the director shall publish a Notice of Request for Qualifications in the State Contracts Register pursuant to Sections 14827.1 and 14827.2 of the Government Code. The notice shall include a description of the advisory services required, the selection criteria on which the contract award will be based, submission requirements and deadlines, and a Department of Finance contact name and telephone number for more information. A copy of the Notice of Request for Qualifications shall be provided to the Joint Legislative Budget Committee within seven days of publication in the State Contracts Register. (d) (1) After the final response date stated in the Notice of Request for Qualifications, the Director of Finance, in consultation with the State Treasurer, shall review the responses submitted, and shall evaluate them using the criteria contained in the notice. The director shall rank, in order of preference based on the criteria contained in the notice, the firm or individuals determined to be qualified to perform the required services. (2) The Director of Finance, in consultation with the State Treasurer, may interview any of the qualified firms or individuals regarding the experience and qualifications of those firms or individuals, as well as anticipated concepts and the benefits of alternative methods of furnishing the required services. (e) (1) Following the interviews, if any, held pursuant to subdivision (d), the Director of Finance shall adjust the ranking of the qualified individuals or firms to reflect those firms or individuals deemed to be the most highly qualified to perform the required services. (2) The Director of Finance, in consultation with the State Treasurer, shall enter into negotiations with the firm or individual most highly ranked pursuant to paragraph (1). If negotiations are concluded successfully, the director shall enter into a contract. If the director, in his or her sole discretion, concludes that the negotiations are unsuccessful, the director shall terminate the negotiations, and begin new negotiations, in consultation with the State Treasurer, with the other firms or individuals ranked pursuant to paragraph (1) in order of their ranking, and either contract with or terminate negotiations with each next most highly ranked firm or individual. (3) If, after pursuing the negotiation process set forth in paragraph (2), the Director of Finance has been unable to negotiate a satisfactory contract at fair and reasonable compensation, the director may reinstate the selection process prescribed in this section, commencing with the issuance of a new Notice of Request for Qualifications. (4) The Director of Finance shall notify the Joint Legislative Budget Committee in writing within seven days of entering into a contract with an individual or firm for advisory services. (f) This section shall not apply to the selection of a legal services adviser. (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  98. 11886.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. )

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    The Director of Finance must notify the Joint Legislative Budget Committee in writing when certain article-related sale or disposition conditions occur, and must stop the authorized activities by the earlier of 30 days after that notice or January 10, 2012.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 4. The State Compensation Insurance Fund [11770 - 11886.2] ( Chapter 4 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 7. Transfer of Ownership [11885 - 11886.2] ( Article 7 added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. ) ## 11886.2. (a) The Director of Finance shall notify the Joint Legislative Budget Committee in writing upon his or her determination that neither the sale nor any other transaction authorized by this article is anticipated to achieve the purposes of this article or upon the completion of a disposition of State Compensation Insurance Fund assets and liabilities pursuant to this article. (b) The Director of Finance shall cease those activities he or she is authorized or directed to undertake pursuant to this article upon the earlier of either: (1) The 30th day following written notice by the director to the Chairperson of the Joint Legislative Budget Committee pursuant to subdivision (a). (2) January 10, 2012. (Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)
  99. 11890.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 5. Market Assistance Program for Long-Term Health Care Facility Liability Insurance [11890 - 11892] ( Chapter 5 added by Stats. 2003, Ch. 899, Sec. 3. )

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    This section defines two terms used in the chapter: “long-term health care facility” and “residential care facilities for the elderly.”

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 5. Market Assistance Program for Long-Term Health Care Facility Liability Insurance [11890 - 11892] ( Chapter 5 added by Stats. 2003, Ch. 899, Sec. 3. ) ## 11890. As used in this chapter: (a) “Long-term health care facility” has the same meaning as that term is defined in Section 1418 of the Health and Safety Code. (b) “Residential care facilities for the elderly” has the same meaning as that term is defined in Section 1569.2 of the Health and Safety Code. (Added by Stats. 2003, Ch. 899, Sec. 3. Effective January 1, 2004.)
  100. 11891.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 5. Market Assistance Program for Long-Term Health Care Facility Liability Insurance [11890 - 11892] ( Chapter 5 added by Stats. 2003, Ch. 899, Sec. 3. )

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    The commissioner may create a market assistance program for certain long-term care-related liability insurance if the insurance is not readily available and the public interest requires it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 5. Market Assistance Program for Long-Term Health Care Facility Liability Insurance [11890 - 11892] ( Chapter 5 added by Stats. 2003, Ch. 899, Sec. 3. ) ## 11891. (a) If the commissioner finds after a public hearing that liability insurance for long-term health care facilities, residential care facilities for the elderly, or physicians who provide or oversee the provision of services to residents in long-term health care facilities or residential care facilities for the elderly is not readily available in the voluntary insurance market, and that the public interest requires this availability, the commissioner may authorize the formation of a market assistance program to assist in securing that insurance for long-term health care facilities, residential care facilities for the elderly, or physicians who provide or oversee the provision of services to residents in long-term health care facilities or residential care facilities for the elderly. The commissioner may require insurers, agents, and brokers to attend public hearings and meetings concerning either the need for a market assistance program or the organization and formation of a program. The commissioner may also assist in securing insurance for long-term health care facilities, residential care facilities for the elderly, or physicians who provide or oversee the provision of services to residents in long-term health care facilities or residential care facilities for the elderly for which commercial liability insurance is not readily available by forming a risk pooling arrangement as permitted by the Federal Liability Risk Retention Act of 1986. (b) The commissioner may develop appropriate standards and regulations to implement the market assistance program and risk pooling arrangement authorized by this section. (Added by Stats. 2003, Ch. 899, Sec. 3. Effective January 1, 2004.)
  101. 11892.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 5. Market Assistance Program for Long-Term Health Care Facility Liability Insurance [11890 - 11892] ( Chapter 5 added by Stats. 2003, Ch. 899, Sec. 3. )

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    The commissioner may create a temporary joint underwriting association for liability insurance, and may set standards to implement it. If specified liability insurance becomes readily available in the voluntary market after a public hearing, the association must stop underwriting.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 5. Market Assistance Program for Long-Term Health Care Facility Liability Insurance [11890 - 11892] ( Chapter 5 added by Stats. 2003, Ch. 899, Sec. 3. ) ## 11892. (a) The commissioner may order the creation of an unincorporated, not-for-profit, temporary joint underwriting association for liability insurance, constituting a legal entity separate and distinct from all its members. The purpose of the association shall be to provide a market for liability insurance on a self-supporting basis, without subsidy from association members. (b) If the commissioner determines after a public hearing that liability insurance for long-term health care facilities, residential care facilities for the elderly, or physicians who provide or oversee the provision of services to residents in long-term health care facilities or residential care facilities for the elderly is readily available through the voluntary market, the association created pursuant to subdivision (a) shall cease its underwriting operations. (c) The commissioner may develop appropriate standards and regulations to implement the joint underwriting association authorized by this section. (Added by Stats. 2003, Ch. 899, Sec. 3. Effective January 1, 2004.)
  102. 11895.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 6. Commercial Property: Vehicle Barrier Discount [11895- 11895.] ( Heading of Chapter 6 amended by Stats. 2022, Ch. 180, Sec. 1. )

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    An insurer may consider vehicle barriers as a safety measure and may offer a related property insurance discount, if the discount follows the referenced rules and is actuarially sound and approved by the commissioner before use.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 - 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. ) ## CHAPTER 6. Commercial Property: Vehicle Barrier Discount [11895- 11895.] ( Heading of Chapter 6 amended by Stats. 2022, Ch. 180, Sec. 1. ) ## 11895. (a) An insurer may consider the installation of vehicle barriers as a safety measure and may provide or offer a discount on the property owner’s insurance covering damage or loss to the covered commercial property or liability arising out of the ownership, maintenance, or use of the commercial property relative to the reduced risk to the property as a result of installation of the barriers if the discount provided or offered is provided or offered consistent with Article 10 (commencing with Section 1861.01) of Chapter 9 of Part 2 of Division 1. (b) For the purposes of this section, a vehicle barrier is a safety device that meets, at a minimum, the vehicle impact protection standards as provided by the State Fire Marshal and adopted by the California Building Standards Commission and that is installed to protect persons located within, in, or on the property of, buildings, persons located in an adjacent outdoor area that is covered by the commercial property insurance policy and that is used for the purpose of outdoor dining, or to protect pedestrians, from collisions into those buildings or outdoor areas by motor vehicles. (c) Any discounts on insurance provided in accordance with this section shall be determined to be actuarially sound and approved by the commissioner prior to their use. (Amended by Stats. 2022, Ch. 180, Sec. 2. (AB 1989) Effective January 1, 2023.)
  103. 119.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    Mortgage guaranty insurance means insurance against financial loss from nonpayment of amounts owed on certain debt secured by real estate.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 119. Mortgage guaranty insurance includes insurance against financial loss by reason of the nonpayment of principal, interest and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate. (Added by Stats. 1961, Ch. 719.)
  104. 119.5.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    Insolvency insurance includes coverage for loss caused by an insolvent insurer failing to pay its policy obligations.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 119.5. Insolvency insurance includes insurance against loss arising from the failure of an insolvent insurer to discharge its obligations under its insurance policies. (Added by Stats. 1969, Ch. 1347.)
  105. 119.6.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    This section defines “legal insurance” and lists several arrangements that do not count as legal insurance.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 119.6. Legal insurance includes the assumption of a contractual obligation to reimburse the insured against all or a portion of his fees, costs, and expenses related to or arising out of services performed by or under the supervision of an attorney who is an active member of the bar of any jurisdiction or jurisdictions of the United States, in which these legal services are performed. Legal insurance does not include any of the following: (a) Retainer contracts made by an individual lawyer or law firm with an individual client with the fee based on an estimate of the nature and the amount of services that will be provided to that specific client, and similar contracts made with a group of clients involved in the same or closely related legal matters (such as class actions); (b) Plans providing no benefits other than consultation and advice on matters in connection with, or a part of, referral services. (c) Plans providing limited benefits on simple legal matters on a voluntary and informal basis, not involving a legally binding promise, in the context of an employment or educational or similar relationship; or (d) Legal services provided by labor unions or employee associations to their members in matters relating to employment or occupation. (e) Legal service incidental to other insurance coverages. The foregoing is not intended as an exclusive list of legal services plans or arrangements which do not constitute legal insurance as defined by this section. (Added by Stats. 1974, Ch. 1161.)
  106. 1190.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic incorporated insurer may invest its remaining assets in certain securities or loans if it already holds cash, bank deposits, or specified securities equal to its required minimum paid-in capital.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1190. Any domestic incorporated insurer, which maintains in cash on hand or on deposit in a national or state bank, or in securities specified in Article 3 (commencing with Section 1170), an amount equal to its required minimum paid-in capital, may invest the remainder of its assets in the purchase of, or loans upon the securities set forth in this article. The investments are known as excess funds investments and are subject to the restrictions set forth in this article. (Amended by Stats. 1983, Ch. 142, Sec. 83.)
  107. 1191.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Excess funds may be invested in stock of qualifying corporations in specified jurisdictions.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1191. Excess funds investments may be made in the stock of any corporation organized and carrying on business under the laws of this or any other state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada. (Amended by Stats. 1951, Ch. 567.)
  108. 1191.1.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may use excess funds to buy and sell exchange-traded call options on common stock, but only under the section’s limits.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1191.1. Excess fund investments may be made in the purchase and sale of exchange traded call options on common stock pursuant to this section. An insurer may sell exchange traded call options only through an exchange and only with respect to stock which it owns. Common stock that is obligated under an unexpired written call option shall not be sold unless the insurer first enters into a closing purchase transaction. An insurer shall not sell any other options pursuant to this section. An insurer may purchase exchange traded call options only through an exchange and only for the purpose of a closing purchase transaction. An insurer shall not purchase any other options pursuant to this section. (Added by Stats. 1980, Ch. 814, Sec. 1.)
  109. 1191.5.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic life insurer with at least $100 million in admitted assets may make certain excess fund investments in call options on specified interest-bearing obligations.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1191.5. (a)Excess fund investments may be made by a domestic life insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) in the purchase and sale of call options on interest-bearing obligations pursuant to subdivision (b) or (c). These investments may be made only in options on interest-bearing obligations issued by the United States of America, or any of its agencies or instrumentalities specified in Section 1180. (b) An insurer may purchase call options pursuant to this section for the sole purpose of executing a closing purchase transaction for the interest-bearing obligation subject to the option. An insurer shall not purchase any other options pursuant to this section. (c) An insurer may sell call options pursuant to this section only on interest-bearing obligations that it owns. An insurer shall not sell an interest-bearing obligation subject to an unexpired written call option sold by it except pursuant to a closing purchase transaction under the call option. (Added by Stats. 1989, Ch. 1129, Sec. 2.)
  110. 1192.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Excess funds may be invested in certain interest-bearing obligations and secured transportation-equipment instruments if the stated issuer, registration, guarantee, and security conditions are met.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192. Excess funds investments may be made in: (a) Interest-bearing obligations issued by a nonaffiliate institution, as defined in paragraph (5) of subdivision (f) of Section 1196.1, organized under the laws of any state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada, or interest-bearing obligations registered with the Securities and Exchange Commission and publicly traded issued by an affiliate corporation organized under the laws of any state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada, or interest-bearing obligations issued by an authority established pursuant to the California Industrial Development Financing Act provided for in Title 10 (commencing with Section 91500) of the Government Code, to which the corporation is obligated with respect to payment, or (b) Equipment trust obligations or certificates, or other adequately secured instruments, evidencing an interest in or lien upon transportation equipment used or to be used by a common carrier or common carriers and a right to receive determined portions of fixed obligatory payments for the use or purchase of this equipment, when the obligations, certificates, or instruments are issued by a corporation specified in subdivision (a) or are unconditionally guaranteed or assumed by the corporation as to principal and as to interest or dividends and as to the payment of the fixed obligatory payments or the payment of the determined portions thereof. (Amended by Stats. 2020, Ch. 370, Sec. 216. (SB 1371) Effective January 1, 2021.)
  111. 1192.1.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may invest excess funds in certain listed international development bank obligations, but the amount held under this section must stay within stated percentage limits.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.1. Excess funds investments may be made in bonds, notes or other obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, or the Inter-American Development Bank, or the Government Development Bank for Puerto Rico, or the Asian Development Bank, the International Finance Corporation, or the African Development Bank. Investments held under the authority of this section at any one time shall not be in excess of 21/2 percent of the insurer’s admitted assets or an amount equal to 25 percent of the total of the capital and surplus of such insurer, whichever is the lesser. Percentage or dollar value of assets and surplus as provided herein shall be determined by the insurer’s last preceding annual statement of conditions and affairs filed with the commissioner pursuant to law. (Amended by Stats. 1991, Ch. 1206, Sec. 8.)
  112. 1192.10.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Insurers may make certain excess funds investments in specified securities if all listed conditions are met, and they may not make one if it would push total investments under this section above 10% of admitted assets.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.10. (a) Excess funds investments may be made in securities evidencing an undivided interest in, the right to receive payments from, or payable primarily from distributions on a pool of financial assets held by an unaffiliated business entity, other than those authorized by Section 1192.6, if all of the following conditions are met: (1) The business entity is not a sole proprietorship and is established solely for the purpose of acquiring specific types of financial assets, issuing securities representing an undivided interest in, or right to receive cash flows from, those assets, and engaging in related activities. (2) The pool of assets consists solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the assets. (3) The investment is rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization approved by the Securities and Exchange Commission and within one of the two highest categories established by the securities valuation office of the National Association of Insurance Commissioners. (b) No investment under this section may be made if, as a result of giving effect to that investment, the aggregate amount of investments then held by the insurer under this section would exceed 10 percent of its admitted assets. (c) Investments authorized by this section shall not be subject to subdivision (c) of Section 1196. (Added by Stats. 1993, Ch. 512, Sec. 1. Effective January 1, 1994.)
  113. 1192.2.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may lend on a first lien over an unencumbered leasehold only if the stated loan-value, term, guarantee, and repayment conditions are met.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.2. An insurer may lend on the security of a first lien on an unencumbered leasehold on real property if: (a) The real property subject to the leasehold is primarily improved by a single family residence, the term of the loan does not exceed 30 years, and the amount of the loan plus the amount of the liens of any public bond, assessment or tax assessed upon the property loaned upon does not exceed 75 percent of the sound market value of the leasehold for loan purposes as determined by appraisal; or (b) The real property subject to the leasehold is not primarily improved by a single family residence, the term of the loan does not exceed 30 years, and the amount of the loan plus the amount of the liens of any public bond, assessment or tax assessed upon the property loaned upon does not exceed 662/3 percent of the sound market value of the leasehold for loan purposes as determined by appraisal; or (c) Where the loan is a building loan, the principal so loaned plus the amount of the liens of any public bond, assessment or tax assessed upon the property subject to said leasehold at no time exceeds 75 percent if made upon the kind of property and improvements referred to in (a) above or if other than referred to in (a) above, at no time exceeds 662/3 percent of the sound market value of the leasehold for loan purposes as determined by appraisal, including the actual cost of the improvements thereon taken as security; or (d) The loan is fully guaranteed or fully insured or covered by a commitment to fully guarantee or fully insure by the United States, the Federal Housing Administrator, or by any other agency of the United States which the commissioner shall have approved for the purposes of this subdivision as an issuer of insurance or guarantees of loans on real property, whether the proceeds of the guarantee or insurance is payable in cash or in obligations of the United States; or (e) The loan is fully guaranteed by the United States or any agency thereof pursuant to the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof, or, if a portion of the loan is so guaranteed, then if the unguaranteed portion of the loan does not exceed 75 percent of the sound market value of the leasehold for loan purposes as determined by appraisal. (f) In all cases mentioned in subsections (a), (b), (c) and (e), the loan must be repayable in equal installments not less often than annually in amounts sufficient to completely amortize the loan within three-fourths of the remaining term of the leasehold including options to renew exercisable by the lender. A leasehold on real property is not encumbered within the meaning of this section if subject only to one or more of the following: (a) the lien of taxes and assessments not delinquent at the time of investment, (b) the lien for delinquent taxes or assessments delinquent at the time of investment, which are being contested by any legal proceedings, provided that indemnity has been given pursuant to the indenture under which the bonds and notes are issued, or otherwise, for the payment of any amount which may be found to be due upon the final adjudication of such contest, (c) the lien of taxes and assessment becoming delinquent subsequent to the time of investment, (d) outstanding mineral, oil or timber rights, (e) easements or rights-of-way, (f) sewer rights, (g) rights in walls, (h) building restrictions or other restrictive covenants, or conditions or regulations of use, or subleases under which rents or profits are reserved to the owner. For the purposes of this section, delinquent taxes funded on any deferred payment plan shall be deemed delinquent. (Repealed and added by Stats. 1963, Ch. 321.)
  114. 1192.3.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A life insurer with at least $200 million in admitted assets may make certain excess fund investments, but only within the section’s asset and concentration limits.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.3. Excess fund investments may be made by a life insurer having admitted assets aggregating in value not less than two hundred million dollars ($200,000,000) in the following: (a) Equipment obligations, securities, or certificates of any equipment trust evidencing rights to receive partial payments agreed to be made upon any contract of leasing or conditional sale. (b) The purchase and ownership of machinery or equipment, which is or will within 30 days after acquisition become subject to contracts for sale or use under which contractual payments may reasonably be expected to return the principal of and provide earnings on the investment within the anticipated useful life of the property which shall be not less than five years. Except upon the prior approval, in writing, of the commissioner, an investment may not be made under the authority of this section if at the time of the making of such investment it would result in such insurer then owning such obligations, securities, certificates, machinery and equipment in an amount exceeding five percent of such insurer’s admitted assets as determined by the insurer’s last preceding annual statement filed with the commissioner. Any investment in a single piece of machinery or equipment shall not be made in excess of one percent of the insurer’s admitted assets or 10 percent of the aggregate of the insurer’s capital paid-up and unassigned surplus, whichever is larger. (Added by Stats. 1980, Ch. 1049, Sec. 1.)
  115. 1192.4.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic insurer may not invest more than 10% of its capital and surplus in stock of corporations organized under Canadian law.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.4. No domestic insurer shall have more than 10 percent of its capital and surplus invested in stock of corporations organized under the laws of the Dominion of Canada or of any province of the Dominion of Canada, but this limitation shall not affect the authority conferred by Sections 1172, 1199 and 1240. (Amended by Stats. 1955, Ch. 206.)
  116. 1192.5.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Excess funds may be invested in certain bank and savings-and-loan deposits and debt obligations, plus bankers’ acceptances and commercial paper, if the institution’s accounts are federally insured.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.5. Excess funds investments may be made in all deposits and debt obligations of banks or savings and loan associations whose accounts are insured by an agency or instrumentality of the federal government including accounts or certificates of deposit not subject to Section 1182, bankers’ acceptances, and commercial paper. (Amended by Stats. 1991, Ch. 539, Sec. 10.)
  117. 1192.6.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may invest in certain mortgage-related instruments if the investment meets specified property-loan and resale-market conditions, with an exception for mortgage guaranty insurers.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.6. (a) An insurer, except an insurer authorized to transact mortgage guaranty insurance as defined in Section 119, may invest in a mortgage, mortgage-backed bond, or a mortgage participation, pass-through, conventional pass-through, trust or participation certificate, which is secured by or represents an undivided interest in any loan secured by real property if the loan is a permitted investment for the insurer or in a pool of those loans if each is a permitted investment for an insurer; and for which there exists, at the time of making the investment, a resale market. (b) If the loan or pools of loans have been transferred or contributed by an insurer to a corporation, all the voting securities of which are owned by the insurer, then the mortgage, mortgage-backed bond, or mortgage participation, pass-through, conventional pass-through, trust or participation certificate secured by or representing an undivided interest in the loan or pool of loans shall not be revalued solely due to that transfer. Any subsequent transfer to an affiliate from the wholly owned subsidiary shall be valued at the lower of book value or market value. (Added by Stats. 1987, Ch. 242, Sec. 2.)
  118. 1192.7.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic insurer with at least $100 million in admitted assets may invest excess funds in certain participation certificates, subject to stated conditions and a 4% asset cap.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.7. (a) A domestic insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) may make excess funds investments in participation certificates (1) which represent an undivided interest in an interest-bearing obligation issued by a corporation and (2) for which a resale market exists at the time the investment is made. (b) No investment in a participation certificate may be made pursuant to this section unless the entire obligation is a form of investment which the insurer would be authorized to acquire pursuant to subdivision (a) of Section 1192. (c) An investment may not be made under the authority of this section if at the time of making the investment it would result in the insurer then owning participation certificates described in this section in an amount exceeding 4 percent of the insurer’s admitted assets as determined by the insurer’s last preceding annual statement filed with the commissioner. (Amended by Stats. 1993, Ch. 616, Sec. 1. Effective January 1, 1994.)
  119. 1192.8.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic life insurer with at least $100 million in admitted assets may make certain excess fund investments, but usually only if the investment is exchange-traded and stays within a 10% policyholder surplus cap unless the commissioner gives prior written approval or consent.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.8. (a) A domestic life insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) may make excess fund investments pursuant to this section in interest-bearing notes, bonds, or obligations issued by (1) any operating business trust or limited partnership organized under the laws of any state of the United States, the District of Columbia, the Dominion of Canada, any province of the Dominion of Canada or (2) an authority established pursuant to the California Industrial Development Financing Act, Title 10 (commencing with Section 91500) of the Government Code. The issuer of the notes, bonds, or obligations through itself or its paying agent shall be obligated thereunder to make payments, with respect to the notes, bonds, or other obligations, directly to the insurer or the insurer’s nominee. (b) Except upon the prior written approval of the commissioner, an investment may not be made under the authority of this section unless the note, bond, or obligation is exchange-traded. “Exchange-traded,” as used in this subdivision, means listed and traded on the National Market System of the NASDAQ Stock Market or on a securities exchange subject to regulation, supervision, or control under a statute of the United States and acceptable to the commissioner. (c) Without the prior written consent of the commissioner, an investment made pursuant to this section shall not exceed in the aggregate 10 percent of the life insurer’s policyholder surplus. (d) A request to the commissioner for (1) approval pursuant to subdivision (b) to invest in notes, bonds, or obligations that are not exchange-traded or (2) consent to exceed the 10 percent limitation set forth in subdivision (c), shall be in writing and shall be accompanied by any supporting data and documentation that the commissioner may require. The commissioner shall require the payment of a fee of seven thousand four hundred seventy-two dollars ($7,472), in advance, for the determination of whether to approve or disapprove each request. Each request shall be in writing and shall be deemed approved unless the commissioner disapproves it within 60 days with respect to requests under subdivision (c) or 20 days with respect to requests under subdivision (b), after the request has been filed in the commissioner’s office. (e) This section shall not be construed to increase or reduce the authority to invest in any operating business trust or limited partnership specifically permitted in other sections of this code. (Amended by Stats. 2017, Ch. 534, Sec. 26. (AB 1699) Effective January 1, 2018.)
  120. 1192.9.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic insurer may buy certain investment-company shares as excess funds investments only if the company and the investment satisfy detailed registration, domicile, asset, history, share, policy, expense, and concentration limits.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.9. Notwithstanding Section 1100, a domestic insurer may make excess funds investments in shares of an investment company, as defined in the Federal Investment Company Act of 1940, if the requirements of subdivisions (b) and (c) are satisfied. No investment made pursuant to this section that ceases to satisfy the requirements of subdivision (b) or (c) shall be retained as an excess fund investment. No domestic insurer shall invest under any provision of this code in the shares of any investment company that has more than 33.33 percent of its investments in foreign investments that do not comply with paragraph (4) of subdivision (b). (a) The definitions in this subdivision apply to the following terms when used in this section: (1) A mutual fund is an open-end management company as defined in Section 5(a)(1) of the Federal Investment Company Act of 1940 (15 U.S.C. Sec. 80(a)-5(a)(1)). (2) An exchange traded fund is either an open-end management company as defined in Section 5(a)(1) of the Federal Investment Company Act of 1940, or a unit investment trust as defined in Section 4(2) of the Federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-4(2)), that is registered under the Federal Investment Company Act of 1940 and that satisfies the terms of exemptive orders issued by the United States Securities and Exchange Commission that qualify it to be an exchange-traded fund. (3) A fund is any investment company authorized in this section as an excess fund investment. (b) The investment company shall: (1) Be registered with and reporting to the United States Securities and Exchange Commission. (2) Be domiciled in the United States. (3) Have assets in excess of one hundred million dollars ($100,000,000), or be affiliated with other investment companies that have, in the aggregate, assets in excess of one billion dollars ($1,000,000,000). (4) Have at least 66.67 percent of its investments be investments that are authorized under Article 3 (commencing with Section 1170) and Article 4 (commencing with Section 1190), except that any amount of a fund’s assets may consist of foreign investments, provided that if more than 50 percent of its total investments consist of foreign investments, then the insurer’s investment in that fund shall comply with the provisions of subparagraph (C) of paragraph (1) of subdivision (c), notwithstanding any other provision of this section or this code. (5) Have at least 36 months of active investment history. (6) Issue its shares as fully paid and nonassessable, with no preemptive, conversion, or exchange rights. (7) Issue its shares to the insurer or to the insurer’s custodian, subcustodian, or depository designated pursuant to Section 1104.9, or have its shares be retained by a bank, trust company, or other entity other than the investment company that is authorized by the United States to act as a transfer and dividend paying agent for the investment company, provided that, notwithstanding any other provision of this code, Section 1104.9 shall not apply to the assets or investments held by the investment company. (8) Provide equal rights and privileges to each share within the same class or series, and entitle each share within its class or series to vote and to participate equally in dividends and distributions declared by the investment company and in the net distributable assets of the investment company on liquidation. (9) If it is a mutual fund, entitle shareholders to require the investment company to redeem all shares. (10) If it is an exchange-traded fund, all of its shares are both of the following: (A) Registered under the Federal Securities Act of 1933. (B) Either listed and traded on a national securities exchange registered under the Securities Exchange Act of 1934 or have prices ascertained by quotations furnished through a nationwide automated quotations system approved by the Financial Industry Regulatory Authority. (11) Have no investment policies that authorize any of the following: (A) Borrowings to exceed 331/3 percent of its total assets. (B) The aggregate notional value of its derivative instruments outstanding to exceed 10 percent of its total assets. (C) Investment in commodities or direct ownership of real estate. (12) Have an expense ratio that does not exceed the following amounts of its average daily net asset values: (A) For a money market fund, 100 basis points. (B) For a bond fund, 200 basis points. (C) For a stock or mixed stock/bond fund, 300 basis points. (c) An insurer shall do the following: (1) At no time make or retain an excess fund investment under the authority of this section that exceeds the following limits: (A) An amount of its admitted assets, as reported in its most recent annual statement, that is more than any of the following: (i) Three percent in a single investment company or 7 percent in an affiliated group of investment companies. (ii) Twenty-five percent in all investments authorized by this section. (B) One hundred percent of its surplus as regards policyholders, as reported in its most recent annual statement, in all investments authorized by this section. (C) For an investment in a fund that has more than 50 percent of its assets in foreign investments, those foreign investments shall be foreign investments as defined by Section 1240 and shall be considered foreign investments, investments denominated in foreign currencies, or both, as applicable, for purposes of the limitations set forth in subdivisions (a) and (b) of Section 1241. No insurer shall invest in any such fund pursuant to any other provision of this code. (D) An investment in any single investment company that exceeds 10 percent of the total net asset value of that investment company. (2) Make a specific determination, pursuant to Sections 1200 and 1201, that an investment company has stated investment policies that are suitable for the insurer’s investment objectives. (d) In addition to any other remedies available under this code for any violation of this section, the commissioner may, after giving an insurer notice and an opportunity to be heard, deny credit in any financial statement filed with the commissioner for all or any part of an investment in an investment company, even if it otherwise complies with this section, if he or she finds the investment to be unsound or hazardous. The grounds for finding an investment unsound or hazardous may include, but are not limited to, the following determinations: (1) The investment company’s investment adviser or subadviser lacks sufficient investment experience to render reliable investment advice; or lacks good professional character or good standing with any securities licensing authorities having jurisdiction over them. (2) The portfolio turnover rate of the investment company is excessive in relation to its investment goals. (3) The investment company’s annual investment management fee, or other fees or charges incurred by the investment company or the insurer, are not reasonable when compared to charges or fees associated with similar investment companies. (4) An investment company fails to mirror substantially any security index upon which its stated investment policy is based. (Amended by Stats. 2010, Ch. 400, Sec. 5. (AB 2782) Effective January 1, 2011.)
  121. 1192.95.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may invest excess funds in certain investment pools or cash management pools, but the pools and their managers must meet detailed structural, custody, fee, reporting, and investment limits.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1192.95. (a) Notwithstanding Section 1100, an insurer may make excess funds investments in investment pools and cash management pools established pursuant to this section. The pools shall meet all of the following standards: (1) All participants in a pool shall each be affiliated with one another within the meaning of subdivision (a) of Section 1215 and shall all be insurers, or a pension plan or profit-sharing plan of a participant or affiliate. (2) The pools shall be a corporation, partnership, trust, limited liability company, or business trust domiciled in the United States with all assets held in accordance with Section 1104.9 and shall be maintained in one or more accounts in the name of or on behalf of the investment pool. Pool assets shall be held under a bank custody agreement that states and recognizes the claims and rights of each participant, acknowledges that the pool assets are held solely for the benefit of each participant in proportion to the aggregate amount of its pool investments, and states that the investments shall not be commingled with the general assets of the custodian or any other person. The pool manager shall be an insurer as defined by Section 826 or a business entity registered as an investment adviser under the federal Investment Act of 1940. The fiduciary duties a manager owes to the limited liability company and its members are those of a partner to a partnership. This duty may not be restricted by agreement. (3) Any management fee shall be subject to disapproval by the commissioner. Costs directly incurred in acquiring or selling assets, such as commissions, transaction fees, or custodial fees, are not management fees and may be charged by the pool to the participants as long as these fees are on a direct cost reimbursement basis. All costs shall be apportioned to each participant in proportion to its interest in the pool. (4) All shares of the pool shall be of the same class with equal rights, preferences, and privileges. Each share shall participate equally in dividends and distributions declared by the pool on liquidation in proportion to each participant’s interest. When issued, the shares shall be fully paid and nonassessable and shall have no preemptive, conversion, or exchange rights. (5) Each participant shall be entitled to require the pool to redeem all or any portion of the shares held by the participant on demand without penalty or assessment on any business day. (6) All assets of a cash management pool shall be assets that participant insurers may lawfully acquire individually and shall be: (A) debt obligations issued by or on behalf of the United States, its territories and possessions, the District of Columbia, and states or their political subdivisions, agencies, and instrumentalities, including industrial development obligations, having a maturity not exceeding one year; (B) corporate debt obligations, other than debt obligations issued, assumed, guaranteed, or insured by a participant or by any affiliate of a participant, having a maturity not exceeding one year and that are rated One or Two by the Securities Valuation Office of the National Association of Insurance Commissioners; or (C) accounts, deposits, or obligations of banks or savings and loan associations insured by an agency or instrumentality of the federal government. (7) All assets of an investment pool shall be: (A) investments that are authorized under Section 1191, other than stock issued, assumed, guaranteed, or insured by a participant or any affiliate of a participant; (B) accounts, deposits, or obligations of banks or savings and loan associations insured by an agency or instrumentality of the federal government; or (C) investments that are authorized under Section 1192, other than securities or notes issued, assumed, guaranteed, or insured by a participant or any affiliate of a participant, or under Section 1194.5 or 1241. (8) The assets of pools shall be required to meet the requirements of and be authorized for investment by a domestic incorporated insurer under Article 3 (commencing with Section 1170) or this article. (9) No pool shall make investments in purchases of, or loans upon, more than 30 percent of the total in par value or more than 30 percent of the total number of outstanding shares of the capital stock of any one corporation. (10) Transactions between the pool and its participants shall not be deemed to be material for purposes of subdivision (d) of Section 1215.4 or subdivision (b) of Section 1215.5. Investment activity of pools and transactions between pools and participants shall be reported in the annual registration statement required by Section 1215.4 and pursuant to Section 1215.5. (11) Participation in an investment pool shall be subject to a written pooling agreement that shall be approved by the participant’s board of directors and shall provide that (A) the underlying assets of the pool shall not be commingled with the general assets of the pool manager or any other person; (B) each participant must own an undivided interest in the underlying assets of the pool; (C) the underlying assets of the investment pool are held solely for the benefit of each participant; and (D) the pool manager shall make the records of the investment pool available for inspection by the commissioner. Pool agreements shall also specify what type of share participants hold to evidence their beneficial interest in the pool’s assets. Prior to the execution of a pool agreement, a participating insurer’s board of directors must approve the agreement only after having received a written opinion from an independent outside counsel explaining the ramifications and possible effects that a declaration of insolvency by a participant will have on the insurer’s share of the investment pool. (12) No participant insurer may invest more than 10 percent of admitted assets in a single pool or more than 25 percent of admitted assets in all pools combined. (13) Each participant’s proportionate share of the assets of a pool shall be deemed to be the direct holdings of that participant for purposes of determining compliance with the investment requirements of this code and shall be reported as such on required quarterly and annual reports. Pools operated as limited liability companies pursuant to Title 2.6 (commencing with Section 17701.01) of the Corporations Code shall conform their investments to this paragraph and the requirements of Sections 1200 and 1201. (14) The pool manager shall compile and maintain detailed accounting records setting forth (A) the cash received and disbursements reflecting each participant’s proportional investment in the investment pool; (B) a complete description of all underlying assets of the investment pool including amount, interest rate, and maturity date, if any, and other appropriate designations; and (C) other records that, on a daily basis, will allow the commissioner and the participants to verify each participant’s investments in the pool. (15) Pools shall not borrow or loan assets, except for securities-lending arrangements that are otherwise lawful for insurer participants of the pool. (b) As used in this section, “share” means stock, participation unit, certificate of interest, or other evidence of beneficial ownership in the pool, whether evidenced by an instrument or by a book entry maintained by the pool. (c) The commissioner shall have the authority to review any pool agreement and to disapprove any agreement that does not comply with this section. The commissioner shall have the authority to review the operation of any pool and to order compliance with this section. The commissioner shall have the authority to disallow, as an admitted asset, any pool investment not in compliance with this section. The commissioner may impose a fee upon any pool to recoup the actual cost of review under this section. (Amended by Stats. 2012, Ch. 419, Sec. 25. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.)
  122. 1193.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Insurers may invest excess funds in certain bonds if the bonds meet one of the listed legal-investment conditions; the commissioner may also approve bonds in writing. The commissioner must investigate and make a finding when an insurer requests approval, at the insurer’s expense.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1193. Excess funds investments may be made in bonds of any permanent road division, or any district of any state when such bonds are legal investments for savings banks of this State, or have been certified as legal investments for savings banks pursuant to Division 10 of the Water Code, or when the statutes or laws providing for the issuance of such bonds, provide that such bonds shall be entitled to the same force or value or use as bonds issued by any municipality, or such law specifically states that such bonds shall be legal investments for either savings banks, insurance companies, all trust funds, state school funds or any funds which may be invested in bonds of cities, counties, cities and counties, school districts, or municipalities in the State, or when such bonds have been investigated and approved by a commission or board now or hereafter authorized by law to conduct such investigation and give such approval when such law specifies that upon such approval said bonds are legal investments for insurers, or which the commissioner approves in writing as legal for investment of the funds of insurers. The commissioner in determining whether to approve any bonds as legal investments which do not otherwise qualify as such, shall make, upon the request of any insurer, at such insurer’s expense, an investigation and finding as provided for in Section 1175. (Amended by Stats. 1953, Ch. 1653.)
  123. 1194.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Excess funds may be invested in certain local-improvement bonds, but the purchase price or principal loaned cannot exceed 50% of the relevant real property’s market value.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194. Excess funds investments may be made in bonds issued by any county, municipality, or school district in this State to represent assessments for local improvements authorized by law. At the date of such investment the purchase price or principal loaned shall not exceed fifty per cent of the market value of the real property or of the real property together with the improvements thereon, upon which the bond is the first lien. (Enacted by Stats. 1935, Ch. 145.)
  124. 1194.1.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Excess funds investments may be made in bonds issued under the Improvement Bond Act of 1915.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.1. Excess funds investments may be made in bonds issued pursuant to the Improvement Bond Act of 1915. (Added by Stats. 1957, Ch. 659.)
  125. 1194.5.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Incorporated insurers may invest excess funds in specified debt obligations issued by public entities and government-related bodies.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.5. Excess funds investments may be made in any debt obligation issued by the United States, a federal agency or entity authorized to issue debt obligations by federal statute; the Commonwealth of Puerto Rico, its agencies and political subdivisions; any state, its agencies or political subdivisions, or by any city, county, or city and county, or by any department or board of such city, county, or city and county, whether issued in bearer, registered or book entry form. (Amended by Stats. 1983, Ch. 115, Sec. 2.)
  126. 1194.6.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Insurers may make certain excess-fund investments in debt issued by foreign-law corporations if specified ownership, guarantee, and rating conditions are met.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.6. (a) Excess funds investments may be made by an insurer in bonds, notes, or other evidences of indebtedness payable in United States dollars, and issued by a corporation incorporated under the laws of an alien government provided all of the following conditions are met: (1) All the stock of the corporation is owned and ultimately controlled by a domestic corporation. (2) Payment in full of any bond, note, or other evidence of indebtedness is guaranteed by the domestic corporation. (3) Any bond, note, or other evidence of indebtedness is evaluated by the National Association of Insurance Commissioners as a bond which may be carried at amortized cost. (b) Excess fund investments may be made by a life insurer in bonds, notes, or other evidence of indebtedness payable in a currency other than United States dollars and issued by a corporation incorporated under the laws of an alien government provided all the following conditions are met: (1) All of the stock of the corporation is owned and ultimately controlled by a domestic corporation. (2) Payment in full of any bond, note, or other evidence of indebtedness is guaranteed by the domestic corporation. (3) Any bond, note, or other evidence of indebtedness is evaluated by the National Association of Insurance Commissioners as a bond which may be carried at amortized cost. (4) The life insurer shall, prior to or within five business days after purchase, enter into a contract with a qualified bank pursuant to which the bank agrees to exchange the payments made on the nondollar denominated investment for the full term to maturity of the investment for United States currency at a rate approximating the prevailing exchange rate at the time of the purchase. For purposes of this subdivision, a qualified bank means a bank the accounts of which are insured by an agency or instrumentality of the federal government or which is a member of the Federal Reserve System and a bank that has a net worth equal to or in excess of two hundred fifty million dollars ($250,000,000) as shown on its most recently published financial statements. (c) “Domestic,” as used in this section, means organized under the laws of any state, or of the United States or of the District of Columbia. (Amended by Stats. 1991, Ch. 539, Sec. 11.)
  127. 1194.7.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic incorporated insurer may invest excess funds in Federal home loan bank stock, and if it becomes a member, it may obtain advances and pledge collateral for those advances.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.7. Excess funds investments may be made in the stock of a Federal home loan bank. Any domestic incorporated insurer investing in the stock of a Federal home loan bank and thereby becoming a member thereof shall have power (a) to obtain advances from, and (b) to pledge collateral as security for such advances from such Federal home loan bank. (Added by Stats. 1937, Ch. 738.)
  128. 1194.8.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    This section lets certain domestic insurers invest excess funds in real estate, leases, and related improvements, but only within specified asset and concentration limits and sometimes only with the commissioner’s prior approval.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.8. (a) Excess fund investments may be made by a domestic insurer in real estate and leases thereof and in making improvements thereon for business or residential purposes as an investment for the production of income. The phrase “business or residential purposes” shall not include real estate or leases primarily intended for use or valued as agricultural, horticultural, farm, ranch or mineral property. Any such investment may be made by admitted insurers having admitted assets aggregating in value not less than twenty-five million dollars ($25,000,000). Domestic insurers, other than life, title, mortgage and mortgage guaranty insurers, having admitted assets aggregating in value less than twenty-five million dollars ($25,000,000) but not less than ten million dollars ($10,000,000) may also qualify to make such investments for a period of 12 months with the prior approval of the commissioner. Real estate and leases acquired and improvements made thereon under this section shall not exceed in the aggregate an amount equal to 10 percent of the insurer’s admitted assets. Real estate and leases acquired under this section shall be in addition to that which is authorized to be acquired under the provisions of paragraphs (a) to (h), inclusive, of Section 1194.86. Except upon the prior approval in writing of the commissioner, an investment may not be made under the authority of this section if at the time of the making of the investment it would result in the insurer then owning real estate and leases thereof, other than of the kind and for the purposes described in paragraphs (a), (b), and (f) of Section 1194.86, in an amount exceeding 10 percent of the insurer’s admitted assets. Any investment in a single parcel of real estate or in a single leasehold including improvements thereon made under the authority of this section shall not be made in an amount in excess of 1 percent of the insurer’s admitted assets or 10 percent of the aggregate of the insurer’s capital paid-up and unassigned surplus, whichever amount is larger. A lease eligible for purchase hereunder shall be for a term which at the date of purchase shall not expire for at least 24 years. Percentage or dollar value of assets and capital paid-up and unassigned surplus as provided herein shall be determined by the insurer’s last preceding annual statement of conditions and affairs made as of the December 31st last preceding and which has been filed with the commissioner pursuant to law. (b) In computing the value of real estate held by a domestic insurer for the purpose of complying with the asset standards or percentage of asset standards, the insurer shall add the net equity of the real estate owned by the insured to the amount of encumbrances and liens against the property for which the insurer could be held liable for any deficiency in the event of foreclosure or other action to realize the value of the liens. “Net equity” as used in this section means book value less the value of liens and encumbrances. (c) Notwithstanding subdivision (a) or Section 1100, excess fund investments may be made by a domestic life insurer as an investment for the production of income in interests in publicly traded limited partnerships, limited partnerships in which the life insurer is the general partner, general partnerships, or in shares of beneficial interests in trusts substantially all the assets of which are real estate or leases thereof or improvements thereon for business or residential purposes. “Business or residential purposes” does not include real estate or leases primarily intended for use or valued as agricultural, horticultural, farm, ranch, or mineral property. Any investment authorized by this subdivision may be made by domestic life insurers having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000). Investments acquired pursuant to this subdivision shall be in addition to investments authorized to be acquired under subdivisions (a) to (h), inclusive, of Section 1194.86. Except upon the prior approval in writing of the commissioner, an investment may not be made under the authority of this subdivision in a general partnership or a nonpublicly traded trust if at the time of the making of the investment it would result in the life insurer owning aggregate interests in those investments in an amount exceeding 3 percent of the life insurer’s admitted assets. Except upon the prior approval in writing of the commissioner, an investment may not be made if at the time it would result in the life insurer owning interests in general or limited partnerships or in shares of beneficial interests in trusts in an amount exceeding 10 percent of the life insurer’s admitted assets. An investment in a single partnership or shares of beneficial interest in a single trust made pursuant to this subdivision shall not be made in an amount in excess of 1 percent of the life insurer’s admitted assets or 10 percent of the aggregate of the life insurer’s capital paid-up and unassigned surplus, whichever is larger. Percentage or dollar value of assets and capital paid-up and unassigned surplus as provided herein shall be determined by the life insurer’s last preceding annual statement of conditions and affairs made as of the December 31st last preceding and which has been filed with the commissioner pursuant to applicable provisions of law. For purposes of this subdivision, “publicly traded” means securities of a limited partnership or trust listed and traded on a securities exchange subject to regulation, supervision, or control under a statute of the United States or listed on the NASDAQ system. (d) Investments made pursuant to subdivisions (a) and (c) shall not exceed in the aggregate an amount equal to 10 percent of the insurer’s admitted assets and shall produce sufficient cash-flow to amortize any mortgage, except with the prior written consent of the commissioner. (Amended by Stats. 1991, Ch. 539, Sec. 12.)
  129. 1194.81.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Domestic incorporated insurers may invest in certain mortgage- or lien-secured notes or bonds if the property and loan meet listed conditions.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.81. Domestic incorporated insurers may invest in notes or bonds secured by a mortgage or other first lien upon unencumbered real property meeting the criteria of subdivision (e), if the secured obligation meets the conditions of subdivisions (a) and (b), as follows: (a) There exists no condition or right of reentry or of forfeiture under which the lien can be cut off, subordinated, or otherwise disturbed. (b) The secured obligation satisfies the conditions of paragraph (1), (2), (3), or (4), as follows: (1) The principal so loaned or the entire note or bond issue so secured, plus the amount of the liens of any public bond, assessment, or tax assessed upon the property loaned upon, does not exceed 80 percent of the market value of that real property, together with improvements which are taken as security at the date of investment. (2) Where the loan is insured by an admitted mortgage guaranty insurer conforming to the provisions of Chapter 2A (commencing with Section 12640.01) of Part 6 of Division 2, the unguaranteed portion of the loan, plus the amount of the liens of any public bond, assessment, or tax assessed upon the property loaned upon, does not exceed 80 percent of the market value of that real property, together with improvements which are taken as security at the date of investment. (3) Where the loan is made or the notes or bonds are issued for a building loan on real property, the principal so loaned, or the entire outstanding notes or bonds so issued, plus the amount of the lien of any public bond, assessment, or tax assessed upon the property loaned upon, at no time exceeds 80 percent of the market value of the real property together with the actual cost of the improvements thereon taken as security. (4) Where the loan is secured by a first mortgage or other first lien upon real property primarily improved with a residential building, or buildings, which for the purposes of this paragraph includes a condominium unit, designed for occupancy by not more than four families, the terms of the loan provide for monthly payments of principal and interest sufficient to effect full repayment of the loan within the remaining useful life of the building as estimated in the appraisal for the loan, or 40 years, whichever is less, and the principal so loaned or the entire note or bond issue so secured, plus the amount of the liens of any public bond, assessment, or tax assessed upon the property loaned, does not exceed 90 percent of the market value of that real property, or of that real property together with improvements which are taken as security on the date of investment. (c) Real property is not encumbered within the meaning of this section if subject only to one or more of the following: (1) The lien of taxes and assessments not delinquent at the time of investment. (2) The lien for delinquent taxes or assessments delinquent at the time of investment, which are being contested by any legal proceedings, if indemnity has been given pursuant to the indenture under which the bonds and notes are issued, or otherwise, for the payment of any amount which may be found to be due upon the final adjudication of that contest. (3) The lien of taxes and assessments becoming delinquent subsequent to the time of investment. (4) Outstanding mineral, oil or timber rights. (5) Easements or rights-of-way. (6) Sewer rights. (7) Rights in walls. (8) Building restrictions or other restrictive covenants, or conditions or regulations of use, or leases under which rents or profits are reserved to the owner. (d) For the purposes of this section, delinquent taxes funded on any deferred payment plan shall be deemed delinquent. (e) Only real property meeting the following criteria of paragraph (1), (2), or (3) may secure notes or bonds eligible for investment under this section: (1) There is an improvement on the real property with a value that is substantial in relation to the total value of the property. (2) There is no improvement on the real property, but the funds loaned on account of the secured obligation, which meets the criteria of paragraph (3) of subdivision (b), are used to construct an improvement on real property and the value of the improvement constructed on the real property is at all times substantial in relation to the amount of the construction loan funds advanced by the insurer and drawn down by or on account of the borrower. (3) There is no improvement on the real property, but the property is revenue producing and is used primarily as agricultural, horticultural, farm, or ranch property. (4) There is no improvement on the real property, but the note or bond secured by that real property is held in conjunction with another note or bond held by the insurer that is secured by other real property on which there exists a substantial improvement. However, the value of the unimproved real property may not exceed 20 percent of the total value of all real property taken as security for all those notes or bonds. (Added by Stats. 1991, Ch. 539, Sec. 13.)
  130. 1194.82.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may invest in certain second-mortgage or second-lien notes or bonds if the stated conditions are met.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.82. (a) An insurer may invest in notes or bonds secured by second mortgages or other second liens, including all inclusive or wraparound mortgages or liens, upon real property encumbered only by a first mortgage or lien which meets the requirements set forth in Section 1194.81, subject to either of the following conditions: (1) The insurer also owns the note or bond secured by the prior first mortgage or lien and the aggregate value of both loans does not exceed the loan to market value ratio requirements of Section 1194.81. (2) The note or bond is secured by an “all-inclusive” or “wraparound” lien or mortgage which conforms to the requirements specified in subdivision (b), provided that the aggregate value of the resulting loan does not exceed the loan to market value ratio requirements of Section 1194.81. (b) “Wraparound” and “all-inclusive” lien or mortgage refer to a loan made by an insurer to a borrower on the security of a mortgage or lien on real property other than property containing a residence of one to four units or upon which a residence of one to four units is to be constructed, where the real property is encumbered by a first mortgage or lien and which loan is subject to all of the following: (1) There is no more than one preexisting mortgage or lien on the real property. (2) The total amount of the obligation of the borrower to the insurer under the loan is not less than the sum of the amount disbursed by the insurer on account of the loan and the outstanding balance of the obligation secured by the preexisting lien or mortgage. (3) The instrument evidencing the lien or mortgage by which the obligation of the borrower to the insurer under the loan is secured, is recorded, and the lien is insured under a policy of title insurance in an amount not less than the total amount of the obligation of the borrower to the insurer under the loan. (4) The insurer either (A) pursuant to Section 2924b of the Civil Code, files for record in the office of the recorder of the county in which the real property is located a duly acknowledged request for a copy of any notice of default or of sale under the preexisting lien, (B) otherwise arranges with the recorder of any county in which the real property is located to be advised in case of the filing for record of any notice of default or of sale with respect to any obligation secured by the preexisting lien, or (C) is entitled under applicable law to receive notice of default, sale, and foreclosure of the preexisting lien. (5) The amount disbursed by an insurer under any single wraparound or all-inclusive loan made pursuant to this section shall not exceed the greater of 1 percent of the insurer’s admitted assets or 10 percent of the aggregate of the insurer’s capital paid-up and unassigned surplus. (Amended by Stats. 2007, Ch. 130, Sec. 183. Effective January 1, 2008.)
  131. 1194.85.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic insurer that asks the commissioner to approve certain investments must reimburse the department for its actual expenses, up to $748, for making the approval decision.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.85. In any case in which a domestic insurer has requested the approval of the commissioner to make the investments specified in subdivision (a) or (c) of Section 1194.8, that insurer shall reimburse the department for all actual expenses, not to exceed seven hundred forty-eight dollars ($748), incurred by it in making a determination of whether to approve or disapprove that request. (Amended by Stats. 2017, Ch. 534, Sec. 27. (AB 1699) Effective January 1, 2018.)
  132. 1194.86.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An admitted incorporated insurer may buy, hold, or transfer real estate only for listed purposes and in the stated manner.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.86. Every admitted incorporated insurer may purchase, hold, or convey real estate only for the following purposes and in the following manner: (a) The building in which it has its principal office and the land upon which that building stands. (b) Real estate requisite for its accommodation in the convenient transaction of its business. (c) Real estate acquired by it, or by any person for it, to secure the payment of loans previously contracted or for moneys due. (d) Real estate purchased at sales upon deeds of trust or upon judgments or decrees obtained for those loans or debts. (e) Real estate conveyed to it in satisfaction of debts previously contracted in the course of its dealings. (f) Real estate acquired by gift or devise. (g) Real estate acquired in part payment of the consideration of the sale of real property owned by it, if each such transaction shall not effect an increase in its investment in such real property. (h) Upon the written approval of the Insurance Commissioner, real estate requisite or desirable for the protection or enhancement of the value of other real or personal property owned by the insurers. (i) Real estate and improvements thereon which domestic insurers are permitted to invest pursuant to the provisions and subject to the conditions and limitations of Section 1194.8 or Section 1210. (Added by Stats. 1991, Ch. 539, Sec. 15.)
  133. 1194.87.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    After a hearing, the commissioner may require an insurer to reserve against or write down overstated real estate values, and in some cases to sell long-held real estate within six months.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.87. If, after a hearing, the commissioner is satisfied that an insurer is carrying upon its books any parcel or parcels of real estate at values exceeding the sound market value thereof, he or she may order the insurer to: (a) Create an adequate contingency reserve against the book value of the parcel or parcels, or (b) Reduce the book value of the parcel or parcels by a corresponding amount. In the case of real estate, not of a character described in subdivision (a), (b), (h), or (i) of Section 1194.86, which has been held by the insurer for more than five years, the commissioner may order the insurer to dispose of the real estate within six months if, after a hearing, the commissioner is satisfied that: (1) The insurer has refused reasonable offers for the sale of the real estate, or (2) The real estate may be disposed of without undue hardship to the insurer. For the purpose of enabling him or her to determine whether to issue an order pursuant to this section, the commissioner, if he or she is not satisfied with the appraisal furnished at his or her request by the insurer, may appraise the real estate at the expense of the insurer. The commissioner may suspend or revoke the certificate of authority of an insurer failing to comply with any order issued under this section. (Amended by Stats. 1992, Ch. 427, Sec. 115. Effective January 1, 1993.)
  134. 1194.88.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An admitted incorporated insurer may use funds to improve certain real property acquired under Section 1194.86.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.88. Every admitted incorporated insurer may, for the protection or enhancement of the value of real property acquired under the provisions of Section 1194.86, use its funds in the manner as it shall deem proper to repair, alter, remodel, rehabilitate, demolish, purchase furnishings or other personal property for use in or otherwise to improve the real estate. (Added by Stats. 1991, Ch. 539, Sec. 17.)
  135. 1194.9.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    If the commissioner decides after notice and hearing that certain real estate must be disposed of, the insurance company must sell it within the time the commissioner sets.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.9. If the commissioner shall decide, after due notice and hearing that the interest of any company having real estate acquired pursuant to the provisions of Section 1194.8 requires that any specific parcel or parcels of such real estate be disposed of, then such insurance company shall dispose of such real estate within such reasonable time as the commissioner shall direct. (Added by Stats. 1945, Ch. 1073.)
  136. 1194.95.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may make excess-funds investments in an electronic computer or data processing machine or system if the item costs at least $250,000 and is fully amortized within four full calendar years.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1194.95. Excess funds investments may be made in an electronic computer or data processing machine or system to be used in connection with the business of the insurer; provided, however, that this machine or system shall have an original cost of at least two hundred fifty thousand dollars ($250,000) and shall be amortized in full over a period not to exceed four full calendar years. (Amended by Stats. 1991, Ch. 539, Sec. 18.)
  137. 1195.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Insurers may not invest in an obligation unless it is interest- or income-bearing, or dividend-paying.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1195. This article does not authorize investments in any obligation unless the obligation is interest or income-bearing or dividend-paying. An obligation is interest or income-bearing within the meaning of this section if it is not in default in payment of interest or income on the date of acquisition by the insurer and if no such default was imminent on such date. Nothing in this section contained, however, shall limit or affect the authority conferred by section 1191 of this code. (Amended by Stats. 1939, Ch. 480.)
  138. 1196.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Incorporated insurers may not make excess funds investments in stock or obligations unless the investment is sound and any purchase or loan stays within the stated market-value limits.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1196. Excess funds investments shall not be made in any stock or obligation unless: (a) The stock or obligation qualifies as a sound investment. (b) In case of a purchase, the price paid for the security is not in excess of the current market value at the date of purchase. (c) In case of a loan, the amount loaned does not exceed eighty-five per cent of the market value, at the date of the loan, of the collateral taken as security. (Amended by Stats. 1937, Ch. 738.)
  139. 1196.1.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Domestic insurers face limits on how much lower-rated debt they may acquire or hold, and their board must adopt a written plan if such investments exceed 2% of admitted assets.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1196.1. (a) No domestic insurer shall acquire, directly or indirectly, any medium grade or lower grade obligation of any institution if, after giving effect to any such acquisition, the aggregate amount of all medium grade and lower grade obligations then held by the domestic insurer would exceed 20 percent of its admitted assets, provided that, (1) no more than 10 percent of its admitted assets consists of obligations rated four, five, or six by the Securities Valuation Office; (2) no more than 3 percent of its admitted assets consist of obligations rated five or six by the Securities Valuation Office; and (3) no more than 1 percent of its admitted assets consists of obligations rated six by the Securities Valuation Office. Attaining or exceeding the limit of any one category shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multicategory limits. (b) No domestic insurer may invest more than an aggregate of 1 percent of its admitted assets in medium grade obligations issued, guaranteed, or insured by any one institution nor may it invest more than one-half of 1 percent of its admitted assets in lower grade obligations issued, guaranteed, or insured by any one institution. In no event, however, may a domestic insurer invest more than 1 percent of its admitted assets in any medium or lower grade obligations issued, guaranteed, or insured by any one institution. (c) Notwithstanding subdivision (a) or (b), a domestic insurer may acquire an obligation of an institution in which the insurer already has one or more obligations if the obligation is acquired in order to protect an investment previously made in the obligations of the institution; provided that all of those acquired obligations shall not exceed one-half of 1 percent of the insurer’s admitted assets. (d) Nothing contained in this section; (1) shall prohibit a domestic insurer from acquiring an obligation as a result of a restructuring of a medium or lower grade obligation already held; or (2) shall require a domestic insurer to sell or otherwise dispose of any obligation legally acquired prior to the effective date of this section. (e) The board of directors of any domestic insurer that acquires or invests, directly or indirectly, more than 2 percent of its admitted assets in medium grade and lower grade obligations, shall adopt a written plan for the making of that investment. The plan, in addition to guidelines with respect to the quality of the issues invested in, shall contain diversification standards including, but not limited to, standards for issuers, industry duration, liquidity, and geographic location. (f) As used in this section: (1) “Medium grade obligations” means obligations which are rated three by the Securities Valuation Office of the National Association of Insurance Commissioners. (2) “Lower grade obligations” means obligations which are rated four, five, or six by the Securities Valuation Office of the National Association of Insurance Commissioners. (3) “Admitted assets” means the amount shown as of the last day of the most recently concluded annual statement year, computed in the manner prescribed by the commissioner. (4) “Aggregate amount of medium grade and lower grade obligations” means the aggregate statutory statement value of the obligation. (5) “Institution” means (A) any corporation, business trust, or limited partnership organized under the laws of any state of the United States, District of Columbia, the Dominion of Canada, any province of the Dominion of Canada or (B) an authority established pursuant to the California Industrial Development Financing Act, Title 10 (commencing with Section 91500) of the Government Code. (Added by Stats. 1991, Ch. 539, Sec. 19.)
  140. 1197.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Incorporated insurers must not make an excess funds investment that loans or obligates too much to one borrower or obligor, including affiliated borrowers treated as one.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1197. Excess funds investments shall not be made in a loan or any other obligation to any one borrower or obligor, including all affiliates which shall be treated as one borrower or obligor, in an amount exceeding 10 percent of the capital stock and surplus or 1 percent of the admitted assets of the lending insurer, whichever amount is greater. (Amended by Stats. 2009, Ch. 234, Sec. 9. (AB 299) Effective January 1, 2010.)
  141. 1198.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An insurer may not make excess-funds investments in one corporation’s capital stock above 10% of its excess admitted assets, and may not retain the excess amount above 25% of that measure; the commissioner may treat that retention as a violation under Section 1202.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1198. Excess funds investments shall not be made in purchases of or loans upon shares of the capital stock of any one corporation in an amount exceeding 10 percent of the excess of the admitted assets of the investing insurer over the liabilities and required reserves of such insurer. Nor shall the excess amount of any such investment over and above 25 percent of the excess of the admitted assets of the owner thereof over the liabilities and required reserves of such owner be retained. The commissioner may determine the retention of such excess amount over said 25 percent to be a violation of the provisions of this article within the meaning of and subject to all the provisions of Section 1202. No investment which is permitted under Section 1199 shall be prohibited or its retention limited by this section. (Amended by Stats. 1963, Ch. 1974.)
  142. 1199.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    Domestic incorporated fire, life, and marine insurers are barred from excess-funds investments that put more than 30% of the capital stock of any one corporation into purchases or loans, subject to stated exceptions.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1199. No domestic incorporated fire, life or marine insurer shall make excess funds investments in purchases of, or loans upon, more than 30 percent of the total in par value or number of outstanding shares of the capital stock of any one corporation, except: (a) In the purchase of the stock of another admitted domestic insurer; or (b) With the prior authorization of the commissioner, in the purchase of stock of any other insurance corporation organized under the laws of any other state, or of the Dominion of Canada or of any province of the Dominion of Canada, which is supervised by the state or dominions or provincial insurance commissioner or similar official, and the investments of which comply in substance with the investment requirements and limitations imposed by this code upon like domestic insurers; provided, that no such domestic insurer shall have in the aggregate more than 50 percent of its capital and surplus invested in the stocks of insurance corporations organized under the laws of this state or other states or of the Dominion of Canada or of any province of the Dominion of Canada. (c) In the purchase of stock of any corporation organized under the laws of this state for the exclusive purpose of engaging in the business of financing insurance premiums and any and all matters incidental thereto and engaging exclusively in such business and such matters. (d) Such insurer may purchase or otherwise acquire all or any percent of the issued and outstanding stock of any corporation which is any of the following: (1) A corporation providing investment advisory, management, or sales services to an investment company or separate account. (2) A real property holding, developing, managing, or leasing corporation. (3) A data processing or computer service corporation. (4) An investment company or companies as defined by the Investment Company Act of 1940, (Title 15, U.S.C., Sec. 80a-1, et seq.). (5) A corporation acting as administrative agent for a governmental instrumentality performing insurance-related functions, or for private health and welfare plans. (Amended by Stats. 1968, Ch. 685.)
  143. 12.

    ## Insurance Code - INS ## GENERAL PROVISIONS ( General Provisions enacted by Stats. 1935, Ch. 145. )

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    The masculine gender is defined to include the feminine and neuter.

    ## Insurance Code - INS ## GENERAL PROVISIONS ( General Provisions enacted by Stats. 1935, Ch. 145. ) ## 12. The masculine gender includes the feminine and neuter. (Enacted by Stats. 1935, Ch. 145.)
  144. 12.2.

    ## Insurance Code - INS ## GENERAL PROVISIONS ( General Provisions enacted by Stats. 1935, Ch. 145. )

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    “Spouse” includes a registered domestic partner for this section.

    ## Insurance Code - INS ## GENERAL PROVISIONS ( General Provisions enacted by Stats. 1935, Ch. 145. ) ## 12.2. “Spouse” includes “registered domestic partner,” as required by Section 297.5 of the Family Code. (Added by Stats. 2016, Ch. 50, Sec. 56. (SB 1005) Effective January 1, 2017.)
  145. 120.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    This section says what counts as miscellaneous insurance, including certain weather-loss coverage, open-policy production interruption coverage, and other insurance that is a proper subject of insurance.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 120. Miscellaneous insurance includes insurance against loss from damage done, directly or indirectly by lightning, windstorm, tornado, earthquake or insurance under an open policy indemnifying the producer of any motion picture, television, theatrical, sport, or similar production, event, or exhibition against loss by reason of the interruption, postponement, or cancellation of such production, event, or exhibition due to death, accidental injury, or sickness preventing performers, directors, or other principals from commencing or continuing their respective performance or duties; and any insurance not included in any of the foregoing classes, and which is a proper subject of insurance. (Amended by Stats. 1951, Ch. 566.)
  146. 1200.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    An excess funds investment cannot be made unless the investor’s directors or a qualifying committee authorizes or approves it.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1200. An excess funds investment shall not be made unless authorized or approved by the directors of the investor or by a committee thereof charged with the duty of supervising or making such investment. Such authorization or approval shall be entered upon the records or minutes of the investor and, if made upon authority of such a committee a report shall be submitted to the directors at their next meeting. (Amended by Stats. 1943, Ch. 872.)
  147. 1201.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    If an approval entry is made, it must show specified details about the investment or loan.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1201. The entry of approval shall show: (a) The fact of making such investment. (b) The amount thereof. (c) The name of each director voting to approve the investment. (d) The amount, character and value of the security purchased or taken as collateral. (e) If the investment is a loan, the name of the borrower, the rate of interest thereon and the due date thereof. (Enacted by Stats. 1935, Ch. 145.)
  148. 1202.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    The commissioner may order disposal of investments made in violation of the article, and may also order disposal of excess funds investments for good cause.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Property Authorized for Excess Funds Investments [1190 - 1202] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 1202. The commissioner may, in his discretion and after hearing, by written order require the disposal of any investments made in violation of the provisions of this article, pending which disposal pursuant to such order no value shall be allowed for such investment in any statement, required by any provision of this code, purporting to show the financial condition of the owner thereof, or in measuring the financial condition of the owner thereof for the purpose of determining whether such owner is solvent or insolvent. The commissioner may also, for good cause, require the disposal of any excess funds investments. (Amended by Stats. 1943, Ch. 872.)
  149. 12050.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    An incorporated insurer issuing surety policies on the reserve basis must follow the paid-in capital and surplus requirements in Sections 700.01 to 700.05.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 12050. An incorporated insurer issuing surety policies on the reserve basis shall be governed by the paid-in capital and surplus requirements of Sections 700. 01 to 700.05, inclusive. (Amended by Stats. 1953, Ch. 958.)
  150. 12051.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    For the first three years after admission, an insurer must keep assets equal to its required paid-in capital in cash or in approved government or local public obligations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 12051. During the first three years following its admission, the insurer’s assets in an amount equal to its required paid-in capital shall be in cash or in the value of obligations, purchase of which is approved by the commissioner, of the United States government, any State, or any county in this State. (Enacted by Stats. 1935, Ch. 145.)
  151. 12052.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    After the three-year period, these insurers’ investments are governed only by the code provisions that generally regulate investments of other incorporated insurers on a reserve basis.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 12052. After such three-year period, investments of such insurers are subject only to the provisions of this code regulating generally the investments of other incorporated insurers issuing policies on a reserve basis. (Enacted by Stats. 1935, Ch. 145.)
  152. 12055.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    A credit insurer admitted in the State may acquire and dispose of insured debts and collect debts owed to it or to a person insured by it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital and Scope of Business [12050 - 12055] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 12055. An insurer admitted in the State to transact credit insurance may also acquire and dispose of debts so insured and collect any debts owed to such insurer or to any person so insured by it. In performing any such act the credit insurer shall be under the jurisdiction of the Insurance Commissioner. (Added by Stats. 1963, Ch. 19.)
  153. 12090.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    An admitted surety insurer may not take on or reinsure a single undertaking if the liability would be more than 10% of its capital and surplus; it may reduce the liability by approved deposits or a clean, irrevocable letter of credit.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 12090. (a) An admitted surety insurer shall not become surety on any one undertaking, or accept reinsurance on such undertaking, when its liability thereon, in excess of the amount reinsured by it in an admitted insurer, amounts to more than ten percent of its capital and surplus as shown by its last statement on file in the office of the commissioner. (b) In determining its liability on an undertaking for purposes of subdivision (a), an admitted insurer may reduce its liability by either or both of the following: (1) Deposits with the surety insurer, in a manner acceptable to the commissioner, or by conveyance to it in trust for its protection, of assets that would qualify as admitted assets. (2) A clean and irrevocable letter of credit acceptable to the commissioner. (Amended by Stats. 1991, Ch. 1020, Sec. 1.)
  154. 12091.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    If a surety insurer’s assets no longer equal the required charges, the commissioner must act under Section 12092.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 12091. Whenever a surety insurer fails to maintain such a financial condition that assets allowed under subdivision (a) are equal in value to the aggregate of the charges prescribed under subdivision (b), the commissioner shall act as prescribed in Section 12092. (a) In estimating its condition the commissioner shall allow as assets only such as are allowed under law in force at the time of the estimate. (b) The charges to be aggregated shall be: (1) Eighty percent of the paid-in capital, but in no case less than two hundred fifty thousand dollars ($250,000). (2) All outstanding indebtedness. (3) Provision for reinsuring all outstanding risks, estimated as prescribed in Section 985. (Amended by Stats. 1971, Ch. 163.)
  155. 12092.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    If an insurer does not maintain the financial condition required by section 12091, the commissioner must require the deficiency to be cured within 60 days, publish a certificate if it is not cured, and the insurer may not do business in the state until the deficiency is cured.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 12092. Whenever such an insurer fails to maintain the financial condition required by section 12091, the commissioner shall require the deficiency to be made up in sixty days. If it is not made up as required, he shall issue a certificate showing the extent of such deficiency. He shall publish the certificate once a week for three weeks, in a daily San Francisco paper. From the time of first publication until such deficiency is made up, the insurer shall not do business in this State. (Enacted by Stats. 1935, Ch. 145.)
  156. 12093.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. )

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    If an employee asks after cancellation notice on a blanket fidelity bond, the surety insurer must give the employee the cancellation grounds within 10 days.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Special Restrictions on Business [12090 - 12093] ( Article 3 enacted by Stats. 1935, Ch. 145. ) ## 12093. Whenever a surety insurer gives notice of cancellation of the coverage of an employee under a blanket fidelity bond, upon the request of the employee, the surety insurer, within 10 days of the request, shall furnish to the employee a statement setting forth the ground or grounds upon which the notice of cancellation is based. There shall be no liability on the part of, and no cause of action shall arise against, any surety insurer, or its licensed investigative sources, for any statements made by it concerning any employee in a written notice required to be given pursuant to this section. If the surety insurer fails to comply with the provisions of the first paragraph of this section, the employee may apply to the commissioner for a certificate of the facts or information desired and the commissioner shall act thereon in accordance with the provisions of Article 3 (commencing with Section 12950) of Chapter 2 of Division 3. (Added by Stats. 1961, Ch. 1931.)
  157. 12095.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Special Regulations [12095 - 12097] ( Article 4 added by Stats. 1971, Ch. 1427. )

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    An admitted surety insurer must not treat contractor’s license or performance bond applicants less favorably than comparable cases, except for reasons that apply equally to the listed protected characteristics or to all geographic areas.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Special Regulations [12095 - 12097] ( Article 4 added by Stats. 1971, Ch. 1427. ) ## 12095. No insurer admitted in this state to issue surety insurance shall fail or refuse to accept an application for a contractor’s license or performance bond, or to issue such a bond to an applicant therefor, or refuse or cancel such a bond, under conditions less favorable to the obligor than in other comparable cases, except for reasons applicable alike to persons of every characteristic listed or defined in subdivision (b) or (e) of Section 51 of the Civil Code, or persons of every geographical area; nor shall any characteristic listed or defined in subdivision (b) or (e) of Section 51 of the Civil Code, or location within a county, of itself, constitute a condition or risk for which a greater rate, premium, charge, guaranty, or collateral may be required of the applicant for such a bond. (Amended by Stats. 2008, Ch. 682, Sec. 8. Effective January 1, 2009.)
  158. 12096.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Special Regulations [12095 - 12097] ( Article 4 added by Stats. 1971, Ch. 1427. )

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    An applicant for a contractor’s license or performance bond may file a written complaint with the commissioner if they believe an admitted surety insurer did not comply with Section 12095.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Special Regulations [12095 - 12097] ( Article 4 added by Stats. 1971, Ch. 1427. ) ## 12096. (a) Any applicant for a contractor’s license or performance bond who believes that the admitted surety insurer, regularly issuing such bonds, to whom he has applied did not comply with Section 12095, may file a complaint in writing with the commissioner. If the commissioner finds that there is reasonable ground to believe that the alleged discrimination has occurred, he may set the complaint for hearing, after notice, at which hearing each of the parties to the complaint shall have an opportunity to be heard in person or through their witnesses. (b) Any determination of the commissioner upon such complaint and hearing shall be judicially reviewable. (Amended by Stats. 1979, Ch. 1013.)
  159. 12097.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Special Regulations [12095 - 12097] ( Article 4 added by Stats. 1971, Ch. 1427. )

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    A person who denies a contractor’s license or performance bond only for the grounds in this article is liable for actual damages plus $250.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. Special Regulations [12095 - 12097] ( Article 4 added by Stats. 1971, Ch. 1427. ) ## 12097. Whoever denies a contractor’s license or performance bond solely on the grounds specified in this article is liable for each and every such offense for the actual damages, and two hundred fifty dollars ($250) in addition thereto, suffered by the licensee or applicant for a license. (Amended by Stats. 1979, Ch. 1013.)
  160. 121.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    This section says listing kinds of insurance in one class does not limit them to that class, unless the chapter says otherwise.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 1. THE CONTRACT [100 - 679.75] ( Part 1 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Classes of Insurance [100 - 124.5] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 121. Except as otherwise stated, the enumeration in this chapter of the kinds of insurance in a particular class does not limit any such kind to any one of such particular classes, inasmuch as the classification of similar insurance may vary with the subject matter, risk, and connected insurances; but the fact that similar kinds of insurance occur in different classes does not extend or change the scope of any such class. (Enacted by Stats. 1935, Ch. 145.)
  161. 12100.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    This section defines key terms used in Article 5 on financial guaranty insurance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12100. As used in this article: (a) (1) “Financial guaranty insurance” means a surety bond, an insurance policy or, when issued by an insurer, an indemnity contract and any guarantee similar to the foregoing types, under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee, or indemnitee as a result of any of the following events: (A) Failure of any obligor on or issuer of any debt instrument or other monetary obligation (including equity securities guaranteed under a surety bond, insurance policy, or indemnity contract) to pay, when due to be paid by the obligor or scheduled at the time insured to be received by the holder of the obligation, principal, interest, premium, dividend, purchase price of or on the instrument or obligation, or other monetary payment when the failure is the result of financial default or insolvency, or, provided that the payment source is investment grade, any other failure of that payment source to make payment, regardless of whether the obligation is incurred directly or as guarantor by or on behalf of another obligor that has also defaulted. (B) Changes in the levels of interest rates, whether short or long term, or the differential in interest rates between various markets or products. (C) Changes in the rate of exchange of currency. (D) Changes in the value of financial or commodity indices, or price levels in general. (E) Other events that the commissioner determines by order, regulation, or written consent are substantially similar to any of the foregoing. (2) Notwithstanding paragraph (1), “financial guaranty insurance” shall not include any of the following: (A) Insurance of any loss resulting from any event described in paragraph (1), if the loss is payable only upon the occurrence of any of the following, as specified in a surety bond, insurance policy, or indemnity contract: (i) A fortuitous physical event. (ii) A failure of or deficiency in the operation of equipment. (iii) An inability to extract or recover a natural resource. (B) Title insurance authorized by Section 104 and as permitted to be written by title insurers pursuant to Chapter 1 (commencing with Section 12340) of Part 6. (C) Surety insurance as authorized by Section 105. (D) Credit unemployment insurance, meaning insurance on a debtor in connection with a specific loan or other credit transaction, to provide payments to a creditor in the event of unemployment of the debtor for the installments or other periodic payments becoming due while a debtor is unemployed. (E) Credit insurance authorized by Section 113. (F) Guaranteed investment contracts and funding agreements issued by life insurance companies that provide that the life insurer itself will make specified payments in exchange for specific premiums or contributions. (G) Mortgage guaranty insurance authorized by Section 119 and as permitted to be written by a mortgage guaranty insurer pursuant to Chapter 2A (commencing with Section 12640.01) of Part 6. (H) Indemnity contracts or similar guarantees, to the extent that they are not otherwise limited or proscribed by this article, in which a life insurer does any of the following: (i) Guarantees its obligations or indebtedness or the obligations or indebtedness of a subsidiary (as defined in Section 1215) other than a financial guaranty insurance corporation; provided that: (I) To the extent that any obligations or indebtedness are backed by specific assets, those assets shall at all times be owned by the life insurer or the subsidiary. (II) In the case of the guarantee of the obligations or indebtedness of the subsidiary that are not backed by specific assets of the life insurer, the guarantee terminates once the subsidiary ceases to be a subsidiary. (ii) Guarantees obligations or indebtedness (including the obligation to substitute assets where appropriate) with respect to specific assets acquired by a life insurer in the course of normal investment activities and not for the purpose of resale with credit enhancement, or guarantees obligations or indebtedness acquired by its subsidiary, provided that the assets acquired pursuant to this clause have been either of the following: (I) Acquired by a special purpose entity, whose sole purpose is to acquire specific assets of the life insurer or the subsidiary and issue securities or participation certificates backed by the assets. (II) Sold to an independent third party. (iii) Guarantees obligations or indebtedness of an employee or agent of the life insurer. (I) Any cramdown bond or mortgage repurchase bond, as those phrases are used by nationally recognized rating agencies in respect of mortgage-backed securities. (J) Residual value insurance. (K) Any other form of insurance covering risks that the commissioner determines by order, regulation, or written consent to be substantially similar to any of the foregoing. (b) “Affiliate” means a person that, directly or indirectly, owns at least 10 but less than 50 percent of the financial guaranty insurance corporation or that is at least 10 percent but less than 50 percent, directly or indirectly, owned by a financial guaranty insurance corporation. (c) “Asset-backed securities” means either of the following: (1) Securities or other financial obligations of an issuer provided that both of the following apply: (A) The issuer is a special purpose corporation, trust, or other entity, or, provided that the securities or other financial obligations constitute an insurable risk, is a bank, trust company, or other financial institution, deposits in which are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or any successors thereto. (B) The securities or other financial obligations are related to a pool of assets so that all of the following apply: (i) The pool of assets has been conveyed, pledged, or otherwise transferred to or is otherwise owned or acquired by the issuer. (ii) The pool of assets backs the securities or other financial obligations issued. (iii) No asset in the pool, other than an asset directly payable by, guaranteed by, or backed by the full faith and credit of the United States government or that otherwise qualifies as collateral under paragraph (1) or (2) of subdivision (e), has a value exceeding 20 percent of the aggregate value of the pool. (2) A pool of credit default swaps or credit default swaps referencing a pool of obligations, provided that each of the following is true: (A) The swap counterparty whose obligations are insured under the credit default swap is a special purpose corporation, special purpose trust, or other special purpose legal entity. (B) No reference obligation in the pool, other than an obligation directly payable by, guaranteed by, or backed by the full faith and credit of the United States government, or that otherwise qualifies as collateral under paragraph (2) of subdivision (e), has a notional amount exceeding 10 percent of the pool’s aggregate notional amount. (C) The insurer has the benefit of a deductible or other first loss credit protection against claims under its insurance policy. (d) “Average annual debt service” means the amount of insured unpaid principal and interest on an obligation multiplied by the number of the insured obligations (assuming that each obligation represents a $1,000 par value), divided by the amount equal to the aggregate life of all of those obligations. This definition, expressed as a formula in regard to bonds, is as follows: Average Annual Debt Service = Total Debt Service × Number of Bonds Bond Years Total Debt Service = Insured Unpaid Principal + Interest Number of Bonds = Total Insured Principal $1,000 Bond Years = Number of Bonds × Term in Years Term in Years = Term to maturity based on scheduled amortization or, in the absence of a scheduled amortization in the case of asset-backed securities or other obligations lacking a scheduled amortization, expected amortization, in each case determined as of the date of issuance of the insurance policy based upon the amortization assumptions employed in pricing the insured obligations or otherwise used by the insurer to determine aggregate net liability. (e) “Collateral” means any of the following: (1) Cash. (2) The cashflow from specific obligations that are not callable and scheduled to be received based on expected prepayment speed on or prior to the date of scheduled debt service (including scheduled redemptions and prepayments) on the insured obligation, provided that any of the following is true, as applicable: (A) The specific obligations are directly payable by, guaranteed by, or backed by the full faith and credit of the United States government. (B) In the case of insured obligations denominated or payable in a foreign currency as permitted under paragraph (3) of subdivision (b) of Section 12112, the specific obligations are directly payable by, guaranteed by, or backed by the full faith and credit of the foreign government or the central bank thereof. (C) The specific obligations are insured by the same insurer that insures the obligations being collateralized, and the cashflows from the specific obligations are sufficient to cover the insured scheduled payments on the obligations being collateralized. (3) The market value of investment grade obligations, other than obligations evidencing an interest in the project or projects financed with the proceeds of the insured obligations. (4) The face amount of each letter of credit that meets all of the following criteria: (A) Is irrevocable. (B) Provides for payment under the letter of credit in lieu of or as reimbursement to the insurer for payment required under a financial guaranty insurance policy. (C) Is issued, presentable, and payable either: (i) At an office of the letter of credit issuer in the United States. (ii) At an office of the letter of credit issuer located in the jurisdiction in which the trustee or paying agent for the insured obligation is located. (D) Contains a statement that either: (i) Identifies the financial guaranty insurance corporation, its collateral agent, or any successor by operation of law, including any liquidator, rehabilitator, receiver, or conservator, as the beneficiary. (ii) Identifies the trustee or the paying agent for the insured obligation as the beneficiary. (E) Contains a statement to the effect that the obligation of the letter of credit issuer under the letter of credit is an individual obligation of that issuer and is in no way contingent upon reimbursement with respect thereto. (F) Contains an issue date and an expiration date. (G) Does either of the following: (i) Has a term at least as long as the shorter of the term of the insured obligation or the term of the financial guaranty insurance policy. (ii) Provides that the letter of credit shall not expire without 30 days prior written notice to the beneficiary and allows for drawing under the letter of credit in the event that, prior to expiration, the letter of credit is not renewed or extended or a substitute letter of credit or alternate collateral meeting the requirements of subdivision (e) is not provided. (H) If the letter of credit is governed by the 1983 revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 400 or 500), or any successor revision approved by the commissioner, it shall contain a provision for an extension of time, of not less than 30 days after resumption of business, to draw against the letter of credit in the event that one or more of the occurrences described in Article 19 of Publication 400 or 500 occurs. (I) Is issued by a bank, trust company, or savings association that meets all of the following criteria: (i) Is organized and existing under the laws of the United States or any state thereof or, in the case of a financial institution organized under the laws of a foreign country, has a branch or agency office licensed under the laws of the United States or any state thereof and is domiciled in a member country of the Organization of Economic Co-operation and Development having a sovereign rating in one of the top two generic lettered rating classifications by a securities rating agency acceptable to the commissioner. (ii) Has (or is the principal operating subsidiary of a financial institution holding company that has) a long-term debt rating of at least investment grade. (iii) Is not a parent, subsidiary, or affiliate of the trustee or paying agent, if any, with respect to the insured obligation if that trustee or paying agent is the named beneficiary of the letter of credit. (5) The amount of credit protection available to the insurer (or its nominee) under each credit default swap that satisfies each of the following: (A) May not be amended without the consent of the insurer and may only be terminated in accordance with one of the following: (i) At the option of the insurer. (ii) At the option of the counterparty to the insurer (or its nominee), if the credit default swap provides for the payment of a termination amount equal to the replacement cost of the terminated credit default swap determined with reference to standard documentation of the International Swap and Derivatives Association, Inc. or otherwise acceptable to the commissioner. (iii) At the discretion of the commissioner acting as rehabilitator, liquidator, or receiver of the insurer upon payment by or on behalf of the insurer of any termination amount due from the insurer. (B) Provides for payment under all instances in which payment under a financial guaranty insurance policy is required, except that payment under the credit default swap may be on a first loss, excess of loss, or other nonpro rata basis and may apply on an aggregate basis to more than one policy. (C) Is provided by one of the following: (i) A counterparty whose obligations under the credit default swap are insured by a financial guaranty insurance corporation licensed under this article or guaranteed by a financial institution referred to in clauses (ii) and (iii) of this subparagraph. (ii) A financial institution satisfying the requirements of clauses (i) to (iii), inclusive, of subparagraph (I) of paragraph (4), provided that obligations of the financial institution on parity with its obligations under the credit default swap are rated as investment grade, and further provided that, if the financial institution is not organized under, or acting through a branch or agency office licensed under, the laws of the United States or any state thereof, then the financial institution is required to collateralize the replacement cost of the credit default swap in the event that it fails to maintain the investment grade rating. (iii) Any other financial institution that the commissioner determines to be substantially similar to any specified in clause (i) or (ii). (iv) The requirements of this subparagraph shall not be construed as authority for an insurer domiciled in the United States to issue credit default swaps unless the insurer has explicit authority to issue credit default swaps. Collateral shall be deposited with or held by the financial guaranty insurance corporation, held by a trustee or agent for the benefit of the financial guaranty insurance corporation in trust or to perfect a security interest, or held in trust pursuant to the bond indenture or other trust arrangement by a trustee or custodian for the benefit of holders of the insured obligations in the form of funds for payment of insured obligations, sinking funds, or other reserves that may be used for the payment of insured obligations, collateral agent fees and trustee fees, or reimbursement of the financial guaranty insurance corporation on any obligation insured by the corporation. The trustee, custodian, or agent shall be a bank, savings association, depository institution, or other entity acceptable to the commissioner, the deposits of which are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation (or any successors thereto), or in the case of banking organizations organized under the laws of a foreign country in addition satisfies the requirements of clauses (i) and (ii) of subparagraph (I) of paragraph (4), and in each case that has a net worth of at least twenty-five million dollars ($25,000,000). The trustee or agent may also be an approved or qualified servicer or originator of the kind of assets that comprise the collateral that maintains in force at all times errors and omissions insurance applicable to the trust or agency activities, including without limitation, a servicer qualified under a federal or state insurance or guaranty program to service loans or mortgage loans. The commissioner may adopt regulations, bulletins, notices or orders to limit the amount of collateral provided by obligations, letters of credit, or credit default swaps, or to limit the amount of collateral provided by any single issuer, bank, or counterparty as provided for in this subdivision. The commissioner may also require additional reporting as deemed necessary. (f) “Commercial real estate” means income-producing real property other than residential property consisting of less than five units. (g) “Contingency reserve” means an additional liability reserve established to protect policyholders against the effects of adverse economic cycles or other unforeseen circumstances. (h) “Credit default swap” means an agreement referencing credit derivative definitions published from time to time by the International Swap and Derivatives Association, Inc., or otherwise acceptable to the commissioner, pursuant to which a party agrees to compensate another party in the event of a payment default by, insolvency of, or other adverse credit event in respect of, an issuer of a specified security or other obligation; provided that the agreement does not constitute an insurance contract and the making of the credit default swap does not constitute the transaction of insurance. (i) “Excess spread” means, with respect to any insured issue of asset-backed securities, the excess of (A) the scheduled cashflow on the underlying assets that is reasonably projected to be available, over the term of the insured securities after payment of the expenses associated with the insured issue, to make debt service payments on the insured securities over (B) the scheduled debt service requirements on the insured securities, provided that this excess is held in the same manner as collateral is required to be held under subdivision (e). (j) “Financial guaranty insurance corporation” means an insurer transacting financial guaranty insurance. (k) “Governmental unit” means a state, territory, or possession of the United States of America, the District of Columbia, the country of Canada, a province of Canada, the United Kingdom, a public authority of the United Kingdom, a member country of the Organization for Economic Co-operation and Development having a sovereign rating in one of the top two generic lettered rating classifications by a securities rating agency acceptable to the commissioner, a municipality, or a political subdivision of any of the foregoing, or any public agency or instrumentality thereof. (l) “Guarantees of consumer debt obligations” means insurance policies indemnifying a purchaser or lender against loss or damage resulting from defaults on a pool of debts owed for extensions of credit (including in respect of installment purchase agreements and leases) to individuals provided in the normal course of the purchaser’s or lender’s business, provided that the pool meets the requirements of paragraph (2) of subdivision (c) and that the pool has been determined to be investment grade. Policies providing that coverage shall contain a provision that all liability terminates upon sale or transfer of the underlying obligation to any transferee that is not an insured of the financial guaranty insurance corporation under a similar policy. (m) “Industrial development bond” means any security, or other instrument under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project serving a private industrial, commercial, or manufacturing purpose and not guaranteed by a governmental unit. (n) “Insurable risk” means that the obligation on an uninsured basis has been determined to be not less than investment grade. With respect to asset-backed securities as defined in subdivision (c), the determination shall be, based solely on the pool of assets backing the insured obligation or securing the financial guaranty insurance corporation, without consideration of the creditworthiness of the issuer. (o) “Investment grade” means that the obligation or parity obligation of the same issuer is rated in one of the top four generic lettered rating classifications by a securities rating agency acceptable to the commissioner, that the obligation or parity obligation of the same issuer, without regard to financial guaranty insurance, has been identified in writing by that rating agency as an insurable risk deemed to be of investment grade quality, or that the obligation or parity obligation of the same issuer has been determined to be investment grade (as indicated by a category 1 or 2 rating) by the Securities Valuation Office of the National Association of Insurance Commissioners. (p) “Municipal bonds” means municipal obligation bonds and special revenue bonds. (q) (1) “Municipal obligation bond” means any security, or other instrument, including a lease payable or guaranteed by the United States or another national government that qualifies as a governmental unit, or any agency, department, or instrumentality thereof, or by a state or an equivalent subdivision of another national government that qualifies as a governmental unit, but not a lease of any other governmental unit, under which a payment obligation is created, issued by or on behalf of a governmental unit or issued by a special purpose corporation, special purpose trust, or other special purpose legal entity to finance a project or undertaking serving a substantial public purpose, and that is one or more of the following: (A) Payable from tax revenues, but not tax allocations, within the jurisdiction of the governmental unit. (B) Payable or guaranteed by the United States of America or another national government that qualifies as a governmental unit, or any agency, department, or instrumentality thereof, or by a housing agency of a state or an equivalent political subdivision of another national government that qualifies as a governmental unit. (C) Payable from rates or charges (but not tolls) levied or collected in respect of a nonnuclear utility project, public transportation facility (other than an airport facility) or public higher education facility. (D) With respect to lease obligations, payable from past, present, or future appropriations. (2) Notwithstanding paragraph (1), obligations of a special purpose corporation, special purpose trust, or other special purpose legal entity shall not be considered municipal obligation bonds unless the obligations are investment grade at the time of issuance, the obligations are payable from sources enumerated in subparagraphs (A) to (D), inclusive, and the project being financed or the tolls, tariffs, usage fees, or other similar rates or charges for its use are subject to regulation or oversight by a governmental entity. (r) “Parent” means a person that, directly or indirectly, owns at least 50 percent of a financial guaranty insurance corporation. (s) “Reinsurance” means cessions qualifying for credit under Section 12121. (t) “Security” or “secured” means any of the following: (1) A deposit at least equal to the full amount of the outstanding principal of the insured obligation. (2) Collateral, as defined by subdivision (e), at least equal to the full amount of the outstanding principal of the insured obligation or that has a market value or scheduled cashflow that is equal to or greater than the scheduled debt service on the insured obligation. (3) Property, provided the financial guaranty insurance corporation or the trustee has possession of evidence of the right, title, or authority to claim or foreclose thereon or otherwise dispose of the property for value, the scheduled cashflow from which, or market value thereof, is at least equal to the scheduled debt service on the insured obligation. (u) “Special revenue bond” means any security or other instrument under which a payment obligation is created, issued by or on behalf of, or payable or guaranteed by, a governmental unit to finance a project or undertaking serving a substantial public purpose and not payable from the sources enumerated in subdivision (q) or securities that are substantially similar to the foregoing issued by any of the following: (1) A not-for-profit corporation. (2) A special purpose corporation, special purpose trust or other special purpose legal entity, provided that the obligations are investment grade at the time of issuance, the obligations are not payable from the sources enumerated in subparagraphs (A) to (D), inclusive, of paragraph (1) of subdivision (q), and the project being financed or the tolls, tariffs, usage fees, or other similar rates or charges for its use are subject to regulation or oversight by a governmental entity. (v) “Subsidiary” means a person that, directly or indirectly, is at least 50 percent owned by a financial guaranty insurance corporation. (w) “Total net liability” of a financial guaranty insurance corporation means the aggregate amount of insured unpaid principal, interest, and other monetary payments, if any, of guaranteed obligations insured or assumed, less reinsurance and less collateral. (x) “Utility first mortgage obligation” means an obligation of an issuer secured by a first priority mortgage on property owned or leased by an investor-owned or cooperative-owned utility company and located in the United States, Canada, or a member country of the Organization for Economic Co-operation and Development having a sovereign rating in one of the top two generic lettered rating classifications by a securities rating agency acceptable to the commissioner, provided that the utility or utility property or the usage fees or other similar utility rates or charges are subject to regulation or oversight by a governmental entity. (Amended by Stats. 2012, Ch. 786, Sec. 41. (AB 2303) Effective January 1, 2013.)
  162. 12101.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An insurer may be organized and admitted to transact financial guaranty insurance, but it must be licensed in California before transacting it unless Section 12118 applies.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12101. An insurer may be organized and admitted to transact financial guaranty insurance in the manner prescribed for stock property and casualty insurers by the laws of this state. Except as provided in Section 12118, an insurer shall be required to be licensed to transact financial guaranty insurance in California before it transacts that insurance in this state. An insurer shall become admitted to transact financial guaranty insurance upon making application and complying with all the requirements of the law. (Repealed and added by Stats. 1990, Ch. 1032, Sec. 6.)
  163. 12102.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    This section lets certain financial guaranty insurers also transact surety insurance, but limits what they may do and bars some insurers from getting or keeping this authority.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12102. (a) An insurer with a certificate of authority to transact the business of financial guaranty insurance as defined in Section 12100 may also transact the business of surety insurance as defined in Section 105. (b) An insurer licensed in this state to transact financial guaranty insurance may not transact any other classes of insurance in this state except surety insurance. (c) An insurer that anywhere transacts or is licensed for any classes other than financial guaranty insurance, surety insurance, and credit insurance shall not be eligible for a certificate of authority for the class of financial guaranty insurance in this state. (d) A financial guaranty insurance corporation may only assume in this state those lines of insurance it is admitted to transact in this state. (e) In other states, an insurer may assume financial guaranty, surety, and credit lines of insurance if it is authorized to transact those lines of insurance in other states. (f) After licensure the holder shall continue to comply with the requirements of this section. (Amended by Stats. 2004, Ch. 47, Sec. 1. Effective June 14, 2004.)
  164. 12103.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    Before an insurer can receive a certificate of authority to write financial guaranty insurance, it must submit a plan of operation to the commissioner for approval.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12103. Prior to the issuance of a certificate of authority to transact financial guaranty insurance, an insurer shall submit for the approval of the commissioner a plan of operation detailing the types and projected diversification of guaranties that will be issued, the underwriting procedures that will be followed, managerial oversight methods, investment policies, and other matters prescribed by the commissioner including, but not limited to, those necessary to allow the commissioner to make a finding for the purposes of Section 717. (Repealed and added by Stats. 1990, Ch. 1032, Sec. 6.)
  165. 12104.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted financial guaranty insurance corporation must follow the code provisions that apply to property and casualty insurers, but only when those provisions are not inconsistent with this article.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12104. An admitted financial guaranty insurance corporation shall be subject to all of the provisions of this code applicable to property and casualty insurers to the extent that the provisions are not inconsistent with the provisions of this article. (Repealed and added by Stats. 1990, Ch. 1032, Sec. 6.)
  166. 12105.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    The filing fee for a certificate of authority or amended certificate of authority to transact financial guaranty insurance is $7,472.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12105. The filing fee for a certificate of authority or amended certificate of authority to transact financial guaranty insurance shall be seven thousand four hundred seventy-two dollars ($7,472). (Amended by Stats. 2017, Ch. 534, Sec. 73. (AB 1699) Effective January 1, 2018.)
  167. 12106.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted financial guaranty insurance corporation’s investments in any one insured entity must stay within 4% of admitted assets, unless a stated government-backed rating exception applies. The corporation may also enter certain hedging and credit protection transactions if all listed conditions are met.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12106. (a) An admitted financial guaranty insurance corporation’s investments in any one entity insured by that corporation shall not exceed 4 percent of its admitted assets as of the end of the prior calendar year, except that this limit shall not apply to investments payable or guarantied by a United States governmental unit or agency or the State of California if the investments payable or guarantied by the United States governmental unit or agency or the State of California shall be rated in one of the top two generic lettered rating classifications by a securities rating agency acceptable to the commissioner. (b) In addition to any transaction that an insurer meeting the requirements of Section 1211 may effect and maintain under any other provision of this code, a financial guaranty insurance corporation may effect and maintain a transaction in contracts for the future delivery or receipt of the currency of a foreign country, interest rate options, credit default swaps under which the insurer is acquiring credit protection, and any other products included in the plan referred to in paragraph (7), if the following conditions are satisfied: (1) The transaction is used for the purpose of limiting risk of loss under financial guaranty insurance policies or reinsurance contracts covering those policies due to fluctuations in interest rates or currency exchange rates or, in the case of credit default swaps, financial default, insolvency, or other credit events. (2) The transaction does not exceed a duration of 12 months beyond the term of those policies or reinsurance contracts. (3) The amount of foreign currencies to be purchased under the transaction does not exceed the amount guarantied under those policies or reinsurance contracts that is denominated in foreign currency. (4) The amount that is subject to interest rate hedging transactions does not exceed the amount guarantied under those policies or reinsurance contracts that is subject to the risk of interest rate fluctuations. (5) The counterparty to the transaction has, or is the principal operating subsidiary of a holding company that has, a long-term unsecured debt rating or claims-paying ability rating that is at least investment grade. (6) The transaction is not conducted for arbitrage purposes. (7) The transaction is entered into pursuant to a plan that has been approved by the board of directors of the financial guaranty insurance corporation and filed with and approved by the insurance department of the state of domicile of the financial guaranty insurance corporation. (c) A transaction entered into pursuant to subdivision (b) shall be governed by the terms of this section and shall not be subject to Section 1211. (Amended by Stats. 2005, Ch. 412, Sec. 2. Effective January 1, 2006.)
  168. 12107.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An insurer may get a financial guaranty insurance license only if it has enough paid-in capital and surplus, and it must keep minimum capital and surplus afterward.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12107. (a) No insurer shall be issued a license to transact financial guaranty insurance unless it has paid-in capital of at least fifteen million dollars ($15,000,000) and surplus of at least eighty-five million dollars ($85,000,000), and shall at all times thereafter maintain a minimum paid-in capital of fifteen million dollars ($15,000,000) and a minimum surplus of sixty million dollars ($60,000,000). (b) An insurer licensed in this state and issuing or reinsuring financial guaranty insurance policies in this state prior to January 1, 1991, shall, notwithstanding the provisions of subdivision (a), be deemed to meet the combined paid-in capital and surplus requirements for transacting the financial guaranty insurance business during the period between January 1, 1991, and January 1, 1993, if it has combined capital and surplus of forty-five million dollars ($45,000,000), which includes paid-in capital of at least two million five hundred thousand dollars ($2,500,000). (c) On and after January 1, 1993, every financial guaranty insurance corporation must fully comply with the condition in subdivision (a) that a minimum paid-in capital of fifteen million dollars ($15,000,000) be held and maintained. (Repealed and added by Stats. 1990, Ch. 1032, Sec. 6.)
  169. 12108.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    Financial guaranty insurance corporations must set up and keep contingency reserves, with different reserve formulas and contribution schedules for older and newer guaranties.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12108. (a) An admitted financial guaranty insurance corporation shall establish and maintain a contingency reserve. (b) With respect to all financial guaranties written prior to and in force as of July 1, 1989: (1) The financial guaranty insurance corporation shall establish and maintain a contingency reserve consistent with the requirements applicable for municipal bond insurance policies which were in effect prior to July 1, 1989, in an amount equal to 50 percent of earned premiums on those policies. (2) To the extent that the financial guaranty insurance corporation’s contingency reserves maintained as of July 1, 1989, are less than those required for municipal bond insurance policies pursuant to paragraph (1), the corporation shall have until January 1, 1994, to bring its reserves into compliance. (c) With respect to financial guaranties of municipal obligation bonds, special revenue bonds and investment grade industrial development bonds written after July 1, 1989: (1) The financial guaranty insurance corporation shall establish and maintain a contingency reserve in accordance with paragraph (3) of subdivision (d) for all those insured issues in each calendar year for each category listed in paragraph (2) of this subdivision. (2) The total contingency reserve required shall be the greater of 50 percent of premiums written for each such category or the following amount prescribed for each such category: (A) Municipal obligation bonds, 0.8 percent of principal outstanding. (B) Special revenue bonds, 1.2 percent of principal outstanding. (C) Investment grade industrial development bonds secured by collateral or with a remaining term at the date of insurance of seven years or less and utility first mortgage obligations, 1.4 percent of principal outstanding. (D) All other investment grade industrial development bonds, 1.6 percent of principal outstanding. (3) Contributions to the contingency reserve required by this paragraph, equal to one-eightieth of the total reserve required, shall be made each quarter for 20 years, provided, however, that contributions may be discontinued so long as the total reserve for all categories listed in items (A) through (D) of subparagraph (2) exceeds the percentages contained in items (A) through (D) when applied against unpaid principal. (d) With respect to all other financial guaranties written on or after July 1, 1989: (1) The financial guaranty insurance corporation shall establish and maintain a contingency reserve in accordance with paragraph (3) for all those insured issues in each calendar year for each such category listed in paragraph (2). (2) The total contingency reserve required shall be the greater of 50 percent of premiums written for each such category or the following amount prescribed for each such category: (A) Investment grade obligations, secured by collateral, or with a remaining term at the date of insurance of seven years or less, 1.2 percent of principal outstanding. (B) Other investment grade obligations, 1.7 percent of principal outstanding. (C) Noninvestment grade obligations secured by collateral, 2.5 percent of principal outstanding. (D) Other noninvestment grade obligations, 3.0 percent of principal outstanding. (3) Contributions to the contingency reserve required by subparagraphs (A) and (B) of paragraph (2), equal to one-sixtieth of the total reserve required, shall be made each quarter for 15 years, and contributions to the contingency reserve required by subparagraphs (C) and (D) of paragraph (2), equal to one-fortieth of the total reserve required, shall be made each quarter for 10 years provided, however, that contributions may be discontinued so long as the total reserve for all categories listed in subparagraphs (A) through (D) of paragraph (2) exceeds the percentages contained in subparagraphs (A) through (D) when applied against unpaid principal. (e) Contingency reserves required in subdivisions (b), (c), and (d) may be established and maintained net of collateral and reinsurance, provided that, in the case of reinsurance, the reinsurance agreement requires that the reinsurer shall, on or after the effective date of the reinsurance, establish and maintain a reserve in an amount equal to the amount by which the financial guaranty insurance corporation reduces its contingency reserve. In addition, contingency reserves required in subdivisions (c) and (d) may be maintained net of refundings and refinancings to the extent the refunded or refinanced issue is paid off or secured by obligations that are directly payable or guarantied by the United States government, and net of insured securities in a unit investment trust or mutual fund that have been sold from the trust or fund without insurance. (f) The contingency reserves may be released thereafter in the same manner in which they were established and withdrawals therefrom, to the extent of any excess, may be made from the earliest contributions to such reserves remaining therein: (1) With the prior written approval of the commissioner, if the actual incurred losses for the year, in the case of the categories of guaranties subject to subdivision (c) exceeds 35 percent of earned premiums, or in the case of the categories of guaranties subject to subdivision (d) exceed 65 percent of earned premiums. (2) Upon 30 days prior written notice to the commissioner, provided that the contingency reserve has been in existence for 40 quarters, for reserves subject to subdivision (c), and 30 quarters, for reserves subject to subdivision (d), upon demonstration that the amount carried is in excess of required amounts or excessive in relation to the financial guaranty insurance corporation’s outstanding obligations. (3) A financial guaranty insurance corporation may invest the contingency reserve in tax and loss bonds or similar securities purchased pursuant to Section 832(e) of the Internal Revenue Code (or any successor provision), only to the extent of the tax savings resulting from the deduction for federal income tax purposes of a sum equal to the annual contributions to the contingency reserve. The contingency reserve shall otherwise be invested only in classes of securities or types of investments specified in Article 3 (commencing with Section 1170) of Chapter 2 of Part 2 of Division 1 and Article 4 (commencing with Section 1190) of Chapter 2 of Part 2 of Division 1. (Amended by Stats. 2005, Ch. 412, Sec. 3. Effective January 1, 2006.)
  170. 12109.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    The section sets rules for calculating loss reserves for financial guaranty insurance corporations, including required reserve components, discount-rate adjustments, limits on salvage deductions, and a reporting trigger when exposure is high.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12109. (a) In addition to the contingency reserve, the case basis method or other method as may be prescribed by the commissioner shall be used to determine loss reserves, which shall include a reserve for claims reported and unpaid net of collateral. A deduction from loss reserves shall be allowed for the time value of money by application of a discount rate equal to the average rate of return on the admitted assets of the financial guaranty insurance corporation as of the date of the computation of that reserve. The discount rate shall be adjusted at the end of each calendar year. In addition a reserve component for incurred but not reported claims shall be reasonably estimated if deemed necessary by the financial guaranty insurance corporation, or following an examination or actuarial analysis, by the commissioner. (b) Except as otherwise permitted by the commissioner, no deduction shall be made for anticipated salvage in computing case basis loss reserves, unless that salvage is held by or under the control of the financial guaranty insurance corporation and would qualify as an admitted asset under Section 1100 and Article 3 (commencing with Section 1170) of Chapter 2 of Part 2 of Division 1 and Article 4 (commencing with Section 1190) of Chapter 2 of Part 2 of Division 1, or unless that salvage constitutes or is secured by a clean, irrevocable letter of credit which is approved by the commissioner or complies with the definition of a letter of credit provided in subdivision (e) of Section 12100. (c) If the insured principal and interest on a defaulted issue of obligations exceed 10 percent of the financial guaranty insurance corporation’s capital, surplus, and contingency reserves, its reserve so established shall be supported by a report from an independent source acceptable to the commissioner. (Repealed and added by Stats. 1990, Ch. 1032, Sec. 6.)
  171. 1211.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.6. Hedging [1211 - 1212] ( Article 4.6 added by Stats. 1983, Ch. 1262, Sec. 1. )

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    This section defines key hedging and derivative terms and limits which domestic insurers may use derivative transactions.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.6. Hedging [1211 - 1212] ( Article 4.6 added by Stats. 1983, Ch. 1262, Sec. 1. ) ## 1211. (a) For the purposes of this section the following definitions shall apply: (1) “Aggregate counterparty exposure” means the sum of the aggregate statement value options, swaptions, caps, floors, and warrants purchased, and the aggregate potential exposure of collars, swaps, forwards, and futures entered into. (2) “Cap” means an agreement obligating the seller to make payments to the buyer with each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interests exceeds a predetermined number, sometimes referred to as the strike rate or strike price. (3) “Collar” means an agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor. (4) “Credit default swap” means an agreement obligating the buyer to pay a periodic payment to the seller in return for the seller’s obligation to make a payment to the buyer if a credit event or events occur with respect to underlying interests or an entity, as specified in the documentation of the credit default swap. (5) “Derivative instrument” means an agreement, option, instrument, or a series or combination of those (A) to make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interests, or to make a cash settlement in lieu thereof, or (B) that has a price, performance, value, or cashflow based primarily upon the actual or expected price, level, performance, value, or cashflow of one or more underlying interests. A derivative instrument includes all investment instruments or contracts that derive all or almost all of their value from the performance of an underlying market, index, or financial instruments. The term includes options, warrants, caps, floors, collars, swaps, credit default swaps, swaptions, forwards, and futures. (6) “Derivative transaction” means a transaction involving the use of one or more derivative instruments. (7) “Floor” means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance, or value of one or more underlying interests. (8) “Forward” means an agreement, other than a future, to make or take delivery in the future of one or more underlying interests, or effect a cash settlement, based on the actual or expected price, level, performance, or value of those underlying interests, but does not mean or include spot transactions effected within customary settlement periods, when issued purchases, or other similar cash market transactions. (9) “Future” means an agreement traded on an organized and qualified futures exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests. (10) “Hedging transaction” means a derivative transaction that is entered into and at all times maintained to reduce (A) risk due to a change in the value, yield, price, cashflow, or quantity of assets or liabilities that the insurer has acquired or incurred or anticipates acquiring or incurring or (B) risk due to changes in the currency exchange rate or the degree of exposure as to assets or liabilities denominated in a foreign currency that an insurer has acquired or incurred or anticipates acquiring or incurring. (11) “Option” means an agreement giving the buyer the right to buy or receive, sell, or deliver, enter into, extend, or terminate or effect a cash settlement based on the actual or expected price, spread, level, performance, or value of one or more underlying interests. (A) For purposes of this paragraph, an agreement giving the buyer the right to buy or receive may also be called a “call option.” (B) For purposes of this paragraph, an agreement giving the buyer the right to sell or deliver may be called a “put option.” (12) “Potential exposure” means the amount determined in accordance with the National Association of Insurance Commissioners Annual Statement Instructions. (13) “Qualified bank” means a bank or trust company that meets all of the following: (A) The bank or trust company is organized and existing, or in the case of a branch or agency of a foreign banking organization is licensed, under federal law or the law of any state. (B) The bank or trust company is regulated, supervised, and examined by the United States federal or state authorities having regulatory authority over banks and trust companies. (C) The bank or trust company has assets in excess of five billion dollars ($5,000,000,000). (D) The bank or trust company has senior obligations outstanding, or has a parent corporation that has senior obligations outstanding, rated AA or better, or the equivalent, by two independent nationally recognized statistical rating organizations. (E) The bank or trust company has a ratio of primary capital to total assets of at least 51/2 percent and a ratio of total capital to total assets of at least 6 percent. (14) “Qualified counterparty” is a qualified broker or dealer or a qualified bank or other counterparty rated AA- or Aa3 or higher by a nationally recognized statistical rating organization. (15) “Qualified broker or dealer” means a broker or dealer that is organized under the laws of a state and is registered under the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a et seq.), and has net capital in excess of two hundred fifty million dollars ($250,000,000). (16) “Replication transaction” means a derivative transaction or combination of derivative transactions effected either separately or in conjunction with cash market investments included in the insurer’s investment portfolio in order to replicate the investment characteristic of another authorized transaction, investment, or instrument or that may operate as a substitute for cash market investments. A derivative transaction entered into by the insurer as a hedging transaction authorized pursuant to this section shall not be considered a replication transaction. (17) “Swap” means an agreement to exchange or to net payments or income streams at one or more times based on the actual or expected price, yield, level, performance, or value of one or more underlying interests. (18) “Swaption” means an option to purchase or sell a swap at a given price and time or at a series of prices and times. A swaption does not mean a swap with an embedded option. (19) “Underlying interest” means the assets, liabilities, other interests, or a combination thereof, underlying a derivative instrument, such as any one or more securities, currencies, rates, indices, commodities, or derivative instruments. (20) “Warrant” means an instrument that gives the holder the right to purchase or sell the underlying interest at a given price and time or at a series of prices and times outlined in the warrant agreement. (b) Any domestic incorporated insurer having admitted assets, as of the preceding December 31, of at least one billion dollars ($1,000,000,000) and capital and surplus of at least two hundred million dollars ($200,000,000), after investing an amount equal to its required minimum paid-in capital in securities specified in Article 3 (commencing with Section 1170), may engage in derivative transactions pursuant to, and in compliance with, this section. (c) An insurer may only use derivative instruments under this section to engage in hedging transactions and replication transactions authorized pursuant to this section. (d) An insurer that engages in hedging transactions or replication transactions as authorized pursuant to this section shall do both of the following: (1) Maintain its position in any outstanding derivative instrument used as part of a hedging transaction or replication transaction for only as long as the hedging transaction or replication transaction, as the case may be, continues to be effective in meeting the objective and the rationale the insurer identifies at the point of inception of the hedging or replication transaction. (2) Be able to demonstrate to the commissioner, upon request, that any hedging transaction or replication transaction continues to be effective in meeting that objective and rationale. (e) (1) The aggregate statement value, and potential exposure, of all transactions held under the authority of this section at any one time shall not be in excess of 71/2 percent of the insurer’s admitted assets, as of the preceding December 31. (2) Hedging transactions under this section may only be made if, as a result of, and after giving effect to the transaction, all of the following is established: (A) Excluding options acquired under Section 1212, the aggregate statement value of options, swaptions, caps, floors, and warrants purchased pursuant to this section does not exceed 71/2 percent of its admitted assets as of the preceding December 31. (B) Excluding options acquired under Section 1212, the aggregate statement value of options, swaptions, caps, and floors written pursuant to this section does not exceed 3 percent of its admitted assets as of the preceding December 31. (C) Excluding futures entered into under Section 1212, the aggregate potential exposure of collars, swaps, forwards, and futures, entered into and, except for options acquired under Section 1212, options, swaptions, caps, and floors written pursuant to this section does not exceed 61/2 percent of its admitted assets as of the preceding December 31. (f) An insurer may purchase or sell one or more derivative instruments to offset any derivative instrument previously purchased or sold, as the case may be, without regard to the quantitative limitations of this section, provided that the derivative instrument is an exact offset to the original derivative instrument being offset. (g) (1) The board of directors of any domestic insurer that makes investments pursuant to this section shall first adopt written guidelines for the making of the investments. The guidelines shall cover factors including concentration and diversification of counterparty risk, quality, maturity, and diversification of derivative investments, and other specifications, including investment strategies, asset liability management practices, the insurer’s liquidity needs and its capital and surplus, and other factors that the board of directors deems appropriate. The guidelines shall also include processes and practices that will facilitate the monitoring of derivative transactions through cashflow testing or other methods to substantiate the effectiveness of the hedging strategies and derivative transactions and provide the board of directors of the committee thereof charged with the responsibility for supervising investments the opportunity to assure itself of the training, sufficient understanding, and competency of pertinent personnel implementing the derivative transactions. (2) In order to address the need for appropriate oversight by senior management and by the board of directors, or a committee thereof charged with the responsibility for supervising investments, and to provide for a comprehensive risk management process, an insurer shall establish the following with respect to derivative transactions: (A) Appropriate limits for various identified risks relevant to the derivative transactions used by the insurer. (B) Procedures and practices that control the nature and amount of those risks. (C) Adequate systems or processes for identifying and measuring those risks. (D) Systems or processes for documenting, monitoring, and reporting risk exposures on a timely basis. (E) Systems or processes of internal review and audit to ensure the integrity of the overall risk management process. (3) The board of directors, or a committee thereof charged with the responsibility for supervising investments, shall receive and review quarterly reports which shall include all of the following: (A) Information to ascertain that all derivative transactions have been made in accordance with delegations, standards, limitations, and investment objectives contained in the derivative guidelines. (B) The outstanding derivative positions. (C) The unrealized gains or losses thereon. (D) The derivative transactions closed during the report period. (E) A performance review of the derivative transactions. (F) An evaluation of the risks and benefits of the derivative transactions. (G) Other information necessary to ensure that the internal control procedures are being followed. (4) The board of directors, or a committee thereof charged with the responsibility for supervising investments, shall establish the following management oversight standards for derivative transactions: (A) The board of directors, or a committee thereof charged with the responsibility for supervising investments, has an affirmative obligation to inform management of its desired risk tolerance levels. Management shall appropriately translate these risk tolerance levels into effective policies and procedures that address both individual transactions and entire portfolios. (B) Management and the board of directors, or a committee thereof charged with the responsibility for supervising investments, shall receive sufficient information to assess the strengths and limitations of the insurer’s risk measurement systems in order to determine appropriate risk limits. The board of directors, or a committee thereof charged with the responsibility for supervising investments, shall also review management’s response to strengths and limitations identified through oversight processes such as stress testing, independent validation, and back-testing of risk measurement models. Management and the board of directors, or a committee thereof charged with the responsibility for supervising investments, shall consider the information identified by the oversight processes, including the potential for indirect effects of downside performance beyond the insurer’s finances, when they determine and communicate their risk profile. (C) When management or the board of directors, or a committee thereof charged with the responsibility for supervising investments, identifies weaknesses in the risk management process, they shall consider alternatives and take steps to strengthen that process and maintain detailed documentation of steps and actions taken. (D) Actions shall be taken to correct any deficiencies in internal controls relative to derivative transactions, including any deficiencies determined by the independent certified public accountant in the evaluation of accounting procedures and internal controls and maintain detailed documentation of steps and actions taken. (E) Personnel responsible for risk oversight functions shall possess independence, authority, and expertise. (F) Issuer and counterparty credit decisions for each transaction shall be consistent with the overall credit standards of the insurer. (G) In connection with each derivative transaction under this section, insurers shall maintain a statement in their records listing any member of the board of directors who is employed by, or a partner in, a party involved in the derivative transaction. (5) The board of directors or committee charged with the responsibility of supervising investments shall determine at least quarterly whether all derivative transactions have been made in accordance with delegations, standards, limitations, and investment objectives prescribed in the guidelines. If the determinations are made by a committee of the board of directors, the minutes of the committee reflecting the determinations shall be recorded and a report thereon shall be submitted to the board for its review at the board’s next meeting. (6) The commissioner shall require the guidelines to be submitted and shall disapprove the guidelines if the insurer is unable to show that the guidelines are found sufficient to prevent financially unsound or hazardous transactions or practices. (h) An insurer shall comply with applicable financial requirements as promulgated by the commissioner and the National Association of Insurance Commissioners included in the Purposes and Procedures Manual of the National Association of Insurance Commissioners Securities Valuation Office, the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, and the National Association of Insurance Commissioners Annual Statement Instructions, including, but not limited to, the reporting of transfers, if any, of interests in the assets of the insurer pledged as collateral or interests in the assets of counterparties received as collateral in connection with derivative transactions. (i) (1) The counterparty exposure under a derivative instrument entered into by an insurer authorized to engage in derivative transactions pursuant to this section shall be deemed to be an obligation of the institution to which the insurer is exposed to credit risk and shall be included in determining compliance with any single or aggregate quantitative limitation on investments made by an insurer under this section. (2) An insurer shall only enter into derivative transactions with counterparties that are rated one by the Securities Valuation Office. (3) Notwithstanding any single or aggregate quantitative limitation on investments made by an insurer under this section, the aggregate counterparty exposure under one or more derivative transactions to any single counterparty rated one by the Securities Valuation Office, other than a “qualified counterparty,” shall be limited to one-half of 1 percent of an insurer’s admitted assets, and all counterparties rated one by the Securities Valuation Office, other than qualified counterparties, shall be limited to 3 percent of an insurer’s admitted assets. (j) Investments made pursuant to this section, and related transactions, are deemed excess funds investments and shall be subject to the provisions of Sections 1153.5, 1154, and 1210, and Article 4 (commencing with Section 1190), provided that if an insurer classifies an investment under Section 1210 that investment shall continue to be subject to the limitations of paragraph (1) of subdivision (e). Notwithstanding anything to the contrary, a requirement providing that any derivative transaction be disposed of by the insurer pursuant to Section 1202 shall be deemed conclusive unless the insurer establishes that the derivative transaction or transactions are financially sound and not hazardous. This section shall only be deemed to permit replication of investments or instruments, that are otherwise permitted in this code, and that are reported in compliance with the requirements of the risk-based capital and risk-based capital instructions required by Section 739.2. (k) Except as permitted in this section, nothing in this section shall be deemed to permit an investment, transaction, or practice that is not authorized by another section of this code. Exposure to risk by use of derivatives shall be consistent with the overall investment guidelines. Insurers shall not enter into derivative transactions in whole or in part with funds borrowed for that purpose, including, but not limited to, on margin. (l) The commissioner may adopt rules and issue guidelines establishing standards and requirements relative to practices authorized in this section. In connection with any of the actions contemplated by this section to be taken by the commissioner, including review of an insurer’s written guidelines with respect to derivative transactions and review of documentation maintained by an insurer with respect to derivative transactions, the commissioner may deem the actions to be an examination of an insurer subject to the provisions of Sections 730 to 738, inclusive. The commissioner shall issue regulations establishing requirements regarding the disclosure of affiliations and conflicts of interest between an insurer and persons contracted by the commissioner to perform services on behalf of the commissioner in connection with the matters authorized by this section. (m) An insurer that is not engaged in the issuance of new policies of insurance and that is formed for the purpose of facilitating the rehabilitation of an insolvent insurer under Article 14 (commencing with Section 1010) of Chapter 1, shall, prior to engaging in any derivative transaction, obtain approval for each transaction from the commissioner, and shall otherwise comply with the requirements of this section. However, the insurer may, upon request to the commissioner, and upon showing satisfactory to the commissioner that prior approval of each transaction would not be in the best interests of the policyholders, request that the commissioner waive the requirement of prior approval and the insurer shall, in addition to complying with the requirements of this section, submit monthly written reports of all derivative transactions to the commissioner in the form required by the commissioner within 30 days of the prior month’s end. (Amended by Stats. 2003, Ch. 62, Sec. 200. Effective January 1, 2004.)
  172. 12110.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    Financial guaranty premiums must be backed by an unearned premium reserve, net of reinsurance and collateral; installment premiums use a daily or monthly pro rata reserve, and the commissioner may prescribe or approve another earnings method for other premiums.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12110. An unearned premium reserve shall be established and maintained net of reinsurance and collateral with respect to all financial guaranty premiums. Where financial guaranty insurance premiums are paid on an installment basis, an unearned premium reserve shall be established and maintained, net of reinsurance, computed on a daily or monthly pro rata basis. All other financial guaranty insurance premiums written shall be earned in proportion with the expiration of exposure, or by such other method as may be prescribed or approved by the commissioner. (Amended by Stats. 2005, Ch. 412, Sec. 4. Effective January 1, 2006.)
  173. 12111.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted financial guaranty insurance corporation must use commercially feasible procedures to make sure certain prospectuses disclose that claims may be excluded from California Insurance Guaranty Association coverage if the insurer becomes insolvent.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12111. An admitted financial guaranty insurance corporation shall adopt procedures reasonably calculated to ensure, to the extent it is commercially feasible for the financial guaranty insurance corporation, that any prospectus which discloses that a policy of financial guaranty insurance has been issued also discloses that in the event the financial guaranty insurance corporation were to become insolvent, any claims arising under the policies of financial guarantee insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 15.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1. (Amended by Stats. 2005, Ch. 412, Sec. 5. Effective January 1, 2006.)
  174. 12112.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    Financial guaranty insurance in this state is generally limited to admitted insurers, with specific permitted guaranties and foreign-currency conditions for corporations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12112. (a) Except as provided in Section 12118, financial guaranty insurance may be transacted in this state only by an insurer admitted to transact financial guaranty insurance. (b) The following guaranties are permissible: (1) Financial guaranty insurance shall be written only to insure timely payment of contractual obligations, including principal and interest, purchase obligations, dividends, or any other payment obligation, however characterized of the following: (A) Municipal obligation bonds. (B) Special revenue bonds. (C) Industrial development bonds. (D) Obligations of corporations, trusts, or similar entities established under applicable law. (E) Partnership obligations. (F) Asset-backed securities, trust certificates and trust obligations other than mortgage-backed securities secured by first mortgages on real property which are insurable by a mortgage guaranty insurer authorized under Chapter 2A (commencing with Section 12640.01) of Part 6 of Division 2, unless one of the following applies: (i) The mortgages with loan-to-value ratios in excess of 80 percent are insured by mortgage guaranty insurers authorized under Chapter 2A (commencing with Section 12640.01) of Part 6 of Division 2, are insured by mortgage guaranty insurers licensed under the laws of any other state if that insurer has a claims paying rating of investment grade from a securities rating agency acceptable to the commissioner, or are in an aggregate principal amount less than the single risk limits prescribed in subdivision (e) of Section 12115. (ii) Additional mortgages with principal balances, other collateral with a market value, or, provided the insured risk is investment grade, excess spread, in each instance in an amount at least equal to the coverage that would otherwise be provided by those mortgage guaranty insurers in accordance with item (i) of this subparagraph are pledged as additional support for the asset-backed securities. (G) Installment purchase agreements executed as a condition of sale. (H) Consumer debt obligations. (I) Utility first mortgage obligations. (J) Any other debt instrument or monetary obligation that the commissioner determines by order, regulation, or written consent to be substantially similar to any of the foregoing. (2) A corporation may insure the timely payment of monetary obligations in any category designated in paragraph (1), notwithstanding that the obligation may be insured by a financial guaranty insurance policy issued by another insurer. In the event that any obligation is insured by more than one financial guaranty insurance policy, then each of the insurance policies may by its terms specify its priority of payment in the event of a default under the obligation insured or under any other insurance policy, provided that an insurer shall be entitled to take into account payment under another policy insuring the obligation for purposes of establishing and maintaining loss reserves only to the extent that the policy issued by the insurer provides for payment only in the event of payment default under both the obligation and the other policy. (3) A corporation may also write financial guaranty insurance, as defined in subparagraph (A) of paragraph (1) of subdivision (a) of Section 12100 to insure the timely payment of non-United States dollar debt instruments or other monetary obligations denominated or payable in foreign currency, only for the categories listed in subparagraphs (A) to (J), inclusive, of paragraph (1), provided that each of the following conditions is satisfied: (A) The currency is that of an Organisation for Economic Co-operation and Development country or another country whose sovereign rating is investment grade, or the country is not disapproved by the commissioner within 30 days following receipt of written notification. The commissioner shall not disapprove the country if it is demonstrated that there is no undue risk associated with insuring the timely payment of the instruments or obligations. In making such a determination, the commissioner shall take into consideration the corporation’s outstanding liabilities on noninvestment grade instruments and obligations in relation to its outstanding liabilities on all instruments and obligations and in relation to the amount of surplus to policyholders. (B) Reserves required pursuant to Sections 12108, 12109, and 12110 in regard to the obligations are established and adjusted quarterly based upon the then current foreign exchange rates. (C) The obligations do not exceed 25 percent of an insurer’s aggregate net liability. (D) The aggregate and single risk limitations prescribed by Section 12106 and 12115 are determined by applying the then current foreign exchange rates. (Amended by Stats. 2005, Ch. 412, Sec. 6. Effective January 1, 2006.)
  175. 12113.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted financial guaranty insurance corporation must keep and preserve specified underwriting, monitoring, credit-risk, collateral, and other requested materials.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12113. An admitted financial guaranty insurance corporation shall keep copies of all relevant materials prepared by the insurer or used in the initial underwriting or ongoing monitoring of insured risk; all relevant documents pertaining to changes in the credit risk or performance of the insured on the obligation, and all materials pertaining to the examination of the condition of collateral, assets, or other security; and any other materials requested by the commissioner. All those materials shall be maintained for the entire period during which the insurance is in force and shall be available for examination upon request of the commissioner by the commissioner or by any rating agency approved by the commissioner. (Added by Stats. 1990, Ch. 1032, Sec. 6.)
  176. 12114.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An insurer may insure certain non-investment-grade obligations only if at least 95% of related total net liability is investment grade. A financial guaranty insurance corporation must keep capital, surplus, and contingency reserve at or above specified percentage minimums, and the commissioner may require additional reserves if reserves are inadequate.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12114. (a) An insurer may insure obligations enumerated in subparagraphs (A), (B), and (C) of paragraph (1) of subdivision (b) of Section 12112 that are not investment grade so long as at least 95 percent of the insurer’s total net liability on the kinds of obligations enumerated in those subparagraphs is investment grade. (b) The financial guaranty insurance corporation shall at all times maintain capital, surplus, and contingency reserve in the aggregate no less than the sum of the following: (1) 0.3333 percent of the total net liability under guaranties of municipal bonds and utility first mortgage obligations. (2) 0.6666 percent of the total net liability under guaranties of investment grade asset-backed securities. (3) 1.0 percent of the total net liability under guaranties, secured by collateral or having a term of seven years or less of: (A) Investment grade industrial development bonds, and (B) Other investment grade obligations. (4) 1.5 percent of the total net liability under guaranties of other investment grade obligations. (5) 2.0 percent of the total net liability under guaranties of: (A) Noninvestment grade consumer debt obligations, and (B) Noninvestment grade asset-backed securities. (6) 3.0 percent of the total net liability under guaranties of noninvestment grade obligations secured by first mortgages on commercial real estate and having loan-to-value ratios of 80 percent or less. (7) 5.0 percent of the total net liability under guaranties of other noninvestment grade obligations. (8) If the amount of collateral required by paragraph (3) of subdivision (b) is no longer maintained, that proportion of the obligation insured which is not so collateralized shall be subject to the aggregate limits specified in paragraph (4) of subdivision (b). (9) Additional surplus determined by the commissioner to be adequate to support the writing of surety insurance and credit insurance if the financial guaranty insurance corporation has been authorized to transact surety insurance and credit insurance as authorized by Section 12102. (c) Whenever the reserves for outstanding credit insurance losses or loss expenses or any insurer licensed in this state to transact financial guaranty insurance are determined by the commissioner to be inadequate, he or she shall require the insurer to maintain additional reserves. (Amended by Stats. 2005, Ch. 412, Sec. 7. Effective January 1, 2006.)
  177. 12115.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    A financial guaranty insurance corporation must limit its exposure to loss and keep specified risk measures within percentage caps tied to its capital, surplus, and contingency reserve.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12115. A financial guaranty insurance corporation admitted to transact financial guaranty insurance in this state shall limit its exposure to loss, net of collateral and reinsurance, as follows: (a) For municipal obligation bonds and special revenue bonds: (1) The insured average annual debt service with respect to any one entity and backed by a single revenue source may not exceed 10 percent of the aggregate of the financial guaranty insurance corporation’s capital, surplus, and contingency reserve. (2) The insured unpaid principal issued by a single entity and backed by a single revenue source may not exceed 75 percent of the aggregate of the financial guaranty insurance corporation’s capital, surplus, and contingency reserve. (b) For each issue of asset-backed securities issued by a single entity, and for each pool of consumer debt obligations, the lesser of: (1) Insured average annual debt service; or (2) Insured unpaid principal (reduced by the extent to which the unpaid principal of the supporting assets and, provided the insured risk is investment grade, excess spread, exceed the insured unpaid principal) divided by nine; shall not exceed 10 percent of the aggregate of the financial guaranty insurance corporation’s capital, surplus, and contingency reserve, provided that no asset in the pool supporting the asset-backed securities exceeds the single risk limits prescribed in subdivision (e) of Section 12115 if directly guarantied; and provided further that, if the issuer of such insured asset-backed securities is a special purpose corporation, trust or other entity and that issuer shall have indebtedness outstanding with respect to any other pool of assets, either such other indebtedness shall be entitled to the benefits of a financial guaranty policy of the same financial guaranty insurance corporation, or such other indebtedness shall (A) be fully subordinated to the insured obligation, with respect to, or be nonrecourse with respect to, the pool of assets that supports the insured obligation, (B) be nonrecourse to the issuer other than with respect to the asset pool securing such other indebtedness and proceeds in excess of the proceeds necessary to pay the insured obligation (“excess proceeds”) and (C) not constitute a claim against the issuer to the extent that the asset pool securing such other indebtedness or excess proceeds are insufficient to pay such other indebtedness. (c) For obligations issued by a single entity and secured by commercial real estate, and not meeting the definition of asset-backed securities, the insured unpaid principal less 50 percent of the appraised value of the underlying real estate shall not exceed 10 percent of the aggregate of the financial guaranty insurance corporation’s capital, surplus, and contingency reserve. (d) For utility first mortgage obligations, the insured average annual debt service shall not exceed 10 percent of the aggregate of the financial guaranty insurance corporation’s capital, surplus, and contingency reserve. (e) For all other financial guaranties, the insured unpaid principal for any one entity and backed by a single revenue source may not exceed 10 percent of the aggregate of the financial guaranty insurance corporation’s capital, surplus, and contingency reserve. (Amended by Stats. 2005, Ch. 412, Sec. 8. Effective January 1, 2006.)
  178. 12115.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted financial guaranty insurance corporation must notify the commissioner and its state’s insurance regulatory authority if it falls below certain rating levels, file a two-year business plan after a lower rating failure, comply with any corrective order, and cannot take certain new-risk actions after losing investment-grade status without prior written approval.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12115.5. (a) If an admitted financial guaranty insurance corporation fails to maintain a rating in any of the top three generic rating classifications by any securities rating agency acceptable to the commissioner, it shall immediately send written notification of this failure to both the commissioner and the insurance regulatory authority in its state of domicile. (b) (1) If an admitted financial guaranty insurance corporation fails to maintain a rating at least equal to the highest notch in the fourth generic rating classification by any securities rating agency acceptable to the commissioner, the insurer shall prepare and file with the commissioner a two-year business plan, in reasonable detail, together with other information that the commissioner requires. The plan shall be filed within 45 days of the date when the insurer fails to maintain that rating. (2) In response to that failure, the commissioner may conduct any examination or analysis of the insurer’s assets, liabilities, and operations, including its pricing, that he or she deems necessary. (3) After reviewing the business plan and conducting any examination or analysis, the commissioner may issue a corrective order specifying the corrective measures that he or she determines to be required, and the insurer shall implement those measures. In determining corrective measures, the commissioner may take into account the factors that he or she deems relevant with respect to the insurer, including the results of the examination or analysis. (c) If an admitted financial guaranty insurance corporation fails to maintain an investment grade rating by any securities rating agency acceptable to the commissioner, it shall not do either of the following without the commissioner’s specific prior written approval: (1) If domiciled in this state, accept additional risks or issue new policies anywhere. (2) If domiciled in another state, accept additional risks in this state or issue new policies insuring risks in this state. (Added by Stats. 2005, Ch. 412, Sec. 9. Effective January 1, 2006.)
  179. 12116.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    If a financial guaranty insurer exceeds certain loss limits, it must notify the commissioner immediately and may have to stop new business or submit a corrective plan.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12116. (a) If an admitted financial guaranty insurance corporation at any time exceeds any limitation prescribed by subdivision (a) or (b) of Section 12114 or Section 12115, the corporation shall immediately notify the commissioner in writing. Upon receipt of the written notification, or independent of its receipt, the commissioner may issue an order to show cause why the financial guaranty insurance corporation should not cease transacting financial guaranty insurance business. If the commissioner issues such an order, the commissioner shall serve notice of hearing with the order to the financial guaranty insurance corporation stating the time and place therefor, and the conduct, condition or grounds upon which the commissioner has made the order. The hearing shall occur not less than 20 nor more than 30 days after notice is served. At the hearing, the burden to show cause why the financial guaranty insurance corporation should not cease transacting new financial guaranty insurance shall be borne solely by the financial guaranty insurance corporation. (b) If the commissioner does not issue an order pursuant to subdivision (a) upon receiving written notice, the financial guaranty insurance corporation shall, within 30 days after the limitations are breached, submit a written plan to the commissioner detailing the steps that it will take or has taken to reduce its exposure to loss to no more than the amounts permitted by subdivisions (a) and (b) of Section 12114 and Section 12115. If, after review of the written plan, the commissioner determines that the corporation has not presented reasonable steps to reduce its exposure to loss to not more than the permitted amounts, the commissioner may issue an order to show cause following the same procedures as prescribed in subdivision (a). (c) If, after notice and hearing pursuant to subdivision (a) or (b), the commissioner determines that the financial guaranty insurance corporation has exceeded any limitation prescribed by subdivision (a) or (b) of Section 12114 or Section 12115, the commissioner may order the corporation to cease transacting any new financial guaranty insurance business until its exposure to loss no longer exceeds these limitations. (d) The provisions of this section and Section 12115.5 shall in no way limit the stop order power of the commissioner under any other section. (Amended by Stats. 2005, Ch. 412, Sec. 10. Effective January 1, 2006.)
  180. 12116.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    The commissioner may set conditions for admitted financial guaranty insurers, and may require extra reserves, reject collateral for reporting, or order revised financial statements in certain cases.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12116.5. (a) The commissioner may, for good cause, implement by regulation, order, or written consent, reasonable conditions or limitations under which any or all admitted financial guaranty insurance corporations may insure the type of business described in paragraph (2) of subdivision (c) of Section 12100 or subdivision (a) of Section 12119, reduce reserves in respect of collateral described in paragraph (2) or (5) of subdivision (e) of Section 12100, or engage in the transactions described in subdivision (b) of Section 12106, when, in the judgment of the commissioner, those conditions or limitations are necessary and appropriate to safeguard insurer solvency. (b) Whenever the reserves for outstanding liabilities for obligations insured under subdivision (c) of Section 12100 are determined by the commissioner to be inadequate, he or she shall require the insurer to maintain additional reserves. (c) The commissioner may disallow, for purposes of any financial statements or reports required or permitted to be filed under this code, the recognition of collateral authorized by paragraph (2) or (5) of subdivision (e) of Section 12100 if the commissioner finds after inquiry and review that the collateral fails to legally secure the obligations to which it relates, the collateral is inaccurately valued, the value of the collateral is insufficient in relation to the obligations secured, or the legality or value of the collateral cannot readily be ascertained based on information provided. (d) The commissioner may require restatement or other relevant revision of any admitted financial guaranty insurer’s annual or other financial statement or report required or permitted to be filed under this code if the commissioner finds after inquiry and review that any transaction entered into under subdivision (b) of Section 12106 has the effect of distorting, misrepresenting, or otherwise rendering inaccurate, misleading, or incomplete the financial condition of the insurer in any material respect. (e) No credit default swap authorized or permitted to be insured, acquired, or otherwise used for any purpose by any admitted financial guaranty insurance corporation under any provision of this code shall be used in any manner for more than one purpose, or under more than one statutory authorization, unless authorized by this code. (Added by Stats. 2005, Ch. 412, Sec. 11. Effective January 1, 2006.)
  181. 12117.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    A financial guaranty insurance corporation is not treated as violating Section 12115 for certain pre-1991 outstanding insurance if it was compliant with the single risk limit when issued; otherwise it must comply with Section 12115 by January 1, 1994.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12117. A financial guaranty insurance corporation shall not be deemed in violation of any limitation prescribed by Section 12115 with respect to any financial guaranty insurance outstanding prior to January 1, 1991, if the financial guaranty insurance corporation was in compliance with the applicable single risk limit in effect in this state at the time that the financial guaranty insurance policy was issued. If the financial guaranty insurance corporation was not so in compliance, it shall comply with the limitations prescribed by Section 12115 no later than January 1, 1994. (Added by Stats. 1990, Ch. 1032, Sec. 6.)
  182. 12118.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted but not yet admitted-to-transact financial guaranty insurer must follow this article, can keep writing only within stated limits, and must meet reserve and approval requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12118. An admitted insurer transacting financial guaranty insurance in this state but which is not admitted to transact, financial guaranty insurance in this state shall be subject to all the provisions of this article and: (a) May continue to write financial guaranties of the type authorized by subdivision (b) of Section 12112 as follows: (1) For a period not to exceed five years from January 1, 1991, provided that by July 1, 1991, application shall be made to the commissioner to organize or admit a financial guaranty insurance corporation, controlled by or under common control with that insurer, which financial guaranty insurance corporation, once admitted, shall immediately assume all of the financial guaranty insurance in force on the books of the insurer which was written on or after January 1, 1991. (2) In the case of an insurer transacting only financial guaranty insurance prior to January 1, 1991, which would comply with all of the requirements for admission as a financial guaranty insurance corporation under this article and which has made application, and has paid the filing fee of five thousand dollars ($5,000) required by Section 12105 to amend its current certificate of authority to financial guaranty insurance by no later than March 1, 1991, the insurer may continue to write financial guaranty insurance until the time that the commissioner issues or denies the amended certificate of authority or the application is otherwise terminated. (b) Shall, if it does not make application for an amended certificate of authority to transact the business of financial guaranty insurance pursuant to paragraph (1) of subdivision (a), cease writing any new financial guaranty insurance by no later than July 1, 1991. An insurer subject to this paragraph may do one or more of the following: (1) Reinsure its net in-force business with an admitted financial guaranty insurance corporation. (2) Subject to the prior approval of its domiciliary commissioner and the commissioner of this state, reinsure all or part of its net in-force business with an insurer meeting the requirements of subdivision (b) of Section 12121, except that, in the case of an admitted surety insurer or a nonadmitted insurer that transacts financial guaranty insurance and insurance other than financial guaranty insurance, the insurer’s combined capital and surplus shall be at least one hundred million dollars ($100,000,000) and subparagraphs (A) to (F), inclusive, of paragraph (3) of subdivision (b) of Section 12121 shall not be applicable. The assuming insurer shall maintain reserves for the reinsured business in the manner applicable to the ceding insurer under paragraph (2) of subdivision (a) of Section 12121. (3) Thereafter continue the risks then in force and, with 30 days prior written notice to its domiciliary commissioner, write new financial guaranty policies provided the writing of the policies is reasonably prudent to mitigate either the amount of or possibility of loss in connection with business written prior to January 1, 1991. However, an insurer shall receive the prior approval of its domiciliary commissioner and the commissioner of this state before writing any new financial guaranty insurance policies that would have the effect of increasing its risk of loss. (c) Shall, for all guaranties in force prior to January 1, 1991, including those that fall under the definition of financial guaranty insurance contained in subdivision (a) of Section 12100, be subject to the contingency reserve, reserves for loss and loss adjustment expenses, and unearned premium reserve requirements applicable for municipal bond insurance policies which were in effect prior to July 1, 1989, or January 1, 1991, as appropriate. To the extent that the insurer’s contingency reserves maintained as of the effective date of this article are less than those required under paragraph (1) of subdivision (b) of Section 12108, the insurer shall have until January 1, 1994, to bring its reserves into compliance, except that a part of the reserve may be released proportional to the reduction in net total liabilities resulting from reinsurance, provided that the reinsurer shall, on the effective date of the reinsurance, establish a reserve in an amount equal to the amount released and, in addition, a part of the reserve may be released with the approval of the commissioner upon demonstration that the amount carried is excessive in relation to the corporation’s outstanding obligations. (d) Shall be subject to the reserve requirements applicable to financial guaranty insurance corporations, for business transacted on or after January 1, 1991. (Amended by Stats. 1994, Ch. 662, Sec. 4. Effective January 1, 1995.)
  183. 12119.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    Policy forms must be filed within 30 days after first use in the state, and policies must include specified terms about no acceleration, swap coverage limits, insolvency coverage exclusions, and possible extra provisions set by the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12119. Policy forms and any amendments thereto shall be filed with the commissioner within 30 days after their use in this state by the financial guaranty insurance corporation. (a) (1) Every policy shall provide that, in the event of a payment default or insolvency of the obligor, there shall be no acceleration of the payments required to be made under the policy with respect to guarantied obligations except at the option of the financial guaranty insurance corporation. (2) Notwithstanding paragraph (1), the following provisions apply: (A) A policy may insure amounts payable under a credit default swap or interest rate, currency, or other swap upon a credit event or termination event if the expected amount payable on an accelerated basis in respect of any individual obligation referenced by a credit default swap or in the aggregate under an interest rate, currency, or other swap does not exceed the single risk limits prescribed in subdivision (e) of Section 12115. (B) A policy insuring a credit default swap referencing an obligation shall be treated as if the insurer had directly insured the referenced obligation for all other purposes of this article, including, without limitation, contingency reserve requirements, except that the currency of amounts owed under the credit default swap, rather than the currency of the obligations referenced by the credit default swap, shall apply for purposes of determining whether the obligation is a permissible guaranty under subdivision (b) of Section 12112. (b) Every policy shall contain a statement that in the event the insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 15.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1. (c) The commissioner may prescribe additional minimum policy provisions determined by the commissioner to be necessary or appropriate to protect policyholders, claimants, obligees, or indemnitees. (Amended by Stats. 2005, Ch. 412, Sec. 12. Effective January 1, 2006.)
  184. 1212.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.6. Hedging [1211 - 1212] ( Article 4.6 added by Stats. 1983, Ch. 1262, Sec. 1. )

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    Some domestic insurers may use insurance futures and related options for bona fide hedging, but only within detailed limits and approval steps.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Incorporated Insurers [1140 - 1260] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.6. Hedging [1211 - 1212] ( Article 4.6 added by Stats. 1983, Ch. 1262, Sec. 1. ) ## 1212. (a) Any domestic incorporated insurer having aggregate capital and surplus as of the preceding December 31 of at least twenty-five million dollars ($25,000,000), after investing an amount equal to its required minimum paid-in capital in securities specified in Article 3 (commencing with Section 1170), may purchase insurance futures contracts, purchase call options on insurance futures contracts, and sell put options on insurance futures contracts in bona fide hedging transactions, subject to the limitations set forth in this section. Domestic insurers may sell insurance futures contracts, sell call options on insurance futures contracts, and purchase put options on insurance futures contracts only for the purpose of a closing transaction. No other sales of insurance futures contracts, sales of call options on insurance futures contracts, or purchases of put options on insurance futures contracts are authorized under this section. (b) For purposes of this section, “insurance futures contracts” mean contracts based on indices of loss performance of insurance contracts and traded in accordance with the rules and procedures of a board of trade regulated by the Commodity Futures Trading Commission, or any successor agency, and subject to the terms and conditions of the Commodity Exchange Act (7 U.S.C. Sec. 1 et seq.), as amended. For purposes of this section, “put and call options on insurance futures contracts” mean put or call options, regulated in accordance with the rules of the board of trade on which the options are traded, on insurance futures contracts. (c) No domestic insurer may purchase insurance futures contracts, purchase call options on insurance futures contracts, or sell put options on insurance futures contracts unless the insurance futures contracts are required to be settled in cash within nine months after the end of the loss period underlying the insurance futures contracts, and the relevant type of insurance futures contracts have attained an average daily trading volume of at least 250 contracts and an open interest of 1,000 contracts as reported by the relevant board of trade for the one-month period prior to the insurer initiating the transaction. (d) A transaction will be considered a bona fide hedging transaction only if, upon execution, (1) the insurance futures contract or option is specifically identified with a group of insurance policies issued or reasonably expected to be issued by the insurer in the ordinary course of business and (2) the insurer’s relevant underwriting or insurance-related risk exposures bear a correlation to the risk exposures of the index underlying the insurance futures contracts or options thereon entered into as part of the hedging transaction. For purposes of this section, “correlation” means that the loss experience of the policies hedged is, at the date of purchase of the insurance futures contracts, expected to develop similarly to the loss experience of the policies underlying the insurance futures contract when exposed to similar occurrences and conditions. The insurer shall identify this hedging transaction and the policies and written premiums hedged on its books and records and any insurance futures contract or option position shall be terminated as soon as possible after this correlation does not exist. (e) Notwithstanding other limitations of this section, an insurer may hold open insurance futures contracts and put and call options on insurance futures contracts which do not exceed the equivalent of 75 percent of the insurer’s written premium for each line of business, as designated in the annual statement required by Section 923, being hedged pursuant to this section. For purposes of this subdivision, equivalence shall be based on the par dollar value of the insurance futures contracts and an insurer’s written premium shall be measured based on the loss period reflected in the underlying futures contracts. (f) A domestic insurer shall not enter into hedging transactions in insurance futures contracts or options on insurance futures contracts unless the transaction is authorized or approved by the insurer’s board of directors or a committee designated by the board. This authorization or approval shall be entered on the records or minutes of the domestic insurer and, if made upon the authority of a committee of directors, shall be submitted to the full board of directors for ratification at their next meeting. The entry of approval shall show the fact of entering into the hedging transaction, the specific policies hedged, the size of the hedge as measured pursuant to subdivision (e), and the name of each director voting to approve the hedging transaction. (g) The commissioner may, in his or her discretion, by written order require the disposal of any insurance futures contracts or options on insurance futures contracts made in violation of this section. Pending a disposal pursuant to an order by the commissioner, the insurance futures contracts or options on insurance futures contracts shall not be given any effect on any statement required by this code purporting to show the financial condition of the domestic insurer or in measuring the financial condition of the domestic insurer for the purpose of determining whether the domestic insurer is solvent or insolvent. The commissioner may also, for good cause shown, order the disposal of any insurance futures contract or option on insurance futures contracts. (h) Insurance futures contracts and put and call options on insurance futures contracts shall not be deemed to be investments for purposes of any investment limitations or authorizations contained in this code. (i) The commissioner may adopt rules and guidelines establishing standards and requirements relative to practices authorized in this section. The commissioner shall issue a bulletin by June 30, 1994, setting forth the accounting, reporting, and valuation practices and procedures for insurance futures contracts. However, a bulletin shall not be required if, prior to June 30, 1994, accounting practices and procedures are officially promulgated by the National Association of Insurance Commissioners. The bulletin issued pursuant to this subdivision shall not be superseded by any action of the National Association of Insurance Commissioners that conflicts with or that fails to address matters addressed by the bulletin. No insurer shall engage in hedging transactions with respect to insurance futures contracts or put and call options on insurance futures contracts until the earlier of the date a bulletin is issued or the date accounting practices and procedures are officially promulgated by the National Association of Insurance Commissioners and except pursuant to this section. (Repealed and added by Stats. 1993, Ch. 232, Sec. 2. Effective January 1, 1994.)
  185. 12120.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An admitted financial guaranty insurance corporation is generally not subject to Sections 1861.01 and 1861.05 for financial guaranty insurance rates, but those rates still cannot be excessive, inadequate, unfairly discriminatory, or otherwise violate Chapter 9 of Part 2 of Division 1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12120. An admitted financial guaranty insurance corporation with respect to financial guaranty insurance rates, shall not be subject to Sections 1861.01 and 1861.05, except that financial guaranty insurance rates shall not be excessive, inadequate, or unfairly discriminatory or otherwise in violation of Chapter 9 (commencing with Section 1850) of Part 2 of Division 1. (Added by Stats. 1990, Ch. 1032, Sec. 6.)
  186. 12121.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An authorized financial guaranty insurer may get credit for reinsurance only if the reinsurance is placed with a permitted reinsurer and any termination or amendment fits one of the listed conditions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12121. (a) For financial guaranty insurance that takes effect on or after January 1, 1991, an insurer authorized to transact financial guaranty insurance shall receive credit for reinsurance as an asset or as a reduction from liabilities only if the reinsurance is placed with a reinsurer as provided in subdivision (b), and if the reinsurance agreement may be terminated or amended only if one or more of the following applies: (1) At the option of the reinsurer or the ceding insurer if the reinsurance agreement provides that the liability of the reinsurer with respect to policies in effect at the date of termination shall continue until the expiration or cancellation of each such policy. (2) With the consent of the ceding company, if the reinsurance agreement provides for a cutoff of the reinsurance in force as of the date of termination. (3) At the discretion of the commissioner acting as rehabilitator, liquidator, or receiver of the ceding or assuming insurer. (b) Reinsurance may be placed with one of the following: (1) Another financial guaranty insurance corporation admitted pursuant to this article to transact financial guaranty insurance which may be under common control with the ceding financial guaranty insurer or financial guaranty corporation, but which does not own, and is not owned by, in whole or in part, directly or indirectly, the ceding financial guaranty insurer or financial guaranty insurance corporation. (2) Another financial guaranty insurance corporation admitted pursuant to this article which does own, or is owned by, in whole or in part, directly or indirectly, the ceding financial guaranty insurer or financial guaranty insurance corporation provided that (A) the value of the ownership interest in either case does not exceed the greater of (i) 35 percent of its combined capital and surplus or (ii) 50 percent of the excess of its surplus over its liabilities and capital, and (B) the financial guaranty insurance corporation providing the reinsurance is rated at the time of cession and thereafter in one of the two top generic rating classifications by a securities rating agency acceptable to the commissioner. (3) An insurer admitted to transact surety insurance but not financial guaranty insurance pursuant to this article, if the insurer meets all of the following criteria: (A) Has and maintains combined capital and surplus of at least fifty million dollars ($50,000,000). (B) Establishes and maintains the reserves required in Sections 12108, 12109, and 12110, except that if the reinsurance agreement is not pro rata the contribution to the contingency reserve shall be equal to 50 percent of the quarterly earned insurance premium. (C) Complies with the provisions of subdivision (b) of Section 12114, except that its maximum aggregate assumed total net liability shall be one-half that permitted for a financial guaranty insurance corporation. For the purpose of determining compliance with this clause, the assuming reinsurer, unless at the time of cession and thereafter it is rated in one of the two top generic rating classifications by a securities rating agency acceptable to the commissioner, shall be limited to using 10 percent of its capital and surplus in making this calculation. (D) Complies with the provisions of Section 12115. (E) If the insurer is an affiliate, parent, or subsidiary of the financial guaranty insurance corporation, the affiliate, parent, or subsidiary shall not assume a percentage of the corporation’s total liability in excess of its percentage of equity interest in the corporation. (F) Assumes from the financial guaranty insurance corporation and any affiliate, parent, or subsidiary that is a financial guaranty insurance corporation or an insurer writing only financial guaranty insurance as is or would be permitted by this article, and any other kinds of insurance that a financial guaranty insurance corporation may write in this state, together with all other reinsurers subject to this paragraph, less than 50 percent of the total exposures insured by the financial guaranty insurance corporation and such affiliates, parent, or subsidiaries after deducting any reinsurance placed with another financial guaranty insurance corporation that is not an affiliate, parent, or subsidiary or an insurer writing only financial guaranty insurance as is or would be permitted by this article that is not an affiliate, parent, or subsidiary. (4) A nonadmitted insurer transacting only financial guaranty insurance as is or would be permitted by this article and that otherwise complies with the provisions of subparagraphs (A), (E), and (F) of paragraph (3), and otherwise complies with paragraph (1) or (2), and in compliance with the requirements of subdivision (b) or (c) of Section 922.4 or subdivision (a) of Section 922.5, as applicable. (5) A nonadmitted insurer not transacting only financial guaranty insurance as is or would be permitted by this article and that complies with the provisions of subparagraphs (A), (C), (E), and (F) of paragraph (3) in an amount not exceeding the liabilities carried by the ceding financial guaranty insurance corporation and in compliance with the requirements of subdivision (b), (c), or (d) of Section 922.4 or subdivision (a) or (b) of Section 922.5, as applicable. (c) In determining whether the financial guaranty insurance corporation meets the limitations imposed by Section 12115, in addition to credit for other types of qualifying reinsurance, the financial guaranty insurance corporation’s aggregate risk may be reduced to the extent of the limit for aggregate reinsurance but, in no event, in an amount greater than the amount of the aggregate risk that will become due during the unexpired term of the reinsurance agreement in excess of the financial guaranty insurance corporation’s retention pursuant to the reinsurance agreement. (Amended by Stats. 2012, Ch. 277, Sec. 13. (SB 1216) Effective January 1, 2013.)
  187. 12122.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. )

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    An insurer authorized to write financial guaranty insurance must not pay commissions or gifts to certain issuer or underwriter personnel as an inducement, and those personnel must not receive such payments while the policy is in force.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Surety Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12050 - 12122] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Financial Guaranty Insurance [12100 - 12122] ( Article 5 repealed and added by Stats. 1990, Ch. 1032, Sec. 6. ) ## 12122. No insurer authorized to transact financial guaranty insurance shall pay any commission to or make any gift of money, property, or other valuable thing to any employee, agent, or representative of any issuer of any debt instrument or other monetary obligation of any kind which may be insured pursuant to this article or to any trustee or agent of any such issuer, or to any employee, agent, or representative of any underwriter of any issuer of those debt instruments or monetary obligations as an inducement to the purchase of that insurance, nor may, at any time there is in force a policy issued by that insurer insuring those debt instruments or monetary obligations, any employee, agent, or representative of the issuer or underwriter receive from or on behalf of that insurer any such payment or gift. (Added by Stats. 1990, Ch. 1032, Sec. 6.)
  188. 12124.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Other Casualty Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12124- 12124.] ( Chapter 2 enacted by Stats. 1935, Ch. 145. )

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    Certain incorporated insurers must follow the paid-in capital and surplus requirements in Sections 700.01 to 700.05.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 2. Other Casualty Insurers on Reserve Basis; Capital Requirements and Permitted Insurances [12124- 12124.] ( Chapter 2 enacted by Stats. 1935, Ch. 145. ) ## 12124. An incorporated insurer that does not issue fire, marine, life, liability, workers’ compensation, common carrier liability, surety, title or mortgage policies but does issue other insurance policies on a reserve basis shall be governed by the paid-in capital and surplus requirements of Sections 700.01 to 700.05, inclusive. (Added by renumbering Section 12110 (as amended by Stats. 1982, Ch. 454) by Stats. 1995, Ch. 91, Sec. 98. Effective January 1, 1996.)
  189. 12125.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. )

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    Some insurers may transact legal insurance if they meet specified capital requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. ) ## 12125. (a) Subject to the provisions of this chapter, any insurer admitted to transact any class of insurance in this state, other than title insurance, mortgage insurance, or mortgage guaranty insurance, may transact legal insurance if it has a minimum paid-in capital and surplus of not less than one million dollars ($1,000,000), provided that the paid-in capital shall not be less than five hundred thousand dollars ($500,000), notwithstanding the paid-in capital and surplus requirements of Sections 700.01, 700.02, 10510, and 10511, respectively. (b) Any insurer not admitted to transact any other class of insurance in this state may be admitted to transact legal insurance if it has the paid-in capital and surplus required by subdivision (a). (c) As used in this section, “surplus” means the excess of admitted assets over the sum of (1) liabilities for losses reported, expenses, taxes, and all other indebtedness and reinsurance of outstanding risks as provided by law, and either (2) paid-in capital, in the case of an insurer issuing or having outstanding shares of capital stock, or (3) minimum paid-in capital required by this section, in the case of any other insurer. (Added by renumbering Section 12120 (as amended by Stats. 1976, Ch. 1079) by Stats. 1995, Ch. 91, Sec. 99. Effective January 1, 1996.)
  190. 12126.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. )

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    This section defines “group legal insurance” and lists the kinds of policies that qualify.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. ) ## 12126. Group legal insurance shall mean that form of legal insurance covering groups of persons as defined in this chapter with or without one or more of their dependents and issued upon one of the following bases: (a) Under a policy issued to an employer insuring employees of the employer; (b) Under a policy issued to a labor union insuring members of the union; (c) Under a policy issued to the trustees of a fund established by two or more employers in the same industry or by one or more labor unions or by one or more employers and one or more labor unions, which trustees shall be deemed the policyholder insuring employees of the employers or members of the union; (d) Under a policy issued to any other organization or combination of organizations, incorporated or otherwise, (including professional associations, trade associations, or other organizations) whose members have common concerns or problems, or have joined together as a means for bargaining for a particular position, or have voluntarily formed or become members of an organization designed to perform a service for its members, or any other substantially similar organization, excluding an organization or combination of organizations that is formed or maintained solely for the purposes of obtaining insurance. (Added by renumbering Section 12121 (as amended by Stats. 1974, Ch. 1161) by Stats. 1995, Ch. 91, Sec. 100. Effective January 1, 1996.)
  191. 12127.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. )

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    Group and individual legal insurance may be offered only if rate standards are followed, policy forms are filed with the commissioner, and group policies include required certificate provisions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. ) ## 12127. Group and individual legal insurance may be offered in this state subject to all the following conditions: (a) Premium rates shall comply with any pertinent standards in this code, including the standards that rates not be excessive, inadequate, or unfairly discriminatory. Rates for group legal insurance shall not be deemed to be unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as the rates reflect the difference with reasonable accuracy. Rates shall not be considered to be unfairly discriminatory if they are averaged broadly among persons insured under a group legal insurance plan. (b) No policy or certificate of legal insurance may be delivered or issued for delivery in this state unless and until a copy of the form thereof has been filed with the commissioner. However, this subdivision shall apply only to an insurer for a two-year period immediately following the date upon which it files its first policy or certificate of legal insurance with the commissioner. (c) No policy of group legal insurance may be delivered or issued for delivery in this state unless it contains a provision that the insurer shall issue to the person in whose name the policy is issued, for delivery to each member of the insured group, a certificate setting forth in a summary form a statement of the essential features of the insurance coverage and to whom benefits thereunder are payable. If dependents are included in the coverage, only one certificate need be issued for each family unit. Any certificates delivered to members of an insured group pursuant to this subdivision shall be required to be “individualized” within the meaning of that term as it is defined by Section 10270.63 only if members of the group contribute to the payment of the legal insurance premiums. (Added by renumbering Section 12122 (as amended by Stats. 1974, Ch. 1161) by Stats. 1995, Ch. 91, Sec. 102. Effective January 1, 1996.)
  192. 12128.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. )

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    In a group legal insurance plan, the policyholder is the employer, union, trustees, or other person the policy is issued to, and that policyholder handles contract changes, plan administration, and voting rights.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. ) ## 12128. In every group legal insurance plan, the employer, labor union, trustees, or other person to whom a group legal insurance plan policy is issued shall be the policyholder for all purposes of entering into, amending, or terminating any contract of legal insurance, administering any legal insurance plan, and exercising any voting rights to which the policyholder is entitled. If entitled to vote at meetings of the insurer, such policyholder shall be entitled to one vote. (Added by renumbering Section 12123 by Stats. 1995, Ch. 91, Sec. 103. Effective January 1, 1996.)
  193. 12129.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. )

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    The commissioner enforces this chapter and may issue reasonable rules and regulations needed to administer it, after notice and public hearing.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 4. MISCELLANEOUS CASUALTY INSURANCES [12050 - 12129] ( Part 4 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 3. Group and Individual Plans for Legal Insurance [12125 - 12129] ( Chapter 3 added by Stats. 1974, Ch. 1161. ) ## 12129. The provisions of this chapter shall be enforced by the commissioner, and he may, after notice and public hearing, promulgate such reasonable rules and regulations as are necessary to administer this chapter. (Added by renumbering Section 12124 by Stats. 1995, Ch. 91, Sec. 104. Effective January 1, 1996.)
  194. 12140.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    This provision says Part 5 does not apply to several listed people, entities, and agreements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12140. This part shall not apply to any of the following: (a) A duly authorized attorney at law acting in the usual course of his profession. (b) An admitted insurer. (c) An association of motor carriers. (d) A person who is directly or indirectly engaged, either as principal or agent, in selling or offering for sale, furnishing, or procuring any of the services described in Section 12148, 12152, or 12153, or miscellaneous service that augments or is incidental to any of those services, but who is not directly or indirectly engaged, either as principal or agent, in selling or offering for sale, furnishing, or procuring any other service described in this chapter. (e) A person who is licensed as a vehicle service contract provider and offering any of the services described in paragraphs (1) to (4), inclusive, of subdivision (c) of Section 12800, to the extent that person is providing the services described therein. (f) A person offering the services described in paragraph (7) of subdivision (a) of Section 12805 to the extent that person is providing the services described therein. (g) An agreement that promises routine maintenance. (Amended by Stats. 2016, Ch. 386, Sec. 2. (AB 2354) Effective January 1, 2017.)
  195. 12141.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    Terms used in this part generally have the meanings given in this chapter, unless context requires otherwise.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12141. Except where the context otherwise requires, the terms used in this part shall be given the meanings set forth in this chapter, but such meaning shall not, merely by reason of enactment in this chapter, govern the interpretation of any other provision of this code. (Enacted by Stats. 1935, Ch. 145.)
  196. 12142.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    This section defines when a person is a motor club, and when a person is not a motor club.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12142. (a) Except as provided in subdivision (b), a motor club is a person, directly or indirectly engaged, either as principal or agent, in selling or offering for sale, furnishing or procuring motor club service. (b) A person who is directly or indirectly engaged, either as principal or agent, in selling or offering for sale, furnishing, or procuring any of the services described in Section 12148, 12152, or 12153, or miscellaneous service that augments or is incidental to any of those services, but who is not directly or indirectly engaged, either as principal or agent, in selling or offering for sale, furnishing, or procuring any other service described in this chapter, is not a motor club. (Amended by Stats. 2003, Ch. 88, Sec. 2. Effective January 1, 2004.)
  197. 12142.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    The commissioner must adopt reasonable rules and regulations that specify what miscellaneous services are permitted under the cited sections.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12142.5. The commissioner shall adopt reasonable rules and regulations specifying the types of miscellaneous service permitted under subdivision (d) of Section 12140 and subdivision (b) of Section 12142. The rules and regulations shall be adopted, amended, and repealed in accordance with the procedure provided in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (Added by Stats. 2003, Ch. 88, Sec. 3. Effective January 1, 2004.)
  198. 12143.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    A club agent is someone other than the motor club itself who helps solicit, deliver, or negotiate membership or service contracts, including renewals or continuances.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12143. A club agent is a person other than the motor club itself, who acts or aids in any manner in the solicitation, delivery, or negotiation of any membership or service contract, or of the renewal or continuance thereof. (Amended by Stats. 1972, Ch. 179.)
  199. 12144.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    A motor club service is defined, and motor clubs are not authorized to provide reimbursement-based services that amount to insurance; the commissioner may adopt rules identifying such services.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12144. Motor club service is the rendering or procuring of, or reimbursement for, any of the services defined in this chapter to any person in connection with the ownership, operation, use, or maintenance of a motor vehicle, including a vacation trailer, house or otherwise, or a boat capable of ordinary transportation on a trailer and its trailer, by the person upon any of the following considerations: (a) The person is or will become a member of the club rendering or furnishing the service. (b) The person is or will become in any manner affiliated with the club. (c) The person is or will become entitled to receive membership or other motor club service from the club by virtue of any agreement or understanding with any club. This section shall not authorize a motor club to furnish any service on a reimbursement basis that constitutes the transaction of insurance. The commissioner may make reasonable rules and regulations specifying services that constitute the transaction of insurance for the purposes of this part and which may not be offered on a reimbursement basis. Rules and regulations shall be adopted, amended, and repealed in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (Amended by Stats. 2004, Ch. 183, Sec. 248. Effective January 1, 2005.)
  200. 12145.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

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    This section defines towing service as a motor club drafting or moving a motor vehicle from one place to another using power other than the vehicle’s own.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 5. MOTOR CLUBS [12140 - 12311] ( Part 5 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Definitions and Exemptions [12140 - 12159] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## 12145. Towing service is the drafting or moving by a motor club of a motor vehicle from one place to another under other power than its own. (Enacted by Stats. 1935, Ch. 145.)

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